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/raid1/www/Hosts/bankrupt/TCR_Public/061205.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 5, 2006, Vol. 10, No. 289 Headlines AGERE SYSTEMS: Inks $4 Billion Merger Agreement with LSI Logic ALDERWOODS GROUP: Corporate Buyout Cues S&P's Ratings Withdrawal ALLIED HOLDINGS: Fights Appointment of Official Equity Committee ALLIED HOLDINGS: Wants to Employ Resource Real as Broker ALLIED HOLDINGS: Wants Until March 31 to Decide on Leases AMC ENT: Posts $10.7 Million Net Loss in Period Ended September 28 AMERIPATH INC: Earns $5.7 Million Net Income in 2006 Third Quarter AMERIQUEST MORTGAGE: Fitch Junks Rating on Class M2 Issues ARCH COAL: Earns $50.9 Million in 2006 Third Quarter ARI NETWORK: Earns $225,000 in Period Ended October 31 AUTO UNDERWRITERS: Malone & Bailey Raises Going Concern Doubt AXCESS INT'L: Sept. 30 Balance Sheet Upside-Down by $3.4 Million BIOFORCE NANOSCIENCES: Posts $623,096 Net Loss in 2006 3rd Quarter C-BASS MORTGAGE: Moody's Rates Class B-4 Certificates at Ba1 CABLEVISION SYSTEMS: Charles & James Dolan Ink Aircraft Leases CALPINE CORP: Judge Lifland Approves SDG&E Reinstatement Agreement CHATTEM INC: Moody's Lowers Senior Subordinated Rating to B2 CHESAPEAKE ENERGY: Fitch Rates EUR600 Mil. Sr. Notes Offer at BB CITIGROUP MORTGAGE: Fitch Puts Low-B Ratings on $2.8-Mil. Certs. CITIGROUP MORTGAGE: Losses Cue S&P to Cut Rating on Class B-3 Loan CLOROX CO: September 30 Balance Sheet Upside-Down by $55 Million COLLINS & AIKMAN: Plans Further Workforce Reduction COLLINS & AIKMAN: Wants Until March 14 to Decide on Becker Leases COLTRANE CLO: Fitch Assigns BB Ratings on EUR3.7-Million Notes CONEXANT SYS: Inks Pact Extending Credit Maturity to Nov. 28, 2007 CONSOLIDATED CONTAINER: Earns $15.8 Million in 2006 Third Quarter COSTA BELLA: Fitch Rates $7.5 Million Class G Notes Due 2046 at BB CREDIT SUISSE: DBRS Rates $11.5 Mil. Class B-3 Certs. at BB (high) CREDIT SUISSE: Fitch Rates $11.5 Million Class B-3 Certs. at BB+ CSFB MORTGAGE: Moody's Completes Review and Upgrades Ratings CWALT INC: Fitch Rates $2.04 Million Class B-3 Certificates at BB CWALT INC: Fitch Rates $1.4 Million Class 2-B-4 Certificates at B CYANOTECH CORP: Will Restate Previously Issued Financial Reports DANA CORP: Selling Engine Parts Biz to German Supplier for $157MM DELTA AIR: Inks PBGC Settlement Pact on Pilot Pension Plan DIASYS CORP: Deloitte & Touche Raises Going Concern Doubt DIGITAL DESCRIPTOR: Sept. 30 Balance Sheet Upside-Down by $12.6MM DURA AUTOMOTIVE: Court OKs Kirkland & Ellis as Bankruptcy Counsel DURA AUTOMOTIVE: Court Okays Richards Layton as Local Counsel ENRON CORP: Judge Gonzalez Okays $300,000 Electroimpact Settlement ENRON CORP: Wants Three Separate Settlements Approved ENRON CORP: Energen Sells $12.5 Million Bankruptcy Claim ENTERGY NEW ORLEANS: Plaintiffs Want Rehearing Request Denied EQUITY ONE: Fitch Pares Rating on Class B-2 Certs. to B from BB EXECUTE SPORTS: Posts $1 Million Net Loss in Qtr. Ended Sept. 30 EXIDE TECH: Completes $290 Mil. 10-1/2% Sr. Notes Exchange Offer FAIRCHILD SEMICON: Court Postpones Power Integrations Trial FIRST FRANKLIN: Fitch Pares Class M-3 Certificates Rating to BB- FIRST HORIZON: Fitch Rates $1 Mil. Class B-5 Certificates at B FLYI INC: QVT Financial Acquires 6,899,259 Shares of Stock FLYI INC: Anticipates Existing Common Stock to be Cancelled FOAMEX INT'L: Class 3 Claims Impaired Under Second Amended Plan FOAMEX INTERNATIONAL: Must Mail Solicitation Packages by Dec. 7 GENERAL MOTORS: November U.S. Sales for New Cars & Trucks Up 6% GMAC LLC: Fitch Upgrades Issuer Default Rating to BB+ GOLD KIST: Inks $1.1 Bil. Merger Agreement with Pilgrim's Pride GSI GROUP: Earns $6.1 Million in 2006 Third Quarter HANESBRANDS INC: S&P Rates Proposed $500 Million Sr. Notes at B- HOME PRODUCTS: Debt Restructuring Cues Moody's to Junk Ratings HOMETOWN COMMERCIAL: Fitch Puts Low-B Ratings on Six Certificates HUDSON PRODUCTS: Moody's Rates Proposed $120MM Sr. Facility at B1 IGI INC: Posts $510,000 Net Loss for Third Quarter Ended Sept. 30 INTEGRATED ALARM: Moody's Affirms B3 Corporate Family Rating INTERSTATE BAKERIES: Court Approves Pact Regarding ABA Plan Stay IPIX CORP: Chapter 7 Trustee Auctions Tangible Assets and Patents ISTAR FINANCIAL: Declares $0.77 Quarterly Cash Dividend ITC DELTACOM: September 30 Balance Sheet Upside-Down by $74.6 Mil. JLG INDUSTRIES: Wants to Delist from NYSE After Oshkosh Merger LEHMAN XS: Moody's Rates Class A-4 Notes at B2 LSI LOGIC: Inks $4 Billion Merger Agreement with Agere Systems LSI LOGIC: Earns $44 Million in Third Quarter Ended October 1 LSI LOGIC: S&P Holds Corporate Credit Rating at BB- LOCATEPLUS HOLDINGS: Posts $622,039 Net Loss in 2006 Third Quarter LONG BEACH: Fitch Pares Class M-4 Loans' Rating to B from BB- MERIDIAN AUTOMOTIVE: Judge Walrath Approves $175MM Exit Facility MERRILL LYNCH: DBRS Downgrades Ratings on Two Class Certificates MESABA AVIATION: Can Execute Amended Union Agreements MESABA AVIATION: Wants Until April 13 to Decide on Leases MEZZ CAP: S&P Rates $2.4 Million Class F Certificates at BB MICHELINA INC: Poor Performance Prompts S&P's Negative Watch MILLS CORP: Unable to File Form 10-Q for Quarter Ended Sept. 30 MIRANT CORP: NY Subsidiaries Settles Dispute With Haverstraw Town NATIONAL RETAIL: Fitch Holds BB+ Rating on $125 Million Securities NBS TECHNOLOGIES: UbiQ Ex-Shareholders' Claims Are Without Merit NELLSON NUTRACEUTICAL: Wants To Expand Pachulski Stang's Services NEPHROS INC: Posts $1.9 Million Net Loss in Third Quarter of 2006 NORTEL NETWORKS: Sells Radio Business to Alcatel-Lucent NORTHWEST AIRLINES: Can Implement DIP Settlement Terms NORTHWEST AIRLINES: Court Okays $778.7 Mil. Sec. Sub. Financing NOTIFY TECHNOLOGY: Sept. 30 Equity Deficit Narrows to $600,000 ORECK CORP: Poor Performance Prompts S&P's Negative CreditWatch OVERSEAS SHIPHOLDING: Completes $471 Million Purchase of Maritrans OWENS CORNING: Professional Fee Claims Bar Date Set for January 2 PILGRIM'S PRIDE: Inks $1.1 Billion Merger Agreement with Gold Kist PITTSFIELD WEAVING: Committee Hires Sheehan Phinney as Counsel PRESIDENT CASINOS: Court Confirms Unit's Reorganization Plan Q COMM: Posts $1.3 Million Net Loss in Third Quarter of 2006 REFCO INC: Has Until January 12 to Solicit Plan Acceptances REFCO INC: Various Parties Raise Issues Against Joint Plan REVLON CONSUMER: Plans to Increase Term Loan to $840 Million REVLON INC: To Launch $100 Million Rights Offering RESIDENTIAL ASSET: S&P Junks Rating on Class M-I-3 Certificates SAINT VINCENTS: Can Access Sun Life's Collateral Until March 2 SARM MORTGAGE: Fitch Assigns Low-B Ratings to $1.6 Million Certs. SATELLITE SECURITY: Sept. 30 Balance Sheet Upside-Down by $5.9MM SCIENT INC: Court Sets Dec. 20 Admin. Claim Distribution Hearing SCOTTISH RE: Posts $30.5 Million Net Loss in 2006 Third Quarter SCOTTISH RE: Fitch Puts Ratings on Rating Watch Evolving SEARCHHELP INC: Sept. 30 Balance Sheet Upside-Down by $747,192 SEA CONTAINERS: Wants To Employ Appleby Hunter as Special Counsel SEA CONTAINERS: NYSE ARCA to Remove Securities on December 12 SECURITIZED ASSET: DBRS Rates $9.5MM Class B-4 Certs. at BB (high) SECURITIZED ASSET: Fitch Rates $9MM Class B-4 Certificates at BB+ SENSATA TECHNOLOGIES: Revenues Rise 11% to $298MM in 2nd Quarter SFG LP: Chapter 7 Trustee Hires McGinnis Lochridge as Counsel SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 STRUCTURED ASSET: Fitch Pares Rating on Class M4 Certs. to BB STRUCTURED ASSET: Fitch Cuts Rating Class B2 Certificates to BB- TERWIN MORTGAGE: DBRS Puts Low-B Ratings on Four Class Certs. TIMKEN CO: Gets $92.6 Million Subsidy from U.S. Customs TRIGEM COMPUTER: Earns KRW243-Mil. in Nine Months Ended Sept. 30 WAMU COMMERCIAL: Fitch Assigns Low-B Ratings to Six Certificates WASHINGTON MUTUAL: Moody's Rates Class B-13 Certificates at B2 WERNER LADDER: Court Okays Expansion of PwC's Duties as Auditor WHEELING PITTSBURGH: Esmark's Slate Elected to Board of Directors * Large Companies with Insolvent Balance Sheets ********* AGERE SYSTEMS: Inks $4 Billion Merger Agreement with LSI Logic -------------------------------------------------------------- LSI Logic Corporation and Agere Systems Inc. have entered into a definitive merger agreement under which the companies will be combined in an all-stock transaction with an equity value of approximately $4 billion. Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own. Based on the closing stock price of LSI on Dec. 1, 2006, this represents a value to Agere shareholders of $22.81 per share. The combined company, to be called LSI Logic Corporation, will offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products. The companies had combined revenue of $3.5 billion for the 12 months ended Sept. 30, 2006. The companies operate in more than 20 countries, with a combined workforce of approximately 9,100 employees, including nearly 4,300 engineers. The companies together own a substantial patent portfolio consisting of more than 10,000 issued and pending U.S. patents. Going forward, the new LSI expects to be well positioned to deliver significant benefits to its customers, shareholders and employees. By leveraging its increased scale, expanded IP portfolio and integrated workforce, LSI anticipates being a stronger, more competitive innovator of core technology and building block solutions that enable businesses and consumers to store, protect and stay connected to their information and digital content. "LSI and Agere share a rich heritage of innovation and thought leadership in creating enabling technologies that bring people and information together," LSI Logic president and chief executive officer Abhi Talwalkar said. "By joining forces, we expect the combined scale to enable us to extend our franchises in our market segments, realize significant synergies and better serve the needs of our collective customers, shareholders and employees." Agere Systems president and chief executive officer Richard Clemmer said, "Together, the two companies should be well positioned to achieve greater success. The complementary products and capabilities of each can enable the combined company to pursue significant new opportunities while delivering more value to customers. Agere shareholders, employees and customers will benefit from the synergies and enhanced growth prospects that are anticipated to result from a larger, more competitive organization." The combination of LSI and Agere is anticipated to create a semiconductor and storage systems powerhouse with an unparalleled innovation pipeline and a broad array of competitive, customer- valued products and solutions in large and growing markets. LSI's well-established presence in the storage and consumer electronics markets and Agere's broad footprint in storage, mobility and networking should enable the combined company to drive sustainable long-term growth and shareholder value through the strengthening of its combined platforms and the expansion of its existing customer relationships. "As valued Seagate partners, both Agere and LSI play an important role in providing products that help us deliver our industry- leading hard disc drives," Seagate Technology chief executive officer Bill Watkins said. "We are excited by the innovative possibilities that this new combination represents." About the Transaction Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI common stock for each share of Agere stock they own. Based on the closing stock price of LSI on Dec. 1, 2006, the total consideration to Agere shareholders would be approximately $4 billion or $22.81 per share. Upon closing, LSI will issue approximately 379 million shares on a diluted basis to complete the transaction. At that time, LSI and Agere shareholders will own approximately 52% and 48%, respectively, of the combined company. The combined company also expects to realize substantial cost savings beginning in 2007, with annual cost savings reaching at least $125 million in 2008 from increased efficiencies in manufacturing and operating expenses. The transaction is expected to be slightly dilutive in 2007 and meaningfully accretive in 2008 to LSI's earnings per share, on a non-GAAP basis. LSI president and chief executive officer Abhi Talwalkar will serve as president and chief executive officer of the new company, which will be headquartered in Milpitas, California, and will maintain a significant presence in Allentown, Pennsylvania, with various other locations worldwide. LSI non-executive chairman James Keyes will continue as non-executive chairman of the board of directors of the new company, which will be comprised of nine members, with six being designated by LSI and three being designated by Agere. The transaction is subject to the approval of shareholders from both companies as well as customary closing conditions and regulatory approvals. The companies expect the transaction to close in the first calendar quarter of 2007. Shares of the combined company will trade on the NYSE under the symbol "LSI." Morgan Stanley acted as financial advisor and Wilson Sonsini Goodrich & Rosati acted as legal counsel to LSI. Goldman, Sachs & Co. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to Agere. LSI Stock Repurchase Program LSI's board of directors has authorized a stock repurchase program of up to $500 million. The repurchases are expected to be funded from available cash and short-term investments. About LSI Logic Milpitas, Calif.-based LSI Logic Corporation (NYSE: LSI) -- http://www.lsi.com/-- provides silicon-to-system solutions that are used at the core of products that create, store, and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions, and software applications. LSI products enable technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today. About Agere Systems Agere Systems Inc. (NYSE: AGR) -- http://www.agere.com/-- provides semiconductors and software solutions for storage, mobility, and networking markets. The company's products enable a broad range of services and capabilities, from cell phones, PCs, and hard disk drives to the world's most sophisticated wireless and wireline networks. Agere's customers include manufacturers of consumer electronics and communications and computing equipment. * * * Moody's Investors rates Agere Systems Inc.'s long-term corporate and equity linked ratings at B1 and B3 respectively. The ratings were placed on Aug. 30, 2002, with a stable outlook. Standard & Poor's rates the Company's long-term local and foreign issuer credit ratings at BB-. The ratings were placed on Aug. 29, 2001, with a stable outlook. ALDERWOODS GROUP: Corporate Buyout Cues S&P's Ratings Withdrawal ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew all its ratings on Alderwoods Group Inc., including the 'BB-' corporate credit rating. Service Corp. International (BB/Negative/B-1) completed its transaction to acquire Alderwoods on Nov. 28, 2006. All of Alderwoods prior debt has been refinanced. ALLIED HOLDINGS: Fights Appointment of Official Equity Committee ---------------------------------------------------------------- Allied Holdings Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Georgia to deny the ad hoc committee of holders of approximately 25.2% of outstanding Allied Holdings common stock's renewed request for an appointment of an official committee of equity security holders of AHI. The Debtors do not believe that the Ad Equity Hoc Committee will be able to prove that they are not "hopelessly insolvent." Jeffrey W. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, explains that the Debtors are still negotiating with the International Brotherhood of Teamsters their proposal to reduce labor costs under their collective bargaining agreements with Teamsters-represented employees in the United States. Pending resolution of the labor issue, it is impossible to determine credibly whether the Debtors are "hopelessly insolvent," Mr. Kelley asserts. Nonetheless, even if the Court were to find that the Debtors are not "hopelessly insolvent," an official equity committee should not be appointed because the Ad Hoc Equity Committee cannot meet their burden of proof with regard to adequacy of representation of AHI's shareholders, Mr. Kelley asserts. Mr. Kelley points out that there is no evidence that the Debtors' Board of Directors, whose members collectively hold 39% of AHI's outstanding shares, has not provided, and will not continue to provide, adequate representation of the equity holders' interests. The Ad Hoc Equity Committee's allegation -- shareholders are not being adequately represented because the Debtors' "self-insurance" claims are over-collateralized -- is a rehash of the same, incorrect argument it attempted to put forward with its first request for an equity committee appointment, Mr. Kelley asserts. He notes that the Court has held that AHI's shareholders were being adequately represented as of the time of the entry of February 28, 2006 order denying the first request. "Nothing has changed since then to alter the Court's finding," he says. In addition, the Debtors deny the Ad Hoc Committee's claims that they have effectively abdicated their responsibilities to manage their reorganization to Yucaipa American Alliance (Parallel) Fund I LP, et al., the recent purchasers of two-thirds of AHI's outstanding 8-5/8% Senior Unsecured Notes due 2007. Mr. Kelley clarifies that the Debtors have not abdicated their responsibilities to Yucaipa in connection with their negotiations with the Teamsters. The Debtors believe that it is in their sound business judgment to continue to allow Yucaipa the opportunity to assist them in seeking a consensual resolution with the union. Despite the Debtors' willingness to permit assistance by Yucaipa, any decisions regarding resolution of labor issues will continue to be made independently by the Debtors in consultation with their professionals, Mr. Kelley asserts. In an exercise of independent business judgment, and with a view towards fulfilling fiduciary responsibilities owed to all constituencies, the Debtors have made the determination that the filing of a motion under Section 1113(c) of the Bankruptcy Code to reject the Teamsters CBA would not be appropriate at this time. The Debtors also deny the Ad Hoc Equity Committee's accusation that they have abdicated responsibilities to Yucaipa for the purpose of allowing Yucaipa to effect a merger between the Debtors and Performance Transportation Systems, Inc., another car-haul company in Chapter 11. Mr. Kelly avers that the Debtors are currently pursuing a strategy of a "stand alone" plan of reorganization that does not involve a merger with PTS. Moreover, the Debtors contend that the allegation that they were dictated by Yucaipa to withdraw their second motion for Section 1113(e) relief is factually inaccurate. Mr. Kelley explains Morgan Stanley Senior Funding, Inc.'s commitment to provide additional financing to the Debtors did not require the Debtors continue to prosecute the second Section 1113(e) motion. Morgan Stanley had emerged as the successful lender in an "auction" to select the best deal for the additional $30,000,000 financing contemplated under the fifth amendment to the DIP Credit Facility. Mr. Kelley asserts that the three factors cited in Albero v. Johns-Manville Corp. (In re Johns-Manville Corp.), 68 B.R. 155, 158 (S.D.N.Y. 1986)), weigh against the appointment of an equity committee: (i) the Debtors' bankruptcy cases are not complex -- AHI has only one class of stock outstanding, and AHI's debt structure is relatively simple; (ii) the number of shareholders is relatively small -- 1,434 as of the Petition Date, which figure has not materially changed postpetition; and (iii) since there would be no benefit from an equity committee because shareholders are adequately represented, the costs of that committee would outweigh the benefits. Debtors Want Subpoenas Quashed On November 6, 2006, the Ad Hoc Equity Committee issued a subpoena and notice of deposition requesting a "30(b)(6)" deposition of AHI on November 30. The Ad Hoc Committee also issued a subpoena and a "30(b)(6)" notice of deposition to Yucaipa for depositions in California on December 4 and 5. The Deposition Notices also sought the production of certain documents by AHI and Yucaipa. The Debtors thus ask the Court to: (1) enter an order continuing the hearing on their second request for the appointment of an official equity committee and staying all discovery as to the request until resolution of the discovery disputes; (2) issue an appropriate protective order with respect to the Notice; and (3) quash the Subpoenas. The Debtors object to the scheduled depositions and the production of the requested documents for several reasons: -- the documents and information requested constitute, and would require the disclosure of, the Debtors' material, nonpublic confidential commercial information; -- the deposition topics in the Rule 30(b)(6) of the Federal Rules of Civil Procedure notices of deposition are not specified with reasonable particularity; and -- the requested discovery is unrelated and irrelevant to the Ad Hoc Committee's request and is unduly burdensome and oppressive for AHI. Ad Hoc Committee Talks Back Paul N. Silverstein, Esq., at Andrews Kurth LLP, in New York, argues that there is no basis for the Debtors to treat the Ad Hoc Equity Committee and Yucaipa differently with regard to the disclosure of information. He notes that, similar to the Ad Hoc Equity Committee, Yucaipa is not a member of any official committee. According to Mr. Silverstein, the Debtors' willingness to treat Yucaipa and the Ad Hoc Equity Committee differently raises legitimate and serious concerns as to the influence that Yucaipa is exercising over the Debtors and provides further support for the necessity of an official equity committee. The Ad Hoc Equity Committee notes that Yucaipa has an acknowledged relationship with Performance Transportation Systems, Inc., the Debtors' primary competitor. The Ad Hoc Committee believes that Yucaipa is posed to become the owner of PTS when it emerges from bankruptcy. Mr. Silverstein contends that the Debtors' argument that it is premature to determine their solvency is another red herring because, among other things, "solvency" and "ultimate valuation" are not the relevant tests for the creation of an official equity committee. Furthermore, Mr. Silverstein relates, in a final effort to resolve the discovery dispute consensually, the Ad Hoc Equity Committee had proposed to further limit the requested discovery to the Debtors and Yucaipa. It also reiterated its prior agreement to enter into a confidentiality agreement to protect any non-public or other confidential information that is being produced. The Ad Hoc Equity Committee's willingness to limit its requested discovery strikes a fair balance between any purported concerns by the Debtors or Yucaipa and the Ad Hoc Committee's legitimate right to obtain information in anticipation of the hearing on its request, Mr. Silverstein says. Hence, the Ad Hoc Equity Committee asks the Court to: (i) deny the Debtors' request to quash and for protection; (ii) overrule the Debtors' and Yucaipa's objections to the Subpoenas; and (iii) compel the Debtors and Yucaipa to produce documents and make 30(b)(6) witnesses available for deposition in accordance with the proposed discovery. 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. 35; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Wants to Employ Resource Real as Broker -------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Resource Real Estate Partners, LLC, as the exclusive broker for 43.75 acres of real property owned by Allied Systems, Ltd. (L.P.) in accordance with a brokerage agreement between Allied Holdings, Inc., and Resource Real Estate. The Agreement, executed on Nov. 13, 2006, and effective through March 1, 2007, grants Resource Real Estate exclusive authority to market and solicit bids for the property commonly known as 25 Southside Industrial Parkway in the city of Hapeville, Georgia. Resource Real Estate will be paid a commission equal to 6% of the Property's sale price. A full-text copy of the Agreement is available for free at: http://researcharchives.com/t/s?164b Resource Real Estate has not received a retainer or any payments from the Debtors during the 90 days immediately preceding the Petition Date. Alisa H. Aczel, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, tells the Court that Resource Real Estate is uniquely qualified to represent the Debtors because its professionals have extensive experience in various aspects of real estate, including land sales, investment sales, equity placement, and leasing. Resource Real Estate realized around $500,000,000 in land sales in the Atlanta Metropolitan Market since 1996, Ms. Aczel adds. Scott McGregor, an associate broker at Resource Real Estate, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Resource Real Estate does not hold or represent any interest adverse to the Debtors or their estates with respect to the matters it is being engaged, Mr. McGregor says. 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. 35; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Wants Until March 31 to Decide on Leases --------------------------------------------------------- Allied Holdings Inc. and its debtor-affiliates ask for an additional 98-day extension of their deadline to assume, assume and assign or reject all non-residential real property leases through and including March 31, 2007. Thomas R. Walker, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, relates that the Debtors continue to be lessees to 51 non-residential real property leases. Mr. Walker tells the Hon. Coleman Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia that cause exists for the Court to grant the extension citing: (1) the Debtors have paid and will continue to pay all postpetition lease obligations under the Leases; (2) given the large number of Leases, the Debtors need additional time to determine whether the Leases should be assumed or rejected; (3) no harm to the landlords to the Leases will result from an extension of time because all lease obligations will continue to be paid; (4) the Debtors have been diligent in their efforts to reject and assume non-residential real property leases which, in their business judgment, needed to be rejected or assumed; and (5) the Debtors intend to file a plan of reorganization soon, which plan will address the ultimate treatment of the Leases. A list of the 51 Leases is available for free at http://researcharchives.com/t/s?164a 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. 35; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMC ENT: Posts $10.7 Million Net Loss in Period Ended September 28 ------------------------------------------------------------------ AMC Entertainment Inc. reported a $10.711 million net loss on $631.55 million of revenues for the thirteen weeks ended Sept. 28, 2006, compared with a $10.717 million net loss on $398.94 million of revenues for the same period in 2005. At Sept. 28, 2006, the company's consolidated balance sheet showed $4.28 billion in total assets, $3.06 billion in total liabilities, and $1.22 billion in total stockholders' equity. At Sept. 28, 2006, the company's consolidated balance sheet also showed $401.18 million in total current assets available to pay $381.75 million in total current liabilities. While revenues increased 58.3%, or $232.62 million, during in the thirteen weeks ended Sept. 28, 2006 compared to the same period in 2005, total costs and expenses also increased by $207.03 million during the thirteen weeks ended Sept. 28, 2006 compared to the thirteen weeks ended Sept. 29, 2005. Other expense also increased by $22.05 million, primarily due to the increase in interest expense of $25.36 million, or 97.2%, primarily due to increased borrowings. Full-text copies of the company's consolidated financial statements for the thirteen weeks ended Sept. 28, 2006, are available for free at: http://researcharchives.com/t/s?161e Headquartered in Kansas City, Missouri, AMC Entertainment Inc. -- http://www.amctheatres.com/-- is one of the world's leading theatrical exhibition companies with interests in approximately 411 theatres with 5,635 screens. About 82 percent of the company's theatres are located in the U.S. and Canada, and 18 percent in Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the United Kingdom. * * * AMC Entertainment Inc.'s Senior Secured Revolving Credit Facility carries Moody's Investors Service's Ba1 Probability-of-Default rating. AMERIPATH INC: Earns $5.7 Million Net Income in 2006 Third Quarter ------------------------------------------------------------------ Ameripath Inc. reported a $5.7 million net income for the third quarter of 2006, compared with a $2.9 million net income for the comparable period in 2005. Net revenues for the third quarter of 2006 increased to $191.7 million from $143.6 million in the third quarter of 2005. Net revenues and results of operations include the results of Specialty Laboratories, Inc., a hospital-focused clinical reference laboratory specializing in esoteric testing, from the effective date of the acquisition by Ameripath, which was Jan. 31, 2006. Net revenues from Specialty for the third quarter of 2006 were $40.6 million. Same store revenues for the third quarter of 2006 increased 5.5%, or $7.8 million, when compared to the third quarter of 2005. At Sept. 30, 2006, the company's consolidated balance sheet showed $1.4 billion in total assets, $819.4 million in total liabilities, and $579 million in total stockholders' equity. A full-text copy of the company's Form 10-Q filing for the quarter ended Sept. 30, 2006, is available for free at: http://ResearchArchives.com/t/s?1654 About Ameripath Ameripath is a leading national provides physician-based pathology, dermatopathology and molecular diagnostic services to physicians, hospitals, clinical laboratories and surgery centers. A team of subspecialized pathologists and Ph.D. scientists provide medical expertise, diagnostic quality, and personal consultation services. AmeriPath's team of more than 400 highly trained, board-certified pathologists provide medical diagnostics services in outpatient laboratories owned, operated and managed by Ameripath, as well as in hospitals and ambulatory surgical centers. Specialty Laboratories supports local pathology and community- based medicine by partnering with pathologists and hospitals to improve patient care and reduce episodes-of-care costs. Specialty offers hospitals an extensive menu of highly advanced clinical tests used by physicians to diagnose, monitor and treat disease and a single-source solution for esoteric testing needs. * * * As reported in the Troubled Company Reporter on Nov. 7, 2006, Moody's Investors Service affirmed its B2 Corporate Family Rating for Ameripath Inc. AMERIQUEST MORTGAGE: Fitch Junks Rating on Class M2 Issues ---------------------------------------------------------- Fitch has taken rating actions on Ameriquest Mortgage Securities Inc.'s home equity issues: * AMSI, series 2002-C -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'BBB'; -- Class M2 downgraded to 'CC/DR4' from 'B'. * AMSI, series 2003-6 -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA-'; -- Class M3 affirmed at 'A+'; -- Class M4 affirmed at 'A'; -- Class M5 rated 'BBB' is placed on Rating Watch Negative; and, -- Class M6 rated 'BBB-' is placed on Rating Watch Negative. The affirmations, affecting approximately $314,938,093 of the outstanding balances, are taken due to a satisfactory relationship of credit enhancement to expected losses. In AMSI series 2002-C, class M2 is downgraded due to monthly losses which have generally exceeded excess spread and caused deterioration in the overcollateralization amount. As of the November 2006 distribution, the OC amount of $2,122,961.06 is below the target amount of $6,500,000. As of the cut-off date, the collateral for series 2002-C had a weighted average original loan-to-value of 78.10%, and consists primarily of loans for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 36% of current balance at origination to 62% of current balance in November. In AMSI series 2003-6, classes M5 and M6 are placed on Rating Watch Negative due to monthly losses exceeding the available excess spread in recent months, which has caused deterioration in the overcollateralization amount. As of the November 2006 distribution, the OC amount of $6,978,833 is below the target amount of $8,902,438. As of the cut-off date, the collateral for series 2003-6 had a weighted average original loan-to-value of 79.32%, and all of the loans from the trust were for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 35% of current balance at origination to 57% of current balance in November. The underlying collateral consists of fully amortizing 15 to 30 year fixed and adjustable rate mortgages secured by first liens extended to subprime borrowers. As of the November distribution date, the transactions listed above are seasoned from 48 (2002-C) to 42 (2003-6) months. The pool factors range approximately from 9% (2002-C) to 17% (2003-6). The Ameriquest Securities loans, the retail sector for the Ameriquest Mortgage Securities Inc., were either originated or acquired by Ameriquest Mortgage Company. Ameriquest Mortgage Company serves as the servicer for the loans and is rated 'RPS2+' by Fitch. Fitch's Distressed Recovery ratings, introduced in April 2006 across all sectors of structured finance, are designed to estimate recoveries on a forward-looking basis while taking into account the time value of money. ARCH COAL: Earns $50.9 Million in 2006 Third Quarter ---------------------------------------------------- Arch Coal Inc. reported third quarter 2006 consolidated net income of $50.9 million compared with $18.9 million in the prior-year period. Arch more than doubled its income from operations during the third quarter of 2006, reaching $82.2 million compared with $34.2 million in the prior-year period. Adjusted EBITDA increased nearly 50% over the year-ago period, to $135.8 million from $92.0 million, while revenues declined on a year-over-year basis due to the disposition of select Central Appalachian operations at the end of 2005. "Despite the recent weakening in market conditions, Arch Coal achieved a solid operating performance in the third quarter of 2006 compared with the third quarter of 2005, with substantial improvement in EPS, operating income and EBITDA," said Steven F. Leer, Arch's chairman and chief executive officer. "At the same time, we made a strategic investment in a growing Illinois basin coal producer to expand Arch's footprint in that increasingly attractive region and acquired an interest in DKRW Advanced Fuels, LLC, to participate in the emerging coal-to-liquids industry. Additionally, we announced and commenced a share repurchase program of Arch's common stock to enhance value for our shareholders." "By effectively managing our controllable costs, Arch has succeeded in expanding its operating margins and earnings on a year-over-year basis," said John W. Eaves, Arch's president and chief operating officer. "However, as expected, Arch's operations during the third quarter of 2006 were affected by three scheduled longwall moves, as well as continuing rail challenges and generally weaker pricing conditions in the marketplace." Arch continues to take a patient approach to its marketing efforts, layering in near-term sales while maintaining a significant unpriced position in future periods. Despite weaker pricing conditions, current spot prices for the coal basins in which Arch operates are above the company's year-ago price realization levels. "Arch expects that a return to normal demand growth for coal and continuing supply pressures in Appalachia will exert upward pressure on coal pricing in the future," said Mr. Leer. During the third quarter, Arch signed commitments for 4.7 million tons of Powder River Basin coal for delivery principally in 2007 at prices averaging more than 25% above the company's average price realization in this region for quarter just ended. Additionally, the company signed commitments for 4.9 million tons of Central Appalachian coal for delivery over the next two years at an average realized price that is nearly 10% above this region's average realized price for the third quarter of 2006. In the Western Bituminous region, Arch signed commitments for approximately 1.6 million tons of coal for delivery through 2010 at an average price that is more than 50% above this region's average price realization in the just-ended quarter. Other sales contracting activity during the third quarter consisted of short-term deals associated with remaining uncommitted 2006 production volumes. Based on current expected production over the next two years, Arch has unpriced volumes of 35 to 45 million tons in 2007 and 80 to 90 million tons in 2008. "Despite weaker near-term market conditions, Arch continues to concentrate on achieving margin expansion through the roll-off of lower-priced sales contracts and further progress in optimizing operational execution," said Mr. Leer. "Arch is sharply focused on managing the principal business drivers that should translate into significant value for its shareholders. As such, Arch is committed to making the right business decisions in the near-term in response to current market conditions in order to retain upside potential for the long-term." With the recent weakness in U.S. coal markets, Arch is now targeting lower fourth quarter 2006 and full year 2007 production levels. "While the long-term outlook for U.S. coal markets remains extremely bright, near-term factors have served to dampen market demand and depress pricing," said Mr. Leer. "Our goal is always to match our ongoing production levels with market demand, while leaving the remainder of our valuable, low-cost reserves in place for future development. As a result, we have reduced our targeted production for the fourth quarter of 2006 by 3 million tons and for full year 2007 by approximately 10 million tons. Arch is now targeting production of approximately 140 million tons in 2007." Arch has invested a significant amount of time and energy in recent years in an effort to increase the flexibility of its mining operations, according to Mr. Leer. "Despite the fact that coal mines have relatively high fixed costs, we believe we can operate our mines productively and profitably at reduced production levels," said Mr. Leer. "We strongly believe in the long-term fundamentals of U.S. coal markets," continued Mr. Leer. "Coal's economic advantage over other fuels in electric generation markets has led to a significant level of new coal-fueled capacity announcements, which is expected to translate into meaningful incremental coal demand beginning by 2008. This development represents a sea change for the industry. Additionally, public interest in domestic energy independence and the price of oil is swinging momentum in favor of real investment in Btu-conversion technologies. Arch expects to benefit from these new demand drivers given its size, diverse asset portfolio, skilled workforce, and low-cost operations." St. Louis-based Arch Coal, Inc. (NYSE: ACI) is the second largest coal producer in the United States, with subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch provides the fuel for approximately 7% of the electricity generated in the United States. * * * As reported in the Troubled Company Reporter on Oct. 18, 2006, Moody's Investors Service confirmed its Ba3 Corporate Family Rating for Arch Coal Inc. and its B1 rating on the Company's subsidiary, Arch Western LLC's $950 million issue of 6.75% guaranteed senior unsecured notes due 2013. ARI NETWORK: Earns $225,000 in Period Ended October 31 ------------------------------------------------------ ARI Network Services Inc.'s balance sheet at Oct. 31, 2006, showed total assets of $8.655 million and total liabilities of $8.671 million, resulting in a total shareholders' deficit of $16,000. The Company's total shareholders' deficit at July 31, 2006, stood at $312,000. For the 2007 first fiscal quarter ended Oct. 31, 2006, the company reported revenues of $3.5 million, compared with $3.4 million for the first quarter of fiscal 2006. Operating income was $229,000 for the first quarter of fiscal 2007, compared with operating income of $524,000 for the same period in the prior year. Net income was $225,000 for the first quarter of fiscal 2007, compared with $498,000 for the first quarter of fiscal 2006. ARI Network Services Inc. (OTCBB: ARIS) builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services to 71 equipment manufacturers in the U.S. and Europe and approximately 29,000 dealers and distributors in 89 countries in a dozen segments of the equipment market including outdoor power, power sports, ag equipment, recreation vehicle, floor maintenance, auto, and truck parts aftermarket, marine, and construction. AUTO UNDERWRITERS: Malone & Bailey Raises Going Concern Doubt ------------------------------------------------------------- Malone & Bailey PC expressed substantial doubt about Auto Underwriters of America Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended June 30, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations and significant working capital deficiency. The company reported a $6,574,353 net loss for the year ended June 30, 2006, compared with a $1,528,355 net loss in the prior year. Total revenues decreased $1,230 for the year ended June 30, 2006, compared with the corresponding prior year principally as a result of the significant slow-down in vehicle sales during the period. A couple of factors combined to produce a decidedly negative effect on sales for the period. These factors consisted of: a) the impact of rising energy prices which placed a strain on the customers' ability to meet all of their financial obligations and created a difficult environment for vehicle sales, and b) hurricane Rita, which created significant disruptions to the company customers' lives, as many people were negatively affected. At June 30, 2006, the company's balance sheet showed $9,229,672 in total assets and $14,125,174 in total liabilities, resulting in a $4,895,502 stockholders' deficit. A full-text copy of the company's annual report is available for free at http://researcharchives.com/t/s?163c Based in San Jose, Calif., Auto Underwriters of America Inc. -- http://www.autounderwriter.com/-- purchases and services non- prime installment sales contracts originated by automobile dealers in the sale of new and used automobiles, and light trucks in the United States. AXCESS INT'L: Sept. 30 Balance Sheet Upside-Down by $3.4 Million ---------------------------------------------------------------- Axcess International Inc. filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission. The company reported an $873,608 net loss on $369,621 of sales for the three months ended Sept. 30, 2006, compared with a $785,720 net loss on $204,711 of sales in the comparable period of 2005. At Sept. 30, 2006, the company's balance sheet showed $1,258,707 in total assets and $4,685,878 in total liabilities, resulting in $3,427,171 stockholders' deficit. The company's September 30 balance sheet also showed strained liquidity with $1,023,732in total current assets available to pay $1,320,378 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?1636 Going Concern Doubt Hein & Associates LLP expressed substantial doubt about Axcess International's ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005, and 2004. The auditing firm pointed to the company's recurring losses from operations and resulting continued dependence upon access to additional external financing. About AXCESS International Headquartered in Dallas, Texas, AXCESS International Inc. -- http://www.axcessinc.com-- through its proprietary technology, is a manufacturer of advanced physical security and enterprise asset management systems that can automatically locate, identify, track, monitor, count, and protect people, property and vehicles. The purpose of the systems is: to reduce loss and liability; to increase the efficiency of a client's employees; and to improve the management of personal property, logistics, and facilities. Axcess utilizes two patented and integrated technologies: battery- powered wireless tagging called Active-Radio Frequency Identification and network based streaming digital video. BIOFORCE NANOSCIENCES: Posts $623,096 Net Loss in 2006 3rd Quarter ------------------------------------------------------------------ BioForce Nanosciences Inc. incurred a net loss of $623,096 for the three months ended Sept. 30, 2006, compared with a $452,963 net loss for the three months ended Sept. 30, 2005. Included in general and administrative expense in 2006 is $58,880 for the value of options granted to the company's employees. Excluding this non-cash expense, loss for 2006 would have been $564,216. During the three months ended Sept. 30, 2006, revenue decreased 10% from the same period of 2005. Revenue for 2006 was $31,430, which is a $3,426 decrease from fiscal 2005 sales of $34,856. The company recorded a decrease in consulting revenue of $14,255 and AFM Solutions of $18,675, which was offset by an increase in sales of TipCleaner of $29,988. TipCleaner is a device for cleaning Atomic Force Microscopy probes. At Sept. 30, 2006, the company's balance sheet showed $5,389,540 in total assets, $620,955 in total liabilities and stockholders' equity of $4,768,585. A full-text copy of the company's quarterly report is available for free at http://researcharchives.com/t/s?1643 Going Concern Doubt Moore & Associates, Chartered, expressed substantial doubt about BioForce Nanosciences' ability to continue as a going concern after auditing the Company's financials statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring losses and lack of operations. About BioForce Nanosciences BioForce Nanosciences Inc. -- http://www.bioforcenano.com/-- is a nanotechnology tools and applications company, providing products that support the growth of the nanotechnology industry. BioForce is a wholly owned subsidiary of BioForce Nanosciences Holdings, Inc. C-BASS MORTGAGE: Moody's Rates Class B-4 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned an Aaa rating to the senior certificates issued by C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-RP2, and ratings ranging from Aa2 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Ameriquest Mortgage Company, The Provident Bank and various other originators who originated less than 10% of the mortgage loans, adjustable-rate and fixed-rate subprime loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, and an interest rate swap agreement. Moody's expects collateral losses to range from 7.8% to 8.3%. Litton Loan Servicing LP will service the loans. Moody's has assigned Litton its top servicer quality rating of SQ1 as a primary servicer of subprime loans. These are the rating actions: * Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2006-RP2 Cl. A-1, Assigned Aaa Cl. A-2, Assigned Aaa Cl. A-3, Assigned Aaa Cl. A-4, Assigned Aaa Cl. M-1, Assigned Aa2 Cl. M-2, Assigned A2 Cl. M-3, Assigned A3 Cl. B-1, Assigned Baa1 Cl. B-2, Assigned Baa2 Cl. B-3, Assigned Baa3 Cl. B-4, Assigned Ba1 CABLEVISION SYSTEMS: Charles & James Dolan Ink Aircraft Leases -------------------------------------------------------------- Cablevision Systems Corporation's chairman, Charles F. Dolan, and chief executive officer, James L. Dolan, entered into aircraft time-sharing agreements with the company's subsidiary that holds interests in the company's aircraft. Pursuant to the agreements the senior executives may lease an aircraft from the company for personal use, for which the executives will pay for the actual expenses of each specific flight to the maximum extent permitted under Federal Aviation Administration rules. Full text-copies of the Aircraft time-sharing agreements may be viewed at no charge at: -- Time Sharing Agreement between CSC Transport IV, Inc. and Charles F. Dolan: http://ResearchArchives.com/t/s?1620 -- Time Sharing Agreement between CSC Transport V, Inc. and Charles F. Dolan: http://ResearchArchives.com/t/s?1621 -- Time Sharing Agreement between CSC Transport IV, Inc. and James L. Dolan: http://ResearchArchives.com/t/s?1622 -- Time Sharing Agreement between CSC Transport V, Inc. and James L. Dolan: http://ResearchArchives.com/t/s?1623 Headquartered in Bethpage, New York, Cablevision Systems Corporation is a domestic cable multiple system operator serving more than 3 million subscribers in and around the metropolitan New York area. Its wholly owned subsidiary, Rainbow National Services LLC, headquartered in Jericho, New York, supplies television programming to cable television and direct broadcast service providers throughout the United States. * * * As reported in the Troubled Company Reporter on Oct 11, 2006 Moody's Investors Service placed all ratings for Cablevision Systems Corporation, CSC Holdings, Inc., a wholly owned subsidiary of CVC, and Rainbow National Services LLC on review for downgrade following the Dolan family's announcement of a proposal to acquire Cablevision. The ratings on Cablevision Systems Corporation that are under review are: Corporate Family Rating, Placed on Review for Possible Downgrade, currently at B1; Probability of Default Rating, Placed on Review for Possible Downgrade, currently at B1; and Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently at B3, LGD6, 93%. CALPINE CORP: Judge Lifland Approves SDG&E Reinstatement Agreement ------------------------------------------------------------------ The Hon. Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York approves the Reinstatement Agreement between Otay Mesa Energy Center, LLC, and San Diego Gas & Electric Company, and the Contribution and Transfer Agreement between the Debtors and OMEC. Judge Lifland also authorizes Calpine Power Company to pledge its membership interest in OMEC to a third party project financing party without further Court order, in connection with OMEC's incurrence of debt financing sufficient for the acquisition, construction, ownership, operation, maintenance or leasing of the Facility. The Court further authorizes Calpine Corporation to: (i) record the Equity Investments as equity interests in CPC and, thus, ultimately as investments in OMEC on account of capital contributions; and (ii) make the Intercompany Payments, aggregating $28,400,000. The Reinstatement Agreement As reported in the Troubled Company Reporter on Nov. 7, 2006, Mr. Spiegel states that under the Reinstatement Agreement, the parties will undertake a series of transactions that will culminate with the execution of the Amended PPA by SDG&E and OMEC. Some of the key transactions contemplated under the Reinstatement Agreement are: (a) the transfer of all Facility Assets comprising the Otay Mesa Project from the Debtors to SDG&E, free and clear of all Liens other than certain Permitted Liens; (b) the assignment of all of Calpine Corp.'s rights as lessee under a Ground Lease and Easement Agreement, dated July 8, 2003, as amended, to SDG&E; (c) Calpine Corp's entry into a Ground Sublease and Easement Agreement with OMEC, and the subsequent assignment of all of Calpine Corp.'s rights as sublessor under the Sublease to SDG&E. The Sublease will contain: * a Put Option in favor of OMEC to require SDG&E to purchase the Otay Mesa Project on the 10th anniversary of the Commercial Operation Date or upon the termination of the Amended PPA as a result of a default by SDG&E; and * a Call Option in favor of SDG&E to require OMEC to sell the Otay Mesa Project to SDG&E on the 10th anniversary of the Commercial Operation Date or upon the termination of the Amended PPA as a result of a default by OMEC. (d) the posting of a $25,000,000 Letter of Credit by the Debtors in support of the Amended PPA in favor of SDG&E; (e) CPC's pledge of its membership interest in OMEC to third party project financing parties without further Court order, in connection with OMEC's incurrence of Project Financing sufficient for the acquisition, construction, ownership, operation, maintenance or leasing of the Project; and (f) the amendment and restatement of the Interconnection Agreements between the Debtors and SDG&E, and their subsequent assignment to OMEC at closing. About Calpine Corporation Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially its entire remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CHATTEM INC: Moody's Lowers Senior Subordinated Rating to B2 ------------------------------------------------------------ Moody's Investors Service confirmed the Ba3 corporate family rating of Chattem Inc. and lowered the senior subordinated rating to B2 from B1. The confirmation of the corporate family rating reflects: -- the company's diversified product portfolio, with strong market positions in defensible niche product categories; -- the incremental benefits of the pending acquisition to the U.S. rights of five leading consumer and over-the-counter brands from Johnson & Johnson and the consumer healthcare business of Pfizer; and, -- Moody's expectation that the company will maintain its balanced approach to financial policy including a priority of near-term debt reduction. While Moody's recognizes Chattem's track record in successfully integrating acquisitions into its existing product portfolio, the rating agency is mindful of the potential for integration-related issues given the nearly 40% increase in the company's revenue while at the same time total debt increases by over 2.5x. The downgrade of the senior subordinated notes reflects the significant change in the company's capital structure including issuance of additional senior debt ahead of the subordinated notes after the recent issuance of $125 million in convertible debt as well as the pending closing of a $300 million term loan B facility. The outlook is stable. These actions conclude a review for possible downgrade initiated on Oct. 6, 2006. "Chattem's Ba3 corporate family rating and stable outlook reflects Moody's view that despite its relative small size for a consumer products company, the company's portfolio of niche brands will continue to generate strong profitability and cash flow," says Moody's Vice President Janice Hofferber. At the same time, Moody's is mindful that the significant leverage incurred as a result of the pending acquisition is a significant offset to these credit strengths. Accordingly, should anticipated profit targets for the acquired or existing brands not be achieved or should the company engage in additional debt-financed acquisitions or share repurchases before credit metrics are restored to more comfortable levels, the ratings or outlook may be negatively impacted. An upgrade is unlikely in the near-term. For an upgrade, Moody's would need to conclude that risks stemming from the integration of the acquired brands had been reduced, financial metrics had been restored such that Debt to EBITDA was sustained below 3x and Free Cash Flow to Debt was above 20%. Ratings confirmed: -- Corporate family rating of Ba3, and -- Probability of default rating of Ba3. Ratings downgraded: -- $108 million senior subordinated notes, to B2, LGD6, 91% from B1, LGD5, 76%. Chattem Inc. markets and manufactures a broad portfolio of branded OTC healthcare products, toiletries and dietary supplements. Total revenues for the last twelve months ended Aug. 2006 were approximately $299 million. CHESAPEAKE ENERGY: Fitch Rates EUR600 Mil. Sr. Notes Offer at BB ---------------------------------------------------------------- Fitch assigned a rating of 'BB' to Chesapeake Energy Corporation's offering of EUR600 million of senior notes due 2017 priced at 6.25%. The notes will rank pari passu in right of payment with the company's existing and future senior notes. Proceeds from the offering will be used to repay outstanding borrowings on the company's revolving credit facility which stood at approximately $1.952 billion as of Nov. 30, 2006. Fitch rates Chesapeake's debt with a Stable Outlook: -- Issuer Default Rating at 'BB'; -- Senior unsecured debt at 'BB'; -- Senior secured revolving credit facility and hedge facility at 'BBB-'; -- Convertible preferred stock at 'B+'. Chesapeake continues to be an aggressive acquirer and consolidator of U.S. natural gas assets having completed $3.1 billion in acquisitions in 2006. To finance its aggressive acquisition strategy, the company has historically used a balanced mix of roughly 50% debt and 50% equity. Implicit in the current ratings for Chesapeake is the assumption that the company will continue this trend going forward. Chesapeake's ratings continue to be supported by the size and 'low risk' profile of its oil and gas reserves, its robust organic reserve replacement and growth at economic costs and its hedging strategy which has given a good line of sight to the expected cash flows over the next several quarters. Fitch continues to have concerns regarding the rising cost of acquisitions and Chesapeake's leverage versus its peer group. While Fitch views the balanced acquisition financing positively. The company's debt-to-proven reserve metrics are among the highest in the industry after allocating a percentage of the company's debt to the company's drilling rigs and a percentage of the company's preferred stock as debt. Future acquisitions remain almost a certainty and, given the prices for proven reserves and the mix of debt and equity, they will be leveraging as debt to reserve metrics will rise. Chesapeake is an Oklahoma City-based company focused on the exploration, production and development of natural gas. The company's proved reserves remain predominantly natural gas and are based 100% in North America. Chesapeake's operations are concentrated primarily in the Mid-Continent, South Texas, the Permian Basin, and the Appalachia Basin. The company's reserve growth in recent years reflects the company's aggressive acquisition strategy and consistent success through the drill-bit. CITIGROUP MORTGAGE: Fitch Puts Low-B Ratings on $2.8-Mil. Certs. ---------------------------------------------------------------- Fitch rates Citigroup Mortgage Loan Trust Inc., mortgage pass- through certificates, series 2006-AR9: -- $214,785,100 classes 2-R, 2-A, 2-AIO, and 2-BIO senior notes 'AAA'; -- $5,000,000 class 2-B1, 'AA'; -- $2,500,000 class 2-B2, 'A'; -- $1,591,000 class 2-B3, 'BBB'; -- $2,273,000 non-offered class 2-B4, 'BB'; -- $568,000 non-offered class 2-B5, 'B'; and -- $568,607 non-offered class 2-B6 'NR'. The 'AAA' ratings on the senior notes reflect the 5.5% subordination provided by the 2.2% class 2-B1, the 1.1% class 2- B2, the 0.7% class 2-B3, the 1% non-offered class 2-B4, the 0.25% non-offered class 2-B5, the 0.25% non-offered class 2-B6 (not rated by Fitch). Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. Also, the ratings reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, primary servicing capabilities of Wells Fargo Bank and the master servicing capabilities of CitiMortgage, Inc. The mortgage loans have a final aggregate principal balance of approximately $227,285,706.61 as of the cut-off date, an average balance of $494,099.36, a weighted average remaining term to maturity of 357 months, a weighted average original loan-to-value ratio of 69.33% and a weighted average coupon of 6.815%. The weighted average FICO credit score of the loans is 736. Owner occupied properties and second homes comprise 51.12% and 13.28% of the loans, respectively. The states that represent the largest geographic concentration are California, Florida and New York. All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. CITIGROUP MORTGAGE: Losses Cue S&P to Cut Rating on Class B-3 Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on class B-3 from Citigroup Mortgage Loan Trust's series 2003-CB5 to 'BB-' from 'BBB-' and placed it on CreditWatch with negative implications. At the same time, the 'BBB+' rating on class M-7 from Citigroup Mortgage Loan Trust Inc.'s series 2003-HE4 was also placed on CreditWatch with negative implications. Concurrently, the ratings on the remaining classes from both series were affirmed. The downgrade and CreditWatch negative placement on the class B-3 rating reflect realized losses that have exceeded monthly excess interest cash flow, causing overcollateralization to drop below its initial 0.75% o/c target amount. As of Nov. 25, 2006, approximately $2 million of the collateral pool for series 2003-CB5 was in foreclosure and $6 million was 90- plus days delinquent, compared with o/c of $2.2 million, representing 0.63% of the original pool balance. The CreditWatch negative placement on the class M-7 rating reflects the large balances of mortgage loans that are severely delinquent compared with the remaining credit support provided by o/c and excess spread. As of Nov. 25, 2006, approximately $10.86 million of the collateral pool was REO, $10 million was in foreclosure, and $10.5 million was 90-plus days delinquent. The o/c is currently $7.5 million, monthly excess spread for the next 12 months is expected to average approximately $5 million. Standard & Poor's will continue to closely monitor the performance of these transactions. In both cases, if the severely delinquent mortgage loans result in significant realized losses, further negative rating action can be expected. Conversely, if the severely delinquent mortgage loans become current or do not result in large realized losses, Standard & Poor's will affirm the ratings and remove them from CreditWatch. The affirmations are based on credit support percentages that are adequate to maintain the current ratings on the certificates. As of the Nov. 2006 distribution date, cumulative losses were approximately $3.9 million for series 2003-CB5 and $14.5 million for series 2003-HE4. Total delinquencies were approximately 27% and 44% for series 2003-CB5 and 2003-HE4, respectively. Both series benefit from credit support provided by excess spread, overcollateralization, and subordination. The underlying collateral for these transactions consists mainly of conventional, adjustable- and fixed-rate, fully amortizing, first- and second-lien subprime residential mortgage loans with original terms to maturity of no more than 30 years. Rating Lowered and Placed on Creditwatch Negative Citigroup Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-CB5 B-3 BB-/Watch Neg BBB- Rating Placed On Creditwatch With Negative Implications Citigroup Mortgage Loan Trust Inc. Rating ------ Series Class To From ------ ----- -- ---- 2003-HE4 M-7 BBB+/Watch Neg BBB+ Ratings Affirmed Citigroup Mortgage Loan Trust Citigroup Mortgage Loan Trust Inc. Series Class Rating ------ ----- ------ 2003-CB5 M-1 AAA 2003-CB5 M-2 AA+ 2003-CB5 M-3 AA 2003-CB5 B-1 A+ 2003-CB5 B-2 A- 2003-HE4 A AAA 2003-HE4 M-1 AA+ 2003-HE4 M-2 AA 2003-HE4 M-3 AA- 2003-HE4 M-4 A+ 2003-HE4 M-5 A 2003-HE4 M-6 A- CLOROX CO: September 30 Balance Sheet Upside-Down by $55 Million ---------------------------------------------------------------- The Clorox Company filed its quarterly financial statements for the three months ended Sept. 30, 2006, disclosing a $112,000,000 net income on $498,000,000 of revenues. This compares to net income of $109,000,000 on $466,000,000 of total revenues for the same quarterly period of 2005. At Sept. 30, 2006, the company's balance sheet showed $3,539,000,000 in total assets and $3,594,000,000 in total liabilities resulting in a $55,000,000 in stockholders' deficit. At Sept. 30, 2005, the company disclosed a $156,000,000 stockholders' deficit. The company's September 30 balance sheet also showed a working capital deficit of $20,000,000 resulting from $940,000,000 in total current assets and $960,000,000 in total current liabilities. The company says that the negative working capital at Sept. 30, 2006 is an improvement from the $123,000,000 working capital at June 30, 2006. The company explains that this improvement is principally due to decreases in short-term borrowings, accrued liabilities and accounts payable, partially offset by a decrease in receivables. The decrease in short-term borrowings was primarily due to the pay down of commercial paper balances enabled by improved operating cash flows. The decrease in accrued liabilities and accounts payable was driven by profit sharing and incentive compensation payments and a net decrease in accrued interest on long-term debt due to the timing of payments, the company says. These working capital changes were partially offset by a decrease in receivables, driven by the seasonality of sales in the charcoal and food categories. A full-text copy of the Company's financial statements for the quarterly period ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?1505 Headquartered in Oakland, California, The Clorox Company -- http://www.thecloroxcompany.com/-- provides household cleaning products and reaches beyond bleach. Although best known for bleach (leader worldwide), Clorox makes laundry and cleaning items (Formula 409, Pine-Sol, Tilex), cat litter (Fresh Step), car care products (Armor All, STP), the Brita water-filtration system (in North America), and charcoal briquettes (Kingsford). COLLINS & AIKMAN: Plans Further Workforce Reduction --------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates remind the U.S. Bankruptcy Court for the Eastern District of Michigan that they are pursuing a cooperative sale process, which they expect will culminate with the confirmation of a plan of reorganization. In line with this, the Debtors have determined that a further reduction-in-force is necessary to maximize the value of their estates and to complete the restructuring process. Accordingly, the Debtors seek the Court's authority to provide to RIF-affected employees: (a) a severance package equivalent to up to four weeks of base salary and any accrued and unused vacation; and (b) continued employee benefits for up to four weeks. The base salary component of the Severance Benefits would be subject to an aggregate limit of $775,000. Specifically, the Debtors intend to reduce the number of salaried employees by up to 125, representing approximately $9,300,000 in annual base salaries. "Although the Severance Benefits may impose certain short-term costs, these costs are appreciably less than the operating losses associated with the salaries at issue," Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Rhodes. Furthermore, the Debtors believe that failing to provide the Severance Benefits would only diminish employee morale at this critical time in their Chapter 11 cases, which in turn would hinder their efforts to efficiently carry out and complete the restructuring process. At the same time, keeping in mind the financial constraints under which the Debtors operate, the Severance Benefits have been carefully structured to avoid unnecessary or excessive expenditure, Mr. Schrock asserts. 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. (Collins & Aikman Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants Until March 14 to Decide on Becker Leases ----------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to further extend until March 14, 2007, the period within which they must assume or reject unexpired leases of non-residential real property with Becker Properties LLC and Anchor Court LLC. The Leases are: -- 6600 East Fifteen Mile Road, Sterling Heights, Michigan; -- 1601 Clark Road, Havre de Grace, Maryland; and -- 47785 West Anchor Court, Plymouth, Michigan. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, relates that the Debtors will be unable to determine whether to assume or reject the Leases until they have selected the highest and best offer for the contemplated sale of all or part of their businesses. Without the extension, Mr. Schrock notes, the Debtors will be at risk of assuming the Leases that the selected purchaser might deem unnecessary or impractical, or rejecting the Leases that the purchaser might deem essential to the operations of the Debtors' businesses. Thus, he says, it would make no economic or practical sense to compel the Debtors to assume or reject the Leases at this time. In addition, Mr. Schrock asserts that Becker and Anchor Court are not damaged by the Debtors' continued occupation of the properties covered by the Leases. As of November 29, 2006, the Debtors are complying with their postpetition obligations related to the Leases on a timely basis, he says. Moreover, maintenance of the Leases is essential to the Debtors' continued operations without further complicating the Debtors' ability to confirm a plan in their Chapter 11 cases, Mr. Schrock maintains. The Debtors reserve their right to seek further extensions of the Lease Decision Period. 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. (Collins & Aikman Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLTRANE CLO: Fitch Assigns BB Ratings on EUR3.7-Million Notes -------------------------------------------------------------- Fitch assigns these ratings to Coltrane CLO p.l.c. floating-rate notes: -- EUR26,000,000 Class B due January 2022 'A'; -- EUR45,000,000 Class C due January 2022 'BBB'; -- EUR1,750,000 Class D-1 due January 2022 'BB'; and -- EUR2,000,000 Class D-2 due January 2022 'BB'. CONEXANT SYS: Inks Pact Extending Credit Maturity to Nov. 28, 2007 ------------------------------------------------------------------ Conexant Systems Inc., Conexant USA LLC's wholly owned subsidiary, and Wachovia Bank National Association signed an amendment to the credit and security agreement dated as of Nov. 29, 2005. The amendment extends the termination date of the Credit Agreement to Nov. 28, 2007, and the terms of the receivables purchase agreement and the servicing agreement between the Company and Conexant USA, which was subject to certain conditions precedent, including Conexant USA's renewal of its international credit insurance policy, which occurred on Nov. 29, 2006. Headquartered in Newport Beach, California, Conexant Systems Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- is a fables semiconductor company. The company has approximately 2,400 employees worldwide. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006 Moody's Investors Service assigned a B1 rating to the senior secured floating rate notes and a Caa1 rating to the corporate family rating of Conexant Systems Inc. Moody's also assigned a Probability of default rating of Caa1, a LGD-2 rating for the senior secured notes and a SGL-3 speculative grade liquidity rating. The rating outlook is stable. CONSOLIDATED CONTAINER: Earns $15.8 Million in 2006 Third Quarter ---------------------------------------------------------------- Consolidated Container Co LLC reported a $15.8 million net income on $215.5 million of net sales for the third quarter ended Sept. 30, 2006, compared with a $2.7 million net loss on $207.1 million of net sales for the comparable period in 2005. At Sept. 30, 2006, the company's balance sheet showed $686.9 million in total assets and $777.8 million in total liabilities, resulting in a $90.8 million total member's deficit. The increase in net sales for the third quarter of compared to the same period of 2005 results from the impact of higher average resin costs during 2006. The increase in net income is primarily due to the increase in gross profit for the third quarter of 2006 of $23.3 million, primarily attributable to a gain of $16.1 million dollars on settlement of a contract dispute with Dean Foods Company and business interruption insurance proceeds totaling $3.6 million received during the third quarter of 2006 related to hurricanes Rita and Katrina in 2005. Under the terms of the settlement agreement, the company agreed to pay $10.0 million, $9.1 million discounted, to Dean Foods Company which was less than the cumulative adjustments resulting from the restatement of sales and cost of sales of $25.2 million in the company's consolidated financial statements. The recording of the settlement in the quarter ended Sept. 30, 2006 resulted in a one- time gain on settlement of approximately $16.1 million. Full-text copies of the company's consolidated financial statements for the third quarter ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?1635 Headquartered in Atlanta, Georgia, Consolidated Container Company LLC -- http://www.cccllc.com/-- develops, manufactures and markets rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. The company has a network of 55 strategically located manufacturing facilities and a research, development and engineering center located in Atlanta, Georgia. In addition, the company has three international manufacturing facilities in Canada and Mexico. The company sells containers to the dairy, water, juice & other beverage, household chemicals & personal care, agricultural & industrial, food and automotive sectors. The company's container product line ranges in size from two-ounce to six-gallon containers and consists of single and multi-layer containers made from a variety of plastic resins, including high density polyethylene, polycarbonate, polypropylene, and polyethylene terephthalate. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Standard & Poor's Ratings Services affirmed its ratings on Consolidated Container and removed all ratings from CreditWatch with negative implications, where they were placed on Aug. 23, 2006. The corporate credit rating on Consolidated Container is 'B-'. COSTA BELLA: Fitch Rates $7.5 Million Class G Notes Due 2046 at BB ------------------------------------------------------------------ Fitch assigns these ratings to Costa Bella CDO Ltd.: -- $250,000,000 class A-1 first priority senior secured floating rate notes due 2046 'AAA'; -- $40,000,000 class A-2 Second priority senior secured floating rate notes due 2046 'AAA'; -- $30,000,000 class B third priority senior secured floating rate notes due 2046 'AA '; -- $5,000,000 class C fourth priority senior secured floating rate notes due 2046 'AA-'; -- $23,000,000 class D fifth priority mezzanine deferrable secured floating rate notes due 2046 'A'; -- $18,500,000 class E sixth priority mezzanine deferrable secured floating rate notes due 2046 'BBB'; -- $10,500,000 class F seventh priority mezzanine deferrable secured floating rate notes due 2046 'BBB-'; -- $7,500,000 class G Eighth priority mezzanine deferrable secured floating rate notes due 2046 'BB'. CREDIT SUISSE: DBRS Rates $11.5 Mil. Class B-3 Certs. at BB (high) ------------------------------------------------------------------ Dominion Bond Rating Service assigned these ratings to the Home Equity Pass-Through Certificates, Series 2006-8 issued by Credit Suisse First Boston Mortgage Securities Corp. Home Equity Asset Trust 2006-8: -- $385 million Class 1-A-1 rated at AAA -- $300 million Class 2-A-1 rated at AAA -- $73 million Class 2-A-2 rated at AAA -- $94 million Class 2-A-3 rated at AAA -- $69.2 million Class 2-A-4 rated at AAA -- $50 Class P rated at AAA -- $50 Class R rated at AAA -- $41.4 million Class M-1 rated at AA (high) -- $36.2 million Class M-2 rated at AA -- $21.3 million Class M-3 rated at AA -- $20.1 million Class M-4 rated at AA (low) -- $18.4 million Class M-5 rated at A (high) -- $17.8 million Class M-6 rated at A -- $16.7 million Class M-7 rated at A (low) -- $10.4 million Class M-8 rated at BBB (high) -- $6.9 million Class B-1 rated at BBB -- $6.9 million Class B-2 rated at BBB -- $11.5 million Class B-3 rated at BB (high) The AAA ratings on the Class 1-A, 2-A, P and R certificates reflect 19.90% of credit enhancement provided by the subordinate classes, initial overcollateralization and monthly excess spread. The AA (high) rating on Class M-1 Certificates reflects 16.30% of credit enhancement. The AA ratings on Class M-2 and Class M-3 Certificates reflect 13.15% and 11.30% of credit enhancement, respectively. The AA (low) rating on Class M-4 Certificates reflects 9.55% of credit enhancement. The A (high) rating on Class M-5 Certificates reflects 7.95% of credit enhancement. The "A" rating on Class M-6 Certificates reflects 6.40% of credit enhancement. The A (low) rating on Class M-7 Certificates reflects 4.95% of credit enhancement. The BBB (high) rating on Class M-8 Certificates reflects 4.05% of credit enhancement. The BBB ratings on the Class B-1 and Class B- 2 Certificates reflect 3.45% and 2.85% of credit enhancement, respectively. The BB (high) rating on Class B-3 Certificates reflects 1.85% of credit enhancement. The ratings on the certificates also reflect the quality of the underlying assets and the capabilities of Select Portfolio Servicing Inc. and Wells Fargo Bank N.A. as Servicers. The U.S. Bank National Association will act as Trustee. The LaSalle Bank National Association and Wells Fargo Bank N.A. will act as Custodians. In addition, the certificates will be entitled to the benefits of an interest-rate swap agreement with Credit Suisse International. The Trust will pay a fixed payment at 5.35% per annum to the Swap Provider in exchange for a floating payment at one-month LIBOR on a declining swap notional balance. The Class 2-A-1 Certificates will also be entitled to the benefits of an interest-rate cap agreement with Credit Suisse International at a strike rate of 7.50% on a declining cap notional balance for the February 2007 to March 2007 distributions. Interest and principal payments collected from the mortgage loans will be distributed on the 25th of each month, commencing in December 2006. Interest will first be paid concurrently to the Senior Certificates, followed by sequential interest payments to the subordinate classes. Until the step-down date, principal collected will be paid exclusively to the Senior Certificates unless each of such classes has been paid down to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among the certificates of all classes on a pro rata basis. In addition, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 3.70% of the then-current balance of the mortgage loans. On the closing date, the depositor will deposit approximately $74,005,947 into a segregated prefunding account, which the Trust will use to buy additional mortgage loans from the depositor on or prior to Feb. 23, 2007. The mortgage loans in the Underlying Trust were primarily originated by Ownit Mortgage Solutions Inc., Encore Credit Corporation, and LIME Financial Services Ltd. As of the cut-off date, Loan Group I had an initial aggregate principal balance of $449,613,530, a weighted-average mortgage rate of 8.33%, a weighted-average FICO of 627 and a weighted-average original loan- to-value ratio of 80.7%. Loan Group II had an initial aggregate principal balance of $626,380,623, a weighted-average mortgage rate of 8.32%, a weighted-average FICO of 629 and a weighted- average OLTV ratio of 80.1%. CREDIT SUISSE: Fitch Rates $11.5 Million Class B-3 Certs. at BB+ ---------------------------------------------------------------- Fitch rates Credit Suisse First Boston Mortgage Securities Corp.'s Home Equity Asset Trust 2006-8: -- $921,150,100 class 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, R and P certificates 'AAA'; -- $77,600,000 class M-1 and M-2 'AA+'; -- $21,300,000 class M-3 'AA'; -- $20,125,000 class M-4 'AA-'; -- $18,400,000 class M-5 'A+'; -- $17,825,000 class M-6 'A'; -- $16,675,000 class M-7 'BBB+'; -- $17,250,000 class M-8 and B-1 'BBB'; -- $6,900,000 class B-2 'BBB-'; -- $11,500,000 class B-3 'BB+'. The 'AAA' rating on the senior certificates reflects the 19.9% total credit enhancement provided by the 3.6% class M-1 certificate, 3.15% class M-2, 1.85% class M-3, 1.75% class M-4, 1.6% class M-5, 1.55% class M-6, 1.45% class M-7, 0.9% class M-8, 0.6% class B-1, 0.6% class B-2, 1% class B-3, the 1.85% initial over-collateralization, and the 1.85% target OC. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans and the integrity of the transaction's legal structure, as well as the primary servicing capabilities of Wells Fargo Bank and Select Portfolio Servicing. The mortgage pool consists of first and second lien, fixed and adjustable rate, sub-prime mortgage loans with a cut-off date aggregate principal outstanding balance of $1,075,994,153. As of the cut-off date, the weighted average loan rate is approximately 8.32%, and the weighted average original term to maturity is 355 months. The average cut-off date principal balance of the mortgage loans is approximately $186,743. The weighted average combined original loan-to-value ratio is 80.35%, and the weighted average Fair, Isaac & Co. score is 628. The properties are located in California, Florida, and Illinois, and otherwise distributed over many other states. On the closing date, the depositor will deposit approximately $74,005,947 into a pre-funding account. The amount in this account will be used to purchase subsequent mortgage loans after the closing date and on or prior to Feb. 23, 2007. All of the mortgage loans were purchased by an affiliate of the depositor from various sellers in secondary market transactions. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. CSFB MORTGAGE: Moody's Completes Review and Upgrades Ratings ------------------------------------------------------------ Moody's Investors Service upgraded the ratings of 25 tranches issued by CSFB Mortgage-Backed Pass-Through Certificates in 2003. These actions are the result of a systematic review of all 2003 securitizations of fixed-rate collateral by CSFB Mortgage-Backed Pass-Through Certificates. All classes being upgraded have performed well in terms of loss and delinquencies and have built high levels of credit enhancement as compared to the expected loss on the collateral. These are the rating actions: * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-1 -- Class D-B-1, upgraded to Aaa, previously Aa2, -- Class D-B-2, upgraded to Aa2, previously A2, -- Class D-B-3, upgraded to A2, previously Baa2, -- Class D-B-4, upgraded to Baa2, previously Ba2, -- Class III-B-2, upgraded to Aaa, previously Aa3, -- Class III-B-3, upgraded to Aa3, previously A3. *Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-7 -- Class I-B-2, upgraded to Aaa, previously Aa3, -- Class I-B-3, upgraded to A1, previously A3. * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-8 -- Class D-B-1, upgraded to Aaa, previously Aa2, -- Class D-B-2, upgraded to Aa2, previously A2, -- Class D-B-3, upgraded to Baa1, previously Baa2, -- Class C-B-2, upgraded to A1, previously A3, -- Class C-B-3, upgraded to Baa1, previously Baa3. * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-11 -- Class I-B-2, upgraded to Aa3, previously A3, -- Class I-B-3, upgraded to A3, previously Baa3, -- Class I-B-4, upgraded to Baa2, previously Ba2. -- Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-17 -- Class D-B-2, upgraded to Aa3, previously A3, -- Class D-B-3, upgraded to A3, previously Baa3, * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-19 -- Class C-B-2, upgraded to A2, previously A3. * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-21 -- Class D-B-1, upgraded to Aa1, previously Aa2, -- Class D-B-2, upgraded to Aa3, previously A2. * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-27 -- Class IV-A-16, upgraded to Aaa, previously Aa1, -- Class D-B-3, upgraded to A3, previously Baa3. * Issuer: CSFB Mortgage-Backed Pass-Through Certificates, Series 2003-29 -- Class D-B-2, upgraded to A1, previously Baa1, -- Class D-B-3, upgraded to A3, previously Baa3. CWALT INC: Fitch Rates $2.04 Million Class B-3 Certificates at BB ----------------------------------------------------------------- Fitch rates CWALT, Inc.'s Mortgage Pass-Through Certificates, Alternative Loan Trust 2006-39CB: -- $774.22 million classes 1-A-1 through 1-A-20, 2-A-1 through 2-A-5, 1-X, 2-X, PO, and A-R certificates senior certificates 'AAA'; -- $15.54 million class M-1 certificates 'AA'; -- $4.09 million class M-2 certificates 'AA'; -- $6.14 million class M-3 certificates 'A' -- $2.04 million class M-4 certificates 'A' -- $2.04 million class M-5 certificates 'A-'; -- $2.45 million class M-6 certificates 'BBB'; -- $1.23 million class M-7 certificates 'BBB'; -- $1.23 million class B-1 certificates 'BBB-'; -- $1.23 million privately offered class B-2 certificates 'BB+'; and, -- $2.04 million privately offered class B-3 certificates 'BB'. The 'AAA' rating on the senior certificates reflects the 5.35% subordination provided by the 1.9% class M-1, the 0.5% class M-2, the 0.75% class M-3, the 0.25% class M-4, the 0.25% class M-5, the 0.3% class M-6, the 0.15% class M-7, the 0.15% class B-1, the 0.15% privately offered class B-2, the 0.25% privately offered Class B-3, 0.4% privately offered class B-4 and the 0.30% privately offered class B-5. Classes M-1, M-2, M-3, M-4, M-5, M- 6, M-7, B-1, B-2, and B-3 are rated 'AA' , 'AA', 'A', 'A', 'A-', 'BBB', 'BBB' , 'BBB-', 'BB+' and 'BB' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated RMS2+ by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The mortgage pool consists of two loan groups. Loan Group 1 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $530,816,814 as of the cut-off date, Nov. 1, 2006, secured by first liens on one-to four- family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original-loan-to- value of 67.3%. The weighted average FICO credit score is approximately 718. Cash-out refinance loans represent 42.7% of the mortgage pool and second homes 4.3%. The average loan balance is $225,018. The three states that represent the largest portion of mortgage loans are California, Florida, and Arizona. All other states represent less than 5% of the cut-off date pool balance. Loan Group 2 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $192,981,805 as of the cut-off date, Nov. 1, 2006, secured by first liens on one-to four- family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average OLTV of 78.87%. The weighted average FICO credit score is approximately 693. Cash-out refinance loans represent 30.3% of the mortgage pool and second homes 5.2%. The average loan balance is $181,545. The states that represent the largest portion of mortgage loans are Florida, Texas, Arizona, and California. All other states represent less than 5% of the cut-off date pool balance. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CWALT INC: Fitch Rates $1.4 Million Class 2-B-4 Certificates at B ----------------------------------------------------------------- Fitch rates CWALT Inc.'s mortgage pass-through certificates alternative loan trust 2006-41CB: Group 1: -- $636.1 million classes 1-A-1, through 1-A-15, 1-X, 1-PO, and A-R 'AAA'; -- $12.9 million class 1-M 'AA'; -- $4.9 million class 1-B-1 'A'; -- $3.6 million class 1-B-2 'BBB'; -- $2.6 million class 1-B-3 'BB'; and, -- $1.9 million class 1-B-4 'B'. Group 2: -- $461.9 million classes 2-A-1 through 2-A-20, 2-X, and 2-PO 'AAA'; -- $9.1 million class 2-M 'AA'; -- $3.6 million class 2-B-1 'A'; -- $2.6 million class 2-B-2 'BBB'; -- $1.9 million class 2-B-3 'BB'; and, -- $1.4 million class 2-B-4 'B'. The 'AAA' rating on the Group 1 senior certificates reflects the 4.2% subordination provided by the 1.95% class 1-M, the 0.75% class 1-B-1, the 0.55% class 1-B-2, the 0.4% privately offered class 1-B-3, the 0.3% privately offered class 1-B-4, and the 0.25% privately offered class 1-B-5. The class 1-B-5 is not rated by Fitch. The 'AAA' rating on the Group 2 senior certificates reflects the 4.15% subordination provided by the 1.9% class 2-M, the 0.75% class 2-B-1, the 0.55% class 2-B-2, the 0.4% privately offered class 2-B-3, the 0.3% privately offered class 2-B-4, and the 0.25% privately offered class 2-B-5. The class 2-B-5 is not rated by Fitch. Fitch believes the above credit enhancement for each respective loan group will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc.. The mortgage pool consists of separate loan groups, which are not crossed-collateralized in terms of subordinate credit enhancement. Loan Group 1 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $543,503,699 as of the cut-off date, Nov. 1, 2006, secured by first liens on one- to four-family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average original-loan- to-value of 67.81%. The weighted average FICO credit score is approximately 719. Cash-out refinance loans represent 44.4% of the mortgage pool and second homes 4.6%. The average loan balance is $226,271. The three states that represent the largest portion of mortgage loans are California, Florida, and Arizona. All other states represent less than 5% of the cut-off date pool balance. Loan Group 2 consists primarily of 30-year conventional, fully amortizing mortgage loans totaling $414,524,013 as of the cut-off date, Nov. 1, 2006, secured by first liens on one- to four-family residential properties. The mortgage pool, as of the cut-off date, demonstrates an approximate weighted-average OLTV of 67.90%. The weighted average FICO credit score is approximately 718. Cash-out refinance loans represent 42.6% of the mortgage pool and second homes 3.9%. The average loan balance is $227,261. The three states that represent the largest portion of mortgage loans are California, Florida, and Arizona. All other states represent less than 5% of the cut-off date pool balance. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CYANOTECH CORP: Will Restate Previously Issued Financial Reports ---------------------------------------------------------------- Cyanotech Corporation has determined to restate certain of its previously issued financial statements. The restatement will include amounts correcting the company's results for historical treatment of certain inventory related costs. Additionally, the Company has identified certain minor out-of- period items relating to recording Hawaii state tax credits and accruing interest, which will also be recorded in the appropriate periods in the restated, consolidated financial statements. Further, the Company will also reclassify certain certificates of deposit from cash to investments in conjunction with the restatement. The company identified the matter during the ordinary course of reviewing the company's financial results for the first quarter of fiscal year 2007. This was in conjunction with the company's previously disclosed intent to adopt Statement of Financial Accounting Standards No. 151 for the first quarter of fiscal year 2007. The financial statements expected to be restated are the consolidated balance sheets as of March 31, 2006, and 2005 and the consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended March 31, 2006. This includes the company's unaudited quarterly financial statements during these years. The Company said that these consolidated financial statements, as filed, contain errors and should therefore not be relied upon. The related auditor reports of KPMG LLP, the company's independent registered public accounting firm, with respect to these consolidated financial statements should also no longer be relied upon. Waiver The company has informed its secured credit facility administrator of its intention to restate its financial statements and of its failure to submit its quarterly financial statements timely for the first and second quarters of fiscal year 2007. The company also requested and has obtained a waiver of debt covenants that may not be in compliance as a result of restating previously issued financial statements and waiver as related to untimely submission of its quarterly financial statements for the first and second quarters of fiscal year 2007. The company said that following completion of its work and that of its independent registered public accounting firm, restatement of the company's financial results will be effected as soon as practicable by the filing of a Form 10-K/A. Nasdaq Delisting Cyanotech received a Staff Determination from The Nasdaq Stock Market on Nov. 16, 2006, indicating that the company is not in compliance with the requirements for continued listing under Marketplace Rule 4310(c)(14) because of its failure to file its Report on Form 10-Q for the quarter ended Sept. 30, 2006. The company has announced that it will have to delay filing its Form 10-Q for the second quarter of fiscal year 2007 because the company's independent registered public accounting firm has not yet rendered any decision with respect to a previously announced accounting issue involving the company's historic inventory accounting method. The Company hoped to file both reports by Nov. 30, 2006, announcing that this was subject to the requirements of the independent registered public accounting firm. The Company now believes that the filing will take place before Dec. 15, 2006. Kailua-Kona, Hawaii-based Cyanotech Corporation (Nasdaq: CYAND) -- http://www.cyanotech.com/-- produces BioAstin(R) Natural Astaxanthin and Hawaiian Spirulina Pacifica(R). Cyanotech's spirulina is FDA reviewed and accepted as Generally Recognized as Safe for use as a food ingredient. Cyanotech produces these products from microalgae grown at its 90-acre facility in Hawaii using patented and proprietary technology and distributes them to nutritional supplement, nutraceutical, cosmeceutical, and animal feed makers and marketers in more than 40 countries worldwide. DANA CORP: Selling Engine Parts Biz to German Supplier for $157MM ----------------------------------------------------------------- Dana Corporation has entered into a stock and asset purchase agreement with MAHLE GmbH, a German supplier to the automotive and engine industries, for the sale of Dana's non-core engine hard parts business. The agreement provides for MAHLE and certain of its affiliates to acquire the equity and tangible and intangible assets of the global operations comprising Dana's engine hard parts business from Dana and certain of its affiliates for an aggregate price of approximately $157 million. The price includes approximately $98 million in cash, subject to usual adjustments at closing, and the buyers' assumption of certain liabilities related to the business. In connection with the transaction, the parties will also enter into ancillary agreements, including a transition services agreement and a distribution agreement relating to Victor Reinz(R) branded products. Closing of the transaction is subject to the approval of the United States Bankruptcy Court for the Southern District of New York, which has jurisdiction over Dana's Chapter 11 reorganization proceedings; government regulatory approvals; and customary closing conditions. As a standard element of the bankruptcy process, Dana has filed a motion with the Bankruptcy Court seeking approval of procedures that will provide an opportunity for competitive bids on the engine hard parts business before the Court approves the sale. Dana expects to complete the bidding process and to secure the regulatory approvals in time to close the sale in the first quarter of 2007. The engine hard parts business consists of 39 facilities, which manufacture piston rings, engine bearings, cylinder liners, and camshafts under the Perfect Circle(R), Clevite(R), and Glacier Vandervell(TM) brands. With annual revenues of approximately $670 million in 2005, the operations to be divested employ approximately 5,000 people in 10 countries. Dana announced its intention to sell its engine hard parts business in late 2005. "This divestiture is an important step in implementing Dana's reorganization initiatives and sharpening our focus on our core axle, driveshaft, structural, sealing, and thermal products businesses for the automotive, commercial vehicle, and off-highway markets," Dana Chairman and CEO Mike Burns said. "This transaction also represents an excellent opportunity for MAHLE. While no longer central to Dana's future direction, our engine hard parts business and people have strong potential for an owner that is strategically focused on this market segment." 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). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. 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. The Debtors' exclusive period to file a plan expires on Jan. 3, 2007. They have until Mar. 5, 2007, to solicit acceptances to that plan. DELTA AIR: Inks PBGC Settlement Pact on Pilot Pension Plan ---------------------------------------------------------- Delta Air Lines has reached a comprehensive settlement agreement that will resolve all issues in connection with the termination of the Delta Pilots Retirement Plan with the Pension Benefit Guaranty Corporation, the federal agency charged with insuring the nation's pension plans under ERISA. Delta's Official Committee of Unsecured Creditors also fully supports and has signed the agreement, which has been submitted to the U.S. Bankruptcy Court for the Southern District of New York for approval. "We are pleased we were able to work with the PBGC and our Creditors' Committee constructively to reach this very important and complex agreement. It represents another important milestone in Delta's restructuring," said Edward H. Bastian, Delta's chief financial officer. Under the settlement agreement, the PBGC will make a final decision whether to accept the PBGC staff's recommendation that the Pilot Plan meets the statutory criteria for distress termination. If the agency agrees that the Pilot Plan meets all legal criteria for distress termination, the PBGC will become the Plan's trustee, establishing a Sept. 2, 2006 termination date for the Plan. In settlement of its claims against Delta and its affiliates, the PBGC will be allowed a pre-petition unsecured claim against Delta of $2.2 billion, and the debtors' proposed plan of reorganization will provide for the distribution to the PBGC of $225 million in senior unsecured notes. The Bankruptcy Court previously determined that Delta could not reorganize or emerge from Chapter 11 unless the Pilot Plan was terminated. As previously announced, retired Delta pilots will receive in excess of $800 million in allowed claims in respect of their lost non-qualified pension benefits. Delta's active pilots are now covered by a defined contribution pension plan previously negotiated with the Air Line Pilots Association, the union representing Delta's more than 6,000 active pilots. Delta again reconfirmed in the agreement that it will preserve the Delta Retirement Plan, which covers ground employees and flight attendants. The ability to preserve this plan was made possible by the alternative funding provisions included in the pension reform legislation passed by Congress last August. 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. DIASYS CORP: Deloitte & Touche Raises Going Concern Doubt --------------------------------------------------------- Deloitte & Touche LLP expressed substantial doubt about DiaSys Corporation's ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended June 30, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations, cash used by operating activities, negative working capital, and accumulated deficit. DiaSys Corp.'s net loss decreased $981,451 from $2,029,245 in fiscal year 2005 to $1,047,794 in fiscal year 2006. This decrease was due primarily to the implementation and completion of the consolidation of the company's manufacturing facilities into the United Kingdom, along with other cost reduction plans begun in fiscal year 2005. Net sales decreased 11.8% or $225,980 from $1,914,077 in fiscal year 2005 to $1,688,097 in fiscal 2006. Domestic US sales decreased $88,049 from $386,854 in fiscal year 2005 to $298,805 in fiscal year 2006. International sales decreased $137,931 from $1,527,223 in fiscal year 2005 to $1,389,292 in fiscal year 2006. The decrease in international sales can be largely attributed to the decrease in sales to the company's distributor in China. During its 2006 fiscal year, the company entered into additional distribution agreements. The company believes that the effects of these distribution agreements will impact sales primarily in future periods. At June 30, 2006, the company's balance sheet showed $4,368,428 in total assets, $1,013,773 in total liabilities and stockholders' equity of $3,354,655. Working capital deficiency increased by $229,541 from June 30, 2005, to June 30, 2006. Cash and equivalents as of June 30, 2006, increased by $40,047 over the same period. Cash used in operating activities was $280,091 for the current fiscal year. The cash used in operations resulted primarily from the operating loss, offset by a reduction in inventories and an increase in accounts payable and accrued expenses. The cash shortfall was funded primarily by: -- borrowings from management; -- the exercising of options by the Chairman of the Board of Directors; and -- the issuance of shares of capital stock and warrants to a group of outside investors. Management says the company will require additional financing to discharge its obligations for at least the next twelve months. The company had unshipped orders totaling $425,247 as of June 30, 2006. A full-text copy of the company's annual report is available for free at http://researcharchives.com/t/s?163f Continued OTCBB Listing On November 20, DiaSys disclosed that it has satisfied requirements for continued listing of its Common Stock on the OTC Bulletin Board, under the symbol DYXC.OB, after filing its Annual Report on Form 10-KSB for its fiscal year ended June 30,2006. Headquartered in Waterbury, Connecticut, DiaSys Corporation -- http://www.diasys.com/-- designs, develops, manufactures and distributes proprietary medical laboratory equipment, consumables and infectious disease test-kits to healthcare & veterinary laboratories worldwide. The Company operates in Europe through its wholly owned subsidiary based in Wokingham, England and through distributors in South America. DIGITAL DESCRIPTOR: Sept. 30 Balance Sheet Upside-Down by $12.6MM ----------------------------------------------------------------- Digital Descriptor Systems Inc. posted a $291,791 net loss for the third quarter ended Sept. 30, 2006, compared with net income of $644,282 for the three months ended Sept. 30, 2005. The company attributes the 145% increase in net loss primarily due to the change in accounting procedures in which convertible debentures are treated as derivative according to the guidance of SFAS133 and EITF00-19. Revenues for the three months ended Sept. 30, 2006, were $1,300,203, compared with $1,118,922 for the three months ended Sept. 30, 2005, an increase of $181,281 or 16%. Digital Descriptor generates its revenues through software licenses, hardware, post customer support arrangements, and other services. Its subsidiary, CGM Applied Security Technologies Inc. generates its revenue through the manufacturer and distributor of indicative and barrier security seals, security tapes, and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers as well as a number of highly specialized authentication products. The increase in Digital Descriptor's revenue is attributed to the purchase of CGM in March 2005 and an increase in its revenue for the comparable three-month period. The company's balance sheet at Sept. 30, 2006, showed $6,405,187 in total assets and $19,048,314 in total liabilities, resulting in a $12,643,127 stockholders' deficit. "We continue to improve the vigor of our company," says Anthony Shupin, CEO of Digital Descriptor. "Our year to date earnings before interest, taxes, depreciation and amortization for the nine months of 2006 are $408,023 versus a negative $235,543 in 2005, an increase of 116 percent. Our immediate focus continues to be on increasing revenue, while controlling expenses and improving operations. The company intends to continue to execute its plan to increase operational efficiencies, refine and develop new products and expand sales and distribution channels to meet market demand. Full-text copies of the company's third quarter financials are available for free at http://ResearchArchives.com/t/s?164f About Digital Descriptor Based in Sea Girt, New Jersey, Digital Descriptor Systems -- http://www.ddsi-cpc.com/-- develops and markets integrated enterprise-wide image applications specifically designed for criminal justice organizations. Customers include states, cities, counties, corrections, justice and public safety agencies. Its subsidiary, CGM Applied Security Technologies Inc. -- http://www.cgmsecuritysolutions.com/-- based in Somerset, New Jersey, manufactures and distributes Homeland Security products including indicative and barrier security seals, security tapes and related packaging security systems, protective security products for palletized cargo, physical security systems for tractors, trailers and containers, as well as a number of highly specialized authentication products. DURA AUTOMOTIVE: Court OKs Kirkland & Ellis as Bankruptcy Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized DURA Automotive Systems Inc. and its debtor affiliates to employ Kirkland & Ellis as their bankruptcy counsel, under a general retainer, nunc pro tunc to Oct. 30, 2006. As reported in the Troubled Company Reporter on Nov. 10, 2006, Kirkland will: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) attend meetings and negotiate with representatives of creditors and other parties in interest; (c) take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors, and representing the Debtors' interests in negotiations concerning all litigation in which the Debtors are involved; (d) prepare all motions, applications, answers, orders, reports, and papers necessary to the administration of the Debtors' estates; (e) take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of the Debtors' plan of reorganization; (f) represent the Debtors in connection with obtaining financing after its filing for Chapter 11 protection; (g) advise the Debtors in connection with any potential sale of assets; (h) appear before the Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before the courts and the U.S. Trustee; and (i) perform all other necessary legal services to the Debtors in connection with the Reorganization Cases, including: * analyze the Debtors' leases and executory contracts and their assumption or assignment; * analyze the validity of liens against the Debtors; and * advise on corporate, litigation, environmental, and other legal matters. Kirkland will be paid based on the firm's standard hourly rates: Professional Hourly Rate ------------ ----------- Partners $425 - $950 Counsel $325 - $740 Associates $245 - $540 Paraprofessionals $90 - $280 Nineteen professionals are expected to have primary responsibility for providing services to the Debtors: Partners: Lyndon E. Norley, Esq. $975 Richard M. Cieri, Esq. $825 Todd F. Maynes, P.C., Esq. $795 Partha Kar, Esq. $775 Marc Kieselstein, P.C., Esq. $745 Dennis M. Myers, P.C., Esq. $745 Maureen Sweeney, Esq. $575 Dr. Bernd Meyer-Loewy, Esq. $575 Roger James Higgins, Esq. $545 David A. Agay, Esq. $545 Leo Plank, Esq. $525 Associates: Natasha Watson, Esq. $610 Ryan Blaine Bennett, Esq. $510 Michelle Mulkern, Esq. $430 Uday Gorrepati, Esq. $355 Joy Lyu Monahan, Esq. $350 Kathryn Louise Koenig, Esq. $350 Thad W. Davis, Esq. $325 Lauren Hawkins, Esq. $295 As of Oct. 30, 2006, the Debtors do not owe Kirkland any amounts for legal services rendered prior to the bankruptcy filing. Mr. Kieselstein assured the Court that his firm is disinterested pursuant to Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Kirkland does not hold or represent an interest adverse to the Debtors or their estates, Mr. Kieselstein added. 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. 6; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000). DURA AUTOMOTIVE: Court Okays Richards Layton as Local Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized DURA Automotive Systems Inc. and its debtor affiliates to employ Richards, Layton & Finger P.A. as their local counsel, general co-counsel, and conflicts counsel, nunc pro tunc to Oct. 30, 2006. As reported in the Troubled Company Reporter on Nov. 10, 2006, Richards, Layton & Finger will: * provide legal advice to the Debtors with respect to their rights, powers, and duties as debtors-in-possession in the continued operation of their business and management of their properties; * take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of di8sputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; * prepare and pursue confirmation of the Debtors' plan, approval of that plan, and approval of the Debtors' disclosure statement; * prepare necessary applications, motions, answers, order, reports, and other legal papers on behalf of the Debtors; * appear in Court and protect the interests of the debtors before the Court; and * perform all other legal services for the Debtors that may be necessary and proper in the bankruptcy proceeding. The principal attorneys and paralegals presently designated to represent the Debtors will be paid: Professionals Hourly Rate ------------- ----------- Directors: $390 - $605 Mark D. Collins, Esq. $520 Daniel J. DeFranceschi, Esq. $465 Associates: $210 - $350 Jason M. Madron, Esq. $270 Mark Kurtz, Esq. $225 Paralegals: $125 - $180 Ann Jerominski $165 Rebecca V. Speaker $165 Daniel J. DeFranceschi, Esq., a director of RL&F, assured the Court that his firm is disinterested pursuant to Section 101(14) of the Bankruptcy Code. RL&F does not hold or represent an interest adverse to the Debtors or their estates, Mr. DeFranceschi said. 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 the Debtors. 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. 6; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000). ENRON CORP: Judge Gonzalez Okays $300,000 Electroimpact Settlement ------------------------------------------------------------------ The Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approved the $300,000 settlement agreement between the Reorganized Enron Corp. and its debtor- affiliates and Electroimpact, Inc. As reported in the Troubled Company Reporter on Nov. 21, 2006, the Debtors sought to recover from Electroimpact $747,525 in connection with one of the commercial paper debt prepayments. The Debtors had transferred over $1,000,000,000 to various entities for the purpose of prepaying or redeeming, prior to its stated maturity date, unsecured commercial paper that Enron had previously issued. After further disputes between the parties, the Debtors and Electroimpact negotiated the Settlement Agreement under which Electroimpact will pay Enron $300,000 and forfeit, waive and release any claim against the Debtors pursuant to Section 502(h) of the Bankruptcy Code. Pursuant to the Settlement Agreement, the Debtors will execute a stipulation and order dismissing claims against Electroimpact in the commercial paper action which will effectively serve to dismiss with prejudice the claims against Electroimpact. 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. 183; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: Wants Three Separate Settlements Approved ----------------------------------------------------- The Reorganized Enron Corp. and its debtor-affiliates ask the Honorable Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to approve three separate settlement agreements between these parties: Debtor Party Customer ------------ -------- Enron North America Corp. Houston Energy Services Company LLC and Mainline Energy LLC Enron Corp. and ENA Bank of Montreal Enron Broadband Services, Inc. i2 Technologies, Inc. According to Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, the parties had various prepetition contracts relating to the Reorganized Debtors' supply of power and other services to the Customers. The Reorganized Debtors and the Bank of Montreal were also parties to other prepetition contracts, says Michael Schatzow, Esq., at Venable LLP, in Baltimore, Maryland. Certain disputes arose between the Reorganized Debtors and the Customers under the Contracts. Mr. Ellenberg notes that ENA filed a complaint against Houston Energy, seeking damages for breach of contract and declaratory relief. EBS also filed an adversary proceeding against i2 Technologies. According to Mr. Schatzow, the Bank of Montreal filed certain claims against Enron and ENA, including Claims Nos. 8594, 8595 and 8596. He relates that on Dec. 1, 2003, ENA sued the Bank and Reliant Energy Services, Inc., seeking to avoid certain set- offs and transfers. Pursuant to a stipulation and a Court order dated July 14, 2004, Reliant Energy was dismissed as a defendant in the adversary proceeding. Following negotiations regarding the Contracts, the parties agree that: (1) the Customers will make a settlement payment to the applicable Reorganized Debtor; (2) they will exchange mutual releases of all claims related to the Contracts; and (3) the adversary proceedings will be dismissed. Additionally, the Bank of Montreal Settlement Agreement provides that all proofs of claim filed by the Bank will be disallowed except for Claims Nos. 8595 and 8596 and two claims allowed under Section 502(h) of the Bankruptcy Code. The Houston Energy Settlement Agreement also provides that all scheduled liabilities in favor of Houston Energy and Mainline will be deemed irrevocably withdrawn with prejudice, and to the extent applicable, expunged and disallowed in their entirety. 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. 183; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENRON CORP: Energen Sells $12.5 Million Bankruptcy Claim -------------------------------------------------------- Energen Resources Corporation, oil and gas subsidiary of Energen Corporation, has sold its allowed $12.5 million Enron Corp. bankruptcy claim. The Company estimates that the sale of the claim will generate net income in 2006 of $6.7 million, or 9 cents per diluted share. The Company reaffirmed its 2006 earnings guidance range of $3.10- $3.30 per diluted share (non-GAAP), noting that the Enron settlement is expected to place Energen's 2006 earnings toward the middle of this range. Energen Corporation (NYSE: EGN) -- http://www.energen.com/-- is a diversified energy holding company with headquarters in Birmingham, Alabama. Its two lines of business are the acquisition and development of domestic, onshore natural gas, oil and NGL reserves and natural gas distribution in central and north Alabama. 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. ENTERGY NEW ORLEANS: Plaintiffs Want Rehearing Request Denied ------------------------------------------------------------- The Gordon and Lowenburg Plaintiffs ask the U.S. Bankruptcy Court for the Eastern District of Louisiana to deny Entergy New Orleans, Inc.'s request for a rehearing or clarification on the Court's reasons behind the October 13, 2006 order that partially granted the Debtor's request for summary judgment on the Motions for Class Certification filed by the Gordon and Lowenburg Plaintiffs. The Plaintiffs include Reverend C.S. Gordon, Jr., on behalf of the New Zion Baptist Church, J. Michael Malek, Darryl Malec-Wiley, Willie Webb, Jr., Masison St. Charles LLC, dba Quality Inn Maison St. Charles; and Thomas P. Lowenburg, Martin Adamo, Vern Baxter, Philip D. Carter, Bernard Gordon, Leonard Levine, Ivory S. Madison and Donetta Dunn Miller. Luke F. Piontek, Esq., at Roedel, Parsons, Koch, Blache, Balhoff & McCollister, in Baton Rouge, Louisiana, says that because ENOI lacks standing to appeal, it also lacks standing to request a rehearing on the reasons for the Court's judgment. According to Mr. Piontek, a prevailing party cannot complain about the reasons for a ruling in its favor, because it is not "aggrieved" by the favorable judgment. ENOI, as the prevailing party, lacks standing to attack the reasons for judgment and its request is not the proper stuff of motions for rehearing or to alter or amend the judgment, Mr. Piontek maintains. He says that it is a bedrock principle that the law affords remedy only to those who have been aggrieved, which is not applicable in ENOI's situation since the Court's ruling was not against it. ENOI cannot appeal the fact that the reasons it prevailed on the motions for summary judgment were different that it would have preferred, therefore it cannot request a rehearing or modification of the Court's order, and ENOI lacks standing to challenge the Court's ruling, Mr. Piontek reiterates. If the Court finds that ENOI has standing to request an alteration or amendment of an order in its favor because it is disgruntled with the reasons for the judgment, Mr. Piontek says the Court should still deny the request for rehearing because ENOI has failed to meet the test required to justify an alteration or amendment of a Court order pursuant to Rule 59(c) of the Federal Rules of Bankruptcy Procedure. Mr. Piontek says that the three categories must exist if a Court will consider the alteration or amendment of a prior order: (i) if there are manifest errors of law or fact that must be corrected to prevent manifest injustice; (ii) if new evidence bearing on the order has been discovered since the order was rendered; or (iii) if there has been intervening change of controlling law. He asserts that the Court should deny ENOI's request for a rehearing because ENOI has not shown any manifest error of fact or law by the Court nor cited any newly discovered evidence, and it has not set forth any reason for the Court to modify its order. Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EQUITY ONE: Fitch Pares Rating on Class B-2 Certs. to B from BB --------------------------------------------------------------- Fitch Ratings has taken rating actions on Equity One ABS, Inc.'s Mortgage pass-through certificates: Series 2002-3: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 downgraded to 'BB' from 'BBB+'; and, -- Class B-2 downgraded to 'B' from 'BB'. Series 2002-4: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; and, -- Class B downgraded to 'BBB-' from 'BBB. The collateral on the aforementioned transactions consists of adjustable- and fixed-rate mortgage loans secured by first and second liens on one- to four-family dwellings, all of which were extended to subprime borrowers. Equity One is the originator and servicer of all loans, and currently has a servicer rating of 'RPS2-' provided by Fitch. The affirmations reflect adequate levels of credit enhancement to future expected losses, and affect approximately $71.61 million in outstanding certificates. The downgrades reflect a deterioration in the relationship between CE and future expected losses, and affect approximately $7.95 million in outstanding certificates. As of the November 2006 distribution date, series 2002-3 has a pool factor of 13.27%, and is 53 months seasoned. The pool has incurred cumulative losses of approximately $6.37 million, or 2.25% of the original balance. The transaction has an overcollateralization amount of $1,404,815 which is $548,632 less than its target of $1,953,448. Classes B-1 and B-2 were downgraded due to diminishing amounts of excess spread relative to realized losses. Monthly losses have exceeded excess spread for the last 12 months. Fitch expects this negative trend to continue. Class B-2 was recently downgraded during the last review in September 2006. As of the November 2006 distribution date, series 2002-4 has a pool factor of 15.48% and is 51 months seasoned. The pool has incurred cumulative losses of approximately $5.73 million, or 1.9% of the original balance. The OC amount is $3,724,870 which is $22,908 off its target amount of $3,747,778. Class B was downgraded due to similar reasons as 2002-3. Like series 2002-3, excess spread has not covered losses for any month over the past year, and OC is off target. However, 2002-4 benefits from higher levels of CE. EXECUTE SPORTS: Posts $1 Million Net Loss in Qtr. Ended Sept. 30 ---------------------------------------------------------------- Execute Sports Inc., fka Padova International USA Inc., filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission. The company reported a $1,065,502 net loss on $263,557 of revenues for the three months ended Sept. 30, 2006, compared with a $340,007 net loss on $51,392 of revenues in the comparable period of 2005. At Sept. 30, 2006, the company's balance sheet showed $2,909,496 in total assets, $1,670,556 in total liabilities, and $1,238,940 in total stockholders' equity. The Company's September 30 balance sheet also showed strained liquidity with $1,534,247 in total current assets available to pay $1,670,556 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?162f Going Concern Doubt As reported in the Troubled Company Reporter on June 5, 2006, Bedinger & Company, in Concord, Calif., raised substantial doubt about Execute Sports's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations. About Execute Sports Execute Sports Inc. markets and sells water sports clothing, apparel, and motorcycle accessories. On March 3, 2005, the Company changed its name from Padova International U.S.A. Inc. to Execute Sports Inc. EXIDE TECH: Completes $290 Mil. 10-1/2% Sr. Notes Exchange Offer ---------------------------------------------------------------- Exide Technologies completed its exchange offer of up to $290,000,000 in 10-1/2% senior secured notes due 2013 for all outstanding 10-1/2% senior secured notes due 2013 that were issued and sold in a private placement offering in March 2005. The exchange offer expired at 5:00 pm, New York City time, on Nov. 27, 2006. The new notes are substantially identical to the notes for which they were exchanged, except that the new notes have been registered under the Securities Act of 1933 and the transfer restrictions and registration rights provisions on the original notes do not apply to the new notes. Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. Going Concern Doubt PricewaterhouseCoopers LLP expressed substantial doubt about Exide Technologies' ability to continue as a going concern after auditing the Company's financial statements for the fiscal years ended March 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses and negative cash flows from operations. The auditing firm also said that, given the company's past financial performance in comparison to its budgets and forecasts, there is no assurance the Company will be able to meet the budgets and forecasts and be in compliance through March 31, 2007, with one or more of the debt covenants of its Senior Secured Credit Facility. FAIRCHILD SEMICON: Court Postpones Power Integrations Trial ----------------------------------------------------------- Fairchild Semiconductor disclosed that the jury trial set to begin yesterday against Power Integrations Inc. has been canceled by order of the Delaware U.S. District Court. The court questioned whether the KSR v. Teleflex case, currently pending before the U.S. Supreme Court, and argued only days ago on Nov. 28, 2006, might affect the dispute between Fairchild and Power Integrations. The court found that the same issue of obviousness, a defense to the validity of the Power Integrations patents, "permeates the validity contentions in this case." At issue in the KSR case is whether the defense of obviousness has been improperly restricted by lower court rulings. The court reset the Power Integrations v. Fairchild Semiconductor jury trial on validity issues to May 7, 2007. About Fairchild Fairchild Semiconductor -- http://www.fairchildsemi.com/-- supplies power products to electronic applications in the computing, communications, consumer, industrial and automotive segments. Fairchild's 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products. * * * Moody's Investors Service confirmed Fairchild Semiconductor Corp.'s Ba3 corporate family rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. FIRST FRANKLIN: Fitch Pares Class M-3 Certificates Rating to BB- ---------------------------------------------------------------- Fitch takes rating actions on First Franklin Financial Corporation's residential mortgage-backed certificates: * Series 2001-FF2 -- Classes A-1 and A-2 affirmed at 'AAA'; -- Class M-1 rated 'AA' is placed on Rating Watch Negative; -- Class M-2 downgraded to 'BBB-' from 'A-'; and, -- Class M-3 downgraded to 'BB-' from 'BBB-'. The affirmations, affecting approximately $18.6 million of the outstanding certificates, are taken as a result of a stable relationship between credit enhancement and expected loss. The Rating Watch Negative status affects approximately $4.2 million on the outstanding certificates. The downgrades, affecting approximately $3.2 million of the outstanding certificates, are taken as a result of a deteriorating relationship between credit enhancement and expected loss. Since Fitch last took rating action on series 2001-FF2 in May 2006, monthly losses have exceeded excess spread 5x and continue to deplete the overcollateralization. As of the Nov. 2006 distribution date, the OC is missing its $1,056,775 target by $372,813. The cumulative loss as a percentage of the original pool balance is 1.3% and the delinquency rate as a percentage of the current pool balance is 27.3%. The pool is 60 months seasoned and has a pool factor of 6%. As the transaction continues to season, losses are expected to increase relative to excess spread and the OC is expected to continue to decline. The collateral of the above transaction consists of subprime, fixed-rate mortgage loansand adjustable-rate mortgage loans. In addition, the certificates are supported by two collateral groups, one consists of loans with principal balances that conform to Fannie Mae and Freddie Mac guidelines and the other consists of loans with principal balances that may or may not conform to Fannie Mae and Freddie Mac guidelines. The loans were originated or acquired by First Franklin Financial Corp. and are serviced by Option One Mortgage Corp., which is rated 'RPS1' by Fitch. FIRST HORIZON: Fitch Rates $1 Mil. Class B-5 Certificates at B -------------------------------------------------------------- Fitch rates First Horizon Alternative Mortgage Securities Trust mortgage pass-through certificates, Series 2006-AA7: -- $234.8 million classes A-1, A-2 and A-R senior certificates 'AAA'; -- $7.75 million class B-1 certificates 'AA'; -- $2.5 million class B-2 certificates 'A'; -- $1.87 million class B-3 certificates 'BBB'; -- $1.25 million class B-4 certificates 'BB'; and -- $1.0 million class B-5 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 6.1% subordination provided by the 3.1% class B-1 , the 1% class B-2, the 0.75% class B-3, the 0.5% privately offered class B-4, the 0.4% privately offered class B-5 and the 0.35% privately offered class B-6. These certificates were rated on Nov. 30, 2006. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of First Horizon Home Loan Corporation, currently rated 'RPS2' by Fitch Ratings. Substantially all of the mortgage loans were underwritten to First Horizon's 'Super Expanded Underwriting Guidelines'. These guidelines are less stringent than First Horizon's general underwriting guidelines and could include limited documentation, higher loan-to-value ratios and lower FICO scores. Mortgage loans underwritten to the 'Super Expanded Underwriting Guidelines' could experience higher rates of default and losses than loans underwritten using First Horizon's general underwriting guidelines. As of the cut-off date, Nov. 1, 2006, the aggregate pool consists of conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on single-family residential properties, substantially all of which have original terms to maturity of 30 years. The loans have an initial fixed interest rate period of five years. Thereafter, the interest rate will adjust semi- annually based on the sum of six-month LIBOR index and a gross margin specified in the applicable mortgage note. Approximately 86.6% of the mortgage loans in the aggregate pool have interest only payments scheduled for a period of ten years following the origination date of the mortgage loan. Thereafter, monthly payments will be increased to include principal and interest payments to sufficiently amortize the loan over the remaining term. The principal balance of the aggregate pool is $250,016,929 and the average principal balance is approximately $284,433. The mortgage pool has a weighted average original loan- to-value ratio of 73.17% and the weighted average FICO is 724. Rate/Term and cash-out refinance loans account for 12.06% and 31.28% of the pool, respectively. Second homes represent 6.62% of the pool, and investor occupancies represent 29.64% of the pool. The top five states with the largest concentrations are California, Arizona, Virginia, Florida, and Nevada. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. FLYI INC: QVT Financial Acquires 6,899,259 Shares of Stock ---------------------------------------------------------- QVT Financial LP discloses in a regulatory filing with the Securities and Exchange Commission that it has acquired 6,899,259 shares or 9.3% of FLYi Inc. common stock. QVT Financial is the investment manager for QVT Fund LP, which beneficially owns 5,797,436 shares of FLYi Common Stock issuable upon conversion of the issuer's convertible notes. QVT Financial is also the investment manager for a separate discretionary account managed for Deutsche Bank AG, which holds 1,101,823 shares of Common Stock. Daniel Gold, managing member of QVT Financial, relates that the company has the power to direct the vote and disposition of the Common Stock held by the Fund and the Separate Account. According to Mr. Gold, QVT Financial may be deemed to be the beneficial owner of an aggregate amount of 6,899,259 shares of Common Stock, consisting of the shares beneficially owned by the Fund and the Separate Account. Moreover, QVT Financial GP LLC, as general partner of QVT Financial, may be deemed to beneficially own the same number of shares of Common Stock reported by QVT Financial. QVT Associates GP LLC, as general partner of the Fund, may be deemed to beneficially own the same number of shares of Common Stock reported by the Fund. Mr. Gold discloses that the reported share amounts reflect the amounts beneficially owned by QVT Financial as of February 16, 2006, and those owned by the Fund as of April 4, 2006, as adjusted for subsequent transactions through November 22, 2006. Each of QVT Financial and QVT GP disclaim beneficial ownership of the shares owned by the Fund and those held in the Separate Account. QVT Associates disclaims beneficial ownership of all shares of Common Stock owned by the Fund, except to the extent of its pecuniary interest. Headquartered in Dulles, Virginia, FLYi Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FLYI INC: Anticipates Existing Common Stock to be Cancelled ----------------------------------------------------------- FLYi Inc. anticipates that the likely outcome of its Chapter 11 case is that its existing common stock will be cancelled without consideration and that its stock will have no value. Richard Kennedy, president, general counsel, and corporate secretary of FLYi, discloses in a regulatory filing with the Securities and Exchange Commission that it is impossible to determine the extent of recoveries of creditors of FLYi or of any of its affiliated companies, as those will continue to be dependent on: (i) the completion of the asset recovery and allocation process; (ii) the determination of the total claims pool; and (iii) the finalization and confirmation of a plan of liquidation. None of those has been completed at this time, Mr. Kennedy states. The FLYi stock and recoveries of any claims by creditors against any of the FLYi related companies' bankruptcy estates are highly speculative, and the Company urges investors to use extreme caution in any investment decisions, Mr. Kennedy says. As previously reported, FLYi had entered into an agreement with United Air Lines on April 11, 2006, to resolve, with certain limited exceptions, all of the claims and disputes among them, that it had received 3,266,366 shares of New UAL Common Stock as its initial distribution, and that it had sold these shares for total net cash proceeds of $95,751,494. In October 2006, FLYi received 252,105 shares of New UAL Common Stock as its second distribution pursuant to the agreement. The company sold all of those additional shares in a series of transactions between October 13 and October 17, 2006, for total net cash proceeds of $7,624,431. The net cash proceeds received year-to-date from the sale of New UAL Common Stock, in conjunction with the April 11, 2006 agreement, totals $103,375,925. Mr. Kennedy states that FLYi may receive additional shares of New UAL Common Stock as other disputed claims in the UAL bankruptcy subject to the reserve subsequently are allowed. Headquartered in Dulles, Virginia, FLYi Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FOAMEX INT'L: Class 3 Claims Impaired Under Second Amended Plan --------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates' second amended plan of reorganization reflects the impairment of Class 3 claims -- the Senior Secured Note Claims -- based on the proposed settlement of the adversary proceeding commenced by the Debtors against U.S. Bank National Association, on Nov. 3, 2006. Pursuant to the second amended plan, if holders of the Class 3 claims vote to accept the second amended plan, then each holder of an Allowed Senior Secured Note Claim will receive, in addition to any deemed receipt of its pro rata share of the Senior Secured Notes Adequate Protection Professional Payments, cash in an amount equal that holder's: (a) Allowed Senior Secured Note Base Claim plus Post-Petition Interest; and (b) pro rata share of the Senior Secured Note Premium Settlement Amount. In the event that Class 3 holders vote to reject the Plan, the Senior Secured Base Note Base Claim plus Post-Petition Interest will be allowed but the Senior Secured Note Premium Claim will be disputed. The Class 3 claims are deemed allowed for $315,139,583 plus Post- Petition Interest and the Senior Secured Note Settlement Amount, according to the second amended plan. The allowed amounts of the Post-Petition Interest and the Senior Secured Note Premium Claim may vary depending on whether the Class 3 votes to reject or accept the second amended plan. The second amended plan also provides changes to the treatment or the estimated total allowed amount for five other groups of claims: Class Description Recovery Claim Treatment ----- ----------- -------- --------------- N/A Administrative 100% Except for the Professionals Fee Claims Claims, each holder will be paid in cash, in full. Unimpaired. Estimated Amount: $332,645. N/A Priority Tax 100% Each holder will be paid in cash, Claim in full, or be paid over a six- year period with interest at the statutory rate under applicable federal, state or local law. Unimpaired. Estimated Amount: $1,659,565. 1 Other Priority 100% Each holder will be paid in cash, Claims in the full nominal amount. Unimpaired. Estimated Amount: $394,786. 4 Senior 100% Each holder will be paid in cash, Subordinated in full, plus postpetition Note Claims interest. Unimpaired. Estimated Amount: $208,150,131 5 General 100% Each holder will be paid in cash, Unsecured in full, plus postpetition Claims interest Unimpaired. Estimated Amount: $13,007,468. 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. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Must Mail Solicitation Packages by Dec. 7 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware directs Foamex International Inc. and its debtor-affiliates to mail or cause to be mailed by Dec. 7, 2006, the Solicitation Packages to the claim or equity security holders entitled to vote on their Second Amended Plan of Reorganization. Under the Second Amended Plan, the parties entitled to vote to accept or reject the Second Amended Plan are: (1) claim holders of Class 3 claims -- Senior Secured Note Claims; (2) interest holders of Class 9 -- Existing Preferred Stock; and (3) interest holders of Class 10 -- Existing Common Stock. Prior to the transmission of the Solicitation Packages, the Court authorizes the Debtors to fill any missing dates and information, correct any typographical errors, reformat and make other non- material, non-substantive changes to the Second Amended Plan and Disclosure Statement and any other materials in the Solicitation Package as they deem appropriate. The Court directs the Debtors to serve the Unimpaired Party Notices to holders of these unimpaired claims pursuant to the Second Amended Plan: (a) Administrative Claims, Priority Tax Claims, and DIP Financing Claims; (b) Class 1 claims -- Other Priority Claims; (c) Class 2 claims -- Other Secured Claims; (d) Class 4 claims -- Senior Subordinated Note Claims; (e) Class 5 claims -- General Unsecured Claims; (f) Class 6 claims -- Unliquidated Claims; (g) Class 7 claims -- Intercompany Claims; (h) Class 8 claims -- Equity Interests in Surviving Debtor- Subsidiaries; and (i) Class 11 claims -- Other Common Equity Interests in Foamex International. The Court sets November 15, 2006, as the record date with respect to all holders of claims and equity interests in the Debtors entitled to vote on the Second Amended Plan. All ballots and master ballots must be delivered to Bankruptcy Services LLC, the Debtors' Court-appointed balloting agent, by Jan. 4, 2007, at 4:00 p.m., prevailing Eastern Time. 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. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: November U.S. Sales for New Cars & Trucks Up 6% --------------------------------------------------------------- General Motors dealers in the United States sold 297,556 new cars and trucks in November, a 6% increase compared with last year. Beginning with the 2007 model year in September, retail sales are up 13% while retail sales for November were up 11% compared with a year ago. Retail truck sales were up 17%, led by a 29% increase in large pickup retail sales such as Chevy Silverado and GMC Sierra and a 36% increase in luxury utility retail sales, including triple- digit retail increases for the entire Cadillac Escalade lineup. Retail car sales were up 1%, led by Chevrolet Impala, Buick Lucerne, Pontiac G5, Saturn Aura, and Cadillac CTS. "We continue to experience strong customer demand for our lineup of fuel efficient vehicles and new launch products. In a challenging market, we are pleased to be gaining momentum with our truck lineup, which we attribute to offering the best fuel economy and the best warranty in the segment," General Motors North America vice president for vehicle sales, service, and marketing Mark LaNeve said. "Importantly, sales were solid throughout the month with dealers driving traffic with our annual year-end Red Tag Event." The Red Tag Event runs through Jan. 2, 2007. GMC, Cadillac, Chevrolet, Buick, Saab, and Saturn all had retail sales increases in November. GMC was up 23% retail, compared with a year ago, with double-digit sales increases for the Sierra, Yukon and Yukon XL. Cadillac retail sales were up 26%, with a 15% increase in CTS and triple-digit increases for the entire Escalade lineup. Chevrolet retail sales were up 9%, with retail increases by Silverado, up 23%; Tahoe, up 50%; and Suburban, up 36%. Buick retail sales were up 38%, led by Lucerne, which saw a sales increase of more than 6,000 vehicles compared with last November. Saab retail sales were up 25%, driven by an 87% hike for 9-5, a 64% rise for 9-7X and an 11% retail increase for 9-3. Lastly, Saturn retail sales were up 14% as the all-new 2007 Aura and Sky continue to bring new customers into the Saturn family. "Our Manufacturing team worked extremely hard on a high-quality launch and has already produced more than 50,000 new 2007 Chevy Silverados and GMC Sierras," Mr. LaNeve added. "This accelerated launch means we are in the marketplace 13 weeks ahead of schedule -- and most importantly -- ahead of the competition with the best quality, fuel economy, and value in the important full-size pickup segment." GM continues to reduce its reliance on daily rental sales. Sales to daily rental companies were down 13% compared with year-ago levels, while non-daily rental fleet business was up 5%. Overall fleet sales of 80,452 vehicles were down 7% compared with last November. Certified Used Vehicles November sales for GM Certified Used Vehicles, Cadillac Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, were 42,006 down 1% comparable with last November's sales. Certified sales from Saturn Certified Pre-Owned Vehicles were not available at the time of this release. Total year-to-date certified GM sales, excluding November sales of Saturn Certified Pre-Owned Vehicles, are 478,389 units, down 1% compared with the same period last year. GM Certified Used Vehicles, the industry's top selling certified pre-owned brand, posted 36,485 sales in November, down 1.7% from November 2005. Year-to-date sales for GM Certified Used Vehicles are 413,688 units, comparable to last year's results for the same period. Cadillac Certified Pre-Owned Vehicles posted 3,545 sales in November, up 16% from last November. Saturn certified pre-owned sold 1,351 units down 25%. Saab Certified Pre-Owned Vehicles sold 514 units, up nearly 5%. In its eleventh month of operation, HUMMER Certified Pre-Owned sold 112 units. "Cadillac Certified Pre-Owned Vehicles continues to roll along with another strong monthly sales performance. For the month, they were up 16% over November 2005, with year-to-date sales up 8% from the same period last year," Mr. LaNeve said. "Through November, GM Certified Used Vehicles, the industry's top-selling certified brand, sold 413,688 units, comparable to its category record annual sales in 2005." GM North America Reports November 2006 Production In November, GM North America produced 360,000 vehicles (148,000 cars and 212,000 trucks). This is down 71,000 units or 16% compared with November 2005 when the region produced 431,000 vehicles (169,000 cars and 262,000 trucks). (Production totals include joint venture production of 20,000 vehicles in November 2006 and 30,000 vehicles in November 2005.) The region's 2006 fourth quarter production forecast is unchanged at 1.110 million vehicles (449,000 cars and 661,000 trucks). In the fourth quarter of 2005 the region produced 1.281 million vehicles (483,000 cars and 798,000 trucks). Additionally, the region's initial 2007 first quarter production forecast is set at 1.140 million vehicles (457,000 cars and 683,000 trucks), down 9% from actual first quarter of 2006 results. The majority of the production decrease in the first quarter is attributed to GM's ongoing efforts to reduce low-margin daily rental fleet sales. The remainder of the cuts is attributed to shifting production to the company's new full-size pickups and the ongoing management of inventories. Initial 2007 First Quarter Production Forecasts For Its International Regions GM Europe GM Europe's 2006 fourth quarter production forecast is unchanged at 445,000 units. In the fourth quarter of 2005 the region built 443,000 vehicles. The region's initial 2007 first quarter production forecast is set at 508,000 vehicles. GM Asia Pacific The region's 2006 fourth quarter production forecast is unchanged at 504,000 units. In the fourth quarter of 2005 the region built 420,000 vehicles. GM Asia Pacific's initial 2007 first quarter production forecast is set at 539,000 vehicles. GM Latin America, Africa, and the Middle East The region's 2006 fourth quarter production forecast is unchanged at 215,000 units. In the fourth quarter of 2005 the region built 188,000 vehicles. The region's 2007 first quarter production forecast is set as 214,000 vehicles. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 327,000 people around the world. It has manufacturing operations in 33 countries and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. * * * As reported in the Troubled Company Reporter on Nov. 16, 2006, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to General Motors Corp.'s $1.5 billion senior term loan facility, expiring 2013, with a recovery rating of '1'. At the same time, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating to General Motors Corp.'s $1.5 billion senior term loan facility, expiring 2013, with a recovery rating of '1'. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corporation. GMAC LLC: Fitch Upgrades Issuer Default Rating to BB+ ----------------------------------------------------- Fitch Ratings upgraded GMAC LLC's Issuer Default Rating to 'BB+' from 'BB' and Residential Capital LLC's IDR to 'BBB' from 'BBB-' after the closing of the sale of a controlling interest in GMAC to a consortium led by Cerberus FIM Investors, LLC. The ratings for GMAC and ResCap have also been removed from Rating Watch Positive, where they were originally placed on Apr. 3, 2006. The Rating Outlook for GMAC, ResCap and related subsidiaries is Positive. The ratings of GMAC Bank have been withdrawn as this entity has been effectively merged into GMAC Automotive Bank. With the closing of the transaction, the ratings of GMAC will no longer be directly linked to those of General Motors Corp., in the sense that a rating action on GM will not automatically translate into a similar action at GMAC. Rather, Fitch will view GMAC's relationship with GM as one of a significant customer concentration. As such Fitch would consider how issues at GM, such as labor disruption or weakening market share could impact GMAC's business. If such events would be material, Fitch would factor that into the rating. Nonetheless, Fitch's ratings can withstand a fair degree of weakening at GM. Fitch's upgrade of GMAC reflects a number of factors. First, it recognizes the good record of operating performance the company has demonstrated, despite significant challenges over the past five years. The company's most recent quarter notwithstanding, Fitch expects GMAC will continue to maintain good operating performance, with solid earnings while maintaining credit and capital discipline. Fitch's upgrade also considers the company's capitalization on a risk-adjusted basis. Under Fitch's own standards, GMAC has over the past few years reported solid risk-adjusted capital levels, commensurate with a higher rating. Fitch continues to believe that the good capital discipline witnessed at the company will remain. Fitch also recognizes the good liquidity management the company has demonstrated over a very stressful period. GMAC has been successful obtaining alternative financing sources such as whole loan sales and greater use of securitization to fund its balance sheet as access to capital became more difficult. In addition, the company has carried significant committed liquidity support to protect itself. Fitch notes that the company's dealer floorplan securitization program, SWIFT, has covenants related to a GM bankruptcy. Under such a scenario, a filing by GM would accelerate maturities of the notes issued out of the trust, creating a significant call on liquidity. At Nov. 30, 2006, there was approximately $18 billion of SWIFT notes outstanding. Although a concern, Fitch expects GMAC to have in place contingent liquidity to address such a scenario. Moreover, Fitch expects that future floorplan transactions would not contain such a GM bankruptcy trigger. Fitch is maintaining its two notch differential between GMAC and ResCap, however, given certain changes in the operating agreement between GMAC and ResCap, necessitated by the GMAC Bank restructuring, Fitch may narrow the notching between GMAC and ResCap over time particularly as ResCap approaches its stand-alone rating of mid to high 'BBB'. The Positive Rating Outlook reflects Fitch's view that should GMAC be successful in prudently growing non-GM related financing and insurance businesses, improving operational efficiencies, and maintaining disciplined underwriting, ratings could be raised from the current levels. Fitch has upgraded and removed these ratings from Rating Watch Positive: * GMAC LLC * GMAC International Finance B.V. * GMAC Bank GmbH * General Motors Acceptance Corp., Australia * General Motors Acceptance Corp. of Canada Ltd. -- Issuer Default Rating to 'BB+' from 'BB'; -- Senior unsecured debt to 'BB+' from 'BB'. * Residential Capital LLC -- Issuer Default Rating to 'BBB' from 'BBB-'; -- Senior debt to 'BBB' from 'BBB-'; -- Subordinated debt to 'BBB-' from 'BB+'; -- Short-term Issuer to 'F2' from 'F3'. -- The Rating Outlook is Positive Ratings affirmed by Fitch: * GMAC LLC * GMAC International Finance B.V. * GMAC Bank GmbH * GMAC Australia Finance * General Motors Acceptance Corp. (U.K.) Plc. * General Motors Acceptance Corp. Australia * General Motors Acceptance Corp. of Canada Ltd. * General Motors Acceptance Corp. (N.Z.) Ltd. -- Short-term Issuer 'B'; -- Short-term debt 'B'. These ratings are removed from Rating Watch Evolving, affirmed and subsequently withdrawn: * GMAC Bank -- Issuer Default Rating 'BBB-'; -- Long-term deposits 'BBB'; -- Short-term deposits 'F3'; -- Short-term Issuer 'F3'; -- Individual 'B/C'; and -- Support '3'. GOLD KIST: Inks $1.1 Bil. Merger Agreement with Pilgrim's Pride --------------------------------------------------------------- Gold Kist Inc. and Pilgrim's Pride Corporation entered into a definitive merger agreement under which Pilgrim's Pride will acquire all of the outstanding shares of Gold Kist common stock for $21 per share in cash. The transaction, which was unanimously approved by the boards of directors of both Pilgrim's Pride and Gold Kist, has a total equity value of approximately $1.1 billion, plus the assumption of approximately $144 million of Gold Kist's debt. Together, Pilgrim's Pride and Gold Kist will create the world's leading chicken company in terms of production and the third- largest U.S. meat protein company by revenues. The combined company will have a broad geographic reach and customer base, while maintaining a balanced portfolio of fresh chicken and value- added products. In particular, the enhanced geographic diversification will enable the new Pilgrim's Pride to compete more efficiently both in the U.S. and internationally. "This is a momentous day for both companies and for the chicken industry," said Lonnie "Bo" Pilgrim, chairman of Pilgrim's Pride. "We believe the combination of these two great companies will result in substantial value creation for our respective stockholders, employees, business partners and other constituencies." "We are excited about the opportunity to begin realizing the substantial benefits that will result from the combination between Pilgrim's Pride and Gold Kist," added O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer. "The combined company will be well-positioned to provide even better service to its customers. We look forward to welcoming Gold Kist's employees and contract growers to the Pilgrim's Pride family so they can participate in the long-term growth opportunities of the combined company." Pilgrim's Pride expects to achieve approximately $50 million of annualized synergies, primarily from the optimization of production and distribution facilities and cost savings in purchasing, production, logistics and SG&A. Pilgrim's Pride expects the acquisition will be accretive to the company's diluted earnings per share after the first full year of operations. Pilgrim's Pride believes that the combined company will have a strong financial position and substantial cash flow, enabling it to consistently reduce debt and return to historical debt levels. "After careful consideration, the special committee of independent directors, as well as our entire board, determined that the Pilgrim's Pride enhanced offer is in the best interests of our shareholders, employees, growers and customers," said A.D. Frazier, chairman of Gold Kist. "Since becoming a public company more than two years ago, Gold Kist has made significant progress in achieving its business goals. We look forward to working with the Pilgrim's Pride board and management on a smooth integration, and we recommend that all stockholders embrace this transaction by tendering their shares into the premium offer." "This transaction will position the combined company for long-term growth and leadership in our industry," said John Bekkers, president and chief executive officer of Gold Kist. "The collective talents and expertise of our employees and growers, along with our combined customer relationships, will represent a new standard in the chicken business and make Pilgrim's Pride the preeminent industry player." The Pilgrim's Pride offer represents an approximately 62% premium over Gold Kist's closing stock price on Aug. 18, 2006, the last day of trading before Pilgrim's Pride notified Gold Kist's board of directors in a public letter that it was offering to purchase the company. Under the terms of the merger agreement, Pilgrim's Pride will amend its tender offer to increase its offer price to $21 per share and Gold Kist will amend its Schedule 14D-9 to include the Gold Kist board's recommendation that Gold Kist stockholders tender their shares to Pilgrim's Pride pursuant to the amended tender offer. A revised offer to purchase will be distributed to Gold Kist stockholders and the scheduled expiration date for the amended tender offer is 5:00 p.m., New York City Time, Dec. 27, 2006, unless extended. The offer and related transactions contemplated by the merger agreement are subject to the satisfaction of customary closing conditions. As reported in the Troubled Company Reporter on Oct. 20, 2006, the transaction has received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Baker & McKenzie LLP and Morris, Nichols, Arsht & Tunnell, LLP are acting as legal counsel and Credit Suisse, Legacy Partners Group LLC and Lehman Brothers Inc. are acting as financial advisors to Pilgrim's Pride. Innisfree M&A Incorporated is acting as information agent for Pilgrim's Pride's offer. Lehman Brothers Inc. and Credit Suisse have provided financing commitments. Merrill Lynch & Co. and Gleacher Partners LLC are serving as financial advisors to Gold Kist. Alston & Bird LLP and Richards, Layton & Finger P.A. are serving as outside legal counsel to Gold Kist. MacKenzie Partners is acting as information agent for Gold Kist. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. About Gold Kist Based in Atlanta, Georgia, Gold Kist Incorporated (NASDAQ: GKIS) -- http://www.goldkist.com/-- operates a fully integrated chicken production, processing and marketing business. Gold Kist's production operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina. * * * As reported in the Troubled Company Reporter on Oct. 16, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products sector, the rating agency confirmed its B1 Corporate Family Rating for Gold Kist Inc., and revised its B3 rating from B2 on the company's $130 million, 10.250% Guaranteed Senior Global Notes due March 15, 2014. Additionally, Moody's assigned an LGD5 rating to those bonds, suggesting noteholders will experience a 78% loss in the event of a default. GSI GROUP: Earns $6.1 Million in 2006 Third Quarter --------------------------------------------------- The GSI Group Inc. reported a $6.1 million net income on $97.7 of revenues for the third quarter ended Sept. 30, 2006, compared with a $5.4 million net income on $107.7 million of revenues for the same period in 2005. Net income increased by $0.7 million to $6.1 million for the third quarter of 2006 from $5.4 million in the same period of 2005, attributable to the increase in gross profit of $837,000, the decrease in operating expenses of $982,000, offset by the increase in other expenses of $1.0 million primarily due to the cost related to the extinguishment of debt. At Sept. 30, 2006, the company's balance sheet showed $254.6 million in total assets, $176.5 million in total liabilities, $3 million in minority interest, and $75.1 million in total stockholders' equity. At Sept. 30, 2006, cash and cash equivalents were $6.5 million, compared to cash and cash equivalents of $2.5 million at Dec. 31, 2005. The increase was due to net cash flows of $21.8 million from operating activities, offset by net cash used in investing activities of $9.2 million and net cash used in financing activities of $8.6 million. Full-text copies of the company's consolidated financial statements for the third quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?1644 The GSI Group Inc. -- http://www.grainsystems.com/-- is a manufacturer of agricultural equipment. The company's grain, swine and poultry products are used by producers and purchasers of grain, and by producers of swine and poultry. The GSI Group, Inc. is comprised of several manufacturing divisions. Grain Systems (GSI), and GSI International are the grain storage, drying and material handling divisions of The GSI Group. GSI manufactures galvanized steel storage bins and many types of grain drying systems including portable, stacked, tower and process dryers. In addition, GSI carries a full line of material handling equipment including augers, bin sweeps, bucket elevators, conveyors, distributors, chain loop systems, and grain spreaders. The GSI Group markets its products to over 75 countries worldwide through a network of independent dealers to grain/protein producers and large commercial businesses * * * 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. HANESBRANDS INC: S&P Rates Proposed $500 Million Sr. Notes at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' senior unsecured debt rating to Winston-Salem, North Carolina-based intimate apparel and activewear maker Hanesbrands Inc.'s proposed $500 million senior notes to be issued as a combination of fixed- and floating-rate notes. The notes are being offered in the U.S. pursuant to Rule 144A, with registration rights. Proceeds from the notes will be used to refinance the company's interim $500 million bridge bank facility. The existing 'B-' rating on the $500 million bridge loan facility will be withdrawn upon the closing of the transaction. At the same time, existing ratings on the company, including the 'B+' corporate credit rating, were affirmed. The rating outlook is stable. The new senior unsecured notes are rated two notches below the 'B+' corporate credit rating due to the large amount of secured debt in the capital structure. "The rating reflects Hanesbrands' high leverage resulting from its all debt-financed $2.4 billion special dividend to Sara Lee Corp. following the Sept. 5, 2006 spin-off, the commodity-like nature of some of its products, the highly competitive and promotional retail environment, and the company's relatively narrow business focus," said Standard & Poor's credit analyst Susan Ding. "There is also execution risk for new management in operating the company as a standalone entity. However, these risks are somewhat mitigated by Hanesbrands' strong and widely recognized brand names (including Hanes, Champion, Playtex, and Bali), its core replenishment business (which is less susceptible to fashion risk), and its relatively stable cash flows." Due to the significant debt leverage resulting from the special dividend to Sara Lee, Standard & Poor's expect Hanesbrands to focus on reducing debt with internally generated cash flow. Standard & Poor's also expect the company to maintain credit measures above the median for the rating to offset some of the inherent risks in the apparel industry. Standard & Poor's estimate that Hanesbrands will maintain lease- adjusted operating margins in the 13% range, EBITDA interest coverage at more than 2.5x, and total debt to EBITDA at less than 4.5x pro forma for the notes transaction. HOME PRODUCTS: Debt Restructuring Cues Moody's to Junk Ratings -------------------------------------------------------------- Moody's Investors Service lowered Home Products International, Inc.'s corporate family rating to Caa3 from Caa1, and its senior subordinated notes rating to Ca from Caa2. The rating action was prompted by HPI's Nov. 2006 report that it reached an agreement in principle with certain noteholders holding a majority of the senior subordinated notes regarding the terms of a restructuring of the company's indebtedness. Additionally, the company did not make the interest payment due Nov. 15th on its senior subordinated notes, resulting in the probability-of-default rating being lowered to D. As part of the restructuring, holders of the senior subordinated notes would convert their debt holdings for 95% of the equity of the reorganized company. Moody's will withdraw the ratings upon completion of the proposed debt restructuring. Ratings downgraded: -- Corporate family rating, to Caa3 from Caa1; -- Probability-of-default rating, to D from Caa1; -- $116 million 9.625% senior subordinated notes due 2008, to Ca from Caa2, LGD4, 66%. Home Products International, Inc. is a leading supplier of value- priced laundry management products, general storage products, closet storage products, bathware products and kitchen storage products to large national retailers. The company reported revenues over $200 million in 2005. HOMETOWN COMMERCIAL: Fitch Puts Low-B Ratings on Six Certificates ----------------------------------------------------------------- Hometown Commercial Capital Trust 2006-1 commercial mortgage pass- through certificates are rated by Fitch Ratings as: -- $125,694,000 class A 'AAA'; -- $141,546,000 Class X 'AAA'; -- $3,357,000 Class B 'AA'; -- $1,679,000 Class C 'AA-'; -- $3,170,000 Class D 'A'; -- $4,289,000 Class E 'BBB+'; -- $1,492,000 Class F 'BBB'; -- $1,865,000 Class G 'BBB-'; -- $1,119,000 Class H 'BB+'; -- $560,000 Class J 'BB'; -- $746,000 Class K 'BB-'; -- $372,000 Class L 'B+'; -- $560,000 Class M 'B'; and, -- $559,000 Class N 'B-'; The $3,730,752 Class O is not rated by Fitch. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 45 fixed rate loans having an aggregate principal balance of approximately $149,192,752, as of the cutoff date. HUDSON PRODUCTS: Moody's Rates Proposed $120MM Sr. Facility at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating to Hudson Products Holdings, Inc. Additionally, Moody's assigned a B1 rating to the company's proposed $120 million senior secured credit facility. Moody's has not rated the company's $48 million senior subordinated notes. The rating outlook is stable. These are the rating actions: * Corporate family rating, B2 * Probability of default rating, B2 * $95 million senior secured term loan due 2013, B1, LGD3, 35% * $25 million senior secured revolver due 2011, B1, LGD3, 35%. The ratings remain subject to Moody's review of final documentation. Hudson's B2 corporate family rating reflects: -- the high pro forma leverage at closing (5.5x debt-to- EBITDA, debt-to-revenue greater than 1.1x) -- the company's small size; and, -- its vulnerability to the cyclical nature of the oil and gas industry which is a key end market for the company's fans and air-cooled heat exchangers. The company's strong market position and significant installed base, which result in part sales, high margin service, retrofits and upgrades, support the rating. Additionally, the company's market leadership position in fans and air-cooled heat exchangers, its global presence for a relatively small company, and favorable near-term industry dynamics support the rating. Hudson's significant backlog and customers' announced capital expansions provide near-term revenue visibility and mitigate some of the credit risk inherent to the company's nominal revenue base thereby supporting the stable outlook. The Sterling Group L.P. has signed a letter of intent to acquire Hudson for $194 million in cash, which represents a 7.5x multiple of the company's adjusted EBITDA of $25.8 million for the trailing twelve months ended Sept. 30, 2006. Sterling intends to finance the acquisition with the aforementioned credit facility, senior subordinated notes and a $51 million equity contribution. Hudson, headquartered in Sugar Land, Texas, is a leading, global heat transfer solutions firm providing engineered thermal processing products to the petroleum, natural gas, power generation, and chemical industries. Revenues for the trailing 12 months ended Sept. 30, 2006, were just over $115 million. IGI INC: Posts $510,000 Net Loss for Third Quarter Ended Sept. 30 ----------------------------------------------------------------- IGI Inc. filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission reporting a $510,000 net loss on $658,000 of revenues for the three months ended Sept. 30, 2006, compared with a $615,000 net loss on $732,000 of sales in the comparable period of 2005. At Sept. 30, 2006, the company's balance sheet showed $4,776,000 in total assets, $2,290,000 in total liabilities, and $2,486,000 in total stockholders' equity. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?1637 Going Concern Doubt Amper, Politziner & Mattia, P.C. expressed substantial doubt on IGI, Inc.'s ability to continue as going concern after it audited the Company's financial statement for the year ending Dec. 31, 2005. The auditing firm pointed to the Company's recurring operating losses and a working capital deficiency of $501,000. About IGI Inc. Headquartered in Buena, New Jersey, IGI Inc. (AMEX:IG) -- http://www.askigi.com/-- is a technology company focused on the development of custom products using the patented Novasome(R) delivery technology. The Company offers the patented Novasome(R) lipid vesicle encapsulation technology which contributes value- added qualities to cosmetics, skin care products, dermatological formulations and other consumer products, providing improved dermal absorption, low potential for irritations, controlled and sustained release as well as improved stability. IGI has licensed Novasome(R) lipid vesicle encapsulation technology to leading global dermatological and skin care companies including Johnson & Johnson Consumer Products Inc., Estee Lauder Companies, Chattem Inc., Genesis Pharmaceutical Inc., and Apollo Pharmaceutical Inc. INTEGRATED ALARM: Moody's Affirms B3 Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service affirmed Integrated Alarm Service Group's B3 corporate family and probability of default ratings. Moody's has also affirmed the B3 rating on the company's $125 million 12% senior secured notes. The ratings outlook remains negative. Ratings affirmed: -- $125 million 12% Secured Second Lien Notes due 2011, B3 LGD4, 58% -- Corporate Family Rating, B3 -- Probability of Default Rating, B3 The ratings outlook is negative The ratings affirmation reflects Moody's expectation that IASG will use existing cash balances and cash flow from operations to meet near-term interest payments. Moody's rating affirmation also reflects IASG's meaningful enterprise value and the observable market value of the company's alarm contract portfolio. At the same time, weaker than expected financial performance over the last several quarters, a low probability that the company will achieve sufficient cash flow to reduce debt meaningfully over the rating horizon, and IASG's inability to lower customer attrition rates -- a key ratings driver for alarm monitoring service companies -- on a sustained basis, constrain the rating. Despite an improving cost structure and indications that attrition rates might be declining, significant quarter-to-quarter attrition volatility as shown by the declining revenues, weak cash flow-to- debt metrics, intense competition, and significant costs to acquire new customer accounts weigh heavily on the ratings. Additionally, IASG continues to report a material weakness in its internal controls of accounts receivable, revenue, and deferred revenue accounts. This is the second year that such weaknesses have been identified. For this reason, Moody's continues to assess the ongoing weaknesses as "Category B" material weaknesses in accordance with its report, "Section 404 Reports on Internal Control". Moody's believes that the management distraction, and the manpower and capital resources dedicated to remediating the aforementioned material weaknesses and complying with Sarbanes-Oxley have had a material adverse impact on the company's performance. Additionally, Moody's believes that IASG, with less than $100 million in revenues, is relatively less able to absorb the costs of complying with Sarbanes-Oxley because of its modest size and limited resources. Moody's will continue to monitor the company's internal control assessments for continued disclosure of resource and other financial reporting issues. The negative ratings outlook reflects continuing material weaknesses with respect to the company's financial reporting. Barring significant changes to the company's capital structure, it is unlikely that Moody's would upgrade the rating or outlook until IASG has fully remediated all internal control weaknesses. Moody's could consider a ratings downgrade if profit margins remain depressed and liquidity deteriorates. An inability to remediate internal control weaknesses in a timely manner could also result in a ratings downgrade. Moody's has affirmed the company's SGL-4 speculative grade liquidity rating -- Moody's lowest speculative grade liquidity rating. The affirmation of the SGL-4 rating reflects the potential acceleration of the maturity of the senior secured notes and the potential lack of access to the company's $30 million revolving credit facility. Headquartered in Albany, New York, IASG provides alarm monitoring services. Revenue for the twelve months ended Sept. 30, 2006 was approximately $96 million. INTERSTATE BAKERIES: Court Approves Pact Regarding ABA Plan Stay ---------------------------------------------------------------- The Honorable Jerry Venters of the U.S. Bankruptcy Court for the Western District of Missouri approves a stipulation to avoid further delay and expense that would be occasioned by litigating the Procedural Motions among Interstate Bakeries Corp. and its debtor-affiliates, the American Bakers Association Retirement Plan Trustees, Sara Lee Corporation, Sara Lee Bakery Group, Chicago Baking Company, Flowers Bakeries Inc., Schotts Bakery Inc., and Holsum Baking Corporation. The parties agree that: (1) All proceedings in the Adversary Proceeding #06-04167, as well as all proceedings with regards to the Debtors' Objection to ABA's proof of claim, will be stayed until the earlier of: * 30 days after the District of Columbia Court has entered a final order with respect to any review of the August 2006 Letter issued by the Pension Benefit Guaranty Corporation; or * 30 days after the D.C. Court has entered an order denying the Debtors' joinder and intervention as a defendant in the Amended Sara Lee Complaint. During either 30-day period, any party may seek a hearing to continue the stay, the Interim Order, or the Section 5011(c) Stay Motions, and all parties reserve their rights or defenses. (2) The automatic stay will be modified to allow: (a) the ABA Plan and Trustees to join the Debtors as defendants in any review of the 2006 PBGC Letter in the D.C. Litigation; (b) the ABA Plan and Trustees to file a claim, crossclaim, counterclaim or third-party claim in the D.C. Litigation for declaratory relief against, among others, the Debtors to determine the rights of the parties under the ABA Plan documents and the 2006 PBGC Letter; and (c) the prosecution of the D.C. Litigation against the Debtors. (3) The ABA Plan and Trustees will file a motion in the D.C. Litigation to join the Debtors and all other employers currently participating in the ABA Plan as parties to the review of the 2006 PBGC Letter. All parties reserve their rights to intervene in the D.C. Litigation or file any claims, cross claims, counterclaims or third-party claims. (4) If the Debtors are not permitted to join and intervene in the D.C. Court as a party defendant in the Amended Sara Lee Complaint and other review of the 2006 PBGC Letter, they reserve their rights to prosecute the Adversary Proceeding, and all other parties reserve their rights, claims and defenses, including prosecution of the Procedural Motions. (5) The ABA Plan and Trustees, Sara Lee, Chicago Baking, Bakers Association and the Debtors will jointly ask the District Court to stay any proceedings with regard to the various Motions to Withdraw Reference. The Procedural Motions include the ABA Motion for Abstention, the various Motions to Withdraw Reference and the Motions for 5011 Stay. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due Aug. 15, 2014, on Aug. 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) IPIX CORP: Chapter 7 Trustee Auctions Tangible Assets and Patents ----------------------------------------------------------------- Donald F. King, the court-appointed Chapter 7 trustee of IPIX Corporation, disclosed two auctions to be held on December 12 and 20 regarding the company's tangible assets and provisional patents for Gigapixel camera technology. Both will be held at the U.S. Bankruptcy Court for the Eastern District of Virginia, Alexandria Division, with motions to approve the sales to the highest bidders made immediately after the auctions' conclusions, according to Donald F. King, the court- appointed Chapter 7 trustee. The December 12 auction -- slated for 10:00 a.m. -- is focused on the sale of IPIX equipment and furniture. The assets will be sold in bulk and are physically housed in IPIX Reston and in storage facilities in Chantilly, Va., and Tennessee. The auction of the Gigapixel provisional patents is scheduled for 10:30 a.m. on Dec. 20. The company's Gigapixel camera technology was developed in conjunction with the Defense Advanced Research Projects Agency, a Pentagon-funded agency that specializes in developing new technologies for military applications. The technology has undergone some testing and was in the process of being enhanced with night-vision capabilities when IPIX filed bankruptcy. According to Mr. King, "Even though the technology is in the developmental stage, it has a vast number of potential applications. It's also supported by a provisional patent due to expire mid-February of next year. The potential for the buyer that develops and patents this technology is staggering." When asked about the sale of more than 30 more patents owned by IPIX, including its core 360-degree software technology, Mr. King said he expects to announce the auction date of the assets "very soon," with a potential sale date as early as mid-January 2007. According to Stephen Karbelk, sales agent for the trustee and the auction process, "There are still many more assets to be sold, including the OMNIview(TM) dewarping technology and an entire inventory of cameras and lenses located in Winston-Salem, N.C." Mr. King is based in Fairfax, Va., and a principal with Odin, Feldman & Pittleman where he heads the Bankruptcy & Creditors' Rights practice group. Mr. King's practice primarily involves representation of debtors, creditors and committees in Chapter 11 reorganizations, but he also represents other types of debtors and creditors, particularly businesses and institutional lenders, in all phases of the bankruptcy process including workouts. Since 1991, he has served as a Chapter 7 trustee in bankruptcy for the Eastern District of Virginia. Mr. Karbelk is based in Fairfax, Va., and is the regional president, Washington/Baltimore for Tranzon Fox, an affiliate of the national auction organization, Tranzon L.L.C. Tranzon Fox is a full-service real estate auction company and a member company of Tranzon L.L.C., which is based in Richmond, Virginia. Tranzon has 14 independently owned and operated member auction companies with more than 20 offices coast-to-coast. Interested bidders may contact Stephen Karbelk at Tranzon Fox at Tel. No. (703) 539-8622. Headquartered in Reston, Virginia, IPIX Corporation (NASDAQ:IPIX) -- http://www.ipix.com/-- provides immersive imaging products for government and commercial applications. The company's immersive, 360-degree imaging technology has been used to create high- resolution digital still photography and video products for surveillance, visual documentation and forensic analysis. The Company filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code on July 31, 2006, in the U.S. Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (Case No. 06-10856). As a result of the filing, IPIX terminated all business activities after concluding it didn't have sufficient funding to remain solvent and was unsuccessful in securing the additional funding crucial for continued operation. ISTAR FINANCIAL: Declares $0.77 Quarterly Cash Dividend ------------------------------------------------------- iStar Financial Inc.'s Board of Directors has declared a regular quarterly cash dividend on its common stock of $0.77 per share for the quarter ended Dec. 31, 2006. The $0.77 dividend is payable on Dec. 29, 2006, to holders of record on Dec. 15, 2006. iStar Financial (NYSE: SFI) -- http://www.istarfinancial.com/-- is a publicly traded finance company focused on the commercial real estate industry. The Company provides custom- tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior and mezzanine corporate capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver a strong dividend and superior risk-adjusted returns on equity to shareholders by providing the highest quality financing solutions to its customers. * * * iStar Financial Inc.'s preferred stock carry Moody's Investors Service's Ba1 rating with a stable outlook. Fitch Ratings raised the Company's preferred stock rating to 'BB+' from 'BB' in January 2006. Fitch said the Rating Outlook is Stable. ITC DELTACOM: September 30 Balance Sheet Upside-Down by $74.6 Mil. ------------------------------------------------------------------ ITC Deltacom Inc. reported a $13.8 million net loss on $124.1 million of revenues for the quarter ended Sept. 30, 2006, compared with a $10.1 million net loss on $128.5 million of revenues for the same period in 2005. At Sept. 30, 2006, the company's consolidated balance sheet showed $427.7 million in total assets, $428.4 million in total liabilities, and $73.9 million in convertible redeemable preferred stock, resulting in a $74.6 million total stockholders' deficit. The increase in net loss is primarily due to the lower recorded revenues of $124.1 million in the third quarter of 2006, the $2.7 million increase in interest expense from $11.9 million in the 2005 quarter to $14.6 million in the 2006 quarter, attributable to higher average balances of outstanding borrowings and an increase in weighted average interest rates, offset by the decrease of $1.9 million in total cost of services and equipment. The decline in total revenues was primarily attributable to a decrease in long distance revenues, which are part of the company's integrated communications services revenues. Cash provided by operating activities was $22.5 million in the 2006 nine-month period ended Sept. 30, 2006. In the 2006 nine- month period, the company used $33.8 million to fund capital expenditures and $1.1 million to pay accrued restructuring costs related to prior years. Cash used by financing activities in the 2006 nine-month period of $1.0 million was used for repayment of capital lease obligations and other long-term liabilities. Cash and cash equivalents at Sept. 30, 2006 was $57.6 million compared to $69.4 million at Dec. 31, 2005. Full-text copies of the company's financial statements for the third quarter ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?163b ITC DeltaCom, Inc. provides integrated communications services in the southeastern United States. The company delivers a comprehensive suite of high-quality voice and data telecommunications services, including local exchange, long distance, high-speed or broadband data communications, and Internet connectivity, and sells customer premise equipment to the Company's end-user customers. JLG INDUSTRIES: Wants to Delist from NYSE After Oshkosh Merger -------------------------------------------------------------- JLG Industries Inc. has submitted a request to the New York Stock Exchange for withdrawal of the listing of its common stock effective Dec. 8, 2006. JLG's proposed delisting is contingent, among other conditions, upon shareholder approval and closing of the Agreement and Plan of Merger among JLG, Oshkosh Truck Corporation, and a newly formed subsidiary of Oshkosh, Steel Acquisition Corp. To effect the delisting, JLG filed a Form 25 with the Securities and Exchange Commission and the New York Stock Exchange. By operation of law, the delisting application will be effective on Dec. 8, 2006, unless withdrawn by JLG in advance of such date. JLG Industries, Inc. -- http://www.jlg.com/-- produces access equipment (aerial work platforms and telehandlers) and highway- speed telescopic hydraulic excavators. JLG's manufacturing facilities are located in the United States, Belgium, and France, with sales and service operations on six continents. * * * As reported in the Troubled Company Reporter on Nov 16, 2006, Moody's Investors Service assigned a Ba3 first time rating to Oshkosh Truck Corp.'s $3.5 billion first lien senior secured credit facility, $500 million revolving credit facility, $400 million Term Loan A, and $2.6 billion Term Loan B, and a Ba3 corporate family rating. LEHMAN XS: Moody's Rates Class A-4 Notes at B2 ---------------------------------------------- Moody's Investors Service assigned ratings of A3 to the Class A-1 notes, Baa3 to the Class A-2 notes, Ba3 to the Class A-3 notes, and B2 to the Class A-4 notes issued by Lehman XS NIM Company 2006-GPM6. The notes are backed by residual and prepayment penalty cash flows from an underlying securitization of Alt-A, adjustable-rate, negative amortization mortgage loans: GreenPoint Mortgage Funding Trust Mortgage Pass-Through Certificates, Series 2006-AR6. The cash flows available to repay the notes are significantly impacted by the rate of loan prepayments and the timing and amount of loan losses on the underlying transaction's mortgage pool. Moody's examined various combinations of loss and prepayment scenarios to evaluate the cash flows to the rated notes. These are the rating actions: * Issuer: Lehman XS Net Interest Margin Notes Series 2006-GPM6 Class A-1, Assigned A3 Class A-2, Assigned Baa3 Class A-3, Assigned Ba3 Class A-4, Assigned B2 The notes 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. LSI LOGIC: Inks $4 Billion Merger Agreement with Agere Systems -------------------------------------------------------------- LSI Logic Corporation and Agere Systems Inc. have entered into a definitive merger agreement under which the companies will be combined in an all-stock transaction with an equity value of approximately $4 billion. Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI for each share of Agere they own. Based on the closing stock price of LSI on Dec. 1, 2006, this represents a value to Agere shareholders of $22.81 per share. The combined company, to be called LSI Logic Corporation, will offer a comprehensive set of building block solutions including semiconductors, systems and related software for storage, networking and consumer electronics products. The companies had combined revenue of $3.5 billion for the 12 months ended Sept. 30, 2006. The companies operate in more than 20 countries, with a combined workforce of approximately 9,100 employees, including nearly 4,300 engineers. The companies together own a substantial patent portfolio consisting of more than 10,000 issued and pending U.S. patents. Going forward, the new LSI expects to be well positioned to deliver significant benefits to its customers, shareholders and employees. By leveraging its increased scale, expanded IP portfolio and integrated workforce, LSI anticipates being a stronger, more competitive innovator of core technology and building block solutions that enable businesses and consumers to store, protect and stay connected to their information and digital content. "LSI and Agere share a rich heritage of innovation and thought leadership in creating enabling technologies that bring people and information together," LSI Logic president and chief executive officer Abhi Talwalkar said. "By joining forces, we expect the combined scale to enable us to extend our franchises in our market segments, realize significant synergies and better serve the needs of our collective customers, shareholders and employees." Agere Systems president and chief executive officer Richard Clemmer said, "Together, the two companies should be well positioned to achieve greater success. The complementary products and capabilities of each can enable the combined company to pursue significant new opportunities while delivering more value to customers. Agere shareholders, employees and customers will benefit from the synergies and enhanced growth prospects that are anticipated to result from a larger, more competitive organization." The combination of LSI and Agere is anticipated to create a semiconductor and storage systems powerhouse with an unparalleled innovation pipeline and a broad array of competitive, customer- valued products and solutions in large and growing markets. LSI's well-established presence in the storage and consumer electronics markets and Agere's broad footprint in storage, mobility and networking should enable the combined company to drive sustainable long-term growth and shareholder value through the strengthening of its combined platforms and the expansion of its existing customer relationships. "As valued Seagate partners, both Agere and LSI play an important role in providing products that help us deliver our industry- leading hard disc drives," Seagate Technology chief executive officer Bill Watkins said. "We are excited by the innovative possibilities that this new combination represents." About the Transaction Under the terms of the agreement, Agere shareholders will receive 2.16 shares of LSI common stock for each share of Agere stock they own. Based on the closing stock price of LSI on Dec. 1, 2006, the total consideration to Agere shareholders would be approximately $4 billion or $22.81 per share. Upon closing, LSI will issue approximately 379 million shares on a diluted basis to complete the transaction. At that time, LSI and Agere shareholders will own approximately 52% and 48%, respectively, of the combined company. The combined company also expects to realize substantial cost savings beginning in 2007, with annual cost savings reaching at least $125 million in 2008 from increased efficiencies in manufacturing and operating expenses. The transaction is expected to be slightly dilutive in 2007 and meaningfully accretive in 2008 to LSI's earnings per share, on a non-GAAP basis. LSI president and chief executive officer Abhi Talwalkar will serve as president and chief executive officer of the new company, which will be headquartered in Milpitas, California, and will maintain a significant presence in Allentown, Pennsylvania, with various other locations worldwide. LSI non-executive chairman James Keyes will continue as non-executive chairman of the board of directors of the new company, which will be comprised of nine members, with six being designated by LSI and three being designated by Agere. The transaction is subject to the approval of shareholders from both companies as well as customary closing conditions and regulatory approvals. The companies expect the transaction to close in the first calendar quarter of 2007. Shares of the combined company will trade on the NYSE under the symbol "LSI." Morgan Stanley acted as financial advisor and Wilson Sonsini Goodrich & Rosati acted as legal counsel to LSI. Goldman, Sachs & Co. acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom acted as legal counsel to Agere. LSI Stock Repurchase Program LSI's board of directors has authorized a stock repurchase program of up to $500 million. The repurchases are expected to be funded from available cash and short-term investments. About Agere Systems Agere Systems Inc. (NYSE: AGR) -- http://www.agere.com/-- provides semiconductors and software solutions for storage, mobility, and networking markets. The company's products enable a broad range of services and capabilities, from cell phones, PCs, and hard disk drives to the world's most sophisticated wireless and wireline networks. Agere's customers include manufacturers of consumer electronics and communications and computing equipment. About LSI Logic Milpitas, Calif.-based LSI Logic Corporation (NYSE: LSI) -- http://www.lsi.com/-- provides silicon-to-system solutions that are used at the core of products that create, store, and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions, and software applications. LSI products enable technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today. LSI LOGIC: Earns $44 Million in Third Quarter Ended October 1 ------------------------------------------------------------- LSI Logic Corporation reported third quarter ended Oct. 1, 2006, revenues of $493 million, a 2% increase year-over-year compared with the $482 million reported in the third quarter of 2005, and up 1% sequentially compared with the $490 million reported in the second quarter of 2006. Third quarter 2006 GAAP net income was $44 million compared with third quarter 2005 GAAP net loss of $73 million. Third quarter 2006 GAAP results compared with second quarter 2006 GAAP net income of $54 million. Third quarter GAAP net income included $11 million of stock-based compensation expense and a net charge of $10 million from special items, acquisition-related amortization, restructuring and their related tax effect. Third quarter 2006 non-GAAP net income was $65 million, an increase of 43% compared with third quarter 2005 non-GAAP net income of $45 million. Second quarter non-GAAP 2006 net income was $57 million. Cash and short-term investments grew 6% sequentially to $1.3 billion, from $1.2 billion in the second quarter and up 50% from the year-ago period. At Oct. 1, 2006, the company's balance sheet showed $2.979 billion in total assets, $1.175 billion in total liabilities, and $1.804 billion in total stockholders' equity. "Revenues increased modestly during the quarter, with strong growth in storage semiconductors partially offset by expected lower demand for our portable media player products," LSI Logic president and chief executive officer Abhi Talwalkar said. "Total storage revenues were 17% higher than the year-ago period, fueled in part by increasing demand for SAS-enabled storage solutions. We further strengthened investments in our storage business, entering into a definitive agreement to acquire StoreAge Networking Technologies, a privately held maker of storage management applications software." LSI Logic chief financial officer Bryon Look said, "Higher gross margins and improved operating performance contributed to solid third quarter results, with net income significantly exceeding guidance." "SG&A expenditures as compared to second quarter 2006 declined on both a percentage and an absolute basis. Our balance sheet also strengthened, with a $68 million increase in cash and short-term investments." Full-text copies of the company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1659 About LSI Logic Milpitas, Calif.-based LSI Logic Corporation (NYSE: LSI) -- http://www.lsi.com/-- provides silicon-to-system solutions that are used at the core of products that create, store, and consume digital information. LSI offers a broad portfolio of capabilities including custom and standard product ICs, host bus and RAID adapters, storage area network solutions, and software applications. LSI products enable technology companies in the Storage and Consumer markets to deliver some of the most advanced and well-known electronic systems in the market today. LSI LOGIC: S&P Holds Corporate Credit Rating at BB- --------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on Milpitas, California-based LSI Logic Corp. The outlook is revised to positive from stable, reflecting the company's potentially stronger business profile after its planned acquisition of Agere Systems Inc. "The ratings reflect LSI's good liquidity and asset-light operating model, offset by the company's reliance on a limited customer base, and the challenges caused by long design cycles for its products and high costs of certain key components, when compared against the competitive "gate array" technology," said Standard & Poor's credit analyst Bruce Hyman. The stock-based acquisition of Agere Systems Inc. somewhat broadens the customer base, and is expected to provide some operating cost savings, as well as an enhanced business position with some key customers. LSI is a major manufacturer of custom-designed application- specific semiconductors, multicustomer application-specific standard products, and enterprise storage systems. Key served markets include digital entertainment devices, storage components and storage systems, and communications equipment suppliers. Allentown, Pennsylvania-based Agere provides customized semiconductors for storage, mobility, and networking markets, serving the consumer electronics, handset and computing equipment markets. Given the inherently long design cycles and highly customized nature of the ASIC market, the companies do not serve the merchant semiconductor market, and their revenues largely depend on the performance of their existing customer base. Capital expenditures are moderate, after both companies' transitions to an outsourced manufacturing model. The two companies also generate moderate levels of free cash flows. Pro forma leverage is moderate for the rating, with debt to EBITDA around 2.6x for the four quarters ended Sept. 30, 2006, and could be somewhat lower, assuming some realized cost savings. LOCATEPLUS HOLDINGS: Posts $622,039 Net Loss in 2006 Third Quarter ------------------------------------------------------------------ LocatePLUS Holdings Corp. filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission disclosing a $622,039 net loss on $3,370,558 of revenues, compared with a $3,277,759 net loss on $3,005,961 of revenues in the comparable period of 2005. At Sept. 30, 2006, the company's balance sheet showed $8,568,348 in total assets, $5,507,964 in total liabilities, and $3,060,384 in total stockholders' equity. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?162c Going Concern Doubt Livingston & Haynes, P.C., in Wellesley, Massachusetts, raised substantial doubt about LocatePLUS' ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's accumulated deficit at December 31, 2005 and substantial net losses in each of the last two years. About LocatePLUS Based in Beverly, Massachusetts, LocatePLUS Holdings Corp. -- http://www.locateplus.com/-- and its subsidiaries are industry-leading providers of public information and investigative solutions that are used in homeland security, anti-terrorism and crime fighting initiatives. The Company's proprietary, Internet-accessible database is marketed to business- to-business and business-to-government sectors worldwide. LONG BEACH: Fitch Pares Class M-4 Loans' Rating to B from BB- ------------------------------------------------------------- Fitch has taken these rating actions on the Long Beach Mortgage Loan Trust, series 2003-1: -- Class A-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BB+' from 'BBB'; -- Class M-4 downgraded to 'B' from 'BB-'. All of the mortgage loans were originated by Long Beach Mortgage Company. The mortgage loans consist of fixed- and adjustable-rate subprime mortgage loans and are secured by first- and second-lien mortgages or deeds of trust on residential properties. As of the November 2006 distribution date, the transaction is seasoned 45 months, and the pool factor is 10%. Washington Mutual Bank, FA is the servicer for all of the mortgage loans. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $142.22 million of outstanding certificates. Specifically, the affirmation on class A-1 reflects a guaranty provided by the Federal National Mortgage Association, whose financial strength is rated 'AAA' by Fitch. The downgrades, affecting approximately $55.19 million of outstanding certificates, reflect continued deterioration in the relationship between CE and future loss expectations. The transaction is experiencing monthly losses that exceed the available excess spread, resulting in substantial deterioration of overcollateralization and preventing the OC from maintaining its target amount. As of the November 2006 distribution date, the current OC amount of $6,608,964 is below the target OC of $10 million. The performance of the transaction has also been adversely affected by a growing concentration of loans secured with manufactured homes. While the percentage of MH loans in the initial pool balance was relatively modest, the MH loans have made up a disproportionately large percentage of the liquidated loans and, due to relatively slow voluntary prepayments, have become a significant percentage of the remaining pool balance. As of October 2006, the MH concentration is 10%. Fitch will closely monitor the relationship between XS and monthly losses. If the losses continue to exceed XS, the ratings will be reassessed. MERIDIAN AUTOMOTIVE: Judge Walrath Approves $175MM Exit Facility ---------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorizes Meridian Automotive Systems Inc. and its debtor-affiliates to enter into the Commitment Letter and Fee Letter with Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc., and a group of lenders. Judge Walrath authorizes and directs the Debtors to perform all of their obligations under the Commitment Letter and Fee Letter, including, but not limited to, paying all fees to Deutsche Bank, reimbursing Deutsche Bank's reasonable out-of-pocket expenses incurred in connection with the Exit Facility, and indemnifying Deutsche Bank and the Exit Lenders. The Deutsche Bank Exit Facility, aggregating no less than $175,000,000, consists of four components: (1) A $70,000,000 first-lien asset-based revolving credit facility; (2) An $80,000,000 first-lien term loan facility; (3) A $25,000,000 first-lien pre-funded letter of credit facility; and (4) An uncommitted incremental asset-based revolving credit facility up to an aggregate principal amount of $30,000,000. Judge Walrath also permits the Debtors to file the unredacted Fee Letter under seal. Debtors File Redacted Fee Letter In connection with their request to enter into the Commitment Letter with Deutsche Bank, the Debtors delivered to the Court a redacted version of the Fee Letter. Pursuant to the Fee Letter, the Debtors will pay, among other things, these non-refundable fees to Deutsche Bank: (1) A facility fee equal to 1.5% of the total commitments with respect to the ABL Facility; (2) A facility fee equal to 3% of the total commitments with respect to the First-Lien Term Credit Facilities; and (3) A fee equal to 1% of the total commitments with respect to the Credit Facilities if the Debtors consummate the Transaction within one year but do not borrow under the Senior Secured Financing. A full-text copy of the Redacted Fee Letter is available for free at http://ResearchArchives.com/t/s?1634 U.S. Trustee's Objection Kelly Beaudin Stapleton, the United States Trustee for Region 3, was concerned with two issues with regards to the Debtors' request to enter into the Fee Letter without disclosing its material terms: * It was unclear whether it's reasonable to expect that the Court and other parties-in-interest should be obligated to evaluate the commercial reasonableness of the fees referenced in the Fee Letter based on the total amount of those fees. * Approval of the Debtors' request is tantamount to sealing the Fee Letter from public view. Joseph J. McMahon, Jr., Esq., in Wilmington, Delaware, contended that the exit financing fees contained in the Fee Letter are not "commercial information" worthy of protection under Section 107(b) of the Bankruptcy Code. In fact, the record in the Chapter 11 cases undercuts the Debtors' argument that the specific terms of the Fee Letter constitute commercial information, which warrant protection under Section 107(b). Mr. McMahon pointed out that when the Debtors sought approval of their $375,000,000 DIP financing arrangement from JPMorgan Chase Bank, N.A., they specifically described the calculation of the DIP facility's arrangement and underwriting fees, and certain parameters of the flex provision. The Debtors were then unconcerned of the impact that the publication of that information would have on the JP Morgan's ability to syndicate the financing, Mr. McMahon noted. The U.S. Trustee asked the Court to direct the Debtors to disclose more contents of the Fee Letter. In particular, the Debtors should disclose the anticipated amount of the fees and expenses of the professionals of Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. given that the Debtors will be obligated to pay those fees and expenses provided that they are reasonable, Mr. McMahon maintains. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000). MERRILL LYNCH: DBRS Downgrades Ratings on Two Class Certificates ---------------------------------------------------------------- Dominion Bond Rating Service upgraded two classes and downgraded two classes from two Merrill Lynch Mortgage Investors Trust transactions: -- $25,639,000 Mortgage Loan Asset-Backed Certificates, Class B-5 to BB (low) from BB (high) -- $4,773,000 Mortgage Loan Asset-Backed Certificates, Series 2005-NCA, Class B-5 to BB (low) from BB (high) The downgrades are the result of the increased 90+ days delinquency pipeline relative to the available level of credit enhancement. In the two above-mentioned transactions, overcollateralization did not reach their targets due to insufficient excess spread. The mortgage loans consist of 100% of fixed-rate second lien mortgage loans, which are subordinate to senior lien mortgage loans on the respective properties. The mortgage loans in the Underlying Trusts were acquired by Merrill Lynch Mortgage Investors, Inc. from a variety of originators. -- $22,590,795 Mortgage Loan Asset-Backed Certificates, Class M-1 to AAA from AA (high) -- $15,668,000 Mortgage Loan Asset-Backed Certificates, Class M-2 to AAA from AA (high) The upgrades are the result of the high level of credit enhancement. MESABA AVIATION: Can Execute Amended Union Agreements ----------------------------------------------------- Following the Nov. 27, 2006 ratification of the consensual letters of agreement modifying Mesaba Aviation, Inc.'s collective bargaining agreements with the Air Line Pilots Association, International, the Association of Flight Attendants-CWA, AFL-CIO, and the Aircraft Mechanics Fraternal Association, the Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota approves each of: * the ALPA Restructuring Agreement, * the AFA Restructuring Agreement, and * the AMFA Restructuring Agreement, and all their attachments. Judge Kishel also authorizes the Debtor to enter into and implement each component of the Restructuring Agreements, whether or not specifically referenced in the ruling. As reported in the Troubled Company Reporter on Nov. 28, 2006, the ratified union contracts and changes to wage and benefits for all non-contract employees, including management, will start being implemented Dec. 1, 2006. The Restructuring Agreements will also become effective upon entry of the ruling and satisfaction of the conditions set forth in each of the Restructuring Agreements, Judge Kishel says. However, the Restructuring Agreements will not be considered a postpetition agreement for purposes of priority of any claims, and will not be assumed, or deemed assumed, by the Debtor unless and until a Chapter 11 plan of reorganization will have been confirmed by the Bankruptcy Court and substantially consummated. Judge Kishel further rules that any claim for rejection of the Restructuring Agreements that arises at any time (a) after the effective date of each of the Restructuring Agreements, and (b) before the effective date of any the Debtor's Plan, will be treated in the Debtor's Chapter 11 case, or any other superseding bankruptcy case, as a prepetition general unsecured claim against the estate. Additionally, those rejection claims will not be entitled to priority, as an administrative expense of the Debtor's Chapter 11 case, any superseding bankruptcy case, or otherwise, except to the extent that the claims are for compensation, contributions to a defined contribution plan or benefits, in each case, in connection with services rendered to, or an act or omission by, the Debtor during the pendency of its Chapter 11 case and before the rejection in which case the claims will be accorded status as administrative expenses of the Debtor's Chapter 11 case to the full extent permitted by law. Approval of the Restructuring Agreements is without prejudice to the Debtor's right, subject to the terms and conditions of the Restructuring Agreements, to seek further relief pursuant to Section 1113 of Bankruptcy Code with respect to the Unions, including rejection of the Restructuring Agreements. The Unions reserve their rights with respect to any request for that relief, Judge Kishel says. In the event that each of the Restructuring Agreements is rejected, the Debtor and the Unions reserve all rights and arguments with respect to (i) whether a claim for damages arises as a result of a rejection of the Restructuring Agreements, and (ii) the amount of any claim. Furthermore, Judge Kishel approves the indemnification, exculpation, and Unions Claim provisions of the Restructuring Agreements. The provisions concerning the Unions Claim will not be subject to reconsideration pursuant to Rule 3008 of the Federal Rules of Bankruptcy Procedure or Section 502(j) of the Bankruptcy Code. The Unions, the Unions' Mesaba Master Executive Council and each of their current or former members, and other representatives are released and exculpated from any claim related to any act or omission in connection with the Restructuring Agreements, except for gross negligence or willful misconduct. But in all respects, the Exculpated Parties will be entitled to reasonably rely on the advice of counsel with respect to their duties and responsibilities. Full-text copies of: -- the AFA Restructuring Agreement and exhibits is available for free at http://researcharchives.com/t/s?1640 -- the ALPA Restructuring Agreement and exhibits is available for free at http://researcharchives.com/t/s?1641 -- the AMFA Restructuring Agreement and exhibits is available for free at http://researcharchives.com/t/s?1642 Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 30 and 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MESABA AVIATION: Wants Until April 13 to Decide on Leases --------------------------------------------------------- Mesaba Aviation, Inc. asks the Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota to further extend the time within which it may assume or reject unexpired leases through the earlier of: (a) April 13, 2007; or (b) confirmation of a plan of reorganization. Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, P.A., in Minneapolis, Minnesota, tells Judge Kishel that these factors made it impossible for the Debtor to intelligently appraise the Leases in the market and the value of the Leases to the reorganization: (1) the size and complexity of its operation; (2) its labor negotiations; (3) the uncertain status of its air services agreement with Northwest Airlines, Inc.; and (4) its attempts to obtain postpetition financing acceptable to the Official Committee of Unsecured Creditors and the potential lenders. Mr. Tansey notes that the Debtor has recently reached tentative agreements with its remaining unions, which agreements provide for labor concessions that the Debtor believes are sufficient to allow it to obtain definitive air service agreements, and make postpetition financing available to it. The Debtor also believes that upon ratification of the tentative labor agreements, its bankruptcy case is poised to allow it to develop and confirm a plan of reorganization in the near future. According to Mr. Tansey, the Debtor's operations are dependent on the Debtor's ability to remain in possession of the Leased Premises. Continued possession of the Leased Premises is necessary for the Debtor to conduct its financial affairs and preserve the possibility that it can reorganize. The Debtor is optimistic that it will be able to assume or reject all Leases by April 13, 2007, Mr. Tansey says. If the Debtor is forced to prematurely assume the Leases, the estate and unsecured creditors will be exposed to potentially significant administrative priority claims arising from the possible termination of the Leases, Mr. Tansey says. Premature rejection may jeopardize the Debtor's ability to reorganize and maximize the value of its estate. Mr. Tansey assures the Court that the Debtor is current on all of its postpetition obligations under the Leases, and intends to make timely payment of all future obligations during the pendency of the Chapter 11 case. Unless an objection is filed not later than Nov. 29, 2006, the Court may grant the request without a hearing. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) MEZZ CAP: S&P Rates $2.4 Million Class F Certificates at BB ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Mezz Cap Commercial Mortgage Trust 2006-C4's $86.836 million commercial mortgage pass-through certificates series 2006-C4. The preliminary ratings are based on information as of Dec. 1, 2006. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the servicer, the economics of the mortgage loans, and the geographic and property type diversity of the loans. Standard & Poor's analysis determined that, on a weighted average basis, the pool has debt service coverage of 1.12x, a beginning LTV of 108.3%, and an ending LTV of 95.5%. All of the B notes are subordinate to A notes that are not included in the trust. The DSCs and LTVs reflect the combined economics of the A and B notes. Preliminary Ratings Assigned Mezz Cap Commercial Mortgage Trust 2006-C4 Recommended Class Rating Amount credit support ----- ------ ----------- -------------- A AAA $62,522,000 28.000% X * AAA $86,836,490 N/A B AA $2,170,000 25.501% C A $2,170,000 23.002% D BBB $3,473,000 19.003% E BBB- $1,194,000 17.628% F BB $2,497,000 14.752% G NR $6,729,000 N/A H NR $760,000 N/A J NR $5,321,490 N/A R-I NR N/A N/A R-II NR N/A N/A * Interest-only class with a notional amount N/A - Not applicable NR - Not rated MICHELINA INC: Poor Performance Prompts S&P's Negative Watch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on Duluth, Minnesota-based frozen-entree manufacturer Michelina's Inc., including the 'B+' corporate credit rating, on CreditWatch with negative implications, meaning that the ratings could be lowered or affirmed after the completion of Standard & Poor's review. Total debt outstanding was about $179 million at Oct. 8, 2006. "The CreditWatch listing reflects weaker-than-expected year to date operating performance and an extremely limited cushion under credit facility covenants," explained Standard & Poor's credit analyst Alison Sullivan. Year to date, EBITDA has declined 10% due to declining volume and catch-up spending on maintenance. In addition, sales were negatively affected as a large co-pack customer shifted to store turn shipments from pipeline fill. Lease-adjusted total debt to EBITDA weakened to 3.9x from 3.7x at fiscal 2005. At Oct. 8, 2006, Michelina's was in compliance with all covenants of its senior credit facility. However, cushion under the interest coverage covenant was very limited. In addition, this covenant, along with the leverage covenant, will tighten further at the end of December 2006. Standard & Poor's believes it is likely that the company will not meet its covenants at the end of December if it is unable to secure an amendment. Standard & Poor's will review Michelina's operating and financial plans with management and monitor the status of a potential credit agreement amendment before resolving the CreditWatch listing. MILLS CORP: Unable to File Form 10-Q for Quarter Ended Sept. 30 --------------------------------------------------------------- The Mills Corporation and The Mills Limited Partnership has filed a notice with the Securities and Exchange Commission that they will be unable to report on Form 10-Q for the quarter ended Sept. 30, 2006. Pending Accounting Restatement and Related Audit The company says it is not able to timely file the Form 10-Q because it has not completed their financial statements for the quarter ended Sept. 30, 2006, or their restated financial statements for 2000-2004 and the first three quarters of 2005, which will be reflected in the financial statements included in their 2005 Form 10-K when filed. TMC and TMLP previously filed Form 12b-25s for their 2005 Form 10-K and for their Form 10-Q for the quarters ended March 31, 2006, and June 30, 2006. The company is currently compiling the 2005 financial statements and expect to file their Form 10-Qs for the quarters ended March 31, 2006, June 30, 2006, and Sept. 30, 2006, shortly after the filing of the 2005 Form 10-K, although there can be no assurance of the actual dates of filing. The filing of the 2005 Form 10-K will be made after the Audit Committee of the Board of Directors of TMC, with the assistance of Gibson, Dunn & Crutcher LLP, the Audit Committee's outside counsel, completes an independent investigation addressing, among other matters, the restatement as well as prior restatements in February 2003 and February 2005. TMC and TMLP said the investigation is expected to be completed in November. They have also undertaken a comprehensive review of their accounting policies and practices to determine whether these policies and practices are consistent with GAAP. Before filing their 2005 Form 10-K, Ernst & Young LLP, their auditors, will also need to complete their audit procedures relating to the 2005 financial statements and the prior period restated financial statements. Status of Accounting Review In addition to errors relating primarily to certain investments by a wholly owned subsidiary, Mills Enterprises Inc., and the accrual of compensation expense related to TMC's Long-Term Incentive Compensation Plan, TMC and TMLP disclosed errors in the selection and application of various other accounting policies, including: -- capitalization of interest to predevelopment and development projects; -- capitalization of overhead to predevelopment and development projects; -- cumulative impact of and the ongoing accounting for development and leasing fees and interest income related to the adoption of Financial Accounting Standards Board Interpretation No. 46R, Consolidation of Variable Interest Entities; -- translation from foreign currencies of investments in foreign subsidiaries; -- acounting for the Empire tract transfer; -- accounting for grand opening and advertising costs for development projects; -- evaluation of capitalized costs, including accounting for acquisitions of properties; -- evaluation of foreign tax exposures; and -- other items that have a cumulative impact of less than $10 million individually. In addition to these accounting errors, TMC and TMLP also disclosed that they planned to change their accounting policies for interest and overhead capitalized to predevelopment and development projects, effective Jan. 1, 2005. The cumulative effect of the changes in accounting for interest and overhead as of Jan. 1, 2005, is expected to be approximately $61 million for TMC and $82 million for TMLP. Additionally, 2005 net income is expected to be reduced by approximately $17 million for TMC and $20 million for TMLP for the effect of the new accounting principles as the previously filed interim financial statements for 2005 used the previous accounting policies. TMC and TMLP also disclosed that the cumulative impact of the accounting errors that had then been identified were expected to reduce stockholders' equity of TMC by $263 million to $283 million as of Sept. 30, 2005 (with an expected reduction of TMLP's partners' capital of $348 million to $368 million as of Sept. 30, 2005). TMC and TMLP subsequently reviewed their accounting for construction allowances paid to tenants to ready their spaces for opening and determined that some of these costs, which were previously recorded as depreciation expense, should be reclassified as tenant inducements. The impact of this will be to reclassify amounts previously recorded to depreciation expense as a reduction to minimum rent. Tenant allowances and inducements are both expense items amortized over the lease term and, consequently, this reclassification will have no impact on net income. The reclassification will, however, reduce minimum rent and depreciation and, as a result, will reduce funds from operations. For consolidated entities, the expected reductions in minimum rent and depreciation for 2003, 2004 and the nine months ended Sept. 30, 2005, for TMC and TMLP are $1.9 million, $9 million, and $8.6 million, respectively. Status of Audit Committee Investigation The Audit Committee, as advised by independent counsel, has been conducting an investigation into various accounting issues, including those issues reported in TMC's and TMLP's current reports on Form 8-K filed January 6, February 24, March 17, May 11, and Aug. 10, 2006, and various other issues that were brought to the attention of the Audit Committee and its independent counsel during the course of the Investigation. The Audit Committee has received oral reports from its independent counsel regarding the anticipated findings of the Investigation. The Audit Committee and its independent counsel also have kept TMC's Board of Directors, E&Y and the staff of the SEC, Division of Enforcement, apprised regarding the anticipated findings of the Investigation. The Investigation is now essentially complete. The Audit Committee and its independent counsel, subject to the identification by the registrants or E&Y of any additional issues before filing of their financial statements for the year ended Dec. 31, 2005, and their restated financial statements for certain prior years, expect to complete the Investigation by November 2006. Impairment Charges In the fourth quarter of 2005, TMC and TMLP changed their business strategy and correspondingly decided on Dec. 30, 2005, to reduce the number of predevelopment projects and to write-off the associated capitalized cost of the abandoned projects. Accordingly, 10 predevelopment projects were written off in the fourth quarter of 2005. TMC and TMLP disclosed that a charge of $71 million related to these projects was expected in the fourth quarter of 2005. As part of the restatement, it has been determined that certain of these projects were previously impaired and should have been written off in prior periods. Additionally, the planned changes in accounting principles and certain of the accounting errors affect the carrying values and reduce the amount of the total charge expected in the fourth quarter of 2005, such that the total charge in the fourth quarter of 2005 for TMC is expected to be approximately $39 million and for TMLP is expected to be approximately $45 million. Apart from the restatement, TMC and TMLP are required to periodically assess their operating properties for impairment under SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets. Although this review has not been completed for 2005 or the first three quarters of 2006, at this time, TMC and TMLP believe that the Cincinnati Mills project did not satisfy the undiscounted cash flow test set forth in SFAS 144 as of Dec. 31, 2005. As a result, it is expected that a write-down of approximately $50 million for TMC (with an effect to TMLP of approximately $57 million) will be recorded in the fourth quarter of 2005 with respect to this property. Further, TMC believes the investment in the Columbus City Center, accounted for using the equity method, is impaired and it is expected that a write-down of approximately $8 million for TMC (with an impact to TMLP of approximately $9 million) will be recorded in the fourth quarter of 2005. In the second quarter of 2006, TMC and TMLP decided to sell their investment in FoodBrand, an entity that master leases, manages and operates food courts and restaurants at certain of their malls and third party facilities that is accounted for using the equity method. Accordingly, TMC and TMLP expect that a write-down with an effect of approximately $14 million to TMC (with an impact to TMLP of approximately $16 million) will be recorded with respect to this investment during such quarter. TMC and TMLP also took a write-off of approximately $5 million for TMC (with an impact to TMLP of approximately $6 million) for Vallejo, a domestic pre-development project located in California that was abandoned during the second quarter of 2006. During the second quarter of 2006, TMC decided to explore the possible sale of its European operations. This decision negatively impacted the net realizable value of certain predevelopment projects in Europe. Accordingly, a write-down with an impact to TMC of approximately $17 million (with an impact to TMLP of approximately $19 million) will be recorded in the second quarter of 2006. In November 2006, they sold their interest in the partnership that held the development rights for the Mercati Generali project located in Rome. TMC and TMLP expect a write-down in the range of $3 million to $5 million related to the Mercati Generali project in the third quarter of 2006. They do not expect any material future capital expenditures with respect to this project. TMC and TMLP may also take a charge in the third quarter of 2006 for a possible impairment related to Pittsburgh Mills, which may be sold. TMLP's investment in the Pittsburgh Mills project is approximately $56 million. Maturity of Senior Term Loan TMLP's Senior Term Loan with Goldman Sachs Mortgage Company with a current outstanding balance as of Nov. 13, 2006, of approximately $1.026 billion, has a maturity of Dec. 31, 2006, with two alternative extension options. Under one alternative, TMLP can extend the facility until June 30, 2008, if, among other things, it consummates a recapitalization transaction reasonably acceptable to GSMC, as Administrative Agent, before Dec. 31, 2006, that provides sufficient proceeds to repay at least $850 million towards principal, interest, and fees then outstanding under the Senior Term Loan. Under the other alternative, TMLP can extend the maturity for two 90-day periods through June 30, 2007, if, among other things, TMC Board of Directors has adopted, before Dec. 1, 2006, a plan, reasonably acceptable to the Administrative Agent, to sell or recapitalize TMC's and its subsidiaries' assets or TMC has entered into a definitive merger agreement or other similar agreement that would provide for repayment of the Senior Term Loan in full. To be eligible for either extension alternative, TMLP will also have to file its audited financial statements and prepare a budget approved by the Administrative Agent showing that TMLP will have, among other things, adequate liquidity for the applicable extension period. If the conditions for the exercise of either option extension of the maturity date are not satisfied, the facility will be due and payable in full on Dec. 31, 2006. Ernst & Young Auditors' Reports It is expected that the audit reports of Ernst & Young LLP on the consolidated financial statements of TMC and TMLP for the year ended Dec. 31, 2005, will contain an explanatory paragraph to the effect that there is substantial doubt about the ability of TMC and TMLP to continue as going concerns due principally to the maturity date of TMLP's Senior Term Loan. About The Mills Limited Partnership The Mills Limited Partnership is TMC's operating partnership subsidiary. TMC is TMLP's sole general partner and owns a 1% general partner interest and an 86.4% limited partner interest in TMLP as of Sept. 30, 2006. About The Mills Corporation Chevy Chase, Md.-based The Mills Corporation (NYSE: MLS) -- http://www.themills.com/-- develops, owns, and manages a diversified portfolio of retail destinations, including regional shopping malls, retail, and entertainment centers. It currently owns 39 properties in the United States totaling approximately 48 million square feet. In addition, The Mills has various projects in development, redevelopment, or under construction. MIRANT CORP: NY Subsidiaries Settles Dispute With Haverstraw Town ----------------------------------------------------------------- Mirant Corporation's New York subsidiaries, Haverstraw-Stony Point Central School District, Town of Haverstraw, Town of Stony Point, and County of Rockland resolved the long-running tax disputes concerning two of Mirant's power generating plants and reached an agreement in principle. The disputes date back to 1995 and have worked their way through both state and federal courts. The problems intensified after the company and its New York subsidiaries filed for Chapter 11 protection in 2003. The parties began meeting in person with Elizabeth Warren, the mediator, at the Harvard Law School in Cambridge, Massachusetts, where they negotiated and struck a deal. Ms. Warren, a professor of Law at Harvard Law School, said, "The problems were complex, and the negotiations were difficult. But all parties worked extremely hard to find the best possible solution." Ms. Warren added, "The representatives of Haverstraw, Stony Point and Rockland County were aggressive as they worked to protect the homeowners and school children who depend on tax revenues from the Mirant plants. They were tough negotiators, but they also recognized the enormous gains that would come from settling this very expensive and long- running litigation. I was deeply impressed by their skills and professionalism, and by their dedication to the welfare of their communities." At the mediator's direction, details of the agreement will remain confidential until the final papers are signed. The mediator has also insisted that the discussions during the negotiations remain confidential. "What matters is the very good outcome," Ms. Warren said. "Both sides can stop hemorrhaging money for legal fees and can work with stable financial projections. The agreement resolving the existing tax disputes will allow the New York subsidiaries of Mirant to exit bankruptcy, and it will provide the taxing authorities with a much more stable revenue base. This is a win for everyone." Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. * * * Moody's Investors Service assigned its B2 corporate family rating, effective July 13, 2006, on Mirant Corporation NATIONAL RETAIL: Fitch Holds BB+ Rating on $125 Million Securities ------------------------------------------------------------------ Fitch affirmed these ratings for National Retail Properties Inc. formerly known as Commercial Net Lease Realty, Inc.: -- Issuer Default Rating 'BBB-'; -- $490 million of senior unsecured notes 'BBB-'; -- $172.5 million of senior unsecured convertible notes 'BBB-'; -- Unsecured $300 million revolving credit facility expiring May 2009 'BBB-'; -- $125 million of preferred securities 'BB+'. Fitch's Outlook remains Positive. The ratings are supported by NNN's consistent business strategy, which entails acquiring, owning, and investing in single-tenant retail properties, generally under long-term commercial net leases. Fitch notes that earnings from the company's portfolio of properties occupied by tenants across various lines of trade adequately covered fixed charges by 2.4x for the first three quarters of 2006. This level has been relatively steady since 2004. By affirming NNN's ratings, Fitch also recognizes the company's ample unencumbered property coverage of unsecured debt, equal to 2.2x as of Sept. 30, 2006. NNN has grown modestly over the past year, and thus, further diversified its earnings. Moreover, the company's leverage was slightly improved, with debt plus preferred securities equal to 47% of undepreciated book capital as of Sept. 30, 2006, compared to 52.5% as of Dec. 31, 2005. Risk-adjusted capitalization has also improved and remains appropriate for the rating category. Fitch's concerns continue to center around the company's taxable REIT subsidiary's development build-for-sale activities and investments in mortgage residual interests. Fitch acknowledges that NNN's TRS development build-for-sale activities have contributed positively to all-in earnings before interest, taxes, depreciation and amortization in excess of debt service requirements. Yet, Fitch remains cognizant that such earnings from activities exhibit different risk characteristics than those from wholly owned commercial net leased retail properties. Fitch also notes that although NNN's mortgage residual interests in on-balance sheet securitizations have generated strong returns since inception in May 2005, this asset adds an additional element of earnings volatility. Fitch believes a protracted flat yield curve environment could impair the earnings of those securitization-related assets. During the coming year's retail cycle, Fitch's Positive Outlook on NNN will likely be resolved. Central factors that will determine the resolution of the current outlook include: -- the ability to keep core earnings from commercial net leased properties at current or higher levels relative to debt service requirements; -- to maintain healthy risk-adjusted leverage; -- to remain disciplined with respect to thus far successful build-for-sale activities; and, -- to continue diversifying an already broad tenant base. National Retail Properties, Inc. is a self-advised real estate investment trust that is headquartered in Orlando, Florida and specializes in leasing single-tenant stand-alone retail space on a triple-net basis. NBS TECHNOLOGIES: UbiQ Ex-Shareholders' Claims Are Without Merit ---------------------------------------------------------------- NBS Technologies Inc. reported that a statement of claim has been filed with the offices of the American Arbitration Association against it and certain of its subsidiaries by and on behalf of former shareholders of UbiQ Incorporated. UbiQ is a software development firm dedicated to the smart card industry that was acquired by NBS in August 2004 for US$3,060,000 in cash and 1,330,435 common shares of NBS. The statement of claim seeks to rescind the agreement pursuant to which NBS acquired UbiQ and is also claiming damages and injunctive relief against NBS for alleged fraudulent misrepresentation. NBS believes the Claims are without merit and intends to aggressively defend itself. As reported in the Troubled Company Reporter on Nov. 20, 2006, NBS disclosed a going private transaction proposed by its controlling shareholder Brookfield Asset Management. The going private transaction provides for the shareholders of NBS, other than Brookfield and its affiliates, to receive, in addition to cash consideration, a non-transferable contingent entitlement to share in the net proceeds received by NBS from any final adjudication or final settlement of all matters related to the claims and counterclaims of the Card Technology v. DataCard litigation involving NBS and the related proceedings in the United States Department of Justice. As the subject matter of the Litigation relates to assets acquired on the acquisition of UbiQ, shareholders would no longer be entitled to receive any payments in respect of the Contingent Consideration should the UbiQ Agreement be rescinded. About NBS Technologies Based in Toronto, Ontario, NBS Technologies Inc. (TSX: NBS) -- http://www.nbstech.com/-- provides smart card manufacturing and personalization equipment, secure identity solutions and point of sale transaction services for financial institutions, governments and corporations worldwide. NBS Technologies is a global company with locations in China, Canada, France, the U.S. and the United Kingdom, along with a worldwide dealer network. At June 30, 2006, NBS Technologies' balance sheet showed a stockholders' deficit of CDN$13,743,000, compared to a deficit of CDN$4,646,000 at Sept. 30, 2005. NELLSON NUTRACEUTICAL: Wants To Expand Pachulski Stang's Services ----------------------------------------------------------------- Nellson Nutraceutical, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to expand Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP's scope of legal services. As reported in the Troubled Company Reporter on Mar. 7, 2006, Pachulski Stang is expected to: (a) provide legal advice with respect to their powers and duties as debtors-in-possession in the continued operation of their businesses and management of their properties; (b) prepare and pursue confirmation of Debtors' plan and approval of the Debtors' disclosure statement; (c) prepare necessary applications, motions, answers, orders, reports and other legal papers on behalf of the Debtors; (d) appear in Court and protect the interests of the Debtors before the Court; and (e) perform all other legal services for the Debtors that are necessary and proper in the Debtors bankruptcy proceeding. In addition to these existing services, Pachulski Stang will: (a) provide general corporate services to the Debtors; (b) provide advice and representation to the Debtors in labor and employment matters; (c) provide general litigation services in litigation matters that may be related to these bankruptcy cases; and (d) provide all other legal, corporate, labor, and general litigation services for the Debtors as necessary. Laura Davis Jones, Esq., a partner and shareholder at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, LLP, disclosed that the Firm received a $880,000 prepetition retainer. The Firm's professionals bill: Professional Hourly Rate ------------ ----------- Laura Davis Jones, Esq. $675 Richard M. Pachulski, Esq. $725 Brad R. Godshall, Esq. $625 Maxim B. Litvak, Esq. $395 Rachel Lowy Werkheiser, Esq. $325 Patricia J. Jeffries $175 Marlene Chappe $150 Jorge E. Rojas $120 Ms. Jones assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Ms. Jones can be reached at: Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub, LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, Delaware 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 http://www.pszyjw.com/ Headquartered in Irwindale, California, Nellson Nutraceutical, Inc., formulates, makes and sells bars and powders for the nutrition supplement industry. The Debtors filed for chapter 11 protection on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski, Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtors in their restructuring efforts. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent an informal committee of which General Electric Capital Corporation and Barclays Bank PLC are members. In its Schedules of Assets and Liabilities filed with the Court, Nellson Nutraceutical reports $312,334,898 in total assets and $345,227,725 in total liabilities when it filed for bankruptcy. NEPHROS INC: Posts $1.9 Million Net Loss in Third Quarter of 2006 ----------------------------------------------------------------- Nephros Inc. filed its third quarter financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission. The company reported a $1,905,528 net loss on $164,699 of revenues for the three months ended Sept. 30, 2006, compared with a $1,808,276 net loss on $225,248 of revenues in the comparable period of 2005. At Sept. 30, 2006, the Company's balance sheet showed $7,002,041 in total assets, $6,913,347 in total liabilities, and $88,694 in total stockholders' equity. A full-text copy of the Company's quarterly report is available for free at http://ResearchArchives.com/t/s?162d Going Concern Doubt As reported in the Troubled Company Reporter on July 27, 2006, Deloitte & Touche LLP expressed substantial doubt about Nephros, 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 auditing firm pointed to the Company's recurring losses and difficulty in generating sufficient cash flow to meet its obligations and sustain operations. About Nephros Inc. New York-based Nephros Inc. (Amex: NEP) develops and markets medical devices products designed to improve the quality of life for the End-Stage Renal Disease patient, while addressing the critical financial and clinical needs of the care provider. Nephros also markets filtration products complimentary to its core ESRD therapy business. ESRD is a disease state characterized by the irreversible loss of kidney function. NORTEL NETWORKS: Sells Radio Business to Alcatel-Lucent ------------------------------------------------------- Nortel Networks Corporation has reached a definitive agreement for the sale of certain assets and the transfer of certain liabilities related to its UMTS access business to Alcatel-Lucent. The move follows the signing of the non-binding Memorandum of Understanding between the two companies announced Sept. 1, 2006. The transaction is a 320 million cash transaction, less significant deductions and transaction related costs. The parties have agreed to target a closing at year-end, and in any event, a closing within 90 days of yesterday's announcement. Approximately 1,700 of Nortel's UMTS access business employees will transfer to Alcatel-Lucent. "The completion of this transaction will allow Nortel to increase resources dedicated to our strategic business priorities. It also positions Alcatel-Lucent to be successful in the UMTS access market with an infusion of great technology and great people," said Mike Zafirovski, president and chief executive officer, Nortel. "This transaction is a win-win for both companies, but more importantly, for our customers. We will continue to work with Alcatel-Lucent to ensure the transition is seamless to our customers." "Nortel is committed to developing the wireless technologies that will deliver 4G Mobile Broadband and this provides one more step in reaching that objective," said Richard Lowe, president, Mobility and Converged Core Networks, Nortel. "Nortel is focused on providing the foundation for the coming mobile video and multimedia revolution that mobile network operators will soon face. At the same time, we will continue delivering superior value to our GSM and CDMA customers, as well as our customers that have deployed our UMTS core networks". Completion of the transaction is subject to, among other things, the conclusion of consultations with works councils and other employee representatives, finalization of the terms of certain ancillary agreements including a transitional services agreement whereby Nortel will provide to Alcatel-Lucent setup, infrastructure and application services for a defined period of time as well as customary closing conditions including regulatory approvals. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service upgraded its B3 Corporate Family Rating for Nortel Networks Corp. to B2. NORTHWEST AIRLINES: Can Implement DIP Settlement Terms ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York authorizes Northwest Airlines Corp. and its debtor-affiliates to implement settlement terms relating to the final payoff amount due under the $975,000,000 Second Amended and Restated Credit and Guarantee Agreement dated as of April 15, 2005. The Court declares that the Settlement Agreement is the full, final and complete settlement of all disputes among the Debtors, JPMorgan Chase Bank, N.A., as administrative agent, and the Lenders relating to the Credit Agreement and all related documents. The Court also rules that all direct and indirect claims and causes of action between the parties arising in connection with the Credit Agreement, and any payments or transfers made pursuant to it, are released and discharged. As reported in the Troubled Company Reporter on Nov. 1, 2006, the Debtors had asked the Court to implement settlement terms relating to the final payoff amount due under the $975,000,000 Second Amended and Restated Credit and Guarantee Agreement dated as of April 15, 2005. On Aug. 8, 2006, Judge Gropper entered a final order authorizing the Debtors to obtain up to $1,225,000,000 of DIP financing from Citicorp USA, Inc., and other lenders. The Debtors used the proceeds of the financing to repay the $983,700,000 principal and interest outstanding under the Prepetition Credit Agreement. JPMorgan Chase Bank, N.A., as administrative agent under the Prepetition Credit Agreement, however, demanded an additional $55,000,000 to $60,000,000 on account of a $19,500,000 prepayment fee, default interest, and additional interest due to their alleged inability to elect Eurodollar loans, interest on interest, and other amounts. The Debtors disputed JPMorgan's demands. Pursuant to a Court-approved stipulation, the Debtors deposited $59,792,291 in an interest-bearing segregated account for the benefit of JPMorgan and the Prepetition Lenders to the extent the Disputed Amounts are determined to be payable under the Prepetition Credit Agreement. On Sept. 20, 2006, Northwest Airlines, Inc., and JPMorgan, on behalf of the Prepetition Lenders, signed a letter agreement pursuant to which they agreed in principle on the full, final and complete settlement of the Disputed Amounts. The Debtors agree to pay from the Segregated Account: (i) $23,000,000 to JPMorgan for distribution to the Prepetition Lenders: -- $6,250,000 in prepayment fee, -- $11,500,000 in interest on account of the Eurodollar/ ABR interest rate differential and interest thereon, and -- $5,250,000 in default interest; (ii) Wachtell, Lipton, Rosen & Katz's fees and expenses as counsel to JPMorgan, amounting to $425,000 as of September 30, 2006; (iii) $260,899 as reimbursement to certain Prepetition Lenders for fees and expenses paid to L.E.K. Consulting, Inc., consultant to JPMorgan; and (iv) $18,038 to JPMorgan for its prepetition expenses. The Debtors will also pay interest on the agreed amounts from Aug. 21, 2006, to the payment date, at the interest rate earned on the funds deposited in the Segregated Account. Funds remaining in the Segregated Account after the settlement amounts have been paid in full will be made available to the Debtors. Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, tells the Court that the terms and conditions of the Letter Agreement are fair and reasonable, and in the best interests of the Debtors, their estates and their creditors. He notes that the nearly $24,000,000 in settlement payments represent less than half of the amount sought by JPMorgan. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. (Northwest Airlines Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NORTHWEST AIRLINES: Court Okays $778.7 Mil. Sec. Sub. Financing --------------------------------------------------------------- The Hon. Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York grants Northwest Airlines Corp. and its debtor-affiliates' request to: -- obtain postpetition financing of up to $778,760,000 on a secured and subordinated superpriority basis pursuant to the (i) Commitment Letter dated Nov. 3, 2006, between Northwest and Citigroup Global Markets Inc., on behalf of Citigroup, Citibank, N.A.; Citicorp USA Inc.; Citicorp North America Inc.; and any other of their affiliates, and (ii) the Fee Letter dated Nov. 3, 2006, between Northwest and Citigroup; and -- repay and refinance certain existing prepetition loans secured by seven Airbus A330 aircraft, existing postpetition loans secured by the Airbus A330 aircraft with U.S. Registration Nos. N812NW and N860NW, and postpetition loans that are scheduled to be made before the closing of the new financing in connection with the acquisition of the A330 aircraft with U.S. Registration Nos. N813NW and N861NW. Judge Gropper rules, among others, that: (1) With respect to any Collateral granted under the Loan Documentation, neither the Agents nor the Lenders will be required to file or serve financing statements, mortgages, notices of lien or similar instruments which otherwise may be required under federal or state law in any jurisdiction, or take any action, including taking possession, to validate and perfect the liens; (2) To the extent applicable, the automatic stay under Section 362 of the Bankruptcy Code is modified to permit the Lenders and the Agents under the Aircraft Financing Facility to pursue remedies under the Loan Documentation, except that five business days' notice to Northwest Airlines will be required prior to the commencement of a foreclosure action with respect to any Collateral; (3) The provisions of the Court order and any actions taken pursuant to the Court order will survive entry of any order (a) confirming any plan of reorganization in Northwest Airlines' Chapter 11 case, (b) converting any of the Debtor's Chapter 11 case to a Chapter 7 case, or (c) dismissing the Debtor's Chapter 11 case. The superpriority claims and postpetition liens will maintain their priority as provided by the Court order and the Loan Documentation until all of the obligations under the Aircraft Financing Facility are indefeasibly paid in full in cash and discharged; (4) The Agent and the Lenders are relieved of the requirement to file proofs of claim in the Debtor's Chapter 11 case with respect to any obligations under the Aircraft Financing Facility and any other claims or liens granted; and (5) The Agents and the Lenders under the Aircraft Financing Facility will be entitled to the protections of Section 364(e) of the Bankruptcy Code. Citigroup-Backed Financing The Debtors had also asked the Court to file (i) a redacted version of its request and Commitment Letter, and (ii) the Fee Letter under seal to protect confidential commercial information in the agreements. The Fee and Commitment Letters also contemplate the financing of the Airbus A320 aircraft with U.S. Registration No. N377NW and the Airbus A319 aircraft with U.S. Registration No. N371NB, the existing mortgage loans on which will have been fully repaid at the time of closing of the new financing. In order to further its reorganization efforts, Northwest Airlines has negotiated with Citigroup to arrange refinancing for certain existing loans, and to provide financing for the purchase of certain new aircraft, that will provide savings to the Debtor over the existing loans and financing commitments that it will replace. Even though the new loans will have a slightly lower loan-to- value ratio and shorter average life than the existing financings, the initial cash outlay by Northwest Airlines in the refinancing and the faster amortization of the new loans will not have a significant impact on Northwest's liquidity, and will be more than set off by the significant cost savings provided by the refinancing, Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates. According to Mr. Ellenberg, the new financing is structured to be more efficient for lenders in the market, with loan to value funding levels and average debt amortization repayment schedules which will make the loans more liquid and attractive to subsequent investors. The new postpetition credit facility will continue beyond Northwest Airlines' emergence from bankruptcy provided certain conditions are satisfied. For these reasons, approval of the new credit facility and the repayment and refinancing of the Debtor's existing loans will provide significant benefits to the estate and are important to its restructuring efforts, Mr. Ellenberg says. Existing Financings Northwest Airlines owns each of the Prepetition A330 aircraft, subject to prepetition mortgage loan facilities. The value of the collateral under each of the existing loans exceeds the amounts outstanding under the loans. In addition, Northwest Airlines and Airbus S.A.S., AVSA, S.A.R.L. were parties to a purchase agreement, which provided for the purchase and delivery terms of Airbus A330 aircraft. Northwest assumed the A330 Purchase Agreement, subject to certain amendments and the fixing of contingent administrative liabilities in the event of liquidation. Airbus and its affiliates have agreed to provide or procure financing for up to 10 A330 aircraft scheduled to be delivered in 2006 and 2007, of which three are subject to the proposed refinancing. Northwest Airlines also entered into a Term Sheet with United Technologies Corp. and UT Finance Corp. UTC also agreed to provide financing for Northwest's purchase of four new A330 aircraft, of which one is subject to the proposed refinancing. The A330 Purchase Agreement and the financing agreements were filed under seal in order to protect confidential terms. Northwest Airlines also owns, subject to prepetition mortgage loan facilities, the Airbus N377NW and N371NB Aircraft. The existing loans with respect to each of these aircraft will be maturing in November and December 2006 pursuant to the Debtor's 1110(a) agreements. New Financing Pursuant to the Commitment and Fee Letters, Citigroup has agreed to arrange refinancing for the Prepetition A330 aircraft; refinancing for the N812NW and N860NW Aircraft that were delivered to Northwest with financing from Airbus; and refinancing or new financing, as the case may be, for the N813NW and N861NW Aircraft that are scheduled to be delivered under the A330 Purchase Agreement during November and December 2006. The new financing from Citigroup will be in the form of a senior secured subordinated superpriority credit facility of up to $778,760,000 under Sections 364(c)(1), (2) and (3) of the Bankruptcy Code. The amount of the facility corresponds to a percentage of the appraised value of the aircraft to be financed or refinanced. As set forth in the Commitment Letter, Citigroup will provide a senior facility in the principal amount of up to $632,742,500, and a junior facility in the principal amount of up to $146,017,500. The refinanced aircraft and the new aircraft purchased with financing under the credit facility will serve as collateral under the credit facility. The senior facility in the principal amount of $632,742,500 is equal to the total of: -- $20,566,000 per 2003 A319 Aircraft; -- $22,724,000 per 2003 A320 Aircraft; -- $50,095,500 per 2004 A330-200 Aircraft; -- $51,733,500 per 2004 A330-300 Aircraft; -- $57,895,500 per 2006 A330-200 Aircraft; and -- $59,858,500 per 2006 A330-300 Aircraft. The amounts correspond to 65% of the value of each Aircraft as set out in a valuation report of Airclaims. The junior facility in the principal amount of $146,017,500 is equal to the sum of: -- $4,746,000 per 2003 A319 Aircraft; -- $5,244,000 per 2003 A320 Aircraft; -- $11,560,500 per 2004 A330-200 Aircraft; -- $11,938,500 per 2004 A330-300 Aircraft; -- $13,360,500 per 2006 A330-200 Aircraft; and -- $13,813,500 per 2006 A330-300 Aircraft. The amounts correspond to 15% of the appraised value of each Aircraft. All amounts owing under the credit facility will constitute superpriority administrative claims against Northwest's bankruptcy estate, junior only to superpriority claims granted to the lenders under the Debtor-In-Possession Financing Facility dated August 21, 2006. Maturity dates of the senior and junior facilities were not disclosed, but if these conditions are not satisfied, both facilities will terminate on the effective date of the Debtors' reorganization plan: (a) Northwest's plan of reorganization becomes effective; (b) reorganized Northwest assumes the loans and other obligations under the loan documents; (c) Citigroup, as collateral agent, on behalf of the lenders, has a perfected first priority security interest in the collateral entitled to the benefits and restrictions of Section 1110 of the Bankruptcy Code; and (d) no default or event of default has occurred and be continuing under the loan documents. The facility will be syndicated by Citigroup. For a period of time Northwest and its subsidiaries and agents will not be permitted to syndicate or issue any debt security or commercial bank or other debt facility, without the prior written consent of Citigroup, other than secured aircraft debt and lease financings with respect to certain aircraft, aircraft restructurings and aircraft financings with manufacturers. Citigroup will act as the sole Administrative Agent, Collateral Agent, Lead Arranger, and Book-Running Manager in the transaction. It will also have the sole right, but not the obligation, to add one or more co-arrangers to the facility in its discretion, with Northwest Airlines' consent. The new financing is expected to close before year-end 2006. Northwest Airlines may prepay any individual aircraft loan under the credit facility without premium or penalty, subject to reimbursement of the lenders' LIBOR breakage costs, if any. Amounts borrowed under the senior or junior facilities that are repaid or prepaid may not be reborrowed. Northwest will also pay certain fees in connection with the financing. Interest Rates The interest rates for the two facilities reflect a blend margin over LIBOR of about 1.97% on an internal rate of return basis. The interest rates per annum applicable to the senior facility will be LIBOR, including statutory reserves, plus 1.75% or, at the option of Northwest Airlines, the Alternate Base Rate plus 0.75%. The Alternate Base Rate is to be defined as the highest of: (x) the base rate of Citibank, N.A.; (y) the Federal Funds rate plus 0.50%; and (z) the latest three-week moving average of secondary market morning offering rates for three-month certificates of deposit, as determined by Citibank and adjusted for the cost of reserves and FDIC insurance assessments plus 0.50%. The interest rates per annum applicable to the senior facility will be LIBOR, including statutory reserves, plus 3.50% or, at Northwest Airlines' option, the Alternate Base Rate plus 2.50%. LIBOR rate advances will be based on three-month interest periods. Interest will be payable quarterly at the end of each interest period. During the continuance of any payment default under the loan documentation, the interest rate on all overdue obligations under the loan documentation will increase by 2% per annum. A full-text copy of the redacted Commitment Letter is available for free at http://ResearchArchives.com/t/s?163d Aircraft Creditors' Concerns Several aircraft creditors said the Debtors' Financing Motion does not include a carve-out for the Section 1110 interests in any of the aircraft subject to the proposed financing. The aircraft creditors are MBIA Insurance Company, Bank of America, Transamerica Aviation LLC and TA Air VII, Goldman Sachs Credit Partners, Credit Industriel et Commercial, DVB Bank AG, Halifax Bank plc, The Governor and Company of the Bank of Scotland, Bayerische Landesbank, HSH Nordbank AG, Lloyds Bank PLC, BS Greenwich Kahala B757 N537US LLC, GMAC Commercial Finance LLC, Merrill Lynch Credit Products LLC, Bear Stearns Investment Products Inc., and Sumitomo Bank. According to Douglas J. Lipke, Esq., at Vedder, Price, Kaufman & Kammholz P.C., in Chicago, Illinois, the Financing Motion and redacted Commitment Letter are, at best, unclear about the proposed treatment of the Section 1110 assets and agreements under the proposed financing transactions. Thus, the Aircraft Creditors objected to the Debtors' Financing Motion and requested that these provisions be included in the Debtors' proposed draft order: (x) No Waiver of Section 1110 Beneficiary Rights; and (y) Limitation on Liens in Section 1110 Assets. The Aircraft Creditors also clarified the definition of a Section 1110 Agreement and the Section 1110 Assets. On November 20, 2006, the Aircraft Creditors withdrew their limited objection after the Debtors' counsel assured them that the Financing Motion does not affect any Section 1110 Assets or Agreements in which any of them have an interest. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. (Northwest Airlines Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NOTIFY TECHNOLOGY: Sept. 30 Equity Deficit Narrows to $600,000 -------------------------------------------------------------- Notify Technology Corporation's balance sheet at Sept. 30, 2006, showed total assets of $1.4 million and total liabilities of $2 million, resulting in a total shareholders' deficit of $600,000. The company's shareholders' deficit at Sept. 30, 2005, stood at $700,000. For the fiscal year ended Sept. 30, 2006, the company reported a net loss of $314,893, compared with a net loss of $557,452 for fiscal 2005. The company reported total revenue of $4.3 million for the fiscal year ended Sept. 30, 2006, compared with $5 million for fiscal 2005. The decrease in total revenue consisted of a 49% decrease in its legacy Visual Got Mail revenue partly offset by a 34% increase in NotifyLink revenue. Gross margin as a percentage of revenue for the 12-month period ended Sept. 30, 2006, was 87.2%, compared with 74.4% in the same 12-month period in 2005. At Sept. 30, 2006, the company's balance sheet also showed strained liquidity with $1.3 million in total current assets and $2 million in total current liabilities. Headquartered in San Jose, California, Notify Technology Corporation (OTC: NTFY) -- http://www.notifycorp.com/-- is a software company that develops mobility products for organizations of all sizes. Notify's wireless solutions provide secure synchronized email and PIM access and management to any size organization on a variety of wireless 2-way devices and networks. Notify sells its wireless products directly and through authorized resellers internationally. ORECK CORP: Poor Performance Prompts S&P's Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed all of its ratings on Oreck Corp., including the 'B+' corporate credit rating, on CreditWatch with negative implications. Approximately $183 million of debt is affected by this action. "The CreditWatch listing is based on the company's weaker-than- expected operating performance, which has resulted in key credit protection measures that are below anticipated levels for the rating, and tight financial covenants under its bank facility," noted Standard & Poor's credit analyst Patrick Jeffrey. The company's operating performance has been significantly affected over the past year by the impact of Hurricane Katrina. While operations have fully resumed, Oreck's financial results continued to trend below expected levels in the first quarter of fiscal 2007, further pressuring covenants. Standard & Poor's will meet with management to discuss the company's efforts to improve sales levels and its cost structure, as well as its ability to maintain adequate cushion under its financial covenants. It is unlikely that the rating would be lowered more than one notch as a result of this review. OVERSEAS SHIPHOLDING: Completes $471 Million Purchase of Maritrans ------------------------------------------------------------------ Overseas Shipholding Group, Inc. completed the acquisition of Maritrans Inc. for $471 million. The acquisition was made pursuant to the definitive merger agreement between the companies entered on Sept. 25, 2006. At a special meeting of stockholders of Maritrans held on Nov. 28, 2006, in Philadelphia, Pennsylvania, stockholders holding greater than a majority of Maritrans' outstanding shares approved and adopted the merger agreement. Following the stockholder vote and in accordance with the merger agreement, Maritrans was merged with a wholly owned subsidiary of OSG, and each outstanding share of Maritrans' common stock was converted into the right to receive $37.50 per share in cash. Based on 12 million shares outstanding and the assumption of net debt outstanding as of Sept. 30, 2006, the transaction is valued at $471 million. OSG financed the acquisition with borrowings under its revolving credit agreement and intends to repay up to $300 million of this amount from qualified withdrawals under its Capital Construction Fund. The transaction is expected to be immediately accretive to OSG's earnings, before consideration of any transaction synergies. Maritrans will be renamed "OSG America, Inc." in connection with the transaction. As a result of the combination, OSG's U.S. Flag fleet now totals 35 operating and newbuild vessels that include handysize product carriers, a car carrier, dry bulk carriers and articulated tug barges. OSG's U.S. Flag fleet provides U.S.-based companies with a broad range of short haul and long haul transportation and lightering services. The strategic acquisition also gives OSG a presence in all four major U.S. trading routes: intra U.S.-Gulf, U.S. Gulf to the East Coast, U.S. Gulf to the West Coast and the Alaskan North Slope trades. "We view having a leading presence in the Jones Act trade as integral to our long-term strategy of growth and diversification," Morten Arntzen, President and Chief Executive Officer of OSG, commented. "As a leading player in the U.S. coastwise trade, we can provide commercial and government customers a diversified portfolio of services. Our fleet of high quality tankers and barges coupled with an experienced team of more than 930 sea and shore-based professionals, enables us to continue to provide superior customer service as well as serving as a platform for future expansion." "The predominantly medium and long-term nature of U.S. Flag revenues support our balanced chartering strategy, thus enhancing the stability of OSG's future earnings overall," stated Myles Itkin, Executive Vice President and Chief Financial Officer of OSG. "Additionally, OSG derives substantial economic benefit by being able to apply its CCF fund to this transaction." Jonathan P. Whitworth, 39, appointed Senior Vice President of OSG and Head of the U.S. Flag Strategic Business Unit in conjunction with the transaction, commented, "Since 1998, Maritrans has been actively engaged in a double-hull rebuilding program aimed at ensuring that its Jones Act fleet is 100% compliant with the U.S. Oil Pollution Act of 1990. Maritrans' patented barge rebuilding process allows articulated tug barges to be converted at a significant cost advantage. The rebuild and newbuild programs of the newly combined Company comprise thirteen vessels, including the Overseas Houston, which will be delivered next month and has been chartered to Shell, and the articulated tug and barge unit, the Overseas Vision and M350, which is scheduled to deliver late next year and commence a long-term charter to Sunoco. The newbuild program with vessels delivering through 2010 provides needed tonnage in the Jones Act trade, which is facing a significant phase-out of non-OPA compliant vessels." Mr. Whitworth will lead OSG's U.S. Flag strategic business unit from its offices in Tampa, Florida and will report directly to Mr. Arntzen. The management team of OSG's U.S. Flag unit includes Eric F. Smith, 41, who previously led the unit, as Chief Commercial Officer and Head of Government Affairs, Jack Robinson, 57, as Vice President Marine Operations, Christopher J. Flanagan, 47, as Vice President Marine Technical, Norman D. Gauslow, 60, as Vice President Marine Labor Relations and Matthew J. Yacavone, 39, as Vice President Business Development. About Maritrans Headquartered in Tampa, Florida, Maritrans Inc., (NYSE: TUG) -- http://www.maritrans.com/-- is a U.S.-based company with a 78-year commitment to building and operating petroleum transport vessels for the U.S. domestic trades. Maritrans employs a fleet of 11 ATBs, five product carriers, two of which have been redeployed to transport non-petroleum cargoes, and three large ATBs under construction. Approximately 75% of the company's oil carrying fleet capacity is double-hulled with a fleet capacity aggregating approximately 3.4 million barrels, 79% of which is barge capacity. Maritrans maintains an office in the Philadelphia area. About Overseas Shipholding Headquartered in New York, U.S.A., Overseas Shipholding Group, Inc. (NYSE:OSG) -- http://www.osg.com/-- is one of the largest publicly traded tanker companies in the world with an owned, operated and newbuild fleet of 117 vessels, aggregating 13.0 million dwt and 865,000 cbm, as of June 30, 2006. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets, the company is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world's most customer-focused marine transportation companies, with offices in New York, Athens, London, Manila, Newcastle and Singapore. * * * As reported in the Troubled Company Reporter on Nov. 22, 2006, Moody's Investors Service's confirmed Overseas Shipholding Group, Inc.'s Ba1 Corporate Family Rating. OWENS CORNING: Professional Fee Claims Bar Date Set for January 2 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware set Jan. 2, 2006 as the deadline for filing professional fee claims against Owens Corning and its debtor-affiliates. The Reorganized Debtors inform all professionals employed in the Debtors' Chapter 11 cases that they must file their final requests for compensation or reimbursement of fees on or before Jan. 2, 2007. The Debtors' Plan of Reorganization took effect on Oct. 31, 2006. Pursuant to Sections 327, 328, 330, 331, 503(b) or 1103 of the Bankruptcy Code, the professionals covered by the January 2 bar date include professionals seeking compensation or reimbursement of costs and expenses relating to services performed after the Petition Date and prior to and including the Effective Date in connection with the Reorganized Debtors' Chapter 11 cases. The Jan. 2, 2007 bar date covers professionals retained by the Debtors, the Official Committee of Unsecured Creditors Committee, the Official Committee of Asbestos Claimants, and the Legal Representative for the Class of Future Asbestos Claimants. For claims making a substantial contribution under Sections 503(b)(3)(D) or 503(b)(4), the professionals covered by the bar date include professionals hired by the Ad Hoc Bondholders' Committee and the Ad Hoc Equity Holders' Committee. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. PILGRIM'S PRIDE: Inks $1.1 Billion Merger Agreement with Gold Kist ------------------------------------------------------------------ Pilgrim's Pride Corporation and Gold Kist Inc. entered into a definitive merger agreement under which Pilgrim's Pride will acquire all of the outstanding shares of Gold Kist common stock for $21 per share in cash. The transaction, which was unanimously approved by the boards of directors of both Pilgrim's Pride and Gold Kist, has a total equity value of approximately $1.1 billion, plus the assumption of approximately $144 million of Gold Kist's debt. Together, Pilgrim's Pride and Gold Kist will create the world's leading chicken company in terms of production and the third- largest U.S. meat protein company by revenues. The combined company will have a broad geographic reach and customer base, while maintaining a balanced portfolio of fresh chicken and value- added products. In particular, the enhanced geographic diversification will enable the new Pilgrim's Pride to compete more efficiently both in the U.S. and internationally. "This is a momentous day for both companies and for the chicken industry," said Lonnie "Bo" Pilgrim, chairman of Pilgrim's Pride. "We believe the combination of these two great companies will result in substantial value creation for our respective stockholders, employees, business partners and other constituencies." "We are excited about the opportunity to begin realizing the substantial benefits that will result from the combination between Pilgrim's Pride and Gold Kist," added O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer. "The combined company will be well-positioned to provide even better service to its customers. We look forward to welcoming Gold Kist's employees and contract growers to the Pilgrim's Pride family so they can participate in the long-term growth opportunities of the combined company." Pilgrim's Pride expects to achieve approximately $50 million of annualized synergies, primarily from the optimization of production and distribution facilities and cost savings in purchasing, production, logistics and SG&A. Pilgrim's Pride expects the acquisition will be accretive to the company's diluted earnings per share after the first full year of operations. Pilgrim's Pride believes that the combined company will have a strong financial position and substantial cash flow, enabling it to consistently reduce debt and return to historical debt levels. "After careful consideration, the special committee of independent directors, as well as our entire board, determined that the Pilgrim's Pride enhanced offer is in the best interests of our shareholders, employees, growers and customers," said A.D. Frazier, chairman of Gold Kist. "Since becoming a public company more than two years ago, Gold Kist has made significant progress in achieving its business goals. We look forward to working with the Pilgrim's Pride board and management on a smooth integration, and we recommend that all stockholders embrace this transaction by tendering their shares into the premium offer." "This transaction will position the combined company for long-term growth and leadership in our industry," said John Bekkers, president and chief executive officer of Gold Kist. "The collective talents and expertise of our employees and growers, along with our combined customer relationships, will represent a new standard in the chicken business and make Pilgrim's Pride the preeminent industry player." The Pilgrim's Pride offer represents an approximately 62% premium over Gold Kist's closing stock price on Aug. 18, 2006, the last day of trading before Pilgrim's Pride notified Gold Kist's board of directors in a public letter that it was offering to purchase the company. Under the terms of the merger agreement, Pilgrim's Pride will amend its tender offer to increase its offer price to $21 per share and Gold Kist will amend its Schedule 14D-9 to include the Gold Kist board's recommendation that Gold Kist stockholders tender their shares to Pilgrim's Pride pursuant to the amended tender offer. A revised offer to purchase will be distributed to Gold Kist stockholders and the scheduled expiration date for the amended tender offer is 5:00 p.m., New York City Time, Dec. 27, 2006, unless extended. The offer and related transactions contemplated by the merger agreement are subject to the satisfaction of customary closing conditions. As reported in the Troubled Company Reporter on Oct. 20, 2006, the transaction has received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Baker & McKenzie LLP and Morris, Nichols, Arsht & Tunnell, LLP are acting as legal counsel and Credit Suisse, Legacy Partners Group LLC and Lehman Brothers Inc. are acting as financial advisors to Pilgrim's Pride. Innisfree M&A Incorporated is acting as information agent for Pilgrim's Pride's offer. Lehman Brothers Inc. and Credit Suisse have provided financing commitments. Merrill Lynch & Co. and Gleacher Partners LLC are serving as financial advisors to Gold Kist. Alston & Bird LLP and Richards, Layton & Finger P.A. are serving as outside legal counsel to Gold Kist. MacKenzie Partners is acting as information agent for Gold Kist. About Gold Kist Based in Atlanta, Georgia, Gold Kist Incorporated (NASDAQ: GKIS) -- http://www.goldkist.com/-- operates a fully integrated chicken production, processing and marketing business. Gold Kist's production operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Moody's Investors Service's implementation of its new Probability- of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products sector, the rating agency held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its $100 million 9.25% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. PITTSFIELD WEAVING: Committee Hires Sheehan Phinney as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Hampshire authorized the Official Committee of Unsecured Creditors in Pittsfield Weaving Company's chapter 11 case, to retain Bruce A. Harwood, Esq., and the firm Sheehan Phinney Bass + Green, PA, as its counsel. Sheehan Phinney will: a) advise the Committee with respect to its powers and duties in the pending Chapter 11 Case; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtor, the operation of the Debtor's business, or other matters relevant to the case; c) assist the Committee in analyzing and negotiating any plan or plans of reorganization filed in this case and, to the extent necessary or appropriate, drafting, structuring or negotiating a competing plan of reorganization; d) appear before the Bankruptcy Court and such other Courts as necessary or appropriate in connection with matters relating to this case or the Debtor's estate; e) object, assent or otherwise respond to matters brought before the Court which affect the rights of the Committee or its members; and f) perform all other legal services, which may be necessary or appropriate or normally incident to chapter 11 cases. Mr. Harwood will be billed $290 per hour for his work. James S. LaMontagne, Esq., a Sheehan Phinney member, will charge the Debtor $225 per hour for his work. Other firm's professionals bill: Designation Hourly Rate ----------- ----------- Associates $145 Paralegal $110 Legal Assistant $55 Mr. Harwood assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Pittsfield, New Hampshire, Pittsfield Weaving Company -- -- http://www.pwcolabel.com/-- provides brand identification to the apparel and soft goods industries, and manufactures woven and printed labels and RFID/EADS solutions. The Company filed it chapter 11 protection on Sept. 20, 2006 (Bankr. D. NH Case No. 06- 11214). Williams S. Gannon, Esq., at William S. Gannon PLLC represent the Debtor in its restructuring efforts. Pittsfield Weaving estimated its assets and debts at $10 million to $50 million when it filed for protection from its creditors. PRESIDENT CASINOS: Court Confirms Unit's Reorganization Plan ------------------------------------------------------------ The United States Bankruptcy Court for the Eastern District of Missouri has entered an order confirming the Chapter 11 plan of reorganization submitted by President Riverboat Casino-Missouri, Inc., a wholly owned subsidiary of President Casinos, Inc. that conducts President's St. Louis, Missouri gaming operations. The plan of reorganization approved by the Bankruptcy Court for the Eastern District of Missouri provides that the stock of PRC-MO will be sold to Pinnacle Entertainment, Inc. for approximately $31 million pursuant to the terms of a purchase agreement previously entered into between President and Pinnacle. Upon closing of the transaction, the plan of reorganization calls for the creation of a distribution trust to distribute to creditors the proceeds of the sale and certain other assets of PRC-MO. All priority and administrative claims and claims of unsecured trade creditors will be paid in full pursuant to the plan of reorganization. The plan of reorganization also provides that holders of President's outstanding bonds will be paid the amount of their claims less a $10 million discount (or approximately $50.6 million). An aggregate of $5 million of the $10 million discount will be permanently waived, and the remaining $5 million will be deferred and be payable from one-half of any future amounts in excess of $5 million recovered by President pursuant to certain specified pending litigation and tax refund claims. In addition, under the plan of reorganization the first $5 million from such litigation and tax refund claims and one-half of any recoveries in excess of $5 million will be used first to pay the outstanding bankruptcy claim of John Edward Connelly & Associates and its assignees (in the amount of approximately $3.3 million) with the balance to be distributed to President. The plan of reorganization does not become effective until the closing of the sale of the stock of PRC-MO to Pinnacle Entertainment. The Missouri Gaming Commission has approved the sale of PRC-MO stock to Pinnacle. The closing of the sale transaction remains subject to various closing conditions. Headquartered in St. Louis, Missouri, President Casinos Inc. -- http://www.presidentcasino.com/-- currently owns and operates a dockside gaming casino in St. Louis, Missouri through its wholly owned subsidiary, President Missouri. The Debtor filed for chapter 11 protection on June 20, 2002 (Bankr. S.D. Miss. Case No. 02-53055). On July 11, 2002, substantially all of Debtor's other operating subsidiaries filed for chapter 11 protection in the same Court. The Honorable Judge Edward Gaines ordered the transfer of President Casino's chapter 11 cases from Mississippi to Missouri. The case was reopened on Nov. 5, 2002 (Bankr. E.D. Mo. Case No. 02-53005). Brian Wade Hockett, Esq., at Hockett Thompson Coburn LLP, represents the Debtors in their restructuring efforts. David A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP, represents the Official Committee of Unsecured Creditors. Thomas E. Patterson, Esq., and Ronn S. Davids, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP and E. Rebecca Case, Esq., and Howard S. Smotkin, Esq., at Stone, Leyton & Gershman, P.C., represent the Official Committee of Equity Security Holders. Q COMM: Posts $1.3 Million Net Loss in Third Quarter of 2006 ------------------------------------------------------------ Q Comm International Inc. has filed its third quarter financials ended Sept. 30, 2006, with the Securities and Exchange Commission. For the three months ended Sept. 30, 2006, the company reported a $1,379,232 net loss on $12,430,361 of total sales, compared with a $1,119,533 net loss on $12,782,094 of total sales in the comparable quarter of 2005. At September 30, the company's balance sheet showed $5,029,021 in total assets, $2,309,876 in total liabilities, and $2,719,145 in total stockholders' equity. Full-text copies of the company's third quarter financials are available for free at http://ResearchArchives.com/t/s?164c Going Concern Doubt Hansen, Barnett & Maxwell, Salt Lake City, Utah, expressed substantial doubt about Q Comm International's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the recurring losses from operations and accumulated deficit. About Q Comm Q Comm International Inc. -- http://www.qcomm.com/-- is a prepaid transaction processor that electronically distributes prepaid products from service providers to the point of sale. Q Comm offers proprietary prepaid transaction processing platforms, support of various point-of-sale terminals, product management, merchandising, customer support and engineering. REFCO INC: Has Until January 12 to Solicit Plan Acceptances ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extends Refco Inc. and its debtor-affiliates' exclusive periods to solicit acceptances of their First Amended Chapter 11 Plan through and including Jan. 12, 2007, without prejudice to their right to seek further extensions. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. On Oct. 6, 2006, the Debtors filed their Amended Plan and Disclosure Statement. On Oct. 16, 2006, the gave its tentative approval on the Disclosure Statement and on Oct. 20, 2006, the Court Clerk entered the written disclosure statement order. The hearing to consider confirmation of Refco, Inc., and its debtor-affiliates' plan is set for Dec. 15, 2006. Objections to the plan, if any, must be in by Dec. 1, 2006. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). Refco Commodity Management, Inc., formerly known as CIS Investments, Inc., a debtor-affiliate of Refco Inc., filed for chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No. 06-12436). RCMI's exclusive period to file a chapter 11 plan expires on Feb. 13, 2007. (Refco Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). REFCO INC: Various Parties Raise Issues Against Joint Plan ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved procedures governing discovery with respect to the confirmation of the Chapter 11 Plan filed by Refco Inc. and its debtor-affiliates; Marc S. Kirschner, the Chapter 11 Trustee for Refco Capital Markets, Ltd.; and the Joint Sub-Committee of the Official and Additional Committees of Unsecured Creditors, the Troubled Company Reporter reported on Nov. 17, 2006. Pursuant to the Court's order governing discovery with respect to confirmation of the First Amended Joint Chapter 11 Plan, the Ad Hoc Committee of Equity Security Holders of Refco, Inc.; Forex Capital Markets, LLC; and certain customers and creditors of the Chapter 11 Debtors, including Refco FX Associates, LLC, and Refco Capital Markets, Ltd., separately filed with the Court their statements of issues to be raised against the confirmation of the Joint Chapter 11 Plan for the Refco Debtors. The Court will convene a Plan confirmation hearing on Dec. 15, 2006. (1) Ad Hoc Equity Committee The Ad Hoc Equity Committee contends that the Plan violates Section 1129(a)(7) of the Bankruptcy Code because, among others: (a) the Plan fails to provide Refco, as the equity security holder of New Refco Group Ltd., LLC, and holders of Class 8 Old Equity Interests as much as they would receive in Refco's hypothetical Chapter 7 liquidation; (b) the vast majority of proofs of claim filed against Refco and New Refco lack merit and would be disallowed in a Chapter 7 liquidation of the parties; (c) the scheduled intercompany debt of Refco and New Refco lacks basis and would not result in an allowed intercompany claim against them; (d) Refco and New Refco possess valuable causes of action against third parties, the proceeds of which, in a Chapter 7 Liquidation, would provide a distribution to Class 8 Old Equity Interests greater than what is provided to them under the Plan; (e) there are likely many additional claims and defendants known to the Plan Proponents -- information that are not available to the Ad Hoc Equity Committee; (f) Refco and New Refco suffered damages in the form of loss of value in their subsidiaries, which is cognizable under applicable law; (g) Refco suffered damages in the form of the loss of its IPO proceeds; (h) any fraudulent transfer claims or other non-preference avoidance claim brought by Refco and New Refco would not result in a replacement claim against them under Section 502(h); (i) the Plan improperly releases subsidiary estates for liabilities that are effectively reallocated to the parent estates; and (j) in addition to improperly providing proceeds of Refco and New Refco causes of action to subsidiary creditors ahead of equity, the Plan does protect equity's chance to receive any residual value under this waterfall. The Ad Hoc Equity Committee asserts that the compromises embodied in the Plan are improper and should not be approved because the settlements: (i) were not negotiated at arm's-length since the fiduciaries representing Refco and New Refco were conflicted; (ii) were negotiated with no consideration given to Refco and New Refco's downstream claims for loss, damages and contribution; (iii) cannot be approved because they materially prejudice Class 8 Old Equity Interests; and (iv) do not satisfy the standards applicable under Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 1123(b)(3)(A). In addition, the Ad Hoc Equity Committee complains that the Plan violates Sections 1129(a)(1) to (3) because it does not comply with the applicable provisions of the Bankruptcy Code. Paul N. Silverstein, Esq., at Andrews Kurth LLP, in New York, tells Judge Drain that it is likely that Section 1129(a)(10) will not be satisfied as to Refco and New Refco, because: -- given that the Plan does not provide for substantive consolidation, at least one impaired accepting class of Refco and New Refco must vote to accept the Plan, not counting the vote of insiders; and -- there are three potential impaired accepting subclasses for Refco and New Refco corresponding to Class 5(a), Class 5(b), and Class 6. Mr. Silverstein further argues that the Plan fails to satisfy the Section 1129(b) cram-down requirements on the basis that it discriminates unfairly against, and is not fair and equitable to, holders of Class 8 Old Equity Interest because it deprives them of the proceeds of causes of action to which they would be entitled. To the extent that the Plan Proponents seek substantive consolidation, or the Plan is deemed to constitute a substantive consolidation, of Refco and New Refco with any of the other Refco entities, the consolidation is manifestly inappropriate, Mr. Silverstein maintains. The Ad Hoc Equity Committee reserves the right to take discovery on any issue that has been addressed to date, to the extent those issues have any bearing on the Plan confirmation. (2) FXA Customers The FXA Customers assert that the customer funds held by FXA that are to be subject to a variety of equitable remedies do not constitute property of the estate under Section 541(a) of the Bankruptcy Code. Therefore, the Plan as it relates to FXA cannot dispose of funds, the FXA Customers contend. Todd E. Duffy, Esq., at Duffy & Amedeo LLP, in New York, states that the Plan cannot be confirmed before final adjudication of the FXA Customers' property rights in the customer funds on deposit with FXA. Mr. Duffy adds that the Plan violates the Section 1122 requirements in respect of the classification of customer claims with non-customer claims. Mr. Duffy argues that Plan is not feasible under Section 1129(a)(11) and does not otherwise satisfy the confirmation requirements as it proposes to use customer funds -- subject of a variety of equitable remedies, including constructive trust claims -- to pay claims of other non-customer creditors. The FXA Customers contend that the global settlement proposed in the Plan violates the requisite elements of Rule 9019 and applicable decisional law. Specifically, FXA is not receiving any comparable or reasonable benefit under that settlement in exchange for waiving its rights to collect on the $84,000,000 intercompany receivable owed to FXA. Mr. Duffy states that the value attributable to the agreement by the senior secured lenders and the senior subordinated noteholders to waive or release their claims against FXA is not reasonable in relation to the value attributable to the distribution that FXA could obtain from RCM on account of the intercompany receivable. The FXA Customers also assert that the creation of Refco FX Convenience Claims in Class 6 violates Section 1122. Furthermore, the FXA Customers complain that the Plan violates Section 1129(a)(7) requirements, as to whether claimholders in dissenting and impaired classes will receive or retain under the Plan on account of claim property of a value that is not less than the amount that a holder would receive or retain if the debtor were liquidated under Chapter 7. Mr. Duffy notes that FXA Customers will receive a larger recovery on their claims either: (i) based on the variety of equitable remedies asserted in the constructive trust litigation presently pending; (ii) through a Chapter 7 of FXA; and (iii) as a result of the denial of the Global Settlement, enabling FXA to seek to avoid the claims and liens of the senior secured lenders and the senior subordinated noteholders, while at the same time, recover a dividend on the intercompany receivable owed from RCM. The FXA Customers reserve the right to assert additional objections to the Plan Confirmation. (3) FXCM Forex Capital Markets, LLC, may object to the Plan to the extent that its provision prejudices the right of FXCM or any of its holder of interest or affiliate to seek rescission of Refco Group Ltd., LLC's purchases of interest in FXCM Entities. FXCM and certain holders of interests in FXCM Entities have filed proofs of claim against RGL and other related Debtors, asserting the right to seek rescission of purchases of interests in FXCM Entities. In addition, FXCM may object to the Plan to the extent that it does not provide an opportunity for any holder of an interest in any FXCM Entity to exercise any right of first refusal contained in a Limited Liability Operating Agreement or other similar document for any FXCM Entity. Accordingly, FXCM and its affiliates reserve the right to assert additional Plan confirmation objections, and to contend that the Discovery Order: (i) violates the Federal Rules of Bankruptcy Procedure, including Bankruptcy Rule 2002; (ii) was not entered after "notice and a hearing" within the meaning of Section 102(1) of the Bankruptcy Code; and (iii) denies them due process of law as required by the Fifth Amendment to the Constitution of the United States of America. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. On Oct. 6, 2006, the Debtors filed their Amended Plan and Disclosure Statement. On Oct. 16, 2006, the gave its tentative approval on the Disclosure Statement and on Oct. 20, 2006, the Court Clerk entered the written disclosure statement order. The hearing to consider confirmation of Refco, Inc., and its debtor-affiliates' plan is set for Dec. 15, 2006. Objections to the plan, if any, must be in by Dec. 1, 2006. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). Refco Commodity Management, Inc., formerly known as CIS Investments, Inc., a debtor-affiliate of Refco Inc., filed for chapter 11 protection on Oct. 16, 2006 (Bankr. S.D.N.Y. Case No. 06-12436). RCMI's exclusive period to file a chapter 11 plan expires on Feb. 13, 2007. (Refco Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). REVLON CONSUMER: Plans to Increase Term Loan to $840 Million ------------------------------------------------------------ Revlon Consumer Products Corporation, a wholly owned operating subsidiary of Revlon Inc., plans to refinance its existing credit agreement as part of its overall plans to improve cash flow and strengthen its balance sheet and capital structure. As part of the refinancing, RCPC expects to refinance and replace its existing $800 million term loan with a new 5-year $840 million term loan facility and amend its existing $160 million multi- currency revolving credit facility and extend its maturity through the same 5-year period. The 2006 Term Loan Facility will be secured by substantially the same collateral package and guarantees that secure RCPC's existing term loan facility and the 2006 Revolving Credit Facility will continue to be secured by its existing collateral package and guarantees. RCPC expects to use the proceeds of the 2006 Credit Facilities to repay in full the approximately $800 million of outstanding indebtedness under its existing term loan facility. The balance of the proceeds is expected to be available for general corporate purposes, after paying fees and expenses related to the 2006 Credit Facilities. RCPC expects to close and fund the 2006 Credit Facilities in late December 2006. Consummation of the 2006 Credit Facilities transactions is subject to a number of customary conditions, including, among other things, the execution of definitive documentation, perfection of security interests in collateral and that Revlon launch a rights offering for at least $100 million in equity securities. The Company also disclosed that Citicorp Global Markets Inc. agreed to act as sole lead arranger and sole bookrunner with Citicorp USA Inc. acting as administrative agent on the 2006 Term Loan Facility and 2006 Revolving Credit Facility. JPMorgan Chase Bank N.A. agreed to act as syndication agent on the 2006 Term Loan Facility. Revlon Inc. -- http://www.revloninc.com/-- is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's brands include Revlon(R), Almay(R), Vital Radiance(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). Headquartered in New York, Revlon Consumer Products Corp. is a worldwide cosmetics, skin care, fragrance, and personal care products company. The company is a wholly owned subsidiary of Revlon Inc. -- http://www.revloninc.com/-- which in turn is majority-owned by MacAndrews and Forbes, which is wholly-owned by Ronald O. Perelman. * * * As reported in the Troubled Company Reporter on Oct. 2, 2006, Moody's Investors Service reported that it lowered Revlon Consumer Products Corporation's long-term ratings, including the corporate family rating to Caa1 from B3. Moody's affirmed the company's speculative grade liquidity rating of SGL-4. As reported in the Troubled Company Reporter on Sept. 27, 2006, Standard & Poor's Ratings Services lowered all of its ratings on New York City-based Revlon Consumer Products Corp., including its corporate credit rating, to 'CCC+' from 'B-'. S&P said outlook is negative. REVLON INC: To Launch $100 Million Rights Offering -------------------------------------------------- Revlon Inc. intends to launch a $100 million rights offering that would allow stockholders to purchase additional shares of its Class A common stock. The proceeds of the equity issuance will be used to reduce debts. Pursuant to the rights offering, the company would distribute at no charge to each stockholder of record of its Class A and Class B common stock, as of the close of business on Dec. 11, 2006, transferable subscription rights to enable the stockholders to purchase shares of Class A common stock at a subscription price to be determined by a committee of Revlon's independent directors and based on market conditions at the time of the rights offering. Pursuant to an over-subscription privilege in the rights offering, each rights holder that exercises its basic subscription privilege in full may also subscribe for additional shares at the same subscription price per share, to the extent that other stockholders do not exercise their subscription rights in full. MacAndrews & Forbes, Revlon's parent company, which is wholly- owned by Ronald O. Perelman, has agreed to purchase its pro rata share of the $100 million of Class A common stock covered by the rights offering. Additionally, MacAndrews & Forbes will backstop up to $75 million of the rights offering by purchasing the number of remaining shares of Class A common stock offered but not purchased by other stockholders. The Company also disclosed that, although MacAndrews & Forbes is entitled to an over-subscription right, it has agreed not to exercise the right to maximize the shares available for purchase by other stockholders. The rights offering will be conducted via an existing effective shelf registration statement. Approximately $50 million of the proceeds from the rights offering are expected to be used to redeem approximately $50 million principal amount of the 8-5/8% Senior Subordinated Notes due 2008 of Revlon Consumer Products Corporation, the company's wholly-owned operating subsidiary, with the remainder of the proceeds to be used to repay indebtedness outstanding under RCPC's $160 million multi-currency revolving credit facility, after paying fees and expenses related with the rights offering. The shares to be sold to MacAndrews & Forbes will be sold in reliance on Rule 506 under the Securities Act of 1933, as amended. The proposed issuance of shares to MacAndrews & Forbes will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The company expects to consummate the rights offering in January 2007 subject to market and other customary conditions, at which time RCPC's existing $87 million line of credit from MacAndrews & Forbes will be amended to provide for the continuation of $50 million of the line of credit through Jan. 31, 2008, on substantially the same terms. Revlon Inc. -- http://www.revloninc.com/-- is worldwide a cosmetics, skin care, fragrance, and personal care products company. The Company's brands include Revlon(R), Almay(R), Vital Radiance(R), Ultima(R), Charlie(R), Flex(R), and Mitchum(R). At Sept. 30, 2006, Revlon Inc.'s balance sheet showed $925 million in total assets and $2.150 billion in total liabilities, resulting in a $1.225 billion stockholders' deficit. RESIDENTIAL ASSET: S&P Junks Rating on Class M-I-3 Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-I-3 from Residential Asset Securities Corp. Series 2002-KS2 Trust to 'CCC' from 'B' and removed it from CreditWatch, where it was placed with negative implications June 6, 2006. According to Standard & Poor's surveillance practices, classes of certificates or notes from RMBS transactions with ratings lower than 'B-' are no longer eligible to be on CreditWatch. In addition, the rating on class M-II-2 from series 2003-KS2 was lowered to 'BBB' from 'A+' and placed on CreditWatch negative, and the ratings on three other classes from series 2002-KS2 and 2003-KS1 were placed on CreditWatch negative. Concurrently, 15 other ratings from these three transactions were affirmed. The lowered ratings and CreditWatch placements on the series 2002- KS2 and 2003-KS2 certificates were based on erosion of credit support due to mortgage loan pool performance that has allowed overcollateralization percentages to fall below their target levels. In addition, the amount of delinquencies in the pools suggests that this performance trend could continue. As of the Nov. 25, 2006, distribution date, cumulative losses in the affected pools ranged from 1.65% to 4.14% of the original pool balances. Ninety-plus-day delinquencies ranged from 13.74% to 35.51% of the current pool balances. The CreditWatch placements on the series 2003-KS1 certificates were based on recent losses that have caused the o/c percentage to fall below its target and on the level of delinquencies in the pool. As of the Nov. 25, 2006,distribution date, the o/c level was approximately $6.37 million, or 0.42% of the original pool balance, compared with an o/c target of 0.5%. Additionally, 36.88% of the pool balance is 90 days or more delinquent, in foreclosure, or REO. Standard & Poor's will closely monitor the performance of the classes with ratings on CreditWatch. If pool performance improves to a point at which credit support percentages increase, Standard & Poor's will affirm these ratings and remove them from CreditWatch. Conversely, if credit support percentages continue to decline, negative rating actions can be expected. The affirmations are based on credit support levels that are sufficient to maintain the current ratings on the certificates. Credit support for these transactions is provided by a combination of excess interest, o/c, and subordination. The underlying collateral for these transactions consists primarily of fixed- and adjustable-rate, first-lien, 30-year mortgages on one- to four-family homes. Residential Funding Corp. acquired the loans in these transactions in accordance with its AlterNet program. Residential Funding established this program primarily to purchase mortgage loans made to borrowers with less- then-perfect credit histories or higher debt-to-income ratios, or those who present certain other risks to investors. Rating Lowered and Removed from Creditwatch Negative RASC Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-KS2 M-I-3 CCC B/Watch Neg Rating Lowered and Placed on Creditwatch Negative RASC Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-KS2 M-II-2 BBB/Watch Neg A+ Ratings Placed on Creditwatch Negative RASC Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-KS2 M-I-2 A/Watch Neg A 2002-KS2 M-II-2 A/Watch Neg A 2003-KS1 M-2 A/Watch Neg A Ratings Affirmed RASC Trust Series Class Rating ------ ----- ------ 2002-KS2 A-I-5, A-I-6 AAA 2002-KS2 A-IIA, A-IIB AAA 2002-KS2 M-I-1, M-II-1 AA 2003-KS1 A-I, A-II AAA 2003-KS1 M-1 AA 2003-KS2 A-I-5, A-I-6 AAA 2003-KS2 M-I-1, M-II-1 AA 2003-KS2 M-I-2 A+ 2003-KS2 M-I-3 BBB+ SAINT VINCENTS: Can Access Sun Life's Collateral Until March 2 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York, with the consent of Sun Life Assurance Company of Canada and Sun Life Assurance Company of Canada (U.S.), extends the termination date for Saint Vincent Catholic Medical Centers of New York and its debtor-affiliates' use of the Sun Life Cash Collateral through and including March 2, 2007. On January 1, February 1, and March 1, 2007, the Debtors will pay to Sun Life a $368,404 monthly interest due under the Loan Documents. The Official Committee of Unsecured Creditors, and Sun Life have also stipulated to extend the reservation of rights period, through and including March 2, 2007, with respect to: (a) the Westchester Notes; (b) the Westchester Collateral; and (c) all claims, challenges, causes of action and objections related to the Westchester Notes and Collateral. As reported in the Troubled Company Reporter, Saint Vincent Catholic Medical Centers of New York issued $78.3 million in promissory notes to the order of Sun Life Assurance Company of Canada and Sun Life Assurance Company of Canada (U.S.) prior to its bankruptcy filing. The Promissory Notes are secured by first priority liens to the Debtors' various properties. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 40 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SARM MORTGAGE: Fitch Assigns Low-B Ratings to $1.6 Million Certs. ----------------------------------------------------------------- Structured Adjustable Rate Mortgage Loan Trust's $181.8 million mortgage pass-through certificates, series 2006-11, which closed Nov. 30, 2006, are rated by Fitch Ratings: -- $172.4 million classes 2-A1, 2-A2, 3-A1, 3-A2 and R 'AAA'; -- $4.0 million class B1-II, 'AA'; -- $2.4 million class B2-II 'A'; -- $1.4 million class B3-II, 'BBB'; -- $912,000 class B4-II 'BB'; -- $729,000 class B5-II 'B'. The Group II 'AAA' rating on the senior certificates reflects the 5.5% total credit enhancement provided by the 2.20% class B1-II, the 1.3% class B2-II, the 0.75% class B3-II, the privately offered 0.5% class B4-II, and the privately offered 0.4% class B5-II, as well as the non-rated, privately offered 0.35% class B6-II. Fitch believes that the amount of credit enhancement will be sufficient to cover credit losses, including limited bankruptcy, fraud and special hazard losses. In addition, the ratings reflect the quality of the mortgage collateral, the strength of the legal and financial structures, and the master servicing capabilities of Aurora Loan Services, Inc. and the primary servicing capabilities of Countrywide Home Loan Servicing LP and Aurora Loan Services LLC. Group II consists of 313 adjustable-rate, conventional, first lien residential mortgage loans, substantially all of which have original terms to stated maturity of 30 years. As of the Nov. 1, 2006 cut-off date, the mortgages have an aggregate principal balance of approximately $182,477,097. The Group II mortgage pool has a weighted average original loan-to-value ratio of 73.31%, a weighted average coupon of 6.68%, and a weighted average remaining term to maturity of 359. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The mortgage loans were originated by various originators or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines. The largest percentages of originations are Countrywide Home Loans Servicing LP and Lehman Brothers Bank, FSB. SASCO, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. SATELLITE SECURITY: Sept. 30 Balance Sheet Upside-Down by $5.9MM ---------------------------------------------------------------- Satellite Security Corp. reported a $3.4 million net loss on $419,632 of revenues for the third quarter ended Sept. 30, 2006, compared with a $373,705 net loss on $263,431 of revenues for the same period in 2005. At Sept. 30, 2005, the company's balance sheet showed $2.0 million in total assets and $7.9 million in total liabilities, resulting in a $5.9 million total stockholders' deficit. The company's revenues are derived from two sources, the sale of hardware that uses Global Positioning System and ReFLEX paging technology, and the provisioning of asset tracking and related monitoring services. Revenues increased due to increased hardware sales partially offset by decreased monitoring service revenue from the company's Monitoring and Support Center. Cost of revenues were $355,764 or 85% for the three months ended Sept. 30, 2006, compared to $186,132 or 71% for the same period in 2005. Cost of revenues as a percentage of revenues increased $169,632 due to product mix, as a higher percentage of revenues were derived from hardware sales during the period, combined with higher hardware costs from third party manufacturers, and reduced leverage on fixed costs at the Monitoring and Support Center. Contributing to the increase in net loss, in addition to the above factors, is the $661,247 increase in operating expense and the $3.1 million increase in interest expense, offset by a $722,097 non-cash interest income from net change in fair value of common stock warrants and embedded derivative liability. Operating expenses increased in the third quarter ended Sept. 30, 2006 primarily due to the $600,658 increase in general and administrative expenses. The increases were primarily due to increased audit, consulting and legal fees, partly as a result of the company becoming a public company, as well as additional payroll to support the administrative and finance functions. The increase in interest expense is primarily due to non-cash expenses which were incurred as a result of the valuation of the warrants and embedded derivative liabilities mainly related to the Secured Note Financing with a group of investors. Secured Note Financing On July 13, 2006 the company entered into a secured convertible note and warrant financing transaction with a group of unrelated accredited investors in which the company issued an aggregate of: (i) $3.3 million of Secured Convertible Promissory Notes, (ii) 18,006,221 Series A Warrants exercisable at $0.13 per share and, (iii) 18,006,221 Series B Warrants exercisable at $0.143 per share. The Series A and Series B warrants expire on July 13, 2011. The amounts outstanding under the Secured Convertible Promissory Notes bear interest at the rate of 10% per annum, payable on a quarterly basis. The promissory notes mature on July 13, 2009 and are secured by a lien on substantially all of the company's assets, including a pledge of its shares in Satellite Security Systems Inc. At the election of the holders of the promissory notes, any outstanding principal and interest due may be converted into shares of the company's common stock at a set conversion price. The company calculated the fair value of the embedded conversion feature on July 13, 2006 using the Black-Scholes valuation model. The fair value of $3,072,343 was recorded as a debt discount, which reduced the carrying amount of the promissory notes. To determine the liability related to the warrants, the company calculated the fair value of the warrants on July 13, 2006 using the same Black-Scholes valuation model. The fair value of $2,924,024 was also recorded as a debt discount. Combined with deferred debt issuance costs, the total debt discount attributable to the warrants and embedded conversion feature of $5,996,367 exceeded the principal amount of the promissory notes by $2,696,397. Accordingly this excess amount was charged directly to interest expense on July 13, 2006. The company re-measured the fair value of the embedded conversion feature at Sept. 30, 2006 using the Black-Scholes valuation model This resulted in a fair market value for the embedded conversion feature of $3,259,600. The increase in the fair market value of the embedded conversion feature resulted in a non-cash interest expense of $187,257. Combined with non-cash interest income related to the re-measurement of the fair value of the warrants, the company recorded non-cash interest income of $722,097 in the quarter ended Sept. 30, 2006 related to the net change in the fair market value of the common stock warrants and embedded derivative liability. Liquidity Resources Net cash provided by financing activities for the nine-month period ended Sept. 30, 2006 was $3,645,067, primarily from the issuance of the $3.3 million secured convertible promissory notes. Net cash used in operating activities was $2,638,852 while net cash used in investing activities was $62,219. The balance of $943,996 represented increase in cash for the nine-month period. Full-text copies of the company's consolidated financial statements for the third quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?164d Going Concern Doubt Tauber & Balser, P.C, in Atlanta, Ga., raised substantial doubt about Celtron International, Inc., nka Satellite Security Systems, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring operating losses, negative cash flows from operations, negative working capital, and shareholders' deficiency. About Satellite Security Corp. Satellite Security Corporation -- http://www.satsecurity.com/-- through its subsidiary, Satellite Security Systems provides GPS- based solutions to ensure the security of personnel, vehicles and equipment, while automating and streamlining business processes in order to reduce costs. The cornerstone of the S3's offering, GlobalGuard, is a state-of-the-art GPS tracking system that provides unsurpassed reliability, power, and flexibility. SCIENT INC: Court Sets Dec. 20 Admin. Claim Distribution Hearing ---------------------------------------------------------------- The Honorable Arthur J. Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Dec. 20, 2006, at 9:30 a.m., to consider Scient Inc. and its debtor-affiliates' motion seeking entry of an order: a) authorizing the Debtors to make a distribution to holders of allowed administrative claims and, to the extent funds are available, to priority claims; b) dismissing the Debtors' chapter 11 cases effective upon the filing of a final certificate of distribution with the Court; and c) granting related relief, including, but not limited to, the pooling of the Debtors' assets and liabilities for the purpose of making the distribution. The hearing will be held at Alexander Hamilton Custom House, One Bowling Green, in New York City. Objections to the motion are due on Dec. 15, 2006, with copies served on these parties: 1) Attorneys for the Debtors Greenberg Traurig LLP Attn: Howard J. Berman, ESq. 200 Park Avenue New York 10166 2) Attorneys for the Official Committee of Unsecured Creditors Arent Fox PLLC Attn: Andrew I. Silfen, Esq. and Leah M. Eisenberg, Esq. 1675 Broadway New York 10019-5820 3) The Office of the United States Trustee Attn: Richard C. Morrissey, Esq., 21st Floor 33 Whitehall St. New York 10004 About Scient Inc. Headquartered in New York, Scient Inc. provides technology strategy consulting, systems architecture, and infrastructure development, as well as certain industry specific solutions. It offers its services to design, develop, and deploy advanced eBusiness solutions for 1000 companies and other corporate users of information technology. On July 16, 2002, Scient and some of its subsidiaries each filed a Chapter 11 petition (U.S. Bankr. S.D.N.Y. Case Nos. 02-13455 through 02-13458). On Sept. 13, 2002, the Court approved the sale of substantially all of the Debtors' assets to SBI and Company for $10,570,000 in cash plus a credit for all principal amounts due SBI under a $4.9 million debtor-in-possession financing agreement dated July 16, 2002, and approved by the Court on dated Aug. 15, 2002. SCOTTISH RE: Posts $30.5 Million Net Loss in 2006 Third Quarter --------------------------------------------------------------- Scottish Re Group Limited reported a net loss of $30.5 million for the three months ended Sept. 30, 2006, as compared with a net income of $31.9 million the prior year period. At Sept. 30, 2006, the company's consolidated balance sheet showed $13.83 billion in total assets, $12.39 billion in total liabilities, $9.3 million in minority interest, $143.5 million in Mezzanine equity, and $1.28 billion in total shareholders' equity. The net operating loss was $24.0 million for the three months ended Sept. 30, 2006 as compared to net operating earnings of $32.6 million for the prior year period. "The company has been in a very difficult period the past several months, but has continued to maintain its focus on the core business. Excluding the expected one-off expenses related to our current situation and the unusually high tax expense for the quarter, the third quarter results reflect an underlying core profitability that is within our expectations. It is important to note that our mortality continues to be in line with expectations," said Paul Goldean, Chief Executive Officer of Scottish Re Group Limited. Total revenues for the three months ended Sept. 30, 2006 increased to $611.3 million from $563.7 million for the prior year period, an increase of 8%, primarily due to the increase in net investment income in the third quarter ended Sept. 30, 2006 to $162.4 million compared to $92.1 million in the same period in 2005. The increase in investment income is primarily due to the income on higher total investments from the new securitization structures including Ballantyne Re, Orkney II and HSBC II, combined with higher interest rates. Excluding realized gains and losses and the change in value of the embedded derivatives, total revenues for the three months ended Sept. 30, 2006 increased to $618.3 million from $565.0 million for the prior year period, an increase of 9%. Total benefits and expenses increased to $618.2 million for the three months ended Sept. 30, 2006, from $535.9 million for the prior year period, an increase of 15%. The increase was principally due to $54.1 million higher collateral finance facilities expenses and $21.6 million higher claims and other policy benefits due to adjustments arising from updated cedant reporting and other reserve increases. For the three months ended Sept. 30, 2006, the company had a pre- tax loss of $6.8 million before minority interest as compared to a pre-tax profit of $27.8 million for the prior year period. Income tax expense in the third quarter ended Sept. 30, 2006 was $20.8 million compared to an income tax benefit of $6.7 million in the same period in 2005. The change in the effective tax rate in the third quarter ended Sept. 30, 2006 compared to the same period in 2005 is primarily related to a $30.1 million valuation allowance established on deferred tax assets. About Scottish Re Scottish Re Group Limited -- http://www.scottishre.com/-- is a global life reinsurance specialist. Scottish Re has operating businesses in Bermuda, Grand Cayman, Guernsey, Ireland, Singapore, the United Kingdom and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.), Inc. Scottish Re Capital Markets, Inc., a member of Scottish Re Group Limited, is a registered broker dealer that specializes in securitization of life insurance assets and liabilities. SCOTTISH RE: Fitch Puts Ratings on Rating Watch Evolving -------------------------------------------------------- Fitch revised the Rating Watch on Scottish Re Group Ltd.'s ratings to Evolving from Negative, after the notification that SCT has successfully amended the bank agreement which allows the transfer of funds from affiliate Scottish Annuity & Life Insurance Ltd. to SCT. On Monday funds are expected to be transferred to the trustee to repay $115 million of senior convertible notes that are expected to be put to the company on Dec. 6, 2006. This notification satisfies Fitch's most immediate near-term concern. The ratings being placed on Rating Watch Evolving reflects the pending agreement with MassMutual Capital Partners LLC and Cerberus Capital Management, L.P., which is expected to result in a new equity investment into the company of $600 million. Fitch expects to review SCT's financial profile as well as business prospects and franchise upon the successful close of the agreement. While Fitch views the agreement and the potential $600 million investment positively, SCT continues to face business and operating challenges and uncertainties, including the outcome of the shareholder vote. As such, the Rating Watch could be revised positively or negatively or the ratings could be affirmed with a Stable Outlook as the process develops. These ratings were placed on Rating Watch Evolving from Rating Watch Negative: * Scottish Annuity & Life Insurance Company (Cayman) Limited --IFS at 'BBB'. * Scottish Re (U.S.) Inc. --IFS at 'BBB'. * Scottish Re Limited --IFS at 'BBB'. * Scottish Re Group Limited -- Issuer Default Rating at 'BB'; -- 4.5% $115 million senior convertible notes at 'BB-'; -- 5.875% $142 million hybrid capital units at 'B+'; -- 7.25% $125 million non-cumulative perpetual preferred stock at 'B+'. SEARCHHELP INC: Sept. 30 Balance Sheet Upside-Down by $747,192 -------------------------------------------------------------- SearchHelp Inc. has filed its third quarter financial statements ended Sept. 30, 2006, with the Securities and Exchange Commission. For the three months ended Sept. 30, 2006, the company reported a $972,464 net loss on $109,838 of total revenues, compared with a $330,556 net loss on $1,157,045 of total revenues in the comparable quarter of 2005. At Sept. 30, 2006, the company's balance sheet showed $2,457,968 in total assets and $3,205,160 in total liabilities, resulting in a $747,192 stockholders' deficit. The company's September 30 balance sheet also showed strained liquidity with $515,789 in total current assets available to pay $1,578,358 in total current liabilities. Full-text copies of the company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1649 Going Concern Doubt Lazar, Levine and Felix LLP in New York raised substantial doubt about SearchHelp, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations, negative working capital and capital deficiency. About SearchHelp Inc. SearchHelp Inc. sells family oriented software through its subsidiary, FamilySafe Inc. and sells film and cameras through its subsidiary, E-Top-Pics Inc. SEA CONTAINERS: Wants To Employ Appleby Hunter as Special Counsel ----------------------------------------------------------------- Sea Containers, Ltd. and its debtor-affiliates ask the Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware for authority to employ Appleby Hunter Bailhache as their special counsel for Bermuda legal matters, nunc pro tunc to Oct. 15, 2006. Edwin S. Hetherington, vice president, general counsel, and secretary of Sea Containers Ltd., relates that Appleby has served as the Debtors' outside Bermudian counsel on matters including corporate and securities law and general litigation since 1974. Mr. Hetherington tells Judge Carey that that the firm's professionals have become very familiar with the Debtors and their business affairs, and have gained extensive experience in most aspects of the Debtors' general legal work and needs. Specifically, Appleby will: -- continue to advise and represent SCL in accordance to its prior representation; and -- advise and represent the Debtors with respect to SCL's Bermuda insolvency proceeding and other matters that may arise in the Debtors' Chapter 11 cases or the Bermuda proceeding in the ordinary course of operations. Appleby will be paid for its services based on the firm's customary hourly rates: Professionals Hourly Rate ------------- ----------- Partners $400 - $625 Associates $200 - $590 Paraprofessionals $125 - $260 The firm will also be reimbursed for necessary out-of-pocket expenses. Mr. Hetherington relates that Appleby has received a replenishing prepetition retainer with a remaining balance of $183,856 for providing the Debtors with representation on Bermuda legal matters prior to the Petition Date. In addition to the retainer, Appleby has also received $205,941 from the Debtors on account of services rendered regarding the Bermuda legal matters. Jennifer Yolande Fraser, Esq., a partner at Appleby, assures the Court that her firm does not hold any interest adverse to Debtors or their estates with respect to the matters on which it is to be employed. Ms. Fraser can be contacted at: Jennifer Y. Fraser, Esq. Appleby Hunter Bailhache Canon's Court, 22 Victoria Street P.O. Box HM 1179 Hamilton HM EX, Bermuda Tel: (441) 295-2244 Fax: (441) 292-8666 http://www.applebyglobal.com 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. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: NYSE ARCA to Remove Securities on December 12 ------------------------------------------------------------- The New York Stock Exchange Arca, Inc., notified the U.S. Securities and Exchange Commission that it intends to remove the entire Class A and Class B common shares of Sea Containers, Ltd., from listing and registration on the NYSE Arca at the opening of business on Dec. 12, 2006. The NYSE Arca believes that the securities are no longer suitable for continued listing and trading after a review by the NYSE Regulation indicated that SCL delayed the filing of its Form 10-K for Dec. 31, 2005 and certain 2006 Form 10-Q filings with the SEC. SCL was unable to give any assurance as to when the delayed reports may be available for filing because of, among others, SCL's focus on developing a restructuring plan. The NYSE had previously determined that the Securities should be suspended from trading and filed with the SEC an application to remove the Securities from listing and registration on the NYSE Arca. SCL was notified of the decision on September 29 and had a right to appeal the determination to de-list its Securities to a Committee of the Board of Directors, provided that it file a written request for a review with the Secretary of the NYSE Arca. SCL did not do so within the specified time period and the Securities were suspended from trading on Oct. 3, 2006. The NYSE Arca also intends to remove these four classes of senior notes from their listing: (1) 10-3/4% Series B Senior Notes due October 15, 2006, (2) 7-7/8% Series B Senior Notes due February 15, 2008, (3) 12-1/2% Senior Notes due December 1, 2009, and (4) 10-1/2% Senior Notes due May 15, 2012. 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. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SECURITIZED ASSET: DBRS Rates $9.5MM Class B-4 Certs. at BB (high) ------------------------------------------------------------------ Dominion Bond Rating Service assigned these ratings to the Mortgage Pass-Through Certificates, Series 2006-WM3 issued by Securitized Asset Backed Receivables LLC Trust 2006-WM3. -- $413.5 million Class A-1 rated at AAA -- $315.9 million Class A-2 rated at AAA -- $85.7 million Class A-3 rated at AAA -- $32.5 million Class M-1 rated at AA (high) -- $29.5 million Class M-2 rated at AA -- $17.5 million Class M-3 rated at AA (low) -- $31 million Class M-4 rated at A -- $14.5 million Class M-5 rated at A (low) -- $13.5 million Class B-1 rated at BBB (high) -- $9 million Class B-2 rated at BBB -- $8 million Class B-3 rated at BBB (low) - -$9.5 million Class B-4 rated at BB (high) The AAA ratings on the Class A Certificates reflect 18.40% of credit enhancement provided by the subordinate classes, initial overcollateralization and monthly excess spread. The AA (high) rating on Class M-1 reflects 15.15% of credit enhancement. The AA rating on Class M-2 reflects 12.20% of credit enhancement. The AA (low) rating on Class M-3 reflects 10.45% of credit enhancement. The "A" rating on Class M-4 reflects 7.35% of credit enhancement. The A (low) rating on Class M-5 reflects 5.90% of credit enhancement. The BBB (high) rating on Class B-1 reflects 4.55% of credit enhancement. The BBB rating on Class B-2 reflects 3.65% of credit enhancement. The BBB (low) rating on Class B-3 reflects 2.85% of credit enhancement. The BB (high) rating on Class B-4 reflects 1.90% of credit enhancement. The ratings on the Certificates also reflect the quality of the underlying assets and the capabilities of HomEq Servicing Corporation as Servicer, as well as the integrity of the legal structure of the transaction. Deutsche Bank National Trust Company will act as Trustee. The Trust will enter into an interest rate swap agreement with Barclays Bank PLC. The Trust will pay to the Swap Provider a fixed payment of 5.275% per annum in exchange for a floating payment at LIBOR from the Swap Provider. In addition, the LIBOR Certificate holders will receive the benefits of an interest rate cap agreement with Barclays Bank PLC with a strike rate of 5.350%. Interest and principal payments collected from the mortgage loans will be distributed on the 25th day of each month commencing in December 2006. Interest will be paid first to the Class A Certificates on a pro rata basis and then sequentially to the subordinate Certificates. Until the step-down date, principal collected will be paid exclusively to the Class A Certificates unless their respective note balances have been reduced to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among all classes on a pro rata basis. In addition, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 3.80% of the then-current balance of the mortgage loans. All of the mortgage loans in the Underlying Trust were originated or acquired by WMC Mortgage Corp. As of the cut-off date, the aggregate principal balance of the mortgage loans is $998,949,119. The weighted average mortgage rate is 8.236%, the weighted average FICO is 645 and the weighted average original loan-to-value ratio is 82.45%, without taking into consideration the combined loan-to-value on the piggybacked loans. SECURITIZED ASSET: Fitch Rates $9MM Class B-4 Certificates at BB+ ----------------------------------------------------------------- Fitch rates the Securitized Asset Backed Receivables Trust mortgage pass-through certificates, series 2006-WM3, which closed on Dec. 1, 2006: -- $815.14 million class A-1 through A-3 'AAA'; -- $32.47 million class M-1 'AA+'; -- $46.95 million class M-2 'AA'; -- $17.48 million class M-3 'AA'; -- $30.97 million class M-4 'A+'; -- $14.49 million class M-5 'A-'; -- $13.49 million class B-1 'BBB+'; -- $8.99 million class B-2 'BBB'; -- $7.99 million class B-3 'BBB-'; and, -- $9.49 million privately offered class B-4 'BB+'. The 'AAA' rating on the senior certificates reflects the 18.4% total credit enhancement provided by the 3.25% class M-1, the 2.95% class M-2, the 1.75% class M-3, the 3.1% class M-4, the 1.45% class M-5, the 1.35% class B-1, the 0.9% class B-2, the 0.8% class B-3, the 0.95% privately offered class B-4, and the 1.9% initial and target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of HomEq Servicing Corporation as servicer and Deutsche Bank National Trust Company as Trustee. The collateral pool consists of 4,780 of adjustable-rate and fixed-rate, first and second lien mortgage loans with a cut-off date pool balance of $998,949,119. Approximately 23.12% of the mortgage loans are fixed-rate mortgage loans, 76.88% are adjustable-rate mortgage loans, and 11.64% are second lien mortgage loans. The weighted average loan rate is approximately 8.236%. The weighted average remaining term to maturity is 336 months. The average principal balance of the loans is approximately $208,985. The weighted average combined loan-to-value ratio is 82.45%. The properties are primarily located in California, Florida and New York. WMC is a mortgage banking company incorporated in the state of California. WMC was owned by a subsidiary of Weyerhaeuser Company until May 1997 when it was sold to WMC Finance Co., a company owned principally by affiliates of Apollo Management, L.P., a private investment firm. On June 14, 2004, GE Consumer Finance acquired WMC Finance Co. SENSATA TECHNOLOGIES: Revenues Rise 11% to $298MM in 2nd Quarter ---------------------------------------------------------------- Sensata Technologies B.V. reported the results of its operations for the quarter ended June 30, 2006. Revenue for the quarter was $298 million, increasing 11% from the quarter ended June 30, 2005. Adjusted EBITDA was $81 million, $3 million greater than the first quarter, but $2 million less than the quarter ended June 30, 2005. "Our results for the Second Quarter were in line with our expectations for the period. Revenue in the Sensors business was strong as we began to realize the benefits of our investment in the Occupant Weight Sensor technology. Additionally, as planned for the year, we saw some decrease in margin levels relative to 2005 due to additional manufacturing costs of transitioning new products into production and an increase in corporate costs associated with the move to a stand-alone company. We continue to track in line with our plans for 2006," said Tom Wroe, Chairman, President and Chief Executive Officer. Highlights of the Second Quarter 2006 Revenues for the quarter ended June 30, 2006 were a record $298 million, an increase of one% over the quarter ended March 31, 2006, and 11% over the quarter ended June 30, 2005 due to strength in the Sensors business, primarily driven by increased sales of new products including Occupant Weight sensors and Mass Air Flow sensors. Adjusted EBITDA increased $3 million from the first quarter related to increased contributions from new products and the positive impact from cost reduction programs. Compared to the Second Quarter of 2005, EBITDA was down $2 million due to higher corporate level expenses. Cash at June 30, 2006, was $52 million and the Company's line of credit remained undrawn. Additionally, capital expenditures were $12 million for the second quarter of 2006, compared with $10 million for the first quarter, and $9 million in the second quarter 2005 as the Company continued to invest in new equipment to support growth. Highlights of the First Six Months of 2006 Revenues increased 10% over the same period in the prior year to a record $592 million. The increase in revenue was driven by growth in our Sensors products including new products and strong sales of our core pressure sensors. Adjusted EBITDA was $159 million which was $2 million less than the same period last year due to higher corporate level expenses. Business Outlook "The business outlook remains strong. Despite the challenges facing the Big 3 US auto makers, our global footprint and continuous investment in new technologies has positioned us well for delivering on our plans," Mr. Wroe added. Headquartered in Attleboro, Massachusetts, Sensata Technologies B.V. -- http://www.sensata.com/-- designs and manufactures sensors and controls across a range of markets and applications. Sensata has business and technology development centers in Attleboro, Massachusetts, Holland and Japan and manufacturing operations in Brazil, China, Korea, Malaysia, and Mexico, as well as sales offices around the world. Sensata Technologies employs approximately 5,400 people world-wide. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service, in connection with its implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. manufacturing sector, confirmed the B2 Corporate Family Rating for Sensata Technologies B.V., as well as the Caa1 rating on the company's $301.6 million of Senior Subordinate Notes Due 2016. Those debentures were assigned an LGD6 rating suggesting noteholders will experience a 93% loss in the event of default. SFG LP: Chapter 7 Trustee Hires McGinnis Lochridge as Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas allowed Randolph N. Osherow, the Chapter 7 Trustee in SFG L.P. and its debtor-affiliates' estate, to employ McGinnis, Lochridge & Kilgore L.L.P. as his counsel. McGinnis Lochridge will assist the Trustee in determining the assets of the estate and liquidate those assets for distribution in accordance with the terms and priorities of the Bankruptcy Code. In addition, the firm will assist the Trustee in defending or prosecuting related matters. Steve Turner, a McGinnis Lochridge partner, will bill the Debtor $325 per hour for his work. Mr. Turner discloses other firm's professionals bill: Designation Hourly Rate ----------- ----------- Other Attorneys $125 - $325 Legal Assistants $40 - $115 Mr. Turner assures the Court that his firm does not represent any interest adverse to the Debtors' estates. Mr. Turner can be reached at: McGinnis, Lochridge & Kilgore, L.L.P. 600 Congress Avenue, Ste. 2100 Austin, TX 78701 SFG LP -- http://sandiafood.com/-- operates as a franchisee and operator of "Johnny Carino's" restaurants in Texas, New Mexico and Arizona. The Company filed for chapter 11 protection on Aug. 4, 2006 (Bankr. W.D. Tex. Case No. 06-11207). When the Debtor filed for protection from its creditors, it estimated its assets and debts between $10 million and $50 million. Sandia Food Group, Inc., its general partner, filed for chapter 11 protection on Aug. 7, 2006 (Bankr. W.D. Tex. Case No. 06-11212). On Aug. 8, 2006, three more affiliates filed chapter 11 petitions in the same Court. On Oct. 23, 2006, the Debtors' consolidated chapter 11 cases were converted into chapter 7 proceeding (Bankr. W.D. Tex. Case No. 06-11207). Randolph N. Osherow was appointed as the Debtors' chapter 7 Trustee. SOUNDVIEW HOME: Moody's Rates Class M-10 Certificates at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned an Aaa rating to the senior certificates issued by SoundView Home Loan Trust 2006-NLC1, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by First NLC Financial Services, LLC originated adjustable-rate and fixed-rate subprime mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection from subordination, overcollateralization, excess spread, an interest rate cap agreement and an interest rate swap agreement. Moody's expects collateral losses to range from 5.7% to 6.2%. Wells Fargo Bank, N.A. and Ocwen Loan Servicing, LLC will service the loans. Wells Fargo Bank, N.A. will serve as master servicer of the loans. Moody's assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 for subprime residential mortgage loans. Moody's has also given Ocwen a servicer quality rating of SQ2- for subprime residential mortgage loans. These are the rating actions: * Issuer: Soundview Home Loan Trust 2006-NLC1 * Asset-Backed Certificates, Series 2006-NLC1 Class A-1, Assigned Aaa Class A-2, Assigned Aaa Class A-3, Assigned Aaa Class A-4, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa1 Class M-8, Assigned Baa2 Class M-9, Assigned Baa3 Class M-10, Assigned Ba1 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. STRUCTURED ASSET: Fitch Pares Rating on Class M4 Certs. to BB ------------------------------------------------------------- Fitch Ratings has taken rating actions on Structured Asset Security Corp. Amortizing Residential Collateral Trust's residential mortgage-backed certificates: Series 2002-BC8: -- Classes A1, A3, AIO, ASIO affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 downgraded to 'BB+' from 'BBB+'; and -- Class M4 downgraded to 'BB' from 'BBB'. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $100.85 million of outstanding certificates. CE is in the form of subordination, overcollateralization and excess spread. The negative rating actions, affecting approximately $5.37 million of outstanding certificates, reflect deterioration in the relationship between CE and expected losses due to higher- than-expected delinquencies and losses as well as OC below its target amount. Approximately 36% of the pool is more than 60 days delinquent. The OC amount is currently $1,129,005 below its target amount of $6,343,090. In five of the past six months, the excess spread has not been sufficient to cover the monthly losses incurred. Cumulative losses as a percent of the original collateral balance are 1.5%. The transaction is seasoned 49 months and the pool factor is 9%. The mortgage pool consists of fixed and adjustable rate, fully amortizing and balloon, first and second lien conventional residential mortgage loans having an original term of no more than 30 years. The mortgage loans were originated or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines and are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. Fitch will continue to closely monitor this transaction. STRUCTURED ASSET: Fitch Cuts Rating Class B2 Certificates to BB- ---------------------------------------------------------------- Fitch rates Structured Asset Security Corp.'s residential mortgage-backed certificates: Series 2003-BC1: -- Class M1 upgraded to 'AAA' from 'AA+'; -- Class M2 affirmed at 'A+'; -- Class B1 downgraded to 'BBB-' from 'BBB'; and, -- Class B2 downgraded to 'BB-' from 'BBB-'. The affirmation reflects an adequate relationship of credit enhancement to future loss expectations and affects approximately $15.6 million of outstanding certificates. CE is in the form of subordination, overcollateralization and excess spread. The negative rating actions, affecting approximately $17.3 million of outstanding certificates, reflect deterioration in the relationship between CE and expected losses due to higher- than-expected delinquencies and losses as well as OC below its target amount. Approximately 51% of the pool is more than 60 days delinquent. The OC amount is currently $4,002,449 below its target amount of $10,592,907. In five of the past six months, the excess spread has not been sufficient to cover the monthly losses incurred. Cumulative losses as a percent of the original collateral balance are 7.8%. The upgrade reflects an improvement in the relationship between CE and future loss expectations and affects approximately $12.9 million of outstanding certificates. Even though OC is currently below its target amount, Fitch expects the trigger to fail for the foreseeable future which will prevent the OC target from stepping down. As the bonds pay sequentially, this will help protect the most senior certificates. The CE level for class M1 has increased by more than three times the original level since the closing date. The transaction is seasoned 45 months and the pool factor is 24%. The mortgage pool consists of closed-end, first lien, fixed and adjustable rate, fully amortizing and balloon mortgage loans. At origination all of the loans had been modified one or more times. The mortgage loans were acquired by various subsidiaries of Household Finance Corporation and are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. Select Portfolio Servicing, Inc., rated 'RPS2' by Fitch, is the primary servicer. Fitch will continue to closely monitor this transaction. TERWIN MORTGAGE: DBRS Puts Low-B Ratings on Four Class Certs. ------------------------------------------------------------- Dominion Bond Rating Service upgraded one class, downgraded four classes and placed two classes Under Review with Negative Implications from five Terwin Mortgage Trust, Asset-Backed transactions. The upgrade of the $14,155,069 Asset-Backed Certificates, TMTS Series 2004-18SL, Class I-M-2 to AAA from "A" as the result of the high level of credit enhancement. These downgrades are the result of the increased 90+ days delinquency pipeline relative to the available level of credit enhancement. In the three mentioned transactions, overcollateralization did not reach their targets due to insufficient excess spread. The mortgage loans consist of 100% of fixed-rate second lien mortgage loans, which are subordinate to senior lien mortgage loans on the respective properties. The mortgage loans in the Underlying Trusts were acquired by Terwin Advisors LLC from a variety of sources. -- $9,300,000 Asset-Backed Certificates, TMTS Series 2004- 16SL, Class B-3 to B from BB -- $24,150,000 Asset-Backed Certificates, TMTS Series 2004- 18SL, Class I-B-4 to B from BB -- $19,662,000 Asset-Backed Certificates, TMTS Series 2005- 5SL, Class B-4 to BB (low) from BB (high) -- 18,038,000 Asset-Backed Certificates, TMTS Series 2005-5SL, Class B-5 to B from BB These ratings were placed Under Review with Negative Implications as a result of the increased 90+ days delinquency pipeline relative to the available level of credit enhancement. The mortgage loans consist primarily of adjustable-rate and fixed-rate mortgage loans that are secured by first liens on residential properties. The mortgage loans in the Underlying Trusts were acquired by Terwin Advisors LLC from a variety of sources. -- $2,208,000 Asset-Backed Certificates, TMTS Series 2004- 7HE, Class B-3 -- $3,285,000 Asset-Backed Certificates, TMTS Series 2004- 9HE, Class B-3 TIMKEN CO: Gets $92.6 Million Subsidy from U.S. Customs ------------------------------------------------------- The Timken Company received approximately $92.6 million from the U.S. Customs under the U.S. Continued Dumping and Subsidy Offset Act for 2006. The company will apply the entire amount toward funding its U.S. pensions. CDSOA provides the authority for U.S. Customs to distribute antidumping duties to U.S. producers harmed by unfair trade that have continued to invest in their technology, equipment, and people. Headquartered in Canton, Ohio, The Timken Company (NYSE: TKR) -- http://www.timken.com/-- manufactures highly engineered bearings and alloy steels. It also provides related components and services such as bearing refurbishment for the aerospace, medical, industrial, and railroad industries. The Company has operations in 27 countries and employs 27,000 employees. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service confirmed The Timken Company's Ba1 Corporate Family Rating and the Ba1 rating on the company's $300 Million Unsecured Medium Term Notes Series A due 2028 in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. TRIGEM COMPUTER: Earns KRW243-Mil. in Nine Months Ended Sept. 30 ---------------------------------------------------------------- TriGem Computer Inc. posted KRW243,229,870 of net income for nine months ended Sept. 30, 2006, Minjeong Jeon at Bloomberg News in Hong Kong, reports. The company had a KRW216,162,480 net loss during the same period in 2005. TriGem also reported KRW324,562,280 of net sales for the three quarters, much lower compared with KRW630,406,620 in 2005. The Korean PC maker previously sought to sell its assets at an auction. Human & Technology Co. emerged as the sole bidder, but the Suwon District Court, Bankruptcy Division, in South Korea, canceled the whole bidding process as that offer was found to be below market price. Human & Technology initially agreed to acquire TriGem's assets for KRW170,000,000,000 or US$177,000,000, according to Bloomberg News. However, Human & Technology noted that it would bring the price down should it find after due diligence that KRW30,000,000,000 of receivables from TriGem's subsidiaries would be difficult to collect. It has also rejected demands to guarantee employment. The Korean Court previously estimated TriGem's value at KRW200,000,000,000 to KRW250,000,000,000 -- US$209,000,000 to US$261,000,000. Human & Technology's reduced final offer for TriGem's assets was not disclosed for confidentiality reasons, Asia Pulse said. TriGem said in an e-mailed statement to Bloomberg that it will seek stay in the business on its own. TriGem's spokesman said creditors would hold open the possibility of selling their controlling stake if a company with a proper takeover price comes forward, Asia Pulse said. Headquartered in Ansan City, Kyunggi-Do, Korea, TriGem Computer Inc. -- http://www.trigem.com/-- manufactures desktop PCs, notebook PCs, LCD monitors, printers, scanners, other computer peripherals, and PIDs and supplies over four million PCs a year to clients all over the world. Il-Hwan Park, the Foreign Representative, filed a chapter 15 petition on Nov. 3, 2005 (Bankr. C.D. Calif. Case No. 05-50052). Charles D. Axelrod, Esq., at Stutman Treister & Glatt, P.C., represents the Foreign Representative in the United States. TriGem America Corporation, an affiliate of the Debtor, filed for chapter 11 protection on June 3, 2005 (Bankr. C.D. Calif. Case No. 05-13972). TriGem Texas, Inc., another affiliate of the Debtor, also filed for chapter 11 protection on June 8, 2005 (Bankr. C.D. Calif. Case No. 05-14047). (TriGem Bankruptcy News, Issue No. 9 Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) WAMU COMMERCIAL: Fitch Assigns Low-B Ratings to Six Certificates ---------------------------------------------------------------- WaMu Commercial Mortgage Securities Trust 2006-SL1, commercial mortgage pass-through certificates are rated by Fitch: -- $81,223,000 class A 'AAA'; -- $357,268,000 class A-1A 'AAA'; -- $511,360,300 class X* 'AAA'; -- $10,227,000 class B 'AA'; -- $14,702,000 class C 'A'; -- $10,227,000 class D 'BBB+'; -- $7,031,000 class E 'BBB'; -- $3,835,000 class F 'BBB-'; -- $7,671,000 class G 'BB+'; -- $2,557,000 class H 'BB'; -- $2,556,000 class J 'BB-'; -- $1,918,000 class K 'B+'; -- $1,918,000 class L 'B'; -- $639,000 class M 'B-'; and -- $9,588,300 class N 'NR'. * Notional amount and interest-only. 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 443 fixed- and floating-rate loans having an aggregate principal balance of approximately $511,360,300 as of the cutoff date. WASHINGTON MUTUAL: Moody's Rates Class B-13 Certificates at B2 -------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by WaMu Mortgage Pass-Through Certificates, Series 2006-AR17, and ratings ranging from Aa1 to B2 to the subordinate certificates in the deal. The securitization is backed by Washington Mutual Bank-originated adjustable-rate, negatively amortizing Alt-A mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Moody's expects collateral losses to range from 0.5% to 0.7%. Washington Mutual Bank will service the loans and Washington Mutual Mortgage Securities Corp. will act as administrative agent with respect to the servicing of the loans. These are the rating actions: * Issuer: WaMu Mortgage Pass-Through Certificates Series 2006- AR17 Trust * Securities: WaMu Mortgage Pass-Through Certificates, Series 2006-AR17 Class 1A, Assigned Aaa Class 1A-1A, Assigned Aaa Class 1A-1B, Assigned Aaa Class CA-1C, Assigned Aaa Class 1X-PPP,Assigned Aaa Class 2A, Assigned Aaa Class 2A-1B, Assigned Aaa Class 2X-PPP,Assigned Aaa Class B-1, Assigned Aa1 Class B-2, Assigned Aa1 Class B-3, Assigned Aa1 Class B-4, Assigned Aa2 Class B-5, Assigned Aa2 Class B-6, Assigned Aa3 Class B-7, Assigned A1 Class B-8, Assigned A2 Class B-9, Assigned A2 Class B-10,Assigned Baa1 Class B-11,Assigned Baa3 Class B-12,Assigned Ba2 Class B-13,Assigned B2 Class R, Assigned Aaa The Class B-12 and Class B-13 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. WERNER LADDER: Court Okays Expansion of PwC's Duties as Auditor --------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware granted the request of Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor- ffiliates to expand the scope of PricewaterhouseCoopers LLP's employment as their tax advisors and auditors, subject to the terms and conditions of the two engagement letters dated Sept. 7, 2006, between the Debtors and PwC. As reported in the Troubled Company Reporter on Nov. 21, 2006, PwC agreed to provide these additional services: (1) audit the Werner Holding Co. (DE), Inc., Employee Savings Plan as required by the Employees Retirement Income Security Act of 1974, as subsequently amended; (2) audit the Retirement Plan for Employees of Werner Holding (DE), as required by ERISA; and (3) perform all other tax and auditing services as may be requested by the Debtors in their Chapter 11 cases. Under the supplement application, the Debtors will pay for the Additional Services based on the hourly rates of PwC's personnel: Designation Hourly Rate ----------- ----------- Partner $600 Manager $280 Senior Associate $200 Associate $130 Intern $100 Administrative Staff $80 The Debtors will also reimburse PwC for its reasonable expenses incurred in connection with the provision of the Additional Services. Judge Carey rules that if the Debtors seek to retain PwC to provide other tax and auditing services, no later than 10 business days of an engagement, the Debtors will file a notice with the Court either: (a) annexing a copy of the engagement letter; or (b) summarizing the services to be performed and serve the notice on the U.S. Trustee, counsel to the Official Committee of Unsecured Creditors, counsel to the Ad Hoc Committee of Second Lien Note Holders, and counsel to the DIP Lenders. If an objection to the other services is filed within 10 days of the service of the notice, Judge Carey directs the Debtors to seek the Court's approval of the engagement, provided that PwC will be entitled to receive compensation and reimbursement, also subject to Court approval. If no objection to the notice is timely filed, the Debtors will submit for Court approval, under certification of counsel, an order authorizing the further retention of PwC. Judge Carey further rules that PwC will be compensated in accordance with the procedures under Sections 330 and 331 of the Bankruptcy Code, and other applicable Bankruptcy Rules and Local Rules of the Court. Judge Carey instructs PwC to submit time records in a summary format that will describe the services rendered by each of the firm's professional and the amount of time spent on each date, in half-hour or whole-hour increments. Judge Carey also authorizes the Debtors to indemnify PwC in accordance with the PwC Agreements, but not for any claim in connection with PwC's postpetition performance of any services other than the services under the PwC Agreements unless the services and indemnification are approved by the Court. Judge Carey notes that the Debtors have no obligation to indemnify PwC or provide contribution or reimbursement for any claim or expense that is either: (a) judicially determined to have arisen from PwC's gross negligence or willful misconduct; or (b) settled prior to a judicial determination as to PwC's gross negligence or willful misconduct, but determined by the Court to be a claim or expense for which PwC should not receive indemnity, contribution or reimbursement under the terms of the Supplemental Application and the PwC Agreements, as modified by the Court. If before the earlier of the confirmation of the Debtors' Chapter 11 plan and the closing of the Debtors' Chapter 11 cases, PwC believes that it is entitled to the payment of any amounts by the Debtors on account of indemnification, contribution or reimbursement obligations under the PwC Agreements and the Supplemental Application, Judge Carey says PwC must file an application with the Court and the Debtors may not pay the amounts to PwC until the Court approves the payment. Brian W. Smith, a partner at PwC, reiterates that the firm 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. 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. 14; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WHEELING PITTSBURGH: Esmark's Slate Elected to Board of Directors ----------------------------------------------------------------- Esmark Inc. confirmed that its slate of directors was certified as elected to the board of directors of Wheeling-Pittsburgh Corp. by a significant majority with each of the Esmark director candidates receiving over 6.1 million votes to roughly 2.8 million votes for each of the incumbent directors. "The vote went as we expected. After months of discussions with major investors of Wheeling-Pitt and the United Steelworkers," Commenting on the shareholder vote results, Craig Bouchard, Esmark's President and CFO, said. "We knew that replacing the incumbent board was widely viewed as a critical component to ending the financial difficulties Wheeling- Pitt has endured since emerging from Bankruptcy in 2003. The slate of directors nominated by Esmark took office late yesterday afternoon. "We believe that these directors have the knowledge and experience to decide the best path for Wheeling-Pitt -- a path that will bolster management depth, transform the balance sheet to mostly equity and add cash and customers very quickly to the commercial base. The overwhelming support shown for the Esmark slate of directors should be viewed as a mandate for Wheeling-Pitt to move forward with Esmark's business strategy. "We thank the many Wheeling-Pitt shareholders who have supported our vision and we look forward to working with them in the future" Bouchard added. "We also thank the United Steelworkers and their leadership for their unfailing support of Esmark in this effort, and look forward to their support of our future transactions." About Esmark Inc. Founded by James P. Bouchard and Craig T. Bouchard, Esmark Inc. provides steel services that combines the economic and strategic firepower of Ferrostaal, Mars Industries, and Meda Steel with the vision, industry knowledge, and financial expertise of the Bouchard Group. Esmark distributes and provides value-added steel products to approximately 2,000 core customers in the Midwest. The Company has acquired nine steel companies since it was formed in 2003, focusing on older, established companies. About Wheeling-Pittsburgh Based in Wheeling, West Virginia, Wheeling-Pittsburgh Corporation is a holding company that, together with its several subsidiaries and joint ventures, produces steel and steel products using both integrated and electric arc furnace technology, with major production facilities in the Upper Ohio and Monongahela valleys. The Company has slab making production capacity of 2.8 million short tons and hot rolling capacity of 3.4 million short tons. * * * As reported in thed Troubled Company Reporter, Nov. 28, 2006, Wheeling-Pittsburgh Corporation disclosed that a replacement of a majority of its board of directors effectively constitutes a change of control under its $250 million Term Loan Agreement and $225 million Revolver, and would cause a default on the loans. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (20) 118 (3) Acorda Therapeut. ACOR (8) 40 5 AFC Enterprises AFCE (40) 157 4 Alaska Comm Sys ALSK (25) 566 26 Alliance Imaging AIQ (18) 674 30 AMR Corp. AMR (514) 30,128 (1,202) Armstrong World AWI (1,197) 4,721 1,132 Atherogenics Inc. AGIX (136) 197 146 Bare Essentials BARE (619) 139 42 Blount International BLT (107) 441 121 CableVision System CVC (5,400) 9,776 (400) Centennial Comm CYCL (1,062) 1,434 33 Choice Hotels CHH (78) 286 (48) Cincinnati Bell CBB (679) 1,889 55 Clorox Co. CLX (55) 3,539 (20) Compass Minerals CMP (74) 671 145 Corel Corp. CRE (22) 113 11 Crown Media HL CRWN (449) 917 190 Deluxe Corp DLX (68) 1,296 (188) Denny's Corporation DENN (231) 454 (73) Domino's Pizza DPZ (592) 360 (20) Echostar Comm DISH (365) 9,351 1,696 Emeritus Corp. ESC (115) 713 (34) Emisphere Tech EMIS (6) 35 12 Empire Resorts I NYNY (25) 61 (2) Encysive Pharm ENCY (88) 69 33 Gencorp Inc. GY (98) 1,017 (3) Graftech International GTI (157) 875 253 Hansen Medical HNSN (32) 38 33 HealthSouth Corp. HLS (1,339) 3,310 (314) I2 Technologies ITWO (46) 208 1 ICOS Corp ICOS (18) 285 111 IMAX Corp IMAX (33) 243 84 Immersion Corp IMMR (22) 47 31 Incyte Corp INCY (66) 465 295 Indevus Pharma IDEV (147) 79 35 Investools Inc. IEDU (63) 120 (79) J Crew Group Inc. JCG (55) 414 128 Kaiser Aluminum KALU (3,105) 1,598 123 Koppers Holdings KOP (86) 637 148 Ligand Pharm LGND (239) 232 (162) Lodgenet Entertainment LNET (62) 269 18 McMoran Exploration MMR (38) 438 (46) New River Pharma NRPH (65) 170 135 Northwest Airlines NWACQ (7,718) 13,498 659 NPS Pharm Inc. NPSP (182) 237 150 Omnova Solutions OMN (2) 366 72 ON Semiconductor ONNN (1) 1,417 316 Portal Software PRSF (20) 112 (14) Qwest Communication Q (2,576) 21,114 (1,569) Radnet Inc. RDNT (75) 127 (1) Riviera Holdings RIV (29) 222 10 Rural Cellular RCCC (540) 1,410 165 Rural/Metro Corp. RURL (89) 305 51 Savvis Inc. SVVS (142) 442 16 Sealy Corp. ZZ (188) 933 89 Sepracor Inc. SEPR (33) 1,352 424 St. John Knits Inc. SJKI (52) 213 80 Sun-Times Media SVN (322) 905 (383) Town Sports Inte. CLUB (25) 417 (55) Vertrue Inc. VTRU (9) 441 (75) Weight Watchers WTW (103) 935 (72) Worldspace Inc. WRSP (1,574) 604 140 WR Grace & Co. GRA (480) 3,641 902 ********* 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 ***