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/raid1/www/Hosts/bankrupt/TCR_Public/061219.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 19, 2006, Vol. 10, No. 301 Headlines ACTUANT CORP: Earns $25.2 Million in 2006 Fourth Quarter ADELPHIA COMMS: ACC Noteholders Want $5 Billion Secured Debt Paid AFFILIATED COMPUTER: Identifies $51MM Additional Non-Cash Expense AGILENT TECHNOLOGIES: Completes Acqiris and PXIT Acquisitions AMERIQUAL FINANCE: Moody's Holds Corporate Family Rating at B1 ANCHOR GLASS: Claims Objection Deadline Stretched to March 1 ANCHOR GLASS: Hires Brian Bussell as New CEO ANDREW CORP: Posts $34.2 Million Net Loss in FY Ended Sept. 30 APRIA HEALTHCARE: Appoints Dr. Norman Payson as Director ASARCO LLC: Court Expands SRK Consulting's Scope of Employment ASARCO LLC: Court Okays NAI Utah as Real Estate Agent ASSET BACKED: Fitch Rates $14.2-Mil. Class B Certificates at BB+ BANYAN CORP: Posts $565,527 Net Loss in 2006 Third Fiscal Quarter BAYOU GROUP: Court Sets January 17 as Bar Date for Filing Claims BLOCKBUSTER INC: S&P Holds Ratings and Revises Outlook to Stable BRIDGEVIEW VILLAS: Case Summary & Seven Largest Unsec. Creditors CALPINE CORP: Fitch Withdraws Junk Rating on Sr. Unsecured Debt CARIBE MEDIA: S&P Puts B Senior Debts' Rating on Negative Watch CBD MEDIA: Moody's Holds Corporate Family Rating at B2 CBD MEDIA: S&P Places Junk Rating on Sr. Debt on Negative Watch CENTRAL AMERICAN: Moody's Lifts Sr. Notes' Rating to B1 from B2 CHURCH & DWIGHT: Moody's Upgrades Corporate Family Rating to Ba1 CLECO CORP: Completes Financing of Bonds Issued by Rapides Finance COLFAX CORP: S&P Affirms Ratings and Says Outlook is Stable COLLINS & AIKMAN: Excl. Plan-Filing Period Intact Until Jan. 12 COLLINS & AIKMAN: Seeks Approval of Deal with Customers & JPMorgan CONVERIUM HOLDINGS: S&P Raises Credit Rating to BBB from BB+ COOPER COMPANIES: Weak Financial Results Cue S&P's Negative Watch COUDERT BROTHERS: Panel Clamors for Ch. 11 Trustee Appointment COUDERT BROTHERS: Hires Kurtzman Carson as Claims Agent CHRISTOPHER WICKSTROM: Voluntary Chapter 11 Case Summary CSFB HOME: S&P Holds Low-Ratings on 12 Certificate Classes CVS CORP: Inks Merger Agreement With Caremark Rx CVS CORP: Caremark Rx Receives Express Scripts' Unsolicited Bid CVS CORP: Express Scripts Discloses Details of Caremark Offer DAIMLERCHRYSLER: Unit Ordered to Pay $350MM in U.S. Fraud Case DELPHI CORP: Investor Group Commits Up to $3.4 Billion Investment DELPHI CORP: Steering Unit Books $3.3 Bil. in New Business DETROIT SCHOOL: Mounting Financial Strain Cue Fitch's Neg. Outlook DEUTSCHE MORTGAGE: Fitch Lifts Low-B Ratings on $86.3-Mil of Debts DIVERSIFIED REIT: Fitch Lifts Rating on $4MM Class H Notes to BB- DIVERSIFIED REIT: Fitch Lifts Rating on $5MM Class F Notes to BB+ DOLLARAMA GROUP: Moody's Rates $200-Mil. Sr. Unsecured Notes at B3 DORAL FINANCIAL: Board Approves Monthly Cash Dividend DUPREE & ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors EDISON MISSION: S&P Holds Ratings and Revises Outlook to Stable ENTERGY NEW: Court Approves Transfer of Cottonwood Energy's Claim EUROGAS INC: Sept. 30 Balance Sheet Upside-Down by $41.1 Million FIELDCREST BUILDING: Case Summary & 13 Largest Unsecured Creditors FINANCIAL MEDIA: Aug. 31 Balance Sheet Upside-down by $2.2 Million FOAMEX INTERNATIONAL: Seeks Conversion of FMXI Into Delaware LLC FOAMEX INT'L: Pa. Revenue Dept. Opposes Amended 2nd Ch. 11 Plan FOOTE DEVELOPMENT: Case Summary & Largest Unsecured Creditor GEO GROUP: Modifies Financing Plan for CentraCore Purchase GEORGIA-PACIFIC: Fitch Rates New $1.25-Bil. Senior Notes at B+ GLASSMASTER COMPANY: Elliott Davis Raises Going Concern Doubt GRANITE BROADCASTING: Organizational Meeting Set for Thursday HARRAH'S ENT: Board to Decide on $16.7-Bil Buyout Offer Today HEALTHY DIRECTIONS: S&P Lifts Rating to B+ with Stable Outlook HENRY SKAGGS: Case Summary & 12 Largest Unsecured Creditors HOLLINGER INC: Two Subsidiaries Sell Assets for $16.81 Million HOLLINGER INC: Can File Financials Under Fair Value Basis INTERMEC INC: Fitch Withdraws BB- Rating on Senior Unsecured Debt JANI KASSU: Voluntary Chapter 11 Case Summary JOHN SHANNON: Voluntary Chapter 11 Case Summary J.P. MORGAN: Fitch Rates $16.29-Mil. Certificate Class at BB+ J.P. MORGAN: S&P Holds Junk Rating on Class M Certificates KB HOME: Planned Restatement Prompt Moody's Ratings Review KYPHON INC: Moody's Rates New $675-Mil. Sr. Credit Facility at B1 LA PETITE: Moody's Holds Rating on $130-Mil. of Sr. Loans' at B2 LARRY BROWN: Case Summary & 13 Largest Unsecured Creditors LBREP/L SUNCAL: Liquidity Pressures Cue S&P's Negative Watch LODGENET ENT: Buys Ascent Entertainment for $380 Mil. from Liberty LODGENET ENT: Command Corp. Agreement Cues S&P's Negative Outlook LONNIE DUEKER: Voluntary Chapter 11 Case Summary LSP BATESVILLE: S&P Holds B+ Rating on $326 Mil of Senior Bonds MIAD SYSTEMS: Inks $380,000 Loan Pact with M.L. Strategic Limited MIDLAND COGENERATION: S&P Withdraws B Rating on $200-Mil. Bonds MIDLAND COGENERATION: Fitch Withdraws Junk Rated Secured Bonds MIDDLE MICHIGAN: Case Summary & Largest Unsecured Creditor MOTHERS WORK: S&P Lifts Corporate Credit Rating to B from B- NAVISTAR INT'L: Reports Increased Truck Shipments in Fiscal 2006 NAVISTAR INT'L: CFO William Caton Replaces Robert Lannert as Dir. NEENAH FOUNDRY: Moody's Holds Corporate Family Rating at B2 NEW CASTLE: Case Summary & Nine Largest Unsecured Creditors NEW WORLD: October 3 Balance Sheet Upside Down by $138 Million NEWCOMM WIRELESS: Has Until December 22 to File Schedules NEWPAGE CORPORATION: Moody's Lifts Corporate Credit Rating to B1 CASCADES INC: Norampac Acquisition Cues DBRS to Lower Ratings NORTEL NETWORKS: Amends $750 Million Master Facility Agreement NORTH STREET: Fitch Holds Rating on $49-Mil. Income Notes at BB+ OASIS HEATING: Voluntary Chapter 11 Case Summary OMNOVA SOLUTIONS: Fitch Issuer Default Rating at B+ PABLO DERBOGHOSSIAN: Case Summary & 6 Largest Unsecured Creditors PAK-A-SAK FOOD: Case Summary & 20 Largest Unsecured Creditors PALMDALE HILLS: S&P Lowers and Places Ratings on Negative Watch PARK-OHIO: Improved Performance Prompts S&P's Rating Upgrade PEABODY ENERGY: S&P Rates $500-Million Junior Debentures at B PRIDE BUSINESS: Posts $8.6 Million Net Loss in 2006 Third Quarter REFCO INC: Plan Satisfies 13 Steps for Confirmation, Court Rules REVERE INDUSTRIES: Moody's Cuts Corp. Family Rating to B3 from B2 RUBICON MINERALS: Completes Plan of Arrangement With Africo SG MORTGAGE: Fitch Rates $12.6-Mil. Class M-10 Certificates at BB+ SAGITTARIUS BRANDS: Poor Performance Cues S&P's Negative Outlook SAINT VINCENTS: Wants to Assume Extended Lease With BBC Realty SAINT VINCENTS: Medclr Offers Higher Bid for Aged Receivables SALON MEDIA: Posts $349,000 Net Loss in 2006 Third Fiscal Quarter SANMINA-SCI: S&P Retains Negative CreditWatch on BB- Rating SCRANTON PA: Chronic Budget Imbalance Cues S&P to Hack Ratings SHUMATE IND: Completes $3.7 Mil. Private Placement of Securities SITEL CORPORATION: Earns $7.4 Million in 2006 Second Quarter SONIA INVESTMENTS: Voluntary Chapter 11 Case Summary STATSURE DIAGNOSTIC: Sept. 30 Balance Sheet Upside-Down by $8 Mil. STONE ENERGY: Moody's Downgrades Corp. Family Rating to B3 TECH DATA: Moody's Rates Proposed $350 Mil. Senior Notes at Ba2 TITAN FINANCIAL: Court Grants Chapter 7 Conversion Plea TITAN INTERNATIONAL: Moody's Rates $200-Mil. Senior Notes at B3 THAXTON GROUP: Court Extends Removal Period to May 30 THOMAS MCINTYRE: Case Summary & 23 Largest Unsecured Creditors TRUE TEMPER: S&P Lowers Subordinated Debt Rating to CCC UNION ROAD: Case Summary & 14 Largest Unsecured Creditors USN CORP: Sept. 30 Balance Sheet Upside-Down by $21.5 Million VENTAS INC: Moody's Rates $230-Million Senior Notes at Ba2 VENTURE VII: Moody's Places Ba2 Rating on $11.4 Mil. Class E Notes VILLAJE DEL RIO: Colina Fails in Bid to Install Chapter 11 Trustee VILLAJE DEL RIO: Plan Confirmation Hearing Set for January 22 WACHOVIA BANK: Moody's Holds Low-B Ratings on $32.5 Mil. of Certs. WASHINGTON MUTUAL: Good Performance Cues Moody's Rating Upgrades WASTECH INC: Posts $131,584 Net Loss in Quarter Ended Sept. 30 WILLIAM LYON: Moody's Holds Corporate Family Rating at B1 WINDSTREAM CORP: Moody's Affirms Corporate Family Rating at Ba2 WINSTON HOTELS: Moody's Lifts Preferred Stock Rating to B2 from B3 * Large Companies with Insolvent Balance Sheets ********* ACTUANT CORP: Earns $25.2 Million in 2006 Fourth Quarter --------------------------------------------------------- Actuant Corporation reported record sales and earnings for its fourth quarter and fiscal year ended Aug. 31, 2006. Fourth quarter fiscal 2006 net earnings was $25.2 million, compared to $19.1 million for the fourth quarter of fiscal 2005. Fiscal 2006 fourth quarter results include a $4.9 million pre-tax charge covering a portion of the company's restructuring of its European electrical business, offset by a $5.4 million income tax benefit primarily related to the reversal of a tax valuation allowance for net operating losses. Net earnings for fiscal 2006 were $92.6 million compared to $71.3 million for the prior year. Fourth quarter sales increased approximately 21% to $324.6 million compared to $269.4 million in the prior year, driven by strong base business growth and sales from acquired businesses. Excluding foreign currency exchange rate changes and sales from acquired businesses, fourth quarter sales increased approximately 13% from the comparable prior year period. Sales for the fiscal year ended Aug. 31, 2006 were $1.2 billion, approximately 23% higher than the $976 million in the comparable prior year period, reflecting sales volume added through business acquisitions and strong base business growth. Excluding the impact of foreign currency rate changes and sales from acquired businesses, full year sales increased 9% year-over-year. Commenting on the results, Robert C. Arzbaecher, Chief Executive Officer, stated, "Actuant finished fiscal 2006 strongly, driving another quarter of significant year-over-year sales and earnings growth. The continued profitable growth in our industrial tools businesses, Enerpac and Hydratight, led the record results. Additionally, as expected, automotive business revenues grew 63% for the quarter on sales related to new convertible model introductions." Mr. Arzbaecher added, "We are very happy with Actuant's progress in fiscal 2006 as we continued to execute our business model to drive strong cash flow and earnings growth. Our team achieved 9% sales growth excluding currency and acquisitions, deployed approximately $129 million in aggregate on acquisitions that strengthened our existing business, and continued to drive LEAD (Lean Enterprise Across Disciplines) and organizational competency throughout the business. Fiscal 2006's 21% EPS growth was the fifth consecutive year of EPS growth in excess of 15% since Actuant's creation through a spin-off. We were also able to convert those strong earnings into cash, generating over $100 million of cash flow, which was again in excess of net income." Net debt at Aug. 31, 2006 was approximately $455 million, compared to $460 million at the beginning of the quarter. The reduction in net debt during the quarter was attributable to fourth quarter cash flow of approximately $29 million, partially offset by the $24 million of borrowings to fund the August 2006 Actown acquisition. Availability under the company's revolving credit facility remained strong at approximately $170 million as of Aug. 31, 2006. Year-over-year, Actuant's fiscal 2006 fourth quarter and full fiscal year operating profit increased to $38.2 million and $154.1 million, respectively, including the fourth quarter European Electrical restructuring charge of $4.9 million. Year-over-year fourth quarter operating profit margins expanded from 13.1% to 13.3%, excluding the negative impact of the restructuring charge in fiscal 2006. At Aug. 31, 2006, the company's consolidated balance sheet showed $1.2 million in total assets, $850,410 in total liabilities, and $362,965 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Aug. 31, 2006, are available for free at http://researcharchives.com/t/s?1730 About Actuant Corporation Actuant Corp. (NYSE:ATU) -- http://www.actuant.com/-- manufactures and markets a broad range of industrial products and systems, organized into two business segments, Tools & Supplies and Engineered Solutions. * * * As reported in the Troubled Company Reporter on Oct. 23, 2006, Moody's Investors Service affirmed its Ba2 corporate family rating for Actuant Corp. ADELPHIA COMMS: ACC Noteholders Want $5 Billion Secured Debt Paid ----------------------------------------------------------------- The ACC Senior Noteholders ask the U.S. Bankruptcy Court for the Southern District of New York to reconsider its deferral of their motion to order Adelphia Communications Corp. and its debtor- affiliates to immediately pay in full approximately $5,000,000,000 in principal amount of senior secured debt, in light of the adjournment of the hearing on the Disclosure Statement Supplement. The ACC Senior Noteholders want the ACOM Debtors to immediately pay in full the principal amount of senior secured debt currently outstanding, and any accrued but unpaid interest, under the: -- Olympus Co-Borrowing Facility, -- Century Co-Borrowing Facility, -- UCA/HHC Co-Borrowing Facility, and -- FrontierVision Prepetition Credit Agreement. The ACC Senior Noteholders also ask the Court to schedule a hearing on their motion as soon as possible. The ACC Senior Noteholders are: -- Aurelius Capital Management, LP; -- Banc of America Securities, LLC; -- Catalyst Investment Management Co., LLC; -- Drawbridge Global Macro Advisors, LLC; -- Drawbridge Special Opportunities Advisors, LLC; -- Elliott Associates, LP; -- Farallon Capital Management, LLC; -- Noonday Asset Management, LP; -- Perry Capital LLC; and -- Viking Global Investors, LP. Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP in New York contends that, en route toward solicitation and confirmation of a plan of reorganization, Adelphia Communications Corp. is spending more than $41,000,000 per month in unnecessary postpetition interest on the Bank Debt. The significant erosion of ACOM's estate requires the Court's immediate action, Mr. Bienenstock contends. The ACC Senior Noteholders including Aurelius Capital Management LP, Banc of America Securities LLC, and Catalyst Investment Management Co. LLC, relate that at the scheduling conference held on Sept. 26, 2006, the Court found that: -- their motion to direct the ACOM Debtors to immediately pay in full the $5,000,000,000 in principal amount of senior secured debt "deserves to be heard," but declined to set the motion for hearing; and -- temporarily adjourning their motion will, among other things, "avoid[] interference with the solicitation process." Mr. Bienenstock notes that in excess of $1,500,000,000 has been paid as adequate protection interest payments on certain secured bank debt in the ACOM Debtors' Chapter 11 cases. Mr. Bienenstock tells the Court that after the sale of substantially all of the ACOM Debtors' assets, repayment of their postpetition financing, and consummation of the Joint Venture Plan of Reorganization for the Parnassos Debtors and Century-TCI Debtors, the ACOM Debtors are holding in excess of $17,500,000,000 in value, approximately $12,500,000,000 in cash. Mr. Bienenstock contends that each day's delay in satisfying the Bank Debt further diminishes the value available to satisfy unsecured claims in the ACOM Debtors' cases. Specifically, Mr. Bienenstock points out, parties-in-interest have been told that the "burn rate" is approximately $1,300,000 per day or up to $40,000,000 a month, minus the limited amount that the ACOM Debtors may earn on their investments in accordance with applicable investment guidelines. Mr. Bienenstock notes that the ACOM Debtors' Revised Fifth Amended Plan of Reorganization proposes to treat the Bank Debt by payment of outstanding principal amount and interest accrued on the Plan's Effective Date, subject to the right of disgorgement. Mr. Bienenstock relates that the ACC Senior Noteholders noted in open court their intention to oppose the ACOM Plan. Mr. Bienenstock asserts that since all of the ACOM Debtors' assets have been sold and the ACOM Plan is a liquidation plan under the guise of a chapter 11 plan, the Court and all parties should take whatever steps necessary and appropriate "to cease the needless incurrence of interest in the Bank Debt and the hemorrhaging of value that occurs daily." Mr. Bienenstock further argues that: (a) holders of the Bank Debt are entitled to adequate protection payments consistent with the Court's prior conclusion regarding the oversecured status of the Bank Debt; (b) the ACOM Debtors have a fiduciary duty to maximize their estates' value; (c) Section 105 of the Bankruptcy Code authorizes the Court to enter orders in furtherance of adequate protection and maximizing value; (d) the ACC Senior Noteholders' request for the Bank Debt payment is substantially similar to those requests granted in: * In re Calpine Corp., Case No. 05-60200 (BRL); and * In re Wabash Valley Power Assoc., Inc., 167 B.R. 885 (S.D. Ind. 1994); (e) the duty to maximize value and Sections 361 and 105 of the Bankruptcy Code mandate payment of the Bank Debt to stop the erosion of the ACOM Debtors' estates; and (f) the ACOM Plan should not be used as leverage. Non-Agent Committee Supports Immediate Payment The Ad Hoc Committee of Non-Agent Secured Lenders supports the ACC Senior Noteholders' request. On behalf of the Non-Agent Committee, Richard L. Wynne, Esq., at Kirkland & Ellis LLP, in New York, contends that allowing the immediate payment of the Bank Debt will: (1) reduce the need to confirm the ACOM Plan on an expedited basis; (2) substantially narrow Bank Lender issues with respect to the ACOM Plan confirmation; (3) eliminate the inappropriate and improper coercive provisions of the ACOM Plan; and (4) subject to the same disgorgement provisions previously approved by the Court and provided by the ACOM Plan, eliminate the need for the estate to pay contract interest to the Lenders until confirmation, and will not be prejudicial to any parties-in-interest given the disgorgement provisions that would apply. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. AFFILIATED COMPUTER: Identifies $51MM Additional Non-Cash Expense ----------------------------------------------------------------- Affiliated Computer Services Inc. determined that the incremental cumulative non-cash compensation expense through June 30, 2006, related to incorrect accounting measurement dates is approximately $51 million and that prior year financial statements will be restated. The determination was arrived at after it has completed the review and evaluation of the results of its internal investigation of its historical stock option practices. The company is currently reviewing the tax impact, including related interest and penalties, associated with stock options and other matters. The company's management made on Dec. 7, 2006, a presentation of its determination to the audit committee of its board of directors who concurred with and approved management's determination. Previously, the company disclosed that it was continuing to review and evaluate the results of the internal investigation and recent accounting guidelines established by the Securities and Exchange Commission to determine the accounting consequences of the use of incorrect measurement dates for certain stock option grants during the period from 1994 through 2005. The company's management is also currently evaluating the impact of the results of the internal investigation of its stock option practices on its internal control over financial reporting and disclosure controls and procedures. The company's management has already discussed the matter with the Audit Committee and PricewaterhouseCoopers LLP, the company's independent registered public accounting firm. Headquartered in Dallas, Texas, Affiliated Computer Services, Inc., (NYSE: ACS) -- http://www.acs-inc.com/-- provides business process outsourcing and information technology solutions to commercial and government clients. * * * As reported in the Troubled Company Reporter on Nov. 29, 2006 Standard & Poor's Ratings Services kept its ratings for Affiliated Computer Services Inc. including the 'B+' corporate credit rating, on CreditWatch, where they were placed with negative implications on Sept. 29, 2006. AGILENT TECHNOLOGIES: Completes Acqiris and PXIT Acquisitions ------------------------------------------------------------- Agilent Technologies Inc. has completed the acquisition of Acqiris SA and PXIT Inc. Financial details of these two transactions were not disclosed. All of Acqiris and PXIT's employees have joined Agilent. Acqiris is a privately held company that provides high-speed digitizers and analyzers used in commercial, industrial and government electronics markets. Acqiris' products include a broad offering of digitizers, time-to-digital converters and waveform analyzers with high resolution and high-speed performance. The company also offers software, integration and development support as well as long-term maintenance and support. PXIT is a privately held company that provides signal integrity testing systems for broadband optical transceiver manufacturers. Agilent Technologies Inc. (NYSE: A) -- http://www.agilent.com/-- is the world's premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company's 20,000 employees serve customers in more than 110 countries. Agilent had net revenue of $5.1 billion in fiscal 2005. * * * As reported in the Troubled Company Reporter on Dec. 13, 2006, Moody's Investors Service upgraded the ratings of Agilent Technologies Inc. to Ba1 from Ba2 and revised the outlook to positive. As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services placed its 'BB+' corporate credit rating on Palo Alto, California-based Agilent Technologies Inc. on CreditWatch with positive implications. AMERIQUAL FINANCE: Moody's Holds Corporate Family Rating at B1 -------------------------------------------------------------- Moody's Investors Service changed the company's Speculative Grade Liquidity Rating to SGL-3 from SGL-2, reflecting the recent weakening in the company's cash position owing to substantial cash outflows in Fiscal Year 2006, as well as the degree to which the company is relying on its revolving credit facility to cover the cash short-falls. All of the company's debt ratings have been affirmed, as Moody's believes that the balance of the credit fundamentals remain strong enough to support the current B1 Corporate Family Rating and B2 senior notes rating. The ratings outlook remains stable. Moody's assesses AmeriQual's liquidity to be adequate, although its liquidity profile has deteriorated somewhat in FY 2006 due to weakness in internal sources of cash. AmeriQual maintains only a small cash balance: essentially no cash as of September 2006 and only $3 million one year prior. Free cash flow was negative $15 million over the LTM September 2006 period when it undertook heavy expenditures on working capital and CAPEX to support business growth -- revenues increased by over 30% over this period. The company also paid material dividends to its equity holders over this period, resulting in the exhaustion of internal sources of liquidity to cover its operating requirements. Moody's expects free cash flows to improve over the next 12 months, as CAPEX and working capital levels are likely to moderate, and assuming a modest degree of revenue growth associated with new military supply contracts while operating margins are maintained. Also, with the majority of the company's debt represented by the $105 million senior notes due 2012 and a $35 million senior secured revolving credit facility due 2010, the company will not face significant debt repayment requirements over the next few years. As such, Moody's believes that AmeriQual's cash flow generation will be adequate to cover all but large, unanticipated expenditures over the next 12 months, while possibly reducing revolver drawings. The B1 Corporate Family Rating continues to reflect AmeriQual's relatively high leverage, its small revenue base and customer concentration, and risk that the company's market position or product mix in the military food sector may change over the next few years, negatively affecting margin volatility over time. The ratings positively consider the company's strong and stable profit margins as a leading supplier of field rations to the U.S. military, the current strong military contracting environment for operating requirements, consistent supplementary income provided by its long-standing commercial business segment. Downgrades: * Ameriqual Group, LLC -- Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 AmeriQual Group, LLC, headquartered in Evansville, Idiana, is a supplier of individual and group field rations to the U.S. Department of Defense. The company is also a provider of thermal processing of flexible retort packaging products for major commercial food marketing and distributions companies. AmeriQual had LTM September 2006 revenues of $233 million. ANCHOR GLASS: Claims Objection Deadline Stretched to March 1 ------------------------------------------------------------ Anchor Glass Container Corporation sought and obtained an order from the U.S. Bankruptcy Court for the Middle District of Florida extending its deadline to object to claims, through and including March 1, 2007. During the course of dealing with claims objections, Anchor Glass and the Alpha Resolution Trustee have discovered that in certain instances it is still not clear in which class certain filed claims belong, Robert A. Soriano, Esq., at Shutts & Bowen LLP, in Tampa, Florida, maintains. "This confusion is sometimes the result of the way a claimant prepared the claim and sometimes the way in which the claim was classified by Acclaris, Inc., [the Debtor's] official noticing agent, claims agent, and balloting agent," Mr. Soriano relates. Pursuant to the Debtor's Second Amended Plan of Reorganization, the Alpha Resolution Trustee is responsible for objecting to contested claims in Class 5, consisting of General Unsecured Claims, while Anchor Glass is responsible for objecting to any other contested Claims. Mr. Soriano notes that the Alpha Trustee has sought to extend its Claims Objection Deadline to February 28, 2007. For this reason, Anchor Glass asked the Court to extend its Claims Objection Deadline to March 1 to avoid a situation in which the Alpha Trustee has successfully objected to a claim that might become the responsibility of the Debtor. The Debtor does not want to be prejudiced by not being able to interpose an objection to a claim, if appropriate, Mr. Soriano explains. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ANCHOR GLASS: Hires Brian Bussell as New CEO -------------------------------------------- Anchor Glass Container Corporation has hired Brian N. Bussell as its new chief executive officer. James Continenza, a member of the company's board of directors had been serving as Interim CEO since September. Mr. Bussell joins Anchor Glass from Coca-Cola Enterprises where he most recently served as the Vice President of Operations and Supply Chain Management for North America. Mr. Bussell said, "I am excited to have the opportunity to lead the Anchor team and look forward to working with Anchor's loyal customers and suppliers." In making the announcement, Mr. Continenza said, "I took on the role of Interim CEO in September at the request of the board and am proud of all the hard work the Anchor team has completed during my short tenure. I look forward to transitioning with Brian and working closely with him in the future as I return to my duties as chair of the compensation committee and a member of Anchor's board of directors." Anchor Glass' board chairman Eugene Davis said, "We are very pleased to welcome Brian to Anchor, and we thank Mr. Continenza for getting the company pointed in the right direction and for his many other contributions to Anchor. We expect Jim to remain actively involved in developing strategic opportunities for Anchor and believe that his time in the CEO role will prove to have served him well as he once again becomes a very important member of our board." Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents Anchor Glass in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When Anchor Glass filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. The Court confirmed Anchor Glass' second Amended Plan of Reorganization on April 18, 2006. Anchor Glass emerged from Chapter 11 protection on May 3, 2006. (Anchor Glass Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ANDREW CORP: Posts $34.2 Million Net Loss in FY Ended Sept. 30 -------------------------------------------------------------- Andrew Corp. reported a $34.2 million net loss for the fiscal year ended Sept. 30, 2006, compared with net income of $38.8 million for fiscal 2005. The loss is primarily due to the $79 million increase in income tax expense as a result of the recording of a valuation allowance on its U.S. deferred tax assets. Sales for fiscal 2006 of $2.1 billion increased from $1.9 billion fiscal 2005. The sales increase resulted from higher sales in Antenna and Cable Products and Base Station Subsystems offset by an expected sales decline in Network Solutions. The company's top 25 customers accounted for 69% of sales in fiscal 2006, 2005, and 2004. In fiscal 2006 and 2005, major OEMs accounted for 39% of sales. No single customer accounted for more than 10% of sales in fiscal 2006. In fiscal 2005, Cingular Wireless accounted for 11% of total sales. Gross profit margins decreased slightly from 22.3% in fiscal 2005 to 22.1% in fiscal 2006 due primarily to higher commodity costs, especially copper, and the expected decrease in Network Solutions margin contribution resulting from the completion of U.S. E-911 upgrade installations. Operating expenses were $390 million in fiscal 2006, or 18.2% of sales, compared with $359 million in fiscal 2005, or 18.3% of sales. Operating expenses increased $30.8 million compared with fiscal 2005 due primarily to higher sales and administrative costs, which increased from 11.4% of sales in fiscal 2005 to 11.9% of sales in fiscal 2006. Research and development expenses increased $5.1 million in fiscal 2006 versus fiscal 2005, but decreased as a percentage of sales from 5.5% in fiscal 2005 to 5.3% in fiscal 2006. Sales by Major Geographic Region Sales in the Americas increased 6% in fiscal 2006 compared to fiscal 2005 due to strong growth in antenna and cable products, power amplifiers and filter sales which were offset by sales decreases in geolocation equipment and satellite products. Europe, Middle East, and Africa sales increased 8% in fiscal 2006 compared to fiscal 2005 due to strong Antenna and Cable Group sales, primarily resulting from the acquisition of Precision Antenna Ltd., offset by lower Base Station Subsystems Group sales. Asia Pacific sales increased 28% in fiscal 2006 compared to fiscal 2005 due to increased Antenna and Cable Group sales, primarily in India, Indonesia, and China. With the anticipated issuance of 3G licenses in fiscal 2006, Chinese operators slowed their investment in wireless infrastructure in fiscal 2005. Gross Profit Gross profit as a percentage of sales was 22.1% in fiscal 2006 and 22.3% in fiscal 2005. Two of the more significant factors driving the margin decrease were the company's changing product mix and increased commodity costs. Over the last three years, Andrew's gross profit percentages have changed as its product offering has evolved from primarily passive components to complete system solutions, including more active electronic components. Additionally, higher margin geolocation sales have decreased over the past three years as U.S. service providers have implemented and completed E-911 upgrade installations. In fiscal 2006, the company used approximately 70 million pounds of copper. The company's average cost per pound of copper increased by approximately $0.45 throughout fiscal 2006, resulting in an increase in cost of products sold of approximately $32 million or 1.5% of sales. In addition, in fiscal 2005, product recall costs associated with one of the company's Base Station Subsystem products resulted in a charge of $17 million or 0.8% of sales. Liquidity and Capital Resources In fiscal 2006 the company had cash flow from operations of $91.8 million. Cash and cash equivalents were $169.6 million at Sept. 30, 2006, a decrease of $19.2 million from Sept. 30, 2005. Working capital was $585 million at Sept. 30, 2006, compared with $639 million at Sept. 30, 2005. The company's balance sheet at Sept. 30, 2006, showed total assets of $2.4 billion, total liabilities of $900 million, and total shareholders' equity of $1.5 billion. A full text-copy of the company's annual report on Form 10-K may be viewed at no charge at http://ResearchArchives.com/t/s?1729 Headquartered in Westchester, Illinois, Andrew Corporation (NASDAQ:ANDW) -- http://www.andrew.com/-- designs, manufactures and delivers equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries. * * * Standard & Poor's Ratings Services revised its CreditWatch implications on Andrew Corp. to negative from developing. The 'BB' corporate credit rating and other ratings on the company were placed on CreditWatch developing on Aug. 7, 2006. APRIA HEALTHCARE: Appoints Dr. Norman Payson as Director -------------------------------------------------------- Apria Healthcare Group Inc. has filled a vacancy on its Board of Directors by the appointment of Norman C. Payson, MD. "As the leading contracted provider to more managed care organizations than any other homecare provider, Apria will greatly benefit from Dr. Payson's extensive managed care experience," said David L. Goldsmith, Chairman of Apria's Board of Directors. "We are looking forward to his contributions to the Board as Apria continues to strengthen all aspects of its business." Prior to these roles, Dr. Payson served as chief executive officer of Oxford Health Plans from 1998 through 2002, where he led the successful turnaround of the New York-based managed care plan before its 2004 sale to United Health Group. In 1985, Dr. Payson co-founded Healthsource, Inc., a large health plan operating in 15 states, and served as its chief executive officer through 1997. Dr. Payson, 58, is Chairman of the Board of Concentra, a healthcare company that specializes in occupational health. He also serves as a director of Medicine in Need Corporation (MEND), a charitable biotechnology drug development company that specializes in diseases that afflict the third world. A graduate of the Massachusetts Institute of Technology, Dr. Payson received his medical degree from Dartmouth Medical School. Currently, he is a graduate student lecturer at the Center for Evaluative Clinical Sciences at Dartmouth Medical School, the Tuck School at Dartmouth, the Columbia University School of Public Health, the Sloan School at MIT and the University of Chicago Graduate School of Business. Among other industry and charitable activities, Dr. Payson is on the Board of Directors of America's Health Insurance Plans and chairs its committee on quality, and on the Board of Directors of the City of Hope, a tertiary cancer hospital and research center. About Apria Healthcare Headquartered in Lake Forest, California, Apria Healthcare Group Inc. (NYSE:AHG) -- http://www.apria.com/-- provides home respiratory therapy, home infusion therapy and home medical equipment through approximately 500 branches serving patients in all 50 states. * * * As reported in the Troubled Company Reporter on June 5, 2006, Standard & Poor's Ratings Services affirmed its BB+, Stable, rating on Apria Healthcare. ASARCO LLC: Court Expands SRK Consulting's Scope of Employment -------------------------------------------------------------- The Honorable Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC to expand the scope of SRK Consulting (U.S.A) Inc.'s employment to include conducting a business plan for the company. Judge Schmidt also authorizes ASARCO to pay SRK's invoices, not exceeding $1,800,000 for the entire project, without further Court order. About ASARCO LLC Tucson, Ariz.-based ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Court Okays NAI Utah as Real Estate Agent ----------------------------------------------------- The Honorable Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi authorized ASARCO LLC to employ NAI Utah Commercial Real Estate Inc. as its sole real estate agent for the sale of the Utah Property. Before filing for bankruptcy, NAI assisted ASARCO in marketing approximately 6.9 acres of real property located at 3422-3440 South 700 West, in Salt Lake City, Utah. The agreement between NAI and ASARCO expired in March 2005. NAI will receive a 4% commission of the gross sale price of the Utah property. Steven R. Condie, principal broker of NAI, assured the Court that his firm does not represent any interest adverse to ASARCO and its estate, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About ASARCO LLC Tucson, Ariz.-based ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASSET BACKED: Fitch Rates $14.2-Mil. Class B Certificates at BB+ ---------------------------------------------------------------- Asset Backed Funding Corp., asset-backed certificates, $1.38 billion mortgage pass-through certificates, series 2006-HE1, are rated by Fitch Ratings as: -- $1.14 billion classes A-1, A-2A through A-2D 'AAA'; -- $46 million class M-1 'AA+'; -- $43.2 million class M-2 'AA'; -- $26.9 million class M-3 'AA-'; -- $23.4 million class M-4 'A+'; -- $22.6 million class M-5 'A'; -- $21.2 million class M-6 'A-'; -- $18.4 million class M-7 'BBB+'; -- $12.0 million class M-8 'BBB'; -- $10.6 million class M-9 'BBB-'; and, -- $14.2 million privately offered class B 'BB+'. The 'AAA' rating on the senior certificates reflects the 19.6% total credit enhancement provided by the 3.25% class M-1, the 3.05% class M-2, the 1.9% class M-3, the 1.65% class M-4, the 1.6% class M-5, the 1.5% class M-6, the 1.3% class M-7, the 0.85% class M-8, the 0.75% class M-9, 1% privately offered class B and the initial and target overcollateralization of 2.75%. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of Wells Fargo Bank, N.A. as master servicer. U.S. Bank, N.A., will serve as trustee. The mortgage pool consists of first lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $1,124,547,588. Approximately 27.76% of the mortgage loans are fixed rate mortgage loans and 72.24% are adjustable-rate mortgage loans. The weighted average current loan rate is approximately 8.527%. The weighted average remaining term to maturity is 348 months. The average principal balance of the loans is $175,109. The weighted average original combined loan-to-value ratio is 81.01%. The weighted average FICO score is 625. The properties are primarily located in California, Florida, and Texas. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. BANYAN CORP: Posts $565,527 Net Loss in 2006 Third Fiscal Quarter ----------------------------------------------------------------- In its third quarter financial statements for the period ended Sept. 30, 2006, Banyan Corporation reported a $565,527 net loss on $1,432,204 of total revenues, compared to a net loss of $1,104,080 on $376,457 of total revenues for the same quarter in 2005. At Sept. 30, 2006, the company's balance sheet showed $5,868,191 in total assets, $5,249,824 in total liabilities, and $618,367 in stockholders' equity. The company reported $6,332,710 in total assets, $5,650,663 in total liabilities, and $682,047 in stockholders' equity at June 30, 2006. The company's September 30 balance sheet also showed strained liquidity with $2,245,184 in total current assets available to pay $4,670,612 in total current liabilities. Banyan Corp. has incurred operating losses for several years. These losses have caused the company to operate with limited liquidity and have created a working capital deficiency of $2,425,428 at Sept. 30, 2006. Management's plans to address these concerns include the conversion of outstanding debt to equity, additional equity financing, sales of franchises and increasing collections of receivables from franchisees and developing the diagnostic imaging business. The company's operating activities have not yet generated a positive cash flow. The company expects that it will generate a positive cash flow by the end of 2006 since its recently acquired diagnostic testing business has generated a positive cash flow. In 2006, Banyan Corp. entered into an agreement that provides $3,000,000 from the sale of convertible notes to an investment group. The company has currently received a total of $3,000,000. The proceeds were used to acquire the company's diagnostic testing business and as working capital for operating expenses and accounts payable. In 2004 and 2005, Banyan Corp. was also provided $3,000,000 from the sale of convertible notes to this investment group, $1,200,000 in 2004 and $1,800,000 in 2005. The investment group has converted all $1,200,000 of the notes issued in 2004 and $302,656 of the notes issued in 2005 to stock. The aggregate outstanding principal amount of the remaining convertible notes is $4,497,344 as of the current date, including the outstanding notes issued in 2005 and 2006. The company believes without assurance that the investment group will continue to convert the rest of the notes to stock. However, the rate of conversion has become negligible as a result of the decrease in its stock price, to which the rate of conversion is tied. All of the remaining debt may not be converted when the remaining convertible notes begin to come due in the first quarter of 2007. The company intends to refinance, extend or otherwise restructure this debt before it becomes due. In the event that the company is unable to do so, it may have to file for protection under the federal bankruptcy laws and may be unable to continue in operation as a going concern. Full-text copies of the company's financial statements for the quarterly period ended Sept. 30, 2006, is available for free at http://researcharchives.com/t/s?1740 Going Concern Doubt As reported in the Troubled Company Reporter on May 17, 2006, Schwartz Levitsky Feldman LLP, Chartered Accountants, raised substantial doubt about Banyan Corporation'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 stockholders' deficit. About Banyan Corp. Banyan Corporation (OTCBB:BANY.OB) is a holding company focused on investing in and building a network of subsidiaries engaged in diagnostic testing, the franchising of Chiropractic USA branded chiropractic clinics, providing practice development training and assistance to chiropractors, and offering franchise support and related services to franchisees. BAYOU GROUP: Court Sets January 17 as Bar Date for Filing Claims ---------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York set Jan. 17, 2007, at 5:00 p.m. EST, as the general deadline for all creditors owed money by: Debtor Case No. ------ -------- Bayou Management, LLC 06-22305 Bayou Group, LLC 06-22306 Bayou Superfund, LLC 06-22307 Bayou No Leverage Fund, LLC 06-22308 Bayou Affiliates Fund, LLC 06-22309 Bayou Accredited Fund, LLC 06-22310 Bayou Fund, LLC 06-22311 Bayou Advisors, LLC 06-22312 Bayou Equities, LLC 06-22313 on account of claims arising prior to May 30, 2006, to file formal written proofs of claim. Proofs of claim may be sent be mail to: Bayou Group, LLC c/o The Trumbull Group, LLC P.O. Box 5064 Bowling Green Station New York, NY 10274 or delivered by hand or overnight courier to: The Trumbull Group, LLC c/o U.S. Bankruptcy Court Southern District of New York 300 Quarropas Street, 2nd Floor White Plains, NY 10501 As reported in the Troubled Company Reporter on Nov. 7, 2006, Judge Hardin extended until Feb. 28, 2007, Bayou Group, LLC and its debtor-affiliates' exclusive period to file a Chapter 11 Plan of Reorganization. Judge Hardin also gave the Debtors until April 27, 2007 to solicit acceptances for its plan. About Bayou Group Based in Chicago, Illinois, Bayou Group, LLC, operates and manages hedge funds. The company and its affiliates filed for chapter 11 protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306). Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BLOCKBUSTER INC: S&P Holds Ratings and Revises Outlook to Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on video rental retailer Blockbuster Inc. to stable from negative. The ratings on the Dallas-based company, including the 'B-' corporate credit rating, were affirmed. "The outlook revision is based on the company's strengthened cash flow protection measures as a result of its cost reduction efforts and lower advertising and promotional expenses," said Standard & Poor's credit analyst Diane Shand. Total debt to EBITDA declined to 5.6x in 12 months ended Sept. 30, 2006, from 8.9x, a year earlier, and EBITDA coverage of interest increased to 1.9x from 1.4x. Although cash flow protection measures are still weak, Standard & Poor's expects further improvement in the near term due to slightly better operating results and a reduction of debt by $150 million. The company's operating margin increased to 16.7% in the first nine months of 2006, from 11.7% a year earlier. The ratings on Blockbuster reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, its thin cash flow protection measures, high leverage, and the technology risks associated with delivery of video movies to the home. Industry fundamentals for the video rental market, on which Blockbuster's profitability is heavily dependent, are weak. The company generated 71% of total sales from its movie rental business in 2005, and its domestic rental same-store sales have been weak since 2001. The company was particularly hard hit in 2005 when the rental market dropped at a double-digit rate, after steadily declining at a low-single-digit rate in the prior three years. The contraction in the rental market is attributable to the elimination of exclusive movie release rental time windows as a result of the format change to DVD from VHS, and to studios' pricing DVDs to stimulate retail sales. In response to weak rental industry dynamics, Blockbuster eliminated late fees to increase customer traffic. This move affected revenues by $532 million and operating income by an estimated $250 million-$300 million in 2005. In addition, the company is attempting to transform into a home entertainment store and has launched a national online and in-store rental subscription program. Standard & Poor's has concerns over whether these initiatives will revive the company's flagging rental business. BRIDGEVIEW VILLAS: Case Summary & Seven Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Bridgeview Villas, Inc. 2695 Divot Place Columbus, OH 43211 Bankruptcy Case No.: 06-57286 Type of Business: The Debtor's affiliate, Bridgeview Villas II L.P., filed for chapter 11 protection on October 20, 2006 (Bankr. S.D. Ohio Case No. 06-56000). Chapter 11 Petition Date: December 13, 2006 Court: Southern District of Ohio (Columbus) Judge: John E. Hoffman Debtor's Counsel: James E. Nobile, Esq. Nobile, Needleman & Thompson, LLC 4511 Cemetery Road, Suite B Hilliard, OH 43026 Tel: (614) 529-8600 Fax: (614) 529-8656 Total Assets: $2,104,500 Total Debts: $617,802 Debtor's Seven Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Kristier Realty, LLC $150,000 c/o Plunkett & Cooney, P.C. 300 East Broad Street, Suite 590 Columbus, OH 43215 David & Irma Rivera $125,000 c/o Hrabcak & Co., LPA 63 East Wilson Bridge Road Columbus, OH 43085 Performance Paving, Inc. $51,000 1040 Brentnell Avenue Columbus, OH 43219 American Electric Power $10,384 P.O. Box 24401 Canton, OH 44701-4401 City of Columbus $7,418 Water & Sewer Services P.O. Box 182882 Columbus, OH 43218-2882 Time Warner Cable $4,000 P.O. Box 741803 Cincinnati, OH 45274-1803 David Van Slyke $0 Plunkett & Cooney 300 East Broad Street, Suite 590 Columbus, OH 43215 CALPINE CORP: Fitch Withdraws Junk Rating on Sr. Unsecured Debt --------------------------------------------------------------- Fitch has withdrawn ratings on Calpine Corp and Unit Calpine Canada Energy Finance ULC's guaranteed by Calpine Corp.: -- Issuer Default Rating 'D'; -- First Priority Secured Notes 'B/RR1'; -- Second Priority Secured Notes 'B-/RR1'; and, -- Senior Unsecured Debt 'CC/RR5'. Calpine Corp. filed for bankruptcy on Dec. 20, 2005. At that time, Fitch's asset valuations and recovery analysis indicated strong recovery potential for first and second lien debt holders and both debt classes were accorded recovery ratings of RR1. Since the bankruptcy filing, pricing for competitive generators such as Calpine has strengthened and recovery prospects across the capital structured has improved. Ultimate recovery prospects will await final resolution of the bankruptcy petition, at which time Fitch may reestablish ratings coverage. CARIBE MEDIA: S&P Puts B Senior Debts' Rating on Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and 'CCC+' senior unsecured debt ratings on CBD Media Holdings LLC and its 'CCC+' subordinated debt rating on CBD Media LLC on CreditWatch with negative implications. At the same time, Standard & Poor's placed its 'B' corporate credit and senior secured debt ratings on Caribe Media Inc and ACS Media LLC on CreditWatch with negative implications. The CreditWatch listings reflect the agreement between Local Insight Media LLC (formerly named Caribe Acquisition Holdings LLC) and CBD Media LLC to combine their businesses. Local Insight Media is the ultimate holding company of Caribe Media Inc. and ACS Media LLC. The agreement calls for 100% of the membership interest of CBD Media Holdings, the parent of CBD Media, to be contributed to Local Insight Media. Spectrum Equity Investors owns about 95% of CBD Media Holdings. Local Insight Media is owned by Welsh, Carson, Anderson & Stowe. Upon completion of the transaction, which is expected in the 2007 first quarter, WCAS will own a majority of Local Insight Media, with Spectrum holding a significant minority position. Pro forma revenues for the combined company are about $200 million. Standard & Poor's will review its ratings after evaluating the operating and financial strategies of the individual companies and that of the consolidated entity. If Standard & Poor's were to lower the ratings on the three companies, it is expected to be limited to one notch. CBD MEDIA: Moody's Holds Corporate Family Rating at B2 ------------------------------------------------------ Moody's Investors Service affirmed CBD Media Holdings LLC's Corporate Family rating and changed the rating outlook to developing from stable after the company's report that it has executed a definitive agreement to combine its business with Local Insight Media LLC. The ratings affirmed comprise: * CBD Media Holdings LLC's -- Corporate Family rating at B2 -- PDR: B2 -- 9.25% Senior global notes due 2012 at Caa1, LGD5, 89% * CBD Media LLC's -- Senior secured revolving credit facility due 2009 at Ba2, LGD2, 13% -- Senior secured term loan C due 2009 at Ba2, LGD2, 13% -- 8.625% Senior subordinated global notes due 2011 at B2, LGD4, 56% The rating outlook is changed to developing from stable. The impact on the company's capital structure is currently unclear, but Moody's stated that it expects to refresh ratings once it has reviewed the combined entity's capital structure. Moody's expects to withdraw CBD's Corporate Family rating and PDR at closing as CBD will be operated as a subsidiary of Local Insight Media. Ratings on specific CBD debt issues will also be withdrawn at closing, if such debt is refinanced. Headquartered in Cincinnati, Ohio, CBD Media is the exclusive telephone directory publisher for Cincinnati Bell-branded yellow pages in the Cincinnati-Hamilton metropolitan area. The company posted $87 million of revenue in the last twelve months ended September 2006. CBD MEDIA: S&P Places Junk Rating on Sr. Debt on Negative Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and 'CCC+' senior unsecured debt ratings on CBD Media Holdings LLC and its 'CCC+' subordinated debt rating on CBD Media LLC on CreditWatch with negative implications. At the same time, Standard & Poor's placed its 'B' corporate credit and senior secured debt ratings on Caribe Media Inc and ACS Media LLC on CreditWatch with negative implications. The CreditWatch listings reflect the agreement between Local Insight Media LLC (formerly named Caribe Acquisition Holdings LLC) and CBD Media LLC to combine their businesses. Local Insight Media is the ultimate holding company of Caribe Media Inc. and ACS Media LLC. The agreement calls for 100% of the membership interest of CBD Media Holdings, the parent of CBD Media, to be contributed to Local Insight Media. Spectrum Equity Investors owns about 95% of CBD Media Holdings. Local Insight Media is owned by Welsh, Carson, Anderson & Stowe. Upon completion of the transaction, which is expected in the 2007 first quarter, WCAS will own a majority of Local Insight Media, with Spectrum holding a significant minority position. Pro forma revenues for the combined company are about $200 million. Standard & Poor's will review its ratings after evaluating the operating and financial strategies of the individual companies and that of the consolidated entity. If Standard & Poor's were to lower the ratings on the three companies, it is expected to be limited to one notch. CENTRAL AMERICAN: Moody's Lifts Sr. Notes' Rating to B1 from B2 --------------------------------------------------------------- Moody's Investors Service upgraded the rating for The Central American Bottling Corporation's 9% senior unsecured notes, due 2009, to B1 from B2, and assigned a corporate family rating of B1. The rating outlook is stable. "The upgrade reflects CABCORP's relatively healthy credit metrics and financial policies, and its solid operating performance since the company was first rated by Moody's in February 2004", said Moody's analyst Sebastian Hofmeister. CABCORP's B1 CFR is based on the company's valuable beverage franchises and its role as PepsiCo's anchor bottler in Central America. In the context of Moody's Rating Methodology for the Global Soft Beverage Industry, CABCORP receives Baa scores on market position, product innovation and product diversity, which are supported by consistent local market execution and the access to PepsiCo's broad brand portfolio. Scores of Ba and Baa for credit metrics as well as Ba for profitability also support the rating. Offsetting these strengths are CABCORP's limited, single-B type scale, its modest track record of free cash flow generation and a pronounced emerging markets exposure. The latter two factors explain most of the gap between the B1 CFR and the Ba2 yielded by Moody's Soft Beverage Rating Methodology. Headquartered in Guatemala City, Guatemala, The Central American Bottling Corporation is the anchor bottler for PepsiCo in the Central American countries of Guatemala, its largest market in terms of sales and earnings, Nicaragua, Honduras and El Salvador. CABCORP generates most its volume from carbonated soft drinks but continues to grow its non-CSD categories such as beer, juice, nectars and isotonic and energy drinks, which currently account for about 14% of total sales volume when including joint ventures. For the 12 months ended Sept. 30, 2006, sales reached about $401 million. CHURCH & DWIGHT: Moody's Upgrades Corporate Family Rating to Ba1 ---------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating of Church and Dwight Company Inc. to Ba1 from Ba2. This rating action reflects Moody's view that the incremental portfolio benefits achieved via recent acquisitions significantly offset the slightly higher leverage incurred over the last 12 months. At the same time, Moody's views CHD's historical track record of achieving solid organic growth and quickly integrating acquisitions in order to achieve expected synergies and restore credit metrics as key positive factors in the upgrade. The outlook is stable. "CHD's corporate family rating and stable outlook are supported by the company's consistent ability to generate solid operating performance from its diversified product portfolio of leading, innovative brands in its premium categories, and with sufficient scale, known brands and price competitiveness in its value categories," says Moody's Vice President Janice Hofferber. The company's participation in generally stable, disposable, household and personal care categories, its leading market share positions, its growth potential in international markets; and management's disciplined financial policies will continue to support free cash flow generation and deleveraging. The ratings are constrained by its smaller scale in relation to its competitors that often have significantly more financial flexibility, greater bargaining power with retail customers, and considerably larger resources available to seek market share gains in the respective categories. Moody's notes, however, that CHD's dual focus on brand support and cost efficiency combined with the company's balanced growth strategy are important offsets to scale. Recent acquisitions have been important strategic and synergistic additions to the portfolio and more importantly, CHD has a proven track record of effective integration. While Moody's anticipates that debt reduction will be an important priority for free cash flow, it recognizes that the company will continue to seek strategic opportunities to grow and will maintain its prudent financial policies in executing these strategies. Ratings upgraded: -- Corporate family rating to Ba1 from Ba2; -- Probability of default rating to Ba1 from Ba2; -- $100 million convertible senior debentures to Ba1, LGD4, 56% from Ba2, LGD4, 59%; and, -- $250 million senior subordinated notes due to Ba2, LGD5, 84% from Ba3, LGD5, 85%. Ratings affirmed: -- $100 million senior secured revolving credit facility due 2009, affirmed at Baa3; -- $528 million senior secured term loan A facility due 2011, affirmed at Baa3. Outlook is stable. Church and Dwight Company, Inc., based in Princeton, New Jersey, is a leading marketer and manufacturer of a broad portfolio of household and personal care consumer products, historically under the Arm and Hammer brand name, and is also the world's leading sodium bicarbonate producer. The company has grown significantly via acquisitions including the company's most recent acquisition in August 2006 of The Orange-Glo International Inc., a maker of OxiClean laundry additive, and the Orange Glo and Kaboom cleaner brands. Total revenues for the last twelve months ended September 2006 were approximately $1.9 billion. CLECO CORP: Completes Financing of Bonds Issued by Rapides Finance ------------------------------------------------------------------ Cleco Power LLC, a wholly owned subsidiary of Cleco Corporation, completed the financing of revenue bonds issued by the Rapides Finance Authority consisting of $60 million aggregate principal amount of the issuer's revenue bonds Series 2006 on Nov. 21, 2006. The bonds mature on Nov. 1, 2036 and bear interest while in a long-term rate at 4.70% per annum. The bonds are being issued pursuant to an indenture of trust, dated as of Nov. 1, 2006, between the issuer and The Bank of New York Trust Company, N.A., as trustee. On Nov. 21, 2006, Cleco Power entered into a Loan Agreement, dated as of Nov. 1, 2006, with the issuer whereby the company has agreed to make payments sufficient to pay the principal of, premium, if any, and interest on the bonds. The proceeds of the bonds will be used to pay a portion of the costs of the acquisition, improvement, installation and construction by Cleco Power of facilities for solid waste disposal and sewage disposal facilities at Cleco Power's solid fuel Rodemacher Unit 3 power plant to be located in Boyce, Rapides Parish, Louisiana. The payment of the principal of and interest on the bonds when due are insured by a financial guaranty insurance policy issued by Ambac Assurance Corporation. Cleco Power and the bond insurer have entered into an insurance agreement, dated as of Nov. 1, 2006, pursuant to which Cleco Power has agreed, among other things, to pay a premium to the bond insurer and to reimburse the bond insurer for any payments made under the bond insurance policy. Payment of the principal of and premium, if any, and interest on the bonds will be secured by an assignment by the issuer to the trustee of the issuer's interest in the agreement and all payments to be made under the agreement. The bonds will not be secured by a mortgage or a security interest in the project or any other property of Cleco Power. A full-text copy of the loan agreement dated as of Nov. 1, 2006 between Cleco Power LLC and the Rapides Finance Authority is available for free at: http://researcharchives.com/t/s?172d Headquartered in Pineville, Louisiana, Cleco Corp. (NYSE:CNL) -- http://www.cleco.com/-- is a regional energy services holding company that conducts substantially all of its business operations through its two principal operating business segments: Cleco Power, an integrated electric utility services subsidiary which also engages in energy management activities, and Cleco Midstream , a merchant energy subsidiary that owns and operates a merchant generation station, invests in a joint venture that owns and operates a merchant generation station, and owns and operates transmission interconnection facilities. In March 2003, Moody's Investors Service assigned a Ba2 rating to Cleco Corp.'s Preferred Stock. COLFAX CORP: S&P Affirms Ratings and Says Outlook is Stable ----------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Colfax Corp. to stable from positive. At the same time, Standard & Poor's affirmed the 'BB-' corporate credit and secured bank loan ratings. "The outlook revision follows Colfax's announcement of its planned acquisition of Lubrication Systems Company and resulting debt leverage that exceeds our expectations required for a higher rating," said Robert Wilson Standard & Poor's credit analyst. The meaningful debt increase from the proposed acquisition results in a financial profile commensurate with the current rating. The ratings on Richmond, Virginia-based Colfax, a leading marketer and manufacturer of pump products to the oil and gas and power generation industries, among others, reflect the company's weak business profile. Also, the company's financial policy remains aggressive. Colfax is expected to continue to invest in its fluid-handling segment, where it maintains leading niche positions, albeit in mature markets. COLLINS & AIKMAN: Excl. Plan-Filing Period Intact Until Jan. 12 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan extend Collins & Aikman Corporation and its debtor-affiliates' exclusive periods to: -- file a plan of reorganization through and including deadline through and including Jan. 12, 2007; and -- solicit acceptances of the plan through and including March 14, 2007. As reported in the Troubled Company Reporter on Dec. 6, 2006, the Debtors sought for a bridge order extending their exclusive right to file a plan of reorganization and to solicit plan acceptances. The Debtors told the Honorable Steven W. Rhodes that the proposed extension is consistent with their decision to pursue a cooperative sale process to maximize the value of their estates and to save jobs. The Debtors expect the sale process to culminate with the Plan confirmation. A brief extension of the Exclusivity Periods is intended to enable the Debtors to continue the Plan process in an orderly, efficient and cost-effective manner for the benefit of all parties. 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 US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). COLLINS & AIKMAN: Seeks Approval of Deal with Customers & JPMorgan ------------------------------------------------------------------ Collins & Aikman Corporation and its debtor-affiliates are pursuing a cooperative sale process, which they expect will culminate with the confirmation of a plan. In connection with this, the Debtors have worked very hard with its major customers - - including DaimlerChrysler Corporation, Ford Motor Company, General Motors Corporation and Auto Alliance International, Inc. - - and JPMorgan Chase Bank, N.A., as agent to the senior, secured prepetition lenders and as agent to the senior, secured postpetition lenders, to negotiate an agreement that will form the basis of a plan. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, New York, relates that the parties have successfully negotiated a comprehensive customer agreement that, among other things: (a) provides for a framework to facilitate the orderly sale of a majority of the Debtors' businesses with the support of JPMorgan and the Customers; (b) provides a meaningful opportunity to save thousands of jobs; (c) memorializes an agreement among the Debtors, JPMorgan and the Customers on the substantive terms of a Chapter 11 plan; and (d) provides a clear framework toward a consensual resolution and conclusion to the Debtors' highly complex cases. While the Debtors believe that the sale of their carpet & acoustics business, with its strong fundamental business operations and its consistently positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) results, will provide them with significant funds, they believe that their plastics & convertibles businesses require additional support from the Customers if the Debtors are to maximize the value of the related assets. The concessions that the Debtors are seeking from the Customers in the Customer Agreement would allow the Debtors to continue operating their Plastics & Convertibles business while, at the same time, market certain of these assets to allow them to maximize value, preserve the maximum number of jobs related to these business lines and wind down in an orderly fashion plants that are not saleable, Mr. Schrock avers. Without these concessions, however, the Debtors would have to sell assets quickly or not at all, which would undeniably diminish recoveries and create claims against the Debtors by the Customers -- for the inevitable consequential breach of the Debtors' various contracts with the Customers -- that would materially dilute the funds available for distribution to the Debtors' creditors, Mr. Schrock asserts. Moreover, if the Debtors cease operations, it likely would materially disrupt United States automobile manufacturing on a global basis and cause significant harm to the Customers, Mr. Schrock adds. Consequently, it is essential for both the Debtors and the Customers that the Debtors' plants continue to operate. The Customer Agreement will be effective as of November 26, 2006. The parties agree that the Debtors will file a reorganization plan that conforms to the terms set forth in a Plan Term Sheet and is otherwise consistent with the provisions of the Customer Agreement. The parties agree to support the Plan so long as the proposed treatment of the Parties' claims, if any, under the Plan is not materially worse than the treatment set forth on the Plan Term Sheet as determined by the respective parties in their reasonable discretion; and the releases set forth on the Plan Term Sheet are in the Plan. However, nothing in the Customer Agreement will be deemed a solicitation of votes to accept the Plan, Mr. Schrock informs the U.S. Bankruptcy Court for the Eastern District of Michigan. Pursuant to the Funding Protocol and in accordance with the budget stated in the Customer Agreement: (a) From the Effective Date through the earlier of the exit date for the Plastics & Convertibles plants, or the closing date of a sale to a qualified buyer, the Supplier and each major Plastics & Convertibles Customer will pay the costs incurred in operating each of the Plastics & Convertibles Plants allocable to the production of a Customer's component parts; (b) On the Effective Date and through the cessation of production at the Plastic & Convertibles Plants, the Supplier will pay and each of the major Plastics & Convertibles Customer will fund 100% of its allocable share of the administration expenses; and (c) From the Effective Date through the earlier to occur of the cessation of production at the Plant or June 30, 2007, the Supplier will pay and each Major Plastics & Convertibles Customer will fund the 100% of its allocable share of the Supplier's estate professional fees and expenses as well as that of JPMorgan and its advisors. The "Supplier" will consist of the Debtors and its non-Debtor subsidiaries and affiliates, excluding Collins & Aikman Automotive Hermosillo, S.A. de C.V. JPMorgan consents to the Supplier's use, if the need arises, of its cash collateral in order to satisfy the Supplier's obligations to fund its allocable share of the costs. Mr. Schrock tells the Court that the Customers agree that: -- any claim arising from any rights to its repayment approved by the Court for the launch costs paid by the Customers during the Debtors' Chapter 11 case; junior secured claims, and the $30,000,000 administrative loan, will be waived and discharged; -- any claim for cap-ex will be treated as provided by the agreements relating to the cap-ex funding and the Court order approving the agreements or as set forth in the Plan Term Sheet; -- it will not assert a claim against the Supplier in its Chapter 11 cases for special or consequential damages and the claims will be waived and discharged; -- any other administrative expense claim against the Supplier for damages, the amounts paid pursuant to the Customer Agreement, and all other special or consequential damages arising out of or in any way relating to the Supplier's inability to perform, or breach of performance, under that Customer's production and service contracts relating to the Plastics & Convertibles Plants will be waived and discharged; and -- any other claim that would otherwise have to be paid in cash in full pursuant to Section 1129(a)(9)(A) of the Bankruptcy Code under a confirmed Chapter 11 plan will be waived and discharged. Retention bonuses will be paid to certain individuals in accordance with the Customer Agreement. The Supplier will pay and the relevant Customers will fund the Retention Bonuses in accordance with the Funding Protocol. The Customers agree not to exercise any set-off or reductions against postpetition accounts payable, other than ordinary course set-offs. However, the agreement will not affect any set-offs, recoupments or reductions a Customer exercised and implemented prior to November 1, 2006, against postpetition accounts payable prior to the Effective Date so long as the Supplier knew of the amount of the set-offs, recoupments or reductions based upon the Supplier's receipt of debit memoranda or other customary notification by the Customer to the Supplier. The Customers also agree to support the Supplier's efforts to sell, either as a whole or in part, to one or more qualified buyers the plants and divisions listed in the Customer Agreement. Mr. Schrock relates that a "Supplier Default" occurs if: (i) the Supplier fails to meet its obligations to continue to produce component parts at a given plant as required by the Customer Agreement, (ii) the Supplier fails to pay the obligations it has undertaken to pay in the Customer Agreement at a given plant for a reason other than the Customer's failure to fund in a timely manner, or (iii) the Supplier's secured lenders terminate the Supplier's right to use cash collateral or otherwise enforce remedies upon an occurrence of an event of default under the terms of the Supplier's loan agreements. No Supplier Default will occur due to: (a) a force majeure event, (b) lack of funding for cap-ex, tooling or launch costs, or (c) the failure of a Customer to fund under the Customer Agreement. If any of the Customers fail to fund, reimburse or pay the Supplier pursuant to the terms of the Customer Agreement, the Supplier may, but will not be obligated to, after three business days written notice to the Customer causing the "Customer Payment Failure," cease production for the Customer, which cessation will not be a Supplier Default. As part of the Customer Agreement, the parties will also sign an access agreement that provides the Customers with certain rights to take control of the Supplier's plants and facilities to produce parts if the Supplier defaults on certain obligations. Mr. Schrock maintains that the Customer Agreement provides the Debtors with numerous benefits, including: (a) allowing the Debtors to avoid a forced shut-down of their operations; (b) providing the Debtors with millions of dollars in ongoing funding; (c) reducing the Customers' administrative claims against the Debtors' estates and waiving future claims of the Customers relating to the wind-down of certain of the Debtors' operations; (d) providing the Debtors with Customer-commitments to not resource certain products; (e) providing the Debtors with a recovery that will maximize the value of the Debtors' working capital; and (f) providing the Debtors with the support of the Customers and the JPMorgan for the sale of the Debtors' businesses and a Chapter 11 plan. Accordingly, the Debtors ask the Court to approve the Customer Agreement. The Debtors also ask Judge Rhodes to conduct an expedited preliminary hearing on their request and authorize them from and after the entry of an interim order to obtain the financing provided under the Customer Agreement. The Debtors ask the Court to conduct the final hearing on their request on January 11, 2007. A full text copy of the Customer Agreement is available for free at http://researcharchives.com/t/s?172a The Debtors filed under seal certain confidential exhibits to the Customer Agreement: * Exhibit B - Plastics & Convertibles Production Payments and Obligations Budget; Funding Protocol * Exhibit C - Administration Expenses and Professional Fees and Expenses Budget * Exhibit D - Retention Bonus Budget * Exhibit F - Prepetition Payables/Customer-Specific Resolution * Exhibit G - Sale Facilities & Determination Dates * Exhibit H - Administrative Expenses and Priority Claims that May be Absorbed by the Estate and Secured Lenders' Collateral * Exhibit K - Non-Participating Customer Letter * Exhibit L - Inventory Bank Build Schedule Pursuant to Section 107(d) of the Bankruptcy Code, the Debtors had sought and obtained the Court's authorization to file the Exhibits under seal. Mr. Schrock explained to Judge Rhodes that the Debtors and the Customers would be competitively disadvantaged in a sale process and in the operation of their businesses by the disclosure of the information contained in the Exhibits. Responses (a) AAI and Ford Two of the Debtors' Customers, AutoAlliance International, Inc., and Ford Motor Company, have been parties to intense negotiations regarding the Customer Agreement. Timothy A. Fusco, Esq., at Miller, Canfield, Paddock and Stone, P.L.C., in Detroit, Michigan, however, tells the Court that there are issues that need to be addressed to satisfaction before AAI and Ford can be in a position to join in the Customer Agreement. Mr. Fusco notes that the Motion was filed without AAI's and Ford's consent, with a hearing scheduled on very short notice. Moreover, according to Mr. Fusco, drafts of the Customer Agreement continue to be circulated and it is almost impossible to determine which version of the various documents is the most current one for review and comment. Both AAI and Ford do not accept the proposed Funding Protocol in its current form. If the Court is inclined to give initial approval to the Motion, any Customer Agreement should be conditional upon submission of final documents and a reasonable time for the parties to review, Mr. Fusco suggests to the Court. (b) Creditors Committee While the Official Committee of Unsecured Creditors and its professionals are extremely frustrated at the turn the Debtors' Chapter 11 cases have taken, the Committee is supportive of the concept of the Customer Agreement to the extent it will bring liquidity into the Debtors' estates to facilitate a robust sale process that will enable the Debtors to realize maximum value for their assets for the benefit of the Debtors' unsecured creditors. Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, New York, relates the Committee, however, is still in the process of reviewing and analyzing the terms of the Customer Agreement and the related relief requested by the Debtors. Thus, the Committee reserves its rights to file an objection, on any grounds, to the final approval of the Customer Agreement. Mr. Freeman states that the Committee is particularly concerned with the provisions of the Customer Agreement that contemplate global releases for the Customers. The Debtors have agreed to release all claims and causes of action against the Customers despite the Committee's views throughout the Debtors' cases that the Customers must be held accountable for their prepetition conduct; and without quantifying the value of the claims and causes of action that they have agreed to release. Since the early stages of the Debtors' cases, the Committee has been troubled by the Debtors' reluctance to prosecute potentially valuable causes of action against their Customers. The Customer Agreement has amplified the Committee's concerns in this regard as the Customer Agreement demonstrates the Debtors' willingness to waive potentially valuable claims and causes of action that they hold against the Customers, Mr. Freeman says. Accordingly, according to Mr. Freeman, in connection with the plan process, the Committee must be afforded the opportunity to investigate fully any and all claims assertable against the Customers; and the Debtors must be required to demonstrate that the releases provide a quantifiable benefit to their estates well in excess of the value of the potential causes of action against the Customers. 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 US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONVERIUM HOLDINGS: S&P Raises Credit Rating to BBB from BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services raised its counterparty credit rating on Converium Holdings (North America) Inc. to 'BBB' from 'BB+' and removed it from CreditWatch with positive implications, where it was placed on Oct. 17, 2006. Standard & Poor's also said that the outlook on CHNA is stable. "The upgrade reflects the closing of National Indemnity Co.'s (NICO; AAA/Stable/--) acquisition of Converium group's North American operations," said Standard & Poor's credit analyst Damien Magarelli. "This includes CHNA and Converium Reinsurance (North America) Inc." Standard & Poor's views CHNA and its units as a collective nonstrategic holding of NICO, but the bondholders do benefit from NICO's ownership of CHNA. Although S&P believes NICO will service CHNA's debt in the near term, as CHNA's subsidiaries remain in receivership and cannot yet pay dividends to service debt, it remains uncertain that CHNA bondholders benefit from the financial strength of NICO over the long term without explicit support. COOPER COMPANIES: Weak Financial Results Cue S&P's Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Lake Forest, California-based specialty medical device maker Cooper Companies Inc., including the 'BB' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing reflects the company's weak fiscal 2006 fourth quarter and its downward revision in guidance for 2007, the most recent in a succession of lowered expectations," explained Standard & Poor's credit analyst Cheryl Richer. Prospectively, lower cash flow will limit Cooper's ability to pay down debt as quickly as we had anticipated. Contributing to the 3% constant currency drop over the 2005 period were delays in the consolidation of U.S. distribution facilities, a more complex silicone hydrogel ramp up than expected, and a slowdown in global demand for soft contact lenses. Furthermore, as the market transitions to silicone hydrogel lenses, estimated by Cooper to be 44% of new patient fits, the inability to capture customers translates into lost market share opportunities given that historical switching patterns are low. The 'BB' rating reflects Cooper's largely single product line focus and its need to compete against much larger players. This is partially offset by its solid No. 3 position (18% global market share) in the $4 billion soft contact lens industry. The company is exposed to technology changes, as well as the risks inherent in integrating its largest ever acquisition (Ocular Sciences Inc.), made in January 2005--a process expected to span three years. Despite the recent slowdown in demand (which could be attributed to inventory build up), Cooper benefits from favorable industry demographics, a growing teen population (the primary users), increased incidence of myopia, and continued improvement in soft contact lens visual acuity, comfort, and care. Standard & Poor's will meet with management to discuss its strategy in addressing our concerns. S&P expects to resolve the CreditWatch listing in January. COUDERT BROTHERS: Panel Clamors for Ch. 11 Trustee Appointment -------------------------------------------------------------- The Official Committee of Unsecured Creditors of Coudert Brothers, LLP, asks the U.S. Bankruptcy Court for the Southern District of New York to appoint a Chapter 11 Trustee in the Debtor's bankruptcy case. David J. Adler, Esq., at McCarter & English, LLP, tells the Court that a Chapter 11 trustee will: a) investigate the circumstances that led to the Debtor's demise and to determine if the estate has claims against others that may be pursued for the benefit of creditors. b) complete the liquidation of the estate and perform the traditional bankruptcy tasks of receivables collection, miscellaneous asset disposition, claims administration and distribution; and c) pursue and defend litigation on behalf of the estate. The Committee complains that the Debtor has "recklessly" engineered a wind down designed to protect its partners at the expense of its creditors. Because of this reckless wind down, the Committee says the Debtor's financial condition continues to deteriorate. The Committee argues that only an independent trustee can fairly and competently liquidate the Debtor's remaining assets. Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The firm had operations in Australia and China. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor in its restructuring efforts. Brian F. Moore, Esq., and David J. Adler, Esq., at McCarter & English, LLP, represent the Official Committee Of Unsecured Creditors. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of US$18,261,380. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 20, 2007. COUDERT BROTHERS: Hires Kurtzman Carson as Claims Agent ------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York authorized Coudert Brothers LLP to retain Kurtzman Carson Consultants LLC as its claims agent. The Debtor tells the Court that Kurtzman Carson's assistance will expedite the service of notices, streamline the claims administration process, and permit the Debtor to focus efficiently on its reorganization efforts. As claims agent, Kurtzman Carson will: a) maintain an official copy of the Debtor's schedules of assets and liabilities and statement of financial affairs listing the Debtor's known creditors and the amounts owed them; b) notify all potential creditors of the existence and amount of their respective claims as evidenced by the Debtor's books and records and as set forth in the Schedules; c) furnish a notice of the last date for the filing of proofs of claims and a form for the filing of a proof of claim; d) file with the Clerk an affidavit or certificate of service with a copy of the notice, a list of persons to whom it was mailed, and the date the notice was mailed, within 10 days of service; e) docket all claims received, maintain the official claims register for the Debtor on behalf of the Clerk, and provide the Clerk with certified duplicate unofficial Claims Register on a monthly basis; f) specify, in the Claims Register, these information for each claim docketed: -- the claim number assigned; -- the date received; -- the name and address of the claimant and agent, if applicable, who filed the claim; and -- the classification(s) of the claim g) relocate, by messenger, all of the actual proofs of claim filed to KCC, not less than weekly; h) record all transfers of claims and provide any notices of such transfers required by Rule 3001 of the Federal Rules of Bankruptcy Procedure; i) make changes in the Claims Register pursuant to Court Order; j) upon completion of the docketing process for all claims received to date by the Clerk's office, turn over to the Clerk copies of the Claims Register for the Clerk's review; k) maintain the official mailing list for the Debtor of all entities that have filed a proof of claim; l) assist with, among other things, solicitation and calculation of votes and distribution as required in furtherance of confirmation of the chapter 11 plan; and m) at the close of the case, box and transport all original documents in proper format, as provided by the Clerk's office, to the Federal and Record Administration. Applicable fees for Kurtzman Carson's professionals are: Designation Hourly Rate ----------- ----------- Clerical $40 to $65 Project Specialist $75 to $115 Consultant $125 to $195 Sr. Consultant / Sr. Managing Consultant $205 to $250 Technology / Programming Consultant $115 to $195 Kurtzman Carson assures the Court that it does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. A copy of Kurtzman Carson's engagement agreement is available for free at http://researcharchives.com/t/s?1745 Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The firm had operations in Australia and China. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor in its restructuring efforts. Brian F. Moore, Esq., and David J. Adler, Esq., at McCarter & English, LLP, represent the Official Committee Of Unsecured Creditors. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of US$18,261,380. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 20, 2007. CHRISTOPHER WICKSTROM: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Christopher Jon Wickstrom aka CC Queen Anne Realty Trust aka Pudgy Dog Realty Trust aka Full Throttle Realty Trust 33 Wooncepit Road Harwichport, MA 02645 Tel: (508) 432-0982 Bankruptcy Case No.: 06-14571 Type of Business: The Debtor is the president of Wickstrom Materials Corp., which filed for chapter 11 protection on May 22, 2006 (Bankr. D. Mass. Case No. 06-11513). Chapter 11 Petition Date: December 4, 2006 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Frank D. Kirby, Esq. Frank D. Kirby & Associates, P.C. 111 West 8th Street South Boston, MA 02127 Tel: (617) 269-5444 Fax: (860) 257-3398 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. CSFB HOME: S&P Holds Low-Ratings on 12 Certificate Classes ---------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of home equity pass-through certificates from three CSFB Home Equity Mortgage Trust transactions. Concurrently, ratings on 111 classes from 15 series from the same issuer are affirmed. The upgrades reflect increases in the actual and projected credit support percentages to the respective classes due to the significant paydown of the collateral pools and the shifting interest structure of the transactions. In addition, the senior certificates for two of the three transactions have already paid down completely, and the senior classes for the other series are projected to fully pay down in two months. As a result, the credit support percentages for the upgraded classes are approximately twice the original percentages at the new rating levels. As of the November 2006 remittance date, these transactions had outstanding pool principal balances of 18.43% for series 2004-3, 25.19% for series 2004-5, and 26.02% for series 2004-6. Total delinquencies were 8.87%, 6.48%, and 9%, respectively, while cumulative realized losses were 2.52%, 1.39%, and 1.59%, respectively. The affirmed ratings reflect adequate actual and projected credit support percentages for the respective classes. Total delinquencies for the transactions with affirmed ratings ranged from 3.92% for series 2005-HF1 to 10.60% for series 2003-7. Cumulative realized losses ranged from 0.02% for series 2006-1 to 2.40% for series 2005-1. These transactions are at or are building to their respective overcollateralization targets. Credit support for these transactions is provided by subordination, overcollateralization, and excess interest cash flow. The collateral consists primarily of 30-year, fixed-rate, closed-end second-lien mortgage loans secured by one- to four- family residential properties. Ratings Raised CSFB Home Equity Mortgage Trust Home equity pass-through certificates Series Class To From ------ ----- -- ---- 2004-3 M-1 AA+ AA 2004-3 M-2 AA AA- 2004-5 M-1 AA+ AA 2004-6 M-1 AA+ AA 2004-6 M-2 A+ A Ratings Affirmed CSFB Home Equity Mortgage Trust Home equity pass-through certificates Series Class Rating ------ ----- ------ 2003-6 P AAA 2003-6 M-2 A 2003-6 B-1, B-2 BBB 2003-7 P AAA 2003-7 B BBB 2004-1 P AAA 2004-1 M-2 A 2004-1 B BBB 2004-2 P AAA 2004-2 M-2 A 2004-2 B-1 BBB+ 2004-2 B-2 BBB 2004-2 B-3A, B-3F BBB- 2004-3 P AAA 2004-3 M-3 A+ 2004-3 M-4 A 2004-3 M-5 A- 2004-3 B-1 BBB+ 2004-3 B-2A, B-2F BBB 2004-4 A-4, P AAA 2004-4 M-1 AA+ 2004-4 M-2 AA 2004-4 M-3 AA- 2004-4 M-4 A+ 2004-4 M-5 A 2004-4 M-6 A- 2004-4 B-1 BBB+ 2004-4 B-2 BBB 2004-4 B-3 BBB- 2004-5 A-2, P AAA 2004-5 M-2 A 2004-5 B-1 BBB+ 2004-5 B-2 BBB 2004-5 B-3 BBB- 2004-6 P AAA 2004-6 M-3 BBB+ 2004-6 M-4 BBB 2004-6 M-5 BBB- 2004-6 B-1 BB+ 2004-6 B-2 BB 2005-1 A-1, P AAA 2005-1 M-1 AA+ 2005-1 M-2 AA 2005-1 M-3 AA- 2005-1 M-4 A+ 2005-1 M-5 A 2005-1 M-6 A- 2005-1 M-7 BBB+ 2005-1 M-8 BBB 2005-1 M-9 BBB- 2005-1 B-1 BB+ 2005-1 B-2 BB 2005-3 B-1 BB+ 2005-3 B-2 BB 2005-4 A-1, A-2B, A-3, A-4, P AAA 2005-4 M-1 AA+ 2005-4 M-2 AA 2005-4 M-3 AA- 2005-4 M-4 A+ 2005-4 M-5 A 2005-4 M-6 A- 2005-4 M-7 BBB+ 2005-4 M-8 BBB 2005-4 M-9F, M-9A BBB- 2005-4 B-1, B-2 BB+ 2005-5 A-1A, A-1F1, A-1F2, A-2A, A-2F, P AAA 2005-5 M-1 AA+ 2005-5 M-2 AA 2005-5 M-3 AA- 2005-5 M-4 A+ 2005-5 M-5 A 2005-5 M-6 A- 2005-5 M-7 BBB+ 2005-5 M-8 BBB 2005-5 M-9 BBB- 2005-5 B-1 BB+ 2005-HF1 A-1, A-2A, A-2B, A-3A, A-3B, G, P AAA 2005-HF1 M-1 AA+ 2005-HF1 M-2 AA 2005-HF1 M-3 AA- 2005-HF1 M-4 A+ 2005-HF1 M-5 A 2005-HF1 M-6 A- 2005-HF1 M-7 BBB+ 2005-HF1 M-8 BBB 2005-HF1 M-9 BBB- 2005-HF1 B-1 BB+ 2005-HF1 B-2 BB 2006-1 A-1A1, A-1A2, A-1B, A-1F, A-2, A-3 AAA 2006-1 M-1 AA+ 2006-1 M-2 AA 2006-1 M-3 AA- 2006-1 M-4 A+ 2006-1 M-5 A 2006-1 M-6 A- 2006-1 M-7 BBB+ 2006-1 M-8 BBB 2006-1 M-9 BBB- 2006-1 B-1 BB+ 2006-2 1A-1, 1A-2, 1A-3, 1P, 2A-1, 2P, G AAA 2006-2 1M-1 AA+ 2006-2 1M-2 AA 2006-2 1M-3 AA- 2006-2 1M-4 A+ 2006-2 1M-5 A 2006-2 1M-6 A- 2006-2 1M-7 BBB+ 2006-2 1M-8 BBB 2006-2 1M-9, 2M-1 BBB- 2006-2 1B-1 BB+ 2006-2 1B-2 BB CVS CORP: Inks Merger Agreement With Caremark Rx ------------------------------------------------ Caremark Rx Inc. and CVS Corporation have entered into a definitive merger agreement to create the nation's premier integrated pharmacy services provider. Under the terms of the agreement, which is a merger of equals, Caremark shareholders will receive 1.67 shares of CVS for each share of Caremark. The exchange ratio was determined by the parties based on an average of the closing prices of the two companies over a mutually agreed trading period before signing. The merger is expected to create significant benefits for employers and health plans through more effective cost management and innovative new programs, and for consumers through expanded choice, unparalleled access, and more personalized services. It is also expected to drive substantial value for shareholders through a number of benefits anticipated from the combination. These anticipated benefits include: -- increased competitive strength, -- the ability to achieve significant synergies from the combination, -- accretion to earnings in the first full year, -- cash flow generation opportunity, and -- a platform from which to accelerate growth. The combined business is expected to fill or manage over one billion prescriptions per year. The new company will be called CVS/Caremark Corporation and be headquartered in Woonsocket, Rhode Island. The new pharmacy services business, including the combined pharmacy benefits management, specialty pharmacy, and disease management businesses, will be headquartered in Nashville, Tennessee. Combined projected revenues for CVS and Caremark for 2006 are estimated to be approximately $75 billion, after adjusting for inter-company transactions. "Combining Caremark's expertise in serving employers and health plans with CVS's expertise in serving consumers will create a powerful force for change in pharmacy services," Caremark chairman, chief executive officer, and president Mac Crawford said. "Caremark has been focusing on moving our services closer to the consumer as the consumer is being asked to become more involved in their own healthcare decisions through changes in plan designs, the adoption of consumer directed plans and, of course, the introduction of Medicare Part D. "This merger creates a significant platform to address the needs of both payors and consumers by providing high-quality, cost- effective services in a manner that is convenient, flexible and easy for the consumer to navigate and understand." "This merger is a logical evolution for CVS, Caremark and the entire pharmacy industry," CVS chief executive officer, chairman, and president Tom Ryan said. "Over the past year, Mac and I have developed a shared view of where the healthcare market needs to go and how we can work together to get there first. "Employers and health plans want to control costs, but also want their plan members to have access to a full range of integrated pharmacy services. "Consumers of prescription drugs demand convenience and want to get more for their healthcare dollar. Together, CVS and Caremark will help manage the costs and complexities of the U.S. healthcare system, offering unparalleled access and driving superior healthcare outcomes, enhancing value for employers, health plans and consumers." Merger Combines Two Industry Leaders This transaction addresses the rapidly changing dynamics of today's healthcare delivery system. Healthcare is becoming more consumer-centric as the U.S. healthcare system strains to manage growing costs and employers shift more responsibility for managing costs to employees. An aging population, increasing incidence of chronic disease and increasing utilization of the Medicare drug benefit is fueling demand for prescriptions and pharmacy services. Cost-effective generic drugs are becoming more widely available and new drug therapies to treat unmet healthcare needs and reduce hospital stays are being introduced. Consumers need medication management programs and better information to help them get the most out of their healthcare dollars. CVS/Caremark will be uniquely positioned to provide solutions that address these trends and will greatly improve the pharmacy services experience for consumers. The combined company will drive value for pharmacy services customers through an enhanced ability to assist and provide actionable information to plan participants and more effectively manage pharmacy cost trends. CVS/Caremark will have the opportunity to improve clinical outcomes, resulting in better control over healthcare costs for employers and health plans. CVS/Caremark also will be well positioned to offer broader disease management, health assessment and wellness services to help plan participants manage and protect against potential health risks and avoid future health costs. The merger combines CVS's PBM, PharmaCare, with Caremark. PharmaCare operates 51 retail specialty pharmacies and four mail- order pharmacies. CVS/Caremark will create the premier specialty pharmacy company in the country, with unmatched capabilities in this area. Additionally, PharmaCare, which has a history of serving small employers, increases Caremark's access to this customer channel, enabling the combined company to compete more effectively in this industry sector. Together, CVS/Caremark will have more than 180,000 employees, including more than 21,000 pharmacists and nurse practitioners. The vast majority of Caremark's and CVS's 2005 revenues were derived from pharmacy-related activities. Substantial Benefits to Stockholders The stock-for-stock transaction offers significant benefits for shareholders by combining two financially strong leaders in their respective industries. Substantial operating synergies of approximately $400 million are expected to be realized through increased purchasing scale and operating efficiencies. The companies expect the combination to be accretive in the first full year after close. The combined company is expected to be a cash flow generator, which will fuel the long-term growth of CVS/Caremark. Transaction Highlights Under the terms of the agreement, Caremark shareholders will receive 1.67 shares of CVS for each share of Caremark. The exchange ratio approximates the 90-day average ratio of the two companies' closing stock prices. On a pro forma basis, CVS stockholders will own 54.5% of the combined company, and Caremark stockholders will own 45.5%. The board of directors of the new company will be split evenly between Caremark and CVS. Mac Crawford will become chairman of CVS/Caremark and Tom Ryan will become president and chief executive officer. CVS chief financial officer David Rickard will be chief financial officer of CVS/Caremark, and Caremark senior executive vice president and chief operating officer Howard McLure will become president of the Caremark pharmacy services business. The transaction will be subject to stockholder approvals from both companies as well as customary regulatory approvals, including antitrust review in the U.S. under the Hart-Scott-Rodino statute pre-merger notification. The companies expect the transaction to close in six to 12 months. The combined company's ordinary shares will trade on the NYSE under the symbol "CVS." Caremark's financial advisors on the transaction were J.P. Morgan Securities Inc. and UBS Securities LLC, and its lawyers were King & Spalding LLP for general legal matters and Jones Day LLP on regulatory matters. CVS received its investment banking advice from Evercore Group L.L.C. and Lehman Brothers Inc., and it was advised on general legal matters by Davis Polk & Wardwell and on regulatory matters by Mintz Levin Cohn Ferris Glovsky and Popeo P.C. About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is America's largest retail pharmacy, operating approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on Nov. 15, 2006, Moody's Investors Service placed CVS Corp.'s Ba1 rating on $125,000,000 Series A-2 securities lease obligations on review for possible upgrade. CVS CORP: Caremark Rx Receives Express Scripts' Unsolicited Bid --------------------------------------------------------------- Caremark Rx Inc. acknowledged receipt of an unsolicited letter dated Dec. 18, 2006, from Express Scripts Inc. outlining a proposed transaction. On Nov. 1, 2006, Caremark executed a merger agreement with CVS Corp., which provides for the combination of the two companies in a transaction structured as a merger of equals. Caremark continues to be bound by the terms of the merger agreement and the parties anticipate filing a joint proxy statement with the Securities & Exchange Commission shortly. Caremark's Board of Directors will review the terms of the proposal submitted by Express Scripts in a manner consistent with its obligations under the CVS merger agreement and applicable Delaware law. Caremark will have no further comment on this matter at this time. CVS has not yet had an opportunity to review Express Scripts' offer. However, CVS notes that it has a definitive agreement with Caremark that will result in the creation of the nation's leading pharmaceutical services provider in a merger of equals transaction. CVS believes the prospects for completing that transaction are excellent, and it remains confident in the long- term strategic value of its combination as well as the benefit to shareholders of CVS and Caremark. About Express Scripts Headquartered in St. Louis, Missouri, Express Scripts Inc. (Nasdaq: ESRX) -- http://www.express-scripts.com/-- provides integrated PBM services, including network- pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost- management and patient- care services. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union- sponsored benefit plans. About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is America's largest retail pharmacy, operating approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on Nov. 15, 2006, Moody's Investors Service placed CVS Corp.'s Ba1 rating on $125,000,000 Series A-2 securities lease obligations on review for possible upgrade. CVS CORP: Express Scripts Discloses Details of Caremark Offer ------------------------------------------------------------- Express Scripts Inc. is proposing to acquire all of the outstanding shares of Caremark Rx Inc. for $29.25 in cash and 0.426 shares of Express Scripts stock for each share of Caremark stock. Based on the Express Scripts closing stock price on Friday, Dec. 15, 2006, the offer has a value of $58.50 per Caremark share or approximately $26 billion in the aggregate. The Express Scripts offer represents a 15% premium over the all- stock purchase price to be paid to Caremark stockholders pursuant to its proposed acquisition by CVS Corporation, based on the closing prices of CVS and Express Scripts common stock on Dec. 15, 2006. Furthermore, the Express Scripts offer represents a 22% premium over $47.99, which is the average closing stock price of Caremark since Nov. 1, 2006, the day its proposed acquisition by CVS was announced. The Express Scripts offer is structured so that the receipt of the stock portion will be tax free to Caremark stockholders. Upon completion of the transaction, it is anticipated that Caremark stockholders would own approximately 57% of the combined company, and Express Scripts stockholders would own approximately 43%. Express Scripts expects that the proposed transaction would be completed in the third quarter of 2007. The transaction is expected to generate annual cost synergies of approximately $500 million. Express Scripts expects that the transaction will be neutral to GAAP earnings per share in the first full year following closing, and significantly accretive thereafter. Excluding transaction- related amortization, the transaction is significantly accretive to earnings per share beginning the first full year following closing. Express Scripts expects the combined company will generate substantial free cash flow, which will enable it to consistently and rapidly reduce acquisition-related debt and return to historical leverage levels. "This opportunity is very compelling as it offers significant value to stockholders, plan sponsors and patients," Express Scripts president, chief executive officer, and chairman George Paz stated. "By creating the world's preeminent pharmacy benefit management company, we will continue to make the use of prescription drugs, including biopharmaceuticals, safer and more affordable for plan sponsors and patients. Together, we will benefit from more efficient cost management capabilities and unparalleled service offerings. Our independence as a pharmacy benefit manager and alignment with plan sponsors and patients allow all plan sponsors to maintain maximum flexibility in achieving their goals. "Our companies share years of experience and success in pharmacy benefit and specialty management, with longstanding commitments to quality service for plan sponsors and patients," Mr. Paz added. "Together, we will have the size, scale and financial strength to expand the markets we serve and enhance our value proposition and, thus, our competitive position. The collective resources of our two organizations will benefit plan sponsors and patients through greater use of cost-effective generic and lower cost brand drugs, specialty pharmacy, home delivery and flexible retail networks. "Express Scripts has completed five significant acquisitions since 1998 and has a proven track record of integrating companies to maximize value for stockholders and to best serve its plan sponsors and patients. We look forward to Caremark's careful consideration of our offer and an open dialogue with its Board of Directors to complete this transaction," concluded Mr. Paz. Express Scripts believes that the complementary nature of the two companies will create an industry-leading PBM uniquely positioned to generate substantial stockholder value. -- Highly Complementary Businesses: As a combined company, Express Scripts and Caremark will continue to offer the high-quality service that plan sponsors and patients have come to expect. The combined company will be a recognized leader in generic utilization and other drug cost management programs. It will benefit from the unique growth opportunities in the industry, as well as from broader and more comprehensive specialty management capabilities. -- Scale Provides Efficiencies: As one company, the enlarged scale of Express Scripts and Caremark allows for reduced overall costs through, among other things, increased purchasing power and operating efficiencies. -- Strong Financial Profile: The combined entity will have a strong financial profile driven by consistent and increasing cash flow. Before synergies, the two companies are expected to generate 2006 EBITDA in excess of $2.7 billion. In addition, Express Scripts expects that the transaction will be neutral to GAAP earnings per share in the first full year following closing, and significantly accretive thereafter. Excluding transaction-related amortization, the transaction is significantly accretive to earnings per share beginning the first full year following closing. Express Scripts has delivered its offer to Caremark's Board of Directors and believes it constitutes a "Superior Proposal" under the terms of the CVS/Caremark Merger Agreement. Express Scripts has received commitment letters from Citigroup Corporate and Investment Banking and Credit Suisse to fully finance the proposed transaction. The Express Scripts offer is subject to completion of a confirmatory due diligence review of Caremark, as well as satisfaction of other customary closing conditions, including expiration of the waiting period under the Hart- Scott-Rodino Antitrust Improvements Act and the approval of both Express Scripts and Caremark stockholders. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Express Scripts, and Citigroup Corporate and Investment Banking and Credit Suisse are acting as financial advisors. MacKenzie Partners is acting as proxy advisor to Express Scripts. About Express Scripts Headquartered in St. Louis, Missouri, Express Scripts Inc. (Nasdaq: ESRX) -- http://www.express-scripts.com/-- provides integrated PBM services, including network- pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost- management and patient- care services. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union- sponsored benefit plans. About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is America's largest retail pharmacy, operating approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on Nov. 15, 2006, Moody's Investors Service placed CVS Corp.'s Ba1 rating on $125,000,000 Series A-2 securities lease obligations on review for possible upgrade. DAIMLERCHRYSLER: Unit Ordered to Pay $350MM in U.S. Fraud Case -------------------------------------------------------------- The Multnomah County Circuit Court has ordered DaimlerChrysler North American Holding Corp. and its heavy truck subsidiary, Freightliner LLC, to pay $350 million in damages in connection with a multinational fraud case, CNNMoney reports. The Court found DaimlerChrysler liable for $280 million of the punitive damages, with the remaining $70 million asserted against Freightliner, reports say. The Oregon Court found that Freightliner transferred assets between its divisions in an effort to avoid a legal judgment. The U.S. Court's ruling follows a British Court order handed down last year compelling Freightliner to pay approximately $489 million to German truck maker MAN AG, CNNMoney adds. DaimlerChrysler intends to appeal the jury ruling. A company spokeswoman has reiterated that Freightliner had never sought to hide assets from MAN. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DELPHI CORP: Investor Group Commits Up to $3.4 Billion Investment ----------------------------------------------------------------- Delphi Corp. disclosed that it has accepted a proposal for an equity purchase and commitment agreement with affiliates of Appaloosa Management L.P., Cerberus Capital Management, L.P., and Harbinger Capital Partners Master Fund I, Ltd., as well as Merrill Lynch & Co. and UBS Securities LLC to invest up to $3.4 billion in preferred and common equity in the reorganized Delphi to support the company's transformation plan announced on March 31, 2006 and its plan of reorganization framework agreement also filed Monday. The Plan Framework Support Agreement, signed by Delphi, the Plan Investors and General Motors Corp., outlines the expected treatment of the company's stakeholders in its anticipated plan of reorganization and provides a framework for several other aspects of the company's Chapter 11 reorganization. DIP Loan Separately, Delphi accepted a proposal from JPMorgan Chase Bank, N.A. and a group of lenders to refinance in full the company's existing $2.0 billion DIP facility and approximately $2.5 billion prepetition revolver and term loan facilities. In recognition of the favorable environment in the capital markets and to minimize transaction fees payable by Delphi, the company has accepted the lenders' undertaking on a best efforts basis without underwriting by the lenders. The company is filing motions seeking approval of the agreements with the U.S. Bankruptcy Court of the Southern District of New York and will be filing the relevant agreements this week with the Securities and Exchange Commission. The Court has scheduled a hearing to consider approval of the plan investment, plan support and DIP refinancing agreements at 10:00 a.m. EST on Jan. 5, 2007. Objections, if any, to the agreements must be filed with the Court by 4:00 p.m. EST on Jan. 2, 2007. "[Mon]day's agreements represent significant milestones in Delphi's reorganization and another major step forward towards emergence from our Chapter 11 reorganization in the U.S.," said Delphi Chairman and CEO Robert S. "Steve" Miller. "Delphi has long emphasized its commitment to pursuing a resolution of the principal issues in our restructuring. The agreements announced today demonstrate real progress toward that objective. The Plan Investors' conditional commitment to invest up to $3.4 billion in the reorganized company, together with their support of Delphi's transformation plan and our reorganization plan framework, should provide additional confidence to our customers, suppliers, employees and financial stakeholders. Similarly, our new $4.5 billion DIP financing provides an appropriate foundation from which to negotiate and secure emergence financing. While there is much that remains to be accomplished in our reorganization, Delphi and its stakeholders are together navigating a course that should lead to consensual resolution with our U.S. labor unions and GM while providing an acceptable financial recovery framework for stakeholders." Equity Investment Under the terms of the Equity Purchase and Commitment Agreement, the Plan Investors will commit to purchase $1.2 billion of convertible preferred stock and approximately $200 million of common stock in the reorganized company. Additionally, the Plan Investors will commit to purchasing any unsubscribed shares of common stock in connection with an approximately $2.0 billion rights offering that will be made available to existing common stockholders. The rights offering provides that Delphi will distribute certain rights to its existing shareholders to acquire new common stock subject to the effectiveness of a registration statement to be filed with the SEC, approval of the Bankruptcy Court and satisfaction of other terms and conditions. The rights, which would be transferable by the original eligible holders, would permit holders to purchase their pro rata share of new common stock at a discount to anticipated reorganization business enterprise value. Under the terms of the agreement, the Plan Investors will commit to purchase the number of shares that were offered through the rights offering to eligible holders, but whose rights were not exercised. In the event no other shareholders exercised the rights, the Plan Investors would purchase all of the unsubscribed shares for an amount no greater than approximately $2.0 billion. Altogether, the Plan Investors could invest up to $3.4 billion in the reorganized company. The investment agreement is subject to the completion of due diligence to the satisfaction of the Plan Investors in their sole discretion, satisfaction or waiver of numerous other conditions, including Delphi's achievement of consensual agreements with its U.S. labor unions and GM that are acceptable to the Plan Investors in their sole discretion, and the non-exercise by either Delphi or the Plan Investors of certain termination rights, all of which are more fully described in the Equity Purchase and Commitment Agreement. Plan of Reorganization Framework Delphi also filed Monday a Plan Framework Support Agreement between Delphi, GM, and the Plan Investors, which outlines Delphi's proposed framework for a plan of reorganization. While the plan framework is based on extensive discussions and negotiations among Delphi, GM, the Plan Investors and Delphi's statutory committees conducted since August of this year, not every one of the proposed terms and conditions of the plan framework are necessarily acceptable to Delphi's stakeholders, including the Company's statutory committees, each of which may determine to oppose one or more elements of the framework. The Plan Framework Support Agreement as well as the economics and structure of the plan framework itself are expressly conditioned on reaching consensual agreements with Delphi's U.S. labor unions and GM. Both Delphi and the Plan Investors are permitted to terminate the Equity Purchase and Commitment Agreement, which terminates the Plan Support Agreement, if consensual agreements are not reached with labor and GM by Jan. 31, 2007. The Plan Framework Support Agreement outlines certain plan terms, including the distributions to be made to creditors and shareholders, the treatment of GM's claim, the resolution of certain pension funding issues, and the corporate governance of the reorganized Debtors. "This plan framework agreement forms a platform for the resolution of our transformation issues and the formulation of a consensual reorganization plan," Mr. Miller said. The Plan Framework Support Agreement outlines these treatment of claims and interests in Delphi's chapter 11 plan of reorganization: * All senior secured debt would be refinanced and paid in full and all allowed administrative and priority claims would be paid in full. * Trade and other unsecured claims and unsecured funded debt claims would be satisfied in full with $810 million of common stock, 18 million out of a total of 135.3 million shares, in the reorganized Delphi, at a deemed value of $45 per share, and the balance in cash. The framework requires that the amount of allowed trade and unsecured claims (other than funded debt claims) not exceed $1.7 billion. * In exchange for GM's financial contribution to Delphi's transformation plan, and in satisfaction of GM's claims against the company, GM will receive 7 million out of a total of 135.3 million shares of common stock in the reorganized Delphi, $2.63 billion in cash, and an unconditional release of any alleged estate claims against GM. In addition, as with other customers, certain GM claims would flow-through the chapter 11 cases and be satisfied by the reorganized company in the ordinary course of business. The plan framework anticipates that GM's financial contribution to Delphi's transformation plan would include items to be agreed to between Delphi and GM such as triggering of the GM benefit guarantees; assumption by GM of certain postretirement health and life insurance obligations for certain Delphi hourly employees; provision of flowback opportunities at certain GM facilities for certain Delphi employees; GM's payment of certain retirement incentives and buyout costs under current or certain future attrition programs for Delphi employees; GM's payment of mutually negotiated buy-downs; GM's payment of certain labor costs for Delphi employees; a revenue plan governing certain other aspects of the commercial relationship between Delphi and GM; and GM's support of the wind-down of certain Delphi facilities and the sales of certain Delphi business lines and sites. While the actual value of the potential GM contribution cannot be determined until a consensual resolution with GM is completed, Delphi is aware that GM has publicly estimated its potential exposure related to Delphi's chapter 11 filing. * All subordinated debt claims would be allowed and satisfied with $450 million of common stock (10 million out of a total of 135.3 million shares) in the reorganized Delphi, at a deemed value of $45 per share and the balance in cash. * Holders of existing equity securities in Delphi would receive $135 million of common stock (3 million out of a total of 135.3 million shares) in the reorganized Delphi, at a deemed value of $45 per share, and rights to purchase approximately 57 million shares of common stock in the reorganized Delphi for $2.0 billion at a deemed exercise price of $35 per share (subject to the rights offering becoming effective and other conditions). Emergence Corporate Governance Structure The Equity Purchase and Commitment Agreement and the Plan Framework Support Agreement also include certain corporate governance provisions for the reorganized Delphi. Under the terms of the proposed plan, the reorganized Delphi would be governed by a 12 member Board of Directors, 10 of whom would be independent directors and two of whom would be a new Executive Chairman and a new Chief Executive Officer and President. Most notably as part of the new corporate governance structure, the current Delphi Board of Directors along with the Plan Investors, have mutually recognized that current Delphi President and Chief Operating Officer, Rodney O'Neal, will be appointed CEO and president of the reorganized Delphi no later than the effective date of the plan of reorganization. Separately, Delphi's Board has decided to make Mr. O'Neal's CEO appointment effective Jan. 1, 2007, to allow for the most optimum transition between Miller and O'Neal before the company emerges from bankruptcy. Concurrent with O'Neal's appointment, Miller will become Delphi's first Executive Chair and will continue to oversee the company's chapter 11 reorganization through emergence. A five member selection committee, consisting of John D. Opie, Delphi Board of Director's lead independent director, a representative of each of Delphi's two statutory committees and a representative of each of Delphi's two lead Plan Investors -- Cerberus and Appaloosa -- will select the company's post-emergence Executive Chair as well as four independent directors (one of whom may be from Delphi's current Board of Directors). The two lead Plan Investors must both concur in the selection of the Executive Chair, but do not vote on the four common independent directors and will each appoint three Board members comprising the remaining six members of the new board of directors. The new board of directors must satisfy all exchange/NASDAQ independence requirements. Executive compensation for the reorganized company must be on market terms, must be reasonably acceptable to the Plan Investors, and the overall executive compensation plan design must be described in the company's disclosure statement and incorporated into the plan of reorganization. Pension Funding The Plan Framework Support Agreement reaffirms Delphi's earlier commitment to preserve its salaried and hourly defined benefit U.S. pension plans and will include an arrangement to fund approximately $3.5 billion of its pension obligations. The company agreed that as much as $2 billion of this amount may be satisfied through GM taking an assignment of Delphi's net pension obligations under applicable federal law. GM will receive a note in the amount of such assignment on market terms that will be paid in full within 10 days following the effective date of a plan of reorganization. Through this funding, Delphi will make up required contributions to the plans that were not made in full during the Chapter 11 process. The company has previously said that one of the goals of its transformation plan is the retention of existing U.S. defined benefit pension plans for both its hourly and salaried workforce. In order to retain the programs and related benefits accrued, Delphi will freeze the U.S. pension plans no later than at the time of emergence. "With this funding, Delphi will be able to preserve its pension plans and become fully funded to the extent required by ERISA," said Mr. Miller. "While other major Chapter 11 labor transformation cases have regrettably had to terminate their pension plans as part of their restructuring, Delphi has expended a great deal of effort and energy to save our employees' pensions." Existing Prepetition And Dip Loan Refinancing Given the current favorable conditions in the capital markets, Delphi will be seeking court approval to enter into a $4.5 billion replacement DIP financing facility on more favorable terms than the combined DIP and prepetition term and revolver loan facilities that are being replaced. Under the terms of the replacement financing facility, Delphi estimates that it will save approximately $8 million per month in financing costs. These savings result from the interest rate under the replacement financing facility being lower than the accrual rate for the adequate protection payments in respect of the secured prepetition credit facilities, which the company proposes to repay with a portion of the proceeds of the replacement financing facility. The savings generated would preserve additional value of the company's estates and would enhance the ability to implement its transformation plan and emerge from chapter 11 protection. The replacement financing facility will have similar terms as the existing DIP facility, with certain key exceptions, all of which are beneficial for Delphi and its estates. The refinancing of the secured prepetition credit facilities will not impair, in any material respect, the lien priorities of other holders of secured claims relative to such facilities. Details of the replacement financing facility and the existing DIP facility can be found in Delphi's DIP refinancing motion filed with the Court. Consensual Agreement Status While there have been continuing discussions with the company's U.S. labor unions and GM, the parties have not reached comprehensive agreements and there are significant differences of views that need to be reconciled in order to achieve consensual agreements in a timeframe that would permit Delphi to preserve the plan investment and plan framework and support agreements announced today. "While today's agreements are an important step forward in our transformation, we remain keenly focused on reaching a consensual resolution with all of our U.S. unions and GM," Mr. Miller said. "Our fiduciary responsibility as debtors-in-possession is to maximize the value of our estates. Although [Mon]day's court filings represent an encouraging and necessary move closer to emergence, we and our counterparts at the negotiating table must complete our work promptly and on a consensual basis if Delphi is to emerge from chapter 11 during the first half of 2007." Consistent with its prior practice, the company will not comment further regarding the status or substance of its discussions with GM or its unions while discussions are ongoing. About Delphi Corporation Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- (Pink Sheets: DPHIQ) is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Rothschild Inc. serves as the Debtors' investment banker. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. DELPHI CORP: Steering Unit Books $3.3 Bil. in New Business ---------------------------------------------------------- Delphi Corporation has already booked $3.3 billion in new steering and halfshaft business to date in 2006, and expects additional new business awards prior to year-end, company officials disclosed. Most of the new business awards are approximately five years in duration. Further details remain confidential at the customers' request. Sixteen global customers are included among the new business awards, with no single customer representing more than 50% of the total business. More than half of the new business is for vehicles produced in Europe, Asia and South America. The products sold include electric and hydraulic power steering systems, steering columns, gears, hoses and halfshafts. "We're showing remarkable strength during a turbulent time for the entire industry," said Bob Remenar, president, Delphi Steering division. "This sales performance shows that we have strong technologies that excite a diversified and global customer base. We have a team that is committed to bringing value to our customers. Our team has built strong sales momentum throughout the year. We expect that momentum to continue for the remainder of the year and into 2007." Beyond the short-term improvement, the news has historical significance: In the 100 years that Delphi has been producing steering components and systems, 2006 will represent the second- strongest bookings year ever. As the division continues to book sales for the remainder of the year, Remenar said he expects that 2006 will reflect more than a 50% gain compared with 2005. Remenar further said that more than 30% of the new business in 2006 is conquest business. "It's really simple," Remenar said. "We expect that as more customers get to know us -- our people, our products, our quality, and our global footprint, with our engineering and manufacturing capabilities -- they will want to do more business with Delphi Steering." Delphi Steering now supports 64 customers worldwide. The division has more than 9,200 employees at 22 manufacturing plants, 11 customer support centers, and five regional engineering centers worldwide. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DETROIT SCHOOL: Mounting Financial Strain Cue Fitch's Neg. Outlook ------------------------------------------------------------------ Fitch Ratings downgraded the Detroit School District, Michigan's limited tax general obligation rating to 'BB+' from 'BBB-'. The Rating Outlook is Negative. The LTGO rating had been placed on Rating Watch Negative on Aug. 5, 2005. The downgrade reflects mounting financial pressures for the district as the Board of Education remains committed to improving its financial performance. While the district offset a general fund deficit of $48.7 million in fiscal 2004 with deficit financing in fiscal 2005, its deficit elimination plan filed with the Michigan Department of Education necessitates significant labor concessions, personnel reductions and school closings over several years to compensate for student enrollment declines. The teachers strike in September reflected difficult bargaining and achieved some salary and benefit concessions, but the disruption of classes accelerated enrollment declines and will require deeper spending cuts in the current fiscal year. The Board is refining its fiscal adjustments to judiciously allocate its resources without compromising educational quality, but the risks of successful implementation are heightened by labor and community sensitivity to the measures. Fitch affirms the 'AA' rating on the district's unlimited tax general obligation bonds, which participate in the Michigan School Bond Loan Fund. The 'AA' program rating reflects Michigan's constitutional and statutory requirements to lend debt service payment funds to school districts that would otherwise default on their qualified general obligation unlimited tax bonds for any reason. Michigan possesses authority to issue general obligation bonds or notes so that its long-established School Bond Loan Fund has sufficient moneys for this purpose, and the state constitution prohibits impairment of bondholder rights related to the fund. The 'BB+' LTGO rating reflects the weakened economic base of Detroit, which is coterminous with the district, the difficulty of making deep spending reductions as enrollment continues to slip and a high debt burden. Under the deficit elimination plan filed in Feb. 2005 with the Michigan Department of Education, the district will reduce general fund spending by 29.8% over a five- year period through fiscal 2010. Fitch anticipates that spending cuts in fiscal 2006 may produce a modest general fund surplus, but the teachers strike in fiscal 2007 may require additional spending reductions from budgetary expectations. Anticipating continued state revenue sharing weakness and enrollment declines, the district is eliminated 3,646 full-time equivalent positions in fiscal 2006 and 2007 and closing 95 schools though 2010. At the end of fiscal 2005, the district had $1.9 billion in outstanding direct. Direct debt ratios are high for districts of comparable size, at $2,098 per capita and 7.4% of market value. The inclusion of overlapping debt significantly increases overall debt levels to $5,269 per capita and 18.7% of market value. Amortization of existing debt is slow at 15% in five years and 30% in 10 years. DEUTSCHE MORTGAGE: Fitch Lifts Low-B Ratings on $86.3-Mil of Debts ------------------------------------------------------------------ Fitch Ratings upgrades six classes of Deutsche Mortgage & Asset Receiving Corp.'s commercial mortgage pass-through certificates, series 1998-C1, as: -- $99.9 million class D to 'AAA' from 'AA+'; -- $27.2 million class E to 'AAA' from 'AA-'; -- $45.4 million class F to 'AA' from 'BBB+'; -- $45.4 million class G to 'BBB+' from 'BB+'; -- $18.2 million class H to 'BB+' from 'BB'; and, -- $22.7 million class J to 'B+' from 'B-'. Fitch affirms these classes: -- $415.1 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $109 million class B at 'AAA'; and, -- $109 million class C at 'AAA'. The $22.7 million class K remains 'CCC/DR3' and the $4 million class L remains 'C/DR6'. Class A-1 has been paid in full. Interest shortfalls are occurring on classes J, K, L and M. The upgrades reflect the increased credit enhancement due to paydown and additional defeasance since Fitch's last rating action. As of the November 2006 distribution date, the pool's aggregate certificate balance has been reduced by approximately 49.3% to $918.6 million from $1.82 billion at issuance. In addition, 25 loans have been defeased since issuance. As of the December 2006 distribution date, 15 assets are in special servicing. The Clipper loans are six cross-collateralized health care properties. The loans have been in special servicing since 2000 and remain current. The borrower and special servicer have negotiated an extension for the loans until December 2006 with a second extension option through December 2008. The second largest specially serviced loan is secured by a hotel in Arlington, VA. The borrower is currently marketing the property for sale. The third largest specially serviced asset is a hotel in Homewood, AL. The asset is real estate owned and is being marketed for sale. Losses are expected, based on the most recent appraisal value. Fitch expects losses from specially serviced loans to deplete class L and affect class K. Realized losses in the pool total $84.6 million to date, or 4.7% of the original principal balance. 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. DIVERSIFIED REIT: Fitch Lifts Rating on $4MM Class H Notes to BB- ----------------------------------------------------------------- Fitch Ratings upgrades five classes and affirms five classes of notes issued by Diversified REIT Trust 2000-1 Ltd./Corp. These rating actions are effective immediately: -- $13,232,647 class A-1 affirm at 'AAA'; -- $105,453,352 class A-2 affirm at 'AAA'; -- $18,090,000 class B affirm at 'AAA'; -- $26,992,000 class C affirm at 'AAA'; -- $21,249,000 class D upgrade to 'AA' from 'AA-'; -- $11,343,000 class E upgrade to 'A-' from 'BBB+'; -- $4,307,000 class F upgrade to 'BBB-' from 'BB+'; -- $5,025,000 class G upgrade to 'BB+' from 'BB'; -- $4,308,000 class H upgrade to 'BB-' from 'B+'; and, -- class X notes affirm at 'AAA'. DREIT 2000-1 is a collateralized debt obligation which closed April 13, 2000. DREIT 2000-1 is composed of a static pool of senior unsecured real estate investment trust securities. The upgrades are driven primarily by the improved credit quality, seasoning of the collateral, and deleveraging of the transaction. Since last review, an additional 15.83% of the original capital structure was paid down. The percentage of portfolio assets having experienced credit upgrades outweighs the percentage of downgrades. The weighted average rating factor has improved to 4.92, as of Nov. 28, 2006, from 5.65 at last review. The weighted average coupon remains relatively stable at 7.73%. The weighted average life, demonstrating seasoning, has decreased slightly to 1.82, as of Nov. 28, 2006, from 1.88 at last review. The notes pay principal in sequential order and there are no over- collateralization or interest coverage tests. There are currently no defaulted assets in the portfolio. Fitch will continue to monitor and review this transaction for future rating adjustments. DIVERSIFIED REIT: Fitch Lifts Rating on $5MM Class F Notes to BB+ ----------------------------------------------------------------- Fitch Ratings upgrades three classes and affirms seven classes of notes issued by Diversified REIT Trust 1999-1 Ltd./Corp. These rating actions are effective immediately: -- $52,979,107 class A-1 affirm at 'AAA'; -- $187,728,092 class A-2 affirm at 'AAA'; -- $31,125,600 class B affirm at 'AAA'; -- $31,125,600 class C affirm at 'AAA'; -- $41,500,800 class D upgrade to 'AA' from 'A+'; -- $23,344,200 class E upgrade to 'BBB' from 'BBB-'; -- $5,187,600 class F upgrade to 'BB+' from 'BB'; -- $7,781,400 class G affirm at 'BB-'; -- $5,187,600 class H affirm at 'B'; and, -- class X notes affirm at 'AAA'. DREIT 1999-1 is a collateralized debt obligation which closed May 26, 1999. DREIT 1999-1 is composed of a static pool of senior unsecured real estate investment trust securities. The portfolio, since last review on Aug. 10, 2006, has paid down an additional 14.18% of the original capital structure. Fitch has reviewed the credit quality of the individual assets comprising the portfolio. The Fitch weighted average rating factor has improved to 6.12 as of Nov. 28, 2006 compared to 6.64 at last rating review. Since the last review, the portfolio assets have experienced more upgrades than downgrades. The calculated weighted average coupon has also remained stable and is currently at 7.37%. The seasoning of the collateral can be illustrated by the declining weighted average life. Fitch's WAL of the portfolio declined to 1.57 years as of Nov. 28, 2006 versus 1.65 years at last review. The notes pay principal in sequential order and there are no over- collateralization or interest coverage tests. There are currently no defaulted assets in the portfolio. Fitch will continue to monitor and review this transaction for future rating adjustments. DOLLARAMA GROUP: Moody's Rates $200-Mil. Sr. Unsecured Notes at B3 ------------------------------------------------------------------ Moody's Investors Service affirmed the B1 corporate family rating of Dollarama Group Holdings L.P.; assigned a B3 rating to the new $200 million senior unsecured floating rated deferred interest notes of Dollarama Group Holdings L.P.; and upgraded the company's bank credit facilities to Ba1 from Ba2. The outlook is changed to negative from stable. New rating assigned: * Dollarama Group Holdings L.P. -- $200 Million senior floating rate deferred interest notes at B3, LGD5, 82%. Ratings affirmed: * Dollarama Group Holdings L.P. -- Corporate family rating at B1; -- Probability of default rating at B1; and -- Speculative grade liquidity rating of SGL-2. * Dollarama Group L.P. -- $200 million senior subordinated notes at B2, LGD4,59%. Ratings upgraded: * Dollarama Group L.P. -- CDN$75 million revolving credit facility at to Ba1, LGD2, 18% from Ba2, LGD2, 21%; -- CDN$120 million term loan A to Ba1, LGD2, 18% from Ba2 LGD2, 21%; and; -- $246 million secured term loan B to Ba1, LGD, 18% from Ba2, LGD2, 21%. This rating action is prompted by Dollarama's issuance of the B3-rated $200 million senior floating rate deferred interest notes, proceeds from which will repay approximately CDN$150 million in junior subordinated notes and make a distribution on certain of its equity securities, in each case held by affiliates of its majority owner, Bain Capital, resulting in a 0.6x increase in debt/EBITDA to 6.9x. The B1 corporate family rating recognizes Dollarama's solid franchise, broad though somewhat regional retail network in Eastern Canada, and its favorable competitive position, balanced by weak credit metrics resulting from its highly leveraged balance sheet. The negative outlook reflects Dollarama's highly leveraged balance sheet, and the risk that leverage will not reduce due to the company's aggressive financial policy. Downward rating pressure would result from Dollarama failing to reduce leverage either via improvements in cash flow generation or by reductions in absolute debt levels such that Debt/EBITDA was sustained above 7x. To stabilize the rating outlook Dollarama needs to reduce leverage reducing below 6.5x. The B3 rating on the new notes recognizes their junior and structurally subordinate position in the capital structure at a new holding company level, with all other debt and operating company liabilities in a senior position. The new notes will initially be deferred interest securities and are not expected to pay cash interest. The upgrade of the secured bank facilities to Ba1 results from the application of Moody's Loss Given Default Methodology, which recognizes the support to the overall capital structure provided by the new debt at a junior level. Dollarama is a Montreal, Canada-based discounter with 450 stores located predominantly in Eastern Canada and the Atlantic Provinces. DORAL FINANCIAL: Board Approves Monthly Cash Dividend ----------------------------------------------------- The Board of Directors of Doral Financial Corporation, on Dec. 11, 2006, approved the regular monthly cash dividend on the Company's 7% Noncumulative Monthly Income Preferred Stock, Series A, 8.35% Noncumulative Monthly Income Preferred Stock, Series B and 7.25% Noncumulative Monthly Income Preferred Stock, Series C, in the amount of $0.2917, $0.173958, $0.151042 per share. The dividend is payable on Dec. 29, 2006 to the record holders as of the close of business on Dec. 27, 2006 in the case of the Series A Preferred Stock, and to the record holders as of the close of business on Dec. 15, 2006 in the case of Series B and Series C Preferred Stock. Doral also reported that the quarterly dividend on the Company's 4.75% perpetual cumulative convertible preferred stock, in the amount of $2.96875 per share, which had been approved by the Board of Directors on Oct. 27, 2006, will be paid on Dec. 15, 2006 to holders of record as of the close of business on Dec. 1, 2006. About Doral Financial Based in New York City, Doral Financial Corp. (NYSE: DRL) -- http://www.doralfinancial.com/-- a financial holding company, is a residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Standard & Poor's Ratings Services removed from CreditWatch and affirmed its ratings on Doral Financial Corp., including its 'B+' counterparty rating. The ratings were placed on CreditWatch with negative implications on April 19, 2005. The outlook is negative. DUPREE & ASSOCIATES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Dupree & Associates, Inc. P.O. Box 1073 Highlands, NC 28741 Bankruptcy Case No.: 06-20098 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Highlands Point Design & Development, LLC 06-20099 Grady S. Dupree 06-20100 Chapter 11 Petition Date: December 15, 2006 Court: Western District of North Carolina (Bryson City) Judge: George R. Hodges Debtors' Counsel: David R. Hillier, Esq. Gum, Hillier & McCroskey, P.A. 47 North Market Street, P.O. Box 3235 Asheville, NC 28802 Tel: (828) 258-3368 Fax: (828) 252-6721 Total Assets Total Debts ------------ ----------- Dupree & Associates, Inc. $449,000 $528,776 Highlands Point Design & $450,000 $391,910 Development, LLC Grady S. Dupree $4,613,280 $1,897,366 A. Dupree & Associates, Inc.'s Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Exxon $26 P.O. Box 103104 Roswell, GA 30076 B. Highlands Point Design & Development, LLC's Six Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Larry Rogers Construction $52,009 776 Dillard Road Highlands, NC 28741 Capital One $7,186 P.O. Box 30285 Salt Lake City, UT 84130-0285 Chase $7,177 P.O. Box 15298 Wilmington, DE 19850-5298 Slaughter & Wheeler $1,223 2900 Chamblee-Tucker Road Suite 300, Building 9 Atlanta, GA 30341 Reeves Hardware $307 P.O. Box 345 Clayton, GA 30525 Home Depot $6 P.O. Box 9121 Des Moines, IA 50368 C. Grady S. Dupree's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Macon Bank Lots 1 and 2 $324,725 50 West Main Street Highlands Point Franklin, NC 28734 Lot 10 Highlands Point Chase Consumer debt $11,018 P.O. Box 15298 Wilmington, DE 19850-5298 Chase Consumer debt $9,601 P.O. Box 15298 Wilmington, DE 19850-5298 Macon County Tax $7,371 Discover Financial Services Consumer debt $7,360 Chase Consumer debt $5,813 Fusion Systems Consumer debt $1,445 Wilson Gas Consumer debt $935 Emory Clinic $882 Stone Electric Consumer debt $372 Verizon Wireless Consumer debt $272 Terminex Consumer debt $152 Fred H. Jones Atty. for Kenton Unknown and Linda W. David EDISON MISSION: S&P Holds Ratings and Revises Outlook to Stable --------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on, Edison Mission Energy, Edison Mission Marketing and Trading, Edison Mission Energy Funding Corp., and Midwest Generation LLC (Midwest Gen) to stable from positive. Each company's 'BB-' long-term rating was affirmed, as was the 'B' rating assigned to the debt of Mission Energy Holding Co. The 'BB' rating and stable outlook assigned to the Homer City Funding LLC debt are not affected by these outlook revisions because Homer City's credit quality is not directly tied to the ratings of its parent and affiliates. The outlook was revised after the company announced that it will need to invest $2.5 billion to $3.5 billion between 2008 and 2018 to meet emissions controls at the power plants in the Midwest Gen portfolio. Most of the spending will not begin until about 2010 and will continue over the ensuing years. "While it is still uncertain what the mix of cash from operations and proceeds of debt issuances will be in support of these additions to the capital program, it is our view that the magnitude of the expanded capital program has the potential to alter financial metrics," said Standard & Poor's credit analyst David Bodek. Cash contributions for the financing of emissions controls may meaningfully reduce liquidity and debt financing may reduce current financial cash flow and leverage ratios. Cash contributions from earnings and debt issuance might both have a chilling effect on future growth prospects for the company. Moreover, retrofitting portions of the portfolio with emissions controls may be uneconomical, which could impair cash flows. The uncertainties presented by these heightened capital needs reduce the near term prospects for rating upgrades. Consequently, the ratings outlooks have been restored to stable. The ratings on EME, MEHC, Edison Mission Marketing and Trading, EME Funding, and Midwest Gen continue to reflect the credit quality of the distributable cash flow from a portfolio of generating assets. The ratings also take into account the financial risk of double and triple leverage at EME and MEHC. The ratings also incorporate Standard & Poor's expectation that while EME may use some cash to invest in certain new assets, EME will retain sufficient cash on hand to retire its MEHC debt at maturity and that MEHC would subsequently be dissolved. ENTERGY NEW: Court Approves Transfer of Cottonwood Energy's Claim ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana has approved the transfer of the claims of Cottonwood Energy Company LP to Deutsche Bank Securities Inc. As reported in the Troubled Company Reporter on Dec. 7, 2006, from Nov. 2 to 20, 2006, the Bankruptcy Clerk recorded 12 claim transfers in Entergy New Orleans, Inc.'s Chapter 11 case: Creditor Transferee Claim Amount -------- ---------- ------------ Magnus Energy Deutsche Bank $2,226,291 Marketing, Ltd. Securities, Inc. Cottonwood Energy Deutsche Bank 787,827 Company LP Securities, Inc. Security Support Redrock Capital 19,196 Services Security Support Redrock Capital 7,570 Services American Eagle Door Trade-Debt.Net Inc. 4,306 & Glass Co LLC Flat Busters Trade-Debt.Net Inc. 943 of LA LLC Salathe Oil Co Inc. Trade-Debt.Net Inc. 786 AAS Co. Trade-Debt.Net Inc. 545 Ogden Museum Trade-Debt.Net Inc. 350 of Southern Art French Quarter Trade-Debt.Net Inc. 250 Festivals Inc. LA Spring Water Trade-Debt.Net Inc. 229 Merlin J & Trade-Debt.Net Inc. 167 Dorothy K. Lehman The claims transfer notices were filed by: -- Deutsche Bank Securities, Inc. 60 Wall Street, 2nd Floor New York, NY 10005 Attn: Matt Doheny Tel: (212) 250-5760 -- Redrock Capital Partners, LLC 111 S. Main Street, Ste C11 P.O. Box 9095 Breckenridge, CO 80424 Attn: Christopher Todd belitz Tel: (970) 547-9065 -- Trade-Debt.Net Inc. P.O. BOX 1487 West Babylon, NY 11704 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. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EUROGAS INC: Sept. 30 Balance Sheet Upside-Down by $41.1 Million ---------------------------------------------------------------- Eurogas Inc.'s balance sheet at Sept. 30, 2006, showed $3.1 million in total assets and $30.1 million in total liabilities, resulting in a $41.1 million total stockholders' deficit. The company reported a $10,160 net loss for the quarter ended Sept. 30, 2006, compared with a $307,199 net loss for the same period in 2005. The company had no oil and gas sales for both periods. Management says the losses for both periods were due in large part to the absence of revenues, combined with continued administrative, interest, foreign exchange loss and other recurring continuing expenses. General and administrative expenses were $ 0 for the three months ended Sept. 30, 2006 compared to $269,435 for the three months ended Sept. 30, 2005. The decrease in administrative expenses is the result of the corporate inactivity of the company due to the Chapter 7 Bankruptcy. 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?1728 About Eurogas EuroGas Inc. (Other OTC:EUGS.PK) has investments in properties believed to be rich in oil, gas, and talc. CEO Wolfgang Rauball owns 26% of the company. Eurogas Inc. has been inactive since the company was put in chapter 7 by one of its US creditors. The company has impaired most of its oil and gas properties and the remaining assets have been put under the control of a bankruptcy trustee. Realization of the investment in properties and equipment is dependent upon the US Bankruptcy Court in Salt Lake City, Utah, releasing the company from chapter 7. Since all assets of the company were sold at an auction held by the US Bankruptcy Trustee in March 2006, proceeds in the amount of approximately $800,000 are to be distributed by the Bankruptcy Trustee once he files his final report with the Bankruptcy Court in Salt Lake City and the presiding Judge approves of this repot. FIELDCREST BUILDING: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Fieldcrest Building and Developing, LLC 72 Comstock Trail East Hampton, CT 06424 Tel: (860) 267-2117 Bankruptcy Case No.: 06-32241 Type of Business: The Debtor is a project contractor. Chapter 11 Petition Date: December 13, 2006 Court: District of Connecticut (New Haven) Judge: Lorraine Murphy Weil Debtor's Counsel: John J. O'Neil, Jr., Esq. Francis O'Neil & Del Piano, LLC 255 Main Street Hartford, CT 06106 Tel: (860) 527-3271 Fax: (860) 527-2584 Total Assets: $2,151,089 Total Debts: $7,329,008 Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ TD Banknorth N.A. Single Family Home $1,000,000 2461 Main Street 15 Dogwood Drive Secured: Glastonbury, CT 06033 Andover, CT $465,900 Senior Lien: $641,000 Upper Kensington $1,000,000 Drive, East Lyme, CT Secured: $200,000 Senior Lien: $132,000 22 Farview Run $1,000,000 Marlborough, CT Secured: $1,001,000 Senior Lien: $912,500 Upper Kensington $1,000,000 Drive, East Lyme, CT Secured: $330,000 Upper Kensington $540,000 Drive, East Lyme, CT Secured: $330,000 Senior Lien: $1,000,000 Upper Kensington $540,000 Drive, East Lyme, CT Secured: $220,000 Senior Lien: $1,132,000 Niantic Real Estate LLC 15 Dogwood Drive $275,000 197 Upper Pattagansett Road Andover, CT Secured: East Lyme, CT 06333 $465,900 Senior Lien: $366,000 Lots 11 & 30 $132,500 Upper Kensington Secured: Drive, East Lyme, CT $330,000 Senior Lien: $1,540,000 Sal Avarista & Son Single Family Home $17,750 Painting Contractor 22 Farview Run Secured: 230 Hartford Turnpike Marlborough, CT $1,001,000 Vernon Rockville, CT 06066 Senior Lien: $1,921,755 Strober-General Building Single Family Home $15,081 Supply Co., Inc. 222 Farview Run Secured: 367 Ellingotn Road Marlborough, CT $1,001,000 East Hartford, CT 06108 Senior Lien: $1,939,505 Stock/Kitchen Factor Trade Debt $61,331 P.O. Box 120280 East Haven, CT 06512 Pierre Giroux dba Trade Debt $30,000 Giroux Electric Stock 4413 Trade Debt $29,125 Francis Hamm & Assoc., Inc. Trade Debt $23,957 M.J. Edmonds Trade Debt $19,021 American Express - Optima Credit Card Purchases $16,267 Portland Electric Co. Trade Debt $13,600 S. Marchant Plumbing, LLC Trade Debt $13,600 Booth Flooring, Inc. Trade Debt $11,489 FINANCIAL MEDIA: Aug. 31 Balance Sheet Upside-down by $2.2 Million ------------------------------------------------------------------ Financial Media Group Inc. has reported its results of operations for the year ended Aug. 31, 2006. The company reported a net loss of $1.61 million for the twelve month period ended Aug. 31, 2006, compared with a net loss of $197,998 for the comparable period ended August 31, 2005. The net loss for the fiscal year ended Aug. 31, 2006 was attributed to a $2.9 million charge for the impairment of marketable securities due to the fluctuation in the value of the company's portfolio mix. Revenues increased to $6.63 million, from $1.33 million in 2005. At Aug. 31, 2006, the company's balance sheet showed $5.9 million in total assets and $8 million in total liabilities, resulting in a $2.2 million stockholders' deficit. "Over the last year, Financial Media Group has implemented several cost containing efforts to ensure that our controllable costs are being more closely monitored during this growth period," said Albert Aimers, Chief Executive Officer of Financial Media Group, Inc. "In addition, we have always taken a very conservative approach to our accounting practices, particularly in terms of the impairment of marketable securities, which was the main reason for our increased loss. We are very encouraged by our record sales, which were a direct result of a substantial increase in new customers. We are also optimistic about several new initiatives, including mywallst.net, our Financial Social Network, which we believe will bring additional value to our shareholders." Full-text copies of the company's financial statements for the year ended Aug. 31, 2006, are available for free at: http://researcharchives.com/t/s?1738 Going Concern Doubt Kabani & Company Inc. expressed substantial doubt about Financial Media Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Aug. 31, 2006. The auditing firm pointed to the company's accumulated deficit of $3.7 million as of Aug. 31, 2006 and net loss of $1.6 million for the year ended Aug. 31, 2006. About Financial Media Group, Inc.: Financial Media Group Inc. (OTCBB: FNGP.OB) -- is a diversified media and advertising company. The company provides internet based media and advertising services through its financial website and the company's newspaper "WallSt.net Digest." WallStreet Direct Inc., a wholly-owned subsidiary, specializes as a provider of financial news, tools and content for the global investment community. WallStreet Direct Inc. owns and operates http://www.wallst.net/ On Feb. 10, 2006, Financial Media Group Inc. established a 100% wholly owned subsidiary Financial Filings Inc. This business unit focuses on providing Edgarization and newswire services to small and mid-sized public companies. These compliance services provide formatting of pertinent SEC filings and distribution of news in more than 30 languages to media outlets in more than 135 countries. FOAMEX INTERNATIONAL: Seeks Conversion of FMXI Into Delaware LLC ---------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's authority to convert FMXI Inc. from a Delaware corporation to a Delaware limited liability company in connection with their Second Amended Joint Plan of Reorganization. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that the Debtors originally planned to effectuate the conversion on the Effective Date of the Second Amended Plan; however, they determined that certain savings could be realized if the FMXI is converted before the end of 2006. Ms. Morgan adds that FMXI's conversion before year-end will simplify the Debtors' overall tax structure and reduce their tax burden and collective tax compliance costs. Furthermore, since FMXI's conversion is contemplated by the Second Amended Plan, doing it now will eliminate the need to incur further tax compliance costs associated with filing a tax return for the period from Jan. 1, 2007, through the Effective Date. Ms. Morgan says the Debtors' estimated saving could range from $50,000 to $90,000. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INT'L: Pa. Revenue Dept. Opposes Amended 2nd Ch. 11 Plan --------------------------------------------------------------- The Commonwealth of Pennsylvania Department of Revenue objects to Foamex International Inc. and its debtor-affiliates' Second Amended Plan of Reorganization to the extent it attempts to release the Debtors' corporate officers from any liability for payment of state trust fund taxes. Attorney General Thomas W. Corbett, Jr., Esq., relates that the Revenue Department has administrative and priority claims against certain Debtors for unpaid corporate taxes: Debtor Type of Claim Amount ------ ------------- ------ Foamex, LP Priority $37,312 Foamex, LP Gen. Unsecured 500 Foamex International Inc. Administrative 1,985 Foamex International Inc. Priority 1,077 Foamex Capital Corporation Administrative 264 Foamex Capital Corporation Priority 144 FMXI, Inc. Administrative 264 FMXI, Inc. Priority 144 In addition, the Debtors have failed to file corporate tax reports for 2005, 2006, and 2007 through Jan. 16, 2007. Mr. Corbett asserts that without the filing of the tax reports, the Court should not confirm the Debtors' Second Amended Plan. The Revenue Department wants any order confirming the Second Amended Plan to provide that the Plan does not compromise the Department's rights against the Debtors' corporate officers to seek recovery of state trust funds to the extent provided by applicable law. Accordingly, the Revenue Department asks the Court to deny confirmation of the Second Amended Plan. 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. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOOTE DEVELOPMENT: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------ Debtor: Foote Development Company 6132 Southwest Riverpoint Lane Portland, OR 97280 Bankruptcy Case No.: 06-03868 Type of Business: The Debtor is a real estate developer and project contractor. See http://www.footedevelopment.com/ Chapter 11 Petition Date: December 7, 2006 Court: Southern District of California (San Diego) Judge: Peter W. Bowie Debtor's Counsel: Gary B. Rudolph, Esq. Sparber Rudolph Annen, APLC 701 B Street, Suite 1000 San Diego, CA 92101 Tel: (619) 239-3600 Fax: (619) 239-5601 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shaw & Hren Maintenance Bonds Unknown 16135 Pauma Valley Drive Pauma Valley, CA 92061-0599 GEO GROUP: Modifies Financing Plan for CentraCore Purchase ---------------------------------------------------------- The GEO Group Inc. has modified its planned method of financing the acquisition of CentraCore Properties Trust. Geo Group will no longer be seeking to amend the indenture for its outstanding 8-1/4% senior unsecured notes, as reported on Nov. 16, 2006. In addition, GEO Group does not at the present time intend to proceed with the previously announced private placement of $275 million in senior secured notes through a bankruptcy-remote subsidiary. Instead, GEO Group plans to finance the CPT transaction through approximately $365 million in increased borrowings under an amended senior secured credit facility and approximately $50 million in cash on hand. After further consideration, GEO Group believes that this method of financing the acquisition reduces execution risk and provides GEO Group with increased operational flexibility on a going forward basis. GEO Group has received a firm commitment from BNP Paribas to finance the amended senior secured credit facility. Based in Boca Raton, Florida, The GEO Group, Inc. (NYSE: GEO) delivers correctional, detention and residential treatment services to federal, state and local government agencies around the globe. GEO has government clients in the USA, Australia, South Africa, Canada and the United Kingdom. GEO Group's worldwide operations include 62 correctional and residential treatment facilities, with a total design capacity of approximately 52,000 beds. * * * On Sept. 26, 2006, Moody's Investors Service affirmed GEO Group's Ba3 corporate family and senior secured debt ratings, with a stable outlook. The rating agency also affirmed GEO Group's B1 senior unsecured debt rating. GEO Group is planning to acquire CentraCore Properties Trust in a debt-financed transaction. CentraCore, a REIT, is GEO Group's main landlord. GEORGIA-PACIFIC: Fitch Rates New $1.25-Bil. Senior Notes at B+ -------------------------------------------------------------- Fitch rated Georgia-Pacific's new senior unsecured guaranteed notes due 2015 and 2017 aggregating $1.25 billion 'B+'. Fitch also affirms these GP ratings: -- Issuer Default Rating 'B+'; -- Senior unsecured 'B+/RR4'; -- Senior secured revolver 'BB/RR2'; and, -- First lien term Loan. 'BB/RR2'. GP's Rating Outlook remains Stable. The rating on GP's Second Lien Term Loan has been withdrawn in anticipation of repayment. GP issued the new notes to repay its $2.25 billion Second Lien Term Loan concurrent with a $1 billion increase in its First Lien Term Loan B, bringing the latter's balance to approximately $6.2 billion. This frees assets from $1.25 billion of liens which favors unsecured debtors. However, in Fitch's opinion this does not substantively change the recovery prospects of unsecured debtors in an event of bankruptcy which is the distinguishing feature between secured and unsecured ratings. GP's new note issues will benefit from upstream guarantees by select subsidiaries which, together with the issuer, in aggregate directly hold 75% of GP's consolidated total assets. This attribute differentiates the new notes from the majority of GP's other notes and bonds issued before its acquisition by Koch Industries, Inc. However, as a going concern the guarantees do not enhance the prospects of timely repayment and therefore do not justify a rating different from other senior unsecured indebtedness. GP's IDR of 'B+' is based on a review of the prospects for GP's various businesses which have been performing well. Heading into next year, in Fitch's opinion, GP will likely suffer from the decline in the U.S. housing market which has had a very negative impact on the prices for lumber, plywood, oriented strand board and gypsum wallboard. However, GP's other businesses, in particular domestic bathroom tissue and towels and corrugated containers, are currently strong and on a positive trend which is the basis for the Stable Outlook. GP was taken private by Koch last year in a transaction valued at just over $21 billion, financed with approximately $11 billion in new debt and $7 billion in equity. GLASSMASTER COMPANY: Elliott Davis Raises Going Concern Doubt ------------------------------------------------------------- Elliott Davis LLC expressed substantial doubt about Glassmaster Company Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Aug. 31, 2006. The auditing firm pointed to the company's loss from operations during the past fiscal year and working capital deficit at Aug. 31, 2006. Glassmaster Company Inc. reported a $724,882 net loss on $20.4 million of sales for the year ended Aug. 31, 2006, compared with $100,815 of net income on $18.2 million of sales for fiscal 2005. The net loss is attributable to lower gross profit, increased general and administrative expenses, and higher interest expense. Sales increased in all three segments, with sales in the industrial products segment increasing nearly $1 million. Gross margin decreased from 16% to 12% from the fiscal year 2005 to 2006. The decrease was due to several factors, including higher material costs, higher than typical health care costs, and a lack of working capital. Material costs increased during the year due to spikes in energy and petroleum costs. Health care costs spiked during the year due to several individual claims. General and administrative expenses increased mostly due to an increase in headcount. During the fiscal year, a new general manager for the industrial products segment was added, the marine segment added staff to operate the business, and the finance department added staff to compensate for the increased activity from the marine segment. Further, corporate costs increased due to increased costs in the administration of the health insurance plan and higher bank fees. Interest expense increased from $634,000 to $830,000, a 31% increase. Most of the increase is due to the increase in the prime rate, which increased from 6.5% to 8.25% during the year. At Aug. 31, 2006, the company's balance sheet showed $11.6 million in total assets, $11.55 million in total liabilities, and $51,181 in total stockholders' equity. The company's balance sheet at Aug. 31, 2006, also showed strained liquidity with $6.7 million in total current assets available to pay $10.6 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the fiscal year ended Aug. 31, 2006 are available for free at http://researcharchives.com/t/s?1737 About Glassmaster Company Based in Lexington, South Carolina, Glassmaster Company Inc. (OTC:GLMA.OB) -- http://www.glassmaster.com/-- develops and manufactures extruded monofilaments, fishing and cutting line, abrasive nylon monofilaments, flexible control cables, switch panels, electronic test equipment, and the Modular T-slotted Composite Framework System. The company employs 300 process engineers, marketing specialists, management personnel and production technicians at Lexington, South Carolina, and Kalamazoo, Michigan. GRANITE BROADCASTING: Organizational Meeting Set for Thursday ------------------------------------------------------------- Diana G. Adams, the U.S. Trustee for Region 2, will convene an organizational meeting in Granite Broadcasting Corporation, WXON, Inc., WXON License, Inc., KBWB, Inc., KBWB License, Inc., and WEEK-TV License, Inc.'s Chapter 11 cases at 1:00 p.m. on Dec. 21, 2006, at the U.S. Trustee's 341 Meeting Room at, 80 Broad Street, 2nd floor, New York. The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in APW Enclosure Systems Inc.'s chapter 11 case at 10:00 a.m., on Dec. 21, 2006, at Room 5209, J. Caleb Boggs Federal Building, 844 King Street in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in New York, Granite Broadcasting Corp. -- http://www.granitetv.com/-- owns and operates, or provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. The Company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D. N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets of $443,563,020 and debts of $641,100,000. HARRAH'S ENT: Board to Decide on $16.7-Bil Buyout Offer Today ------------------------------------------------------------- Harrah's Entertainment Inc.'s board of directors will decide today whether the company will accept the $16.7 billion buyout offer from Apollo Management LP and Texas Pacific Group, Caroline Humer writes for Reuters. As published in the Troubled Company Reporter on Nov. 30, 2006, Harrah's previously rejected a $15-billion offer from Apollo Management LP and Texas Pacific Group. The private equity group subsequently raised their bid to $83.50 per share, or $15.5 billion. Their current offer stands at $90 per share. Headquartered in Las Vegas, Nevada, Harrah's Entertainment, Inc. (NYSE:HET) -- http://www.harrahs.com/-- is a gaming corporation that owns and operates casinos, hotels, and five golf courses under several brands. * * * As reported in the Troubled Company Reporter on Oct. 3, 2006, Standard & Poor's Ratings Services lowered its ratings on Harrah's Entertainment and its subsidiary Harrah's Operating Co. Inc., including its long- and short-term corporate credit ratings to 'BB+' from 'BBB-' and to 'B' from 'A-3', respectively. In addition, these ratings were placed on CreditWatch with negative implications. This company had about $10.8 billion of reported debt outstanding as of June 30, 2006. As reported in the Troubled Company Reporter on Oct. 3, 2006, Fitch Ratings downgraded the debt ratings of Harrah's Entertainment Inc. and its principal operating subsidiary Harrah's Operating Co. Harrah's Entertainment's Issuer Default Rating was lowered to 'BB+' from 'BBB-'. Harrah's Operating Co.'s Issuer Default Rating was also downgraded to 'BB+' from 'BBB-'. Other affected Harrah's Operating ratings include: Bank Credit Facility to 'BB+' from 'BBB-', Senior Unsecured Notes to 'BB+' from 'BBB-' and Subordinated notes to 'BB-' from 'BB+'. HEALTHY DIRECTIONS: S&P Lifts Rating to B+ with Stable Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on nutritional supplements direct marketer Healthy Directions LLC to 'B+' from 'B'. The outlook is stable. "The upgrade reflects Healthy Directions' track record of consistent operating performance and improving credit measures," said Standard & Poor's credit analyst Ana Lai. Potomac, Maryland-based Healthy Directions is a small player in the highly fragmented $18 billion vitamin, mineral and supplement retailing industry. The company faces broad competition from other direct marketers and retailers of VMS products, such as NBTY Inc. (BB/Stable/--) and General Nutrition Centers Inc. (B/Stable/- -), which have more established market positions. However, Healthy Directions benefits from a loyal customer base and a disciplined customer acquisition approach. As a result, Healthy Directions has achieved consistent cash flow over the past few years. "Credit measures have improved due to debt reduction and are above average for the rating," said Ms. Lai. HENRY SKAGGS: Case Summary & 12 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Henry L. Skaggs, Jr. Mable Sue Skaggs 6924 Gaines Ridge Road Columbus, GA 31904 Bankruptcy Case No.: 06-40965 Chapter 11 Petition Date: December 4, 2006 Court: Middle District of Georgia (Columbus) Judge: John T. Laney III Debtor's Counsel: Stephen G. Gunby, Esq. Grogan, Rumer & Gunby, LLP P.O. Box 1846 Columbus, GA 31902 Tel: (706) 324-3448 Fax: (706) 327-3958 Total Assets: $500,000 to $1 Million Total Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ DaimlerChrysler Financial $73,401 c/o MacDowell & Associates Clifford W. Heindel P.O. Box 450849 Atlanta, GA 31145 American Express Centurion Bank $31,991 c/o John Swann 2905 Piedmont Road Atlanta, GA 30305 American Express Centurion Bank $25,292 c/o Trauner Cohen & Thomas 2880 Dresden Drive Atlanta, GA 30341 Quixtar Visa $13,382 Bank of America PO Box 15026 Wilmington, DE 19850 Alliance One $13,144 1160 Centre Pointe Drive, Ste #1 Mendola Heights, MN 55120 AmeriCredit $13,040 P.O. Box 183593 Arlington, TX 76096 Target National Bank $9,848 c/o Craig Goodman P.O. Box 450809 Atlanta, GA 31145 First Equity Card Corporation $7,135 P.O. Box 84075 Columbus, GA 31908 Wachovia $5,578 Bank Card Services P.O. Box 15026 Wilmington, DE 19850 Capital One $4,227 P.O. Box 30285 Salt Lake City, UT 84130 Chase Cardmember Services $3,798 P.O. Box 100043 Kennesaw, GA 30156 Emerge $1,132 P.O. Box 105555 Atlanta, GA 30348 HOLLINGER INC: Two Subsidiaries Sell Assets for $16.81 Million -------------------------------------------------------------- Domgroup Ltd., a wholly owned subsidiary of Hollinger, Inc., has entered into an agreement to sell its real property located at 280 Hurontario Street, Collingwood, Ontario, to Charis Developments Ltd. for $2.81 million. The transaction is expected to close at the end of January 2007. As reported in the Troubled Company Reporter on Dec. 12, 2006, Hollinger's wholly owned subsidiary, 10 Toronto Street Inc., entered into an agreement to sell its real property located at 10 Toronto Street, Hollinger's Toronto corporate office, to Morgan Meighen & Associates for $14 million. The transaction is expected to close in May 2007. Ravelston Receivership and CCAA Proceedings On April 20, 2005, the Court issued two orders by which The Ravelston Corporation Limited and Ravelston Management Inc. were: (i) placed in receivership pursuant to the Bankruptcy & Insolvency Act (Canada) and the Courts of Justice Act (Ontario); and (ii) granted protection pursuant to the Companies' Creditors Arrangement Act (Canada). RSM Richter Inc. was appointed receiver and manager of all of the property, assets, and undertakings of Ravelston and RMI. Ravelston holds approximately 16.5% of the outstanding Retractable Common Shares of Hollinger. On May 18, 2005, the Court further ordered that the Receivership Order and the CCAA Order be extended to include Argus Corporation Limited and its five subsidiary companies which collectively own, directly or indirectly, 61.8% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. On June 12, 2006, the Court appointed Richter as receiver and manager and interim receiver of all the property, assets, and undertaking of Argent News Inc., a wholly owned subsidiary of Ravelston. The Ravelston Entities own, in aggregate, approximately 78% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. The Court has extended the stay of proceedings against the Ravelston Entities to Jan. 19, 2007. About Hollinger Inc. The principal asset of Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- is its approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a newspaper publisher with assets which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada. Litigation Risks Hollinger Inc. faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on Sept. 7, 2004; (3) a $425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a Nov. 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a $5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on Nov. 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC. HOLLINGER INC: Can File Financials Under Fair Value Basis --------------------------------------------------------- Hollinger Inc. obtained on Dec. 7, 2006, a decision from certain Canadian securities regulatory authorities allowing it to file financial statements for periods ending on or after Dec. 31, 2003, using the fair value basis. The receipt of this decision marks the end of a lengthy process that established a basis upon which Hollinger can now update its continuous disclosure record in light of its unique circumstances. Hollinger intends to finalize and file financial statements for the financial years ended Dec. 31, 2003, 2004, and 2005 and March 31, 2006, as well as interim financial statements for the current fiscal year and other continuous disclosure documents with a view to bringing its disclosure filings current and compliant with applicable law. Once these documents are filed, Hollinger will apply to the Ontario Securities Commission for the revocation of the MCTO. The company is required by the recent decision to complete its filings within 90 days of the date of the decision. The full text of the decision is appended to this Update. By order made Dec. 14, 2006, the Ontario Superior Court of Justice extended the time for calling an Annual Meeting of Shareholders of Hollinger to Jan. 31, 2007. Supplemental Financial Information As of the close of business Dec. 8, 2006, Hollinger and its subsidiaries -- other than Sun-Times and its subsidiaries -- had approximately $33.2 million of cash or cash equivalents on hand, including restricted cash. At that date, Hollinger owned, directly or indirectly, 782,923 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Sun-Times. Based on the Dec. 8, 2006, closing price of the shares of Class A Common Stock of Sun-Times on the NYSE of $4.82, the market value of Hollinger's direct and indirect holdings in Sun-Times was $76 million. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Sun-Times is being held in escrow in support of future retractions of its Series II Preference Shares. All of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Sun-Times is pledged as security in connection with the senior notes and the second senior notes. In addition to the cash or cash equivalents on hand, Hollinger has previously deposited approximately CDN$8.8 million in trust with the law firm of Aird & Berlis LLP, as trustee, in support of Hollinger's indemnification obligations to six former independent directors and two current officers. In addition, CDN$758,000 has been deposited in escrow with the law firm of Davies Ward Phillips & Vineberg LLP in support of the obligations of a certain Hollinger subsidiary. As of Dec. 8, 2006, there was approximately $72.3 million aggregate collateral securing the $78 million principal amount of the Senior Notes and the $15 million principal amount of the Second Senior Notes outstanding. Hollinger is current on all payments due under its outstanding Senior notes and Second Senior Notes. However, it is non-compliant under the Indentures governing the Notes with respect to certain financial reporting obligations and other covenants arising from the insolvency proceedings of the Ravelston Entities. Neither the trustee under the Indentures nor the holders of the Notes have taken any action as a result of such defaults. Ravelston Receivership and CCAA Proceedings On April 20, 2005, the Court issued two orders by which The Ravelston Corporation Limited and Ravelston Management Inc. were: (i) placed in receivership pursuant to the Bankruptcy & Insolvency Act (Canada) and the Courts of Justice Act (Ontario); and (ii) granted protection pursuant to the Companies' Creditors Arrangement Act (Canada). RSM Richter Inc. was appointed receiver and manager of all of the property, assets, and undertakings of Ravelston and RMI. Ravelston holds approximately 16.5% of the outstanding Retractable Common Shares of Hollinger. On May 18, 2005, the Court further ordered that the Receivership Order and the CCAA Order be extended to include Argus Corporation Limited and its five subsidiary companies which collectively own, directly or indirectly, 61.8% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. On June 12, 2006, the Court appointed Richter as receiver and manager and interim receiver of all the property, assets, and undertaking of Argent News Inc., a wholly owned subsidiary of Ravelston. The Ravelston Entities own, in aggregate, approximately 78% of the outstanding Retractable Common Shares and approximately 4% of the Series II Preference Shares of Hollinger. The Court has extended the stay of proceedings against the Ravelston Entities to Jan. 19, 2007. About Hollinger Inc. The principal asset of Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- is its approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a newspaper publisher with assets which include the Chicago Sun-Times and a large number of community newspapers in the Chicago area. Hollinger also owns a portfolio of commercial real estate in Canada. Litigation Risks Hollinger Inc. faces various court cases and investigations: (1) a consolidated class action complaint filed in Chicago, Illinois; (2) a class action lawsuit that was filed in the Saskatchewan Court of Queen's Bench on Sept. 7, 2004; (3) a $425,000,000 fraud and damage suit filed in the State of Illinois by International; (4) a lawsuit seeking enforcement of a Nov. 15, 2003, restructuring proposal to uphold a Shareholders' Rights Plan, a declaration that corporate by-laws were invalid and to prevent the closing of a certain transaction; (5) a lawsuit filed by International seeking injunctive relief for the return of documents of which it claims ownership; (6) a $5,000,000 damage action commenced by a lessor of an aircraft lease, in which Hollinger was the guarantor; (7) an action commenced by the United States Securities and Exchange Commission on Nov. 15, 2004, seeking injunctive, monetary and other equitable relief; and (8) investigation by the enforcement division of the OSC. INTERMEC INC: Fitch Withdraws BB- Rating on Senior Unsecured Debt ----------------------------------------------------------------- Fitch Ratings has affirmed and simultaneously withdrawn these ratings for Intermec, Inc.: -- Issuer Default Rating at 'BB-'; -- Senior secured bank facility at 'BB+'; and, -- Senior unsecured debt at 'BB-'. All debt ratings for this issuer are also withdrawn at this time. Fitch will no longer provide rating coverage of Intermec. JANI KASSU: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Jani Kassu Trading, Inc. 2604 5th Street Stafford, TX 77477-6311 Tel: (281) 499-3069 Bankruptcy Case No.: 06-36795 Chapter 11 Petition Date: December 4, 2006 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Margaret Maxwell McClure, Esq. 909 Fannin, Suite 1580 Houston, TX 77010 Tel: (713) 659-1333 Fax: (713) 658-0334 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. JOHN SHANNON: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: John L. Shannon 8920 Highway T Wappapello, MO 63966 Bankruptcy Case No.: 06-10663 Chapter 11 Petition Date: November 30, 2006 Court: Eastern District of Missouri (Cape Girardeau) Judge: Barry S. Schermer Debtor's Counsel: J. Patrick O'Loughlin, Esq. O'Loughlin, O'Loughlin & Koett, L.C. 1736 North Kingshighway Cape Girardeau, MO 63701 Tel: (573) 334-9104 Fax: (573) 334-5256 Total Assets: $1,372,205 Total Debts: $607,340 The Debtor does not have any creditors who are not insiders. J.P. MORGAN: Fitch Rates $16.29-Mil. Certificate Class at BB+ ------------------------------------------------------------- Fitch rates J.P. Morgan Mortgage Acquisition Corp, asset-backed pass-through certificates, Series 2006-CH2, as: Group I -- $1.343 billion, classes AF-1a through AF-6 'AAA'; -- $9.28 million class MF-1 'AA+'; -- $8.69 million class MF-2 'AA'; -- $4.94 million class MF-3 'AA-'; -- $4.74 million class MF-4 'A+'; -- $4.15 million class MF-5 'A'; -- $3.16 million class MF-6 'A-'; -- $3.36 million class MF-7 'BBB+'; -- $1.98 million class MF-8 'BBB'; and, -- $3.95 million class MF-9 'BBB-'. Group II -- $342.48 million, classes AV-1 through AV-5 'AAA'; -- $51.31 million class MV-1 'AA+'; -- $44.79 million class MV-2 'AA'; -- $26.87 million class MV-3 'AA-'; -- $24.43 million class MV-4 'A+'; -- $23.62 million class MV-5 'A'; -- $21.17 million class MV-6 'A-'; -- $18.73 million class MV-7 'BBB+'; -- $12.22 million class MV-8 'BBB'; -- $11.40 million class MV-9 'BBB-'; and, -- $16.29 million privately offered class MV-10 'BB+'. The Group I 'AAA' rating on the senior certificates reflects the 13.3% total credit enhancement provided by: -- the 2.35% class MF-1; -- the 2.2% class MF-2; -- the 1.25% class MF-3; -- the 1.2% class MF-4; -- the 1.05% class MF-5; -- the 0.8% class MF-6; -- the 0.85% class MF-7; -- the 0.5% class MF-8; -- the 1% MF-9; and, -- the initial and target overcollateralization of 2.1%. The Group II 'AAA' rating on the senior certificates reflects the 17.55% total credit enhancement provided by: -- the 3.15% class MV-1; -- the 2.75% class MV-2; -- the 1.65% class MV-3; -- the 1.5% class MV-4; -- the 1.45% class MV-5; -- the 1.3% class MV-6; -- the 1.15% class MV-7; -- the 0.75% class MV-8; -- the 0.7% MV-9; -- the privately offered 1% class MV-10; and, -- the initial and target overcollateralization of 2.15%. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of J.P. Morgan Chase Bank, N.A. as servicer, U.S. Bank National Association as trustee and The Bank of New York as Securities Administrator. The certificates are supported by two collateral groups. Group I consists of only fixed rate mortgages, while Group II contains both fixed and adjustable rate mortgages. The group I mortgage pool consists of first lien mortgage loans with a cut-off date pool balance of $395,016,143. The weighted average loan rate is approximately 7.641%. The weighted average remaining term to maturity is 305 months. The average principal balance of the loans is approximately $153,882. The weighted average combined loan-to-value ratio is 73.88%. The properties are primarily located in Florida, California, and Maryland. The group II mortgage pool consists of adjustable-rate and fixed-rate, first lien mortgage loans with a cut-off date pool balance of $1,628,736,022. Approximately 20% of the mortgage loans are fixed-rate mortgage loans, 80% are adjustable-rate mortgage loans and 100% are first lien mortgage loans. The weighted average loan rate is approximately 7.796%. The weighted average remaining term to maturity is 339 months. The average principal balance of the loans is approximately $209,700. The weighted average combined loan-to-value ratio is 78.39%. The properties are primarily located in Florida, California, and New Jersey. JPMorgan Chase Bank, National Association, a national banking association originated all of the mortgage loans, either directly or through an affiliate. For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. J.P. MORGAN: S&P Holds Junk Rating on Class M Certificates ---------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class D through G commercial mortgage pass-through certificates issued by J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2001-CIBC2. At the same time, ratings were affirmed on 11 classes from the same transaction. The raised and affirmed ratings reflect the resolution of several assets that were formerly with the special servicer, as well as credit enhancement levels that adequately support the ratings through various stress scenarios. The upgrades of several senior certificates reflect the defeasance of $228.7 million (27%) in collateral since issuance. As of the Nov. 15, 2006, remittance report, the collateral pool consisted of 129 loans with an aggregate trust balance of $851 million, compared with 143 loans with a balance of $961.7 million at issuance. The master servicer, Midland Loan Services Inc. (Midland), provided primarily year-end financial information for 97% of the pool, excluding the loans secured by defeased collateral. Based on this information, Standard & Poor's calculated a weighted average debt service coverage (DSC) of 1.43x for the pool, compared with 1.37x at issuance. All of the loans in the pool are current. There are currently no assets with the special servicer, ARCap Servicing Inc. To date, the trust has experienced six losses totaling $11 million. The top 10 loans secured by real estate had an aggregate outstanding balance of $232.2 million (27%) and a weighted average DSC of 1.61x for year-end 2005, up from 1.45x at issuance. The increase in DSC, since issuance, resulted primarily from an increase in net cash flow of 10% or more for four of the top 10 loans. Three other top 10 loans are on the master servicer's watchlist and are discussed below. Standard & Poor's reviewed property inspections provided by Midland for all of the assets underlying the top 10 exposures, and all were characterized as "good" or "excellent." Midland reported a watchlist of 28 loans with an aggregate outstanding balance of $143.4 million (17%). The largest loan on the watchlist is the Crocker Richmond portfolio ($18.1 million, 2%) in Richmond, Virginia, which is also the fifth-largest loan in the pool. The loan is secured by three office buildings built in 1986 and renovated in 1989, totaling 233,034 sq. ft. The loan was placed on the watchlist due to low occupancy after the largest tenant vacated. Occupancy had increased to 93% as of Dec. 31, 2005; however, DSC remains low at 0.90x because the borrower had to lower asking rents to increase occupancy. The seventh-largest loan in the pool, Gateway Executive Park ($15.8 million, 2%), is secured by a 231,250-sq.-ft. office building in Schaumburg, Illinois, built in 1972 and renovated in 2000. The loan was placed on the watchlist due to low occupancy and DSC. As of June 30, 2006, occupancy was 81% and DSC was 0.78x. The ninth-largest loan, HSBC Plaza ($15.8 million, 2%), is secured by a 320,347-sq.-ft. office building in Rochester, N.Y. The loan was placed on the watchlist because occupancy had declined to 70% as of May 2005. As of July 31, 2006, occupancy had increased to 90%, but DSC remains low at 0.45x. Standard & Poor's stressed various loans in the transaction, paying closer attention to the loans on the watchlist. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CIBC2 Rating ------ Class To From Credit enhancement(%) ----- -- ---- -------------------- D AA+ AA 12.83 E A+ A- 9.44 F A- BBB+ 8.03 G BBB BBB- 5.06 Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CIBC2 Class Rating Credit enhancement(%) ----- ------ --------------------- A-2 AAA 23.57 A-3 AAA 23.57 B AAA 19.05 C AAA 14.53 H BB+ 4.22 J BB 3.37 K B+ 1.96 L B- 1.39 M CCC+ 0.83 X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. KB HOME: Planned Restatement Prompt Moody's Ratings Review ---------------------------------------------------------- Moody's Investors Service placed all of the ratings of KB Home under review for possible downgrade, including its Ba1 corporate family rating and senior notes rating and Ba2 senior subordinated debt rating. This action comes after the company's recent report that it would have to restate its fiscal 2005 10-K and its 10-Q's for the first two quarters of fiscal 2006. This restatement, plus the late filing of the company's 10-Q for its third fiscal quarter of 2006, will probably not be completed before Dec. 31, 2006, assuming that the SEC does not require additional periods to be restated. Moody's has previously commented that further postponement of the company's fiscal third quarter 10-Q filing beyond Dec. 31, 2006 would prompt a review for downgrade. On Dec, 7, 2006, KB Home, in consultation with its Audit and Compliance Committee and after discussion with its auditors, Ernst & Young LLP, determined that the company's previously issued financial statements and any related reports of its independent registered public accounting firm for the fiscal years ended Nov. 30, 2003, 2004 and 2005, which are included in the company's Annual Report on Form 10-K for the year ended Nov. 30, 2005, and the interim financial statements included in the company's Quarterly Reports on Form 10-Q for the quarters ended Feb. 28, 2006 and May 31, 2006, should no longer be relied upon and will be restated. The company stated in its original 2005 10-K that based on management's evaluation under the Committee of Sponsoring Organizations of the Treadway Commission framework and applicable SEC rules, it concluded that internal controls over financial reporting were effective as of November 30, 2005. However, due to the recent investigation surrounding option backdating, Moody's believes that a material weakness existed pertaining to the company's option granting practices. Moody's expects this internal control weakness to be disclosed in the restated 2005 10-K. We also believe that management and the board will sufficiently address this weakness going forward. The company has received consent from its senior note holders to amend the indentures and to waive default until Feb. 23, 2007 for failure to file its fiscal third quarter 2006 10-Q in a timely fashion. Formal approval from its banking group for the same grace period occurred this week. Moody's review will focus on KB Home's ability to build and maintain liquidity in the face both of a weak housing environment and the worst case scenario of having to fund substantial repayment of its public senior and senior sub notes. The review's conclusion will also depend heavily on decisions made with regard to any further required restatements. An SEC decision to require restatement for more periods than currently contemplated by the company's action plan may cause the company to miss its Feb. 23, 2007 filing deadline. This would either cause the company to have to go back to its note holders and banks to seek additional waivers or trigger defaults under the notes and bank credit facility. Founded in 1957 and headquartered in Los Angeles, California, KB Home is one of America's largest homebuilders, with domestic operating divisions in the following regions and states: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; Central -- Colorado, Illinois, Indiana and Texas; and Southeast -- Florida, Georgia, North Carolina and South Carolina. Kaufman & Broad S.A., the company's 49%-owned subsidiary, is one of the largest homebuilders in France. KB Home's fiscal 2005 revenues and net income were $9.4 billion and $842 million, respectively. KYPHON INC: Moody's Rates New $675-Mil. Sr. Credit Facility at B1 ---------------------------------------------------------------- Moody's Investors Service assigned a rating of B1 to the proposed $675 million senior secured credit facility of Kyphon Inc. The credit facility consists of a five year $300 million revolving credit facility and a seven year $375 million Term Loan B facility. The company intends to use the proceeds from the term loan along with cash on hand and borrowings under the revolving credit facility to finance the purchase of St. Francis Medical Technologies, Inc. Concurrently, Moody's assigned Kyphon a Corporate Family Rating of B1 and a Speculative Grade Liquidity Rating of SGL-1. The ratings outlook is stable. On Dec. 4, 2006, Kyphon reported that it signed a definitive agreement to acquire St. Francis, the manufacturer of the X STOP (Reg.) Interspinous Process Decompression System, the first FDA-approved interspinous process device for treating lumbar spinal stenosis. Under the terms of the agreement, Kyphon will acquire 100% of the fully diluted equity of St. Francis for $525 million in cash, and additional revenue-based contingent payments of up to $200 million payable in 2008 in either cash or a combination of cash and stock, at Kyphon's election. Moody's believes that the biggest advantage of the acquisition will be the sale of the X STOP (Reg.) system through Kyphon's sales force. Kyphon's B1 rating reflects the factors outlined in Moody's Global Medical Products and Device Industry Rating Methodology. Kyphon has scores in the B rating category for these rating factors: -- diversity by customer sales segment; -- concentration by top customer segment, cash flow from operations to debt; -- free cash flow to debt; and, -- debt to book capitalization and debt to EBITDA. While Moody's is concerned by the small size of the company and the operational and financial risks involved with a debt financed transforming acquisition, Moody's notes that the company's operating margins, interest coverage and return on assets are higher than other companies in the single B rating category. The stable outlook incorporates Moody's belief that the core business will continue to grow based on adoption by new spine specialists and higher utilization by existing spine specialists of both the X STOP (Reg.) system and Kyphon's KyphX (Reg.) balloon kyphoplasty products. Despite potential pricing pressure and lower margins due to increased competition, Moody's assumes that the company will continue to expand operating margins based on higher sales productivity, cost synergies from integrating St. Francis, and leveraging general and administrative expenses across a larger combined company. As a result, Moody's anticipates that Kyphon will generate meaningful operating and free cash flow. The assignment of the SGL-1 speculative grade liquidity rating reflects very good liquidity as Moody's expects that internally generated cash flow will be sufficient to fund working capital, capital expenditures and debt service over the next twelve month period ending Dec. 31, 2007. This rating also considers the significant amount of external committed funding the company is anticipated to have upon closing of the proposed $300 million revolving credit facility with Moody's estimate of approximately $240 million in availability at closing. Since Moody's anticipates that Kyphon will have a comfortable cushion to remain in compliance with the financial covenants inherent in the proposed credit facility, Kyphon should be able to maintain access to this committed source of funding over the next four quarters. However, the SGL rating recognizes the absence of an alternate source of liquidity, since all assets will be encumbered under the credit agreement. These ratings were assigned to Kyphon Inc.: -- $375 Million Term Loan B, B1, LGD3, 34% -- $300 million Revolving Credit Facility, B1, LGD3, 34% -- Corporate Family Rating, B1 -- Probability of Default Rating, B2 -- Family LGD assessment LGD-3, 35% Kyphon develops and markets medical devices designed to restore spinal function and diagnose low back pain using minimally invasive technologies. The company's products are used in balloon kyphoplasty for the treatment of spinal fractures caused by osteoporosis or cancer, and in the Functional Anaesthetic Discography procedure for diagnosing low back pain due to degenerative disc disease. The company reported about $295 million of revenues for the nine months ended Sept. 30, 2006. St. Francis is a privately held medical device company that manufactures the X STOP (Reg.) Interspinous Process Decompression IPD (Reg.) System, the first FDA-approved interspinous process device for treating lumbar spinal stenosis. The X-Stop device was launched in the U.S. in early 2006, following FDA approval in 2005. The X STOP (Reg.) technology is the company's initial product line. LA PETITE: Moody's Holds Rating on $130-Mil. of Sr. Loans' at B2 ---------------------------------------------------------------- Moody's Investors Service affirmed the long-term debt ratings of La Petite Academy, Inc. after the report of the acquisition of the company's assets by A.B.C. Learning Centres Limited for $330 million. The purchase agreement was signed on Dec. 13, 2006 and the transaction is expected to be completed by March 31, 2007, subject to regulatory approval by anti-trust authorities. ABC will finance the acquisition through a new credit facility. The transaction values the company at about ten times fiscal 2006 EBITDA. The acquisition will be financed by debt and Moody's expectation is that the existing facilities will be refinanced as part of the transaction, at which point the ratings will be withdrawn. These ratings are affected: -- The B2 rated Corporate Family Rating. -- The Ba2, LGD2, 21% $20 million senior secured first lien revolver due 2011; -- The Ba2, LGD2, 21% $110 million senior secured first lien term loan due 2012; -- The B3, LGD4, 69% $85 million senior secured second lien term loan due 2013; The outlook for the ratings is stable. A.B.C. Learning Centres Limited, based in Brisbane, Australia, is the world's largest publicly traded provider of childcare services and recently entered the US market through the acquisition of two other US childcare companies: Learning Care Group Inc in January 2006 and Children's Courtyard in August 2006. La Petite Academy, Inc., based in Chicago, Illinois, is the second largest, for-profit, preschool provider in the United States. La Petite offers educational, developmental and child care programs that are available on a full-time or part-time basis for children between six weeks and twelve years old. The company's schools are located in 36 states and the District of Columbia, primarily in the southern, Atlantic coastal, mid-western and western regions of the United States. As of Sept. 30, 2006, the company operated 650 schools, including 591 residential academies, 30 employer-based schools and 29 Montessori schools. La Petite had revenue of approximately $421 million for the fiscal year ended July 1, 2006. LARRY BROWN: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Larry Thomas Brown 4711 Ivy Ridge Drive Smyrna, GA 30080 Bankruptcy Case No.: 06-75740 Chapter 11 Petition Date: December 4, 2006 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: Ian M. Falcone, Esq. The Falcone Law Firm PC 363 Lawrence Street Marietta, GA 30060 Tel: (770) 426-9359 Total Assets: $0 to $50,000 Total Debts: $1 Million to $100 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Countrywide Home Lending Conventional Real $337,600 450 American St Credit Estate Mortgage Reporting S Simi Valley, CA 93065 Countrywide Home Lending Conventional Real $326,267 450 American St. Credit Estate Mortgage Reporting S Simi Valley, CA 93065 Bank Of America Home Equity Line $88,253 4161 Piedmont Pkwy. of Credit Greensboro, NC 27410 Lexus Financial Service Automobile $69,449 12735 Morris Road Ext. # Alpharetta, GA 30004 Amex Credit Card $68,147 P.O. Box 297871 Fort Lauderdale, FL 33329 Amex Credit Card $59,630 P.O. Box 297871 Fort Lauderdale, FL 33329 Ford Motor Credit Automobile $36,527 Corporation P.O. Box Box 542000 Omaha, NE 68154 GMAC Auto Lease $35,210 P.O. Box 105677 Atlanta, GA 30348 American Honda Automobile $28,170 P.O. Box 1027 Alpharetta, GA 30009 Maf Collection Service Collection Gold $277 134 S. Tampa St. S Gym Tampa, FL 33602 Verizon Fl. Other $91 P.O. Box 165018 Columbus, OH 43216 Verizon Florida Inc. Other $91 P.O. Box 165018 Columbus, OH 43216 Verizon Fl. Other Unknown P.O. Box 165018 Columbus, OH 43216 LBREP/L SUNCAL: Liquidity Pressures Cue S&P's Negative Watch ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on LBREP/L SunCal Master I LLC on CreditWatch with negative implications. The CreditWatch placements reflect near-term liquidity pressures resulting from materially lower than expected sales of home sites in the borrower's master-planned communities. As a consequence of the current housing downturn, homebuilders' appetite for land purchases has been sharply curtailed, delaying the anticipated sale of 2,254 of the borrower's lots (nearly 20% of the originally entitled total). In response to liquidity pressures, the borrower's sponsors have contributed additional equity, and the borrower is soliciting additional subordinated capital as well as amendments to the liquidity covenant governing its $320 million secured credit facility. S&P expects to meet with the sponsors soon and will evaluate whether the borrower's ultimate capitalization is sufficient to support the current ratings, given our expectations for challenging market conditions over the next 12 to 18 months. LBREP/L SunCal Master I LLC is a single-purpose, finite-life entity created to acquire, entitle, and develop four parcels of land in Southern California, primarily for residential purposes. The borrower is a partnership between LBREP Lakeside SC Master I LLC (LBREP) and SCC Ranch Ventures LLC. LBREP is an affiliate of Lehman Bros. Real Estate Private Equity Group. SCC is an affiliate of unrated SunCal Cos. (SunCal). Irvine, California-based SunCal is the largest private master-planned community developer in California. The credit facilities were originally obtained to fund a large distribution to the sponsors, prefund development, and repay existing debt. Ratings Placed On Creditwatch Negative BREP/L SunCal Master I LLC To From Issuer credit rating B+/Watch Neg/-- B+/Stable/-- First-lien credit facility BB-/Watch Neg BB- Recovery rating 1/Watch Neg 1 Second-lien credit facility B+/Watch Neg B+ Recovery rtg 2/Watch Neg 2 LODGENET ENT: Buys Ascent Entertainment for $380 Mil. from Liberty ------------------------------------------------------------------ LodgeNet Entertainment Corp. entered into a stock purchase agreement with Liberty Satellite & Technology Inc. and Liberty Satellite's parent company, Liberty Media Corp. to acquire 100% of the capital stock of Ascent Entertainment Group Inc., a wholly owned subsidiary of Liberty Satellite, for $380 million. Ascent owns 100% of the capital stock of On Command Corp. The purchase price of the acquisition will be paid in cash and 2,050,000 shares of common stock of the company, subject to adjustments. The share consideration is valued at $47,867,500, and the cash consideration will be $332,132,500. LodgeNet, Liberty Satellite, and Liberty Media have made customary representations, warranties, covenants, and indemnities in the Purchase Agreement. The completion of the Purchase Agreement is subject to the satisfaction of customary closing conditions, including approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In addition, LodgeNet has agreed to pay Liberty Satellite a termination fee of $5 million in certain circumstances if required approvals under the HSR Act are not received. Stockholders Agreement In connection with the Purchase Agreement, LodgeNet entered into a stockholders agreement with Liberty Satellite and Liberty Media to provide for certain transfer, voting ,and standstill restrictions and registration rights on the shares of common stock of LodgeNet to be issued to Liberty Satellite in connection with the Acquisition. Bank Commitment Letter Also in connection with the Purchase Agreement, LodgeNet entered into a bank commitment letter with Bear, Stearns & Co. Inc., Bear Stearns Corporate Lending Inc., Credit Suisse, and Credit Suisse Securities (USA) LLC. The Commitment Letter provides for senior secured credit facilities for an aggregate amount of up to $475 million comprised of a revolving credit facility of up to $50 million and one or more term loan facilities of up to an aggregate of $425 million. LodgeNet has further agreed to register the resale of the company's common shares to be issued to Liberty Satellite. Headquartered in Sioux Falls, South Dakota, LodgeNet Entertainment Corporation (NASDAQ:LNET) -- http://www.lodgenet.com/-- provides cable, video-on-demand and video game entertainment services to the lodging industry. As of Sept. 30, 2006, the company provided interactive and basic cable television services to approximately 6,100 hotel properties serving over one million rooms. The company's balance sheet, at Sept. 30, 2006, showed $268.9 million in total assets and $331.3 million in total liabilities, resulting in a $62.4 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on Nov. 2, 2006, Moody's affirmed the 'B1' rating for both the Corporate Family Rating and Probability of Default Rating of LodgeNet Entertainment, the 'Ba1' rating for both the company's Senior Secured Revolver and Senior Secured Term Loan, and the 'B2' rating for the company's 9.5% Senior Sub Notes. Moody's said the outlook is positive. LODGENET ENT: Command Corp. Agreement Cues S&P's Negative Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on interactive-TV hotel entertainment provider LodgeNet Entertainment Corp. to negative from stable, following the company's announcement that it has entered into an agreement to acquire competitor On Command Corp. for $380 million. At the same time, S&P affirmed the 'B+' corporate credit rating on the company. LodgeNet expects to secure a $425 million term loan to partially fund this transaction and to refinance its existing term loan. For the 12 months ended Sept. 30, 2006, LodgeNet had $276 million in debt. "The transaction would increase Sioux Falls, S.D.-based LodgeNet's room base, create relationships with additional hotel customers, eliminate a competitor, and provide an opportunity for cost reductions," said Standard & Poor's credit analyst Tulip Lim. "However, LodgeNet would be increasing its size significantly with this acquisition. We are concerned about some integration risk and the near- to intermediate-term weakening of LodgeNet's credit profile as a result of the transaction." The ratings reflect LodgeNet's exposure to the cyclical and seasonal lodging industry, the expectation that the company's substantial capital spending will continue to limit its discretionary cash flow, and the limited size and long-term growth potential of this market niche. LodgeNet's operating results are subject to the discretionary nature of traveler purchases and the unpredictable quality of Hollywood movies, which generate a majority of room revenue. These risks are only partially offset by the company's good market position, its solid margins, and the relative stability provided by long-term noncancelable contracts. S&P views the combination with On Command as conferring increased revenue and efficiencies over the longer term, likely with less pressure on client renewal terms. However, integration will involve some restructuring costs and IT investments. S&P cannot currently quantify cost synergies or restructuring costs. Prior to the On Command announcement, the company also announced that it will be acquiring the assets of high-speed Internet access solutions company StayOnline Inc., which will increase LodgeNet's base of rooms with high-speed service to 175,000 from 35,000. LONNIE DUEKER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Lonnie F. Dueker Patricia A. Dueker 8920 Highway T Wappapello, MO 63966 Bankruptcy Case No.: 06-10665 Type of Business: The Debtor operates a hotel known as Miller's Motor Lodge. See http://www.millersmotorlodge.com/ Chapter 11 Petition Date: November 30, 2006 Court: Eastern District of Missouri (Cape Girardeau) Judge: Barry S. Schermer Debtor's Counsel: J. Patrick O'Loughlin, Esq. O'Loughlin, O'Loughlin & Koett 1736 N. Kingshighway Cape Girardeau, MO 63701 Tel: (573) 334-9104 Fax: (573) 334-5256 Total Assets: $1,307,305 Total Debts: $607,340 The Debtor does not have unsecured creditors who are not insiders. LSP BATESVILLE: S&P Holds B+ Rating on $326 Mil of Senior Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' rating on LSP Batesville Funding Corp.'s $150 million senior secured bonds due 2014 and $176 million senior secured bonds due 2025. The outlook is stable. The rating action follows the announcement on Dec. 11, 2006 that a wholly owned subsidiary of Complete Energy Holdings LLC signed a definitive agreement to purchase the equity partners' majority interests in the Batesville Electric Generating Facility. The transaction is expected to be completed in January 2007, subject to certain regulatory approvals. "The announcement does not affect the ratings on the bonds as the project level structure will remain unchanged, and we do not regard the parent's credit risk to be a main rating driver," said Standard & Poor's credit analyst Karim Nassif. LSP Batesville's 100% owner is CEP Batesville Acquisition LLC (not rated). Owners of CEP Batesville have predominantly included private equity funds as well as a minor shareholding owned by Complete Energy Partners LLC. The stable outlook on LSP Batesville reflects the predictability of contracted revenues over the next seven years. MIAD SYSTEMS: Inks $380,000 Loan Pact with M.L. Strategic Limited ----------------------------------------------------------------- MIAD Systems Ltd., nka Melo Biotechnology Holdings Inc., has entered into a loan agreement with M.L. Strategic Limited, pursuant to which MIAD Systems will borrow $380,000 from MLSL. The loan will be used by MIAD Systems for operating capital and will be distributed by MLSL to the company in one lump sum within 21 days from Dec. 7, 2006, the "Effective Date". The loan is an unsecured, non-interest bearing loan. Pursuant to the Agreement, MIAD Systems is obligated to pay back the principal balance of the loan in a balloon payment, one year from the Effective Date. A full text-copy of the Loan Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?1721 Headquartered in Markham, Ontario, Melo Biotechnology Holdings Inc. fka MIAD Systems Ltd. -- http://www.miad.com/-- supplies business computer systems and provides computer maintenance, installation and networking services to major clients primarily engaged in the corporate, institutional, municipal, utilities and education fields. M.L. Strategic Limited is a British Virgin Islands corporation and is the owner of a majority of the issued and outstanding shares of the common stock of Melo Biotechnology. As reported in the Troubled Company Reporter on Sept. 21, 2006, Miad Systems Ltd.'s interim balance sheet, as of June 30, 2006, showed total assets of CDN$1,886,059 and total liabilities of CDN$2,306,443, resulting in a total stockholders' deficit of CDN$420,384. MIDLAND COGENERATION: S&P Withdraws B Rating on $200-Mil. Bonds --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' subordinated debt rating on Midland Cogeneration Funding Corp. II's (aka Midland Cogeneration Venture L.P.) $200 million tax-exempt subordinated pollution control bonds issued by the Economic Development Corporation of the County of Midland (Michigan). Standard & Poor's is discontinuing surveillance on the bonds at the request of MCV and based on the expectation that future information will not be obtainable from public sources. MCV recently discontinued its practice of publicly filing financial information with the SEC. Before the rating withdrawal, the rating on MCV's bonds were on CreditWatch with negative implications. "We expect that a number of credit concerns will persist into 2007 and beyond," said Standard & Poor's credit analyst Michael Messer. "The rating had been on CreditWatch with negative implications to reflect uncertainty regarding MCV's economics after 2007, when many gas hedges expire and the project's offtaker, Consumers Energy Co. (BB/Stable/--), can invoke regulatory provisions under the purchased-power agreement that will reduce cash flow," said Mr. Messer. Standard & Poor's anticipates that MCV's financial position will be materially weakened unless exposure to regulatory risk and escalating fuel costs are effectively addressed in 2007. MIDLAND COGENERATION: Fitch Withdraws Junk Rated Secured Bonds -------------------------------------------------------------- Fitch Ratings withdraws the 'CCC+' rating of Midland Cogeneration Venture LP's tax-exempt secured lease obligation bonds due 2009. Midland Cogeneration Venture operates one of the largest cogeneration power plants in the US. With a generating capacity up to 1,500 MW, the company is responsible for about 10% of the electricity used in Michigan's lower peninsula. Midland Cogeneration Venture is jointly owned by CMS Energy (49%), El Paso Corporation (44%), and Dow Chemical (7%). MIDDLE MICHIGAN: Case Summary & Largest Unsecured Creditor ---------------------------------------------------------- Debtor: Middle Michigan Properties, LLC 23251 Cheltenham Lane Dearborn Heights, MI 48127 Bankruptcy Case No.: 06-58533 Chapter 11 Petition Date: December 13, 2006 Court: Eastern District of Michigan (Detroit) Judge: Steven W. Rhodes Debtor's Counsel: Richard F. Fellrath, Esq. Melissa L.M. Fellrath, Esq. 4056 Middlebury Drive Troy, MI 48085 Tel: (248) 519-5064 Fax: (248) 519-5065 Total Assets: $749,400 Total Debts: $2,943,000 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ La Salle Bank, Midwest N.A. Bank Loan $2,943,000 fka Standard Federal Bank, N.A. Secured: 2600 West Big Beaver Road $749,400 Troy, MI 48084 Unsecured: c/o Ari M. Charlip $2,193,600 40900 Woodward Avenue, Suite 250 Bloomfield Hills, MI 48304 MOTHERS WORK: S&P Lifts Corporate Credit Rating to B from B- ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on Philadelphia-based Mothers Work Inc., including the corporate credit rating, to 'B' from 'B-'. The outlook is positive. Mothers Work, a specialty maternity apparel retailer, had funded debt of about $115 million as of Sept 30, 2006. "The upgrade reflects a recovery in operating performance in the past few quarters as well as an improvement in credit protection measures due to higher earnings and debt reduction," said Standard & Poor's credit analyst Ana Lai. Total debt to EBITDA declined to about 5.2x for the fiscal year ended Sept. 30, 2006, from over 7x in fiscal 2005. With the just-completed redemption of $25 million of senior notes, total debt to EBITDA is currently less than 5x. In addition, EBITDA interest coverage improved to about 2x for the fiscal year ended Sept. 30, 2006, from about 1.5x in fiscal 2005. "We also expect the positive operating momentum to continue into 2007 due to reduced competitive pressure, good execution of its merchandising strategy, and contributions from the company's agreements with Kohl's and Sears," said Ms. Lai. The speculative-grade ratings on Mothers Work reflect the high business risk associated with the company's participation in the narrowly defined and intensely competitive maternity segment of the apparel retailing industry, a history of inconsistent operating results, and a leveraged capital structure. Following negative sales trends in fiscal 2004 and 2005, Mothers Work's recent operating results have recovered as competitive pressure from discounters and other specialty retailers has eased and consumers' response to its merchandising mix has improved. Mothers Work reported comparable-store sales growth of 6.5% in the fourth quarter and 4.3% in the fiscal year ended Sept. 30, 2006. The growth in sales contributed to an increase in adjusted EBITDA to $51.7 million, from about $34 million a year earlier. Operating margins expanded to about 17% of sales, from about 15% in the year-earlier period, due to lower markdowns. NAVISTAR INT'L: Reports Increased Truck Shipments in Fiscal 2006 ---------------------------------------------------------------- Navistar International Corp. reported substantially increased truck shipments and relatively flat engine shipments for its fiscal year ended Oct. 31, 2006. Worldwide shipments of school buses, Class 6-7 medium trucks and Class 8 heavy trucks totaled 147,400 units, up 14% from the 129,600 units shipped in fiscal 2005. In addition, a total of 11,000 Class 4-5, small bus and stripped chassis for the motor home and step-van markets were shipped. The company did not participate in this market in 2005. Navistar's engine subsidiaries shipped a total of 519,700 engines, down slightly from fiscal 2005 volume of 522,600 engines. Shipments of diesel engines to Ford Motor Company were down by nearly 40,000 units. "With our fourth quarter improvements in market share in our core businesses, the performance of our other business units and the cash balances that we achieved, we have many reasons to be proud," Navistar chairman, president, and chief executive officer Daniel C. Ustian said. "We are focused on delivering on our commitments by aggressively implementing a plan based on three strategic initiatives: creating great products, achieving a competitive cost structure, and delivering profitable growth," Mr. Ustian added. Mr. Ustian noted that the company's fourth quarter combined market share was the highest for the company in the past five years. "As we move forward, we remain committed to strengthening our core products by focusing on quality, investing in products that give us a sustainable competitive advantage and by getting the necessary volume to benefit from increased sales," Mr. Ustian said. Navistar's preliminary year-end unaudited manufacturing cash and marketable securities as of Oct. 31, 2006, was approximately $1.2 billion, as anticipated. Mr. Ustian said that the company has received more than 2,000 orders for the new International ProStar(TM) Class 8 heavy truck that is scheduled to go into initial production in January. The ProStar(TM) offers best in class fuel economy, lowest cost of ownership and unprecedented uptime. "There are so many exciting things happening at our company and we are continuing to move forward despite the distraction of the restatement process," Mr. Ustian said. Concerning the restatement process, Bill Caton, executive vice president and chief financial officer, said, "We are committed to accurate financial statements and we will continue to devote the necessary time and resources to achieve that goal." Mr. Caton said those resources have included the hiring of more than 50 new employees in the accounting area and the continued use of Huron Consulting Group as consultants to the company's accounting management. "We have made significant progress on completing the restatement of our financial statements while at the same time strengthening accounting processes throughout the company," Mr. Caton said. "The efforts to address our accounting issues and our commitment to accuracy will extend the completion of our 2005 financial statements beyond Feb. 1, 2007, which will then be followed by the completion of our 2006 financial statements," Mr. Caton said. The company does not plan to comment on its 2006 results until its financial statements are completed. NYSE Delisting The company has continued to update the New York Stock Exchange on its progress in completing its financial statements and has been advised by the exchange that it expects to suspend trading in Navistar's stock by Dec. 20, 2006, and begin procedures to delist the company from the exchange. The company plans to contest those actions. The company has advised the NYSE that it anticipates being quoted on the Pink Sheet Electronic Quotation Service following the suspension. Waiver Mr. Caton noted that the company's relationship banks have again expressed their support by granting a waiver that extends the financial statement-filing requirement in Navistar Financial Corp.'s $1.2 billion revolving credit agreement to Oct. 31, 2007. NFC continues to access this revolver and the parent operating company has its $1.5 billion loan facility in place until it matures in March 2009. Mr. Caton also said that the company anticipates refinancing this facility before maturity to obtain lower borrowing costs. Additionally, the company intends to pay down $200 million of its $1.5 billion loan facility by the end of calendar 2006. About Navistar International Based in Warrenville, Illinois, Navistar International Corp. (NYSE:NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Dec. 13, 2006, Standard & Poor's Ratings Services reported that its 'BB-' corporate credit ratings on Navistar International Corp., and Navistar's subsidiary, Navistar Financial Corp., remain on CreditWatch with negative implications where they were placed on Jan. 17, 2006. NAVISTAR INT'L: CFO William Caton Replaces Robert Lannert as Dir. ----------------------------------------------------------------- Navistar International Corp.'s vice chairman and a Class I director, Robert C. Lannert, notified the company on Dec. 11, 2006, that his resignation from the Board of Directors became effective on Dec. 8, 2006. William A. Caton, the company's executive vice president and chief financial officer, was elected as a Class I director of the company to fill the vacancy created by Mr. Lannert's resignation. Incentive Awards The Board's Compensation Committee approved on Dec. 11, 2006, cash-based long-term incentive awards under the Navistar International Corporation 2004 Performance Incentive Plan for certain employees, including its principal executive officer, principal financial officer, and other named executive officers. These cash-based long-term incentive awards are in lieu of the company's fiscal year 2007 annual grant of stock options to those individuals and are only applicable for fiscal year 2007. This fiscal year 2007 incentive award is in addition to, and separate from, the company's Annual Incentive Awards for fiscal year 2007. About Navistar International Based in Warrenville, Illinois, Navistar International Corp. (NYSE: NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Dec. 13, 2006, Standard & Poor's Ratings Services reported that its 'BB-' corporate credit ratings on Navistar International Corp., and Navistar's subsidiary, Navistar Financial Corp., remain on CreditWatch with negative implications where they were placed on Jan. 17, 2006. NEENAH FOUNDRY: Moody's Holds Corporate Family Rating at B2 ----------------------------------------------------------- Moody's affirmed the Corporate Family rating of Neenah Foundry Company at B2, and its Probability of Default rating at B2. Moody's also assigned a B2 rating to the company's new senior secured notes. The notes, together with a new senior secured revolving credit facility, and $75 million of privately placed subordinated notes, will be used to repay all of Neenah's existing debt. The company is tendering for its guaranteed second-lien senior secured notes and will be calling its senior subordinated notes at par. The tender includes a consent solicitation to delete substantially all of the restrictive covenants and certain event of defaults provisions in the existing second-lien senior secured notes. Reflecting a completion of the tender and stripping of covenants, the ratings on the existing senior secured notes are lowered to B3 for any amounts that remain outstanding. The ratings reflect the company's credit metrics in a cyclical industry. While Neenah has significantly improved its operating performance after reorganizing in October 2003, the proposed refinancing will slightly increase leverage. In addition the company will be facing operating pressures in 2007 from lower production in its commercial vehicle segment due to new emission control regulations which could adversely affect demand for heavy trucks. The rating outlook remains stable and anticipates that Neenah's credit metrics will likely remain in the B2 range in the near term. Any incremental liquidity afforded by the proposed refinancing, combined with the company's diverse end markets, are expected to partially offset the adverse impact of expected production declines in the commercial vehicle market. Rating action: -- $225 million of senior secured notes, due 2017, to be initially issued under Rule 144A with registration rights, B2, LGD3, 46%. The rating of this instrument benefits from the inclusion of $75 million of subordinated notes in Neenah's capital structure. Moody's stated that the 2013 maturity date of the subordinated notes is well in advance of the maturity date of the senior secured notes. Under Moody's LGD methodology, any future permanent reduction of the subordinated notes in the capital structure could adversely impact the rating of the senior secured notes. Affirmed: -- B2 Corporate Family Rating; -- B2 Probability of Default Rating; The Outlook is Stable. Downgraded: -- $133.1 million of guaranteed second-lien senior secured notes due 2010, to B3, LGD5, 73% from B2, LGD3, 46%. These notes are subject to a tender and consent offer. The B3 rating applies to any stub portion of the issue remaining outstanding after the tender offer that will be stripped of protective covenants. If the substantial majority of this issue is tendered and extinguished, Moody's will withdraw the rating. This rating is affirmed with the LGD assessment changed. The rating will be withdrawn upon completion of the call: -- Caa1, LGD 6, 91% for the $100 million of unsecured senior subordinated notes due 2013 Neenah's existing first-lien guaranteed senior secured credit agreement for up to $92 million is not rated by Moody's. The last rating action was Nov. 14, 2005 when ratings were affirmed. The ratings reflect Neenah's high leverage and relatively strong operating performance stemming from favorable trends in company's end markets. Higher sales experienced since 2003 reflect favorable demand in the heavy duty truck, and municipal markets, and the recovery of steel scrap costs. As a result of improved sales, the company has experienced higher utilization rates which have translated into improved margins. Neenah's customer and sector concentrations have shifted away from the automotive segment since its emergence from Chapter 11 in 2003. While Neenah's credit metrics have improved, the ratings also reflect the company's cyclical markets, and continued moderate interest coverage. Neenah's credit metrics for the last twelve months ending Sept. 30, 2006: -- total debt/EBITDA, 3.7x -- EBIT/Interest, 1.6x. Neenah's free cash flow for the corresponding period was approximately $9 million. Future events that could put pressure on Neenah's outlook and/or ratings lower include a competitive pricing environment which results in lower operating performance, the inability to pass through raw material costs, loss of market share or a significant customer, or significant deterioration in demand in the company's end markets. Consideration for a lower outlook or rating could arise if leverage were to increase by an additional turn and EBIT/Interest coverage deteriorates consistently below 1.5x. Future events that could improve Neenah's outlook and/or ratings would be generated from a consistent operating environment in which the company can maintain high levels of capacity utilization, or increase and further diversify its customer base. Consideration for an improved outlook or higher ratings could arise if EBIT/Interest coverage is maintained consistently over 2.0x. Neenah, headquartered in Neenah, Wisconsin, manufactures and markets a wide range of metal castings and forgings for the heavy municipal market plus a wide range of complex industrial castings, with concentrations in the medium- and heavy-duty truck and HVAC markets. Annual revenues in fiscal 2006 were $542 million. NEW CASTLE: Case Summary & Nine Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: New Castle Investors, LLC 1400 South Patriot Drive Yorktown, IN 47396 Bankruptcy Case No.: 06-08228 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Evansville Investors, LLC 06-08229 Wabash Investors, LLC 06-08230 Chapter 11 Petition Date: December 15, 2006 Court: Southern District of Indiana (Indianapolis) Judge: Frank J. Otte Debtors' Counsel: Edward B. Hopper, II, Esq. Stewart & Irwin PC 251 East Ohio Street, Suite 1100 Indianapolis, IN 46204 Tel: (317) 639-5454 Fax: (317) 632-1319 Estimated Assets Estimated Debts ---------------- --------------- New Castle Investors, LLC Less than $10,000 $1 Million to $100 Million Evansville Investors, LLC Less than $10,000 $1 Million to $100 Million Wabash Investors, LLC Less than $10,000 $1 Million to $100 Million A. New Castle Investors, LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nationwide Health Properties Balance on purchase $3,901,282 Inc. of lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 MLD Properties Limited Balance on purchase Unknown Partnership of lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 Old National Bank Balance of purchase Unknown Letter of Credit Operations price on lease 402 Main Street Mount Vernon, IN 47620 B. Evansville Investors, LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nationwide Health Properties Balance of purchase $3,039,960 Inc. price for lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 MLD Properties Limited Balance of purchase Unknown Partnership price of lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 Old National Bank Balance of purchase Unknown Letter of Credit Operations price of lease 402 Main Street Mount Vernon, IN 47620 C. Wabash Investors, LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Nationwide Health Properties Balance of purchase $2,558,633 Inc. price for lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 MLD Properties Limited Balance of purchase Unknown Partnership price of lease Brent P. Chappell 610 Newport Center Drive Suite 1150 Newport Beach, CA 92660 Old National Bank Balance due on Unknown Letter of Credit Operations leased property 402 Main Street Mount Vernon, IN 47620 NEW WORLD: October 3 Balance Sheet Upside Down by $138 Million -------------------------------------------------------------- New World Restaurant Group, Inc. filed its third quarter financial statements for the three-month period ended Oct. 3, 2006. At Oct. 3, 2006, the company's balance sheet showed $130,170,000 in total assets, $268,530,000 in total liabilities, and $138,360,000 in stockholders' deficit, compared with $130,924,000 in total assets, $257,135,000 in total liabilities, and $126,211,000 in stockholders' deficit at Jan. 3, 2006. The company's October 3 balance sheet also showed strained liquidity with $22,046,000 in total current assets available to pay $35,687,000 in total current liabilities. The company earned $752,000 net income on $95,752,000 of total revenues for the quarterly period ended Oct. 3, 2006, compared to a net loss of $4,814,000 on $94,782,000 of total revenues at for the third quarter period ended Sept. 27, 2005. Full-text copies of the company's financial statements for the quarterly period ended Oct. 3, 2006, is available for free at: http://researcharchives.com/t/s?1742 About New World Restaurant Based in Golden, Colorado, New World Restaurant Group -- http://www.nwrgi.com/-- is an operator of bagel bakeries in the quick casual segment of the restaurant industry. The company produces fresh-baked goods, made-to-order sandwiches, crisp salads and gourmet coffee. The company owns five independent brands including Einstein Bros., Noah's New York Bagels, Manhattan Bagel, Chesapeake Bagel Bakery and New World Coffee. The brands sport their own identity, and work independently in niches nationwide. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Moody's Investors Service confirmed its B2 Corporate Family Rating for New World Restaurant Group, in connection with the implementation of its new Probability-of-Default and Loss-Given- Default rating methodology for the Restaurant sector. NEWCOMM WIRELESS: Has Until December 22 to File Schedules --------------------------------------------------------- NewComm Wireless Services, Inc., has until Friday, Dec. 22, 2006, to file its schedules of assets and liabilities with the U.S. Bankruptcy Court for the District of Puerto Rico. The Debtor says it needs the extension given the size and complexity of its business. Newcomm Wireless has about two thousand creditors and parties-in-interest. Newcomm adds that since the filing of its bankruptcy case, most of its time is devoted in preparing for and negotiating an asset purchase agreement. Furthermore more, the Debtor says it hasn't received and entered some invoices into its financial systems. The Debtor believes that the extension until Friday would give it ample time to accurately collate and prepare the schedules and statements. Headquartered in Guaynabo, Puerto Rico, NewComm Wireless Services, Inc., is a PCS company that provides wireless service to the Puerto Rico market. The company is a joint venture between ClearComm, L.P. and Telefonica Larga Distancia. The company filed for chapter 11 protection on Nov. 28, 2006 (Bankr. D. P.R. Case No. 06-04755). Carmen D. Conde Torres, Esq., at C. Conde & Assoc. and Peter D. Wolfston, Esq., at Sonnenschein Nath & Rosenthal LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it reported assets and liabilities of more than $100 million. NEWPAGE CORPORATION: Moody's Lifts Corporate Credit Rating to B1 ---------------------------------------------------------------- Moody's Investors Service upgraded NewPage Corporation's long term debt ratings by one notch on expectations that debt will decline early in the new year with the application of cash sweep payments. Upgrades: -- The company's corporate family rating was upgraded to B1 from B2; -- NewPage's senior secured term loan was upgraded to Ba2 from Ba3; -- its second lien notes upgraded to B2 from B3; and, -- its senior subordinated notes upgraded to B3 from Caa1. The rating action concludes a review initiated on July 11th in response to the company's report that it had launched an offering of common shares and a refinance of its senior secured term loan. While neither of these initiatives was completed, with the application of approximately $240 million of asset sale proceeds plus the "sweep" of excess cash flow from operations, Moody's expects book debt to decrease by approximately $330 million when compared to what was outstanding when the IPO/refinance transaction was announced. In aggregate, NewPage will have reduced its debt load by some 25% since the company was formed in the spring of 2005, and will have achieved the debt reduction that was contemplated when the IPO was being was considered. This supports the ratings upgrade and the stable outlook. Moody's review also included an assessment of liquidity. With its revolving credit facility being substantially un-drawn, and with good prospects for reasonable cash generation over the next four quarters, NewPage's speculative grade liquidity rating was affirmed at SGL-2, indicating good liquidity. Moody's July report also assigned ratings on the company's then contemplated replacement term loan. With neither the IPO nor the refinance having been completed, rating on the previously contemplated replacement term loan was withdrawn. Upgrades: * NewPage Corporation -- Corporate Family Rating, Upgraded to B1 from B2 -- Senior Secured Term Loan, Upgraded to Ba2 LGD2 25% from Ba3 LGD2 29% -- Second Lien Notes, Upgraded to B2 LGD5 73% from B3 LGD5 73% -- Senior Subordinated Notes, Upgraded to B3 LGD6 94% from Caa1 LGD6 94% Outlook Actions: * NewPage Corporation -- Outlook, Changed To Stable From Rating Under Review Withdrawals: * Issuer: NewPage Corporation -- Senior Secured Bank Credit Facility, Withdrawn, previously rated Ba3 Headquartered in Dayton, Ohio, NewPage is a privately held integrated producer of coated publication papers. Moody's estimates that New Page has an 18% share of the North American market for coated papers. CASCADES INC: Norampac Acquisition Cues DBRS to Lower Ratings ------------------------------------------------------------- Dominion Bond Rating Service downgraded the Senior Unsecured Debt rating of Cascades Inc. to BB (high) from BBB (low). The trend is now Stable. The rating action follows a full review of Cascades' acquisition of the outstanding 50% interest in Norampac Inc., which was reported on Dec. 5, 2006, and is expected to close by the end of 2006. This rating action removes the Company from Under Review with Negative Implications where it was placed on Dec. 5, 2006. DBRS determined that the impact of increased acquisition-related leverage, in addition to the uncertainty regarding a measurable improvement in currently challenging industry conditions, more than offset the positive attributes of the transaction. Cascades' credit metrics were considered aggressive for an investment-grade rating prior to the acquisition, and have further weakened with the increase in debt. In addition, challenging industry conditions, including high input costs, relatively soft demand, and relative strength in the Canadian dollar, are expected to persist. As a result, Cascades' credit profile is no longer considered adequate for an investment-grade rating. On a pro forma basis, debt-to-capital increases to 59% and cash flow-to-debt modestly declines to 0.13, which includes 50% of Norampac's outstanding debt and $310 million in debt financing. The impact on Cascades' financial profile is relatively modest, particularly given the Company's decision to increase the equity- funded share of the $560 million transaction to $250 million. However, an improvement in Cascades' credit metrics to levels considered more appropriate for an investment-grade rating is unlikely over the near term. The acquisition of the remaining 50% equity interest in Norampac has strengthened Cascades' business profile. Positive attributes of the transaction include an increased presence in the packaging sector, which has historically generated relatively stable earnings at Norampac, and a more balanced mix of revenue. The Company will now have access to Norampac's cash flow, which will help to reduce the Company's debt load. In addition, packaging industry capacity curtailments have been implemented and are expected to support price increases. Cascades is expected to generate modest earnings growth over the near to medium term despite industry challenges, which largely underpins the Stable trend. NORTEL NETWORKS: Amends $750 Million Master Facility Agreement -------------------------------------------------------------- Nortel Networks Corporation's principal operating subsidiary, Nortel Networks Limited, has amended its master facility agreement with Export Development Canada. The amendment extends the maturity date of the Facility for an additional year to Dec. 31, 2008. The total Facility is maintained at $750 million, including the existing $300 million of committed support for performance bonds and similar instruments. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corp (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 including Mexico in Latin America. * * * 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. NORTH STREET: Fitch Holds Rating on $49-Mil. Income Notes at BB+ ---------------------------------------------------------------- Fitch affirmed six classes of notes issued by North Street Referenced Linked Notes, 2002-4 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $353,000,000 class A notes at 'AAA'; -- $40,000,000 class B notes at 'AA'; -- $46,000,000 class C notes at 'A'; -- $61,000,000 class D notes at 'BBB+'; -- $25,000,000 class E notes at 'BBB'; and, -- $49,000,000 income notes at 'BB+'. North Street 2002-4 is a partially funded synthetic collateralized debt obligation that closed March 15, 2002 and was created to enter into a credit default swap with UBS Investment Bank. North Street 2002-4 has a reference portfolio composed of corporate debt obligations, residential mortgage backed securities, commercial mortgage backed securities and asset backed securities. Fitch's affirmation of the ratings is a result of the stable credit quality of the reference portfolio, with the weighted average rating factor of 10 both as of the most recent trustee report dated Oct. 31, 2006 and at the time of Fitch's last review. Assets rated at or below 'BBB' represented 34.51% as of the most recent trustee report available and 35.3% at the time of Fitch's last review, below the allowed maximum of 50%. The referenced portfolio has experienced no credit events to date. The ratings of the class A, B, C and D notes address the credit quality of the reference pool and the likelihood of the applicable class of notes having to make credit protection payments under the credit default swap. The rating of the class E notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the income notes addresses the likelihood that investors will receive ultimate payments of interest, at the rated coupon of 7.5%, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. OASIS HEATING: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Oasis Heating & Air Conditioning, Inc. 74 Ames Street Brockton, MA 02302 Tel: (508) 588-1308 Bankruptcy Case No.: 06-14736 Type of Business: The Debtor designs, installs, fabricates and services all of Eastern Massachusetts' heating and air conditioning needs. Chapter 11 Petition Date: December 13, 2006 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Leonard Ullian, Esq. Law Offices of Ullian & Associates, Inc. 220 Forbes Road, Suite 106 Braintree, MA 02184 Tel: (781) 848-5980 Fax: (781) 848-0819 Estimated Assets: Unknown Estimated Debts: Unknown The Debtor did not file a list of its 20 largest unsecured creditors. OMNOVA SOLUTIONS: Fitch Issuer Default Rating at B+ --------------------------------------------------- Fitch Ratings affirmed these credit ratings for OMNOVA Solutions Inc.: -- Issuer default rating at 'B+'; -- Senior secured credit facility at 'BB+, recovery rating 1' -- Senior secured notes at 'B+/RR4'. The Rating Outlook is Stable. These rating actions affect $165 million in public securities and the company's $72 million senior secured credit facility. OMNOVA's credit ratings are supported by its small company size, relatively high debt level, and weak, though improving, operating performance. The company's size has declined and its product portfolio has become more limited upon the divestiture of its roofing business in late September 2006 for approximately $40 million cash. The opportunistic sale monetized a small contributor to sales and operating income while removing warranty liabilities from the balance sheet. However, Fitch notes that resulting lower revenue and earnings levels make OMNOVA more susceptible to default risk when business conditions weaken. Total debt-to-operating EBITDA remains high at 3.6x with $165 million 11.25% notes representing the majority of the outstanding debt. These notes may be refinanced in 2007 after its call date at June 1 as the company tries to reduce future interest expense. The remaining portfolio has shown mixed results in 2006 so far. The Decorative Products segment began to contribute profit, although at very low levels, while the Performance Chemicals segment exhibited weaker margin and lower profit on lower volumes. Despite weaker profitability, Performance Chemicals continues to be the company's largest contributor to earnings. That OMNOVA's stronger segment is presenting some weakness is a near-term concern. The Stable Rating Outlook reflects Fitch's view that operating performance and credit measures are expected to change modestly from current levels near term. Fitch expects Performance Chemicals to stabilize or possibly weaken if carpet demand remains weak and raw material prices soften with energy prices near term. Fitch also expects Decorative Products to weaken slightly if office vacancy rates increase in 2007 and a weaker U.S. economy stems refurbishment activity, resulting in slower wallcovering and laminate demand. OMNOVA Solutions Inc. is a specialty chemical producer based in Fairlawn, Ohio. The company has leading positions in styrene-butadiene latex production, vinyl wallcovering, coated fabrics and decorative laminates. For the last 12 months ended Aug. 31, 2006, the company had operating EBITDA of $50.1 million on sales of $812.2 million unadjusted for the recent divestiture. PABLO DERBOGHOSSIAN: Case Summary & 6 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Pablo E. DerBoghossian Ana L. DerBoghossian 7968 Megan Hammock Way Sarasota, FL 34240 Bankruptcy Case No.: 06-06807 Chapter 11 Petition Date: November 30, 2006 Court: Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Melody D. Genson, Esq. Melody D. Genson, PA 3665 Bee Ridge Road, Suite 316 Sarasota, FL 34233 Tel: (941) 927-6377 Total Assets: $1 Million to $100 Million Total Debts: $1 Million to $100 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Morequity Mortgage $500,000 P.O. Box 3788 Value of Evansville IN 47736 Collateral: $485,000 Net Unsecured: $15,000 Citi Advantage Credit Card Debt $46,475 P.O. Box 6417 The Lakes NV 88901 Capital One Bank Visa Credit Card Debt $19,505 P.O. Box 650007 Dallas TX 75265 Bank of America Credit Card Debt $14,408 P.O. Box 15726 Wilmington DE 19886 United Mileage Plus Credit Card Debt $11,188 P.O. Box 15153 Wilmington DE 19886 APTA Bank of America Credit Card Debt $9,374 P.O. Box 15726 Wilmington DE 19886 PAK-A-SAK FOOD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Pak-A-Sak Food Stores, Inc. dba Piggly Wiggly 4930 Arendell Street P.O. Box 1137 Morehead City, NC 28557 Bankruptcy Case No.: 06-04078 Type of Business: The Debtor is a retailer and operates grocery and food stores. See http://www.cconnect.net/pakasak/ The Debtor filed for chapter 11 protection on January 22, 2004 (Bankr. E.D. N.C. Case No. 04- 00590). Chapter 11 Petition Date: December 13, 2006 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: George M. Oliver, Esq. Trawick H Stubbs, Jr., Esq. Stubbs & Perdue, P.A. P.O. Box 1654 New Bern, NC 28563 Tel: (252) 633-2700 Fax: (252) 633-9600 Total Assets: $5,009,974 Total Debts: $4,781,970 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Institutional Food House 2004 Class VII - $44,907 P.O. Box 1368 Unsecured Creditor Hickory, NC 28603 Minges Bottling Group 2004 Class VII - $41,734 P.O. Box 520 Unsecured Creditor Ayden, NC 28513 Piedmont Partnership 2004 Class VII - $27,262 P.O. box 31487 Charlotte, NC 28231 Internal Revenue Service Payroll Taxes $24,328 Insolvency I 320 Federal Place Greensboro, NC 27402 Frito Lay 2004 Class VII - $19,901 P.O. Box 643104 Unsecured Creditor Pittsburgh, PA 15264 Coastal Dist. Group 2004 Class VII - $13,696 Unsecured Creditor Interstate Brands Corp. 2004 Class VII - $11,910 Unsecured Creditor Star Foods 2004 Class VII - $9,822 Unsecured Creditor Sysco of Hampton 2004 Class VII - $9,329 Unsecured Creditor Connecticut Indemnity Co. 2004 Class VII - $8,800 Unsecured Creditor Kraft Pizz/Nabisco $8,742 Keebler/B&H 2004 Class VII - $6,385 Unsecured Creditor Stevens Sausage 2004 Class VII - $6,150 Unsecured Creditor Anderson News Company 2004 Class VII - $5,216 Unsecured Creditor Craven Co. Tax Collector $4,743 Lance, Inc. 2004 Class VII - $4,539 Unsecured Creditor Murray Bisquit Co. 2004 Class VII - $3,899 Unsecured Creditor Tom's Foods 2004 Class VII - $3,893 Unsecured Creditor City of New Bern $3,654 Kraft Pizza/Tombstone 2004 Class VII - $3,506 Unsecured Creditor PALMDALE HILLS: S&P Lowers and Places Ratings on Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Palmdale Hills Property LLC. Concurrently, the ratings were placed on CreditWatch with negative implications. The rating actions reflect performance that has materially deviated from the borrower's original expectations. Construction delays have forestalled lot sales and pressured covenants governing the borrower's first- and second-lien bank loans. The downgrades and CreditWatch placements also reflect rising construction costs and materially weaker demand for finished home sites, which S&P believes will negatively affect profitability. The borrower will likely refinance outstanding balances under a $200 million senior secured first-lien credit facility and a $75 million senior secured second-lien facility, at which time the ratings would be withdrawn. However, if the proposed refinancing fails to occur in a timely fashion, S&P may lower the ratings further or revise the assigned recovery ratings. Palmdale Hills Property LLC is a single-purpose entity formed to acquire, develop, and market the 10,625-acre Ritter Ranch master- planned community in northern Los Angeles County. The company is a wholly-owned subsidiary of SCC/Palmdale LLC, and is an affiliate of unrated SunCal Cos. Irvine, California-based SunCal was founded in 1973 and is currently the largest developer of private master- planned communities in California. Ritter Ranch is located in the community of Palmdale, California, 30 miles north of Los Angeles. Under a fully approved development plan, the borrower is entitled to develop 7,200 home sites, a golf course, seven schools, and significant open space. The loans are nonrecourse to SunCal, and were originally obtained to repay existing debt and fund development costs. Ratings Lowered And Placed on Creditwatch Negative Palmdale Hills Property LLC To From -- ---- Issuer credit B-/Watch Neg/-- B/Stable/-- First-lien B/Watch Neg B+ (Recovery rtg: 1) (Recovery rtg: 1) Second-lien CCC+/Watch Neg B- (Recovery rtg: 4) (Recovery rtg: 4) PARK-OHIO: Improved Performance Prompts S&P's Rating Upgrade ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on Park-Ohio Industries Inc., including its corporate credit rating to 'B+' from 'B'. The outlook is stable. "The upgrade reflects the company's lower financial leverage and improved performance," said Standard & Poor's credit analyst Clarence Smith. The ratings on Park-Ohio continue to reflect the company's highly leveraged financial profile which more than offsets the company's business profile as a diversified operator of logistics and manufacturing businesses serving cyclical and competitive end markets. The company is expected to remain highly leveraged as free cash flow generation constrains working capital needs to continue supporting growth. The ratings on Park-Ohio continue to reflect the company's highly leveraged financial profile that more than offsets the company's business profile as a diversified operator of logistics and manufacturing businesses serving cyclical and competitive end markets. The company is expected to remain highly leveraged as free cash flow generation constrains working capital needs to continue supporting growth. A significant reduction in financial leverage coupled with improvements in Park-Ohio's business profile, including sustainable operating margins, could result in positive rating actions. Alternatively, Standard & Poor's would be inclined to either revise the outlook to negative or lower the ratings if the company starts making large debt-financed acquisitions or if credit metrics deteriorate for an extended period of time. PEABODY ENERGY: S&P Rates $500-Million Junior Debentures at B ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to the $500 million convertible junior subordinated debentures due 2066 of Peabody Energy Corp. (BB/Stable/--). Proceeds from the notes are expected to reduce bank loan borrowings, which were used to fund the recent acquisition of Excel Coal Ltd. (unrated). Standard & Poor's characterizes the bonds as having intermediate equity content given the securities' long-dated maturity (60 years), deep subordination, and cumulative optional deferral of interest up to 10 years. The ratings on Peabody reflect its aggressive financial leverage, including significant debt-like liabilities, ongoing cost pressures, and challenges posed by the inherent risks of coal mining. The ratings also reflect the company's leading market position, its substantial and diversified reserve base, and currently favorable coal industry conditions. Peabody is North America's largest coal producer, with approximately 240 million tons of coal sold (including 25 million from its trading and brokerage operations) during 2005, and 10.3 billion tons of reserves (including 500 million tons of Excel reserves). Ratings List Peabody Energy Corp. Corporate Credit Rating BB/Stable/-- Rating Assigned $500 mil conv jr sub debt B PRIDE BUSINESS: Posts $8.6 Million Net Loss in 2006 Third Quarter ----------------------------------------------------------------- Pride Business Development Holdings Inc. reported an $8.6 million net loss on $493,988 of revenues for the quarter ended Sept. 30, 2006, compared with a $909,578 net loss on $32,664 of revenues for the same period in 2005. The increase in net loss is mainly due to the $6.6 million increase in general and administrative expenses, particularly salaries and compensation costs, and the $1.1 million increase in interest expenses. The increase in interest expense was mainly due to discounts charged on loans amortized during the three month period ended Sept. 30, 2006. At Sept. 30, 2006, the company's balance sheet showed $1.1 million in total assets and $3.4 million in total liabilities, resulting in a $2.3 million stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $554,986 in total current assets available to pay $3.4 million in total current liabilities. 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?172e Going Concern Doubt As reported in the Troubled Company Reporter on June 22, 2006, Malone & Bailey, P.C., in Houston, Texas, raised substantial doubt about Pride Business Development Holdings, 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 operating net losses and working capital deficit. About Pride Business Development Holdings Based in Camarillo, California, Pride Business Development Holdings, Inc. (OTC:PDVGE.OB) -- http://www.pridegroup.org/-- is a specialty and protective clothing and materials manufacturer for the domestic and international law enforcement, military, and dangerous materials handling markets with its brand of Bodyguard(R) products. The Company's current focus is the manufacture and sale of personal soft body armor (bullet-resistant vests) and ballistic and projectile fragment covers such as ballistic blankets and bomb blast blankets. The company, through its wholly owned subsidiary Bodyguard, Inc., is the holder of the worldwide exclusive license to utilize the Smith & Wesson trademarks on personal body armor (and related apparel) and ballistic blankets. REFCO INC: Plan Satisfies 13 Steps for Confirmation, Court Rules ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York confirmed Refco, Inc., and its debtor-affiliates' Modified Joint Chapter 11 Plan on Dec. 15, 2006. Marc S. Kirschner, the Chapter 11 Trustee for Refco Capital Markets, Ltd.; and the Official Committee of Unsecured Creditors and the Additional Committee are co-proponents of the Plan. Plan Satisfies 16 Steps Toward Confirmation Judge Drain finds that the Plan satisfies the 16 statutory requirements necessary to confirm a plan pursuant to Section 1129 of the Bankruptcy Code: A. The Plan complies with the applicable provisions of Section 1129(a)(l), which encompasses the requirements of Sections 1122 and 1123 governing classification of claims and interests and contents of the Plan. The Plan provides for (i) the impairment of certain classes of claims and interests, while leaving others unimpaired, hence modifying the rights of certain holders of claims and interests and leaving the rights of others unaffected, and (ii) the assumption and assignment or rejection of executory contracts and unexpired leases to which the Debtors are parties. In addition, in accordance with Section 1123(b)(6), the Plan includes additional appropriate provisions that are consistent with applicable provisions of the Bankruptcy Code, including, but not limited to: * the Plan provisions governing distributions on account of Allowed Claims; * the Plan provisions establishing that confirmation will not discharge claims against the Debtors; * the preservation of rights of action and the creation of the Litigation Trust to pursue the Contributed Claims; * the disposition of executory contracts and unexpired leases; * retention of jurisdiction by the Court over certain matters after the Plan Effective Date; and * the means for implementation of the Plan. B. Refco has complied with the Section 1129(a)(2) requirements regarding solicitation of acceptances of the Plan. Judge Drain concludes that the impact of the proposed settlement between the Plan Proponents and the Ad Hoc Committee of Equity Security Holders on those Classes that were solicited to vote is not "material" or "adverse" enough to warrant re-solicitation. Judge Drain notes that no value was attributed to the Litigation Trust Interests in the original Disclosure Statement. Any speculation as to the value of those interests was expressly disavowed by the Plan's liquidation analysis. As a result, none of the Claimholders in Classes receiving Tranche A Litigation Trust Interests could possibly have predicated its vote for the Plan on a precise estimate of the value of its Litigation Trust recovery. C. The Plan has been proposed in good faith, with the legitimate and honest purposes of maximizing the value of the Debtors' estates and the recovery to Claimholders. The Plan also provides for the distribution of the Debtors' assets and the wind-down of the Debtors' corporate affairs. Accordingly, the Plan complies with Section 1129(a)(3). D. Any payment made or to be made by the Plan Proponents, or by a person issuing securities or acquiring property under the Plan, for services or for costs and expenses in or in connection with the Debtors' Chapter 11 case, or in connection with the Plan and incident to the Debtors' case, has been approved by, or is subject to the approval of, the Court as reasonable, thereby satisfying Section 1129(a)(4). Pursuant to interim application procedures established under Section 331, the Court has authorized and approved the payment of certain fees and expenses of professionals in the Debtors' cases, which fees remain subject to final review by a fee committee and the Court for reasonableness. E. The manner of selection of (i) a Plan administrator, who will be the sole officer and director or manager, as applicable, of the Reorganized Debtors, and (ii) an RCM Trustee -- as the party responsible for the administration of the RCM estate -- is appropriate. Accordingly, the selection process satisfies Section 1129(a)(5) because the Plan Administrator will be appointed by the Joint Sub-Committee, and the RCM Trustee was appointed by Court order. The RCM Trustee is to wind down the RCM Estate in accordance with the RCM Settlement Agreement. F. The Plan satisfies Section 1129(a)(6) because it does not provide for any change in rates over which a governmental regulatory commission has jurisdiction. G. In accordance with Section 1129(a)(7), the Plan satisfies the "best interests" test as to each Class of Impaired Claims and Interests because the estimated Plan recovery percentage for all creditors is not less than, and in most cases greater than, recoveries under a hypothetical Chapter 7 liquidation. H. Holders of Class 7 Subordinated Claims against one or more of the Contributing Debtors and Class 8 Old Equity Interests, Holders of Class 7 FXA Subordinated Claims against FXA and Holders of Class 9 RCM Subordinated Claims against RCM are deemed to have rejected the Plan because they are not entitled to receive or retain any Distribution or property under the Plan on account of their Claims or Interests. Holders of FXA Class 5(a) Claims voted to reject the Plan. Although Section 1129(a)(8) has not been satisfied with respect to FXA Class 5(a) and the Rejecting Classes, the Plan is confirmable because the Plan satisfies Section 1129(b) with respect to those Classes. Section 1129(b) provides that the Court may cram down a plan over a dissenting vote of impaired classes of Claims or Interests as long as a plan does not "discriminate unfairly" and is "fair and equitable" with respect to the dissenting class. Judge Drain holds that the Plan Proponents presented uncontroverted evidence at the Confirmation Hearing that the Plan does not discriminate unfairly and is fair and equitable with respect to the Rejecting Classes as required by the "cramdown" requirements of Section 1129(b)(1). Accordingly, Judge Drain says, upon Confirmation and the occurrence of the Effective Date, the Plan will be binding upon the members of the Rejecting Classes and FXA Class 5(a). I. The Plan meets the requirements under Section 1129(a)(9) because it provides for: (1) payment by the Debtors of Administrative Claims, in full, in cash; (2) payment of the unpaid portion of the Non-Tax Priority Claims in full, in cash; (3) each Allowed Priority Tax Claimholder to receive: * cash equal to the unpaid portion of the Allowed Priority Tax Claim; * treatment in any other manner such that the Allowed Priority Tax Claims will not be impaired pursuant to Section 1124; or * other treatment as agreed upon in writing. J. At least one Class of Claims against each Debtor has voted to accept the Plan. Judge Drain notes that: (a) all impaired voting Classes have voted to accept the Plan with respect to each of the Contributing Debtors; (b) Classes 4 and 6 have voted to accept the Plan with respect to Refco F/X Associates, LLC; and (c) all impaired voting Classes have voted to accept the Plan with respect to RCM. Accordingly, the requirement under Section 1129(a)(10) has been met. K. The Plan is feasible and meets the requirements of Section 1129(a)(11) because it includes a means for liquidating a debtor's property. L. All fees payable under 28 U.S.C. Section 1930 have been paid or will be paid on the Effective Date, thereby satisfying Section 1129(a)(12). M. Under the Plan, all benefit plans, policies and programs of the Debtors applicable to their retirees and the retirees of its subsidiaries are treated as executory contracts that are subject to rejection. Accordingly, the requirements of Section 1129(a)(13) are satisfied. N. Refco is not required by a judicial or administrative order, or by statute, to pay a domestic support obligation. Section 1129(a)(14) is, therefore, inapplicable. 0. Refco is not an individual, and accordingly, Section 1129(a)(15) is inapplicable. P. Refco is a moneyed, business, or commercial corporation, and Section 1129(a)(16) is, thus, inapplicable. A full-text copy of the Court's Findings of Fact, Conclusions of Law, and Order Confirming the Modified Joint Chapter 11 Plan is available at no charge at http://researcharchives.com/t/s?174e Admin. Claims Bar Date Set Unless previously paid before the Plan's Confirmation Date, all requests for payment of Administrative Claims against all Debtors and RCM that were not previously filed must be submitted no later than 30 days after the Effective Date or be forever barred. The Reorganized Debtors and the RCM Trustee will have until the later of (i) 60 days after the Effective Date or (ii) 30 days after the filing of the Administrative Claim, to object to those claims. RCM Case Conversion Judge Drain finds that if RCM's Chapter 11 case is converted to a Chapter 7 case, all aspects of the Plan relating to RCM, including all settlements, compromises and releases, will nonetheless be and remain binding with full force and effect as a settlement between the RCM Chapter 7 estate and the Debtors' estates. The Plan Effective Date will constitute the effective date of the settlement between the RCM Chapter 7 estate and the Estates of other Debtors. The conversion of RCM's Chapter 11 case before the Effective Date will not impair the Effective Date occurring with respect to the other Debtors. Other Plan Provisions Are Approved Judge Drain rules that the remaining property of the Debtors' estates, other than the Contributed Claims, which will be transferred to and vest in the Litigation Trust, will not revest in the Debtors or RCM on or following the Confirmation Date or Effective Date, but will remain property of the Estates and continue to be subject to the Court's jurisdiction until distributed to Allowed Claimholders. The Court also appoints RJM LLC, a New Jersey Limited Liability Company, as the Plan Administrator. RJM was designated by the Joint Subcommittee. In the event that, after the Effective Date RJM determines that it is appropriate, each of the Affiliate Debtors will be dissolved or merged with and into Refco Inc., with the parent company as the surviving entity. The Affiliate Debtors and FXA -- until they are wound up and potentially merged with and into Refco -- will continue to exist as Reorganized Refco, Reorganized FXA or the applicable Reorganized Affiliate Debtor, after the Effective Date. On the Effective Date, all executory contracts or unexpired leases of the Debtors will be deemed rejected in accordance with Sections 365 and 1123. Moreover, Judge Drain rules that on the Effective Date, the Reorganized Debtors and Post-Confirmation RCM will fund a segregated bank account consisting of 110% of: (x) the amount of any holdbacks on previously billed and paid amounts, provided, however, that the 10% holdback of fees is released and may be remitted to certain professionals; and (y) the amount of estimated additional fees and expenses expected to be incurred by each Professional through the Effective Date. All settlements of disputes embodied in the Plan are approved as fair, equitable, reasonable and in the best interests of the Debtors, the Reorganized Debtors and their estates. Notwithstanding the transfer of claims to the Litigation Trust, Judge Drain clarifies that the claims will not be merged into a single entity, but will be deemed asserted on behalf of each applicable Estate holding that claim immediately prior to contribution, and will remain separate and distinct from other Estates in connection with the prosecution. Pursuant to Section 1123(b)(3), Judge Drain approves the Plan Proponents' appointment of Mr. Kirschner as Litigation Trustee to represent each of the Estates. The Litigation Trustee will be deemed the successor-in-interest to each of the Contributing Debtors, FXA, and the RCM Trustee. In addition, Mr. Kirschner will also act as trustee in the Private Actions Trust to hold certain claims and causes of action against third parties owned by holders of Claims or Interests against RCM or the Debtors, and which claims, even after contribution, are not assets of the Estates. Court Addresses Confirmation Objections Judge Drain rules that all Plan confirmation objections that have not been withdrawn, waived, or settled are overruled on the merits. (1) Director and Officer Indemnification Objections Judge Drain says timely filed Claims arising in favor of present or former officers or directors under contract, statute, or entity governance documents of any of the Debtors, will entitled to be asserted against the estate of each and every Debtor to the same extent as provided for under applicable law. Nothing in the Plan or Confirmation Order will (i) permit Officer and Director Claims to be treated as Subordinated Claims or otherwise subordinated, or (ii) be construed to prevent present or former directors and officers of the Debtors from seeking and obtaining coverage and payments from insurance policies of Refco Inc. or from insurance policies of any other Refco Entity. (2) New York Financial and Hillier Capital Objections Judge Drain directs RCM to transfer to the FXA Estate $2,000,000 on the Effective Date to settle the dispute. Judge Drain also directs the Plan Administrator to form a committee of FXA customers who did not do business with FXA in Japan to oversee and direct the litigation involving FXA assets in Japan. New York Financial will serve as the chair of the committee; Hillier Capital is appointed as member of that committee. Judge Drain says the Non-Japan FXA Customer Committee will have consent rights with respect to any settlement regarding the litigation involving FXA assets in Japan. Furthermore, all reasonable expenses born in connection with the role of chair of the Non-Japan FXA Customer Committee will be born by the FXA Estate. New York Financial and Hillier Capital are granted an Allowed Administrative Expense Claim against the FXA Estate pursuant to Section 503(b) in an aggregate collective amount not to exceed $200,000. (3) West Loop Objection Judge Drain notes that West Loop Associates, LLC, will be paid $3,750,000 in cash by the Refco LLC estate on or before the Effective Date. West Loop will release all claims against the Debtors and against Refco LLC. In addition, West Loop will be barred from bringing any action against any third party as to the potential matters set forth in the Plan. However, West Loop will expressly retain all rights to bring actions against Mark Goodman & Associates; 550 West Jackson Associates Limited Liability Company; Mark Goodman; Phillip R. Bennett; Santo Maggio; and Grant Thornton. The Court grants West Loop a $20,000,000 Claim against Refco Group Ltd. The Claim will be satisfied in full by distribution of the Litigation Trust Interests allocable to the Claim. However, Judge Drain says, all Litigation Trust Interests distributable on account of West Loop's Allowed Claim will be deemed to have been assigned by West Loop to the Contributing Debtors for distribution to Holders of Allowed Contributing Debtors General Unsecured Claims. The Contributing Debtors will transfer $1,875,000 from Contributing Debtors Cash Distribution to the RCM Trustee for addition to the RCM Cash Distribution. (4) Securities Plaintiff Objection Judge Drain clarifies that nothing in the Plan or the Confirmation Order will be deemed to release, enjoin or bar any claims or the prosecution of any claims asserted in In re Refco Securities Litigation, Case No. 05-civ-8626 (SDNY), against: -- any of the Secured Lender Releasees that acted as an underwriter, book running manager or initial purchaser in connection with the underwriting, offering, distribution, or sale of the 9% Senior Subordinated Notes due 2012 issued by certain of the Debtors or of any equity securities of Refco Inc., with respect to any act or failure to act by any Secured Lender Releasee; and -- other non-Debtor defendants in the Securities Litigation, except the Released Parties identified in the Plan, the Contributing Non-Debtor Affiliates, and the Contributing Non-Debtor Affiliate Management, to the extent that the Lead Plaintiffs or the putative class members receive a distribution under the Modified Plan. (5) FXCM Objection Judge Drain also clarifies that nothing in the Plan will impair the right of FXCM Sellers from arguing that they are entitled to an equitable remedy of rescission of RGL's purchase of the FXCM Equity Stake. However, any action seeking that remedy will be heard by the Bankruptcy Court unless it has permitted the FXCM Sellers to bring that action in a different forum. Allocation of BAWAG Proceeds The Court authorizes the Debtors to utilize the BAWAG P.S.K. Bank fur Arbeit und Wirtschaft und Osterreichische Postsparkasse Aktiengesellschaft Proceeds in accordance with the Plan and the BAWAG Allocation Order. The BAWAG Proceeds may be used to pay the obligations owing to RCM under the Cash Management Advance Agreement dated October 16, 2006, and to implement the other Distributions contemplated in the Plan. For purposes of making Cash Distributions, the BAWAG Contingent Proceeds will be used to satisfy the Senior Subordinated Note Distribution to the extent the funds are available to the Estates prior to the payment in full of the Senior Subordinated Note Distribution. About Refco Inc. Based in New York, Refco Inc. (OTC: RFXCQ) -- 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 US$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). REVERE INDUSTRIES: Moody's Cuts Corp. Family Rating to B3 from B2 ----------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of Revere Industries, LLC, to B3 from B2 reflecting weaker than projected EBITDA margins and free cash flow generation coupled with an increased reliance on the credit facility to fund working capital requirements. Moody's affirms the B1 rating on the first lien term loan and revolving credit facility and the Caa1 rating on the second lien term loan. The rating affirmations are contingent upon the successful execution of its requested amendments to the first and second lien facilities and the sale of certain assets, the proceeds from which will be used to reduce first lien borrowings. The rating outlook is changed to negative. The B3 corporate family rating reflects: 1) Revere's relatively high leverage and reliance on its revolving credit facility to fund working capital and capital expenditure requirement; 2) a significant customer concentration and related challenges converting growth prospects into strong EBITDA margins and free cash flow generation; 3) the expectation of limited headroom within its amended covenants during 2007 and 2008; 4) its dominant market position in niche markets and a blue chip customer base; and, 5) the execution risk associated with its planned asset sales. The negative outlook reflects Moody's concerns about the ongoing operating challenges which could hinder EBITDA expansion and free cash flow generation in the near term. In addition, the outlook reflects the company's weak liquidity position, limited headroom in the amended leverage and fixed charge covenants and increased interest costs. These are the rating actions: -- Corporate Family Rating, downgrade to B3 from B2 -- PDR Rating, downgraded to B3 from B2 -- First lien revolving credit facility due 2010, affirmed B1; LGD assessment changed to LGD 2, 28% from LGD 3, 33% -- First lien term loan due 2011, affirmed B1; LGD assessment changed to LGD 2, 28% from LGD 3, 33% -- Second lien term loan, affirmed Caa1; LGD assessment changed to LGD 5, 72% from LGD 5, 78% The rating outlook is changed to negative from stable. Moody's previous rating action of Revere was the Sept. 27, 2006 upgrade of the first lien term loan and revolving credit facility to B1 from B2 and assignment of a B2 Probability of Default Rating. Revere Industries, LLC is a leading manufacturer of plastic and metal custom-engineered components for major industrial customers across a variety of industries. RUBICON MINERALS: Completes Plan of Arrangement With Africo ----------------------------------------------------------- Africo Resources Ltd., formerly CopperCo Resource Corp., has completed the Plan of Arrangement with Rubicon Minerals Corporation effective Dec. 8, 2006. By virtue of the arrangement, Africo has become a reporting issuer in Alberta, British Columbia, Ontario and Qu,bec. Trading of Africo's common shares is expected to commence on the Toronto Stock Exchange on or about Dec. 15, 2006, under the symbol ARL. As a result of the Arrangement, Africo has also received from escrow net proceeds of $18,716,033 pursuant to its previously announced private placement of 5,000,000 units at a price of $4.00 per unit. Each unit consisted of one common share of Africo and one-half of one warrant, each whole warrant which will entitle the holder to acquire an additional common share at a price of $5.00 until May 23, 2008. Rubicon Minerals holds a 35.6% interest in Africo Resources. About Africo Resources Africo Resources Ltd. (TSX: ARL) operates the Kalukundi Property, a copper-cobalt property located within the Kolwezi District of Katanga Province in the south-east of the Democratic Republic of the Congo, in which it is earning a 75% interest. About Rubicon Minerals Rubicon Minerals Corporation (TSX:RMX)(AMEX:RBY) -- http://www.rubiconminerals.com/s/Home.asp/-- is a Canadian gold exploration company that controls over 260 square kilometers of land in the prolific Red Lake gold camp of Ontario, Canada, including 100% of the Phoenix Gold Zone discovery at the McFinley gold project. Rubicon also owns several large land positions in Newfoundland to cover a number of highly prospective gold and base metal targets. In addition, Rubicon acquired an interest in a high-grade copper-cobalt deposit in the Democratic Republic of Congo that is being developed by Africo Resources Ltd. * * * As indicated in the going concern paragraph in its interim consolidated financial statements for the third quarter ended Sept. 30, 2006, Rubicon Minerals Corp. relates that it has incurred losses since inception and has an accumulated operating deficit of $19 million at Sept. 30, 2006. SG MORTGAGE: Fitch Rates $12.6-Mil. Class M-10 Certificates at BB+ ------------------------------------------------------------------ SG Mortgage Securities Trust 2006-OPT2, which closed on Dec. 14, 2006, is rated by Fitch as: -- $618.55 million classes A-1, A-2 and A-3A through A-3D 'AAA'; -- $42.70 million class M-1 'AA+'; -- $39.04 million class M-2 'AA'; -- $12.20 million class M-3 'AA-'; -- $17.08 million class M-4 'A+'; -- $13.83 million class M-5 'A'; -- $8.13 million class M-6 'A-'; -- $10.98 million class M-7 'BBB+'; -- $6.10 million class M-8 'BBB'; -- $10.57 million class M-9 'BBB-'; and, -- $12.61 million privately offered class M-10 'BB+'. The 'AAA' rating on the senior certificates reflects the 23.95% total credit enhancement provided by the 5.25% class M-1, the 4.8% class M-2, the 1.5% class M-3, the 2.1% class M-4, the 1.7% class M-5, the 1% class M-6, the 1.35% class M-7, the 0.75% class M-8, the 1.3% class M-9, the 1.55% privately offered class M-10, the 1.2% non-rated, privately offered class M-11 and the 1.45% initial and target over-collateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans, the integrity of the transaction's legal structure as well as the capabilities of Option One Mortgage Corporation as servicer. HSBC Bank USA, National Association is the trustee. The certificates are supported by three collateral groups. Group I will consist of 1,090 mortgage loans that have original principal balances that conform to Fannie Mae and/or Freddie Mac guidelines. The Group I mortgage pool consists of first and second lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $203,532,831. Approximately 0.92% of the mortgage loans are fixed-rate mortgage loans and 99.08% are adjustable-rate mortgage loans. The second lien amount is 0.92%. The weighted average current loan rate is approximately 8.904%. The weighted average remaining term to maturity is 356 months. The average principal balance of the loans is $186,727. The weighted average original combined loan-to-value ratio is 77.47%. The weighted average FICO score is 590. The properties are primarily located in California, Florida, and New York. Group II will consist of 1,580 mortgage loans that have original balances that conform to Fannie Mae and/or Freddie Mac guidelines. The Group II mortgage pool consists of first and second lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $279,009,079. Approximately 0.88% of the mortgage loans are fixed-rate mortgage loans and 99.12% are adjustable-rate mortgage loans. The second lien amount is 0.88%. The weighted average current loan rate is approximately 8.848%. The weighted average remaining term to maturity is 355 months. The average principal balance of the loans equals $176,588. The weighted average original CLTV is 78.45%. The weighted average FICO score is 597. The properties are primarily located in California, Florida, and New York. Group III will consist of 1,127 mortgage loans that have original balances that may or may not conform to Fannie Mae and/or Freddie Mac guidelines. The Group III mortgage pool consists of first and second lien, adjustable-rate and fixed-rate mortgage loans that have a cut-off date pool balance of $361,844,089. Approximately 3.36% of the mortgage loans are fixed-rate mortgage loans and 96.64% are adjustable-rate mortgage loans. The second lien amount is 3.36%. The weighted average current loan rate is approximately 8.4%. The weighted average remaining term to maturity is 355 months. The average principal balance of the loans equals $321,068. The weighted average original CLTV is 83.13%. The weighted average FICO score is 621. The properties are primarily located in California, Florida, and New York. SAGITTARIUS BRANDS: Poor Performance Cues S&P's Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Nashville, Tennesse-based Sagittarius Brands Inc. to negative. "This follows operating performance that is below our expectations," said Standard & Poor's credit analyst Jackie Oberoi. Same-store sales were negative during the third quarter ended Sept. 3, 2006, and year-to-date. Negative comparable restaurant sales have increased leverage to about 7x, limiting cash flow protection. The 'B' ratings, which Standard & Poor's affirmed, reflect Sagittarius' small size in the competitive quick-service sector of the restaurant industry, and the company's regional concentration. Sagittarius operates and franchises Mexican and seafood quick- service restaurants under the Del Taco and Captain D's brands, respectively. Del Taco is a small, regionally concentrated player in the highly competitive quick-service Mexican sector of the restaurant industry, with only a 0.7% national market share, compared with 8.2% for Taco Bell, its most significant competitor. Captain D's is regionally concentrated in the Southeast U.S.; its largest competitor is Long John Silver's, which has about twice as many units as Captain D's. SAINT VINCENTS: Wants to Assume Extended Lease With BBC Realty -------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to: a) extend a lease agreement between Saint Vincent Catholic Medical Center and BCC Realty Corp. for nonresidential real property located at 221-227 Canal Street, New York; and b) assume the Extended Lease pursuant to Section 365(a) of the Bankruptcy Code. SVCMC provides services to low income women, infants, and children participating in a Women, Infants, and Children Program at the Premises. SVCMC's operation of the WIC Center, including leasehold expenses, is funded entirely by the New York State Department of Heath. After arm's-length negotiations, the Debtors have reached an agreement with BBC Realty for the Extended Lease under which: (1) the Debtors will renew their current lease for an additional five-year term beginning January 1, 2007; (2) the Debtors will have the option to terminate the Lease upon six months notice to BBC Realty; and (3) rent will be $3,900 per month plus additional rent comprised of certain utility charges, all of which will be funded by the DOH. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the entry into and assumption of the Extended Lease should be approved because it will allow the Debtors to continue to provide services to the WIC Program participants at the Premises without interruption. In addition, Mr. Troop says, the continued occupation of the Premises for the next five years is the most efficient and cost effective way to provide services under the WIC Program at the Premises for various reasons, including: * the location of the Premises is favorable given its central and easily accessible location in Manhattan's Chinatown neighborhood and the proximity of the WIC Center to other SVCMC health care clinics; * it would be difficult to relocate the WIC Center due to the nature of the services provided, the heavy foot traffic at the WIC Center, and the indigent population base serviced; * the Debtors will avoid the significant costs that would accompany relocation to a new, suitable location,; * relocation of their operations would result in an interruption in the provision of services under the WIC Program and could jeopardize the Debtors' ability to continue to receive funding from the DOH for the operation of the WIC Center; * relocation of the WIC Center could result in an erosion of the WIC Center's patient-base to other, proximately located facilities which also offer the WIC Program's services and benefits; * compared with other leases available in the market, the rental obligations under the Extended Lease are reasonably priced, especially in light of the location and early- termination option; * the Extended Lease permits the Debtors to terminate the lease prior to its expiration date should it become necessary or more advantageous for the Debtors' to relocate or discontinue their operations at the Premises; and * the costs of the Extended Lease should be completely covered by funds received from DOH in connection with the running of the WIC Program. Furthermore, in connection with the assumption of the Extended Lease, SVCMC will pay BBC Realty for prepetition rent owed pursuant to the original lease for $1,300. 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) SAINT VINCENTS: Medclr Offers Higher Bid for Aged Receivables ------------------------------------------------------------- Medclr Hospital Portfolios, LLC, asks the U.S. Bankruptcy Court for the Southern District of New York to deny Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' request to privately sell to Equicare Portfolio I, LLC, certain aged accounts receivable. NCO Group, Inc., has been the Debtors' main agent for collection of receivables for over 15 years. Medclr is a subsidiary of NCO. As reported in the Troubled Company Reporter on Nov. 30, 2006, the Debtors were owed $190,000,000 in Bad Debt as of September 2006. Following extensive good faith negotiations, the Debtors agreed to sell the Bad Debt to Equicare, subject to the Purchase and Sale Agreement. Among other things, the initial sale of the Bad Debt pursuant to the Purchase and Sale Agreement is expected to generate $1,760,000 for the Debtors' estates. Marc E. Richards, Esq., at Blank Rome LLP, in New York, discloses that NCO and Medclr first learned of the Debtors' intentions to sell their current Bad Debt when Hilco Healthcare Receivables, LLC, approached NCO to partner on a potential purchase of the Debtors' current Bad Debt. In July 2006, Hilco and Medclr, Inc., delivered a proposal to the Debtors to purchase the Bad Debt. The Debtors advised Hilco and Medclr that they received higher proposals and that they would proceed with a private auction involving two other bidders. Mr. Richards informs Judge Hardin that Medclr has reviewed the terms and conditions in the purchase agreement and continues to be very interested in pursuing a purchase of the Bad Debt. Medclr is prepared to significantly enhance the consideration to be provided to the Debtors' estates for the benefit of their creditors. According to Mr. Richards, Medclr is prepared to move forward with the transaction concerning the current and future Bad Debt by December 19, 2006, the date in which the Debtors must close with Equicare under the Purchase Agreement, to ensure that there would be no delay associated with acceptance of Medclr's offer. Mr. Richards adds that a comparison of the Purchase Agreement against the Medclr purchase agreement demonstrates the significant added value provided by Medclr through its offer. The financial components of the two proposals are: Equicare Medclr Purchase Purchase Item Agreement Agreement ---- --------- --------- Pricing Factor For Current Bad Debt .0125 .0135 Pricing Factor For Future Bad Debt .0125 .0150 Target Recovery Amount Multiplier 2.75 2.50 Costs And Fees Related To: Calculation of Back-End Participation with Debtors 40% 35% Mr. Richards relates that Medclr is ready, willing and able to collect the Bad Debt on behalf of the Debtors. Hence, Medclr asks the Court to require the Debtors to consider the Medclr Purchase Agreement as the highest and best bid or alternatively, to hold a restricted open auction for the Bad Debt between Medclr and Equicare. 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) SALON MEDIA: Posts $349,000 Net Loss in 2006 Third Fiscal Quarter ----------------------------------------------------------------- Salon Media Group, Inc., has filed its third quarter financial statements for the three-month period ended Sept. 30, 2006. The company reported a $349,000 net loss on $1,884,000 of revenues for the quarterly period ended Sept. 30, 2006, compared to a net loss of $160,000 on $1,654,000 of total revenues in the third quarter of 2005. At Sept. 30, 2006, the company's balance sheet showed $5,840,000 in total assets, $1,513,000 in total liabilities, and $4,327,000 in stockholders' equity, compared to $5,304,000 in total assets, $1,687,000 in total liabilities, and $3,617,000 in stockholders' equity at March 31, 2006. Since inception, the company has incurred annual losses and negative cash flows from operations and has an accumulated deficit at Sept. 30, 2006 of $92,023. Based on cash on hand as of Sept. 30, 2006, forecasted trade receivable receipts, cash payments, advertising revenues of an estimated high of $6.6 million and total revenues of an estimated twelve-month period record high of $9.3 million, the company estimates that its cash on hand will be sufficient to meet minimum operating needs through June 2007. Between July 2007 and September 2007, the company estimates that it will not have cash on hand at the end of each month. The forecasted revenue amounts, though achievable, have never been attained by the company in a prior twelve-month period. Salon Media relies on cash projections to run its business and changes such projections as new information is made available or events occur. The most significant component of Salon's cash projections is cash to be generated from advertising sales and, to a lesser extent, cash to be generated from Salon Premium. Forecasting cash receipts from advertising sales for an extended period of time is problematic due to the short duration of most advertising sales. If projected cash inflows and outflows do not meet expectations, the company's ability to continue as a going concern may be adversely affected. A full-text copy of the company's financial statements for the quarterly period ended Sept. 30, 2006, is available for free at http://researcharchives.com/t/s?173f Going Concern Doubt As reported in the Troubled Company Reporter on July 5, 2006, Burr, Pilger & Mayer LLP expressed substantial doubt about Salon Media Group, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended March 31, 2006. The auditor pointed to the company's recurring losses, negative cash flows from operations and accumulated deficit. About Salon Media Founded in 1995, Salon Media Group, Inc. (SALN.OB) -- http://www.salon.com/-- is an Internet publishing company. Salon Media combines original investigative stories and personal essays along with commentary and staff-written Web logs about politics, technology, culture, and entertainment. SANMINA-SCI: S&P Retains Negative CreditWatch on BB- Rating ----------------------------------------------------------- Standard & Poor's Ratings Services left its 'BB-' corporate credit and other ratings on San Jose, California-based Sanmina-SCI Corp. on CreditWatch with negative implications, where they were placed on Aug. 14, 2006. While Sanmina filed its 10-Q for the period ending July 1, 2006 by the Dec. 14, 2006, deadline, the company has filed for a 15-day extension to file its 2006 10-K, now due Dec. 29, 2006. Should the company be unable to file within that deadline, we will review the reaction of the bondholders and creditors under the October 2006 term loan to determine any rating impact," said Standard & Poor's credit analyst Lucy Patricola. The company's securitization programs and lenders under the company's revolving credit have granted waivers to file through Jan. 10, 2007, and possibly longer depending on any extension granted by the bondholders. The rating could be lowered to the 'CCC' category if extensions to file financial statements are not granted by the company's remaining bondholders or lenders, reflecting heightened concerns of debt acceleration. In the process of reviewing stock option grants, the company uncovered several other accounting irregularities. Upon receipt and review of the company's 10-K, we will evaluate the impact of additional restatements, the company's compliance with Sarbannes- Oxley requirements relating to internal controls, and additional involvement of the SEC or other judicial authorities, and operational performance over the last two quarters to determine the final impact on the rating. SCRANTON PA: Chronic Budget Imbalance Cues S&P to Hack Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its underlying rating on Scranton, Pennsylvania's GO debt three notches to a speculative-grade 'BB' from 'BBB' based on the city's chronic structural imbalances, which have been addressed through deficit financing in fiscals 2004 and 2005 and a planned additional deficit financing in fiscal 2006 to address imbalances in fiscals 2006-2008. The outlook is now stable. The city's financial performance has greatly deteriorated over the past two years, and the fiscal 2006 budget remains structurally out of balance for the third consecutive year. Audited results indicate operating deficits of $3.7 million for fiscal 2004 and $5.0 million for fiscal 2005. Management entered into sale and lease-back agreements between the city and Scranton Sewer Authority for $4.0 million and $5.5 million in fiscals 2004 and 2005, respectively, to fill its year-end shortfalls. The fiscal 2006 budget was structurally imbalanced with a $6.2 million shortfall. "The downgrade to speculative grade also reflects management's lack of timely remedial action to improve financial performance," said Standard & Poor's credit analyst John Sugden. "Scranton officials, however, have recently undertaken measures to enhance revenues to partially offset projected operating deficits. Despite these efforts, the 2007 budget remains structurally imbalanced." Management intends to issue additional deficit financing of between $12 million and $15 million to address structural imbalances in fiscals 2006-2008: * roughly $6.0 million-$7.0 million of which it will use to fill the fiscal 2006 budgetary gap, * $1.2 million for the fiscal 2007 gap, and * roughly $5.0 million for fiscal 2008. Aside from increasing the emergency medical service fee to the $52 maximum allowed from $10, officials did not implement any new revenue-raising fees, charges, or tax increases nor did they enact any significant cost-saving measures in 2006. Due to deficit borrowing in excess of operating shortfalls, Scranton's general fund balance position has improved slightly. The fiscal 2005 unreserved fund balance was $4.4 million, or 8% of operating expenditures. From a liquidity standpoint, however, cash and cash equivalents at fiscal year-end 2005 were just $1.4 million, or 2.7% of operating expenditures. Despite management's increasing the real estate tax by 25% to 103 mills in fiscal 2007 and raising the real estate transfer tax to 3.4% in fiscal 2007, the fiscal 2007 budget increased by 3.6% and has been balanced with another $1.2 million expected to be raised through the 2006 deficit financing. "Management's efforts to reduce or eliminate the structural imbalance and improve the city's liquidity will determine whether or not we raise the speculative-grade rating," added Mr. Sugden. The police and fire union contracts expired on Dec. 31, 2003. According to officials, they have appealed the money awarded to the unions at arbitration, which was substantially above what Act 47 allows. Management's goal is to reduce the workforce in these unions, which would provide the city with an estimated annual savings of roughly $2.5 million. Before any reductions can be made, however, the arbitration panel must reach a decision and the contracts must be settled. While these savings would alleviate some pressure on the city's budget, it would not eliminate the budget gap entirely. The rating action affects roughly $68.5 million of debt outstanding. SHUMATE IND: Completes $3.7 Mil. Private Placement of Securities ---------------------------------------------------------------- Shumate Industries Inc. held the final closing in connection with its sale of $3,787,550 of its securities in a private placement of its common shares and warrants. In connection with the private placement 3,787,550 shares of the Company's common stock and 1,893,775 Class A Warrants will be issued. The final closing of the offering occurred on Dec. 14, 2006. The net proceeds will be used to accelerate the inventory build up and launch of the Hemiwedge Cartridge Valve and the reduction of Shumate's liabilities thus strengthening its balance sheet. The remaining proceeds will be used for general working capital and to fund the Company's strategic plan to expand its Hemiwedge Technology platform of products to meet the increasing demand of the energy industry. "We are pleased to secure this capital infusion which will allow the Company to ramp up inventory and build market momentum" Matthew Flemming, Shumate's CFO, stated. "During the fourth quarter 2006, we are moving forward with a full scale launch of the surface-level Hemiwedger Cartridge Valve adding to Shumate's top line numbers. Additionally, the Company used $525,000 of the offering proceeds to fully retire its $2.5 million debenture and its accrued interest of approximately $225,000 with its senior lender as referenced within the previously filed Current Report on Form 8-K filed Aug. 15, 2006. Due to these events, the Company's balance sheet will be improved considerably." The Company's total number of shares of common stock outstanding after this final closing is approximately 19,322,277 and the fully diluted number of shares of common stock outstanding, upon the exercise of all outstanding warrants and options, is approximately 22,907,376. First Montauk Securities Corp., an NASD member firm, acted as placement agent. The Placement Agent received a cash commission of 7%, a non-accountable expense allowance of 2%, and a 1% management fee, as well as warrants to purchase up to 378,755 shares of the Company's common stock at a price of $1.25 per share. In connection with the offering, the Company agreed to file a registration statement with the SEC covering the resale of the shares of common stock and the common stock underlying the warrants and the placement agent warrants no later than 30 days after the final closing. Net proceeds to the Company after the payment of commissions and fees in connection with the offering were approximately $3,350,000. Headquartered in Conroe, Texas, Shumate Industries Inc. (OTCBB:SHMT) -- http://www.shumateinc.com/-- formerly known as Excalibur Industries, serves the energy field services market through its Shumate Machine Works operating subsidiary. With its roots going back more than 25 years, Shumate is a contract machining and manufacturing company utilizing state-of-the-art 3-D modeling software, computer numeric controlled machinery and manufacturing expertise to perform close tolerance and precision machining for energy field service applications. * * * At June 30, 2006, the company's balance sheet showed $ 3,666,316 in total stockholders' equity deficit compared to a $ 6,277,008 deficit at Dec. 31, 2005. SITEL CORPORATION: Earns $7.4 Million in 2006 Second Quarter ------------------------------------------------------------ Sitel Corp. reported $7.4 million of net income on $278.3 million of revenues for the quarter ended June 30, 2006, compared with $2.6 million of net income on $251.8 million of revenues for the same period in 2005. Revenue increased $26.5 million, mainly due to the $23.7 million increase in European revenue and the $4.3 million increase in Latin America revenue, offset by a $1.4 million decrease in Asia Pacific revenue. North American revenue in the first quarter of 2006 remained consistent compared to the same period in 2005. A decrease of $24.3 million of revenue resulting from the loss of General Motors was offset by $24.2 million of revenue growth primarily in customer acquisition, technical support and risk management. The weakening of the U.S. dollar versus the Canadian dollar resulted in $600,000 of the increase. European revenue increased $23.7 million for the three months ended June 30, 2006 compared to the same period in 2005. Higher sales volumes from new and existing clients resulted in an increase in revenue of $24.2 million for the three months ended June 30, 2006 compared to the same period in 2005. The strengthening of the U.S. dollar versus the British pound and Euro partially offset this increase by $500,000. Latin America revenue increased $4.3 million for the three months ended June 30, 2006 compared to the same period in 2005. Higher sales volumes from new and existing clients resulted in an increase in revenue of $3.4 million, while the weakening of the US dollar versus the Brazilian Real resulted in the remaining $900,000 of the increase. Asia Pacific revenue decreased $1.4 million for the three months ended June 30, 2006 compared to the same period in 2005. Lower sales volumes with existing clients resulted in a decrease in revenue of $300,000, while the strengthening of the U.S. dollar versus the New Zealand and Australian dollars resulted in the remaining $1.1 million of the decrease. The $4.8 million increase in net income is primarily due to the $26.5 million increase in revenues, the $6 million gain on settlement with a business partner, the $1.1 million decrease in interest expense, the $1.3 million increase in equity in earnings of affiliates, and the $549,000 increase in other income, offset by the $28.4 million increase in operating expenses(excluding the effects of the $6 million settlement gain). The increase in operating expenses is primarily due to the $25.1 million increase in direct labor and telecommunications expense. Interest expense decreased $1.1 million or 34.0% due to a gain of $1.4 million for a reduction in interest on a Brazil tax obligation being recorded as a reduction of these expenses. This gain was partially offset by higher amortization of debt acquisition costs. Equity in earnings of affiliates increased $1.3 million for the three months ended June 30, 2006 compared to the same period in 2005 primarily due to the $1.2 million in insurance proceeds received by the company's India joint venture related to flood damage in 2005. Other income increased primarily as a result of fluctuations in foreign currency remeasurement gains arising from monetary assets and liabilities denominated in currencies other than a business unit's functional currency. The increase in direct labor and telecommunications expense was primarily the result of higher ramp-up costs of new client programs, particularly in Europe, and a change in the mix of services provided in the three months ended June 30, 2006 compared to the same period in 2005. At June 30, 2006, the company's balance sheet showed $429.2 million in total assets, $288.5 million in total liabilities, $5.8 million in minority interests, and $134.9 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2006, are available for free at http://researcharchives.com/t/s?1733 Merger Agreement with ClientLogic Corp. On Oct. 13, 2006, the company and ClientLogic Corporation disclosed that they have signed a definitive merger agreement. Under the terms of the agreement, a newly formed subsidiary of ClientLogic will merge with the company and pay $4.05 per share in cash for all of the outstanding common stock of the company. The board of directors of each company has unanimously approved the transaction. The transaction is expected to be completed in the first quarter of 2007 and is subject to customary closing conditions, including approval of the company's shareholders and regulatory clearances. The company's board of directors has recommended to its shareholders that they vote in favor of the transaction. About Sitel Corp. Sitel Corp.(NYSE:SWW) -- http://www.sitel.com/-- provides outsourced customer support services. On behalf of many of the world's leading organizations, SITEL designs and improves customer contact models across its clients' customer acquisition, retention and development cycles. SITEL manages approximately two million customer interactions per day via the telephone, e-mail, Internet and traditional mail. SITEL has over 42,000 employees in 101 global contact centers, utilizing more than 32 languages and dialects to serve customers in 56 countries. * * * Sitel Corp. carries Standard & Poor's Rating Services 'B' corporate credit rating. SONIA INVESTMENTS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Sonia Investments, LLC dba Rodeo Inn dba Days Inn 3601 East Highway 80 Mesquite, TX 75150 Bankruptcy Case No.: 06-35540 Chapter 11 Petition Date: December 13, 2006 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Arthur I. Ungerman, Esq. One Glen Lakes Tower 8140 Walnut Hill Lane, No. 301 Dallas, TX 75231 Tel: (972) 239-9055 Fax: (972) 239-9886 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. STATSURE DIAGNOSTIC: Sept. 30 Balance Sheet Upside-Down by $8 Mil. ------------------------------------------------------------------ StatSure Diagnostic Systems Inc. reported $995,010 of net income on sales of $225,411 for the quarter ended Sept. 30, 2006, compared with a $350,574 net loss on $204,846 of sales for the same period in 2005. At Sept. 30, 2006, the company's balance sheet showed $1.4 million in total assets and $9.4 million in total liabilities, resulting in an $8 million stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $465,840 in total current assets available to pay $775,039 in total current liabilities. The company's revenues are primarily generated from sales of its patented saliva collection devices. Specimens collected with the device are sent to and processed at laboratories. The net income is principally attributable to a non-cash derivative income of $1,547,877 in the current quarter, mainly as a result of mark-to market adjustment on embedded derivatives principally driven by the decrease in the company's common stock price from $1.50 to $1.11. The company did not have derivative instruments in the same periods of 2005. Selling, general and administrative expenses actually increased 130% to $523,350 in the third quarter of 2006 from $227,302 in the third quarter of 2005. This increase is due to significantly greater expenses for consulting, professional fees, amortization expense, and payroll. Full-text copies of the company's financial statements for the quarter ended Sept. 30, 2006, are available for free at: http://researcharchives.com/t/s?1743 Going Concern Doubt Lazar Levine & Felix LLP expressed substantial doubt about Statsure Diagnostic Systems, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2005, and Dec. 31, 2004. The auditing firm pointed to the company's recurring losses from operations, negative working capital and net capital deficiency. About StatSure Diagnostic Based in Framingham, Massachusetts, StatSure Diagnostic Systems, Inc.(SSUR.OB) -- http://www.statsurediagnostics.com/-- develops, manufactures, and markets rapid immunoassay tests for the detection of sexually transmitted and other infectious diseases. In addition, the company has developed and is marketing a product line of patented, oral-fluid collection devices. STONE ENERGY: Moody's Downgrades Corp. Family Rating to B3 ---------------------------------------------------------- Moody's Investors Service is lowering: -- the corporate family rating for Stone Energy Corp. to B3 from B2; -- the probability of default rating to B3 from B2; -- the ratings on the senior unsecured notes to B3 and LGD3, 44% from B2 and LGD3, 45%; and, -- the senior subordinated notes ratings to Caa2 and LGD5, 81% from Caa1 and LGD5, 82%. The ratings comes after the company's report that it is pursuing an asset divestiture program and will not actively pursue a merger at this time but instead return its focus on its core Gulf of Mexico property base. Simultaneously, Moody's is upgrading the company's SGL rating to SGL-3 from SGL-4. The outlook is negative. This concludes Moody's review of Stone's ratings. The downgrade to B3 reflects weak underlying trends highlighted by its rising costs structure and weak capital productivity, particularly over the past two years year as it increased its focus on the high risk, high cost deepwater which turned out to be unsuccessful. While management had been distracted by the ongoing merger situations for several months the underlying trends had already been deteriorating and contributed to Moody's placing Stone's ratings under review for downgrade prior to the two failed mergers with Plains Exploration and Energy Partners, Ltd. Stone's announced plan to divest certain assets and use the proceeds to repay debt should help improve the company's overall financial flexibility, however, it will also reduce the company's scale and keep its focus on the existing property base in the short lived Gulf of Mexico region, which carries a high reinvestment risk and has not produced positive results over the past couple of years. Despite a continuous rise in its capital spending over the past couple of years, Stone has seen its total production volumes fall, very high and unsustainable total full cycle costs, very weak reserve replacement while seeing its 3-year all sources finding and development costs soar to $38.23/boe for 2005. In addition, the company's leverage on the proven developed reserve base has significantly risen to about $11.10/boe at Sept. 30, 2006 compared to $7.84/boe at Dec. 31, 2005. Given Moody's expectation that reserve replacement will again be weak in 2006, leverage will remain near the $11.00/boe level until any asset sales occur. All of Stone's metrics have fallen out of line with the B2 rated peers and are even weaker than some of the B3 rated E&P companies. While Moody's believes these metrics will remain weak into 2007, the company's scale, liquidity, and favorable commodity price should provide the company sufficient opportunities to try and stabilize the operations at least over the next 12 months. The negative outlook reflects the need for management to execute on its planned asset sales, and reduce and sustain leverage on the PD reserves to under $8.00/boe while providing clear evidence that the company's operating performance is stabilizing with its leading edge unit full cycle costs trending towards $40.00/boe. In addition, a stable outlook would be considered if the company is improving its capital productivity trends with solid reserve replacement at more competitive costs while also continuing its current positive sequential quarter production trends. The outlook could also be moved to stable if asset sales occur faster than expected. However, a ratings downgrade could result from further deterioration of cost and reserve replacement trends, a decline in production volumes, or increased leverage. In addition, any stock repurchases completed before leverage is reduced could also result in a downgrade. The upgrade of the speculative grade liquidity rating to SGL-3 reflects the significantly improved liquidity position as Stone's projected cash flows over the next 12 months are expected to sufficiently cover the planned capital spending program, interest expense, and working capital. In addition, the company currently has approximately $100 million available under its $325 million borrowing base revolving credit facility and has sufficient room under its maintenance covenants. The SGL-3 is tempered by the expectation that Stone will spend the majority of its cashflow on capex in 2007 and that the lenders are secured by the company's reserves, providing no readily available alternate source of liquidity. Downgrades: * Issuer: Stone Energy Corporation -- Corporate Family Rating, Downgraded to B3 from B2 Upgrades: * Issuer: Stone Energy Corporation -- Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Outlook Actions: * Issuer: Stone Energy Corporation -- Outlook, Changed To Negative From Rating Under Review Stone Energy Corporation is headquartered in Lafayette, Louisiana is an independent oil and gas company engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the GOM, the deep shelf of the GOM, the deepwater of the GOM, Rocky Mountain Basins and the Williston Basin. TECH DATA: Moody's Rates Proposed $350 Mil. Senior Notes at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 to Tech Data Corporation's proposed offering of up to $350 million convertible senior notes due 2026 and affirmed its existing ratings. The net proceeds from the offering will be used primarily to pay down Tech Data's higher interest bearing intra-quarter debt and enhance the company's liquidity position. The rating reflects both the overall probability of default of the company under Moody's LGD framework, to which Moody's affirms its PDR of Ba1, and a loss-given-default of LGD-6 for the convertible senior notes. The ratings outlook remains negative. This report is not viewed as a change in the company's overall financial policies and Moody's notes that at the current rating level of Ba1, the company has modest debt capacity. Additionally, Tech Data is expected to save approximately $9 million in annual net interest expense through this offering. In May 2005, Tech Data implemented a restructuring program to improve the cost structure and productivity of its EMEA operations. The company has incurred $55 million of total cash restructuring costs, which should generate annualized cost savings of the same amount. It is Moody's understanding that Tech Data has completed the restructuring program and expects no further cash charges. Moody's most recent rating action on Tech Data occurred on March 15, 2006 when Moody's affirmed Tech Data's ratings and revised the outlook to negative from stable. This was due to increasing competitive pricing pressures, steady gross margin decline, continued weakness in the EMEA operations and weakened operating profitability on a year-over-year basis. Tech Data's operating performance for the trailing twelve months ending in October 2006 was weak with a gross margin of 4.5% compared to 5% in fiscal 2006 and operating margin of 0.7% versus 0.8% in the prior year. Tech Data's margins, which have continued to trend down over a multi-year period across several cycles, are thinner than its peer distributors. Moody's notes that if the earnings were to experience further weakening from current levels, the EMEA business continued to exhibit weak operating results despite the restructuring efforts or gross cash flow migrates below historical levels, Moody's would likely downgrade the corporate family rating. To the extent the company experiences a reversal of margin trends and benefits from the EMEA restructuring actions, resulting in operating performance that returns to historical levels, Moody's could stabilize the CFR. These new ratings and assessments were assigned: -- Up to $350 million Convertible Senior Unsecured Notes due 2026 at Ba2, LGD6, 94% These ratings were affirmed: -- Corporate Family Rating at Ba1 -- Probability of Default Rating at Ba1 The rating outlook is negative. Clearwater, Florida-based Tech Data Corp. is a global distributor of information technology and computer related products. TITAN FINANCIAL: Court Grants Chapter 7 Conversion Plea ------------------------------------------------------- The Honorable Mary Grace Diehl of the U.S.6 Bankruptcy Court for the Northern District of Georgia in Atlanta has approved Titan Financial Group II, LLC, and its debtor affiliates' motion for an order converting their Chapter 11 cases to cases under Chapter 7. The Debtors' Chapter 11 cases are converted into liquidation proceedings, pursuant to Section 1112(a) of the Bankruptcy Code, effective Nov. 1, 2006. Felicia S. Turner, the U.S. Trustee for Region 21, has appointed Robert Trauner as interim Chapter 7 Trustee. Following the $14.5 million sale of substantially all of their assets to World Acceptance Corporation in October, the Debtors determined that engaging in a plan process will unnecessarily deplete their assets and will not result in any economic benefit for the estates. For these reasons, the Debtors moved for a Chapter 7 conversion of their cases. About Titan Financial Headquartered in Atlanta, Georgia, Titan Financial Group II, LLC, provided standard installment loans and serves approximately 80,000 customers through its 125 retail branches across Georgia, South Carolina and Texas. The Company and 11 of its affiliates filed for chapter 11 protection on Sept. 3, 2006 (Bankr. N.D. Ga. Case No. 06-70852). Amy Edgy Ferber, Esq., Paul K. Ferdinands, Esq., and Sarah R. Borders, Esq., at King & Spalding, LLP, represented the Debtors. The Debtors' Chapter 11 cases have been converted into Chapter 7 liquidation proceedings. Robert Trauner serves as Chapter 7 Trustee. David B. Kurzweil, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP, represent Mr. Trauner. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. TITAN INTERNATIONAL: Moody's Rates $200-Mil. Senior Notes at B3 --------------------------------------------------------------- Moody's Investors Service assigned a B3 first time rating to Titan International, Inc.'s $200 million senior unsecured notes and a B2 corporate family rating. The purpose of the proposed notes is to term out borrowings under the company's revolving credit facility which were used to fund Titan's Goodyear and Continental acquisitions of $153 million. The B2 corporate family rating reflects the current modest operating margins and vulnerability to the cyclical agricultural and earthmoving/construction markets. The B3, LGD4, 58% rating reflects the expected loss and recovery levels based on Moody's Loss Given Default Methodology. Moody's also assigned a SGL-2 Speculative Grade Liquidity rating to Titan. The rating outlook is stable. "Titan's B2 corporate family rating reflects its niche market in providing wheels and tires to the agricultural and earthmoving/construction end markets. However, the rating is constrained by the ongoing cyclicality of these end markets and customer concentrations," Moody's analyst Peter Doyle said. Presently the company is benefiting from these strong end markets, which are the key to its financial performance over the near to medium term. Additionally, full year operating results from the company's acquisitions should result in improvement of key credit metrics for LTM September 2006: -- EBIT/Interest expense of 2x; -- EBITDA/Interest expense of 3.7x; and, -- Debt/EBITDA of 5.3x. Further constraints on the corporate family rating are the continued integration of its acquisitions and potential for future acquisitions. The stable outlook reflects Moody's expectations that Titan's debt protection measures should be supportive of the B2 rating over the next twelve to eighteen months. Debt protection measures should improve as the company increases operating efficiencies and gains from the full year operating results of its Goodyear and Continental acquisition. The key risk that Titan will continue to face is the cyclicality in its end markets. Nevertheless, Titan should be able to weather future cyclical downturns much better than in the past due to its commitment to maintain ample liquidity. The B3 rating on the proposed senior unsecured notes reflects an LGD4, 58% loss given default assessment and is one notch below the corporate family rating. The senior unsecured notes are guaranteed by Titan's domestic subsidiaries and benefit from the junior position of approximately $81.2 million of convertible notes in Titan's capital structure. The convertible notes are structurally subordinate to all subsidiary claims. Moody's does not rate the convertible debt. The SGL-2 Speculative Grade Liquidity Rating reflects Moody's belief that the company will maintain a good liquidity profile over the next 12-month period. The SGL rating anticipates that approximately $110 million in availability under the company's revolving credit facility at closing of the senior unsecured notes, cash on hand, and free cash flow should be sufficient to fund the company's capital spending and operational needs over the next 12 months. Titan ratings assigned: -- Corporate family rating B2; -- Probability-of-default rating B2; and, -- $200 million senior unsecured notes due late 2011 at B3 LGD4, 58%; Speculative Grade Liquidity at SGL-2. Titan, headquartered in Quincy, Illinois is a leading manufacturer of wheels, tires and assemblies for off-highway vehicles serving the agricultural, earthmoving/construction, and consumer end markets. THAXTON GROUP: Court Extends Removal Period to May 30 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware further extended, until May 30, 2006, the period within which The Thaxton Group Inc. and its debtor-affiliates can file notices of removal with respect to prepetition actions pursuant to Bankruptcy Rules 9006 and 9027. The Debtors inform the Court that they were party to a number of civil actions and proceedings. The Debtors have focused on their operational restructuring and business plan of their Southern Management business. In addition, the Debtors spent their time marketing and selling their non-core business units and participated in the final global settlement with involved parties. The extension, the Debtors say, will enable them to make an informed decision regarding removal of any prepetition action. Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for Chapter 11 protection on Oct. 17, 2003 (Bankr. Del. Case No. 03-13183). Daniel B. Butz, Esq., Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors in their restructuring efforts. Alan Kolod, Esq., at Moses & Singer LLP, represents the Offical Committee of Unsecured Creditors. As of Dec. 31, 2005, the Debtors reported assets totaling $98,889,297 and debts totaling $175,693,613. THOMAS MCINTYRE: Case Summary & 23 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Thomas L. McIntyre 2 South 976 Deer Path Road Batavia, IL 60510 Bankruptcy Case No.: 06-15929 Type of Business: The Debtor operates an equine training show facility under the industry name of Equine Productions Inc. Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Deborah McIntyre 06-15922 Chapter 11 Petition Date: December 4, 2006 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Miriam R. Stein, Esq. Arnstein & Lehr LLP 120 South Riverside Plaza, Suite 1200 Chicago, IL 60606 Tel: (312) 876-7119 Fax: (312) 876-0288 Total Assets Total Debts ------------ ----------- Thomas L. McIntyre $212,800 $1,318,652 Deborah McIntyre $303,648 $1,223,189 A. Thomas L. McIntyre's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 1040 taxes plus $527,745 Mail Stop 5010 CHI accrued interest 230 S. Dearborn Street and penalties Chicago, IL 60604 Illinois Dept. of Revenue Income tax plus $194,194 100 W. Randolph, Suite 7500 accrued interest Chicago, IL 60601 and penalties through July 31, 2006 Internal Revenue Service Location: 2 South $169,616 Mail Stop 5010 CHI 976 Deer Path secured value: 230 S. Dearborn Street Road, Batavia IL $200,000 Chicago, IL 60604 Farm -- under senior lien: contract for sale $171,498 for $400,000 Debtor has 50% interest Internal Revenue Service 1040 taxes plus $56,081 Mail Stop 5010 CHI accrued interest 230 S. Dearborn Street and penalties Chicago, IL 60604 Illinois Dept. of Revenue Location: 2 South $54,662 100 W. Randolph, Suite 7500 976 Deer Path secured value: Chicago, IL 60601 Road, Batavia IL $200,000 Farm -- under senior lien: contract for sale $401,439 for $400,000 Debtor has 50% interest Internal Revenue Service Location: 2 South $41,952 Mail Stop 5010 CHI 976 Deer Path secured value: 230 S. Dearborn Street Road, Batavia IL $200,000 Chicago, IL 60604 Farm -- under senior lien: contract for sale $341,114 for $400,000 Debtor has 50% interest Internal Revenue Service 1040 taxes plus $24,775 Mail Stop 5010 CHI accrued interest 230 S. Dearborn Street and penalties Chicago, IL 60604 Internal Revenue Service 1040 taxes plus $22,893 Mail Stop 5010 CHI accrued interest 230 S. Dearborn Street and penalties Chicago, IL 60604 Internal Revenue Service Location: 2 South $18,372 Mail Stop 5010 CHI 976 Deer Path secured value: 230 S. Dearborn Street Road, Batavia IL $200,000 Chicago, IL 60604 Farm -- under senior lien: contract for sale $383,066 for $400,000 Debtor has 50% interest Internal Revenue Service 1040 taxes $9,475 Mail Stop 5010 CHI 230 S. Dearborn Street Chicago, IL 60604 Illinois Dept. of Revenue Income tax $1,039 100 W. Randolph, Suite 7500 Chicago, IL 60601 Guardian Anesthesia Assoc. Medical services $454 185 Penny Ave. Dundee, IL 60118 Illinois Urological Medical services $386 Institute S.C. 25 N. Winfield Road, #407 Winfield, IL 60190 Kane Anesthesia Associates Medical services $168 34536 Eagle Way Chicago, IL 60678 Illinois Dept. of Revenue Income tax $40 100 W. Randolph, Suite 7500 Chicago, IL 60601 Suburban Pulmonary & Sleep Medical services $30 Assoc. 700 E. Ogden Ave. #202 Westmont, IL 60559 Aurora Eye Clinic Ltd. Medical services $23 1300 N. Highland Ave. Ste. 1 Aurora, IL 60506 TriCity Medical services $23 Radiology S.C. 9410 Compubill Drive Orland Park, IL 60462 B. Deborah McIntyre's 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 1040 taxes plus $527,745 Mail Stop 5010 CHI accrued interest 230 S. Dearborn Street and penalties Chicago, IL 60604 Illinois Dept. of Revenue Income tax plus $194,194 100 W. Randolph, Suite 7500 accrued interest Chicago, IL 60601 and penalties through July 31, 2006 Internal Revenue Service $18,963 Mail Stop 5010 CHI 230 S. Dearborn Street Chicago, IL 60604 Internal Revenue Service $950 Mail Stop 5010 CHI 230 S. Dearborn Street Chicago, IL 60604 Illinois Dept. of Revenue $12 100 W. Randolph, Suite 7500 Chicago, IL 60601 TRUE TEMPER: S&P Lowers Subordinated Debt Rating to CCC ------------------------------------------------------- Standard & Poor's Ratings Services lowered several of its ratings on Memphis, Tennesse-based golf club shaft designer, manufacturer, and marketer True Temper Sports Inc. The corporate credit rating was lowered to 'B-' from 'B', and the rating outlook is stable. The subordinated debt rating was lowered to 'CCC' from 'CCC+'. The ratings were removed from CreditWatch with negative implications, where they were placed Nov. 17, 2006. Total debt outstanding was approximately $235.6 million as of Oct. 1, 2006, excluding operating lease obligations. "The downgrade primarily reflects the company's weaker-than- expected operating performance through the first nine months of 2006, which has caused credit protection measures to weaken below our expectations," said Standard & Poor's credit analyst Mark Salierno. "Given the company's highly leveraged capital structure and existing operating challenges, we believe that TTSI's ability to materially reduce its debt will continue to be challenging in the near-to-immediate term." At the same time, Standard & Poor's affirmed its 'B' bank loan rating on TTSI's first-lien senior secured credit facility (and removed it from CreditWatch), and revised the recovery rating to '1', indicating a high expectation for full recovery of principal in the event of a payment default, from '3'. The first-lien facility is now rated one notch higher than the corporate credit rating on True Temper. On Dec. 13, 2006, the company announced that it plans to add about $45 million in second-lien term loan facilities. Although S&P expects the company to use a substantial portion of the proceeds from the second-lien financing to repay a piece of its outstanding first-lien term loans, an undisclosed amount of incremental debt is expected to be added to the balance sheet. The rating actions on the loan facility reflect first-lien lenders' more favorable prospects for recovery following the planned reduction of first- lien debt. The 'B-' rating on TTSI reflects the company's narrow business focus, its highly leveraged financial profile, and the discretionary nature of golf equipment sales. Somewhat mitigating these factors are the company's leading market position in steel golf club shafts and its low-cost manufacturing capabilities. UNION ROAD: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Union Road Land Corporation 67 Bay Shore Drive Toms River, NJ 08753 Bankruptcy Case No.: 06-22489 Chapter 11 Petition Date: December 13, 2006 Court: District of New Jersey (Camden) Judge: Judith H. Wizmur Debtor's Counsel: Barry W. Frost, Esq. Teich Groh 691 State Highway 33 Trenton, NJ 08619-4407 Tel: (609) 890-1500 Fax: (609) 890-6961 Total Assets: $1,900,010 Total Debts: $1,323,686 Debtor's 14 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Albertson Ward $5,807 36 Euclid Street Woodbury, NJ 08096 Computer Design Services $4,592 P.O. Box 818 Jackson, NJ 08527 Long & Marmero $4,129 129 North Broadway, Suite 200 Camden, NJ 08102 Consulting Engineer Services $3,867 150 Delsea Drive, Suite 1 Sewell, NJ 08080 Farr Gambacorta & Wright $3,000 1000 Atrium Way, Suite 401 Mount Laurel, NJ 08054 Marcus Broder P.C. $2,768 TRC Environmental $1,207 Robert Pastine $1,000 South Jersey Engineers $800 Dolan & Dolan P.A. $723 Mark Cherry, Esq. $720 Federici & Akin $533 Gerstein Grayson LLP $370 Dave Stitz $300 USN CORP: Sept. 30 Balance Sheet Upside-Down by $21.5 Million ------------------------------------------------------------- USN Corporation's balance sheet at Sept. 30, 2006, showed $3.2 million in total assets and $24.7 million in total liabilities, resulting in a $21.5 million stockholders' deficit. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $2.2 million in total current assets available to pay $24.7 million in total current liabilities. USN reported a $4.5 million net loss on $3.6 million of sales for the second quarter ended Sept. 30, 2006, compared with a $3 million net loss on $6.3 million of sales for the same period in 2005. Net sales declined 44% during the three months ended Sept. 30, 2006, as compared to the prior year quarter. The decline in net sales is primarily due to two factors, the decline in gross sales and the higher return rate experienced in the current year period of 41% of gross sales as compared to 30% of gross sales in the prior year period. The increase in net loss is attributable to the decline in net sales, the $1 million increase in operating media costs which is consistent with the change to operating 24 hours per day from 15 hours per day in the 2005 period, and the $168,000 increase in interest expenses, partially offset by the $258,000 decrease in non-cash compensation expenses. The increase in interest expense is primarily the result of amortization of the loan origination fees and the intrinsic value of the beneficial conversion feature of the $691,000 in convertible promissory notes added during the current year. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2006, are available for free at http://researcharchives.com/t/s?172f Going Concern Doubt Creason & Associates, P.L.L.C., expressed substantial doubt about USN Corporation's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ending March 31, 2006. About USN Headquartered in Los Angeles, California, USN Corporation, fka Premier Concepts Inc., through its wholly owned subsidiary, USN Television Group, Inc. -- http://www.usntvg.com/-- is a retailer of consumer products, such as jewelry, watches, coins and other collectibles, through interactive electronic media using broadcast, cable and satellite television and the internet. USN TV's programming is transmitted by satellite to cable television systems, direct broadcast satellite systems, including DirecTV, and television broadcasting stations across the United States. USN TV also markets its products through the internet. Revenues are primarily generated from sales of merchandise offered through USN TV's television home shopping programming. USN filed a voluntary chapter 11 petition on Oct. 10, 2003 (Bankr. C.D. Calif. Case No. 03-36445). The Bankruptcy Court confirmed the company's First Amended Chapter 11 Reorganization Plan on Nov. 30, 2004. Lawrence A. Diamant, Esq., at Robinson, Diamant, & Wolkowitz, represented the Debtor in its chapter 11 restructuring. USN will remain subject to the jurisdiction of the Bankruptcy Court until it makes its final payment to unsecured creditors in the fourth quarter of fiscal year 2006. VENTAS INC: Moody's Rates $230-Million Senior Notes at Ba2 ---------------------------------------------------------- Moody's placed a Ba2 rating on $230 million of 3-7/8% Convertible Senior Notes issued by Ventas, Inc., the REIT holding company of Ventas Realty Limited Partnership and Ventas Capital Corporation. Moody's also rates Ventas, Inc's senior debt shelf at Ba3. This rating reflects effective subordination to debt securities at its subsidiaries, and the lack of definitiveness surrounding guarantees of obligations of Ventas, Inc. issued off of this shelf. The recently issued convertible debt of Ventas, Inc. has unconditional joint and several guarantees on a senior basis by Ventas Realty and Ventas Capital, among other Ventas group companies. These guarantors, and the issuer of the convertible, Ventas, Inc., mirror the guarantor and issuer pool of the senior debt of Ventas Realty, that Moody's rates Ba2. This parallel guarantor/issuer structure is what drives the Ba2 rating on the convertible senior debt of Ventas, Inc. Ventas, Inc. is a health care real estate investment trust that owns 454 health care and senior housing assets in 43 states, including 43 hospitals, 218 skilled nursing facilities and 174 senior housing and other assets. At Sept. 30, 2006, Ventas had $2.8 billion in book assets. VENTURE VII: Moody's Places Ba2 Rating on $11.4 Mil. Class E Notes ------------------------------------------------------------------ Moody's Investor Service assigned ratings to notes issued by Venture VII CDO Limited Moody's Ratings: -- Aaa to the $388,000,000 Million Class A-1A Senior Secured Floating Rate Notes Due 2022; -- Aaa to the $90,000,000 Million Class A-1AR Senior Secured Floating Rate Revolving Notes Due 2022; -- Aa1 to the $53,125,000 Million Class A-1B Senior Secured Floating Rate Notes Due 2022; -- Aaa to the $49,775,000 Million Class A-2 Senior Secured Floating Rate Notes Due 2022; -- Aa2 to the $31,250,000 Million Class B Senior Secured Floating Rate Notes Due 2022; -- A2 to the $32,350,000 Million Class C Secured Deferrable Floating Rate Notes Due 2022; -- Baa2 to the $23,700,000 Million Class D Secured Deferrable Floating Rate Notes Due 2022; and, -- Ba2 to the $11,400,000 Million Class E Secured Deferrable Floating Rate Note Due 2022. The portfolio, primarily composed of bank loans, participations and corporate debt securities, will be managed by MJX Asset Management LLC. VILLAJE DEL RIO: Colina Fails in Bid to Install Chapter 11 Trustee ------------------------------------------------------------------ The Honorable Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas in San Antonio denied Colina Del Rio, L.P.'s motion to appoint a Chapter 11 Trustee in Villaje Del Rio, Ltd.'s bankruptcy case. Judge King denied the motion without prejudice to its re-urging at the hearing on the confirmation of the Debtor's proposed Amended Plan of Reorganization, currently set for Jan. 22, 2006. Colina was the successful bidder for a $$26.7 million Deed of Trust Note originally issued by the Debtor in favor of Berkshire Mortgage Finance Limited Partnership and subsequently assigned to the U.S. Department of Housing and Urban Development. The HUD assigned its interest on the note to Colina in December 2005. Colina sought for the appointment of a Chapter 11 Trustee based on the Debtor's supposed attempts to ignore the provisions of the Bankruptcy Code and alleged conflicts of interest between the Debtor, as controlled by George Geis, and its creditors. Mr. Geis controls Villaje Management, LLC, which has sole control of the Debtor. According to Colina, the Debtor has pursued this case for the sole benefit of Mr. Geis. Colina accuses the Debtor of failing to act as a fiduciary for the creditors and, instead, working for the single purpose of recovering the real property so that it can complete the multifamily rental apartment project it is building in San Antonio, Texas. Headquartered in San Antonio, Texas, Villaje Del Rio, Ltd., is a real estate developer. The company filed for chapter 11 protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797). Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets of less the $50,000 and estimated debts between $10 million and $50 million. VILLAJE DEL RIO: Plan Confirmation Hearing Set for January 22 ------------------------------------------------------------- The Honorable Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas in San Antonio has approved the Third Amended Disclosure Statement explaining Villaje Del Rio Ltd.'s Plan of Reorganization. The Court finds that the Disclosure Statement, as modified in open court, complies with the requirements Section 1125 of the Bankruptcy Code. The Debtor is now authorized to disseminate the Disclosure Statement to its Creditors for approval. Ballots accepting or rejecting the Plan must be filed by 5:00 p.m., on Jan. 12, 2007, with the Debtor's counsel: Hohmann, Taube & Summers, LLP Attn: Villaje Balloting 100 Congress Ave, Suite 1800 Austin, TX 78701 Fax: (512) 472-5997 Objection to confirmation of the Debtor's Plan must be filed by 5:00 p.m., on Jan. 12, 2007, with: The Clerk of Bankruptcy Court Western District of Texas 615 E. Houston St., Room 137 San Antonio, TX 78205 A copy of the objection must also be filed with Hohmann Taube. The Court has scheduled a hearing on the confirmation of the Debtor's Plan at 10:00 a.m. on Jan. 22, 2007. Plan Overview As reported in the Troubled Company Reporter on Sept. 19, 2006, all cash necessary for the Debtor to make payments pursuant to the Plan will be obtained from the sale of its real property and the pursuit of certain litigation claims. As the Debtor's representative, George Geis, Esq., at Hohmann, Taube & Summers, LLP will guarantee payment of fees and expenses for the prosecution of the Litigation Claims. Fees and expenses for pursuing the Litigation Claims is expected to exceed $200,000. Under the Plan, each holder of an Allowed Class II Priority Non Tax Claim will be paid in full pursuant to an agreement between the Debtor and the claimant on the effective date of the Plan. Holders of Class III Priority Tax Claims will be paid in full, through equal monthly payments of principal and interest of the Allowed Claim over a period of five years, plus statutory interest. Holders of Allowed Convenience Claims will receive the lesser of their Allowed Claim or $1,000 in full satisfaction of their Allowed Claim within 60 days from the effective date. Holders of Allowed General Unsecured Claim will have the right to elect treatment as an Allowed Convenience Claim by making their election for the treatment on their timely filed Ballot. Otherwise, they will receive their pro rate share of proceeds from the Litigation Claims. The Allowed Claim of George Geis, totaling $1.5 million, will be paid with the excess cash flow, if any, from the Debtor after all senior classes are paid in full. Equity Interests Holders will not receive any distribution on account of the interests until all senior allowed claims are paid in full. All Allowed Lease Cure Claims, equal to the monetary amount necessary to fully cure any lease or executory contract of the Debtor assumed under the Plan, will be paid pursuant to Section 6.6 of the Plan. A full-text copy of the Debtor's Third Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060918223118 Headquartered in San Antonio, Texas, Villaje Del Rio, Ltd., is a real estate developer. The company filed for chapter 11 protection on May 1, 2006 (Bankr. W.D. Tex. Case No. 06-50797). Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets of less the $50,000 and estimated debts between $10 million and $50 million. WACHOVIA BANK: Moody's Holds Low-B Ratings on $32.5 Mil. of Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the rating of one class and affirmed the ratings of 18 classes of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2004-C11 as: -- Class A-1, $31,294,592, Fixed, affirmed at Aaa -- Class A-2, $70,000,000, Fixed, affirmed at Aaa -- Class A-3, $87,715,000, Fixed, affirmed at Aaa -- Class A-4, $52,829,000, Fixed, affirmed at Aaa -- Class A-5, $454,900,000, Fixed, affirmed at Aaa -- Class A-1A, $157,642,347,Fixed, affirmed at Aaa -- Class X-C, Notional, affirmed at Aaa -- Class X-P, Notional, affirmed at Aaa -- Class B, $28,641,000, Fixed, upgraded to Aa1 from Aa2 -- Class C, $13,018,000, Fixed, affirmed at Aa3 -- Class D, $23,434,000, WAC, affirmed at A2 -- Class E, $11,717,000, WAC, affirmed at A3 -- Class F, $14,320,000, WAC, affirmed at Baa1 -- Class G, $13,019,000, WAC, affirmed at Baa2 -- Class H, $10,415,000, WAC, affirmed at Baa3 -- Class J, $16,924,000, Fixed, affirmed at Ba1 -- Class K, $5,207,000, Fixed, affirmed at Ba2 -- Class L, $2,604,000, Fixed, affirmed at Ba3 -- Class M, $2,604,000 Fixed, affirmed at B1 -- Class N, $2,603,000, Fixed, affirmed at B2 -- Class O, $2,604,000, Fixed, affirmed at B3 As of the Nov. 17, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 2.7% to $1.03 billion from $1.04 billion at securitization. The Certificates are collateralized by 54 mortgage loans ranging in size from less than 1.0% to 12.1% of the pool, with the top 10 loans representing 51.8% of the pool. The pool includes six shadow rated investment grade loans comprising 45.7% of the pool. Two loans, representing 9.7% of the pool balance, have defeased and are collateralized by U.S. Government securities. There have been no realized losses to date and currently there are no loans in special servicing. Five loans, representing 4.7% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for approximately 98.8% of the pool. Moody's loan to value ratio for the conduit component is 92.1%, compared to 96.2% at securitization. Moody's is upgrading Class B due to defeasance and improved overall pool performance. The largest shadow rated loan is the Brass Mill Center & Commons Loan at $122.5 million, 12.1% which is secured by the borrower's interest in a 1.2 million square foot regional mall and adjacent 197,000 square foot grocery-anchored community center. The properties are located approximately 28 miles southwest of Hartford in Waterbury, Connecticut. The mall is anchored by Sears, Filene's, J.C. Penney and Burlington Coat Factory. Performance has been stable since securitization. The loan sponsors are General Growth Properties Inc. and the New York State Common Retirement Fund. Moody's current shadow rating is Baa3, the same as at securitization. The second shadow rated loan is the Four Seasons Town Center Mall Loan at $93 million, 9.2% which is secured by the borrower's interest in a 1.1 million square foot regional mall located in Greensboro, North Carolina. The center is anchored by Dillard's, J.C. Penney and Belk Stores. Performance has improved since securitization due to increased revenues. The loan sponsor is General Growth Properties Inc. Moody's current shadow rating is A3, compared to Baa3 at securitization. The third shadow rated loan is the Starrett-Lehigh Building Loan at $59.1 million, 5.8% is a pari-passu interest in a $181.6 million first mortgage loan. The loan is secured by a 2.3 million square foot Class B/C office building located in the Penn Station submarket of New York City. The property is 88% occupied, compared to 74.3% at securitization. The largest tenants are U.S. Customs, Tommy Hilfiger USA and Martha Stewart Omnimedia. Performance has improved since securitization due to increased revenues and stable expenses. Moody's current shadow rating is Aa3, compared to A1 at securitization. The fourth largest shadow rated loan is the Bay City Mall Loan at $25.1 million, 2.5% which is secured by a 525,000 square foot regional mall located within the Saginaw-Bay City MSA in Bay City, Michigan. The center is anchored by Target, Sears, Younkers and J.C. Penney. In-line occupancy is 83%, compared to 87.0% at securitization. Financial performance has been impacted by decreased revenues as well as increased expenses. The borrower's reported 2005 net operating income is 27.6% lower than Moody's original expectations. The loan sponsor is General Growth Properties Inc. Moody's current shadow rating is B3, compared to Baa2 at securitization. The remaining two rated loans comprise 4% of the pool. The Home Depot Loan at $21.6 million, 2.1% which is secured by a 100,000 square foot single tenant building located in Colma, California, is shadow rated A1 compared to A3 at securitization. The University Mall Loan at $19.1 million, 1.9% which is secured by the borrower's interest in a 593,000 square foot retail property located in Tuscaloosa, Alabama, is shadow rated Aa3, the same as at securitization. The top three conduit loans represent 17.7% of the outstanding pool balance. The largest conduit loan is the Bank of America Tower Loan at $74.5 million, 9.2% and secured by a 661,000 square foot Class A office building and an adjacent 36,000 square foot annex building located in Jacksonville, Florida. The property is 86.1% occupied, compared to 79.5% at securitization. The property is anchored by Bank of America Corporation. Performance has been impacted by a decline in market rents and increased expenses. Moody's LTV is 91.6%, compared to 89.4% at securitization. The second largest conduit loan is the Westland Mall Loan at $58.8 million, 5.8%, is secured by the borrower's interest in a 835,000 square foot regional mall located approximately five miles north of the Miami International Airport in Hialeah, Florida. The center is anchored by Burdines, Sears and J.C. Penney. The center is 100% occupied, compared to 95% at securitization. Financial performance has been impacted by flat revenues and increased operating expenses. The loan sponsor is an affiliate of the Mills Corporation. The borrower's reported 2005 net operating income is 6.5% lower than Moody's original expectations. Moody's LTV is 87.9%, compared to 77.7% at securitization. The third largest conduit loan is the ARC Portfolio I Loan at $31.6 million, 3.1%, which is secured by a portfolio of seven manufactured housing communities totaling 1,500 pads. The properties range from 100 to 490 pads and are located in seven states. At securitization the portfolio was securitized by eight properties but one property has been released through defeasance. Financial performance has improved due to increased revenues, stable expenses and loan amortization. The loan sponsor is Affordable Residential Communities Inc., LLC, a REIT that specializes in manufactured housing communities. Moody's LTV is 75.5%, compared to 95.1% at securitization. The pool's collateral is a mix of retail, multifamily, office and mixed use, U.S. Government securities and industrial and self storage. The collateral properties are located in 27 states. The highest state concentrations are Florida, New York, California, Connecticut and North Carolina. All of the loans are fixed rate. WASHINGTON MUTUAL: Good Performance Cues Moody's Rating Upgrades ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of six classes of Washington Mutual Multifamily Mortgage 2001-1 Limited, Secured Notes, Series 2001-1 as: -- Class A-1, $170,162,574, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class A-2, $14,666,000, Fixed, affirmed at Aaa -- Class A-3, $17,808,000, Fixed, affirmed at Aaa -- Class A-4, $4,191,900, Fixed, affirmed at Aaa -- Class A-5, $3,142,000, Fixed, affirmed at Aaa -- Class B-1, $9,428,000, Fixed, upgraded to Aaa from Aa3 -- Class B-2, $4,191,000, Fixed, upgraded to Aaa from A3 -- Class B-3, $6,285,000, Fixed, upgraded to Aa3 from Baa2 -- Class B-4, $9,428,000, Fixed, upgraded to Baa2 from Ba2 -- Class B-5, $4,190,000, Fixed, upgraded to Ba1 from Ba3 As of the Nov. 20, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 37.9% to $260.3 million from $419 million at securitization. The Certificates are collateralized by 187 loans secured by multifamily properties. The loans range in size from less than 0.2% to 3.6% of the pool, with the top 10 loans representing 21.0% of the pool. The pool has not experienced any losses since securitization and currently there are no loans in special servicing. Seventeen loans, including two of the top three loans, are on the master servicer's watchlist. The watchlisted loans represent 12.6% of the pool. Moody's was provided with year-end 2005 operating results for 86.5% of the pool. Moody's weighted average loan to value ratio is 72.7%, compared to 77.4% at last review in February 2005 and compared to 86.4% at securitization. Moody's is upgrading Classes B-1, B-2, B-3, B-4 and B-5 due to increased subordination levels and improved overall pool performance. Classes A-4, A-5, B-1, B-2 and B-3 were upgraded on Dec. 8, 2006 based on a Q tool based portfolio review. The top three loans represent 9.1% of the outstanding pool balance. The largest loan is the Victoria Square Apartments Loan, which is secured by a 96-unit multifamily property located in Milpitas, California. The property is 94.8% occupied, compared to 100% at last review. Performance has declined significantly since securitization due to weak market conditions. Moody's LTV is in excess of 100%, similar to last review. The second largest loan is the Royal Fir Apartments Loan, which is secured by a 186-unit multifamily property located in Kent, Washington. The property is 90.5% occupied, compared to 97.9% at last review. Moody's LTV is 92.9%, compared to 98.2% at last review. The third largest loan is the Lincoln Terrace Loan, which is secured by a 170-unit multifamily property located in Anaheim, California. The property is 92.9% occupied, compared to 97% at last review. Moody's LTV is 49.2%, compared to 54.1% at last review. The pool's collateral consists entirely of multifamily properties. The collateral properties are located in five states. The highest state concentrations are California, Washington and Oregon. There are 146 loans, representing approximately 70.5% of the current pool balance, that are full recourse obligations to the related borrower or affiliate. WASTECH INC: Posts $131,584 Net Loss in Quarter Ended Sept. 30 -------------------------------------------------------------- Wastech Inc. reported a $131,584 net loss on $9,000 of revenues for the quarter ended Sept. 30, 2006, compared with $143,013 of net income for the same period in 2005. The company had no revenues in the third quarter of 2005. The $9,000 revenues in the current quarter represent management fee income of $3,000 per month that the company receives from an entity affiliated with the company's chairman Richard D. Tuorto Sr. The net loss is mainly due to increased interest expense resulting from a non-interest bearing note in the principal amount of $4,000,000 which is due and payable on April 12, 2009 issued by the company's wholly-owned subsidiary, Wastech of West Virginia Inc. The net income in the third quarter of 2005 is mainly due to an unusual gain of $241,809 from the cancellation of shares previously issued for compensation and accrued expenses. At Sept. 30, 2006, the company's consolidated balance sheet showed $5.9 million in total assets, $4.8 million in total liabilities, and $1.1 million in total stockholders' equity. The company's balance sheet at Sept. 30, 2006, also showed strained liquidity with $32.500 in total current assets available to pay $1.6 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2006, are available fro free at http://researcharchives.com/t/s?173c Going Concern Doubt Turner Jones & Associates LLC, expressed substantial doubt about Wastech 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 company pointed that the company has ceased all operating activities and that without substantial input of equity capital, the company will not be able to resume meaningful revenue-producing activities. About Wastech Inc. Wastech Inc (OTC:WTCH) was formerly known as Corporate Vision Inc. In April 2006, the company purchased from H.M. Flood Business Trust Ltd. the rights to approximately 44,000 acres of subsurface coal, coal bed methane and all other mineral rights in various counties in West Virginia, as well as 5,898.49 acres of oil and gas reserves in Fayette County, West Virginia. Due to the company's failure to comply with the terms of the assignment agreement, H.M. Flood Business Trust Ltd. filed on Oct. 10, 2006 a lawsuit against Wastech West Virginia Inc. in Kanawha County, West Virginia, to recover the payment of $980,000 due on Oct. 7, 2006, as well as the amount due on the $4,000,000 note due on April 13, 2009. WILLIAM LYON: Moody's Holds Corporate Family Rating at B1 --------------------------------------------------------- Moody's Investors Service affirmed all of the ratings of William Lyon Homes, Inc., including the company's B1 corporate family rating and B3 senior notes ratings. The ratings outlook is stable. The stable ratings outlook is based on Moody's expectation that the company will continue to manage its inventory effectively, thereby improving its cash flow generation, and use the excess cash flow to pay down debt and lower its interest burden. The affirmation reflects the company's good inventory management and improvement in cash flow from operations. William Lyon's inventories grew a modest 3.8% in the third quarter of 2006 to $1.65 billion, a rate that was lower than for the majority of the other homebuilders. William Lyon's CFO for the LTM period ended 9/30/2006 was $144 million, making the company one of only six that was cash flow positive for that reporting period. Although CFO was a negative $20 million for the third quarter of 2006, this represented a significant improvement from the negative $138 million generated in the third quarter of 2005. At the same time, the ratings are constrained by declining interest coverage, geographic concentration, long land supply, and the continued presence of secured debt, albeit reduced, in the capital structure. The company's interest coverage for the LTM period ended Sept. 30, 2006 was 4.3x, down from 5.6x at FYE 2005. In terms of geographic concentration, the company is heavily concentrated in California as home closings for nine months ended in Sept. 30, 2006 represented around 62% of the company's total home closings. In terms of years of lot inventory, the company's supply is greater than seven years, which maps to a B rating category. The company's secured debt constituted 36% of total debt and 21% of the capital structure. These ratings for William Lyon Homes, Inc. were affirmed: -- Corporate family rating, affirmed at B1; -- Probability of Default rating affirmed at B1; -- $150 million Senior Notes Due 12/15/2012, affirmed at B3; -- $247 million Senior Notes due 4/01/2013, affirmed at B3; and, -- $150 million Senior Notes due 2/15/2014, affirmed at B3. Begun in 1956 and headquartered in Newport Beach, California, William Lyon Homes designs, builds, and sells single family detached and attached homes in California, Arizona and Nevada. Consolidated homebuilding revenues for the last twelve months ended Sept. 30, 2006 were $1.8 billion. WINDSTREAM CORP: Moody's Affirms Corporate Family Rating at Ba2 ---------------------------------------------------------------- Moody's Investors Service affirmed Windstream Corporation's Ba2 corporate family on the reported split-off of its directory publishing business to affiliates of Welsh, Carson, Anderson and Stowe. As a result of the proposed transaction, Windstream expects to retire up to $250 million in debt and repurchase 19.6 million of Windstream common stock valued at approximately $275 million. Moody's believes that the company's plans to split-off its directory publishing assets will not have a material impact on the company's credit metrics. Although the directory business generated $67 million of annual EBITDA, it comprises about 4% of the company's pro forma full year EBITDA. In addition, the rating agency believes that the cash flow impact of the transaction will be insignificant after factoring in the cash interest and dividend savings as a result of the proposed debt retirement and repurchase of Windstream equity. Moody's affirmed these ratings: * Windstream Corporation -- Corporate Family Rating at Ba2 -- Probability of Default Rating at Ba2 -- Senior secured revolving credit facility Affirmed Ba1, LGD2, 24% -- Senior secured term loan tranche A Affirmed Ba1, LGD2, 24% -- Senior secured term loan tranche B Affirmed Ba1, LGD2 24% -- 8 1/8% senior unsecured notes due 2013 Affirmed Ba3, LGD5, 79% -- 8 5/8% senior unsecured notes due 2016 Affirmed Ba3, LGD5, 79% * Windstream Holdings of the Midwest, Inc -- 6 _% Notes due 2028 Affirmed Ba1, LGD2, 24% * Windstream Georgia Communications Corp. -- 6 & 1/2% Notes due 2013 Affirmed Baa2, LGD1, 0% * Valor Telecommunications Enterprises, LLC -- 7_% Senior Notes due 2015 Affirmed Ba1, LGD2, 24% Outlook is stable. The Ba2 corporate family rating reflects Windstream's high debt levels and the expected downward pressure on wireline revenue and cash flow growth in the future. Due to the company's high dividend payments, cash flows available for debt reduction are likely to remain below 3% in the next two years, and Moody's does not expect debt to decline below 3.3x EBITDA over the ratings horizon. The ratings and the outlook benefit from the stability of the company's operations, and management's track record of delivering on expected results. Windstream, headquartered in Little Rock, Arizona, is an ILEC formed via merger of Alltel's wireline operations and Valor. The company provides telecommunications services in 16 states with approximately 3.3 million access lines in service and about $3.2 billion in annual revenues. WINSTON HOTELS: Moody's Lifts Preferred Stock Rating to B2 from B3 ------------------------------------------------------------------ Moody's Investors Service raised the preferred stock rating of Winston Hotels, Inc. to B2, from B3, and revised its rating outlook to stable. The rating change reflects the success Winston Hotels has enjoyed in generating consistent earnings growth and flag diversity, as well as increased coverages. Moody's stated that: -- Winston has achieved RevPAR growth of 11% from 3Q05 to 3Q06; -- increased size and diversification through modest growth in its gross asset base from $665 million at year-end 2005 to $692 million at 3Q06, and has plans to acquire more assets in 2007; -- significant improvement in geographic concentration from 70% of rooms in the Mid-Atlantic/Southeast to a projected 50% by YE07; and, -- stable levels of total debt and secured debt. In addition, occupancy has improved to 73% at 3Q06, from 71% at year-end 2005. Same store operating margins improved 100 bps to 44% from the same period last year. Offsetting these positives are significant brand concentrations: Hilton and Marriott have approximately 80% of all rooms. Furthermore, 39 of Winston's 53 hotels are managed by Alliance Hospitality. Moody's noted that Winston Hotels' fixed charge coverage is good for its peer group at 2.8x YTD and has remained in the 2.2x to 2.8x range for the past four years. Moody's rating action indicates that Winston Hotels has shown resilience in a post-September 11 lodging environment, which created substantial challenges for all hotel sectors, including the mid-scale and limited-service hotel segments on which Winston Hotels focuses. Although Winston Hotels owns some high-end limited-service, extended-stay and full-service hotels, the vast majority of the REIT's properties are in the mid-scale non-food-and-beverage category, and 70% are located in the Mid-Atlantic/Southeast, with a concentration in North Carolina, Georgia, Texas and Florida. Hilton comprises 41% and Marriott comprises 38% of franchised rooms, with Choice and InterContinental being the other major franchisors. Moody's stated that Winston Hotels had 13 hotel mezzanine loans totaling $62 million at 3Q06, some of which is concentrated. The REIT is in the process of expanding this lending program through a joint venture with GE Capital, in which GE provides the first mortgages and Winston provides the mezzanine piece. This business has performed well so far, but it remains untested and is an important risk consideration. An upgrade would result from growth in assets to around $2 billion, with further geographic diversification such that closer to 50% of the properties are concentrated in the Mid-Atlantic/Southeast and increased brand diversification with less than two-thirds of the portfolio comprised of the top two brands. A downgrade would result from stalled asset or RevPAR growth, a decline in fixed charge coverage to one consistently in the low 2x range, or from asset quality problems in its mezzanine loan portfolio. The last rating action for Winston took place on Oct. 11, 2005 when Moody's affirmed the preferred stock rating of Winston at B3 and changed the outlook to positive. This rating has been raised: * Winston Hotels, Inc. -- preferred stock to B2, from B3. Winston Hotels, Inc. is a lodging REIT headquartered in Raleigh, North Carolina, USA. At Sept. 30, 2006, Winston Hotels had total assets of $553 million, and equity of $258 million. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($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 (620) 139 42 Blount International BLT (107) 441 121 CableVision System CVC (5,400) 9,776 (400) Centennial Comm CYCL (1,062) 1,434 33 Charter Comm-a CHTR (5,632) 15,198 (999) 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 Delphi Corp DPHIQ (7,756) 17,514 2,250 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) 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 Guidance Software GUID (2) 22 (1) Hansen Medical I 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 Immunomedics Inc IMMU (21) 50 21 Incyte Corp INCY (66) 465 295 Indevus Pharma IDEV (124) 92 55 Inergy Holdings NRGP (19) 1,647 (12) Investools Inc. IEDU (64) 120 (79) IPG Photonics IPGP (31) 115 24 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) Riviera Holdings RIV (29) 222 10 Rural Cellular RCCC (540) 1,410 164 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. 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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 ***