/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/061116.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, November 16, 2006, Vol. 10, No. 273 Headlines 1POINT SOLUTIONS: Sale of Assets Continue Despite Break-In ADELPHIA COMMS: Chicago Partners Can Provide Consulting Services ADELPHIA COMMUNICATIONS: Court Approves Comcast JV Settlement ADVENTURE PARKS: Court Approves Frost Tamayo as Local Counsel ADVENTURE PARKS: Court Okays James Frenzel as Panel's Co-Counsel ALLIED HOLDINGS: Court OKs Payment of Automobile Liability Claims ALLIED HOLDINGS: Volvo Seeks Summary Judgment on AAG Dispute AMERIQUEST MORTGAGE: Moody's Junks Rating on Class M-4 Certs. ANSONIA CDO: Fitch Places Junk Ratings on Three Note Classes ANVIL KNITWEAR: Meeting of Creditors Scheduled Today ASSET BACKED: Fitch Rates $10.13MM Privately Offered Class at BB+ BA ENERGY: Moody's Rates $450 Million Senior Term Loan at B1 CABELA'S MASTER: Moody's Rates $11.2 Million Class D Notes at Ba2 CATHLEEN SMITH: Case Summary and Largest Unsecured Creditor CATHOLIC: Portland Wants Appraisal Work Suspended Due to Mediation CATHOLIC CHURCH: Rev. Martin Amos is Davenport's New Bishop CHATTEM INC: Plans to Offer $100 Million Convertible Senior Notes CHENIERE ENERGY: Sabine Pass Closes $2 Billion Senior Notes Sale CINCINNATI BELL: Earns $25 Million for 2006 Third Quarter CINRAM INT'L: Weak Performance Prompts S&P's Negative Outlook CITIGROUP COMMERCIAL: Fitch Rates Three Cert. Classes at Low-Bs CITIZENS COMMS: S&P Affirms Ratings and Removes Negative Watch CLEAR CHANNEL: Earns $198.621 Million in Third Quarter of 2006 COLLINS & AIKMAN: Restructuring Focus Shifts Toward Sale COMMUNICATIONS CORP: Wants Final Order on Cash Collateral Use COMPLETE RETREATS: Panel to Conduct Rule 2004 Exam on LPP Mortgage CONGOLEUM CORP: Sept. 30 Balance Sheet Upside-Down by $44.3 Mil. COPELANDS' ENT: Sells Assets to The Sports Authority and Hilco COREL CORP: Slapped With Copyright Infringement Lawsuit by Entrust CS MORTGAGE: Moody's Rates Class B-1 Certificates at Ba2 CWABS ASSET: Moody's Rates Class B Certificates at Ba1 DANA CORPORATION: Court Approves Bing Metals Settlement Agreement DANA CORP: Dana Credit Inks New Forbearance Pact with Noteholders DELPHI CORP: Delphi Medical Wants to Close Stafford Facility DELPHI CORP: Wants W.Y. Campbell as Financial Advisor DELTA AIR: US Airways Makes $8 Billion Merger Offer DENNY'S CORP: Extends CEO Nelson Marchioli's Employment Term DURA AUTOMOTIVE: Nasdaq to Delist Common Stock and Securities ELECTRONIC DATA: Moody's Holds Rating and Says Outlook is Positive ELTON KERR: Case Summary & 15 Largest Unsecured Creditors ENRON CORPORATION: Court Approves $19.7 Million Fleet Settlement ENRON CORP: Court Okays $25 Million NewPower Settlement Agreement FERRO CORPORATION: Files Three Quarters of 2005 Financial Reports FINOVA GROUP: Wants to Settle Claims and Sell Remaining Assets FIRST CONSUMERS: Moody's Cuts Rating on $36 Million Notes to B2 FISHER SCIENTIFIC: Thermo Merger Prompts S&P to Lift Ratings FOAMEX INTERNATIONAL: Foamex LP Can Assume Amended Chemtura Pact FOAMEX INT'L: Schulte Roth Unveils 12-Member Sr. Noteholders Panel FORD CREDIT: S&P Rates $59.1 Million Class D Notes at BB+ FORD MOTOR: DBRS Says Financial Restatement Has No Material Impact GENERAL MOTORS: S&P Rates Proposed $1.5 Billion Senior Loan at B+ GS MORTGAGE: S&P Holds Low-B Ratings on Six Certificates GSAMP TRUST: Losses Cue Moody's to Junk Ratings on Two Tranches GSI GROUP: CEO and Director Richard Christman Resigns HERBALIFE LTD: Class III Board Member Jesse Rogers Resigns HORNBECK OFFSHORE: Closes Offering of $220 Mil. Convertible Notes HORNBECK OFFSHORE: Moody's Holds Low-B Ratings with Neg. Outlook HOSPITAL FOR SPECIAL: Moody's Lifts Rating on Series B Bonds IMAX CORP: To Pay Interim CFO Edward MacNeil CDN$345,000 Per Year INTERPUBLIC GROUP: Fitch Rates $400 Million Senior Notes at B INTERPUBLIC GROUP: S&P Rates Proposed $400 Mil. Senior Notes at B JP MORGAN: Fitch Puts BB+ Rating on $8.4MM Privately-Offered Class KINDER MORGAN: Moody's Rates Four Senior Credit Facilities at Ba2 LAWRENCE MANNING: Case Summary & 14 Largest Unsecured Creditors LB COMMERCIAL: Moody's Holds Junk Ratings on Two Certificates LINCO DEVELOPERS: Voluntary Chapter 11 Case Summary LONG BEACH: Moody's Rates Class B Subordinate Certificates at Ba2 LORECE WRIGHT: Case Summary & 10 Largest Unsecured Creditors MASTR ASSET: Moody's Reviews Class M-11 Certificates' Rating MAYCO PLASTICS: Panel Hires Grant Thornton as Financial Advisor MAYCO PLASTICS: Wants to Borrow Funds from PNC and Fifth Third METABOLIFE INTERNATIONAL: Ideasphere Acquires Non-Ephedra Brands MICROVISION INC: Inks Underwriting Pact with MDB Capital Group MORINE INC: Case Summary & Three Largest Unsecured Creditors MOTIVNATION INC: Files Amended Financial Statements MUSHIN INC: Case Summary & 20 Largest Unsecured Creditors MUSICLAND HOLDING: Panel Wants to Recover Fraudulent Transfers MUSICLAND HOLDING: Walks Away from Calhoun Beach Lease Contract NASH FINCH: Moody's Junks Rating on $322 Mil. Subordinated Notes NATIONAL ENERGY: Court Moves Claim Inclusion Date to February 15 NEENAH FOUNDRY: Moody's Holds Junk Rating on $100 Mil. Senior Note NEW YORK: Wants Until January 2 to File Schedules & Statements NORTH AMERICAN: Wants Solicitation Period Extended to March 31 NORTH AMERICAN: Plan Confirmation Hearing Scheduled Tomorrow PARKWAY HOSPITAL: Can Borrow Additional $700,000 from Boro Medical PERFORMANCE TRANSPORTATION: Seeks Plan-Filing Period Extension PERFORMANCE TRANSPORTATION: Turns to PwC for Tax Advice PITTSBURGH BREWING: Objects to Three Claims Filed by PBGC PONTIAC GENERAL: Fitch Cuts Underlying Rating to BB- from BBB+ POPE & TALBOT: Posts $10 Mil. Net Loss in Quarter Ended Sept. 30 PORTRAIT CORP: Judge Hardin Sets November 28 as Claims Bar Date PORTRAIT CORPORATION: Hires Mesirow as Restructuring Accountants PRIMUS TELECOMMS: Sept. 30 Balance Sheet Upside-Down by $466.3MM RADNOR HOLDINGS: Stevens & Lee Okayed as Panel's Conflicts Counsel REMY INTERNATIONAL: Weak Earnings Prompt S&P to Cut Rating to CCC RFMSI TRUST: S&P Puts Negative Watch on Class B-2 Certs. Rating RURAL/METRO: Makes $7 Million Principal Payment on Term Loan B SALOMON BROTHERS: Moody's Acts on 17 Non-Investment Grade Bonds SAN JOAQUIN: Fitch Affirms BB Rating on $1.97 Bil. Revenue Bonds SCOTTISH RE: Likely Notes' Non-Payment Prompts S&P to Cut Ratings SEA CONTAINERS: Taps Sidley Austin as Bankruptcy Counsel SEA CONTAINERS: U.S. Trustee Appoints Seven-Member Creditors Panel SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 SPECIALTYCHEM PRODUCTS: Sells All Assets to Resilience Capital STRUCTURED ASSET: S&P Puts Default Rating on Two Security Classes SUSAN GREENFIELD: Case Summary & 13 Largest Unsecured Creditors TAPESTRY PHARMA: Posts $3.6 Mil. Net Loss in Qtr. Ended Sept. 27 TECHNICAL OLYMPIC: Write-Offs Cue Moody's to Downgrade All Ratings TELCORDIA TECH: Weak Revenue Prompts S&P to Lower Ratings THERMA-WAVE INC: Second Fiscal Qtr. Net Loss Narrows to $1.95 Mil. THOMAS HULING: Case Summary & 15 Largest Unsecured Creditors TRANSMERIDIAN EXPLORATION: $290 Mil. Sr. Notes Trading at Discount TRIPOS INC: Posts $4.4 Million Net Loss in 2006 Third Quarter TRIPOS INC: Wants Waiver on Covenant Violation from LaSalle Bank TUBE CITY: Onex Partners Offer Prompts S&P's Negative Watch TYSON FOODS: Incurs $56 Million Net Loss in 2006 Fourth Quarter UNIVERSAL EXPRESS: Posts $5.5 Mil. Net Loss in First Fiscal Qtr. US AIRWAYS: Makes $8 Billion Merger Offer to Delta Air US AIRWAYS: Pilot Groups to Conduct Informational Picket Today VANGUARD CAR: Europcar Alliance Plan Cues S&P to Affirm B+ Rating VESTA CAPITAL: Chapter 11 Case Cues Moody's to Withdraw Ratings WCI COMMUNITIES: High Leverage Prompts S&P to Lower Ratings WERNER LADDER: Court Approves PwC as Tax Advisor and Auditor WERNER LADDER: Wants to Reject Supplemental Retirement Plans WORLDCOM INC: Court Expunges Gary Campbell's Personal Injury Claim WORLDCOM INC: Court Expunges Mark Lahti's Personal Injury Claim XERIUM TECH: Earns $5.7 Million in Third Quarter Ended Sept. 30 * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 1POINT SOLUTIONS: Sale of Assets Continue Despite Break-In ---------------------------------------------------------- Auctioneer Bobby Colson disclosed that office equipment was stolen from 1Point Solutions LLC's Bellevue office Monday night, NashvillePost.com reports. The equipment was supposed to be auctioned off Tuesday to pay some portion of the Company's more than $12 million debts,. E. Thomas Wood, writing for NashvillePost.com, relates that Mr. Colson found out that a glass door at the rear of the facility had been smashed open and that four computers and eight flat-screen monitors were missing. John McLemore, the Bankruptcy Trustee who arranged the auction of the Company's assets, told NashvillePost.com that the glass door was not covered by the building's alarm system, and the thief avoided motion detectors in the hallway by using a box-cutter to chop through wallboards as he moved from room to room. "The good news is that the point of entry wasn't where the good stuff was, in the front," Mr. McLemore attested. He added that there were new Dell computers still in their boxes among the goodies at the front of the office, but the ones taken were used. In spite of the break-in, the auction went on for seven hours before ending late Tuesday afternoon. Some 210 registered bidders, NashvillePost.com says, spent more than $60,000 in the course of the day. According to the data compiled by NashvillePost.com, two more auctions are set for December. The sale of a house and steel building owned by CEO Barry R. Stokes in Dickson is set for Dec. 14, 2006, and then on Dec. 16, 2006, comes what Mr. McLemore is proudly calling "the beaver-skin coat sale" -- the sale of Mr. Stokes' personal possessions, including the now-famous coat and other luxury items. Headquartered in Dickson, Tennessee, 1Point Solutions LLC's creditors filed an involuntary chapter 11 petition on Sept. 26, 2006 (Bankr. M.D. Tenn. Case No. 06-05400). John McLemore, the Chapter 11 Trustee in 1Point Solutions LLC obtained permission from the Court to substantively consolidate the Debtor's chapter 11 case with the bankruptcy case of the Debtor's founder, Barry R. Stokes. ADELPHIA COMMS: Chicago Partners Can Provide Consulting Services ---------------------------------------------------------------- Adelphia Communications Corporation and its debtor affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Chicago Partners LLC, nunc pro tunc to July 24, 2006, to provide consulting services with respect to the litigation between the Debtors and Deloitte & Touche LLP. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, relates that pursuant to an order dated October 24, 2003, the Debtors retained LECG, LLC, as their economics consultants. LECG has provided the Debtors with a variety of services, including consulting services and expert testimony services related to the Deloitte Litigation. On July 24, 2006, several professionals, including those who worked for the Debtors as accounting consultants and experts with respect to the Deloitte Litigation, left LECG to join Chicago Partners' New York office. Chicago Partners is an accounting, finance, and economics consulting firm with offices in New York and Chicago. Due to the familiarity of those professionals with the Deloitte Litigation, Chicago Partners is now uniquely qualified to provide consulting services and expert testimony services to the Debtors with respect to the Deloitte Litigation, Ms. Chapman says. To the extent that Chicago Partners provides consulting services to Dechert LLP, lead counsel for the Debtors in the Deloitte Litigation, or any of the Debtors' other retained counsel in connection with litigation matters, Chicago Partners' work will be performed at the sole direction of the Debtors' counsel and will be solely and exclusively for the purpose of assisting counsel in their representation of the Debtors. As such, Ms. Chapman says, Chicago Partners' work may be of fundamental importance in the formation of mental impressions and legal theories by counsel, which may be used in counseling the Debtors and in the representation of the Debtors. Accordingly, in order for Chicago Partners to carry out its responsibilities, it may be necessary for Debtors' counsel to disclose their legal analysis as well as other privileged information and attorney work product. Thus, Ms. Chapman asserts, it is critical that the Court order that the status of any writings, analysis, communications, and mental impressions formed, made, produced, or created by Chicago Partners in connection with its assistance of Dechert or any of the Debtors' other retained counsel in litigation matters be deemed the work product of Dechert or any of the Debtors' other retained counsel in their capacity as counsel to the Debtors. Moreover, the Debtors seek an order that provides that the confidential or privileged status of the Chicago Partners Litigation Work Product will not be affected by the fact that the firm has been retained by the Debtors rather than by Dechert or any of the Debtors' other retained counsel. The Debtors will pay Chicago Partners on an hourly basis, plus reimbursement of actual and necessary expenses incurred. The hourly billing rates for Gene L. Deetz and Peter Logrieco, both Principals at Chicago Partners, will be $460 and $455. These rates are the same rates that were previously billed by LECG, and are less than Chicago Partners' standard rates. The hourly billing rates for other CP consultants will range from $100 to $425, subject to periodic adjustments. These rates are similar to rates previously billed by LECG. According to Mr. Deetz, the firm has performed a conflicts check. Mr. Deetz assures the Court that the Managing Consultants at Chicago Partners (i) do not provide services to any party adverse to the Debtors with respect to the matters on which the firm is to be retained, and (ii) have no connection with any of the Potential Parties in Interest that would affect its ability to provide services to the Debtors. "To the extent that one of [Chicago Partners'] clients might have claims against the Debtors, we would not provide services to any such client in pursuing such claims, and thus we would expect that our provision of services to such clients would not be 'adverse' to our representation of the Debtors. . . . Further, to the extent that any of [Chicago Partners'] clients or principals of such clients might institute litigation against any Debtors, we would not provide services in such litigation," Mr. Deetz tells the Honorable Robert E. Gerber, U.S. Bankruptcy Court Judge for the Southern District of New York. The Debtors assert that the professionals at Chicago Partners are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 153; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADELPHIA COMMUNICATIONS: Court Approves Comcast JV Settlement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York, approved the motion of Adelphia Communications Corporation relative to (a) the settlement of postpetition cost allocations with the Comcast JV Partners and (b) the modification of cash management protocol as necessary to implement settlement. The Debtors presented to the Court a revised order approving the Motion. The Order reflects certain modifications to the order and settlement agreement that was filed with the Motion, to which these parties-in-interest objected: * JPMorgan Chase Bank, N.A.; * Bank of America, N.A.; * Calyon New York Branch; * The Bank of New York; * The Bank of New York Company; * Barclays Bank PLC; * CIBC, Inc.; * Credit Suisse, Cayman Branch; * The Royal Bank of Scotland PLC; and * Toronto Dominion (Texas), LLC The parties to the Settlement Agreement have agreed to the modifications. The Debtors believed that the modifications resolve the Objections and that the parties that filed the Objections do not oppose entry of the Proposed Order. The Proposed Order included a revised Schedule 2.4 and a new Schedule 2.4.1 to the Settlement Agreement. As a result of the occurrence of the Effective Date of the JV Debtors' Joint Plan, the schedules provide the final dollar amounts to be allocated to the Century-TCI and Parnassos Borrower Groups through Sept. 30, 2005, and through July 31, 2006. Specifically, the Proposed Order provides that the Debtors will be authorized to and will allocate Postpetition Expenses through July 31, 2006, to the Century-TCI and Parnassos Borrower Groups: Amount Allocated Amount Allocated to Century-TCI to Parnassos Postpetition Expenses Borrower Group Borrower Group --------------------- ---------------- ---------------- Sale, Prepetition Bank Debt, and some General Restructuring $8,967,869.70 $5,238,777.35 Creditor Committee, certain General Bankruptcy Costs, Accounting Restatement and Management $0.00 $0.00 Equity Committee $0.00 $0.00 DIP Financing $1,053,641.16 $397,600.44 Litigation Expenses $0.00 $0.00 Bank Advisors $7,737,162.05 $3,952,077.87 Other Reorganization Expenses and Income: Other Expenses $438,725.08 $375,634.55 Postpetition Interest ($1,281,445.47) ($14,318,442.36) Fee Committee $39,374.17 $21,940.73 High Speed Internet Expenses $6,536,626.53 $4,867,051.79 Workers Compensation Insurance Premiums $31,332,085.50 $4,424,361.76 ---------------- ---------------- TOTAL $54,824,038.73 $4,959,002.12 ================ ================ The allocation of Postpetition Expenses through Sept. 30, 2005, reflects: Amount Allocated Amount Allocated to Century-TCI to Parnassos Postpetition Expenses Borrower Group Borrower Group --------------------- ---------------- ---------------- Sale, Prepetition Bank Debt, and some General Restructuring $6,395,191.43 $3,989,742.55 Creditor Committee, certain General Bankruptcy Costs, Accounting Restatement and Management $0.00 $0.00 Equity Committee $0.00 $0.00 DIP Financing $1,004,610.81 $379,098.42 Litigation Expenses $0.00 $0.00 Bank Advisors $5,747,358.90 $2,816,250.09 Other Reorganization Expenses and Income: Other Expenses $161,587.01 $230,998.38 Postpetition Interest ($1,101,105.11) ($6,127,001.11) Fee Committee $22,063.54 $12,058.00 High Speed Internet Expenses $4,853,785.71 $3,894,291.60 Workers Compensation Insurance Premiums $24,376,220.94 $3,478,025.78 ---------------- ---------------- TOTAL $41,459,713.23 $8,673,463.71 ================ ================ The Debtors have advised Comcast Corporation that in anticipation of the implementation of the Settlement Agreement, prior to Effective Date of the JV Plan and to Closing under the Purchase Agreement, the Debtors transferred $5,000,000 from Parnassos to ACOM, representing the Debtors' estimate of the impact of the allocation of Postpetition Expenses to Parnassos under the Settlement Agreement rather than under the Interim Cost Order on the balance of the cash of Parnassos at Closing. The parties' rights to any credit agreement prior to the Debtors' filing for chapter 11 protection, with respect to which any entity within the Century-TCI or Parnassos Borrower Groups was obligated, will be preserved as to the Century-TCI or Parnassos Borrower Groups; will not be affected by the Settlement Agreement; and will constitute "Excluded Expenses" under the agreement. A full-text copy of the Revised Proposed Order is available for free at http://ResearchArchives.com/t/s?150c Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 151; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVENTURE PARKS: Court Approves Frost Tamayo as Local Counsel ------------------------------------------------------------- The Honorable John T. Laney III of the U.S. Bankruptcy Court for the Middle District of Georgia in Valdosta authorized Adventure Parks Group LLC and its debtor-affiliates to employ Frost, Tamayo, Sessums & Aranda P.A. as their special counsel. Frost Tamayo will serve as local counsel of Vanek, Vickers & Masini P.C. in the prosecution of the claims of Cypress Gardens Adventure Park LLC, as Plaintiff v. Landmark American Insurance Company and J. Smith Lanier & Co., as Defendants. The case is pending in the Circuit Court of the Tenth Judicial Circuit in Polk County, Florida, Case No. 53-2005-CA-003549, Division 8. The case involves recovery on insurance contracts issued by Landmark American Insurance through J. Smith Lanier, an insurance broker. In the complaint, there is also a claim against J. Smith Lanier having to do with failure to obtain adequate insurance coverage for the Cypress location. The losses involved result from damage by three separate hurricanes, which caused damage to the property of Cypress. John W. Frost, II, Esq., a shareholder at Frost Tamayo Sessums & Aranda P.A., disclosed that he will bill $400 per hour. Other attorneys from the firm bill between $225 and $450 per hour. Mr. Frost assured the Court that the Firm does not represent nor hold any interest adverse to the Debtors. 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. Mark J. Wolfson, Esq., at Foley & Lardner LLP and James C. Frenzel, Esq., at James C. Frenzel P.C. in Georgia represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. ADVENTURE PARKS: Court Okays James Frenzel as Panel's Co-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' bankruptcy cases to retain James C. Frenzel P.C. as its co-counsel. The Firm will: a. serve as local counsel at the direction of Foley and Lardner LLP, the Committee's lead counsel; b. provide the Committee with legal advice with respect to its duties and powers in the Debtors' proceeding in all matters relating to or affected by Georgia law; c. represent and appear on behalf of the Committee in matters occurring within the state of Georgia as requested; d. represent the Committee on routine motions before the Bankruptcy Court; and e. perform other legal services as may be required and in the best interests of the unsecured creditors and the Committee. Mr. Frenzel disclosed that attorneys bill between $175 and $350 per hour and paraprofessionals and law clerks bill $100 per hour. Mr. Frenzel assured the Court that his Firm does not represent nor hold any interest adverse to the Debtors with respect to the matters on which the Firm is engaged. 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. Mark J. Wolfson, Esq., at Foley & Lardner LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. ALLIED HOLDINGS: Court OKs Payment of Automobile Liability Claims ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia allows Allied Holdings, Inc., and its debtor-affiliates to pay prepetition automobile liability claims. According to Judge Mullins, the Debtors are authorized, but not required, to pay the prepetition automobile claims in their sole discretion, subject to the terms and conditions of applicable insurance policies and related agreements. The payment of any single Automobile Claim will not exceed $250,000. If a proposed settlement payment exceeds $250,000, the Debtors will provide counsel for the Official Committee of Unsecured Creditors five days written notice of the proposed payment. If the Committee objects, the matter will be heard by the Court. The Debtors are also authorized to accept and enter into a Corrective Endorsement. As reported in the Troubled Company Reporter on Sept. 8, 2006, Pursuant to certain policies, two insurance carriers provide automobile liability coverage for the Debtors, specifically: (i) the ACE Group of Companies through the ACE AL Program, which provided coverage for the U.S. Debtors from March 1, 2003, through December 31, 2005; and (ii) the American Home Assurance Company by the AHA Policy, which provided coverage for the Debtors in Canada, prepetition. Under the Insurance Policies, ACE and AHA retained a portion of the premiums paid by the Debtors each year, and ceded the remaining amount of premiums to Haul Insurance Limited in return for Haul's agreement to reinsure a substantial portion of automobile liability losses under the Policies. To secure its obligations to ACE, Haul has caused letters of credit to be issued in favor of ACE under their reinsurance agreement. In 2005, the ACE AL Program carried a $1,000,000 per incident deductible and a $5,000,000 limit of coverage. Under the ACE AL Program, the Debtors are responsible for $7,000,000 inner- aggregate liability between the $1,000,000 and $5,000,000 layers of coverage. On the same year, the AHA Policy carried a CN$500,000 per incident deductible and a CN$2,500,000 limit of coverage, under which the Debtors are responsible for CN$500,000 inner-aggregate liability between the CN$500,000 and CN$1,000,000 layers of coverage. Prior to filing for bankruptcy, the Debtors have approximately 204 claims pending for alleged automobile-related liability, of which 164 are in the U.S. and 40 are in Canada. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, told the Court that if the Debtors do not pay amounts within the deductible limits or Haul does not pay its obligations under its reinsurance agreements, the Insurance Carriers may draw on the letters of credit posted by the Debtors or Haul. Mr. Winsberg pointed out that the draw would hurt Haul's and the Debtors' ability to seek a return of any cash collateral posted with the banks that issued the letters of credit. Furthermore, the Debtors discovered that a policy regarding a corridor deductible for 2005 contained an error. Following discussions with ACE, the Debtors received an endorsement that corrects the 2005 policy to reflect the parties' prepetition agreement. A full-text copy of the Corrective Endorsement if available for free at http://researcharchives.com/t/s?113f 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) ALLIED HOLDINGS: Volvo Seeks Summary Judgment on AAG Dispute ------------------------------------------------------------ Volvo Parts North America, Inc., asks the U.S. Bankruptcy Court for the Northern District of Georgia to enter a summary judgment declaring that Volvo is entitled to, and did recoup, the overpayments against the account balance of Allied Automotive Group, Inc. As reported in the Troubled Company Reporter on April 19, 2006, Volvo asked the Court to dismiss an adversary proceeding initiated by the Debtors and, alternatively, demanded a trial by jury. Allied Automotive Group had asked the Court to compel Volvo to turn over certain funds and prepetition deposits. The Debtors claimed that Volvo's continued possession of the funds is an exercise of control over property of the Debtors' estate. Allied Automotive Group and Volvo are parties to a Service Agreement dated Jan. 12, 2004. Under the agreement, Volvo agreed to provide managed breakdown assistance for AAG drivers in need of mechanical service in exchange for payment. On the Petition Date, Volvo began requiring AAG to post a deposit in advance of each service it provided. AAG posted $48,735 in prepetition Deposits with Volvo. Between the Petition Date and Oct. 20, 2005, AAG posted more than 1,800 additional Deposits, aggregating $1,015,104, with Volvo. During that postpetition period, Volvo provided $476,651 in services. AAG said that it has paid in full all postpetition services Volvo provided and is entitled to a return of the remaining unearned Deposits totaling $538,743. Representing Volvo, C. David Butler, Esq., at Shapiro Fussell Wedge Smotherman Martin & Price, LLP, in Atlanta, Georgia, asserted that: * the Debtors fail to state any claim on which relief can be granted against Volvo; * the Debtors' claims are barred by the doctrine of recoupment; * the Debtors' claims are barred because they are not insolvent; * the Debtors' claims are barred by the doctrine of accord and satisfaction on payment; and * the Debtors' claims are barred by the doctrines of estoppel or waiver; Volvo denied that the Remaining Funds are property of the Debtors' bankruptcy estates, and that the Debtors have a legal or equitable interest in the Remaining Funds. Volvo contends that the Debtors cannot use the Remaining Funds under Section 363 of the Bankruptcy Code. Summary Judgment C. David Butler, Esq., at Shapiro Fussell Wedge & Martin, in Atlanta, Georgia, notes that the controlling pre-bankruptcy obligations of the parties are contained in the Service Agreement between Volvo and AAG under which AAG promised to pay for, and Volvo promised to provide, repair services to disabled trucks. Thus, Mr. Butler says, Volvo may recoup its damages arising from AAG's breach of its payment obligations against AAG's claim for a refund of money paid to Volvo for the uninterrupted provision of services bargained for by AAG. Mr. Butler submits that: * no affirmative recovery is sought by Volvo; * Volvo's unsecured proof of claim for $963,000 should be allowed in full; and * a windfall to AAG should be avoided by dismissing AAG's complaint and adversary proceeding. "Equity and the application of Georgia law principles of recoupment demand this result," Mr. Butler emphasizes. Against this backdrop, Volvo asks the Court to enter a summary judgment declaring that Volvo is entitled to, and did recoup, the overpayments against the account balance of AAG. 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) AMERIQUEST MORTGAGE: Moody's Junks Rating on Class M-4 Certs. ------------------------------------------------------------- Moody's Investors Service downgraded three certificates from two deals issued by Ameriquest Mortgage Securities Inc. These rating actions were prompted by declines in overcollateralization to below-target levels. Moody's analysis considered current projected losses versus available support from overcollateralization, excess spread, and subordination. Collateral performance to date has been in the area of original expectations; however, excess spread compression has caused some erosion of credit enhancement, impacting the junior-most tranches in these deals. These are the rating actions: Downgrade: * Issuer: Ameriquest Mortgage Securities Inc. -- Series 2002-3; Class M-4, downgraded from B3 to Caa2 * Quest Trust 2004-X3 -- Class M-6, downgraded from Ba1 to Ba2 * Quest Trust 2004-X3 -- Class M-7, downgraded from Ba2 to B1 ANSONIA CDO: Fitch Places Junk Ratings on Three Note Classes ------------------------------------------------------------ Fitch has assigned these ratings to Ansonia CDO 2006-1 Ltd. and Ansonia CDO 2006-1 LLC, (Ansonia CDO 2006-1): -- $215,462,000 class A-FL floating-rate notes 'AAA'; -- $80,000,000 class A-FX 5.702% notes 'AAA'; -- $57,479,000 class B 5.812% notes 'AA'; -- $34,285,000 class C 5.961% notes 'A+'; -- $16,134,000 class D 6.062% notes 'A'; -- $18,151,000 class E 6.163% notes 'A-'; -- $24,201,000 class F 6.755% notes 'BBB+'; -- $30,252,000 class G 7.149% notes 'BBB'; -- $26,218,000 class H 7.445% notes 'BBB-'; -- $48,403,000 class J floating-rate notes 'BBB-'; -- $43,361,000 class K 3.15% notes 'BB+'; -- $23,193,000 class L 3.15% notes 'BB'; -- $14,117,000 class M 3.15% notes 'BB-'; -- $22,184,000 class N 1.25% notes 'B+'; -- $18,151,000 class O 1.25% notes 'B'; -- $13,109,000 class P 1.25% notes 'B-'; -- $12,100,000 class Q 1.00% notes 'CCC+'; -- $10,084,000 class S 1.00% notes 'CCC'; -- $8,067,000 class T 1.00% notes 'CCC-'. The maturity date on all classes of notes is July 2046. Additional information on Fitch's action can be obtained from the new issue report titled 'Ansonia CDO 2006-1 Ltd./LLC', which will be available shortly on the Fitch Ratings web site at http://www.derivativefitch.com/ ANVIL KNITWEAR: Meeting of Creditors Scheduled Today ---------------------------------------------------- The U.S. Trustee for Region 2 will convene a meeting of Anvil Knitwear Inc. and its debtor-affiliates' creditors at 2:00 p.m., on Nov. 16, 2006, at 80 Broad St., 2nd Floor in New York City. This is the first meeting of creditors required under Section 341(a) in the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in New York, Anvil Holdings, Inc., is a Delaware holding company with no material operations and owns all of the outstanding common stock of Anvil Knitwear, Inc. Anvil Knitwear, in turn, owns all of the outstanding common stock of Spectratex, Inc., fka Cottontops, Inc. The Debtors design, manufacture, and market active wear. The Debtors filed for chapter 11 protection on Oct. 2, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12345 through 06- 12347). The Debtors' consolidated financial data as of July 29, 2006 showed total assets of $110,682,000 and total debts of $244,586,000. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. ASSET BACKED: Fitch Rates $10.13MM Privately Offered Class at BB+ ----------------------------------------------------------------- Fitch rates Asset Backed Funding Corp. Asset-Backed Certificates, $813.3 million mortgage pass-through certificates, series 2006- OPT3, which closed on Nov. 14, 2006: -- $635.65 million classes A1, A2 and A-3A through A-3C 'AAA'; -- $35.03 million class M1 'AA+'; -- $32.08 million class M2 'AA'; -- $18.57 million class M3 'AA-'; -- $16.04 million class M4 'A+'; -- $15.62 million class M5 'A'; -- $13.98 million class M6 'A-'; -- $13.51 million class M7 'BBB+'; -- $12.24 million class M8 'BBB'; -- $10.55 million class M9 'BBB-'; -- $10.13 million privately offered class B 'BB+'. The 'AAA' rating on the senior certificates reflects the 24.70% total credit enhancement provided by the 4.15% class M1, the 3.80% class M2, the 2.20% class M3, the 1.90% class M4, the 1.85% class M5, the 1.65% class M6, the 1.60% class M7, the 1.45% class M8, the 1.25% class M9, 1.20% privately offered class B and the initial and target overcollateralization of 3.65%. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of Option One Mortgage Corp. as servicer and Wells Fargo Bank, N.A., as Trustee. The certificates are supported by three collateral groups. Group I will consist of 841 mortgage loans that have original principal balances that conform to Fannie Mae guidelines. The Group I mortgage pool consists of first lien, adjustable-rate and fixed- rate mortgage loans that have a cut-off date pool balance of $151,756,592. Approximately 10.17% of the mortgage loans are fixed rate mortgage loans and 89.83% are adjustable-rate mortgage loans. The weighted average current loan rate is approximately 8.810%. The weighted average remaining term to maturity is 357 months. The average principal balance of the loans is $180,448. The weighted average original loan-to-value ratio is 97.68%. The weighted average FICO score is 634. The properties are primarily located in California (12.23%), Florida (11.62%), and Massachusetts (5.45%). Group II will consist of 640 mortgage loans that have original balances that conform to Freddie Mac guidelines. The Group II mortgage pool consists of first lien, adjustable-rate and fixed- rate mortgage loans that have a cut-off date pool balance of $151,850,026. Approximately 9.85% of the mortgage loans are fixed rate mortgage loans and 90.15% are adjustable-rate mortgage loans. The weighted average current loan rate is approximately 8.807%. The weighted average remaining term to maturity is 357 months. The average principal balance of the loans equals $237,266. The weighted average original loan-to-value ratio is 97.71%. The weighted average FICO score is 634. The properties are primarily located in California (12.54%), Massachusetts (9.25%), and Florida (7.64%). Group III will consist of 1,917 mortgage loans that have original balances that may or may not conform to Fannie Mae and/or Freddie Mac guidelines. The Group III mortgage pool consists of first lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $540,552,843. Approximately 7.80% of the mortgage loans are fixed rate mortgage loans and 92.20% are adjustable-rate mortgage loans. The weighted average current loan rate is approximately 8.776%. The weighted average remaining term to maturity is 357 months. The average principal balance of the loans equals $281,979. The weighted average original loan-to- value ratio is 98.37%. The weighted average FICO score is 643. The properties are primarily located in California (37.03%), New York (9.05%), and Florida (7.31%). For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. Option One was incorporated in 1992, and began originating and servicing subprime loans in February 1993. Option One is a subsidiary of Block Financial, which is in turn a subsidiary of H & R Block, Inc. BA ENERGY: Moody's Rates $450 Million Senior Term Loan at B1 ------------------------------------------------------------ Moody's Investors Service assigned a B1 Corporate Family Rating and B1 senior secured ratings to BA Energy's Inc.'s $450 million 7-year senior secured Term Loan B and CDN$60 million senior secured revolving credit maturing the earlier of project completion or Sept. 30, 2010. BA is building a greenfield merchant stand-alone bitumen upgrader. BA expects Phase I's 77,500 barrels per day of capacity to cost in the range of CDN$1.1 billion, including soft costs. It expects Term Loan and revolver proceeds, plus cash on hand and its pending initial public offering, to fully fund Phase I engineering, procurement, construction, and start-up costs. Subject to pro- forma covenant compliance, the rated facilities also permit BA to incur another $300 million of pari-passu debt to commence Phase II. The rating outlook is stable. However, the ratings and outlook are entirely subject to (a) BA completing its IPO of common shares during fourth quarter 2006 for gross proceeds of at least CDN$220 million to CDN$240 million; (b) prior to disbursement of Term Loan B construction account funds, BA would have executed CDN$150 million of contingent common equity commitments as a cost overrun buffer; and (c) Moody's review of final documentation affirming that the terms, conditions, and financial structure match assumptions built into the ratings. Contingent equity providers' commitments will have been backed by unconditional letters of credit from investment grade banks. The ratings would likely be downgraded if BA is unable to complete its pending IPO by year-end 2006 and is not able to execute its contingent equity commitments before the first construction disbursements under Term Loan B. The rationales for the corporate family and debt ratings overlap because BA is a greenfield project, with no cash flow until 2008, and the debt facilities are effectively a project finance package for the creation of a credit worthy borrower. The ratings are restrained: (a) by a very tough sector and regional cost and labor productivity environment, significantly escalating project risks; (b) 55% of total engineering and 12% of construction have been completed, widening the potential for significant cost overruns; (c) two critical process technologies have not previously been built to commercial scale and operations; (d) a lack of liquidated damages in the major equipment supply, engineering, and construction contracts, reportedly to reduce costs and get suppliers to commit to shorter delivery times; (e) the fact that Heartland must demonstrate a sound market for its sour syncrude production; and, (f) its lack of firm feedstock supply contracts or product offtake contracts. The ratings are supported: (a) by heavy first-in equity funding and significant contingent equity to absorb a modest degree of project risk and cost overruns; (b) a favorable fundamental view of uncommitted regional bitumen production growth, ample to feed BA's upgrader; (c) supportive third party engineering review of the project on behalf of the lenders; and, (d) BA's employment of leading engineering and construction firms. The ratings are also supported by BA's deeply experienced management team, steeped in general downstream and oil sands upgrading experience, and by a degree of potential support from parent Value Creation Inc., which holds extensive oil sands leases. Although it incorporates the risk of two new processes technologies not yet been tested at commercial scale, and Heartland will also test the market for sour synthetic crude oil, the Heartland Upgrader is a sound project concept located in the midst of vital infrastructure and bitumen flows to which the project appears able to eventually connect. Notably, the B1 ratings also benefit from: (a) the credit facilities' covenanted ability to temper their financial exposure to project risk and target BA's use of funds and activities to the sole objective of completing and operating the project; (b) establishment of a debt service reserve account for 8 quarters of interest expense and remaining term loan funds placed in a construction reserve account; (c) post-start-up covenants providing protection once commercial operations are attained; and, (d) a first lien on all project contracts and tangible and intangible assets contracts. For each construction account draw, a minimum of CDN$30 million of contingent equity cost overrun buffer must be in place. Thus BA must be in an over-funded position in order to have access to construction account funds. The ratings after start-up are restrained by the project's status as a single standalone processing unit, exposing debt service capacity to inherent downtime risk and substantial shortfall. Further restraint stems from continuing margin pressures in the bitumen and upgrading sector due to the Athabasca region's sustained rise in bitumen and synthetic crude oil supply exceeding the current capacity of export pipelines to extend the scale of the bitumen and synthetic crude market. Overall, margins will always be subject to volatile commodity seasonal, cyclical, and secular movements on both sides of BA's gross margin After start-up, BA's capacity for a ratings upgrade would depend on its ability to operate reasonably to design specifications, generate free cash flow in line with expectations, and fund potential sustained heavy capital spending for subsequent project phases with a cash flow and new equity mix suitable for a higher rating. The ratings and outlook are also subject to change if sector conditions have moderated down sufficiently to impair the project's ability to sustain sound margins. While the project has not arranged feedstock or offtake agreements, the province of Alberta believes that, at least over the intermediate term, growth in bitumen production will outpace the growth in competing bitumen upgrading capacity. It is also confident that there will be a sufficient demand for undedicated upgraded bitumen for the project to move its volumes into the market at a market clearing price. BA believes it will also be able to adapt its product mix as the optimal mix evolves over time with local supply conditions and regional and broader U.S. refinery demand conditions. Third party downstream engineer Purvin & Gertz estimates that the volume of bitumen production in the region that is not yet committed to dedicated upgraders may be as much as 438,000 barrels per day in 2005, 1,092,000 barrels per day in 2010, and 2,474,000 barrels per day in 2015. As of now, that data indicates ample free market bitumen for which independent upgraders will compete. Including Heartland, Purvin & Gertz estimates that independent upgrading facilities comprising approximately 191,000 barrels per day by 2010 and approximately 500,000 barrels per day by 2015. BA expects Phase I to cost in the range of CDN$1.1 billion, funded with CDN$295 million of existing cash, $450 million of Term Loan B proceeds, and fourth quarter 2006 IPO gross proceeds of at least CDN$220 million to CDN$240 million. Approximately CDN$94 million-equivalent of Term Loan B proceeds would be placed in a debt service reserve account with the remainder in a construction reserve account. A modest degree of cost overrun protection is provided by the CDN$150 million of contingent common equity. The ratings also consider the potential for an additional $300 million of pari passu term debt to partially fund Phase II, with attendant project risks and before material debt reduction of Term Loan B has occurred. BA Energy is headquartered in Calgary, Alberta, Canada. The Heartland Upgrader is located in the Athabasca oil sands region of Fort Saskatchewan, Alberta. CABELA'S MASTER: Moody's Rates $11.2 Million Class D Notes at Ba2 ----------------------------------------------------------------- Moody's assigned definitive ratings of Aaa to Class A-1&A-2, A2 to Class B, Baa2 to Class C, and Ba2 to Class D notes of Series 2006- III issued by Cabela's Credit Card Master Note Trust. These are the rating actions: * Issuer: Cabela's Credit Card Master Note Trust -- $250,000,000 Class A-1 Fixed Rate Asset-Backed Notes, Series 2006-III, rated Aaa -- $182,500,000 Class A-2 Floating Rate Asset-Backed Notes, Series 2006-III, rated Aaa -- $35,000,000 Class B Floating Rate Asset-Backed Notes, Series 2006-III, rated A2 -- $21,250,000 Class C Floating Rate Asset-Backed Notes, Series 2006-III, rated Baa2 -- $11,250,000 Class D Floating Rate Asset-Backed Notes, Series 2006-III, rated Ba2 Structure: Y. Angela Ge, an associate analyst in Moody's Structured Finance Group, said this is the second series issued from the Note Trust that does not benefit from a monoline bond insurance policy. Instead, the notes and related ratings are based on the quality of the underlying pool of credit card receivables and the transaction's structural protections, including subordination, early amortization trigger events, and credit enhancement levels that reflect the potential risks associated with the floating rate payment obligations of the trust. Collateral: The collateral of the Note Trust consists of the Series 2004-1 certificate issued out of Cabela's Master Credit Card Trust, which represents an undivided investor interest in the assets of the Master Trust. The underlying assets mainly consist of prime receivables arising in selected VISA revolving credit card accounts that meet certain eligibility criteria. Compared to the industry averages, the Trust receivables have very low charge-off rate and high payment rate. Origination and servicing: Cabela's Incorporated originates and services its $1.4 billion credit card program through a wholly-owned, unrated subsidiary, World's Foremost Bank. WFB is a limited purpose credit card bank located in Lincoln, Nebraska. The company: Cabela's is an unrated, public retail company located in Lincoln, Nebraska. Cabela's was established in 1961 and is currently the leading outdoor mail order business in the U.S. The company mails more than 120 million catalogs annually to customers in all 50 states and 120 countries. As of the closing date, Cabela's also operates thirteen retail stores. CATHLEEN SMITH: Case Summary and Largest Unsecured Creditor ----------------------------------------------------------- Debtor: Cathleen Chambery Smith 405 Arbol Via Walnut Creek, CA 94598 Bankruptcy Case No.: 06-42186 Chapter 11 Petition Date: November 15, 2006 Court: Northern District of California (Oakland) Judge: Leslie J. Tchaikovsky Debtor's Counsel: Marc Voisenat, Esq. 1330 Broadway, Suite 1035 Oakland, CA 94612 Tel: (510) 272-9710 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ David Sternberg, Esq. Legal Services $72,000 540 Lennon Lane Walnut Creek, CA 94598 CATHOLIC: Portland Wants Appraisal Work Suspended Due to Mediation ------------------------------------------------------------------ The Archdiocese of Portland in Oregon asks the U.S. Bankruptcy Court for the District of Oregon to: (a) suspend any further work by the real estate appraisers retained by the Official Committee for Tort Claimants; and (b) schedule a status conference on the matter for approximately the week of December 11, 2006. These real estate appraisers include: -- Powell Valuation, Inc., -- Duncan & Brown, Inc., and -- Skelte & Associates, Inc. Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland, Oregon, explains that the parties in the Archdiocese's Chapter 11 case are currently engaged in a global mediation with two mediators: (1) Honorable Michael R. Hogan of the U.S. District Court for the District of Oregon; and (2) Judge Lyle C. Velure, Circuit Court Judge of the State of Oregon for Lane County. The Archdiocese is hopeful with the mediation that the value of the properties being appraised will become irrelevant and the parties will be able to agree to the material terms of a consensual plan of reorganization, Mr. Stilley tells Judge Perris. The Appraisals are estimated to result in appraisal fees totaling $185,500, which will be paid by the bankruptcy estate. The Archdiocese believes that the chances of a successful mediation will be enhanced and its resources preserved if further appraisal work is curtailed while the mediation proceeds. 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) CATHOLIC CHURCH: Rev. Martin Amos is Davenport's New Bishop ----------------------------------------------------------- Bishop Franklin of the Diocese of Davenport in Iowa tendered his resignation as head of the diocese on October 12, 2006. The Vatican has appointed Bishop Martin John Amos in his place. Bishop Franklin's Statement October 12, 2006 Bishop Franklin: Thank you for attending this meeting today on such short notice. In May of 2005, I offered my resignation to the Holy Father on the occasion of my 75th birthday. With my resignation, I offered to continue my work as Bishop of the Davenport Diocese until a successor is installed. I am now the second oldest bishop of a diocese in the United States and the seventh oldest bishop of a diocese in the world. For the past seventeen months, we have prayed for a new bishop. Today, our prayers have been answered. The Holy Father has accepted my resignation and has appointed Bishop Martin John Amos as the Eighth Bishop of Davenport. It is with joy and great pleasure that I introduce to you Bishop Amos. Bishop Amos's Statement Thank you, Bishop Franklin. First, let me tell how grateful I am for the warm welcome I have received since arriving in Davenport yesterday. As you are now aware, Pope Benedict XVI has appointed me the 8th Bishop of the Diocese of Davenport. Bishop Franklin will remain in the Diocese as the apostolic administrator until my installation on November 20. I am sure that you are curious about who I am, where I come from and what I am like. The biographical details will be available after this press conference, but let me make some brief comments now. I was born in 1941 in Cleveland, Ohio. The oldest of six children -- three boys and three girls. I was ordained to the priesthood in 1968. Served in two parishes as associate pastor and then was transferred to the Borromeo Seminary High School and then the Seminary College where I was Academic Dean and taught Latin and Scripture. After 10 years I was sent to St. Dominic Parish in Shaker Heights, OH where I pastored for 18 years. So pastoring and teaching have always been a part of my life. On April 3, 2001 Pope John Paul II named me Auxiliary Bishop of Cleveland and life greatly changed. But those are just a few of the facts about where I've been. Last week, Archbishop Sambi called to tell me the Holy Father wished me to pastor here in the Diocese of Davenport. It has certainly been a roller coaster week! I am sad about leaving what I have called home for almost 65 years. I am anxious and at the same time excited about this new path on my journey. Certainly God has been with me on many twists and turns in life and I know that God is with me as I come here today. I come to a Diocese that recently celebrated its 125th Anniversary. I have been told about the wonderful priests, deacons, religious and people of the Diocese. Bishop Franklin has briefly discussed with me the serious issues facing the Diocese. I know we need to continue to reach out to those touched by abuse and to continue to strengthen the protection of children and young people. The recent decision to declare Bankruptcy will have serious implications. I know you have many questions about a variety of these issues and others as well. So have I. But until I have an opportunity to meet with my staff and the leadership and the people of the Diocese, I really can't respond to your questions until a later date. As a bishop when I install a new pastor for a parish, one of the final things I say to him is what I hope will be the mark of my own pastoring of the Diocese of Davenport. I say to him, "My brother, be a loving father, a gentle shepherd and a wise teacher." I pray I will be that for you . . . a loving father, a gently shepherd and a wise teacher. After this press conference I will join Bishop Franklin and some of the staff to celebrate Mass -- to pray for the people of the Diocese and for myself. My thought was, after that I will be going home, but I realized I am home, now. I will return to the Diocese of Cleveland to wrap up affairs there, to say my good-byes and return for my installation on November 20th. In the meantime, I ask the people of the Diocese to keep me in your prayers. I know that over the past year you have been praying for me as you prayed for the new bishop, now you can pray for me by name. Archbishop Hanus' Statement The appointment of the Most Reverend Martin J. Amos as the next Bishop of Davenport is the occasion for heartfelt congratulations. The clergy, religious, and laity of the Archdiocese of Dubuque join me in welcoming him to our state and assuring him of our prayerful support as he assumes and then fulfills his position as pastoral leader. One hundred twenty-five years ago, the southern half of the state of Iowa was taken away from the Archdiocese to form the new Diocese of Davenport. We have been separate and independent dioceses since that date. But we remain "sister churches" working for the welfare of Iowans, especially the needy and the poor. Personally, I and Archbishop Kucera, had the privilege of participating in the episcopal ordination of Bishop Amos on June 7, 2001, in Cleveland. We joined the other participating bishops in imposing hands on him and invoking the Holy Spirit. We rejoice that he will now be fulfilling his vocation as a bishop in the Province of Dubuque. May the same Holy Spirit be his strength and inspiration. Most Rev. Jerome Hanus, O.S.B. Archbishop of Dubuque 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) CHATTEM INC: Plans to Offer $100 Million Convertible Senior Notes ----------------------------------------------------------------- Chattem Inc. intend to offer, subject to market and other conditions, $100 million aggregate principal amount of Convertible Senior Notes due 2013 in a private placement to qualified institutional buyers. Chattem intends to use approximately $26 million of the offering proceeds to fund a convertible note hedge transaction to be entered into with an affiliate of the placement agent for the offering, which transaction is intended to offset Chattem's exposure to potential dilution upon conversion of the notes. Chattem will also enter into a separate warrant transaction with an affiliate of the placement agent that, together with the convertible note hedge transaction, will have the effect of increasing the effective conversion premium of the notes to Chattem to approximately 60%. Chattem plans on using proceeds from the warrant transaction and a portion of the net proceeds from the note offering to repay all amounts outstanding under its existing revolving credit facility. In certain circumstances, the notes may be convertible into cash up to the principal amount of the notes and, with respect to any excess conversion value, into cash, shares of Chattem common stock or a combination of cash and common stock, at Chattem's option. The interest rate, conversion price and other terms will be determined by negotiations between Chattem and the purchasers of the notes. Chattem anticipates that the notes will bear interest at a rate in the range of 2% to 2.25% and will have an initial conversion premium in the range of 25% to 27%. If Chattem consummates the acquisition of the U.S. rights to five brands from Johnson & Johnson and the consumer healthcare business of Pfizer Inc., Chattem plans on using the remaining proceeds derived from the sale of the notes to finance in part such acquisition. If the acquisition does not close, Chattem will use the net proceeds remaining after the cost of funding the convertible note hedge transaction and the repayment of obligations under its existing revolving credit facility for working capital and other general corporate purposes. Based in Chattanooga, Tennessee, Chattem Inc. (NASDAQ: CHTT) -- http://www.chattem.com/-- manufactures and markets a variety of branded consumer products, including over-the-counter healthcare products and toiletries and skin care products. The Company's products include Icy Hot(R), Gold Bond(R), Selsun Blue(R), Garlique(R), Pamprin(R) and BullFrog(R). * * * As reported in the Troubled Company Reporter on Oct. 10, 2006 Moody's Investors Service placed Chattem Inc's corporate family rating and senior subordinated ratings of Ba3 and B1, respectively, under review for possible downgrade prompted by the company's announcement today that it had entered into an agreement to acquire the U.S. rights to five leading consumer and over-the-counter brands from Johnson & Johnson and the consumer healthcare business of Pfizer Inc. for $410 million in cash. The review for downgrade reflects the potential for significantly increased leverage and weakened debt protection measures as a result of this likely all-debt financed acquisition. CHENIERE ENERGY: Sabine Pass Closes $2 Billion Senior Notes Sale ---------------------------------------------------------------- Cheniere Energy, Inc.'s wholly-owned subsidiary, Sabine Pass LNG, L.P., has closed its private placement of $550 million of 7.25% senior secured notes due 2013 and $1.482 billion of 7.50% senior secured notes due 2016. As reported in the Troubled Company Reporter on Nov. 8, 2006 Sabine Pass LNG, L.P., entered into a purchase agreement with Credit Suisse Securities (USA) LLC, as representative of several initial purchasers, to sell to the Initial Purchasers $550 million aggregate principal amount of its 7.25% Senior Secured Notes due 2013 and $1.482 million aggregate principal amount of its 7.50% Senior Secured Notes due 2016. The notes were offered and sold in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and in offshore transactions to non-United States persons in reliance on Regulation S under the Securities Act. The Company disclosed that at closing, net proceeds of approximately $2 billion from the offering were used as follows: approximately $380 million to repay borrowings under, and replace, the $1.5 billion project finance facility of Sabine Pass LNG; approximately $380 million to distribute funds to Cheniere LNG Holdings, LLC that it used, together with other funds, to repay its approximately $600 million of term debt; approximately $335 million to fund a reserve account for scheduled interest payments on the notes through May 2009; and approximately $18 million to pay transaction costs and expenses. The remaining approximately $887 million will be used to fund the remaining costs to complete Phase 1 and Phase 2-Stage 1 of the Sabine Pass LNG receiving terminal. The notes sold by Sabine Pass LNG were not registered under the Securities Act or any 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. About Sabine Pass LNG Sabine Pass LNG L.P. is a liquefied natural gas receiving terminal under construction in western Cameron Parish, Louisiana and is a wholly owned subsidiary of Cheniere Energy, Inc. About Cheniere Energy Based in Houston, Texas, Cheniere Energy Inc. (AMEX:LNG) explores and produces oil. It also develops a liquefied natural gas receiving-terminal business. It operates a seismic database covering about 7,000 sq. mi. It also has a 9% interest in exploration and production affiliate Gryphon Exploration, which explores areas targeted by a seismic data licensed from Fairfield Industries. With proved reserves of 3,021 barrels of oil and 919.1 million cu. ft. of natural gas, it operates along the coast of Louisiana, both onshore and in the shallow waters along the Gulf of Mexico. In 2005, it acquired BPU LNG. * * * Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Cheniere Energy Inc. and affirmed its 'BB' rating on the $600 million term B bank loan at Cheniere LNG Holdings LLC, an indirectly owned, 100% subsidiary of Cheniere Energy. The outlook is stable. CINCINNATI BELL: Earns $25 Million for 2006 Third Quarter --------------------------------------------------------- Cincinnati Bell Inc., reported revenue of $320 million with operating income of $83 million and net income of $25 million for the third quarter ended Sept. 30, 2006, compared to revenue of $300 million, operating income of $72 million and net loss of $44 million for the comparable quarter in 2005. Net income excluding special items in the quarter was $24 million, an increase of $13 million from the third quarter of 2005. Special items in the current quarter included a charge of $3 million related to the outsourcing of supply chain management functions and a gain on the sale of broadband fiber assets of $5 million. For the nine months ended Sept. 30, 2006 the Company reported revenue of $941.7 million with net income of $63.6 million, versus revenue of $904.3 million with net loss $77.1 million for the same period in 2005. Free cash flow was $15 million in the quarter, with which the company repaid debt. Net debt totaled $2.1 billion at the end of the quarter. Capital expenditures during the quarter were $35 million, or 11% of revenue. In the current quarter, adjusted EBITDA was $118 million, up 3% from a year ago. Year-to-date adjusted EBITDA of $346 million represented a decline of 4% from the prior year period. Current quarter results include a gain of $3.6 million in the Broadband segment related to the sale of a bankruptcy claim receivable. Segment Results Local Segment Quarterly total access line performance rate of decline slowed from 4.2% to 4%. Compared with the second quarter of 2006, access line decline was up slightly primarily due to higher levels of involuntary churn. At the end of the quarter, the company had 47,000 out-of-territory access lines, up 34% from the prior year. The Local segment produced quarterly revenue of $187 million, equal to the third quarter of 2005. Adjusted EBITDA in the quarter of $92 million decreased by $3 million compared to a year ago as a result of increased pension and post-retirement medical expenses. Year-to-date adjusted EBITDA of $283 million was down 2% from the prior year period. Wireless Services Cincinnati Bell Wireless's postpaid net activations of 11,000 represented an increase of 7,000 from a year ago. Postpaid churn of 1.7% was an improvement from 2.2% in the third quarter of 2005. ARPU of $47.25 was a slight increase from a year ago. The Wireless segment generated quarterly revenue of $65 million, up 12% from the third quarter of 2005 and included a $7 million increase in postpaid service revenue. Quarterly adjusted EBITDA was $14 million, an increase of $5 million from a year ago. Year- to-date adjusted EBITDA was $38 million compared with $46 million in the prior year period. In the quarter, Cincinnati Bell acquired 20 megahertz of advanced wireless spectrum in the company's Cincinnati and Dayton operating area, which will enable the Company to continue to expand the wireless business through new data services. The Company also acquired spectrum outside of its traditional markets including Indianapolis. Hardware and Managed Services The Hardware and Managed Services segment produced quarterly revenue of $57 million, a 32% increase from a year ago driven by an increase in equipment sales and data center and related managed service activity. The growth produced quarterly adjusted EBITDA of $6 million, up 74% from the third quarter of 2005. Year-to- date adjusted EBITDA was $14 million, an increase of 27% from the prior year period. Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:CBB) -- http://www.cincinnatibell.com/-- provides a wide range of local exchange and wireless telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. * * * Cincinnati Bell's senior secured debt, bank loan debt and corporate family ratings carry Moody's Ba3 rating. Moody's also junked the Company's preferred stock rating and placed its senior unsecured debt at B1 and senior subordinated debt at B2. Standard & Poor's placed the Company's long term foreign and local issuer credit ratings at B+ with a negative outlook. The Company's senior secured and bank loan debts carry Fitch's BB+ ratings. Fitch also assigned a BB- rating to the Company's senior unsecured debt, a B rating to its subordinated debt and a B- rating to its preferred stock. CINRAM INT'L: Weak Performance Prompts S&P's Negative Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Cinram International Inc., a wholly owned indirect subsidiary of Cinram International Income Fund, to negative from stable. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit rating and its 'BB-' bank loan rating, with a recovery rating of '4', on prerecorded multimedia manufacturer Cinram. "The negative outlook is based on Cinram's weakened financial performance with both reported revenues and EBITDA down compared with the same period the previous year," said Standard & Poor's credit analyst Lori Harris. The reported EBITDA margin also declined compared with the same period the previous year because of lower volume and prices. "We believe that margin pressure will be ongoing given the media replication industry's commodity-like nature, which has resulted in a continued decline in selling prices," added Ms. Harris. Furthermore, the negative outlook also reflects Standard & Poor's concerns about long-term industry fundamentals as digital distribution is expected to become a larger source of studio revenues. The ratings on Cinram reflect the company's limited financial flexibility and weak business risk profile, which is based on customer and product concentration, seasonality, and the commodity-like nature of the media replication industry that is vulnerable to shifts in technology toward on-demand products and availability of hit new releases. Although new hits are a significant source of revenue growth, the availability of previously released titles and television series in DVD format is also an important part of the company's revenue base. These factors are partially offset by Cinram's strong market position as the world's largest manufacturer of prerecorded multimedia products, solid credit measures, and management's track record of adapting to changing technologies. The negative outlook reflects the rating agency's concerns regarding the challenges Cinram faces given its weakened operating performance and difficult industry fundamentals. The medium-to- long-term effect of these challenges could be weakness in the overall business model as consumers choose other media delivery methods. Downward pressure on the ratings could come from debt-financed acquisition activity or the deterioration in the company's operations stemming from the loss of a significant contract or the increased consumer acceptance of a competitive product or service. In the medium term, there is limited potential for a revision of the outlook back to stable, given the high technological risk associated with the industry. CITIGROUP COMMERCIAL: Fitch Rates Three Cert. Classes at Low-Bs --------------------------------------------------------------- Fitch rates Citigroup Commercial Mortgage Trust, Series 2006-FL2, commercial mortgage pass-through certificates: -- $711,655,000 Class A-1 'AAA'; -- $237,218,000 Class A-2 'AAA'; -- $1,193,552,082 Class X-1 'AAA'; -- $0 Class X-2 'AAA'; -- $1,193,552,082 Class X-3 'AAA'; -- $17,904,000 Class B'AA+'; -- $20,887,000 Class C 'AA+-'; -- $38,790,000 Class D 'AA'; -- $26,855,000 Class E 'AA-'; -- $26,855,000 Class F 'A+'; -- $23,871,000 Class G 'A'; -- $20,887,000 Class H 'A-'. -- $22,379,000 Class J 'BBB+'; -- $22,380,000 Class K 'BBB'; -- $23,871,082 Class L 'BBB-'; These are rated by Fitch and are nonpooled components of the related trust assets. -- $978,603 Class CAC-1 'BBB+'; -- $670,418 Class CAC-2 'BBB'; -- $779,549 Class CAC-3 'BBB-'; -- $2,564,349 Class CAN-1 'BBB+'; -- $3,802,021 Class CAN-2 'BBB'; -- $7,455,660 Class CAN-3 'BBB-'; -- $10,600,000 Class CNP-1 'BBB-'. -- $20,117,692 Class CNP-2 'BBB-'; -- $5,182,308 Class CNP-3 'BB+'; -- $1,000,000 Class DSG-1 'BBB-'; -- $1,200,000 Class HFL 'BBB-'; -- $4,000,000 Class HGI-1 'BBB'; -- $8,500,000 Class HGI-2 'BBB-'. -- $2,800,000 Class HMP-1 'BBB'. -- $3,300,000 Class HMP-2 'BBB-'; -- $2,700,000 Class HMP-3 'BBB-'; -- $6,971,100 Class MVP 'BBB-'; -- $2,000,000 Class RAM-1 'BBB-'; -- $2,400,000 Class RAM-2 'BB+'; -- $6,000,000 Class WBD-1 'BBB-'; -- $4,000,000 Class WBD-2 'BB+'. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 16 floating rate loans having an aggregate principal balance of approximately $1,318,173,786, as of the cutoff date. CITIZENS COMMS: S&P Affirms Ratings and Removes Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Stamford, Connecticut-based Citizens Communications Co., including the 'BB+' corporate credit rating. The outlook is negative. All ratings were removed from CreditWatch, where they were placed with negative implications on Sept. 18, 2006. The CreditWatch placement followed the company's announcement that it had entered into a definitive agreement to acquire Dallas, Pennsylvania-based Commonwealth Enterprises Inc. for a total of $1.2 billion, including the assumption of approximately $228 million of Commonwealth net debt. The acquisition may initially be partially financed with a $990 million bridge loan, which the company would refinance with long-term debt prior to maturity. The ratings were placed on CreditWatch because of S&P's concerns about the integration risk associated with the acquisition of Commonwealth, including its competitive local exchange carrier business, and a modestly weaker financial profile. Pro forma total debt is approximately $4.8 billion. "Today's affirmation results from our belief that, although the initial borrowings needed to fund the acquisition will modestly increase leverage, Citizens' financial profile should remain appropriate for the ratings," said Standard & Poor's credit analyst Allyn Arden. Also, Standard & Poor's believe the acquisition improves Citizens' satisfactory business risk profile given the greater economies of scale and geographic diversity, reducing the company's exposure to the highly competitive Rochester, New York, market. The affirmation does not incorporate a major debt-financed acquisition. The ratings on Citizens reflect: -- a shareholder-oriented financial policy with an aggressive dividend payout and share repurchases; -- a heightened business risk profile resulting from rising competition from cable telephony and wireless substitution, which have caused access-line losses; -- integration risk from the acquisition of Commonwealth; and, -- longer term risk to regulatory support. Citizens also lacks a facilities-based video strategy to help combat the "triple-play" bundle offered by some cable operators. Tempering factors include: -- Citizens' status as a well-positioned incumbent local exchange carrier with relatively stable and high margins, primarily in less-competitive, rural areas; -- growth in high-speed data services; and; -- healthy discretionary cash flow generation. CLEAR CHANNEL: Earns $198.621 Million in Third Quarter of 2006 -------------------------------------------------------------- Clear Channel Communications Inc. reported results for its third quarter ended Sept. 30, 2006. For the three months ended Sept. 30, 2006, the Company reported $198.621 million of net income compared with $211.980 million of net income in the same quarter of 2005. At Sept. 30, 2006, the Company's balance sheet showed $18.931 billion in total assets, $10.786 billion in total liabilities, $328 million in minority interests, and $7.817 billion in total stockholders' equity. The Company reported revenues of approximately $1.8 billion in the third quarter of 2006, an increase of 7% from the $1.7 billion reported for the third quarter of 2005. Included in the Company's revenue is a $14.4 million increase due to movements in foreign exchange; strictly excluding the effects of these movements in foreign exchange, revenue growth would have been 6%. Clear Channel's income before discontinued operations increased 8% to $185.9 million, as compared with $171.8 million for the same period in 2005. The Company's OIBDAN (defined as Operating Income before Depreciation & Amortization, Non-cash compensation expense and Gain (loss) on disposition of assets - net) was $595.4 million in the third quarter of 2006, a 10% increase from the third quarter of 2005. "We are one of the best performing companies in the media industry," commented Mark Mays, chief executive officer. "Our healthy fundamentals and solid growth highlight the superior positioning of our assets and the emerging benefits of our concerted investment strategy. "We are capitalizing on our diverse portfolio of out-of-home media properties to meet the shifting demands of the global media marketplace. "Our radio division once again outperformed the industry, demonstrating the strength of our brands in connecting with our audiences. "Our outdoor division continues its track record of robust growth, posting considerable revenue gains year-over-year. Looking ahead, we continue to maintain strong operating momentum and we are hopeful that we can continue to convert our revenue gains into profitable returns for our shareholders." Randall Mays, president and chief financial officer, commented, "We generated strong results in the third quarter, demonstrating the scale and operating leverage in our business model. "Even as we continue to invest in our content and distribution assets to position our company to excel over the long-term, we are converting our revenue growth into profitable and tangible cash flows." Radio Broadcasting The Company's radio broadcasting revenues increased 5% during the third quarter of 2006 as compared with the third quarter of 2005 primarily from an increase in national advertising revenues, driven by increases in yield and average unit rates. The number of 30 second and 15-second commercials broadcast as a percent of total minutes sold increased in the third quarter of 2006 as compared with the same period of 2005. The Company's top 50 markets paced the revenue growth for the quarter, growing revenues at a higher percentage than the remainder of its markets. Strong advertising client categories during the third quarter of 2006 as compared with the third quarter of 2005 were autos, retail, and entertainment. The Company's radio broadcasting direct operating and SG&A expenses increased $27.5 million for the third quarter of 2006 as compared with the third quarter of 2005. This growth includes an increase in non-cash compensation expense of $6.3 million as result of adopting FAS 123R. Also contributing to the increase were increased costs related to programming, sales and distribution initiatives. Outdoor Advertising The Company's outdoor advertising revenue increased 8% during the third quarter of 2006 as compared to the third quarter of 2005. Included in the 2006 results is approximately $14.4 million from increases related to foreign exchange movements compared to 2005. Strictly excluding the effects of foreign exchange, the Company's outdoor advertising revenue for the third quarter of 2006 would have increased 6% over the third quarter of 2005. Outdoor advertising expenses increased $19.7 million, including $1.5 million in non-cash compensation expense related to the adoption of FAS 123R, during the third quarter of 2006 as compared with the third quarter of 2005. Included in the 2006 results is approximately $12.1 million from increases related to foreign exchange movements compared with 2005. Included in SG&A expenses during the third quarter of 2005 is $26.6 million related to restructuring the Company's businesses in France. The Company's outdoor advertising OIBDAN increased 18% in the third quarter of 2006 as compared to the same period of 2005. Americas Outdoor The Company's Americas revenue increased 12% during the third quarter of 2006 as compared with the third quarter of 2005 primarily attributable to bulletin and airport revenues. The increase in bulletin revenue was driven by an increase in rates. The increase in airport revenues was attributable to increased occupancy and rates as well as the acquisition of Interspace Airport Advertising in the current quarter, which contributed $14.6 million to revenue growth over the third quarter of 2005. Strong revenue growth for the quarter was achieved across a broad spectrum of markets including Boston, Cleveland, Dallas, Minneapolis, Orlando, Sacramento, San Antonio, and Tucson. Top advertising client categories during the quarter included autos, business and consumer services, entertainment, insurance, and retail. Direct operating and SG&A expenses increased $17.9 million in the third quarter of 2006 over the third quarter of 2005. Increased site lease and commission expenses associated with the increase in revenue drove the increase. Interspace contributed $9 million to direct operating and SG&A expenses in the third quarter of 2006. Non-cash compensation expense increased $1.2 million related to the adoption of FAS 123R. International Outdoor Revenues from the Company's international outdoor operations increased 4% in the third quarter of 2006 as compared to the third quarter of 2005 primarily from movements in foreign exchange. Excluding the effects of foreign exchange, the Company's international outdoor revenue was flat over the third quarter of 2005 primarily as a result of growth in street furniture revenues offset by declines in billboard revenues in France and the United Kingdom. Top advertising client categories during the quarter included autos, business and consumer services, entertainment, insurance and retail. Direct operating and SG&A expenses increased 1% over the third quarter of 2005 primarily from increases due to movements in foreign exchange and an increase in fixed rent associated with guarantees on new contracts. Included in direct operating and SG&A expenses in the third quarter of 2005 is approximately $26.6 million related to restructuring the Company's businesses in France. Also included in the increase is $300,000 in non-cash compensation expense related to the adoption of FAS 123R. FAS No. 123R: Share Based Payment The Company adopted FAS 123R on Jan. 1, 2006, under the modified- prospective approach which requires it to recognize employee compensation cost related to its stock option grants in the 2006 financial statements for all options granted after the date of adoption as well as for any options that were granted prior to adoption but not vested. Under the modified-prospective approach, no stock option expense is reflected in the financial statements for 2005 attributable to these options. Non-cash compensation expense recognized in the financial statements during 2005 relates to the expense associated with restricted stock awards. Return of Capital to Shareholders The Company announced Aug. 9, 2005, its intention to return approximately $1.60 billion of capital to shareholders through either share repurchases, a special dividend or a combination of both. Since announcing its intent through the date of this release, the Company has returned approximately $1.58 billion to shareholders by repurchasing 53.5 million shares of its common stock. Since announcing a share repurchase program in March 2004, the Company has repurchased approximately 130.9 million shares of its common stock for approximately $4.3 billion. Subject to its financial condition, market conditions, economic conditions and other factors, it remains the Company's intention to return the remaining balance of approximately $18 million in capital to its shareholders through share repurchases from funds generated from the repayment of inter-company debt, the proceeds of any new debt offerings, available cash balances and cash flow from operations. The $1 billion share repurchase plan authorized on Aug. 9, 2005, has been completed. A $600 million repurchase plan was authorized by the Board of Directors on March 9, 2006, and approximately $18 million remains under this plan. An additional $1 billion share repurchase plan was authorized on Sept. 6, 2006. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1516 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. COLLINS & AIKMAN: Restructuring Focus Shifts Toward Sale -------------------------------------------------------- Collins & Aikman Corporation expects to sell its operations, in whole or in parts, to maximize the value of the enterprise for its creditors and preserve the largest number of jobs for its employees. On Aug. 30, 2006, the Company filed a plan of reorganization that proposed a framework for emergence from Chapter 11. Under the Plan, the Company's pre-petition secured lenders were to exchange their debt for equity in a reorganized Collins & Aikman. The Plan also provided the flexibility to continue the sale process as an alternative recovery strategy. After recently disclosed production cuts by its major customers and projected deterioration in the US automotive sector, the Company, in consultation with its major creditor constituencies, further analyzed the risks and benefits of operating as a stand- alone enterprise. The Company, in conjunction with its creditors, has concluded that a sale process option in the Plan represents the best strategy for maximizing creditor recoveries. The current course of action was recommended by Collins & Aikman's senior management team and restructuring advisors after meeting with creditors. "The valiant and successful effort put forth by C&A's employees and restructuring team to stabilize operations must be commended," commented Frank Macher, Collins & Aikman's President and CEO. "However, industry conditions have continued to deteriorate to a point that we have determined it was absolutely necessary for us to pursue a cooperative sale process to provide the maximum value for our creditors and preserve the largest number of jobs for our employees." In conjunction with the sale process, the Company anticipates announcing the consolidation or closure of additional facilities in the near future. Rationale for these additional actions will largely be based on buyer interest, which likely will take into consideration projected capacity requirements, plant performance, and the operational restructuring and volume reduction measures recently announced by its largest customers. "Despite the current environment, there are portions of our operations that have not only shown improvement but are operating at a level that should be very attractive for the right buyer," added Mr. Macher. "We have maintained a dialogue with a number of interested parties throughout our reorganization and feel pursuing this track is the best option available for all of our stakeholders, including employees, customers and creditors." Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. COMMUNICATIONS CORP: Wants Final Order on Cash Collateral Use ------------------------------------------------------------- Communications Corporation of America and its debtor-affiliates and White Knight Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Louisiana in Shreveport to issue a final order allowing the use of cash collateral securing repayment of their prepetition debts to: -- General Electric Capital Corporation, in its individual capacity as lender and as collateral agent and the senior agent, and certain financial institutions that are a party to two Credit Agreements, each dated June 4, 2004; -- Bank of Montreal as agent, and certain financial institutions that are a party to a certain Note Agreement, dated as of June 4, 2004; and -- Apollo Management, L.P., as Notes Representative, and certain financial institutions that are a party to a certain Note Agreement, dated as of June 4, 2004. The Debtors asked for access to their lenders' cash collateral in order to fund their day-to-day operations and provide services necessary for their businesses. The court has issued a series of interim orders, most recently on Sept. 15, 2006, granting access to the cash collateral in accordance with certain budgets. To protect creditors asserting liens on the cash collateral against any diminution in the value of their collateral, the Debtors agree to provide customary adequate protection in the form of replacement and superpriority claims under Section 507(b) of the Bankruptcy Code. About White Knight Headquartered in Lafayette, Louisiana, White Knight Holdings, Inc., is a media, television and broadcasting company. White Knight entered into commercial inventory agreements, joint sales agreements, and shared services agreements with Communications Corporation of America. However, both entities are independent companies and are not affiliates of each other. Along with Communications Corp., White Knight operates around 23 TV stations. White Knight and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. White Knight and its debtor-affiliates' chapter 11 cases are jointly administered under Communication Corporation of America's chapter 11 case. When White Knight and its debtor-affiliates filed for protection from their creditor, they estimated less than $50,000 in assets and estimated debts between $100,000 and $500,000. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. COMPLETE RETREATS: Panel to Conduct Rule 2004 Exam on LPP Mortgage ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor-affiliates' chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the District of Connecticut to conduct an examination, pursuant to Rule 2004 of the Federal Rules of Civil Procedure, on LPP Mortgage Ltd. LPP Mortgage, along with the Patriot Group LLC, provided prepetition financing to the Debtors. The Court directed LPP Mortgage, through its persons most knowledgeable, to appear for oral examination at the offices of Bingham McCutchen LLP, One State Street, in Hartford, Connecticut, or other mutually agreeable location on Nov. 17, 2006, or on another date as may be agreed upon by the parties. The Committee seeks to examine documents, within the scope of Rule 2004(b), from LPP Mortgage concerning topics, which include: -- an account history of financing of or credit advanced to the Debtors within six months prior to the Petition Date; -- financial statements or reports regarding the Debtors; -- opinion letters regarding mortgages on properties owned or leased by the Debtors; -- lists purporting to identify original notes and corresponding mortgages or the amount of debt allocated to each property or property interest of the Debtors; -- documents reflecting memberships held by LPP Mortgage, its processors-in-interest, or its principals, employees or affiliates in any of the Debtors' clubs; -- internal reports and analyses regarding the Debtors or financing extended or contemplated to be extended to the Debtors; -- the assignment of notes and mortgages from Beal Bank, S.S.B. to LPP Mortgage; -- the financing of the Debtors by LPP Mortgage or its predecessors-in-interest; -- contracts, agreements, or arrangements between LPP Mortgage or its processors-in interest and the Debtors; -- the identity of each person who participated in any decision by LPP Mortgage, or its predecessors-in-interest to enter into, modify, continue or terminate a contract, agreement, or arrangement between LPP Mortgage, or its predecessors-in-interest, and the Debtors; -- the management, operation, financing, or marketing of the Debtors; -- the Debtors' financial condition; -- communications between LPP, or its predecessors-in- interest, and the Debtors; and -- settlements between LPP, or its predecessors-in-interest, and the Debtors. 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). CONGOLEUM CORP: Sept. 30 Balance Sheet Upside-Down by $44.3 Mil. ---------------------------------------------------------------- Congoleum Corporation reported financial results for the third quarter ended Sept. 30, 2006. Sales for the three months ended Sept. 30, 2006 were $57.5 million, compared with sales of $60.5 million reported in the third quarter of 2005, a decrease of $3.0 million or 5.0%. The net loss for the third quarter of 2006 was $0.4 million, compared with net income of $0.3 million in the third quarter of 2005. Sales for the nine months ended Sept. 30, 2006 were $173.4 million compared with sales of $176.2 million in the first nine months of 2005. Net income for the nine months ended September 30, 2006 was $0.4 million, versus a net loss of $14.6 million, in the first nine months of 2005, which included an asbestos related charge of $15.5 million. Roger S. Marcus, Chairman of the Board, commented, "As previously reported, there was an explosion in late August on one of our two main resilient sheet production lines at the Marcus Hook facility. Fortunately, no one was hurt and the damage was limited to the oven section of the line. We were able to immediately replace about a third of the lost production capacity using our other line on a seven-day operation. We also made an arrangement with a competitor to provide the balance of our requirements. By the end of September we were nearly back to normal service levels as a result of these arrangements. While we estimate the incident cost us approximately $0.8 million in the third quarter due to excess costs, lost production and the impact of lost sales, I do not anticipate any further negative impact on fourth quarter performance. The equipment manufacturer, our insurance carrier, and our own employees should all be complimented for their timely response and support in expediting the line rebuilding process. At this time we expect the replacement line will be installed and running by the end of this year." Mr. Marcus continued, "In addition to the impact of the production disruption, our third quarter sales suffered from an extremely slow retail environment, particularly in upper end remodel products, which is affecting the entire flooring category. On a positive note, our Duraproduct sales continue to show healthy growth despite this environment, and we are benefiting from the 2006 introduction of our K-Tech product line which we did not have at this time last year." "The impact of the production line incident, the weak retail environment, and continuing cost increases on certain specialty raw materials all hurt our results for the quarter. However, the good news is that the line problems are behind us, costs for our core raw materials appear to have stabilized, and a September price increase of nearly 5% will help our margins going forward. While we will not have the hurricane-related business that took place in the fourth quarter of 2005, we expect increased Duraproduct sales and the addition of K-Tech will help replace some of that business." Bankruptcy Update In March 2006, Congoleum filed a new amended plan of reorganization. In addition, an insurance company, Continental Casualty Company, and its affiliate, Continental Insurance Company, filed a plan of reorganization and the Official Committee of Bondholders, representing holders of the Company's 8-5/8% Senior Notes due August 1, 2008, also filed a plan of reorganization. In May 2006, the U.S. Bankruptcy Court for the District of New Jersey ordered all parties in interest in Congoleum's reorganization proceedings to participate in global mediation discussions. Several mediation sessions took place from June through September 2006. During the initial mediation negotiations, Congoleum reached an agreement in principle, subject to mutually agreeable definitive documentation, with the Asbestos Claimants Committee, the Future Claimants' Representative, and the Company's controlling shareholder, American Biltrite, Inc., on certain terms of an amended plan of reorganization, which Congoleum filed and proposed jointly with the ACC on August 11, 2006. CNA and the Bondholders' Committee jointly filed a new, competing plan on Aug. 18, 2006 and each withdrew its prior plan of reorganization. Following further mediated negotiations, Congoleum, the ACC, the FCR, ABI and the Bondholders' Committee reached agreement on terms of a new amended plan, which was the tenth plan. Congoleum filed this plan jointly with the ACC on Sept. 15, 2006. Following the Bondholders' Committee's withdrawal of support for CNA's plan, CNA filed an amended plan of reorganization. On October 23, 2006, Congoleum and the ACC jointly filed a revised version of the Tenth Plan which reflected minor technical changes agreed to by the various parties supporting Congoleum's plan. On Oct. 26, 2006, the Bankruptcy Court held a hearing to consider the adequacy of the disclosure statements with respect to the Tenth Plan and the CNA Plan and to hear arguments on respective summary judgment motions that the Tenth Plan and the CNA Plan are not confirmable as a matter of law. The Bankruptcy Court provisionally approved the disclosure statements for both the Tenth Plan and the CNA Plan subject to the Bankruptcy Court's ruling on the respective summary judgment motions which are pending. Because the Tenth Plan and Eleventh Plan are substantially identical, the Company believes rulings issued with respect to the Tenth Plan will also apply to the Eleventh Plan. About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX: CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. D. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At Sept. 30, 2006, Congoleum Corporation's balance sheet showed a $44,378,000 stockholders' deficit compared with a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). COPELANDS' ENT: Sells Assets to The Sports Authority and Hilco -------------------------------------------------------------- Copelands' Enterprises, Inc., has entered into a definitive asset purchase agreement with a joint venture composed of The Sports Authority, Hilco Real Estate, LLC and Hilco Merchant Resources, LLC. Under the agreement, The Sports Authority is to acquire seven to thirteen of Copeland's current 20 retail store locations. Hilco Real Estate, which has acquired certain lease designation rights, is expected to acquire or remarket the Company's remaining leases. Together with the Sports Authority, Hilco Merchant Resources and Hilco Real Estate collectively structured, financed and facilitated the strategic transaction, and will also manage the disposition of unwanted assets. The Company plans to immediately seek approval of the agreement from the U.S. Bankruptcy Court for the District of Delaware. The sale will be subject to court approval, a court-supervised auction sale, and other conditions to closing. The Company disclosed that it believes that The Sports Authority plans to retain many of the current employees working at the Company's retail stores and that the proposed sale is the best available means of keeping as many of its facilities open as possible. It also said that the sale of its business as a "going concern" should maximize the value of its assets and operations for the benefit of its creditors and help preserve jobs for company employees. About Sports Authority Headquartered in Englewood, Colorado, The Sports Authority, Inc., operates approximately 400 stores in 45 states under "The Sports Authority" name. The Sports Authority, Inc.'s e-tailing website, located at thesportsauthority.com is operated by GSI Commerce, Inc. under license and e-commerce agreements. About Hilco Real Estate Hilco Real Estate, LLC is headquartered in Northbrook, Illinois. It provides real estate disposition, lease negotiation, real estate appraisal and property disposition services. About Hilco Merchant Resources Hilco Merchant Resources -- http://www.hilcomerchantresources.com/ -- provides high yield strategic retail inventory disposition and store closing services. Over the years, Hilco principals have disposed of assets valued in excess of $35 billion. Hilco Merchant Resources and Hilco Real Estate are part of the Hilco Organization, a provider of asset valuation, acquisition, disposition and financial services to an international marketplace through 19 specialized business units, 400 employees and nearly 200 qualified field consultants. About Copelands' Enterprises Based in San Luis Obispo, California, Copelands' Enterprises Inc. dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The Company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). Laura Davis Jones, Esq., Marc A. Berlinson, Esq., and Ira A. Kharasch, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. COREL CORP: Slapped With Copyright Infringement Lawsuit by Entrust ------------------------------------------------------------------ Entrust Inc. filed a copyright infringement lawsuit against Corel Corporation alleging that Corel and its resellers have distributed Entrust software in various Corel WordPerfect products without a license to do so. The complaint cited copying and distribution of Entrust security technology in multiple products in Corel's WordPerfect portfolio without license and without paying applicable fees for those rights. These Entrust products help organizations protect sensitive information from unauthorized access and modification. The claim also alleges violation of the Virginia Business Conspiracy Act. The lawsuit was filed in the United States District Court for the Eastern District of Virginia on Nov. 13, 2006. Entrust alleged that Corel distributed Entrust's Authority File Toolkit software with Corel's suite of Wordperfect products. The Toolkit software allows an application to digitally sign, encrypt, and time-stamp documents. About Entrust Inc. Dallas, Tex.-based Entrust Inc. (NASDAQ: ENTU) -- http://www.entrust.com/-- offers SSL Certificates, e-mail security, data protection, Public-Key Infrastructure, strong authentication, and other security products and services. About Corel Corp. Ottawa, Ontario-based Corel Corporation (NASDAQ: CREL) (TSX: CRE) -- http://www.corel.com/-- is a packaged software company with an estimated installed base of over 40 million users. The Company provides productivity, graphics and digital imaging software. Its products are sold in over 75 countries through a scalable distribution platform comprised of original equipment manufacturers, Corel's international websites, and a global network of resellers and retailers. The Company's product portfolio features CorelDRAW(R) Graphics Suite, Corel(R) WordPerfect(R) Office, WinZip(R), Corel(R) Paint Shop(R) Pro, and Corel Painter(TM). * * * As reported in the Troubled Company Reporter on Nov. 7, 2006, Standard & Poor's Ratings Services affirmed its 'B' long-term corporate credit and senior secured debt ratings on Canada-based packaged software company, Corel Corp. CS MORTGAGE: Moody's Rates Class B-1 Certificates at Ba2 -------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificate issued by CSMC Trust 2006-CF3 and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by various mortgage lender originated adjustable-rate and fixed-rate reperforming mortgage loans acquired by DLJ Mortgage Capital, Inc. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination, excess spread, overcollateralization, and an interest-rate swap agreement provided by Credit Suisse International. Moody's expects collateral losses to range from 7.2% to 7.7%. Select Portfolio Servicing, Inc will service the mortgage loans. These are the rating actions: * CSMC Trust 2006-CF3 * CS Mortgage Pass-Through Certificates, Series 2006-CF3 Cl. A-1, Assigned Aaa Cl. M-1, Assigned Aa2 Cl. M-2, Assigned Aa3 Cl. M-3, Assigned A2 Cl. M-4, Assigned Baa1 Cl. M-5, Assigned Baa2 Cl. M-6, Assigned Baa3 Cl. B-1, Assigned Ba2 The certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. CWABS ASSET: Moody's Rates Class B Certificates at Ba1 ------------------------------------------------------ Moody's Investors Service assigned an Aaa rating to the senior certificates issued by CWABS Asset-Backed Certificates Trust 2006- 20 and a ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Countrywide Home Loans, Inc. originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by Countrywide Financial Corporation. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by lender paid primary mortgage insurance, provided by both United Guaranty Mortgage Indemnity Company and Mortgage Guaranty Insurance Corporation. The rating also benefit from subordination, excess spread, overcollateralization, and the interest-rate swap agreement provided by Bear Stearns Financial Products Inc. After taking into consideration the benefit from the mortgage insurance, Moody's expects collateral losses to range from 3.4% to 3.9%. Countrywide Home Loans LP will act as master servicer. These are the rating actions: * CWABS Asset-Backed Certificates Trust 2006-20 * Asset-Backed Certificates, Series 2006-20 Cl. 1-A, Assigned Aaa Cl. 2-A-1, Assigned Aaa Cl. 2-A-2, Assigned Aaa Cl. 2-A-3, Assigned Aaa Cl. 2-A-4, Assigned Aaa Cl. M-1, Assigned Aa1 Cl. M-2, Assigned Aa2 Cl. M-3, Assigned Aa3 Cl. M-4, Assigned A1 Cl. M-5, Assigned A2 Cl. M-6, Assigned A3 Cl. M-7, Assigned Baa1 Cl. M-8, Assigned Baa2 Cl. M-9, Assigned Baa3 Cl. A-R, Assigned Aaa Cl. B, Assigned Ba1 The Class B Certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. DANA CORPORATION: Court Approves Bing Metals Settlement Agreement ----------------------------------------------------------------- At Dana Corporation and its debtor-affiliates' behest, the U.S. Bankruptcy Court for the Southern District of New York approved the settlement agreement the Debtors entered into with Bing Metals Group-Assembly Inc., which provides that: (a) The Debtors will purchase at normal invoice price all parts in Bing Metals' inventory produced for the Ford U-354 Program in an as-is condition, as long as those parts are not generally recognized as scrap. The parties will reconcile their accounts receivable and accounts payable for those parts, taking into account any postpetition debits possessed by the Debtors for "offsets for steel, short shipping, sorting costs and defective costs" and to determine the amount to be paid upon reconciliation. The Debtors will limit its potential offsets to the offsets they had previously brought to Bing Metals' attention, including $48,000 in debits they identified to Bing Metals on the eve of Settlement. The Debtors will also waive any other potential debits and pay the reconciled amount. The Debtors estimates that the amount is approximately $150,000, whereas Bing Metals has argued that it should be approximately $170,000. (b) The Debtors agree to purchase at normal invoice price 176 packaging baskets that Bing Metals had purchased for packaging parts to be sold to the Debtors. The total invoice cost of those baskets was approximately $55,000. The Debtors estimate that the amount represents the fair market value for those packaging baskets and as part of the Settlement, the Debtors paid the amount to Bing Metals on September 22, 2006. (c) The Debtors will purchase from Bing Metals any Severstal brand steel inventory in Bing Metals' possession at $0.1814 per pound. Bing Metals has since advised the Debtors that it can provide no evidence that the steel it possesses is Severstal brand steel. As a result of the concession, the Debtors have no obligation to pay those amounts. (d) The Debtors agree to pay $75,000 to Bing Metals for "costs attributed to start-up of the Toyota Program," including "sunk costs." Bing Metals was required to provide to the Debtors all of the documentary evidence of those costs in Bing Metals' possession, but the Debtors agreed as a part of the Settlement to pay the amount immediately regardless of what evidence was produced by Bing Metals. In connection with the Settlement, the Debtors made the Sunk Cost Payment on September 22, 2006. (e) Bing Metals was to surrender possession of the Ford Tooling by immediately providing the Debtors with access to its premises and assisting with the shipment of those tooling. Bing Metals surrendered possession of the Ford Tooling to the Debtors on September 12, 2006. (f) The Debtors would assume Bing Metals' obligations to third parties with respect to the purchase of Toyota Tooling. (g) The parties agree to a limited release of claims with respect to the Toyota and Ford Programs, but the Debtors will retain certain warranty claims against Bing Metals for parts sold by Bing Metals to them. (h) The Debtors will pay $25,000 to Bing Metals if it could provide proof that the Debtors agreed to pay a particular expedited shipping charge. Bing Metals has since conceded that it has no proof that the Debtors ever agreed to pay the amount. As reported in the Troubled Company Reporter on Oct. 19, 2006, the Debtors and Bing Metals are parties to a number of agreements relating to two separate manufacturing programs for Operations, Engineering and Maintenance products: (1) The Ford U-354 Program Bing Metals supplies the Debtors with parts utilized to manufacture frames for the Ford Expedition and Lincoln Navigator sport-utility vehicle. In February 2005, the Debtors issued a purchase order for tooling in connection with the Ford Program. Pursuant to the Purchase Order and the Debtors' agreements with Ford Motor Company, ownership of the Ford Tooling passed from Bing to the Debtors to Ford. The Debtors have paid Bing Metals in full before the Petition Date for the Ford Tooling, and was reimbursed by Ford for the cost of those tooling. (2) The Toyota 200L Program In late 2005, Bing Metals was identified as a supplier parts utilized to manufacture frames for the Sequoia sport-utility vehicle, referred to as the Toyota 200L Program. In connection with the Toyota Program, the Debtors and Bing Metals entered into a non-binding letter of intent in November 2005. The Debtors then issued a series of purchase orders, dated June 7, 2006, for approximately $3,611,459 for tooling to be utilized in Bing Metals' production of component parts for the Toyota 200L Program. Bing Metals, in turn, sought to purchase that tooling from Fabest Co., Ltd., for approximately $400,000 less than the amount the Debtors were to pay for the Toyota Tooling. As of the Debtors' bankruptcy filing, the Toyota Tooling had not been completed by Fabest or sold to Bing Metals, and the Debtors have not paid any amounts to Bing Metals for the Tooling. In late July and August 2006, the Debtors expressed concerns to Bing Metals regarding the quality of the parts Bing Metals was producing for them. After continuing to experience various financial, quality and other difficulties, Bing Metals advised the Debtors that it no longer desired to produce production parts under the Ford U-354 Program, and that it desired to terminate its relationship with the Debtors with respect to that program. In response, the Debtors exercised its right to cancel the letter of intent with respect to the Toyota 200L Program. The parties then held a number of discussions in an effort to effect an equitable and consensual conclusion of their business relationship. As part of the process, the Debtors sought to take possession of the Ford Tooling from Bing Metals so that it could be delivered to a replacement supplier. Bing Metals, however, was unwilling to release the Ford Tooling unless and until the Debtors agreed to pay certain disputed amounts associated with both the Ford U- 354 Program and the Toyota 200L Program. Specifically, Bing Metals demanded that the Debtors pay various costs it incurred in connection with the Ford U-354 Program, including reimbursement for steel purchased by Bing Metals, certain expedited freight charges it incurred in shipping parts to the Debtors and the cost of certain packaging baskets it had purchased. Bing Metals sought to have the Debtors waive their rights to certain debits or claims they have against Bing Metals for short shipments and defective parts. Bing Metals also demanded that the Debtors reimburse various costs it allegedly incurred in connection with its efforts to source the tooling for the Toyota 200L Program. The Michigan Lawsuit The Debtors were unwilling to pay the demanded amounts. Subsequently, on Sept. 11, 2006, the Debtors commenced a lawsuit against Bing Metals in the U.S. District Court for the Eastern District of Michigan: (a) asserting that Bing Metals had breached its contracts with the Debtors relating to the Ford U-354 Program; and (b) seeking the return of the Ford Tooling, along with money damages and other forms of relief. On the same date, the Debtors filed a motion in the Michigan Lawsuit, seeking a temporary restraining order requiring Bing Metals to give the Debtors' employees access to its premises so that the Debtors could take possession of the Ford Tooling. Bing Metals filed a response to the Debtors' TRO Motion. Before the hearing on the TRO Motion, the Debtors and Bing Metals have agreed on a settlement of their disputes. 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 CORP: Dana Credit Inks New Forbearance Pact with Noteholders ----------------------------------------------------------------- Dana Credit Corporation has outstanding notes in the aggregate principal amount of approximately $399,000,000. An Ad Hoc Committee of Noteholders in Dana Corporation and its debtor- affiliates' bankruptcy cases, representing the holders of a majority of the outstanding principal amount of the DCC Notes, has asserted that the DCC Notes became immediately due and payable as a result of the commencement of the Debtors' bankruptcy. In a filing with the Securities and Exchange Commission dated October 30, 2006, Michael L. DeBacker, vice president of Dana Corporation, relates that DCC and the Ad Hoc Committee have been negotiating the terms of a new forbearance agreement under which, among other things, DCC will continue to market its lease and other portfolio assets and use the sale proceeds to make payments to forbearing holders of the DCC Notes. According to Mr. DeBacker, the terms of the forbearance agreement which are currently being discussed are set forth in the DCC Restructuring Proposal. Dana does not undertake to furnish any updates to the terms or to any drafts of the proposed forbearance agreement until the time, if any, as a definitive agreement with respect to the matter is executed, Mr. DeBacker says. A full-text copy of DCC Restructuring Proposal is available at no charge at http://researcharchives.com/t/s?143d 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). DELPHI CORP: Delphi Medical Wants to Close Stafford Facility ------------------------------------------------------------ Delphi Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to authorize Delphi Medical Systems Texas Corporation to: (a) enter into an amendment to a contract manufacturing agreement with Applera Corporation; and (b) close its facility at the city of Stafford, in Houston, Texas. Pursuant to the Contract, Delphi Medical Texas used the operations at the Houston Facility to manufacture and sell certain medical, analytical, and testing devices to Applera. In turn, Applera: (i) purchased the Products exclusively from Delphi Medical Texas on a three-year basis; (ii) assigned to Delphi its interest in the lease for the Houston Facility; and (iii) transitioned its work force at the Houston Facility to Delphi Medical Texas. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, informs the Court that manufacturing the products for Applera were unprofitable at the agreed prices and the alternative uses for the Facility's excess capacity did not develop as planned. As a result, Delphi Medical Texas, whose sole function was to perform pursuant to the Agreement, suffered annual losses aggregating $2,500,000. According to Mr. Butler, losses might increase given that the current term of the Agreement extends to June 6, 2008. Accordingly, Delphi Medical Texas has determined that it is necessary to seek an earlier termination of the Agreement and wind down operations at the Facility. To facilitate the closure of the Facility, Delphi Medical Texas proposes to enter into an amendment to the Agreement to continue manufacturing and selling a set quantity of products to Applera for a finite period of time. Among other things, the Amendment provides: * price increases that will reduce losses by $1,300,000 through 2007; * that Applera will purchase remaining inventory upon the closure of the Houston Facility, thus saving Delphi Medical Texas the necessity of liquidating $5,000,000 worth of otherwise excess inventory; and * that Applera will pay Delphi Medical Texas $547,000 as a success fee for closing the Houston Facility and relocating manufacturing operations. About $250,000 of that amount will be allocated to defray the expense of employee severances and $297,000 will be allocated as retroactive price increases. A full-text copy of the Applera Contract Amendment is available for free at http://researcharchives.com/t/s?150d Delphi Medical Texas expects that the wind-down period will be completed and the Houston Facility will be closed in the first quarter of 2007. Delphi Medical Texas will have no further obligations once all requirements under the Agreement are satisfied. Mr. Butler asserts that the Amendment and closure of the Houston Facility will provide several benefits to Delphi Medical Texas with relatively minor attendant costs. Specifically, the Debtors have an estimated total benefit value of $9,700,000 compared to an estimated total cost of $350,000. Applera has agreed to enter into the Amendment to the Agreement. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: Wants W.Y. Campbell as Financial Advisor ----------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York for permission to employ W.Y. Campbell & Company as their financial advisor and investment banker effective as of Sept. 1, 2006. John D. Sheehan, vice president and chief restructuring officer of Delphi Corporation, relates that since commencing operations in 1988, Campbell has, among other things, completed numerous transactions in a host of industry segments with particular experience in automotive related transactions. Campbell has concluded transactions across North America, Europe, and Asia. Mr. Sheehan explains that Campbell's accumulated experiences and special expertise in automotive related transactions makes the firm uniquely qualified to provide financial advisory and investment banking services that are essential to the Debtors in their Chapter 11 cases. As the Debtors' financial advisor, Campbell will: (a) identify, review, evaluate and initiate potential merger and acquisition transactions or other transactions; (b) review and analyze the assets and the operating and financial strategies of the Debtors' Mount Business; (c) assist in the definition of objectives related to value and terms of divestiture; (d) assist in identification of the Mount Business' proprietary attributes; (e) assist in the identification and solicitation of appropriate transaction parties; (f) prepare and distribute confidentiality agreements and appropriate descriptive selling materials; (g) initiate discussions and negotiations with prospective transaction parties; (h) assist the Debtors and their other professionals in reviewing and evaluating the terms of any proposed M&A Transaction or other transaction, in responding to it and, if directed, in developing and evaluating alternative proposals for an M&A Transaction or other transaction; (i) review and analyze any proposals the Debtors receive from third parties in connection with an M&A Transaction or other transaction; (j) assist or participate in negotiations with the parties-in- interest in connection with an M&A Transaction or other transaction; (k) advise and attend meetings of the Debtors' Board of Directors, creditor groups, official constituencies, and other interested parties; (l) participate in hearings before the Bankruptcy Court or any other court as the Debtors may request and provide relevant testimony; (m) assist the Debtors' internal and external counsel to enable that counsel to provide legal advice to the Debtors as contemplated under an engagement letter between the Debtors and Campbell; and (n) at the Debtors' request, render other financial advisory and investment banking services. In exchange for its services, Campbell will be entitled to receive in cash: * a $50,000 monthly advisory fee of $50,000, which in the aggregate will not be less than $600,000; * an M&A fee due and payable upon the closing of any M&A Transaction; * $750 per hour for preparing for, attending, or testifying at hearings; * to the extent the Debtors ask Campbell to perform additional services not contemplated by the Engagement Letter, the additional fees as will be mutually agreed upon by Campbell and the Debtors, in writing, in advance; * a monthly fee credit equal to 100% of the aggregate Monthly Fees credited against the M&A Fee; and * reasonable expenses incurred in connection with the performance of the firm's engagement. In addition, the Debtors will indemnify and hold Campbell harmless against liabilities arising out of or in connection with its retention by the Debtors except for any liability resulting from the firm's gross negligence, willful misconduct or fraud. A full-text copy of the Engagement Letter is available for free at http://researcharchives.com/t/s?150e Andre A. Augier, a managing director at Campbell, assures the Court that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. Campbell does not hold or represent an interest adverse to the Debtors or their estates, Mr. Augier says. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: US Airways Makes $8 Billion Merger Offer -------------------------------------------------- US Airways Group, Inc. (NYSE: LCC) has made a merger proposal to Delta Air Lines, Inc. (OTC: DALRQ) under which both companies would combine upon Delta's emergence from bankruptcy. The proposal would provide approximately $8.0 billion of value in cash and stock to Delta's unsecured creditors. Delta creditors would receive $4.0 billion in cash and 78.5 million shares of US Airways stock with an aggregate value of approximately $4.0 billion based on the closing price of US Airways' stock as of Nov. 14, 2006. The combination of US Airways and Delta would create one of the world's largest airlines and would operate under the Delta name. Customers would benefit from expanded choice as well as the reach and services of a large-scale provider within the cost structure of a low-fare carrier. As a combined company, the "New" Delta would be the number one airline across the Atlantic and the second largest airline to the Caribbean. The New Delta would reach more than 350 destinations across five continents, including North and South America, Europe, Asia and Africa. In the U.S., the combination would create a leading competitor in the Eastern U.S. and an enhanced position in the Western U.S. The combined company would be the number one airline at 155 airports. The New Delta would also be uniquely positioned to compete with low cost and legacy carriers. US Airways' proposal represents a 25% premium over the current trading price of Delta's prepetition unsecured claims as of Nov. 14, 2006 (40 cents/dollar), assuming that there will ultimately be $16.0 billion of unsecured claims. The proposal also represents a 40 percent premium over the average trading price for Delta unsecured claims over the last thirty days. US Airways believes that the combination will generate at least $1.65 billion in annual synergies, including $935 million in network synergies, predominantly from optimization of the airlines' complementary networks, including rationalization of network overlap, which will result in a 10 percent reduction of the combined airlines' capacity, reducing unprofitable flying and improving the mix of traffic. In addition, $710 million in net cost synergies will be achieved by combining facilities in overlap airports and eliminating redundant systems and overhead. Significantly, the opportunity to generate more than half of these synergies could be lost if a merger is delayed until after Delta emerges from bankruptcy. The merger is expected to be accretive to US Airways' earnings in the first full year after completion of the merger. US Airways Chairman and Chief Executive Officer Doug Parker stated, "We believe that the combination of US Airways and Delta, like the US Airways/America West merger we completed in September 2005, is extremely compelling and will create significant value for each of our stakeholders. The combined company will be a more effective and profitable competitor in the current fragmented marketplace, with the ability to better meet the continuing evolution of the airline industry. We will be flying under the Delta brand name, which is recognized around the world. "Delta creditors will receive significantly greater value under this proposal than they would under any standalone plan for Delta. US Airways shareholders and Delta creditors will benefit from the significant upside potential of the combined company through their respective ownership stakes. "Even with a 10 percent reduction in capacity, all existing U.S. destinations served today by US Airways and Delta will remain part of the new, improved network. Consumers will have the advantages of a larger, full-service airline with the cost structure of a low-fare carrier, and the communities we serve, as well as those Delta serves, will have access to a wider range of network options. More than ever, the New Delta will be able to connect our customers to the people and places they want to visit. "All of the employees of the New Delta will benefit from working for a larger and more competitive airline. As we demonstrated during our US Airways/America West merger, long-term job security for employees in our industry results from sound economics and a healthy business able to compete in our changing marketplace," Parker concluded. The New Delta will create a more comprehensive global route network that will provide more choice for travelers and attract new customers to key markets. In addition, many travelers have already benefited from the US Airways/America West merger. Since the merger, US Airways has lowered leisure fares in nearly 350 markets with discounts ranging from 10 percent to 75 percent -- an average reduction of 24% within those markets. US Airways has also lowered business fares in nearly 400 markets during the same period with reductions ranging from 10 percent to 83 percent -- an average reduction of 37% within those markets. Paul Reeder, President of PAR Capital Management, US Airways' largest shareholder, said, "We enthusiastically support this transaction, which we believe offers the opportunity to build upon US Airways' current competitive position. We have confidence in the US Airways management team, the $1.65 billion in identified synergies, and the potential upside for US Airways shareholders." USAir CEO's Letter to Delta Counterpart A full-text copy of the letter US Airways sent to Gerald Grinstein, Delta's Chief Executive Officer: November 15, 2006 VIA FACSIMILE Mr. Gerald Grinstein Chief Executive Officer Delta Air Lines, Inc. Atlanta, GA 30320-6001 Dear Jerry: Last Spring we had a conversation about a potential merger of US Airways and Delta. As you know, following that conversation, I sent you a letter on September 29, 2006, outlining our thoughts about a transaction, describing the significant benefits that could be achieved for both of our respective stakeholder groups from this type of transaction, and proposing to meet with you and your team to work together to further consider and develop our proposal. I was disappointed that you declined to meet or even enter into discussions in your letter of October 17, 2006. Because the benefits of a merger of US Airways and Delta are so compelling to both of our companies' stakeholders, we believe it is important to inform them about our proposal. Therefore, we are simultaneously releasing this letter to the public. The Board of Directors and management team of US Airways believe that a combination of Delta and US Airways presents a significantly greater value for Delta's creditors, customers, employees and partners than a plan to emerge from bankruptcy on a standalone basis. We also believe that, unless we act quickly to pursue a combination through the actions that can be taken during Delta's bankruptcy process, our respective stakeholders will not be able to realize what we believe are substantial economic benefits from such a combination. Merger Proposal We propose a merger of Delta and US Airways in a transaction in which Delta prepetition unsecured creditors would receive $4.0 billion in cash plus 78.5 million shares of US Airways' common stock. Based upon the closing price of US Airways' common stock of $50.93 on November 14, 2006, the equity component represents a value of approximately $4.0 billion. As a result of this transaction, immediately following the merger, Delta unsecured creditors would own approximately 45 percent of the combined company. This proposal represents an aggregate of approximately $8.0 billion in value to Delta's prepetition unsecured creditors, before taking into account realization of any of the significant additional value from the synergies we believe are achievable. Even prior to the realization of any synergy value, this proposal represents a 25 percent premium over the current trading price of Delta's prepetition unsecured claims as of November 14, 2006 (40 cents/dollar), assuming that there will ultimately be $16.0 billion of unsecured claims. The proposal also represents a 40 percent premium over the average trading price for Delta unsecured claims over the last thirty days. We believe that this proposal, which is based on publicly available information, fully values Delta. Synergy Value What makes this proposal most compelling for both Delta creditors and US Airways shareholders are the significant synergies that we believe can be readily achieved in this proposed transaction. We have preliminarily identified annual network and cost synergies in excess of $1.65 billion, which at a median industry EBITDAR multiple of 5.0x translates into approximately $8.3 billion of additional value creation. This is value that neither of our teams, no matter how well managed, could create independently. Under the combination, these synergies would be shared by Delta creditors and US Airways shareholders in proportion to their initial ownership in the combined company. The synergies would be generated only through an appropriately timed transaction, and under our current analysis we believe would be as follows: * Approximately $710 million would be realized through expense reductions. The largest savings would be in consolidation of information systems, reduction of overhead and consolidation of facilities. Additional savings are expected through lower distribution costs and renegotiation of our collective contracts with vendors. Based upon our experience and synergies achieved with the merger of US Airways and America West, we believe this estimate is conservative. * Another $935 million would be realized through network rationalization synergies. Network rationalization savings would be generated by managing the combined networks to ensure that the combined fleet size is better matched to passenger demand. Network synergies would also arise from better serving our current customers, and by increasing our competitive presence, attracting new customers and corporate accounts in markets where neither carrier today is a significant competitor. In our US Airways/America West merger, we preliminarily identified approximately $250 million in potential annual cost synergies that we believed could be realized in that transaction. After having successfully completed that transaction over a year ago, we have now identified over $300 million in cost synergies, outperforming our expectations. Year-to-date, US Airways' RASM is up 17.1 percent versus the industry being up 9.1 percent, which translates into $425 million in network synergies already this year. Accordingly, we have a high level of confidence that we can achieve at a minimum the synergies that we have identified in a potential Delta/US Airways merger. Our analysis presumes that a merger would proceed in the same fashion as the US Airways/America West transaction, with the closing in conjunction with Delta's emergence from bankruptcy. As I have previously indicated to you, if we model a merger of our companies after Delta emerges from bankruptcy standalone, our synergy estimates are cut in half. We do not believe that simply allowing that potential value to evaporate is in the best interests of any constituency. Financing and Structure We have obtained a financing commitment from Citigroup to provide $7.2 billion in new financing for this transaction. This funding would be utilized to refinance Delta's debtor- in-possession credit facility, refinance US Airways' existing senior secured facility with GE Capital, and provide the funding for the $4.0 billion cash portion of our offer. All other allowed secured debt and administrative claims would be assumed or paid in full. Preliminarily, we would intend to follow the model used successfully in the US Airways/America West merger for this transaction. We would, of course, seek to structure the transaction in a tax efficient manner for our respective stakeholders, maximizing Delta's net operating loss carryforwards. Integration Our proposal contemplates the creation of the leading global airline operating under the "Delta" name and brand. To streamline our operations and capitalize on potential synergies, we would expect to develop together an integration plan, and identify areas in which efficiencies can be maximized, including appropriate rationalization of operational centers. Regulatory Matters We have worked with antitrust counsel to analyze this transaction and believe that any antitrust issues can be resolved. Labor Matters We believe that this transaction is in the best interests of the employees of US Airways and Delta because of the strength and stability of the company that the transaction will produce. Also, we expect that we would move to the highest of the existing labor costs in every group. Because the wage rates for Delta and US Airways employees are not markedly different, we do not anticipate that this action will have a material negative impact, and that fact has been included in our analysis. Similar to the US Airways/ America West merger in which there were no furloughs of mainline operating group employees, our current model does not assume furloughs of employees in the mainline operating groups. Conditions Our proposal is conditioned on satisfactory completion of a due diligence investigation, which we believe can be completed expeditiously. In addition, the proposed transaction would be conditioned on the bankruptcy court's approval of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals and approval of the shareholders of US Airways. Given our analysis to date, we are confident that our joint efforts would result in satisfaction of these conditions and a successful combination of our companies in a timely manner. This proposal presents an opportunity for Delta creditors to receive significantly higher recoveries than they can receive under any standalone plan for Delta. It is also an opportunity for US Airways shareholders to benefit from the significant upside potential of the combination. Consumers will benefit from expanded choice as well as the reach and services of a large-scale provider within the cost structure of a low-fare carrier. Our employees will benefit from a more competitive employer and our willingness to adopt highest common denominator employee costs. As I expressed to you previously, I understand that you and your team have worked extremely hard on your own restructuring, and greatly respect all that you have accomplished to make Delta a healthy, viable airline. We simply believe that a combination with US Airways will produce even more value for your creditors and our shareholders, and that this is a unique opportunity to create an airline that is even better positioned to thrive long into the future, whatever that future might bring to the industry, greatly benefiting our employees and customers. We and our advisors, Citigroup Corporate and Investment Banking and Skadden, Arps, Slate, Meagher & Flom LLP, are ready to commence due diligence and to negotiate definitive documentation immediately, and request that you agree to work with us so that this alternative to your standalone plan can be quickly and fully developed. We are prepared to meet with you, Delta's Board, Delta's Official Committee of Unsecured Creditors, and any major Delta creditor or other stakeholder, to achieve this outcome. I believe we owe it to our respective stakeholders to pursue this opportunity vigorously. I look forward to hearing from you soon. Respectfully, /s/ Doug Parker $7,200,000,000 Citigroup Commitment US Airways has committed financing from Citigroup for the proposed transaction for $7.2 billion, representing $4.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing at both companies. The US Airways proposal is conditioned on satisfactory completion of a due diligence investigation, which the Company believes can be completed expeditiously, approval by Delta's Bankruptcy Court of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals, and the approval of the shareholders of US Airways. US Airways believes that this process could be completed in the first half of 2007. Citigroup Corporate and Investment Banking is acting as financial advisor to US Airways, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as primary legal counsel, with Fried, Frank, Harris, Shriver & Jacobson LLP as lead antitrust counsel to US Airways. Conference Call on Nov. 15 US Airways executives held a conference call with analysts and investors on Nov. 15, 2006, relating to the proposed merger with Delta. A full-text copy of the investor presentation is available at no charge at http://researcharchives.com/t/s?152d Delta Will Review USAir Offer Delta Air Lines' CEO Gerald Grinstein issued [this] statement regarding U.S. Airways' proposed merger with Delta: "We received a letter from U.S. Airways this morning and will of course review it. Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier. Our plan is working and we are proud of the progress Delta people are making to achieve this objective. The Bankruptcy Court has granted Delta the exclusive right to create the plan of reorganization until Feb. 15, 2007. We will continue to move aggressively towards that goal." [USAir's Doug Parker first called Mr. Grinstein in July 2006 for talks about a potential merger. In an October 17 letter, Mr. Grinstein advised Mr. Parker that exploratory merger discussions at that time would not be productive given the significant work that remains to be done by Delta's restructuring team. Mr. Grinstein added that the USAir proposal has been presented to the Official Committee of Unsecured Creditors in Delta's bankruptcy case, and the panel supported the company's response to the offer.] About US Airways Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. The Company and its affiliates filed for chapter 11 protection on Aug. 11, 2002 (Bank. E.D. Va. Case No. 02-83984). Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed their second chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. On March 31, 2006, the Court entered a final decree closing the chapter 11 cases of four affiliates. Only US Airways, Inc.'s chapter 11 case remains open. US Airways (NYSE: LCC) and America West's merger created the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of Star Alliance, which provides connections for our customers to 841 destinations in 157 countries worldwide. About Delta Air 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. DENNY'S CORP: Extends CEO Nelson Marchioli's Employment Term ------------------------------------------------------------ Denny's Corporation amended the employment agreement with Denny's Inc., a wholly owned subsidiary, and Nelson J. Marchioli, the president and chief executive officer of the Company and Denny's Inc., to extend the term of Mr. Marchioli's employment through May 20, 2009. A full text-copy of the amendment to the Employment Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1518 Headquartered in Spartanburg, South Carolina, Denny's Corporation -- http://www.dennys.com/-- is America's largest full-service family restaurant chain, consisting of 543 company-owned units and 1,035 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. * * * As reported in the Troubled Company Reporter on Aug. 11, 2006 Denny's Corporation's balance sheet at June 28, 2006 showed $500.3 million in total assets and $758.2 million in total liabilities, resulting in a $257.9 million stockholders' deficit. DURA AUTOMOTIVE: Nasdaq to Delist Common Stock and Securities ------------------------------------------------------------- The NASDAQ Stock Market had made a final determination to delist the Common Stock (Pink Sheets:DRRAQ) and the Convertible Trust Preferred Securities (Pink Sheets:DRRPQ) of Dura Automotive Systems, Inc., and will file a Form 25 with the Securities and Exchange Commission to complete the delisting. The delisting will become effective ten days after the Form 25 filing. NASDAQ previously suspended trading of the security. The Company, Oct. 31, 2006, disclosed that it had received a delisting notification from The Nasdaq Stock Market, dated Oct. 30, 2006, which stated that trading of its common stock will be suspended at the opening of business on Nov. 8, 2006. The Company also disclosed that it does not intend to appeal the decision. NASDAQ letter indicated that the delisting determination was prompted in light of DURA's voluntary filing for protection under Chapter 11 of the U.S. Bankruptcy Code and was based on Nasdaq Marketplace Rules 4300, 4450(f), and IM-4300. Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co- counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ELECTRONIC DATA: Moody's Holds Rating and Says Outlook is Positive ------------------------------------------------------------------ Moody's Investors Service has affirmed Electronic Data Systems Corporation's Ba1 rating and has revised its rating outlook to positive from stable. The rating outlook revision reflects EDS's reduction of cash outflows associated with large commercial and governmental problem contracts, including Navy, growth in organic revenue and new business contract signings, improvement in operating margins to in excess of 3%, and containment of capital expenditures to less than 10% of revenues with a concurrent reduction of CFT off balance sheet capital financing program usage. EDS's Ba1 rating reflects its leading market position in commercial I/T outsourcing, an industry prone to technical execution risks, a concentrated set of large client contracts, a shift toward smaller contract parceling, and offshore competition. EDS maintains its franchise breath as one of the largest I/T services companies worldwide and its cash flows are improving. However, its sizeable financial leverage adjusted for operating leases and under funded pensions and low net cash asset returns have constrained its rating. "A positive overall I/T services industry outlook and EDS's increasing offshore footprint support the potential for the company to maintain a book to bill ratio of approximately 1:1 and improve its operating margins to 6% in 2007," said Vice President and Senior Analyst John Moore. What Could Drive the Rating-Up * Operating margins adjusted by Moody's for pensions and under funded leases meet or exceed 6% in FY 2007 (versus 4.2% LTM Sept. 2006 operating margin adjusted by Moody's for leases and under funded pensions); * Moody's gains further confidence in the performance stability of EDS's large contracts, including developmental stage contracts with prospective milestones and recently renewed contracts; * The ratio of debt to EBITDAR less capital expenditures adjusted by Moody's for operating leases and under funded pensions is 5.5x or less; and, * The company continues to sign a consistent amount of contracts approximating $20 billion or more on an LTM basis. What Could Drive the Rating- down Given the positive rating outlook, a rating downgrade is unlikely at the present time. A revision of the rating outlook back to stable could occur if: (a) Organic revenues and new business contract signings decline in excess of 5% on an annual basis; (b) Gross capital expenditures exceed 10% of revenues on an annual basis; or (c) The company experiences weakening contract performance such that operating margins with Moody's adjustments for leases and under funded pensions decline to 3% or less on an annual basis. Headquartered in Plano, Texas, Electronic Data Systems Corporation is a leading provider of I/T services worldwide. ELTON KERR: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Elton R. Kerr Marga L. Kerr 1903 West Yakima Avenue Yakima, WA 98902 Bankruptcy Case No.: 06-02872 Chapter 11 Petition Date: November 14, 2006 Court: Eastern District of Washington (Spokane/Yakima) Judge: Frank L. Kurtz Debtors' Counsel: Metiner G. Kimel, Esq. Kimel Law Offices 1115 West Lincoln Avenue, Suite 105 Yakima, WA 98902 Tel: (509) 452-1115 Fax: (509) 452-1116 Total Assets: $629,648 Total Debts: $2,046,278 Debtors' 15 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $1,500,000 P.O. Box 21126 Philadelphia, PA 18114 State of Ohio Collections $100,000 Enforcement Section 150 East Gay Street, 21st Floor Columbus, OH 43215 Millikin & Fitton Law Firm, LPA $24,800 5020-B College, Corner Pike Oxford, OH 45056 American Express $15,000 P.O. Box 297814 Fort Lauderdale, FL 33329 Chase $11,150 P.O. Box 15299 Wilmington, DE 19850-5299 JC Penny $8,577 Ronald M. Martin Jr. $8,000 John Folkerth $5,017 National City Bank - VISA $4,848 Juanita Kerr $4,500 Huntington Bank $15,049 Collateral FMV: $12,100 Wells Fargo Financial $1,040 Oakwood City $669 Sears $1,905 Collateral FMV: $1,500 PAML $400 ENRON CORPORATION: Court Approves $19.7 Million Fleet Settlement ---------------------------------------------------------------- The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approved a $19.7 million settlement agreement between Enron Corp. and FleetBoston Financial Corp., Fleet National Bank, and certain of their affiliates. As reported in the Troubled Company Reporter on Oct. 9, 2006, the Debtor reached an agreement with Fleet Financial to settle the MegaClaims litigation and an avoidance action to recover preferential transfers in connection with Enron's Commercial Paper litigation. Pursuant to the terms of the settlement, Fleet Financial will pay Enron $10.4 million to settle the MegaClaims litigation and $9.35 million to settle the Commercial Paper litigation. Fleet Financial did not admit liability or wrongdoing and both parties agreed to settle the litigation to avoid the costs and uncertainties of further proceedings. 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. 182; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: Court Okays $25 Million NewPower Settlement Agreement ----------------------------------------------------------------- The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approved the $25 million settlement agreement between Enron Corp. and its debtor-affiliates, and the NewPower Entities, and Rufus T. Dorsey, IV. As reported in the Troubled Company Reporter, Nov. 8, 2006, Enron Corp., Enron North America Corp., Enron Energy Services, Inc., Enron Power Marketing, Inc., Enron Energy Services, LLC, entered into a Master Cross-Product Netting, Setoff and Security Agreement with The New Power Company, NewPower Holdings, Inc., and TNPC Holdings, Inc., concerning a series of commodity purchase and swap transaction. The Master Agreement was amended on Oct. 18, 2001, pursuant to which the Enron Debtors held $70,000,000 in collateral posted by the NewPower Entities and the Debtors obtained secured claims against the NewPower Entities for $28,000,000. On June 11, 2000, the NewPower Entities sought Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Georgia. The Enron Debtors filed timely proofs of claim in the NewPower Chapter 11 cases. The Enron Debtors assert secured claims of more than $28,000,000 for outstanding principal and interest due on the Secured Note pursuant to the first NewPower settlement. On Sept. 24, 2004, Mr. Dorsey, the examiner for the NewPower Entities, filed Adversary Proceeding No. 04-04303 in the Enron Bankruptcy Court, seeking to recover the New Power Entities' $28,000,000 payment on the Secured Note, recharacterize the indebtedness evidenced by the Secured Note as equity in NewPower Holdings, and to equitable subordinate all of the equity interests in NewPower Holdings held or asserted by the Enron Parties. On March 29, 2005, Mr. Dorsey filed an objection in the NewPower Bankruptcy Court, seeking to disallow the Enron Parties' equity interests. In response to the objection, the Enron Debtors filed a motion in the Enron Bankruptcy Court, seeking to enforce the automatic stay and Enron Plan injunction, and impose sanctions on Mr. Dorsey and his counsel for their knowing violation of the stay in the Enron Chapter 11 cases. To resolve their dispute, the parties entered into a settlement agreement. The terms of the settlement are: (1) the Enron Claims and the Enron Equity Interest will be allowed in the NewPower Chapter 11 cases, provided, however, that the Enron Parties will waive their rights to receive, collectively, the first $5,725,000 of the Enron Reserve; (2) the NewPower Entities will transfer to the Enron Parties the Enron Reserve reflected in the NewPower June MOR, plus any interest accrued on the balance after June 30, 2006, minus $5,725,000; (3) The NewPower Entities will make the subsequent shareholder distributions to the Enron Parties on or before December 14, 2006, and certain Enron shares held by the non-Debtor Enron affiliates will be cancelled and they will have no more ownership interest in the NewPower Entities; and (4) they will mutually release each other from all claims related to the Adversary Proceeding, the Objection and the Sanctions Motion. 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. 182; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FERRO CORPORATION: Files Three Quarters of 2005 Financial Reports ----------------------------------------------------------------- Ferro Corporation has now submitted its 2005 reports on Form 10-Q for the quarters ending March 31, June 30 and Sept. 30, 2005, to the Securities and Exchange Commission. The Company's Statement of Operations showed: For the period ended ------------------------------------------------ Quarter Quarter Quarter 03/31/06 06/30/06 09/30/06 ----------- --------- ---------- Revenue $461,674,000 $496,626,000 $466,116,000 Net (Loss) ($65,000) ($154,000) ($6,850,000) The Company's Balance Sheet showed: For the period ended ----------------------------------------------- Quarter Quarter Quarter 03/31/06 06/30/06 09/30/06 ---------- ---------- --------- Current Assets $640,453,000 $643,089,000 $626,011,000 Total Assets $1,740,891,000 $1,719,239,000 $1,698,818,000 Current Liabilities $402,457,000 $383,856,000 $375,031,000 Total Liabilities $1,213,911,000 $1,207,523,000 $1,186,508,000 Total Stockholders' Equity (Deficit) ($504,923,000) ($490,310,000) ($491,377,000) Full-text copies of the company's financial statements are available for free at: First quarter ended March 31, 2005 http://researcharchives.com/t/s?1522 Second quarter ended June 30, 2006 http://researcharchives.com/t/s?1523 Third quarter ended Sept. 30, 2006 http://researcharchives.com/t/s?1524 With the completion of the 2005 financial filings, the Company will then focus on the completion of its Form 10-Q filings for the first three quarters of 2006, and expects to file these reports with the SEC by the end of 2006. About Ferro Corp Headquartered in Cleveland, Ohio, Ferro Corporation -- http://www.ferro.com/-- supplies technology-based performance materials for manufacturers. Ferro materials enhance the performance of products in a variety of end markets, including electronics, telecommunications, pharmaceuticals, building and renovation, appliances, automotive, household furnishings, and industrial products. The Company has approximately 6,800 employees globally. * * * Standard & Poor's Ratings Services' 'B+' long-term corporate credit and 'B' senior unsecured debt ratings on Ferro Corp. remains on CreditWatch with negative implications, where they were placed Nov. 18, 2005. FINOVA GROUP: Wants to Settle Claims and Sell Remaining Assets -------------------------------------------------------------- The FINOVA Group, Inc. and FINOVA Capital Corporation, on Nov. 10, 2006, filed a motion in the United States Bankruptcy Court for the District of Delaware to seek an order: (i) approving the previously announced settlement of various litigations associated with The Thaxton Group, Inc.; (ii) approving the ongoing sale of FINOVA's remaining assets, the orderly windup of FINOVA's operations and its future dissolution; (iii) reopening the Company's chapter 11 case to facilitate the planned asset sales and, ultimately, the dissolution of FINOVA; and (iv) channeling to the Court any claim of the holders of senior secured notes of the Company and the indenture trustee for the senior secured notes against FINOVA arising under or related to FINOVA's joint chapter 11 plan, the ongoing liquidation, the senior secured notes, or the windup. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Pachulski, Stang, Ziehl, Young & Jones P.C. and Wachtell, Lipton, Rosen & Katz represent the Official Committee of Unsecured Creditors. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. Finova is winding up its affairs. FIRST CONSUMERS: Moody's Cuts Rating on $36 Million Notes to B2 --------------------------------------------------------------- Moody's Investors Service downgraded the rating of the Series 2001-A, Class C subordinate notes issued through First Consumers Credit Card Master Note Trust to B2 from Baa2. This rating action concludes a review that began on July 28, 2006. Rating action: * Issuer: First Consumers Credit Card Master Note Trust -- $36,000,000 Class C Asset-Backed Notes, Series 2001-A, downgraded to B2 from Baa2 Rationale: The downgrade of the Class C notes was prompted by an increase in the default frequency regarding the sufficiency of a class- specific reserve account to fully cover the outstanding principal on the notes. Although the reserve account currently exceeds the par value of the notes, the notes may not be retired until the final maturity in Sept. 2008, during which time the reserve account may be drawn upon to cover monthly, LIBOR-based interest coupon payments. The sufficiency of the amount held in the class- specific reserve account is a function of future interest rates, the rate of return on amounts held in the reserve account, and the speed at which the remaining invested amount is written down. Upon the depletion of the collateral amount, the Class C noteholders are not entitled to Trust collections. The $38 million reserve account, however, can be used to pay Class C coupon payment shortfalls. As a result, Class C coupon payments will be paid entirely from draws from the reserve account until the legal final maturity date of Sept. 2008 according to the servicer, First National Bank of Omaha. Given the potential level of negative carry between the income earned on the reserve account and the coupon on the Notes and the length of the exposure the sufficiency of the funds in reserve account to pay off the full Class C principal balance at maturity is no longer consistent with a Baa2 rating. Background: The Class C ratings were initially put on review in March 2002. At that time, rapid deterioration in the Trust's performance caused the breach of an early amortization event for all the outstanding classes of notes in the trust. Shortly thereafter, the card program was discontinued, cardholders' charging privileges were revoked, and deterioration in the collateral performance accelerated. Servicing was transferred to a successor in June 2003. The ratings on the Class C notes were confirmed shortly thereafter, in Sept. 2003. Unlike the other related classes of notes, which were downgraded several notches, the Series 2001-A Class C notes were not initially downgraded due to a class-specific reserve account, which was funded to the Class C's $36 million par value. Over time, this reserve account has grown to over $38 million due to investment earnings; however, for reasons cited above, the sufficiency of the funds in the reserve account to pay off the full Class C principal balance no longer warrants a Baa2 rating. FISHER SCIENTIFIC: Thermo Merger Prompts S&P to Lift Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on the debt of Fisher Scientific International Inc. in light of the completion of its merger with Thermo Electron Corp. to create Thermo Fisher Scientific Inc. (BBB+/Positive/--). The ratings were also removed from CreditWatch, where they were placed with positive implications May 8, 2006, in anticipation of the merger's closing. The rating on Fisher Scientific's senior unsecured debt was raised to 'BBB+' from 'BBB-' and the rating on the company's subordinated debt was raised to 'BBB' from 'BB+'. The 'BBB-' corporate credit rating on Fisher Scientific was withdrawn, as was the 'BBB' senior secured rating assigned to a bank facility that has been repaid. FOAMEX INTERNATIONAL: Foamex LP Can Assume Amended Chemtura Pact ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Foamex L.P. to assume, as amended, its executory contract dated June 16, 2003, with Chemtura Company. As reported in the Troubled Company Reporter on Oct. 25, 2006, Chemtura, as successor-in-interest to Great Lakes Chemical Corporation, supplied the Debtors with a variety of additives classified in general as flame-retardants. These additives were critical to meet industry and regulatory requirements for retarding the flammability of foam products, while meeting environmental guidelines. Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, contended that with the assumption of the Chemtura Contract, Foamex is ensured continued supply of the specialty chemical it needs. Chemtura also agreed to provide Foamex several weeks to pay the cure amount due to Chemtura, and has agreed to a 9% discount on the cure amount owed. Specifically, Chemtura has agreed to accept $1,055,317 in order to cure any and all defaults under the Chemtura Contract to be paid in three equal weekly installments. Foamex owes $1,155,317 to Chemtura for prepetition purchases. 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 INT'L: Schulte Roth Unveils 12-Member Sr. Noteholders Panel ------------------------------------------------------------------ Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Adam C. Harris, Esq., at Schulte Roth & Zabel LLP, in New York, discloses that as of Nov. 6, 2006, the Ad Hoc Committee of the Holders of Foamex International Inc. and its debtor-affiliates' 10-3/4% Senior Secured Notes due April 1, 2009, consists of 12 members: (a) Basso Capital, (b) Cerdarview Capital Management, LP, (c) Chilton Investment Company, Inc., (d) Credit Suisse First Bolton, (e) Jefries & Company, Inc., (f) Murray Capital Management, Inc., (g) Northeast Investors, (h) Plainfield Asset Management LLC, (i) Quadrangle, (j) Rockview Capital, (k) TQA Investors, LLC, and (l) Venor Capital Management LP. As of Nov. 6, 2006, the aggregate principal amount of Senior Secured Notes held or managed by the Senior Noteholders Committee is approximately $135,000,000. The aggregate principal amount of all the Senior Secured Notes outstanding is $300,000,000. 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 CREDIT: S&P Rates $59.1 Million Class D Notes at BB+ --------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Ford Credit Auto Owner Trust 2006-C's $3.019 billion asset-backed notes series 2006-C. The preliminary ratings are based on information as of Nov. 14, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support, including: -- the subordination of 7% for class A, 4% for class B, and 2% for class C; -- the excess spread; and, -- a nonamortizing, fully funded reserve account equal to 0.5% of the initial gross pool balance. The payment structure also features a turbo mechanism through which the excess spread, after covering losses, will be used to pay the securities until the requisite overcollateralization is reached. Preliminary Ratings Assigned Ford Credit Auto Owner Trust 2006-C Class Rating Amount ----- ------ ------ A-1 A-1+ $664,000,000 A-2A AAA $530,721,000 A-2B AAA $530,720,000 A-3 AAA $509,551,000 A-4A AAA $288,419,000 A-4B AAA $288,419,000 B A+ $88,795,000 C BBB+ $59,196,000 D BB+ $59,196,000 FORD MOTOR: DBRS Says Financial Restatement Has No Material Impact ------------------------------------------------------------------ Dominion Bond Rating Service notes that Ford Motor Company reported the completion of the restatement of its financial results from 2001 through to the third quarter of 2006. DBRS believes that the restatements have no material impact on the Company's financial position and do not warrant any rating actions. The restatements do not affect the availability of the Company's committed credit facilities. More importantly, the Company has taken action to remediate the material weaknesses in its accounting for certain derivative transactions under the Statement of Financial Accounting Standards 133. DBRS notes that the accounting error occurred at Ford Motor Credit Company, Ford's wholly owned finance subsidiary. Ford Credit had incorrectly accounted for certain interest rate swaps, which it used to hedge against the interest rate risk inherent in certain long-term fixed-rate debt. As part of Ford's restatements of results through to the third quarter of 2006 to correct the accounting error, Ford has also reversed certain immaterial accounting adjustments and recorded them in the proper period. These restatements, on a net basis, have a cumulative effect on net income of an improvement of $850 million but the restatements have no impact on the Company's cash position. The Company has filed the restated results for 2001 through to 2005 as well as the third quarter of 2006, and Ford plans to file the restated results for the first and second quarters of 2006 by November 20. GENERAL MOTORS: S&P Rates Proposed $1.5 Billion Senior Loan at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to General Motors Corp.'s proposed $1.5 billion senior term loan facility, expiring 2013, with a recovery rating of '1'. The 'B+' rating was placed on Creditwatch with negative implications, consistent with the other issue ratings of GM, excluding recovery ratings. The bank loan is rated one notch higher than the corporate credit rating. This and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a payment default. At the same time, Standard & Poor's said that all ratings on GM, including the 'B+' bank loan ratings--but excluding the '1' recovery ratings--remain on CreditWatch with negative implications. GM's unsecured debt continues to be rated one notch below the corporate credit rating. The rating agency estimate that the absolute recovery prospects for the unsecured creditors exceed 50% as detailed in our recovery report dated June 20, 2006. In addition, the disadvantage to the unsecured debtholders is reflected by the ratio of priority claims to adjusted assets, which is in the mid-20% area. The new secured term loan facility provides the company with a modest amount of incremental liquidity. Ratings List: * General Motors Corp. -- Corporate credit rating -- B/Watch Neg/B-3 -- Senior unsecured debt -- B-/Watch Neg * Rating Assigned -- $1.5 bil. secured bank term loan -- B+/Watch Neg -- Recovery rating -- 1 GS MORTGAGE: S&P Holds Low-B Ratings on Six Certificates -------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on eight classes of commercial mortgage pass-through certificates from GS Mortgage Securities Corp. II's series 2003-C1. Concurrently, ratings are affirmed on the remaining 12 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 $398.9 million (26%) in collateral since issuance. As of the Oct. 10, 2006, remittance report, the collateral pool consisted of 72 loans with an aggregate trust balance of $1.555 billion, compared with 74 loans totaling $1.611 billion at issuance. The master servicer, Capmark Finance Inc., reported primarily full-year 2005 financial information for 100% of the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 2.2x, up from 2.12x 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 $756.8 million (49%) and a weighted average DSC of 2.33x, up from 2.20x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. Three of the properties were characterized as "excellent," one property was characterized as "fair," and the remaining properties were characterized as "good." Credit characteristics for seven of the loans in the pool continue to be consistent with those of investment-grade obligations. These are the details of the loans: -- The largest exposure in the pool, One North Wacker, is encumbered by a $175.2 million class A note (11%) and a $45 million class B note. The loan is secured by the fee interest in a 1.34 million-sq.-ft. office property in Chicago, Illinois. Occupancy was 94% as of June 30, 2006. Standard & Poor's adjusted net cash flow is up 6% from its level at issuance. -- The second-largest exposure in the pool, the Sun Valley Mall loan, has a loan balance of $128.3 million (8%). The loan is secured by 1.0 million sq. ft. of a 1.4 million- sq.-ft. regional mall in Concord, Calif. The sponsor of the loan is Taubman Realty Group L.P. The property reported a year-end 2005 DSC of 2.28x. Standard & Poor's adjusted NCF is up 8% from its level at issuance. -- The third-largest exposure in the pool, the Bridgewater Commons loan, has a $110.7 million class A note (7%) and a $32.8 million class B note. The loan is secured by 534,706 sq. ft. of an 887,057-sq.-ft. regional mall in Bridgewater, New Jersey. The manager of the property is General Growth Properties Inc. Occupancy was 100% as of June 30, 2006. Standard & Poor's adjusted NCF is similar to its level at issuance. -- The fourth-largest exposure in the pool, the GGP Portfolio loan, has a loan balance of $86.9. The loan is secured by the fee and leasehold interests in two regional malls. The Provo Town Center is an 801,602-sq.-ft. regional mall in Provo, Utah. Occupancy at the property was 86% as of March 2006. The Spokane Valley Mall is a 618,347-sq.-ft. mall in Spokane, Washington. Occupancy at the property was 81% as of March 31, 2006. The sponsor of the loan and manager of the property is General Growth Properties Inc. Standard & Poor's adjusted NCF is similar to its level at issuance. -- The fifth-largest exposure, the Miami Center loan, has a loan balance of $81.0 million. The interest-only loan is secured by a 779,224-sq.-ft. office property in Miami, Florida. Occupancy was 99% as of June 30, 2006. Standard & Poor's adjusted NCF is 7% above its level at issuance. -- The eighth-largest exposure in the pool, the Paseo Nuevo Shopping Center loan, has a loan balance of $27.0 million. The interest-only loan is secured by a 152,401-sq.-ft. retail property in Santa Barbara, California. For the six months ended June 30, 2006, the DSC was 3.26x. Standard & Poor's adjusted NCF is similar to its level at issuance. -- The 16th-largest exposure in the pool, the Sycamore Commons Shopping Center loan, has a loan balance of $20.0 million. The interest-only loan is secured by 200,276 sq. ft. of a 247,513-sq.-ft. retail property in Matthews, N.C. The property reported a year-end 2005 DSC of 3.44x. Standard & Poor's adjusted NCF is similar to its level at issuance. Capmark reported a watchlist of six loans. The Newark Legal Center, the ninth-largest exposure, has an outstanding balance of $26.5 million and is secured by a 424,378-sq.-ft. office property in Newark, New Jersey. While this loan is not on the watchlist, the largest tenant's lease expires at the end of this month, and the tenant will not be renewing. 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. Ratings Raised GS Mortgage Securities Corp. II Commercial Mortgage Pass-Through Certificates Series 2003-C1 Rating ------ Class To From Credit enhancement (%) ----- -- ---- ---------------------- B AA+ AA 9.97 C AA AA- 8.94 D AA- A+ 8.16 E A+ A 6.99 F A A- 6.22 G A- BBB+ 4.92 H BBB+ BBB 4.15 J BBB BBB- 3.37 Ratings Affirmed GS Mortgage Securities Corp. II Commercial mortgage pass-through certificates series 2003-C1 Class Rating Credit enhancement (%) ----- ------ ---------------------- A-1 AAA 13.47 A-2A AAA 13.47 A-2B AAA 13.47 A-3 AAA 13.47 K BB+ 2.59 L BB 2.07 M BB- 1.68 N B+ 1.30 O B 1.17 P B- 0.91 X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. GSAMP TRUST: Losses Cue Moody's to Junk Ratings on Two Tranches --------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible downgrade four tranches from GSAMP Trust 2004-SEA2. The transaction was issued with seasoned subprime mortgage loans, some of which had experienced delinquency prior to securitization. The tranches from 2004-SEA2 are being downgraded and placed on review for possible downgrade based upon rapid deterioration of overcollateralization and subordination caused by an accelerating pace of losses. The losses are attributed to a high frequency of defaulted loans and substantial severity of loss on liquidated collateral. These are the rating actions: * Issuer: GSAMP Trust 2004-SEA2 * Downgrades: -- Class M-5; Downgraded to Caa2, Previously B1; -- Class B-1; Downgraded to C; previously B3. * Review for Downgrade: -- Class M-3; current rating Baa3, under review for possible downgrade; -- Class M-4; current rating Ba2, under review for possible downgrade. GSI GROUP: CEO and Director Richard Christman Resigns ----------------------------------------------------- GSI Group Inc., disclosed that its chief executive officer and director, Richard Christman, has resigned from his positions. The Company also disclosed that William J. Branch, chairman, assumes the additional duties of chief executive officer. GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group's common shares are listed on Nasdaq (GSIG). * * * In May 2005, Moody's Investors Service assigned a B3 rating to the senior notes of The GSI Group, Inc. In addition, Moody's affirmed GSI's existing ratings, including its B2 senior implied rating, and assigned a speculative grade liquidity rating of SGL-2. Also in May 2005, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to GSI Group and assigned its 'B-' senior secured rating to the $125 million senior unsecured notes due in 2013. The outlook was stable. HERBALIFE LTD: Class III Board Member Jesse Rogers Resigns ------------------------------------------------------------- Herbalife Ltd. disclosed that Jesse Rogers, Class III member of its Board of Directors, has retired from the Board effective as of Nov. 10, 2006. The Company disclosed that the reason for his retirement was the potential conflict of interest presented by the acquisition of Neways, Inc., by Golden Gate Capital, a private equity firm of which Mr. Rogers is a Managing Director. Herbalife Ltd. (NYSE: HLF) -- http://www.herbalife.com/-- is a marketing company that sells weight-management, nutritional supplements and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 62 countries through a network of more than one million independent distributors. The company supports the Herbalife Family Foundation -- http://www.herbalifefamily.org/-- and its Casa Herbalife program to bring good nutrition to children. * * * Standard & Poor's Ratings Services rated Herbalife Ltd.'s long- term foreign and local issuer credit ratings at BB+. HORNBECK OFFSHORE: Closes Offering of $220 Mil. Convertible Notes ----------------------------------------------------------------- Hornbeck Offshore Services, Inc., closed its offering of $220 million aggregate principal amount of convertible senior notes due Nov. 15, 2026 that were privately offered within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company also said that the initial purchasers exercised their option to purchase an additional $30 million in principal amount of the notes to cover over-allotments. The notes will initially bear interest at a fixed rate of 1.625% per year, declining to 1.375% beginning on Nov. 15, 2013, and will be guaranteed by the same subsidiaries of Hornbeck Offshore that guaranteed its existing 6.125% senior notes. In certain circumstances, the notes will be convertible into cash up to the principal amount and shares of the Company's common stock for any conversion value above the principal amount or, upon the Company's election, prior to Nov. 15, 2013, solely into shares of common stock, based on an initial conversion rate of 20.6260 shares per $1,000 principal amount of notes, corresponding to approximately $48.48 per share. The initial conversion price represents a premium of 37.5% relative to the last reported sale price on Nov. 7, 2006 of the Company's common shares on The New York Stock Exchange of $35.26. The Company estimates that the net proceeds from the offering, including proceeds resulting from the exercise of the initial purchasers' over-allotment option, will be approximately $242.8 million, after deducting discounts, commissions and estimated expenses. The Company disclosed that it used $75.8 million of the combined net proceeds to fund the cost of convertible note hedge transactions it entered into with certain financial institutions, including affiliates of the initial purchasers, which involves the purchase of call options with exercise prices equal to the conversion price of the notes and are intended to limit exposure to dilution to the Company's stockholders upon the potential future conversion of the notes. In addition, the Company has entered into separate warrant transactions resulting in gross proceeds of $51.9 million that involved the sale of warrants to purchase its common stock to the same financial institutions that entered into the convertible note hedge transactions. The convertible note hedge and warrant transactions will effectively increase the conversion price of the convertible notes to approximately $62.59 per share of its common stock, representing a 77.5% premium based on the last reported sale price on Nov. 7, 2006 of $35.26 per share. The Company also used $63.3 million of the net proceeds to repurchase approximately 1.8 million shares of its common stock contemporaneously with the closing of the notes offering in privately negotiated block trades. The remaining net proceeds of approximately $155.6 million will be used for general corporate purposes, including possible future acquisitions and additional new vessel construction. The Company further disclosed that the financial institutions that were counterparties on the convertible note hedge and warrant transactions or their affiliates purchased shares of the Company's common stock in privately negotiated transactions concurrent with or shortly after pricing of the notes. In addition, the financial institutions or their affiliates may modify their hedge positions by entering into or unwinding various derivative transactions and/or purchasing or selling shares of the Company's common stock in secondary market transactions prior to expiration of the convertible note hedge and warrant transactions. Based in Covington, Louisiana, Hornbeck Offshore Services Inc. -- http://www.hornbeckoffshore.com/-- through its subsidiaries, provides offshore supply vessels for the offshore oil and gas industry primarily in the United States Gulf of Mexico and internationally. HORNBECK OFFSHORE: Moody's Holds Low-B Ratings with Neg. Outlook ---------------------------------------------------------------- Moody's affirmed Hornbeck Offshore Services Inc.'s Ba3 corporate family rating, Ba3 Probability of Default Rating, Ba3 and LGD4, 55% senior unsecured note ratings, and changed the outlook from stable to negative. The rating affirmation was consequent to HOS's new $220 million 1.625% senior unsecured convertible note offering, with a $30 million green-shoe option that was exercised by investors. The proceeds from the convertible notes will augment the company's current $320 million cash balance underpinning its current $560 million new build program through 2010 and will also provide the company with increased optionality to execute a potential strategic acquisition and additional newbuilds. Although the company's overall profile is in line with the Ba3 rated peers, the negative outlook reflects the added debt that causes HOS' upcycle financial leverage to significantly increase without the addition of any associated operating cash flow. The pro forma LTM leverage for the transaction of approximately 4.23x is not only higher than Moody's anticipated for the Ba3 CFR, but it is currently of a B-rated profile. Although Moody's believes that current market conditions look supportive into 2007 and is likely to cause leverage to increase over the next few quarters, recent commodity price declines could lead to softer market conditions in the latter half of 2007 and possibly into 2008 and thus potentially slow HOS's leverage reduction given that it is entirely dependent on EBITDA growth and no debt repayment. While HOS' pro forma cash balances will be about $475 million, the current newbuild program is $560 million, the higher debt could put a degree of stress on the balance sheet if market conditions were to change and the company were to commit the new proceeds to either increase the already aggressive newbuild program or to complete a meaningful acquisition. In addition, over the past couple of years, the convertible notes market has evolved to create transactions that cause a degree of value transfer from the bonds to equity. A portion of the proceeds from HOS's convertible note offering was used to pay for the net cost of the convertible note hedge transaction which serves to protect the equity from dilution. This hedge was achieved through HOS's purchase of a call option on its stock at the conversion price while simultaneously selling warrants with a higher strike price. This effectively resulted in the conversion price being set at a 77% premium, thus making conversion harder to achieve. Further, share count reduction also occurred as HOS repurchased approximately 1.8 million shares of its common stock in a negotiated block trade to offset the degree of short selling that has become a feature of convertibles. The net result is that the company is left with about $155.6 million of net proceeds that can be deployed for re-investment and the effective coupon on the notes increases to approximately 2.57% since it is paying 1.625% on the full $250 million, including the green-shoe. To move back to a stable outlook, there needs to be a clear indication that management is meeting its projections and reducing sustainable leverage back to within the 3.5x range. Also, there needs to be no added leverage if the company either adds to the newbuild program or completes a material acquisition. In addition, a stable outlook would require that additional new builds, particularly if they are at a higher cost, are backed by firm contracts that provide sufficient cover for the capital needed to complete them. A move back to a stable outlook will also require that HOS does not execute stock buybacks, especially while the majority of the newbuild program still needs to be funded and completed. Hornbeck Offshore Services, Inc., a diversified marine service company headquartered in Covington, Louisiana, is a leading provider of technologically advanced, new generation OSVs primarily in the GoM and select international markets, and is a leading transporter of petroleum products through its fleet of ocean-going tugs and tank barges primarily in the northeastern U.S., the GoM and in Puerto Rico. Hornbeck currently owns a fleet of over 60 vessels primarily serving the energy industry. HOSPITAL FOR SPECIAL: Moody's Lifts Rating on Series B Bonds ------------------------------------------------------------ Moody's Investors Service upgraded to Baa3 from Ba1 the rating assigned to Hospital for Special Care's Series B (1997) Bonds issued by the Connecticut Health and Educational Facilities Authority. The upgrade affects $55.9 million of debt outstanding. The outlook is revised to stable from positive at the higher rating level. The upgrade reflects improved financial performance and liquidity which we believe are sustainable. Legal security: The Series B bonds are secured by a gross revenue pledge of the obligated group and a mortgage. The obligated group consists of Hospital for Special Care and HFSC Community Services, including Brittany Farms Health Center nursing home. Interest rate derivatives: None. Strengths: -- Dominant market position as a niche provider of chronic rehabilitation services in the State of Connecticut -- Significantly improved financial performance in fiscal year 2005 and FY 2006 after more challenging performance in FY 2003 and FY 2004 -- Improved liquidity measures to a record level at fiscal year end 2006 which should show continued growth given the facility's modest capital needs and improved operations; stronger liquidity provides a cushion for the organization in the event of changes in payer reimbursement Challenges: -- High dependency on Medicaid poses a risk to future revenue growth if the state were to lower or eliminate Medicaid rate increases during a fiscal crisis -- Unfavorable changes in Medicare reimbursement for long-term acute care hospitals that cannot be mitigated through increases in acuity or expense reductions Recent developments: The rating upgrade on Hospital for Special Care's Series B bonds reflect improved financial performance in fiscal years2005 and 2006, and expected for FY 2007. In FY 2006, HFSC reported a 2.9% operating margin and 9.1% operating cash flow margin. These results were lower than FY 2005's 4.6% operating margin and 11.5% operating cash flow margin due primarily to a one-time credit in FY 2005 related to the freezing of the pension plan, along with other cost reduction measures. Performance through the first six months of FY 2007 indicate continued improvement with HFSC reporting a 3.5% operating margin and a 9.5% operating cash flow margin. Management expects FY 2007 results to be on par with or slightly ahead of FY 2006. FY 2006 debt coverage measures still remain modest at 2.07x maximum annual debt service coverage and a high 7.44x debt-to-cash flow ratio, but represent material improvement from just two years ago. The recent results of higher earnings follow more challenging financial performance in FY 2003 and FY 2004. Various cost reduction efforts, which included reduced use of agency nurses and lower turnover and vacancy rates and the freezing of the defined benefit pension plan, were contributing factors to the improvement. Revenue enhancement strategies included the FY 2005 opening of a 28-bed satellite facility within St. Francis Hospital in Hartford. FY 2006 represented the first full year of this program. Revenue growth has also been a function of higher acuity. Moody's believe that HFSC's financial performance remains heavily tied to the fiscal health of the State of Connecticut given the high reliance on Medicaid. The financial difficulties in FY 2003 and FY 2004 were largely due to the lack of Medicaid rate increases as the state struggled with fiscal deficits. HFSC was successful in receiving rate increases after this period after an outreach effort to state representatives regarding HFSC's importance and exclusive services in the state. As a result, HFSC received 2%, 4% and 2% rate increases in FY 2005, FY 2006 and FY 2007, respectively. Moody's note that Medicaid does not cap the number of days of coverage it will reimburse, an important credit factor given HFSC's high average length of stay. The ability to receive favorable rate increases from Medicaid will be a key factor in maintaining an investment grade rating over the life of the bonds. While not a large percent of revenues, Medicare represents a risk to HFSC as well since HFSC is reimbursed as a long-term acute care hospital. Medicare recently reduced reimbursement to LTACH providers which translated into a $700,000 reduction to HFSC. HFSC's increasing acuity mitigated what could have been a larger impact. Moody's note that HFSC is not subject to the "75% rule" as it is not deemed to be an inpatient rehabilitation facility. HFSC's liquidity position has increased to record levels and is an important credit factor in the maintenance of the Baa3 rating. Moody's believe that HFSC's ability to withstand any potential reductions in Medicaid reimbursement will be aided by its increasing cash reserves. In FY 2006, unrestricted cash increased to $27 million or 103 days on hand from $22 million and 91 days at FYE 2005. Cash-to-debt also improved, to 46% from 36% in FY 2005. Cash increased further to $30 million as of Sept. 30, 2006. The rating agency expect cash to show continued growth given modest capital spending and the freezing of the defined benefit pension plan that reduced cash outlays in this area. Annual capital spending has been less than depreciation expense for several years. Management has indicated that capital spending is typically less for LTACH facilities given the less-invasive procedures that are offered. HFSC is a unique facility in the State of Connecticut given its focus on respiratory, rehabilitation and pediatric care. While there are other providers in the state that have certain of these services, none have the breadth of services that HFSC provides nor a similar acuity level and critical mass. Additionally, the other providers only service the adult population. Moody's believe that this is an important credit feature for HFSC that contributes to its essential role in the state and western Massachusetts. Outlook: The stable outlook is based on our belief that financial performance will be maintained at current levels providing adequate debt service coverage. Medicaid rates should also remain favorable over the next 18 to 24 months. What could change the rating--up Improvement in debt service coverage ratios, growth in liquidity and overall strengthening of the balance sheet, continued trend of favorable Medicaid rate increases What could change the rating--down Departure from current operating results, decline in liquidity, changes in the Medicaid program that results in freezing or reduction in rates without actions implemented to mitigate the reductions, increase in debt Key indicators: Assumptions and adjustments: * Based on financial statements for Hospital for Special Care and Affiliates -- First number reflects audit year ended March 31, 2005 -- Second number reflects audit year ended March 31, 2006 * Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 557; 551 * Total operating revenue: $96 million; $102 million * Moody's-adjusted net revenue available for debt service: $12.4 million; $11.1 million * Total debt outstanding: $61 million; $58 million * Maximum annual debt service: $5.3 million; $5.3 million * MADS Coverage with reported investment income: 2.15 times; 2.08x * Moody's-adjusted MADS Coverage with normalized investment income: 2.33 times; 2.07 times * Days-cash-on-hand: 90 days; 103 days * Debt-to-cash flow: 6.6x, 7.4x * Cash-to-debt: 36%; 46% * Operating margin: 4.6%; 2.9% * Operating cash flow margin: 11.5%; 9.1% IMAX CORP: To Pay Interim CFO Edward MacNeil CDN$345,000 Per Year ----------------------------------------------------------------- IMAX Corporation reached an arrangement with Edward MacNeil that during his term as interim chief financial officer, he will receive an annualized salary of CDN$345,000 and a guaranteed bonus of CDN$50,000 payable in March 2007, in respect of the year ending Dec. 31, 2006. Headquartered jointly in New York City and Toronto, Canada, IMAX Corporation -- http://www.imax.com/-- is an entertainment technology company, which emphasizes on film and digital imaging technologies, including 3D, post-production, and digital projection. IMAX also designs and manufactures cameras, projectors and consistently commits funds to ongoing research and development. * * * As reported in the Troubled Company Reporter on Oct. 3, 2006 Moody's Investors Service, in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the Gaming, Lodging & Leisure sector, confirmed IMAX Corporation's B3 Corporate Family Rating. Moody's also downgraded the Company's probability-of-default rating on its 9-5/8% Senior Notes due 2010 to Caa1 from B3. Additionally, Moody's assigned an LGD4 rating to these notes, suggesting noteholders will experience a 58% loss in the event of a default. As reported in the Troubled Company Reporter on Oct. 26, 2006 Standard & Poor's Ratings Services affirmed its ratings, including the 'B-' corporate credit rating, on IMAX Corp. and removed them from CreditWatch, where they were placed on March 10, 2006, with developing implications. The outlook is negative. INTERPUBLIC GROUP: Fitch Rates $400 Million Senior Notes at B ------------------------------------------------------------- Fitch Ratings has assigned a rating of 'B/RR4' to Interpublic Group's $400 million 4.25% convertible senior unsecured notes due March 15, 2023. The new notes rank pari passu with other senior unsecured indebtedness of the company. The Outlook remains Negative. IPG's ratings are: -- Issuer default rating (IDR) 'B'; -- Enhanced liquidity facility notes 'B/RR4'; -- Senior unsecured notes (including the new convertible senior unsecured notes) 'B/RR4'; -- Cumulative convertible perpetual preferred stock 'CCC/RR6'; -- Mandatory convertible preferred stock 'CCC/RR6'. The company has agreed to exchange half ($400 million) of its old $800 million, 4.5% convertible senior notes due 2023 for $400 million, 4.25% new convertible senior notes due 2023. This exchange enhances the company's financial flexibility by extending the first put date on the new securities to March 2012 from March 2008 (the second put date is extended to 2015 from 2013). This transaction also reduces the interest rate modestly (0.25%) on the new notes. In addition, the notes are not considered 'participating' securities meaning that should the company pay a common dividend it would not trigger the payment of contingent interest. The rating and Negative Outlook continue to reflect the heightened operational and financial risk given an extended time frame for the company's operational turn around. The ratings continue to reflect weak financial performance which has been driven by ongoing material control weaknesses (which have yet to be remedied) and operational challenges. The company continues to endure integration issues from its restructuring initiatives, including major management changes. Also, while the company has reduced the high profile departures of major clients in 2006, compared to 2005, Fitch recognizes that the nature of the advertising agency business could expose the company to the risk of sustained client losses. These risks are balanced somewhat by IPG's position in the industry as a leading global advertising holding company, its diverse client base, and the progress it has made recently toward winning new accounts (Walmart) and driving organic growth within its existing client base. IPG's liquidity position is supported by approximately $1.5 billion in cash and equivalents at Sept. 30, 2006. Net of $220 million in letters of credit, the company has approximately $530 million available under its $750 million enhanced liquidity facility due June 15, 2009. Fitch incorporates into its analysis the meaningful working capital deficit (approximately $1.3 billion) resulting from payables and accrued liabilities in excess of receivables and Fitch expects that IPG will be free cash flow negative in 2006. Near-term flexibility is enhanced by the minimal debt maturities IPG faces in 2007. IPG's next meaningful maturity is in 2008 when its $250 million floating-rate senior unsecured notes come due and the $400 million convertible notes not included in this exchange become putable by the note holders for cash. The Recovery Ratings and notching reflect Fitch's recovery expectations under a distress scenario. Fitch has used an enterprise value analysis for these recovery ratings, given the limited tangible asset base that exists for companies in the advertising services industry. The 'RR4' recovery rating for IPG's bank facility, ELF notes and senior unsecured notes reflects Fitch's belief that approximately 30%-50% recovery is realistic, and the 'RR6' recovery rating for the preferred stock reflects Fitch's estimate that negligible recovery would be achievable. INTERPUBLIC GROUP: S&P Rates Proposed $400 Mil. Senior Notes at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' rating to the proposed $400 million 4.25% convertible senior notes due 2023 of Interpublic Group of Cos. Inc. (B/Watch Neg/B-3), which are being issued on a private basis in exchange for the same principal amount of its old, 4.5% convertible senior notes due 2023. At the same time, the rating on these notes was placed on CreditWatch with negative implications. The new notes differ from the old notes principally in the lower interest rate, an extension of the date upon which they will be callable, and an extension of the dates upon which they will be subject to repurchase at the investor's option. The ratings on the outstanding debt of Interpublic remain on CreditWatch with negative implications, where they were placed on March 22, 2006, as a result of declines in Interpublic's core business and Standard & Poor's reduced confidence in the company's prospects for cash flow generation. "We expect to evaluate Interpublic's operating outlook and business strategies within the next several weeks in order to complete our CreditWatch review," Standard & Poor's credit analyst Deborah Kinzer said. "Rating downside is currently limited to one notch." Ratings List Ratings Remaining on CreditWatch Interpublic Group of Cos. Inc. Corporate Credit Rating B/Watch Neg/B-3 Short-Term Credit Rating B-3/Watch Neg Senior Unsecured Debt B/Watch Neg New Rating; CreditWatch/Outlook Action $400 Mil. 4.25% Sr. Unsec. Convertible Notes B/Watch Neg JP MORGAN: Fitch Puts BB+ Rating on $8.4MM Privately-Offered Class ------------------------------------------------------------------ Fitch rates J.P. Morgan Mortgage Acquisition Corp's asset-backed pass-through certificates, series 2006-CHM1: -- $472.7 million, classes A-1 through A-5 'AAA'; -- $20.9 million class M-1 'AA+'; -- $25.5 million class M-2 'AA'; -- $8.7 million class M-3 'AA-'; -- $9.6 million class M-4 'A+'; -- $8.7 million class M-5 'A'; -- $7.8 million class M-6 'A-'; -- $7.5 million class M-7 'BBB+'; -- $6.3 million class M-8 'BBB'; -- $7.2 million class M-9 'BBB-'; -- $8.4 million privately offered class M-10 'BB+'. The 'AAA' rating on the senior certificates reflects the 21.20% total credit enhancement provided by the 3.50% class M-1, the 4.25% class M-2, the 1.45% class M-3, the 1.60% class M-4, the 1.45% class M-5, the 1.30% class M-6, the 1.25% class M-7, the 1.05% class M-8, the 1.20% M-9, the 1.40% privately offered class M-10, and the initial and target overcollateralization of 2.75%. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of J.P. Morgan Chase as servicer, U.S. Bank National Association as trustee and JPMorgan Chase Bank as securities administrator. The aggregate mortgage pool consists of adjustable-rate and fixed- rate, first and second lien mortgage loans with a cut-off date (Oct. 1, 2006) pool balance of $599,836,724. Approximately 25% of the mortgage loans are fixed-rate mortgage loans, 75% are adjustable-rate mortgage loans and 100% are first lien mortgage loans. The weighted average loan rate is approximately 7.852%. The weighted average remaining term to maturity is 341 months. The average principal balance of the loans is approximately $180,131. The weighted average combined loan-to-value ratio is 78.48%. The properties are primarily located in Florida (19.93%), California (11.40%), and New York (7.48%). JPMorgan Chase Bank, National Association, a national banking association originated all of the mortgage loans, either directly or through an affiliate. For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. KINDER MORGAN: Moody's Rates Four Senior Credit Facilities at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned provisional ratings of Ba2 to the senior secured credit facilities that are proposed to help finance the management buy-out of Kinder Morgan, Inc. The Ba2 rating is indicative of where Moody's currently expects KMI's existing debt ratings to fall once the existing debt and the new credit facilities are secured and guaranteed on a pari passu basis as part of the financing related to the MBO. The ratings of Kinder Morgan Energy Partners, L.P. -- KMI's master limited partnership vehicle -- are likely to fall to Baa2 senior unsecured/Prime-2 when and if the MBO occurs. KMI subsidiary Terasen Inc.'s Baa2 senior unsecured ratings are likely to be downgraded to Ba2 in tandem with KMI's. Moody's affirmed the ratings of Terasen's subsidiaries Terasen Gas, Inc., Terasen Pipelines Inc., and equity investments Express Pipeline Limited Partnership and Express Pipeline LLC. A three-notch downgrade for KMI would reflect its debt doubling as a result of the MBO. Moody's estimates that KMI's debt-to-capital on a tangible net worth basis will be well over 100% pro forma for the transaction, leaving it the most weakly capitalized by that measure among Moody's peer group of diversified gas companies. A one-notch downgrade for KMP, while reflecting increased potential for event risk and financial pressure due to its affiliation with a heavily-leveraged general partner sponsor, would also acknowledge a meaningful amount of separateness between the credits of these two entities. KMP's financial metrics will not be directly affected by the MBO. As one of the largest master limited partnerships in the U.S., Moody's believes that it remains well positioned compared to its peers. These companies' ratings remain under review for possible downgrade until there is more certainty as to the consummation of the MBO, which the company expects to occur in the first quarter of 2007. The definitive ratings ultimately assigned will be based on the final terms of the financing, as well as a review of the 2007 KMI and KMP budgets that are currently being prepared. "The provisional rating and other ratings according to our guidance take into account the potential for some de-leveraging from asset sales in the near term after the MBO closes," says Moody's Vice President Mihoko Manabe. In addition to the pending sale of its U.S. retail business for $710 million, KMI has disclosed it is contemplating the sales of its TransMountain subsidiary to KMP and a portion or all of its Corridor subsidiary to a third party. Moody's has assigned a provisional rating to KMI's MBO debt, as denoted by in front of the Ba2 rating, considering it highly likely that the Ba2 rating will become final after all documents are received, and these loans are placed in the market. If for any reason the MBO is not consummated, the provisional rating will be withdrawn. Alternatively, if the terms and conditions of the financing change materially from those in the current term sheet, the final rating may be different from the provisional rating. As a non-investment grade company, KMI would be assigned a first- time Corporate Family Rating and its debt issues would be notched according to Moody's loss given default methodology. If at the conclusion of the review the ratings hold at the current guidance, KMI's CFR would be Ba2. The Ba2 indicated for its senior secured term loans and for the existing senior unsecured debt that would be secured pari passu to them will reflect the pledge of all of the company's U.S. assets and subsidiaries. There is a minor amount of junior debt, a subordinated TRUPS issue that will not be secured and would be rated B1 under this methodology. If KMI were to be assigned a CFR of Ba2, its Canadian intermediate holding company Terasen Inc. would be assigned a CFR of Ba1. Under the loss given default methodology, Terasen's senior unsecured and subordinated debt would both be rated Ba2, due to their junior position to a substantial amount of secured and unsecured debt of its subsidiaries. Terasen is assigned its own CFR to reflect a default probability and credit that is distinct from KMI due to the former's Canadian domicile, regulatory ringfencing, and the structure of its joint-venture project-financed investments. Terasen's debt will not be secured. Terasen's higher CFR also reflects closer proximity to highly rated operating subsidiaries Terasen Gas, Inc. and Terasen Pipelines Inc., and equity investments Express Pipeline Limited Partnership and Express Pipeline LLC. Moody's affirmed Express' ratings on the basis of the covenant pattern and the fact that two-thirds of the asset is owned by financially strong entities unrelated to KMI. Moody's believes that this should serve to insulate the project to a material degree from any potentially adverse impact that might arise due to KMI's weaker financial profile post-MBO. Moody's also affirms the rating of Corridor. While Moody's understands that Corridor is likely to undergo a significant expansion to accommodate the proposed expansion of the Athabasca Oil Sands Project by 2009 or 2010, we expect that the terms of the firm service transportation agreement with the AOSP shippers will provide strong support for the financing of the pipeline expansion in a manner consistent with the existing FSA. While Moody's expects that the construction phase of the expansion, like the construction of the original pipeline, will be 100% debt financed, on achieving commercial operations, Corridor's shareholders are expected to contribute their deemed equity percentage as governed by the FSA. Moody's believes that both the existing and expansion FSAs will limit the ultimate leverage at Corridor to the deemed debt level percentages as governed by the FSA. The rating agency believes that there is a reasonable probability that KMI will pursue the monetization of all or a portion of Corridor prior to the in- service date which could significantly increase Corridor's ability to raise the equity that will need to be injected once the expansion reaches commercial operations. Assignments: * Issuer: Kinder Morgan, Inc. -- Senior Secured Bank Credit Facility, Assigned (P)Ba2 -- Senior Secured Bank Credit Facility, Assigned (P)Ba2 -- Senior Secured Bank Credit Facility, Assigned (P)Ba2 -- Senior Secured Bank Credit Facility, Assigned (P)Ba2 Headquartered in Houston, Texas, Kinder Morgan, Inc. and Kinder Morgan Energy Partners, L.P. are midstream energy companies. LAWRENCE MANNING: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Lawrence W. Manning Patsy M. Manning 4077 Norris Store Road Ayden, NC 28513 Bankruptcy Case No.: 06-03728 Chapter 11 Petition Date: November 14, 2006 Court: Eastern District of North Carolina (Wilson) Debtors' Counsel: Trawick H Stubbs, Jr., Esq. Stubbs & Perdue, P.A. P.O. Box 1654 New Bern, NC 28563 Tel: (252) 633-2700 Fax: (252) 633-9600 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtors' 14 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bank of America/MBNA $39,195 P.O. Box 15027 Wilmington, DE 19850-5027 Chase $16,377 P.O. Box 15298 Wilmington, DE 19850 Capital One $10,474 P.O. Box 30285 Salt Lake City, UT 84130-0285 BB&T/Choice Visa $10,334 P.O. Box 6248 Sioux Falls, SD 57117 Discover $9,897 P.O. Box 30943 Salt Lake City, UT 84130 BB&T BankCard Corp. $9,787 MBNA $6,023 Bank of America - Delaware $5,572 Lowe's $5,244 World Points/Bank of America $5,077 Bank of America - New Jersey $3,202 American Express $1,534 Lenoir County Tax Unknown Pitt County Tax Collector Unknown LB COMMERCIAL: Moody's Holds Junk Ratings on Two Certificates ------------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of 10 classes of LB Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998- C4: -- Class A-1-b, $680,048,552, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class A-2, $332,234,160, Fixed, affirmed at Aaa -- Class B, $106,343,000, Fixed, affirmed at Aaa -- Class C, $106,344,000, Fixed, affirmed at Aaa -- Class D, $121,535,000, Fixed, upgraded to Aaa from A2 -- Class E, $30,384,000, Fixed, upgraded to Aa3 from Baa1 -- Class F, $50,640,000, Fixed, upgraded to Baa1 from Ba1 -- Class G, $45,576,000, Fixed, upgraded to Ba1 from Ba2 -- Class H, $15,192,000, Fixed, affirmed at Ba3 -- Class J, $20,255,000, Fixed, affirmed at B1 -- Class K, $10,128,000, Fixed, affirmed at B3 -- Class L, $15,192,000, Fixed, affirmed at Caa2 -- Class M, $10,128,000, Fixed, affirmed at Caa3 As of the Oct. 15, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 23.3% to $1.6 billion from $2 billion at securitization. The Certificates are collateralized by 250 loans ranging in size from less than 1.0% to 13.4% of the pool, with the top 10 loans representing 45.6% of the pool. The pool consists of a large loan shadow rated component, representing 33.1% of the pool, a conduit component, representing 63.4% of the pool and a credit tenant lease component, representing 3.5% of the pool. Fifty-four loans, representing 22.6% of the pool, have defeased and have been replaced with U.S. Government securities. The largest defeased loan is the Arden II Loan ($104.7 million - 6.7%), which is the third largest loan in the pool. There is one loan, representing 0.4% of the pool balance, in special servicing. Moody's has estimated a loss of approximately $1.5 million for the specially serviced loan. Eight loans have been liquidated from the pool resulting in realized aggregate losses of approximately $16.0 million. Fifty-nine loans, representing 12.7% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for 98.5% of the performing loans excluding defeased assets and CTL loans. Moody's weighted average loan to value ratio for the conduit component is 82.6%, compared to 88.1% at Moody's last full review in Feb. 2005 and compared to 92% at securitization. Moody's is upgrading Classes D, E, F and G due to increased subordination levels, defeasance and stable overall pool performance. Classes C and D were upgraded on Aug. 2, 2006 and Class D was placed on review for further possible upgrade based on a Q tool based portfolio review. The large loan component consists of five shadow rated loans. The largest shadow rated loan is the TRT Holdings Loan ($208.5 million - 13.4%), which is secured by five Omni Hotels located in New York, Chicago and Texas. The portfolio contains 1,858 rooms with the hotels ranging in size from 337 to 410 rooms. The portfolio's RevPAR for calendar year 2005 was $135.50, which represents a 17.6% increase since last review and an increase of 6.3% since securitization. The strongest performer was the Omni Berkshire Place Hotel in New York City, which experienced a 38.9% increase in RevPAR, from $191.5 at securitization to $266.00 in calendar year 2005. All of the five hotels reported increases in net operating income since last review ranging from 5.6% to 38.2%. Overall, performance has improved significantly since last review. Moody's current shadow rating is Ba1, compared to Ba3 at last review and compared to Baa1 at securitization. The second largest shadow rated loan is the Mills Loan ($130.9 million - 8.4%), which is secured by a 1.2 million square foot super regional mall located in Ontario, California. The property's performance has improved since securitization due to increased rents, stable expenses and amortization. The property is 99.7% occupied, essentially the same as at securitization. Moody's current shadow rating is A3, compared to A3 at last review and compared to Baa3 at securitization. The third largest shadow rated loan is the Fresno Fashion Fair Mall Loan ($64.7 million - 4.2%), which is secured by a 900,000 square foot regional mall located in Fresno, California. The property's performance has improved significantly since securitization, largely due to its dominant market position. Net operating income has increased by approximately 22.0% since last review and approximately 60.0% since securitization. As of March 2006, the mall was 95.8% occupied, compared to 98.0% at securitization. The center is anchored by J.C. Penney, Macys and Gottschalks. Moody's current shadow rating is Aa2, compared to A2 at last review and compared to Baa3 at securitization. The fourth largest shadow rated loan is the Bayside Loan ($55.7 million - 3.6%), which is secured by the Bayside Marketplace, a 250,000 square foot specialty retail center located in Miami, Florida. Despite occupancy dropping to 83% as of March 2006 from 96.0% at securitization, the property's overall performance has improved. Moody's current shadow rating is Baa2, compared to Baa3 at last review and compared to Ba1 at securitization. The fifth largest shadow rated loan is the Inland Portfolio Loan ($54.6 million - 3.5%), which is secured by a portfolio of 12 retail properties located in Illinois, Minnesota, Indiana and Wisconsin. The portfolio totals 1.2 million square feet. Occupancy is currently 96%, compared to 94% at last review and compared to 98.0% at securitization. The loan is interest only through the Anticipated Repayment Date of Oct. 1, 2008. Moody's current shadow rating is Baa1, compared to Baa2 at last review and compared to A3 at securitization. The top three non-defeased conduit loans represent 3.9% of the pool. The CTL component includes 25 loans secured by properties under bondable leases. The largest CTL exposures are CVS, Kmart and Food Lion. The weighted average shadow rating for the CTL component is Ba2, compared to Baa3 at securitization. The pool collateral is a mix of retail, U.S. Government securities, hotel, multifamily and mobile home, office, CTL industrial and self storage and healthcare. The collateral properties are located in 33 states and Puerto Rico. The highest state concentrations are California, Texas, New York, Florida, and Illinois. All of the loans are fixed rate. LINCO DEVELOPERS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Linco Developers, LLC 6325 Kimberly Mll Road College Park, GA 30349 Bankruptcy Case No.: 06-74485 Chapter 11 Petition Date: November 7, 2006 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtor's Counsel: Nathaniel H. Blackmon, III, Esq. The Blackmon Law Firm LLC 1785 Park Place Boulevard, Suite 209 Stone Mountain, GA 30087 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. LONG BEACH: Moody's Rates Class B Subordinate Certificates at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned a rating of Aaa to the senior certificates issued by Long Beach Mortgage Loan Trust 2006-10, and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Long Beach Mortgage Company originated adjustable-rate and fixed-rate subprime mortgages. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, an interest rate swap agreement provided by ABN AMRO Bank N.V. Moody's expects collateral losses to range from 4.75% to 5.25%. Washington Mutual Bank will act as a servicer. Moody's has assigned Washington Mutual its servicer quality rating of SQ2 as a primary servicer of subprime loans. These are the rating actions: * Issuer: Long Beach Mortgage Loan Trust 2006-10 Cl. I-A, Assigned Aaa Cl. II-A1, Assigned Aaa Cl. II-A2, Assigned Aaa Cl. II-A3, Assigned Aaa Cl. II-A4, 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 Cl. B, Assigned Ba2 The Class B certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. LORECE WRIGHT: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Lorece Wright 162 West Del Amo Long Beach, CA 90805 Bankruptcy Case No.: 06-15911 Chapter 11 Petition Date: November 14, 2006 Court: Central District Of California (Los Angeles) Judge: Samuel L. Bufford Debtor's Counsel: William H. Brownstein, Esq. William H. Brownstein and Associates, P.C. 1250 Sixth Street, Suite 205 Santa Monica, CA 90401 Tel: (310) 458-0048 Fax: (310) 576-3581 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First Franklin Loan Services $272,079 5200 Lanershim Boulevard, Suite 740 Secured: North Hollywood, CA 91501 $367,921 Octavia Jones $150,000 723 123rd Street Los Angeles, CA 90044 Winetta Walden $70,000 1040 West 91st Street, Suite 7 Los Angeles, CA 90044 Ivy Jean Levy $40,000 P.O. Box 2173 Apple Valley, CA 92307 Union Bank of California NALRU $20,000 1777 P.O. Box 85443 San Diego, CA 92186-5443 Desiree Crossley $20,000 Patricia Tillman $12,000 Reginald Wright $10,000 Roland Harris $5,000 Anthony Wright $4,800 MASTR ASSET: Moody's Reviews Class M-11 Certificates' Rating ------------------------------------------------------------ Moody's has placed under review for possible downgrade one class of MASTR Asset Backed Securities Trust 2006-FRE2 securitization. The transaction, issued in 2006, is backed by first and second lien adjustable- and fixed-rate mortgage loans. The projected pipeline loss has increased over the past few months and may affect the credit support for this certificate. The certificate is being placed on review for downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers for the current rating level. The securitization is backed by Fremont Investment & Loan originated, adjustable-rate (91%) and fixed-rate (9%), subprime mortgage loans acquired by UBS Real Estate Securities Inc. Under review for possible downgrade: * Issuer: MASTR Asset Backed Securities Trust -- Series 2006-FRE2, Class M-11, current rating Ba2, under review for possible downgrade; MAYCO PLASTICS: Panel Hires Grant Thornton as Financial Advisor --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, has authorized the Official Committee of Unsecured Creditors appointed in Mayco Plastics Inc. and Stonebridge Industries Inc.'s bankruptcy cases to retain Grant Thornton LLP as its financial advisor, nunc pro tunc to Oct. 1, 2006. Grant Thornton will: a) assist in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b) evaluate the Debtors' financial information, including, but not limited to, the analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; c) evaluate and analyze the reporting regarding cash collateral and any debtor-in-possession financing arrangements and budgets; d) evaluate potential employee retention and severance plans; e) assist with the identification and implementation of asset redeployment opportunities; f) analyze the assumption and rejection issues regarding executory contracts and leases; g) evaluate and analyze the Debtors' proposed business plans and the business and financial condition of the Debtors generally; h) assist in evaluating reorganization strategy and alternatives available to the creditors; i) evaluate and critique of the Debtors' financial projections and assumptions; j) evaluate enterprise, asset and liquidation valuations; k) give advice and assistance to the Committee in negotiations and meetings with the Debtors and the bank lenders; l) litigate consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and n. provide other advisory services as requested by the Committee or its counsel to assist the Committee in these Chapter 11 cases. The current hourly rates for Grant Thornton's personnel are: Designation Hourly Rate ----------- ----------- Principal/Partner $500 Director/Senior Manager $460 Manager $300 - $395 Senior Associate $200 - $265 Associate $165 - $175 Administrative $75 - $120 Martha E. M. Kopacz, at Grant Thornton, assures the Court that her firm does not hold any interest adverse to the Debtors estates and is "disinterested person" as that term is defines in Section 101(14) of the Bankruptcy Code. Grant Thornton can be reached at: Grant Thornton LLP Edward E. Nusbaum Chief Executive Officer 175 West Jackson Boulevard 20th Floor Chicago, IL 60604 Phone: 312.856.0200 Fax: 312.602.8099 Headquartered in Sterling Heights, Michigan Mayco Plastics Inc. -- http://www.mayco-mi.com/-- is an automotive supplier of injection molded plastics. Stonebridge Industries Inc., the majority shareholder and parent of Mayco Plastics, is an investment firm that acquires companies and helps them grow their business in order to increase shareholder value. Mayco and Stonebridge filed for chapter 11 protection on Sept. 12, 2006 (Bankr. E.D. Mich. Case Nos. 06-52727 & 06-52743). Stephen M. Gross, Esq., and Jeffrey S. Grasl, Esq., at McDonald Hopkins Co. LPA represent the Debtors. AlixPartners LLC serves as the Debtors' financial advisor. Clark Hill PLC is counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. MAYCO PLASTICS: Wants to Borrow Funds from PNC and Fifth Third -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan will convene a hearing at 11:00 a.m. tomorrow, Nov. 17, 2006, to consider Mayco Plastics Inc. and Stonebridge Industries Inc.'s request to obtain post-sale funding from PNC Bank and Fifth Third Bank, their Prepetition Lenders. The Debtors want to borrow money from the Prepetition Lenders to pay for chapter 11 administration costs and to pursue the collection of prepetition collateral during the 60-day transition period wherein NJT Enterprises, LLC, will determine which of the Debtors' executory contracts and unexpired leases it will assume. NJT Enterprises had acquired substantially all of the Debtors' assets, free and clear of liens, for $5.5 million. The sale closed on Oct. 20, 2006. NJT Enterprises also agreed to separately pay for the Debtors' useable and merchantable inventory that is not older than 30 days, along with service parts that it chooses to purchase. The $14.5 million Debtor-in-Possession revolving working capital line of credit provided by Citizens Bank terminated upon the closing of the sale to NJT Enterprises. Funds will be disbursed to the Debtors pursuant to a ten-week budget. A copy of the budget is available for free at: http://researcharchives.com/t/s?1525 Headquartered in Sterling Heights, Michigan Mayco Plastics Inc. -- http://www.mayco-mi.com/-- is an automotive supplier of injection molded plastics. Stonebridge Industries Inc., the majority shareholder and parent of Mayco Plastics, is an investment firm that acquires companies and helps them grow their business in order to increase shareholder value. Mayco and Stonebridge filed for chapter 11 protection on Sept. 12, 2006 (Bankr. E.D. Mich. Case Nos. 06-52727 & 06-52743). Stephen M. Gross, Esq., and Jeffrey S. Grasl, Esq., at McDonald Hopkins Co. LPA represent the Debtors. AlixPartners LLC serves as the Debtors' financial advisor. Clark Hill PLC is counsel to the Official Committee of Unsecured Creditors while Grant Thornton LLP serves as its Financial Advisor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. METABOLIFE INTERNATIONAL: Ideasphere Acquires Non-Ephedra Brands ---------------------------------------------------------------- Ideasphere Inc. closed a transaction on Nov. 7 to acquire certain assets of Metabolife International Inc. The amount was not disclosed. Metabolife, based in San Diego, has been operating under Chapter 11 bankruptcy protection since July. Key assets acquired by Ideasphere include: -- the company's core non-ephedra brands: * Metabolife Ultra, * Metabolife Complete, * Metabolife Ultra Caffeine Free, and * Metabolife Green Tea Formula; -- a state-of-the-art powder and tablet manufacturing facility located in Orem, Utah; and -- a distribution center in Memphis. The products will continue to be marketed under the Metabolife brand, which will operate as a separate division within ISI. "These Metabolife assets are a great fit with our current operations and product lines," ISI president Mark Fox said. "In addition to expanding our manufacturing, distribution and customer service capacity, Metabolife provides us with a platform to expand distribution on a global scale." Mr. Fox said Ideasphere is planning to enter the Asian market, including India and China, sometime in 2006. The acquisition of the Metabolife assets is part of a strategic plan to build the ISI portfolio of nutritional and natural products and brands dedicated to supporting and promoting healthy lifestyles: * The addition of Metabolife's state of the art Alpine laboratory and process engineering facilities significantly increases ISI's capabilities and speed of new product development. * The added capacity of the Alpine plant in Orem, located within minutes of the existing Twinlab plant in American Fork, will increase ISI's production capacity by billions of dose forms of tablets and powders. * The Alpine facility is producing in excess of 80 million tablets a month with a single shift, and with the combined capacity ISI becomes a leading producer of dietary supplements in all of the major dose forms of capsules, tablets and powders. "We will immediately integrate these assets and facilities into our operations," Mr. Fox said. "One of our top priorities for the first quarter of 2006 is to develop new products, and the Alpine manufacturing facilities will become our center for research and development." "Metabolife has built up a strong consumer following and the brand is well-entrenched in the mass channel," Mr. Fox said. "We plan to continue marketing current mass products under the Metabolife brand, and will develop new product offerings to expand both the Metabolife line as well as the Twinlab line of vitamins, minerals and supplements." About Ideasphere Inc. Ideasphere Inc. with offices in New York and American Fork, Utah, was launched in 2001 to create a company that offers consumers "a one-stop wellness solution" through an integrated combination of nutritional products, science-based content and information, and healthy lifestyle programs and services. ISI is currently comprised of several SBUs: * Twinlab Corporation manufactures and distributes high quality, science based nutritional supplements, and performance products. * Nature's Herbs and Alvita Teas provide and manufacture herbal teas for more than 75 years. * Rebus LLC is a consumer health and science content developer and publisher. About Metabolife International 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. MICROVISION INC: Inks Underwriting Pact with MDB Capital Group -------------------------------------------------------------- Microvision Inc., filed with the Securities and Exchange Commission a prospectus supplement relating to its shelf registration statement. The prospectus supplement together with the related base prospectus contemplate the sale of 3,317,567 shares of the Company's common stock pursuant to an underwriting agreement with MDB Capital Group, LLC. The public offering price for each share will be $2.39 and each share will be sold to the underwriter at the public offering price less an underwriting discount of 7.5%. The Company expects to receive approximately $7,928,985.13 in gross proceeds from the offering. The SEC, on Sept. 8, 2005, declared effective the registration statement on Form S-3 of the Company, which permitted the issue of shares of the Company's common stock, preferred stock and warrants to purchase securities of the Company up to a combined amount of $35,000,000. A full text-copy of the underwriting agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1521 Headquartered in Redmond, Wash., Microvision Inc., -- http://www.microvision.com/-- develops high-resolution displays and imaging systems based on the company's proprietary silicon micro-mirror technology. The company's technology has applications in a broad range of military, medical, industrial, professional and consumer products. Going Concern Doubt As reported in the Troubled Company Reporter on April 6, 2006, PricewaterhouseCoopers LLP in Seattle, Washington, raised substantial doubt about Microvision's ability to continue as a going concern after auditing the company's consolidated financial statements and its internal control over financial reporting as of Dec. 31, 2005. The auditor pointed to the company's losses since inception, accumulated deficit, and need for additional financial resources to fund its operations at least through Dec. 31, 2006. MORINE INC: Case Summary & Three Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Morine, Inc. fka Gold's Gym Bloomington, Inc. fka Morgan & Grimshaw Enterprises, Inc. 1121 East Shelbourne Normal, IL 61761 Bankruptcy Case No.: 06-71639 Type of Business: Gold's Gym operates fitness and bodybuilding centers, with over 650 facilities in 45 states and 23 countries. See http://www.goldsgymbloomington.com/ Chapter 11 Petition Date: November 15, 2006 Court: Central District of Illinois (Springfield) Judge: Mary P. Gorman Debtor's Counsel: Jonathan A. Backman, Esq. 117 North Center Street Bloomington, IL 61701 Tel: (309) 820-7420 Fax: (309) 820-7430 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MMA II, LLC $3,800,000 c/o Jeffrey Richardson, Esq. Value: 135 South Water Street, Suite 444 $5,780,000 Decatur, IL 62525 Unsecured: $3,100,000 CEFCU Non-purchase $212,073 c/o Kevin D. Schneider, Esq. Money Security 411 Hamilton Boulevard Peoria, IL 61602 McLean Commercial Corporation $30,000 405 North Hershey Road Bloomington, IL 61704 MOTIVNATION INC: Files Amended Financial Statements --------------------------------------------------- MotivNation Inc. delivered an amended annual report for the year ended Dec. 31, 2005, and quarterly reports for the three months ended March 31, 2006, and June 30, 2006, with the Securities and Exchange Commission to incorporate certain revisions that have been made to MOVT's disclosures and the presentation of MOVT's financial statements, in response to the SEC's comments issued on Aug. 30, 2006. The Company restates three sections of its annual and quarterly reports: -- Item 3. Legal Proceedings -- Item 6. Management Discussion and Analysis or Plan of Operation -- Item 7. Financial Statements The Company's Statement of Operations showed: For the period ended ------------------------------------------------ Year Quarter Quarter 12/31/05 03/31/06 06/30/06 ----------- --------- ---------- Revenue $3,286,523 $491,903 $536,695 Net (Loss) ($1,470,051) ($1,867,794) ($320,183) The Company's Balance Sheet showed: For the period ended --------------------------------------------- Year Quarter Quarter 12/31/05 03/31/06 06/30/06 ---------- ---------- --------- Current Assets $381,757 $1,601,347 $1,316,865 Total Assets $988,078 $2,207,220 $1,952,966 Current Liabilities $1,062,759 $792,657 $853,193 Total Liabilities $1,977,811 $4,854,501 $4,868,272 Total Stockholders' Equity (Deficit) ($989,733) $2,647,281 $1,952,966 Full-text copies of the company's financial statements are available for free at: Year Ended Dec. 31, 2005 http://researcharchives.com/t/s?151e First quarter ended March 31, 2006 http://researcharchives.com/t/s?151f Second quarter ended June 30, 2006 http://researcharchives.com/t/s?1520 Going Concern Doubt Spector & Wong, LLP, in Pasadena, California, raised substantial doubt about MotivNation 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 recurring losses, substantial working capital and stockholders' deficit and negative cash flows from operations. Headquartered in Irvine, California, MotivNation Inc. -- http://www.motivnation.com/-- engages in customizing motorcycles and automobiles for individuals and provides custom parts and accessories for independent dealers and manufacturers. MUSHIN INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Mushin, Inc. dba C5 Fitness 4800 Linglestown Road, Suite 101 Harrisburg, PA 17112 Bankruptcy Case No.: 06-02613 Type of Business: The Debtor operates a full-service fitness Center. See http://www.c5fitness.com/ Chapter 11 Petition Date: November 15, 2006 Court: Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Robert E. Chernicoff, Esq. Cunningham and Chernicoff P.C. 2320 North Second Street Harrisburg, PA 17110 Tel: (717) 238-6570 Fax: (717) 238-4809 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ADSCO Industrial Services Trade Debt $18,395 891 Eisenhower Boulevard Harrisburg, PA 17111 Jani-King of Raleigh/Durham Trade Debt $10,952 801 Jones Franklin Road Suite 230 Raleigh, NC 27606 Verizon Directories Corp. Trade Debt $6,037 Account Receivable Department DFW Airport, TX American Express Trade Debt $5,954 P.O. Box 360001 Fort Lauderdale, FL 33336-0001 PP&L Electric Utilities Trade Debt $5,849 P.O. Box 25222 Lehigh Valley, PA 18002-5222 Toshiba America Info Sys Inc. Trade Debt $5,288 Standard Funding Corp. Trade Debt $5,193 Bellsouth Advertising and Trade Debt $5,134 Publishing Sport Supplements Trade Debt $4,414 In Gear Cycling & Fitness, Inc. Trade Debt $4,351 Derr's Landscaping Trade Debt $4,256 The Lamar Companies Trade Debt $4,100 UGI Utilities, Inc. Trade Debt $3,659 Ronald P. Dreese & Associates Trade Debt $3,551 Keystone Business Support Trade Debt $3,423 C.W. Fritz Co. Trade Debt $3,406 The Cappuccino Connection Trade Debt $3,331 Manifest Funding Services Trade Debt $3,302 Sanitary Maintenance Building Trade Debt $3,229 Voicescapes, Inc. Trade Debt $3,049 MUSICLAND HOLDING: Panel Wants to Recover Fraudulent Transfers -------------------------------------------------------------- Pursuant to Sections 547, 548, 550 and 551 of the Bankruptcy Code, the Official Committee of Unsecured Creditors in Musicland Holding Corp. and its debtor-affiliates' chapter 11 cases, seeks to avoid and recover certain preferential and fraudulent transfers made by the Debtors to 20 secured trade creditors. Prior to filing for bankruptcy, the Debtors ordered and received goods from the Secured Trade Creditors. Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in New York, discloses that within 90 days prior to the Petition Date, certain of the Debtors made monetary transfers and returned various goods to and for the benefit of the Creditors. Mr. Indelicato asserts that the Transfers constitute preferential and fraudulent transfers for these reasons: (a) The Transfers were made within 90 days before the Petition Date; (b) The Transfers constitute an interest in the Debtors' property; (c) The Transfers were made for or on account of antecedent debts owed to the Creditors by one or more of the Debtors before the Transfers were made; (d) The Transfers were made while the Debtors were insolvent; (e) The Transfers enabled the Creditors to receive more than what they would have receive if: (i) the Debtors' cases were under Chapter 7 of the Bankruptcy Code; (ii) the Transfers had not been made; and (iii) the Creditors received payment on account of the debt paid by the Transfers to the extent provided by the provisions of the Bankruptcy Code; and (f) The Debtors received less than a reasonably equivalent value in exchange for the Transfers. As part of the Debtors' business relationship with the Creditors, the Debtors were entitled to take certain deductions or chargebacks that arose from price protection programs, advertising programs and other incentives, Mr. Indelicato states. The Creditors are parties to certain Price Protection Programs and Advertising Programs and have breached their obligations by failing to remit payment to the Debtors' estates for credits earned by and owed to the Debtors, Mr. Indelicato adds. Moreover, the Creditors owe debts to the Debtors' estates pursuant to the postpetition Price Protection and Advertising Programs, Mr. Indelicato says. "All or part of the sums due and owing from the [Creditors] to the Debtors constitute property of the Debtors' respective estates, which [the Creditors] are required to turnover to the Debtors pursuant to Section 5429b) of the Bankruptcy Code." Mr. Indelicato emphasizes that the Creditors are not entitled to offset the postpetition amounts due to the Debtors' estates under the Price Protection and Advertising Programs against any prepetition debt owed by the Debtors. The Committee asks the U.S. Bankruptcy Court for the Southern District of New York to: (a) avoid the Transfers; (b) to the extent the Creditors possess filed or scheduled claims against the Debtors which have not been transferred or assigned to an unrelated party who is not a member of the Secured Trade Creditors Committee, disallow the Creditors' Claims until the Transfers are repaid in full to the Debtors; (c) in relation to the Transfers, enter judgment in favor of the Committee and against the Creditors in these amounts, plus interest at the legal rate from the date of the Transfers, together with all costs of the lawsuit: Creditor Amount -------- ------ Bertelsmann Music Group, Inc. $1,643,880 Sony BMG Music Distribution Caroline Records Inc. 708,087 EMI Music Inc. 3,718,940 Paramount Home Entertainment, Inc. 6,163,153 Paramount Pictures Corporation RED Distribution, Inc. 855,806 RED Distribution, LLC Sony Music Entertainment Inc. 2,989,911 Sony Home Entertainment, Inc. 5,149,433 Sony Pictures Home Entertainment, Inc. Twentieth Century Fox Home Entertainment LLC 14,608,033 Twentieth Century Fox Home Entertainment, Inc. Universal Music Group 10,134,372 Universal Music Group Distribution, Corp. V.P.D. IV, Inc. 1,698,875 Video Products Distributors, Inc. Warner/Elektra/Atlantic Corporation 4,586,393 WEA Corporation, WEA Inc. (d) enter judgment in favor of the Committee and against the Creditors for amounts due and outstanding to the Debtors' estates under the postpetition Price Protection and Advertising Programs: Creditor Amount -------- ------ Paramount Home Entertainment, Inc. $304,545 Paramount Pictures Corporation Sony Home Entertainment, Inc. 472,278 Sony Pictures Home Entertainment, Inc. Twentieth Century Fox Home Entertainment LLC 657,149 Twentieth Century Fox Home Entertainment, Inc. 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. 21; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MUSICLAND HOLDING: Walks Away from Calhoun Beach Lease Contract --------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates inform the U.S. Bankruptcy Court for the Southern District of New York that they are rejecting their residential real property lease contract with the Community Management Team of the Calhoun Beach Club, effective as of Oct. 31, 2006. As reported in the Troubled Company Reporter on June 6, 2006, pursuant to Sections 365 and 554 of the Bankruptcy Code, the Debtors obtained the Court's approval of expedited procedures for rejecting executory contracts and unexpired personal and residential real property leases. The Debtors will no longer require many of the properties, goods and services they obtained under various executory contracts and unexpired leases to which they were party after the closing of the Trans World Entertainment Corporation sale. 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) NASH FINCH: Moody's Junks Rating on $322 Mil. Subordinated Notes ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Nash Finch Company, including the corporate family rating to B2 from B1. The rating outlook is negative. The downgrade was prompted by softening operating performance and Moody's concern that new strategic initiatives could cause disruption that might further pressure market position and credit metrics over the near term. Ratings lowered: -- Corporate Family Rating to B2 from B1 -- Probability of Default Rating to B2 from B1 -- $125 million senior secured revolving credit agreement to B2, LGD4, 53% from B1, LGD4, 54% -- $1759 million senior secured term loan to B2, LGD4, 53% from B1, LGD4, 54% -- $322 million convertible subordinated notes to Caa1, LGD6, 91% from B3, LGD6, 91% Credit metrics going forward are likely to weaken as a result of Nash Finch's softer than anticipated operating performance. In the recent third fiscal quarter, both sales and margins fell in its wholesale and retail segments. The wholesale distribution segment experienced customer attrition and lower sales to existing customers. The retail segment was impacted by store closures and a 1.8% decrease in comparable store sales. Nash Finch anticipates that it may not meet its total leverage covenant at the end of the fourth quarter, and is negotiating an amendment to its bank agreement. The company has formulated new strategic initiatives, including potential consolidation of distribution centers and potential closing of retail stores, to boost sales and margins in its challenged wholesale and retail segments. These initiatives could cause disruption that might further pressure operating results. The B2 corporate family rating reflects Moody's concern that the competitive challenges facing the company may intensify in coming years and that strategic and organizational changes may impact near term efficiency. The ongoing SEC inquiry poses a major element of uncertainty. Important qualitative elements consistent with the rating include the company's challenged position within the grocery retailing and distribution industry that has Ba and B characteristics, and its past aggressive financial policy for dividends and debt financed acquisitions that scores at the B level. Moody's believes that competitive pressures on the company and its supermarket customers will remain intense as stronger operators like Wal-Mart continue to develop Supercenters in Nash Finch's trade areas. Key historical quantitative measures -- such as leverage, interest coverage, operating cash flow coverage, and scale -- have high non-investment grade attributes. The expectation of improved Board oversight and stability within senior management, as well as resolution of the SEC inquiry related to possible insider stock trading by former company officers, are also important rating factors. The negative rating outlook reflects Moody's concern that the outcome of the SEC inquiry could have consequences for the company. Ratings could be lowered if Nash Finch's competitive position erodes further such that sales continue to fall in the wholesale and retail divisions and reported EBITDA margin declines to 2% or lower. Diminished liquidity profile, the inability to efficiently execute new strategic initiatives or significant cash consequences from the SEC inquiry could also result in a downgrade. The rating outlook could stabilize upon the benign resolution of the SEC inquiry combined with the likelihood that reported EBITDA margin, adding back non-cash charges, can be sustained at or above 3%. Headquartered in Edina, Minnesota, Nash Finch Company is a leading grocery distributor to retailers and military commissaries and operates 69 supermarkets in the upper Midwest and Great Plains regions. Revenue for the 12 months ending June 2006 was $4.7 billion. NATIONAL ENERGY: Court Moves Claim Inclusion Date to February 15 ---------------------------------------------------------------- At the La Paloma and Lake Road Lenders' behest, the United States Bankruptcy Court for the Middle District of Maryland extended the time during which National Energy & Gas Transmission Inc. is required to maintain sufficient funds in a disputed claims reserve to cover all Additional Claim Amounts, until Feb. 15, 2007. As reported in the Troubled Company Reporter on Oct. 16, 2006, the steering committees for the Lake Road and La Paloma project credit facilities, acting for and on behalf of certain syndicates of lenders to the Lake Road and La Paloma power projects, asked the Bankruptcy Court to extend a June 19, 2006 Order Authorizing Inclusion of Disallowed Claims through Oct. 2, 2006. The Lenders were seeking allowance of additional Class 3 Lake Road and La Paloma Project Guarantee Claim amounts consisting of the Interest Claim aggregating $90,872,298 in Tranche A loan interest accrued by non-debtor project companies, and Expenses Claim amounting to $10,616,673. The U.S. District Court for the District of Maryland had affirmed the Bankruptcy Court's disallowance of the Interest Claim, but reversed the disallowance of the Expenses Claim and remanded for further proceedings. The Bankruptcy Court scheduled a trial on the Expenses Motion for Jan. 27, 2007. As required, National Energy & Gas Transmission Inc. maintains a reserve for disputed claims from which to make distributions should they ultimately become Allowed claims. However, the Debtor declined to reserve for the Interest Claim. The Bankruptcy Court ordered the Debtor to maintain sufficient funds in the reserve for the Interest Claims, but only through Oct. 2, 2006. District Court Judge Alexander Williams denied the Lenders' motion certifying the Interest Claim for an immediate appeal, holding that factual issues regarding the Expenses Claim should be resolved first. The Lenders sought leave from the District Court to pursue, on an expedited basis to the U.S. Court of Appeals for the Fourth Circuit, an immediate appeal from the District Court's ruling. Patricia A. Borenstein, Esq., at Miles & Stockbridge P.C., in Baltimore, Maryland, argued that the Interest Claim ruling means the Lenders would be unable to pursue the matter until the end of January 2007, at the earliest. "If the [Bankruptcy] Court does not further extend the order compelling the Debtor to maintain the reserve, then, the Lenders face the real risk that a premature distribution by the Debtor would moot the Lenders' legitimate appeal," Ms. Borenstein said. Ms. Borenstein maintained there is serious risk that by the time the Lenders have the opportunity to appeal the District Court Order with regard to the Interest Claim, the Debtor will no longer have sufficient funds to cover the Interest Claim, if it is eventually allowed. Accordingly, the Lenders sought an order for the Debtors to maintain sufficient funds in the reserve to ensure a full ratable distribution on the additional claim amounts until the resolution of the appeal of the Interest Claim to the Fourth Circuit. NEGT Objects to Extension Although the Project Lenders carefully avoid using the term "Motion for Reconsideration" to describe their request, that is precisely what the Motion is, Matthew A. Feldman, Esq., at Willkie Farr & Gallagher LLP, in New York, told Judge Mannes. Thus, pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, the Motion was required to be made not later than 10 days after the date of entry of the Extension Order, or June 29, 2006. Moreover, pursuant to Rule 9006(b)(2) of the Federal Rules of Bankruptcy Procedure, the Bankruptcy Court has no discretion to enlarge that deadline, even if in the presence of equitable or other grounds for doing so which, in any event, do not exist here. Because the Motion lacks merit even without consideration of its lack of timeliness, the Motion must be denied, Mr. Feldman said. Even if the Project Lenders' request is not a motion for reconsideration, the Lenders are collaterally estopped from seeking the relief sought in the Motion, Mr. Feldman argued. Steering Committees Talk Back The Steering Committees of the Project Lenders averred that NEGT's "doctrine of collateral estoppel" argument should be overruled stating that the request for extension did not ask the Bankruptcy Court to reconsider a prior order. The Steering Committees noted that the extension request merely asked the Bankruptcy Court to enlarge the time, as set in the June 19 Order, during which NEGT is required to maintain sufficient funds in the Disputed Claims Reserve to cover all Additional Claim Amounts. About National Energy Bethesda, MD-based PG&E National Energy Group Inc. nka National Energy & Gas Transmission Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and six of its affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and emerged from bankruptcy on Oct. 29, 2004. NEGT's affiliates -- NEGT Energy Trading Holdings Corp., NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corp., NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures -- filed their First Amended Plan and Disclosure Statement on March 3, 2005, which was confirmed on Apr. 19, 2005. Steven Wilamowsky, Esq., and Jessica S. Etra, Esq., at Willkie Farr & Gallagher LLP represent the ET Debtors. On Nov. 6, 2006, Judge Mannes entered a final decree closing Quantum Ventures' Chapter 11 case with its estate having been fully administered. (PG&E National Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) NEENAH FOUNDRY: Moody's Holds Junk Rating on $100 Mil. Senior Note ------------------------------------------------------------------ Moody's Investors Service affirmed the Corporate Family rating of Neenah Foundry Company at B2, its Probability of Default rating at B2; and the senior subordinated notes, at Caa1. Moody's also raised the rating on the existing senior secured second lien notes, to B2 from Caa1; and withdrew the ratings on the proposed senior secured notes based on Neenah's disclosure that it has terminated its cash tender offer and consent solicitation with respect to the planned refinancing of its existing senior secured second lien notes. The ratings continue to reflect the company's improved operating performance and credit metrics in a cyclical industry, and the potential for some weakening of performance in 2007. Moody's believes that Neenah's production of certain large castings used in commercial vehicles could weaken during 2007, if new emission control regulations which come into effect dampen overall demand for large commercial vehicles. The rating outlook remains stable. The stable outlook reflects the company's potential to weather downturns in the heavy truck market due to its diversified revenue mix which includes exposure to a number of end markets. This diversification should help mitigate weaker demand from commercial vehicle customers and enable Neenah to sustain financial metrics that are supportive of the B2 rating. Neenah is expected to expand its capital spending program during 2007, and in the face of potentially weaker operating trends, this added spending could constrain free cash flow generation. The refinancing would have enhanced Neenah's liquidity profile and provided the company with greater financial flexibility to support its spending needs if operating trends result in weaker cash flow. While Neenah's liquidity profile remains adequate, in the absence of the refinancing, the company's financial flexibility is diminished. Affirmed ratings: -- B2 Corporate Family Rating; -- B2 Probability of Default Rating; -- $100 million of unsecured senior subordinated notes due 2013, at Caa1 with LGD assessment revised to LGD5, 85% from LGD6, 97% Ratings raised: -- $133.1 million of guaranteed second-lien senior secured notes due 2010, to B2, LGD3, 46% from Caa1, LGD5, 79% Ratings withdrawn: -- $300 million of senior secured notes, to be initially issued under Rule 144A with registration rights, B2, LGD4, 57% The last rating action was Oct. 11, 2006 when ratings were assigned to the $300 million of senior secured notes that were to fund the company's refinancing. At that time the rating on the company's existing $133.1 million of guaranteed second-lien senior secured notes was lowered to Caa1. Those notes, which were subject to a tender and consent solicitation, and $100 million of senior subordinated notes were to be redeemed in connection with the proposed refinancing. Moody's ratings for those instruments had anticipated the successful completion of the refinancing. However, with the cancellation of the refinancing and termination of the tender and consent, the ratings for the proposed new debt issues are being withdrawn and the ratings and LGD assessments for the existing debt are being restored to their prior level. Future events that could put pressure on Neenah's outlook or ratings include: (a) a competitive pricing environment which results in lower operating performance; (b) the inability to pass through raw material costs; (c) loss of market share or a significant customer; (d) significant deterioration in demand in the company's end markets; or, (e) decreased liquidity. Consideration for a lower outlook or rating could arise if leverage were to increase by an additional turn and EBIT/Interest coverage deteriorates consistently below 1.5x. Future events that could improve Neenah's outlook or ratings would be generated from a consistent operating environment in which the company can maintain high levels of capacity utilization, or increase and further diversify its customer base. Consideration for an improved outlook or higher ratings could arise if EBIT/Interest coverage is maintained consistently over 2.0x. Neenah, headquartered in Neenah, Wisconsin, manufactures and markets a wide range of metal castings and forgings for the heavy municipal market plus a wide range of complex industrial castings, with concentrations in the medium- and heavy-duty truck and HVAC markets. Annual pro forma revenues approximate $543 million. NEW YORK: Wants Until January 2 to File Schedules & Statements -------------------------------------------------------------- New York Racing Association Inc. asks the U.S. Bankruptcy Court for the Southern District of New York to extend, until Jan. 2, 2007, the deadline to file its schedules of assets and liabilities and statement of financial affairs. The Debtor tells the Court that it was unable to complete its requirements in time as required under the Bankruptcy Code due to the size and complexity of its operations. The Debtor relates that it requires sufficient time to compile data from books and records to prepare its required schedules and statements. Based in Jamaica, New York, The New York Racing Association Inc. aka NYRA -- http://www.nyra.com/-- operates racing tracks in Aqueduct, Belmont Park and Saratoga. The company filed a chapter 11 petition on November 2, 2006 (Bankr. S.D.N.Y. Case No. 06-12618) Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represents the Debtor in its restructuring efforts. When the Debtor sought protection from its creditors, it listed more than $100 million of total assets and more than $100 million of total debts. NORTH AMERICAN: Wants Solicitation Period Extended to March 31 -------------------------------------------------------------- North American Refractories Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Pennsylvania to extend, until Mar. 31, 2007, their exclusive period to solicit acceptances to their third amended plan of reorganization dated Dec. 28, 2005. The Debtor's exclusive period to solicit plan acceptances to their Plan has been extended ten times since the Plan was filed on July 31, 2003. Third Amended Plan Under the Amended Plan, holders of Class 1-A Claims secured by a letter of credit, bond, other financial instruments or cash will retain their collateral subject to any rights of the Debtors under any applicable agreements to seek a reduction of the collateral. The claims will be satisfied from the collateral or its proceeds as the claims become fixed and liquidated and payable under applicable agreements. For the allowed secured claims under capitalized leases and other secured financing agreements, the Debtors will either: a) reinstate the debt underlying the secured financing agreement or capitalized lease and leave the collateral for the debt in place; b) distribute the collateral securing the allowed secured claim; and c) distribute cash in an amount equal to the proceeds actually realized from the sale, pursuant to Sec. 363(b) of the Bankruptcy Code, of any collateral securing the allowed secured claim, less the actual costs and expenses of disposing of the collateral. With regards to its Class 2 Debtor-in-Possession Financing Claim, Honeywell International Inc. has agreed with the Debtors that the DIP Facility be fully drawn, not repaid, and deemed satisfied on the effective date of the Plan. Each holder of a Class 3-A General Unsecured Claim will be paid in cash on the effective date of the Plan in an amount equal to 90% of the allowed claim amount. The full liquidated value of Class 4-A Asbestos Trust Claims will be paid while Class 3-B and Class 4-B Claims will be unaffected by the Plan. Class 3-C Claims will receive no distribution under the Plan and equity interests in the Debtors will be cancelled and terminated. A full-text copy of the Debtors' Third Amended Reorganization Plan is available for free at: http://researcharchives.com/t/s?152c The Court will convene a hearing on Dec. 20, 2006, 2:00 p.m., at Courtroom A, 54th Floor, US Steel Tower in Pittsburgh, Pennsylvania, to consider the Debtors' request. Responses are due by Dec. 1, 2006. Headquartered in Pittsburgh, Pennsylvania, North American Refractories Company was engaged in the manufacture and non- retail sale of refractory bricks and related products. The company and its affiliates sought chapter 11 protection on January 4, 2002 (Bankr. W.D. Pa. Case No. 02-20198) after suffering a slump in the domestic economy and encountering an overwhelming number of claims from individuals asserting injuries or illnesses caused by exposure to asbestos containing products it manufactured. Paul M. Singer, Esq., of Pittsburgh represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed $27,559,000,000 in assets and $18,634,000,000 in debts. NORTH AMERICAN: Plan Confirmation Hearing Scheduled Tomorrow ------------------------------------------------------------ The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the Western District of Pennsylvania will convene a hearing tomorrow, Nov. 17, 2006, at 2:00 p.m., to consider confirmation of North American Refractories Company and its debtor-affiliates' third amended plan of reorganization. Headquartered in Pittsburgh, Pennsylvania, North American Refractories Company was engaged in the manufacture and non- retail sale of refractory bricks and related products. The company and its affiliates sought chapter 11 protection on January 4, 2002 (Bankr. W.D. Pa. Case No. 02-20198) after suffering a slump in the domestic economy and encountering an overwhelming number of claims from individuals asserting injuries or illnesses caused by exposure to asbestos containing products it manufactured. Paul M. Singer, Esq., of Pittsburgh represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed $27,559,000,000 in assets and $18,634,000,000 in debts. PARKWAY HOSPITAL: Can Borrow Additional $700,000 from Boro Medical ------------------------------------------------------------------ The Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan approved The Parkway Hospital Inc.'s request for additional $700,000 unsecured postpetition financing from Boro Medical, P.C. The Debtor says that having access of the funds will enable it to pay postpetition expenses, including postpetition salary obligations and trade and professional administrative claims. The Court previously approved the initial DIP loan of $1 million from Boro Medical on Sept. 15, 2006, which was used to pay payroll obligations, working capital requirements and other Court-approved expenses. In addition, the Debtor has been in negotiation with Medical Capital LLC with respect to a complete refinancing of all of the Debtor's receivables. The Debtor continued to negotiate with other parties in connection to additional DIP and exit financing. As security for the postpetition indebtedness, the Debtor grants Boro Medical administrative claim subject to a carve out for fees due to the U.S. Trustee and payments to professionals retained in the Debtor's chapter 11 case. The Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. The firm of Alston & Bird LLP serves as substitute bankruptcy counsel to the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. PERFORMANCE TRANSPORTATION: Seeks Plan-Filing Period Extension -------------------------------------------------------------- Performance Transportation Services, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the Western District of New York to extend the periods within which they have the exclusive right to: a) file a plan, through and including Jan. 29, 2007; and b) solicit and obtain acceptances of that plan, through and including March 29, 2007. The Debtors delivered their Joint Plan of Reorganization and accompanying Disclosure Statement to the Court on Oct. 27, 2006. The Debtors filed an amendment to their Joint Plan on Nov. 10, 2006. Yucaipa American Alliance Fund I, LP, and Yucaipa American Alliance (Parallel) Fund I, LP, holders of majority of the Debtors' prepetition second lien secured debt, are co-proponents of the Joint Plan. According to Garry M. Graber, Esq., at Hodgson Russ LLP in Buffalo, New York, the Debtors remain engaged in negotiations with their principal creditor constituencies, including Yucaipa. In addition, the Debtors are conducting discussions with their principal customers regarding concessions necessary for PTS to successfully emerge from Chapter 11, Mr. Graber relates. The Debtors are negotiating term sheets with certain of their principal customers and hope to conclude those discussions in the near future. To deny extension of the Exclusive Periods at this critical juncture will inject disruption in the Debtors' Chapter 11 cases and ongoing negotiations, Mr. Graber points out. Any competing plans will complicate and delay the plan process, he adds. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: Turns to PwC for Tax Advice ------------------------------------------------------- Performance Transportation Services, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the Western District of New York for authority to employ PricewaterhouseCoopers LLP as their restructuring tax advisor, nunc pro tunc to Oct. 4, 2006. Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, relates that PwC has developed a great deal of institutional knowledge regarding the Debtors' operations, finances and systems. Under an Engagement Letter dated October 4, PwC, as the Debtors' Restructuring Advisor, will: (a) determine the: * amount of the Debtors' cancellation of indebtedness income; * the Debtors' stock basis; and * the tax basis of Debtor-owned assets; and (b) identify federal and state tax attributes and any limitations imposed on those attributes for the Debtors. PwC's professionals will be paid at their customary hourly rates, which are subject to periodic adjustments: Position Rate -------- ---- Partners $740 Directors $600 Managers $490 Senior Associates $395 In addition, Mr. Graber says PwC's professionals are entitled to reimbursement of certain expenses and indemnification. Kenneth P. Hagen at PwC assures the Court that his firm is a "disinterested" person as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PITTSBURGH BREWING: Objects to Three Claims Filed by PBGC --------------------------------------------------------- Pittsburgh Brewing Company Inc. and Keystone Brewers Holding Co. objects to the claims filed by the Pension Benefit Guaranty Corporation related to the to the defined benefit pension plan maintained by Pittsburgh Brewing. The Debtors ask the Honorable M. Bruce McCullough of the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh to: a. reducing the UBL Claim to an amount to be proven at a hearing on the Objection; b. determine that UBL Claim is not entitled to priority; c. disallow the Minimum Funding Claim in its entirety; and d. determine that the Premium Claim is not entitled to priority. Background Pittsburgh Brewing previously maintained the Pittsburgh Brewing Company Pension Plan covered by Title IV of ERISA. In 1995, Pittsburgh Brewing "froze" the Plan, i.e., the Plan was closed to new participants, and the participants already in the Plan ceased earning additional benefits. Since 1995, the Debtors' minimum funding contributions to the Plan, as required by the Internal Revenue Code, have related solely to the Plan's past service liability. Judge McCullough previously authorized on April 26, 2006, PBGC to terminate the Plan. Pittsburgh Brewing and PBGC then agreed to appoint a Trustee and terminate the Plan. In the agreement, the parties established April 1, 2005, as the Plan's termination date. As of the termination date, the Plan's assets were insufficient to cover the Plan's benefit liabilities. Pension Benefit Guaranty Corp. PBGC guarantees the payment of certain pension benefits when single employer defined benefit pension plans covered by Title IV of ERISA are terminated. When an under-funded pension plan terminates, PBGC generally becomes trustee of the pension plan and pays the plan's participants and beneficiaries with its own insurance funds to the extent of the plan's unfunded guaranteed benefits. The plan sponsor and each member of the contributing sponsor's controlled group are jointly and severally liable to PBGC for payment of: a. any unfunded benefit liabilities under a covered pension plan; b. any contributions necessary to satisfy the minimum funding requirements under the Internal Revenue Code and ERISA; and c. insurance premiums owed to the PBGC with respect to the pension plan. PBGC Claims PBGC filed three claims relating to the Plan: -- Proof of Claim No. 97, for the Plan's unfunded benefit liabilities, allegedly totaling $11,817,700, known as UBL Claim; -- Proof of Claim No. 95, for unpaid minimum funding contributions allegedly owed the Plan totaling $1,290,185, known as Minimum Funding Claim; and -- Proof of Claim No. 96, for unpaid insurance premiums owed PBGC with respect to the Plan, allegedly totaling $5,771.57, known as Premium Claim. Judge McCullough will convene a hearing at 1:30 p.m. on Dec. 12, 2006, to consider the Debtors' objection. Headquartered in Pittsburgh, Pennsylvania, Pittsburgh Brewing Company, Inc. -- http://www.pittsburghbrewingco.com/-- manufactures malt liquors, such as beer and ale. Its products include Iron City Beer, IC Light Beer, and Augustiner Amber Lager. The Company filed for chapter 11 protection on Dec. 7, 2005 (Bankr. W.D. Penn. Case No. 05-50347). Robert O. Lampl, Esq., at Law Office Robert O. Lampl, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its assets and debts estimated $1 million to $10 million. Keystone Brewers Holding Co, a holding company for PBC's intellectual property assets, also filed a voluntary chapter 11 petition on March 10, 2006. PONTIAC GENERAL: Fitch Cuts Underlying Rating to BB- from BBB+ -------------------------------------------------------------- Fitch downgrades to 'BB-' from 'BBB+' the underlying rating on Pontiac General Building Authority, Michigan's outstanding $1.9 million limited tax general obligation bonds, series 2002 and places the bonds on Rating Watch Negative. The downgrade reflects severely constrained financial flexibility, a structural deficit, and inadequate financial reporting controls. Management expects another operating deficit in fiscal 2006, and Fitch's Rating Watch considers the possibility of a further downgrade, depending on the severity of the deficit reported in the audited results. Pontiac's constrained financial operations are due to declines in state shared and income tax revenues and increases in public safety costs. The city's economy has weakened over the past several years and is heavily dependent on General Motors Corp both as a taxpayer and employer. Fitch maintains the Rating Watch Negative on GM's Issue Default Rating 'B'. At the end of fiscal 2004, the city's general fund deficit totaled $20.8 million and grew to $31.8 million by fiscal 2005, or approximately 50% of expenditures. The deficit was eliminated this year primarily through the issuance of $22 million of deficit spending bonds, renegotiation of $6 million in obligations to GM, and a $3 million transfer from the city's budget stabilization fund. However, the city's structural budgetary imbalance persists. Audited financial results for fiscal 2006, which ended on June 30, are expected by Dec. 31, 2006. The passage of four 10-year property tax measures on Nov. 7 is expected to provide some near-term budgetary relief and restore certain operations and services, including police, library, senior citizens, and recreational programs. The new tax levies should generate $3 million per year. In addition, the adopted budgets for fiscal 2006 and 2007 project that state shared and income tax revenue will not decline further. Although the city has been able to reduce general fund expenditures through significant layoffs and attrition, escalating overtime costs for public safety have hindered effective spending control. Internal management financial reporting as well as account and fund management controls are inadequate. In 2005, the city contracted an outside accounting firm to help address financial control issues and to supplement existing financial staff. Although many of the reporting and accounting issues appear to have been addressed, the city's inability to adequately manage ongoing financial operations remains a concern. The struggle to maintain adequate financial operations is exacerbated by prior cost containment measures, which eliminated a number of staff positions. It is anticipated that the outside accounting firm will continue working with the city until additional personnel are hired and trained, possibly in 2009. Located 31 miles from Detroit in Oakland County, Michigan, Pontiac has high unemployment at 14.7%. Wealth levels within the city are low, as per capita income is 45% of the county, 65% of the state, and 63% of the national averages. GM concentration is significant, representing one-third of the city's tax base. GM employs 12,000 workers in Pontiac and manufactures at the Pontiac Assembly center the Chevrolet Silverado and the GMC Sierra full size pick-up trucks. These popular vehicles should help maintain the viability of the Pontiac plants; however, given GM's financial uncertainties, production volume could be shifted away from Pontiac to other GM facilities which also manufacturer these vehicles. The city's debt levels are moderate with direct debt equal to $1,252 per capita, or 2.2% of full market value. Overlapping debt totals $1,402 per capita, or 2.5% of full market value. Repayment of debt is average with 53% of principal being retired in ten years. POPE & TALBOT: Posts $10 Mil. Net Loss in Quarter Ended Sept. 30 ---------------------------------------------------------------- Pope & Talbot Inc. reported a $10,161,000 net loss on $214,583,000 of total revenues for the three months ended Sept. 30, 2006, compared to a $8,822,000 net loss on $212,736,000 of total revenues for the same period in 2005. The company's balance sheet at Sept. 30, 2006, disclosed total assets of $677,858,000, total liabilities of $593,662,000, and total stockholders' equity of $84,196,000. Liquidity and Capital Resources The company's total debt to total capitalization ratio was 82% at Sept. 30, 2006, compared with 75% at Dec. 31, 2005. Total debt increased from $332.0 million at Dec. 31, 2005, to $389.2 million at Sept. 30, 2006. The increase in the debt ratio was due to a $27.8 million reduction in total stockholders' equity resulting primarily from the net loss in the first nine months of 2006, and an increase in borrowing under the new credit facilities. Cash requirements in the first nine months of 2006 included $21.4 million for capital expenditures, $8.4 million for operating activities, $18.5 million in fees associated with the new senior secured credit facilities and $3.6 million for debt extinguishment costs associated with repayment of the Halsey pulp mill lease financings. The use of cash for operating activities resulted in part from the company's repurchase of $23.9 million of accounts sold under its former receivables purchase agreement in the second quarter of 2006 and termination of that agreement; all the accounts were collected at Sept. 30, 2006. Full-text copies of the company's financial statements for the three months ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?151c Going Concern Doubt In May 2006, KPMG LLP in Portland, Oregon, raised substantial doubt about Pope & Talbot, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2004, and 2005. The auditor pointed to the Company's recurring losses; inability to comply with financial covenants; inability to refinance or renew maturing debt and comply with financial covenants in future periods. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?f74 Based in Portland, Oregon, Pope & Talbot, Inc. (NYSE: POP) -- http://www.poptal.com/-- is a North American forest products company. Pope & Talbot was founded in 1849 and produces pulp and softwood lumber in the U.S. and Canada. Markets for the Company's products include: the U.S.; Europe; Canada; South America; Japan; and other Pacific Rim countries. * * * As reported in the Troubled Company Reporter on June 22, 2006, Moody's Investors Service downgraded Pope & Talbot Inc.'s senior unsecured debt rating to Caa2 from Caa1. The rating action was prompted by news that the company plans to refinance certain indebtedness. The company's senior unsecured debt also carries Dominion Bond Rating Services' CCC rating. PORTRAIT CORP: Judge Hardin Sets November 28 as Claims Bar Date --------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York set Nov. 28, 2006, at 5:00 p.m., as the deadline for all creditors owed money by Portrait Corporation of America, Inc., and its debtor-affiliates to file formal written proofs of claim on account of claims arising prior to Aug. 31, 2006. Creditors must mail their proofs of claims to: The U.S. Bankruptcy Court Southern District of New York Attn: Portrait Corporation of America, Inc. Claims Processing, Bowling Green Station, P.O. Box 5074 New York, NY 10274-5074 or deliver the proofs of claim by messenger or overnight courier to: Office of the Clerk U.S. Bankruptcy Court Southern District of New York Re: Portrait Corporation of America, Inc. Claims Processing One Bowling Green, New York, NY 10274 The deadline for asserting claims by a co-debtor, surety, or guarantor under section 501(b) of the Bankruptcy Code and Bankruptcy Rule 3005 is Dec. 28, 2006, at 5:00 p.m. Governmental units have until March 1, 2007, at 5:00 p.m., to file proofs of claim. About Portrait Corp Portrait Corporation of America, Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' Financial Advisor and Investment Banker. Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP represents the Official Committee of Unsecured Creditors. Peter J. Solomon Company serves as financial advisor for the Committee. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. PORTRAIT CORPORATION: Hires Mesirow as Restructuring Accountants ---------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York has authorized Portrait Corporation of America, Inc., and its debtor-affiliates to employ Mesirow Financial Consulting, LLC, as their restructuring accountants. Mesirow Financial will: a) assist in the preparation of or review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b) assist in the preparation of or review of the Debtors' financial information, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; c) assist with the analysis, tracking and reporting regarding cash collateral and any debtor in possession financing arrangements and budgets; d) assist with the implementation of bankruptcy accounting procedures as may be required by the Bankruptcy Code and generally accepted accounting principles, including, but not limited to, a Statement of Position 90-7; e) give advice and assistance regarding tax-planning issues, including, but not limited to, assistance in estimating net operating loss carry forwards, international, state and local tax issues and the tax considerations of proposed plans of reorganizations; f) develop and evaluate potential employee retention and severance plans; g) assist with identifying and implementing potential cost containment opportunities; h) assist with identifying and implementing asset redeployment opportunities; i) analyze assumption and rejection issues regarding executory contracts and leases; j) assist in the preparation and review of proposed business plans and the business and financial condition of the Debtors; k) assist in evaluating reorganization strategies and alternatives; l) review and critique the Debtors' financial projections and assumptions; m) prepare enterprise, asset and liquidation valuations; n) assist in preparing documents necessary for confirmation; o) give advice and assistance to the Debtors in negotiations and meetings with the creditors' committee, the bank lenders and other parties-in-interest; p) give advice and assistance on the tax consequences of proposed plans of reorganization; q) assist with the claims resolution procedures, including, but not limited to, analyses of creditors' claims by type and entity; r) provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and s) perform other functions as requested by the Debtors or their counsel. The Debtors have filed a motion to retain Berenson & Company as their financial advisors. The Debtors say the services Mesirow will provide will not be duplicative of those provided by Berenson. The customary hourly rates for Mesirow Financial's professionals are: Designation Hourly Rate ----------- ----------- Sr. Managing Directors Managing Directors $620 - $690 Sr. Vice Presidents $530 - $590 Vice Presidents $430 - $490 Sr. Associates $330 - $390 Associates $190 - $290 Paraprofessionals $150 Mesirow has agreed to a 20% discount on its fees for this engagement. To the best of Mesirow's knowledge, it does not hold or represent any interest adverse to the Debtors' estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Portrait Corp Portrait Corporation of America, Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' Financial Advisor and Investment Banker. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. PRIMUS TELECOMMS: Sept. 30 Balance Sheet Upside-Down by $466.3MM ---------------------------------------------------------------- PRIMUS Telecommunications Group Incorporated filed its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 9, 2006. At Sept. 30, 2006, the Company's balance sheet showed $402.143 million in total assets and $868.474 million in total liabilities, resulting in a $466.331 million stockholders' deficit. The Company had a $236.334 million deficit at Dec. 31, 2005. PRIMUS reported third quarter 2006 net revenue of $248 million, down from $252 million in the prior quarter and $290 million in the third quarter 2005. The Company reported $121,000 of net income for the quarter, compared with a net loss of $220 million in the prior quarter and a net loss of $51 million in the third quarter 2005. "We are pleased to report the fourth consecutive quarter of steady improvement in our recurring Adjusted EBITDA trajectory," PRIMUS chairman and chief executive officer K. Paul Singh said. "Our improved performance is driven by continuing implementation of our previously announced strategy of maximizing cash flow from operations by driving down costs while focusing our available resources on high margin products and services. "Execution of this strategy has resulted in the continued shedding of low margin retail revenue and its associated costs, while continued growth in new services and other high margin products has resulted in improved operating margins. That progress, together with aggressive management of SG&A expense, has enabled us to increase Adjusted EBITDA. "Our performance in recent quarters has re-established a stable base of EBITDA generation from operations. While such progress is encouraging, we must build on this success by continuing to increase the margin contribution from new products and by reducing our interest expense in order to generate adequate levels of cash flow to realize the full growth potential of PRIMUS and meet our future debt maturity obligations," Mr. Singh stated "We are actively pursuing initiatives to become Free Cash Flow breakeven on an operating basis through a combination of improved EBITDA performance and reduced interest expense," Mr. Singh added. The Company's improved operating performance has resulted from continued execution of the four-pronged PRIMUS Action Plan: -- Prioritize revenue growth in new services, while concentrating available resources for optimum effectiveness Revenue from broadband, local, wireless, and VOIP initiatives grew to $35 million in the quarter, an increase of 35% from the third quarter 2005. In addition to consistent quarterly revenue growth from new services, profitability from these services is also increasing, providing clear support for the Company's Action Plan. -- Enhance margins by increasing scale on the new initiatives, adding broadband infrastructure in high density locations and migrating customers onto the PRIMUS network PRIMUS now has over 183,000 DSL customers in Australia and Canada. The Australian and Canadian DSLAM networks are comprised of 181 and 65 nodes, respectively. There are now over 88,000 services (local and broadband) provisioned directly on the Company's DSLAM facilities in Australia and Canada. Margins from these on-net services are almost double those of off-net services. To capitalize on the recent completion of the Canadian DSLAM network, the Company elected to increase advertising to accelerate growth in on-net services. -- Continue to drive down expenses through aggressive cost controls After four consecutive quarters of reduced SG&A expense, the Company reported a third quarter total of $72 million, essentially flat with the prior quarter despite a $1 million increase in advertising, but down over $20 million from the prior year quarter. Primus's aggressive expense reduction efforts have also focused on a range of cost of revenue reductions in the current quarter and such efforts are continuing. Additionally, the Australian regulatory commission issued an Interim Determination Letter lowering charges for on-net local loop services paid to Telstra, which is one of the regulatory matters currently under review. If this interim ruling is affirmed, it is estimated that PRIMUS's annual expense for these services will be reduced by approximately $2 million. -- Strengthen the balance sheet opportunistically through potential deleveraging and equity capital infusion During the first three quarters of 2006 Primus successfully: (1) exchanged $27 million principal amount of the 5.75% Convertible Subordinated Debentures due 2007 for $27 million of newly created Step-Up Convertible Debentures due 2009; (2) exchanged $3 million principal amount of its 12.75% Senior Notes for 1.8 million shares of common stock; (3) exchanged $32 million principal amount of 5% Exchangeable Senior Notes for $55 million principal amount of 3.75% Convertible Senior Notes due 2010; (4) issued $24 million principal amount of 5% Exchangeable Senior Notes for $18 million in cash (net of issuance costs); (5) raised $13 million cash proceeds from the sale of its Indian subsidiary; and (6) sold $5 million of newly issued common stock to a private investor. To attain the targeted levels of Free Cash Flow it is imperative that substantial further progress be made in reducing overall debt and interest expenses -- an area that is a priority. Third Quarter 2006 Financial Results The Company sold its India-based operations at the end of the second quarter 2006. From an accounting perspective, the sale has been treated as a discontinued operation and, therefore, those operating results are excluded from the individual line items of the statement of operations in all prior period results, and the income is shown as a separate line item on the statement of operations. Third quarter 2006 revenue was $248 million, down 2% sequentially from $252 million in the prior quarter and down 15% from $290 million in the third quarter 2005. "The $4 million sequential revenue decline was driven largely by a $4 million reduction in low-margin prepaid services revenue, representing the continued shedding of unprofitable revenue as part of our previously announced restructuring of the prepaid business. "The balance of the sequential revenue decline was comprised of a $2 million decrease in high-margin retail services, including legacy voice and dial-up Internet services. "These decreases were partially offset by an increase of $2 million as a result of the weakening United States dollar," PRIMUS chief financial officer Thomas R. Kloster said. "While we are pleased by the continued growth of our high margin initiatives such as broadband, local, wireless and VOIP services -- which generated $35 million of revenue and improved margins in the third quarter 2006 -- we need to accelerate this growth in order to compensate fully for the margin loss from the revenue decline in legacy services." Net revenue from data/Internet and VOIP services was $73 million (29% of total net revenue for the quarter), up slightly from the prior quarter. Geographic revenue mix changed modestly with 20% coming from the United States, 28% from Canada, 21% from Europe and 31% from Asia-Pacific. The mix of net revenue was 78% retail (52% residential and 26% business) and 22% wholesale. SG&A expense was $72 million (29.3% of net revenue), consistent with $72 million in the prior quarter (28.7% of net revenue) and down from $93 million (32.0% of net revenue) in the third quarter 2005. As compared with the prior quarter, advertising expense increased by $1 million and the Company incurred a $1 million expense for European administrative taxes. These increases were offset by continued declines in commission expense primarily related to the prepaid services revenue decline. Income from operations was $10 million in the third quarter 2006 versus a loss of $228 million (including a $223 million non-cash asset impairment write-down and loss on sale or disposal of assets, and a $4 million non-cash expense related to the restructuring of the prepaid services business) in the prior quarter and a loss of $34 million in the third quarter 2005. The prior quarter's asset impairment write-down reduced the level of depreciation and amortization expense to $7 million during the third quarter 2006 from $17 million in the prior quarter. Adjusted EBITDA of $16.6 million, as calculated in the attached schedules, compares with $11.5 million in the prior quarter (which included a $4.1 million non-cash prepaid services business restructuring charge) and $1.1 million in the third quarter 2005. Interest expense for the third quarter 2006 was $13 million, down from $14 million in both the prior and year-ago quarters. Liquidity and Capital Resources PRIMUS ended the third quarter 2006 with a cash balance of $80 million, including $9 million of restricted funds, as compared with $96 million, including $8 million of restricted funds, as of June 30, 2006. For the quarter, a net $6 million in cash was used for operating activities. This total reflects $23 million in cash used in operating activities (including $16 million in cash interest payments, $2 million for tax payments, $2 million for fees related to the issuance of the 5% Exchangeable Senior Notes in the second quarter, $1 million being transferred to restricted cash and $2 million for working capital), partially offset by $17 million of Adjusted EBITDA. In addition, $8 million of cash was used for capital expenditures and $2 million for scheduled principal reductions on debt obligations. Free cash flow for the third quarter 2006 was negative $14 million as compared to negative $1 million in the prior quarter and a negative $33 million in the third quarter 2005. The first and third quarters have higher cash interest payments based on the timing of debt interest due dates. The $71 million unrestricted cash balance as of Sept. 30, 2006, is expected to remain relatively stable as of Dec. 31, 2006. However, first quarter 2007 scheduled principal maturities of $23 million of the 5.75% Convertible Subordinated Debentures and $8 million for a vendor financing will result in a significant decrease in unrestricted cash levels during the first quarter of 2007. As a result, Primus's highest management priority is to explore potential means to reduce the cash outflow in the first quarter of 2007. The principal amount of PRIMUS's long-term debt obligations as of Sept. 30, 2006, was $641 million, down from $643 million at June 30, 2006. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1529 Going Concern Doubt As reported in the Troubled Company Reporter on June 19, 2006, Deloitte & Touche LLP expressed substantial doubt about PRIMUS Telecommunications Group, Incorporated's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended Dec. 31, 2005. The auditing firm pointed to the Company's recurring losses from operations, the maturity of $23.6 million of the 5-3/4% convertible subordinated debentures due February 2007, negative working capital, and stockholders' deficit. About PRIMUS Telecommunications Group Based in McLean, Virginia, PRIMUS Telecommunications Group Inc. (NASDAQ: PRTL) -- http://www.primustel.com/-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol, Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 350 points-of-presence throughout the world, ownership interests in undersea fiber optic cable systems, 16 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. RADNOR HOLDINGS: Stevens & Lee Okayed as Panel's Conflicts Counsel ------------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors of Radnor Holdings Corporation and its debtor- affiliates to retain Stevens & Lee PC as its special conflicts counsel, nunc pro tunc to Sept. 18, 2006. As reported in the Troubled Company Reporter on Oct. 18, 2006, Stevens & Lee will: a) perform services that its primary counsel, Greenberg Traurig LLP cannot perform because of actual or apparent conflicts with its existing clients; and b) perform other discrete duties assigned by the Committee or Greenberg Traurig. The Committee said that it will ensure that there will be no duplication of Greenberg's efforts. The current standard hourly rates for principal attorneys and paralegal expected to represent the Committee are: Professional Designation Hourly Rate ------------ ----------- ----------- Joseph H. Houston, Jr., Esq. Shareholder $445 Thomas G. Whalen, Jr., Esq. Associate $280 Valerie A. Frew Paralegal $150 Stephanie L. Foster Legal Assistant $115 Stevens & Lee's other professionals charge: Designation Hourly Rate ----------- ----------- Shareholders $325 to $650 Associates $180 to $325 Legal Asst./Paralegals $95 to $175 Mr. Houston assured the Court that his firm does not hold or represent any interest adverse to the Debtors' estates. Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/ -- manufactures and distributes a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Case No. 06-10894). Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher, represent the Debtors. Donald J. Detweiler, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, serves the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. REMY INTERNATIONAL: Weak Earnings Prompt S&P to Cut Rating to CCC ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Anderson, Indiana-based electrical components manufacturer Remy International Inc. to 'CCC' from 'CCC+'. The outlook is negative. "The downgrade stems from Remy's inability to improve very weak earnings and cash flow, leaving the company with shrinking prospects for meeting its December 2007 maturity of its $145 million senior notes," Standard & Poor's credit analyst Nancy C. Messer said. Remy recently lowered its earnings guidance for 2006 to a range that is not sufficient to cover the company's cash interest expense. In addition, Remy's possible asset divestitures, details of which have not been announced, are not expected to reduce leverage, and could have implications for the recovery ratings that Standard & Poor's has assigned to Remy's secured debt. Remy's secured bank debt is governed by a borrowing base mechanism, which should tie usage to asset levels. Still, should future asset sales manage to reduce asset protection we would review our recovery rating. The expected sale of Remy's diesel powertrain remanufacturing operations could generate proceeds of up to $150 million by the end of 2006, and the company has retained a financial restructuring firm to advise it in the best use of these proceeds. Although details of the possible asset divestiture and subsequent debt repurchase have not been disclosed, the company is expected to remain highly leveraged following the two transactions. In addition to the 2007 maturity, Remy faces several debt maturities in the intermediate term, which will be difficult to refinance if EBITDA remains depressed. The company's $80 million term loan has a required bullet payment due in June 2008. The company's $125 million second-lien floating notes mature in April 2009, and $165 million of subordinated notes mature in May 2009. RFMSI TRUST: S&P Puts Negative Watch on Class B-2 Certs. Rating --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 55 classes of mortgage pass-through certificates from 18 RFMSI Trust transactions. Concurrently, the rating on one class is placed on CreditWatch with negative implications. Additionally, the ratings on various RFMSI Trust series are affirmed. The raised ratings reflect rapid prepayments and good performance of the mortgage loan pools. All of the series with raised ratings have paid down to less than 46% of their original pool balances. Projected credit support percentages range from 1.84x to 2.62x the percentages associated with the higher rating categories and should be sufficient to support the classes at the higher rating levels. Cumulative realized losses are very low for all of the upgraded series, with a maximum of 0.02% of the original pool balances for series 2003-S12. Total delinquencies ranged from 0% to 2.67%. Only three deals contain mortgage loans that are seriously delinquent, with the highest level at 1.24%. The 'B' rating on class B-2 from series 2003-S3 is placed on CreditWatch with negative implications due to the anticipated realized losses on a $539,376 REO loan, for which only $166,865 in credit support remains. Standard & Poor's will continue to closely monitor the performance of this transaction. Standard & Poor's will downgrade class B-2 if the realized losses deplete credit support to a level that is insufficient to support the 'B' rating. Conversely, if the REO property does not cause significant additional realized losses and remaining credit support is sufficient to support the 'B' rating, the rating agency will affirm the rating and remove it from CreditWatch. The affirmations are based credit support levels that are adequate to maintain the current ratings. Credit support for all of these transactions is provided by subordination. Ratings Raised RFMSI Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ----- 2002-S11 M-3 AAA AA+ 2002-S12 M-3 AAA AA+ 2002-S14 M-3 AAA AA+ 2002-S15 M-3 AAA AA+ 2002-S16 M-3 AAA AA+ 2002-S17 M-3 AA- A+ 2002-S18 M-2 AA+ AA 2002-S18 M-3 AA A 2002-S19 M-1 AAA AA+ 2002-S19 M-2 AA+ AA 2002-S19 M-3 AA- A 2002-S19 B-1 BBB+ BBB- 2002-S19 B-2 BB+ B+ 2002-S20 M-1 AAA AA+ 2002-S20 M-2 AA+ AA- 2002-S20 M-3 AA- A- 2002-S20 B-1 A- BB+ 2002-S20 B-2 BBB- B+ 2003-S1 M-1 AAA AA+ 2003-S1 M-2 AA+ AA- 2003-S1 M-3 A+ BBB+ 2003-S1 B-1 BBB BB+ 2003-S1 B-2 BB+ B+ 2003-S2 M-2 AA A+ 2003-S2 M-3 A BBB+ 2003-S2 B-1 BBB BB+ 2003-S2 B-2 BB- B 2003-S3 M-1 AA+ AA 2003-S3 M-2 A+ A 2003-S5 M-1 AA+ AA 2003-S5 M-2 AA A 2003-S5 M-3 A BBB 2003-S5 B-1 BBB BB 2003-S5 B-2 BB B 2003-S6 M-1 AA+ AA 2003-S6 M-2 A+ A 2003-S6 M-3 BBB+ BBB 2003-S6 B-1 BB+ BB 2003-S8 M-1 AA+ AA 2003-S8 M-2 AA- A 2003-S8 M-3 BBB+ BBB 2003-S8 B-1 BB+ BB 2003-S8 B-2 BB- B 2003-S9 M-2 AAA AA+ 2003-S9 M-3 AA A 2003-S9 B-1 A+ BBB- 2003-S9 B-2 BBB B+ 2003-S11 M-1 AA+ AA 2003-S11 M-2 A+ A 2003-S11 M-3 BBB+ BBB 2003-S11 B-1 BB+ BB 2003-S12 M-2 AAA AA+ 2003-S12 M-3 AA- A+ 2003-S12 B-1 A- BBB+ 2003-S12 B-2 BB BB- Rating Placed On Creditwatch Negative RFMSI Trust Mortgage Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-S3 B-2 B/Watch Neg B Ratings Affirmed RFMSI Trust Mortgage Pass-Through Certificates Class Rating ----- ------ 2002-S11 A-1, A-P, A-V, M-1, M-2 AAA 2002-S12 A-1, A-6, A-7, A-8, A-9, A-P, A-V AAA 2002-S12 M-1, M-2 AAA 2002-S13 A-6, A-7, A-P, A-V, M-1, M-2 AAA 2002-S13 M-3 AA+ 2002-S14 A-1, A-P, A-V, M-1, M-2 AAA 2002-S15 A-11, A-12, A-P, A-V, M-1, M-2 AAA 2002-S16 A-1, A-2, A-3, A-9, A-10, A-P, A-V AAA 2002-S16 M-1, M-2 AAA 2002-S17 A-1, A-2, A-6, A-7, A-P, A-V, M-1 AAA 2002-S18 A-1, A-P, A-V, M-1 AAA 2002-S19 A-1, A-2, A-3, A-4, A-5, A-8, A-9, A-10 AAA 2002-S19 A-11, A-12, A-13, A-14, A-15, A-P, A-V AAA 2002-S20 A-1, A-2, A-3, A-4, A-5, A-9, 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III-A-2, III-A-3, III-A-4 AAA 2004-S6 III-A-5, III-A-6, III-A-7, III-A-P AAA 2004-S6 III-A-V AAA 2004-S6 M-1, III-M-1 AA 2004-S6 M-2, III-M-2 A 2004-S6 M-3, III-M-3 BBB 2004-S6 B-1, III-B-1 BB 2004-S6 B-2, III-B-2 B 2004-S7 A-1, A-P, A-V AAA 2004-S7 M-1 AA 2004-S7 M-2 A 2004-S7 M-3 BBB 2004-S7 B-1 BB 2004-S7 B-2 B 2004-S8 A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 AAA 2004-S8 A-9, A-10, A-11, A-P, A-V AAA 2004-S8 M-1 AA 2004-S8 M-2 A 2004-S8 M-3 BBB 2004-S8 B-1 BB 2004-S8 B-2 B 2004-S9 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2004-S9 I-A-7, I-A-8, I-A-9, I-A-10, I-A-11 AAA 2004-S9 I-A-12, I-A-13, I-A-14, I-A-15, I-A-16 AAA 2004-S9 I-A-17, I-A-18, I-A-19, I-A-20, I-A-21 AAA 2004-S9 I-A-22, I-A-23, I-A-24, I-A-25, I-A-26 AAA 2004-S9 I-A-27, I-A-P, I-A-V AAA 2004-S9 I-M-1 AA 2004-S9 I-M-2 A 2004-S9 I-M-3 BBB 2004-S9 I-B-1 BB 2004-S9 I-B-2 B 2005-SA1 I-A-1, I-A-2, I-A-3, II-A, III-A AAA 2005-SA1 M-1 AA 2005-SA1 M-2 A 2005-SA1 M-3 BBB 2005-SA1 B-1 BB 2005-SA1 B-2 B 2005-SA2 I-A, II-A-1, II-A-2, III-A-1, III-A-2 AAA 2005-SA2 III-A-3, IV-A, V-A, VI-A-1, VI-A-2 AAA 2005-SA2 M-1 AA 2005-SA2 M-2 A 2005-SA2 M-3 BBB+ 2005-SA2 M-3 BBB- 2005-SA2 B-1 BB 2005-SA2 B-2 B 2005-SA3 I-A, II-A-1, II-A-2, II-A-3, III-A AAA 2005-SA3 IV-A, R-I, R-II, R-III AAA 2005-SA3 M-1 AA 2005-SA3 M-2 A+ 2005-SA3 M-3 BBB 2005-SA3 B-1 BB 2005-SA3 B-2 B 2005-SA4 I-A1, I-A2-1, I-A2-2, I-A3-1, I-A3-2 AAA 2005-SA4 II-A1, II-A2, R-I, R-II AAA 2005-SA4 I-M-1 AA+ 2005-SA4 II-M-1 AA 2005-SA4 I-M-2 AA- 2005-SA4 II-M-2 A 2005-SA4 I-M-3 BBB+ 2005-SA4 II-M-3 BBB 2005-SA4 I-B-1, II-B-1 BB 2005-SA4 I-B-2, II-B-2 B 2005-SA5 I-A1 II-A, III-A, R-1, R-II AAA 2005-SA5 M-1 AA 2005-SA5 M-2 A 2005-SA5 M-3 BBB 2005-SA5 B-1 BB 2005-SA5 B-2 B 2005-S1 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2005-S1 I-A-P, I-A-V AAA 2005-S2 A-1, A-2, A-3, A-4, A-5, A-6, A-P, A-V AAA 2005-S4 A-1, A-2, A-3, A-P, A-V AAA 2005-S4 M-1 AA 2005-S4 M-2 A 2005-S4 M-3 BBB 2005-S4 B-1 BB 2005-S4 B-2 B 2005-S6 A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 AAA 2005-S6 A-P, A-V, R AAA 2005-S7 A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 AAA 2005-S7 A-9, A-P, A-V, R-I, R-II AAA 2005-S7 M-1 AA 2005-S7 M-2 A 2005-S7 M-3 BBB 2005-S7 B-1 BB 2005-S7 B-2 B 2005-S8 A-1, A-2, A-3, A-P, A-V, R AAA 2005-S8 M-1 AA 2005-S8 M-2 A 2005-S8 M-3 BBB 2005-S8 B-1 BB 2005-S8 B-2 B 2005-S9 A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8 AAA 2005-S9 A-9, A-10, A-11, A-12, A-P, A-v, R-I AAA 2005-S9 R-II AAA 2006-SA1 I-A-1, I-A-2, II-A-1, II-A-2, R-I, R-II AAA 2006-SA1 M-1 AA 2006-SA1 M-2 A 2006-SA1 M-3 BBB 2006-SA1 B-1 BB 2006-SA1 B-2 B 2006-S1 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2006-S1 I-A-7, I-A-8, I-A-9, II-A, A-P, A-V, R-1 AAA 2006-S1 R-II AAA 2006-S1 M-1 AA 2006-S1 M-2 A 2006-S1 M-3 BBB 2006-S1 B-1 BB 2006-S1 B-2 B 2006-S2 A-1, A-2, A-3, A-4, A-5, A-6, A-7, R AAA 2006-S2 A-P, A-V AAA 2006-S3 A-1, A-2, A-3, A-4, A-5, A-6, A-7 AAA 2006-S3 A-8, A-9, A-10, R, A-P, A-V AAA 2006-S4 A-1, A-2, A-3, A-4, A-5, A-6, A-7 AAA 2006-S4 A-8, A-9, A-10, A-P, A-V, R-I, R-II AAA RURAL/METRO: Makes $7 Million Principal Payment on Term Loan B -------------------------------------------------------------- Rural/Metro Corporation reported that it made a $7 million unscheduled principal payment on its senior secured Term Loan B to reduce the principal balance to $100 million and generate annual interest savings of approximately $549,000. The Company also announced that it is in the process of completing its financial statements and related disclosures for the three months ended Sept. 30, 2006 and will file for a five-day extension to file its first-quarter report on Form 10-Q. Jack Brucker, president and chief executive officer, said, "We are pleased by our ability to continue generating strong free cash flow that we can apply to overall debt reduction as we execute on our deleveraging strategy and demonstrate our commitment to enhancing long-term stockholder value. We believe our debt- reduction strategy will provide excellent opportunities to enhance profitability while maintaining our long-standing reputation as a high-quality, responsive partner to the cities, counties, fire departments, healthcare facilities, patients and others who trust us for their care and protection." Since the inception of the Term Loan B in March 2005, the Company has made a total of $35 million in unscheduled principal payments from operating cash flow and generated approximately $2.7 million in interest savings. 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. In its annual report the Company's balance sheet at June 30, 2006 showed $299,192,000 in total assets and $390,599,000 in total liabilities resulting in a $93,472,000 stockholders' deficit. The Company had a $98,643,000 deficit at June 30, 2005. SALOMON BROTHERS: Moody's Acts on 17 Non-Investment Grade Bonds --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of 16 classes and affirmed the ratings of 13 classes of Salomon Brothers Commercial Mortgage Trust 2001-MM, Commercial Mortgage Pass-Through Certificates, Series 2001-MM: -- Class A-3, $120,816,597, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $19,311,544, Fixed/WAC Cap, upgraded to Aaa from Aa1 -- Class C, $24,129,605, Fixed/WAC Cap, upgraded to A1 from A2 -- Class D, $10,591,148, Fixed/WAC Cap, affirmed at Baa2 -- Class E-1, $8,323,765, Fixed, upgraded to A2 from Baa1 -- Class F-1, $7,600,000, Fixed, upgraded to Ba1 from Ba2 -- Class G-1, $4,111,964, Fixed, affirmed at B3 -- Class E-2, $12,215,443, Fixed, upgraded to A3 from Baa1 -- Class F-2, $5,000,000, Fixed, affirmed at Ba1 -- Class G-2, $2,211,964, Fixed, affirmed at B2 -- Class E-3, $12,800,000, Fixed, upgraded to A3 from Baa1 -- Class F-3, $6,100,000, Fixed, upgraded to Ba1 from Ba2 -- Class G-3, $6,211,964, Fixed, upgraded to B1 from B2 -- Class E-4, $11,400,000, Fixed, upgraded to Baa1 from Baa2 -- Class F-4, $2,800,000, Fixed, upgraded to Ba1 from Ba2 -- Class G-4, $511,964, Fixed, upgraded to Ba3 from B2 -- Class E-5, $14,400,000, Fixed, affirmed at Baa1 -- Class F-5, $5,900,000, Fixed, affirmed at Ba1 -- Class G-5, $511,964, Fixed, affirmed at B2 -- Class E-6, $7,900,000, Fixed, affirmed at Ba3 -- Class F-6, $1,200,000, Fixed, affirmed at B3 -- Class G-6, $511,964, Fixed, affirmed at Caa2 -- Class E-7, $12,300,000, Fixed, upgraded to Baa1 from Baa2 -- Class F-7, $1,400,000, Fixed, upgraded to Ba1 from Ba2 -- Class G-7, $1,811,964, Fixed, upgraded to Ba3 from B2 -- Class E-8, $15,000,000, Fixed, upgraded to Baa1 from Baa2 -- Class F-8, $5,500,000, Fixed, upgraded to Ba1 from Ba2 -- Class G-8, $3,811,964, Fixed, affirmed at B2 As of the Oct. 18, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 51.9% to $324.4 million from $674.4 million at securitization. The Certificates are collateralized by 19 mortgage loans ranging in size from 2.4% to 9.9% of the pool, with the top 10 loans representing 71.7% of the pool. There have been no losses since securitization and currently there are no loans in special servicing. The loans were originated by Massachusetts Mutual Life Insurance Company. This transaction has some unique features in terms of certificate structure, loan grouping, payment priority and loss allocation. The trust consists of five senior certificates and 24 junior certificates. The junior certificates are divided into eight series that each contain three certificates (Classes E, F and G) that correspond to eight specific loan groups. Each loan group originally contained 4 loans. The aggregate principal balance of each loan group is divided into a senior portion and a junior portion. After the principal balance of the related senior portion has been reduced to zero, the principal balance of each junior portion is reduced by the remaining payments of principal made on the related mortgage loans. Based on the payment priority and the certificate structure of this transaction, it is possible that a junior certificate holder may receive principal payments before the principal balance of a higher-rated certificate is reduced to zero. It is also possible that a junior certificate holder of a lower-rated bond may receive principal payment before the principal balance of a higher-rated certificate from a different junior certificate series is reduced to zero. Moody's was provided with year-end 2005 operating results for 97.4% of the pool. The loan to value ratio for the overall pool is 64.7%, compared to 66.7% at Moody's last full review in April 2005 and compared to 72.8% at securitization. The LTV of each loan group is discussed below. Moody's is upgrading pooled Classes B and C due to increased subordination levels and improved overall pool performance. Also, the rating agency is upgrading Classes E-1, F-1, E-2, E-3, F-3, E- 4, F-4, E-7, F-7, E-8, F-8, G-3, G-4 and G-7 due to the improved performance of the associated loan group. Loan Group A consists of two loans totaling $20 million and is the collateral for Classes E-1, F-1 and G-1. Loan Group A's certificate balance has declined by approximately 76.8% since securitization due to the payoff of two loans and amortization of the remaining two loans. The loans in this group are no longer making principal payments to the senior pooled classes. The largest loan in this loan group is the 2777 East Camelback Road Loan ($10.4 million), which is secured by a 106,000 square foot office building located in Phoenix, Arizona. Moody's LTV for Loan Group A is 72.2%, compared to 81.7% at last review, resulting in an upgrade of Classes E-1 and F-1. Loan Group B consists of two loans totaling $19.4 million and is the collateral for Classes E-2, F-2 and G-2. Loan Group B's certificate balance has declined by approximately 76.7% since securitization due to the payoff of two loans and amortization of the remaining two loans. The loans in this group are no longer making principal payments to the senior pooled classes. The largest loan in Loan Group B is the Mercy West Medical Center Loan ($11.0 million), which is secured by a 142,000 square foot medical office building in Clive, Iowa. Moody's LTV for Loan Group B is 68.2%, compared to 72.1% at last review, resulting in an upgrade of Class E-2. Loan Group C consists of two loans totaling $33.6 million and is the collateral for Classes E-3, F-3 and G-3. Loan Group C's certificate balance has declined by approximately 61% since securitization due to the payoff of two loans and amortization of the remaining two loans. The largest loan in Loan Group C is the Trails Village Center Loan ($17.1 million), which is secured by 134,000 square foot retail center located in Las Vegas, Nevada. Moody's LTV for Loan Group C is 56.1%, compared to 72.9% at last review, resulting in an upgrade of Classes E-3, F-3 and G-3. Loan Group D consists of two loans totaling $39.4 million and is the collateral for Classes E-4, F-4 and G-4. Loan Group D's certificate balance has declined by approximately 51.3% since securitization due to the payoff of one loan and amortization of the remaining three loans. The largest loan in Loan Group D is the Richmond Square Loan ($23.9 million), which is secured by a 360-unit luxury high rise apartment building located in Arlington, Virginia. Moody's LTV for Loan Group D is 54.8%, compared to 64.9% at last review, resulting in an upgrade of Classes E-4, F-4 and G-4. Loan Group E consists of three loans totaling $54.8 million and is the collateral for Classes E-5, F-5 and G-5. Loan Group E's certificate balance has declined by approximately 35.8% since securitization due to the payoff of one loan and amortization of the remaining three loans. The largest loan in Group E is the Glenpointe Center East Loan ($32.0 million), which is secured by a 319,000 square foot Class A office complex located in Teaneck, New Jersey. Although the property is currently 100% occupied, the Teaneck office market has softened since securitization with an estimated current vacancy rate of 25%. Moody's LTV for Loan Group E is 65.4%, compared to 62.7% at last review. Loan Group F consists of three loans totaling $49.9 million and is the collateral for Classes E-6, F-6 and G-6. Loan Group F's certificate balance has declined by approximately 37.8% since securitization due to the payoff of one loan and amortization of the remaining three loans. The largest loan in Loan Group F is the SouthPark Towers Loan ($28 million), which is secured by a Class A office building located in Charlotte, North Carolina. The property is 80.0% occupied, essentially the same as at last review, compared to 98.4% at securitization. The performance of this property has improved slightly since last review. Moody's LTV for Loan Group F is 84.9%, compared to 90.3% at last review. Loan Group G consists of two loans totaling $42.8 million and is the collateral for Classes E-7, F-7 and G-7. Loan Group G's certificate balance has declined by approximately 50.3% since securitization due to the payoff of two loans and amortization of the remaining two loans. The largest loan in Loan Group G is the Capitol Place III Loan ($24.3 million), which is secured by a 303,000 square foot office building located in Washington, D.C. Moody's LTV for Loan Group G is 50.2%, compared to 66.5% at last review, resulting in an upgrade of Classes E-7, F-7 and G-7. Loan Group H consists of three loans totaling $64.4 million and is the collateral for Classes E-8, F-8 and G-8. Loan Group H's certificate balance has declined by approximately 25.0% since securitization due to the payoff of one loan and amortization of the remaining three loans. The largest loan in Loan Group H is the Stamford Square Loan ($31.3 million), which is secured by a 275,000 square foot Class A office building located in Stamford, Connecticut. The property is 100% occupied, the same as at securitization. Moody's LTV for Loan Group H is 65.1%, compared to 70.9% at last review, resulting in an upgrade of Classes E-8 and F-8. The pool's collateral is a mix of office, multifamily, retail and lodging. The collateral properties are located in 14 states and the District of Columbia. The highest state concentrations are New York, Washington, D.C., New Jersey, Connecticut and North Carolina. All of the loans are fixed rate. SAN JOAQUIN: Fitch Affirms BB Rating on $1.97 Bil. Revenue Bonds ---------------------------------------------------------------- Fitch Ratings has affirmed the underlying 'BB' ratings for these San Joaquin Hills Transportation Corridor Agency, California issues: -- $1.75 billion insured and uninsured toll road refunding revenue bonds, series 1997A; -- $226 million senior lien toll road revenue bonds, series 1993. The Rating Outlook is Stable. A portion of the series 1997A bonds is rated 'AAA' based on a guarantee of scheduled debt service payments under an insurance policy with MBIA Insurance Corporation (insurer financial strength rated 'AAA' by Fitch). The bonds were originally underwritten by Citigroup Global Markets Inc. The bonds are secured by a net pledge of toll revenue collected at the mainline and ramp toll plazas and a portion of development impact fees assessed in the corridor. The 'BB' rating reflects the strength of the SJHTCA's service area, management's demonstrated willingness to raise rates and act in the interest of bondholders, more economic rate-making flexibility than previously anticipated, slightly improved financial flexibility, and the project's role as a congestion reliever. The rating also incorporates the future financial challenges faced by the SJHTCA which are evidenced by the 64% increase in debt service obligations from fiscal year 2006-2012 and the nearly 100% increase by 2018. In addition, the SJHTCA will need to remain at its revenue maximization point for the foreseeable future to prevent a default, thus limiting its ability to deal with the loss of traffic from the construction of Foothill/South or short-to medium term disruptions from economic cycles between now and the final maturity of the debt in 2036. SJHTCA's experience with implementing consistent toll increases supports Fitch's view that such facilities have growing strength over time. In Fitch's base case scenario which assumes annual rate increases at or above inflation, but below levels implemented by the SJHTCA board over the past five years, traffic could be expected to continue to grow moderately over time and may very well provide the SJHTCA with enough revenue to prevent a default. Even under Fitch's stress case scenario which assumes much lower traffic and revenue growth, a payment default would be forestalled to 2025-2030, with liquidity draws beginning in 2012. Fitch does assume the receipt of $120 million in mitigation payments for the impact of the construction of Foothill/South, which will be made by the SHJTCA's sister agency the Foothill/Eastern Transportation Corridor Agency (F/ETCA) pursuant to a mitigation payment and loan agreement entered into by the two agencies in November 2005. Importantly, the base and stress scenarios do not assume the availability of loan proceeds from the F/ETCA, as Fitch believes that the high likelihood for construction increases on Foothill/South may limit the availability of surplus cash for the SJHTCA. Traffic on the facility was up 0.6% and 3.5% in fiscal years 2005 and 2006, respectively. While the growth rate is low, it was achieved despite an 18% increase in the average toll between fiscal 2004 and fiscal 2006. Traffic on the facility has grown at an average annual growth rate of about 12% between fiscal years 1997-2006 and reflects eight toll increases. Revenue was up 12.9% and 8.3% in fiscal years 2005 and 2006, respectively, and has increased at an AAGR of 19.2% between fiscal years 1997-2006. Excluding ramp-up in 1997-2000, revenue has grown at an AAGR of 9.8% between 2000 and 2006. Despite the substantial and frequent toll increases - the average toll has increased over 200% since the road opened - traffic has continued its slow growth every year, with fiscal 2001 being the only year in which traffic did not grow. In July of 2006, the mainline peak hour toll was increased by 14.3% ($0.50) and the off-peak mainline toll was increased by 8.3% ($0.25). Thus far traffic appears to be running at between 0-2% above fiscal 2006, with revenue up between 8-9%. Debt service coverage for fiscal 2006 - including the use of approximately $1 million from the rate stabilization fund and the $12 million available under the Federal letter of Credit - was 1.41 times (x). Coverage in fiscal 2005 was 1.42x assuming $2 million in the rate stabilization fund. Structured liquidity consists of the Toll Rate Stabilization Fund which had $2 million, the Debt Service Reserve Fund which had $133.5 million and Occupancy Fund which had $15 million in cash and $10 million in the form of a surety, all as of June 30, 2006. The San Joaquin Hills toll road is one of two projects managed by the Transportation Corridor Agencies of Orange County, California. While toll revenues are the primary source of income on the San Joaquin Hills toll road, net development impact fees are also pledged to the bonds. The TCA also manages the Foothill/Eastern toll roads. Fitch rates the Foothill/Eastern project bonds 'BBB.' SCOTTISH RE: Likely Notes' Non-Payment Prompts S&P to Cut Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on Scottish Re Group Ltd. to 'CCC' from 'B+' and kept the rating on CreditWatch with negative implications. Standard & Poor's also lowered its counterparty credit and financial strength ratings on Scottish Re's operating companies to 'B+' from 'BBB-' and kept them on CreditWatch with negative implications. In addition, Standard & Poor's raised its senior secured debt rating on Ballantyne Re plc's Class A-1 notes to 'AA' from 'BBB-' and removed the rating from CreditWatch developing. Standard & Poor's also raised its subordinated debt rating on Ballantyne's Class B-1 and B-2 notes to 'BBB+' from 'BBB-' and removed these ratings from CreditWatch developing. Ballantyne Re is a special-purpose reinsurer established by Scottish Re for the purpose of reinsuring certain policies assumed by Scottish Re from Security Life of Denver Insurance Co. (AA/Stable/A-1+). "The downgrade on Scottish Re reflects the increased possibility that the company will not repay the noteholders of $115 million of convertible notes, who are likely to exercise a put option on Dec. 6, 2006," Standard & Poor's credit analyst Neil Strauss said. "The payment of the noteholders from holding-company funds has been at risk since the summer, when the company announced poor second-quarter results." These results created an adverse event for its credit facility and thus disallowed funds being upstreamed from the operating companies, where liquidity would normally be available to the holding company. Although the company might be able to eliminate the credit facility outstanding balance and thereby cancel the bank agreement, there has only been slow incremental progress to that goal over the past several months, and the attainment of that goal is uncertain, as it depends on third parties whose sense of urgency and timing might lag Scottish Re's. In addition, although the company has stated that it is exploring strategic alternatives to either sell the company or receive a capital infusion, this process lags significantly the company's original timetable for resolution. Such a transaction remains possible and could have positive credit characteristics. However, attainment of such a deal is uncertain as well and dependent wholly on actions of third parties. The downgrade of the operating company reflects tight liquidity for the ongoing needs in the business. The company's recently released 10Q stated that Scottish Re runs the risk of its liquidity sources being outpaced by its liquidity needs as early as the end of second-quarter 2007 unless affirmative steps are taken to restructure or sell the business. The company's business plan had been to finance cash-flow needs from raising capital, securitizations, or both. However, in the company's current vulnerable position, neither can be counted on. Thus, a run-off scenario for this company would not be orderly, as cash flow could turn negative within the next year and stay negative for several years. In the event that a transaction is consummated prior to the Dec. 6 deadline to either raise liquidity to solve the immediate problem or a capital infusion is arranged to help towards solution of the longer term financing needs, Standard & Poor's would evaluate the ratings based on the terms of the transaction. Any final resolution would incorporate the viability of the franchise and business prospects following the events of the past several months. Standard & Poor's raised the ratings on Ballantyne after further conversations with Security Life of Denver, the sole cedent of the block of business contained in the structure. Standard & Poor's conclusion is that it can look directly through to Security Life of Denver as the relevant counterparty to this transaction. SEA CONTAINERS: Taps Sidley Austin as Bankruptcy Counsel -------------------------------------------------------- Sea Containers Ltd. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Sidley Austin LLP as their general reorganization and bankruptcy counsel, nunc pro tunc to Oct. 15, 2006. Edwin S. Hetherington, vice president, general counsel and secretary of Sea Containers, Ltd., states that in the months leading up to the Petition Date, Sidley has been advising the Debtors on restructuring and insolvency issues, including factors pertinent to the commencement of the Debtors' Chapter 11 cases, as well as on general corporate, banking and litigation matters. Mr. Hetherington adds the Debtors' Chapter 11 cases are complex and require counsel with extensive experience in bankruptcy, insolvency and restructuring matters, including cross-border insolvency issues, as well as specialized and substantial experience in litigation, corporate, real estate, intellectual property, employment, banking and tax law. As the Debtors' general counsel, Sidley will: (a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their businesses; (b) take all necessary action on the Debtors' behalf to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, negotiating any and all litigation in which the Debtors are involved, and objecting to claims filed against the Debtors' estates; (c) prepare, on the Debtors' behalf, all necessary motions, answers, orders, reports, and other legal papers in connection with the administration of the Debtors' estates; (d) attend meetings and negotiate with representatives of creditors and other parties-in-interest, attend court hearings, and advise the Debtors on the conduct of their Chapter 11 cases; (e) perform any and all other legal services for the Debtors in connection with their Chapter 11 cases and with the formulation and implementation of the Debtors' plan of reorganization; (f) advise and assist the Debtors regarding all aspects of the plan confirmation process, including, but not limited to, securing the approval of a disclosure statement, soliciting votes in support of plan confirmation, and securing confirmation of the plan; (g) provide legal advice and representation with respect to various obligations of the Debtors and their directors and officers; (h) provide legal advice and perform legal services with respect to matters involving the negotiation of the terms and the issuance of corporate securities, matters relating to corporate governance and interpretation, application or amendment of the Debtors' corporate documents, including their certificates or articles of incorporation, bylaws, material contracts, and matters involving the fiduciary duties of the Debtors and their officers and directors; (i) provide legal advice and legal services to directors and officers, including former directors and officers, of the Debtors with respect to the class action securities litigation; (j) provide legal advice and legal services with respect to litigation, tax and other general non-bankruptcy legal issues for the Debtors to the extent requested by the Debtors; and (k) render other services, as agreed upon by Sidley and the Debtors. Mr. Hetherington relates that Sidley is a full-service law firm with a national and international presence -- with lawyers in major cities throughout the United States, Europe and Asia. He adds that the firm has experience and expertise in every major substantive area of legal practice, and its clients include leading public companies and privately held businesses in a variety of industries and major nonprofit organizations. Sidley intends to charge the Debtors for its legal services on an hourly basis. Mr. Hetherington tells the Court that the firm's professionals bill: Designation Hourly Rates ----------- --------------- U.S.-based partners $415 - $850 U.S.-based associates $190 - $495 U.S.-based paraprofessionals $25 - $240 U.K.-based partners GBP450 - GBP550 U.K.-based associates GBP195 - GBP410 U.K.-based paraprofessionals GBP110 - GBP140 As of the Petition Date, Sidley held a $402,969 retainer. Sidley received $5,663,079 in fees and $229,489 in expenses within one year prior to the Petition Date. Larry J. Nyhan, Esq., a partner at Sidley Austin LLP, assures the Court that the firm does not hold or represent any interest adverse to the Debtors' estates in matters upon which it is to be engaged and it is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Hetherington also relates that Sidley represented and still represents GE Capital Corporation and some of its subsidiaries in matters unrelated to the Debtors or their Chapter 11 cases. GE owns 50% of the outstanding equity interests of GE Seaco, of which SCL is also a co-owner. Mr. Hetherington says Sidley is not precluded from representing the Debtors in all restructuring and bankruptcy matters, and taking positions on SCL's behalf in bankruptcy matters involving GE, both in negotiations and in pleadings, including confirmation of a plan of reorganization. Mr. Hetherington discloses the Debtors seek to employ Kirkland & Ellis LLP as their special conflicts litigation counsel for the sole and limited purpose of representing SCL in any litigation or arbitration against or involving GE. About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported US$1.7 billion in total assets and US$1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: U.S. Trustee Appoints Seven-Member Creditors Panel ------------------------------------------------------------------ Pursuant to Section 1102(a)(1) of the Bankruptcy Code, Kelly B. Stapleton, the United States Trustee for Region 3, has appointed seven creditors willing to serve on the Official Committee of Unsecured Creditors in Sea Containers, Ltd., and its debtor- affiliates' Chapter 11 cases: 1. Bank of New York 101 Barclay Street-8 West New York, NY 10286 Attn: Martin Feig, Vice President Phone: (212) 815-5385 Fax: (732) 667-4767 2. Sea Containers 1983 Pension Scheme Aspen Trustees, Ltd. 303-306 High Holbern London WCIV 7J2, United Kingdom Attn: Jane Kathryn Fryer Phone: (44) 207-430-0734 Fax: (44) 207-430-0525 3. Sea Containers 1990 Pension Scheme c/o Ferrington Yates, Esq. Sonnenschein Nath & Rosenthal LLP 1221 Avenue of the Americas New York, NY 10020 Phone: (212) 768-6878 Fax: (212) 768-6800 4. HSH Nordbank AG Gerhart-Hauptmann-Platz 50 Hamburg, Germany D20095 Attn: Jorg-Rainer Kalz Phone: (9) 40-3333-13561 Fax: (9) 40-3333-13561 5. Trilogy Capital LLC 2 Pickwick Plaza Greenwich, CT 06830 Attn: Barry D. Kupferberg Phone: (203) 971-3420 Fax: (203) 971-3499 6. Dune Capital LLC c/o Dune Capital Management LP 623 Fifth Avenue, 30th Floor New York, NY 10022 Attn: Andrew B. Cohen Phone: (212) 301-8308 Fax: (646) 885-2473 7. Mariner Investment Group, Inc. 500 Mamaroneck Avenue, Suite 101 Harrison, NY 10528 Attn: Adam S. Cohen Phone: (914) 798-4234 Fax: (914) 777-3363 About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported US$1.7 billion in total assets and US$1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by SoundView Home Loan Trust 2006-WF1, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Wells Fargo Bank, N.A. originated adjustable-rate and fixed-rate Alt-A mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection from subordination, excess spread, overcollateralization, an interest rate swap agreement and mortgage insurance. After taking into account the benefits of mortgage insurance, Moody's expects collateral losses to range from 2.45% to 2.95%. Wells Fargo Bank, N.A. will service the loans. Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 for prime residential mortgage loans. These are the rating actions: * SoundView Home Loan Trust 2006-WF1 * Asset-Backed Certificates, Series 2006-WF1 Cl. A-1A, Assigned Aaa Cl. A-2, Assigned Aaa Cl. A-3, Assigned Aaa Cl. A-4, Assigned Aaa Cl. A-1F, 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 SPECIALTYCHEM PRODUCTS: Sells All Assets to Resilience Capital -------------------------------------------------------------- Resilience Capital Partners has completed the acquisition of substantially all of the assets of SpecialtyChem Products Corporation. The new company will be known as ChemDesign Products, Inc. Bassem Mansour, a managing partner of Resilience Capital Partners, said, "We are thankful to the company's dedicated employees, suppliers and customers for their continued support and commitment to the business. We are excited about the growth prospects of SpecialtyChem and believe that we can help achieve those goals with proper capitalization and support for the organization," "We are enthusiastic about our new ownership under Resilience Capital and continue to believe that SpecialtyChem is well positioned to be a leader in the fine and specialty chemical marketplace," Dave Mielke, president of SpecialtyChem, said. "SpecialtyChem serves an important niche in the fine chemicals industry with a blue chip customer base. We are highly confident that the Marinette facility can return to the profitable position it had achieved in the past," Steven Rosen, a Managing Partner of Resilience Capital Partners, said. About Resilience Capital Partners Resilience Capital Partners -- http://www.resiliencecapital.com/- - is a private equity firm based in Cleveland, Ohio focused on investing in underperforming and turnaround situations. Resilience's investment strategy is to acquire lower middle market companies that have solid fundamental business prospects, but have suffered from a cyclical industry downturn, are under-capitalized, or have less than adequate management resources. Resilience typically acquires companies with revenues of $25 million to $250 million. Resilience manages two private equity funds with capital under management of over $75 million. Since its inception in 2001, Resilience has acquired 11 companies with revenues in excess of $600 million. About ChemDesign Corporation Headquartered in Fitchburg, Massachusetts, ChemDesign Corporation -- http://www.chemdesigncorp.com/-- is a custom manufacturer of various fine organic chemicals for paper products, electronics, agricultural products and other materials. The Debtor filed for chapter 11 protection on Aug. 27, 2006 (Bankr. E.D. Wis. Case No. 06-24729. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. About SpecialtyChem Products Headquartered in Marinette, Wisconsin, SpecialtyChem Products, Corp., manufactures various organic chemicals for paper products, electronics, agricultural products and other materials. The company filed for chapter 11 protection on June 12, 2006 (Bankr. E.D. Wis. Case No. 06-23131). Christopher J. Stroebel, Esq., Timothy F. Nixon and Marie L. Nienhuis, Esq., at Godfrey & Kahn, S.C., represent the Debtor in its restructuring efforts. Fort Dearborn Partners, Inc., is the Debtor's turnaround consultant, and gives financial advice to the Debtor. Matthew M. Beier, Esq., and Eliza M. Reyes, Esq., at Brennan, Steil and Basting, S.C., and Matthew T. Gensburg, Esq., and Nancy A. Peterman, Esq., at Greenberg Traurig, L.L.P., represent the Official Committee of Unsecured Creditors of the Debtor. In its schedule of assets and liabilities, the Debtor disclosed $11,394,224 in total assets and $12,323,425 in total debts. STRUCTURED ASSET: S&P Puts Default Rating on Two Security Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two classes of mortgage-backed securities from Structured Asset Securities Corp. Mortgage Loan Trust's series 2004-S4 and 2005-S5 to 'D' from 'CCC'. The ratings on class B-3 from series 2004-S4 and class B-4 from series 2005-S5 are lowered to 'D' due to principal write-downs of $105,389 and $550,203, respectively, during the October 2006 remittance period. The principal write-downs occurred because the transactions experienced losses of $1.3 million for series 2004-S4 and $2.1 million for series 2005-S5, which completely eroded the overcollateralization available. Total delinquencies were 5.89% for series 2005-S5 and 11.20% for series 2004-S4, and cumulative realized losses were 2.60% for series 2004-S4 and 2.85% for series 2005-S5. The collateral in these transactions consists of pools of conventional, fixed-rate, second-lien, fully amortizing and balloon residential mortgage loans. Ratings Lowered Structured Asset Securities Corp. Mortgage Loan Trust Rating Series Class To From ------ ----- -- ---- 2004-S4 B-3 D CCC 2005-S5 B-4 D CCC SUSAN GREENFIELD: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Susan P. Greenfield 1580 Sandpiper Cir Weston, FL 33327 Bankruptcy Case No.: 06-15885 Type of Business: The Debtor filed for chapter 11 protection on April 14, 2006 (Bankr. S.D. Fla. Case No. 06- 11381). Chapter 11 Petition Date: November 15, 2006 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Sherri B. Simpson, Esq. Sherri B. Simpson, P.A. 517 Southwest 1 Avenue Fort Lauderdale, FL 33301 Tel: (954) 524-4141 Fax: (954) 763-5117 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Honk Food International Final Judgment for $2,068,827 S. De R.L. appealed damages c/o Robert Goldman, Esq. 1 East Broward Boulevard Suite 700 Fort Lauderdale, FL 33301 Florida Department of Court Ordered $72,169 Court Ordered Payments Restitution P.O. Box 12300 Tallahassee, FL 32317-2300 Bank of America Charge Account $14,420 P.O. Box 1598 Norfolk, VA 23501 Amex Credit Card Purchase $11,381 MBNA America Credit Card Purchase $3,404 Afni, Inc. Collection Sprint $1,533 Merchant's Credit Guide Co. Collection - Shell Oil $1,194 Central Finl. Control Collection - Cleveland $890 Clinic Hospital Sterling & King Inc. Collection - $801 Carotrans Intl. Inc. CBE Group Collection Dish $746 Network KCA financial Services Collection - $599 MCI/Worldcom Professional Adjustment Collection - $377 Zephyrhills Spr. Internal Revenue Service 2004 & 2002 Audit Unknown TAPESTRY PHARMA: Posts $3.6 Mil. Net Loss in Qtr. Ended Sept. 27 ---------------------------------------------------------------- Tapestry Pharmaceuticals, Inc., reported a $3.6 million net loss for the third quarter of 2006 ended Sept. 27, 2006. This compares to a net loss for the third quarter of 2005 of $5.5 million. The operating loss for the third quarter of 2006 was $3.8 million compared to an operating loss of $4.7 million for the third quarter of 2005. The third quarter 2006 operating loss includes a non-cash compensation expense of $593,000 related to the Company's implementation in 2006 of SFAS 123(R), which requires the expensing of employee stock options. The company did not generate any revenue and had an accumulated deficit of $119.4 million as of Sept. 27, 2006. The Company's balance sheet at Sept. 27, 2006, showed $30,209,000 in total assets, $4,770,000 in total liabilities, and stockholders' equity of $25,439,000. As of Sept. 27, 2006, Tapestry had $28.2 million in cash, cash equivalents, and short-term investments. A full-text copy of the company's quarterly report is available for free at http://researcharchives.com/t/s?1509 "We have focused virtually all of our monthly cash spend on advancing our lead compound, TPI 287, a third generation proprietary taxane, into broad clinical development against a number of drug resistant solid tumors," commented Leonard P. Shaykin, Chairman and Chief Executive Officer of Tapestry Pharmaceuticals. "Having reached MTD (the maximum tolerated dose) in our once every 21 day Phase I trial, the company is moving expeditiously to initiate our first Phase II trials at identified participating clinical sites. Additional patients are currently being added to our 21 day Phase I protocol at MTD to give us more clinical experience with the compound at this dosing schedule. We continue to escalate in the weekly times three Phase I dosing regime to reach MTD. We hope to present the data from both of these Phase I studies at the next ASCO meeting in June 2007," added Mr. Shaykin. "We expect to begin treating patients in our first Phase II trials of TPI 287 in both prostate and non-small cell lung cancer in the first quarter of next year. Additional Phase II studies in other indications will follow shortly thereafter. Since our compound is a taxane, and active preclinically in many resistant solid tumor cell lines, our Phase II program is designed to determine in what tumor type our compound should be advanced for Phase III studies. As we recruit patients for these multiple Phase II studies we will see an increase in our clinical spending." Going Concern Doubt As reported in the Troubled Company Reporter on March 21, 2006, Grant Thornton LLP raised going concern doubts about Tapestry Pharmaceuticals' ability to continue as a going concern after auditing its financial statements for the year ending December 28, 2005. The Company had no revenue and incurred a $17,538,000 net loss during the year ended December 28, 2005, and, as of that date, reported an accumulated deficit of $107,262,000. Cash and short- term investments on hand totaled $14,086,000 at Dec. 28, 2005. About Tapestry Pharmaceuticals Based in Boulder, Colorado, Tapestry Pharmaceuticals, Inc. -- http://www.tapestrypharma.com/-- develops proprietary therapies for the treatment of cancer. The Company is also actively engaged in evaluating new therapeutic agents and/or related technologies. TECHNICAL OLYMPIC: Write-Offs Cue Moody's to Downgrade All Ratings ------------------------------------------------------------------ Moody's Investors Service downgraded all of the ratings of Technical Olympic USA, Inc., including its corporate family rating to B1 from Ba3, senior unsecured notes to B2 from Ba3 and its senior subordinated notes to B3 from B2. At the same time, Moody's lowered the Loss-Given Default assessment and rate on the senior unsecured notes to LGD4, 58% from LGD4, 53%, and on the subordinated notes to LGD5, 88% from LGD5, 87%. The ratings remain on review for downgrade, an action that was commenced on Sept. 27, 2006. The downgrades were triggered by the estimated $204 million in aggregate write-offs that TOA will take in its third quarter, broken down into $143.6 million of impairment related to its Transeastern joint venture as well as approximately $60 million of additional land impairment and option abandonment charges at both its consolidated entities and at its other joint venture operations. In addition, TOA has in place certain completion guarantees at the Transeastern joint venture, which could translate into additional charges, as well as the necessity to defend against, or settle, a lawsuit from Transeastern's lead banker. As a result, debt leverage metrics are likely to weaken even as earnings-based metrics continue to erode. The downgrades also consider that although the company is attempting to pare back its land position, the total number of lots that it owns and controls at quarter-end equates to a land supply that approximates eight years--a land inventory position that is simply untenable in the current market. The ratings remain on review for downgrade, in large part reflecting Moody's expectation that earnings in 2007 will decline significantly from depressed 2006 levels, and that covenant compliance may become challenging if the company's currently weak operating environment is protracted. In addition, management's ability to build liquidity and reduce debt leverage in the face of a downturn of unknown breadth and duration is as yet unproven. Going forward, the ratings could be reduced again if any of the following were to occur: (a) if the company were to begin generating losses from continuing operations; (b) if the company were required to obtain waivers in order to comply with its financial covenants; (c) if cash flow were to remain negative; (d) if the equity base were to be significantly reduced from current levels; or, (v) if debt leverage were to exceed 65%. The ratings outlook could stabilize if the company's land position were to be reduced significantly, positive cash flow were to be generated, the equity base strengthened, and debt levels reduced. These are the rating actions: -- Corporate family rating changed to B1 from Ba3 -- Probability of default rating changed to B1 from Ba3 -- Senior unsecured note ratings changed to B2 from Ba3 -- LGD assessment and rate on the senior unsecured notes changed to LGD4, 58% from LGD4, 53% -- Senior subordinated note ratings changed to B3 from B2 -- LGD assessment and rate on the senior subordinated notes changed at LGD5, 88% from LGD5, 87%. Headquartered in Hollywood, Florida, Technical Olympic USA, Inc. builds and sells single family homes largely for the move-up homebuyer. It also operates captive mortgage origination and title insurance service companies. It is 67%- owned by Technical Olympic S.A. Revenues and net income for 2005 were approximately $2.5 billion and $218 million, respectively. TELCORDIA TECH: Weak Revenue Prompts S&P to Lower Ratings --------------------------------------------------------- Standard & Poor's Rating Services lowered its ratings on Piscataway, New Jersey-based Telcordia Technologies Inc. and removed them from CreditWatch, where they were placed with negative implications Sept. 29, 2006. The corporate credit rating was lowered to 'B' from 'B+', and the rating outlook is negative. "The ratings downgrade reflects weakness in revenue, EBITDA, and liquidity, which is expected to continue over the near term," said Standard & Poor's credit analyst Stephanie Crane. "We also expect a moderate increase in financial leverage, with limited prospects for debt payment in the near term coming from free cash flow." The ratings reflect Telcordia's vulnerable business profile, with its narrow and mature addressed market and significant customer concentration, as well as its leveraged financial profile. The ratings are, however, supported by a leading position in providing products and services for regional Bell operating companies and global carriers. Telcordia faces a number of challenges across several business units. These include a currently weaker-than-historical telecom industry spending environment, as well as consolidation within the RBOCs--a key client base for Telcordia. Also, the company's focus on growth markets have yet to achieve the scale needed for profitability, and its core business is subject to ongoing pricing pressures. Standard & Poor's expect full-year fiscal 2007 adjusted EBITDA margins to continue in the 20% area, despite lower revenue than previously anticipated, ongoing pricing pressures, and the costs associated with expansion into new markets. This reflects cost- control vigilance and a shift toward offshoring to India. Including Standard & Poor's adjustment for operating leases and pension obligations, total debt to adjusted EBITDA is around 6.2x, ahead of 5.7x levels as of fiscal 2006. THERMA-WAVE INC: Second Fiscal Qtr. Net Loss Narrows to $1.95 Mil. ------------------------------------------------------------------ Therma-Wave Inc. filed its financial statements for the second fiscal quarter ended Oct. 1, 2006, with the Securities and Exchange Commission on Nov. 8, 2006. Net revenues for the fiscal second quarter 2007 were $15.8 million, down $2.1 million or 12% sequentially from $17.9 million recorded in the fiscal first quarter 2007. Net revenues declined $1.5 million, or 9%, from the $17.3 million reported for the fiscal second quarter of 2006. Net loss attributable to common stockholders for the 2007 second fiscal quarter was $1.95 million including approximately $450,000 in stock-based compensation costs recorded in accordance with Statement of Financial Accounting Standards No. 123(R), and approximately $77,000 in restructuring charges. Sequentially, net loss attributable to common stockholders increased by $820,000 compared with a net loss attributable to common stockholders of $1.13 million in the fiscal first quarter of 2007. In the year ago period, the Company reported a net loss attributable to common stockholders of $4.15 million including the impact of restructuring charges totaling $2.26 million. Boris Lipkin, Therma-Wave's president and chief executive officer, stated, "Our fiscal second quarter performance was highlighted by bottom line results within our stated guidance range and cash utilization which was slightly better than anticipated. "Revenues were below forecast primarily due to a shipment push out based on a revised customer delivery requirement, an increase in deferred systems revenue and lower than anticipated upgrade revenues. "During the quarter, Therma-Wave received a number of repeat orders for our leading edge metrology offerings, with new bookings for the period coming in at $18.8 million. "New orders were slightly below our original forecast primarily due to the delay in the release of a significant multi-unit tool order by one of our customers. "I am pleased to say that we have already received a significant portion of this new order in October and expect the remainder to be recorded during the current quarter. "We continue to make progress on our next generation Opti-Probe line of precision measurement tools for the 45nm technology node and beyond in the areas of thin film and optical critical dimension metrology. "During September, we accepted the first production orders for our 45nm Opti-Probe tools based on successful customer demonstrations. These orders were received before we shipped our first evaluation tool in October to a customer. "This marks an important milestone in our next generation 45nm product launch cycle and reflects the confidence our customers have in our ability to provide the tools critical to their most important next generation metrology production needs," Mr. Lipkin concluded. Gross margin for the fiscal second quarter 2007 was 38.5% compared with 38.3% in the fiscal first quarter 2007 and 34.4% in the year ago period. Cash and cash equivalents totaled $17.5 million as of Oct. 1, 2006, reflecting cash utilization of $1.4 million during the second fiscal quarter. At Oct. 1, 2006, the Company's balance sheet showed $59.749 million in total assets, $36.559 million in total liabilities, $7.260 million in redeemable convertible preferred stock, and $15.930 million in total stockholders' equity. Full-text copies of the Company's second fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?150a Going Concern Doubt As reported in the Troubled Company Reporter on June 20, 2006, PricewaterhouseCoopers, LLP, in San Jose, California, raised substantial doubt about Therma-Wave, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended April 2, 2006. The auditor pointed to the Company's recurring net losses and negative cash flows from operations. About Therma-Wave Based in Fremont, California, Therma-Wave, Inc. (NASDAQ: TWAV) -- http://www.thermawave.com/-- develops, manufactures and markets process control metrology systems used in the manufacture of semiconductors. Therma-Wave offers products to the semiconductor manufacturing industry for the measurement of transparent and semi-transparent thin films; for the measurement of critical dimensions and profile of IC features and for the monitoring of ion implantation. THOMAS HULING: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Thomas S. Huling Diana M. Huling 1815 Boulder Springs Drive, Apartment D Saint Louis, MO 63146 Bankruptcy Case No.: 06-45568 Chapter 11 Petition Date: November 14, 2006 Court: Eastern District of Missouri (St. Louis) Judge: Kathy A. Surratt-States Debtors' Counsel: Bonnie L. Clair, Esq. Summers, Compton, Wells & Hamburg, P.C. 8909 Ladue Road St. Louis, MO 63124 Tel: (314) 991-4999 Fax: (314) 991-2413 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtors' 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Business Bank of 1943 Wright Street $223,612 St. Louis St. Louis, MO, Rental/ Secured: 8000 Maryland Investment Property $185,000 Saint Louis, MO 63105 $7628 Pa., St. Louis, $34,869 MO, Foreclosed, 7/27/2006 Deficiency Balance Business Debt 142 North Main Street $241,496 St. Charles, MO 63301 Foreclosed, Deficiency Balance, Business Debt 5627 Chamberlain Avenue $112,000 St. Louis, MO 63112 Business Debt Private Bank 2201 Atwater, St. Louis $264,000 1401 South Brentwood MO, Foreclosed, Boulevard Deficiency Balance, Saint Louis, MO 63144 Business Debt Lindell Bank 10192 Baron 1328 Colby $174,524 5500 Mexico Road 5538 Hodiamont 10015 Saint Peters, MO 63376 Monarch Foreclosed Deficiency balance, Business Debt 3931 Ohio, St. Louis $77,010 MO 63118 Frank Anselmo $250,000 430 Nantucket Saint Charles, MO 63301 Eagle Bank 2720-24 Chippewa $177,477 P.O. Box 128 Festus, MO 63028 New Frontier 4055-57 Botanical, $88,500 St. Louis, MO 63110 Foreclosed Deficiency Balance, Business Debt King Commercial Leasing Potential Guarantee/ $73,309 Deficiency Balance of Equipment lease/purchase, Business Debt King Commercial Leasing Potential Guarantee/ $63,978 Deficiency Balance of Equipment lease/purchase, Business Debt Chase Home Finance, LLC 3736 Oregon Avenue $55,023 St. Louis, MO 63118 Deficiency Balance, Business Debt Jefferson Bank & Trust 3507 Central, St. Louis $53,942 MO 63133, Foreclosed Citizens National Bank Deficiency Balance, $52,623 Business Debt Private Bank 6331 Hancock, St. Louis $48,000 MO, Foreclosed, Deficiency Balance, Business Debt Washington Mutual Home Loans 4346 Humphrey $42,400 St. Louis, MO 63116 Business Debt St. Louis County Real Estate Taxes $37,337 3145 Fee Fee Road Business Debt Gateway Bank of St. Louis 4100 2-5 Cleveland, $35,530 St. Louis, MO 63110 Foreclosed 6/28/2006 Deficiency Balance, Business Debt TRANSMERIDIAN EXPLORATION: $290 Mil. Sr. Notes Trading at Discount ------------------------------------------------------------------ Transmeridian Exploration Inc.'s $290 million of 12% senior secured notes due 2010 are trading at a discount -- 93.75% of the bond's face amount. Currently, the bonds have a yield slightly above 14%. The Company posted 15 quarters of successive losses. In its latest filing with the Securities and Exchange Commission, the Company reported a $14.235 million net loss on $7.755 million of revenues for the third quarter ended Sept. 30, 2006, compared with a $2.523 million net loss on $3.852 million of revenues in the comparable period of 2005. At Sept. 30, 2006, the Company's balance sheet showed $315.681 million in total assets, $277.323 million in total liabilities, and $38.358 million in total stockholders' equity. The Company had $78.259 million of accumulated deficit at Sept. 30, 2006, compared with $37.686 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?152a Lorrie T. Olivier is the Company's chairman of the board, president, and chief executive officer. Earl W. McNiel is the Company's chief financial officer. Transmeridian Exploration Incorporated (AMEX: TMY) is an independent energy company established to acquire and develop identified and underdeveloped oil reserves in the region around the Caspian Sea. Transmeridian targets medium sized fields with low initial entry costs, identified reserves, significant upside reserve potential and a quick payback period of two to three years and which offer the likelihood of lower than average international finding costs. Transmeridian's primary oil and gas property is the South Alibek Field, in which the company holds a 100% interest through its subsidiary CaspiNeftTME in Kazakhstan. TRIPOS INC: Posts $4.4 Million Net Loss in 2006 Third Quarter ------------------------------------------------------------- Tripos, Inc., reported financial results for the third quarter of the fiscal year ended Sept. 30, 2006. For the three months ended Sept. 30, 2006, the Company reported a net loss of $4.4 million on $7.7 million of revenue compared with net income of $160,000 on $13.2 million of revenue for the third quarter of 2005. Financial results for the third quarter were impacted by several factors. Most significant among these was the continued losses at the Tripos Discovery Research, Ltd., chemistry facility in England due to the failure to close the anticipated pipeline of business. The company incurred a restructuring charge of $338,000 for the elimination of 14 positions in August at the Tripos Discovery Research facility. In addition, Tripos has conducted a further reduction of positions at this facility in the fourth quarter of 2006 with an expected charge of $500,000. Also impacting the quarter was the delay in recognition of approximately $1.4 million of revenues on the informatics service contract with Wyeth Pharmaceuticals. This delayed revenue recognition was the result of a delay in the project plan and incremental costs required for completion of the assignment. The third quarter of 2006 also included certain expenses related to actions taken to better position the informatics products business going forward. Tripos initiated the replacement of two distributors in the Pacific Rim territory and launched a promotional offer for a new software product, Surflex-Dock(TM), which provides an incentive for customers to adopt this technology before the end of 2006. "We were extremely disappointed with the third-quarter results. New business that had been anticipated did not develop as forecasted," said Dr. John P. McAlister, president and CEO of Tripos. "Throughout this year, we have dealt with the rapid realignment of the market for outsourced discovery research services to the low-cost venues in Asia and Eastern Europe. As a result, we have continued to take steps to streamline the Discovery Research organization as revenue expectations have changed while we have sought to build a project pipeline with existing customers and attract new business. In spite of the cost-based competition, Tripos leverages the superior science of its proprietary chemistry techniques, particularly for midsize pharmaceutical companies and biotechnology organizations." "Tripos' discovery informatics products business is expanding and updating its offerings to leverage new scientific applications and improved user functionality. During this period, we have introduced new scientific offerings for computational drug discovery and protein modelling. Discovery informatics services is also transitioning its approach to the services business with the unveiling of the Benchware(R) Discovery 360 enterprise solution, the release of the latest generation of Benchware Notebook as well as leading broad adoption and support of open- source workflow software," Mr. McAlister concluded. Strategic Alternatives Update In addition to announcing its third-quarter financial results today, Tripos also provided an update on its efforts to explore strategic alternatives. These options include pursuing merger and acquisition transactions, becoming a private company, and separating the discovery informatics and discovery research businesses. After extensive activity to identify strategic partners and comprehensive consideration by the Board of Directors, Tripos has determined to exit the discovery research business. Tripos will proceed as a stand-alone public Discovery Informatics business unless it is able to negotiate and conclude a transaction to sell the Discovery Informatics business. With respect to Tripos' Discovery Research business, Tripos: * Has completed further staffing reductions at Tripos Discovery Research. * Is currently engaged in advanced discussions for the sale of the U.K.-based Discovery Research business. The buyer would assume substantially all of the assets and liabilities of that business. * Is in the process of selling certain surplus real estate in the U.K. With respect to Tripos' Discovery Informatics business, Tripos: * Is working to restructure the Discovery Informatics business as a public company to continue to provide software and enterprise solutions to the pharmaceutical and biotechnology industries. * As part of the restructuring, the company is seeking funding for the near-term capital needs of the Discovery Informatics business, either through replacement of its bank credit facility, which matures Jan. 1, 2007, or through the proceeds of other debt or equity financings, any of which may be dilutive to the interests of current stockholders. * Continues to evaluate possible sale transactions, and is currently in advanced discussions with a potential buyer for the Discovery Informatics business. The Company says that there is no assurance that any of the matters described might pursue might ultimately lead to a transaction on terms acceptable to the Tripos board or, where applicable, Tripos stockholders. Similarly, Tripos cannot predict the ultimate proceeds available for stockholders if it is able to sell its Discovery Research and Discovery Informatics business, nor can Tripos predict the price at which its common stock would trade if it continues to operate as a public company focused on Discovery Informatics. Commenting on these developments, Dr. McAlister said, "Our board and management have developed a plan intended to preserve the current value of our Discovery Informatics business and, over time, to provide increased value to our stockholders. We are mindful that over the course of 2006, our stockholders have been very patient with us. They have witnessed a substantial decline in our stock price, while we have not been able to complete a transaction that might result in any immediate value or liquidity to our stockholders. Although we continue to seek a possible sale of our Discovery Informatics business, we think it is prudent to structure the business so that it can operate on a standalone basis in order to preserve, and over time enhance, shareholder value." Dr. McAlister added, "Following the January 2006 announcement of intent to explore our strategic alternatives, we have participated in active discussions with a large number of potential strategic and financial investors throughout North America, Europe and Asia. Among the proposals we received, we have engaged in extensive, and in some cases, advanced negotiation with several parties, but to date none of these negotiations have resulted in a definitive agreement that our board was willing to accept and recommend to stockholders. Initial efforts to sell our entire company caused us to maintain staffing levels at our Discovery Research business that resulted in significant losses. More recently, we have restructured that business in anticipation of a separate transaction to divest these activities." "We continue to believe in the benefits of an integrated platform of discovery informatics tools and discovery research services. However, given Tripos' size and capital resources in the context of the rapidly changing market for outsourced research services, we have determined that it was more appropriate to concentrate on our core discovery informatics business." Tripos, Inc. -- http://www.tripos.com/-- (Nasdaq:TRPS) combines leading-edge technology and innovative science to deliver consistently superior chemistry-research products and services for the biotechnology, pharmaceutical and other life science industries. Within Tripos' Discovery Informatics business, the company provides software products and consulting services to develop, manage, analyze and share critical drug discovery information. Within Tripos' Discovery Research business, Tripos' medicinal chemists and research scientists partner directly with clients in their research initiatives, leveraging state-of-the-art information technologies and research facilities. TRIPOS INC: Wants Waiver on Covenant Violation from LaSalle Bank ---------------------------------------------------------------- Tripos, Inc., disclosed that due to the financial performance of the third quarter of 2006, the Company was not in compliance with the Minimum Net Worth covenant under its credit facility with LaSalle Bank N.A. The company has requested a waiver of the covenant violation for the period ended Sept. 30, 2006; however, there are no assurances that the bank will grant the waiver or what additional terms might be imposed in connection with a waiver. In addition, the LaSalle Bank facility matures Jan. 1, 2007. LaSalle Bank has advised Tripos that it does not intend to renew or extend the revolving credit facility beyond Jan. 1, 2007. Tripos' ability to fund the anticipated capital and operating needs of its business following maturity of the LaSalle Bank facility is dependent on the replacement of this facility or the ability to secure alternative bank or other debt financing or equity funding as well as on operating improvement. Nevertheless, Tripos has requested an extension from LaSalle Bank to enable the company to complete certain strategic transactions that are currently under negotiation. Tripos, Inc. -- http://www.tripos.com/-- (Nasdaq:TRPS) combines leading-edge technology and innovative science to deliver consistently superior chemistry-research products and services for the biotechnology, pharmaceutical and other life science industries. Within Tripos' Discovery Informatics business, the company provides software products and consulting services to develop, manage, analyze and share critical drug discovery information. Within Tripos' Discovery Research business, Tripos' medicinal chemists and research scientists partner directly with clients in their research initiatives, leveraging state-of-the-art information technologies and research facilities. TUBE CITY: Onex Partners Offer Prompts S&P's Negative Watch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+' corporate credit rating, on Tube City IMS Corp. on CreditWatch with negative implications. The action followed the announcement that Onex Partners, a private equity fund managed by Toronto-based investment company Onex Corp., has agreed to acquire the outstanding stock of Tube City for approximately $637 million in cash and assumed debt. "The CreditWatch placement reflects our concern regarding an increase in debt leverage to an already highly leveraged capital structure," Standard & Poor's credit analyst Marie Shmaruk said. "We could lower ratings on the Tube City IMS if the financing of the proposed transaction further increases financial leverage and pressures credit metrics. The rating could be affirmed if financial leverage remains unchanged and liquidity is enhanced." Tube City IMS provides services to North American steel producers, including raw materials procurement, on-site scrap and material management and slag processing services under long-term contracts to steel mills in the U.S., Canada, and Europe. Resolution of the CreditWatch will entail a review of Onex Corp.'s financial policies and Tube City IMS' revised capital structure. The transaction is expected to close in early 2007. TYSON FOODS: Incurs $56 Million Net Loss in 2006 Fourth Quarter --------------------------------------------------------------- Tyson Foods Inc. reported operating loss of $20 million compared to operating income of $188 million, and net loss of $56 million compared to net income of $117 million, respectively, for the fourth quarter of fiscal 2006 and 2005. Fourth quarter 2006 and 2005 sales were both $6.5 billion. Sales for fiscal 2006 were $25.6 billion compared to $26.0 billion for last year. Operating loss was $77 million compared to operating income of $745 million, and net loss was $196 million compared to net income of $372 million, respectively, for fiscal 2006 and 2005. During the fourth quarter of fiscal 2006, the Company recorded pretax charges totaling $23 million associated with the Company's previously announced $200 million cost reduction initiative, plant closing costs and other business consolidation efforts. These charges included severance expenses, product rationalization costs and other asset impairment related expenses. The Company previously recorded plant-closing costs of $59 million for the first nine months of fiscal 2006. The Company previously began a review in the fourth quarter of fiscal 2006 of its tax account balances as a result of differences noted in deferred tax liabilities related to temporary book to tax differences. At the time of the previous announcement, the Company disclosed the tax effect of the aggregated basis differences was an understatement of approximately $22 million. While the Company is nearing completion, the review is not yet final. Based upon the information available at this time, the Company recorded a charge in the fourth quarter of fiscal 2006 of approximately $15 million. As the Company completes its process, additional information may become available that could change the amount and timing of the charge. The Company expects to complete its assessment prior to filing its fiscal 2006 Form 10-K. Net loss for the fourth quarter and 12 months of fiscal 2006 includes a charge of $5 million related to the cumulative effect of a change in accounting principle due to the Company's adoption of Financial Accounting Standards Board Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations," an interpretation of FASB Statement No. 143. "The best thing I can say about fiscal 2006 is, it's over," said Richard L. Bond, president and chief executive officer. "For most of the year, we were plagued by supply and demand imbalance as well as export market disruptions in our chicken and beef segments. Despite some continuing problems in the protein sector, during the quarter our core business showed improvement and continued to strengthen. "In addition, we successfully launched several programs that will better position us for 2007 and beyond," Mr. Bond said. "We implemented a comprehensive cost management initiative to generate approximately $200 million in annual savings. We also consolidated beef processing facilities, refocused on running cost-efficient and competitive operations and introduced price increases across retail and foodservice channels. Finally, we have enhanced our strong management team by adding several key executives in our finance, consumer products and international groups. I believe the solid execution of these and other initiatives by Tyson Team Members is favorably impacting our business. We set a short-term goal to return to profitability, and based on our business performance to date, I am very confident we will achieve it in our first fiscal quarter of 2007." Based in Springdale, Arkansas, Tyson Foods, Inc. (NYSE:TSN) -- http://www.tysonfoods.com/-- processes and markets chicken, beef, and pork. The company produces protein-based and prepared food products, which are marketed under the "Powered by Tyson(TM)" strategy. * * * As reported in the Troubled Company Reporter on Sept. 26, 2006, Standard & Poor's Ratings Services assigned its 'BBB-' rating to Springdale, Arkansas-based meat processor Tyson Foods Inc.'s $1 billion unsecured revolving credit facility maturing Sept. 10, 2010, guaranteed by wholly owned subsidiary Tyson Fresh Meats Inc. (formerly IBP Inc.). At the same time, Standard & Poor's lowered its rating on $2.1 billion of the company's outstanding senior unsecured debt to 'BB+' from 'BBB-' because these debt issues do not have the benefit of the Tyson Fresh Meats guarantee, which was recently provided to the holders of Tyson's 6.6% notes due 2016. As reported in the Troubled Company Reporter on Sept. 21, 2006, Moody's Investors Service took a number of rating actions in relation to Tyson assigned a Ba1 rating to Tyson Foods, Inc.'s $1 billion senior unsecured bank credit facility and to a $345 million senior unsecured bank term loan for Tyson's Lakeside Farms Industries Ltd. subsidiary, under a full Tyson Foods, Inc. guarantee; affirmed Tyson's Ba1 corporate family rating, its Not Prime short term rating and its SGL-3 speculative grade liquidity rating; and, applied Moody's new Probability of Default and Loss Given Default rating methodology to all of the company's long-term ratings. The outlook on all long term ratings continues to be negative. UNIVERSAL EXPRESS: Posts $5.5 Mil. Net Loss in First Fiscal Qtr. ---------------------------------------------------------------- Universal Express Inc. filed its financial statements for the first fiscal quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 13, 2006. For the first fiscal quarter ended Sept. 30, 2006, the Company reported a $5,572,770 net loss on $481,898 of revenues, compared with a $3,294,780 net loss on $219,172 of revenues in the comparable quarter of 2005. At Sept. 30, 2006, the Company's balance sheet showed $7,598,046 in total assets, $2,755,825 in total liabilities, ($142,967) in total minority interest, and $4,985,188 in total stockholders' equity. Full-text copies of the company's first fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?150b Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 16, 2006, Pollard-Kelley Auditing Services Inc. in Fairlawn, Ohio, expressed substantial doubt about Universal Express Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2006. The auditing firm pointed to the Company's recurring losses. About Universal Express Universal Express Inc. -- http://www.usxp.com/-- is a logistics and transportation conglomerate with multiple developing subsidiaries and services. Its principal subsidiaries include Universal Express Capital Corp. and Universal Express Logistics, Inc. (which includes Virtual Bellhop, LLC, Luggage Express and Worldpost, its international shipping divisions), and Private Postal Center Network.com and its division Postal Business Center Network.com. US AIRWAYS: Makes $8 Billion Merger Offer to Delta Air ------------------------------------------------------ US Airways Group, Inc. (NYSE: LCC) has made a merger proposal to Delta Air Lines, Inc. (OTC: DALRQ) under which both companies would combine upon Delta's emergence from bankruptcy. The proposal would provide approximately $8.0 billion of value in cash and stock to Delta's unsecured creditors. Delta creditors would receive $4.0 billion in cash and 78.5 million shares of US Airways stock with an aggregate value of approximately $4.0 billion based on the closing price of US Airways' stock as of Nov. 14, 2006. The combination of US Airways and Delta would create one of the world's largest airlines and would operate under the Delta name. Customers would benefit from expanded choice as well as the reach and services of a large-scale provider within the cost structure of a low-fare carrier. As a combined company, the "New" Delta would be the number one airline across the Atlantic and the second largest airline to the Caribbean. The New Delta would reach more than 350 destinations across five continents, including North and South America, Europe, Asia and Africa. In the U.S., the combination would create a leading competitor in the Eastern U.S. and an enhanced position in the Western U.S. The combined company would be the number one airline at 155 airports. The New Delta would also be uniquely positioned to compete with low cost and legacy carriers. US Airways' proposal represents a 25% premium over the current trading price of Delta's prepetition unsecured claims as of Nov. 14, 2006 (40 cents/dollar), assuming that there will ultimately be $16.0 billion of unsecured claims. The proposal also represents a 40 percent premium over the average trading price for Delta unsecured claims over the last thirty days. US Airways believes that the combination will generate at least $1.65 billion in annual synergies, including $935 million in network synergies, predominantly from optimization of the airlines' complementary networks, including rationalization of network overlap, which will result in a 10 percent reduction of the combined airlines' capacity, reducing unprofitable flying and improving the mix of traffic. In addition, $710 million in net cost synergies will be achieved by combining facilities in overlap airports and eliminating redundant systems and overhead. Significantly, the opportunity to generate more than half of these synergies could be lost if a merger is delayed until after Delta emerges from bankruptcy. The merger is expected to be accretive to US Airways' earnings in the first full year after completion of the merger. US Airways Chairman and Chief Executive Officer Doug Parker stated, "We believe that the combination of US Airways and Delta, like the US Airways/America West merger we completed in September 2005, is extremely compelling and will create significant value for each of our stakeholders. The combined company will be a more effective and profitable competitor in the current fragmented marketplace, with the ability to better meet the continuing evolution of the airline industry. We will be flying under the Delta brand name, which is recognized around the world. "Delta creditors will receive significantly greater value under this proposal than they would under any standalone plan for Delta. US Airways shareholders and Delta creditors will benefit from the significant upside potential of the combined company through their respective ownership stakes. "Even with a 10 percent reduction in capacity, all existing U.S. destinations served today by US Airways and Delta will remain part of the new, improved network. Consumers will have the advantages of a larger, full-service airline with the cost structure of a low-fare carrier, and the communities we serve, as well as those Delta serves, will have access to a wider range of network options. More than ever, the New Delta will be able to connect our customers to the people and places they want to visit. "All of the employees of the New Delta will benefit from working for a larger and more competitive airline. As we demonstrated during our US Airways/America West merger, long-term job security for employees in our industry results from sound economics and a healthy business able to compete in our changing marketplace," Parker concluded. The New Delta will create a more comprehensive global route network that will provide more choice for travelers and attract new customers to key markets. In addition, many travelers have already benefited from the US Airways/America West merger. Since the merger, US Airways has lowered leisure fares in nearly 350 markets with discounts ranging from 10 percent to 75 percent -- an average reduction of 24% within those markets. US Airways has also lowered business fares in nearly 400 markets during the same period with reductions ranging from 10 percent to 83 percent -- an average reduction of 37% within those markets. Paul Reeder, President of PAR Capital Management, US Airways' largest shareholder, said, "We enthusiastically support this transaction, which we believe offers the opportunity to build upon US Airways' current competitive position. We have confidence in the US Airways management team, the $1.65 billion in identified synergies, and the potential upside for US Airways shareholders." USAir CEO's Letter to Delta Counterpart A full-text copy of the letter US Airways sent to Gerald Grinstein, Delta's Chief Executive Officer: November 15, 2006 VIA FACSIMILE Mr. Gerald Grinstein Chief Executive Officer Delta Air Lines, Inc. Atlanta, GA 30320-6001 Dear Jerry: Last Spring we had a conversation about a potential merger of US Airways and Delta. As you know, following that conversation, I sent you a letter on September 29, 2006, outlining our thoughts about a transaction, describing the significant benefits that could be achieved for both of our respective stakeholder groups from this type of transaction, and proposing to meet with you and your team to work together to further consider and develop our proposal. I was disappointed that you declined to meet or even enter into discussions in your letter of October 17, 2006. Because the benefits of a merger of US Airways and Delta are so compelling to both of our companies' stakeholders, we believe it is important to inform them about our proposal. Therefore, we are simultaneously releasing this letter to the public. The Board of Directors and management team of US Airways believe that a combination of Delta and US Airways presents a significantly greater value for Delta's creditors, customers, employees and partners than a plan to emerge from bankruptcy on a standalone basis. We also believe that, unless we act quickly to pursue a combination through the actions that can be taken during Delta's bankruptcy process, our respective stakeholders will not be able to realize what we believe are substantial economic benefits from such a combination. Merger Proposal We propose a merger of Delta and US Airways in a transaction in which Delta prepetition unsecured creditors would receive $4.0 billion in cash plus 78.5 million shares of US Airways' common stock. Based upon the closing price of US Airways' common stock of $50.93 on November 14, 2006, the equity component represents a value of approximately $4.0 billion. As a result of this transaction, immediately following the merger, Delta unsecured creditors would own approximately 45 percent of the combined company. This proposal represents an aggregate of approximately $8.0 billion in value to Delta's prepetition unsecured creditors, before taking into account realization of any of the significant additional value from the synergies we believe are achievable. Even prior to the realization of any synergy value, this proposal represents a 25 percent premium over the current trading price of Delta's prepetition unsecured claims as of November 14, 2006 (40 cents/dollar), assuming that there will ultimately be $16.0 billion of unsecured claims. The proposal also represents a 40 percent premium over the average trading price for Delta unsecured claims over the last thirty days. We believe that this proposal, which is based on publicly available information, fully values Delta. Synergy Value What makes this proposal most compelling for both Delta creditors and US Airways shareholders are the significant synergies that we believe can be readily achieved in this proposed transaction. We have preliminarily identified annual network and cost synergies in excess of $1.65 billion, which at a median industry EBITDAR multiple of 5.0x translates into approximately $8.3 billion of additional value creation. This is value that neither of our teams, no matter how well managed, could create independently. Under the combination, these synergies would be shared by Delta creditors and US Airways shareholders in proportion to their initial ownership in the combined company. The synergies would be generated only through an appropriately timed transaction, and under our current analysis we believe would be as follows: * Approximately $710 million would be realized through expense reductions. The largest savings would be in consolidation of information systems, reduction of overhead and consolidation of facilities. Additional savings are expected through lower distribution costs and renegotiation of our collective contracts with vendors. Based upon our experience and synergies achieved with the merger of US Airways and America West, we believe this estimate is conservative. * Another $935 million would be realized through network rationalization synergies. Network rationalization savings would be generated by managing the combined networks to ensure that the combined fleet size is better matched to passenger demand. Network synergies would also arise from better serving our current customers, and by increasing our competitive presence, attracting new customers and corporate accounts in markets where neither carrier today is a significant competitor. In our US Airways/America West merger, we preliminarily identified approximately $250 million in potential annual cost synergies that we believed could be realized in that transaction. After having successfully completed that transaction over a year ago, we have now identified over $300 million in cost synergies, outperforming our expectations. Year-to-date, US Airways' RASM is up 17.1 percent versus the industry being up 9.1 percent, which translates into $425 million in network synergies already this year. Accordingly, we have a high level of confidence that we can achieve at a minimum the synergies that we have identified in a potential Delta/US Airways merger. Our analysis presumes that a merger would proceed in the same fashion as the US Airways/America West transaction, with the closing in conjunction with Delta's emergence from bankruptcy. As I have previously indicated to you, if we model a merger of our companies after Delta emerges from bankruptcy standalone, our synergy estimates are cut in half. We do not believe that simply allowing that potential value to evaporate is in the best interests of any constituency. Financing and Structure We have obtained a financing commitment from Citigroup to provide $7.2 billion in new financing for this transaction. This funding would be utilized to refinance Delta's debtor- in-possession credit facility, refinance US Airways' existing senior secured facility with GE Capital, and provide the funding for the $4.0 billion cash portion of our offer. All other allowed secured debt and administrative claims would be assumed or paid in full. Preliminarily, we would intend to follow the model used successfully in the US Airways/America West merger for this transaction. We would, of course, seek to structure the transaction in a tax efficient manner for our respective stakeholders, maximizing Delta's net operating loss carryforwards. Integration Our proposal contemplates the creation of the leading global airline operating under the "Delta" name and brand. To streamline our operations and capitalize on potential synergies, we would expect to develop together an integration plan, and identify areas in which efficiencies can be maximized, including appropriate rationalization of operational centers. Regulatory Matters We have worked with antitrust counsel to analyze this transaction and believe that any antitrust issues can be resolved. Labor Matters We believe that this transaction is in the best interests of the employees of US Airways and Delta because of the strength and stability of the company that the transaction will produce. Also, we expect that we would move to the highest of the existing labor costs in every group. Because the wage rates for Delta and US Airways employees are not markedly different, we do not anticipate that this action will have a material negative impact, and that fact has been included in our analysis. Similar to the US Airways/ America West merger in which there were no furloughs of mainline operating group employees, our current model does not assume furloughs of employees in the mainline operating groups. Conditions Our proposal is conditioned on satisfactory completion of a due diligence investigation, which we believe can be completed expeditiously. In addition, the proposed transaction would be conditioned on the bankruptcy court's approval of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals and approval of the shareholders of US Airways. Given our analysis to date, we are confident that our joint efforts would result in satisfaction of these conditions and a successful combination of our companies in a timely manner. This proposal presents an opportunity for Delta creditors to receive significantly higher recoveries than they can receive under any standalone plan for Delta. It is also an opportunity for US Airways shareholders to benefit from the significant upside potential of the combination. Consumers will benefit from expanded choice as well as the reach and services of a large-scale provider within the cost structure of a low-fare carrier. Our employees will benefit from a more competitive employer and our willingness to adopt highest common denominator employee costs. As I expressed to you previously, I understand that you and your team have worked extremely hard on your own restructuring, and greatly respect all that you have accomplished to make Delta a healthy, viable airline. We simply believe that a combination with US Airways will produce even more value for your creditors and our shareholders, and that this is a unique opportunity to create an airline that is even better positioned to thrive long into the future, whatever that future might bring to the industry, greatly benefiting our employees and customers. We and our advisors, Citigroup Corporate and Investment Banking and Skadden, Arps, Slate, Meagher & Flom LLP, are ready to commence due diligence and to negotiate definitive documentation immediately, and request that you agree to work with us so that this alternative to your standalone plan can be quickly and fully developed. We are prepared to meet with you, Delta's Board, Delta's Official Committee of Unsecured Creditors, and any major Delta creditor or other stakeholder, to achieve this outcome. I believe we owe it to our respective stakeholders to pursue this opportunity vigorously. I look forward to hearing from you soon. Respectfully, /s/ Doug Parker $7,200,000,000 Citigroup Commitment US Airways has committed financing from Citigroup for the proposed transaction for $7.2 billion, representing $4.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing at both companies. The US Airways proposal is conditioned on satisfactory completion of a due diligence investigation, which the Company believes can be completed expeditiously, approval by Delta's Bankruptcy Court of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals, and the approval of the shareholders of US Airways. US Airways believes that this process could be completed in the first half of 2007. Citigroup Corporate and Investment Banking is acting as financial advisor to US Airways, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as primary legal counsel, with Fried, Frank, Harris, Shriver & Jacobson LLP as lead antitrust counsel to US Airways. Conference Call on Nov. 15 US Airways executives held a conference call with analysts and investors on Nov. 15, 2006, relating to the proposed merger with Delta. A full-text copy of the investor presentation is available at no charge at http://researcharchives.com/t/s?152d Delta Will Review USAir Offer Delta Air Lines' CEO Gerald Grinstein issued [this] statement regarding U.S. Airways' proposed merger with Delta: "We received a letter from U.S. Airways this morning and will of course review it. Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier. Our plan is working and we are proud of the progress Delta people are making to achieve this objective. The Bankruptcy Court has granted Delta the exclusive right to create the plan of reorganization until Feb. 15, 2007. We will continue to move aggressively towards that goal." [USAir's Doug Parker first called Mr. Grinstein in July 2006 for talks about a potential merger. In an October 17 letter, Mr. Grinstein advised Mr. Parker that exploratory merger discussions at that time would not be productive given the significant work that remains to be done by Delta's restructuring team. Mr. Grinstein added that the USAir proposal has been presented to the Official Committee of Unsecured Creditors in Delta's bankruptcy case, and the panel supported the company's response to the offer.] About Delta Air 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. About US Airways Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. The Company and its affiliates filed for chapter 11 protection on Aug. 11, 2002 (Bank. E.D. Va. Case No. 02-83984). Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed their second chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. On March 31, 2006, the Court entered a final decree closing the chapter 11 cases of four affiliates. Only US Airways, Inc.'s chapter 11 case remains open. US Airways (NYSE: LCC) and America West's merger created the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of Star Alliance, which provides connections for our customers to 841 destinations in 157 countries worldwide. * * * As reported in the Troubled Company Reporter on June 14, 2006, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and other ratings on US Airways Group Inc., and revised the outlook to stable from negative. US AIRWAYS: Pilot Groups to Conduct Informational Picket Today -------------------------------------------------------------- The US Airways and America West pilot groups will conduct informational picketing today, Thursday, Nov. 16, at 12 p.m. EST to demonstrate their increasing frustration with management's unwillingness to fully participate in negotiations for a fair, single contract that addresses the pilots' basic needs and allows the company to realize the full synergies obtainable from merging US Airways and America West Airlines. The pilot groups, both of whom are represented by the Air Line Pilots Association, Int'l., will picket at two of US Airways' largest hubs -- Charlotte Douglas International Airport in Charlotte, North Carolina and Phoenix Sky Harbor International Airport in Phoenix, Arizona. The pilots also commented on US Airways' announcement on a proposed merger with Delta Air Lines to create one of the world's largest airlines, although US Airways has yet to complete the integration of the pilot groups that is required as part of the terms of the 2005 America West/US Airways merger. "The billions of dollars that the US Airways and America West pilots have committed to US Airways propelled our airline to profitability and opportunity," said Captain Jack Stephan, chairman of the US Airways Master Executive Council. "But like the planes we fly, management's grandiose plans will not take off without the pilots on board. So far, the company's empty promises have failed to capture all the synergies that just the US Airways/America West merger can provide." "We recognize US Airways senior management's enthusiasm for a merger with Delta; however, before it can be successful, management must first focus on fulfilling the promises made to their investors, customers and employees for the America West-US Airways merger," said Captain Kevin Kent, chairman of the America West Master Executive Council. "Regardless of whether or not another airline is in the mix, the pilots will no longer be exploited to make such a transaction occur." Despite the announcement of the merger, the pilots at US Airways and America West remain focused on the issue of achieving a fair single contract, one that is commensurate with US Airways' position in the marketplace. Joint negotiations with US Airways management have been ongoing for one year, and during this time, the pilots have received only concessionary proposals that resemble the bankruptcy-driven contracts that were made as pilot investments in the airline. "US Airways management will unravel all that we have accomplished if they insist on propagating their bankruptcy mentality at the negotiating table," Captain Stephan said. "The sooner they realize that those days are over, the sooner this management can make good on their promises to all employees and stakeholders alike." "US Airways has posted remarkable profits for three consecutive quarters due to the efforts of front-line employees such as the pilots, yet they refuse to fully engage in negotiations for a contract that recognizes our contributions. Management's decision to not focus on putting the America West/US Airways operations together for one seamless airline is bad news for our customers," said Captain Kent. Founded in 1931, Air Line Pilots Association, International -- http://www.alpa.org/-- represents 61,000 pilots at 40 airlines in the U.S. and Canada. About US Airways Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. The Company and its affiliates filed for chapter 11 protection on Aug. 11, 2002 (Bank. E.D. Va. Case No. 02-83984). Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed their second chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. On March 31, 2006, the Court entered a final decree closing the chapter 11 cases of four affiliates. Only US Airways, Inc.'s chapter 11 case remains open. US Airways (NYSE: LCC) and America West's merger created the fifth largest domestic airline employing nearly 35,000 aviation professionals. US Airways, US Airways Shuttle and US Airways Express operate approximately 3,800 flights per day and serve more than 230 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways is a member of Star Alliance, which provides connections for our customers to 841 destinations in 157 countries worldwide. * * * As reported in the Troubled Company Reporter on June 14, 2006, Standard & Poor's Ratings Services affirmed its 'B-' corporate credit and other ratings on US Airways Group Inc., and revised the outlook to stable from negative. VANGUARD CAR: Europcar Alliance Plan Cues S&P to Affirm B+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on Vanguard Car Rental USA Holdings Inc. The outlook is stable. Vanguard Car Rental Holdings LLC, the parent of Vanguard Car Rental USA Inc., had entered into a strategic alliance with Europcar Groupe S.A. (BB-/Stable/-) that includes the sale of its Europe, Middle East, and Africa operations to Europcar, as well as a partnership between the two-car rental companies in which their customers will have access to each other's operations. Proceeds from the sale will total EUR670 million. The sale will result in Vanguard Car Rental USA remaining as the primary operating entity of Vanguard Car Rental Holdings. "The decline in Vanguard Car Rental USA's balance debt of approximately $5 billion is expected to be minimal after a substantial portion of the proceeds are used to retire the European fleet debt," Standard & Poor's credit analyst Betsy Snyder said. "In addition, Vanguard Car Rental Holdings' annual revenues will decline by approximately $500 million." The ratings on Tulsa, Okla.-based Vanguard Car Rental USA reflect a weak financial profile and very aggressive financial policy, even after the June 2006 recapitalization of the company. However, the company's business risk profile does benefit from its significant presence in the North American on-airport car rental market. Vanguard Car Rental USA is the major operating subsidiary of Vanguard Car Rental Holdings, which is owned by Cerberus Capital Management L.P. After the proposed sale of its European, Middle East, and African operations, Vanguard Car Rental Holdings' operations will consist primarily of the National and Alamo brands in the U.S. and Canada. Vanguard participates primarily in the on-airport segment of the car rental industry. At the top 50 airports in the U.S., the Alamo and National brands have a combined market share of approximately 21%, behind Hertz (28%) and a combined Avis and Budget (30%, both owned by Cendant). National, which accounts for approximately 49% of Vanguard's revenues, focuses on frequent business travelers (50% of revenues are derived from commercial accounts). Alamo (approximately 51% of Vanguard's revenues) concentrates on leisure and value travelers at major vacation destinations. The on-airport segment of the car rental industry is heavily reliant on airline traffic. Demand tends to be cyclical, and can also be affected by global events such as wars, terrorism, and disease outbreaks. Vanguard's credit ratios are expected to remain fairly consistent over the near to intermediate term due to its heavy debt burden. If the company were to add substantial equity to its capital structure, the outlook could be revised to positive. An outlook revision to negative is considered less likely. VESTA CAPITAL: Chapter 11 Case Cues Moody's to Withdraw Ratings --------------------------------------------------------------- Moody's Investors Service affirmed and withdrawn the C senior debt rating of Vesta Insurance Group, Inc. and the C trust preferred rating of Vesta Capital Trust I. The ratings have been withdrawn because the company has been granted protection under Chapter 11 of the U.S. Bankruptcy Code since August 2006. The last rating action occurred on July 5, 2006 when Moody's lowered the senior debt rating of Vesta Insurance Group to C from B3 and the trust preferred rating of Vesta Capital Trust I to C from Caa2 following the company's announcement that its insurance subsidiaries had been placed into rehabilitation in various regulatory jurisdictions. Vesta Insurance Group, based in Birmingham, Alabama, formerly wrote primarily homeowners insurance. WCI COMMUNITIES: High Leverage Prompts S&P to Lower Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on WCI Communities Inc. to 'BB-' from 'BB'. Concurrently, the rating on roughly $650 million of senior subordinated debt is lowered to 'B' from 'B+'. The outlook remains negative. "The downgrades reflect a much steeper-than-anticipated drop in new orders, higher leverage as a result of the company's use of short-term debt to offset a free operating cash flow deficit, and, to a lesser extent, continued share repurchase activity," said credit analyst James Fielding. The negative outlook is largely based on extremely challenging conditions in important Florida housing markets and constrained demand for discretionary luxury home purchases that will negatively affect sales and earnings in the foreseeable future. Standard & Poor's will revise the outlook to stable once debt levels are materially reduced and it becomes clear that WCI's core markets have stabilized. However, if leverage measures remain high as a consequence of a material increase in contracts receivable defaults or aggressive share repurchase activity, the rating agency will lower the ratings further. WERNER LADDER: Court Approves PwC as Tax Advisor and Auditor ------------------------------------------------------------ Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to hire PricewaterhouseCoopers LLP as their tax advisors and auditors. PwC is a multi-national accounting firm that provides auditing, accounting advice, tax compliance and consulting, financial consulting and advisory services and has extensive experience in providing services for corporate restructurings in large and complex Chapter 11 cases. PwC has also served as the Debtors' tax advisors and auditors since August 1999 and has become well acquainted with their businesses, finances, operations, systems and capital resources, relates Larry V. Friend, vice-president, chief financial officer and treasurer of Werner Holding Co., Inc. Pursuant to an engagement letter dated Feb. 15, 2006, PwC agrees to: (1) review and sign the required state corporate income tax returns for the Debtors for the tax year beginning Jan. 1, 2005, through Dec. 31, 2005; (2) advise and assist the Debtors regarding tax planning issues, including calculating net operating loss carry forwards and the tax consequences of any proposed plan of reorganization; (3) assist in preparing any Internal Revenue Service ruling requests regarding the future tax consequences of alternative reorganization structures; and (4) perform all other tax, auditing and consulting services to the Debtors that are necessary in their bankruptcy proceedings. According to Mr. McCutcheon, PwC received a $29,500 fixed fee for its preparation and review of the Debtors' tax returns for 2005. The Debtors have paid $14,750 of the fixed fee. The Debtors will pay PwC for all other tax consulting, auditing, and related advisory support services on an hourly basis: Designation Hourly Rate ----------- ----------- Partner $445 - $605 Managing Director $430 - $525 Director and Senior Manager $315 - $450 Manager $295 - $420 Senior Associate $170 - $255 Associate $130 - $180 Intern $100 - $125 Administrative Staff $75 - $85 The Debtors will also reimburse PwC for its reasonable expenses incurred in connection with the provision of the additional services. The Debtors agree to indemnify and hold harmless PwC and its personnel from and against any and all third-party claims, suits and actions, and all associated damages, settlements, losses, liabilities, costs and expenses arising from or relating to the services provided, except to extent finally determined to have resulted from the gross negligence or other intentional misconduct of PwC. Robert W. McCutcheon, a partner at PwC, assures the Court that PwC is a disinterested person as the term is defined Sections 101(14) and 1107(b) of the Bankruptcy Code, and that the firm represents no interest adverse to the Debtors and their estates. PricewaterhouseCoopers LLP 300 Madison Avenue 24th Floor New York, New York 10017 Telephone: (646) 471 4000 U.S. Trustee Objects As reported in the Troubled Company Reporter Aug. 16, 2006, Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, disputes the limited liability provisions in PwC's engagement. "Stripped to its essence, this provision holds PwC to an unconscionably low standard of performance," Ms. Stapleton says. The U.S. Trustee explains that the low performance standards, which explicitly waive in advance claims for future acts and omissions that are anything short of gross negligence or intentional misconduct, are not appropriate for a professional person employed to assist a debtor in performing its statutory duties. The effect of that provision is to dramatically curtail the circumstances under which PwC may be held liable for more than the amount of its fees and then, no matter how egregious PwC's conduct, to limit the types of damages for which PwC may be held liable. The PwC engagement letter limits the firm's liability to pay damages for any losses incurred by client as a result of breach of contract, negligence or other tort committed by PwC, regardless of the theory of liability asserted, to no more than the total amount of fees paid to PwC for the particular service provided under the agreement to which the claim relates. In addition, PwC will not be liable in any event for lost profits or any consequential, indirect punitive, exemplary or special damages. Ms. Stapleton suggests that PwC provide proof that the limitation of liability provisions its seeks are common in the marketplace for tax services, and are reasonable. Otherwise, those provisions should be stricken. Judge's Decree The Hon. Kevin J. Carey overrules the U.S. Trustee's Limited Objection to the extent not otherwise resolved. The Court rules that PwC will not be required to file time records related to the Fixed Fee Services in accordance with the United States Trustee guidelines, but in its fee applications to be filed with the Court, PwC will present descriptions of: -- the Fixed Fee Services provided, -- the approximate time expended in providing the Fixed Fee Services, and -- the individuals who provided the fixed fee services to the Debtors. In the event that PwC is required to contribute to any losses, claims, liabilities or expenses, any limitation of the contribution in the engagement letters will not apply, Judge Carey says. PwC is required to file a compensation application if -- before the earlier of (i) an order confirming a Chapter 11 plan in the Debtors' bankruptcy cases, and (ii) an order closing the Debtors' Chapter 11 cases -- it believes that it is entitled to payment of any amounts on account of the Debtors' indemnification, contribution or reimbursement obligations under the PwC engagement letters. The Debtors are not allowed to pay any amounts to PwC absent Court approval. 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: Wants to Reject Supplemental Retirement Plans ------------------------------------------------------------ Werner Holding Co. (DE) Inc. aka Werner Ladder Company and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware, to the extent necessary, to reject the Supplemental Employee Retirement Plans, amended and restated effective Dec. 31, 2000, for certain employees. To address specific gaps in the Qualified Pension Plan due to, among other things, limitations imposed on the administration of the Pension Plan by the Employee Retirement Income Security Act of 1974, employment of certain employees past age 65 and significant longevity, inflation and other factors, Werner DE implemented two supplemental employee retirement plans: (i) Supplemental Pension Plan A Applicable to Key Executives of Werner Holding Co. (DE), Inc., its Parent and Subsidiaries, Amended and Restated Dec 31, 2000; and (ii) Supplemental Pension Plan B Applicable to Elected Salaried Corporate Officers of Werner Holding Co. (DE), Inc., its Parent and Subsidiaries, Amended and Restated Dec. 31, 2000. The Debtors do not believe that the SERPs are executory contracts within the meaning of Section 365, but are requesting for authority to reject the SERPs out of an abundance of caution in the event that they are determined to be executory contracts. Kara Hammond Coyle, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that, as of the Petition Date, nine former executives and officers of Werner DE -- the Pay Out Group -- were receiving benefits under the SERPs. The estimated cost to Werner DE of providing the SERPs benefits is $85,000 per month or $1,002,000 annually. No payments have been made to the Pay Out Group pursuant to the SERPs since the Petition Date. Shortly after the Debtors' bankruptcy filing, certain members of the Pay Out Group contacted the Debtors to inquire about the payments and they were informed that no future payments would be made to them, Ms. Coyle recounts. Afterwards, a formal notice that future payments would be terminated was transmitted to the Pay Out Group. In the exercise of their sound business judgment, the Debtors have determined to reject the SERPS. Ms. Coyle notes that the Debtors do not receive any benefits in return for the $1,002,000 that they annually spend to provide benefits to the nine former executives and officers. Hence, she says, the equities clearly favor a retroactive rejection of the SERPs. As the Payout Group (a) is comprised of retirees who were very senior executives of the Debtors and presumably have resources available to them, and (b) received adequate notice of the Debtors' intention not to make future payments, the Debtors believe that retroactive rejection is appropriate. 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) WORLDCOM INC: Court Expunges Gary Campbell's Personal Injury Claim ------------------------------------------------------------------ At WorldCom Inc. and its debtor-affiliates' behest, the U.S. Bankruptcy Court for the District of New York entered summary judgment against Gary Campbell and expunged his personal injury claim. As reported in the Troubled Company Reporter on Oct. 2, 2006, Mr. Campbell filed Claim No. 38345 in June 2004, seeking $30,000 for "personal injury/wrongful death." Mr. Campbell filed a personal injury lawsuit in December 2003 against the Debtors in the Marion County Superior Court, in Indiana, asserting personal injury. The Debtors' confirmed Plan of Reorganization provides that "no distributions shall be made on account of any Personal Injury Claim until such Claim is liquidated and becomes an Allowed Claim." The only way that a Personal Injury Claim can become an Allowed Claim is for the Claim to be determined by an administrative or judicial tribunal of appropriate jurisdiction, Shane C. Mecham, Esq., at Stinson Morrison Hecker LLP, in Kansas City, Missouri, averred. The administrative or judicial tribunal of appropriate jurisdiction for Mr. Campbell's Claim is the Marion Superior Court because that is where he filed the state court action on which his claim is based, Mr. Mecham explained. However, the Marion Court has dismissed Mr. Campbell's lawsuit. Accordingly, as a matter of law, Mr. Campbell's Claim has been determined by an administrative or judicial tribunal of appropriate jurisdiction, and that determination precludes it from becoming an allowed claim, Mr. Mecham emphasized. Moreover, the period to file an appeal of the Marion Court decision has lapsed, Mr. Mecham added. 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: Court Expunges Mark Lahti's Personal Injury Claim --------------------------------------------------------------- At WorldCom Inc. and its debtor-affiliates' request, the U.S. Bankruptcy Court for the Southern District of New York entered a summary judgment against Mark Lahti and expunged his personal injury claim. On Dec. 5, 2003, Mr. Lahti filed a personal injury lawsuit against the Debtors in the Marion County Superior Court, in Indiana. Subsequently, in June 2004, Mr. Lahti filed Claim No. 38344, seeking $250,000 for personal injury and wrongful death. The Debtors then objected to Claim No. 38344. On March 28, 2006, the Marion Superior Court dismissed, with prejudice, Mr. Lahti's lawsuit for failure to prosecute. Moreover, the period to file an appeal has lapsed. Shane C. Mecham, Esq., at Stinson Morrison Hecker LLP, in Kansas City, Missouri, argued that the only way that a Personal Injury Claim can become an Allowed Claim is for that Claim to be determined by an administrative or judicial tribunal of appropriate jurisdiction. Under the Debtors' confirmed Plan of Reorganization, Mr. Lahti's Claim is a personal injury claim, Mr. Mecham averred. The Marion Superior Court has appropriate jurisdiction over the Claim, Mr. Mecham added, because it is where Mr. Lahti filed his state court action on which his Claim is based. Furthermore, the dismissal of the Lawsuit precludes the Claim from becoming an allowed claim, Mr. Mecham emphasized. 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) XERIUM TECH: Earns $5.7 Million in Third Quarter Ended Sept. 30 --------------------------------------------------------------- Xerium Technologies, Inc., reported net sales of $145.5 million for the third quarter of 2006, a 3.9% increase from $140.1 million for the third quarter of 2005. Net income was $5.7 million in the third quarter of 2006, compared to a net loss of $8 million for the third quarter of 2005. Net cash generated by operating activities was $22.6 million for the third quarter of 2006, compared to $19.9 million in the same quarter last year. Cash on hand at Sept. 30, 2006 was $36.7 million, compared to $32.5 million at June 30, 2006, $60 million at Dec. 31, 2005 and $59.9 million at Sept. 30, 2005. Capital expenditures for the third quarter of 2006 were $6.8 million, compared to $5.9 million for the third quarter of 2005. Approximately $3.1 million of capital expenditures for the year's third quarter were directed toward projects designed to support the Company's growth objectives, with the remaining $3.7 million used to sustain the Company's existing operations and facilities. The Company disclosed net restructuring expenses of $1.3 million during the third quarter of 2006 in connection with the reorganization of its European management structure. Thomas Gutierrez, chief executive officer, said, "Earnings for the third quarter this year were affected by several factors, including significant investments in areas across our businesses. During this quarter the majority of our planned 2006 restructuring activities were completed. We have now moved beyond restructuring efforts and started to focus on initiatives designed to further differentiate Xerium in the marketplace. These programs, which will continue into 2007 and from which we do not expect a substantial return during the balance of 2006, are primarily focused on advanced product and process design and business development. Xerium has always had a strong focus on generating cost reductions to offset inflation and we plan to continue this discipline. Mr. Gutierrez added, "Our cash position has improved by more than 12% in the past quarter. We have determined that the capital spending requirements for 2006 will not exceed $32 million in total, and made a voluntary debt repayment of $23 million on Nov. 2, 2006 to further reduce our long-term debt. "We took other steps in the third quarter that strategically improve our global position, including purchasing our Japanese distributor. In addition, we sold our UK equipment business. Overall, we remain optimistic about the long-term prospects for Xerium." Mr. Gutierrez concluded, "During the fourth quarter we will be evaluating the creation of a dividend reinvestment plan, or DRIP, that would allow shareholders to elect to reinvest all or a portion of their dividends in shares of our common stock rather than cash. Some of our largest shareholders have indicated interest in participating in such a plan, and we think that a DRIP has merit in that to the extent we issue new shares in respect of dividends it could effectively reduce the cash required to pay dividends. We expect to come to a decision on this initiative during the fourth quarter of this year." Nine Months Results Net sales for the first nine months of 2006 were $446.9 million, a 2.1% increase from $437.8 million for the first nine months of 2005. The total impact of currency fluctuations on net sales for the first nine months of 2006, as compared to the first nine months of 2005, was a decrease of $1.9 million. Net income was $26.4 million for the first nine months of 2006, compared to a net loss of $12.1 million for the same period of 2005. Net cash generated by operating activities was $44.6 million for the first nine months of 2006, compared to $26.5 million in the same period last year. Net cash provided by operating activities for the first nine months of 2005 reflects IPO-related costs of $20.7 million. Dividend Declared The Company, further, announced that its Board of Directors had declared a dividend of $0.225 per share of common stock payable on Dec. 15, 2006 to shareholders of record as of the close of business on Dec. 5, 2006. Headquartered in Wesborough, Massachusetts, Xerium Technologies, Inc. -- http://xerium.com/-- manufactures and supplies two types of products used primarily in the production of paper: clothing and roll covers. The company operates under a variety of brand names and owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products, designed to optimize performance and reduce operational costs. With 35 manufacturing facilities in 15 countries, Xerium Technologies has approximately 3,900 employees. Headquartered in Westborough, Massachusetts, Stowe Woodward, a unit of Xerium Technologies, Inc., supplies roll covers, bowed rolls and manufacturing services for the pulp and paper industry. Stowe Woodward has manufacturing operations around the world. * * * As reported in the Troubled Company Reporter on Jan. 24, 2006, Moody's Investors Service changed the outlook on Xerium Technologies, Inc.'s ratings to negative from stable, and affirmed the company's corporate family rating at B1. The change in outlook to negative reflects Xerium's weaker than expected operating performance primarily due to production inefficiencies in North America and delays in achieving benefits from cost reduction initiatives. Moody's believes the impact of these issues, coupled with a difficult pricing environment for roll covers and to a lesser extent clothing products, will continue to negatively affect operating performance over the intermediate term. Affirmed ratings are: * Corporate family rating; B1 * Guaranteed senior secured term loan B; B1 * Guaranteed senior secured revolving credit facility; B1 * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re The Beignet Company, Inc. Bankr. N.D. Ga. Case No. 06-73848 Chapter 11 Petition filed November 2, 2006 See http://bankrupt.com/misc/ganb06-73848.pdf In re H. L. Mohler Corporation Bankr. N.D. Ind. Case No. 06-40389 Chapter 11 Petition filed November 7, 2006 See http://bankrupt.com/misc/innb06-40389.pdf In re Global Sports Marketing Corporation Bankr. E.D. Pa. Case No. 06-15151 Chapter 11 Petition filed November 8, 2006 See http://bankrupt.com/misc/paeb06-15151.pdf In re Hugo's Inc. Bankr. M.D. N.C. Case No. 06-11367 Chapter 11 Petition filed November 8, 2006 See http://bankrupt.com/misc/ncmb06-11367.pdf In re Hugo's Too Inc. Bankr. M.D. N.C. Case No. 06-11368 Chapter 11 Petition filed November 8, 2006 See http://bankrupt.com/misc/ncmb06-11368.pdf In re Seabreeze Associates, LLC Bankr. E.D. Va. Case No. 06-50653 Chapter 11 Petition filed November 8, 2006 See http://bankrupt.com/misc/vaeb06-50653.pdf In re Timothy Ray Pope Bankr. D. S.C. Case No. 06-05118 Chapter 11 Petition filed November 8, 2006 See http://bankrupt.com/misc/scb06-05118.pdf In re APAK Sports, Inc. Bankr. W.D. Tenn. Case No. 06-29258 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/tnwb06-29258.pdf In re Adari Investments Bankr. D. Md. Case No. 06-17141 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/mdb06-17141.pdf In re Bauer & Associates, P.C. Bankr. S.D. Ind. Case No. 06-07145 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/insb06-07145.pdf In re Bay Storage & Distribution, Inc. Bankr. N.D. Calif. Case No. 06-31060 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/canb06-31060.pdf In re Lee Bruder Bankr. W.D. Pa. Case No. 06-25666 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/pawb06-25666.pdf In re Majestic Wholesale Outlet, Inc. Bankr. E.D. Mich. Case No. 06-21945 Chapter 11 Petition filed November 9, 2006 See http://bankrupt.com/misc/mieb06-21945.pdf In re American Historic Racing Motorcycle Association, Ltd. Bankr. M.D. Tenn. Case No. 06-06626 Chapter 11 Petition filed November 10, 2006 See http://bankrupt.com/misc/tnmb06-06626.pdf In re DeKalb Funeral Chapel LLC Bankr. M.D. Tenn. Case No. 06-06617 Chapter 11 Petition filed November 10, 2006 See http://bankrupt.com/misc/tnmb06-06617.pdf In re Austin Venture I, Inc. Bankr. W.D. Tex. Case No. 06-11858 Chapter 11 Petition filed November 13, 2006 See http://bankrupt.com/misc/txwb06-11858.pdf In re Robert Keith Mann Bankr. S.D. Fla. Case No. 06-15816 Chapter 11 Petition filed November 13, 2006 See http://bankrupt.com/misc/flsb06-15816.pdf In re Effie's Cantina, LLC Bankr. M.D. Ala. Case No. 06-11290 Chapter 11 Petition filed November 14, 2006 See http://bankrupt.com/misc/almb06-11290.pdf In re JH Monroig Construction Corp. Bankr. D. P.R. Case No. 06-04524 Chapter 11 Petition filed November 14, 2006 See http://bankrupt.com/misc/prb06-04524.pdf In re Lighthouse Barista's Inc. Bankr. D. Nebr. Case No. 06-81845 Chapter 11 Petition filed November 14, 2006 See http://bankrupt.com/misc/neb06-81845.pdf In re Via Dolorosa Gospel Tabernacle Bankr. E.D. Mich. Case No. 06-56750 Chapter 11 Petition filed November 14, 2006 See http://bankrupt.com/misc/mieb06-56750.pdf ********* 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 ***