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/raid1/www/Hosts/bankrupt/TCR_Public/061115.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 15, 2006, Vol. 10, No. 272 Headlines ACE SECURITIES: Moody's Rates Class M-10 Sub. Certificates at Ba1 ADVENTURE PARKS: Foley & Lardner Okayed as Committee's Counsel ADVENTURE PARKS: Committee Hires GlassRastner as Financial Advisor ALLIED HOLDINGS: Has Until March 16 to Remove Civil Actions AMERICAN CELLULAR: Fitch Rates Senior Secured Facility at BB- AMERIQUEST MORTGAGE: Fitch Downgrades Ratings on Four Issues ATARI INC: Secures Three-Year $15 Million Credit Facility BEAR STEARNS: Moody's Rates Class II-B-5 Certificates at Ba2 BEAR STEARNS: Moody's Rates Class B-4 Sub. Certificates at Ba2 BEAR STEARNS: S&P Holds Low-B Ratings on Six Certificate Classes BENEDICT COLLEGE: Moody's Downgrades Rating on $45 Million Debt BEST MANUFACTURING: Wants Exclusivity Period Extended to April 6 BLOCKBUSTER INC: Posts $24.7 Mil. Net Loss in 2006 Third Quarter BOE HYDIS: Chapter 15 Petition Summary CARRAWAY METHODIST: Sells Assets to Physicians Medical for $26.5MM CABELA'S CREDIT: Fitch Rates $11.25 Million Class D Notes at BB+ CATHOLIC CHURCH: Lane & Waterman Hired as Davenport's Counsel CATHOLIC CHURCH: Portland Wants Hamilton's Scope of Work Expanded CENTENNIAL COMMS: Redeeming $20 Million of 10-3/4% Senior Notes CHARLES RIVER: Posts $16.6 Million Net Loss for 2006 Third Quarter CITIZENS COMMS: Frontier to Deploy Burnsville Wireless Service CLEAR CHANNEL: Receives Two Competing Takeover Bids CLEAR CHANNEL: Discloses New International Management Team COMPLETE RETREATS: Amends Ableco DIP Pact, Gets $2MM Add On Loan COMPLETE RETREATS: Wants Patriot & Footbridge Agreements Approved CONEXANT SYSTEMS: Prices $275 Million Senior Secured Notes CONTINENTAL AIRLINES: Inks Underwriting Pact with Morgan Stanley COUNTY CONDUIT: Case Summary & 20 Largest Unsecured Creditors CSFB HOME: S&P Downgrades Rating on Class B-2 Certificates to BB CVS CORPORATION: Moody's Puts Ratings on Review and May Upgrade DAIMLERCHRYSLER: Suspends Some Senior Managers at Bus Unit DANA CORP: Court Lifts Stay Allowing Franklin to Terminate Pacts DANA CORPORATION: Releases Third Quarter 2006 Financial Results DANA CORP: Retiree Panel Taps Segal Co. as Actuarial Consultants DELTA AIR: Comair Labor Union Okays Four-Year Labor Agreement DYNEGY INC: Sells Rockingham Facility to Duke Energy for $195 Mil. EMISPHERE TECH: Sept. 30 Stockholders' Deficit Narrows to $5.5MM ENESCO GROUP: Inks Thirteenth Amendment to Credit Facility ENRON CORP: Judge Lake Sentences Skilling to 24 Years in Jail ENRON CORP: Wants Kennedy Oil's Claim for $2.9 Million Reduced EVANS INDUSTRIES: Court Confirms Amended Liquidating Plan FISCHER IMAGING: Earns $355,000 in Quarter Ended September 30 FOAMEX INTERNATIONAL: Wants GMAC Settlement Agreement Approved FOAMEX INTERNATIONAL: Wants to Enter into Toyota Forklifts Lease FORD MOTOR: Files Third Quarter & Restated 2005 Annual Reports FMC REAL: Fitch Holds Low-B Ratings on Class G and H Notes GENERAL MOTORS: Fitch Rates New $1.5 Billion Senior Loan at BB GLOBAL CROSSING: Sept. 30 Balance Sheet Upside-Down by $131 Mil. GLOBAL CROSSING: Will Acquire IMPSAT Fiber for $95 Million GLOBAL POWER: Wants Court Approval to Use BoA's Cash Collateral GUNDLE SLT: Weak Earnings Cue S&P Junk Rating on Senior Notes HARRAH'S OPERATING: Moody's Puts Ratings on Review & May Downgrade HEARTLAND PARTNERS: Disclosure Approved & Modified Plan Confirmed HEXION SPECIALTY: Amends Pact for $2 Billion Credit Facilities HOLLINGER INT'L: Balance Sheet Upside-Down by $322MM at Sept. 30 HOLLINGER INT'L: Chancery Court Approves $50 Million Settlement HOME EQUITY: Moody's Rates Class B-1 Subor. Certificates at Ba1 IMPSAT FIBER: Will be Acquired by Global Crossing for $95 Million INDUSTRIAL ENTERPRISES: Amends March 31, 2006 Financial Statements INDYMAC INDX: Moody's Rates Class M-10 Sub. Certificates at Ba1 INTEGRATED HEALTHCARE: Restates 2006 1st & 2nd Quarter Financials J.P. MORGAN: S&P Removes Negative Watch on Junk Rated Certificates JO-ANN STORES: Moody's Reviews Ratings and May Downgrade KANSAS CITY: Moody's Rates Senior Unsecured Notes due 2013 at B3 MAJESTIC HOLDCO: Lower Revenues Cue Moody's to Revise Outlook MARK PARKER: Chapter 15 Petition Summary MESABA AVIATION: Wants Complaint on Labor Agreements Stayed MESABA AVIATION: MAIR Wants Panel Barred from Challenging Payments MESABA AVIATION: Wants Preliminary Injunctive Relief To Be Final METABOLIFE INT'L: Agrees to $56 Million Settlement for Tort Claims MORGAN STANLEY: Moody's Rates Class B-5 Sub. Certificates at Ba2 MILLS CORP: Annual Stockholders Meeting Set for December 21 MUSICLAND HOLDING: Objects to James Hayes Lift Stay Motion MUSICLAND HOLDING: Second Interim Fee Filing Deadline is Jan. 30 NATURAL NUTRIENTS: S&P Rates $200 Million Senior Bonds at B- NRG ENERGY: Fitch Rates $1.1 Billion Senior Notes at B+ ON SEMICONDUCTOR: Earns $76.8 million in 2006 Third Quarter ON SEMICONDUCTOR: Prepays $55 Million Senior Credit Facility PILGRIM'S PRIDE: Prices Gold Kist's 10-1/4% Senior Notes REAL ESTATE: Moody's Puts Low-B Ratings on Six Certificate Classes RIVIERA HOLDINGS: Buy Offer Prompts Moody's to Hold B2 Rating RIVIERA HOLDINGS: Buy Offer Prompts S&P's Developing Watch RURAL/METRO: Moody's Assigns Loss-Given-Default Ratings SAINT VINCENTS: Court Okays 3-Year Lease Agreement with SW BOCES SAINT VINCENTS: Court Okays Lease Rejection Stipulation with Bayer SALOMON BROTHERS: Fitch Cuts Ratings on 2 Cert. Classes to Low-B SEARS HOLDINGS: Sears Canada Shareholders Reject Buyout Offer SERACARE LIFE: Inks Joint Plan with Ad Hoc Equity Committee SFBC INT'L: Moody's Assigns Loss-Given-Default Rating SHERIDAN HOLDINGS: Moody's Assigns Loss-Given-Default Ratings SHYPPCO FINANCE: Fitch Holds C Rating on $62 Mil. Class A-3 Notes SHAW COMMS: DBRS Confirms Senior Notes' Rating at BB (high) SPATIALIGHT INC: Incurs $4.1 Mil. Net Loss in 2006 Third Quarter SPHERIS INC: Moody's Assigns Loss-Given-Default Ratings STRUCTURED ASSET: Moody's Rates Class B5-II Sub. Certificates B2 TEAM FINANCE: Moody's Assigns Loss-Given-Default Ratings TLC HEALTH: Moody's Assigns Loss-Given-Default Ratings TITAN GLOBAL: Inks $22.9 Mil. Loan Deal With Greystone Business TOTAL SAFETY: Moody's Junks Rating on $40 Mil. Senior Secured Loan TUBE CITY: $720 Mil. Onex Offer Cues Moody's to Review Ratings UNITED CUTLERY: U.S. Trustee Appoints Four-Member Creditors Panel UNITED CUTLERY: Panel Hires Harter Secrest as Bankruptcy Counsel UNIVERSAL HOSPITAL: Moody's Assigns Loss-Given-Default Rating US ONCOLOGY: Moody's Assigns Loss-Given-Default Ratings USG CORP: S&P Rates Proposed $500 Mil. Senior Unsec. Notes at BB+ USP DOMESTIC: Moody's Assigns Loss-Given-Default Rating VALENCE TECHNOLOGY: Posts $4.8MM Loss in Quarter Ended Sept. 30 VB CHOWCHILLA: Case Summary & Five Largest Unsecured Creditors VESTA INSURANCE: Files 1st Amended Plan & Disclosure Statement VESTA INSURANCE: Committee Wants Voting Deadline Established VOIP INC: Files Restated Results for 2006 Quarter Ended June 30 VWR INTERNATIONAL: Moody's Assigns Loss-Given-Default Ratings WERNER LADDER: Court Extends Plan-Filing Period to January 15 WERNER LADDER: Court Okays Neil Minihane as Committee Consultant WERNER LADDER: Ct. OKs 5th Amended Agreement with Grupo American WORLD AIRCRAFT: Case Summary & 20 Largest Unsecured Creditors WORLDCOM INC: Qwest Wants to Recover Terminating Access Charges WORLDCOM INC: Wants to Recover Excess Commission Payments to HSG YOUTH AND FAMILY: Moody's Assigns Loss-Given-Default Ratings * Cadwalader Wickersham Names 24 Attorneys as Special Counsels * Upcoming Meetings, Conferences and Seminars ********* ACE SECURITIES: Moody's Rates Class M-10 Sub. Certificates at Ba1 ----------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM2 and ratings ranging from Aa1 to Ba1 to the mezzanine and subordinate certificates in the deal. The securitization is backed by Fremont Investment & Loan originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by DB Structured Products, Inc. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by subordination, excess spread, overcollateralization, and an interest-rate swap agreement. Moody's expects collateral losses to range from 4.75% to 5.25%. Countrywide Home Loans Servicing LP will service the mortgage loans and Wells Fargo Bank, National Association will act as master servicer. Moody's has assigned Wells Fargo a servicer quality rating of SQ1 as a master servicer of subprime mortgage loans. These are the rating actions: * ACE Securities Corp. Home Equity Loan Trust, Series 2006-FM2 * Asset Backed Pass-Through Certificates Cl. A-1, Assigned Aaa Cl. A-2A,Assigned Aaa Cl. A-2B,Assigned Aaa Cl. A-2C,Assigned Aaa Cl. A-2D,Assigned Aaa Cl. M-1, Assigned Aa1 Cl. M-2, Assigned Aa2 Cl. M-3, Assigned Aa3 Cl. M-4, Assigned A1 Cl. M-5, Assigned A2 Cl. M-6, Assigned A3 Cl. M-7, Assigned Baa1 Cl. M-8, Assigned Baa2 Cl. M-9, Assigned Baa3 Cl. M-10,Assigned Ba1 ADVENTURE PARKS: Foley & Lardner Okayed as Committee's Counsel -------------------------------------------------------------- The Honorable John T. Laney III of the U.S. Bankruptcy Court for the Middle District of Georgia in Valdosta authorized the Official Committee of Unsecured Creditors appointed in Adventure Parks Group LLC and its debtor-affiliates' chapter 11 cases to retain Foley & Lardner LLP as its lead counsel. Foley & Lardner will provide the Committee with legal advice with respect to its powers and duties in connection with the affairs of the estate of the Debtors and to perform certain legal services for the Committee. Specifically, Foley and Lardner will: a) serve as lead counsel, coordinating with local counsel; b) meet or otherwise confer with and provide the Committee with legal advice with respect to its statutory duties and powers in the Debtors' chapter 11 cases in all matters, but referring Georgia law issues primarily to local counsel; c) represent and appear at hearings on behalf of the Committee in all matters requiring the Committee participation, but permitting local counsel to attend hearings on routine, uncontested matters; d) negotiate with counsel for the Debtors, secured creditors, equity and executory contract parties on various matters; and e) perform other legal services as may be required and in the best interests of the unsecured creditors generally and the Committee. Mark J. Wolfson, Esq., a partner at Foley & Lardner, disclosed that the Firm's primary professionals bill: Professional Hourly Rate ------------ ----------- Attorneys $247 - $405 Paraprofessionals $153 Foley & Lardner's other professionals who will on the case will bill the Firm's standard rates, subject to a 10% discount. Mr. Wolfson assured the Court that Foley & Lardner holds no interest adverse to the estate and is disinterested pursuant to Sec. 101(14) of the Bankruptcy Code. 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. ADVENTURE PARKS: Committee Hires GlassRastner as Financial Advisor ------------------------------------------------------------------ The Honorable John T. Laney III of the U.S. Bankruptcy Court for the Middle District of Georgia in Valdosta authorized the Official Committee of Unsecured Creditors appointed in Adventure Parks Group LLC and its debtor-affiliates' chapter 11 cases to retain GlassRatner Advisory & Capital Group LLC as its financial advisor. GlassRatner Advisory will assist in the analysis of the Debtors' financial statements. Specifically, Glassratner Advisory will: a) analyze the current financial position the Debtors; b) analyze the Debtors' business plans, cash flow projections, restructuring programs, selling, general, and administrative structure, and other reports or analyses prepared by the Debtors or its professionals in order to advise the Committee on the viability of the continuing operations and the reasonableness of projections and underlying assumptions with respect to industry and underlying assumptions with respect to industry and market conditions; c) analyze the financial ramifications of proposed transactions for which the Debtors seek Bankruptcy Court approval including, but not limited to, DIP financing, assumption and rejection of leases, management compensation and retention and severance plans, and potential sale transactions; d) analyze and advise at meetings with the Committee, its counsel and representatives of the Debtors; e) attend and advise the Committee and its counsel in the development, evaluation and documentation of any plan of reorganization or strategic transaction, including developing, structuring and negotiating the terms and conditions of potential plan or strategic transaction and the value of consideration that is to be provided to unsecured creditors; g) render expert testimony on behalf of the Committee; and h) provide such other services, as requested by the Committee and agreed to by GlassRatner Advisory. Ian Ratner, a principal at GlassRatner Advisory, disclosed that its professional fees are based on a $20,000 fixed monthly fee plus 2.5% of aggregate distribution to holders of allowed general unsecured trade claims in excess of 50% of the allowed claims. Mr. Ratner assured the Court that GlassRatner Advisory does not hold any interest adverse to the estate and is disinterested pursuant to Sec. 101(14) of the Bankruptcy Code. 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. ALLIED HOLDINGS: Has Until March 16 to Remove Civil Actions ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia extended until March 16, 2007, Allied Holdings, Inc., and its debtor-affiliates' period to remove civil actions. Vivieon E. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, said that enlarging the Removal Period will: -- provide the Debtors an opportunity to make informed decisions concerning the removal of causes of action; -- assure that the Debtors do not forfeit any of their rights under Section 1452 of the Judiciary Code; and -- permit the Debtors to continue focusing their time and energy on reorganizing. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMERICAN CELLULAR: Fitch Rates Senior Secured Facility at BB- ------------------------------------------------------------- Fitch assigns a rating of 'BB-' to American Cellular Corporation's senior secured credit facility. In addition, Fitch affirms the 'B-' Issuer Default Rating for AmCell, Dobson Cellular Systems Inc. and the parent company, Dobson Communications Corp. Fitch downgrades the senior unsecured notes at AmCell to 'B/RR3' from 'B+/RR2'. The senior subordinated notes are affirmed at 'CCC+/RR5'. The Rating Outlook is Stable. The IDR ratings at Dobson reflect its current leverage, smaller scale as a regional operator, and the competitive operating environment. Fitch also believes a higher level of event risk is present with potential universal service funding reform since USF disbursements are a material percentage of total cash flow. Positive offsets to these concerns include significantly improved operating metrics at Dobson primarily driven by the nearing completion of its GSM migration (86% of subscribers are GSM) as well as the significant coverage and quality improvements made to the company's GSM network. The improvement experienced in operating metrics compared to a year ago includes: -- Postpaid churn improved by 87 basis points to 1.95%; -- ARPU increased 5.1% to $49.2; -- Postpaid gross additions increased 9% to 92,100; -- Postpaid net additions increased to 11,300 compared to - 34,500. Performance at AmCell has improved from a year ago but not to the extent of the consolidated results at Dobson. While churn has improved to the same level, gross additions were relatively flat to a year ago and ARPU increased modestly. The new senior secured credit facility consists of a: * five-year $50 million senior secured revolving credit facility, * seven-year $100 million senior secured multiple draw term loan, and * seven-year $100 million senior secured delayed draw term loan. If AmCell has not repaid or refinanced its 10% senior notes by Feb. 1, 2011, then the revolving credit facility and term loan facilities will mature on Feb. 1, 2011. AmCell has fully drawn the multiple draw term loan and drawn $25 million on the revolving credit facility. Each term loan facility will amortize in an amount equal to 0.25% per quarter beginning with the fourth quarter of 2006. Financial covenants include a debt to EBITDA limitation of 6.5 times (x) or less. The credit facility is guaranteed by ACC Holdings, LLC, AmCell's direct parent and by each of AmCell's direct domestic subsidiaries except for Alton CellTel Co Partnership. Dobson or DCC does not provide any guarantees for AmCell debt. The credit facility is secured by a first priority security interest in substantially all of the tangible and intangible assets of American Cellular and its direct subsidiaries as well as a pledge of AmCell's capital stock. Borrowings under the credit facility have been used for the Highland acquisition and spectrum auction purchases. As a result of the drawdowns on the credit facilities, leverage increased slightly at Dobson to 6.5x at the end of the third quarter 2006. Dobson's consolidated liquidity is stable, albeit modest, based on its cash position and lack of near-term maturities. Pro forma cash at the end of the third quarter of 2006 was approximately $102 million reflecting the Highland acquisition and debt redemption. Dobson's nearest material maturity is not until 2011. The indentures with Amcell's 10% senior notes will not allow restricted payments to Dobson until AmCell materially improves its cash flow. Therefore, DCS bondholders must rely on DCS cash generation to service interest payments. For 2006, Fitch expects free cash flow at DCEL to be approximately $40-50 million. The secured credit facility at AmCell was notched up three times to reflect expectations for outstanding recovery prospects. The ratings for AmCell's senior unsecured notes of 'B/RR3' were downgraded by one notch to reflect the diminished recovery prospects. Fitch has taken these rating actions: Dobson Communications Corp. -- Issuer default rating affirmed at 'B-'; -- $150 million senior floating rate notes affirmed at 'CCC+/RR5'; -- $160 million senior convertible debentures affirmed at 'CCC+/RR5'; -- $420 million senior notes affirmed at 'CCC+/RR5'; -- $136 million convertible preferred stock affirmed at 'CCC-/RR6'. Dobson Cellular Systems Inc. -- Issuer default rating affirmed at 'B-'; -- $75 million senior secured credit facility affirmed at 'BB-/RR1'; -- $500 million first priority secured notes affirmed at 'BB-/RR1'; -- $325 million second priority secured notes affirmed at 'BB-/RR1'. American Cellular Corporation -- Issuer default rating affirmed at 'B-'; -- $250 million senior secured credit facility affirmed at 'BB-/RR1'; -- $900 million senior unsecured notes downgraded to 'B/RR3' from 'B+/RR2'; -- $14.5 million senior subordinated notes affirmed at 'CCC+/RR5'. AMERIQUEST MORTGAGE: Fitch Downgrades Ratings on Four Issues ------------------------------------------------------------ Fitch Ratings has taken rating actions on these Ameriquest Mortgage Securities Inc. and Argent Securities Inc. home equity issues: AMSI, Series 2003-8 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2, rated 'A+', placed on Rating Watch Negative; -- Class M3, rated 'A-', placed on Rating Watch Negative; -- Class M4, rated 'BBB+', placed on Rating Watch Negative; -- Class M5 downgraded to 'BB' from 'BBB'; -- Class M6 downgraded to 'BB-' from 'BBB-'. AMSI, Series 2004-R3 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 downgraded to 'BB+' from 'BBB-'; -- Class M7 downgraded to 'BB' from 'BB+'. ARSI, Series 2004-PW1 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BB'; -- Class M10 downgraded to 'B' from 'B+'; -- Class M11 downgraded to 'CC/DR2' from 'B'. The affirmations, affecting approximately $663,488,805 of the outstanding balances, are taken due to a satisfactory relationship of credit enhancement to expected losses. In AMSI series 2003-8, classes M2, M3 and M4 have been placed on Rating Watch Negative and classes M5 and M6 (approximately $28.08 million outstanding in aggregate) are being downgraded due to monthly losses which have generally exceeded excess spread and caused deterioration in the overcollateralization amount. As of the October 2006 distribution, the OC amount of $11,912,243.27 is below the target amount of $12,500,100. The OC is currently providing only 2.4% CE and based on currently outstanding balance for class M6, it only equals 0.50% of original balance. The loss to date, approximately 1.15% of original balance, is higher than the industry average of 0.8%. As of the cut-off date, the collateral for series 2003-8 had a weighted average original loan-to-value of 78.74%, and all of the loans from the trust were for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 36% of current balance at origination to 56% of current balance in October. In AMSI series 2004-R3, classes M6 and M7 are being downgraded due to monthly losses which have generally exceeded excess spread and caused deterioration in the overcollateralization amount. As of the October 2006 distribution, the OC amount of $10,931,538 is below the target amount of $15,000,009. Fitch expects the performance triggers to pass at the stepdown date of March 2007 and the OC target amount to continue to decrease, preventing CE as a percentage of the current pool balances to build for the most subordinate class. The loss to date, approximately 1.32% of original balance, is significantly higher than the industry average of 0.55% and the delinquency rate of 15.78% exceeds the industry average of 13.07%. As of the cut-off date, the collateral for series 2004-R3 had a weighted average original loan-to-value of 79.81%, and all of the loans from the trust were for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 35% of current balance at origination to 46% of current balance in October. In ARSI series 2004-PW1, classes M10 and M11 (approximately $9.275 million outstanding in aggregate) are being downgraded due to monthly losses which have generally exceeded excess spread and caused deterioration in the overcollateralization amount. The OC was expected to increase to approximately 2.85%, about $9,975,003, of the aggregate original principal balance of the mortgage loans but the transaction never reached its target. The OC is currently providing only 1.85 % CE, about $1,836,945.55, and based on currently outstanding balance for class M11, it only equals 0.52% of original balance. The loss to date, approximately 1.69% of original balance, is significantly higher than the industry average of 0.55% and the delinquency rate of 20.84% exceeds the industry average of 13.07%. As of the cut-off date, the collateral for series 2004-PW1 had a weighted average original loan-to-value of 92.77%, ranging from 85%-95% and all the loans from the trust were for the purpose of purchases. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 35% of current balance at origination to 52% of current balance in October. The underlying collateral consists of fully amortizing 15 to 30 year fixed and adjustable rate mortgages secured by first liens on one- to four-family residential properties extended to subprime borrowers. As of the October distribution date, the transactions listed above are seasoned from 28 (2004-PW1) to 37 (2003-8) months. The pool factors (current principal balance as a percentage of original) range approximately from 21% (2003-8) to 31% (2004-R3). The Ameriquest Securities loans, the retail sector for the Ameriquest Mortgage Securities Inc., were either originated or acquired by Ameriquest Mortgage Company. The Argent Securities loans, the wholesale sector for the Ameriquest Mortgage Securities Inc., were either originated or acquired by Argent Mortgage Company, LLC or Olympus Mortgage Company. Ameriquest Mortgage Company serves as the servicer for the loans in both of these sectors and is rated 'RPS2+' by Fitch. ATARI INC: Secures Three-Year $15 Million Credit Facility --------------------------------------------------------- Atari, Inc., entered into a new three-year secured revolving credit facility with Guggenheim Corporate Funding, LLC, as the administrative agent to a syndicate of lenders, which provides up to $15 million of credit availability based upon accounts receivables. The Company expects that the Guggenheim credit facility will provide funding for its current and reasonably foreseeable capital requirements as it relates to working capital needs in the ordinary course of business. "The Guggenheim facility provides Atari with the working capital flexibility to support our day-to-day operations," stated David Pierce, President and Chief Executive Officer. "Guggenheim is a prestigious financial partner and Atari looks forward to building on this partnership as we continue to execute on our strategy." New York-based Atari, Inc. (Nasdaq: ATAR) -- http://www.atari.com/-- develops interactive games for all platforms and is one of the largest third-party publishers of interactive entertainment software in the U.S. The Company's 1,000+ titles include franchises such as The Matrix(TM) (Enter The Matrix and The Matrix: Path of Neo), and Test Drive(R); and mass-market and children's franchises such as Nickelodeon's Blue's Clues(TM) and Dora the Explorer(TM), and Dragon Ball Z(R). Atari, Inc. is a majority-owned subsidiary of France- based Infogrames Entertainment SA (Euronext - ISIN: FR- 0000052573), the largest interactive games publisher in Europe. * * * Going Concern Doubt As reported in the Troubled Company Reporter on July 3, 2006, Deloitte & Touche LLP expressed substantial doubt about Atari, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the for the fiscal years ended March 31, 2006 and 2005. The auditing firm pointed to Atari's significant operating losses and the expiration of its line of credit facility. BEAR STEARNS: Moody's Rates Class II-B-5 Certificates at Ba2 ------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Bear Stearns Mortgage Funding Trust 2006- AR3, and ratings ranging from Aaa to Ba2 to the subordinate certificates in the deal. The securitization is backed by first lien, adjustable-rate, negative amortization Alt-A mortgage loans originated by Bear Stearns Residential Mortgage Corp. and EMC Mortgage Corporation . The ratings are based primarily on the credit quality of the loans, and on protection from subordination, excess spread, and overcollateralization. Moody's expects collateral losses to range from 1% to 1.2% for Group I, and collateral losses to range from 0.95% to 1.15% for Group II. EMC will service the loans. Moody's has assigned EMC its servicer quality rating of SQ2 as primary servicer of prime loans. These are the rating actions: * Bear Stearns Mortgage Funding Trust 2006-AR3 * Mortgage Pass-Through Certificates, Series 2006-AR3 -- Class I-A-1, Assigned Aaa -- Class I-A-2A, Assigned Aaa -- Grantor Trust Class I-A-2B, Assigned Aaa -- Underlying Class I-A-2B, Assigned Aaa -- Class I-A-3, Assigned Aaa -- Class I-X, Assigned Aaa -- Class I-B-1, Assigned Aaa -- Class I-B-2, Assigned Aa1 -- Class I-B-3, Assigned Aa1 -- Class I-B-4, Assigned Aa2 -- Class I-B-5, Assigned A1 -- Class I-B-6, Assigned A2 -- Class I-B-7, Assigned A3 -- Class I-B-8, Assigned Baa1 -- Class I-B-9, Assigned Baa3 -- Class II-A-1, Assigned Aaa -- Class II-A-2A, Assigned Aaa -- Grantor Trust Class II-A-2B, Assigned Aaa -- Underlying Class II-A-2B, Assigned Aaa -- Class II-A-3, Assigned Aaa -- Class II-B-1, Assigned Aaa -- Class II-B-2, Assigned Aa3 -- Class II-B-3, Assigned A3 -- Class II-B-4, Assigned Baa1 -- Class II-B-5, Assigned Ba2 BEAR STEARNS: Moody's Rates Class B-4 Sub. Certificates at Ba2 -------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Bear Stearns Asset Backed Securities I Trust 2006-ST1, and ratings ranging from Aa2 to Ba2 to the subordinate and mezzanine certificates in the deal. The securitization is backed by SunTrust Mortgage, Inc. originated fixed-rate Alt-A mortgage loans acquired by Federal National Mortgage Association. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. Moody's expects collateral losses to range from 1.8% to 2%. SunTrust Mortgage, Inc. will service the loans, and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned SunTrust Mortgage, Inc. its servicer quality rating of SQ2+ as a primary servicer of prime loans. Furthermore, Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as master servicer. These are the rating actions: * Bear Stearns Asset Backed Securities I Trust 2006-ST1 * Asset-Backed Certificates, Series 2006-ST1 Cl. A-1, Assigned Aaa Cl. A-2, Assigned Aaa Cl. M-1, Assigned Aa2 Cl. M-2, Assigned A1 Cl. M-3, Assigned A2 Cl. M-4, Assigned A3 Cl. B-1, Assigned Baa1 Cl. B-2, Assigned Baa2 Cl. B-3, Assigned Baa3 Cl. B-4, Assigned Ba2 BEAR STEARNS: S&P Holds Low-B Ratings on Six Certificate Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on one class of commercial mortgage pass-through certificates from Bear Stearns Commercial Mortgage Securities Trust 2003-PWR2. Concurrently, ratings are affirmed on the remaining 17 classes from the same series. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The upgrades of several senior certificates reflect the defeasance of $89.1 million in collateral since issuance. As of the Oct. 11, 2006, remittance report, the collateral pool consisted of 100 loans with an aggregate trust balance of $1.01 billion, compared with the same number of loans totaling $1.067 billion at issuance. The master servicer, Wells Fargo Commercial Mortgage Servicing, reported primarily full-year 2005 financial information for 99% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.81x, up from 1.77x at issuance. All of the loans in the pool are current. To date, the trust has not experienced any losses. The top 10 loans have an aggregate outstanding balance of $418.2 million and a weighted average DSC of 1.9x, down from 1.92x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans, and all of the properties were characterized as "good." Credit characteristics for three of the loans in the pool continue to be consistent with those of investment-grade obligations. Credit characteristics for the Barrett Pavilion loan are no longer consistent with those of an investment-grade obligation. These are the details of these four loans: -- The largest exposure in the pool, 3 Times Square, is encumbered by a $154.5 million class A-1 note and a $94.2 million class B note. The A note is divided into three pari passu pieces, $90.5 million of which serves as the trust collateral. The loan is secured by a leasehold interest in a 883,405-sq.-ft. office property in Manhattan. The property serves as the U.S. headquarters for Reuters Group PLC. Reuters' lease extends until Nov. 2021. Occupancy was 99% as of June 30, 2006. -- The third-largest exposure in the pool, the Barrett Pavilion loan, has a trust balance of $44 million. The interest-only loan is secured by a 461,255-sq.-ft retail property in Kennesaw, Georgia. The sponsor of the loan and manager of the property is Inland Real Estate Trust Inc. The loan appears on the watchlist because the second-largest tenant declared bankruptcy and rejected its lease. The sponsor entered into a master lease for the space and is involved in advanced negotiations with prospective tenants. The property reported a year-end 2005 DSC of 2.82x. Standard & Poor's adjusted net cash flow is down 14% from its level at issuance. -- The seventh-largest exposure in the pool, the Westside Centre loan, has a trust balance of $29.4 million. The loan is secured by a fee interest in a 490,784-sq.-ft. retail property in Huntsville, Alabama. Occupancy was 97% as of June 30, 2006. Standard & Poor's adjusted NCF is 4% above the level at issuance. -- The 16th-largest exposure in the pool, the Dartmouth Towne Center loan, has a trust balance of $17 million. The loan is secured by 200,276 sq. ft. of a 303,296-sq.-ft. retail property in North Dartmouth, MA. For the six months ended June 30, 2006, the DSC was 2.02x. Standard & Poor's adjusted NCF is similar to its level at issuance. In addition to the Barrett Pavilion loan, there are seven other loans on the watchlist totaling $96.9 million. The First Union Plaza is the ninth-largest loan in the pool, with an outstanding balance of $26.8 million (3%), and is secured by a 235,979-sq.-ft. office property in Durham, North Carolina. This loan is on the watchlist because the collateral property reported a year-end 2005 DSC of 0.94x and because the largest tenant's leases expire this month. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Rating Raised Bear Stearns Commercial Mortgage Securities Trust 2003-PWR2 Commercial mortgage pass-through certificates series 2003-PWR2 Rating Class To From Credit enhancement(%) ----- -- ---- ---------------------- B AA+ AA 11.62 Ratings Affirmed Bear Stearns Commercial Mortgage Securities Trust 2003-PWR2 Commercial mortgage pass-through certificates series 2003-PWR2 Class Rating Credit enhancement(%) ----- ------ -------------------- A-1 AAA 14.26 A-2 AAA 14.26 A-3 AAA 14.26 A-4 AAA 14.26 C A 8.85 D A- 7.92 E BBB+ 6.73 F BBB 5.68 G BBB- 4.75 H BB+ 3.43 J BB 2.91 K BB- 2.38 L B+ 1.98 M B 1.45 N B- 1.19 X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. BENEDICT COLLEGE: Moody's Downgrades Rating on $45 Million Debt --------------------------------------------------------------- Moody's Investors Service has downgraded the underlying rating of Benedict College to B2 from B1 and placed the rating under review for possible further downgrade. This action affects $17.4 million of bonds issued through Richland County, South Carolina, and $27.5 million of Series 2002 bonds issued through the Educational Facilities Authority for Private Nonprofit Institutions of Higher Learning of South Carolina, leading to total rated debt of $45 million. This downgrade reflects Moody's continued concern about the College's debt structure now that the near term refinancing has been completed and a heightened concern about the College's liquidity position. The Watchlist reflects ongoing uncertainty as fall 2006 enrollment levels and associated tuition revenue is not finalized, and the audit for fiscal year 2006 is conducted. The College successfully refinanced $22.2 million of bank financings which will lengthen the maturity of these notes and is considered a positive by Moody's. However, since the loan with the National Bank of South Carolina is collateralized, Moody's continues to view the structure of the College's debt as an additional risk for bond holders whose bonds are secured by a general obligation of the College. The College's $22.2 million bank loan is secured by a collateral pledge of endowment investments, including a $16 million certificate of deposit held at the Bank. This leaves bondholders with a subordinate interest in the investments. After year over year declines since 2002, fall 2006 enrollment is essentially flat with 2005. The College reported, as of early October, 2,497 full time equivalent students were enrolled compared 2,521 a year ago. About 70 students at that time were also on campus taking classes and awaiting clearance from financial aid. Outlook Moody's Watchlist review will assess the College's FY2006 operating performance based on audited financial statements, as well as forecasts for FY2007 operating performance in light of finalized enrollment and tuition revenue information. Enrollment and tuition revenues from the fall and spring semesters are key drivers of operating cash flow. Moody's believes it is critical for Benedict to maintain sufficient cash flow to cover debt service. The College has very limited liquidity and has relied heavily on bank financings for liquidity needs, which were reflected on the balance sheet prior to the debt restructuring. Rated Debt: Series 1998 and 1999 issued through Richland County, South Carolina: B2 underlying; Aa3 long-term rating based on insurance from Radian Asset Assurance, Inc. Series 2002 issued through the Educational Facilities Authority for Private Nonprofit Institutions of Higher Learning of South Carolina: B2 underlying; Aa3 long-term rating based on insurance from Radian Asset Assurance, Inc. BEST MANUFACTURING: Wants Exclusivity Period Extended to April 6 ---------------------------------------------------------------- Best Manufacturing Group LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey to extend until April 6, 2007, their exclusive period to file a chapter 11 plan of reorganization. The Debtors also want the exclusive period to solicit acceptances of that plan extended to June 6, 2007. Kristina Doss, writing for Dow Jones Newswires, states that without the Court's approval, the Debtors' exclusivity periods will expire on Dec. 7, 2006, and Feb. 5, 2007, respectively. According to Dow Jones, the Company wants more time to develop its Chapter 11 Plan, because it has been: a) devoting significant resources to stabilizing its business operations, b) reducing overheard, and c) reinforcing relationships with vendors and customers. Court papers show that the Debtors have been working closely with crisis managers Glass & Associates Inc. and Houlihan Lokey Howard & Zukin Capital Inc. to develop an "effective reorganization strategy," which could include the sale of additional assets. Ms. Doss relates that the Debtors, which have already sold their retail-uniforms unit to Clipper Corp., said its professionals are currently marketing its business for sale and negotiating with potential buyers. Until details of a sale are worked out, it would have a hard time coming up with a Plan, the Debtors added. The Court will convene a hearing until Nov. 30, 2006, to consider the Debtors' request. Headquartered in Jersey City, New Jersey, Best Manufacturing Group LLC -- http://www.bestmfg.com/-- and its subsidiaries manufacture and distribute textiles, career apparel and other products for the hospitality, healthcare and textile rental industries. The Company and four of its subsidiaries filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. N.J. Case No. 06-17415). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent the Debtors. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, and Brian L. Baker, Esq., and Stephen B. Ravin, Esq., at Ravin Greenberg PC, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BLOCKBUSTER INC: Posts $24.7 Mil. Net Loss in 2006 Third Quarter ---------------------------------------------------------------- Blockbuster Inc. reported a $24.7 million net loss on $1.3 billion of revenues for the third quarter ended Sept. 30, 2006, compared with a $491.4 million net loss on $1.4 billion of revenues for the same period in 2005. The decrease in revenues in the third quarter of 2006 was a result of a decrease in the company-owned store base compared with the same period in 2005. This decrease was mostly offset by a $28 million decrease in selling, general and administrative expenses. The Company recognized a $336.1 million impairment of goodwill and other long-lived assets in the third quarter of 2005, none in the third quarter of 2006. At Sept. 30, 2006, the Company's balance sheet showed $2.8 billion in total assets, $2.1 billion in total liabilities, and $702.6 million in total stockholders' equity. Full-text copies of the Company's consolidated financial statements for the quarter ended Sept. 30, 2006 are available for free at http://researcharchives.com/t/s?14f8 About Blockbuster Blockbuster Inc. -- http://www.blockbuster.com/-- provides in-home movie and game entertainment, with more than 9,000 stores throughout the Americas, Europe, Asia and Australia.. * * * As reported in the Troubled Company Reporter on Oct. 11, 2006, Moody's Investors Service affirmed its B3 Corporate Family Rating for Blockbuster Inc. in connection with its implementation of the new Probability-of-Default and Loss-Given-Default rating methodology for the US and Canadian Retail sector. Standard & Poor's Ratings Services lowered, in November 2005, its corporate credit and bank loan ratings on Blockbuster Inc. to 'B-' from 'B' and the subordinated note rating to 'CCC' from 'CCC+'. S&P said the outlook is negative. Fitch downgraded, in August 2005, Blockbuster Inc.'s Issuer default rating to 'CCC' from 'B+'; Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; and Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. BOE HYDIS: Chapter 15 Petition Summary -------------------------------------- Petitioner/Foreign Representative: Hae Sung Park Grandville 211-dong, Suite No. 302 #111 Koomi-dong Bundang-gu Sungnam-si South Korea Debtor: BOE Hydis Technology Co., Ltd. San 136-1 Ami-ri, Bubal-eub Icheon-si Gyeonggi-do 467-701 South Korea Case No.: 06-52334 Type of Business: The Debtor manufactures TFT-LCD screens and monitors, tablet PCs, laptops and notebooks. The Debtor licenses their AFFS LCD technology to a number of high profile electronics firms, such as Samsung, Siemens, IBM, Dell, LG, and Hewlett- Packard. See http://www.boehydis.com/ Chapter 15 Petition Date: November 14, 2006 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Petitioner's Counsel: Lawrence Peitzman, Esq. Peitzman, Weg and Kempinsky LLP 10100 Santa Monica Boulevard, Suite 1450 Los Angeles, CA 90067 Tel: (310) 552-3100 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million CARRAWAY METHODIST: Sells Assets to Physicians Medical for $26.5MM ------------------------------------------------------------------ The Honorable Tamara O. Mitchell of the U.S Bankruptcy Court for the Northern District of Alabama in Birmingham approved Carraway Methodist Health Systems and its debtor-affiliates' sale of substantially all of their assets free and clear of all liens, claims, and encumbrances to Physicians Medical Center LLC for $26.5 million. Judge Mitchell also authorized the Debtors to assume and assign unexpired leases and executory contracts. A full-text copy of the 14-page list of assumed contracts is available for free at http://ResearchArchives.com/t/s?14e8 Pursuant to the Physicians Medical Asset Purchase Agreement, Physicians Medical will assume these liabilities: -- liabilities under the Debtors' provider agreement with the United States Department of Health and Human Services regarding Medicare reimbursements in an amount not to exceed $3.90 million; -- liabilities under the Assigned Executory Agreements, provided that the Debtors and Physicians Medical each will pay one-half of the cure costs at closing; and -- accrued employee wages and benefits. Based in Birmingham, Alabama, Carraway Methodist Health Systems, dba Carraway Methodist Medical Center -- http://www.carraway.org/ -- is a major teaching hospital, referral center and acute care hospital that serves Birmingham and north central Alabama. The Company and its affiliates filed for chapter 11 protection on Sept. 18, 2006 (Bankr. N.D. Ala. Case No. 06-03501). Christopher L. Hawkins, Esq., Helen D. Ball, Esq., and Patrick Darby, Esq., at Bradley Arant Rose & White LLP, represent the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million and $50 million and estimated debts of more that $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. CABELA'S CREDIT: Fitch Rates $11.25 Million Class D Notes at BB+ ---------------------------------------------------------------- Fitch rates Cabela's Credit Card Master Note Trust's series 2006- III asset-backed notes as: -- $250.0 million class A-1 'AAA'; -- $182.50 million class A-2 'AAA'; -- $35.0 million class B 'A+'; -- $21.25 million class C 'BBB+'; -- $11.25 million class D 'BB+'. The ratings are based on the quality of the receivables pool, available credit enhancement, World's Foremost Bank's servicing capabilities, and the sound legal and cash flow structures. Credit enhancement totaling 13.50% for the class A-1 notes is derived from 7.00% subordination of the class B notes, 4.25% subordination of the class C notes, 2.25% subordination of the class D notes, and a cash collateral account. The class A-2 notes are supported by a total of 13.50% credit enhancement, derived from 7.00% subordination of the class B notes, 4.25% subordination of the class C notes, 2.25% subordination of the class D notes, and a CCA. The class B notes are supported by a total of 6.50% credit enhancement, derived from 4.25% subordination of the class C notes, 2.25% subordination of the class D notes, and a CCA. The class C notes are supported by 2.25% subordination of the class D notes, a spread account, and a CCA. The class D notes are supported by a spread account and a CCA. Class A-1 noteholders will receive monthly interest payments at a fixed annual rate of 5.26%, and class A-2, B, C, and D noteholders will receive monthly interest payments of one-month LIBOR (1mL)+0.05%, 1mL+0.20%, 1mL+0.40%, and 1mL+1.65% per annum, respectively. Noteholders will receive monthly interest payments on the 15th business day of each month, commencing on December 15, 2006. The ratings address the likelihood of investors receiving full and timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the October 15, 2014 legal final termination date. They do not address the likelihood of principal repayment by the expected maturity date of October 17, 2011 for class A-1, A-2, B, C, and D notes. CATHOLIC CHURCH: Lane & Waterman Hired as Davenport's Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Iowa allowed the Catholic Diocese of Davenport to employ Lane & Waterman LLP as its general reorganization and restructuring counsel effective as of Oct. 10, 2006. As reported in the Troubled Company Reporter on Oct. 16, 2006, Lane & Waterman will assist the Diocese in the: (a) negotiation and refinement of a plan of reorganization; (b) selection and coordination of the efforts of the experts, which may be employed by the Diocese to ascertain the values of the bankruptcy estate, and to perform other analyses as may be presented by the creditors and other interested parties in the case; (c) evaluation of personal and real property issues; (d) evaluation and advice on the unique aspects of the reorganization case and the relationship between the Bankruptcy Code and applicable law and the law governing the activities of a Roman Catholic Diocese; and (e) evaluation and prosecution, where appropriate, of any claims which may be asserted by the Diocese. Charlene Maaske, Davenport's chief financial office, related that the firm's professionals would be paid at these hourly rates: Professional Hourly Rate ------------ ----------- Richard A. Davidson, Esq. $230 R. Scott Van Vooren, Esq. $230 Catherine E. Hult, Esq. $190 Other Partners $190 - $215 Associates $150 Paralegals $90 Ms. Maaske attested that the L&W is a "disinterested" person. To the best of the Diocese's knowledge, the L&W does not have any connections with the Diocese or its creditors, or any other parties-in-interest in the bankruptcy case. The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court, the Davenport Diocese reports $4,492,809 in assets and $1,650,439 in liabilities. (Catholic Church Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Portland Wants Hamilton's Scope of Work Expanded ----------------------------------------------------------------- The Archdiocese of Portland in Oregon, the Tort Claimants Committee and David A. Foraker, the legal representative of future claimants in Portland's case, ask the U.S. Bankruptcy Court for the District of Oregon to: (i) expand the scope of services to be provided by Hamilton, Rabinovitz & Alschuler, Inc., their independent expert, to include services relating to the estimation and valuation of unresolved present child sexual abuse tort claims; and (ii) increase, retroactively to May 21, 2006, the cap on HR&A's fees from $100,000 to $175,000 in the aggregate, without prejudice to the right of a party to seek additional increases on the cap. Portland, et al., relate that through the period ended July 31, 2006, HR&A provided consulting services that have resulted in billings totaling $112,508. Through inadvertence, HR&A first exceeded the $100,000 cap on May 22, 2006. Robert Sims at HR&A did not realize until August 22, 2006, that the firm's total billings exceeded the cap. Portland, et al., ask Judge Perris to excuse HR&A's neglect and authorize an increase of the fee cap retroactively to May 21, 2006. Portland, et al., recognize that HR&A's work in connection with the estimation and valuation of future child abuse claims may be helpful in matters relating to the estimation and valuation of unresolved present child sexual abuse claims. Portland and the Tort Committee, as well as the Court, have considered the possibility of utilizing Mr. Sims' knowledge and expertise in connection with the estimation of present child sexual abuse claims, although it is not presently known how or to what extent his services might become useful in that context. In light of that possibility, and to avoid the need for filing an additional application to authorize those services, Portland, et al., suggest that the HR&A Appointment Order be supplemented. U.S. Trustee Objects Ilene J. Lashinsky, the United States Trustee for Region 14, asks the Court to deny Portland, et al.'s request for retroactive increase of HR&A's fee cap and for the proposed expanded scope of firm's duties. Pamela J. Griffith, the Assistant United States Trustee, explains that Portland, et al.'s request does not satisfactorily explain why HR&A failed to seek an increase of the fee cap in May 2006 and why the proposed retroactive increase is appropriate. Court Orders imposing fee limitations will be meaningless if parties can receive their full fee notwithstanding violations of the orders imposing the limitations, Ms. Griffith points out. Ms. Griffith also contends that an expansion of HR&A's duties is premature. The need for and usefulness of the expanded services is not presently known. "The United States Trustee is concerned the HR&A's estimation of present child sexual abuse claims might conflict with its previous effort to estimate future child abuse claims. The United States Trustee opposes the expansion of HR&A's duties until and unless HR&A can satisfactorily explain that no conflict will result from estimating the claims of two groups who may have conflicting claims to funds in this case," Ms. Griffith says. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CENTENNIAL COMMS: Redeeming $20 Million of 10-3/4% Senior Notes --------------------------------------------------------------- Centennial Communications Corp. will redeem $20 million aggregate principal amount of its $145 million outstanding 10-3/4% senior subordinated notes due Dec. 15, 2008. The redemption will occur on or about Dec. 15, 2006 at face value with no prepayment penalties. About Centennial Communications Headquartered in Wall, New Jersey, Centennial Communications Corporation -- http://www.centennialwireless.com/-- provides wireless communications with cellular licenses covering smaller markets in the central United States. Centennial also offers personal communications services in the Caribbean, as well as wireline and wireless broadband services. It operates as a competitive local-exchange carrier in Puerto Rico, offering traditional and Internet-based phone service. Centennial sold its Puerto Rican cable operations in 2004. Venture capital firm Welsh, Carson, Anderson & Stowe (54%) and a unit of the Blackstone Group (24%) are Centennial's controlling shareholders. At Aug. 31, 2006, Centennial's balance sheet showed $1,433,497,000 in total assets and $2,498,651,000 in total liabilities resulting in a $1,065,154,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on Jul. 3, 2006, Fitch assigned Centennial Communications Corp.'s issuer default rating at 'B-' and senior unsecured notes rating at 'CCC/RR6'. The rating outlook is stable. CHARLES RIVER: Posts $16.6 Million Net Loss for 2006 Third Quarter ------------------------------------------------------------------ Charles River Laboratories International, Inc., reported net sales from continuing operations increased 9% in the third quarter of 2006, to $264.7 million from $242.8 million in the third quarter of 2005. The sales increase was driven by Research Models & Services sales increasing 7.3% and Preclinical Services sales increasing 10.6%. Foreign exchange contributed 1.2% to the net sales growth. Primarily as a result of a tax expense, the Company reported a consolidated net loss for the third quarter of 2006 of $16.6 million, compared with consolidated net income of $32.1 million in the third quarter of 2005. On a GAAP basis, net income from continuing operations for the third quarter of 2006 was $32.1 million, compared with $29.9 million for the third quarter of 2005. Results for the third-quarter of 2006 also included $2.4 million of stock option expense. On a non-GAAP basis, net income from continuing operations was $38.1 million for the third quarter of 2006, versus $38 million for the same period in 2005. The non-GAAP net income for the third quarter of 2006 excluded $8.8 million of amortization and stock-based compensation costs associated with the acquisition of Inveresk. The Company's results from continuing operations, exclude results of the Clinical Phase II - IV business and closure of the Interventional and Surgical Services business, which are now reported as discontinued operations. Including $45.3 million of income tax expense related to the sale of the Clinical Phase II - IV business, the loss from discontinued operations was $48.7 million in the third quarter of 2006. Research Models and Services Sales for the RMS segment were $127.6 million in the third quarter of 2006, an increase of 7.3% from $118.9 million in the third quarter of 2005. Sales of In Vitro products increased in the quarter, while Transgenic Services in the United States continued to decline. In the third quarter of 2006, the RMS segment's gross and operating margins were lower than in the third quarter of last year. On both a GAAP and non-GAAP basis, the segment's gross margin was 41.1%, compared to 42% for the third quarter of 2005, and the operating margin was 28.8%, compared to 30.9% for the same period last year. Preclinical Services Results for the Preclinical Services segment includes the Phase I Clinical business. Third-quarter net sales for the Preclinical Services segment were $137.1 million, an increase of 10.6% from the $123.9 million in the third quarter of 2005. On a GAAP basis, the Preclinical segment's gross margin was 36.4%, compared to 37.2% for the third quarter of 2005. The operating margin improved to 16.8% from 16.1%. On a non-GAAP basis, which excludes $8.6 million of amortization related to the Inveresk acquisition, the third-quarter operating margin was 23% compared to 24.6% for the third quarter of 2005. Nine-Month Results For the first nine months of 2006, net sales from continuing operations increased by 7% to $786.7 million, compared to $735.1 million in the same period in 2005. On a GAAP basis, net income from continuing operations was $93.4 million for the first nine months of 2006 compared to $89.2 million for the same period in 2005. Results for the first nine months of 2006 included $9.2 million of stock option expense. On a non-GAAP basis, net income from continuing operations was $113.3 million for the first nine months of 2006 compared to $115.4 million for the same period in 2005. For the first nine months of 2006, non-GAAP net income excluded $5.3 million for cost-saving initiatives implemented in the second quarter of 2006 and $25.9 million of amortization and stock-based compensation costs associated with the acquisition of Inveresk. Non-GAAP net income for the first nine months of 2005 excluded Inveresk-related charges of $37.8 million. Including a loss of $184.4 million from discontinued operations, of which $129.2 million resulted from the goodwill impairment recorded in the first quarter of 2006 and $45.3 million was the income tax expense associated with the sale of the Clinical Phase II - IV business, the consolidated net loss for the first nine months of 2006 was $91 million, compared to net income of $91.6 million for the same period in 2005. Stock Repurchase Program Charles River presently has a stock repurchase authorization in place from its Board of Directors, which provides for the purchase of up to $300 million of its common stock. As of Sept. 30, 2006, the Company had approximately 66.9 million shares of common stock outstanding. Wilmington, Massachusetts-based Charles River Laboratories International, Inc. (NYSE: CRL) -- http://www.criver.com/-- sells pathogen-free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models -- rats and mice bred for preclinical experiments, including transgenic "knock out" mice -- to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. * * * As reported in the Troubled Company Reporter on June 21, 2006 Standard & Poor's Ratings Services assigned its 'BB-' senior unsecured debt rating to Charles River Laboratories International Inc.'s $300 million 2.25% convertible senior notes due 2013. The corporate credit rating is 'BB+' and the rating outlook is positive. As reported in the Troubled Company Reporter on Nov. 9, 2006, Moody's Investors Service in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Healthcare Service and Distribution sector, confirmed its Ba1 Corporate Family Rating for Charles River Laboratories International Inc. CITIZENS COMMS: Frontier to Deploy Burnsville Wireless Service -------------------------------------------------------------- Citizens Communications Company has reached agreement with the Burnsville City Council to deploy its Frontier Mobile wireless broadband data service throughout the city. The company's agreement with Burnsville allows for scaleable, cost-efficient additions designed to expand network coverage as needed. The Company disclosed that the Burnsville Council, led by Mayor Elizabeth Kautz, approved granting Frontier access to rights-of-way and city facilities on which to locate equipment. The use of city-owned infrastructure for networks helps to ensure maximum coverage within the City. Burnsville is a suburb located south of the Twin Cities of Minneapolis and St. Paul, with a population of more than 60,000. John Lass, senior vice president and general manager for the Central Region, said, "Burnsville is home to Frontier Communications' Central Region and was recently selected as one of the company's core call centers, so we are especially proud to bring Frontier Mobile service to the community," According to Mayor Kautz, "Our relationship with Frontier Communications is a first step in achieving our goal to be competitive globally on the telecommunications front; it will also meet our goal to make available to our citizens a broadband Internet choice that is affordable for them. We are delighted with our partnership with Frontier Communications and look forward to a very successful relationship." Headquartered in Stamford, Connecticut, Citizens Communications Company 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 and 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. CLEAR CHANNEL: Receives Two Competing Takeover Bids --------------------------------------------------- Clear Channel Communications Inc. received two competing takeover bids that valued the company at over $17 billion, reports said. The Company received a bid from a set of investors consisting of Blackstone Group LP, Kohlberg Kravis Roberts & Co., and Providence Equity Partners Inc. The Company also received an opposing bid from a leverage buyout group consisting of Bain Capital LLC and Thomas H. Lee Partners LP. Texas Pacific Group, a previous member of the team, was not part of the proponents. Apollo Management LP and Carlyle Group and Cerberus Capital Management LP and Oak Hill Capital Partners were considering bidding for the company, reports said. San Antonio, Tex.-based Clear Channel Communications, Inc. (NYSE: CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service placed the (P)Ba2 Multiple Seniority Shelf Rating for Clear Channel Communications Inc. on review for possible downgrade. CLEAR CHANNEL: Discloses New International Management Team ---------------------------------------------------------- Clear Channel Outdoor disclosed a new management team for its international business units. The members of the newly named management team will report to global president and chief operating officer, Paul Meyer. The management team includes: * Jonathan Bevan, international chief financial officer and director of corporate development; * Barry Sayer, newly appointed regional president for the United Kingdom, Ireland, and the company's 13 African markets, including South Africa; * Hubert Janvier, newly appointed regional president, Southern Europe, which includes France, Spain, Italy, and Belgium; * Rickard Hedlund, newly appointed regional president, Northern and Eastern Europe; and * Mark Thewlis, regional president, Asia Pacific. Barry Sayer, who has been serving concurrently as chief executive officer for the company's African business and interim CEO for the United Kingdom, has also been named the UK's permanent CEO. Rickard Hedlund was previously the company's CEO for Northern Europe. Hubert Janvier had been the company's CEO for Belgium and Spain. "I am confident that we now have a truly outstanding management team in place to oversee the continued growth of our international business units," Mr. Meyer stated. "Each of our regional presidents has a strong operating track record and brings a hands-on management style that will ensure we are sharing best practices among our international business units and with the Americas. "Together with Jonathan Bevan, they will have a critically important role in shaping our global strategy for the continued success of our business internationally." San Antonio, Tex.-based Clear Channel Communications, Inc. (NYSE: CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service placed the (P)Ba2 Multiple Seniority Shelf Rating for Clear Channel Communications Inc. on review for possible downgrade. COMPLETE RETREATS: Amends Ableco DIP Pact, Gets $2MM Add On Loan ---------------------------------------------------------------- As Complete Retreats LLC and its debtor-affiliates prepared to close under its debtor-in-possession financing facility agreement with Ableco Finance LLC, they determined that, among other things, their estimates of various expenses that must be paid or escrowed upon closing, including legal fees for secured lenders, closing costs, title costs, and transfer taxes, were dramatically understated. Moreover, the Debtors underestimated the amount of reserves on availability that would be required by Ableco. To obtain the additional liquidity they need to operate their business in the upcoming months, the Debtors engaged in further discussions and negotiations with Ableco, their existing secured lenders, and other parties. As a result, Ableco agreed to lend the Debtors an additional $2,000,000 so that the Ableco DIP Financing Facility would now provide up to a total loan of $82,000,000. Ableco also agreed to reduce certain required reserves on availability by approximately $4,000,000. In exchange for the additional liquidity, the Debtors agreed to modify the Ableco DIP Facility so that $5,000,000 of the DIP loan would have a higher interest rate than the remaining portion. The Debtors believe that the additional liquidity will afford them sufficient time to finish their review of investor proposals, formulate an appropriate exit strategy, and facilitate and consummate their prompt exit from bankruptcy. Accordingly, the Debtors obtained the U.S. Bankruptcy Court for the District of Connecticut's permission to amend the Ableco DIP Facility. The Honorable Alan H.W. Shiff authorized the Debtors to: -- incur postpetition indebtedness up to an aggregate principal amount of $82,000,000; -- pay interest with respect to a $5,000,000 portion of the Ableco DIP Facility term loan portion at a rate of 20% per annum; -- amend the definition of the term "Borrowing Base" and the release of certain reserves to provide the Debtors with approximately $4,000,000 of incremental liquidity; and -- amend the definition of "Holdback" to mean $2,000,000 or a greater amount as may be agreed to by The Patriot Group, LLC. In addition, the Court permitted Ableco, in its sole discretion, to advance funds or other extensions of credit in excess of any Budget, Budget Amount, Material Deviation formulae, or other terms and conditions, provided that the principal amount of those advances will not exceed $82,000,000. As reported in the Troubled Company Reporter on Nov. 1, 2006, the Court authorized the Debtors to borrow up to $80,000,000 from Ableco as administrative and collateral agent, and certain other lenders, on a final basis. All objections to the Ableco DIP Financing have been withdrawn or overruled. The Court permitted the Debtors to repay prepetition obligations and existing DIP obligations, which payments will be without prejudice to the rights of the Debtors, the Official Committee of Unsecured Creditors or any other party-in-interest. Each Prepetition Lender and each Existing DIP Lender were expected to provide the Debtors, no later than 3:00 p.m. on the business day immediately preceding the Closing of the Ableco DIP Financing Facility, a written pay-off letter setting forth their Prepetition Indebtedness or Existing DIP Indebtedness. The Court noted that LPP Mortgage Ltd. delivered its proposed pay-off statements to the Debtors, the Creditors Committee, and Ableco on Oct. 27, 2006. With the first advance of funds under the Ableco DIP Financing Facility, Judge Shiff directed the Debtors to pay, in full, to each Prepetition Lender and each Existing DIP Lender their full Pay-Off Amount. Judge Shiff authorized the Debtors to withhold payment of $2,000,000 to The Patriot Group LLC. The Holdback will accrue interest at the rate specified in the Patriot Prepetition Loan Documents. The Court preserved the Creditors Committee's rights to challenge the Pay-Off Amounts and the reasonableness of any professional fees, expenses or claim for payment of interest at a default rate. As adequate protection for the diminution in the value of Patriot's interest in the Patriot Prepetition Collateral, and to secure the prompt payment and performance of the Holdback and all other Remaining Patriot Prepetition Indebtedness and Remaining Existing DIP Loan Obligations owed to Patriot, the Court granted Patriot the Patriot Replacement Lien and the Patriot Super- Priority Claim that is equal or subordinate only to the Carve-Out and the Super-Priority Claims of Ableco and the Postpetition Lenders. Judge Shiff also authorized the Debtors to pay homeowner association fees, condominium fees and similar fees that accrued prepetition, up to $80,000, in connection with obtaining title insurance with respect to the closing of Ableco DIP Financing Facility that was proposed to occur on Oct. 31, 2006. The Final DIP Order is without prejudice to Christopher Stevens' rights to pursue claims for the imposition of a constructive trust with respect to funds he paid to the Debtors amounting to $750,000. The term of the Ableco DIP Facility will be through the earliest of: (i) April __, 2008; (ii) the date of substantial consummation of a confirmed plan of reorganization; or (iii) the date on which the loans become due and payable in accordance with the terms of the loan documents. A full-text copy of the Final DIP Order on the Ableco DIP Financing Facility is available for free at: http://researcharchives.com/t/s?143f A full-text copy of the Approved Ableco DIP Financing Facility is available for free at: http://researcharchives.com/t/s?1440 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. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Wants Patriot & Footbridge Agreements Approved ----------------------------------------------------------------- In August 2006, the U.S. Bankruptcy Court for the District of Connecticut authorized Complete Retreats LLC and its debtor- affiliates to obtain $12,000,000 in postpetition financing from The Patriot Group, LLC, and LPP Mortgage Ltd. The Patriot DIP Order provided the Official Committee of Unsecured Creditors with certain rights to investigate and bring actions against each the Debtors' prepetition lenders. Patriot is an agent under a prepetition loan facility with the Debtors. Footbridge Limited Trust is a participant in the Patriot Facility. The Committee has been and is conducting an investigation of Patriot and Footbridge, in accordance with the Patriot DIP Order, to determine the existence of potential claims that it could assert against the Prepetition Lenders, Joel Levitin, Esq., at Dechert LLP, in New York, relates. Rule 2004 Exam on Patriot In line with its investigation, the Committee has sought and obtained the Court's permission to perform an examination pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure on Patriot. The Committee seeks discovery from Patriot, among other things: -- an account history of financing of or credit advanced to the Debtors within the six months before the Petition Date; -- lists purporting to identify original notes and corresponding mortgages and the amount of debt allocated to each property or property interest of the Debtors; and -- contracts, agreements, arrangements, communications and settlements of any kind between Patriot and the Debtors. The Settlement Agreement In order to obtain capital to fund their operations and to avoid the uncertainty and costs associated with litigation, the Debtors, the Committee, Century Corporation Limited, and Private Retreats Paradiso Ltd., engaged in negotiations with Patriot, Footbridge, and the Lenders' officers, representatives, subsidiaries, investors and financing participants. Century Corp. and Private Retreats Paradiso are Nevisian subsidiaries and affiliates of the Debtors who own real property that serves as a portion of the collateral for the prepetition and DIP financing that Patriot advanced to the Debtors. Accordingly, the Debtors and the Committee sought and obtained the Court's permission, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, to enter into a Settlement Agreement and Release with Patriot and Footbridge. Upon the effective date of the Settlement Agreement, Patriot and Footbridge will pay the Debtors $1,000,000, in the aggregate, in full and final settlement of all disputes and controversies between the parties. Patriot will pay $750,000 of the Settlement Amount while Footbridge will pay the remaining $250,000. In return, the Debtors and the Committee will release and forever discharge Patriot and Footbridge of and from any and all claims, demands, debts, obligations, rights, actions, causes of action, damages or liabilities, which they have or could have against Patriot and Footbridge. The releases as they relate to Footbridge's financing participants, Great Sound Realty and Lantana Resort Limited, will be effective only as to claims, causes of action or other rights of recovery arising as of and subsequent to the March 8, 2006 LMC Acquisition, when Grosvenor Trust Company Limited, as trustee for Footbridge, purchased 100% of the membership interests in DR Lantana Management, LLC, from Debtor Preferred Retreats, LLC. The Debtors and the Committee concede that the payoff amounts set forth in an October 30, 2006 payoff letter from Patriot are valid, approved, and not subject to review, reduction or challenge of any kind. Nothing in the Agreement, however, will be construed to affect, in any way, the rights of any of the Released Parties to assert claims against the Debtors, Paradiso, and Century. Termination of Investigation The Debtors and the Committee will terminate the investigation on Patriot and Footbridge. Moreover, the Debtors and the Committee will have no further right to re-open the investigation for potential claims. The Committee further agrees to withdraw, with prejudice, its motions for Rule 2004 examinations on Patriot and John C. Howe, Patriot's former principal. Validity of Patriot's Claims Under the Agreement, the Debtors and the Committee acknowledge that the proofs of claim filed by Patriot in the Debtors' bankruptcy cases are accurate as to amount and secured status and not subject to any objection, defense, setoff claims, claim of recoupment, subordination or recharacterization. The Debtors and the Committee further acknowledge that Patriot's proofs of claim are allowed as filed. A 17-page copy of the Patriot/Footbridge Settlement Agreement and Release is available for free at: http://researcharchives.com/t/s?14fb 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. 14; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONEXANT SYSTEMS: Prices $275 Million Senior Secured Notes ---------------------------------------------------------- Conexant Systems, Inc., priced of its offering of $275 million aggregate principal amount of floating rate senior secured notes due 2010 to qualified institutional buyers pursuant to Rule 144A, or in offshore transactions pursuant to Regulation S, under the Securities Act of 1933. The Company disclosed that the offering size was increased from $250 million. The sale of the notes is expected to close on Nov. 13, 2006, subject to customary closing conditions. The notes will bear interest, payable and reset quarterly, at a rate per annum equal to three-month LIBOR plus 3.75%. The notes will be guaranteed by certain domestic subsidiaries of the company and secured by first-priority liens on substantially all of the assets of the company and the subsidiary guarantors. The company intends to apply the net proceeds from the offering, together with available cash, cash equivalents and marketable securities on hand, to repay at maturity or otherwise retire its outstanding 4% convertible subordinated notes due Feb. 1, 2007. The notes and related guarantees have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and unless so registered may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- is a fables semiconductor company. The company has approximately 2,400 employees worldwide. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006 Moody's Investors Service assigned a B1 rating to the senior secured floating rate notes and a Caa1 rating to the corporate family rating of Conexant Systems Inc. Moody's also assigned a Probability of default rating of Caa1, a LGD-2 rating for the senior secured notes and a SGL-3 speculative grade liquidity rating. The rating outlook is stable. CONTINENTAL AIRLINES: Inks Underwriting Pact with Morgan Stanley ---------------------------------------------------------------- Continental Airlines, Inc., entered into an underwriting agreement with Morgan Stanley & Co. Incorporated, as representative of the several underwriters named therein, in connection with the issuance and sale by the Company of $200 million aggregate principal amount of 8.75% Notes due 2011. The Company expects delivery of the Notes will be made under the Underwriting Agreement on or about Nov. 13, 2006. The Company is offering the Notes pursuant to the Prospectus Supplement, dated Nov. 8, 2006, which forms a part of the Company's automatic shelf registration statement on Form S-3 filed with the Securities and Exchange Commission. A full text-copy of the Underwriting Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?14e9 Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 3,200 daily departures throughout the Americas, Europe and Asia, serving 154 domestic and 138 international destinations. More than 400 additional points are served via SkyTeam alliance airlines. With more than 43,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 61 million passengers per year. Continental consistently earns awards and critical acclaim for both its operation and its corporate culture. * * * As reported in the Troubled Company Reporter on Oct. 23, 2006, Standard & Poor's Ratings Services affirmed its ratings, including the 'B' long-term and 'B-3' short-term corporate credit ratings, on Continental Airlines Inc. The outlook is revised to stable from negative. Continental has about $17 billion of debt and leases. As reported in the Troubled Company Reporter on Oct. 23, 2006, Fitch Ratings has upgraded Continental Airlines Inc.'s Issuer Default Rating (IDR) to 'B-' from 'CCC' and Senior Unsecured Debt to 'CCC/RR6' from 'CC/RR6'. Rating outlook was stable. As reported in the Troubled Company Reporter on Nov. 10, 2006 Moody's Investors Service assigned ratings of Caa1, LDG5-75% to the $200 million of senior unsecured notes issued by Continental Airlines, Inc.'s. Moody's affirmed the B3 corporate family rating. The outlook is stable. COUNTY CONDUIT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: County Conduit Corp. 195 Main Street PO Box 297 Hurleyville, NY 12747 Bankruptcy Case No.: 06-36221 Chapter 11 Petition Date: Nov. 13, 2006 Court: Southern District of New York (Poughkeepsie) Debtor's Counsel: Gerald Orseck, Esq. Orseck Law Offices 1924 State 204 Route 52 P.O. Box 469 Liberty, NY 12754 Tel: (845) 292-5800 Fax: (845) 292-6749 Total Assets: $3,040,035 Total Debts: $918,791 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Henry Christensen, Esq. Judgment taken in $281,954 PO Box 308 the matter of Sandee Middletown, NY 10940 Friedland v. County Conduit Corp. Internal Revenue Service taxes (est) $127,000 Box 266, Niagara Sq. Station 111 W. Huron Street, Room 309 Buffalo, NY 142012301 Robert Freiberg $57,000 PO Box 424 Smallwood, NY 12778 Orseck Law Offices legal fees $55,000 PO Box 469 Liberty, NY 12754 Steven DeCarlo Lillian Kapelow- $54,712 All County Title assignment of judgment 444 Broadway, Suite 5 Ashkenazie, et al v. Monticello, NY 12701 Friedland County of Dutchess real property taxes $45,000 22 Market Street Poughkeepsie, NY 12601 County of Sullivan real property taxes $30,000 Government Center Monticello, NY 12701 Larry Licari $24,375 571 9th Street #4C Brooklyn, NY 11215 NYS Dept of Taxation & taxes (est) $15,000 Finance PO Box 5300 Albany, NY 12205 P&M Accounting $12,500 456 Broadway Monticello, NY 12701 Donna Blau $8,125 201 E 21st Street #11M New York, NY 101106419 Jack Pale $8,125 2115 Montvale Court West Seattle, WA 98199 CSFB HOME: S&P Downgrades Rating on Class B-2 Certificates to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B-2 from CSFB Home Equity Asset Trust 2003-2. Concurrently, the ratings on classes B-1 and B-2 are placed on CreditWatch with negative implications. In addition, the ratings on the other three classes from this series are affirmed. The downgrade and CreditWatch negative placements are based on deteriorating performance that has continued to allow losses to outpace excess interest and erode available credit support. As of the Oct. 2006 remittance report, cumulative losses totaled 2.08% of the original pool balance and had eroded overcollateralization to $2.2 million, which is below its current target of $2.75 million. The resulting credit support percentages for classes B-1 and B-2 are projected to be lower than the original percentages at the corresponding rating levels. Severely delinquent loans total approximately $11.7 million, or 19.92% of the current pool balance, which has been paid down to 10.64% of the original balance. Standard & Poor's will continue to closely monitor the performance of the classes with ratings on CreditWatch negative. If losses decline to a point at which they no longer outpace excess interest, and the level of o/c has not been further eroded, the rating agency will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest, the rating agency will take further negative rating actions. Credit support is provided by subordination, o/c, and excess interest cash flow. The collateral for this transaction consists of subprime closed-end, fixed- and adjustable-rate, first- and second-lien mortgage loans with original terms to maturity not greater than 30 years. Rating Lowered And Placed On Creditwatch Negative CSFB Home Equity Asset Trust 2003-2 Rating ------ Class To From ----- -- ---- B-2 BB/Watch Neg BBB Rating Placed On Creditwatch Negative CSFB Home Equity Asset Trust 2003-2 Rating ------ Class To From ----- -- ---- B-1 BBB+/Watch Neg BBB+ Ratings Affirmed CSFB Home Equity Asset Trust 2003-2 Series Class Rating ------ ----- ------ 2003-2 M-1 AA 2003-2 M-2 A+ 2003-2 M-3 A CVS CORPORATION: Moody's Puts Ratings on Review and May Upgrade --------------------------------------------------------------- Moody's Investors Service placed the ratings of eight securities supported by CVS Corporation lease obligations on review for possible upgrade: * CVS Credit Lease Backed Pass-Through Certificates -- Series A-1, $158,700,000, currently rated Baa2; on review for possible upgrade -- Series A-2, $125,000,000, currently rated Ba1; on review for possible upgrade -- CVS Lease-Backed Pass-Through Certificates, Series 2001, $241,784,170, currently rated Baa2; on review for possible upgrade -- CVS Lease-Backed Pass-Through Certificates, Series 2002-1, $245,371,101, currently rated Baa2; on review for possible upgrade -- CVS Lease-Backed Pass-Through Certificates, Series 2003-1, $117,832,023, currently rated Baa2; on review for possible upgrade -- CVS Leased-Backed Pass-Through Certificates, Series 2003-2, $285,699,572, currently rated Baa2; on review for possible upgrade -- CVS Lease-Backed Pass-Through Certificates, Series 2004-1, $474,341,341, currently rated Baa2; on review for possible upgrade -- CVS Lease-Backed Pass-Through Certificates, Series 2005, $379,197,066, currently rated Baa2; on review for possible upgrade The review for possible upgrade was triggered by CVS's senior unsecured debt rating being placed on review for possible upgrade by Moody's on Nov. 2, 2006. The rating action is prompted by the announcement that drugstore retailer CVS and pharmacy benefits manager Caremark Rx, Inc. intend to merge, and Moody's belief that the credit quality of CVS may improve as a result of the transaction. Headquartered in Woonsocket, Rhode Island, CVS currently operates about 6,205 drug stores in 44 states and the District of Columbia. DAIMLERCHRYSLER: Suspends Some Senior Managers at Bus Unit ---------------------------------------------------------- DaimlerChrysler has suspended some senior managers in its bus division because of "irregularities." Wolfgang Diez, chief executive officer and president of EvoBus GmbH and head of DaimlerChrysler Buses, also resigned for personal reasons. Andreas Renschler, head of DaimlerChrysler's heavy truck division, will take over Mr. Diez's duties until a successor is found, German magazine WirtschaftsWoche reported. About DaimlerChrysler DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- engages in the development, manufacture, distribution, and sale of various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DANA CORP: Court Lifts Stay Allowing Franklin to Terminate Pacts ---------------------------------------------------------------- In October 2006, Franklin Fueling Systems Inc. asked the United States Bankruptcy Court for the Southern District of New York to, among others, modify the automatic stay to permit it to immediately terminate three agreements it entered into with Dana Corporation and its debtor-affiliates in November 2005: (1) A Supply Agreement requiring the Debtors to supply certain in-ground flexible fuel pipe to FFS; (2) A Bailment Agreement relating to certain of FFS' property to be used by the Debtors in the manufacture of the piping products; and (3) An Equipment Sale Agreement to convey certain used equipment to FFS. Accordingly, the Court directed the Debtors to provide Franklin Fueling a report of their expert's opinions for testimony and that expert's related information not later than Nov. 10, 2006. Franklin may also make use of expert rebuttal testimony, and by no later than Nov. 17, 2006, provide the Debtors with a report of its expert's opinions for testimony and that expert's related information. The Court also established these dates to govern the discovery process with regards to the Debtors and Franklin: Nov. 17, 2006 -- Close of written discovery Nov. 28, 2006 -- Close of fact witness deposition discovery Dec. 1, 2006 -- Close of expert witness deposition discovery Dec. 11, 2006 -- Deadline to file pre-hearing briefs, witness identification lists, hearing exhibit identification lists and any stipulations of facts Dec. 18, 2006 -- Evidentiary hearing The Court ruled that the parties may agree with each other to extend any scheduled dates without the need to amend the Agreed Scheduling Order or to obtain the Court's permission in advance. The Court clarified that the authority to extend the scheduled dates does not apply to the Dec. 11, 2006, deadline for pre- hearing briefs and related submissions or the Dec. 18, 2006, hearing date. The parties have also agreed to enter into a Court-approved protective order for confidential information exchanged among them in the current matter. Confidential Information will refer to any information which contains trade secrets, know-how, proprietary data, research, development or other confidential commercial information. Confidential Information designated as "CONFIDENTIAL" may only be disclosed to the parties' outside counsel of record and in-house counsel, the parties' officers and employees to a limited extent, consultants and experts retained for the matter, actual or potential witnesses, and the Court. The Court previously authorized the Debtors and Franklin to conduct discovery pursuant to Rules 7026, 7028 and 7037 of the Federal Rules of Bankruptcy Procedure. The Court directed the Debtors to serve written responses and any privilege, and make responsive, non-privilege documents available for Franklin's inspection and copying no later than Nov. 2, 2006. The Court permitted either party to serve additional document requests, interrogatories or requests for admissions; provided that: (i) neither Party may serve more than 25 interrogatories in total or 150 document requests in total, including discrete subparts as to both; and (ii) all document requests, interrogatories or requests for admissions must be served so that the deadline for responses is no later than the date for the close of written discovery. The responding Party must serve written responses and any privilege logs, and make responsive, non-privileged documents available for inspection and copying by the requesting Party no later than 15 days after service of the requests. About Dana Corporation Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORPORATION: Releases Third Quarter 2006 Financial Results --------------------------------------------------------------- Dana Corporation Unaudited Condensed Consolidated Balance Sheet As of September 30, 2006 ASSETS CURRENT ASSETS Cash and cash equivalents $785,000,000 Accounts receivable Trade 1,266,000,000 Other 224,000,000 Inventories 732,000,000 Assets of discontinued operations 458,000,000 Other current assets 238,000,000 -------------- Total current assets 3,703,000,000 Investments and other assets 1,316,000,000 Investments in equity affiliates 627,000,000 Property, plant and equipment, net 1,805,000,000 -------------- TOTAL ASSETS $7,451,000,000 ============== LIABILITY AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $478,000,000 Accounts payable 861,000,000 Liabilities of discontinued operations 209,000,000 Other accrued liabilities 745,000,000 -------------- Total current liabilities 2,293,000,000 Liabilities subject to compromise 3,970,000,000 Deferred employee benefits and other non-current liabilities 267,000,000 Long-term debt 16,000,000 DIP financing 700,000,000 Commitments and contingencies - Minority interest in consolidated subsidiaries 82,000,000 Shareholders' equity 123,000,000 -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,451,000,000 ============== Dana Corporation Unaudited Condensed Consolidated Statement of Operations For Three Months Ended September 30, 2006 Net sales $2,009,000,000 Costs and expenses Cost of sales 1,949,000,000 Selling, general and administrative expenses 90,000,000 Impairment of goodwill 46,000,000 Impairment of other assets 165,000,000 Other income, net 44,000,000 -------------- Loss from operations (197,000,000) Interest expense 24,000,000 Reorganization items, net 25,000,000 -------------- Loss before income taxes (246,000,000) Income tax expense (20,000,000) Minority interests (2,000,000) Equity in earnings of affiliates (4,000,000) -------------- Loss from continuing operations (272,000,000) Loss from discontinued operations (84,000,000) -------------- Loss before effect of change in accounting (356,000,000) Effect of change in accounting - -------------- Net loss ($356,000,000) ============== Dana Corporation Unaudited Condensed Consolidated Statement of Operations For Nine Months Ended September 30, 2006 Net sales $6,506,000,000 Costs and expenses Cost of sales 6,199,000,000 Selling, general and administrative expenses 329,000,000 Impairment of goodwill 46,000,000 Impairment of other assets 180,000,000 Other income (expense), net 114,000,000 -------------- Loss from operations (134,000,000) Interest expense 89,000,000 Reorganization items, net 114,000,000 -------------- Loss before income taxes (337,000,000) Income tax expense (78,000,000) Minority interests (5,000,000) Equity in earnings of affiliates 12,000,000 -------------- Loss from continuing operations (408,000,000) Loss from discontinued operations (102,000,000) -------------- Loss before effect of change in accounting (510,000,000) Effect of change in accounting - -------------- Net loss ($510,000,000) ============== Dana Corporation Unaudited Condensed Consolidated Statement of Cash Flows For Nine Months Ended September 30, 2006 OPERATING ACTIVITIES Net loss ($510,000,000) Depreciation and amortization 206,000,000 Impairment and divestiture-related charges 325,000,000 Reorganization items, net 114,000,000 Payment of reorganization charges (65,000,000) Changes in working capital 29,000,000 Deferred taxes (14,000,000) Effect of change in accounting - Other (71,000,000) -------------- Net cash flows provided by operating activities 14,000,000 INVESTING ACTIVITIES Purchases of property, plant and equipment (239,000,000) Acquisition of business, net of cash acquired (17,000,000) Proceeds from sales of other assets 54,000,000 Payments from leases, loans and partnerships 20,000,000 Other 33,000,000 -------------- Net cash flows used for investing activities (149,000,000) FINANCING ACTIVITIES Net change in short-term debt (550,000,000) Payments of long-term debt (4,000,000) Proceeds from debtor-in-possession facility 700,000,000 Issuance of long-term debt 7,000,000 Dividends paid - Other (6,000,000) -------------- Net cash flows provided by financing activities 147,000,000 Net increase in cash and cash equivalents 12,000,000 -------------- Cash and cash equivalents - beginning of period 762,000,000 Effect of exchange rate changes on cash balances held in foreign currencies 6,000,000 Net change in cash of discontinued operations 5,000,000 -------------- Cash and cash equivalents - end of period $785,000,000 ============== A full-text copy of Dana Corporation's third quarter financial results is available for free at: http://researcharchives.com/t/s?14ed About Dana Corporation Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Retiree Panel Taps Segal Co. as Actuarial Consultants ---------------------------------------------------------------- The Official Committee of Non-Union Retirees in Dana Corporation and its debtor-affiliates' chapter 11 cases asks the U.S. Bankruptcy Court for the Southern District of New York for authority to retain The Segal Company, as its actuarial consultants, nunc pro tunc to Oct. 2, 2006. As actuarial consultants, Segal will: (a) understand the complex nature of the retiree benefits at issue; (b) question the benefit analyses conducted by the Debtors' actuarial professionals; (c) challenge the use of certain assumptions used by the Debtors' actuaries, including but not limited to, the expected lifetimes of the retirees used in calculating benefits, various inflationary healthcare factors, the impact of Medicare Part D, and the actual impact to the Retirees with respect to proposed reductions of benefits; (d) assist in negotiating with the Debtors' during the Section 1114 process, including but not limited to evaluating the impact of various proposals on the retirees; (e) provide expert testimony in the event of a Section 1114 hearing; (f) independently analyze the actual impact on the retirees of any settlement or adjudication of retiree benefits for purposes of determining the amount of their resulting unsecured claim; (g) provide assistance in advocating against anticipated objections of the Official Committee of Unsecured Creditors with respect to any proposed settlement and resulting claim; and (h) work with the Retiree Committee to find alternative healthcare plans that will save money for the Debtors' estate going forward. Trent P. Cornell, Esq., at Stahl Cowen Crowley, LLC, in Chicago, Illinois tells the Court that the Retirees need to concurrently explore various options to restructure their benefits to lessen the impact of any resulting reductions. These Segal professionals will have primary responsibility in providing services to the Retiree Committee: Professional Hourly Rates ------------ ------------ Thomas D. Levy $583 Stuart Wohl $436 Jarilyn Paul $436 Harold Burch $200 Segal will also be reimbursed for its necessary out-of-pocket expenses. Stuart Wohl, senior vice president of The Segal Company, assures the Court that his firm does not represent any interest adverse to the Retiree Committee or the Debtors and their estates, and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Responses 1. Equity Committee The Official Committee of Equity Security Holders believes that the retention of an independent actuary to test the analysis and conclusions of the Debtors' actuarial consultants is appropriate and would be a benefit to all constituents. Thus, the Equity Committee asserts that Segal should be jointly retained by the Retiree Committee, the Equity Committee and the Official Committee of Unsecured Creditors. By practice, actuaries use statistical knowledge and expertise to evaluate the data presented. While an actuary may test different assumptions, those assumptions should not alter the objectivity of the analysis, Gary Kaplan, Esq., at Fried, Frank, Harris, Shriver & Jacobson, LLP, in New York, relates. Thus, the Equity Committee asserts that whether or not the official committees are aligned on the issue of modifying the Debtors' retiree benefits is irrelevant. "If Segal is truly independent and is being retained to conduct an unbiased analysis, as the Retiree Committee asserts, there should be no reason why Segal cannot work on behalf of all official committees," Mr. Kaplan contends. If, however, the Retiree Committee is seeking to retain Segal to manipulate the facts and statistics to achieve a desired outcome, Mr. Kaplan says Segal's analysis will be unreliable and the Debtors' estates should not have to bear the costs and expenses related to their efforts. To the extent that Segal is not going to serve as an independent actuary retained to provide an important and unbiased check on the Debtors' analysis, it may be necessary for the other official committees to seek to retain an independent and unbiased actuary, Mr. Kaplan adds. Mr. Kaplan relates that before filing a response, the Equity and Creditors' Committee have requested that Segal's retention be on a joint basis. The Retiree Committee, however, refused their requests. Given the fact that the Debtors' estates will be paying Segal's fees and expenses and the work should benefit all official committees equally, there is no basis to limit the retention of Segal to consultants to the Retiree Committee, Mr. Kaplan asserts. Accordingly, the Equity Committee seeks the Court's authority to retain Segal as its actuarial consultant on a joint basis with the Retiree Committee. 2. Creditors' Committee The Creditors' Committee recognizes the complex nature of the retiree benefits at issue in the Debtors' Chapter 11 cases, and agrees that it is important for an independent actuary to provide a critical and unbiased examination to the estate constituencies. Like the Retiree Committee, the Creditors' Committee believes that it will need the assistance of an actuary to examine the financial and retiree benefit information provided by the Debtors to fulfill its fiduciary duties to unsecured creditors of the estate. As Segal will provide a "critical and unbiased examination" of the Debtors' retiree benefits claims, the Creditors' Committee believes that Segal can be retained jointly by the Creditors' Committee and the Retiree Committee, thereby avoiding costs to the Debtors' estates of hiring two independent professionals. The Creditors' Committee asserts that both Committees can utilize Segal's analysis to formulate their own strategies and conclusions on how best to address retiree benefits in the Debtors' cases. Accordingly, the Creditors' Committee seeks the Court's authority to retain Segal as its actuarial consultant on a joint basis with the Retiree Committee. Retiree Committee Talks Back Mr. Cornell contends that while the Creditors' Committee's and Equity Committee's requests sound innocuous enough, both Committees ignore the question why the Retiree Committee needs an actuary and the adversarial role that exists between the constituencies with respect to the actuaries' work. The Debtors are seeking permanent elimination of a vast majority of their retiree benefits. Thus, to negotiate in good faith pursuant to Section 1114, the Retiree Committee must look behind and challenge the assumptions used by the Debtors' actuaries, Mr. Cornell maintains. Segal will assist the Retiree Committee in understanding the Section 1114 proposals and help structure new benefit packages. There is no need for the Creditors' and Equity Committees to have any involvement in the process, Mr. Cornell asserts. Nevertheless, to the extent either of those Committees do have involvement, it is likely that they will oppose continuing retiree benefits and will likely cross-examine professionals from Segal at the 1114 hearing, Mr. Cornell says. The other material task required by the Retiree Committee of Segal is to determine and defend the actuarial valuation of the Retiree Committee's unsecured claim. "This is where the Creditors' and Equity Committee are very interested in Segal's work -- and where they are assuredly going to be directly opposed to the Retiree Committee," Mr. Cornell contends. The Retirees' unsecured claim is the difference in the value of their lifetime benefits as of the Petition Date versus the value of any continuing benefits after modification, Mr. Cornell elaborates. The Debtors have indicated that they are going to attempt to have Towers Perrin reduce its own previously calculated numbers. Likewise, professionals for the Creditors' Committee have already indicated that they will oppose any unsecured claim springing from the potential reduction in retiree benefits. Thus, an integral part of Segal's job will be to defend its analysis against challenges by the parties that seek a joint retention, Mr. Cornell points out. The Creditors' and Equity Committees are not looking for a cost saving measure for the Debtors' estate, Mr. Cornell argues. Instead, they are trying to tie up the Retiree Committee's actuary so that it cannot support the Retirees' unsecured claim. "Segal cannot be expected to answer to the Committees that have diametrically opposed interests with respect to the same claim," Mr. Cornell states. About Dana Corporation Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: Comair Labor Union Okays Four-Year Labor Agreement ------------------------------------------------------------- Teamster flight attendants at Comair Inc. overwhelmingly ratified a new four-year agreement that strengthens workers' job security, caps health insurance payments and provides financial assistance to the company. Along with its parent company, Delta Airlines, Comair is restructuring under Chapter 11 protections. "With this vote our members have shown they are ready to move forward," said Connie Slayback, President of Local 513 in Florence, Kentucky and a Comair flight attendant. "This agreement maintains industry leading wages and helps Comair begin the process of rebuilding the company." The agreement comes nearly a year after the parties began negotiations, and follows two visits to the U.S. Bankruptcy Court for the Southern District in New York. "These workers fought a long, hard battle but it was worth it," said Jim Hoffa, Teamsters General President. "This agreement ensures that Comair flight attendants will receive the compensation and respect they deserve." The agreement will be enacted by the end of the year, dependent upon when Comair pilots and mechanics reach agreements with the Cincinnati-based carrier. The flight attendants' agreement would take effect sooner if the two groups and the company negotiate agreements before Dec. 31. Founded in 1903, the Teamsters Union represents more than 1.4 million hardworking men and women in the United States and Canada. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. DYNEGY INC: Sells Rockingham Facility to Duke Energy for $195 Mil. ------------------------------------------------------------------ Dynegy Inc. completed the sale of the Rockingham Power Generation Facility to Duke Energy Carolinas LLC for approximately $195 million in cash. The transaction was announced on May 22, 2006, in connection with the redemption of the company's $400 million Series C Convertible Stock, which was completed on May 26, 2006. In the May 22 announcement, the company stated that Dynegy Holdings Inc., the company's wholly owned subsidiary, had arranged a $150 million term loan as an interim source of liquidity. DHI is required under the terms of its credit facility to use the proceeds from the sale of the Rockingham facility to retire the $150 million term loan within five business days after the consummation of the sale. The remainder of the proceeds will be an additional source of liquidity. The transaction received the requisite regulatory approvals from the Federal Energy Regulatory Commission and the North Carolina Utilities Commission, as well as meeting the conditions required by the Hart-Scott-Rodino Antitrust Improvements Act. As a result of the completion of reported liability management plan activities and a multi-year self-restructuring initiative, the company has shifted its strategic focus to the growth of its power generation business in selected markets. A news release issued on Sept. 15, 2006, relates to a proposed combination with LS Power, which would result in a combined entity with more than 20,000 megawatts of generation capacity, with a strong presence in the Midwest, the Northeast and the West Coast. Headquartered in Houston, Texas, Dynegy Inc. (NYSE:DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The company's power generation portfolio consists of more than 12,800 megawatts of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. * * * On Sept. 22, 2006, Moody's Investors Service affirmed the ratings of Dynegy Holdings Inc., including the B1 Corporate Family Rating and the B2 rating for its senior unsecured debt. Moody's also affirmed the ratings of DHI's parent, Dynegy Inc., including the (P)Caa1 rating for its shelf registration for issuance of senior unsecured debt. The rating outlook for DYN and DHI remains stable. EMISPHERE TECH: Sept. 30 Stockholders' Deficit Narrows to $5.5MM ---------------------------------------------------------------- Emisphere Technologies Inc. filed its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 8, 2006. Third Quarter Financial Results Emisphere reported an operating loss of $8.7 million for the quarter ended Sept. 30, 2006, compared with an operating loss of $8.1 million for the third quarter of 2005. Emisphere reported a net loss of $8.158 million for the quarter ended Sept. 30, 2006, compared with a net loss of $9.640 million for the same quarter of 2005. Total operating expenses were $8.8 million for the 2006 third quarter, an increase of $200,000, or 2%, compared with the same period last year. Included in operating expenses for the three months ended Sept. 30, 2006 is $400,000 in non-cash compensation expense related to the implementation of Statement of Financial Accounting Standards 123, "Share Based Payment." SFAS 123 was adopted by the Company on Jan. 1, 2006, under the modified prospective application, and therefore was not recorded in the three months ended Sept. 30, 2005. Without this charge in the three months ended Sept. 30, 2006, total operating expenses would show a decrease of $200,000 or 2%. Total operating expenses include research and development costs of $4.8 million, an increase of $100,000 or 2%, compared with last year's third quarter, and general and administrative expenses of $3 million, an increase of $200,000 or 7%, compared with the same period last year. For the quarter ended Sept. 30, 2006, the Company had interest expense of $600,000, partially offset by a decrease in the fair value of derivatives of $600,000, interest income of $500,000, resulting in $500,000 of other income. Other income and expense for the same period last year was $1.5 million of expense, which was comprised of an increase in the fair value of derivative instruments of $1.3 million and interest expense of $300,000, partially offset by interest income of $100,000. As of Sept. 30, 2006, Emisphere held cash, cash equivalents and investments totaling approximately $28 million. This represents a net increase of $18.8 million from such amounts held on Dec. 31, 2005. At Sept. 30, 2006, the Company's balance sheet showed $34.818 million in total assets and $40.375 million in total liabilities, resulting in a $5.557 million stockholders' deficit. The Company had a $14.895 million deficit at Dec. 31, 2005. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?14ff Going Concern Doubt PricewaterhouseCoopers LLP raised substantial doubt about Emisphere Technologies, 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 auditing firm pointed to the Company's operating losses, limited capital resources and significant future commitments. About Emisphere Technologies Headquartered in Tarrytown, New York, Emisphere Technologies Inc. -- http://www.emisphere.com/-- is a biopharmaceutical company charting new frontiers in drug delivery. The Company develops oral forms of injectable drugs, either alone or with corporate partners, by applying its proprietary eligen(R) technology to these drugs. ENESCO GROUP: Inks Thirteenth Amendment to Credit Facility ---------------------------------------------------------- Enesco Group, Inc., signed a thirteenth amendment to its current U.S. credit facility with Bank of America, N.A. and LaSalle Bank N.A., effective as of November 6, 2006, to extend the Company's credit facility to December 29, 2006. The amendment continues existing financial covenants requiring compliance, subject to permitted variances, with budgeted cash receipts, cash disbursements and loan formulas. The amendment also provides for a forbearance of certain existing events of default under the credit agreement as of the date of the thirteenth amendment and requires the Company to enter into a definitive agreement on or prior to Nov. 30, 2006, for a transaction that will refinance Enesco's existing credit facility. About Enesco Group, Inc. Enesco Group, Inc. --- http://www.enesco.com/-- is a world leader in the giftware, and home and garden decor industries. Serving more than 44,000 customers worldwide, Enesco distributes products to a wide variety of specialty card and gift retailers, home decor boutiques, as well as mass-market chains and direct mail retailers. Internationally, Enesco serves markets operating in the United Kingdom, Canada, Europe, Mexico, Australia and Asia. With subsidiaries located in Europe and Canada, and a business unit in Hong Kong, Enesco's international distribution network is a leader in the industry. Enesco's product lines include some of the world's most recognizable brands, including Border Fine Arts, Bratz, Circle of Love, Foundations, Halcyon Days, Jim Shore Designs, Lilliput Lane, Pooh & Friends, Walt Disney Classics Collection, and Walt Disney Company, among others. What Happened to Precious Moments? On May 17, 2005, the Company terminated its license agreement with Precious Moments, Inc., to sell Precious Moments(R) products in the U.S. On July 1, 2005, the Company we began operating under an agreement with PMI where Enesco provided PMI transitional services related to its licensed inventory through December 31, 2005. In conjunction with the PMI agreement, in June 2005 the Company incurred a loss of $7.7 million equal to the cost of inventory transferred to PMI. The Company has not recorded any revenues for transition services in 2006, as PMI has exercised its option to perform the services in-house beginning January 1, 2006. During the transition period, Enesco maintained inventories of PMI products on a consignment basis and processed sales orders on PMI's behalf. Enesco recorded the gross sale and cost of sale of PMI products and, additionally, recorded a charge to cost of sales for the sale amounts to be remitted to PMI, net of the amounts due from PMI for inventory purchases. Enesco also earned sales commissions and service fees from PMI for product fulfillment, selling and marketing costs. In the three months ended June 30, 2006, Enesco and PMI reconciled the amounts owed to each other and, as a result, the Company recorded an additional charge of $355,000 to cost of sales to properly reflect amounts due to PMI. At June 30, 2006, the net amount owed PMI was $1 million, payable in three equal installments in July, August and September. ENRON CORP: Judge Lake Sentences Skilling to 24 Years in Jail ------------------------------------------------------------- As widely reported, the Honorable Sim Lake of the U.S. District Court for the Southern District of Texas sentenced former Enron Corp. CEO Jeffrey Skilling to 24 years and four months in prison for his part in the criminal activities at Enron that led to its financial collapse and bankruptcy filing. Judge Lake also ordered Mr. Skilling to source $45,000,000 out of his own pocket to pay as restitution to the victims of the Enron fraud. A federal jury in May 2006 found Mr. Skilling guilty on 19 counts of criminal offenses, including conspiracy, fraud and insider trading that he allegedly committed while serving as CEO of Enron. 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, Brian S. Rosen, Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler, Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP, Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L. Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 181 and 182; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: Wants Kennedy Oil's Claim for $2.9 Million Reduced -------------------------------------------------------------- Enron Corp. and its debtor-affiliates objects to Kennedy Oil's request for: -- payment of its administrative expenses; and -- ENA's full account for any cash collateral Kennedy had a security interest as of the Petition Date. In its 61st Omnibus Claims Objection, the Reorganized Debtors objected to Kennedy Oil's Claim No. 15605 on grounds that Kennedy failed to demonstrate that it is entitled to any security interest. Kennedy Oil had filed Claim No. 15605 seeking recovery of $2,910,363 plus postpetition interest, attorneys' fees, and collection costs arising from natural gas transactions with Enron North America Corp. in October and November 2001, which were executed pursuant to a Gas Transportation Agreement dated as of August 27, 1999. Kennedy Oil maintains that it has security interests in the proceeds from ENA's resale of any gas it purchased from Kennedy under the Agreement. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates Kennedy Oil and ENA were parties to other agreements. Specifically, in November 2001, the parties entered into an Enfolio Firm Confirmation that confirmed transaction number YK 6095.1. In October 2001, they also entered into multiple Enfolio Firm Confirmations that confirmed transaction numbers YC 1743.1, YC1743.2 and YC1743.4. Each of the Firm Confirmations was subject to the Enfolio Firm General Terms and Conditions. Ms. Gray says that the Firm GTC and Firm Confirmations automatically terminated at the Petition Date and damages were to be measured by the difference between the gas prices under the Firm Confirmations and the market price for natural gas on the termination. At the time of the termination, the market price of natural gas was higher than the price reflected in the Firm Confirmations, which means that Kennedy was able to sell the gas that it sold to ENA as a higher price than the price reflected in the Firm Confirmations, Ms. Gray relates. At the time of the termination, ENA was in-the-money under the contract and the termination conferred a substantial benefit ob Kennedy Oil. Therefore, ENA is entitled to setoff its Mark-to- Market Damages resulting from Kennedy's termination of the Confirmations pursuant to Section 3 of the Firm GTC, Ms. Gray asserts. The Mark-to-Market Damages due and payable to ENA should total $1,189,097, but the Kennedy Claim does not reflect the amount due to ENA under the GTC, Ms. Gray notes. Therefore, she argues, the Claim should be reduced by amounts that Kennedy owes ENA under the Firm Confirmations. In response to Kennedy's request to recover postpetition interest, collections costs and attorney's fees, Ms. Gray notes that, while Section 506(b) of the Bankruptcy Code permits recovery of postpetition interest, collections costs and attorney's fees in limited circumstances, the right to recover the amounts is granted only to creditors who are proven to be over-secured. Even if a creditor proves that his claim is over-secured, he is only allowed to collect fees, costs and interest under Section 506(b) up to the amount of the equity cushion, which does not exist in Kennedy's Claim, Ms. Gray points out. Moreover, Ms. Gray refutes Kennedy Oil's allegation that the Debtors are judicially estopped from objecting to the Kennedy Claim pursuant to a settlement of a previous adversary proceeding. Ms. Gray notes that the adversary proceeding is unrelated to its Claim and involves different facts and legal issues. Ms. Gray also notes that under the Second Circuit Court ruling of Bates v. Long Island R.R. Co., 997 F.2d 1028, a party cannot be judicially estoppel on the basis of prior inconsistent statements made in previous litigation that resulted in a settlement, emphasizing estoppel only applies when a tribunal in a prior proceeding has accepted the claim at issue by rendering a favorable decision. Accordingly, the Reorganized Debtors ask the Court to: (1) reduce the amount of the Kennedy Claim by $1,189,097, resulting in an allowed general unsecured claim of $1,721,266 against ENA; (2) disallow and expunged in its entirety Kennedy's claim for postpetition interest, attorney's fees and collection costs; and (3) declare that the Reorganized Debtors are not judicially estopped from objecting to the Kennedy Claim. 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, Brian S. Rosen, Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler, Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP, Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L. Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP represent the Debtor. Jeffrey K. Milton, Esq., Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 181; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EVANS INDUSTRIES: Court Confirms Amended Liquidating Plan --------------------------------------------------------- The Honorable Jerry A. Brown of the U.S. Bankruptcy Court for the Eastern District of Louisiana confirmed the Amended Liquidating Plan of Reorganization of Evans Industries, Inc., and its debtor- affiliates. As reported in the Troubled Company Reporter on Oct. 5, 2006, the Debtors' Plan contemplates the sale of substantially all of their assets to the highest bidder at an auction. Proceeds from the sale will be used first to satisfy administrative and priority claims. Excess sale proceeds and certain residual assets will be transferred to a Distribution Trust for the benefit of general unsecured creditors. An entity called New Evans has been designated as the stalking- horse bidder for the Debtors' assets. New Evans proposes to acquire these assets for a $2.5 million cash payment plus the assumption of debt. According to the Debtors, approximately $617,251, plus the Residual Assets, will be vested to the Distribution Trust under the deal with New Evans. Treatments of Claims The winning bidder for the Debtors' assets will assume the postpetition secured claim of Frost National Bank and Frost's liens will attach to all assets transferred to the winning bidder as first priority, senior secured liens. If the winning bidder does not assume Frost's claim, the claim will be paid in full from the sale proceeds prior to any other payments contemplated under the plan. GE Commercial Finance will be paid an agreed amount from the sale proceeds for the purchase of GE Commercials' equipment. All assets encumbered by GE Commercial will be transferred to the winning bidder. As of the petition date, the Debtors owed CIT Equipment Finance approximately $1.2 million in principal and accrued interest, $57,000 in late charges and $9,000 in attorneys' fees, on account of various loans. If New Evans will win at the auction, CIT's claim will be paid in cash in an amount agreed upon by New Evans and CIT. The Court will conduct a valuation hearing to determine the value of CIT's collateral if the parties fail to reach an agreement over the payments due to CIT. CIT will also be allowed to bid for its collateral at the auction and offset the total amount of its claim against the value of its collateral. The Distribution Trustee will pay the secured claim of ASI Federal Credit Union/SBA from the proceeds of the pledged business interruption insurance. The Debtors estimate the secured claim of Amegy Bank at zero and concludes that no payment is necessary under this class. Sydney Longwell's secured claim will be either paid in full on the effective date of the Plan or assumed by the winning bidder. All property encumbered by the secured claim of Janice Evans, Janice Hamilton and Gary Hamilton will be sold and the proceeds distributed to these creditors up to the allowed amount of their claims. The Official Committee of Unsecured Creditors is currently reviewing these claims and may object to distributions under this class. The Committee intends to request that proceeds from the sale of Ms. Evans and the Hamilton's collateral will be held in escrow pending the outcome of its investigation. Each of the secured claims of CitiCapital Commercial Corp, HSBC Business Credit(USA), Inc. and SpiritBank will either be paid in full on the effective date from the sale proceeds or assumed by the winning bidder. Any tort claimant in prepetition litigation with the Debtors will be assigned all of the Debtors' rights under any insurance policies covering their claims. All damages not paid by the insurers will be treated as general unsecured claims. Creditors electing to hold Class 14 convenience claims will receive an amount equal to 50% of their allowed claim, without interest. The Distribution Trustee will pay into the 401(k) account of any creditor holding a Class 15 401(k) claim the full amount of any unpaid, unmatched 401(k) contributions due under the plan for the year 2001. For the years 2002 and 2003, the wining bidder will pay into the 401(k) account the full amount of any unpaid contribution over a period of five years without interest. Holders of General Unsecured Claims will receive distributions from the excess sale proceeds and residual assets held in trust by the Distribution Trustee. On the effective date, Equity interest will be terminated. A full-text copy of the Disclosure Statement explaining the Debtors' Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=061004213941 Judge Brown disclosed that the modifications to the Plan made at the confirmation hearing do not adversely change the treatment of the Claim of any creditor and are immaterial. About Evans Industries Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The company filed for chapter 11 protection on April 25, 2006 (Bankr. E.D. La. Case No. 06-10370). Eric J. Derbes, Esq., and Melanie M. Mulcahy, Esq., at The Derbes Law Firm, LLC, represent the Debtor. C. Davin Boldissar, Esq., at Locke Liddell & Sapp, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $500,000 and $1 million and debts between $10 million and $50 million. FISCHER IMAGING: Earns $355,000 in Quarter Ended September 30 ------------------------------------------------------------- Fischer Imaging Corporation reported a $355,000 net income for the three months ended Sept. 30, 2006, compared to $19,948,000 earned for the same period in 2005. Total revenues decreased 96.6% to $500,000 for the three-months ended Sept. 30, 2006 from $13.4 million for the three-months ended Sept. 30, 2005. Service and product revenues have significantly declined from the prior year due to the sale of the Company's intellectual property rights related to its mammography business and products to Hologic, Inc. As of May 31, 2006, no further revenue will be generated from the intellectual property sold to Hologic. Product revenues decreased 96.7% to $0.3 million in the three- months ended September 30, 2006 from $9.4 million in the three- months ended Sept. 30, 2005. -- SenoScan digital mammography product revenue during the three-months ended Sept. 30, 2005 was $3.2 million. As a result of the Asset Sale, there was only one sale of a rental unit for $0.1 million in the three-months ended September 30, 2006 and there will be no further sales of SenoScan. -- Revenues from the MammoTest breast biopsy products were $3.9 million in the three-months ended Sept. 30, 2005. The decrease in MammoTest product revenue is a direct result of the Asset Sale. There will be no further sales of MammoTest. -- The radiology, electrophysiology and surgical products revenues decreased $2.2 million to $200,000 in the three- months ended Sept. 30, 2006 from $2.4 million in the three-months ended Sept. 30, 2005. The sales decrease on RE&S products in the three-months ended Sep. 30, 2006, as compared to the three-months ended Sept. 30, 2005, was primarily due to a decrease in Bloom revenues of $400,000 and a $1.8 million volume decrease in VersaRad x-ray products as a result of the last time buy purchase order from Kodak which was completed in May 2006. We expect revenues for the three-months ending Dec. 31, 2006 will be approximately $100,000, all of which occurred prior to the Nov. 1, 2006 sale of the RE&S Business. At Sept. 30, 2006, the Company's balance sheet showed $3,828,000 in total assets, $1,469,000 in total liabilities and stockholders' equity of $2,359,000. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?1500 Going Concern Doubt Ehrhardt Keefe Steiner & Hottman PC expressed substantial doubt about Fischer Imaging's ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the company's recurring losses from operations and the sale of substantially all of its assets. Fischer Imaging Corporation -- http://www.fischerimaging.com/-- services and manufactures medical imaging systems for the screening and diagnosis of disease. The Company began producing general-purpose x-ray imaging systems in 1910 and is the oldest manufacturer of x-ray imaging devices in the United States. The Company filed for chapter 11 protection on Aug. 22, 2006 (Bankr. D. Colo. Case No. 06-15611). Douglas W. Jessop, Esq., at Jessop & Company, P.C., represents the Debtor in its restructuring efforts. When it filed for protection from its creditors, it listed $2,235,414 in total assets and $26,104 in total debts. FOAMEX INTERNATIONAL: Wants GMAC Settlement Agreement Approved -------------------------------------------------------------- Foamex International Inc. asks the U.S. Bankruptcy Court for the District of Delaware to approve the Settlement Agreement with GMAC Commercial Finance LLC, formerly known as BNY Financial Corp. GMAC Commercial, commenced a lawsuit against Foamex in the United States Bankruptcy Court for the Northern District of Mississippi asserting claims arising out of the recovery for certain preferential transfers made to Foamex. Subsequent to the filing of the Adversary Proceeding, the Debtors filed a petition for Chapter 11. In light of the commencement of the Debtors' Chapter 11 cases, GMAC Commercial dismissed the Adversary Proceeding and filed Claim No. 822 for $90,358 against Foamex. In their 7th Omnibus Objections to Claims, the Debtors sought the Court's authority to reduce and reclassify Claim No. 822 as an unsecured non-priority claim. The parties agree to resolve the issues between them with respect to the Claim though a Complete Release and Compromise Settlement Agreement. The principal terms of the Settlement Agreement are: (a) Foamex will allow GMAC an unsecured claim for $45,179; and (b) the parties will mutually release each other from any and all claims or actions in connection with the Adversary Proceeding or the Claim. 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. 32; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Wants to Enter into Toyota Forklifts Lease ---------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to authorize Foamex L.P., to enter into a lease with Toyota Motor Credit Corporation for two electric forklift trucks. Foamex will lease each forklift truck for two months at a monthly rental of $585 plus applicable taxes. Foamex will also be charged an hourly overtime rate of $1 for each hour of use of any forklift truck in excess of 500 hours in any calendar quarter as determined by the hour meter or other mechanical device used to record house of used supplied in the Equipment. Among the other terms of the Lease are: (a) Foamex agrees to perform, at its own cost and expense, all maintenance, service and repair to the forklift trucks, including: * daily maintenance; * preventive maintenance service; * repairing, overhauling or adjusting of the forklift trucks' parts; * replacing or repairing of tires; and * repairs required as determined by Toyota during its periodic inspection and report to Foamex; (b) Foamex assumes all risks and liabilities arising from its possession, use and operation of the forklift trucks for the duration of the Lease; (c) Foamex will provide and pay for an all-risk insurance insuring against physical loss or damage to the forklift trucks in an amount satisfactory to Toyota; and (d) In case of theft or destruction of any of the forklift truck, Foamex will reimburse Toyota immediately by paying Toyota an amount equal to the then unpaid balance of aggregate rental for that forklift truck plus the fair market value at the expiration of the Lease. The Debtors maintain that the terms of the Lease are consistent with market rates for similar equipment. Notwithstanding the Debtors' belief that entry in to the Lease is an ordinary course transaction, absent Court approval, Toyota will refuse to enter into the Lease, and the Debtors will be unable to obtain use of the forklift trucks. Because the forklift trucks are necessary for their ongoing operations, the Debtors state, if the Court denies approval of the Lease, they will be forced to find other lessor willing to lease similar equipment to them and renegotiate and draft a new lease. 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. 32; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FORD MOTOR: Files Third Quarter & Restated 2005 Annual Reports -------------------------------------------------------------- Ford Motor Company filed with the Securities and Exchange Commission its 2006 third-quarter 10-Q Report and an amended 2005 10-K Report to restate its previously reported financial results from 2001 through 2005 to correct accounting for certain derivative transactions under Paragraph 68 of the Statement of Financial Accounting Standards 133, Accounting for Derivative Instruments and Hedging Activities. As part of the restatement, the company also reversed certain immaterial accounting adjustments and recorded them in the proper period. For the third quarter and first nine months of 2006, the company reported a net loss of $5.2 billion and $7 billion, respectively; this is an improvement of about $550 million and $250 million, respectively, from the preliminary results released on Oct. 23. The improvement primarily reflected the effect of the change in accounting for certain Ford Motor Credit Company interest rate swaps under Paragraph 68 of SFAS 133 and the impact of that change on the valuation allowance for deferred tax assets. The company also filed a Form 10-K/A for the year ended Dec. 31, 2005, which includes amended financial statements for each of the years ended Dec. 31, 2003, 2004, and 2005, and selected financial data for each of the years 2001 through 2005. Amended Form 10-Qs for the first and second quarter of 2006 will be filed with the SEC by Nov. 20. The restatement's cumulative impact on net income was an increase of about $850 million. The change in accounting for the Ford Credit interest rate swaps did not affect the economics of the derivative transactions involved, nor have any impact on Ford Motor Company's cash. Ford restated its results after discovering that certain interest rate swaps that Ford Credit had entered into did not satisfy the specific requirements of Paragraph 68 of SFAS 133 that would have exempted these transactions from periodic assessments of their effectiveness. One of the general requirements of SFAS 133 is that hedge accounting is appropriate only for those hedging relationships that a company expects will be highly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged. Although Ford Credit's interest rate swaps were and continue to be highly effective economic hedges, the company determined that nearly all of these transactions did not meet Paragraph 68's exemption requirements. SFAS 133 precludes the company from retroactively testing the effectiveness of these transactions in order to continue to apply hedge accounting. As a result, the restatement of the company's financial results reflects changes in fair value of these hedging instruments as derivative gains and losses during the affected periods, without recording any offsetting change in the value of the debt they were hedging. Changes in the fair value of interest rate swaps are driven primarily by changes in interest rates. Ford Credit has long-term interest rate swaps with large notional balances, many of which are "receive-fixed, pay-float" interest rate swaps. These types of swaps increase in value when interest rates decline, and decline in value when interest rates rise. As a result, changes in interest rates can cause substantial volatility in the fair values that must now be recognized in earnings. For 2001 and 2002, when interest rates were trending lower, Ford is now recognizing large derivative gains in its restated financial statements. The upward trend in interest rates from 2003 through 2005 caused the interest rate swaps to decline in value, resulting in the recognition of derivative losses for these periods. "After a review of our internal controls, we determined a material weakness did exist with relation to SFAS 133. That material weakness has been fully remediated with the completion of this restatement," Ford's executive vice president and chief financial officer Don Leclair said. "Our hedging strategy going forward will continue to be effective at reducing our exposure to economic risks." The restatement also includes out-of-period adjustments that were previously evaluated, both individually and in the aggregate, and determined to be immaterial to the company's originally-filed financial statements. As part of the restatement, these immaterial adjustments are being reversed and recorded in the appropriate periods. Effect of Restatement Net Income/(Loss) * ----------------------------------------------- 2001 2002 2003 2004 2005 (Bils.) (Bils.) (Bils.) (Bils.) (Bils.) ------- ------- ------- ------- ------- Previously Reported Net Income ($5.5) ($1.0) $0.5 $3.5 $2.0 Total Change in Net Income/(Loss) $0.7 $1.9 ($0.3) ($0.5) ($0.6) ------- ------- ------- ------- ------- Net Income after Restatement ($4.8) $0.9 $0.2 $3.0 $1.4 ======= ======= ======= ======= ======= * Including Special Items Full-text copies of the Company's financials are available for free at: Third Quarter Ended Sept. 30, 2006 http://ResearchArchives.com/t/s?1511 Year Ended Dec. 31, 2005 http://ResearchArchives.com/t/s?1512 About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Oct. 24, 2006, Standard & Poor's Ratings Services placed its 'B' senior unsecured debt issue ratings on Ford Motor Co. on CreditWatch with negative implications. At the same time, S&P affirmed all other ratings on Ford, Ford Motor Credit Co., and related entities, except the rating on Ford Motor Co. Capital Trust II 6.5% cumulative convertible trust preferred securities, which was lowered to 'CCC-'from 'CCC.' At the same time, Fitch Ratings placed Ford Motor's 'B+/RR3' senior unsecured debt on Rating Watch Negative. Moody's Investors Service has disclosed that Ford's very weak third quarter performance led to the downgrade of the company's long-term rating to B3. FMC REAL: Fitch Holds Low-B Ratings on Class G and H Notes ---------------------------------------------------------- Fitch has affirmed nine classes of notes issued by FMC Real Estate CDO 2005-1. -- 131,825,000 class A-1 floating-rate 'AAA'; -- 43,941,000 class A-2 floating-rate 'AAA'; -- 43,941,000 class B floating-rate 'AA'; -- 49,434,000 class C floating-rate 'A'; -- 34,055,000 class D floating-rate 'BBB+'; -- 13,182,000 class E floating-rate 'BBB'; -- 21,970,000 class F floating-rate 'BBB-'; -- 35,153,000 class G fixed-rate 'BB'; -- 12,084,000 class H fixed-rate 'B'. FMC 2005-1 is a cash flow commercial real estate loan collateralized debt obligation that closed July 13, 2005. Most assets are short term floating rate loans. Given that the CDO has four years of its reinvestment period remaining, the assets are expected to fully turnover. The reinvestment period ends in July 2010. Asset Manager: FMC 2005-1 is managed by SCFFI GP LLC, an affiliate of Five Mile Capital. Five Mile is an alternative fixed-income investment management firm founded in February 2003 by individuals whose former experience includes positions with Salomon Brothers Inc., Greenwich Capital Markets, Inc., Kidder, Peabody & Company, Inc., and PaineWebber Inc. Five Mile is majority owned and controlled by its management and minority owned by affiliates of American International Group, Inc., W.R. Berkley Corporation, and MBIA Inc. As of June 16, 2005, Five Mile launched three investment funds: Housatonic Fund, Silvermine Fund and Structured Income Fund, of which SCFFI is a general partner. The assets for FMC are from the Structured Income Fund, which has $662 million in equity commitments and is now closed to new investors. This fund focuses on debt and debt-like investments secured by commercial real estate, consumer receivables, and other asset-backed collateral. Deal Overview: Since closing, the portfolio has maintained above average reinvestment flexibility and has shown stable overcollateralization and interest coverage ratios. The weighted average spread has decreased since the effective date, from 6.15% to 5.41%; however it remains above the covenanted 4.25%. The decrease in the WAS is due in part to the large amount of cash within the CDO. This cash balance decreased from a high of 27.95%, as of the August 2006 trustee report, to 15.49% of the Aggregate Collateral Balance, as of September 2006. The asset manager is being judicious in their investment decisions and expects to invest the current cash and any cash due to anticipated prepayments by February 2007. The OC ratios of classes A through G remain stable; each class is within its covenant. The IC ratios of classes A through G have also remained stable and each class is significantly over its covenant, as of the September 2006 trustee report. Upgrades during the reinvestment period are unlikely given that the pool could still migrate to the modeled Poolwide Expected Loss. The Fitch PEL is 32.625%, as of September 21, 2006, compared to a modeled stressed PEL of 56.5%. The cushion of 23.88% provides above average reinvestment flexibility to the manager. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural feature of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. Collateral Analysis: The pool continues to be weighted more heavily towards subordinate debt, B-notes (38%) and mezzanine loans (49%), than whole loans and A-notes (13%). However, the percentage of subordinate debt has declined from 97% at issuance to 87%, as of September 2006. Additionally, since close, the pool has migrated to an improved quality of loans indicated by its increase in the weighted average stressed DSCR, from 0.97x to 1.12x. Since close, the largest percent of non-traditional assets are still hotels; however the portfolio's exposure to this property type is lower (17% versus 19%). Condominium conversion exposure has increased slightly since close (from 1.1% to 4.2%). The office property type still remains the largest percentage (51.1%) of the loan portfolio. Except for the Herfindahl test covenant, the pool composition is within guidelines, particularly with respect to its cushion. The largest exposure (8.5% of the pool) is a pari passu participation interest in a whole loan, on a class A office building in Midtown Manhattan's Grand Central submarket. The loan has strong sponsors and the submarket is performing well with 94.6% occupancy. The property is 90% complete and approximately 40% leased. Tenants have begun moving into their spaces. The loan is expected to refinance on or before the second quarter of 2007. The loans on the manager's monitoring list include a B-note position on a class A office building in Midtown Manhattan's Madison Avenue submarket and a B-note position on a condominium conversion in Tampa, Florida. The Manhattan office building (4.3% of the pool) was flagged as the building occupancy fell to 41% since the loan closed, due to one tenant moving out. Of the vacated space 18,000 square feet has been leased, bringing the occupancy up to 63%. The submarket is considered strong with a vacancy rate of 7.5%. There are few large blocks of contiguous spaces in the submarket. As such, stabilization of this building is expected to occur within nine to twelve months. The condominium conversion in Tampa, Florida (3.6% of the pool) is on the manager's monitoring list because the primary servicer has put all condominium conversion loans in Florida on its watch list. As of October 31, 2006, 25.4% of the units have closed and sales delivered such that the loan exposure is below rental market value. Sales continue to be active at the property. Rating Definitions: The ratings of the class A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G, and H notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Ongoing Surveillance: Fitch will continue to monitor and review this transaction for future rating adjustments. GENERAL MOTORS: Fitch Rates New $1.5 Billion Senior Loan at BB -------------------------------------------------------------- Fitch Ratings has assigned a 'BB/RR1' rating to General Motors Corporation's new $1.5 billion, seven-year senior secured term loan. GM's new term loan is also placed on Rating Watch Negative, where it stands with GM's 'B' Issuer Default Rating and 'B/RR4' senior unsecured debt pending resolution of the Delphi situation. The new senior secured loan will be secured by perfected, first- priority liens on machinery, equipment and special tools at principal U.S. manufacturing facilities. The loan is overcollateralized and full recovery is expected under a default scenario. The loan is also subject to a collateral value test with collateral value required to be at least 2.5 times (x) the amount of the loan outstanding. The new secured term loan brings total secured debt facilities to $7.5 billion. Under Fitch's recovery analysis, the new term loan would move the estimated recovery value for unsecured debtholders to the very bottom of the 'RR4' range (estimated recovery of 30- 50%). As a result, any changes to Fitch's assumptions or to GM's liability structure could result in a downgrade of the unsecured debt rating. The new facility provides a very modest boost to liquidity, which remains adequate to fund near-term negative cash flows. Cash flows remain negative due to operating results, working capital drains and restructuring costs. Liquidity is expected to be boosted substantially by the pending sale of a controlling interest in GMAC. Operating results have benefited from the rollout of the GMT-900 series SUV products, and will further benefit from the rollout of the refreshed pickup lineup. However, industry sales declines in these categories are likely to continue due to changing customer tastes, the impact of higher gas prices and the impact of slower growth, casting doubt on the sustainability of revenues in the latter part of 2007. The realization of cost savings from restructuring efforts should become more evident, although high commodity costs, restructuring costs and working capital outflows will likely result in continued negative cash outflows in 2007. The Delphi situation, further stresses in the supply base, and the September 2007 UAW contract talks also pose event risk over the near-term. GLOBAL CROSSING: Sept. 30 Balance Sheet Upside-Down by $131 Mil. ---------------------------------------------------------------- Global Crossing Ltd. disclosed its financial results for the third quarter of 2006 and provided updates on its business activities for the same period. "We've revved up our business and it shows on many fronts," John Legere, Global Crossing's chief executive officer, said. "We've generated positive adjusted EBITDA in the third quarter and posted revenue growth for the second quarter in a row -- and with the completed acquisition of Fibernet and our announced merger with Impsat, we've found two companies that complement our portfolio and are expected to contribute positively to our overall financial goals. Our strategy is sound, our business is healthy and our employees are focused on ensuring that Global Crossing is a true stand-out in the telecommunications industry." Highlights Global Crossing's business performance continued to improve in the third quarter of 2006 on a sequential and year-over-year basis. On a sequential basis, "invest and grow" revenue, namely that part of the business focused on serving global enterprises, carrier data and indirect channel customers, grew by 5% compared with the second quarter for both the company's UK subsidiary (GCUK) and for its businesses outside of the UK. Adjusted gross margin improved to 41% of revenue from 38% in the second quarter, and adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was positive, ending the quarter at $7 million. In addition, Global Crossing disclosed that the acquisition of UK- based Fibernet Group Plc and the planned acquisition of Latin America-based Impsat Fiber Networks. Both companies will accelerate execution of Global Crossing's strategy of delivering converged IP services to enterprises and carriers globally, and they will expand Global Crossing's UK and Latin American offerings in their respective regions. Global Crossing expects the Fibernet acquisition to contribute annual revenue of more than $80 million, and to yield annual adjusted EBITDA of $30 million after completion of the integration and operational synergies are fully realized. Additionally, the combination of Fibernet with GCUK will yield up to $10 million of capital expense savings. Integration is expected to be complete in 12 to 18 months and to cost up to $10 million. The Impsat acquisition is expected to generate $270 million in annual revenue and $70 million in adjusted EBITDA following integration, which includes the impact of anticipated net expense synergies of more than $10 million per year. Integration will take approximately 12 to 18 months after the transaction closes, which is expected in the first quarter of 2007. Revenue and Margin During the third quarter, Global Crossing's consolidated revenue grew sequentially by $5 million to $466 million. Adjusted gross margin grew $16 million and was 41% of revenue or $191 million in absolute terms, compared with 38% of revenue or $175 million in the second quarter. "Invest and grow" revenue grew sequentially by 5% or $14 million to $313 million in the third quarter. This was driven by growth in the company's businesses outside of the UK, which generated $205 million in "invest and grow" revenue, up $9 million from $196 million in the second quarter. Global Crossing's GCUK subsidiary generated $108 million in "invest and grow" revenue, a $5 million sequential improvement. Adjusted gross margin for the "invest and grow" segment was $172 million in absolute terms or 55% of revenue for the third quarter. This was a $17 million sequential improvement from $155 million in the second quarter of 2006 or 52% of revenue. Cost of revenue -- which includes cost of access; technical real estate, network and operations; third party maintenance; and cost of equipment sales -- was $381 million in the third quarter, down $12 million or 3% from $393 million in the second quarter of 2006. Cost of access accounted for $275 million of Global Crossing's cost of revenue during the third quarter, down $11 million or 4% from the second quarter of 2006 when cost of access expense was $286 million. Sales, general and administrative costs were $78 million in the third quarter of 2006, compared with $85 million in the second quarter of 2006. Earnings Adjusted EBITDA was positive for the third quarter at $7 million, compared with a loss of $17 million in the second quarter of 2006. Consolidated loss applicable to common shareholders was $51 million, compared with a loss of $77 million in the second quarter of the year. Cash and Liquidity As of Sept. 30, 2006, unrestricted cash and cash equivalents totaled $417 million, and restricted cash was $7 million. Global Crossing used $39 million of cash in the third quarter, including the use of $45 million for capital expenditures and principal on capital leases. Cash sources included $17 million of sales proceeds for Indefeasible Rights of Use. Global Crossing expects that it will generate positive cash flow for the fourth quarter of 2006. On Oct. 11, 2006, Global Crossing disclosed it had acquired Fibernet for approximately $95 million in cash. The company has received a financing commitment for up to approximately $95 million from ABN Amro to finance the Fibernet acquisition. On Oct. 26, 2006, Global Crossing disclosed an agreement to acquire Impsat for $95 million in cash and the assumption of Impsat's debt, which totaled $241 million as of June 30, 2006. The company will fund the Impsat transaction with approximately $160 million of its cash resources, and it has received a financing commitment from Credit Suisse for up to $200 million to be used to refinance existing Impsat debt. Closing is subject to the approval of Impsat's common shareholders, certain debt holders, certain regulatory approvals and other closing conditions. About Global Crossing Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunication services over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe including Bermuda, Argentina, Brazil, Chile, Mexico, Panama, Peru and Venezuela. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The company filed for chapter 11 protection on Jan. 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. At Sept. 30, 2006, Global Crossing Ltd.'s balance sheet reflected a $131 million stockholders' deficit. At June 30, 2006, Global reported $1.87 billion in total assets and $1.95 billion in total liabilities, resulting to a stockholders' deficit of $86 million. It also reported a $173 million stockholders' deficit on Dec. 31, 2005. GLOBAL CROSSING: Will Acquire IMPSAT Fiber for $95 Million ---------------------------------------------------------- Global Crossing Ltd. has agreed to acquire IMPSAT Fiber Networks Inc. for $9.32 in cash for each share of Impsat common stock, representing a total equity value of approximately $95 million. Global Crossing will assume, refinance, and repay Impsat's debt, which was $241 million as of June 30, 2006. Impsat's cash balance as of June 30, 2006, was $23 million, resulting in a net debt balance of $218 million at that date. The transaction is expected to close in the first quarter of 2007. The acquisition of Impsat will accelerate Global Crossing's strategy to provide converged Internet provider services to enterprises and carriers globally, in addition to enhancing the company's financials. Impsat, as a leading Latin American provider of IP, hosting and value-added data solutions, will add over 4,500 customers to Global Crossing's ranks, all of which are supported by a world class sales and customer care team with local presence in seven Latin American countries. Impsat's extensive IP-based intercity network, 15 metropolitan networks and 15 advanced hosting centers will provide a greater breadth of services and coverage to Global Crossing's Latin American operations. Impsat will also add scale to the company's regional presence and will enhance its competitive position as a global service provider to multinational enterprises and carrier customers. Global Crossing expects the acquisition to contribute annual revenue of more than $270 million, and to yield annual Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization of more than $70 million after operational synergies are fully realized. Annual operational savings after integration are expected to be more than $10 million. Integration of the business is expected to be completed 12 to 18 months after closing of the transaction, at a one-time cost of approximately $10 million. John Legere, Global Crossing's chief executive officer, said, "The combination of Impsat's data-centric customer set, extensive Latin American network and managed IP capabilities with Global Crossing's proven ability to deliver converged IP services on a global scale is a compelling win for the customers of both companies. "The Impsat acquisition, along with our recently completed acquisition of Fibernet in the UK, demonstrates our strategic and focused participation in industry consolidation. We will aggressively pursue those opportunities that would enhance our core business, expand our service capabilities and improve our financials." Global Crossing and Impsat have had a commercial relationship since 2000, when Global Crossing selected Impsat as one of its providers of Point of Presence facilities for Global Crossing's Latin American network, known as South American Crossing. Impsat has also been a customer of Global Crossing in Latin America since 2000. This longstanding relationship means that customers of both companies should enjoy a seamless transition following closing of the transaction. Ricardo Verdaguer, Impsat's chief executive officer, noted, "This transaction demonstrates the value created by Impsat within the telecommunications industry in Latin America and represents an attractive offer to our shareholders. "Our service-oriented employees and portfolio of IP- based products and services mesh perfectly with Global Crossing's strategy and culture, which emphasize technology, security, customer support and control. I believe combining our companies will enhance the solutions we provide customers, create economies of scale and further serve the economic development objectives of the Latin American region." At closing of the acquisition, Global Crossing expects to use approximately $160 million of its existing cash for equity payments to Impsat shareholders, transaction expenses and repayment of a limited amount of indebtedness. In addition, Global Crossing has obtained a financing commitment from Credit Suisse for up to $200 million to refinance most of the Impsat debt that is not being repaid at closing. Global Crossing has obtained a financing commitment for approximately $95 million from ABN Amro to finance its previously announced acquisition of Fibernet Group plc in the United Kingdom. Together, the two financing arrangements, which are subject to customary closing conditions, are intended to preserve sufficient cash reserves to enable Global Crossing to pursue additional growth opportunities that may arise, including those being generated by industry consolidation. The transaction is subject to the approval of Impsat's common shareholders, certain debt holders, certain regulatory approvals and other closing conditions. Under separate agreements, Morgan Stanley & Co., a significant shareholder and debt holder of Impsat; W.R. Huff Asset Management Co., a significant debt holder; and certain officers and directors of Impsat have agreed to support the transaction. The Blackstone Group is acting as sole financial advisor, and Latham and Watkins LLP and Jorge Ortiz y Asociados are acting as legal counsel to Global Crossing on the transaction. About IMPSAT Fiber Networks IMPSAT Fiber Networks Inc. -- http://www.impsat.com/-- provides private telecommunications networks and Internet services in Latin America. The company owns and operates 15 data centers and metropolitan area networks in some of the largest cities in Latin America, providing services to more than 4,200 national and multinational companies, financial institutions, governmental agencies, carriers, Internet service providers and other service providers throughout the region. Impsat has operations in Argentina, Colombia, Brazil, Venezuela, Ecuador, Chile, Peru, the United States and throughout Latin America and the Caribbean. About Global Crossing Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunication services over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe including Bermuda, Argentina, Brazil, Chile, Mexico, Panama, Peru and Venezuela. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The company filed for chapter 11 protection on Jan. 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed US$25,511,000,000 in total assets and US$15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. GLOBAL POWER: Wants Court Approval to Use BoA's Cash Collateral --------------------------------------------------------------- Global Power Equipment Group Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to use the cash collateral securing repayments of its obligations to Bank of America N.A. On Oct. 1, 2004, the Debtors entered into a $1 million credit agreement with Bank of America N.A. On Apr. 1, 2005, the Debtors further entered into a $25 million term loan and $75 million revolving credit facility joint agreement with the U.S. Bank of National Association and Bank of Oklahoma N.A., their senior lenders. These obligations were secured by liens and security interest in substantially of the Debtors' assets. The Debtors' proposed cash collateral will be used to fund its administration and operating expenses. Additionally, the Debtors pledge approximately $8.5 million in cash and cash equivalent to further secure the Debtors' obligations. Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc. aka GEEG Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). Attorneys at White & Case LLP and The Bayard Firm, P.A., represent the Debtors. The Official Committee of Unsecured Creditors appointed in the Debtors' cases has selected Landis Rath & Cobb LLP as its counsel. As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. The Debtors' exclusive period to filed a chapter 11 plan expires on Jan. 26, 2007. GUNDLE SLT: Weak Earnings Cue S&P Junk Rating on Senior Notes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Gundle/SLT Environmental Inc. to 'B-' from 'B+'. The outlook is stable. At the same time, Standard & Poor's lowered the issue rating on GSE's senior secured credit facilities to 'B' from 'B+', one notch above the corporate credit rating. Standard & Poor's also raised the recovery rating to '1' from '2' on the senior secured credit facilities, indicating a high expectation of full recovery of principal in a payment default. In addition, consistent with the lower corporate credit rating, Standard & Poor's lowered the rating on the company's senior unsecured notes to 'CCC' from 'B-'. As of Sept. 30, 2006, the company had about $187 million of debt outstanding. "The downgrade reflects weaker-than-expected operating earnings and cash flow, resulting in the deterioration of liquidity and key credit protection measures," said Standard & Poor's credit analyst Robyn Shapiro. While Standard & Poor's expect adverse working capital trends to reverse in the months ahead due to seasonality and lower raw material costs, business conditions could remain challenging. Because of the highly competitive environment in the geomembrane industry, selling prices and operating margins are likely to decrease with expected capacity additions worldwide. Also, GSE's contractual agreement with Waste Management Inc., which accounts for 13% of sales, is set to expire on Dec. 31, 2006. Although the terms and conditions of GSE's new arrangement with Waste Management have not been finalized, management anticipates that once the existing contract expires, revenues and profitability will be hurt as a result. The ratings on Houston, Texas-based GSE reflect the limited scope of the company's operations, the commodity nature of its products, vulnerability to fluctuating raw material costs, and a highly leveraged financial risk profile. Partially offsetting factors include the company's market position as the largest manufacturer of geomembrane liners, its global manufacturing and distribution capabilities, and relatively stable end markets. The ratings are supported by Standard & Poor's expectation that liquidity will improve significantly by year-end and the company will maintain sufficient liquidity under its revolving credit facility to withstand seasonal swings in working capital. Additionally, cost-cutting efforts as well as managements' strategic focus to diversify the business should lead to improving operating performance in the intermediate term. Standard & Poor's expect that GSE will approach any acquisition spending in a manner that does not erode credit quality. S&P also expect that the company will obtain covenant relief if necessary. If favorable developments during the next several months result in meaningful improvements in operating performance and credit measures, the rating agency could revise the outlook to positive. However, if raw material cost inflation or competitive pressures result in a further deterioration of operating results and liquidity, the outlook could be revised to negative or the ratings lowered. HARRAH'S OPERATING: Moody's Puts Ratings on Review & May Downgrade ------------------------------------------------------------------ Moody's Investors Service placed the ratings of Harrah's on review for possible downgrade reflecting a weakening liquidity cushion caused by the unresolved buy-out proposal that has delayed the company from going to market to refinance near term maturities. Harrah's is likely to draw on its $5.0 billion revolving credit facility to repay its 8.5% senior notes that mature on Nov. 2006 and to finance its pending $530 million acquisition of London Clubs. As a result, Moody's estimates revolver availability could drop to around $700 to $800 million by year-end 2006. This level of availability is insufficient to support the company's near term maturities of $500 million, 9.375% senior subordinated notes due Feb. 2007, and $500 million 5.375% senior notes due June 2007. Moody's is concerned that Harrah's may need to provide security for future borrowings which would result in a downgrade of the company's existing senior unsecured and subordinated bond ratings. The review for possible downgrade will focus on the company's plans to shore up its near term liquidity profile, as well as the outcome of the board's review of the pending buy-out offer or other debt financed initiatives to enhance shareholder value that could occur if the buy-out proposal does not go forward. As outlined in Moody's previous rating action, if an agreement is reached to take Harrah's private in an all debt financed transaction, Moody's estimates a potential downgrade to the single B rating category. If a transaction is not consummated, Moody's is concerned that management may face considerable pressure to increase returns to shareholders that would need to be financed with new debt. Ratings affected: * Issuer: Caesars Entertainment, Inc. -- Senior Unsecured, Placed on Review for Possible Downgrade, currently Baa3 -- Senior Subordinated, Placed on Review for Possible Downgrade, currently Ba1 -- Outlook, Changed To Rating Under Review From Negative * Issuer: Harrah's Operating Company, Inc. -- Senior Unsecured, Placed on Review for Possible Downgrade, currently Baa3 -- Multiple Seniority Shelf, Placed on Review for Possible Downgrade, currently (P)Baa3 / (P)Ba1 -- Senior Unsecured Commercial Paper, Placed on Review for Possible Downgrade, currently P-3 -- Outlook placed under review from negative Moody's last rating action was a change in Harrah's rating outlook to negative that occurred on Oct. 2, 2006. Headquartered in Las Vegas, Nevada, Harrah's Entertainment, Inc., through its wholly-owned subsidiary, Harrah's Operating Company, Inc., operates 37 casinos, primarily under the Harrah's, Caesar's, and Horseshoe brand names. HEARTLAND PARTNERS: Disclosure Approved & Modified Plan Confirmed ----------------------------------------------------------------- The Honorable Eugene R. Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago: -- approved Heartland Partners L.P and its debtor-affiliates' disclosure statement, and -- confirmed the Debtors' Second Amended Joint Plan of Liquidation. Judge Wedoff determined that the Modified Plan satisfies the 13 standards for confirmation under Section 1129(a) of the Bankruptcy Code. Overview of the Plan All of the Debtors' property will either be sold, liquidated, or abandoned. As of the Plan Effective Date, the Liquidation Proceeds and all other property of each Debtor's Estate will be transferred, conveyed, and assigned to the Liquidating Trust. Liquidating Trust On or before the Plan Effective Date, the Debtors will establish a liquidating trust in accordance with the Liquidating Trust Agreement. The Debtors will be deemed to have transferred the Liquidation Proceeds and all other property of the Debtors' Estates to the Liquidating Trust pursuant to the terms of the Liquidating Trust Agreement. By confirmation of the Plan, the Bankruptcy Court will specifically approve and designate the Liquidating Trust and the Liquidating Trustee as representative of each Estate and will find that the Liquidating Trust and the Liquidating Trustee are acting on behalf of and for the benefit of the Liquidating Trust's beneficiaries. Terms of the Plan The Debtors are classified in these classes: Class No. Debtor --------- ------ 1 CMC Heartland Partners 2 Heartland Development Corporation 3 Heartland Partners, L.P. 4 CMC/Heartland Partners Holdings, Inc. 5 HTI Interests, LLC These classes will be paid in full: -- Class 1A Non-Tax Priority Claims, -- Class 2A Non-Tax Priority Claims, -- Class 3A Non-Tax Priority Claims, -- Class 4A Non-Tax Priority Claims, and -- Class 5A Non-Tax Priority Claims. Allowed Class 1B, 2B, 3B, 4B, and 5B LaSalle's Secured Claim is impaired. Under the Plan, LaSalle's security interest will attach to the Trust Assets, and LaSalle is entitled to all rights and remedies under the Letter of Credit. Holders of Class 1C, 2C, 3C, 4C, and 5C Other Secured Claims have a first priority interest in the collateral securing their claim. At the Debtors' election, the holder will receive the collateral securing its claim or the liquidation proceeds of the collateral less the cost of liquidation. On the Plan effective date or as soon as practicable, holders of Class 1D, 2D, 3D, 4D, and 5D General Unsecured Claims will receive cash equal to their pro rata share of the liquidation proceeds. Holders of Class 1F, 2F, 3F, 4F, and 5F Equity Interests will not receive anything under the Plan. A full-text copy of the Debtors' Modified Plan of Liquidation is available for a fee at: http://www.researcharchives.com/bin/download?id=061113225735 Headquartered in Chicago, Illinois, Heartland Partners, LP, (Amex: HTL) is a based real estate limited partnership with properties, primarily in the upper Midwest and northern United States. CMC Heartland is a subsidiary of Heartland Partners, L.P. and is the successor to the Milwaukee Road Railroad, founded in 1847. The company and four of its affiliates filed for chapter 11 protection on Apr. 28, 2006 (Bankr. N.D. Ill. Case No. 06-04764). Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed total assets of $4,375,000 and total debts of $3,951,000. The Debtors' consolidated list of 20 largest unsecured creditors, however, showed more than $30 million in environmental litigation claims. HEXION SPECIALTY: Amends Pact for $2 Billion Credit Facilities -------------------------------------------------------------- Hexion Specialty Chemicals Inc., amended its senior secured credit facility pursuant to an amendment and restatement of the credit agreement governing the credit facility. The amended and restated credit agreement provides that the Company's current seven-year $1.625 billion term loan facility will remain outstanding, and also provides for an additional $375 million seven-year term loan facility, with the term beginning in May 2006. It also provides that the Company's current seven-year $50 million synthetic letter of credit facility will remain outstanding, with the term beginning in May 2006. The Company disclosed that it continues to have access to the $225 million revolving credit facility. Sale of Senior Secured Notes The Company, on Nov. 3, 2006, through its wholly owned finance subsidiaries, Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, sold $200 million of Second-Priority Senior Secured Floating Rate Notes due 2014 and $625 million of 9 3/4% Second- Priority Senior Secured Notes due 2014. The Notes were issued under an Indenture, dated Nov. 3, 2006, among Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, certain guarantors named therein, and Wilmington Trust Company, as Trustee. The Floating Rate Notes bear interest at a rate per annum, reset quarterly, equal to LIBOR plus 4.50%, provided, that, if a Note Registration Default occurs, up to 1% of additional interest will accrue on the Floating Rate Notes. Interest will be paid quarterly in arrears to the holders of record of the Floating Rate Notes on February 15, May 15, August 15 and November 15 of each year commencing on Feb. 15, 2007. The Fixed Rate Notes bear interest at a rate per annum of 9 3/4%, provided, that, if a Note Registration Default occurs, up to 1% of additional interest will accrue on the Fixed Rate Notes. Interest will be paid semi-annually in arrears to the holders of record of the Notes on May 15 and November 15 of each year commencing on May 15, 2007. The terms of the Notes are substantially identical to the indenture, dated as of Aug. 12, 2004. However, are not fungible with the previously issued second-priority notes. Under the terms of the Indenture, the Company is subject to certain customary covenants, that, among other things, restrict its ability to create liens on its assets, incur debt at its subsidiaries or enter into sale leaseback transactions, subject to a number of important qualifications and exceptions. The Indenture also specifies certain events of default, including failure to pay principal and interest on the Notes, failure to comply with covenants, subject to a grace period in certain instances, and certain bankruptcy, insolvency or reorganization events. Notes Registration Rights Agreement In connection with the sale of Floating Rate Notes and Fixed Rate Notes, the Company and certain of our wholly owned subsidiaries, including Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC, entered into a registration rights agreement with Credit Suisse Securities (USA) LLC, as representative of the initial purchasers of the Notes. Pursuant to the registration rights agreement, the Company agreed to file a registration statement to exchange the Notes for new notes, with substantially identical terms to the Notes being exchanged. It also agreed to cause the Note Exchange Offer Registration Statement to be declared effective under the Securities Act and to offer the new notes in exchange for surrender of the Notes. For each Note validly tendered, the Company will issue to the holder of the Note a new note, which will be freely transferable by holders other than its affiliates after the exchange offer without further registration under the Securities Act. In certain circumstances and subject to certain conditions, the Company agreed to cause a shelf registration statement covering resales of the Notes to be declared effective and to keep it effective for a period up to Nov. 3, 2008. The Company also agreed that if it fails to timely file a Note Exchange Offer Registration Statement or a Note Shelf Registration Statement or if certain other conditions are not met, it will pay additional cash interest on the Notes or new notes at the rate of 0.25% per annum for the first 90-day period immediately following the occurrence of a Note Registration Default, and will increase by an additional 0.25% per annum for subsequent 90-day period up to a maximum of 1% per annum until the earlier of the cure of the Note Registration Default or Nov. 3, 2008. Intercreditor Agreement On Nov. 3, 2006, the Company entered into an intercreditor agreement governing the relationship between creditors under its senior secured credit facility and creditors under the Notes with respect to certain shared collateral. Pursuant to the terms of the intercreditor agreement, at any time at which first-priority secured obligations are outstanding, the intercreditor agent, initially, JPMorgan Chase Bank, N.A., the administrative agent under the senior secured credit facility, will determine the time and method by which the security interests in the collateral securing the Notes and the senior secured credit facility will be enforced. The trustee under the Notes will not be permitted to enforce the security interests securing the Notes except, in any insolvency or liquidation proceeding, as necessary to file a claim or statement of interest with respect to the Notes or as necessary to take any action in order to create, prove, preserve, perfect or protect its rights in the second-priority liens. The intercreditor agreement further provides that, so long as there are first-priority secured obligations outstanding: (i) the holders of first-priority secured obligations may direct the intercreditor agent to take actions with respect to the shared collateral without the consent of the holders of the Notes; (ii) the Company may require the trustee under the Notes to agree to modify the applicable security documents or the intercreditor agreement, without the consent of the trustee under the Notes and the holders of the Notes, to secure additional extensions of credit and add additional secured creditors so long as the modifications do not expressly violate the provisions of the senior secured credit agreement or the Indenture; and (iii) the holders of the first-priority secured obligations may change, waive, modify or vary the security documents without the consent of the holders of the Notes, provided that the change, waiver or modification does not materially adversely affect the rights of the holders of the Notes and the other secured creditors. Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://hexionchem.com/-- makes thermosetting resins (or thermosets). Thermosets add a desired quality (heat resistance, gloss, adhesion) to a number of different paints and adhesives. Hexion also makes formaldehyde and other forest product resins, epoxy resins, and raw materials for coatings and inks. The Company has 86 manufacturing and distribution facilities in 18 countries. * * * As reported in the Troubled Company Reporter on Oct. 23, 2006 Standard & Poor's Ratings Services lowered its corporate credit rating on Hexion Specialty Chemicals Inc. to 'B' from 'B+'. The outlook is stable. S&P also lowered the rating on the existing $225 million first-lien senior secured revolving credit facility to 'B' from 'B+'. As reported in the Troubled Company Reporter on Oct. 19, 2006 Moody's Investors Service assigned B3 ratings to the new guaranteed senior secured second lien notes due 2014 of Hexion Specialty Chemicals Inc. HOLLINGER INT'L: Balance Sheet Upside-Down by $322MM at Sept. 30 ---------------------------------------------------------------- Sun-Times Media Group, Inc., fka Hollinger International Inc., reported a $34.9 million net loss for the third quarter ended Sept. 30, 2006, compared to a $9.1 million loss in the third quarter of 2005. The loss from continuing operations was also $34.9 million, compared to a loss from continuing operations of $10.8 million in the third quarter of 2005. The loss from continuing operations for the nine months ended Sept. 30, 2006 was $41.3 million, compared with a loss of $51.7 million for the nine months ended Sept. 30, 2005. The Company's balance sheet at Sept. 30, 2006, showed $905,298,000 in total assets and $1,227,326,000 in total liabilities, resulting in a $322,028,000 stockholders' deficit. STNG Operating Segment Results Total operating revenues for the third quarter were $99.1 million compared with $113.6 million in the year-ago period. All of the Company's revenues are generated by its Sun-Times News Group operating segment. Advertising revenues in the third quarter were $76.4 million, down $12.5 million, or 14%, compared with the prior year period. The Company estimates that newspaper print advertising declined approximately 9.7% in the third quarter for the greater Chicago market versus the comparable period in 2005. This compares with 2.6% in the first quarter and 7.5% in the second quarter, respectively. STNG's advertising revenue performance lagged the Chicago market in the third quarter largely due to weakness at the Chicago Sun- Times, as well as at publications in the southwest suburbs, including the Daily Southtown. Consistent with the Company's expectations, its suburban titles, excluding the southwest suburban publications, modestly improved their market share of print advertising revenue in the third quarter versus the year-ago period. Circulation revenues in the third quarter were down 8% compared with the same period a year ago. The $1.7 million decline reflects lower single-copy sales and continued competitive discounting of home subscription rates. Newsprint expense in the third quarter was $15.1 million, down 12% from the prior year period. Total newsprint consumption was down 22% due to lower circulation and page volumes, as well as planned reductions of page sizes of many of STNG's titles. Reduced consumption more than offset an approximately 13% increase in average cost per metric ton compared to the third quarter of last year. STNG segment compensation expense declined $900,000 to $43.2 million in the third quarter due to lower headcount resulting from reorganization efforts and attrition, which more than offset wage increases and $500,000 additional severance costs. Other operating costs increased by $500,000 to $33.1 million in the third quarter from the comparable period a year ago due to increased professional fees of $1.3 million, largely to support the reorganization effort, and increased advertising and marketing expense of $500,000, partially offset by lower bad debt expense of $500,000, and cost savings. Investment & Corporate Group Operating expenses of the Investment and Corporate Group were $19.7 million in the third quarter, up $1.6 million from the same period last year, largely due to severance costs of $4.1 million related to the planned closing of the Company's New York office at year end. Spending related to the Special Committee investigation and litigation was $6.7 million in the 2006 third quarter, down $2.6 million from the same period a year ago. Lower costs related to the Special Committee, together with a decrease in wages of approximately $1.7 million, were partially offset by a $2.6 million increase in other legal and professional fees, largely due to increases in internal audit and compliance activities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?1514 Gordon A. Paris, Chief Executive Officer, said, "We have taken significant steps to improve our cost structure and address the challenging market and competitive environment. There is more work to do. The Company has a valuable collection of titles with strong brand identity. We are exploring ways to better leverage these brands to improve our profitability. In particular, with respect to the Chicago Sun-Times, we are analyzing alternatives to reposition and reenergize that property to more effectively meet the needs of our targeted print and online readers and advertisers. We also continue to better align our cost structure with our revenue base, with efficiencies that include the previously announced Gary and Harlem plant closures, aggressive working capital management, reductions in newsprint consumption, and a series of other measures to reduce costs. "At the same time, in our continuing efforts to maximize shareholder value, the Board is very focused on resolving the outstanding non-operating issues facing the Company, and we are actively assessing a broad array of options across the Company and its assets," concluded Mr. Paris. The Board is currently engaged in a search for a new Chief Executive Officer to be based in Chicago. The Board expects to announce an appointment shortly. Stock Option Practices Review Sun-Times is conducting an investigation into stock option awards to executives and key employees through 2003, when the Company ceased granting stock options. The investigation is being conducted by the Special Committee of the Board of Directors. While the investigation is not yet complete, preliminary results indicate that the grant dates on some stock option awards were misdated between 1999 and 2002. Based upon the preliminary results, management believes that the amounts resulting from option misdating do not have a material impact on the financial statements for the relevant periods. However, the Company will need to determine whether any of these instances were intentional, which could require the restatement of affected prior year results. About Hollinger International Hollinger International Inc., nka Sun-Times Media Group, Inc -- http://www.hollingerinternational.com/-- is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area. HOLLINGER INT'L: Chancery Court Approves $50 Million Settlement --------------------------------------------------------------- Sun-Times Media Group, Inc., fka Hollinger International Inc., reported Monday that the Delaware Court of Chancery has approved a settlement of the claims brought against certain of the Company's former independent directors in a derivative action filed by Cardinal Value Equity Partners in December 2003. The settlement, which was originally disclosed in May 2005, provides for the payment of $50 million to the Company. The settlement will be funded by proceeds from certain of the Company's executive and organization liability insurance policies. Of the $50 million to be received by the Company, $2.5 million will be paid to Cardinal's counsel as attorneys' fees. The Court also approved a previously announced $2.8 million settlement with former Company executive Peter Y. Atkinson. Gordon A. Paris, Chief Executive Officer and Chairman of the Special Committee of the Board of Directors, commented, "We are pleased that the Delaware Chancery Court has approved these settlements. The Special Committee is committed to continuing our efforts to obtain additional recoveries for the Company." The former directors who are parties to the Cardinal settlement are: * Richard R. Burt * Henry A. Kissinger * Shmuel Meitar * James R. Thompson * Dwayne O. Andreas * Raymond G. Chambers * Marie-Josee Kravis * Robert S. Strauss * A. Alfred Taubman * Lord Weidenfeld * Leslie H. Wexner. The settlement agreement contains no admission of wrongdoing or liability by any of these individuals. The proceeds of the Cardinal suit settlement will be held in escrow until the resolution of any appeal of the order approving the settlement. As part of the settlement, Cardinal's claims against the remaining defendants: * Conrad M. Black * Barbara A. Black * Daniel W. Colson * Richard N. Perle * F. David Radler * Bradford Publishing Company * Horizon Publications, Inc. will be dismissed without prejudice. The dismissal without prejudice will enable the Special Committee to continue to pursue the Company's claims against Mr. and Mrs. Black, Mr. Radler, Mr. Colson, Mr. Perle, John A. Boultbee, Hollinger Inc., Ravelston Corporation Limited, and Ravelston Management Inc. in the U.S. District Court for the Northern District of Illinois. That litigation has been stayed pending the outcome of a criminal case that the United States Attorney for the Northern District of Illinois has brought against certain of those individuals. The dismissal without prejudice also enables the Special Committee to pursue claims against Bradford Publishing Company and Horizon Publications, Inc. About Hollinger International Hollinger International Inc., nka Sun-Times Media Group, Inc -- http://www.hollingerinternational.com/-- is a newspaper publisher whose assets include The Chicago Sun-Times and a large number of community newspapers in the Chicago area. HOME EQUITY: Moody's Rates Class B-1 Subor. Certificates at Ba1 --------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Home Equity Mortgage Trust 2006-5 and ratings ranging from Aa1 to Ba1 to subordinate certificates in the deal. The securitization is backed by various originators originated, fixed-rate, closed end second mortgage loans acquired by DLJ Mortgage Capital, Inc. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by subordination, excess spread, overcollateralization, and the interest-rate swap agreement provided by Credit Suisse International. Moody's expects collateral losses to range from 7.9% to 8.6%. Select Portfolio Servicing, Inc. and Ocwen Loan Servicing, LLC will service the loans, and SPS will act as master servicer. Moody's has assigned SPS its servicer quality rating of SQ2- as a servicer of second-lien mortgage loans. These are the rating actions: * Home Equity Mortgage Trust 2006-5 * Home Equity Mortgage Pass-Through Certificates, Series 2006-5 Cl. A-1, Assigned Aaa Cl. A-2, Assigned Aaa Cl. A-3, Assigned Aaa Cl. A-IO,Assigned Aaa Cl. M-1, Assigned Aa1 Cl. M-2, Assigned Aa2 Cl. M-3, Assigned Aa3 Cl. M-4, Assigned A1 Cl. M-5, Assigned A2 Cl. M-6, Assigned A3 Cl. M-7, Assigned Baa1 Cl. M-8, Assigned Baa2 Cl. M-9, Assigned Baa3 Cl. B-1, Assigned Ba1 IMPSAT FIBER: Will be Acquired by Global Crossing for $95 Million ----------------------------------------------------------------- Global Crossing Ltd. has agreed to acquire IMPSAT Fiber Networks Inc. for $9.32 in cash for each share of Impsat common stock, representing a total equity value of approximately $95 million. Global Crossing will assume, refinance, and repay Impsat's debt, which was $241 million as of June 30, 2006. Impsat's cash balance as of June 30, 2006, was $23 million, resulting in a net debt balance of $218 million at that date. The transaction is expected to close in the first quarter of 2007. The acquisition of Impsat will accelerate Global Crossing's strategy to provide converged Internet provider services to enterprises and carriers globally, in addition to enhancing the company's financials. Impsat, as a leading Latin American provider of IP, hosting and value-added data solutions, will add over 4,500 customers to Global Crossing's ranks, all of which are supported by a world class sales and customer care team with local presence in seven Latin American countries. Impsat's extensive IP-based intercity network, 15 metropolitan networks and 15 advanced hosting centers will provide a greater breadth of services and coverage to Global Crossing's Latin American operations. Impsat will also add scale to the company's regional presence and will enhance its competitive position as a global service provider to multinational enterprises and carrier customers. Global Crossing expects the acquisition to contribute annual revenue of more than $270 million, and to yield annual Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization of more than $70 million after operational synergies are fully realized. Annual operational savings after integration are expected to be more than $10 million. Integration of the business is expected to be completed 12 to 18 months after closing of the transaction, at a one-time cost of approximately $10 million. John Legere, Global Crossing's chief executive officer, said, "The combination of Impsat's data-centric customer set, extensive Latin American network and managed IP capabilities with Global Crossing's proven ability to deliver converged IP services on a global scale is a compelling win for the customers of both companies. "The Impsat acquisition, along with our recently completed acquisition of Fibernet in the UK, demonstrates our strategic and focused participation in industry consolidation. We will aggressively pursue those opportunities that would enhance our core business, expand our service capabilities and improve our financials." Global Crossing and Impsat have had a commercial relationship since 2000, when Global Crossing selected Impsat as one of its providers of Point of Presence facilities for Global Crossing's Latin American network, known as South American Crossing. Impsat has also been a customer of Global Crossing in Latin America since 2000. This longstanding relationship means that customers of both companies should enjoy a seamless transition following closing of the transaction. Ricardo Verdaguer, Impsat's chief executive officer, noted, "This transaction demonstrates the value created by Impsat within the telecommunications industry in Latin America and represents an attractive offer to our shareholders. "Our service-oriented employees and portfolio of IP- based products and services mesh perfectly with Global Crossing's strategy and culture, which emphasize technology, security, customer support and control. I believe combining our companies will enhance the solutions we provide customers, create economies of scale and further serve the economic development objectives of the Latin American region." At closing of the acquisition, Global Crossing expects to use approximately $160 million of its existing cash for equity payments to Impsat shareholders, transaction expenses and repayment of a limited amount of indebtedness. In addition, Global Crossing has obtained a financing commitment from Credit Suisse for up to $200 million to refinance most of the Impsat debt that is not being repaid at closing. Global Crossing has obtained a financing commitment for approximately $95 million from ABN Amro to finance its previously announced acquisition of Fibernet Group plc in the United Kingdom. Together, the two financing arrangements, which are subject to customary closing conditions, are intended to preserve sufficient cash reserves to enable Global Crossing to pursue additional growth opportunities that may arise, including those being generated by industry consolidation. The transaction is subject to the approval of Impsat's common shareholders, certain debt holders, certain regulatory approvals and other closing conditions. Under separate agreements, Morgan Stanley & Co., a significant shareholder and debt holder of Impsat; W.R. Huff Asset Management Co., a significant debt holder; and certain officers and directors of Impsat have agreed to support the transaction. The Blackstone Group is acting as sole financial advisor, and Latham and Watkins LLP and Jorge Ortiz y Asociados are acting as legal counsel to Global Crossing on the transaction. About Global Crossing Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunication services over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe including Bermuda, Argentina, Brazil, Chile, Mexico, Panama, Peru and Venezuela. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The company filed for chapter 11 protection on Jan. 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed US$25,511,000,000 in total assets and US$15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. About IMPSAT Fiber Networks IMPSAT Fiber Networks Inc. -- http://www.impsat.com/-- provides private telecommunications networks and Internet services in Latin America. The company owns and operates 15 data centers and metropolitan area networks in some of the largest cities in Latin America, providing services to more than 4,200 national and multinational companies, financial institutions, governmental agencies, carriers, Internet service providers and other service providers throughout the region. Impsat has operations in Argentina, Colombia, Brazil, Venezuela, Ecuador, Chile, Peru, the United States and throughout Latin America and the Caribbean. Going Concern Doubt In its audit report on the consolidated financial statements for year ended Dec. 31, 2005, auditors working for Deloitte & Touche LLP noted that IMPSAT Fiber Networks, Inc.'s current liquidity position, high debt obligations, and negative operating results raised substantial doubt as to its ability to continue as a going concern. INDUSTRIAL ENTERPRISES: Amends March 31, 2006 Financial Statements ------------------------------------------------------------------ Industrial Enterprises of America Inc. amends its financial statements on Form 10-QSB/A for the quarter period ended March 31, 2006, to the Securities and Exchange Commission. The company restated its financial statements, including the notes for the three months ended March 31, 2006, in order to correct an error in recording the sale of its operating assets under the equity method of accounting instead of recording the transaction as an arms' length transaction recognizing the fair market value of the securities received in the transaction. Restated 2006 Quarterly Results For the three months ended March 31, 2006, the Company incurred a $6.8 million net loss on $9 million of net revenues compared to a $851,341 net loss on $831,831 of net revenues for the same period in 2005. At March 31, 2006, the Company's restated balance sheet showed total assets of $34,573,958, total liabilities of $21,327,474 and total stockholders' equity of $13,246,484. A full-text copy of the Company's restated quarterly report is available for free at http://researcharchives.com/t/s?14f9 Going Concern Doubt Beckstead and Watts, LLP, in Henderson, Nevada, raised substantial doubt about Industrial Enterprises' ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended June 30, 2005. The auditor pointed to the Company's net losses from its inception, and its limited operations, since the Company has not commenced planned principal operations. About Industrial Enterprises of America Headquartered in New York City, Industrial Enterprises of America, Inc. (OTCBB:IEAM) is an automotive aftermarket supplier that specializes in the sale of anti-freeze, auto fluids, and other automotive additives & chemicals. The company has distinct proprietary brands that collectively serve the retail, professional, and discount automotive aftermarket channels. INDYMAC INDX: Moody's Rates Class M-10 Sub. Certificates at Ba1 --------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by IndyMac INDX Mortgage Loan Trust 2006-AR14 and ratings ranging from Aa1 to Ba1 to the subordinate certificates of this deal. The securitization is backed by first lien, adjustable-rate, negative amortization mortgage loans originated by IndyMac Bank, F.S.B. The ratings are based primarily on the credit quality of the loans and on protection from subordination, overcollateralization and excess spread. Moody's expects collateral losses to range from 1.05% to 1.25%. IndyMac Bank F.S.B. will service the loans. Moody's has assigned IndyMac Bank F.S.B its servicer quality rating of SQ2 as a primary servicer of prime first lien residential mortgage loans. These are the rating actions: * IndyMac INDX Mortgage Loan Trust 2006-AR14 * Mortgage Pass-Through Certificates, Series 2006-AR14 Cl. 1-A1A, Assigned Aaa Cl. 1-A1B, Assigned Aaa Cl. 1-A2A, Assigned Aaa Cl. 1-A3A, Assigned Aaa Cl. 1-A3B, Assigned Aaa Cl. 1-A4A, Assigned Aaa Cl. 1-A1AU, Assigned Aaa Cl. 1-A2AU, Assigned Aaa Cl. 1-A3AU, Assigned Aaa Cl. 1-A3BU, Assigned Aaa Cl. 1-A4AU, Assigned Aaa Cl. 1-AX, Assigned Aaa Cl. 2-A, Assigned Aaa Cl. 2-AX, Assigned Aaa Cl. M-1, Assigned Aaa Cl. M-2, Assigned Aa1 Cl. M-3, Assigned Aa1 Cl. M-4, Assigned Aa2 Cl. M-5, Assigned Aa3 Cl. M-6, Assigned A1 Cl. M-7, Assigned A2 Cl. M-8, Assigned Baa1 Cl. M-9, Assigned Baa2 Cl. M-10,Assigned Ba1 INTEGRATED HEALTHCARE: Restates 2006 1st & 2nd Quarter Financials ----------------------------------------------------------------- Integrated Healthcare Holdings Inc. filed with the Securities and Exchange Commission amended financial statements on Form 10-Q/A for the quarterly periods ended March 31 and June 30, 2006, in the overstatement of net revenues and accounts receivable. According to the company, the restatements with respect to its financial statements for these periods were necessary to write off patient accounts receivable for services provided under capitated contracts. Restated 2006 Quarterly Results At March 31, 2006, the Company's restated balance sheet showed total assets of $132,883,713 and total liabilities of $161,279,718 resulting in a total stockholders' deficit of $28,396,005. The Company's March 31 balance sheet also showed strained liquidity with $73,123,217 in total current assets and $153,299,970 in total current liabilities. For the three months ended March 31, 2006, the company reported $2.5 million of net income on $86,163,974 of net revenues. At June 30, 2006, the Company's restated balance sheet showed total assets of $133,341,527 and total liabilities of $160,409,681 resulting in a total stockholders' deficit of $27,068,154. The Company's June 30 balance sheet also showed strained liquidity with $74,444,424 in total current assets and $152,775,883 in total current liabilities. For the three months ended June 30, 2006, the company earned $1.3 million on $89.8 million of net revenues compared to a $10.1 million net loss on $83.1 million of net revenues for the same period in 2005. A full-text copy of the Company's Restated Financial Report for the Year Ended March 31, 2006, is available for free at: http://researcharchives.com/t/s?14f6 A full-text copy of the Company's Restated Financial Report for the Quarter Ended June 30, 2006, is available for free at: http://researcharchives.com/t/s?14f7 Going Concern Doubt As reported in the Troubled Company Reporter on Aug. 3, 2006, Ramirez International Financial & Accounting Services, Inc., in Irvine, California, raised substantial doubt about Integrated Healthcare Holdings, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditor pointed to the Company's losses, stockholders' deficiency, and need for additional capital to refinance debt. About Integrated Healthcare Holdings Based in Santa Ana, Calif., Integrated Healthcare Holdings, Inc., is a predominantly physician-owned company that acquired from Tenet Healthcare Corp. four hospital facilities representing approximately 12% of the hospital beds in Orange County, California: 282-bed Western Medical Center in Santa Ana; 188-bed Western Medical Center in Anaheim; 178-bed Coastal Communities Hospital in Santa Ana; and 114-bed Chapman Medical Center in Orange. J.P. MORGAN: S&P Removes Negative Watch on Junk Rated Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services removed its ratings on eight classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2004- CIBC8 from CreditWatch, where they were placed with negative implications on June 16, 2006. Concurrently, two of these eight ratings are lowered, and six are affirmed. In addition, 12 other ratings from the same transaction are affirmed. The former CreditWatch negative placements reflected the default of the 10th-largest loan, which S&P has continued to monitor. The CreditWatch resolutions follow Standard & Poor's receipt of updated valuation information from the special servicer, Midland Loan Services Inc., for the property securing the loan. The rating affirmations reflect credit enhancement levels that adequately support the ratings through multiple stress scenarios. The 10th-largest loan, with a balance of $25.6 million, was transferred to the special servicer in Jan. 2006 due to payment default. The loan is secured by the Parkwoods Apartments, an 826- unit multifamily property in Dallas, Texas, which is also encumbered by a $1.7 million B note held outside the trust. The loan is currently 90-plus-days delinquent. To date, $1.1 million in total advances have been made on behalf of the loan, which includes interest thereon. An appraisal reduction amount of $9.4 million is in effect related to this loan. Current occupancy for the collateral property is 60%. A March 2006 appraisal valued the property at $20 million. After receiving the appraisal, Midland learned that the property was subject to a Land Use Restrictive Covenants for Low-Income Housing Rents agreement, and that it was not in compliance. A receiver was appointed on March 27, 2006, and Midland further learned that the City of Dallas had cited the property for numerous and significant code violations. As a result, a new appraisal was ordered to determine the effect on value caused by the existence of the LURA, as well as by the $1.6 million in deferred maintenance and the actions brought by the City of Dallas. The appraisal, dated November 2006, states an "as-is" value of $11.9 million with the LURA in place. Excluding the LURA, the hypothetical as-is value is $13.2 million. The appraiser also referenced $1.6 million in deferred maintenance. Midland is attempting to take title to the property through foreclosure while also reviewing all possible remedies and options available to the trust, including, but not limited to, pursuing the carve-out guarantor. Standard & Poor's estimates that losses upon the eventual resolution of this asset will be substantial, which is reflected in the current rating actions. The rating agency will continue to closely monitor the loan to determine whether additional rating actions are warranted. As of Oct. 12, 2006, the trust pool consisted of 105 loans with an aggregate balance of $1.20 billion, down from $1.25 billion and the same number of loans at issuance. The master servicer, Capmark Finance Inc., provided year-end 2005 financial information for 100% of the pool. Based on this information and excluding defeased loans ($14.5 million, 1%), Standard & Poor's calculated a weighted average debt service coverage of 1.75x for the pool, up from 1.61x at issuance. All of the loans in the pool are current except for the Parkwoods Apartments loan, which is 90- plus-days delinquent. The only ARA in effect is related to the Parkwoods Apartments loan. To date, the trust has not experienced a loss. The top 10 loans, excluding the Parkwoods Apartments loan, have an aggregate outstanding balance of $543.1 million (46%) and a weighted average DSC of 2.14x, up from 1.82x at issuance. The increase is inflated, however, as five of the top 10 loans are currently in their interest-only periods and the DSC at issuance included the amortization of principal that has not yet commenced. Including the amortization of these loans, the actual DSC is 1.84x. The seventh-largest loan is on the watchlist and is discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. Two properties were was characterized as "excellent," while the remaining collateral was characterized as "good." Four of the top 10 loans in the pool exhibited credit characteristics consistent with those of investment-grade obligations at issuance and continue to do so. This includes the largest loan in the pool, which is a $153.1 million participation interest in a $439.3 million A note that is secured by the Forum Shops in Las Vegas. The loan continues to exhibit credit characteristics consistent with an 'AAA' rated obligation Capmark reported a watchlist of 15 loans with an aggregate outstanding balance of $140.1 million (11%), which includes one of the top 10 loans in the pool. The seventh-largest loan in the pool, 544 Third Avenue ($34.5 million, 3%), is secured by 126 units of a 31-story, 133-unit multifamily property and 1,118 sq. ft. of ground floor retail space on Third Avenue between 36th and 37th streets in Manhattan. The loan was placed on the watchlist due to low DSC. Net cash flow declined as a result of a lower gross income and an increase in expenses. Year-end 2005 occupancy was 94%, and DSC was 1.14x. Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced loans and those on the watchlist. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Lowered And Removed From Creditwatch Negative J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates Series 2004-Cibc8 Rating ------ Class To From Credit enhancement (%) ---- -- ---- ---------------------- N CCC CCC+/Watch Neg 1.54 P CCC- CCC/Watch Neg 1.29 Ratings Affirmed And Removed From Creditwatch Negative J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-CIBC8 Rating ------ Class To From Credit enhancement (%) ----- -- ---- ---------------------- H BBB- BBB-/Watch Neg 5.40 J BB+ BB+/Watch Neg 3.35 G BBB BBB/Watch Neg 5.40 K BB- BB-/Watch Neg 2.83 L B B/Watch Neg 2.32 M B- B-/Watch Neg 1.93 Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2004-CIBC8 Class Rating Credit enhancement(%) ----- ------ --------------------- A1 AAA 14.92 A-1A AAA 14.92 A2 AAA 14.92 A3 AAA 14.92 A4 AAA 14.92 B AA 12.35 C AA- 11.19 D A 8.88 E A- 7.72 F BBB+ 6.43 X1 AAA N/A X2 AAA N/A N/A - Not applicable. JO-ANN STORES: Moody's Reviews Ratings and May Downgrade -------------------------------------------------------- Moody's Investors Service downgraded all ratings of Jo-Ann Stores, Inc. and left the ratings on review for possible further downgrade. The downgrade is prompted by persistently negative comparable store sales and the potentially adverse impact on sales and cash flow. The review for downgrade also considers Moody's concern that operational performance and debt protection measures could continue to deteriorate during the key fourth quarter of the Jan. 2007 fiscal year to levels that are not appropriate for the current ratings. These ratings are lowered and left on review for possible further downgrade: -- Corporate Family Rating to B3 from B1; -- Probability of Default Rating to B3 from B1; -- $100 million senior subordinated note (2012) to Caa2, LGD5, 79%, from B3, LGD 5, 80%. Moody's does not rate the $425 million secured bank credit facility. Given about $120 million of revolving credit facility availability as of July 2006, Moody's recognizes Jo-Ann's currently adequate liquidity position. However, comparable store sales and margins have fared poorly over recent quarters as most categories have generated weaker results than industry peers. In Moody's view, customer count and sales conversion have fallen as potential customers have not found an appealing product selection and shopping environment at Jo-Ann. Moody's believes that the company's strategic options could considerably narrow if the fourth quarter is weak given our expectation that the new CEO may not have an impact until the second half of calendar 2007. During the review, Moody's will focus on: (a) prospects for sales and cash flow results during the forthcoming holiday season; (b) the company's liquidity and working capital profile over the next four to six quarters, and; (c) the strategic alternatives available to the company's new senior management team. Ratings could be confirmed if Moody's becomes comfortable that revenue and debt protection measures will become appropriate for the assigned ratings in 2007. Jo-Ann Stores, headquartered in Hudson, Ohio, is a fabric and craft specialty retailers. The company operates 817 retail locations in 47 states. Revenue for the twelve months ending July 29, 2006 was $1.9 billion. KANSAS CITY: Moody's Rates Senior Unsecured Notes due 2013 at B3 ---------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Kansas City Southern de Mexico S.A de C.V.'s issue of senior unsecured notes due 2013. Moody's will withdraw the rating on KCSM's 10.25% senior unsecured notes due 2007. Also, Moody's changed the ratings outlook to stable from negative for KCSM, Kansas City Southern Railway Company and Kansas City Southern. KCSM is highly leveraged compared to other railroad competitors, with credit metrics that are consistent with other issuers at the B3 rating level. The company operates a geographically attractive railway concession in Mexico and has shown strong recent improvement in operating performance, somewhat lagging the trend of the rest of the industry however. KCSM is highly sensitive to conditions in the Mexican economy and to Mexican regulation and has a particularly high exposure to local automotive production levels. In addition, "KCSM has significant ongoing capital spending requirements, especially for locomotives, which will likely limit sustained improvement in credit metrics" according to Bob Jankowitz, Senior Vice President at Moody's. KCSM's debt level will not change as proceeds of the 2013 Notes will pay for the 10.25% Notes tendered under KCSM's current Tender Offer. Because a substantial portion of the 10.25% Notes has been tendered to date, Moody's will withdraw the rating on these notes. However, issuing the 2013 Notes at this time will ease the near term refinancing risk considerably, particularly since a condition of KCSM's bank facility requires the outstanding 10.25% Notes to be refinanced in March, 2007 at the latest. In addition, KCSM is expected to renegotiate its bank term loan to extend out the amortization schedule. These financing actions at KCSM, combined with much better operating performance at both railroads and management's efforts to control the cash position, have improved liquidity for both KCSM and KCSR. Moody's expectations of adequate near-term liquidity and some further operating improvement drove the revision in the rating outlook to stable from negative. Moody's notes that KCSM's 2013 Notes will not be guaranteed by either KCSR or KCS. Similarly, the KCSR debt is not guaranteed by KCSM. Kansas City Southern de Mexico owns the concession to operate Mexico's northeast railway. MAJESTIC HOLDCO: Lower Revenues Cue Moody's to Revise Outlook ------------------------------------------------------------- Moody's Investors Service revised Majestic HoldCo, L.L.C.'s rating outlook to negative from stable in response to a continued decline in the company's overall year-to date operating performance due primarily to lower revenues and market share as well as a significant increase in promotional expenses in the Northern Indiana gaming market. As a result of this year-to-date trend, Majestic Star's debt/EBITDA is close to 6.8x taking into account a full year of the Trump acquisition that occurred in Dec. 2005, putting Majestic Star's leverage at the very low end of the 'B' indicated rating category for that particular metric, according to Moody's Global Gaming methodology. Majestic Holdco, LLC's B2 corporate family and Caa1 senior discount note ratings, along with Majestic Star Casino, LLC's B1 senior secured note and Caa1 senior unsecured note ratings, were affirmed, although further declines over the next two quarters would likely result in a ratings downgrade. Majestic Star's two Indiana casino properties generate a majority of the company's consolidated revenues and EBITDA. On a year-to-date basis, Majestic Star's Northern Indiana properties have experienced a 13.5% decline in gross gaming revenues while the Northern Indiana gaming market overall has increased about 5%. Gross gaming revenues were impacted by highway construction on the roads leading from Chicago as well as increased promotional activity by the other riverboats in the Northern Indiana market. Boyd Gaming Blue Chip casino experienced a 22.6% increase in year-to-date gross gaming revenues through October 2006 following the opening of its single level barge earlier this year. During that same period, Resorts East Chicago experienced a 13.3% increase in gross gaming revenues through October 2006 driven by its increased marketing efforts to capture lost market share. In addition to lower top line performance, Majestic Star's cash flow and profitability was negatively impacted by the increase in its promotional and complimentary expenses as management attempted to improve the level of gaming play of existing customers and to re-introduce the gaming facilities to customers that patronized the Indiana properties prior to the acquisition and integration of Trump Indiana. Majestic Star has brought in new management at the Indiana properties in an effort to improve operating results. This, along with a growing, albeit increasingly competitive, Northern Indiana market, gives the company an opportunity to stabilize it results over the next 6 to 12 month period. Management stated that the fourth quarter continues to be a building quarter and expects to benefit from its marketing initiative sometime in the first quarter of 2007. If this does not occur, the company will likely be downgraded. MARK PARKER: Chapter 15 Petition Summary ---------------------------------------- Petitioner/Foreign Representative: Timothy Newson Debtor: Mark Steven Parker 8052 Taxahaw Road Kershaw, SC 29067 Case No.: 06-05212 Chapter 15 Petition Date: November 14, 2006 Court: District of South Carolina (Columbia) Petitioner's Counsel: William E. Hopkins, Jr., Esq. McCutchen Blanton Johnson & Barnette LLP 1414 Lady Street Columbia, SC 29201 Tel: (803) 799-9791 Estimated Assets: $50,000 to $100,000 Estimated Debts: $100,000 to $500,000 MESABA AVIATION: Wants Complaint on Labor Agreements Stayed ----------------------------------------------------------- On behalf of Mesaba Aviation, Inc., Timothy R. Thornton, Esq., at Briggs and Morgan P.A., in Minneapolis, Minnesota, tells the Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota that the Debtor has reached tentative labor agreements with the Air Line Pilots Association, International, the Association of Flight Attendants-CWA, AFL-CIO, and the Aircraft Mechanics Fraternal Association. Accordingly, the Debtor asks Judge Kishel to enter a ruling staying the complaint pending the results of the Unions' votes on the tentative agreements. Mr. Thornton asserts that staying the complaint is appropriate, because: (a) a stay will further the appropriate role of the courts in dispute resolution under the Railway Labor Act; (b) the issues presented on appeal by the Unions will be moot upon completion of the votes and ratification of the tentative agreements; (c) a stay will conserve precious resources of the courts, the Debtor and the Unions; and (d) the Unions will not be materially harmed by a stay, particularly since the Debtor has not exercised its Section 1113 of the Bankruptcy Code right to implement terms. According to Mr. Thornton, the Unions' members will complete ratification voting by the end of November 2006. A stay will permit the RLA's dispute resolution process to come to fruition without litigation dissonance. Mr. Thornton explains that if the complaint is not stayed, the appeals would plow forward without regard for the parties' major dispute resolution success and the Debtor's meager assets. Moreover, a stay will allow the parties to consider tentative agreement ratification without distracting parallel litigation. Unless a response in opposition is filed not later than Nov. 15, 2006, Judge Kishel may grant the request without a hearing. Judge Kishel had enjoined the Unions from calling, instigating, and engaging in any strikes, work stoppages, and other concerted refusal to perform normal employment duties. 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. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: MAIR Wants Panel Barred from Challenging Payments ----------------------------------------------------------------- MAIR Holdings, Inc., Mesaba Aviation, Inc.'s parent company, asks the Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota to bar the Debtor's estate from challenging its 2002 Dividend Transfers and administrative expense payments. MAIR Holdings also ask the Court to deny the Debtor's Official Committee of Unsecured Creditors' request to void these dividend transactions. As reported in the Troubled Company Reporter on Nov. 14, 2006, the Creditors' Committee has repeatedly alleged that MAIR Holdings is the recipient of improper payments and dividends from the Debtor, since its appointment in the Debtor's bankruptcy case. Kenric D. Kattner, Esq., at Haynes and Boone, LLP, in Houston, Texas, asserted that every payment and dividend that MAIR received from the Debtor was appropriate under applicable law, and occurred in the ordinary course of the Debtor's business. Moreover, the Debtor was solvent at the time it made each payment and dividend, and it remained solvent and able to pay its obligations after each payment or dividend to MAIR. On June 30, 2003, MAIR and the Debtor entered into a management services agreement pursuant to which MAIR provides to the Debtor financial and administrative services and incurs expenses on behalf of, and for the Debtor's benefit. As a result of an actual controversy between the parties involving the Dividend Transfers and the MSA, MAIR specifically asked the Court to declare that: (1) The Debtor's estate is barred from challenging the Dividends that occurred on April 30, November 30, and Aug. 31, 2002, based on the expiration of limitations, and the estate cannot recover these Dividends from, or assert an action against MAIR; (2) The Dividends were permitted distributions under governing Minnesota law, and the estate cannot recover these Dividends from, or assert an action against MAIR; and (3) The Dividends and the MSA Transfers are not subject to avoidance under Sections 544 and 548 of the Bankruptcy Code. The Creditors' Committee subsequently asked the Court to void the $10.9 million prepetition dividend transfers and other administrative payments to MAIR Holdings, Inc., and to direct MAIR Holdings to return these transfers to the Debtor's estate. MAIR Talks Back However, Mr. Kattner argues that the Creditors Committee's counterclaims are barred by (a) limitations, (b) principles of set-off, recoupment, or other equitable principles, and (c) the doctrines of waiver and estoppel. Mr. Kattner notes that applicable Minnesota law bars the Creditors Committee's counterclaims to the extent that they seek to avoid dividends. The doctrine of in pari delicto bars the counterclaims to the extent that they are premised on the Debtor's wrongdoing. Mr. Kattner says MAIR admits that Mesaba generated approximately 95% of MAIR's consolidated operating revenue in fiscal year 2005. However, MAIR denies the allegation that Mesaba's operations generated all of MAIR's net income in 2005. Since 1996, the Debtor subleased 11 of its aircraft from Pinnacle Airlines, Inc., Mr. Kattner explains. MAIR further denies any implication that the Management Services Agreement Transfers or the "One Year Transfers" rendered the Debtor insolvent or incapable of meeting its obligations or conducting its business. MAIR submits that it received the MSA Transfers and One Year Transfers from the Debtor in good faith, and the Creditors Committee cannot establish that any transfer to MAIR is avoidable under applicable law. Additionally, Mr. Kattner says, MAIR admits that the Debtor paid quarterly management fees to MAIR under the MSA, but denies any implication that MAIR did not provide services under the MSA, or that the Debtor did not receive value in exchange for payments made pursuant to the MSA. With respect to the appointment of Mesaba's Board of Directors, MAIR, as the Debtor's sole shareholder, has elected the members of the Board of Directors in accordance with Minnesota law, Mr. Kattner asserts. He explains that Mesaba's by-laws require the Debtor to obtain MAIR's consent or a waiver of consent before it engages in certain significant acts. MAIR denies any allegations that (a) it mischaracterized the content of its proof of claim, and (b) its claims against the Debtor are invalid or subject to disallowance. Against this backdrop, MAIR asks Judge Kishel to declare that it is entitled to recover: (a) the $31,700,000 contribution it made to the Debtor under the terms of the MAIR-Northwest Agreement, except to the extent the contribution is considered an equity investment by MAIR and is so recoverable under applicable priority provisions of the Bankruptcy Code; and (b) any amounts from the Debtor under the MSA or to assert any rights against the Debtor under the MSA for indemnification, missed payments, or otherwise. Rule 7007.1 Statement Pursuant to Rule 7007.1 of the Federal Rules of Bankruptcy Procedure, MAIR informs the Court that: (a) Northwest Airlines Corporation owns 27.5% of its outstanding shares; and (b) Donald Smith & Co., Inc., owns 10% of its outstanding shares. "There are no other corporations that own 10% or more of any class of the equity interests in MAIR," Mr. Kattner says. 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. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: Wants Preliminary Injunctive Relief To Be Final ---------------------------------------------------------------- The Air Line Pilots Association, International, the Association of Flight Attendants-CWA, AFL-CIO, and the Aircraft Mechanics Fraternal Association ask the Honorable Gregory F. Kishel of the U.S. Bankruptcy for the District of Minnesota to rule that the injunctive relief ruling given by the Bankruptcy Court on Oct. 23 is a final order, and that they have the right to an immediate appeal pursuant to Section 158(a)(1) of the Judiciary Procedures Code as a matter of right. Alternatively, the Unions ask the Court to grant them leave to appeal pursuant to Section 158(a)(3). The Unions had previously appealed to the U.S. District Court for the District of Minnesota concerning the preliminary injunction. They believe that the Bankruptcy Court exceeded its jurisdiction in authorizing injunctive relief, James Jorissen, Esq., at Leonard, O'Brien, Spencer, Gale & Sayre, Ltd., in Minneapolis, Minnesota, notes. Mr. Jorissen asserts that in granting the injunction, the Bankruptcy Court arrogated unto itself jurisdictional expanse that the U.S. Congress took away from the federal courts when it passed the Norris-LaGuardia Act, 29 U.S.C. Section 101, in 1932. The Norris-LaGuardia Act expressly provides, with few exceptions not applicable in the complaint, that no U.S. court will have jurisdiction to issue any restraining order or temporary or permanent injunction in a case involving a labor dispute. "The demoralizing and synergistic effect of these companion rulings is that the Unions have no recourse other than through appeals," Mr. Jorissen explains. "The bargaining equilibrium Congress sought to achieve through both the substantive and procedural requirements of Section 1113 and through preservation of the Unions' right to strike under the Norris-LaGuardia Act has been scuttled," he adds. The Unions believe that the injunction, insofar as it effectively disposes of all of the issues raised by the Debtor in its complaint against the Unions, represents a final order, appealable as a matter of right under Section 158(a)(1) of the Judiciary Procedures Code. Reasons for Appeal According to Mr. Jorissen, the Unions will present on appeal whether the Norris-LaGuardia Act deprive the Bankruptcy Court of jurisdiction to enjoin the Unions from striking in response to the Debtor's (a) rejection of the CBAs, and (b) unilateral election to impose new work rules, rates of pay, and other terms of employment. "The Unions will therefore seek on appeal an order vacating the improvidently granted Injunction and remanding the adversary proceeding to the Bankruptcy Court with instructions to dismiss the Adversary Proceeding for lack of subject matter jurisdiction," Mr. Jorissen says. Mr. Jorissen argues that leave to appeal should be granted because: (a) The appeal involves a controlling question of law as to whether the Norris-LaGuardia Act divested the Bankruptcy Court of jurisdiction to issue the injunction; (b) Substantial grounds for difference of opinion exist as to the issue presented by the appeal, as the Bankruptcy Court itself acknowledged in the injunction; and (c) An immediate appeal will materially advance termination of the complaint. If the Bankruptcy Court exceeded its jurisdictional bounds in issuing the injunction, then the injunction will need to be vacated and the complaint, which seeks as an end the issuance of a permanent injunction, dismissed. Mr. Jorissen notes that no bankruptcy court in the 74-year history of the Norris-LaGuardia Act has ever before enjoined a labor union from striking in response to an employer's rejection and unilateral imposition of new terms and conditions of employment. The Union's appeal, therefore, involves a single, novel and controlling question of law under the Norris-LaGuardia Act, Mr. Jorissen tells Judge Kishel. Mr. Jorissen further asserts that even if the injunction could properly be characterized as interlocutory in nature, the Bankruptcy Court can and should grant the Unions leave to appeal because resolution of the novel issue presented on appeal will unquestionably determine the outcome of the complaint. Mr. Jorissen explains that if the Bankruptcy Court exceeded its jurisdictional bounds in issuing the injunction, then that will be the end of the complaint. If the injunction is upheld on appeal, that will be equally dispositive of the issues raised by the Debtor in the complaint. 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. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) METABOLIFE INT'L: Agrees to $56 Million Settlement for Tort Claims ------------------------------------------------------------------ Brown Rudnick Berlack Israels LLP, counsel for the Official Committee of Unsecured Creditors in Metabolife International Inc.'s bankruptcy case, reached a $56 million global settlement benefiting tort claimant creditors. Many of Metabolife's creditors are plaintiffs in ephedra-related personal injury tort lawsuits against Metabolife and other defendants relating to Metabolife's ephedra-based products. The memorandum of under- standing executed by the relevant bankruptcy parties provides for a consensual plan of liquidation for the benefit of all of Metabolife's creditors, including a $56 million fund that will be established to satisfy the under- or non-insured ephedra tort claims against Metabolife and non-debtor defendants. Metabolife, currently known as MII Liquidation, filed for Chapter 11 bankruptcy in June 2005, in the face of declining sales and increasing litigation over its flagship product, Metabolife 356, which contained the now FDA-banned ephedra herbal stimulant. After more than a year of legal proceedings and negotiations, Metabolife and other defendants agreed to the $56 million global settlement of over 250 tort claims, thereby providing a positive resolution for tort claimants who would have been otherwise left with the probability of little recovery from Metabolife in the wake of that company's bankruptcy. The memorandum of understanding also provides for mechanisms under which Metabolife's other creditors will be treated and receive distributions. About Brown Rudnick Brown Rudnick -- http://www.brownrudnickcenter.com/-- is a full- service, international law firm with offices in the United States and Europe. The firm's attorneys provide representation across key areas of the law: Bankruptcy & Corporate Restructuring, Complex Litigation, Corporate & Securities, Real Estate, Health Care, Government Law & Strategies, Energy and Intellectual Property. Combining a dedication to excellence with a commitment to superior client service, Brown Rudnick provides its clients with a breadth and depth of expertise uniquely suited to their legal needs. About Metabolife Headquartered in San Diego, California, Metabolife International, Inc. -- http://www.metabolife.com/-- sells dietary supplements and management products in grocery, drug and mass retail locations nationwide. The Company and its subsidiary, Alpine Health Products, LLC, filed for chapter 11 protection on June 30, 2005 (Jointly Administrated Under Bankr. S.D. Calif. Case No. 05-06040). David L. Osias, Esq., and Deb Riley, Esq., at Allen Matkins Leck Gamble & Mallory LLP, represent the Debtors in their chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $23,983,112 in total assets and $12,214,304 in total debts. MORGAN STANLEY: Moody's Rates Class B-5 Sub. Certificates at Ba2 ---------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates issued by Morgan Stanley Mortgage Loan Trust 2006- 14SL, and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Morgan Stanley Mortgage Capital Inc. acquired fixed-rate closed-end second mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses by subordination, excess spread, and overcollateralization. Moody's expects collateral losses to range from 8% to 8.5%. GMAC Mortgage Corporation will service the loans. These are the rating actions: * Morgan Stanley Mortgage Loan Trust 2006-14SL * Mortgage Pass-Through Certificates, Series 2006-14SL Cl. A-1, Assigned Aaa Cl. M-1, Assigned Aa2 Cl. M-2, Assigned Aa3 Cl. M-3, Assigned A2 Cl. M-4, Assigned A3 Cl. B-1, Assigned Baa1 Cl. B-2, Assigned Baa2 Cl. B-3, Assigned Baa3 Cl. B-4, Assigned Ba1 Cl. B-5, Assigned Ba2 MILLS CORP: Annual Stockholders Meeting Set for December 21 ----------------------------------------------------------- The Mills Corporation currently plans to hold its 2006 annual meeting of stockholders on Thursday, Dec. 21, 2006, at a time and place to be determined and announced later. The date of the meeting may be moved to the last week of December if the Company determines that it is unable to complete the process for the solicitation of proxies by December 21. The Company is required by its bylaws and by the listing requirements of the New York Stock Exchange to hold an annual meeting of stockholders in 2006. The Company's Board of Directors adopted resolutions on Nov. 2, 2006 calling the 2006 annual meeting and fixing the close of business on Dec. 1, 2006 as the record date for purposes of determining stockholders entitled to notice of and to vote at the meeting. At the 2006 annual meeting, the Company will be submitting for stockholder consideration: 1) the election of directors; and 2) ratification of the appointment of Ernst & Young LLP, as the Company's independent registered public accounting firm. In accordance with Rule 14a-8 of the Securities Exchange Act of 1934, all stockholder proposals to be considered for inclusion in the Company's proxy statement for the 2006 annual meeting pursuant to the stockholder proposal rule must be received by the Company's Corporate Secretary by the close of business on Monday, Nov. 20, 2006. As reported in the Troubled Company Reporter yesterday, Gazit- Globe Ltd. has filed a lawsuit against The Mills Corp, seeking to compel the Company to hold its annual meeting. Gazit-Globe recently increased its ownership of common stock in The Mills Corporation to in excess of 9% and expressed a desire to recapitalize the struggling company. The lawsuit was filed in Delaware where The Mills Corporation is incorporated. Headquartered in Chevy Chase, Maryland, The Mills Corporation (NYSE:MLS) -- http://www.themills.com/-- develops, owns, manages retail destinations including regional shopping malls, market dominant retail and entertainment centers, and international retail and leisure destinations. The Company owns 42 properties in the U.S., Canada and Europe, totaling 51 million square feet. In addition, The Mills has various projects in development, redevelopment or under construction around the world. * * * As reported in the Troubled Company Reporter on March 24, 2006, The Mills Corporation disclosed that the Securities and Exchange Commission has commenced a formal investigation. The SEC initiated an informal inquiry in January after the Company reported the restatement of its prior period financials. Mills is restating its financial results from 2000 through 2004 and its unaudited quarterly results for 2005 to correct accounting errors related primarily to certain investments by a wholly owned taxable REIT subsidiary, Mills Enterprises, Inc., and changes in the accrual of the compensation expense related to its Long-Term Incentive Plan. As reported in the Troubled Company Reporter on April 17, 2006, The Mills Limited Partnership entered into an Amendment No. 3 and Waiver to its Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of Dec. 17, 2004, among Mills Limited, JPMorgan Chase Bank, N.A., as lender and administrative agent, and the other lenders. The agreement provides a conditional waiver through Dec. 31, 2006, of events of default under the facility that are associated, among other things, with: the pending restatement of the financial statements of Mills Corporation and Mills Limited, and the delay in the filing of the 2005 Form 10-K of Mills Corp. and Mills Limited. MUSICLAND HOLDING: Objects to James Hayes Lift Stay Motion ---------------------------------------------------------- James and Susan Hayes sought the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow them to commence: (a) negotiations with St. Paul Travelers Insurance with regards to the personal injury incident; and (b) an action for negligence against Musicland Holding Corp. and its debtor-affiliates in the Supreme Court, County of Erie. Joel A. McMahon, Esq., at Watson, Bennett, Colligan, Johnson & Schechter, L.L.P., in Buffalo, New York, related that in February 2004, Mr. Hayes suffered severe injuries to his left lower extremities when he slipped and fell in the parking lot of a Mediaplay store. The Mediaplay store is owned and managed by Musicland Group, Inc. Mr. McMahon asserted that Mr. Hayes sustained his injuries due to the Debtors' negligence, the Troubled Company Reporter reports on Oct. 20, 2006. Debtors Oppose Andrea L. Johnson, Esq., at Kirkland & Ellis LLP, in New York, notes that the automatic stay is a key element in preventing a chaotic and uncontrolled scramble for a debtor's assets in a variety of uncoordinated proceedings in different courts. Ms. Johnson contends that James and Susan Hayes failed to establish a prima facie case for the lifting of the automatic stay. If the Court allows Mr. Hayes' request, it may create an unnecessary distraction preventing the Debtors from focusing on confirming and implementing the liquidating plan of reorganization, Mr. Johnson says. "Allowing the action to proceed prejudices the interests of the Debtors and other unsecured creditors." The Debtors ask the Court to deny Mr. Hayes' request. The Official Committee of Unsecured Creditors joins in the Debtors' Objection. Hayes Talks Back The cost of defending an action is but one factor for the Court to consider, but it alone does not constitute grounds for denying a movant relief from the automatic stay, Joel A. McMahon, Esq., at Watson, Bennett, Colligan, Johnson & Schechter, L.L.P., in Buffalo, New York, contends. Mr. McMahon relates that the Debtors' counsel is aware that Mr. Hayes sustained an ulceration that may result in amputation, but the Debtors deny that the resulting ulceration was related to the initial injury. Mr. McMahon argues that the Debtors' position is speculative. "It is the Hayes' position that the ulceration and potential amputation is related to the incident caused by the Debtors' negligence as lessee of the subject property," Mr. McMahon says. Mr. Hayes asks the Court to permit him to proceed in negotiations with the Debtors' insurance carrier and to commence an action for negligence against the Debtors. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MUSICLAND HOLDING: Second Interim Fee Filing Deadline is Jan. 30 ---------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates' Plan of Liquidation provides that all final requests for payment of Fee Claims must be filed no later than 45 days after the Confirmation Date. The U.S. Bankruptcy Court for the Southern District of New York has set a confirmation hearing date on Nov. 28, 2006. If the Plan is confirmed by November 28, the Professionals will be required to submit a Final Fee Application by Jan. 12, 2007. The Professionals would be obligated to file their Final Fee Application relatively shortly after the filing of their Second Interim Fee Application. The Debtors, the Official Committee of Unsecured Creditors and the Informal Committee of Secured Trade Vendors believe that the requirement of filing the Second Interim Fee Application would likely result in unnecessarily duplicative proceedings, a waste of valuable judicial resources and an increase in the cost of Professional's fees for the Debtors' estates. Consequently, the Parties agree that the Professionals' deadline for filing their Second Interim Fee Application is extended through January 30, 2007. If, however, the deadline for filing Final Fee Applications occurs before the Second Interim Fee Application Deadline, the Professionals are no longer required to file the Second Interim Fee Applications and the deadline will be deemed vacated. Upon review, the United States Trustee has no objections to the Parties' agreement to postpone the filing deadline for the Second Interim Fee Application. At the parties' behest, the Court approves the Stipulation. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATURAL NUTRIENTS: S&P Rates $200 Million Senior Bonds at B- ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary 'B-' rating to Natural Nutrients USA LLC's $200 million senior secured bonds due 2014. The outlook is stable. The proceeds of the bonds will be used to construct, develop, and operate the Natural Chem Glycerine Plant in Corning, Iowa for approximately $37.7 million of project consideration and the Natural Nutrients Plant in Stanley, Wisconsin for approximately $127 million. The rest of the proceeds will be used to fund the interest during construction, a 12-month debt service reserve account, insurance costs, and owner's contingency. Natural Chem Group LLC, through its affiliate Natural Nutrients, plans to develop several plants utilizing its proprietary process for the production of value-added products from the low-value, by- product syrup stream produced at ethanol plants. "The stable outlook on the bonds reflect our expectation that the project's development and construction risk are acceptable at the 'B-' rating level," said Standard & Poor's credit analyst Elif Acar. The 'B-' rating is contingent upon review of the final documents at closing and can be affirmed, changed, or withdrawn based on the closing documents reflection of representations and assumptions provided by the company during the preliminary rating process. NRG ENERGY: Fitch Rates $1.1 Billion Senior Notes at B+ ------------------------------------------------------- Fitch Ratings has assigned a rating of 'B+/RR3' on NRG Energy's issuance of $1.1 billion senior notes due 2011. This issue will rank equally with NRG's other senior unsecured obligations. The Rating Outlook is Stable. On Nov. 3, 2006, Fitch affirmed NRG's ratings following the company's announcement of its hedge reset transaction. Proceeds from the current offering along with cash on hand will be used to fund payments to counterparties under certain of the company's existing long-term hedging agreements pursuant to agreements to reset the hedge price levels into line with current market prices. While this transaction will increase total debt oustanding, it will also substantially increase cash flow for the 2007 to 2010 period, as well as permit the company to enter into further hedges through 2012. NRG owns and operates a diverse portfolio of power-generating facilities, primarily in Texas and the Northeast, South Central and Western regions of the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production, and energy resource recovery facilities. NRG also has ownership interests in generating facilities in Australia and Germany. ON SEMICONDUCTOR: Earns $76.8 million in 2006 Third Quarter ----------------------------------------------------------- ON Semiconductor Corp. reported a $76.8 million net income on $420.9 million of revenues for the quarter ended Sept. 29, 2006, compared with a net income of $23.5 million on $313.6 million of revenues for the same period in 2005. At Sept. 29, 2006, the Company's balance sheet showed $1,416.7 million in total assets, $1,417.5 million in total liabilities and $19.5 million in Minority interests in consolidated subsidiaries, resulting in a $20.3 million stockholders' deficit. Full-text copies of the Company's consolidated financial statements for the quarter ended Sept. 29, 2006, are available for free at http://researcharchives.com/t/s?1492 About ON Semiconductor ON Semiconductor -- http://www.onsemi.com/-- supplies power solutions to engineers, purchasing professionals, distributors and contract manufacturers in the computer, cell phone, portable devices, automotive and industrial markets. * * * ON Semiconductor Corp.'s bank loan debt and long-term corporate family rating carry Moody's B2 ratings. The ratings were placed on Dec. 15, 2005 with a positive outlook. In June of the same year, Standard & Poor's placed the company's long-term local and foreign issuer credit ratings at B+ with a stable outlook. ON SEMICONDUCTOR: Prepays $55 Million Senior Credit Facility ------------------------------------------------------------ ON Semiconductor Corporation reported the prepayment of approximately $55 million of its senior secured credit facility, on Nov. 9, 2006, with proceeds from sale and leaseback transaction with General Electric Capital Corporation. On Nov. 7, 2006, Semiconductor Components Industries, LLC, a wholly owned subsidiary of ON Semiconductor Corp., consummated a sale and leaseback transaction with General Electric Capital Corp. with respect to certain manufacturing equipment located at SCILLC's semiconductor wafer fabrication facilities in Gresham, Oregon. As part of the contemplated Transaction, SCILLC sold the Equipment to GECC for $70 million in cash on Nov. 7, 2006 pursuant to a bill of sale and then leased the same Equipment back from GECC on the same day. The parties also executed a lease agreement dated as of Nov. 7, 2006, a schedule to the lease agreement dated as of Nov. 7, 2006, and several ancillary documents. Under the terms of the Lease Agreement, GECC's capitalized costs were $70 million, SCILLC's interest rate is fixed at 5.94% per annum, and lease payments are due monthly. The Lease Agreement provides SCILLC limited rights to relocate and substitute Equipment during its term. It further provides for: (1) a basic term of 72 months with a cash purchase option at the end equal to the Equipment's then fair market value; and (2) an early cash purchase option at 60 months equal to approximately 35% of GECC's capitalized costs. Under the Lease Agreement, SCILLC indemnifies GECC for certain matters, including taxes. The document lists various occurrences that would constitute an Event of Default. Similarly, it lists various remedies for an Event of Default, including the acceleration of lease obligations under the Lease Agreement. The Corporation plans to account for the lease portion of the Transaction as a capital lease in its consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles. GECC or its affiliates have from time to time, and may in the future, participate as a lender or lenders to the Corporation and/or SCILLC, and in the ordinary course of business provide other services and products to the Corporation and/or SCILLC. Currently, GECC and its affiliates are participating lenders in SCILLC's senior secured credit facility for a principal amount of approximately $32 million. A full-text copy of the Bill of Sale dated Nov. 7, 2006 executed by Semiconductor Components Industries, LLC (as seller) to General Electric Capital Corporation (as buyer) is available for free at: http://ResearchArchives.com/t/s?1507 A full-text copy of the Lease Agreement dated as of Nov. 7, 2006 between Semiconductor Components Industries, LLC (as lessee) and General Electric Capital Corporation (as lessor) is available for free at http://ResearchArchives.com/t/s?1508 ON Semiconductor -- http://www.onsemi.com/-- supplies power solutions to engineers, purchasing professionals, distributors and contract manufacturers in the computer, cell phone, portable devices, automotive and industrial markets. At Sept. 29, 2006, ON Semiconductor's balance sheet showed a stockholders' deficit of $20.3 million, compared to a deficit of $300.3 million at Dec. 31, 2005. * * * ON Semiconductor Corp.'s bank loan debt and long-term corporate family rating carry Moody's B2 ratings. The ratings were placed on Dec. 15, 2005 with a positive outlook. In June of the same year, Standard & Poor's placed the Company's long-term local and foreign issuer credit ratings at B+ with a stable outlook. PILGRIM'S PRIDE: Prices Gold Kist's 10-1/4% Senior Notes -------------------------------------------------------- Pilgrim's Pride Corporation disclosed new pricing in its cash tender offer for, and consent solicitation with respect to, any and all of Gold Kist Inc.'s outstanding 10-1/4% Senior Notes due March 15, 2014 (CUSIP No. 380616AB8, ISIN US380616AB82). The tender offer and consent solicitation are being made in connection with Pilgrim's Pride's proposed acquisition of all of the outstanding common shares of Gold Kist. Pilgrim's Pride's obligation to accept for purchase and to pay for Notes properly tendered and not withdrawn is subject to the satisfaction of certain conditions which are described in the Offer to Purchase, and Consent Solicitation Statement Dated Sept. 29, 2006, including the satisfaction or waiver of all conditions to the tender offer for Gold Kist's common shares. As reported in the Troubled Company Reporter on Nov. 7, 2006, Pilgrim's Pride extended the tender offer expiration date to Nov. 29, 2006, unless further extended. Pilgrim's Pride also received the requisite consents to the proposed amendments to the Notes and the indenture under which the Notes were issued from holders of approximately 99% of the aggregate principal amount of the outstanding Notes. Pursuant to the terms of the offer, as a result of the extension of the Expiration Date, the consideration payable to holders of Gold Kist Notes has been calculated using a new Price Determination Date of Nov. 13, 2006, which is the 11th business day preceding the scheduled Expiration Date. Based on an assumed payment date of Dec. 2, 2006, holders who validly tendered Notes with consents at or prior to 5:00 p.m., New York City time, on Oct. 13, 2006 are eligible to receive $1,153.29 for each $1,000 principal amount of the Notes. The Total Consideration includes a consent payment equal to $30 in cash per $1,000 principal amount of the Notes. The Consent Payment is payable only to holders of Notes validly tendered with consents and not validly withdrawn on or prior to the Consent Date. Holders who validly tendered Notes with consents after the Consent Date but at or prior to midnight, New York City time, on the Expiration Date are eligible to receive $1,123.29 for each $1,000 principal amount of the Notes. In addition to the Total Consideration or the Tender Offer Consideration payable in respect of Notes purchased in the offer, Pilgrim's Pride will pay accrued and unpaid interest from the last interest payment date to, but not including, the Payment Date. The "Payment Date" is expected to be promptly after the Expiration Date and immediately prior to the closing of the transactions contemplated by the tender offer for Gold Kist's common shares. The Total Consideration and the Tender Offer Consideration were determined as of 10:00 a.m., New York City time on Nov. 13, 2006, based on the Reference Yield of 4.686% for the Notes, and a Fixed Spread of 50 basis points for the Notes, using an assumed Dec. 2, 2006, Payment Date for calculation purposes. The offer is currently scheduled to expire at 5:00 p.m. New York City Time on Nov. 29, 2006. If the Expiration Date is extended for more than 10 business days following the Expiration Date, a new price determination date will be established (to be 10:00 a.m. New York City time on the 11th business day immediately preceding the new Expiration Date) and the Tender Offer Consideration and the Total Consideration will be redetermined as of new price determination date. Information regarding the pricing, tender and delivery procedures, the conditions to the tender offer and consent solicitation relating to the Notes and the proposed amendments to the Notes and Gold Kist indenture are contained in the Offer to Purchase. Pilgrim's Pride has engaged Lehman Brothers Inc. to serve as the Dealer Manager for the tender offer and the Solicitation Agent for the consent solicitation. Mellon Investor Services LLC has been retained to serve as the Depository and Innisfree M&A Incorporated has been retained to serve as the Information Agent for the tender offer and consent solicitation. Requests for documents may be directed to: Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor, New York, NY 10022 Telephone (877) 687-1874 (toll free in the U.S. and Canada) or (212) 750-5833 (call collect) Questions regarding the tender offer and consent solicitation may be directed to Lehman Brothers Inc. by telephone at (800) 438-3242 (toll free in the U.S.) or (212) 528-7581 (call collect). Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Moody's Investors Service's implementation of its new Probability- of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products sector, the rating agency held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its $100 million 9.250% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. REAL ESTATE: Moody's Puts Low-B Ratings on Six Certificate Classes ------------------------------------------------------------------ Moody's Investors Service assigned these provisional ratings to certificates issued by Real Estate Asset Liquidity Trust Commercial Mortgage Pass-Through Certificates, Series 2006-3: -- Aaa to the $215.5 million Class A-1 Certificates, -- Aaa to the $165.826 million Class A-2 Certificates, -- Aa2 to the $9.329 million Class B Certificates, -- A2 to the $9.969 million Class C Certificates, -- Baa2 to the $0.001 million Class D-1 Certificates, -- Baa2 to the $9.414 million Class D-2 Certificates, -- Baa3 to the $0.001 million Class E-1 Certificates, -- Baa3 to the $3.726 million Class E-2 Certificates, -- Ba1 to the $3.557 million Class F Certificates, -- Ba2 to the $1.235 million Class G Certificates, -- Ba3 to the $1.065 million Class H Certificates, -- B1 to the $1.065 million Class J Certificates, -- B2 to the $0.937 million Class K Certificates, -- B3 to the $0.298 million Class L Certificates, -- Aaa to the $* million Class XP-1 Certificates, -- Aaa to the $* million Class XP-2 Certificates, -- Aaa to the $* million Class XC-1 Certificates, and -- Aaa to the $* million Class XC-2 Certificates. * Initial notional amount The ratings on the Certificates are based on the quality of the underlying collateral -- a pool of multifamily and commercial loans located in Canada. The ratings on the Certificates are also based on the credit enhancement furnished by the subordinate tranches and on the structural and legal integrity of the transaction. The pool's strengths include its high percentage of less risky asset classes, recourse on 62.3% of the pool, the overall low leverage and the creditor friendly legal environment in Canada. In addition, five loans have investment grade shadow ratings. Moody's concerns include the concentration of the pool, where the top ten loans account for 49.7% of the total pool balance and the existence of subordinated debt on 21.6% of the pool. Moody's beginning loan-to-value ratio was 84.2% on a weighted average basis. Moody's issues provisional ratings in advance of the final sale of securities and these ratings reflect Moody's preliminary credit opinions regarding the transaction only. Upon a conclusive review of the final version of all the documents and legal opinions, Moody's will endeavor to assign a definitive rating to the Notes. A definitive rating may differ from a provisional rating. RIVIERA HOLDINGS: Buy Offer Prompts Moody's to Hold B2 Rating ------------------------------------------------------------- Moody's Investors Service affirmed the existing B2 ratings and negative outlook of Riviera Holding Corporation. Moody's also notes that Riviera has entered a 30-day exclusive negotiation agreement with real estate developer Ian Bruce Eichner and D.E. Shaw group over Eichner/DE Shaw's offer to purchase Riviera's outstanding shares for $21 per share. The proposal is conditioned on completion of due diligence, negotiation of definitive transaction documents, receipt of necessary board, shareholder and regulatory approvals. Eichner/DE Shaw has stated that it plans to acquire the outstanding shares using a combination of debt and equity and has spoken with several financial institutions regarding debt financing. There is no change in Moody's existing Riviera ratings, and the outlook remains negative. The negative outlook, which was assigned in September 2006, reflects concerns regarding Riviera's future strategic direction given recent efforts to sell the company, the potential that gaming revenues may be negatively impacted by lower foot traffic to the Las Vegas hotel and casino given the closure of several properties nearby, and a slightly weaker near term liquidity profile given the expiration date of the company's revolving credit facility in July 2007. Should the negotiations between Eichner/DE Shaw produce a definitive merger agreement the ratings would likely go on review for downgrade. The review for downgrade would be based on the assumption that, if a merger agreement received shareholder approval, the transaction would result in a more highly leveraged entity than exists today. Moody's last rating action on Riviera occurred in September 2006 when loss given default methodology was applied to all speculative grade issuers. Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Net revenues for the trailing twelve months ended Sept. 30, 2006 were approximately $201 million. RIVIERA HOLDINGS: Buy Offer Prompts S&P's Developing Watch ---------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Riviera Holdings Corp., including its 'B' corporate credit rating, on CreditWatch with developing implications. The CreditWatch listing reflects Riviera's announcement that it had received a nonbinding proposal from real estate developer Ian Bruce Eichner and the D. E. Shaw group, on behalf of an entity to be formed by them, to acquire all of the outstanding shares of Riviera at a cash price of $21 per share, or about $475 million including the assumption of debt. Their proposal is conditioned: -- upon satisfactory completion of due diligence; -- negotiation of definitive transaction documents; and, -- receipt of necessary board, stockholder, third party, and regulatory approvals. After receipt of the proposal, Riviera entered into a 30-day exclusive negotiating agreement with Eichner and a member of the D. E. Shaw group, effective Nov. 13, 2006. In addition, Riviera's board of directors has adopted resolutions, under the defensive provisions of Riviera's articles of incorporation and Nevada's business combination law, enabling Eichner and members of the D. E. Shaw group to join together in making and negotiating their acquisition proposal and to seek approvals that would be needed to consummate the acquisition. In resolving its CreditWatch listing, Standard & Poor's will continue to monitor developments associated with a potential acquisition of the company. Should the company's outstanding notes be fully redeemed, Standard & Poor's would withdraw its ratings on Riviera. However, should some or all of the debt remain outstanding under a more highly leveraged capital structure, ratings could be lowered. RURAL/METRO: 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 sectors, the rating agency confirmed its B2 Corporate Family Rating for Rural/Metro Corporation. Additionally, Moody's revised and 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 Discount Notes due 2016 Caa1 Caa1 LGD6 92% Rural/Metro LLC Senior Secured Revolver due 2010 B1 Ba2 LGD2 15% Sr. Secured Term Loan B due 2011 B1 Ba2 LGD2 15% 9.875% Sr. Sub. Notes due 2015 B3 B3 LGD4 63% 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 its 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 Scottsdale, Arizona, Rural/Metro Corporation -- http://www.ruralmetro.com/-- provides emergency and non-emergency medical transportation, fire protection, and other safety services in 23 states and approximately 400 communities throughout the United States. SAINT VINCENTS: Court Okays 3-Year Lease Agreement with SW BOCES ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has authorized Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates to lease an office and classroom space located at 275 North Street, Harrison, in New York, to Southern Westchester Board of Cooperative Educational Services. As reported in the Troubled Company Reporter on Oct. 19, 2006, the proposed transaction continues a longstanding relationship between SW BOCES and Saint Vincent Catholic Medical Centers following the expiration of a similar lease for two SW BOCES programs. Pursuant to the Lease, SW BOCES will occupy 4,813 square feet of classroom and office space on the first and second floors of Vincentia Hall, located on the Debtors' Westchester campus in Harrison, New York. The Lease will run from September 1, 2006, through August 31, 2009. SW BOCES will pay rent for: Rent Period ---- ------ $189,825 09/01/06 - 08/31/07 $195,520 09/01/07 - 08/31/08 $201,385 09/01/08 - 08/31/09 SVCMC will pay for all utilities and building maintenance expenses, except SW BOCES' telephone bills. SW BOCES will have access to the Premises from Monday through Friday, from 7:30 a.m. until 4:30 p.m. SVCMC will also provide SW BOCES with access to gym, recreation, and art therapy areas, subject to SVCMC's right to schedule their use and access. SW BOCES agrees to provide and maintain a comprehensive policy of general liability insurance protecting itself, SVCMC, SVCMC's mortgagee, and any other designated parties against any liability for which SW BOCES is liable. In addition, pursuant to the Lease, events of default will include SW BOCES': (a) failure to pay rent on the due date and further failure to cure that delinquency within 10 days; (b) breach of any covenant of the Lease or any other lease between the parties, and corresponding failure to cure the breach within 30 days after written notice has been given by SVCMC to SW BOCES; or (c) commencement of bankruptcy proceedings. Upon default, SVCMC may cancel the Lease or re-enter the Premises and elect to recover as liquidated damages the present value of the rent to be paid by SW BOCES to SVCMC for the remainder of the term of the Lease, less the present value of the fair rental value of the Premises over the same period. SW BOCES agrees to indemnify and hold SVCMC and its employees, agents, contractors and directors from any liabilities, expenses and damages resulting from its use or occupancy of the Premises. Either party can terminate the Lease for cause. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 36 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAINT VINCENTS: Court Okays Lease Rejection Stipulation with Bayer ------------------------------------------------------------------ In a stipulation approved by the U.S. Bankruptcy Court for the Southern District of New York, Saint Vincents Catholic Medical Centers of New York and Bayer Corporation agree that: 1. The St. Mary's Equipment Lease will be deemed rejected as of Aug. 29, 2006; 2. The St. Joseph's Equipment Lease will be deemed rejected as of the Debtor's bankruptcy filing; 3. After reconciliation of prepetition amounts owed to Bayer pursuant to the Equipment Leases and an $18,378 credit in postpetition payments made to Bayer on account of the St. Joseph's Equipment Lease, Bayer will have an allowed general unsecured claim for $15,664 resulting from the Equipment Leases; 4. Except for the $18,378 credit, all prior payments made by the Debtors to Bayer under the Equipment Leases will remain Bayer's property, and the Debtors will have no claim for their return; and 5. Bayer will have no other claims against the Debtors arising from or related to the Equipment Leases. As reported in the Troubled Company Reporter on July 17, 2006, SVMC operated seven hospitals including Saint Mary's Hospital in Brooklyn, which was closed on Sept. 20, 2005, as of July 5, 2005. Prior to its bankruptcy filing, SVCMC also operated Saint Joseph's Hospital in Queens, which was closed on August 27, 2004. St. Mary's and St. Joseph's, each leased equipment from Bayer Corporation pursuant to two Cost Management Plan Contracts. The equipment leased by St. Joseph's was returned to Bayer on April 1, 2005, for storage. The Debtors have never used or possessed the equipment since the Debtor's bankruptcy filing but continued to make payments under the St. Joseph's Equipment Lease. Since the closure of the lab that utilized the equipment leased to St. Mary's, the Debtors never used that equipment but continued to make payments under the St. Mary's Equipment Lease. The Debtors wanted to reject: (i) the St. Joseph's Equipment Lease effective as of July 5, 2005; and (ii) the St. Mary's Equipment Lease effective as of September 30, 2005 -- the date the lab was closed. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, informed the Court that the Debtors are current on their obligations under the Equipment Leases and have made: * postpetition payments under the St. Joseph's Equipment Lease totaling $18,378; and * post-Closure Date payments under the St. Mary's Equipment Lease totaling $23,959. Mr. Troop asserted the retroactive application of the Court's approval of the rejection is fair, equitable, and consistent with recent court decisions because: -- the Equipment Leases are burdensome liabilities with no corresponding benefit to the Debtors and their estates; -- the rejection eliminates any claim Bayer may have to further administrative payments under the Equipment Leases and provides the Debtors with the opportunity to recoup administrative payments that have been made; -- Bayer will not be prejudiced by a retroactive rejection of the Equipment Leases because, had the rejection occurred earlier, Bayer would not have been able to re-lease the equipment or obtain any significant value from the equipment; -- Bayer has been on notice that the Debtors were not benefiting from the Equipment Leases or using the equipment. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 37 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SALOMON BROTHERS: Fitch Cuts Ratings on 2 Cert. Classes to Low-B ---------------------------------------------------------------- Fitch has taken rating actions on the following classes of Salomon Brothers Mortgage Securities VII, Inc., asset-backed pass-through certificates: Series 2002-CIT1: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB+' from 'A'; -- Class M-3 downgraded to 'BBB' from 'A-'; -- Class M-4 downgraded to 'BB' from 'BBB'; -- Class M-5 downgraded to 'BB-' from 'BBB-'. The affirmations reflect satisfactory credit enhancement relationship to future loss expectations and affect approximately $39 million in outstanding certificates, as of the October 25, 2006 distribution report. The downgrades reflect deterioration in the relationship between CE & future loss expectations and affect about $5.4 million in outstanding certificates. The pool factor (loan principal outstanding as a percentage of the loan principal at closing) currently stands at 18.33%. The collateral in this transaction consists of 30-year fixed-rate & adjustable-rate mortgages extended to subprime borrowers. The CIT Group is the originator of these loans. The mortgage loans are serviced by Litton Loan Servicing, LP which is rated 'RPS1' by Fitch for subprime transactions. As of the Oct. 25, 2006 distribution date, the overcollateralization was $719,353 with a target of $1,240,344. The average monthly excess spread for the past three months is approximately $109,350 and the average monthly loss for the same period is approximately $200,365. This has led to an average monthly reduction in credit enhancement of $91,015 over the past three months. The 90+ delinquencies are 17.02% of the current collateral balance and this includes foreclosures and real estate owned of 3.58% and 1.53%, respectively. The cumulative losses in this transaction are currently 2.47% of original collateral balance. SEARS HOLDINGS: Sears Canada Shareholders Reject Buyout Offer ------------------------------------------------------------- Hawkeye Capital Management, LLC, Knott Partners Management LLC and Pershing Square Capital Management, L.P. said that the minority shareholders of Sears Canada Inc. decisively rejected the squeeze- out transaction proposed by Sears Holdings Corporation at the Special Meeting of the shareholders of Sears Canada held yesterday. Of the shares voted at the Special Meeting and eligible to be counted to determine whether the proposed transaction would be approved by the required majority of the minority, 61.52% were voted against the proposed transaction. Excluding shares owned by Sears Holdings and its affiliates, over 91% of the publicly held shares voted and eligible to be counted in the minority were voted against the proposed transaction. In addition, the Court of Appeal for Ontario denied Sears Holdings' motion for leave to appeal the decision of the Ontario Divisional Court which upheld the Ontario Securities Commission's findings that Sears Holdings had violated Ontario's securities laws and that elements of the conduct of Sears Holdings in pursuit of its take-over bid were coercive and abusive of the minority shareholders of Sears Canada and of the capital markets generally. "This was a great day for minority shareholder rights in Canada," said Richard Rubin, Managing Partner of Hawkeye Capital Management, LLC. "Our goal was to ensure that Sears Canada remain a public company for the benefit of all of its shareholders and we have succeeded." In light of these events, Hawkeye, Knott Partners and Pershing Square have disbanded their group, which was formed in April 2006 to oppose Sears Holdings' efforts to acquire the publicly owned shares of Sears Canada. About Sears Holdings Corp. Hoffman Estates, Illinois-based Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- is a broadline retailer, with 3,800 full-line and specialty retail stores in the United States and Canada. Sears is a home appliance retailer as well as a retailer of tools, lawn and garden, home electronics, and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including well-known labels as Lands' End, Jaclyn Smith, and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. * * * As reported in the Troubled Company Reporter on Oct. 27, 2006, Moody's Investors Service, in connection with its implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. and Canadian retail sector, the rating agency confirmed its Ba1 Corporate Family Rating for Sears Holdings Corporation, and its Baa3 rating on the Company's $4 billion Sr. Sec. Revolving Credit Facility. Additionally, Moody's assigned an LGD2 rating to the facility, suggesting creditors will experience a 24% loss in the event of a default. As reported in the Troubled Company Reporter on June 23, 2006, Standard & Poor's Ratings Services revised its outlook on Sears Holdings Corp. to stable from negative. All ratings, including the 'BB+' corporate credit rating, and the 'B-1' short-term rating for Sears Roebuck Acceptance Corp., are affirmed. As reported in the Troubled Company Reporter on Jun 22, 2006, Fitch affirms its ratings of Sears Holdings Corporation including its Issuer Default Rating (IDR) at 'BB'; Senior notes at 'BB'; and Secured bank facility at 'BBB-'. SERACARE LIFE: Inks Joint Plan with Ad Hoc Equity Committee ----------------------------------------------------------- SeraCare Life Sciences Inc. entered into a Joint Plan of Reorganization pursuant to Bankruptcy Code Section 1121(a), with certain members of the Ad Hoc Equity Committee on Nov. 10 . The Ad Hoc Equity Committee are: -- Harbinger Capital Partners Master Fund I Ltd., -- Harbinger Capital Partners Special Situations Fund L.P., -- Black Horse Capital Partners, and -- The Wolfson Group, The Plan will not be effective unless approved by the U.S. Bankruptcy Court for the Southern District of California. The Plan is also subject to the approval of the classes of claims and interests entitled to vote to the extent required by the Bankruptcy Code. Overview of the Plan The Plan proposes that the Company reorganize, and that current shareholders fund a restructuring of the Company's balance sheet. The Company and the Ad Hoc Committee have proposed that the Plan be based on a rights offering. The rights offering will be available to current shareholders on a pro rata basis. Each shareholder will be entitled to purchase a pro rata share, out of all current shareholders, of 4,250,000 new shares to be issued at a price of $4.75 per share. Both the new shares issued and the price per share could be adjusted if the plan is not confirmed by March 15, 2007. In connection with the Plan, members of the Ad Hoc Committee have committed to fully participate in the rights offering. In addition, certain members of the Ad Hoc Committee will act as backstop purchasers, and have committed to purchase all unexercised subscription rights. Under the Plan, each shareholder of the Company that is a holder as of the rights offering record date (which has not been announced but would likely be on or around Dec. 21, 2006) will be allowed to purchase its pro rata share of 4,250,000 shares of the reorganized Company's common stock. The subscription rights will not be transferable and the price of shares in the rights offering will be $4.75 per share. The rights offering will seek to raise $20,187,500 for the Company. The Plan also contemplates that the Company will affect a re- incorporation merger pursuant to which it will become a Delaware corporation. In addition, the reorganized Company's board of directors would be adjusted so that the Board would consist of a total of five members: -- Susan Vogt, the Company's chief executive officer; -- Gene Davis; -- one designee of Harbinger reasonably acceptable to the Company; -- one designee of Black Horse reasonably acceptable to the Company; and -- the fifth member would be a current member of the Company's Board of Directors or a person designated by the Company's chief executive officer. Terms of the Plan The Plan divides the claims and interests in the Company into Classes. Certain claims --in particular, Administrative Claims and Priority Tax Claims -- remain unclassified in accordance with Bankruptcy Code Section 1123(a)(1). The Plan assigns all other claims and interests to one of eight Classes, which will receive distributions under the Plan. Classes 1, 2, 3, 4, 4A, 5, and 6A, consisting, respectively, of priority claims, bank claims, junior secured note claims, miscellaneous secured claims, Commerce Bank claims, general unsecured creditor claims, and certain governmental claims will be unimpaired, and be paid in cash in full to the extent of allowed claims. Class 8, consisting of common stock options interests, will be unimpaired and will receive new options in the reorganized Company. Unimpaired classes are, pursuant to the Bankruptcy Code, deemed to accept the plan and therefore do not vote on the Plan. At the option of the Plan proponents, holders of class 6B, consisting of certain non-governmental claims, will be paid in cash or stock of the reorganized Company to the extent of allowed claims. Holders of class 6B will be entitled to cast provisional ballots in the event the Plan proponents decide to pay the allowed claims in stock. Class 7, consisting of holders of the Company's common stock, will be impaired and entitled to vote on the Plan. A full-text copy of the Plan is available for free at http://ResearchArchives.com/t/s?150f Plan Support Agreement The Company and the Ad Hoc Committee also entered into a Plan Support Agreement pursuant to which the parties agree to seek confirmation of the Plan. Under the Support Agreement, the Company agreed to file a motion with the Bankruptcy Court: -- to approve the withdrawal of its previous financing motion related to its letter of intent with the Allegiant Group; -- not to file or seek confirmation or be a proponent of a plan of reorganization other than their Joint Plan; and -- to pay certain fees and expenses of the Ad Hoc Committee. Members of the AHEC agreed: -- to act as the backstop purchasers of the Company's common stock in connection with the rights offering; -- to purchase the existing bank debt of the Company; and -- subject to the existence of certain conditions, to consent to certain motions related to the directors and officers insurance claims and class action litigation against the Company. Each of the parties agreed to use their commercially reasonable efforts to seek the Bankruptcy Court's approval of the joint disclosure statement and confirmation of the Plan. The Support Agreement will terminate upon the occurrence or non-occurrence of certain events, including: -- failure of the Bankruptcy Court to: * approve the joint disclosure statement before Dec. 31, 2006, or * confirm the Plan before May 31, 2007, -- failure to consummate the Plan before June 30, 2007, or -- the failure to maintain a specified amount of EBITDA. The Support Agreement also provides that the subscription price per share in the proposed rights offering will be reduced (i) by $0.25 per share every 15 days beginning March 15, 2007, if the Plan is not confirmed by then, until the Plan is confirmed; and (ii) by an additional $0.25 per share for each 15 day period after the 30th day after the Bankruptcy Court approves the Plan until the Plan becomes effective; provided that the price reduction contemplated by clause (ii) will not apply if the Plan becomes effective on or before March 31, 2007. A corresponding adjustment will be made to the number of shares in the rights offering to maintain the total financing amount. A full-text copy of the Plan Support Agreement is available for free at http://ResearchArchives.com/t/s?1510 Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., Paul J. Couchot, Esq., and Peter W. Lianides, Esq., represent the Debtor. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SFBC INT'L: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Healthcare Service and Distribution sector, the rating agency confirmed its Caa1 Corporate Family Rating for SFBC International, Inc., and upgraded its B3 rating on the Company's Senior Secured Credit Facility due 2009 to B1. In addition, Moody's assigned an LGD1 rating to notes, suggesting noteholders will experience a 7% 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 its 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 Princeton, New Jersey, SFBC International, Inc. (NASDAQ: SFCC) -- http://www.sfbci.com/and http://www.pharmanet.com-- is an international drug development services company offering a comprehensive range of clinical development, clinical and bioanalytical laboratory, and consulting services to the branded pharmaceutical, biotechnology, generic drug and medical device industries. SFBC has more than 35 offices, facilities and laboratories with approximately 2,500 employees strategically located throughout the world. SHERIDAN HOLDINGS: 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 sectors, the rating agency confirmed its B2 Corporate Family Rating for Sheridan Holdings, Inc. Additionally, Moody's revised and 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 2009 B2 B1 LGD3 34% Sr. Sec. 1st Lien Term Loan due 2011 B2 B1 LGD3 34% Sr. Sec. 2nd Lien Term Loan due 2012 Caa1 Caa1 LGD5 87% 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 its 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 Sunrise, Florida, Sheridan Healthcare provides physician services to hospitals and ambulatory surgical facilities that desire to outsource the physician staffing for the anesthesia, neonatology and emergency departments. Sheridan also provides a full compliment of professional and administrative support services including physician billing. SHYPPCO FINANCE: Fitch Holds C Rating on $62 Mil. Class A-3 Notes ----------------------------------------------------------------- Fitch affirms one class and upgrades two classes of notes issued by Shyppco Finance Company, LLC. These rating actions are effective immediately: -- $11,582,083 class A-2A Notes affirmed at 'AAA'; -- $28,491,924 class A-2B Notes upgraded to 'BBB+' from 'BB+'; -- $12,740,291 class A-2C Notes upgraded to 'BBB+' from 'BB+'; -- $62,000,000 class A-3 Notes remain at 'C/DR6'. Shyppco is a collateralized debt obligation managed by MBIA Capital Management, which closed May 5, 1998 and is composed of high yield, emerging market and investment grade bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The upgrades are the result of increased credit enhancement levels due to the deleveraging of the A2-A, A2-B and A2-C notes. Shyppco continues to fail its overcollateralization test and therefore continues to divert both principal proceeds and interest proceeds towards the pro-rata redemption of the class A-2 notes. As a result, approximately 22.5% of the original class A-2 balance has been paid down since Fitch's last review in June 2005 and a total of 76.84% of the original class A-2 balance has been paid down since the CDO closed. Additionally, the weighted average coupon has increased and the collateral quality has remained stable with the weighted average rating remaining in the 'B-/CCC+' area. The current rating on the A-3 notes continues to reflect Fitch's expected recovery. Although the A-3 notes have not received any payments since 1998, Fitch projects that they will begin receiving some interest payments after the A-2 notes have been fully redeemed. The rating of the class A-2A Notes reflects the insurance wrap provided by MBIA Insurance Corp., whose insurer financial strength is rated 'AAA' by Fitch. The ratings on the class A-2B and A-2C notes address 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. The rating on the class A-3 notes addresses the ultimate return of principal and interest by the legal final maturity date. SHAW COMMS: DBRS Confirms Senior Notes' Rating at BB (high) ----------------------------------------------------------- Dominion Bond Rating Service confirmed the long-term rating of Shaw Communications Inc.'s Senior Notes at BB (high) Positive and maintained the Positive trend at this time. While DBRS continues to recognize Shaw's sustained EBITDA growth, DBRS is concerned with Shaw's focus on principally returning all or the majority of its free cash flow to shareholders with ongoing share repurchases and its increased dividend for F2007. As a result of its increased dividend, Shaw is expected to be in a slight negative free cash flow position in fiscal year 2007. The Company is expected to use its roughly $100 million from its cash tax savings for share repurchases or investments, with debt reduction expected to be a third option. The lack of debt reduction, along with an increasingly competitive environment and competitors operating with much strong balance sheets, has continued to mitigate rating improvement for Shaw. Notwithstanding these concerns DBRS recognizes Shaw's: (1) consistent incremental improvements in operations over the past four years and cash flow-to-debt improving to 0.17 times; (2) continued broadband growth despite strong broadband penetration -- second highest in North America at nearly 60% of basic subscribers; (3) successful scaling of its telephony service that will contribute to future EBITDA growth; (4) growth in basic video subscribers indicating that new services are helping to drive growth in legacy services; and (5) improved key credit ratios mostly due to growth in operations. Shaw is currently deploying its digital telephony service where demand is robust and the service is now available to roughly 60% of homes passed. Shaw's triple-play offering of video, telephony and broadband continues to drive average revenue per unit and reduces customer turnover. Shaw has been disciplined in its pricing strategy for its services, which has continued to support a relatively rational competitive environment in western Canada, thus averting a price war with its telco competitors. However, DBRS expects that Shaw's competitive advantage in some markets could potentially be short-lived as its telcos competitors are currently deploying video offers, which will give them a similar bundle of services with the addition of wireless. Furthermore, the telcos are currently appealing regulatory rulings that restrict their ability to respond to cable telephony competition. Should these restrictions be removed sooner than currently planned, DBRS believes that the telcos could become more nimble, which would likely increase Shaw's business risk profile. As a result, DBRS believes that it will be necessary to mitigate this expected heightening competitive environment through a reduction in its financial risk and therefore a more balanced use of its free cash flow. Thus, Shaw's ability to improve its financial risk profile and compete against the incumbent telcos will be key for rating improvement. SPATIALIGHT INC: Incurs $4.1 Mil. Net Loss in 2006 Third Quarter ---------------------------------------------------------------- SpatiaLight, Inc., posted a $4,173,985 net loss for the quarter ended Sept. 30, 2006, versus a net loss of $3,620,751, for the same period a year ago. The company reported a net loss of $15,111,236 for the nine months ended Sept. 30, 2006, compared to $9,293,733 for the nine months ended Sept. 30, 2005. SpatiaLight had revenues of $298,046 for the quarter ended Sept. 30, 2006, as compared with revenues of $58,457 for the same period in 2005. Revenues for the nine months ended Sept. 30, 2006 were $442,888, compared to revenues of $197,365 for the same period in 2005. At Sept. 30, 2006, the Company's balance sheet showed $10,562,948 in total assets, $15,029,944 in total liabilities and $1,947,909 in temporary equity, resulting in a $6,414,905 stockholders' deficit. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?1503 Don Suh, SpatiaLight's new CEO, commented, "SpatiaLight is pleased with the results of the third quarter and we look forward to continued growth as we become the proven supplier of LCoS microdisplays to the television industry." Mr. Suh added, "SpatiaLight will continue to grow its revenues both through existing products and new product initiatives with current and potential customers. SpatiaLight's product roadmap is intended to help manufacturers lower their costs while maintaining superior image quality and offering a tremendous value proposition for the end customer. SpatiaLight's LCoS imagers will now be marketed for use in front projector systems, both for the home and office, pocket projection solutions and single panel based handheld solutions." Dave Hakala, Chief Operating Officer, commented, "We are now a couple of months into our ramp up and we are seeing successful production progress. We believe that the third quarter is just the beginning of our production output growth and we look forward to continued success in our production output." Going Concern Doubt Odenberg, Ullakko, Muranishi & Co. LLP expressed substantial doubt about SpatiaLight, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring operating losses, negative cash flows from operations, negative working capital position and stockholders' deficit. About SpatiaLight SpatiaLight, Inc. -- http://www.spatialight.com/-- founded in 1989, manufactures high-resolution Liquid Crystal on Silicon microdisplays for use in high definition televisions and other display applications. The company manufactures its products at its facility in South Korea. SPHERIS 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 sectors, the rating agency confirmed its B3 Corporate Family Rating for Spheris, Inc. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. Sec. Revolving Credit Facility B3 Ba3 LGD2 17% Sr. Sec. First Lien Term Loan B3 Ba3 LGD2 17% 11% Sub. Notes Caa1 Caa1 LGD5 75% 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 its 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 Franklin, Tennessee, Spheris Inc. provides medical transcription services to health systems, hospitals and physician practices. STRUCTURED ASSET: Moody's Rates Class B5-II Sub. Certificates B2 ---------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Structured Asset Securities Corporation Mortgage Loan Trust, Series 2006-RF3 and ratings ranging from Aa2 to B2 to subordinate certificates in the deal. The securitization is backed by Wells Fargo Bank, N.A. and other mortgage lenders, none individually exceeding originated, adjustable-rate and fixed-rate, FHA/VA and alt-a mortgage loans acquired by Lehman Brothers Holding Inc. The Stack 1 Certificates ratings are based on the credit quality of the underlying loans and the insurance provided by FHA and the guarantee provided by the VA. Moody's expects Stack 1 Certificates collateral losses to range from 0.35% to 0.45%. The Stack 2 Certificates ratings are based on the credit quality of the underlying loans and the mortgage insurance provided by United Guaranty and Triad Guaranty. After taking into account the benefit from the mortgage insurance, Moody's expects Stack 2 Certificates collateral losses to range from 0.4% to 0.6%. The Federal Housing Administration is a federal agency within the Department of Housing and Urban Development whose mission is to expand opportunities for affordable home ownership, rental housing, and healthcare facilities. The Department of Veterans Affairs, formerly known as the Veterans Administration, is a cabinet level agency of the federal government. The rating of this pool is based on the credit quality of the underlying loans and the insurance provided by FHA and the guarantee provided by the VA. Approximately 89% of the loans have insurance provided by FHA and 11% from the VA. The rating is also based on the structure and legal integrity of the transaction. Wells Fargo Bank, N.A., First Horizon Home Loan Corporation, Aurora Loan Services LLC, will service the mortgage loans and Aurora will act as master servicer. Moody's has assigned Wells Fargo its servicer quality rating of SQ1 as a servicer of prime mortgage loans, First Horizon its servicer quality rating of SQ2+ as a servicer of prime mortgage loans, and Aurora its servicer quality rating of SQ2 as a servicer of prime mortgage loans. Moody's has assigned Aurora its servicer quality rating of SQ1- as a master servicer of mortgage loans. These are the rating actions: * Structured Asset Securities Corporation Mortgage Loan Trust, Series 2006-RF3 * Mortgage Pass-Through Certificates, Series 2006-RF3 Cl. 1-A1, Assigned Aaa Cl. 1-A2, Assigned Aaa Cl. 1-A3, Assigned Aaa Cl. 1-A4, Assigned Aaa Cl. 1-AP, Assigned Aaa Cl. 1-AX, Assigned Aaa Cl. 2-A, Assigned Aaa Cl. B1-I, Assigned Aa2 Cl. B2-I, Assigned A2 Cl. B3-I, Assigned Baa2 Cl. B4-I, Assigned Ba2 Cl. B5-I, Assigned B2 Cl. 3-A1, Assigned Aaa Cl. 3-A2, Assigned Aaa Cl. 3-AP, Assigned Aaa Cl. 3-AX, Assigned Aaa Cl. 4-A, Assigned Aaa Cl. B1-II,Assigned Aa2 Cl. B2-II,Assigned A2 Cl. B3-II,Assigned Baa2 Cl. B4-II,Assigned Ba2 Cl. B5-II,Assigned B2 Cl. R, Assigned Aaa The notes are being offered in a privately negotiated transaction without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. TEAM FINANCE: 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 sectors, the rating agency confirmed its B2 Corporate Family Rating for Team Finance LLC. Additionally, Moody's revised and 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 B2 B1 LGD3 34% Sr. Sec. Term Loan due 2012 B2 B1 LGD3 34% 11.25% Sr. Sub. Notes due 2013 Caa1 Caa1 LGD5 87% 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 its 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%). Team Finance LLC, is an intermediate holding company. Headquartered in Knoxville, Tennessee, Team Health, Inc., the parent company, -- http://www.teamhealth.com/-- is affiliated with over 5,600 healthcare professionals who provide emergency medicine, radiology, anesthesia, hospitalist, urgent care and pediatric staffing and management services to over 500 civilian and military hospitals, surgical centers, imaging centers and clinics in 43 states. TLC 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 sectors, the rating agency confirmed its B2 Corporate Family Rating for TLC Health Care Services, Inc. Additionally, Moody's revised and held TLC Funding Corporation's 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 Revolver due 2011 B2 B1 LGD3 35% Senior Secured 1st Lien Term Facility due 2012 B2 B1 LGD3 35% Second Lien Term Facility due 2013 Caa1 Caa1 LGD5 88% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of its 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 Lake Success New York, TLC Health Care Services Inc. -- http://www.tlcathome.com/-- provides Medicare home health care services, specializing in care for the elderly. TITAN GLOBAL: Inks $22.9 Mil. Loan Deal With Greystone Business --------------------------------------------------------------- Titan Global Holdings Inc. reached an agreement in principal to establish a new $15,000,000 revolving credit facility and $7,950,000 senior term loan with Greystone Business Credit II, LLC. The new financings provide terms that will save Titan more than $3.6 million in annual cash flow and permit the Company to reduce the number of outstanding common shares. The completion of these financings will give Titan's business units additional working capital to exploit organic and strategic opportunities for the acceleration of business operations and revenue-growing activities. "The cumulative cost and monthly payments for this financing are dramatically cheaper and lower than our existing financings, and the terms of the agreements allow us much more flexibility to invest in real growth," said David Marks, Chairman of Titan. "Under the previous financing arrangements, since August, 2005 we paid approximately $9.8 million to our senior lenders in interest, fees, and principal. Given these contractual obligations, Titan wasn't able to invest in significant organic growth. Upon completion of these new financings, Titan will have more flexibility to use its substantial free cash flow for use to exploit Titan's organic and strategic opportunities." Termination of the previous financings will enable a reduction in the total number of common Titan shares by up to 1.25 million shares. In September, 2006, Titan reached agreements with Laurus Master Fund, Ltd. for an option-purchase entitling Titan to buy-back up to 1.25 million of the 2.5 million Titan common shares Laurus owns and to limit the sale of all remaining common shares of Titan Laurus owns. Pursuant to the Option, Laurus has agreed to sell to Titan 1.25 million shares of TTGL for total consideration of $1 thousand dollars subject to the repayment on or before December 31, 2006, of all outstanding principal and interest amounts owed by Titan to Laurus under its debt facilities. Upon exercise of the Option, Titan will cancel these common shares. The new Greystone financings will be used to repay the existing credit facilities of each Titan business unit, including repayment of its Oblio Telecom Inc. loans with Capital Source, and Titan's Electronics and Homeland Security Division's senior convertible loans due to Laurus, and to provide for future working capital requirements. Additionally, the parties have discussed Greystone providing financing solutions for Titan's acquisition prospects. "In our current and last fiscal year which ended Aug. 31, 2006 Titan made great fundamental progress in dramatically growing its revenue and earnings before interest, depreciation, taxes, and amortization," said Bryan Chance, President and Chief Executive Officer of Titan Global Holdings. "These new financings will enable us to devote more funds to the creation of shareholder value." The Greystone Revolving Credit Facility would have a term of three years and an interest rate of the Prime Rate of Citibank, N.A. plus 1.50%, and the Senior Term Loan would have a term of three years and would be amortized over four years on a straight line basis with an interest rate of the Prime Rate of Citibank, N.A., plus 6.00%. Titan and Greystone expect to close the transaction by Dec. 15, 2006. Upon recovery by Titan of federal excise taxes and universal service fund fees paid, Titan will accelerate the retirement of the Greystone senior loan. There can be no assurance that such new financing arrangements will be finalized in a timely fashion or on terms acceptable to Titan. If the parties are unable to agree on final terms, the contemplated financings will not be completed. The agreement in principal is subject to Greystone's ongoing due diligence and audits, Titan's execution and delivery to Greystone of loan and security agreements, notes, and assurances as are reasonable and customary for similar loans, and as Greystone may reasonably require in connection with the closing. Headquartered in Salt Lake City, Utah, Titan Global Holdings, Inc. (OTCBB: TTGL) -- http://www.titanglobalholdings.com/-- operates through three divisions: Oblio Telecom, Inc., Titan PCB East, Inc. and Titan PCB West, Inc. Oblio is engaged in the creation, marketing, and distribution of prepaid telephone products for the wire line and wireless markets and other related activities. Titan PCB is a printed circuit board manufacturer providing competitively priced time-sensitive, quality products to the commercial and military electronics markets. Titan PCB offers high layer count, fine line production of rigid, rigid-flex and flex PCBs. Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 5, 2006, Wolf & Company, P.C., in Boston, Massachusetts, raised substantial doubt about Titan Global Holdings, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the fiscal year ended Aug. 31, 2005. The auditor pointed to the Company's significant operating losses, high debt levels, defaults on debt covenants, and negative working capital. At May 31, 2006, the Company's balance sheet showed total assets of $46,945,000 and total liabilities of $54,586,000, resulting in a stockholders' deficit of $7,641,000. TOTAL SAFETY: Moody's Junks Rating on $40 Mil. Senior Secured Loan ------------------------------------------------------------------ Moody's Investors Service assigned first time ratings consisting of a Ba3 rating for the proposed senior secured first lien credit facilities and a Caa1 rating for the proposed senior secured second lien term loan of Total Safety, U.S., Inc. Concurrently, Moody's assigned a B2 Corporate Family Rating to Total Safety. The outlook for the ratings is stable. The proposed transaction is in connection with the acquisition of the company by DLJ Merchant Banking Partners from H.I.G. Capital through a combination of equity and debt financing. Proceeds from the proposed $75 million first lien loan, the $40 million second lien term loan, along with about $68 million of equity will be used to purchase the equity of the company, refinance existing debt, and pay expenses and transaction fees associated with the transaction. The $15 million senior secured revolver includes a letter of credit subfacility. The Corporate Family Rating of B2 reflects the high level of indebtedness at the time of the purchase with funded debt exceeding 2006 expected pro forma revenues, the significant amount of goodwill and intangibles to total assets, and the relatively low level of expected pro forma free cash flow relative to debt in 2006. The ratings are supported by the potential size of the global safety compliance market relative to current penetration, trends in regulatory compliance and low capital expenditure requirements. Scale expansion, further tangible progress with the In-Plant Service Center initiative and successful diversification of the company into mining, steel manufacturing and other industrial clients could lead to a positive outlook. Weaker than expected revenue growth, increases in financial leverage from acquisitions or margin deterioration could put negative pressure on the company's ratings. In addition, if free cash flow to debt is anticipated to turn negative for any period of time, the ratings could be downgraded. Moody's assigned these ratings: -- Corporate Family Rating, rated B2; -- $15 million senior secured first lien revolving credit facility due 2011, rated Ba3, LGD 2, 29%; -- $75 million senior secured first lien term loan due 2012, rated Ba3, LGD 2, 29%; -- $40 million senior secured second lien term loan due 2013, rated Caa1, LGD 5, 81%; The ratings outlook is stable. The ratings are contingent upon the receipt of executed documentation in form and substance acceptable to Moody's. Total Safety, U.S., Inc., headquartered in Houston, Texas, provides a range of safety-related services to the refining, petrochemical and oil and gas exploration and production industries, as well as other industrial companies. TUBE CITY: $720 Mil. Onex Offer Cues Moody's to Review Ratings -------------------------------------------------------------- Moody's Investors Service placed the ratings of Tube City IMS Corporation under review for possible downgrade. The review was prompted by Onex Corporation's report that it has agreed to acquire Tube City in a transaction valued at $720 million, including equity and debt. Moody's review will assess the impact of increased leverage on Tube City's credit profile and capital structure, and the overall debt service capabilities of the company in light of the acquisition and higher debt levels. In addition, Moody's review will consider the amount of equity investment by Onex Partners II, Onex's $3.5 billion private equity fund, which is expected to be approximately $240 million, as well as the strategic positioning within Onex. If the Onex acquisition results in the repayment of Tube City's existing debt, the existing ratings will be withdrawn at the conclusion of any new financing. These ratings were placed on review for possible downgrade: * Issuer: Tube City IMS Corporation -- Corporate Family Rating of B1 -- Probability of Default rating of B1 -- Gtd. First Lien Revolving Credit Facility, B1 -- Gtd. First Lien Term Loan due 2010, B1, LGD3, 43% -- Gtd. Second Lien Term Loan due 2011, B3, LGD5, 86% Tube City IMS Corporation, headquartered in Glassport, PA, is a leading North American provider of on-site steel mill services such as material handling, scrap management, metal recovery and slag processing. UNITED CUTLERY: U.S. Trustee Appoints Four-Member Creditors Panel ----------------------------------------------------------------- The United States Trustee for Region 8, appointed four creditors to serve on an Official Committee of Unsecured Creditors in United Cutlery Corp.'s chapter 11 case: 1. Prima Products Global Ltd 15/F Unit 22 Wah Wai Ind. Bldg 53-61 Pak Tin Par Street Hong Kong, China Attention: Arendt Hopeman 2. The Beanstalk Group, LLC 28 East 28th Street, 15th Floor New York, NY 10016 Attn: Richard Bergovoy 3. Valk Industries 50 Valk Lane Greeneville, TN 37744-0668 Attn: Dale Waddle 4. New Line Cinema c/o Jocelyn Keynes, Esq. Stevens & Lee, PC 485 Madison Ave, 20th Floor New York, NY 10022 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Sevierville, Tennessee, United Cutlery Corp. -- http://www.unitedcutlery.com/-- manufactures hunting, camping, fishing, military, utility, collectible, and fantasy knives. The Debtors also market fantasy-based swords, weapons and armor under license from movie studios. The Company and two of its affiliates filed for chapter 11 protection on Oct. 2, 2006 (Bankr. E.D. Tenn. Case No. 06-50884). Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. UNITED CUTLERY: Panel Hires Harter Secrest as Bankruptcy Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of United Cutlery Corporation obtained authority from the U.S. Bankruptcy Court for the Eastern District of Tennessee to retain Harter Secrest & Emery LLP as its counsel. Harter Secrest is expected to: (a) provide the Committee with legal advise concerning its duties, powers and rights in relation to the debtor and the administration of the case; (b) assist the Committee in the investigation of the acts, conduct, assets, liabilities and financial condition of the debtor, the operation of the debtor's business, the desirability of the continuation of such business, the sale of the Debtor's business, and any other matters relevant to the case or formulation of a plan of reorganization or plan of liquidation; (c) aid the Committee with its negotiations with the debtor on the formulation of a plan of reorganization or liquidation; (d) assist the Committee with the review of the debtor's retention of professionals, and, if appropriate, the appointment of a trustee or examiner under Section 1104 of the Bankruptcy Code; (e) advise the Committee in connection with the Debtor's expressed intention of selling its business; (f) analyze and advise the Committee regarding the many motions, applications, contested matters, and adversary proceedings that are likely to be filed in this case and the hearings that will occur in this case; (g) take actions as are necessary to preserve and protect the unsecured creditors' rights and to pursue such remedies for the unsecured creditors as are appropriate; (h) prepare on behalf of the Committee all necessary or appropriate applications, pleadings, adversary proceedings, answers, reports, orders, responses, and other legal documents; (i) conduct appropriate discovery and investigation into the Debtor's operations, valuation of assets, lending relationships, management, and causes of action; and (j) perform any and all other legal services for the Committee which may be necessary or appropriate and in the best interests of the unsecured creditors. The Committee tells the Court that John R. Weider, Esq., a partner at Harter Secrest, and Ingrid S. Palermo, Esq., an associate, will be the lead attorneys performing services for the Committee. Mr. Weider will bill $330 per hour while Mrs. Palermo bills $200 per hour. Mr. Weider assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Weider can be reached at: John R. Weider, Esq. Harter Secrest & Emery LLP 1600 Bausch & Lomb Place Rochester, New York 14604 Tel: (585) 232-6500 Fax: (585) 232-2152. http://www.hselaw.com/ Headquartered in Sevierville, Tennessee, United Cutlery Corp. -- http://www.unitedcutlery.com/-- manufactures hunting, camping, fishing, military, utility, collectible, and fantasy knives. The Debtors also market fantasy-based swords, weapons and armor under license from movie studios. The Company and two of its affiliates filed for chapter 11 protection on Oct. 2, 2006 (Bankr. E.D. Tenn. Case No. 06-50884). Maurice K. Guinn, Esq., at Gentry, Tipton & McLemore P.C., represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. UNIVERSAL HOSPITAL: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B2 Corporate Family Rating for Universal Hospital Services, Inc., and its B3 rating on the Company's 10-1/8% Senior Notes due 2011. In addition, Moody's assigned an LGD4 rating to notes, suggesting noteholders will experience a 64% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of its 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%). Universal Hospital Services, Inc., is a medical equipment lifecycle services company. UHS currently operates through more than 75 offices, serving customers in all 50 states and the District of Columbia. US ONCOLOGY: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. healthcare service sector, the rating agency confirmed its B1 Corporate Family Rating for U.S. Oncology Holdings. Additionally, Moody's revised or held its probability- of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations of the Company and its subsidiary, U.S. Oncology, Inc.: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior unsecured floating rate notes due 2015 Caa1 B3 LGD6 93% US Oncology, Inc. Senior secured revolving credit facility due 2010 Ba3 Ba2 LGD2 20% Senior secured term loan due 2011 Ba3 Ba2 LGD2 20% 9% senior unsecured notes due 2012 B1 B2 LGD4 58% 10.75% senior sub. notes due 2014 B3 B3 LGD5 81% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston, Texas, US Oncology, is a cancer treatment and research network. Its network includes 1,029 affiliated physicians, 411 sites of service, 78 comprehensive cancer centers, 13 other facilities providing radiation therapy only, a clinical trial program that currently is managing 70 active clinical trials and a pharmaceutical distribution business that currently distributes $1.7 billion in oncology pharmaceuticals annually from its 75,000 square foot oncology pharmaceutical distribution facility. USG CORP: S&P Rates Proposed $500 Mil. Senior Unsec. Notes at BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' debt rating to the proposed $500 million senior unsecured notes of USG Corp., due 2016, to be issued under Rule 144a with registration rights. The rating is based on preliminary terms and conditions. Proceeds from the notes offering will be used for debt reduction and general corporate purposes, which include working capital. USG expects total debt, including capitalized operating leases, tax-effected underfunded pension and postretirement benefits, and asset-retirement obligations, to be $2.9 billion at year-end 2006. The ratings on USG Corp. reflect the Chicago, Illinois-based company's leading position in the U.S. gypsum wallboard and ceiling system markets, competitive cost position, flexible capital spending needs, and moderate financial policies. The ratings also reflect cyclical demand for the company's products. Ratings List: * USG Corp. -- Corporate Credit Rating BB+/Stable -- $500 million senior unsecured notes due 2016 at 'BB+' USP DOMESTIC: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. healthcare services sector, the rating agency downgraded its Ba2 Corporate Family Rating to Ba3 for USP Domestic Holdings, Inc., and affirmed its Ba2 rating on the company's 7-yr Term Loan 'B' due 2013. Additionally, Moody's assigned an LGD3 rating to those bonds, 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%). Headquartere in Dallas, Texas, United Surgical Partners International currently maintains ownership interests or operates 128 surgical facilities. Of its 125 domestic surgery centers, 68 are jointly owned with not-for-profit healthcare systems. The Company also operates three facilities in the United Kingdom. VALENCE TECHNOLOGY: Posts $4.8MM Loss in Quarter Ended Sept. 30 --------------------------------------------------------------- Valence Technology Inc. incurred a $4.8 million net loss available to common stockholders for the fiscal 2007-second quarter ended Sept. 30, 2006, compared to a net loss available to common stockholders of $8.1 million in the second quarter of fiscal 2006 and a net loss of $5.7 million in the first quarter of fiscal 2007. The Company generated revenue for the second quarter of fiscal year 2007 of $6.4 million, an increase of 15.5 percent over the second quarter of fiscal 2006, and an increase of 101.3 percent over first quarter of fiscal 2007. The substantial increase in revenue is a result of the small-format N-Charge system orders that were scheduled to ship in the first quarter but were postponed due to the Company's UL recertification process. Large- format systems represented 69.0 percent of total revenue for the second quarter. At Sept. 30, 2006, the Company's balance sheet showed $18,724,000 in total assets and $74,834,000 in total liabilities, resulting in a stockholders' deficit of $64,720,000. A full-text copy of the company's quarterly report is available for free at http://researcharchives.com/t/s?1504 "I am pleased with our cost reduction programs and enhanced manufacturing processes, as well as the momentum we are experiencing for our large-format Saphion(R) batteries," said Dr. James R. Akridge, president and chief executive officer of Valence Technology. "We will remain focused on cost control, quality processes and products, improved productivity and higher revenue, while diligently working to bring the Company to profitability." Going Concern Doubt As reported in the Troubled Company Reporter on July 5, 2006, Deloitte & Touche LLP expressed substantial doubt about Valence's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ending March 3, 2006. Deloitte & Touche pointed to the Company's recurring losses from operations, negative cash flows from operations and net stockholders' capital deficiency. About Valence Headquartered in Austin, Texas, Valence Technology, Inc., -- http://www.valence.com/-- develops and markets battery systems using Saphion(R) technology, the industry's first commercially available, safe, large-format Lithium-ion rechargeable battery technology. Valence Technology holds an extensive, worldwide portfolio of issued and pending patents relating to its Saphion technology and lithium-ion rechargeable batteries. The company has facilities in Texas, Las Vegas, Nevada, and Suzhou and Shanghai, China. VB CHOWCHILLA: Case Summary & Five Largest Unsecured Creditors -------------------------------------------------------------- Debtor: VB Chowchilla IV, LLC 5213 Clayton Road Suisun Valley, CA 94534 Bankruptcy Case No.: 06-24740 Chapter 11 Petition Date: November 13, 2006 Court: Eastern District of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Wendy Dezzani, Esq. Meegan, Hanschu & Kassenbrock 1545 River Park Drive, Suite 550 Sacramento, CA 95815-4615 Tel: (916) 925-1800 Total Assets: $13,250,000 Total Debts: $10,234,920 Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mark Raeber Loan $120,000 1002 North 11th Avenue Hanford, CA 93230 83 Architects Trade Debt $78,000 2020 alameda Padre Serra Suite 133 Santa Barbara, CA 93103-1756 Provost & Pritchard Trade Debt $70,250 285 West Cromwell Avenue Fresno, CA 93711-6162 Dan Segur Trade Debt $31,500 21 Nob Hill Drive Danville, CA 94526 Technicon Engineering Services Trade Debt $12,170 4539 North Brawley Avenue Suite 108 Fresno, CA 93722 VESTA INSURANCE: Files 1st Amended Plan & Disclosure Statement -------------------------------------------------------------- Vesta Insurance Group, Inc., delivered to the U.S. Bankruptcy Court for the Northern District of Alabama its amended and restated Chapter 11 Plan of Liquidation and Disclosure Statement on November 7, 2006. Pursuant to the Amended Vesta Plan, the first distribution to Vesta creditors will be made no later than 210 days after the Plan's effective date. Vesta will have no obligation to make Distributions on account of an Allowed Claim if the aggregate amount of all Distributions authorized or required to be made at the time in question is less than $5,000 or to a specific allowed claimholder if the amount to be distributed to that holder on a particular date does not constitute a final distribution to the holder and is less than $50. Vesta states that it has acquiesced to the request of the Official Committee of Unsecured Creditors in its case to appoint Lloyd T. Whitaker as Plan Trustee. Mr. Whitaker will be paid from available funds in the estate under the terms and conditions of the retention agreement that will be negotiated with the VIG Committee. Vesta relates that there remains open the overriding question of the current status of the Insurance Receiverships and the projected impact that the liquidations and rehabilitations will have on the Estate. Little or no information has been provided to Vesta by any Receiver as to the steps being taken to administer the entities or the projected return expected on a company-by-company basis. Vesta relates that it is impossible for it to make any predictions as to the impact, whether positive or negative, of the Insurance Receiverships on the Estate. Vesta assures the Court that the Plan is not intended to and does not diminish any property, including any cause of action, that is owned by a Receiver, or assert an interest in property owned by a Receiver, provided the property is not also Estate Property, or if it is, the Estate's interest in the property is subordinate or must yield to the interest of the Receiver pursuant to the McCarran-Ferguson Act. Vesta, acting by and through a Plan trustee and after consultation with the Committee, may abandon, destroy or contribute to a charitable organization any item of tangible Estate Property, which are of inconsequential value with an original cost value equal to or less than $10,000, without notice to any person. The abandonment clause also allows Vesta to abandon or destroy any books or records in its possession, custody or control after providing at least 20 days written notice to counsel of each Receiver, if the information contained relates to the business of an Insurance Company for which the Receiver is authorized to act; counsel of Plan Committee; and the J. Gordon Gaines, Inc. Trustee. A full-text copy of Vesta's First Amended Plan is available at no charge at http://ResearchArchives.com/t/s?14ec A full-text copy of Vesta's First Amended Disclosure Statement is available at no charge at http://ResearchArchives.com/t/s?14eb Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VESTA INSURANCE: Committee Wants Voting Deadline Established ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Vesta Insurance Group, Inc., tells the U.S. Bankruptcy Court for the Northern District of Alabama that Vesta Insurance Group Inc. seeks to bar from voting on its Chapter 11 Plan of Liquidation the unscheduled claimholders that have not filed their claims by the proposed record holder date, which could be as early as November 9, 2006, the hearing to approve the Debtor's Disclosure Statement. Colin M. Bernardino, Esq., at Kilpatrick Stockton LLP, in Atlanta, Georgia, relates that only creditors who carefully study the Debtor's request will know that they will have to file proofs of claim before November 9 to preserve their rights to vote on the Plan. He notes that Vesta has only circulated its request to a limited number of creditors and parties-in-interest; the others will not receive notice of the proposed proof of claim deadline until after the order approving the voting procedures has been entered. The VIG Creditors' Committee asks the Court to establish the Voting Deadline as the date by which creditors must file their proofs of claim to vote on the Plan. Moreover, the VIG Creditors' Committee tells the Court that Vesta should be required to amend its schedules to show claimholders as opposed to Vesta being allowed to file a list of its choosing without following the requirements of Rules 1007, 1008, and 1009 of the Federal Rules of Bankruptcy Procedure. Mr. Bernardino asserts that the order should allow for assignees of "transferred and assigned filed or scheduled claim" to be allowed to vote if the transfer and assignment have been timely and properly noted, to ensure that assignees of claimholders can vote. The VIG Committee also asks the Court to require the Debtor to consult with the panel regarding any decision whether to allow or disallow a ballot or any similar ballot tabulation issues. The VIG Committee insists that the Debtor should tabulate the ballots and report the results not later than two business days before the Plan confirmation hearing. (2) Wilmington Trust Wilmington Trust Company is the trustee with respect to an Indenture dated as of January 31, 1997, pursuant to which Vesta Insurance Group, Inc., issued its 8.525% Junior Subordinated Deferrable Interest Debentures. Wilmington Trust relates that it is currently working with the Debtor to reach a consensual resolution on certain provisions in the Disclosure Statement and the proposed solicitation and voting procedures. Wilmington Trust advises the Court that it will file objections in the event it is unable to reach an agreement with the Debtor. In this regard, Wilmington Trust seeks Judge Bennett's permission to raise its objections concerning Vesta's Chapter 11 Plan of Liquidation and Disclosure Statement and the proposed voting and soliciting procedures before the Court at the Disclosure Statement hearing. Objections to Vesta & Gaines Disclosure Statements (1) Special Deputy Receiver Prime Tempus, Inc., the Special Deputy Receiver appointed by the Texas Department of Insurance to oversee the receivership of certain insurance companies, tells the Court that the Disclosure Statements explaining the Chapter 11 Plans of Liquidation separately filed by Vesta Insurance Group, Inc., and J. Gordon Gaines, Inc., do not contain necessary "adequate information" to make an informed decision on whether to vote to accept or reject the Plans. The Texas Insurance Companies hold approximately $47,062,000 of unsecured claims pursuant to the Debtors' schedules of assets and liabilities. The Texas Insurance Companies comprise: * Vesta Fire Insurance Corp., * Vesta Insurance Corp., * Shelby Casualty Insurance Co., * The Shelby Insurance Co., * Texas Select Lloyd's Insurance Co., and * Select Insurance Services, Inc. George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, in Dallas, Texas, argues that the Debtors are impermissibly attempting to accelerate the December 11, 2006 Claims Bar Date for purposes of voting on the Plans. Mr. Tarpley relates that the Debtors are seeking to limit voting to holders of claims or interests who either: (i) have filed a proof of claim by the Record Holder Date; (ii) hold a claim listed on the Debtors' schedules as not contingent, unliquidated, or disputed; and (iii) hold a claim identified on any list filed by the Debtors before Plan confirmation. Mr. Tarpley states that all claims included on the Debtors' schedule, including the Texas Insurance Companies' claims, are unliquidated. Furthermore, the Debtors have not yet filed any list of claims with the Court identifying claims that are permitted to vote on the Plans. Therefore, he says, only those claimants who file a proof of claim before the record holder date can vote on the Plans. To protect their voting rights, the Texas Insurance Companies must either file a claim sooner than the Court-ordered Claims Bar Date, or risk being disenfranchised by the Debtors' actions. Accordingly, Prime Tempus asks the Court to deny the Debtors' request for establishment of the Record Holder Date to the extent it conflicts with the Claims Bar Date. In addition, Mr. Tarpley complains that the Disclosure Statement fails to adequately address the proposed funding of both Plans. He says that the Disclosure Statements address myriad possible estate causes of action that the Debtors may have against insiders, third parties, legal and accounting firms, and affiliated entities. Information on the anticipated value of, viability of, and costs associated with pursuing the potential causes of action are not provided, he notes. Mr. Tarpley contends that it would be impossible for Prime Tempus to determine whether the interests represented will be better protected through the Plans or a Chapter 7 liquidation of assets. To the extent that the Debtors have valued, determined the viability of, and assessed the costs of pursuing the Debtors estate's potential causes of action, the Debtors' Disclosure Statements should disclose that information. Furthermore, to the extent that the Debtors have not fully evaluated the estate's potential causes of action, Mr. Tarpley maintains that the Debtors should disclose: -- at what stage the evaluation process is; -- how long before the Debtors anticipate they will fully evaluate all potential causes of action; and -- the anticipated budget for the causes of action. Mr. Tarpley relates that the Disclosure Statements contain a list of approximately 150 different entities that might have potential causes of action against the Debtors, including Prime Tempus and the Texas Insurance Companies. He asserts that inadequate information on the nature or viability of the causes of action makes it hard for Prime Tempus to assess and evaluate how the causes of action will affect Prime Tempus or the Texas Insurance Companies under the Plans. Prime Tempus' continued access to Vesta's books and records on matters concerning the Insurance Subsidiaries and the Receivers are not disclosed, Mr. Tarpley contends. With regards to exculpatory clause of the Plans, the "release" of negligence claims, if any, is without support in the law and should be deleted from the Plan, he points out. Prime Tempus wants both Disclosure Statements clarified to provide that no injunction is sought against any action by the receivers that they are authorized to take pursuant to the state insurance codes. Prime Tempus further insists that both the Disclosure Statements and the Plans should clarify that nothing attempts or has the effect of: -- limiting the jurisdiction or authority of the receivership courts overseeing the Insurance Subsidiaries; -- enjoining the Receivers from taking any action authorized by the insurance codes under which they operate; -- mandating or limiting venue of any actions available to the Receivers; -- creating bankruptcy jurisdiction that has been "reverse preempted" by applicable non-bankruptcy law, including the McCarran-Ferguson Act; and -- limiting or asserting an interest in property, including causes of action, owned or controlled by the Receivers. (2) Bankruptcy Administrator J. Thomas Corbett, as Chief Deputy Bankruptcy Administrator for the Northern District of Alabama, asks the Court to deny approval of the Disclosure Statements separately filed by VIG and Gaines because they do not: a) set a date certain for the liquidation of tangible assets, including real and personal property; b) provide an estimate of the costs associated with a complete liquidation of the Debtor's assets; c) provide for the treatment or ownership of assets ultimately not liquidated; d) include a retention agreement for a Plan trustee; and e) identify what future business operations will be conducted by the reorganized Debtor in the event that all assets are not liquidated. Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the Company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines, Inc., is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The Company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered the Order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VOIP INC: Files Restated Results for 2006 Quarter Ended June 30 --------------------------------------------------------------- VoIP Inc. delivered its amended financial statements on Form 10- Q/A for the second quarter ended June 30, 2006, to the Securities and Exchange Commission. The company restated its financial statements for the three months ended June 30, 2006, which understated other income and warrant liabilities, and overstated net loss and additional paid-in capital. Restated 2006 Quarterly Results For the three months ended June 30, 2006, the Company incurred a $5.1 million net loss on $9 million of net revenues compared to a $3.5 million net loss on $1.4 million of net revenues for the same period in 2005. At June 30, 2006, the Company's restated balance sheet showed total assets of $49,760,228, total liabilities of $31,768,585 and total stockholders' equity of $17,991,643. The Company's June 30 balance sheet also showed strained liquidity with $5,350,695 in total current assets available to pay $31,514,773 in total current liabilities. A full-text copy of the Company's restated quarterly report is available for free at http://researcharchives.com/t/s?14fc Going Concern Doubt Berkovits, Lago & Company, LLP, in Fort Lauderdale, Florida, raised substantial doubt about VoIP 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 lack of sufficient working capital and recurring losses. About VoIP VoIP, Inc. provides communications services to communication companies, businesses, and residential consumers. The company also sells various communication hardware to broadband service providers. VWR INTERNATIONAL: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. healthcare services sector, the rating agency confirmed its B2 Corporate Family Rating for VWR International, Inc. Additionally, Moody's held its probability- of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior Secured EURO Term Loan B2 Ba3 LGD2 24% Senior Secured Gtd. U.S. Dollar Term Loan due 2011 B2 Ba3 LGD2 24% Senior Secured Gtd. Revolver, due 2009 B2 Ba3 LGD2 24% Senior Unsecured Gtd. Notes, due 2012 B3 B3 LGD4 67% CDRV Investors Inc. (parent) Senior Subordinated Unsecured Guaranteed Notes, due 2014 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%). Headquartered in West Chester, Pennsylvania, VWR International distributes scientific supplies, which is diversified across a spectrum of products and services, customer groups and geography. The company offers more than 750,000 products, from more than 5,000 manufacturers, to over 250,000 customers throughout North America and Europe. VWR's primary customers work in the pharmaceutical, life science, chemical, technology, food processing and consumer product industries. Its customers also include universities and research institutes; governmental agencies; environmental testing organizations; and primary and secondary schools. VWR International affiliates operate in 18 countries and employ almost 6,000 people. WERNER LADDER: Court Extends Plan-Filing Period to January 15 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the exclusive periods of Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates: (i) to file a plan of reorganization through and including Jan. 15, 2007; and (ii) to solicit acceptances for the plan through and including March 16, 2007. The Court directs the Debtors to deliver their budget for the 2007 fiscal year by Dec. 15, 2006, and their long-term business plan for fiscal years 2008 through 2010 by Jan. 7, 2007. If the Debtors fail to meet the Dec. 15, 2006 and Jan. 7, 2007 deadlines, the Official Committee of Unsecured Creditors; the Second Lien Lenders; Black Diamond Commercial Finance LLC, as the administrative agent under the $99,000,000 DIP Facility; and the lenders under the First Lien Credit Agreement dated June 11, 2003, can seek relief from the Court, on appropriate notice, to terminate the Exclusive Periods. The Debtors' failure to meet the deadlines will be a factor that the Court may consider upon any motion to terminate. Second Lien Committee's Support The Ad Hoc Committee of Second Lien Note Holders under the $100,000,000 Senior Credit Facility dated May 10, 2005, and Credit Suisse First Boston, the administrative agent under the Second Lien Facility, are willing to support a limited extension of the Debtors' exclusive periods to file, and solicit acceptances of, a reorganization plan, subject to conditions that have been the subject of ongoing negotiations with the Debtors. Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los Angeles, California, relates that the Second Lien Committee's support to an extension is conditioned upon, among others, the approval by the Debtors' Board of Directors and Chief Executive Officer of the designation and appointment of a Chief Restructuring Officer, who will oversee and manage the Debtors' restructuring process and report accordingly to the CEO and the Board. The Second Lien Committee and CSFB reserve their rights to expressly preserve, subject to the Court's order, their legal and equitable rights with respect to the Extension Motion in the unlikely event that the terms of their support do not materialize in the ongoing discussions. Court Decree The Hon. Kevin J. Carey overrules any responses or objections to the Debtors' request, except for the response and reservation of rights filed by the Second Lien Committee and CSFB. About Werner Ladder Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The firm of Willkie Farr & Gallagher LLP serves as the Debtors' counsel. Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor. Greenberg Traurig LLP is counsel to the Official Committee of Unsecured Creditors. Jefferies & Co serves as the Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WERNER LADDER: Court Okays Neil Minihane as Committee Consultant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorizes the Official Committee of Unsecured Creditors appointed in the bankruptcy cases of Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates, to retain Neil J. Minihane as its consultant. Pursuant to an Engagement Letter dated Sept. 7, 2006 with the Committee, Mr. Minihane agrees to: (a) review and analyze the Debtors' historical financial and operations data relating to their operations in Chicago, Illinois and Juarez, Mexico, including, profits and loss information and cash usage analyses relating to these facilities; (b) assess and periodically advise the Committee regarding the status and progress of the transition of the Debtors' operations from Chicago to Juarez, and provide suggestions or recommendations as may be appropriate or necessary; (c) advise and attend meetings of the Committee and its professionals, as appropriate; (d) advise and attend meetings with third parties, including the Debtors, as may be requested by the Committee, or otherwise necessary or appropriate to perform the services; (e) prepare and deliver to the Committee a written report on the status and progress of the transition of the Debtors' operations from Chicago to Juarez, and containing suggestions, recommendations and concerns relating to the transition; (f) be reasonably available for follow-up questions by the Committee concerning the report; Mr. Minihane will be: (i) paid $15,000 per week, for a period of four weeks, or as extended by Court order, commencing upon Court approval of the Application; and (ii) reimbursed for reasonable and necessary expenses relating to the services provided. Mr. Minahe assures the Court that he does not hold or represent an interest adverse to the Committee or the bankruptcy estates. He is a "disinterested person" as that term is defined in Section 101 (14) of the Bankruptcy Code. Second Lien Committee's Objection The Ad Hoc Committee of Holders of Second Lien Claims under the $100,000,000 Senior Secured Credit Facility tells the Court it is not opposed in concept to having an expert in the transition of U.S. manufacturing operations to Mexico "look over the shoulder" of the Debtors' management in formulating and implementing an important and fundamental business strategy. The Second Lien Committee believes that Neil J. Minihane's analysis and report may provide valuable insight to all creditor constituencies. The Second Lien Committee, however, does not believe that the product of an estate-funded process should remain the exclusive and confidential work product of the Unsecured Creditors' Committee. "The Minihane analysis, as proposed, is not a tool for litigation. It must be a tool to provide expert insight to the Debtors and assist the principal creditor constituencies in their evaluation of the Debtors' transition plan," Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, LLP, in Wilmington, Delaware, says. Black Diamond Commercial Finance, LLC, as sole administrative agent, collateral agent, book runner, lead arranger, and documentation agent, for the lenders under the DIP Agreement, agrees with the Second Lien Committee. Judge's Decree The Court has required Mr. Minihane to the U.S. Trustee and the Debtors a record of the number of hours worked each day and a description of his services performed. The Hon. Kevin J. Carey also ruled that the final report of Mr. Minihane that is delivered to the Committee will also be delivered to the Debtors, the Second Lien Committee, and to JPMorgan Chase Bank, N.A., as Agent under the First Lien Credit Agreement dated June 11, 2003, and to Credit Suisse, Cayman Island Branch, as Agent under the Second Lien Credit Agreement dated May 10, 2005. Mr. Minihane will not be liable to the Debtors, the Second Lien Committee, and the Agents under each of the DIP Financing Agreements regarding the preparation or content of the final report. About Werner Ladder Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The firm of Willkie Farr & Gallagher LLP serves as the Debtors' counsel. Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor. Greenberg Traurig LLP is counsel to the Official Committee of Unsecured Creditors. Jefferies & Co serves as the Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WERNER LADDER: Ct. OKs 5th Amended Agreement with Grupo American ---------------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates, obtained authority from the U.S. Bankruptcy Court for the District of Delaware to enter into a fifth amendment of a service agreement with Grupo American Industries, S.A. DE C.V., effective July 1, 2006. Werner Co. is a party to a service agreement dated Aug. 1, 2003, with Grupo American Industries, S.A. DE C.V., in connection with the operation of the Debtors' facility in the city of Juarez, Mexico. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, related that the services provided to the Debtors by AI are critical and include, but are not limited to: (i) human resources activities; (ii) accounting and fiscal services; (iii) customs activities; (iv) freight forwarding activities; (v) environmental control; (vi) purchasing of non-production materials; and (vii) expatriate support. The Debtors pay AI a "Shelter Fee" for its services, which is based on the number of full-time employees at the Juarez Facility in any given week and the total number of hours the employees work in that given week. Shelter Fee payments made by the Debtors for the past three years were: Year-to-Date Payment ------------ ------- June 2004 $753,132 June 2005 977,986 June 2006 611,261 The Shelter Agreement is currently set to expire on June 30, 2007. The Debtors wanted to extend the term of the Agreement and obtain certain immediate cost savings. To that end, the Debtors and AI have reached an agreement whereby, in exchange for an 18-month extension of the Shelter Agreement, through Dec. 31, 2008, AI has agreed to reduce its current Shelter Fee rates, retroactive to July 1, 2006, and assume 50% of an employee housing cost program -- up to $69,953 -- in which housing will be provided to labor force employees that AI will hire and bring to Juarez from other areas of Mexico. The Amendment expressly provides that the Shelter Agreement will remain a prepetition agreement and any claims related thereto will be prepetition claims. Mr. Brady explains that the Juarez Facility is a cornerstone of the Debtors' operational restructuring plan. The services provided by AI at the Juarez Facility are essential to the Debtors' operations there, Mr. Brady says. The Debtors expect to save approximately $1,100,000 as a result of the Amendment. Mr. Brady relates that approximately $350,000 of the cost savings would be realized prior to the end of the current contract term and the remaining $750,000 would be realized during the extended term. The Debtors intend to perform in-house many, if not all, of the services currently provided by AI, but the Debtors do not have sufficient resources to do this by June 30, 2007. The Debtors estimate that they will spend approximately $2,700,000 under the Shelter Agreement through December 2008. If the Debtors were to provide the same services themselves through December 2008, they estimate that it would cost approximately $3,000,000. About Werner Ladder Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The firm of Willkie Farr & Gallagher LLP serves as the Debtors' counsel. Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors as its co-counsel. The Debtors have retained Rothschild Inc. as their financial advisor. Greenberg Traurig LLP is counsel to the Official Committee of Unsecured Creditors. Jefferies & Co serves as the Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WORLD AIRCRAFT: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: World Aircraft Connection, Inc. 1450 Coachlight Way Dunedin, FL 34698 Bankruptcy Case No.: 06-06427 Type of Business: The Debtor manufactures and wholesales aircraft parts and equipment. Chapter 11 Petition Date: November 14, 2006 Court: Middle District of Florida (Tampa) Debtor's Counsel: David S. Jennis, Esq. Jennis Bowen & Brundage, P.L. 400 North Ashley Drive, Suite 2540 Tampa, FL 33602 Tel: (813) 229-1700 Fax: (813) 229-1707 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Helimarket Ltd. Payment Under $822,400 Akara Building 24 Contract De Castro Street Wickhams Cay I Road Town Tortola British Virgin Islands Michael Taylor Smith Payment Under $421,013 Zulu Aviation Africa Contract [no address provided] Dr. J Samuel Grimes Jr. Payment Under $418,065 [no address provided] Contract Luc Marcoux Payment Under $362,000 2033 Thomas Street Contract Hollywood, FL 33020 Walter Wolf Payment Under $345,000 c/o Christopher D. Ekman Contract Heilmann Ekman & Associates P.O. Box 216 Burlington, VT 05402-0216 Gilbert Greaux Payment Under $282,500 148 Torino Lane Contract Kissimmee, FL 34759 Serge Ouimet Payment Under $230,000 Contract Heriot Aviation (Pty.) Ltd. Payment Under $225,000 Contract Dan Christensen Payment Under $216,613 Contract Robert Perry Payment Under $200,000 Contract Armstrong Helicopters Ltd. Payment Under $200,000 Contract Fred London Payment Under $150,000 Contract Ceryl Johns Payment Under $130,000 Contract Don Nelson Payment Under $125,000 Contract Clemente Torres Payment Under $125,000 Contract Avalair Helicopters, Inc. Payment Under $120,000 Contract Robert Eremian Repair $90,287 Reimbursement Justo Niebla Settlement Balance $75,000 City of Wilmington NC Deposit for $60,000 Refurbishment Rotorcraft Leasing Co. LLC Payment due under $26,000 successful bid WORLDCOM INC: Qwest Wants to Recover Terminating Access Charges --------------------------------------------------------------- Qwest Corporation commenced a complaint against MCI Inc. and certain other entities, seeking to recover unpaid terminating access charges, plus late fees and prejudgment interest, for indirectly delivered calls made subsequent to WorldCom Inc. and its debtor-affiliates' bankruptcy filing. The other defendants are: * MCI Communications Corporation, * MCI Network Services, Inc., * MCI Telecommunications Corp., * MCI WORLDCOM Communications, Inc., * MCImetro Access Transmission Services LLC, * Telecom USA, Inc., and * Teleconnect Company, * Teleconnect Long Distance Service & Systems Company, * TTI National, Inc., and * WorldCom Technologies Inc. Qwest's Complaint was originally filed under seal. With the consent of Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the District of New York, the Complaint has been made a public record. Qwest provides local, intraLATA toll and exchange access telecommunications services in all or parts of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. Access Charges The use of local exchange networks to originate and terminate long distance calls is known as access service. Interexchange carriers, like the Debtors, use access services of local exchange carriers, like Qwest, as elements in an end-to-end long-distance call that the interexchange carriers sell as their product to their own long distance customers. The transmission of an interexchange call from the calling party's premises or telephone to a long-distance carrier's network is known as "originating access." If the calling party is a local service customer of Qwest, but an interexchange service customer of any of the Debtors, the Debtors are required to pay Qwest originating access charges for the use of Qwest's network to place interexchange calls. The transmission of an interexchange call over the local exchange carrier's network to the called party's premises or telephone is known as "terminating access." If the called party is a local service customer of Qwest, but an interexchange service customer of any of the Debtors, those Debtors are required to pay terminating access charges to Qwest. The amount of originating and terminating access charges payable by interexchange carriers is governed by federal and state tariffs applicable to a given interexchange call. MCI Failed to Pay Qwest Access Charges Scott A. Golden, Esq., at Hogan & Hartson L.L.P., in New York, relates that subsequent to the Petition Date, interexchange service customers of the Debtors made long distance calls to local service customers of Qwest, which were terminated or transported using Qwest's facilities. Some of the calls were Directly Delivered Calls while others were Indirectly Delivered Calls. Under applicable non-bankruptcy law and federal and state tariffs filed by Qwest, MCI is required to pay Qwest the terminating access charges set forth in the tariffs for the use of Qwest's network to terminate or transport long-distance calls, regardless of whether those calls were Directly Delivered Calls or Indirectly Delivered Calls. Mr. Golden contends that the Debtors failed to pay terminating access charges to Qwest on many of the Directly Delivered Calls and Indirectly Delivered Calls made subsequent to the Petition Date. "The charges paid by [the Debtors] to third-party carriers for Indirectly Delivered Calls did not reflect, incorporate or cover the terminating access charges set forth in Qwest's applicable tariff," Mr. Golden avers. Mr. Golden relates that at an April 11, 2006 hearing, the Debtors' counsel appeared to have suggested to the Court that the Debtors may have delivered Indirectly Delivered Calls to Qwest through AT&T pursuant to a "very favorable volume" or other private "contract" between Qwest and AT&T. Mr. Golden argues that the assertion of the Debtors' counsel is false. Mr. Golden maintains that Qwest offers and provides access services exclusively through its tariffs. Furthermore, the Indirectly Delivered Calls are subject to the rates for switched access service, which do not include volume discounts. In addition, the Indirectly Delivered Calls at issue were delivered by the Debtors to Qwest through third-party carriers other than AT&T, Mr. Golden says. Mr. Golden tells the Court that Qwest did not know that the Debtors failed to pay the applicable terminating access charges on the calls until late 2003, when Qwest completed and analyzed certain studies to calls originating and terminating on its local exchange facilities because: -- the Indirectly Delivered Calls were delivered to Qwest over facilities used for local calls; or -- the Indirectly Delivered Calls were not accompanied by "signaling" information used to determined whether a call is local, intrastate long distance or interstate long distance. Accordingly, Qwest asks the Court to: (a) for all Indirectly Delivered Calls placed subsequent to the Petition Date, rule that the Debtors have violated applicable non-bankruptcy state and federal law and breached the State and Federal Tariffs; (b) rule that the Debtors are liable for all unpaid terminating access charges with respect to those Indirectly Delivered Calls, plus late fees and prejudgment Interest; (c) direct the Debtors to pay Qwest an amount equal to the sum of the unpaid terminating access charges plus late fees and prejudgment interest; (d) award costs and attorney's fees Qwest incurred in connection with the complaint; and (e) compel the Debtors to deliver a full accounting of the number of interexchange minutes indirectly to Qwest through unaffiliated third-party carriers subsequent to the Petition Date, and the number of those minutes for which the Debtors have failed to pay Qwest the federal and state tariffed terminating access charges. Mr. Golden clarifies that Qwest's Complaint does not include claims for terminating access charges for Directly Delivered Calls. Those Claims are subject to a complaint filed by Qwest in the United States District Court for the District of Colorado on January 9, 2006. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WORLDCOM INC: Wants to Recover Excess Commission Payments to HSG ---------------------------------------------------------------- In August 1998, WorldCom Technologies Inc., later known as MCI WorldCom Communications, Inc., and HSG/ATN, Inc., entered into a representation agreement, as amended, whereby HSG agreed to obtain orders for certain WorldCom services. WorldCom agreed to pay HSG residual commissions, based on the Adjusted Billed Usage of Services, after termination of the Agreement as long as a Customer's Adjusted Billed Usage exceeds $25,000 per month. WorldCom's obligation to pay commissions ceases the first month that the Customer's Adjusted Billed Usage drops below that threshold. On June 28, 2002, HSG sent WorldCom a termination notice of the Agreement. According to Douglas Y. Curran, Esq., at Stinson Morrison Hecker LLP, in Kansas City, Missouri, WorldCom accepted the termination and reminded HSG that it is required to comply with Section 8.1 of the Agreement, which provides that as long as the Debtor pays the commissions, HSG would not contact any WorldCom Group customers procured pursuant to the Agreement for the purpose of inducing them to switch to a competing service provider. HSG, however, solicited Customers for another service provider in violation of the Agreement, Mr. Curran relates. On November 14, 2002, after discovering HSG's solicitation, WorldCom sent HSG notice of its breach as required under the Agreement. HSG is not entitled to the residual commissions that would have been payable in and after December 2002, Mr. Curran argues. Under Section 8.3 of the Agreement, WorldCom was permitted to terminate commission payments to HSG as a result of the violation of the Agreement. "Any recovery for HSG/ATN must be offset by inadvertent overpayments," Mr. Curran asserts. "[The] Court determined in its April 27, 2004 Memorandum Decision and Order Regarding Motion for Allowance and Payment of Administrative Claim by HSG/ATN, Inc. that the residual commissions are not entitled to administrative expense priority," Mr. Curran declares. Pursuant to the April 27 Order, Mr. Curran contends that WorldCom overpaid HSG in September to November 2002. "WorldCom paid HSG $435,211 in residual commissions allegedly due in September, October and November 2002, at 100 cents on the dollar instead of as Class 6 claims under the Bankruptcy Plan," Mr. Curran says. Mr. Curran also argues that even if WorldCom had been obligated to continue making commission payments despite HSG's breach, HSG has significantly overestimated the commissionable revenue that Customers have produced and will produce for WorldCom, to entitle it to commissions totaling $9,667,051. "In calculating the Claim amount, HSG has erroneously relied on an irrelevant and incorrect customer attrition rate instead of a revenue attrition rate based upon actual commissionable revenue," Mr. Curran contends. Moreover, HSG's calculation of future commissions is too speculative to be recoverable, Mr. Curran adds. Accordingly, the Debtors assert that: * HSG tortiously interfered with WorldCom's contractual relationships with Customers and WorldCom's business and prospective business relationships, through its egregious solicitation of Customers; * HSG's solicitations of current WorldCom Customers and WorldCom agents were intentional, willful and malicious; * HSG's solicitations were calculated to cause damage to WorldCom's business and to interfere with its current contractual relationships with its Customers; * HSG's solicitations were wrongful, egregious and without justification; * HSG benefited and WorldCom was injured and suffered damages as a result of the solicitations; * HSG's multiple solicitation efforts violated the automatic stay because they were actions taken to obtain possession of estate property, namely WorldCom's Customer accounts. Accordingly, the Debtors seek to recover the excess commission payments made to HSG, plus compensatory damages, as well as punitive damages due to the egregiousness of HSG's solicitations, costs, attorneys' fees, and any other relief as the U.S. Bankruptcy Court for the District of New York deems just. Debtors Object to HSG Claims In November 2003, HSG filed Amended Claim No. 36482 for $7,106,348 for services performed. The Debtors argued that Claim No. 36482 was not timely filed, is not entitled to administrative status and does not include sufficient supporting documentation. After some investigation, the Debtors discovered that HSG filed another claim on January 23, 2003, assigned as Claim No. 38458. Similarly, the Debtors opposed the Claim because it did not provide sufficient information to permit them to evaluate it. The Debtors also asserted that Claim No. 38458 is a duplicate claim and HSG failed to mitigate damages. Mr. Curran reminds Judge Gonzalez that HSG did not seek the Court's permission to amend its November 18, 2003, proof of claim. Even if HSG had sought permission to amend its original proof of claim, HSG has provided no justification for its failure to file the amendment by the January 23, 2003, Bar Date, Mr. Curran maintains. Mr. Curran notes that HSG's Claim purports to simply increase the damages HSG is seeking, but provides no justification for the recent increase in the claim amount. Mr. Curran argues that HSG's Claim is barred, in whole or in part, by the equitable doctrines of waiver estoppel, laches and unclean hands. HSG Seeks Summary Judgment HSG asks the Court to grant summary judgment in its favor, and dismiss the Debtors' Complaint with prejudice. HSG asserts that the Complaint fails to state a claim upon which relief may be granted. Eric B. Fisher, Esq., at Morgenstern Jacobs & Blue, LLC, in New York, maintains that the claims asserted by the Debtors are barred by the applicable statutes of limitations, the doctrine of unclean hands, the doctrine of laches, waiver and equitable estoppel, collateral estoppel, payment, res judicata, and release. The Debtors also failed to mitigate or otherwise act to lessen or reduce the alleged damages, Mr. Fisher adds. Mr. Fisher argues that the Debtors' Complaint is a pressure tactic designed to impose costs and burdens on HSG, in order to gain leverage over HSG with respect to its pending proof of claim against WorldCom. Mr. Fisher asserts that HSG is entitled to summary judgment for these reasons: (a) WorldCom's claim for postpetition payments is barred by the statute of limitations; (b) WorldCom's claims for tortious interference with its customer and agent contracts and with its business relationships are a transparent effort to restate breach of contract claims as tort claims; (c) WorldCom seeks to recover for alleged wrongful conduct occurring outside the statute of limitations period for the claims; and (d) WorldCom is not entitled to seek damages under Section 362(h) of the Bankruptcy Code as a matter of law. Debtors Oppose HSG's Summary Judgment Motion Summary judgment is appropriate when there is no genuine issue of material fact and the moving party demonstrates that it is entitled to judgment as a matter of law. HSG has the initial burden of demonstrating the absence of a genuine issue of material fact, Mr. Curran asserts. Mr. Curran argues that: (a) the Debtors' claim under Section 549 of the Bankruptcy Code is timely; (b) the Debtors' tortious interfence claims are not barred because they have not filed any breach of contract claims; (c) the Debtors' tort claims are timely; and (d) the Debtors are entitled to damages for the willful violation of the automatic stay. Mr. Curran maintains that the Debtors clearly initiated proceedings prior to the expiration of the required two-year period -- first when they demanded the return of the funds in the objection to HSG's administrative priority motion in 2003 and then again when they objected to HSG's claims in October 2004, and sought the return of the benefit of the postpetition payments. Accordingly, the Debtors ask the Court to deny HSG's Summary Judgment Motion. HSG Talks Back Mr. Fisher maintains that the Section 549 claim should be dismissed because: (a) The Complaint for turnover of the certain payments was commenced approximately three years after the last of those payments; (b) The Court's Administrative Claim Decision and the subsequent May 11, 2004 Order specifically directed WorldCom to commence an adversary proceeding, but WorldCom failed to file the proceeding before the statute of limitations expired; and (c) Due to the delay, WorldCom has been unable to retrieve relevant documents from former WorldCom employees with knowledge of the matters at issue. * * * The Court directed the parties to complete all fact and expert depositions by December 1, 2006. A pre-trial conference will be held on January 23, 2007. About WorldCom WorldCom, Inc., a Clinton, MS-based global communications company, filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, WorldCom listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on Oct. 31, 2003, and on Apr. 20, 2004, the Company formally emerged from U.S. Chapter 11 protection as MCI, Inc. On Jan. 6, 2006, MCI merged with Verizon Communications, Inc. MCI is now known as Verizon Business, a unit of Verizon Communications. (WorldCom Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) YOUTH AND FAMILY: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. rental company sector this week, the rating agency confirmed its B2 Corporate Family Rating for Youth and Family Centered Services, Inc. Additionally, Moody's revised 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 ---------- ------- ------- ------ ---------- Senior Secured Revolving Credit Facility due 2012 B2 B1 LGD3 41% Senior Secured Term Loan B due 2013 B2 B1 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%). Youth and Family Centered Services, Inc., provides affordable, successful health, education and assisted living services, to troubled children and adolescents through the acquisition of specialized service companies throughout the country. * Cadwalader Wickersham Names 24 Attorneys as Special Counsels -------------------------------------------------------------- Cadwalader, Wickersham & Taft LLP, disclosed the promotion of 24 attorneys to the position of Special Counsel. "Cadwalader has long recognized the need to develop and retain its most valuable asset - our attorneys," Robert O. Link, Jr., Cadwalader's Chairman, states. "The position of Special Counsel supports this effort and provides recognition and incentive for our experienced attorneys who have demonstrated excellent legal and management skills and expertise in their area of practice. "Above and beyond that, these attorneys have worked very hard, have excellent working relationships with clients, train and mentor junior staff, and have made significant contributions to our pro bono, diversity, recruiting and marketing efforts. "We are very fortunate to have so many talented and deserving lawyers to promote this year. We congratulate them on their achievements and look forward to their continued success with us." Aaron Benjamin, an attorney in the Capital Markets Department in Charlotte, focuses on structured finance, derivative products, other innovative limited-recourse lending transactions, secured transaction law and the federal securities laws. He received his J.D. from the University of Toronto Law School and his undergraduate degree, with high honors, from Carleton University. He is admitted to practice in the State of New York. Resident in the New York Litigation Department, Jeffrey S. Burman concentrates in the resolution of reinsurance disputes, including litigation, arbitration and mediation, and the representation of insurers, reinsurers, banks, investment banks, hedge funds, and private equity funds in insurance and reinsurance based transactions. He received his undergraduate degree from the University of Delaware, and his law degree from Rutgers University School of Law, where he was an editor of the Rutgers Law Journal. Following law school, he served as a judicial clerk for The Honorable James M. Havey, Presiding Judge of the Appellate Division of the Superior Court of New Jersey. He is a member of the bars of the States of New York and New Jersey and is admitted to practice before the United States District Courts for the Southern District of New York and the District of New Jersey. Elizabeth Butler, based in the New York Litigation Department, advises clients in a variety of areas of commercial law, including banking, insurance and reinsurance, contracts, antitrust, torts and fraud. She graduated cum laude and Phi Beta Kappa from the University of Minnesota and received her J.D. from Northwestern University School of Law. She is a member of the New York State bar. Anderson D. Caperton, resident in Charlotte, concentrates his practice in the area of real estate finance and securitization. A member of the Global Finance Department, he represents national, international, and regional financial institutions, investment banks, pension funds, and investors in connection with the financing, acquisition, disposition and leasing of commercial office buildings, regional shopping malls, shopping centers, hotels, industrial warehouses, merchandise marts, multifamily housing, and residential and planned unit developments. He received his undergraduate degree from University of Virginia, and his J.D. from University of North Carolina School of Law, where he was a member of the University of North Carolina Law Review and the founder of the North Carolina Banking Institute. He is admitted to practice in the State of North Carolina. Holly Marcille Chamberlain, also in the Global Finance Department in the Charlotte office, practices in the area of real estate finance and securitization. She represents national, international, and regional financial institutions, investment banks, pension funds, and investors in connection with the financing, acquisition, disposition and leasing of commercial office buildings, regional shopping malls, shopping centers, hotels, industrial warehouses, merchandise marts, multifamily housing, and residential and planned unit developments. She received her J.D. from New York Law School and her B.A. from Binghamton University. She is admitted to practices in New York, North Carolina and Massachusetts. Matthew Fenster focuses on litigation for a wide array of health care organizations involving general commercial matters, complex fraud, and health care reimbursement. He earned a B.S. from Cornell University and received his J.D. from New York University School of Law, where he was an editor of the NYU Journal of International Law & Politics. He is admitted to practice in the courts of the States of New York and New Jersey, and before the United States Court of Appeals for the Second Circuit and the United States District Courts for the Southern and Eastern Districts of New York. David Gingold, a member of the Capital Markets Department in New York, is experienced in corporate and capital markets transactions, including public and private debt and equity offerings (including synthetic CDOs and securitizations), public and private mergers and acquisitions, equity and credit derivatives, and various types of structured financings. He received his J.D. from the University of Michigan Law School and his B.A., with honors, from Williams College. He is admitted to practice in the State of New York. Nathan Haynes, a restructuring attorney in New York, has played significant roles in numerous chapter 11 cases, including Northwest Airlines, Lodgian, Inc., Casual Male Corp. and Bradlees Stores Inc. He is experienced in commercial litigation in state and federal bankruptcy court and with issues involving debtor and creditor rights, the enforcement of contractual obligations, loan work-outs, banking and insurance coverage. He is a magna cum laude graduate of Pace Law School, where he was Editor-in-Chief of the Pace Law Review, and a cum laude graduate of Northeastern University. He is admitted in New York and Massachusetts. Resident in the Global Finance Department in New York, Gerard Hefner represents institutional lenders in the real estate finance area, including in the origination of commercial mortgage loans and mezzanine loans secured by office buildings, apartment complexes, shopping malls, hotels, healthcare facilities and cell towers. He received his law degree from St. John's University School of Law, where he was a St. Thomas More Scholar and Associate Editor of the St. John's University Law Review. He received his undergraduate degree, summa cum laude, also from St. John' s University. He is admitted to practice in New York and the District of Columbia. Richard Jensen, resident in the New York office, concentrates in the area of asset securitization, with particular emphasis on the securitization of prime, alt-A and sub-prime residential mortgage loans. Clients he regularly represents include major mortgage, investment and commercial banks. He received his undergraduate degree from Villanova University and earned his law degree from St. John's University School of Law. He is admitted to practice in New York. Robert Kim, a New York capital markets lawyer, has developed expertise in every aspect of the commercial mortgaged-backed securities practice, including public and private CMBS offerings, real estate CDO transactions and structured mortgage and mezzanine loan participation transactions. He received his J.D. from Boston University School of Law and his A.B. from Harvard University. He is admitted to practice in the State of New York. A New York-based litigator, Stacey Lara concentrates in the areas of complex commercial and securities litigation, and antitrust related matters. She received her undergraduate degree from New York University and her J.D. from St. John's University School of Law, where she also served on the Moot Court Honor Society. She is admitted to practice in New York State and before the United States District Court for the Southern District of New York. Jeffrey Legault, a corporate lawyer in New York, represents large corporate entities as well as global investment banks in domestic and cross-border mergers and acquisitions, private placements and joint ventures. He received his undergraduate degree from Queen's University in Kingston, Ontario, Canada and his LL.B. from the Faculty of Law of the University of Toronto. He is admitted in New York and Canada. Ivan Loncar, an attorney in the Capital Markets Department in New York, focuses his practice on fixed income and credit derivatives and structured financial products. He represents dealers, banks and other financial institutions in connection with interest rate, total return, and credit default swaps and other structured financial products that combine securitization techniques and derivative products. He received his LL.B. from University of Belgrade School of Law and his LL.M. from Columbia University School of Law. He is admitted to practice in the State of New York. Michael C. Macchiarola, resident in New York, concentrates his practice on structured products transactions on behalf of investment banks, domestic and foreign commercial banks , and large hedge funds. He has experience with equity-linked and hedge-fund linked products as well as derivatives, particularly equity derivatives. He also advises on prime brokerage and stock loan matters. He received his J.D. from New York University School of Law, an M.B.A. from Columbia Business School, and an A.B. from The College of The Holy Cross. He is licensed to practice in New York. Geoffrey R. Maibohm, a Capital Markets attorney in Charlotte, handles all aspects of commercial mortgage-backed securities transactions, representing issuers, underwriters, servicers and subservicers, as well as co-lenders and participants in loans. He also has significant experience dealing with ongoing servicing issues. He graduated magna cum laude from the Syracuse University College of Law, where he was a member of the Law Review, and his B.A. from the State University of New York at Geneseo. He is admitted in North Carolina and New York. Richard Nugent, an attorney in the Tax Department, is resident in New York. A transactional lawyer with significant expertise in the tax aspects of public and private corporate mergers, acquisitions, and spin-offs, he also has experience advising clients on cross-border tax planning strategies, the tax consequences of restructurings and bankruptcies, and financing transactions. He received his B.A., summa cum laude, from Saint Peter's College, his J.D., with honors, from Rutgers School of Law, and his LL.M., with distinction, from Georgetown University Law Center. Following law school, he clerked for The Honorable Robert P. Ruwe of the United States Tax Court and The Honorable Richard F. Suhrheinrich of the United States Court of Appeals for the Sixth Circuit. He is admitted in New York. Matthew Robertson, resident in the Charlotte Global Finance Department, represents national, international and regional financial institutions, investment banks, and investors in connection with the financing of a wide range of commercial properties, including multi-state, multi-property mortgage loans and large, sophisticated financings involving multiple lenders and various levels of mortgage and mezzanine debt as well as the sale and transfer of various types of commercial loans. He received his B.A., with honors, from the University of Delaware, and his J.D. from Duke University School of Law. He is admitted in North Carolina. Jason Salman, resident in London, has worked on a wide range of corporate and restructuring matters throughout Europe and in Australia, including mergers and acquisitions, reorganizations and restructurings and general corporate governance and regulatory matters. He received his Bachelor of Economics degree and Bachelor of Laws degree from Murdoch University in Western Australia. He is admitted to practice in England and Wales and as a solicitor of the Supreme Court of Western Australia. Michelle R. Seltzer, a lawyer in the Business Fraud and Complex Litigation Group in Cadwalader's Washington, D.C. office, advises clients on a wide range of complex civil litigation matters and on a variety of criminal and regulatory issues, including Foreign Corrupt Practices Act, securities and other white collar crime matters. She received a B.A., with highest honors, from the University of Texas at Austin, and a J.D. from the Duke University School of Law. Following law school, she served as a clerk to United States District Court Judge John F. Nangle in the Southern District of Georgia. She is admitted to practice in the District of Columbia and in Georgia. Thomas Stimson, a member of the Business Fraud and Complex Litigation Group, resident in Washington, represents corporations and individuals in a wide variety of white collar criminal, regulatory, and complex civil litigation matters, including international corruption (arising under the Foreign Corrupt Practices Act), money laundering, securities, antitrust and intellectual property cases. He also conducts internal investigations and advises clients with regard to compliance and corporate governance issues. He received a B.A., with honors, from Iowa State University, and a J.D. from the University of Virginia, where he was a member of the Journal of Law & Politics. He is a member of the District of Columbia Bar and the Virginia State Bar. An attorney in Cadwalader's Capital Markets Department, Laura Swihart concentrates in commercial mortgage-backed securities, representing mortgage loan sellers, issuers and underwriters. She received her J.D. from New York University School of Law and her B.A., with honors, from the University of Connecticut. She is admitted to practice in the State of New York. Jackson Taylor, a member of the Financial Restructuring practice in London, advise creditors, insolvency practitioners, debtor companies and directors on a range of contentious and consensual insolvency processes as well as institutional creditors and ad hoc creditors' committees on restructuring financially distressed companies outside of formal insolvency proceedings. He graduated with double degrees, with honors, from The University of Melbourne, where he also obtained a Master of Laws degree. He also holds a Certificate of Proficiency in Insolvency from the UK Insolvency Practitioners Association. He is qualified as a barrister and solicitor. Joshua R. Weiss, a New York-based litigator, has experience in various areas of complex commercial litigation and arbitration, including banking and finance, swaps and derivatives, securities, contract, employment, trade secrets and unfair competition, bankruptcy, copyright and trademark, and insurance coverage litigation. He also has been involved in numerous international, multi-jurisdictional disputes. He received his undergraduate degree from The Johns Hopkins University, and his J.D., cum laude, from The Benjamin N. Cardozo School of Law, Yeshiva University. He is admitted to practice in New York State and before the United States District Courts for the Southern and Eastern Districts of New York. About Cadwalader, Wickersham & Taft LLP Cadwalader, Wickersham & Taft LLP -- http://www.cadwalader.com/-- established in 1792, is one of the world's leading international law firms, with offices in New York, London, Charlotte, Washington and Beijing. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in antitrust, banking, business fraud, corporate finance, corporate governance, environmental, healthcare, insolvency, insurance and reinsurance, litigation, mergers and acquisitions, private client, private equity, real estate, securities and financial institutions regulation, securitization, structured finance, and tax. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- November 15-16, 2006 EUROMONEY INSTITUTIONAL INVESTOR Asia Capital Markets Forum Island Shangri-La, Hong Kong Contact: http://www.euromoneyplc.com/ November 16, 2006 BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA New Legal Strategies for Retaining Executives at Troubled Companies Contact: 240-629-3300; http://www.beardaudioconferences.com/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Duquesne Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Dinner Program TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Dinner Program TBA, Seattle, WA Contact: 403-294-4954 or http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Life in the Bankruptcy Court with BAPCPA, A View from The Bench Oxford Hotel, Denver, CO Contact: http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Turnaround & Transaction of the Year Award Presentations Solera, Minneapolis, MN Contact: http://www.turnaround.org/ November 16-17, 2006 STRATEGIC RESEARCH INSTITUTE 8th Annual West Distressed Debt Investing Forum Venetian Resort Hotel Casino, Las Vegas, NV Contact: http://www.srinstitute.com November 17, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast with Harry Nolan, Author of Airline without a Pilot - Lessons in Leadership Westin Buckhead, Atlanta, GA Contact: http://www.turnaround.org/ November 17, 2006 TURNAROUND MANAGEMENT ASSOCIATION The Brave New World of Selling Distressed Companies Mid-Day Club, Chicago, IL Contact: http://www.turnaround.org/ November 22, 2006 TURNAROUND MANAGEMENT ASSOCIATION "Inherent Jurisdiction of the Courts" Dinner Event - Special Presentation by Madam Justice Juliana Topolniski Union Bank Inn, Edmonton, AB Contact: http://www.turnaround.org/ November 23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Martini Party Vancouver, British Columbia Contact: 403-294-4954 or http://www.turnaround.org/ November 23-24, 2006 EUROMONEY CONFERENCES 5th Annual China Conference China World Hotel Beijing, China Contact: http://www.euromoneyconferences.com/ November 27-28, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Thirteenth Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Essex House Hotel - New York Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint TMA Florida/ACG Tampa Bay Luncheon Buying and Selling a Troubled Company Centre Club, Tampa, FL Contact: http://www.turnaround.org/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Some Do's and Don'ts in Investing in Turnarounds University Club, Milwaukee, WI Contact: http;//www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Special Program TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Turnaround Industry Trends Jasna Polana, Princeton, NJ Contact: http://www.turnaround.org/ November 30, 2006 EUROMONEY CONFERENCES Euromoney/DIFC Annual Conference Managing superabundant liquidity Madinat Jumeirah, Dubai Contact: http://www.euromoneyconferences.com/ November 30, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring Around Intellectual Property - Preserving Value When Trouble Lurks Carnelian Room, San Francisco, CA Contact: http://www.turnaround.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ December 1, 2006 CEB Creditors' Remedies & Debtors' Rights Garden Grove, CA Contact: http://www.ceb.com/ December 4-5, 2006 PRACTISING LAW INSTITUTE Mortgage Servicing & Default Management Washington, DC Contact: http://www.pli.edu/ December 5, 2006 EUROMONEY CONFERENCES CFO Forum Hyatt Regency, Hangzhou, China Contact: http://www.euromoneyconferences.com/ December 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION Intellectual Property - Are You Overlooking Significant Value? 5th Avenue Suites, Portland, OR Contact: http://www.turnaround.org/ December 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Dinner Portland, Oregon Contact: 503-223-6222 or http://www.turnaround.org/ December 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast The Newark Club, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ December 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Cash Management After The Storm: Near-Term Planning for Long-Term Business Success Sheraton, Metairie, LA Contact: http://www.turnaround.org/ December 8, 2006 CEB Creditors' Remedies & Debtors' Rights Los Angeles / Century City, CA Contact: http://www.ceb.com/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Holiday Party TBA, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function GE Commercial Finance, Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ December 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Extravaganza - TMA, AVF & CFA Georgia Aquarium, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ January 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Lender's Panel University Club, Jacksonville, FL Contact: http://www.turnaround.org/ January 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual Lender's Panel Breakfast Westin Buckhead, Atlanta, GA Contact: http://www.turnaround.org/ January 17, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ January 17-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION Distressed Investing Conference Wynn, Las Vegas, NV Contact: http://www.turnaround.org/ February 8-11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Certified Turnaround Professional (CTP) Training NY/NJ Contact: http://www.turnaround.org/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA PowerPlay - Atlanta Thrashers Philips Arena, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ January 25-27, 2007 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Hyatt Regency, Denver, CO Contact: 1-703-739-0800; http://www.abiworld.org/ February 8-9, 2007 EUROMONEY Leveraged Finance Asia JW Marriott Hong Kong Contact: http://www.euromoneyplc.com/ February 21-22, 2007 EUROMONEY Euromoney Pakistan Conference Perceptions & Realities Marriott Hotel, Islamabad, Pakistan Contact: http://www.euromoneyplc.com/ February 22, 2007 EUROMONEY 2nd Annual Euromoney Japan Forex Forum Mandarin Oriental, Tokyo, Japan Contact: http://www.euromoneyplc.com/ February 25-26, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Marriott Park City, UT Contact: http://www2.nortoninstitutes.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ March 1, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 2, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Bankruptcy Battleground West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Martini Madness Cocktail Reception with Geraldine Ferraro Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ March 15-18, 2007 NATIONAL ASSOCIATION OF BANKRUTPCY TRUSTEES NABT Spring Seminar Ritz-Carlton Buckhead, Atlanta, GA Contact: http://www.NABT.com/ March 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ March 21-22, 2007 EUROMONEY 2nd Annual Vietnam Investment Forum Melia, Hanoi, Vietnam Contact: http://www.euromoneyplc.com/ March 21-22, 2007 EUROMONEY Euromoney Indian Financial Market Congress Grand Hyatt, Mumbai, India Contact: http://www.euromoneyplc.com/ March 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION "The Six Keys of Sustained Profitable Growth" Rodney Page, Senior Partner of Blue Springs Partners Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, Texas Contact: http://www.turnaround.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ April 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ April 12, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - East JW Marriott, Washington, DC Contact: http://www.abiworld.org/ April 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ April 24, 2007 TURNAROUND MANAGEMENT ASSOCIATION "Why Prospects Become Clients" Mark Fitzgerald, President of Sales Training Institute Inc Centre Club, Tampa, FL Contact: http://www.turnaround.org/ April 26-28, 2007 ALI-ABA Fundamentals of Bankruptcy Law Philadelphia, PA Contact: http://www.ali-aba.org April 29 - May 1, 2007 INTERNATIONAL BAR ASSOCIATION International Insolvency Conference Zurich, Switzerland Contact: http://www.ibanet.org/ May 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA Atlanta Golf Outing White Columns, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ May 4, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - NYC Alexander Hamilton US Custom House, SDNY New York, NY Contact: http://www.abiworld.org/ May 7, 2007 AMERICAN BANKRUPTCY INSTITUTE 9th Annual New York City Bankruptcy Conference Millennium Broadway Hotel & Conference Center New York, NY Contact: http://www.abiworld.org/ May 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 28 - July 1, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Jackson Lake Lodge, Jackson Hole, WY Contact: http://www2.nortoninstitutes.org/ July 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or www.turnaround.org July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ July 18, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ July 25-28, 2007 AMERICAN BANKRUPTCY INSTITUTE 12th Annual Southeast Bankruptcy Workshop The Sanctuary, Kiawah Island, SC Contact: http://www.abiworld.org/ August 9-11, 2007 AMERICAN BANKRUPTCY INSTITUTE 3rd Annual Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay Cambridge, MD Contact: http://www.abiworld.org/ September 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Southwest Bankruptcy Conference Four Seasons Las Vegas, NV Contact: http://www.abiworld.org/ September 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ January 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ April 3-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 26th Annual Spring Meeting The Renaissance, Washington, DC Contact: http://www.abiworld.org/ June 4-7, 2008 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 24th Annual Bankruptcy & Restructuring Conference JW Marriott Spa and Resort, Las Vegas, NV Contact: http://www.airacira.org/ June 12-14, 2008 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, MI Contact: http://www.abiworld.org/ August 16-19, 2008 AMERICAN BANKRUPTCY INSTITUTE 13th Annual Southeast Bankruptcy Workshop Ritz-Carlton, Amelia Island, FL Contact: http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 4-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, AZ Contact: http://www.abiworld.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers - the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Emerging Role of Corporate Compliance Panels Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Deepening Insolvency - Widening Controversy: Current Risks, Latest Decisions Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Distressed Market Opportunities Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Reverse Mergers-the New IPO? Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Contact: http://www.beardaudioconferences.com 240-629-3300 BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Contact: http://www.beardaudioconferences.com 240-629-3300 The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 ***