/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070112.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 12, 2007, Vol. 11, No. 10 Headlines 311 HOLDING: Case Summary & 10 Largest Unsecured Creditors 750 EAST: Case Summary & Largest Unsecured Creditor ACTUANT CORP: Earns $25.1 Million in First Quarter Ended Nov. 30 ADLER COLEMAN: Trustee Discloses Undelivered and Uncashed Claims ADVANCED MARKETING: Hachette Book Objects to DIP Financing Plea ADVANCED MEDICAL: IntraLase Deal Cues Moody's Ratings Review AHERN RENTALS: Moody's Holds Corporate Family Rating at B2 AHERN RENTALS: S&P Lifts Corporate Credit Rating to B+ from B AIRTRAN AIRWAYS: Commences Exchange Offer for Midwest Air's Shares ALGOMA STEEL: DBRS Affirms Issuer Rating at BB (low) ALLIANCE ATLANTIS: Planned Buyout Cues S&P's Negative CreditWatch ALLIED HOLDINGS: 3 Parties Oppose Appointment of Equity Committee ALLIED HOLDINGS: Ricardo Malave Allowed to Pursue State Court Suit ALLIS-CHALMERS: S&P Lifts Corporate Credit Rating to B from B- AMCAST INDUSTRIAL: Files Amended Plan and Disclosure Statement AMERICAN CAMSHAFT: U.S. Trustee Appoints 7-Member Creditors' Panel AMERICAN CAMSHAFT: Meeting of Creditors Scheduled on January 16 AMERIQUEST MORTGAGE: Fitch Junks Rating on Class M4 Debt AZTAR CORP: Moody's Holds Rating on $475 Mil. Senior Notes at Ba3 BALDOR ELECTRIC: To Make $900 Million Notes and Stock Offerings BALDOR ELECTRIC: Moody's Places Corporate Family Rating at B1 CALPINE CORP: Wants Holland & Hart as Special Counsel CALPINE CORP: Wants to Hire AP Services as Crisis Managers CANWEST MEDIAWORKS: Plan Acquisition Cues DBRS to Review Ratings CATHOLIC CHURCH: Spokane, et al., File Joint Reorganization Plan CENTRAL GARDEN: Compensation Committee OKs $1.28 Mil. Execs. Bonus CDC MORTGAGE: Fitch Junks Rating on Class B1 and B2 Certificates CHAPARRAL ENERGY: Commences Private Placement of $275 Mil. Notes CHAPARRAL ENERGY: Moody's Puts Caa1 Rating on $275MM Notes Offer CHAPARRAL ENERGY: S&P Junks Rating on $275 Million Senior Notes COLLINS & AIKMAN: Closing Five Plants in North America by March COLLINS & AIKMAN: Wants Lowell Lease Claims Agreement Approved CONSOLIDATED CONTAINER: William Bell Resigns as Holdings' Director CONSTELLATION BRANDS: Earns $107.8 Million in Qtr. Ended Nov. 30 CREATIVE FOODS: Section 341(a) Meeting Slated for February 23 CWABS ASSET: Moody's Rates Class B Certificates at Ba1 DAIMLERCHRYSLER AG: CEO Expresses Support for Chrysler Group Chief DANA CORP: Ct. Approves Pact Allowing Jan. Pension Funding Payment DANA CORP: Ct. Sets Deadlines for Sec. 1113/1114 Scheduling Plan DELPHI CORP: Wants Excl. Plan-Filing Period Extended to July 31 DELPHI CORPORATION: Retains W.Y. Campbell to Sell Mounts Business DELPHI CORP: Highland Proposes Alternative Framework Agreements DELTA AIR: In Talks with Northwest Airlines on Possible Merger DURA AUTOMOTIVE: Section 341(a) Meeting Adjourned Sine Die DURA AUTOMOTIVE: Inks Pact with American Electric and NITCo EASTMAN KODAK: Closing Logistics and Warehousing Facilities EASTMAN KODAK: Fitch Holds Rating on Senior Unsecured Debt at B- ED ROGERS: Case Summary & Eight Largest Unsecured Creditors ELEUTERIO SILES: Voluntary Chapter 11 Case Summary EMMIS COMMUNICATIONS: Earns $3.1 Million in Quarter Ended Nov. 30 EMTA HOLDINGS: Acquires Dyson Properties for $2.1 Million FIRST FRANKLIN: S&P Cuts Rating on Class M-3 Loan to B from BBB FIRST FRANKLIN: S&P Holds Rating on Class B-1 Certs. at BB+ FONIX CORP: Posts $10.8 Mil. Net Loss in 3rd Qtr. Ended Sept. 30 FORD MOTOR: CEO Alan Mulally Considers Selling Jaguar Brand FORUM HEALTH: S&P Cuts Rating on Mahoning County Bonds to BB FREEDOM PIPELINE: Involuntary Chapter 11 Case Summary FRESH DEL MONTE: S&P Pares Corporate Credit Rating to BB- from BB GLOBAL GEOPHYSICAL: Moody's Junks Rating on $40 Mil. Senior Loan GOLD KIST: Pilgrim's Pride Completes Acquisition GOLDEN KNIGHTS: Case Summary & 2 Largest Unsecured Creditors GOODYEAR TIRE: Moody's Holds Corporate Family Rating at B1 GP INVESTMENTS: Fitch Rates Proposed $150 Million Notes at B GSAA HOME: Moody's Rates Class I-B-1 Certificates at Ba1 IRON MOUNTAIN: S&P Rates Proposed EUR175 Mil. Senior Notes at B JP MORGAN: Fitch Holds Low-B Ratings on 4 Certificate Classes KARA HOMES: Court Approves Sale of Four New Jersey Projects KNOLOGY INC: PrairieWave Buyout Cues Moody's Developing Outlook KNOLOGY INC: Stock Purchase Cues S&P to Hold Credit Rating at B MALDEN MILLS: Organizational Meeting Scheduled on January 19 MALDEN MILLS: Chrysalis Expresses Continued Interest in Assets MARCAL PAPER: Brings-In Cole Schotz as Bankruptcy Counsel MARCAL PAPER: U.S. Trustee Picks Seven-Member Creditors Committee MARIA STAUB: Voluntary Chapter 11 Case Summary MARINA OF NORTH CAROLINA: Involuntary Chapter 11 Case Summary MASTR ASSET: Moody's Rates Class M-11 Certificates at Ba2 MCJUNKIN CORP: Moody's Places Corporate Family Rating at B1 MCJUNKIN CORP: S&P Places Corporate Credit Rating at B+ MEDINA FORWARDING: Involuntary Chapter 11 Case Summary NASDAQ STOCK: Extends Final Offers for LSE Until January 26 NATURADE INC: Court Says Disclosure Statement is Adequate NAVISTAR INT'L: Fitch Rates Proposed $1.3 Billion Facility at BB- NEFF CORP: Good Performance Prompts S&P's Stable Outlook NEWPAGE CORP: Good Financial Profile Cues S&P's Positive Outlook NICHOLAS-APPLEGATE: Moody's Junks Rating on $10 Mil. Class D Notes NORTHWEST AIRLINES: In Talks with Delta Air on Possible Merger NORTHWEST AIRLINES: Seeks Court's Approval on New IAM Agreement OWENS CORNING: Judge Fitzgerald Okays $2 Mil. Louisiana Accord OWENS CORNING: Bemis Want $939,000 Admin. Claim Held as Valid OWNIT MORTGAGE: Section 341(a) Meeting Slated for January 23 OWNIT MORTGAGE: Wants to Walk Away from Unexpired Leases PERFORMANCE TRANSPORTATION: Can Close Curtis Bay Terminal PERFORMANCE TRANSPORTATION: Wants Union's Claim Set as Prepetition PILGRIM'S PRIDE: Completes Acquisition of Gold Kist PILGRIM'S PRIDE: Plans Offering of $450 Million Unsecured Notes PIMA COUNTY: S&P Pares Rating on Revenue Bonds to BB from BB+ PROPEX INC: S&P Pares Corporate Credit Rating to B- from B+ RAMBO IMAGING: Case Summary & Largest Unsecured Creditor REDPRAIRIE CORP: S&P Holds Corporate Credit Rating at B RIGEL CORP: Court Approves $6.4 Mil. Asset Sale to WKS Restaurant ROGERS COMMS: Moody's Lifts Corp. Family Rating to Ba1 from Ba2 RONALD JOHNSON: Voluntary Chapter 11 Case Summary ROYAL YACHT: Wants Buddy Ford as Bankruptcy Attorney ROYAL YACHT: Section 341(a) Meeting Scheduled on January 24 SANKATY HIGH: Fitch Holds Low-B Rating on $33.5 Million of Notes STAGE ONE: Case Summary & 17 Largest Unsecured Creditors STALLION OILFIELD: Moody's Places Corporate Family Rating at B2 STRUCTURED ADJUSTABLE: Fitch Junks Rating on Class B5 Certificates STRUCTURED ASSET: Fitch Junks Rating on Class B4 Certificates STRUCTURED ASSET: Expected Losses Prompt Fitch's Ratings Downgrade STT LAND: U.S. Trustee will Meet Creditors on January 31 SUPERVALU INC: Earns $113 Million in Fiscal Quarter Ended Dec. 2 TERWIN MORTGAGE: Fitch Junks Rating on Class B-5 Certificates TOTES ISOTONER: S&P Places Corporate Credit Rating at B TOWER AUTOMOTIVE: Equity Rights Offering Terminated TRANSDIGM GROUP: Moody's Places B1 Corp. Family Rating on Review UNITED SURGICAL: S&P Pares Corp. Credit Rating to B+ from BB- UNION ACCEPTANCE: Court Enters Final Decree & Closes Chap. 11 Case UNIVERSAL BEHAVIORAL: Involuntary Chapter 11 Case Summary VAXGEN INC: James Panek Replaces Lance Gordon as President and CEO VESCOR DEV'T: Files Amended Disclosure Statement on Chap. 11 Plan WEEKS LANDING: Hires Gerard McHale as Chief Restructuring Officer WERNER LADDER: Judge Carey Appoints Warren Smith as Fee Auditor WERNER LADDER: Court Approves Mercer as Human Resources Consultant * BOOK REVIEW: Working Together: 12 Principles for Achieving Excellence in Managing Projects, Teams, and Organizations ********* 311 HOLDING: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: 311 Holding Co., Inc. 940 Pan Drive Hope Mills, NC 28348 Bankruptcy Case No.: 07-50035 Debtor affiliate filing separate chapter 11 petitions: Entity Case No. ------ -------- The New 311 Motorspeedway, Inc. 07-50034 Chapter 11 Petition Date: January 9, 2007 Court: Middle District of North Carolina (Winston-Salem) Judge: Thomas W. Waldrep Debtors' Counsel: Gene B. Tarr, Esq. Blanco Tackabery Combs & Matamoros, P.A. 110 South Stratford Road, Suite 500 P.O. Drawer 25008 Winston-Salem, NC 27114-5008 Tel: (336) 761-1250 Estimated Assets Estimated Debts ---------------- --------------- 311 Holding Co., Inc. $1 Million to $100,000 to $100 Million $1 Million The New 311 Motorspeedway, $10,000 to $100,000 $100,000 to Inc. $1 Million List of 10 Largest Unsecured Creditors of: -- 311 Holding Co., Inc. -- The New 311 Motorspeedway, Inc. Entity Nature of Claim Claim Amount ------ --------------- ------------ Goodyear Tire & Rubber Co. $7,035 c/o Larry Robinson Enterprises Inc. P.O. Box 142758 Fayetteville, GA 30214 Clear Channel Trade debt $5,670 P.O. Box 402520 Atlanta, GA 30384 Contingency Connection Trade debt $1,800 21585 Campground Road Bristol, VA 24202 WBRF-FM Trade debt $728 News & Record Trade debt $633 The Messenger Trade debt $522 WBLO-AM Sports Talk Trade debt $400 Racing News Trade debt $300 Whee/WMVA/WYAT Trade debt $264 Full House Trade debt $100 750 EAST: Case Summary & Largest Unsecured Creditor --------------------------------------------------- Debtor: 750 East Thunderbird Road Corp. 750 East Thunderbird Road, Suite 4 Phoenix, AZ 85022 Bankruptcy Case No.: 07-00089 Chapter 11 Petition Date: January 9, 2007 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Allan D. Newdelman, Esq. Allan D. Newdelman PC 80 East Columbus Avenue Phoenix, AZ 85012 Tel: (602) 264-4550 Fax: (602) 277-0144 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lynn Pirie Loan $180,000 14835 North 15th Avenue Phoenix, AZ 85023 ACTUANT CORP: Earns $25.1 Million in First Quarter Ended Nov. 30 ---------------------------------------------------------------- Actuant Corporation reported first quarter fiscal 2007 net earnings of $25.1 million, which compares favorably with net earnings of $21.3 million for the first quarter of fiscal 2006. First quarter sales increased to $343 million from $284 million in the prior year, driven by strong base business growth and approximately $25 million of sales from acquired businesses. Excluding foreign currency exchange rate changes and sales from acquired businesses, first quarter fiscal 2007 sales increased approximately 9% from the comparable prior year period. This increase was driven by growth in all four reportable segments, including strong growth in the Industrial and Actuation Systems segments. At Nov. 30, 2006, the company's balance sheet showed $1.2 billion in total assets, $845.8 million in total liabilities, and $397 million in total stockholders' equity. Net debt was $455 million, unchanged from the beginning of the quarter. Consistent with prior years, Actuant's first quarter cash flow was impacted by seasonal trends including working capital growth and employee incentive compensation payments for the prior year. Robert C. Arzbaecher, president and chief executive officer of Actuant, commented, "Actuant is off to a solid start in fiscal 2007 with 9% core sales growth, which was slightly ahead of our expectations. Additionally, first quarter EPS increased approximately 16% from last year, driven by higher sales and the benefit of prior year acquisitions." Mr. Arzbaecher continued, "We were especially pleased with the performance of our Industrial segment, which generated strong increases in both core sales and profit margins. Our overall profit margins were down year-over-year as a result of unfavorable sales mix and lower Actuation System and Electrical segment profitability. Our previously announced European Electrical restructuring activities continue on plan, although there was limited financial impact this quarter." He added, "We are also pleased with our acquisition progress, both in integrating previously announced acquisitions and in identifying new acquisition opportunities. We've had success in supplementing our core revenue growth with acquisitions, and this combination has helped Actuant double its sales over the last three years." Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?1856 Headquartered in Butler, Wisconsin, Actuant Corp. (NYSE: ATU) -- http://www.actuant.com/-- is a diversified industrial company with operations in more than 30 countries, including Austria, Hungary, Poland, Italy, Spain, the Netherlands, France, Russia, Turkey, Germany, and the United Kingdom. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools and supplies. Since its creation through a spin-off in 2000, Actuant has grown its sales from US$482 million to over US$1 billion and its market capitalization from US$113 million to over US$1.4 billion. The company employs a workforce of more than 6,300 worldwide. * * * As reported in the Troubled Company Reporter-Europe on Oct. 24, Moody's Investors Service affirmed its Ba2 corporate family rating for Actuant Corp. ADLER COLEMAN: Trustee Discloses Undelivered and Uncashed Claims ---------------------------------------------------------------- Edwin B. Mishkin, Trustee for Adler, Coleman Clearing Corp., has attempted to transfer customer property in the form of securities or cash to customers and to make general creditor distributions to these individuals and entities, but those transfers and distributions have either been returned as undeliverable or were never cashed: Abdullah Al-Dossary Acker Wolman Securities Corp. Advance Consulting Services, Inc. Aimee Potoker Ash and Co., Inc. AT&T Easylink Services AT&T Master Pension Trust Automoatic Data Processing Axis of New York Bankers Trust Services Tennessee Barnesville Ltd. Barbara DeAngelo Benton & Co. Berkshire Securities Corp. Betty Joseph Revocable Trust Biltmore Securities Inc. B. Laterman Co. BRG Securities Corp. Bridge Market Data, Inc. Charles Zalis Christopher Wheaton Claribel Romero C. Minnaar Ltd. Coast Options, Inc. Cohen, Cohn, Duffy & Cranmer Cross Temps Inc. CT Corporation System David Cotcher David Laskey David Ostman Denise Washington Domenick Caria Donald Doty Dudley Devine EHG National Health Services Elizabeth Guilfucci Empire Executive Car & Limousine Service Inc. Estere Kunis Eugenia Gitelmaker Eugenia Tropena Executive Conference Call Services FLA Overseas Partners, LP Forensic Accountants, Inc. Gary Posner Gayle P. Williams G.E.G.U. Inc. d/b/a Marino's Restaurant Georgios and Maria Kapsalls GHM Inc. Gilda R. Dulce Greenway Capital Corp. Harold Levine Harry Argeson Hasbrouck, Thistle & Co. Helix Securities Horace Bryant Irene Salamon Jamie Kessler Janet Antioco Joanne Fadalici Joel Jacobs John Joyce John L. Nappi, Esq. John J. Pallace Joseph Heard JP Morgan Services, Inc. Justin Magruder Karen Schiff Kevin Glazier Khalid Manely Lancaster Leeds & Co., Inc. Lawrence Goldberg Lek Securities Corp. Leona Seidlitz Liberatore Services Lisa Ann Donoso Luv-A-Cup Coffee Service, Ltd. MA Schapiro & Co. Mactaren Securities Inc. Margot Solodartillis Mark Kalas Mark Sweeney Associates, Inc. Mark Weber Marvin Nelson Melvin Securities Corp. Merrill Lynch Specialists, Inc. Metrocall Inc. Michael Lauletti Michael Poiselli Michael S. Smith Mike Gelles Milan Inter Corporation d/b/a Pierino Monroe Parker Securities, Inc. Muriel M. Newman Murphy, Marselles, Smith, Nammack Inc. National Financial Services Need It Now Delivery Service Norman and Patricia Long Pacific Capital Management Patrick O'Rourke Poco Inc. Productivity Systems, Inc. R. Adrian & Co. Raymond Kralovic Rita Jacobs Robert Foise IRA Account Robert G. Terranova Rush-Presbyterian St. Luke's Scholl & Levin Corp. Securities Industry Daily Shared Technologies Inc. Sharia Kordes Signal House Corp. Spry Communications, Inc. Stern Bros. Steven Anzalone Strategic Risk Management Symbola Corp. Tele-Pro Corporation Thomas Pearce Vector Index Investors Veera Capital Verizon Communications Victor H. King William Giarusso Yenith Castellano Yigal Schwartzberg Yorkship Business Supply Zoom Messenger Service To receive property or distribution from the Trustee, customers and creditors must contact Maria Ostrovsky at Cleary Gotilieb, One Liberty Plaza, in New York City, and provide her with current address and other contact information until Jan. 30, 2007. If information is not provided to Cleary Gotlieb within the given period, customer property or general creditor distributions owed to such individuals or entities will be treated as unclaimed property. Adler, Coleman Clearing Corp. is a clearing house. Small brokerage firms "clear" their transactions (process their trades and other paperwork) through a "clearing house". The company filed for Chapter 11 protection in February 1995 after the closure of Hanover Sterling & Co. due to the exhaustion of Adler Coleman's net capital. Hanover is one of the micro-cap brokerage firms, which Adler clears for. ADVANCED MARKETING: Hachette Book Objects to DIP Financing Plea --------------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware authorized Advanced Marketing Services, Inc., and its debtor-affiliates, on an interim basis, to dip their hands into the DIP financing facility arranged by Wells Fargo Foothill, the Troubled Company Reporter disclosed on Jan. 10, 2007. The Debtors had sought the Court's authority to obtain from Foothill and the Senior Lenders, though the DIP Loan Facility, cash advances and other extensions of credit in an aggregate principal amount of up to $75,000,000. Hachette & Quarto Object Hachette Book Group USA, Inc., formerly known as Time Warner Book Group, has been a supplier of books to Advanced Marketing Services, Inc., over the past 20 years. The Debtors have listed Hachette Book as their fourth largest unsecured creditor, holding an unsecured claim for $22,569,624. Jeffrey A. Marks, Esq., at Squire, Sanders & Dempsey L.L.P, in Cincinnati, Ohio, says that during the 45 days before the Debtors filed for bankruptcy, Hachette Book sold books to AMS for which it has not yet been paid. Accordingly, Hachette Book has the right to reclaim the books sold to AMS during that period under Section 546(c) of the Bankruptcy Code, and to an administrative expense claim for those books sold to AMS during the 20-day period before the Petition Date under Section 503(b)(9). To that end, on Dec. 29, 2006, Hachette Book sent an initial reclamation demand to Mark D. Collins, Esq. of Richards, Layton & Finger, P.A., the Debtors' proposed local counsel, demanding reclamation and reserving its rights to supplement and amend its reclamation demand upon further review of its books and records. Hachette Book complain that pursuant to the DIP Loan Facility, the Borrowers have obligated themselves, via an affirmative covenant in the DIP Loan Agreement, to comply with the Qualified Transaction Timeline providing, among other things, that: (i) within 10 days after the Petition Date, the Borrowers must file a motion to sell all or substantially all of their assets, or refinance or recapitalize so as to pay the Lenders in full; and (ii) within 50 days after filing the Sale Motion, the Borrowers must have received cash proceeds from a sale or other transaction sufficient to pay the Lenders in full. Mr. Marks notes that this obligation under the DIP Loan Facility will fundamentally and irrevocably dictate the course of conduct of the Debtors' bankruptcy case. However, the Court, creditors and other parties-in-interest simply have not been provided sufficient information or opportunity to determine whether a sale or other transaction, under the time frame stipulated, is an appropriate resolution of the bankruptcy case, and is otherwise in the best interests of the Debtors' estate and creditors. Mr. Marks also asserts that: (a) The request fails to specify a proposed maximum borrowing for the period before the Final Hearing; (b) The proposed time frame within which to investigate and, if appropriate, challenge, the position of the Lender/Senior Lender is too short and is overbroad in certain respects; (c) Certain provisions relating to the Professional Fee Carve- Out Expenses are unclear, specifically, the distinction between the $2,000,000 carve-out that is proposed to be in effect before a Payoff Event and the $3,000,000 carve-out after a Payoff Event; and (d) The procedure for approval of a Non-Material Amendment is inappropriate to the extent that it permits an abbreviated approval process for an amendment that may in fact be material. The definition of Non-Material Amendment encompasses provisions as any new, subsequent, modified, restated or amended covenants or conditions acceptable or required by the Lenders. The covenants or conditions could very well include material provisions. Accordingly, Hachette Book asks the Court to deny the Debtors' request. Quarto, Inc.; Quarto Publishing, PLC; Book Sales, Inc.; Creative Publishing International, Inc.; Walter Foster, Inc.; and Design Eye Limited, agree with Hachette's arguments. The Quarto Entities assert claims exceeding $3,200,000 against the Debtors. The Quarto Entities also contend that the $2,400,000 extension fee paid on July 31, 2006, to the Lenders under the Debtors' Loan and Security Agreement with Wells Fargo Foothill, Inc., as well as the $750,000 closing fee under the DIP Facility are excessive and should be subject to close examination and disallowance. The Quarto Entities are represented in the Debtors' cases by Victor A. Sahn, Esq., at Sulmeyer Kupetz, in Los Angeles, California. About Advanced Marketing Based in San Diego, California, Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., and Alexandra B. Feldman, Esq., at O'Melveny & Myers, LLP, represent the Debtors. Chun I. Jang, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Apr. 28, 2007. (Advanced Marketing Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED MEDICAL: IntraLase Deal Cues Moody's Ratings Review ------------------------------------------------------------ Moody's Investors Service placed the ratings of Advanced Medical Optics Inc. on review for possible downgrade after the company's disclosure that it has entered into a definitive agreement to acquire IntraLase Corp. in an all-debt financing for approximately $808 million, which translates to $25 per share of IntraLase stock. The proposed transaction is outside of Moody's expectations that was outlined in its last rating action in June 2006. Closing of the transaction is expected to occur in the second quarter of 2007 and will be subject to the receipt of IntraLase stockholder approval as well as regulatory approvals and other customary closing conditions. The Boards of Directors of both companies have approved the transaction. AMO is currently in the process of arranging a final financing package in order to close the transaction. The review for possible downgrade is triggered by the significance of the intended all-debt financing of the acquisition which would pressure on AMO's credit metrics resulting in the expectation that the combined entity's pro forma lease-adjusted debt to EBITDA will rise to above 7.x which is considerably higher than AMO's current lease-adjusted debt to EBITDA of 4.3x for the twelve months ended Sept. 30, 2006. For the same period, EBIT to interest expense will likely tighten which would put pressure on the outcome under the Medical Device Rating Methodology. Additionally, the proposed transaction will not be cash flow accretive over the intermediate term. With the stretched pro forma credit metrics, there is concern that AMO will further engage in debt-financed acquisitions. The review will also consider AMO's expectations for pro forma free cash flow, its intention and timeframe to reduce the amount of incremental pro forma debt and the specific debt financing structure that will be used at closing. These ratings were placed on review for downgrade: -- $300 million senior secured revolving credit facility due 2009 at Ba1, LGD1, 7%; -- $251 million convertible senior subordinated notes due 2024 at B2, LGD4, 66%; -- Corporate Family Rating at B1; and, -- Probability of Default Rating at B1. Advanced Medical Optics, Inc., headquartered in Santa Ana, California, develops, manufactures and markets ophthalmic surgical and contact lens care products. For the twelve months ended Sept. 29, 2006, AMO generated slightly over $1 billion in revenues. IntraLase Corp., headquartered in Irvine, California, designs, develops and manufactures an ultra-fast laser that is used in refractive and corneal surgery by creating safe and more precise corneal incisions. For the twelve months ended Sept. 30, 2006, IntraLase generated approximately $122 million in revenues. AHERN RENTALS: Moody's Holds Corporate Family Rating at B2 ---------------------------------------------------------- Moody's Investors Service affirmed the ratings of Ahern Rentals, Inc. after the company's recent report that it is increasing the size of its second priority senior secured notes to $275 million from $200 million. Proceeds from the upsized note issuance will be used to reduce outstandings under the company's $250 million revolving credit facility. The ratings affirmed include: -- corporate family rating at B2; -- second priority senior secured notes at B3, LGD5, 73%; and -- Speculative Grade Liquidity Rating at SGL-3. The rating outlook remains stable. "Even though the terming out of some revolver outstandings will improve Ahern's funding structure and enhance liquidity, the company's leverage remains high and continues to support a B2 corporate family rating. The strong cyclical recovery in the non- residential construction sector, and the resulting improvement in Ahern's operating performance, should result in Ahern becoming more solidly positioned within the current rating level," said Moody's analyst Peter Doyle. Ahern is increasing its second priority senior secured notes to $275 million from $200 million. Proceeds will be used to reduce outstandings under the company's $250 million revolving credit facility to $95 million from $170 million based on September 2006 results. On a proforma basis for LTM September 2006, key credit metrics should not differ significantly from actual results: -- Debt/EBITDA stood at 3.5x reflecting the normal seasonal build of the company's equipment purchases; -- EBIT/Interest Expense of 1.8x; and, -- Debt/Revenues of 163%. Moody's said that Ahern's operating efficiencies have resulted in strong margins and contributed to EBITDA margins in the mid-40% range. These positive factors are mitigated by modest cash flow generation relative to the leverage employed in Ahern's capital structure. Retained Cash Flow/Debt was 18.3% and Free Cash Flow/Debt was negative 20% through LTM September 2006. The company has significantly increased CAPEX in order to expand its equipment fleet and meet rising demand in the rapidly growing Las Vegas non-residential construction market. These metrics could improve as the company reduces its growth capital expenditures reflecting moderation in revenue growth. The stable outlook reflects Moody's belief that Ahern's debt protection measures should improve over the intermediate term and strongly position the company within the B2 rating. The key risk Ahern will continue to face is the cyclicality of non-residential construction market, which is the main driver for equipment rental industry. Nevertheless, Ahern should be able to weather future cyclical downturns due to improved internal operating efficiencies, its well established network within the company's home territory of Las Vegas, and a commitment to maintain ample liquidity. The B3 rating of the $275 million second priority senior secured notes reflects an LGD5, 73% loss given default assessment and is one notch below the corporate family rating. The second priority senior secured notes are subordinate in claims to the company's $250 million asset based revolver credit facility, which is not rated by Moody's, and are secured by a second priority pledge on substantially all of the company's domestic assets. The SGL-3 Rating reflects Moody's belief that the company will maintain an adequate liquidity profile over the next 12-month period. The rating anticipates that availability under the company's first priority senior secured credit facility should be sufficient to fund the company's required operational needs. The SGL rating is constrained, however, by the level of negative free cash flow during the seasonal build of the company's equipment purchases and by the fact that substantially all of the company's assets are encumbered to secure its bank borrowings. Ratings affirmed: -- Corporate family rating B2; -- Probability-of-default rating B2; -- $275 million second priority senior secured notes due 2013 at B3, LGD5, 73%; Speculative Grade Liquidity at SGL-3. Ahern Rentals, headquartered in Las Vegas, Nevada, is a regional equipment supplier with 35 branches predominately in the Mid-West and West Coast regions. Original equipment cost was $516 million at Sept. 30, 2006. AHERN RENTALS: S&P Lifts Corporate Credit Rating to B+ from B ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Ahern Rentals Inc., including its corporate credit rating to 'B+' from 'B'. Standard & Poor's also assigned a 'B' rating and '3' recovery rating to the company's proposed $75 million second-priority senior secured notes due 2013. The offering is identical to the existing $200 million 9.25% second priority senior secured notes due 2013. The '3' recovery rating indicates meaningful recovery of principal in the event of a default, after recovery of the first lien facilities. The outlook is stable. "The rating action results from the improved operating performance and credit profile, which Ahern has demonstrated, and the current favorable industry conditions," said Standard & Poor's credit analyst John R. Sico. AIRTRAN AIRWAYS: Commences Exchange Offer for Midwest Air's Shares ------------------------------------------------------------------ AirTran Holdings, Inc., the parent company of AirTran Airways, has commenced an exchange offer for all of Midwest Air Group's outstanding shares, for $13.25 per Midwest share, based on the closing price of AirTran common stock on Jan. 8, 2007. The offer consists of $6.625 in cash and 0.5884 shares of AirTran common stock for each Midwest share. The total equity value of the exchange offer is $345 million. The offer, which is being made through Galena Acquisition Corp., a wholly owned subsidiary of AirTran, represents a premium of 61% over the thirty day average closing price of Midwest common stock at the time of AirTran's initial proposal to acquire all of Midwest's common stock at a price of $11.25 per share on Oct. 20, 2006, and an approximately 46% premium over the closing price the day prior to Dec. 13, 2006, the date on which AirTran disclosed its Oct. 20, 2006, offer. "We are committed to bringing these two great airlines together to form an even better airline based on our conviction that it is in the best interests of Midwest and AirTran shareholders, the employees of both companies and the communities the air carriers serve," said Joe Leonard, AirTran Airways' chairman and chief executive officer. "Together, we will be in a stronger position to compete in the changing airline marketplace, to grow underserved cities like Milwaukee and Kansas City, increase employment and advancement opportunities, and to provide our customers with the high quality service they value." "While we would have wished to enter into negotiations with Midwest's Board and management to consummate a definitive merger agreement, it is clear that they had no intention of doing so. Largely due to the overwhelming support we have received for the combination from Midwest shareholders, employees, customers and the communities Midwest serves, after the disclosure of our October 20th proposal, we decided to bring our offer directly to Midwest's investors," he added. "It is clear to most stakeholders that AirTran Airways can grow Midwest Airlines, expand the Milwaukee market and add more destinations and service beyond what Midwest can achieve independently. With our fleet commonality, comparable corporate cultures, commitments to quality service and complementary route networks, we are an ideal partner for Midwest," Mr. Leonard added. "We feel so strongly about the merits of this combination that we are enhancing the value in our actual exchange offer despite the already attractive premium and the fact that Midwest has denied our request to review non-public financial and other information. Even with the increase in the price we are offering, we still expect the transaction to be accretive to earnings by the end of the first full year following the close of the transaction and significantly accretive thereafter," Mr. Leonard concluded. AirTran is offering to acquire all of the outstanding shares of Midwest through its newly formed subsidiary, Galena Acquisition Corp., which was organized in connection with this offer. This exchange offer is the first step in AirTran's plan to acquire all of the outstanding shares of Midwest common stock. AirTran intends, promptly after completion of the offer, for Midwest to consummate a second-step merger whereby Midwest common stock would be converted into the right to receive the same number of shares of AirTran common stock and the same amount in cash per Midwest share as paid in the exchange offer. The exchange offer will be subject to customary conditions, including the tender of a majority of Midwest shares, calculated on a fully diluted basis; redemption of the Midwest rights under its Rights Agreement, commonly known as a poison pill, certain actions to ensure that the Wisconsin control share acquisition statute and business combination statute are not applicable to AirTran following the exchange offer; the expiration or termination of the applicable waiting period under the Hart-Scott- Rodino Antitrust Improvements Act and certain other regulatory approvals. The exchange offer is scheduled to expire at 12:00 midnight, New York City time, on Feb. 8, 2007, unless the exchange offer is extended. Morgan Stanley and Credit Suisse are serving as AirTran's financial advisors and the dealer managers and Smith, Gambrell & Russell, LLP, is serving as AirTran's legal advisor. Innisfree M&A Incorporated is serving as its Information Agent. About Midwest Air Midwest Air Group (AMEX: MEH), the parent company of Midwest Airlines, features nonstop jet service to major destinations throughout the United States. Midwest Connect offers connections to Midwest Airlines flights, as well as point-to-point service between select markets on regional jet and turboprop aircraft. About AirTran AirTran Airways, Inc. (NYSE: AAI) -- http://www.airtran.com/-- operates over 600 daily flights to 50 destinations. The airline's hub is at Hartsfield-Jackson Atlanta International Airport, where it is the second largest carrier. AirTran Airways recently added the fuel-efficient Boeing 737-700 aircraft to create America's youngest all-Boeing fleet. The airline is also the first carrier to install XM Satellite Radio on a commercial aircraft and the only airline with Business Class and XM Satellite Radio on every flight. * * * As reported in the Troubled Company Reporter on Nov. 23, 2006, Moody's Investors Service confirmed its B3 Corporate Family Rating for AirTran Holdings Inc. and its Caa1 rating on the company's 7.0% Guaranteed Convertible Notes Due July 1, 2023, in connection with 's implementation of its Probability-of-Default and Loss- Given-Default rating methodology for the Transportation sector. Moody's also assigned an LGD6 rating to those loans, suggesting noteholders will experience a 91% loss in the event of a default. ALGOMA STEEL: DBRS Affirms Issuer Rating at BB (low) ---------------------------------------------------- Dominion Bond Rating Service confirmed the Issuer Rating of Algoma Steel Inc. at BB (low). The trend remains Stable, as the rating is not expected to change over the near term. Algoma generated higher-than-expected earnings and cash flow in 2006, and repaid all long-term indebtedness. However, despite the company's very strong credit metrics, the rating continues to be largely underpinned by the relatively high business and event risk facing Algoma. Algoma's earnings and cash flow are highly sensitive to steel price fluctuations, given its large proportion of spot market sales and product mix heavily weighted to more commoditized hot- rolled steel. The company has significantly benefited from favourable steel prices since late 2004. However, the direction of steel prices, particularly over the medium to longer term, remains highly uncertain. Importantly, the potential for higher imports into the United States remains a key risk. In addition, Algoma will enter negotiations for a new union contract in 2007, which creates further uncertainty. Labour-friendly initiatives launched by the Company provide no assurance of an expeditious agreement. The challenges faced by Algoma in previous steel cycles have also been factored into the rating, although notable improvements, including efficiency gains under its Margin Improvement Plan, have been made in recent years. The company faces event risk related to the likelihood that it will be acquired over the medium to longer term, as the trend of steel industry consolidation is expected to continue. Based mainly on its small relative production capacity, favourable balance sheet and low-cost/high-quality Direct Strip Production Complex steel making facility, the Company is a likely target. Algoma is also currently exploring strategic investments that could include increasing existing capacity, downstream processing/product line expansion and acquisitions. Diversification into higher-value-added steel products would likely help reduce Algoma's longer-term earnings volatility. Based on the company's debt-to-capital target of 25%, future investments are expected to be manageable. Additional flexibility is provided by its favourable cash position and current debt-free status. However, aggressive capital spending for new projects could increase Algoma's risk profile, particularly in a weakened steel industry environment. Algoma's earnings and cash flow are expected to decline in 2007 but remain favourable. Average steel prices are expected to moderate, with the impact of high inventories and slowing, albeit reasonable economic growth partly offset by industry production curtailments. In addition, high input costs and Canadian dollar strength are expected to constrain Algoma's margins. ALLIANCE ATLANTIS: Planned Buyout Cues S&P's Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services reported that the ratings on Alliance Atlantis Communications Inc., including the 'BB' long- term corporate credit rating, remain on CreditWatch. The implications, however, have been revised to negative from developing. The ratings were first placed on CreditWatch with developing implications Dec. 20, 2006, after Alliance Atlantis' disclosure that it is exploring strategic alternatives, namely the possible sale of the entire company. At the same time, Standard & Poor's placed its ratings, including its 'B+' long-term corporate credit rating, on CanWest MediaWorks Inc. on CreditWatch with negative implications. The rating actions comes after the report by Alliance Atlantis and CanWest Global Communications Corp., the latter of which is the parent of CanWest MediaWorks, that the companies have entered into exclusive discussions regarding the possible purchase of Alliance Atlantis by CanWest and private equity firm Goldman Sachs Capital Partners. It is likely that the debt used to finance CanWest's ownership portion of the potential acquisition will reside at CanWest MediaWorks. "Further details of a potential transaction, including the method of financing, asset deployment, closing conditions, and estimated closing date, are unavailable at this time," said Standard & Poor's credit analyst Lori Harris. "Still, the possible debt-financed purchase of Alliance Atlantis by a financially weaker and lower rated entity has resulted in the negative direction of the CreditWatch placement for both companies," Ms. Harris added. Upon a change of control of Alliance Atlantis, however, the loan would be, at the option of the lenders, due and payable. Standard & Poor's will evaluate the impact of a potential transaction on the companies' credit quality when additional information is obtained. ALLIED HOLDINGS: 3 Parties Oppose Appointment of Equity Committee ----------------------------------------------------------------- Three parties-in-interests in Allied Holdings Inc. and its debtor- affiliates' chapter 11 cases have supported the Debtors' motion asking the U.S. Bankruptcy Court for the Northern District of Georgia to deny the Ad Hoc Equity Holders Committee's motion to appoint an Official Committee of Equity Security Holders. They are: a. Yucaipa American Alliance Fund I LP and Yucaipa American Alliance (Parallel) Fund I LP; b. Official Committee of Unsecured Creditors; and c. the U.S. Trustee. As reported in the Troubled Company Reporter on Dec. 5, 2006, the Debtors had asked the Court to deny the ad hoc committee of equity holders of approximately 25.2% of outstanding Allied Holdings common stock's renewed request for an appointment of an official committee of equity security holders of AHI. The Debtors do not believe that the Ad Equity Hoc Committee will be able to prove that they are not "hopelessly insolvent." Jeffrey W. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, explained that the Debtors are still negotiating with the International Brotherhood of Teamsters their proposal to reduce labor costs under their collective bargaining agreements with Teamsters-represented employees in the United States. Pending resolution of the labor issue, it is impossible to determine credibly whether the Debtors are "hopelessly insolvent," Mr. Kelley asserted. Nonetheless, even if the Court were to find that the Debtors are not "hopelessly insolvent," an official equity committee should not be appointed because the Ad Hoc Equity Committee cannot meet their burden of proof with regard to adequacy of representation of AHI's shareholders, Mr. Kelley explained. Mr. Kelley pointed out that there is no evidence that the Debtors' Board of Directors, whose members collectively hold 39% of AHI's outstanding shares, has not provided, and will not continue to provide, adequate representation of the equity holders' interests. Objections (A) Yucaipa Yucaipa American Alliance Fund I LP and Yucaipa American Alliance (Parallel) Fund I LP, support the Debtors' request that the Court: (1) quash the subpoenas issued by the ad hoc committee of holders of approximately 25.2% of outstanding Allied Holdings, Inc., common stock; and (2) issue a protective order with respect to the notices of deposition sent to AHI and Yucaipa. Robert A. Klyman, Esq., at Latham & Watkins, LLP, in Los Angeles, California, relates that the information the Ad Hoc Equity Committee seeks concerning union negotiations and strategies constitutes confidential commercial information and trade secrets. The use of the information would reasonably be expected to disrupt negotiations with the International Brotherhood of Teamsters at a critical stage of the Debtors' bankruptcy case, Mr. Klyman adds. According to Mr. Klyman, Yucaipa also joins the Debtors in opposing the appointment of an official equity committee because: * shareholders are adequately represented by the Debtors' board of directors, management, and advisors; * the Ad Hoc Equity Committee are well-financed funds capable of representing their interests; and * holders of old equity failed to demonstrate that the Debtors do not appear to be "hopelessly insolvent." The appointment of an official equity committee "should be the rare exception" and one should not be appointed unless equity holders establish that (i) there is a substantial likelihood that they will receive a meaningful distribution in the case under a strict application of the absolute priority rule; and (ii) they are unable to represent their interests in the bankruptcy case without an official committee," Ms Klyman asserts, citing In re Exide Technologies, 2002 U.S. Dist. LEXIS 27210 at 4(D. Del. 2002); and In re Northwestern Corp., 2004 Bankr. LEXIS 635 at 5(Bankr. D. Del. 2004). Yucaipa reserves all of its rights at law or in equity, including the right to file additional pleadings prior to any hearing on the Equity Committee Motion. (B) Creditors Committee The Official Committee of Unsecured Creditors asks the Court to deny the Ad Hoc Equity Committee's renewed motion as it fails to satisfy the standard for the appointment of an official committee of equity security holders. Considering the Debtors' unstable financial condition, the uncertainty of the enterprise value until union negotiations are completed, and the adequate representation of the interests of equity holders by current management and directors, imposing the costs and administrative burdens of an additional official committee on the Debtors' estates is ill-advised and unwarranted, Jonathan B. Alter, Esq., at Bingham McCutchen LLP, in Atlanta, Georgia, says. The Creditors Committee is optimistic that the Debtors and the Teamsters are conducting good-faith substantive negotiations toward the end of completing the collective bargaining process in the next few weeks. Mr. Alter tells the Court that the Ad Hoc Committee's vision of a Yucaipa-controlled Committee is inaccurate because, among other things, Yucaipa does not: * occupy a seat on the Committee; * share information; * receive confidential information; and * hold sway over the actions of the Committee. As with its prior request, the Ad Hoc Committee makes numerous assertions regarding valuation of the Debtors that fail to withstand scrutiny, Mr. Alter points out. The Ad Hoc Committee again incorrectly neglects to consider the seasonality of the Debtors' business and proceeds to draw unsupported conclusions regarding key financial indicators and ratios, he asserts. The Creditors Committee also notes that the Ad Hoc Committee is misstating certain financial information and selecting information in advancing their argument. While any of its assertions that it had made significant contributions to the renewed debtor-in- possession financing and the return of cash collateral in respect of the insurance programs is erroneous, the Ad Hoc Committee demonstrates that they have been able to secure adequate representation and to remain adequately informed of the bankruptcy proceedings without an Official Equity Committee, Mr. Alter explains. The Creditors Committee believes that a hearing on the Renewed Motion prior to the resolution of collective bargaining negotiations would needlessly occupy the Court's time with speculative analysis and would divert the Debtors' attention and resources at a crucial time in the reorganization process. (C) U.S. Trustee Section 1102(a)(1) of the Bankruptcy Code authorizes the U.S. Trustee to appoint additional committees, including a committee of equity security holders. If the U.S. Trustee declines to exercise the discretion to appoint a supernumerary committee, the Court may order the U.S. Trustee to appoint an additional committee. William T. Neary, the U.S. Trustee for Region 6, reminds the Court that on Feb. 28, 2006, the Honorable Homer Drake Jr. of the U.S. Bankruptcy Court for the Northern District of Georgia denied the ad hoc equity committee's original request for appointment of an equity committee because they failed to establish that the Debtors were not "hopelessly insolvent" or that their interests were not being adequately represented. Hence, the U.S. Trustee asks the Court to deny the renewed motion on grounds that the Ad Hoc Equity Committee has failed to demonstrate a substantive change in circumstances that warrant the appointment of an official equity committee since the February 2006 Order. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIED HOLDINGS: Ricardo Malave Allowed to Pursue State Court Suit ------------------------------------------------------------------ The Honorable Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia allows Ricardo Malave, a personal injury claimant, to continue his State Court Action against Allied Holdings, Inc., with respect to tort claims asserted against the Debtor. The Debtors stipulated that the proper defendant in the state court action is Allied Systems. Judge Mullins signed a consent order modifying the automatic stay solely to permit Mr. Malave to: (i) continue the state court action against Allied in respect of the personal injury tort claims to proceed to final judgment upon, or settlement of, the Claims; and (ii) attempt to recover any liquidated final judgment upon, or settlement of, the Claims from the Debtors' available insurance, if any, related to the Claims. Mr. Malave, for himself and on behalf of his minor child, Sandy Malave, filed a personal injury action against George Morgan II, Allied Holdings, Inc., and Axis Group Inc. in the Circuit Court of the 13th Judicial Circuit in and for Hillsborough County, Florida, on July 27, 2005. Mr. Malave's claims arose from a prepetition incident that occurred in Florida. Mr. Malave had asked the Court to lift the automatic stay to proceed with his State Court Action, liquidate his claim, and pursue collection from any applicable insurance company. Dennis J. LeVine, Esq., in Tampa, Florida, explained that relief from stay should be granted because, among others, the Bankruptcy Court does not have jurisdiction to liquidate the Claim since the state court action involves issues of fact and law that are solely within the state tort law's scope; and the Debtors will not be prejudiced by the Action in that they have insurance coverage. Debtors' Objection The Debtors did not oppose Ricardo Malave's request for relief from stay provided that the relief is limited to the entities whom Mr. Malave has asserted claims. Vivieon E. Kelley, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, noted that the proper party defendant in Mr. Malave's state court action is Allied Systems Ltd. (L.P.). Mr. Malave's claims are scheduled as unsecured claims against Allied Systems only. Ms. Kelley pointed out that Mr. Malave has articulated no basis for requesting relief as to Allied Holdings Inc. and Axis Group Inc. against whom he has not asserted claims. To allow him blanket relief to file and prosecute his claims against the Debtors is unnecessary and will be disruptive of the reorganization process, Ms. Kelley asserted. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) ALLIS-CHALMERS: S&P Lifts Corporate Credit Rating to B from B- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oilfield services company Allis-Chalmers Energy Inc. to 'B' from 'B-'. At the same time, Standard & Poor's assigned its 'B' rating to the company's proposed $225 million senior notes due 2017. The outlook is stable. Pro forma for the notes issuance, Houston, Texas-based Allis-Chalmers has $497 million in debt. "The upgrade reflects good operating performance, adherence to stated financial policy, and meaningful improvements in the company's scale and product offerings over the past year," said Standard & Poor's credit analyst David Lundberg. The company has made a series of acquisitions and increased pro forma EBITDA to $158 million for the 12 months ended Sept. 30, 2006, as compared with $37 million when first rated by Standard & Poor's in January 2006. The acquisitions have strengthened the company's position in the rental tool business in particular, and have expanded the company's presence in the offshore Gulf of Mexico and into Argentina. Management has also displayed a willingness to maintain financial leverage in the 3x debt to EBITDA area. With the equity offering planned for later this month, Allis will have issued common stock in the secondary markets twice during the past 12 months, in addition to providing some amount of common stock to sellers in all five of its acquisitions in 2006. The proposed notes, along with a concurrent equity offering, will repay the amount outstanding under a $300 million bridge loan that Allis used to finance its acquisition of Oil & Gas Rental Services Inc. in December 2006. The outlook is stable. Standard & Poor's recognizes that industry trends for oilfield services should remain favorable in the near term and that Allis' cash flows should remain relatively strong in 2007, absent a sharp decline in commodity prices. Standard & Poor's expects the company to continue to be acquisitive and maintain a debt to EBITDA ratio of around 3x. Any further positive rating actions are contingent on Allis' ability to meet financial targets and integrate acquired properties successfully. Worse-than-expected financial results, whether due to deteriorating industry fundamentals or company-specific issues, could result in a negative rating action. Any leveraging acquisitions could also pressure ratings. AMCAST INDUSTRIAL: Files Amended Plan and Disclosure Statement -------------------------------------------------------------- Amcast Industrial Corp. and Amcast Automotive of Indiana Inc. filed with the U.S. Bankruptcy Court for the Southern District of Indiana an Amended Disclosure Statement explaining their Amended Joint Plan of Reorganization. Overview of the Amended Plan The Amended Plan incorporates and constitutes a settlement and compromise of any and all claims by and between the Debtors, the Debtors' Estates and the Official Committee of Unsecured Creditors on the one hand, and the Lenders on the other. As part of the Settlement, cash on hand, which the Lenders claim a lien on, will be distributed as: * $7 million to the Term B Lenders, * $2 million to the General Unsecured Creditors, excluding any Allowed Unsecured Claims of the Lenders and General Motors Corp., and * $2 million to fund prosecution of the Estates' claims against GM. Any amount remaining from the cash on hand will be used to pay: -- Allowed Administrative Expense Claims, including any Allowed Administrative Claims under Section 503(b)(9) of the Bankruptcy Code; -- Allowed Priority Claims; -- Allowed Priority Tax Claims; -- the fees and expenses incurred in winding down the Estates post-confirmation and pursuing the GM Causes of Action and any other claims of the Estates against third parties, including Chapter 5 Causes of Action; and -- payment of GM's Allowed Class 6 and 7 Claims, if any, to the extent the Claim is Allowed and not otherwise subject to setoff. Treatment of Claims Under the Amended Plan, Administrative Claims, Priority Tax Claims, and Priority Claims will be paid in full using the Debtors' cash on hand. The Debtors disclose that the Secured Claim of the Revolving Lenders and Secured Claims of Term Loan A Lenders have been paid in full. The Plan and Settlement will discharge, waive and enjoin any claims or rights to seek disgorgement of any of those payments. The Allowed Claims of the Term Loan B Lenders will be allowed in the amount of $52,907,107.23. NexBank, SSB, as administrative agent for the Term Loan B Lenders, will receive these monies to be applied in accordance with the Credit Agreement an initial distribution on the effective date of $7 million from Cash on Hand plus the Net Proceeds from sale or collection of all remaining assets of the Estates including: -- outstanding pre-petition accounts receivable, including prepetition accounts receivable owed to the Estates from GM, -- tooling assets and tooling receivables, -- inventory on hand not yet converted to Cash as of the effective date, -- Stowe, Pennsylvania real property, -- Cedarburg real property, -- Net Proceeds from Estates' Third Party Litigation Claims, and Net Proceeds from Chapter 5 Causes of Action, and -- all Cash remaining after prosecution of all Claims of and against the Estate. Holders of Allowed Unsecured Claims, excluding any Allowed Unsecured Claims of GM and Lenders, will receive their pro rata portion of the $2 million from cash on hand. Provided, however, if the Plan Proponents are unsuccessful in objecting to GM's Re- Pricing Claim, the amount will be reduced to $1.75 million. The Debtors tell the Court that "unsuccessful" is defined as a determination by the Court, and not through settlement, that: (a) GM has an Allowed Re-Pricing Claim and; (b) the Estates are ordered to pay funds to GM on account of GM's Allowed Re-Pricing Claim over and above any asserted offsets the Estates may claim against the Re-Pricing Claim. Other Secured Claims will be paid in full using proceeds from the sale of their Collateral or the return of their Collateral. Under the Plan, Intercompany Claims will be extinguished. Equity Interestholders will not receive any distribution on account of their Equity Interests unless and until all other classes are paid in full. Any assets remaining after payment in full of all other claims will be distributed pro rata to the Equity Interestholders. The Equity Interests will be canceled upon dissolution of the Debtors. GM's Claims To the extent Allowed, and not subordinated, GM's Claim for re- pricing and Allowed will be repaid in the same percentage as Allowed Unsecured Claims unless GM's Allowed Re-Pricing Claim, if any, is determined to be of a higher or lower priority. In this case, the claim will be repaid in the same percentage as similar level Claimants from these sources in this order: * as an offset to pre-petition accounts receivable owed to the Estates from GM, estimated to be approximately $4.3 million; * as an offset against postpetition accounts receivable owed to the Estates from GM, estimated to be approximately $2 million; * as an offset against tooling accounts receivable owed to the Estates from GM, estimated to be approximately $3 million; * as an offset against GM Causes of Action; and * to the extent GM's Allowed Re-Pricing Claim exceeds all of the foregoing, from cash on hand. To the extent Allowed and not subordinated, GM's Allowed Unsecured Claim will receive same percentage of distribution as Unsecured Claim Holders payable: * as an offset to prepetition accounts receivable owed to the Estates from GM, estimated to be approximately $4.3 million; * as an offset against postpetition accounts receivable owed to the Estates from GM, estimated to be approximately $2 million; * as an offset against tooling accounts receivable owed to the Estates from GM, estimated to be approximately $3 million; * as an offset against GM Causes of Action; and * to the extent GM's Pro Rata Distribution exceeds all of the foregoing, from cash on hand. About Amcast Industrial Headquartered in Fremont, Indiana, Amcast Industrial Corporation, manufactures and distributes technology-intensive metal products to end-users and suppliers in the automotive and plumbing industry. The Company and four debtor-affiliates filed for chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy Court for the Southern District of Ohio confirmed the Debtors' Third Amended Joint Plan of Reorganization on July 29, 2005. The Debtors emerged from bankruptcy on Aug. 4, 2005. Amcast Industrial Corporation and Amcast Automotive of Indiana, Inc., filed for their second chapter 11 petitions on Dec. 1, 2005 (Bankr. S.D. Ind. Case No. 05-33322). David H. Kleiman, Esq., and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C., represent the Debtors in their restructuring efforts. Henry A. Efromson, Esq., and Ben T. Caughey, Esq., at Ice Miller LLP, represent the Official Committee of Unsecured Creditors. Kevin I. Dowd at Berkeley Square Group LLC serves as Amcast's financial advisor. The Creditors' Committee receives financial advice from Thomas E. Hill at Alvarez & Marsal, LLC. When the Debtor and its affiliate filed for protection from their creditors, they listed total assets of $97,780,231 and total liabilities of $100,620,855. AMERICAN CAMSHAFT: U.S. Trustee Appoints 7-Member Creditors' Panel ------------------------------------------------------------------ The U.S. Trustee for Region 9 appointed seven creditors to serve on the Official Committee of Unsecured Creditors in American Camshaft Specialties Inc. and its debtor-affiliates' chapter 11 cases: 1. Stefan J. Prociv MACSTEEL One Jackson Square, Suite 500 Jackson, MI 49201 Tel: (517) 782-0415 Fax: (517) 782-8735 2. Phil Stankewicz Federal Mogul Corp. 26555 Northwestern Highway Southfield, MI 48033 Tel: (248) 354-9892 Fax: (248) 354-8159 3. Hideki Matsukawa Asahi Diamond America, Inc. 9872 Windisch Road West Chester, OH 45069 Tel: (513) 759-5222 Fax: (513) 759-2885 4. Todd Lloyd C.B. De Korne, Inc. 2 Sweet Street Northeast Grand Rapids, MI 49505 Tel: (616) 363-4866 Fax: (616) 363-6663 5. David Lynch Super Steel Treating Co. 6227 Rinke Warren, MI 48091 Tel: (586) 755-9140 ext. 112 Fax: (586) 759-6419 6. Gary Merchant Nucor Steel P.O. Box 309 Norfolk, NE 68702-0309 Tel: (402) 644-0320 Fax: (402) 644-0329 7. Lorrae Danzig AccuServe Corporation 2081 Pine Ridge Drive Jenison, MI 49428 Tel: (616) 669-2222 ext. 31 Fax: (616) 669-8413 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 reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About American Camshaft American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants -- ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins, and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). Christopher A. Grosman, Esq., and Robert A. Weisberg, Esq., at Carson Fischer, P.L.C., represent the Debtors. When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AMERICAN CAMSHAFT: Meeting of Creditors Scheduled on January 16 --------------------------------------------------------------- The U.S. Trustee for Region 9 will convene a meeting of American Camshaft Specialties Inc. and its debtor-affiliates' creditors at 11:00 a.m., on Jan. 16, 2007, at Room 315 E, 211 West Fort, Suite 700 in Detroit, Michigan. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About American Camshaft American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants - ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). Christopher A. Grosman, Esq., and Robert A. Weisberg, Esq., at Carson Fischer, P.L.C., represent the Debtors. When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AMERIQUEST MORTGAGE: Fitch Junks Rating on Class M4 Debt -------------------------------------------------------- Fitch has taken rating actions on Ameriquest Mortgage Securities Inc.'s home equity issues: AMSI, series 2003-2: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 downgraded to 'BB-' from 'BBB-'; and -- Class M4 downgraded to 'CCC/DR5' from 'BB'. AMSI, series 2004-R4: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 rated 'BBB+' placed on Rating Watch Negative; -- Class M5 downgraded to 'BBB-' from 'BBB'; and -- Class M6 downgraded to 'BB-' from 'BBB-' AMSI, series 2004-R12: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BBB-'; and -- Class M10 affirmed at 'BB+' The affirmations, affecting approximately $833.7 million of the outstanding balances, are taken due to a satisfactory relationship of credit enhancement to expected losses. In AMSI series 2003-2, classes M3 and M4 are downgraded due to monthly losses exceeding the available excess spread in recent months, which has caused deterioration in the overcollateralization amount. As of the December 2006 distribution, the OC amount of $1.1 million is below the target amount of $2 million. Monthly losses have exceeded excess spread by an average of $135,000 over the last six months and based on this projection, Fitch estimates approximately eight months before class M4 starts to be written down. As of the cut-off date, the collateral for series 2003-2 had a weighted average original loan-to-value of 80.82%, and virtually all of the loans from the trust were for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 35% of current balance at origination to 60% of current balance in December. In AMSI series 2004-R4, class M4 is placed on Rating Watch Negative and classes M5 and M6 are downgraded due to monthly losses exceeding the available excess spread in recent months, which has caused deterioration in the OC amount. As of the December 2006 distribution, the OC amount of $9.6 million is below the target amount of $13 million. As of the cut-off date, the collateral for series 2004-R4 had a weighted average OLTV of 79%, and all of the loans from the trust were for the purpose of refinance. The balance of collateral in states which have averaged annual home price appreciation below the national average has increased from 35% of current balance at origination to 57% of current balance in December. For all three transactions, the underlying collateral consists of fully amortizing 15- to 30-year fixed- and adjustable-rate mortgages secured by first liens extended to subprime borrowers. As of the December distribution date, the transactions listed above are seasoned from 26 to 45 months. The pool factors range approximately from 12% to 42%. The Ameriquest Securities loans, the retail sector for Ameriquest Mortgage Securities Inc., were either originated or acquired by Ameriquest Mortgage Company. Ameriquest Mortgage Company serves as the servicer for the loans and is rated 'RPS2+' by Fitch. AZTAR CORP: Moody's Holds Rating on $475 Mil. Senior Notes at Ba3 ----------------------------------------------------------------- Moody's Investors Service has confirmed the ratings of Aztar Corporation's notes, assigned a stable ratings outlook to stable, and withdrew the corporate family rating. On Jan. 3, 2007, Aztar Corporation was acquired by entities of Wimar Tahoe Corporation, dba Columbia Entertainment, and became a subsidiary of Wimar Opco LLC, dba Tropicana Entertainment. Tropicana has pre-funded via an irrevocable deposit with the bond trustees sufficient cash to discharge its principal and interest obligations on Aztar's notes and the trustee has been given irrevocable instructions to redeem the notes on Feb. 2, 2007. Moody's will withdraw the ratings and outlook of Aztar Corporation when the notes are redeemed on Feb. 2, 2007. Ratings Changed: -- Corporate Family Rating of Ba2 withdrawn Ratings Confirmed: -- $175 million 9% senior subordinate notes due 2011 at Ba3 LGD5, 80% -- $300 million 8.875% senior subordinate notes due 2014 at Ba3 LGD5, 80% Aztar Corporation owned and operated the Tropicana Casino and Resort in Atlantic City, New Jersey; Tropicana Resort and Casino in Las Vegas, Nevada; Ramada Express Hotel and Casino in Laughlin, Nevada; and Casino Aztar in Evansville, Indiana. On Jan. 3, 2007 Aztar Corporation was acquired by entities of Wimar Tahoe Corporation d/b/a Columbia Entertainment, and became a subsidiary of Wimar Opco LLC. BALDOR ELECTRIC: To Make $900 Million Notes and Stock Offerings --------------------------------------------------------------- Baldor Electric Company plans to make concurrent public offerings of approximately $200 million of common stock, $150 million of mandatorily convertible preferred stock and $550 million of unsecured senior notes. The proceeds from the offerings, along with borrowings under a new senior secured credit facility and the issuance of common stock to Rockwell Automation, Inc. will be used to finance the acquisition of the Reliance Electric industrial motors and Dodge mechanical power transmission businesses of Rockwell Automation, Inc, repay substantially all of the Company's indebtedness and pay related fees and expenses. The offerings are subject to market and other conditions and are conditioned on the concurrent closing of the acquisition. In addition, the company expects to grant the underwriters a customary 15% over- allotment option to purchase additional shares of common and preferred stock. The waiting period under the Hart- Scott-Rodino Antitrust Improvement Act has expired, and the company expects to complete the offerings and the acquisition on Jan. 31, 2007. UBS Investment Bank is acting as sole book-running manager for the common stock offering, UBS Investment Bank and Bear, Stearns & Co. Inc. are acting as joint book-running managers for the mandatorily convertible preferred stock offering and BNP Paribas Securities Corp. and Lehman Brothers Inc. are acting as joint book-running managers for the senior notes offering. The offerings will be made under the company's shelf registration statement filed with the Securities and Exchange Commission on Jan. 8, 2007. Fort Smith, Arkansas-based Baldor Electric Company (NYSE: BEZ) markets, designs, and manufactures industrial electric motors, drives and generators. Baldor has approximately 3,950 employees and 13 manufacturing facilities. * * * As reported in the Troubled Company Reporter on Jan. 9, 2007, Standard & Poor's Rating Services assigned its 'BB-' corporate credit rating to Fort Smith, Arkansas-based Baldor Electric Co. At the same time, Standard & Poor's assigned its 'BB' bank loan ratings and recovery ratings of '1' to the company's proposed $1 billion seven-year, senior secured term loan and $200 million five-year revolving credit facility, indicating the expectation of full recovery of principal in the event of a payment default. BALDOR ELECTRIC: Moody's Places Corporate Family Rating at B1 ------------------------------------------------------------- Moody's Investors Service has assigned a first-time B1 corporate family rating to Baldor Electric Company along with Ba3 ratings for the proposed senior secured credit facilities and B3 ratings for the $550 million senior unsecured notes and $150 million of mandatorily convertible preferred stock. The ratings assigned to the instruments reflect both the overall probability of default of the company, to which Moody's assigns a B1, and a loss given default of LGD3 for the senior secured credit facilities, LGD5 for the senior unsecured notes and LGD6 for the preferred stock. The rating outlook is stable. These first-time ratings are subject to final documentation. Proceeds from the newly rated debt together with proceeds from the issuances of common stock will be used to fund the $1.8 billion acquisition of the Power System businesses of Rockwell Automation, Inc., refinance existing debt and pay transaction fees. The transaction is expected to be completed in the first quarter of 2007. Ratings assigned with a stable outlook: -- B1 corporate family rating, -- B1 probability of default rating, LGD4-50% loss given default assessment, -- Ba3, LGD3, 34% for the $1 billion senior secured term loan maturing in 2014, -- Ba3, LGD3, 34% for the $200 million senior secured revolving credit facility maturing in 2012, -- B3, LGD5, 86% for the $550 million senior unsecured notes, -- B3, LGD6, 98% for the $150 million mandatorily convertible preferred stock, -- SGL-1 speculative grade liquidity rating The initial B1 corporate family rating reflects the high levels of debt required to consummate the acquisition of the Power Systems businesses, modest free cash flow expected in 2007 and significant reliance on and susceptibility to downturns in the North American industrial sector. The ratings acknowledge Baldor's enhanced competitive position, particularly in the North American industrial electric motors market, strong brand recognition, reputation for quality products and strong operating margins. Further, the rating agency believes the Power System businesses fit nicely with the existing Baldor business resulting in a company capable of providing end to end solutions through the power conversion cycle. Despite the relative size of the transaction, Moody's believes integration risk will be low and that cost synergies will be modest in the next two years. Upward rating momentum will be dependent on the company's ability to generate strong cash flows and reduce the acquisition related debt. The stable outlook reflects Moody's view that the combined company will grow organically throughout the assimilation process over the 12 to 18 month period following the acquisition and that modest free cash flow generation will be used to de-leverage. The outlook incorporates an expectation that the global motor market will continue to expand and that the company will expand internationally as a result. The Ba3 rating and LGD3 loss given default assessment for the senior secured facilities reflect benefits and limitations of the collateral. The B3 ratings for the senior unsecured notes and preferred stock reflect the effective subordination to the secured facilities. Moody's notes that despite the same ratings, the senior unsecured notes' LGD5 assessment implies higher recovery levels then that of the preferred stock with a LGD6 assessment. Also, in calculating leverage, the preferred stock was given E basket treatment. The SGL-1 Speculative Grade Liquidity rating reflects Baldor's solid liquidity position, which is supported by $25 to $75 million of cash on the balance sheet at Dec. 31, 2006 and a $200 million five-year senior secured revolving credit agreement, maturing in 2012. The credit facility is not expected to be used to finance the Power Systems acquisition and should be fully available at close. Moody's anticipates that cash on hand, the company's ability to generate positive cash flows during 2007 and unused availability under the credit facility will be more than sufficient to meet investment and dividend requirements as well as nominal debt maturities over the next twelve months. Moody's notes that all tangible and intangible assets are secured under the credit facilities resulting in a low level of alternate liquidity. The senior secured credit facilities and senior unsecured notes are expected to be guaranteed by all direct and indirect material subsidiaries of Baldor. Borrowings under the facilities will be secured by a first lien priority interest in all tangible and intangible assets of Baldor and its subsidiaries. The credit facilities are likely to include three financial covenants, maximum total debt-to-EBITDA ratio, a maximum senior secured debt- to-EBITDA ratio and a minimum fixed charge coverage ratio. The term loan shall be repayable 1% per annum in years one through six, with the balance payable in year seven. The credit facility allows for same day borrowings, has a $20 million sub-limit for letters of credit, requires a MAC representation before each borrowing and mandates that 75% of excess cash be used to retire the term loan until total debt-to-EBITDA is less than 4.0x. Baldor Electric Company is a manufacturer of industrial electric motors, drives and generators. Baldor is headquartered in Fort Smith. Power Systems is a provider of Dodge power transmission products, including mounted bearings and enclosed gearing, and Reliance Electric industrial motors, including large AC and custom, variable speed and specialty, and small and medium AC motors. After this transaction, the motor business will represent 64% of sales, Dodge 28%, motion control and drives 7% and generators 2%. Pro forma revenue for 2006 will likely exceed $1.8 billion. CALPINE CORP: Wants Holland & Hart as Special Counsel ----------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Holland & Hart, LLP, as their special counsel pursuant to Section 327(e) and 328 of the Bankruptcy Code. David R. Seligman, Esq., at Kirkland & Ellis LLP, in New York, relates that throughout the Debtors' Chapter 11 cases, Holland & Hart, among other things, has advised the Debtors with respect to certain tribal law matters. Holland & Hart has represented Debtor CPN Cascade, Inc., in a prepetition litigation pending in the U.S. Court of Federal Claims against Bonneville Power Administration -- the Telephone Flat Litigation. In the Federal Claims Action, CPN Cascade alleged that the Bonneville Power, an agency of the United States Department of Energy, breached a settlement agreement by refusing to pay $9,000,000 pursuant to the terms of the settlement. The Debtors say the Federal Claims Action may result in a substantial recovery for CPN Cascade's bankruptcy estate. As special counsel, Holland & Hart will: (a) continue to represent the Debtors with respect to the Telephone Flat Project Litigation; (b) represent the Debtors in In re Save Medicine Lake Coalition et al. v. Bureau of Land Management, Calpine Corporation et al., an action pending in the U.S. District Court for the Eastern District of California; (c) represent the Debtors in In re Pit River Tribe et al. v. Bureau of Land Management, Calpine Corporation et al., also pending in the U.S. District Court for the Eastern District of California; and (d) continue to advise the Debtors with respect to the development of energy resources and issues arising out of their operations, like real estate matters in Colorado and other states, labor and employment matters and commercial litigation matters. The Debtors will pay Holland & Hart according to its hourly rate: Professional Hourly Rates ------------ ------------ Partners $245 to $550 Associates $145 to $425 Paraprofessionals $100 to $175 The Debtors expect these Holland & Hart professionals to have primary responsibility in providing them legal services: Professional Hourly Rates ------------ ------------ Rick D. Bailey, Esq. $365 Kelly A. Johnson $405 Ryan T. Bergsieker $235 Murray Feldman $325 Karol Kahalley $295 The Debtors will also reimburse Holland & Hart for any necessary out-of-pocket expenses. Rick D. Bailey, Esq., a partner at Holland & Hart, assures the Court that his firm does not represent any interest adverse to the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of ower plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially all of its remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CALPINE CORP: Wants to Hire AP Services as Crisis Managers ---------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ and compensate Lisa J. Donahue and AP Services LLC as their crisis managers, pursuant to the terms of the Amended Services Agreement, nunc pro tunc to Nov. 3, 2006, pursuant to Section 363 of the Bankruptcy Code. In the past months, the Debtors have focused on developing a long-term business plan that will form the core of their plan of reorganization. Recognizing the challenges they will encounter in developing the business plan, the Debtors determined that they need Scott J. Davido to focus primarily on his duties as chief restructuring officer, including: -- bringing the business plan to completion, -- supervising the development of a plan, -- negotiating key aspects of the business plan, and -- focusing on strategic planning and risk management issues. To allow Mr. Davido to focus on those duties, the Debtors named Lisa J. Donahue as interim chief financial officer. To memorialize the changes in their employment statuses, the Debtors amended their Services Agreement with AP Services, LLC, in November 2006. The salient terms of the APS Amended Services Agreement are: (a) Ms. Donahue will continue to be assisted by the same APS Employees that have been working with the Debtors since November 2005; (b) The Debtors will continue to compensate APS in accordance with the terms of the Final Retention Order; (c) APS will be eligible to receive an "Emergence Incentive Bonus" of up to $6,000,000, to be earned upon the consummation of a confirmed plan. Robert P. May, the Debtors' chief executive officer, has the sole discretion to reduce the Emergence Incentive Bonus below $6,000,000. Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of ower plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially all of its remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CANWEST MEDIAWORKS: Plan Acquisition Cues DBRS to Review Ratings ---------------------------------------------------------------- Dominion Bond Rating Service changed the ratings of CanWest MediaWorks Inc.'s issuer rating at BB and senior subordinated notes rating at B (high) to Under Review with Developing Implications from Under Review with Negative Implications following the company's announcement that it intends to acquire Alliance Atlantis Communications Inc. for approximately $2.3 billion through a new acquisition company in conjunction with GS Capital Partners, a private equity affiliate of Goldman Sachs & Co. DBRS will maintain the Under Review with Developing Implications status until there is further clarity regarding the structure and terms of the proposed acquisition. DBRS expects the proposed acquisition entity will likely be structured to require a small initial investment from CanWest, financed from cash on hand. DBRS notes the acquisition could provide the company with strategic benefits, including: 1) strengthened broadcast mix with strong specialty channels and conventional programming; 2) increased focus in the company's core Canadian market; and 3) potential synergies arising from the acquisition. DBRS had placed the company's ratings Under Review with Negative Implications on July 11, 2006, mainly as a result of the potential for a breach of the company's bank covenants. Since that time, DBRS has gained comfort following an amendment to CanWest's bank covenants that a breach of covenant is unlikely in the near term. The acquisition is subject to regulatory approval and is expected to close in the spring of 2007. CATHOLIC CHURCH: Spokane, et al., File Joint Reorganization Plan ---------------------------------------------------------------- The Honorable Gregg W. Zive of the United States Bankruptcy Court for the District of Nevada reported that the mediation in the bankruptcy case of the Catholic Diocese of Spokane, Washington, which has been pending before him since July 2006, has resulted in a successful resolution of the material issues in the case. Judge Zive said, "This has been a long and difficult process. The parties and counsel involved in this case have worked diligently to ensure that an equitable resolution of the case could be reached. It has been a complex and often emotional process, but one that was essential to avoid protracted, debilitating, risky and expensive legal disputes." The global settlement is represented in a consensual Plan of Reorganization that will be filed with the United States Bankruptcy Court for the Eastern District of Washington in Spokane. The parties participating in the mediation and settlement process were the Catholic Diocese of Spokane, the Tort Litigants Committee, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes. The Plan will go through the normal confirmation process before the Honorable Patricia C. Williams, United States Bankruptcy Judge for the Eastern District of Washington. The Plan will be reviewed and submitted to creditors for voting consistent with the United States Bankruptcy Code. Judge Zive explained, "The economic portion of the global settlement totals at least $48 million and provides a mechanism for the payment of future claims. In addition to the sale of Diocesan assets, contributions of more than $20 million from six insurance carriers, and contributions from various Catholic entities in the Diocese, the Parishes will be responsible for raising $10 million. As important as the economic terms of the Plan are, the Plan contains numerous non-monetary, provisions that are as critical as the monetary provisions of the Plan. These non-economic terms were absolutely essential to arriving at a consensual plan. It is hoped that the resolution of this case will help provide the survivors with some measure of closure and allow them to move forward and continue the healing process. At the same time, the settlement will allow the Catholic Diocese of Spokane to continue its ministry and to begin its own journey of renewal, healing and hope." Classification of Claims Under the Plan Under the Joint Plan of Reorganization, all Claims against Spokane, other than Administrative Claims and Priority Tax Claims, are divided into eight separate classes: Class Description ----- ------------ N/A Administrative N/A Priority Tax Claims 1 Priority Employee Unsecured Claims 2 Priority Unsecured Claims 3 Secured Claims 4 General Unsecured Convenience Claims 5 Deposit and Loan Claims and Other Parish and Catholic Entity Secured and Unsecured Claims 6 General Unsecured Claims 7 Tort Claims 8 Priest Retirement Claims The Claims in Classes 5, 6 and 7 are impaired, while those in Classes 1, 2, 3, 4 and 8 are unimpaired. The Diocese will deliver to the Court a Disclosure Statement explaining the Plan on February 1, 2007, Spokane's lawyers told The Associated Press. The Disclosure Statement will include proposals for specific payments to individual creditors as well as how much of the $48 million pool will be available to them, the AP added. The AP noted that still to be resolved are millions of dollars in attorneys fees, which will be paid before any of the victims are compensated. The victims would then vote whether to accept or reject the proposed payouts. According to the AP, during the two-hour telephone hearing held in January 5, 2007, Judge Williams set the confirmation hearing to April 24 and 25, and said, "Even though it will take another three to four months for a final resolution, that is time well spent because the parties have collectively controlled their own destiny, rather than have an appellate court control their destiny." Spokane to Emerge by May 31 The Plan provides that all conditions to the Effective Date must be satisfied or waived no later than May 31, 2007. If the Effective Date has not occurred by May 31, the Confirmation Order will be vacated automatically unless all of the Proponents and the Official Committee of Tort Litigants agree in writing to extend the deadline. Insurance Settlements The Plan further provides that to the extent not previously approved by the Bankruptcy Court, the insurance settlements with the six insurers, and the agreements providing for the settlements will be approved upon entry of, and as a part of, the order confirming the Joint Plan. A schedule of the settlement amounts is available for free at http://researcharchives.com/t/s?1862 On the effective date of the Plan, the Parishes and the Catholic Entities, except Morning Star Boy's Ranch, will release their claims to coverage under the insurance policies covered by the Insurance Settlements in consideration of entry of the Permanent Injunction and receipt of Releases of Claims from each holder of a Tort Claim who elects to receive funds paid for the Releases of Claims. Non-monetary Obligations The Diocese will undertake these non-monetary obligations within 30 days after the Plan Effective Date, unless otherwise noted: 1. For not less than nine years after the Effective Date, the Diocese will post on the Diocesan Web site the names of all known Spokane diocesan clergy who are admitted, proven or credibly accused perpetrators. For deceased perpetrators, the name will be posted only if the abused person wants the deceased priest's name be publicized. The Diocese will maintain the posting for any longer period of time if recommended by the U.S. Conference of Catholic Bishops. 2. The Diocese will continue publication on the Web site of the postings of admitted, proven or credibly accused perpetrators which have been posted since 2002 for a period of not less than nine years after the Effective Date. 3. Within one year after the Effective Date, Bishop Skylstad will go to every parish in which any children were abused or where perpetrators served and read from the pulpit a statement identifying all perpetrators that have served in the parish and urge people to come forward and contact law enforcement, the diocesan Victim's Assistance Coordinator or any survivor group or organization felt appropriate by the person wishing to make a report of abuse. 4. The Diocese will publish in the Inland Register four times per year for five years after the Effective Date and once per year for 20 years, a prominent statement urging persons sexually abused by priests to come forward and contact law enforcement, and the diocesan Victim's Assistance Coordinator or any survivor group or organization felt appropriate by the person wishing to make a report of abuse. 5. Bishop Skylstad will publicly support a complete elimination of all criminal statutes of limitation for child sexual abuse. 6. For two years after the Effective Date, the Diocese will allow any person holding an Allowed Tort Claim to speak publicly in the parish where they were Abused at a time mutually agreed upon by the person holding the Allowed Tort Claim, the Diocese and the parish pastor or administrator. A person holding an Allowed Tort Claim who wishes to so speak publicly in the parish where they were abused will be entitled to speak on no more than one occasion per Tort Claimant, and reasonable notice of the occasion, time and place of his or her presentation will be given by the Diocese or the parish to parish members. 7. The Diocese will make available reasonable space but not more than one full page in each issue of the Inland Register for two years after the Effective Date to allow Tort Claimants to tell their stories of abuse by priests if they desire to publish their stories. 8. The Diocese, and its representatives, will not refer either verbally or in print to the Claims of Tort Claimants as "alleged" Claims. 9. Within a reasonable time after the allowance of any Tort Claim, Bishop Skylstad will send letters of apology to the Tort Claimant and, if requested by the Tort Claimant, his or her immediate family. Spokane Bishop William Skylstad has already instituted some of the provisions as part of Spokane's sex abuse prevention and reporting campaign, the AP said. A full-text copy of Spokane's Joint Plan of Reorganization is available for free at http://researcharchives.com/t/s?1863 The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CENTRAL GARDEN: Compensation Committee OKs $1.28 Mil. Execs. Bonus ------------------------------------------------------------------ The Compensation Committee of Central Garden & Pet Company's board of directors approved $1,282,750 in fiscal 2006 bonuses to six executives: Executive Officer FY 2006 Bonus ----------------- ------------- Glenn W. Novotny $500,000 President and Chief Executive Officer William E. Brown $226,500 Chairman James V. Heim $150,000 President Pet Products Division Stuart W. Booth $155,000 Executive Vice President and Chief Financial Officer Bradley P. Johnson President, Garden Division $206,250 Brooks M. Pennington III $200,000 Director, Special Projects The company disclosed that Mr. Johnson's bonus does not include a transition fee of $250,000 he received upon commencement of employment with the company. Mr. Pennington resigned as president and chief executive officer of Pennington Seed Inc. effective Oct. 1, 2006, the company further disclosed. Headquartered in Walnut Creek, California, Central Garden & Pet Company (NASDAQ: CENT) -- http://www.central.com/-- markets and produces branded products for the lawn & garden and pet supplies markets. Products are sold to specialty independent and mass retailers. The company also provides a host of other regional and application-specific garden and pet brands and supplies. The company has approximately 5,000 employees, primarily in North America and Europe. * * * As reported in the Troubled Company Reporter on Sept. 28, 2006, Moody's Investors Service affirmed its Ba3 corporate family rating for Central Garden and Pet Company. Additionally, Moody's held its Ba2 probability-of-default rating on the company's $350 million senior secured revolver. CDC MORTGAGE: Fitch Junks Rating on Class B1 and B2 Certificates ---------------------------------------------------------------- Fitch has taken rating actions on CDC's mortgage pass-through certificates: CDC Mortgage Capital Trust, series 2002-HE3: -- Class M1 affirmed at 'AA'; -- Class M2 downgraded to 'BBB' from 'A'; -- Class B1 downgraded to 'CC' from 'B+' and assigned distressed recovery rating of 'DR3'; and -- Class B2 remains at 'C/DR6.' CDC Mortgage Capital Trust, series 2003-HE1: --Class M1 affirmed at 'AA'; --Class M2 affirmed at 'A+'; --Class M3 downgraded to 'BBB+' from 'A'; --Class B1 downgraded to 'B+' from 'BB+'; and --Class B2 downgraded to 'C' from 'B+' and assigned DR rating of 'DR6'. CDC Mortgage Capital Trust, series 2003-HE2: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class B1 affirmed at 'BBB'; -- Class B2 downgraded to 'BB' from 'BB+'; and -- Class B3 downgraded to 'B+' from 'BB-'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $124 million of outstanding certificates, as of the Dec. 26, 2006 distribution date. The negative rating actions, affecting approximately $22 million of outstanding certificates, reflect the deterioration of CE relative to expected future losses. As of the December 2006 distribution, series 2002-HE3 has suffered a cumulative loss of 2.47% of its original balance. The overcollateralization has been eroded completely and the B-2 bond has suffered a write down of $469,770 to date. The average monthly excess spread for the past three months has been approximately $56,611 and the average monthly losses for the same period have been $421,896. This has led to an average monthly reduction in credit enhancement of $365,285 for the past three months. The 90+ delinquencies represent 27.51% of the current mortgage pool balance. This number includes foreclosures and real estate owned of 7.34% and 4.69%, respectively. The cumulative loss for the 2003-HE1 transaction is 1.61% of its original balance. The OC is $810,336 versus a target of $3,302,846 and is expected to get reduced further in the coming months as losses exceed available excess spread. The average monthly excess spread for the past three months has been approximately $85,221 and the average monthly losses for the same period have been $435,831. This has led to an average monthly reduction in credit enhancement of $350,610 for the past three months. As a result, OC is expected to be fully exhausted in the next three months and the B-2 bond is then expected to start taking losses. The 90+ delinquencies represent 21.81% of the current mortgage pool balance. Included in this number are foreclosures and REO of 4.19% and 6.60%, respectively. The cumulative loss for the series 2003-HE2 is 1.21% of its original balance. The OC is currently at $2,627,637 versus a target of $3,428,136 and is expected to shrink further as losses exceed excess spread in the coming months. The B-3 bond currently benefits from 3.52% CE in the form of OC. The average monthly excess spread for the past three months has been approximately $108,712 and the average monthly losses for the same period have been $360,995. This has led to an average monthly reduction in credit enhancement of $252,283 for the past three months. The 90+ delinquencies represent 28.83% of the current mortgage pool balance. Included in this number are foreclosures and REO of 6.98% and 5.46%, respectively. The underlying collateral for the transactions listed above consists of 30 year fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties extended to subprime borrowers. As of the December 2006 distribution, the pools are seasoned from a range of 43 months to 49 months. The pool factors for series 2002-HE3, 2003-HE1 and 2003-HE2 are 7.31%, 8.76% and 10.9%, respectively. The servicer for series 2002-HE3 is Select Portfolio Servicing, Inc. and the servicer for the series 2003-HE1 and 2003-HE2 is Ocwen Loan Servicing, LLC. All of the mortgage loans were purchased by Morgan Stanley ABS Capital I Inc., the depositor, from CDC Mortgage Capital Inc., who previously acquired the mortgage loans from various other corporations. CHAPARRAL ENERGY: Commences Private Placement of $275 Mil. Notes ---------------------------------------------------------------- Chaparral Energy Inc. commenced a private placement offering of $275 million of Senior Notes due 2017. The company intends to use the net proceeds of the proposed offering to reduce outstanding indebtedness under its senior secured credit facility. Chaparral disclosed that it may reborrow under the credit facility, subject to its borrowing base, to fund future capital expenditures (including acquisitions) and for general working capital purposes. The notes have not been registered under the Securities Act of 1933 or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. Headquartered in Oklahoma City, Oklahoma, Chaparral Energy, Inc. -- http://www.chaparralenergy.com/-- is an oil and natural gas production and exploitation company. The company also drills in Texas and the Gulf Coast. In 2006 the company agreed to acquire Calumet Oil for about $510 million. CHAPARRAL ENERGY: Moody's Puts Caa1 Rating on $275MM Notes Offer ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Chaparral Energy, Inc., concluding the ratings review initiated in September 2006 after Chaparral's reported acquisition of Calumet Oil Company and certain affiliates. Ratings downgraded include Chaparral's corporate family and probability of default ratings, both to B3 from B2, and Chaparral's existing 8.5% sr. notes due 2015 to Caa1, LGD5, 75% from B3, LGD4, 69%. Moody's also assigned a Caa1 rating to Chaparral's proposed offering of $275 million of senior notes due 2017. Proceeds from the note offering will be used to repay credit facility borrowings. The rating outlook is stable. The downgrade reflects the significant increase in leverage resulting from the Calumet acquisition. Moody's continues to believe that the acquired properties are a good fit for Chaparral geographically and in terms of opportunities for enhanced recovery; however, by not issuing any additional common equity in connection with the transaction, Chaparral's leverage is high. Pro forma for the acquisition as of Sept. 30, 2006, Chaparral's debt- to-PD reserves is approximately $8.63/Boe will, which corresponds to the "Caa" rating category under Moody's E&P rating methodology. Also as of Sept. 30, 2006, Chaparral's pro forma debt-to-book capitalization is nearly 85%. On a debt-to-daily production basis, Chaparral's leverage exceeds $50,000, which is among the highest of all of the E&P companies that Moody's rates. Chaparral's high leverage relative to its production base also is demonstrated by interest expense of approximately $10.85/Boe on a pro forma basis for the nine months ended Sept. 30, 2006. The downgrade also reflects Moody's concerns regarding Chaparral's lack of focus as demonstrated by the accumulation of minor interests outside of its core operating areas and the potential for non-E&P investments. Chaparral hired outside engineers to prepare estimates of Calumet's proved reserves as of Sept. 30, 2006. The results of that study indicate the acquired properties have total proved reserves of 68.3 MMBoe, which is higher than the initial internally engineered estimate of 51.5 MMBoe; however, nearly all of the increase was in the proved undeveloped category. Proved developed reserves as of Sept. 30, 2006 for Calumet were approximately 39.0 MMBoe. The revised acquisition cost is approximately $7.32/Boe; including future capital of $400 million results in a fully developed acquisition cost of $13.17/Boe. Both acquisition cost figures are below current industry averages; however, it should be noted that these properties have a much lower present value per Boe than industry averages due to high lease operating expenses and production taxes and the long-lived nature of the reserves. On a price per daily flowing Boe basis, the acquisition cost is over $106,000, which, based on Moody's evaluation, is much higher than current industry averages and indicates a full valuation on the acquired properties. Current production on the acquired properties is approximately 4,700 Boe/d, which increased Chaparral's production to approximately 18,900 Boe/d. Moody's estimates that as of Dec. 31, 2005 assuming the Calumet acquisition took place on that date, Chaparral's 3-year average finding and development were approximately $12.04/Boe on a fully developed basis. While Chaparral's F&D costs appear competitive relative to similarly rated peers, again these costs reflect a number of acquisitions of low PV properties. Information regarding Chaparral capital productivity for the year ended Dec. 31, 2006 is not available at this time. Of note is that Chaparral's long-lived reserves were evaluated last year using a much higher natural gas price than what will be used for the evaluation as of the end of 2006. Accordingly, negative price- related revisions to Chaparral's natural gas reserves are possible. Chaparral Energy, Inc. is headquartered in Oklahoma City, Oklahoma. CHAPARRAL ENERGY: S&P Junks Rating on $275 Million Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and 'CCC+' senior unsecured ratings on exploration and production company Chaparral Energy Inc. after the report that Chaparral is issuing $275 million senior notes due 2017. The notes are rated 'CCC+'. At the same time, the outlook was revised to stable from negative. Pro forma the planned offering, Oklahoma City, Oklahoma-based Chaparral is expected to have around $1 billion of debt. "The stable outlook reflects the improved liquidity that will result from the offering after Chaparral applies proceeds toward repaying outstanding borrowings from its credit facility," said Standard & Poor's credit analyst Paul Harvey. The company incurred much of the debt to be repaid after its acquisition of Calumet Oil Co. in late 2006. Standard & Poor's had been concerned that Chaparral would be unable to lower outstanding debt on its credit facility prior to scheduled reductions in its borrowing base. Further supporting improved liquidity is the expectation that near-term oil-and-gas-related capital expenditures, not including acquisitions, will remain within cash flows. "The ratings on Chaparral reflect concerns associated with its aggressive growth strategy, high debt leverage, elevated cost structure, and small reserve base," Mr. Harvey said. "These concerns are only partially mitigated by Chaparral's solid reserve life, high operatorship of its properties, and extensive hedging program," he continued. COLLINS & AIKMAN: Closing Five Plants in North America by March --------------------------------------------------------------- Collins & Aikman Corp. will close five plants in North America and cut more than 1,100 jobs by March 28, 2007. According to C&A spokesperson David Youngman, the affected plants, which have been deemed less likely to be sold, are located in Americus, Georgia; Dover and Farmington, New Hampshire; and Scarborough and Gananoque, Ontario. C&A must negotiate severance packages with the union-represented workers in some of the affected plants, which packages are subject to the Court's approval, Bloomberg News reports. The company's soft-trim business is being sold through a Court- monitored auction. The chosen lead bidder is undisclosed, and no auction date has been set. 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. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants Lowell Lease Claims Agreement Approved -------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates ask the Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan to approve a stipulation between the Debtors and BVP Lowell LLC formerly known as Vespera Lowell LLC involving a real property. The Debtors leased real property located at 122 Western Avenue, Lowell, Massachusetts, from BVP Lowell LLC, formerly known as Vespera Lowell LLC, pursuant to a lease to which the Debtors agreed to pay certain expenses associated with the property. Pursuant to Section 365 of the Bankruptcy Code, effective as of Oct. 30, 2006, the Debtors filed a notice on Oct. 19, 2006, rejecting the Lease. By correspondence dated Dec. 4, 2006, Lowell asserted its claim of approximately $2,198,273 under the Lease, consisting predominantly of postpetition expenses related to maintenance, repair and taxes associated with the Lease Property. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, New York, tells the Court that during extensive, arm's length negotiations to resolve the Lease Claim, the parties identified fundamental disagreements regarding the expenses Lowell was entitled to recover from the Debtors pursuant to the Lease and the Rejection. The Debtors analyzed the Lease Claim and concluded that the probable range of outcomes in litigation was significant; and in light of the time, expense and uncertainty of litigation, they believe that a settlement is in the best interest of their estates and creditors. Pursuant to a stipulation, the Debtors agree to pay Lowell $125,000 on or before Jan. 31, 2007, in full and final settlement of all disputes associated with the Lease Claim and Lease Property. Upon Court approval of the stipulation, and bank clearance of the Settlement Amount, the parties will release each other from any and all claims, damages, actions, rights or allegations arising from or related to the Lease, the Lease Claim, the Rejection or the Rejection Notice. 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. 49; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CONSOLIDATED CONTAINER: William Bell Resigns as Holdings' Director ------------------------------------------------------------------ William G. Bell resigned, effective Dec. 31, 2006, from the management committee of Consolidated Container Holdings LLC, the sole member and manager of Consolidated Container Company LLC. In addition, Mr. Bell resigned from the board of directors of two of Holdings' subsidiaries, Consolidated Container Capital Inc. and STC Plastics Inc. No replacement has yet been appointed. Also effective Dec. 31, 2006, Stephen E. Macadam, former chief executive officer of Holdings, resigned from Holdings' Management Committee after completing a 15 month transitional period to facilitate the change of chief executive officer from Mr. Macadam to Jeffery M. Greene in October 2005. Mr. Macadam also resigned from the Board of four of Holdings' subsidiaries, Capital, STC, Reid Mexico S.A. de C.V., and Consolidated Plastics S. de R. L. de C.V. The Management Committee of Holdings appointed on Dec. 1, 2006, Thomas G. McGonagle to the Management and the Audit Committees. The appointment was made in anticipation of the resignation of Mr. Macadam. Pursuant to the terms of Holdings' operating agreement, Vestar Capital Partners, III L.P., the majority owner of the common stock of Holdings, made the appointment. Mr. McGonagle served as the senior vice president and chief financial officer of Vistar Corporation, a national food distribution company, from 2003 to 2006. From 2001 until 2003, he was the co-head of the U.S. Merchant Banking for Babcock & Brown LP. Before that time, Mr. McGonagle spent 14 years at Donaldson, Lufkin & Jenrette / Credit Suisse First Boston most recently serving as Managing Director of the Financial Sponsors Group. Mr. McGonagle received a B.A. from Dartmouth College and an M.B.A. from the Amos Tuck School of Business Administration. Additionally, Mr. McGonagle serves on the boards of The Children's Hospital Foundation, The United States Ski & Snowboard Team Foundation, and the Kent Denver School. Headquartered in Atlanta, Georgia, Consolidated Container Company LLC -- http://www.cccllc.com/-- develops, manufactures and markets rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. The company has a network of 55 strategically located manufacturing facilities and a research, development and engineering center located in Atlanta, Georgia. In addition, the company has three international manufacturing facilities in Canada and Mexico. The company sells containers to the dairy, water, juice & other beverage, household chemicals & personal care, agricultural & industrial, food and automotive sectors. The company's container product line ranges in size from two-ounce to six-gallon containers and consists of single and multi-layer containers made from a variety of plastic resins, including high-density polyethylene, polycarbonate, polypropylene, and polyethylene terephthalate. * * * As reported in the Troubled Company Reporter on Nov. 6, 2006, Standard & Poor's Ratings Services affirmed its ratings on Consolidated Container and removed all ratings from CreditWatch with negative implications, where they were placed on Aug. 23, 2006. The corporate credit rating on Consolidated Container is 'B-'. CONSTELLATION BRANDS: Earns $107.8 Million in Qtr. Ended Nov. 30 ---------------------------------------------------------------- Constellation Brands reported $107.8 million of net income on net sales of $1.5 billion for the third quarter ended Nov. 30, 2006, compared with $109 million of net income on net sales of $1.3 billion in the same period in 2005. Net sales were up 18% over the prior year, primarily due to the June 5, 2006, acquisition of Vincor International Inc., and from growth in the base business. Branded business net sales grew 18 percent. This increase was due to the addition of Vincor and four percent growth for branded business organic net sales on a constant currency basis. "Strong imported beer performance, growth from branded wine in North America, and the addition of Vincor generated solid results for the quarter," Constellation Brands chairman and chief executive officer Richard Sands said. "We continue to be very optimistic about our portfolio's long-term growth potential, although our third quarter results reflect ongoing softness in our U.K. branded wine business as very challenging market conditions persist." For the third quarter of 2007, operating income increased primarily due to the acquisition of Vincor, as well as growth in the base business. The company incurred $4.4 million of stock- based compensation expense for third quarter 2007 related to the company's Mar. 1, 2006, adoption of Statement of Financial Accounting Standards No. 123(R), "Share- Based Payment" ("SFAS 123(R)"). The recognition of stock compensation expense reduced operating income growth by approximately two percentage points. For the quarter, the company also recorded approximately $1 million for its share of start-up and transition expenses related to building out the infrastructure in the eastern United States for Crown Imports LLC joint venture. Wines segment operating margin decreased 70 basis points. This is primarily due to competitive U.K. market conditions that have made it difficult for the company to pass along the annual duty increase and the impact of lower U.K. sales on fixed cost absorption. The impact of these factors was somewhat offset by synergies and mix benefit from the Vincor acquisition. Beers and spirits segment operating margin declined 140 basis points for the quarter, primarily due to higher transportation costs for imported beers, increased material costs for spirits and higher spending behind premium spirits. Interest expense increased 52% to $73.1 million for third quarter 2007, primarily due to the financing of the Vincor acquisition and higher average interest rates. At Nov. 30, 2006, the company's balance sheet showed $9.8 billion in total assets, $6.5 billion in total liabilities, and $3.3 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?1851 Stock Repurchases During third quarter 2007, the company purchased approximately 652,000 shares of its class A common stock at an aggregate cost of $18 million, or at an average cost of $27.65 per share. This completes purchases under the company's previously announced $100 million share repurchase program. About Constellation Brands Based in Fairport, New York, Constellation Brands, Inc. (NYSE:STZ, ASX:CBR) -- http://www.cbrands.com/ -- produces and markets beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Groundrey, Nobilo, Kim Crawford, Alice White, Ruffino, Kumala, Robert Mondavi Private Selection, Rex Goliath, Toasted Head, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Inniskillin, Jackson-Triggs, Simi, Robert Mondavi Winery, Stowells, Blackthorn, Black Velvet, Mr. Boston, Fleischmann's, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao. * * * As reported in the Troubled Company Reporter on Sept. 26, 2006, Moody's Investors Service's affirmed its Ba2 Corporate Family Rating for Constellation Brands Inc., and downgraded its Ba3 probability-of-default rating to B1. The rating agency also assigned its LGD6 loss-given-default ratings on the Company's $250 million 8.125% Senior Subordinated Notes due Jan. 15, 2012, suggesting noteholders will experience a 95% loss in the event of default. CREATIVE FOODS: Section 341(a) Meeting Slated for February 23 ------------------------------------------------------------- The United States Trustee for Region 13 will convene a meeting of Creative Foods, LLC's creditors at 1:00 p.m., on Feb. 23, 2007, at the Jonesboro First Meeting Room in Arkansas. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Osceola, Arkansas, Creative Foods, LLC, manufactures and exports natural and imitation margarine. The company and its affiliate, Osceola Foods, Inc., filed for chapter 11 protection on Jan. 3, 2007 (Bankr. E.D. Ark. Case Nos. 07-10043 & 07-10044). Michael Patrick Coury, Esq., at Farris, Mathews, Branan, Bobango, Hellen & Dunlap PLC, represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million and $100 million. CWABS ASSET: Moody's Rates Class B Certificates at Ba1 ------------------------------------------------------ Moody's Investors Service has assigned an Aaa rating to the senior certificates issued by CWABS Asset-Backed Certificates Trust 2006- 23 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Countrywide Home Loans, Inc. originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by Countrywide Financial Corporation. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by mortgage insurance provided by United Guaranty Mortgage Indemnity Company, Mortgage Guaranty Insurance Corporation and Republic Mortgage Insurance Company. The ratings also benefit from subordination, excess spread, and overcollateralization and an interest-rate swap agreement provided by Bear Stearns Financial Products Inc. After taking into consideration the coverage of the primary mortgage insurance, Moody's expects collateral losses to range from 3.10 % to 3.60%. Countrywide Home Loans Servicing LP will act as master servicer. * CWABS Asset-Backed Certificates Trust 2006-23 * Asset-Backed Certificates, Series 2006-23 Class 1-A, Assigned Aaa Class 2-A-1, Assigned Aaa Class 2-A-2, Assigned Aaa Class 2-A-3, Assigned Aaa Class 2-A-4, Assigned Aaa Class A-R, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa1 Class M-3, Assigned Aa2 Class M-4, Assigned Aa3 Class M-5, Assigned A1 Class M-6, Assigned A2 Class M-7, Assigned A3 Class M-8, Assigned Baa2 Class M-9, Assigned Baa3 Class B, Assigned Ba1 The Class B Certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. DAIMLERCHRYSLER AG: CEO Expresses Support for Chrysler Group Chief ------------------------------------------------------------------ Dieter Zetsche, chief executive of DaimlerChrysler AG, said he and the company's supervisory board supports Chrysler head Tom LaSorda in his effort to return the ailing U.S. unit to profitability, Bloomberg News reports. "I have given him advice to not read too many news clips," Mr. Zetsche told Bloomberg News. "He is doing a good job in a difficult environment." Bloomberg News suggests that Mr. Zetsche's comments may clarify speculations that Mr. LaSorda may lose his job. Mr. LaSorda succeeded Mr. Zetsche as Chrysler's chief. Chrysler, which posted $1.5 billion net loss in third quarter 2006, is forecasting a deficit for 2006. The division recently disclosed of plans to return to profitability in February. "They need to bite the bullet, close some plants and restructure," said Erich Merkle, an analyst at IRN Inc. "They are not going to be able to sell themselves out of this. The economy is slowing down." 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. DANA CORP: Ct. Approves Pact Allowing Jan. Pension Funding Payment ------------------------------------------------------------------ The Honorable Burton R. Lifland the U.S. Bankruptcy Court for the Southern District of New York approved a stipulation between Dana Corp. and its debtor-affiliates and the Official Committee of Unsecured Creditors allowing the January 13 pension funding payment. The Debtors periodically make contributions to their defined benefit pension plans in connection with their collective bargaining agreements and benefit programs for certain non-union employees. As required by the Internal Revenue Code and the Employee Retirement Income Security Act, the next pension contribution, amounting to $7,601,000, will be on Jan. 13, 2007. The Debtors want to make the January 13 Contribution. The Official Committee of Unsecured Creditors asserts that postpetition contributions to the Pension Plans on account of prepetition services are not required by the Bankruptcy Code. The Debtors and the Creditors Committee have agreed to resolve their dispute solely with respect to the January 13 Contribution. Accordingly, the parties stipulate that the Debtors will make the January 13 Contribution with the consent of the DIP Lenders. The Debtors and the Committee agree that neither the making of the January 13 Contribution nor any party's consent to it is intended to waive the right of any party to challenge the Debtors' ability to make any future Pension Contributions. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances to that plan. (Dana Corporation Bankruptcy News, Issue No. 29 & 30; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Ct. Sets Deadlines for Sec. 1113/1114 Scheduling Plan ---------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York establishes these deadlines to govern the briefing, discovery, hearing and adjudication of the Debtors' Section 1113/1114 Process: January 29, 2007 -- Deadline for Debtors to file witness list -- Deadline for Debtors to file Section 1113/1114 Motion February 5, 2007 -- Deadline for Debtors to produce supporting documents to all other parties February 9, 2007 -- Deadline for Official Committee of Non- Union Retirees and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and International Association of Machinists and Aerospace Workers to file preliminary witness list February 20, 2007 -- Deadline to respond or objection to Section 1113/1114 Motion February 22, 2007 -- Deadline for Retiree Committee and the Unions to file final witness list -- Deadline for all other parties to produce supporting documents to Debtors February 26, 2007 -- Deadline for filing of declarations and affidavits to be used for testimony March 1, 2007 -- Completion of discovery March 2, 2007 -- Deadline to respond to objections to Section 1113/1114 Motion March 6, 2007 -- Pre-trial Conference April 30, 2007 -- Target date for the Court to render a decision on the Section 1113/1114 Motion Objections 1. UAW and USW The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union argued that the 1113/1114 Scheduling Motion is another misstep in the Debtors' postpetition relationship with their employees, which only reinforces the ill-will generated since their announcement of the plan to eliminate jobs, cut labor costs, and terminate retirees' health care. The Unions assert that the Scheduling Motion is premature. The Section 1113 and Section 1114 proposals have been tendered to the Unions only very recently and there have been very few meetings with the Debtors regarding those proposals. Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon, LLP, in New York, pointed out that the proposed schedule leaves very little time for the work that would be required to address the issues in the comprehensive bargaining process that the Unions have told the Debtors would be required given the scope of what is at stake. The Debtors' notion that they can continue to negotiate during the frenetically paced litigation activity they envision over the next six weeks may be a boon to their litigators but, in the real world, will mean that negotiations will not progress very far given the enormous distraction that the proposed litigation schedule poses for the Unions, Ms. Ceccotti added. In addition, the Unions noted that the process contemplated by the Scheduling Motion strongly suggests that the Debtors are merely "going through the motions" in their effort to demonstrate compliance with the requirements of Section 1113 and Section 1114. In sharp contrast to the litigation-driven process proposed by the company, Sections 1113 and 1114 were enacted to promote negotiation and bargaining as the focus of the process, with litigation intended only as a last resort, Ms. Ceccotti contended. "The proposed schedule is also excessive, unduly burdensome and poorly constructed," Ms. Ceccotti said. Thus, the Unions asked the Court to deny the Scheduling Motion. 2. Retiree Committee The Official Committee of Non-Union Retirees asked the Court to deny the Scheduling Motion for several reasons: (a) The Debtors themselves do not yet have sufficient information to engage in good faith negotiations with the Retiree Committee; (b) The overly aggressive hearing schedule sought by the Debtors will unnecessarily and materially increase professional fees; (c) The anticipated flow of information from the Debtors pursuant to Section 1114 will not provide sufficient time for examination and good faith negotiations; and (d) Even if the Debtors' proposed hearing dates were not overruled, aspects of the Debtors' discovery and related pre-trial schedule is patently unreasonable. The Retiree Committee has long been interested in obtaining the Debtors' financial forecasts for 2007 but the Debtors have and continue to assert that the information is not yet available. The Retiree Committee believed that the Debtors' game plan has been to "hide the ball" and delay it for as long as possible from any necessary analysis. The Retiree Committee added that the Debtors' intention to eliminate all retiree benefits while trying to pass out millions to their Senior Executives exhibits bad faith. The Retiree Committee, thus, asked the Court to direct the Debtors to promptly respond to its outstanding information requests; and renegotiate with it in good faith and report to the Court the progress of their negotiations. If the Court grants any portion of the Scheduling Motion, the Retiree Committee asked the Court to move the schedules to: February 1, 2007 -- Service of written discovery to Section 1113/1114 Parties February 13, 2007 -- Deadline for Debtors to file a list of expert witnesses February 19, 2007 -- Deadline for Debtors to file a Section 1113/1114 Motion -- Deadline for all other Section 1113/1114 Parties to file list of expert witnesses February 26, 2007 -- Exchange of expert reports among Section 1113/1114 Parties March 5, 2007 -- Deadline for responses on written discovery and responses to Section 1113/1114 Motion -- Completion of all discovery and conclusion of all depositions March 9, 2007 -- Exchange of rebuttal expert reports among Section 1113/1114 Parties March 8, 2007 -- Deadline for Debtors to file response to objections to Section 1113/1114 Motion March 12, 2007 -- Debtors' Section 1113/1114 Process will be trial ready March 12, 13 & 14 -- Trial dates 3. IAMAW The International Association of Machinists and Aerospace Workers is party to postpetition labor agreements representing four bargaining units in the Debtors' facilities in Churubusco Indiana; Manchester, Missouri; Robinson, Illinois; and McConnelsville, Ohio. The IAWMAW asserted that since the four CBAs were entered and amended postpetition, they are not subject to Section 1113 proceedings. The IAWMAW added that modifications of the Churubusco, Manchester, and McConnelsville CBAs will have no impact to the Debtors' reorganization since they will be sold as part of the Engine Products Business. Marianne Goldstein Robbins, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller & Bruggeman, S.C., in Milwaukee, Wisconsin, said the Debtors and the IAMAW can negotiate on any modifications of the Robinson CBA in the ordinary course of business without the expense of an 1113/1114 process. The IAWMAW also pointed out that the Scheduling Motion proposes an aggressive discovery schedule that will prevent any meaningful negotiation of the CBAs. Furthermore, the IAMAW said it did not receive any prerequisites for an 1113/1114 motion, no proposal nor information with which to evaluate the proposals. Accordingly, the IAMAW asked the Court to deny the Scheduling Motion. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances to that plan. (Dana Corporation Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DELPHI CORP: Wants Excl. Plan-Filing Period Extended to July 31 --------------------------------------------------------------- Delphi Corp. and its debtor-affiliates ask the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to further extend their: (a) exclusive period to file a plan of reorganization through July 31, 2007; and (b) exclusive period to solicit acceptances of that plan through Sept. 30, 2007. After intensive negotiations with their statutory committees, General Motors Corporation, and potential plan investors since June 2006, the Debtors were successful in negotiating a framework for a potential reorganization plan and securing a commitment from an investor group to invest substantial sums in the reorganized Debtors, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. The Framework Agreements represent a major milestone in the Debtors' reorganization, illustrate the Debtors' continuing commitment to a consensual resolution of the principal issues in their restructuring, and signify demonstrable progress toward a plan of reorganization, Mr. Butler asserts. The Debtors, however, require more time to conduct further negotiations contemplated by the Framework Agreements, as well as to formulate and submit a disclosure statement and plan of reorganization that conform to the requirements of the Framework Agreements, Mr. Butler says. The Debtors hope to submit a consensual reorganization plan during the first quarter of 2007, according to Mr. Butler. Mr. Butler notes that the Debtors have continued discussions with their six U.S. labor unions to achieve the goals of their Transformation Plan. The Debtors have also made significant strides in the claims reconciliation process. As of Dec. 8, 2006, the debtors have objected to approximately 8,300 claims, totaling approximately $8,900,000,000. In addition, Mr. Butler states, since the Debtors last sought an extension of the Exclusive Periods, they have: -- undertaken and consummated the sale of substantially all of the assets of MobileAria, Inc.; -- completed the sale of their New Brunswick, New Jersey battery manufacturing facility to Johnson Controls, Inc.; -- entered into an agreement with Electronic Data Systems Corporation and EDS Information Services, LLC for the outsourcing of global desktops, service desk, and mainframe systems hosting; and an agreement with Hewlett Packard Company, which provides for the outsourcing of server systems hosting; -- settled certain claims and allegations asserted by the Securities and Exchange Commission; -- entered into attrition plans with the Debtors' unions under which approximately 83% of the eligible IUE-CWA workforce elected to participate; and -- sought approval to enter into a replacement financing facility, which would result in an estimated financing costs savings of approximately $8,000,000 per month. Nevertheless, the Debtors' cases are large and the multi- dimensional scope of actions that must be taken to address Delphi's restructuring requirements are exceedingly complex, Mr. Butler notes. The Debtors still have significant tasks to complete before proposing a plan of reorganization, Mr. Butler points out. Unresolved contingencies still exist. Under the Plan Framework Support Agreement, the Debtors must reach agreements with a number of parties and constituencies, including reaching agreements on new or amended CBAs with each of their U.S. labor unions and agreements resolving the Debtors' many significant GM-related issues. Thus, under these circumstances, the Debtors' requested extension of the Exclusive Periods is justified, Mr. Butler emphasizes. Responses 1. Creditors Committee The Official Committee of Unsecured Creditors believes that a six-month extension of the Exclusive Periods is inappropriate. The Debtors already have received two six-month extensions of the Exclusive Periods and still have not achieved a plan framework that is acceptable to most of their major stakeholders, Robert J. Rosenberg, Esq., at Latham & Watkins LLP, in New York, points out. The Debtors' proposal to enter into framework agreements with Appaloosa Management L.P. and other third party plan investors have been contested by, among others, the Creditors Committee, the Equity Committee, some of the U.S. labor unions, the U.S. Trustee, and Highland Capital Management, LP, Mr. Rosenberg notes. Other parties may file objections in the future. The Creditors Committee, however, consents to a 60-day extension of the Periods for these reasons: -- GM already has obligated itself to support the Appaloosa Framework Agreements until April 2, 2007; and -- The terms of the Agreements are still capable of being revised so as to be acceptable to the Creditors Committee. 2. Equity Committee The Official Committee of Equity Security Holders shares many of the reservations expressed by the Creditors Committee, Debra M. Torres, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, in New York, tells the Court. The Equity Committee, however, does not object to the Debtors' request at this time. "It is of critical importance to the Equity Committee that any plan of reorganization be the result of a fair and open process in which potential bidders or plan investors are able to compete on a level playing field, and which ensures that the highest and best offer is obtained by the Debtors to maximize value for all constituencies," Ms. Torres relates. "If exclusivity is extended, the Debtors must proceed with an open and fair process designed to maximize value that does not favor any party, and does not involve any special provisions, side agreements, extra- contractual understandings or other terms that would have the effect of chilling the bidding and thus precluding the Debtors from obtaining maximum value for all of their constituencies." 3. Highland Capital Highland Capital objects to an extension of the Exclusive Periods to the extent it is intended to give the Appaloosa Plan Investors an advantage over and possibly scare off other potential suitors for the Debtors by making it appear that the Appaloosa Framework Agreements are the sole structure for a plan of reorganization available to and being considered by the Debtors. Highland Capital has delivered a commitment letter to Delphi Corporation's board of directors outlining its proposal and commitment to invest up to $4,700,000,000 in new common stock of reorganized Delphi in a transaction similar to that being proposed by the Appaloosa Plan Investors. Since submitting its proposal to the Debtors, Highland has attempted to negotiate a confidentiality agreement with the Debtors that protects the legitimate needs of the Debtors, but enables Highland Capital to take the steps necessary to effectuate the transaction set forth in the Highland Commitment Letter, including working with the various creditor and equity constituencies in the Debtors' cases and working with potential investors, Judith Elkin, Esq., at Haynes and Boone, LLP, in New York, relates. The Debtors have indicated that they are willing to sign a confidentiality agreement with Highland Capital only if Highland is prevented from or severely restricted in its ability to speak substantively with potential investors and other parties-in- interest in these cases, Ms. Elkin informs the Court. "The Debtors are using the stick of a chilling confidentiality agreement as a way to block dialogue with parties who may need to be involved in the restructuring of the Debtors, other than through the Appaloosa Framework Agreements." Most major creditor and equity constituencies in the Debtors' cases, including all statutory committees, have objected to the Appaloosa Framework Agreements, Ms. Elkin notes. If exclusivity is extended solely for the purpose of allowing the Debtors to attempt to effectuate a plan based on the Appaloosa Framework Agreements, the Debtors will have wasted valuable time if the Agreements deteriorate or are terminated, Ms. Elkin says. Accordingly, Highland Capital asks the Court to deny the Debtors' request. In the alternative, Highland Capital asks the Court to require the Debtors to: (a) cooperate with other potential plan sponsors so that they can enter into a reasonable confidentiality agreement in order to enable them to receive information, speak with potential investors and speak with the other stakeholders; (b) negotiate potential plan structures with parties-in- interest other than the Appaloosa Plan Investors; and (c) consider plan structures other than that contained in the Appaloosa Framework Agreements. 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 Corporation Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORPORATION: Retains W.Y. Campbell to Sell Mounts Business ----------------------------------------------------------------- Delphi Corporation has retained W.Y. Campbell & Company to explore sale opportunities for Delphi's Powertrain and Suspension Mounts business, company officials disclosed Thursday. Delphi's Powertrain and Suspension Mounts business is the largest supplier of mount systems in North America, and the second largest globally, with estimated 2006 revenue of $160 million. The business line is a proven technology leader, known for providing engineered solutions for engine vibration, torque management and other road induced Noise, Vibration and Harshness to a broad customer base. Delphi's Powertrain and Suspension Mounts business has more than 700 employees globally throughout five manufacturing and assembly facilities, including Dayton, Ohio; Ponte de SAr, Portugal; Noida, India; Oshawa, Canada; and Chihuahua, Mexico. Delphi will keep its customers, unions and other stakeholders fully apprised of the transaction and will carefully manage transition needs. Also, the disposition of any U.S. operations would be accomplished in accordance with the requirements of the U.S. Bankruptcy Court for the Southern District of New York. The company would also continue consultations with the European Works Council in accordance with applicable laws. Troy, Mich.-based Delphi Corporation (PINKSHEETS: DPHIQ) -- 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 Debtor in its 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 Debtor's balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. Delphi's exclusive period to file a chapter 11 plan expires on Feb. 1, 2007. Its exclusive period to solicit acceptance of that plan expires on Apr. 2, 2007. Delphi's $4.4 billion DIP Financing Facility expires on Dec. 31, 2007. DELPHI CORP: Highland Proposes Alternative Framework Agreements --------------------------------------------------------------- Highland Capital Management LP asks the U.S. Bankruptcy Court for the Southern District of New York to deny Delphi Corp. and its debtor-affiliates' request to enter into an Equity Purchase & Commitment Agreement and a Plan Framework Support Agreement or, in the alternative, reschedule the Motion's hearing on or before Jan. 22, 2006, to allow Delphi's board of directors adequate time to review the Highland Commitment. Judith Elkin, Esq., at Haynes and Boone, LLP, in New York, contends that the Appaloosa Framework Agreements are fundamentally unfair to the common stockholders of Delphi Corporation and are not in Delphi's best interests for these reasons: -- The Appaloosa Plan Investors will receive a 1.75% Commitment Fee worth $20,000,000 to purchase Preferred Stock that they are only offering to themselves; -- The Appaloosa Plan Investors' exclusive right to acquire Preferred Stock gives them disproportionate control of the board of directors and exclusive approval rights over future business decisions of the reorganized Company; -- Under the Appaloosa Framework Agreements, unsecured creditors will be overpaid by approximately $232,200,000 and junior creditors will be overpaid by approximately $129,000,000 since common stock will be used to partially pay creditor claims at lower than market values; -- The Plan Investors require Delphi to pay a $100,000,000 Break-up Fee; and -- The Debtors filed their motion to enter into the Appaloosa Framework Agreements on December 18, 2006. The Motion should not be heard on an expedited basis especially when its review and consideration is set to occur during and shortly after a holiday period when many financial and other necessary parties are unavailable or have limited availability, Ms. Elkin argues. Consequently, Highland Capital Management, LP, informs the Court that it delivered a commitment letter to Delphi's board of directors on Dec. 21, 2006. Under its Commitment Letter, Highland proposes to invest up to $4,700,000,000 in new Common Stock of reorganized Delphi in a transaction similar to the proposed Appaloosa Framework Agreements, but consistent with the principles of fairness embodied in the Bankruptcy Code, Ms. Elkin informs the Court. The Highland Commitment Letter also specifies the terms of and support for a plan of reorganization that is based on Highland Capital's investment in the Delphi Common Stock. According to Ms. Elkin, the Highland Commitment will provide these benefits: -- The ability of the present board of directors to submit a proposal to the Court that is consistent with its fiduciary duties to all of its stakeholders and should garner the support of the Official Committee of Equity Security Holders. -- Delphi's ability to obtain $4,700,000,000 of capital without offering a $1,200,000,000 preferred stock deal to the Appaloosa Plan Investors that significantly dilutes the existing stockholders, allows the Appaloosa Plan Investors to take control of the Company through its preferential acquisition of almost 30% of the Delphi's equity and grants special veto rights to the Appaloosa Plan Investors on significant Delphi transactions in the future. -- The ability to proceed with a rights offering that does not guarantee an allocation of 6,300,000 shares to the Appaloosa Plan Investors. -- The ability to endorse the management of the Company, as announced on December 18, 2006, while at the same time ensuring that the management will report to an independent board of directors that is not subject to the whims of and controlled by the Appaloosa Plan Investors. -- A transaction that accepts the negotiated deal between the Company and General Motors Corporation, which should be equally supported by GM and the statutory committees. -- A transaction that offers existing stockholders the ability to capture the economic value of the enterprise, rather than allowing the Appaloosa Plan Investors to take that value in violation of the spirit and letter of the Bankruptcy Code. -- A transaction that will be embraced by the market because it is reflective of, and enhances, the current value of the Company. The market recognizes the inherent fairness of the Highland Commitment because common shares are trading 30% higher after the Highland Commitment was announced, Ms. Elkins says. More Objections 1. U.S. Trustee The United States Trustee opposes the Equity Purchase and Commitment Agreement and the Plan Framework Support Agreement on two grounds: (i) The EPCA calls for the payment of millions of dollars of fees and expenses, as allowed administrative claims under Section 503(b)(1) of the Bankruptcy Code, to non-retained professionals for the entities that will fund the Debtors' emergence from bankruptcy. Those fees and expenses will be paid with no oversight by the statutory committees, the Fee Committee, the U.S. Trustee or the Bankruptcy Court, Alicia M. Leonhard, Esq., in New York, points out. (ii) The PSA appears to be a sub rosa plan of reorganization that circumvents the disclosure statement and plan confirmation approval process set forth in Section 1123, 1125 and 1129 of the Bankruptcy Code. The PSA also restricts the rights of creditors and parties-in-interest to meaningfully participate in plan negotiations. "The [PSA] is no more than a term sheet for a plan that has yet to be filed. It should only be considered in the context of continued plan negotiations," Ms. Leonhard contends. As administrative claimants, the professionals of the Plan Investors should file applications under Section 503, rather than obtain blanket approval of retroactive and prospective fees and expenses without any review by parties-in-interest or the Court, Ms. Leonhard asserts. With respect to all of the professionals except Appaloosa Management L.P., without more information, the U.S. Trustee cannot determine whether the fees and expenses are reasonable, "actual and necessary," subject to Section 503(b)(4), or a reasonable exercise of the Debtors' business judgment, Ms. Leonhard emphasizes. Moreover, Appaloosa must demonstrate that it made a substantial contribution to the Debtors' cases in representing an Ad Hoc committee of Equity Security Holders under Section 503(b)(4), Ms. Leonhard adds. Thus, the U.S. Trustee asks the Court to order the Plan Investors' professionals to file applications under Section 503 for review and approval under the appropriate standard prior to any payment of fees and expenses under the EPCA. Ms. Leonhard notes that the PSA dictates many of the terms of the plan. It determines the maximum aggregate of allowed unsecured claims. It codifies a settlement of General Motors' claim apparently without the agreement of the Official Committee of Unsecured Creditors or the Official Committee of Equity Security Holders. Under the PSA, the parties have determined the value of the shares of stock for plan distribution purposes. The parties have also decided how much is needed to resolve the pension obligations in an agreement that does not include the Pension Benefit Guaranty Corporation. However, there has been no disclosure as to the how the terms were derived or opportunity for those affected to vote, Ms. Leonhard cites. Accordingly, the U.S. Trustee asks the Court to disapprove the PSA as a sub rosa plan. 2. IUOE Locals The terms of the EPCA and the PSA and the rights afforded the Plan Investors will have a substantial impact on employee claims and the Section 1113 and 1114 proceedings, Barbara S. Mehlsack, Esq., at Gorlick, Kravitz & Listhaus, P.C., in New York, avers. Accordingly, the International Union of Operating Engineers Local Union Nos. 18S, 101S and 832S seek to protect the claims of their members and their rights under their collective bargaining agreements. The IUOE Locals represent 21 employees in three facilities of Delphi, located in Rochester, New York; Olathe, Kansas; and Columbus, Ohio. The IUOE Locals complain that the payment of $76,000,000 in Commitment Fees and $13,000,000 in Transaction Expenses under the EPCA is justified solely on the bare bones recital that the Investors would not otherwise have entered into the terms of the EPCA. Under the EPCA, the Plan Investors' obligation to consummate the contemplated transactions are conditioned on the Debtors reaching consensual agreements with its major labor union by January 31, 2007, including terms and conditions affecting plant closings, asset dispositions and resolution of union claims. "In view of [Delphi's] insistence on 'pattern bargaining' with the IUOE Locals, seeking to bind them to the terms of the major union contracts, for all practical purposes the fate of the IUOE Locals' agreements are in the hands of the Plan Investors," Ms. Mehlsack asserts. The IUOE Locals have sought to negotiate with Delphi a spin off of assets and liabilities attributable to IUOE represented plan participants to a well-funded multi-employer plan but have been stone walled by the Debtors, according to Ms. Mehlsack. The PSA, however, provides that Delphi will do a spin off of plan assets and liabilities without regard to Delphi's collective bargaining obligations regarding the Pension Plan for Hourly Employees, Ms. Mehlsack notes. The PSA also provides that all employee-related obligations are flow through claims that will be unimpaired but excludes collective bargaining-related employee claims from flow though status, Ms. Mehlsack argues. Thus, the IUOE Locals ask the Court to deny the Debtors' Motion as currently proposed. 3. IBEW and IAMAW The International Brotherhood of Electrical Works Local 663 and International Association of Machinists and Aerospace Workers District 10 do not oppose the introduction of new equity through an appropriate equity purchase agreement. IBEW and IAM, however, complain that the EPCA and the PSA, as drafted, inappropriately interfere with Section 1113 and 1114 negotiations. "The Agreements, in their present form, inappropriately predetermine the plan of reorganization to the detriment of employees represented by the IBEW and IAM in comparison to unrepresented employees, while providing exorbitant fees to Plan Investors, and specified recoveries to, without specified commitment by, General Motors," Marianne Goldstein Robbins, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C., in Milwaukee, Wisconsin, argues. IBEW and IAM complain that the $76,000,000 in Commitment Fees and the $100,000,000 Alternative Transaction Fee under the ECPA are exorbitant and utilize resources, which could otherwise be funding the Debtors' contractual obligations to their employees. The Alternate Transaction Fee will also prevent appropriate consideration of alternate sources of equity, Ms. Robbins asserts. From the filing of objecting parties, it appears that there are alternative sources of equity, which should be considered before exorbitant fees are incurred, Ms. Robbins notes. Moreover, since Debtors have insisted that the IBEW and IAM agree to provisions negotiated with the UAW, the authority for negotiating agreements between the Debtors and the IBEW and IAM is transferred to the UAW and the Investors, in violation of the provisions of Sections 1113 and 1114 of the Bankruptcy Code. The PSA defines what general unsecured creditors will receive -- claims will be limited to $1,700,000,000. However, the amount of general unsecured claims has not been determined and these may include claims of union represented employees and retirees, Ms. Robbins points out. Appaloosa, et al., Join In Debtors' Request Appaloosa Management L.P., A-D Acquisition Holdings, LLC, Harbinger Capital Partners, LLC, Harbinger Del-Auto Investments Company, Ltd., and the rest of the Appaloosa Plan Investors support the Debtors' request and assert that the Appaloosa Framework Agreements are in the best interests of the Debtors and their estates. 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 Corporation Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA AIR: In Talks with Northwest Airlines on Possible Merger -------------------------------------------------------------- Northwest Airlines Corp. and Delta Air Lines Inc. have been in recurring talks regarding a possible link-up following their respective emergence from bankruptcy protection later this year, The Wall Street Journal reports citing people familiar with the issue. WSJ relates that these meetings, between executives at various levels as well as their respective advisers, have helped Delta's creditors recognize that a combination with Northwest is a better alternative to US Airways Group Inc.'s takeover. On Wednesday, US Airways revised its upped its offer to $10.2 billion. Delta had previously rejected U.S. Airways' $8.4 billion bid and filed a stand-alone plan with the U.S. Bankruptcy Court for the Southern District of New York. Delta said that the offer would result in substantially inferior value for creditors compared with its standalone Plan. Delta's financial adviser, The Blackstone Group, estimated the carrier's equity value to be approximately around $9.4 billion to $12 billion. Delta's Official Committee of Unsecured Creditors supported the standalone plan. With US Airways' new offer, Delta's creditors, who met Wednesday, are taking the improved offer seriously, WSJ cites a person familiar with the matter. Delta's creditors also intend to pressure the carrier into opening its books. WSJ further relates that there has also been contacts by UAL Corp.'s United Airlines with Delta but it wasn't clear if Delta has officially investigated an alternative deal with either Northwest or United. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. The Debtors filed their Chapter 11 Plan and Disclosure Statement on Dec. 19, 2006. A hearing to consider the adequacy of the Disclosure Statement is set on Feb. 7, 2007. DURA AUTOMOTIVE: Section 341(a) Meeting Adjourned Sine Die ---------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, has adjourned sine die the meeting of creditors of Dura Automotive Systems Inc. and its debtor-affiliates required under Section 341(a). The U.S. Trustee had convened the Meeting of Creditors on Dec. 7, 2006. The Meeting of Creditors was continued pending the Debtors' filing of their schedules of assets and liabilities, schedules of current income and expenditures, and statements of financial affairs. The Debtors are expected to file their Schedules in January 2007. The Meeting of Creditors offers the opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Inks Pact with American Electric and NITCo ----------------------------------------------------------- DURA Automotive Systems Inc. and its debtor affiliates entered into agreements with American Electric Power, et al., and Northern Indiana Trading Co. to resolve the utility companies' objections to the Debtors' adequate assurance procedures. As reported in the Troubled Company Reporter on Jan. 5, 2007, Quest Energy, LLC, Northern Indiana Trading Co., American Electric, et al., Lawrenceburg Utility and Upper Cumberland Electric filed their objections to the adequate assurance procedures of DURA Automotive Systems Inc. and its debtor affiliates. Stipulations with Utilities (a) AEP, et al. As previously reported, American Electric Power, Duke Energy Indiana, Inc., Exelon Energy Company, The Detroit Edison Company, and the Michigan Consolidated Gas Company objected to the Debtors' Utility Motion. After negotiations, the parties have reached an agreement. Pursuant to a Court approved stipulation, the Debtors will pay AEP and Exelon a one-month payment in advance each month under these terms and conditions: a. Commencing in December 2006, the Debtors will tender these payments to AEP and Exelon on or before the first business day of each month: i. AEP -- $175,000 ii. Exelon -- $63,000, consisting $37,000 for electric and $26,000 for gas. b. If payment is not timely received by AEP and Exelon, they can terminate service to the Debtors after providing the Debtors and their counsel with email and facsimile notice of the default and 5 days to cure the default. The Debtors, and Duke and Detroit Edison/MCG agree that: (1) The Debtors will pay Duke a one-month deposit for $10,000 as adequate assurance of payment. As Duke has received a $6,525 deposit payment from the Debtors, Duke can apply the $6,525 toward the $10,000 deposit and the Debtors have to pay the remaining $3,475 on or before November 22, 2006; (2) The Debtors will pay Detroit Edison/MCG a one-month deposit in the amount of $31,000. As Detroit Edison/MC0 has received a $11,250 deposit payment from the Debtors, Detroit Edison/MCG can apply the $11,250 to the $31,000 deposit. The Debtors have to pay the remaining $19,750 on or before November 22, 2006; and (3) The Debtors will pay all future bills from Duke and Detroit Edison/MCG by the applicable due date. The Utilities agree to promptly provide the Debtors with the amounts of their prepetition claims once they have those figures. (b) NITCo On Nov. 19, 1991, Northern Indiana Trading Company entered into a contract regarding the purchase of natural gas on behalf of Dura Automotive Systems, Inc., and Universal Tool & Stamping for their Sutler, Indiana, facility. Pursuant to the Contract, NITCo is obligated to attempt to purchase, at Universal's request and as Universal's agent, natural gas from natural gas producers on Universal's behalf. Following the purchase, NITCo arranges for the transportation of purchased natural gas to Universal's plant in Butler, Indiana, Each month, NITCo arranges, on Universal's behalf, for the sale of any excess gas purchased by Universal. As compensation for these services, Universal pays NITCo an "agency fee" each month. To provide adequate assurance of payment to NITCo for the Debtors' continued use of its services, the parties had agreed to these terms: 1. On or before 4:00 p.m. (Eastern Time) on Dec. 1, 2006, the Debtors will pay NITCo, via wire transfer, these amounts: i. a security deposit of $11,734 for postpetition services; and ii. charges for postpetition utility services that have accrued but have not been paid as of December 1, 2006, in an amount to be identified in writing by NITCo by the close of business on November 30, 2006, and agreed upon by the Debtors; 2. Commencing on Dec. 10, 2006, on or before 4:00 p.m. (Eastern Time) and continuing monthly on the 10th day of each calendar month, NITCo will send the Debtors, via facsimile, an invoice for the Debtors' estimated usage for the following month based upon Debtors' historical usage for that month; 3. Commencing on Dec. 20, 2006, on or before 4:00 p.m. (Eastern Time) and continuing monthly on the 20th day of each calendar month, the Debtors will pay NITCo the Prepayment Amount, via wire transfer, as payment in advance for service to be rendered during the following month; and 4. If the Debtors fail to make any of the agreed payments when due, NITCo may provide notice of default to the Debtors. If the Debtors fail to cure the specified default within five days after the effective date of the notice, NITCo will be authorized to suspend or terminate all services as of the close of business on the last day of the month in which the default occurs. Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). EASTMAN KODAK: Closing Logistics and Warehousing Facilities ----------------------------------------------------------- Eastman Kodak Company reported that a logistics center and a materials management operation at Kodak Park in Rochester, New York, will close later this year, along with a manufacturing operation that produces specialized solvent-coated products for various lines of business. The closure of the logistics and warehousing facilities will impact about 400 employees. The company disclosed that some of the operations will be relocated to other Kodak facilities, both in and outside Rochester. Kodak noted that the closure of the logistics center is part of the company's digital transformation and will help align the supply chain and logistics function to the digitally oriented operating model of the company's business units. Kodak also disclosed that the Solvent Coating manufacturing operation at Kodak Park would close during the second quarter of 2007, impacting about 85 employees. The company said that declining demand for products manufactured at the facility, combined with available production capacity at other Kodak facilities, led to the closure decision. The facility is housed in Bldg. 329 in a section of Kodak Park south of Ridge Road and west of Mount Read Boulevard, adjacent to the Koda-Vista Neighborhood in the Town of Greece. Kodak emphasized that neither closure decision was related to the performance of employees. All impacted employees will be eligible to receive termination benefits that include up to a year's pay, continuation of health, dental and life insurance benefits for four months, a retraining allowance and outplacement counseling. In association with the actions, Kodak will take a $65 million restructuring charge in the first quarter of 2007 to cover costs including asset write-offs and employee terminations. About Kodak Park South The product logistics center that will close is housed in Bldg. 605 at Kodak Park, and a materials receiving warehouse that will also close is located in Bldg. 502. Both facilities are in Kodak Park South, a section of the site that is largely in the Town of Greece, south of Ridgeway Avenue and west of Mount Read Boulevard, and also bounded by Lexington Avenue and Lee Road. KPS has only four out of more than 125 major buildings currently at Kodak Park, but contains 328 acres of industrial-zoned land. The land and buildings will be put up for sale as a single parcel, with availability by the end of 2007. Bldg. 605 is a 2.1 million square feet edifice with modern climate-controlled warehouse. About Eastman Kodak Co. Headquartered in Rochester, New York, Eastman Kodak Co. (NYSE: EK) -- http://www.kodak.com/-- develops, manufactures, and markets digital and traditional imaging products, services, and solutions to consumers, businesses, the graphic communications market, the entertainment industry, professionals, healthcare providers, and other customers. EASTMAN KODAK: Fitch Holds Rating on Senior Unsecured Debt at B- ---------------------------------------------------------------- Fitch views the proposed sale of Eastman Kodak Company's Health Group for $2.35 billion as potentially having modest positive credit implications for the company's senior unsecured debt based on recovery, as Kodak plans to use $1.15 billion of the proceeds to fully repay its outstanding secured term debt. Fitch's current rating: --Issuer Default Rating 'B'; --Secured credit facilities 'BB/RR1'; --Senior unsecured debt 'B-/RR5'. The Outlook is Negative. Fitch believes the 'B-' senior unsecured debt could potentially be upgraded one notch based on the prospects for higher recovery rates as a result of the proposed reduction of secured debt in the capital structure. However, in the absence of further material improvement in digital revenue growth and profitability, the IDR of 'B' is likely to remain unchanged in the near term as the decline in total debt is offset by the loss of profits and business diversification benefits provided by the Health Group following its divestiture. Fitch will reevaluate Kodak's ratings subsequent to the closing of the transaction, which is expected to occur in the first half of 2007, subject to regulatory and other approvals. The current recovery ratings and notching reflect Fitch's recovery expectations under a distressed scenario. Fitch believes that the enterprise value of the company, and thus, recovery rates for its creditors, will be maximized in a restructuring scenario rather than a liquidation scenario. Fitch applies a significant discount to Kodak's EBITDA and utilizes a 4x distressed EBITDA multiple, which considers Kodak's current multiple and multiples paid for prior acquisitions, assuming that a stress event would indicate business model difficulties, resulting in multiple contraction under a stressed scenario. The current 'RR1' recovery rating for Kodak's secured bank facility reflects Fitch's belief that 100% recovery is realistic. As is standard with Fitch's recovery analysis, the revolver is fully drawn and cash balances fully depleted to reflect a stress event. The current 'RR5' Recovery Rating for the senior unsecured debt reflects Fitch's estimate that a recovery of only 10%-30% would be achievable. Fitch estimates the Health Group generated $2.5 billion of revenue for the latest 12 months ended Sept. 30, 2006 and operating EBITDA of approximately $475 million-$500 million, or approximately 30% of Kodak's total operating EBITDA in the period. The Health Group is Kodak's second most profitable business segment after the steadily declining Film and Photofinishing Systems Group, accounting for $286 million, or approximately 51%, of total segment operating profit in the LTM ended Sept. 30, 2006 based on Fitch's estimates. Pro forma for the divestiture of the Health Group, Fitch expects Kodak's total liquidity will increase to approximately $3.1 billion-$3.6 billion from $2.1 billion as of Sept. 30, 2006 due to the seasonally strong fourth quarter and net proceeds after debt reduction from the sale of the Health Group. Fitch will monitor the outcome of Kodak's ongoing review of potential uses for the remaining proceeds from the divesture. Further liquidity is provided by an undrawn $1 billion secured revolving credit facility due October 2010. Fitch estimates pro forma total debt will decline to $1.6 billion from $2.8 billion as of Dec. 31, 2006, including estimated secured debt reduction of $550 million in the fourth quarter of 2006. Fitch estimates full-year 2006 net debt reduction of approximately $740 million, indicating that Kodak is likely to achieve its full- year debt reduction goal of $800 million. Fitch believes the decline in total debt offset by the divesture of the Health Group will decrease pro forma leverage to 1.6x compared with approximately 2.2x at Sept. 30, 2006 and 1.8x at Dec. 31, 2006. Pro forma interest coverage is expected to improve to approximately 12x from nearly 6x for the LTM ended Sept. 30, 2006 due to the redemption of variable-rate secured debt, which carries a higher interest rate than the remaining fixed-rate debt on the balance sheet. Fitch believes the company's near-term debt maturities are manageable, as the next material debt maturity is not until 2008, when $274 million of debt matures. ED ROGERS: Case Summary & Eight Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Ed Rogers, Incorporated aka Ed Rogers, Inc. 521 East 25th Street Baltimore, MD 21218-5404 Bankruptcy Case No.: 07-10278 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Edwin S. Rogers, Jr. & Harriet R. Rogers 07-10279 Type of Business: Edwin S. Rogers, Jr., is the president and Chairman of the Board of Directors of Ed Rogers, Incorporated. Chapter 11 Petition Date: January 9, 2007 Court: District of Maryland (Baltimore) Judge: Robert A. Gordon Debtors' Counsel: Dale Kerbin Cathell, Esq. Richard M. Kremen, Esq. DLA Piper US LLP The Marbury Building 6225 Smith Avenue Baltimore, MD 21209-3600 Tel: (410) 580-3000 Fax: (410) 580-3001 --- and --- Gary R. Greenblatt, Esq. Mehlman, Greenblatt & Hare, LLC 723 South Charles Street, Suite LL3 Baltimore, MD 21230 Tel: (410) 547-0300 Fax: (410) 547-7474 Estimated Assets Estimated Debts ---------------- --------------- Ed Rogers, Incorporated $100,000 to $1 Million to $1 Million $100 Million Edwin S. Rogers, Jr. & $1 Million to $1 Million to Harriet R. Rogers $100 Million $100 Million A. Ed Rogers, Incorporated's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Chesapeake Bank of Maryland $1,114,740 201 East Joppa Road Secured: Baltimore, MD 21234 $722,503 Unsecured: $392,236 United States Treasury $15,000 Internal Revenue Service 31 Hopkins Plaza Baltimore, MD 21202 Alperstein & Stelmack LLC, CPA $4,500 530 East Joppa Road Baltimore, MD 21286 Kraft & Jacobson, P.A. $4,112 606 Baltimore Avenue Suite 401 Towson, MD 21204 Comptroller of the Treasury Unknown Compliance Division, Room 409 301 West Preston Street Baltimore, Maryland 21201 B. Edwin S. Rogers, Jr. & Harriet R. Rogers's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chesapeake Bank of Maryland 2317 Shaded Brook $1,114,740 201 East Joppa Road Drive, Owings Mills, Secured: Parkville, MD 21234 MD 21117 and $850,000 533 East 25th Unsecured: Street, Baltimore, $261,385 MD 21218 Bank of America Visa account $16,803 P.O. Box 37279 Baltimore, MD 21297-3279 Internal Revenue Service Withholding taxes $15,000 Centralized Insolvency owed on account Office Ed Rogers, Inc. P.O. Box 21126 Philadelphia, PA 19114 ELEUTERIO SILES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Eleuterio Siles 518 South Adams Street Arlington, VA 22204 Bankruptcy Case No.: 06-11819 Chapter 11 Petition Date: December 27, 2006 Court: Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtor's Counsel: Henry S. FitzGerald, Esq. 2200 Wilson Boulevard, Suite 800 Arlington, VA 22201 Tel: (703) 525-8753 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of its 20 largest unsecured creditors. EMMIS COMMUNICATIONS: Earns $3.1 Million in Quarter Ended Nov. 30 ----------------------------------------------------------------- Emmis Communications Corp. reported $3.1 million of net income on $91.2 million of net revenues for the third quarter ended Nov. 30, 2006, compared with $200 million of net income on $98 million of net revenues for the same period in 2005. The significant decrease in net income is because the fiscal 2005 quarter included income from operations of the company's television division, radio stations in Phoenix, and one radio station in St. Louis which have been classified as discontinued operations of $8.6 million, and a $189.5 million gain on sale. In contrast, the current quarter reported only $4.4 million income from discontinued operations. The decrease in net revenues related primarily to revenue declines at Emmis' New York and Los Angeles radio stations. For the third quarter, reported radio net revenues decreased 9.2%, while publishing net revenues were flat. For the third quarter, operating income was $17.5 million, compared to $24.4 million for the same quarter of the prior year, a decrease of 28.4%. Emmis' station operating income for the third quarter was $30.2 million, compared to $37.1 million for the same quarter of the prior year, a decrease of 18.8%. "While we have been disappointed with the continued softness in our New York and Los Angeles markets, we are beginning to see signs that the worst is behind us. I'm confident that programming and management actions taken in recent months are beginning to deliver and point to better results in 2007," Emmis Chairman and CEO Jeff Smulyan said. At Nov. 30, 2006, the company reported $1.2 billion in total assets, $831.6 million in total liabilities, and $248.4 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Nov. 30, 2006, are available for free at http://researcharchives.com/t/s?1852 Redemption of Notes Due 2012 On Sept. 21, 2006, Emmis disclosed that Emmis Operating Company had commenced an offer to purchase, at par, $339.6 million of the outstanding 6-7/8% Senior Subordinated Notes due 2012, pursuant to an asset sale offer required under the indenture for a portion of the Notes and a separate tender offer for the balance of the Notes. On Oct. 20, 2006, approximately $374.9 million of the $375 million outstanding Notes were redeemed at par plus accrued and unpaid interest. The redemption was financed with available cash on hand from the sale of WKCF-TV in August of 2006, coupled with additional borrowings under the company's senior credit facility. On Dec. 29, 2006, Emmis redeemed the remaining $100,000 of outstanding notes. Amendment of Revolving Credit On Nov. 2, 2006, Emmis Operating Company amended and restated its Revolving Credit and Term Loan Agreement to provide for total borrowings of up to $600 million, including a $455 million term loan and a $145 million revolver, of which $50 million may be used for letters of credit. The credit facility also provides for the ability to have incremental facilities of up to $450 million, a portion of which may be allocated to a revolver. In connection with the redemption of substantially all of the Notes and the amendment and restatement of the credit facility, the company recorded a loss on debt extinguishment of $10 million, which is recorded in its quarter ended Nov. 30, 2006. Subsequent to quarter end, the company increased its ownership in Radio Fresh! in Bulgaria. Emmis moved from minority to majority shareholder in the highly-rated national CHR station. About Emmis Communications Based in Indianapolis, Indiana, Emmis Communications Corporation (NASDAQ: EMMS) -- http://www.emmis.com/-- is a diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis owns 21 FM and 2 AM domestic radio stations serving New York, Los Angeles and Chicago as well as St. Louis, Austin, Indianapolis and Terre Haute, Ind. In addition, Emmis owns a radio network, international radio interests, two television stations, regional and specialty magazines, an interactive business and ancillary businesses in broadcast sales. * * * As reported in the Troubled Company Reporter on Sept. 28, 2006, Moody's Investors Service revised its Caa1 rating on Emmis Communications Corporation's series A cumulative convertible preferred to B2 and assigned an LGD6 rating to these debts, suggesting creditors will experience a 99% loss in the event of defaults. Emmis Communications also carries Moody's Ba3 PDR rating. EMTA HOLDINGS: Acquires Dyson Properties for $2.1 Million --------------------------------------------------------- EMTA Holdings Inc. acquired Dyson Properties Inc. for an aggregate purchase price is $2,100,000, to be paid in cash and stock. Durant, Okla.-based Dyson manufactures and sells automotive racing and performance oils and lubricants under the name Synergyn Racing. On Jan. 5, 2007, EMTA entered into an agreement with Sandra Dyson for the purchase of all of the issued and outstanding stock of Dyson. Under the terms of the agreement, the company assumed control of Dyson's business effective as of Jan. 1, 2007. Completion of the transaction is scheduled to take place on Feb. 28, 2007. The initial payment of $100,000 was made on Jan. 9, 2007. An additional $50,000 will be paid on the closing date. The balance of $474,000 will be paid six months after the closing date. In addition, on the closing date, the company will issue a number of shares of common stock valued at $1,476,000 based on the weighted average trading price of the Common Stock during the five trading days prior to the closing date. In addition, Ms. Dyson will be entitled to a royalty for all sales of the Synergyn products for five years at a rate of $0.10 per gallon or $0.10 per pound as the case may be, paid quarterly. Dyson's assets include 5.8 acres of industrial land, 58,000 square feet of industrial and office space and storage and blending and bottling equipment. Michael Dyson, president of Dyson Properties, will remain as president of the EMTA Synergyn subsidiary. The Synergyn line, established in 1992, complements the XenTx line and gives EMTA manufacturing and distribution capabilities from the Synergyn plant in Durant. Synergyn offers the latest in synthetic motor lubricants. Synergyn products are blended for use in the latest NASCAR and NHRA racing engines as well as in personal cars and pickup trucks. Synergyn also supplies lubrication technology for commercial, industrial and farming use. It offers 37 products including oils, oil treatments, fuel supplements, grease and gear lubricants, hydraulic fluids and transmission and tractor fluids. "We expect to expand distribution of both product lines through the cross marketing of each other's products," Edmond L. Lonergan, EMTA CEO and President, stated. "XenTx has been sold primarily through retail and automotive outlets and Synergyn has been sold primarily to the racing community and industry through custom automotive shops and distributors." Mr. Lonergan added, "We are pleased that Michael Dyson will remain as President of our Synergyn subsidiary, adding both management experience and technical support to EMTA." About EMTA Headquartered in Scottsdale, Arizona, EMTA Holdings Inc. (PINKSHEETS: EMHD) is a holding company currently engaged in providing innovative solutions to conserve energy usage, particularly for petroleum-based fuels. The company makes the XenTx line of automotive energy conservation products. The company has developed unique products that are sold to industrial and commercial customers as well as to retail consumers. In addition, the company is currently developing three new lubrication products and is interested in identifying future merger opportunities. * * * At Sept. 30, 2006, EMTA Holdings' balance sheet showed a stockholders' deficit of $2,141,769, compared with a deficit of $774,090 at March 31, 2006. FIRST FRANKLIN: S&P Cuts Rating on Class M-3 Loan to B from BBB --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-3 from First Franklin Mortgage Loan Trust 2001-FF2 to 'B' from 'BBB'. In addition, the rating on this class remains on CreditWatch with negative implications, where it was placed Dec. 15, 2006. At the same time, the rating on class M-2 was placed on CreditWatch with negative implications. Additionally, the ratings on three other classes were affirmed. The lowered rating and CreditWatch placements reflect pool performance that has allowed credit support to begin to erode. Monthly realized losses in this transaction have exceeded monthly excess interest for most of the past six months. This has caused overcollateralization to fall below its target of 0.25%. Currently, the O/C amount is $506,000, or 0.11% of the original pool balance. Over the past three months, monthly realized losses have averaged approximately $177,000, causing the level of O/C to decline by 41.43%. Cumulative losses amount to 1.36% of the original pool balance, and 90-plus-day delinquencies total 22.67% of the current pool balance. In addition, projected losses, based upon the delinquency pipeline, suggest that this trend could continue. Standard & Poor's will closely monitor the performance of the ratings on CreditWatch. If monthly losses decline to a point at which they no longer outpace monthly excess interest, and the level of O/C has not been further eroded, Standard & Poor's will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest, and O/C continues to decline, further negative rating actions can be expected. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for this transaction is provided by a combination of excess spread, O/C, and subordination. The underlying collateral in this transaction is composed of fixed-and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties. These mortgages were originated or purchased by First Franklin Financial Corp. in accordance with guidelines that target borrowers with less-than-perfect credit histories. The guidelines are intended to assess both the borrower's ability to repay the loan and the adequacy of the value of the property securing the mortgage. Rating Lowered And Remaining On Creditwatch Negative First Franklin Mortgage Loan Trust 2001-FF2 Rating ------ Class To From ----- -- ----- M-3 B/Watch Neg BBB/Watch Neg Rating Placed On Creditwatch Negative First Franklin Mortgage Loan Trust 2001-FF2 Rating ------ Class To From ----- -- ---- M-2 A+/Watch Neg A+ Ratings Affirmed First Franklin Mortgage Loan Trust 2001-FF2 Class Rating ----- ------ A-1, A-2, M-1 AAA FIRST FRANKLIN: S&P Holds Rating on Class B-1 Certs. at BB+ ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 34 classes of certificates from three series issued by First Franklin Mortgage Loan Trust. The affirmations reflect credit support percentages that are sufficient to support the current ratings for all three transactions as of the December 2006 reporting period. Loss protection is provided by overcollateralization, subordination, and limited amounts of excess interest. Although O/C for series 2004-FF3 was $611,885 below its target during the December 2006 remittance period, excess interest covered losses and brought O/C closer to its current target during this period. Additionally, current credit support percentages for series 2004- FF3 remain higher than the original percentages at all rating levels. O/C is at its target for the remaining series, and all three deals are passing their delinquency and cumulative loss triggers. Cumulative losses for series 2004-FF3 are $8.37 million, and serious delinquencies are 12.52% of the current pool balance. Cumulative losses are relatively low for series 2005-FF11 at $352,537, and series 2006-FF6 has experienced no losses. Serious delinquencies for both pools are below 2% of their respective pool balances. The underlying collateral consists of subprime and Alt-A, fixed- and adjustable-rate, first- and second-lien mortgage loans. Ratings Affirmed First Franklin Mortgage Loan Trust Series Class Rating ------ ----- ------ 2004-FF3 A-1 AAA 2004-FF3 M-1 AA+ 2004-FF3 M-2 A+ 2004-FF3 M-3 A 2004-FF3 M-4 A- 2004-FF3 B-1 BBB+ 2004-FF3 B-2 BBB 2004-FF3 B-3 BB+ 2005-FF11 A-1, A-2A, A-2B, A-2C, A-2D AAA 2005-FF11 M-1, M-2 AA+ 2005-FF11 M-3 AA 2005-FF11 M-4 AA- 2005-FF11 M-5 A+ 2005-FF11 M-6 A 2005-FF11 B-1, B-2 A- 2005-FF11 B-3 BBB+ 2006-FF6 A-1, A-2, A-3, A-4, M-1 AAA 2006-FF6 M-2 AA+ 2006-FF6 M-3, M-4 AA 2006-FF6 M-5 A+ 2006-FF6 M-6 BBB+ 2006-FF6 M-7 BBB 2006-FF6 B-1 BB+ FONIX CORP: Posts $10.8 Mil. Net Loss in 3rd Qtr. Ended Sept. 30 ---------------------------------------------------------------- Fonix Corp. reported a $10.8 million net loss on $386,000 of revenues for the third quarter ended Sept. 30, 2006, compared with a $6.5 million net loss on $258,000 of revenues for the same period in 2005. The increase in net loss is mainly due to a $1.8 million loss on derivative liability in the current quarter, absent in the 2005 quarter, and the $3.8 million increase in net loss from discontinued operations, partly offset by the $1.5 million decease in operating expenses. At Sept. 30, 2006, the company's balance sheet showed $3 million in total assets and $54.5 million in total liabilities, resulting in a $51.5 million total stockholders' deficit. 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?1857 Going Concern Doubt Hansen, Barnett & Maxwell, the company's auditor, expressed substantial doubt about the company'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 significant losses, negative cash flows from operating activities for three years, and negative working capital. About Fonix Corp. Based in Salt Lake City, Utah, Fonix Corporation (OTC BB: FNIX) -- http://www.fonix.com/-- is speech recognition and text-to-speech technology company that provides speech solutions through its wholly owned subsidiary, Fonix Speech, Inc., currently offering voice solutions for mobile/wireless devices, interactive video games, toys and appliances, computer telephony systems, the assistive market and automotive telematics. FORD MOTOR: CEO Alan Mulally Considers Selling Jaguar Brand ----------------------------------------------------------- Ford Motor Co. CEO Alan Mulally revealed that he might consider selling the company's Jaguar brand, threatening about 8,000 car workers' jobs, The Scotsman reports. The company launched "Way Forward," a turnaround plan that includes the sale of Aston Martin, in an effort to stem multi- billion-pound losses, states The Scotsman. Ford has explored strategic options for its Aston Martin sports-car unit in August, with particular emphasis on a potential sale of all or a portion of the unit. "All good businesses continually review their portfolio, and we will continue to evaluate our portfolio going forward," Mr. Mulally said. "I feel more confident now than when I arrived that we can create a viable Ford." However, he noted that it was a "critical time" for the whole car industry. As reported in the Troubled Company Reporter on Aug. 30, 2006, Sir Anthony Bamford, JC Bamford Excavators Ltd.'s chairman of the board, was looking at the possibility of buying the Jaguar brand from Ford. However, Mr. Bamford subsequently disclosed that he has abandoned plans of buying the Jaguar brand from Ford after executives from Ford Europe and the Premier Automotive Group, revealed that it has no intentions of selling the brand at the moment. According to Mr. Bamford, cited in the Financial Times, Ford was only interested in selling the Jaguar brand together with the profitable Land Rover operations. JC Bamford is a U.K.-based construction-machinery company. Mr. Bamford said that the brand has potential although Jaguar needs to cut ties with Land Rover for him to consider his plans further. Jaguar is part of the Premier Automotive Group -- the organization under which all of Ford's European brands are grouped -- which includes other brands like Volvo, Land Rover, and Aston Martin. In Ford's second quarter results, the segment incurred a $180 million net loss. The company's management said the decline in earnings in the PAG segment primarily reflected unfavorable currency exchange related to the expiration of favorable hedges, adjustments to warranty accruals for prior model-year vehicles, mainly at Land Rover and Jaguar, and lower market share at Volvo associated with new model changeovers, offset partially by favorable product and market mix and lower overhead costs. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, including Mexico, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive- related services include Ford Motor Credit Company and The Hertz Corp. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. after the company increased the size of its proposed senior secured credit facilities to between $17.5 billion and $18.5 billion, up from $15 billion. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4' due to the increase in size of both the secured facilities and the senior unsecured convertible notes being offered. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's US$3 billion of senior convertible notes due 2036. FORUM HEALTH: S&P Cuts Rating on Mahoning County Bonds to BB ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on Mahoning County, Ohio, bonds issued for Forum Health, two notches to 'BB' from 'BBB-', reflecting a financial profile that, while slightly improving compared with the prior two fiscal years, is no longer reflective of the investment-grade rating level. At the same time, Standard & Poor's removed its rating on the bonds from CreditWatch with negative implications, on which it was placed Aug. 25, 2006. The outlook is negative. "While Forum Health has improved operationally and exhibited relatively stable cash balances, there are still questions regarding the turnaround sustainability, uncertainty surrounding the union contract negotiations, and how increased competition will affect Forum's volume," said Standard & Poor's credit analyst Antionette Maxwell. "Furthermore, given the momentous hurdles facing the organization, there is potential for a lower rating level." A lower rating was precluded during the last review and Forum Health was placed on CreditWatch with negative implications due primarily to the potential sale of Forum Health's assets to Community Health Systems. The sale of Forum Health to CHS is no longer being actively considered. Forum Health's deteriorated financial profile is due to several factors, including a higher-than-average wage and benefits cost structure, requiring the need to renegotiate new contracts with organized labor, which Standard & Poor's considers key to the long-term viability of the organization. The union contract negotiations are underway, but it is a slow process by its nature. Additionally, while the turnaround plan is being implemented, the ultimate success and sustainability of improved results need to be demonstrated. Also, Forum will experience heavy competition from the expected opening of a new hospital late in fiscal 2007 that will pull admissions from the Northside Medical Center facility, which has continued to struggle financially during the turnaround. Additional credit factors include Forum Health's continued negative operating performance through the 11 months ended Nov. 30, 2006, although operating losses have subsided from the sizeable fiscal 2005 levels; mixed balance sheet characteristics with increasing leverage due to an erosion of unrestricted net assets; challenging collective bargaining negotiations, which are critical to the success of Forum Health's turnaround program; financial covenant violations requiring waivers and forbearance agreements with credit providers; and overall level of competition in the service area and growing competition in its Southern Mahoning market. Factors supporting the rating include the success in obtaining forbearance agreements from the credit providers through March 31, 2007, the success to date of the interim new senior management team, and the implementation of an aggressive turnaround program for Forum Health. FREEDOM PIPELINE: Involuntary Chapter 11 Case Summary ----------------------------------------------------- Alleged Debtor: Freedom Pipeline, LLC 1046 Texan Trail Grapevine, TX 76051 Involuntary Petition Date: December 27, 2006 Case Number: 06-20797 Chapter: 11 Court: Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtors' Counsel: Nathaniel Peter Holzer, Esq. Jordan Hyden Womble Culbreth & Holzer P.C. 500 North Shoreline Drive, Suite 900 Corpus Christi, TX 78471 Tel: (361) 884-5678 Fax: (361) 888-5555 Petitioners' Counsel: Patrick D. Devine, Esq. Patrick D. Devine, P.C. 4615 Southwest Freeway, Suite 405 Houston, TX 77027 Tel: (832) 251-2722 Fax: (832) 251-2724 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Ironhorse Pipeline Trade Debt $117,969 Inspection, LLC P.O. Box 1747 Aledo, TX 76008 MW Fab Ltd. Trade Debt $57,256 P.O. Box 1183 Mineral Wells, TX 76068 Western Supplies, Inc. Trade Debt $17,413 3601 Central Freeway Wichita Falls, TX 76306 Fence Me In, Inc. Unknown Fort Worth, TX Miller Oilfield Repair, Inc. Unknown Edna, TX FRESH DEL MONTE: S&P Pares Corporate Credit Rating to BB- from BB ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Cayman Islands-based Fresh Del Monte Produce Inc. The corporate credit rating was lowered to 'BB-' from 'BB'. The ratings were removed from CreditWatch, where they were placed with negative implications on Nov. 1, 2006, after the company's third-quarter earnings release and continued weak operating performance. The rating outlook is negative. About $399 million of total debt was outstanding at Sept. 29, 2006. "The downgrade reflects Fresh Del Monte's ongoing weak performance and significantly higher-than-expected leverage," explained Standard & Poor's credit analyst Alison Sullivan. "The company has been negatively affected by difficult industry conditions, including competitive pressures and higher fuel and production costs, and we expect these challenges will continue into 2007. On Dec. 27, 2006, Fresh Del Monte received its second amendment in 2006 to relax its leverage covenant on its secured bank facilities." The 'BB-' rating reflects Fresh Del Monte's participation in the highly variable, commodity-oriented fresh fruit and vegetable industry, which is affected by uncontrollable factors such as global supply, political risk, weather, and disease. Mitigating these concerns are the company's leading positions in the production, marketing, and distribution of fresh produce. Product concentration remains a rating concern due to the high sales and earnings concentration from bananas and pineapples. However, Fresh Del Monte is looking for ways to diversify within the produce industry, for example, by expanding into branded fresh-cut fruit and vegetables, and growing internationally. Sales outside North America represented about 52% of 2005 consolidated sales. Standard & Poor's expect Fresh Del Monte to continue investing in diversification without adding significant debt. For the nine months ending Sept. 29, 2006, sales declined slightly, yet adjusted EBITDA declined 54% because of difficulties in the company's prepared food business, competitive pressures in the European banana market, and lower profitability in the other fresh produce segment because of adverse weather conditions. Higher costs related to fuel, raw materials, packaging, labor, and transportation also hurt financial results. As a result, credit measures have weakened further than Standard & Poor's had expected. Lease- and pension-adjusted debt to EBITDA increased to 4.8x for the 12 months ended Sept. 29, 2006 from about 2.3x at Dec. 31, 2005. Although the company has implemented cost saving initiatives, given expected ongoing difficult industry conditions, Standard & Poor's believes Fresh Del Monte will be challenged to improve performance in the near term. GLOBAL GEOPHYSICAL: Moody's Junks Rating on $40 Mil. Senior Loan ---------------------------------------------------------------- Moody's Investors Service assigned a first-time B3 corporate family rating to Global Geophysical Services and a B3 probability of default rating. Based on the LGD notching methodology, Moody's assigned a B1, LGD2, 28% rating to Global's senior secured $30 million revolving facility and a $60 million first-lien term loan facility and a Caa1, LGD5, 76% rating to Global's $40 million second-lien senior secured term loan facility. Proceeds from the two new term loans in conjunction with a $140 million investment from Kelso & Company will fund approximately $80 million of capex plans for 2007, refinance $56 million of existing debt, the tender of up to $90 million of existing preferred stock, redemption of $9.5 million of common stock, and about $5 million of fees. The Kelso investment is coming in stages, with $50 million already funded to cover the common stock redemption and capex and the remaining $90 million is come on a dollar for dollar basis only as the tendered preferred shares are redeemed. Assuming the full $90 million preferred equity tendered for is redeemed, Kelso will effectively own about 46.7%, with management owning about 33%. The B3 CFR reflects Global's small size and its market position compared to its B-rated peers and the inherent volatility in the seismic business as a result of cyclical exploration and production activity and the short operating track record which provides a higher than normal degree of uncertainty regarding downcycle performance. Partially offsetting this limited operating history is the seasoned management team most of which possesses more than 20 years of experience in the seismic business at some of the larger seismic companies. The B3 CFR also reflects relatively higher geographic diversification than some of the B3 and B2 rated oilfield services peers as it has and continues to operate in multiple basins around the world but low diversity in its product line which is solely seismic data acquisition. In terms of leverage, Global's pro forma leverage with Debt/EBITDA of about 5.0x and Debt/Book Capitalization of approximately 60.71% for the new financing makes it comparable to its B rated peers and its return on assets of about 10.99%. This is in the Ba rating range during the current upcycle. The B1 rating of the first lien senior secured term loan and revolver reflects an LGD 2 loss given default assessment as these facilities are secured by a pledge of all of the company's assets and there is a significant amount of junior debt. The Caa1 rating of the $40 million 2nd lien term loan reflects an LGD5 loss given default assessment given that it is contractually subordinated to the first lien facilities. The stable outlook reflects Moody's expectation that leverage will decline from its pro forma level of about 5.0x over the next six to twelve months to at least within 2.5x during the upcycle. Moody's believes that lower leverage would better position the company in the event of a slow down in exploration and production activity which typically impacts seismic companies disproportionately. The outlook anticipates that any additional capex plans beyond current expectations are funded with either cash flow or equity and that debt reduction is ongoing. However, the outlook or ratings could be pressured if the company does not meet its projected earnings, cashflow, and leverage levels over the course of 2007. A positive outlook would require the company to continue to establish its track record as a stand alone seismic company, that management has exceeded its projected earnings and cashflows, and continues to increase its scale to levels more compatible to its B3 rated peers while maintaining leverage within the 2x level. Moody's believes that in 2007, Global will have adequate liquidity to fund approximately $94 million of planned capital expenditures, an estimated $10 million in interest expense and approximately $10 million of working capital needs. However, as a small and rapidly growing company, Global is prone to increase leverage that is needed for the necessary growth investment and in the event of a downturn, if earnings do not meet expectations, Global could face a potential liquidity problem. Global is headquartered in Houston, Texas and is worldwide land, transition zone, and shallow marine seismic data acquisition services provider. GOLD KIST: Pilgrim's Pride Completes Acquisition ------------------------------------------------ Pilgrim's Pride Corporation completed its acquisition of Gold Kist Inc., following its recently completed successful tender offer, which created the world's leading chicken company. "We are extremely pleased that the final step in our successful acquisition of Gold Kist has now been completed," said Lonnie "Bo" Pilgrim, chairman of Pilgrim's Pride. "We begin 2007 as the preeminent player in the chicken industry, positioned for long- term growth, leadership and value creation for our customers and stockholders." "We believe the acquisition of Gold Kist will be a transforming event for Pilgrim's Pride, not only by creating the industry leader but by making us a stronger and even more efficient company," O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer, added. "This acquisition will further enhance our long-standing reputation for providing outstanding customer service and product innovation, delivering greater value to our stockholders, employees and other constituencies. The integration process is already well under way and we are committed to ensuring a smooth transition of ownership and integration for our customers." As a result of the transaction, Gold Kist is now a wholly owned subsidiary of Pilgrim's Pride. All remaining outstanding shares of Gold Kist have been converted into the right to receive $21 per share in cash. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. About Gold Kist Based in Atlanta, Georgia, Gold Kist Incorporated (NASDAQ: GKIS) -- http://www.goldkist.com/-- operates a fully integrated chicken production, processing and marketing business. Gold Kist's production operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina * * * As reported in the Troubled Company Reporter on Dec. 6, 2006, Standard & Poor's Ratings Services reported that its 'B+' corporate credit rating and other ratings on poultry processor Gold Kist Inc. remain on CreditWatch with positive implications, where they were originally placed Aug. 21, 2006. GOLDEN KNIGHTS: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Golden Knights, Inc. 7109 Staples Mill Road Richmond, VA 23228 Bankruptcy Case No.: 06-33725 Chapter 11 Petition Date: December 21, 2006 Court: Eastern District of Virginia (Richmond) Judge: Douglas O. Tice Jr. Debtor's Counsel: Robert V. Roussos, Esq. Harbour Law, P.L.C. P.O. Box 3127 Norfolk, VA 23514 Tel: (757) 622-9005 Fax: (757) 623-8413 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ TMH, Inc. Note $300,000 1005 Richmond Road Williamsburg, VA 23188 Marvin and Mary Lou Note $250,000 Scoggins 701 Frans Drive Abingdon, MD 21009 GOODYEAR TIRE: Moody's Holds Corporate Family Rating at B1 ---------------------------------------------------------- Moody's Investors Service has affirmed Goodyear Tire & Rubber Company's Corporate Family Rating of B1. Ratings on Goodyear's existing secured and unsecured obligations were also affirmed as was the company's Speculative Grade Liquidity rating of SGL-2. The outlook has reverted to stable from negative. The actions comes after the resolution of Goodyear's organized labor contract with the USW in North America and more detailed disclosure of the settlement's applicable terms and benefits. Moody's would expect the company over time to achieve significant efficiencies from the new contract and other restructuring actions. Collectively, those developments will position the company's metrics in the B1 rating category. In the near-term, however, debt could peak at higher levels from the ramp-up of production, re-structuring expenditures from announced plant closures, and funding the contribution to a new VEBA account. Although improvement in Goodyear's performance is weighted towards 2008 and beyond, Moody's is comfortable that the company has sufficient liquidity to weather an interim period, and, thereafter, its coverage and leverage ratios would be on a recovery path from an enhanced cost structure, increased productivity, lower legacy costs and stream-lined manufacturing footprint. Ratings affirmed: * Goodyear Tire & Rubber Company -- Corporate Family Rating, B1 -- Probability of Default, B1 -- first lien credit facility, Ba1, LGD 2, 10% -- second lien term loan, Ba3, LGD 3, 35% -- third lien secured term loan, B2, LGD 4, 63% -- 11% senior secured notes, B2, LGD 4, 63% -- floating rate senior secured notes, B2, LGD 4, 63% -- 9% senior notes, B2, LGD 4, 63% -- 8 5/8 % senior unsecured notes due 2011, B2, LGD-4, 63% -- floating rate unsecured note due 2009, B2, LGD-4, 63% -- 8 1/2% senior notes, B3, LGD 6, 94% -- 6 3/8% senior notes, B3, LGD 6, 94% -- 7 6/7% senior notes, B3, LGD 6, 94% -- 7% senior notes, B3, LGD 6, 94% -- senior unsecured convertible notes, B3, LGD 6, 94% -- Speculative Grade Liquidity rating, SGL-2 * Goodyear Dunlop Tyres Europe -- Euro revolving credit facilities, Ba1, LGD 2, 10% -- Euro secured term loan, Ba1, LGD 2, 10% The last rating action was on Nov. 16, 2006 at which time ratings on the company's $1.0 billion of unsecured notes with maturities in 2009 and 2011 were assigned. Goodyear has stated that the terms of the new labor contract along with other actions reported during 2006 and early January 2007 will enable it to surpass its goals of reducing high cost tire manufacturing capacity and achieving a more competitive cost structure in its North American operations. Collectively, the actions at USW plants in North America are expected to generate annual savings of $300 million in 2009, which represents more than 3% of that segments sales. Savings from actions at its Valleyfield, Quebec plant and its Moroccan operations would be supplemental to that figure. The Tyler, Texas plant will operate through 2007, and Valleyfield, Quebec will continue tire production through the first half of this year. The bulk of the savings will not be realized until 2008 and beyond. In order to achieve those savings, some "up-front" expenditure will be required. These could lead to an increase in indebtedness during 2007 as working capital requirements are affected by the ramp of domestic production, contributions are made to the VEBA, cash restructuring costs for Valleyfield and Tyler, Texas in early 2008 are incurred, and any supplemental retirement "buy-outs" envisioned under the new USW agreement are considered. Potentially offsetting those requirements would be prospective proceeds from asset sales and/or an equity offering which the company is evaluating. Goodyear's Corporate Family rating of B1 continues to recognize strong scores for several factors in Moody's Automotive Supplier Methodology. These factors include the company's substantial scale, global brands with refreshed product offerings, leading market share, diversified geographic markets, and improved debt maturity and liquidity profiles. Scores for those qualitative attributes would normally track to a higher Corporate Family rating. However, the B1 rating considers Goodyear's relatively weak quantitative scores including leverage, which has stepped-up from recent borrowings and could increase further in the near- term, low EBIT returns and weak FCF/debt ratios. Contributions to pension plans will remain substantial for another year before declining in 2008. Scores from those quantitative factors counter qualitative strengths. The company faces challenges in restoring its balance sheet, and contending with various contingent liabilities. Debt levels should crest during 2007 and leverage measurements retreat as savings begin to be realized from the terms in its North American labor settlement and other actions. Realization of those efficiencies will require successful execution. The stable outlook considers the prospective benefits Goodyear is likely to achieve from the new labor contract and other restructuring actions that will ultimately lead to improved financial performance and lower leverage statistics. Existing cash and access to a sizable committed revolving credit facility provide sufficient resources to manage through what could be a choppy interim period during which demand in North American replacement tire markets may not experience any material growth and raw material costs remain volatile. While metrics for trailing periods covering the strike and its lingering effects in early 2007 may suggest lower rating categories, leverage and coverage measurements are expected to improve as savings are realized and demand stabilizes. Moody's also anticipates Goodyear's year-end balance sheet will confirm lower under-funded pension liabilities. The company is positioned with good liquidity and faces minimal debt maturities until 2009. A positive outlook or higher ratings could develop could develop if debt/EBITDA were to fall to 4x or below and EBIT/interest were to be sustained above 2 times while generating positive free cash flow. Application of proceeds from prospective asset sales or material equity issuance to reduce leverage could also facilitate stronger ratings. Downward pressure on the rating or a negative outlook could develop if replacement tire demand in North America were to weaken and produce lower margins. Similarly, higher raw material costs, which were not recovered from pricing actions or productivity gains, or an inability to realize savings associated with the new USW labor contract could also lead to lower profitability. Evidence of this could come from negative free cash flow, EBIT/interest declining below 1.25x, or debt/EBITDA metrics maintained at or above 5x beyond 2007. The SGL-2 liquidity rating represents good liquidity over the coming year. This stems from continuing extensive cash resources, which were supplemented by a $1 billion note offering in November, and access to a committed $1 billion revolving credit. Moody's would anticipate that a portion of cash resources will be utilized for funding a new VEBA trust, working capital requirements generated from the ramp of production in North America as well as the cash portion of restructuring costs at Tyler, Texas and Valleyfield, Quebec. Repayment of revolving credit borrowings in early January restored external liquidity, and the company continues with adequate cushion under its financial covenants. Terms of its bank credit agreement provide flexibility on the use of any potential asset sale proceeds and provide some source for alternate liquidity to develop. Goodyear Tire & Rubber Company, based in Akron, Ohio, is one of the world's largest tire companies with more than 100 facilities in 29 countries around the world. Products include tires, engineered rubber products, and chemicals. Revenues in 2005 were approximately $20 billion. GP INVESTMENTS: Fitch Rates Proposed $150 Million Notes at B ------------------------------------------------------------ Fitch rates GP Investments Ltd as: -- Foreign currency Issuer Default rating 'B'; and -- Intended issue of $150 million of perpetual notes 'B/RR4'. The Rating Outlook is Stable. GP's ratings are supported by conservative leverage levels, the franchise of the company and the experience of the management team which bodes well for positive prospects going forward. The ratings are constrained, however, by the highly concentrated nature of the intended investment portfolio, the negative cash flow implied by recurring fixed expenses versus recurring income, and the uncertainty related to the maturation period of the investment portfolio and GP's ability to realize investment gains. GP is a Bermuda exempted company that consolidates the activities of a private equity business and an asset management business in Brazil. The company's activities started in 1993 as an asset manager dedicated to private equity activities, managed by partners with substantial experience in the Brazilian market. A major corporate reorganization was completed in 2005 in preparation to an IPO of the company during year 2006. The company is listed on the Luxembourg Stock Exchange and also has a BDS program on the Brazilian Stock Market. Since 1993, GP has built up a successful track record in the Brazilian private equity market, having invested more than USD 1.4 billion in 40 companies in Brazil as of December 2006. Over time the company has refined its investment strategies. It currently looks to acquire investments only with control or joint control positions, with a preference for larger companies, and will not invest in start-ups and green field projects; while some limits regarding maximum exposures by company or sector are in place, GP's investment portfolio is, and will remain, highly concentrated. As of end September 2006, GP managed a portfolio of two investments and has reported the subscription of 4 additional investments. The significant reduction in the size of the investment portfolio down to $83,000,000 at end-September 2006, is the result of the reorganization process completed in 2006, where the company spun off the bulk of its previous investments in three other private equity funds and also completed the subscription of $308,000,000 in new capital through the successful IPO in the Brazilian and Luxembourg stock market. The proceeds are expected to be used to fund new investments in the private equity business. In addition to its private equity business, the company through its subsidiary GP Asset offers services focused on creating and managing alternative fixed-income, equity and multi-asset funds to institutional clients, financial intermediaries, private clients and investment vehicles in Brazil. This business provides an important portion of the recurring income of the company, though historically total recurring income has not been sufficient to cover operating expenses, which have been funded through the income generated by the positive results of the valuation and exits in the investment portfolio and the maintenance of liquidity on hand for these purposes. Given the unpredictable nature of the results and timing of capital gains in the investment portfolio or of the possible positive results in future exits of those investments and the concentration of the portfolio, Fitch Ratings believes that a more ample array of recurring income would be needed to sustain current operating expenses, which will include debt service after the issue, and enhance the risk profile of the company. The perpetual notes will have no fixed final maturity date and will be repaid only in the event that the Issuer redeems the notes or upon acceleration due to an event of default. The notes will be general unsubordinated obligations of the Issuer and will rank 'pari passu' with the issuer's unsubordinated indebtedness. The obligations of the Issuer under the notes will be secured by a first priority pledge by the Issuer of shares representing 100% of the currently outstanding shares of GP Private Equity Ltd., and liquidity will be supported by an 18 month coupon payment reserve which will be deposited in a trustee. The rating of the issuance recognizes the liquidity implicit in the coupon reserve, augmented by substantial cash currently on hand, nevertheless, the concern is that the latter is intended to be used for investments, and its availability at any point during the life of the debt instrument is difficult to predict. GSAA HOME: Moody's Rates Class I-B-1 Certificates at Ba1 -------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by GSAA Home Equity Trust 2006-S1, and ratings ranging from Aa1 to Ba1 to the mezzanine certificates in the deal. The securitization is backed fixed-rate, second lien mortgage loans. The collateral for Group I was acquired by M&T Mortgage Corporation, DHI Mortgage Company, Ltd., Residential Funding Company, LLC, SouthStar Funding LLC, Quicken Loans, Inc., and Alliance Bancorp. The collateral for Group II was originated by First Franklin Financial Corporation and acquired by National City Bank. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. Group II also receives protection from an interest rate cap and swap agreement between the trust and Goldman Sachs Mitsui Marine Derivative Products, L.P. Moody's expects collateral losses to range from 11.30% to 11.80% for Group I, and collateral losses to range from 7.10% to 7.60% for Group II. Ocwen Loan Servicing, LLC, Avelo Mortgage, L.L.C., and National City Home Loan Services, Inc., will service the loans. Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Ocwen Loan Servicing, LLC its servicer quality rating of SQ2- as a primary servicer of subprime loans. Furthermore, Moody's has also assigned National City Home Loan Services, Inc. its servicer quality rating of SQ2 as primary servicer of Second Lien loans and Wells Fargo its top servicer quality rating of SQ1 as master servicer. These are the rating actions: * GSAA Home Equity Trust 2006-S1 * Mortgage Pass-Through Certificates, Series 2006-S1 Class I-A-IO,Assigned Aaa Class I-A-1, Assigned Aaa Class I-M-1, Assigned Aa1 Class I-M-2, Assigned Aa2 Class I-M-3, Assigned A1 Class I-M-4, Assigned A2 Class I-M-5, Assigned Baa1 Class I-M-6, Assigned Baa2 Class I-M-7, Assigned Baa3 Class I-B-1, Assigned Ba1 Class II-A-1, Assigned Aaa Class II-M-1, Assigned Aa2 Class II-M-2, Assigned A2 Class II-M-3, Assigned A3 Class II-M-4, Assigned Baa2 Class II-M-5, Assigned Baa3 IRON MOUNTAIN: S&P Rates Proposed EUR175 Mil. Senior Notes at B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Iron Mountain Inc.'s proposed EUR175 million 6.75% senior subordinated notes due 2018. Proceeds from the proposed debt issuance will be used to repay other debt, including borrowings under Iron Mountain Inc.'s senior credit facilities, and for general corporate purposes. Standard & Poor's affirmed all existing ratings, including the 'BB-' corporate credit rating. The outlook is stable. Boston-based Iron Mountain had about $2.6 billion of debt outstanding as of Sept. 30, 2006. "The ratings reflect Iron Mountain's relatively high debt leverage, limited debt capacity for large acquisitions, and aggressive financial policies supporting its growth strategies," said Standard & Poor's credit analyst Andy Liu. "These factors are only partially offset by the company's leading position as the world's largest records management company and its reasonably stable growth from existing and new customer accounts." Iron Mountain provides warehouse storage for paper-based files, management of digital files, and other, complementary services. JP MORGAN: Fitch Holds Low-B Ratings on 4 Certificate Classes ------------------------------------------------------------- Fitch Ratings has affirmed these J.P Morgan Mortgage Trust issues: Series 2003-A1: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; and -- Class B-5 affirmed at 'B'. Series 2003-A2: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; and -- Class B-5 affirmed at 'B'. J.P. Morgan Acceptance Corporation I, a special purpose corporation, acquired the loans from various originators and deposited the loans in the trusts which issued the certificates. The mortgage loans in the series 2003-A1 transaction were originated by Cendant Mortgage Corporation. The mortgage loans in the series 2003-A2 transaction were originated by Countrywide Home Loans, Inc., Cendant Mortgage Corporation, and Wells Fargo Home Mortgage, Inc. The mortgage loans consist primarily of conventional, adjustable rate, fully amortizing, first-lien residential mortgage loans extended to prime borrowers. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $351.8 million of outstanding certificates. As of the December 2006 remittance period, series 2003-A1 is 38 months seasoned, and series 2003-A2 transaction is 37 months seasoned. The current pool factors are approximately 70% and 59% for series 2003-A1 and 2003-A2 transactions, respectively. All of the mortgage loans in the series 2003-A1 transaction are serviced by PHH Mortgage Corporation, which is rated 'RPS1-' by Fitch. The mortgage loans in the series 2003-A2 transaction are serviced by Countrywide Home Loans, Inc., PHH Mortgage Corporation, and Wells Fargo Home Mortgage, Inc. The master servicer for the series 2003-A2 transaction is Wells Fargo Bank Minnesota, National Association, rated 'RMS1' by Fitch. KARA HOMES: Court Approves Sale of Four New Jersey Projects ----------------------------------------------------------- Kara Homes Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of New Jersey to sell four of its projects at an auction slated for Feb. 15, GlobeSt.com reports. The sale will allow the Debtor to pay its $9 million debt to Magyar Bank. The four New Jersey projects are: * Dayna Estates in Toms River; * Hartley Estates in Toms River; * Sterling Acres in Monroe Twp.; and * Prospect Ridge in Stafford Twp. GlobeSt.com relates that in giving his approval, the Hon. Michael Kaplan said that the projects are unlikely to be profitable and the sale would attract a new developer to complete them. GlobeSt.com reports that Magyar has already placed an initial bid and quotes the bank's officials as saying that Magyar will essentially erase the debts owed and pay the Debtors $300,000 for the properties. Headquartered in East Brunswick, New Jersey, Kara Homes, Inc., aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. KNOLOGY INC: PrairieWave Buyout Cues Moody's Developing Outlook --------------------------------------------------------------- Moody's Investors Service changed Knology, Inc.'s outlook to developing after the company's disclosure of its $255 million cash acquisition of PrairieWave. PraireWave is a voice, video and high-speed Internet broadband services provider, like Knology, which should provide greater geographical diversification and potential for margin improvement. While the ultimate capital structure has not yet been determined, in Moody's view, Knology's corporate family rating could withstand an increase in leverage up to mid 5x range; however, the ratings of individual debt instruments could change. Once the details of the financing have been reported, Moody's expects to resolve the outlook and individual debt instrument ratings. Moody's does not anticipate a negative outlook as a result of this transaction. Knology's B2 corporate family rating reflects the company's lack of scale, financial risk, and concerns over competition, offset by the company's upgraded network, high penetration of multiple services, and reasonable diversification of cash flow among its markets relative to other companies of similar size. These are the rating actions: * Knology, Inc * Affirm -- B2 Corporate Family Rating -- B2 Probability of Default Rating -- Ba3, LGD3, 30% Senior Secured First Lien -- Caa1, LGD5, 82% Senior Secured Second Lien * Change -- Outlook Changed to Developing from Positive Knology, Inc. is a provider of video, Internet and telephony services via its broadband network. The company also provides traditional telephony services through its incumbent local exchange carrier subsidiary. The company maintains its headquarters in West Point, Georgia. KNOLOGY INC: Stock Purchase Cues S&P to Hold Credit Rating at B --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B' corporate credit rating, for West Point, Georgia-based cable overbuilder Knology Inc. This comes after Knology's disclosure that it signed a definitive agreement to acquire the stock of unrated PrairieWave Communications for $255 million in cash. Standard & Poor's expect the transaction to close during the second quarter of 2007. The outlook remains stable. Total debt was $273 million as of Sept. 30, 2006. "Although the amount of new debt to fund the acquisition has yet to be determined, our affirmation reflects that Knology can support a modest increase in leverage at the current rating level," said Standard & Poor's credit analyst Allyn Arden. "We base this opinion on the company's recent operating performance and our expectations that prospects for discretionary cash flow generation will remain good over the next couple of years." With the purchase of PrairieWave, which is also a cable overbuilder, Knology will gain about 56,000 residential and 7,200 commercial customers in South Dakota, as well as portions of Minnesota and Iowa. MALDEN MILLS: Organizational Meeting Scheduled on January 19 ------------------------------------------------------------ The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Malden Mills Industries, Inc. and its debtor-affiliates' chapter 11 cases at 10:00 a.m., on, Jan. 19, 2007, at Office of the United States Trustee, Room 2112, J. Caleb Boggs Federal Building, 844 North 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 Lawrence, Massachusetts, Malden Mills Industries, Inc. -- http://www.polartec.com/-- develops, manufactures, and markets Polartec(R) performance fabrics. Polartec(R) products range from lightweight wicking base layers to insulation to extreme weather protection and are utilized by the best clothing brands in the world. In addition, Polartec(R) fabrics are used extensively by all branches of the United States military including the Army, Navy, Marine Corps, Air Force, and Special Operations Forces. The company also has operations in Germany, Spain, France and the U.K. The company and four of its affiliates filed for chapter 11 protection on Jan. 10, 2007 (Bankr. D. Del. Case Nos. 07-10048 through 07-10052). Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, PC, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million to $100 million and estimated debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on May 10, 2007. MALDEN MILLS: Chrysalis Expresses Continued Interest in Assets -------------------------------------------------------------- Malden Mills Industries, Inc. and its debtor-affiliates filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware on Wednesday. As reported in yesterdays Troubled Company Reporter, the Debtors disclosed that its board of directors had unanimously voted to approve the sale of Malden Mills to Gordon Brothers Group of Boston, Massachusetts, for $44 million. The sale is planned to be implemented under chapter 11. Chrysalis Capital Partners confirms however that the sale is not complete and that Chrysalis continues to be interested in purchasing the assets of Malden Mills and operating the company. Chrysalis has submitted a similar offer to the owners of Malden Mills and is looking forward to participating in the auction. About Chrysalis Capital Chrysalis Capital Partners -- http://www.ccpfund.com/-- is a Philadelphia-based private equity firm with $300 million in capital under management. Chrysalis focuses on 'special situation' investing such as divestitures, buyouts, turnarounds, financial restructurings, reorganizations, and recapitalizations in middle-market companies across a wide range of industries throughout the United States. About Malden Mills Headquartered in Lawrence, Massachusetts, Malden Mills Industries, Inc. -- http://www.polartec.com/-- develops, manufactures, and markets Polartec(R) performance fabrics. Polartec(R) products range from lightweight wicking base layers to insulation to extreme weather protection and are utilized by the best clothing brands in the world. In addition, Polartec(R) fabrics are used extensively by all branches of the United States military including the Army, Navy, Marine Corps, Air Force, and Special Operations Forces. The company also has operations in Germany, Spain, France and the U.K. The company and four of its affiliates filed for chapter 11 protection on Jan. 10, 2007 (Bankr. D. Del. Case Nos. 07-10048 through 07-10052). Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, PC, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million to $100 million and estimated debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on May 10, 2007. MARCAL PAPER: Brings-In Cole Schotz as Bankruptcy Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan gave Marcal Paper Mills Inc. authority to employ Cole, Schotz, Meisel, Forman & Leonard as its bankruptcy counsel. Cole Schotz will: (a) advise the Debtor of its rights, powers, and duties as a Debtor-in-Possession in continuing to operate and manage its assets; (b) advise the Debtor concerning, and assisting in the negotiation of and documentation of, the use of cash collateral or post-petition financing, debt restructuring and related transactions; (c) review the nature and validity of agreements relating to the Debtor's business and property and advise the Debtor; (d) review the nature and validity of liens, if any, asserted against the Debtor and advise as to the enforceability of that liens; (e) advise the Debtor concerning the actions it might take to collect and recover property for the benefit of its estate; (f) prepare on the Debtor's behalf all necessary and appropriate applications, motions, pleadings, orders, notices, petitions, schedules, and other documents, and review all financial and other reports to be filed in the Debtor's Chapter 11 case; (g) advise the Debtor concerning, and preparing responses to, applications, motions, pleadings, notices, and other papers which may be filed in the Debtor's Chapter 11 case; (h) counsel the Debtor in connection with formulation, negotiation and promulgation of a plan of reorganization and related documents; and (i) perform all other legal services for and on behalf of the Debtor which may be necessary or appropriate in the administration of its Chapter 11 case and the Debtor's business and property, including advising and assisting the Debtor with respect to debt restructuring, asset dispositions, corporate, tax, finance, real estate and litigation matters. Michael D. Sirota, Esq., a Cole Schotz shareholder, will bill the Debtor $550 per hour for his work. Mr. Sirota discloses that the firm's other professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Laurence May, Esq. Partner $550 Gerald H. Gline, Esq. Partner $525 Stuart Komrower, Esq. Partner $450 Leo V. Leyva, Esq. Partner $460 Ilana Volkov, Esq. Partner $400 Warren A. Usatine, Esq. Partner $390 Kenneth L. Baum Partner $360 Mark J. Politan, Esq. Associate $280 Felice R. Yudkin, Esq. Associate $185 Eric Stein, Esq. Associate $180 Frances Pisano Paralegal $170 Cynthia Braden Paralegal $165 Mary Manetas Paralegal $145 Mr. Sirota assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Elmwood Park, NJ, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARCAL PAPER: U.S. Trustee Picks Seven-Member Creditors Committee ----------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Marcal Paper Mills Inc.'s chapter 11 case: 1. David Hudson, Jr., Chairperson Dixie Pulp & Paper, Inc. P.O. Box 20204 Tuscaloosa, AL 35402 Tel: (205) 759-2600 Fax: (205) 759-2606 2. David R. Jury, Esq. United Steelworkers Five Gateway Center, Room 807 Pittsburgh, PA 15222 Tel: (412) 562-2545 Fax: (412) 562-2429 3. Gregory A. Hadley, Esq. NewPage Corporation Courthouse Plaza, N.E. Dayton, OH 45463 Tel: (937) 242-9339 Fax: (937) 242-9324 4. Suzanne M. Klar, Esq. PSE&G 80 Park Plaza, T50 Newark, NJ 07102 Tel: (973) 430-6483 Fax: (973) 645-1103 5. Sheila Sedgwick Southern Container Corp. P.O. Box 9049 Smithtown, NY 11787 Tel: (631) 231-0400 Fax: (631) 231-0409 6. James T. Nicholson Ashland Inc. 5200 Blazer Parkway Dublin, OH 43017 Tel: (614) 790-3009 Fax: (614) 790-4054 7. Cosimo Tristani Rapid Processing, LLC 860 Humboldt Street Brooklyn, NY 11222 Tel: (718) 349-0500 Fax: (718) 349-8494 The Committee has selected Lowenstein Sandler PC as its counsel. 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 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 Elmwood Park, NJ, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtor. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MARIA STAUB: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Maria Staub 555 Northeast 15th Street, Suite 20A Miami, FL 33132 Bankruptcy Case No.: 07-10134 Chapter 11 Petition Date: January 10, 2007 Court: Southern District of Florida (Miami) Judge: Robert A. Mark Debtor's Counsel: Jordan E. Bublick, Esq. Jordan E. Bublick, P.A. 11645 Biscayne Boulevard, Suite 305A North Miami, FL 33181 Tel: (305) 891-4055 Fax: (305) 891-4038 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor did not file a list of its 20 largest unsecured creditors. MARINA OF NORTH CAROLINA: Involuntary Chapter 11 Case Summary ------------------------------------------------------------- Alleged Debtor: Marina of North Carolina, LLC dba Days Inn Motel Airport 3101 Scott Futrell Drive Charlotte, NC 28208 Involuntary Petition Date: January 9, 2007 Case Number: 07-30042 Chapter: 11 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Petitioners' Counsel: Richard M. Mitchell, Esq. Mitchell & Culp, PLLC 1001 Morehead Square Drive, Suite 330 Charlotte, NC 28203 Tel: (704) 333-0630 Fax: (704) 333-4975 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Adel Michael Member/Manager Unknown 74 West Rock Road Greenbrook, NJ 08812 Peggy Velez Member/Manager Unknown 74 West Rock Road Greenbrook, NJ 08812 MASTR ASSET: Moody's Rates Class M-11 Certificates at Ba2 --------------------------------------------------------- Moody's Investors Service has assigned an Aaa rating to the senior certificates issued by MASTR Asset Backed Securities Trust 2006- HE5 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by New Century Mortgage Corporation, EquiFirst Corporation, Decision One Mortgage Company, LLC, and First NLC Financial Services, LLC originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by UBS Real Estate Securities Inc. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by a subordination, excess spread, and overcollateralization. The ratings also benefit from both the interest-rate swap and interest-rate cap agreements, both provided by UBS AG. Moody's expects collateral losses to range from 4.75% to 5.25%. Barclays Capital Real Estate Inc., dba HomEq Servicing, will service the mortgage loans and Wells Fargo Bank, N.A. will act as master servicer to the mortgage loans. Moody's has assigned Wells Fargo its servicer quality rating SQ1 as a master servicer of mortgage loans. Moody's has assigned HomEq its servicer quality rating as a primary servicer of subprime loans. These are the rating actions: * MASTR Asset Backed Securities Trust 2006-HE5 * Mortgage Pass Through Certificates, Series 2006-HE5 Class A-1, Assigned Aaa Class A-2, Assigned Aaa Class A-3, Assigned Aaa Class A-4, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A2 Class M-7, Assigned A3 Class M-8, Assigned Baa1 Class M-9, Assigned Baa2 Class M-10,Assigned Baa3 Class M-11,Assigned Ba2 The Class M-11 Certificates were sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under Rule 144A. MCJUNKIN CORP: Moody's Places Corporate Family Rating at B1 ----------------------------------------------------------- Moody's Investors Service assigned a B1 corporate family rating to McJunkin Corporation, a Ba1 rating to McJunkin's proposed $200 million senior secured asset-based revolving credit facility, and a B2 rating to the proposed $575 million senior secured term loan facility. With approximately $241 million in equity from Goldman Sachs Capital Partners, the net proceeds from the notes will be used to fund the buyout of the company, repay substantially all of the existing indebtedness of McJunkin, and pay transaction fees and expenses. This is the first time Moody's has assigned ratings to McJunkin and the ratings remain subject to Moody's review of final documentation. Ratings assigned: -- Corporate family rating at B1; -- Probability of default rating at B1; -- $200 million Asset Based Revolving Credit Facility at Ba1, LGD2, 19%; and -- $575 million Term Loan Facility at B2, LGD4, 61% The B1 corporate family rating reflects McJunkin's high leverage, modest operating margins typical of metal distributors, exposure to the volatile energy sector, weak tangible asset coverage, and the potential for acquisitions. At the same time, the ratings recognize the company's generally stable operating margins and cash flow primarily due to McJunkin's margin based and cost-plus customer contracts, the countercyclical nature of working capital, and modest capital expenditures. This enables McJunkin to service debt in an up or down cycle as well as pursue organic growth opportunities. Further, the ratings incorporate McJunkin's moderate size, favorable market position, adequate liquidity, and a sense of balance between centralized and de-centralized management controls. Two other important factors influencing the ratings are Goldman Sachs Capital Partners' sponsorship of McJunkin and the fact that the company is operating in a highly levered environment for the first time. Moody's will continue to track how the owner's financial, operational, and exit strategies impact debt holders as well as whether it opts for special dividends or stock buybacks from McJunkin. The stable outlook reflects Moody's view that key rating factors are not likely to change over the near term. However, if the company sustains its volume levels and achieves expected cost savings, McJunkin could improve its credit metrics on a sustainable basis by reducing current debt levels. Specifically, if the company improves its credit metrics on a sustainable basis over the next 12 to 18 months by lowering its leverage ratio on an adjusted basis to 3.5x, generating significant free cash flow, and maintaining adequate liquidity, the ratings would likely improve. Factors that could negatively impact the ratings include a deterioration in liquidity, a weakening of working capital metrics, or additional debt-financed acquisitions. McJunkin Corporation, headquartered in Charleston, West Virginia, is a relatively large distributor of pipes, valves, and fittings, serving the five major end markets in the process industry: petroleum refinery, chemical processing, gas distribution and transmission, natural gas and oil exploration and production. MCJUNKIN CORP: S&P Places Corporate Credit Rating at B+ ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to McJunkin Corp., a distributor of pipes, valves and fittings to the energy and processing industries. At the same time, Standard & Poor's assigned a 'BB' rating and '1' recovery rating to McJunkin's proposed $200 million asset-backed revolving credit facility, and a 'B+' rating and '3' recovery rating to its proposed $575 million secured term loan. The '1' and '3' recovery ratings, respectively, indicate the expectation of full and meaningful recovery of principal in the event of a payment default. The outlook is stable. Pro forma for the expected bank debt issuances, Charleston, West Virginia-based McJunkin is expected to have $654 million in debt outstanding. Goldman Sachs Capital Partners will use the proceeds to partially fund its purchase of McJunkin. "The ratings on McJunkin reflect the highly fragmented and competitive industry in which the company operates, cyclical end- markets, aggressive financial leverage, the risk that volatile steel prices may negatively affect profitability, and relatively slow stock inventory turns," said Standard & Poor's credit analyst David Lundberg. "These weaknesses are only partially offset by the company's long- term customer relations, geographic and customer diversity, a highly variable cost structure, contracts that generally allow the company to pass along price increases to the customer, low capital expenditure requirements, and countercyclical cash flow from working capital," Mr. Lundberg continued. The outlook is stable. Standard & Poor's expects McJunkin's maintenance, repairs, and operations segment to continue to generate stable cash flow, and that new project opportunities will be sufficiently robust in the near term, given the outlook for exploration and production and refining capital spending. A significant drop in steel prices or a leveraging acquisition could result in a negative ratings action, although this is not expected in the near term. A cyclical downturn in the E&P, refining, or chemicals industries could also pressure ratings. A positive ratings action would be contingent on improvement in operating performance and financial measures. MEDINA FORWARDING: Involuntary Chapter 11 Case Summary ------------------------------------------------------ Alleged Debtor: Medina Forwarding Corp. c/o Ernesto Medina Flores Registered Agent 4640 Mar Street Brownsville, TX 78520 Involuntary Petition Date: December 29, 2006 Case Number: 06-10878 Chapter: 11 Court: Southern District of Texas (Brownsville) Judge: Richard S. Schmidt Petitioner's Counsel: Guillermo Vega, Jr., Esq. 302 Kings Highway, Suite 105 Brownsville, TX 78521 Tel: (956) 546-5573 Fax: (956) 542-1977 Petitioner Nature of Claim Claim Amount ----------- --------------- ------------ Carlos Gonzalez Valladares Debt $2,252,974 5 Palo Verde, Apartment 1 Brownsville, TX 78520 NASDAQ STOCK: Extends Final Offers for LSE Until January 26 ----------------------------------------------------------- The Board of The Nasdaq Stock Market Inc. extended its Final Offers for London Stock Exchange Group plc and will remain open for acceptance until 3.00 p.m. (London time) on Jan. 26, 2007. Nightingale Acquisition Limited, a wholly owned subsidiary of NASDAQ, owns 61,291,389 LSE Ordinary Shares, representing approximately 28.75%. of the existing issued ordinary share capital of LSE. As of Jan. 11, 2007, 3.00 p.m. (London time), being the First Closing Date, valid acceptances had been received by NAL in respect of a total of 1,307,978 LSE Ordinary Shares, representing approximately 0.61%. of the existing issued ordinary share capital of LSE and 33,931 LSE B Shares, representing approximately 0.43%. of the existing issued B share capital of LSE. Accordingly NAL owns, or has received valid acceptances in respect of, a total of 62,599,367 LSE Ordinary Shares representing approximately 29.36 per cent. of the existing issued ordinary share capital of LSE. Save as disclosed in the Offer Document and above, neither NAL, NASDAQ, nor, so far as NAL and NASDAQ are aware, any person acting in concert with either of them, is interested in or has any rights to subscribe for any LSE Shares, nor does any such person have any short position or any arrangement in relation to LSE Shares. LSE Shareholders who have not yet accepted the Final Offers and who hold LSE Shares in certificated form (that is, not through CREST) should complete, sign and return the relevant Form(s) of Acceptance in accordance with the instructions thereon and the instructions in the Offer Document as soon as possible and, in any event, so as to be received no later than 3.00 p.m. (London time) on Jan. 26, 2007. LSE Shareholders who have not yet accepted the Final Offers and who hold LSE Shares in uncertificated form (that is, through CREST), should submit a TTE instruction in accordance with the instructions in the Offer Document for settlement as soon as possible and, in any event, by no later than 3.00 p.m. (London time) on Jan. 26, 2007. Copies of the Offer Document, the Response Document and Forms of Acceptance are available for collection (during normal business hours only) from: Capita Registrars The Registry 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom -- and -- Greenhill & Co. International LLP Lansdowne House 57 Berkeley Square London W1J 6ER, United Kingdom. The Offer Document and the Response Document are also available on NASDAQ's website. The Final Offers will not be revised except that NAL reserves the right to revise the Final Offers: (i) upon the recommendation of the LSE Board; or (ii) if a firm intention to make a competing offer for LSE is announced, whether or not subject to any preconditions. The Nasdaq Stock Market Inc. -- http://www.nasdaq.com/-- is the largest electronic equity securities market in the United States with approximately 3,200 companies. * * * In December 2006, Standard & Poor's Rating Services lowered its long-term counterparty credit rating on The Nasdaq Stock Market Inc. to 'BB' from 'BB+'. The 'BB+' rating on Nasdaq's existing bank loan facility, which financed the initial 29% stake in the London Stock Exchange, is affirmed, while the Recovery Rating is revised to '1' from '2'. The ratings were removed from CreditWatch Negative where they were placed on Nov. 20, 2006. S&P said the outlook is stable. At the same time, Standard & Poor's has assigned its 'BB+' bank loan rating to $750 million senior secured Term Loan B, $2 billion senior secured Term Loan C, and $75 million revolver issued by Nasdaq, as well as the $500 million senior secured Term Loan C issued by Nightingale Acquisition Ltd., a U.K.-based subsidiary of Nasdaq. The rating agency has assigned a Recovery Rating of '1', which indicates full recovery of principal in the event of default. In addition, Standard & Poor's has assigned its 'B+' rating to $1.75 billion senior unsecured bridge loan issued by Nasdaq and NAL. Moody's Investors Service assigned in April 2006 ratings to three bank facilities of The Nasdaq Stock Market Inc.: a $750 million Senior Secured Term Loan B, a $1.1 billion Secured Term Loan C, and a $75 million Senior Secured Revolving Credit Facility. Moody's said each facility is rated Ba3 with a negative outlook. NATURADE INC: Court Says Disclosure Statement is Adequate --------------------------------------------------------- Naturade, Inc. said that its Disclosure Statement under Chapter 11 of the Bankruptcy Code was approved by the U.S. Bankruptcy Court for the Central District of California, Santa Ana Division. The Company had sought Chapter 11 protection to reorganize on Aug. 31, 2006 and is on track to emerge from Chapter 11 before the end of February 2007 as a reorganized and recapitalized company. Naturade has the support of its lender and the Official Creditors Committee for its Plan of Reorganization and fully expects that it will be approved by the Court in February. "Naturade has a strong legacy of product excellence and innovation in consumer nutritional supplements and was in the health food industry long before the term 'health food industry' was even invented," according to Naturade's CEO Richard Munro, referring to Naturade's establishment in 1926. Mr. Munro, an experienced turnaround and reorganization specialist, has managed Naturade during the reorganization process and has overseen the implementation of its reorganization plan. "During the Chapter 11 process, Naturade has managed to preserve its reputation as a premier supplier of natural nutritional supplements and wellness products and the support of its customer base," stated Mr. Munro. "The substantial capital infusion that Naturade will receive as part of its reorganization plan, is expected to give Naturade the financial strength and appropriate structure to grow and continue to build upon its 80-year history." Mr. Munro added that, "Naturade has an experienced management team, strong sales, great products and loyal customers. We have plans to launch innovative new products in 2007 and beyond to continue to build on our consumer brand strengths and highly valued retailer relationships." Overview of the Plan As reported in the Troubled Company Reporter on Dec. 14, 2006, the Debtor's financial projections indicate that it will have enough resources to meet all of its obligations under the Plan as well as pay the cost of its ongoing business operations after the effective date. The Debtor estimates that it will have approximately $1.4 million in cash to pay approximately $1.1 million of its obligations on the effective date. Payments due on the effective date include administrative claims, allowed priority unsecured claims, cure claims and Plan Agent fees. Ongoing payments to certain secured creditors and the General Unsecured Creditor class under the Plan will be funded from the Debtor's operations. Treatment of Claims The Debtor's plan groups claims against the estate into eight creditor classes and one equity class. With the exception of Allowed Priority Unsecured Claims, all classes are impaired under the Plan. Laurus Master Fund, LP, asserts a secured claim of approximately $2.7 million against the Debtor on account of a Revolving Note and a Term Note. On the effective date, the Debtor will deliver to Laurus an amended and restated promissory note for obligations owed under the Revolving Note. The post-confirmation revolving note will mature on Jan. 1, 2010. In full satisfaction of Laurus' secured claim as evidenced by the Term Note, the Debtor will also issue an amended and restated promissory note. The Debtor will pay to Laurus equal monthly installments of principal and interest under the post confirmation term note beginning on the first full month after the effective date and continuing until January 2010. Health Holdings' approximately $1.3 million claim will be bifurcated into a $900,000 allowed secured claim and a $400,000 deficiency claim. In satisfaction of the $900,000 allowed secured portion, Health Holdings will receive from 33% up to 100% of the Reorganized Debtor's issued and outstanding common stock. The amount of common stock to be issued to Health Holdings will depend on operative provisions embodied in the Debtor's Plan. Howard Shao's secured claim will be paid in monthly installments of principal and interest beginning on the first full month following the effective date and continuing until Dec 2009. Any unpaid claim will become due and payable on Jan. 1, 2010. Mr. Shao's claim will bear interest at 10.5% per annum. Redux Holdings, Inc. has agreed to waive and release its $161,030 secured claim in exchange for interests in the Reorganized Debtor in accordance with provisions of the Plan. Allowed Priority Unsecured Claims totaling approximately $77,041 will be paid in full, in cash, on the effective date of the Plan. The Debtor estimates that no less than $5.5 million of General Unsecured Claims will be asserted in its bankruptcy case. Pursuant to the Plan, if the treatment of General Unsecured Claims provided by Section 6.7.1.1 is applicable, unsecured creditors will receive on each distribution date, their pro rata interest in essentially 50% of the Reorganized Debtor's net cash flow. The Debtor estimates that unsecured creditors will recover, over the three-year term of the Plan, approximately 15.8% of their allowed claims. Headquartered in Brea, California, Naturade Inc. (OTC BB:NRDCE.OB) -- http://www.naturade.com/-- distributes nutraceutical supplements. The Company filed for chapter 11 protection on Aug. 31, 2006 (Bankr. C.D. Calif. Case No. 06-11493). Richard H. Golubow, Esq., Robert E. Opera, Esq. and Sean A. O'Keefe, Esq., at Winthrop Couchot P.C., in Newport Beach, California, represent the Debtor. When the Debtor filed for protection from its creditors, it listed assets of $10,255,402 and debts of $18,427,161. NAVISTAR INT'L: Fitch Rates Proposed $1.3 Billion Facility at BB- ----------------------------------------------------------------- Fitch has assigned a 'BB-' rating to Navistar International Corp.'s proposed $1.3 billion senior unsecured credit facility. Fitch also withdraws the 'BB-' rating on NAV's senior unsecured notes, the 'B' rating on NAV's senior subordinated debt, and the senior unsecured debt rating at Navistar Financial Corp., all of which have been substantially retired. Fitch expects to withdraw the 'BB-' rating on NAV's existing credit facility upon the closing of the new $1.3 billion facility. These are Fitch's existing ratings on NAV and Navistar Financial Corp.: Navistar International Corp.: -- Issuer default rating 'BB-'; and -- Senior unsecured bank facility 'BB-'. Navistar Financial Corp.: -- IDR 'BB-'; and -- Senior unsecured bank lines 'BB-'; All of NAV's and NFC's ratings remain on Rating Watch Negative. The ratings cover approximately $2.5 billion in debt. Resolution of the Watch status will be contingent on the filing of audited financial statements and the outcome of the ongoing SEC investigation. Further material delays in filing, material restatements of financial position or worse-than-expected operating results could lead to a review of the rating for a downgrade. NAV's ratings reflect the company's extended delayed filings of audited financial statements, the scale and uncertainty of any adjustments that may be required to the historical financials from fiscal years 2002 through 2004 and for the first nine months of fiscal 2005, and the potential for limited access to external capital that is aggravated by the potential delisting of NAV's stock from the New York Stock Exchange. A variety of accounting issues will be addressed with the re-filings. In 2006, NAV changed auditors, extending the timetable for the resolution of the restatements. Navistar's new $1.3 billion credit facilities will consist of a $1.1 billion term loan and a $200 million synthetic revolving credit facility, which will be fully drawn upon closing. The transaction is expected to close the week of Jan. 15, and the proceeds will be used to repay the remaining amount outstanding under the existing loan facility. The new facilities will reduce interest payments slightly and will extend the maturity to 2012, which will give NAV funding through the next emission requirement in 2010. Navistar's truck shipments increased 13.7%, or 17,801 units, in fiscal year 2006, but its engine shipments were off slightly due to slowing Ford F series truck sales. NAV's un-audited year-end 2006 cash balance was $1.2 billion, positioning the company well for the heavy duty truck downturn that is expected this year. Navistar has indicated that capital expenditures in 2007 will be between $250 million-$300 million and that cash flow from operations will be stronger than in 2004, when it was $315 million. Free cash flow in 2007 could be negative due to the downturn, continued competitive pricing pressures and high commodity costs, but liquidity remains adequate to finance modest negative cash flow prior to an anticipated rebound in end-demand. Navistar's underfunded pension position will continue to be a meaningful claim on cash flow over the intermediate term. Higher required contributions in later years could coincide with a cyclical decline in operating cash flows, potentially limiting Navistar's capacity to produce free cash flow. NEFF CORP: Good Performance Prompts S&P's Stable Outlook -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Miami- based equipment rental company Neff Corp., including its 'B+' corporate credit rating. In addition, Standard & Poor's removed all ratings from CreditWatch where they were placed with positive implications on May 31, 2006. The outlook is stable. "The action reflects the decreased likelihood that Neff will complete an IPO that it filed in May 2006 in the near term," said Standard & Poor's credit analyst John R. Sico. The CreditWatch had reflected that proceeds from an IPO used for debt repayment, concurrent with the improved operating performance, would enhance the company's credit profile and possibly lead to a modest upgrade. Neff is currently demonstrating improved operating performance, as should be expected during the cyclical upswing in the industry. Absent the IPO, upside to the ratings is limited as the company does not generate sufficient free cash flow to materially reduce high debt levels as a consequence of the 2005 recapitalization. Additionally, if the company pursued a more aggressive financial policy, specifically acquisitions or dividends, it would risk a downgrade or outlook revision to negative. NEWPAGE CORP: Good Financial Profile Cues S&P's Positive Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Dayton, Ohio-based NewPage Corp. and removed all ratings from CreditWatch, where they had been placed with positive implications on April 20, 2006, in connection with the company's planned IPO. The outlook is positive. "The rating action reflects an improving financial risk profile, which could produce credit metrics appropriate for a higher rating," said Standard & Poor's credit analyst John Kennedy. "Despite delaying its proposed IPO, the company has reduced its debt by about $215 million since year-end 2005, primarily using proceeds from asset sales. Furthermore, we expect to raise NewPage's corporate credit rating to 'B+' if an IPO and additional debt reduction are completed on terms substantially similar to those currently indicated by the company, resulting in leverage of 5x or less." At the same time, Standard & Poor's said it raised its ratings on the company's existing $750 million senior secured first-lien term loan to 'B+' from 'B', the $571 million of second-lien secured notes to 'B-' from 'CCC+', the recovery ratings on the first-lien facilities to '1' from '2', and the second-lien secured notes to '3' from '5'. The '1' recovery rating indicates the high expectation of full recovery of principal in the event of a payment default or bankruptcy; while the '3' indicates meaningful recovery of principal in the event of payment default or bankruptcy. These actions reflect the reduction in first-lien debt, which has improved recovery prospects for both these debt tranches. "Reasonable near-term prospects for coated-paper markets should allow NewPage to generate free cash flow," Mr. Kennedy said. "We could raise the ratings if NewPage's capital structure becomes less aggressive. We could revise the outlook to stable if a significant industry downturn or rising costs result in a material deterioration in NewPage's credit measures." NICHOLAS-APPLEGATE: Moody's Junks Rating on $10 Mil. Class D Notes ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings on these classes of notes issued by Nicholas-Applegate CBO I Limited: * $12,830,000 Class C Participating Notes, Due 2012 -- Prior Rating: Baa3, on watch for possible downgrade -- Current Rating: Ba3 * $10,690,000 Class D Floating Rate Notes, Due 2012 -- Prior Rating: B1, on watch for possible downgrade -- Current Rating: Caa3 Moody's has also confirmed the ratings on these classes of notes issued by Nicholas-Applegate CBO I Limited: * $23,700,000 Class B-1 Floating Rate Notes, Due 2012 -- Prior Rating: A3, on watch for possible downgrade -- Current Rating: A3 * $2,500,000 Class B-2 Fixed Rate Notes, Due 2012 -- Prior Rating: A3, on watch for possible downgrade -- Current Rating: A3 Moody's noted that the rating action was primarily due to deterioration in the transaction's credit quality as measured by the weighted average rating factor and decline in the weighted average coupon , as well as the higher than covenanted concentration of securities rated Caa1 or below by Moody's. Furthermore, the transaction's underhedged position poses interest rate risk that could possibly have a negative impact on the transaction's performance in the future. NORTHWEST AIRLINES: In Talks with Delta Air on Possible Merger -------------------------------------------------------------- Northwest Airlines Corp. and Delta Air Lines Inc. has been in recurring talks regarding a possible link-up following their respective emergence from bankruptcy protection later this year, The Wall Street Journal reports citing people familiar with the issue. WSJ relates that these meetings, between executives at various levels as well as their respective advisers, have helped Delta's creditors recognize that a combination with Northwest is a better alternative to US Airways Group Inc.'s takeover. On Wednesday, US Airways revised its upped its offer to $10.2 billion. Delta had previously rejected U.S. Airways' $8.4 billion bid and filed a stand-alone plan with the U.S. Bankruptcy Court for the Southern District of New York. Delta said that the offer would result in substantially inferior value for creditors compared with its standalone Plan. Delta's financial adviser, The Blackstone Group, estimated the carrier's equity value to be approximately around $9.4 billion to $12 billion. Delta's Official Committee of Unsecured Creditors supported the standalone plan. With US Airways' new offer, Delta's creditors, who met Wednesday, are taking the improved offer seriously, WSJ cites a person familiar with the matter. Delta's creditors also intend to pressure the carrier into opening its books. WSJ also relates that there has also been contacts by UAL Corp.'s United Airlines with Delta but it wasn't clear if Delta has officially investigated an alternative deal with either Northwest or United. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. The Debtors filed their Chapter 11 Plan and Disclosure Statement on Dec. 19, 2006. A hearing to consider the adequacy of the Disclosure Statement is set on Feb. 7, 2007. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. NORTHWEST AIRLINES: Seeks Court's Approval on New IAM Agreement --------------------------------------------------------------- Northwest Airlines Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's approval of, and consent to enter into, the Letter of Agreement and Claim Sale Agreement with the International Association of Machinists and Aerospace Workers, District 143. The Court previously approved a compromise and settlement between the Debtors and the IAM and authorized the Debtors to enter into the IAM Letters of Agreement. The Letters of Agreement provide, among other things, that on the effective date of (i) any Chapter 11 plan for the Debtors, and (ii) the IAM Restructuring Agreements, IAM will have an allowed, general unsecured, non-voting, prepetition claim in the Debtors' Chapter 11 cases for $181,000,000 in respect of the concessions the union made. IAM sought amendments to the Letters of Agreement to facilitate the sale of 20% of the IAM Claim to a third party, so that the Debtors' IAM-represented employees who so elect may receive consideration on account of the purchased claim earlier than contemplated in the Letters of Agreement. In light of the benefits that will inure to the Debtors' IAM- represented employees, the Debtors have agreed to modify the Letters of Agreement by a new Letter of Agreement dated as of December 28, 2006. The Debtors have also agreed to enter into a Claim Sale Agreement with IAM and a purchaser of a portion of the IAM Claim to effectuate the transaction. New Agreements Pursuant to the New Letter of Agreement, the parties have agreed, among other things, that: (1) On the effective date of (i) any Plan for the Debtors; and (ii) any plan of agreement between IAM and the Debtors, IAM will have an allowed general unsecured prepetition non-voting claim in the Debtors' Chapter 11 cases for $181,000,000 in respect of the concessions made by IAM; (2) The IAM Claim may not be assigned or transferred in any way, nor is IAM permitted to grant any direct or indirect participation in the IAM Claim until after the effective date of the Debtors' Plan; (3) To provide the Debtors' IAM-represented employees with the opportunity to receive proceeds from a portion of the IAM Claim, the Debtors will make the Purchased Claim available to IAM for assignment or transfer under the terms of the Claim Sale Agreement upon Court approval of the New Letter of Agreement; (4) The Debtors will distribute the proceeds of the sale directly to individual IAM-represented employees net of all applicable income tax withholdings and payroll taxes, which will be withheld by the Debtors and remitted to the appropriate taxing authorities; and (5) Neither the IAM Claim, nor the Purchased Claim, will be allowed for voting purposes. The Debtors note that upon the effectiveness of the New Letter of Agreement, the IAM Claim will be reduced by the Purchased Claim, and the Purchased Claim will be allowed as general unsecured prepetition non-voting claim in the Debtors' cases for $36,200,000. The New Letter of Agreement also provides certain restrictions on ownership of common equity of the Debtors to be consistent with the terms of the Court order regarding the trading of the Debtors' claims and equity securities. IAM said on its Web site that the unsecured claim will be sold for 86.5 cents on the dollar. The union is currently reviewing the most equitable way to distribute the payment of the unsecured claims. The IAM says its economic advisor will calculate the amount each IAM-represented employee is due based on the amount of actual wage concession each employee has made, before Northwest makes the distributions. The Claim Sale Agreement provides a mechanism by which the Purchaser, through the Debtors, will pay to the Debtors' IAM- represented employees, to the extent they are eligible to participate, the value received by the Debtors on account of the sale of the Purchased Claim. Under the Claim Sale Agreement, the Purchaser will acquire all right, title and interest to the consideration that would otherwise be distributed to IAM and the Debtors' IAM-represented employees under the Debtors' Plan in consideration of the Purchased Claim. The Claim Sale Agreement also provides that each Purchaser, and any person who acquires any portion of the Purchased Claim from the Purchaser, agrees that they will be subject in all respects to the provisions of the Court order regarding trading of the Debtors' claims and equity securities. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. The Debtors' exclusive period to file a chapter 11 plan will expire on Jan. 16, 2007. (Northwest Airlines Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) OWENS CORNING: Judge Fitzgerald Okays $2 Mil. Louisiana Accord -------------------------------------------------------------- The Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware approved Reorganized Owens Corning and its debtors-affiliates' $2 million settlement agreement with the state of Louisiana. As reported in the Troubled Company Reporter on Nov. 23, 2006, the Reorganized Debtors sought Judge Fitzgerald's approval of their settlement agreement with the state of Louisiana. The Settlement Agreement relates to Louisiana's Claim No. 7827, which was asserted against Owens Corning in April 2002 on account of certain alleged asbestos-related property damage, Kathleen P. Makowski, Esq., at Saul Ewing LLP, in Wilmington, Delaware, notes. The Settlement Agreement will result in a substantial reduction of the claim amount from approximately $582,000,000 to $2,000,000, Ms. Makowski tells the Court. Headquartered in Toledo, Ohio, Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. The Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed on Sept. 28, 2006, the order of the Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on Oct. 31, 2006, marking the company's emergence from Chapter 11. (Owens Corning Bankruptcy News, Issue No. 147; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). OWENS CORNING: Bemis Want $939,000 Admin. Claim Held as Valid ------------------------------------------------------------- Bemis Co. Inc. asks the U.S. Bankruptcy Court for the District of Delaware to (i) establish that it holds a valid postpetition claim against Reorganized Owens Corning and its debtor affiliates for $939,897 net of credits, (ii) allow its claim as an administrative expense, and (iii) direct the Reorganized Debtors' estates to immediately pay the claim. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, says Bemis will withdraw its request in the event the Reorganized Debtors pay the invoices that are the basis for the claim, as well as other postpetition and pre-Effective Date amounts, prior to the hearing on Bemis' request. Bemis, supplied polyethylene single wrappers to Owens Corning before the Reorganized Debtors' filing for bankruptcy and while the company was under bankruptcy protection. The Debtors paid for the goods purchased postpetition in the regular course of their business. According to Mr. Carignan, as of Dec. 14, 2006, certain postpetition and pre-Effective Date invoices for goods purchased by the Debtors, aggregating $939,894 net of credits, remain unpaid. Bemis expects the Reorganized Debtors to satisfy the unpaid invoices via ordinary payment practices. In an abundance of caution and given the deadline for submitting administrative claims, Bemis has filed a request for payment of its administrative claim merely to preserve its rights to recover on the invoices in the event that the invoices are not satisfied prior to a hearing on the claims it asserted. Headquartered in Toledo, Ohio, Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. The Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed on Sept. 28, 2006, the order of the Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on Oct. 31, 2006, marking the company's emergence from Chapter 11. (Owens Corning Bankruptcy News, Issue No. 148; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). OWNIT MORTGAGE: Section 341(a) Meeting Slated for January 23 ------------------------------------------------------------ The U.S. Trustee for Region 16 will convene a meeting of Ownit Mortgage Solutions, Inc.'s creditors at 1:00 p.m., on Jan. 23, 2007, at Room 105, 21051 Warner Center Lane, in Woodland Hills, California. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Agoura Hills, California, Ownit Mortgage Solutions, Inc. is a subprime mortgage lender, which specializes in making loans to borrowers with poor credit or limited incomes. The Debtor filed for chapter 11 protection on Dec. 28, 2006 (Bankr. C.D. Calif. Case No. 06-12579). Linda F. Cantor, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represents the Debtor in its restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, it estimated assets between $1 million to $50 million and debts with more than $100 million. OWNIT MORTGAGE: Wants to Walk Away from Unexpired Leases -------------------------------------------------------- Ownit Mortgage Solutions Inc. asks the U.S. Bankruptcy Court for the Central District of California for authority to reject unexpired nonresidential real property leases, including all of the its leases and subleases, except for: a) the sublease for the Debtor's headquarters facility in Agoura Hills, California; b) the now expired lease for the Debtor's former branch at 6925 Union Park Center, Suite 345, in Midvale, Utah; and c) the former, terminated lease for the Debtor's former branch at 123 North Lake Avenue, in Pasadena, California. The Debtor informs the Court that they have been in talks with the sublandlord under the Agoura Sublease in connection with the Debtor's continued, limited use of the facility during the bankruptcy. The Debtor says that the Utah Lease expired effective Dec. 31, 2006. Prior to the bankruptcy filing, the Pasadena Lease has been terminated and the Debtor has surrendered the location to the landlord. According to the Debtor, it has ceased all operations at the leased locations, as well as in the Utah and Pasadena locations. It has vacated these locations except for certain remaining personal property. The Debtor believes that these leases will not obtain any material value to its estate and rejecting them would minimize administrative rent obligations. A full-text list of the contracts and leases can be accessed for free at http://researcharchives.com/t/s?1858 Headquartered in Agoura Hills, California, Ownit Mortgage Solutions, Inc. is a subprime mortgage lender, which specializes in making loans to borrowers with poor credit or limited incomes. The Debtor filed for chapter 11 protection on Dec. 28, 2006 (Bankr. C.D. Calif. Case No. 06-12579). Linda F. Cantor, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represents the Debtor in its restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, it estimated assets between $1 million to $50 million and debts with more than $100 million. PERFORMANCE TRANSPORTATION: Can Close Curtis Bay Terminal --------------------------------------------------------- The Honorable Michael J. Kaplan of the U.S. Bankruptcy Court for the Western District of New York authorized Performance Transportation Inc. and its debtor-affiliates to close their vehicle distribution terminal located at Curtis Bay, Maryland. In addition to authorizing the Debtors to close the terminal, Judge Kaplan rules that any person or entity that may hold or assert a claim arising from or related to the closing of the Curtis Bay Terminal, including the Local 557 Plan and New York Teamsters Council Health and Hospital Fund, for withdrawal liability or unpaid contributions, must file a proof of claim on or before Jan. 16, 2007, or the claim will be discharged in its entirety as against the Debtors, the Reorganized Debtors and their estates. Terminal's Negative Earnings To efficiently conduct their vehicle-hauling operations, the Debtors maintain 32 vehicle distribution terminals throughout the United States and Canada wherein they receive shipments of new vehicles from their customers, Garry M. Graber, Esq., at Hodgson Russ LLP in Buffalo, New York, related. During their Chapter 11 cases, the Debtors have analyzed the viability of each of the Terminals, and have determined that the terminal located at Curtis Bay, Maryland, is unprofitable because: (a) it had negative earnings of approximately $400,000 in 2005; (b) it will have estimated negative earnings of approximately $125,000 for 2006; and (c) it is believed to continue experiencing annual losses of approximately $125,000. Mr. Graber further noted that the Debtors have been unable to increase their earnings from the Curtis Bay Terminal since they provide vehicle-hauling services to only one customer. The Debtors believe that closing the Curtis Bay Terminal will provide them with significant cost-savings because, among others: (a) the Debtors maintain 18 vehicle-hauling tractor trailer units at the Terminal. As the Rigs depreciate, the Debtors will incur greater costs to maintain and operate the Rigs; and (b) the Debtors incur approximately $2,000,000 in annual employee-related expenses on account of their operations at the Terminal. Upon closure of the Terminal, the employees will no longer be employed by the Debtors. The Debtors believe that closing the Curtis Bay Terminal is in the ordinary course of business and that they are authorized to close the Terminal under Section 363(c) of the Bankruptcy Code without seeking Court approval. Out of an abundance of caution, however, the Debtors asked the Court to enter a ruling authorizing them to close the Curtis Bay Terminal. The closure of the Curtis Bay Terminal will also mean the termination of 15 union employees, which in turn, eliminates the Debtors' obligation to make contributions to a Freight Drivers and Helpers Local Union No. 557 Pension Plan, Mr. Graber said. The Debtors are expected to incur withdrawal liability to the Local 557 Plan as a result of their complete cessation of contributions to the Local 557 Plan. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PERFORMANCE TRANSPORTATION: Wants Union's Claim Set as Prepetition ------------------------------------------------------------------ Performance Transportation Inc. and its debtor-affiliates ask the Honorable Michael J. Kaplan of the U.S. Bankruptcy Court for the Western District of New York to determine that the Local 557 Plan's Withdrawal Liability Claim is a prepetition unsecured claim, and is not entitled to any administrative expense or priority status under the Bankruptcy Code. In connection with the closure of their terminal located in Curtis Bay, Maryland, and the termination of 15 employees who are members of a local union affiliated with the International Brotherhood of Teamsters, the Debtors anticipate that Freight Drivers and Helpers Local Union No. 557 Pension Plan will file a proof of claim for withdrawal liability pursuant to Section 4201 of the Employee Retirement Income Security Act of 1974. Garry M. Graber, Esq., at Hodgson Russ LLP in Buffalo, New York, relates that the Debtors are otherwise current with respect to their payments to the Local 557 Plan and, therefore, only seek estimation of the Withdrawal Liability Claim. The Debtors estimate that the amount of the Local 557 Plan's Withdrawal Liability Claim will be approximately $6,000,000. The Debtors believe that the Withdrawal Liability Claim is a prepetition unsecured claim properly classified as a Class 5 Claim in their confirmed Plan of Reorganization. However, Mr. Graber says, the Debtors anticipate that the Local 557 Plan may disagree with the classification. To the extent that some or all the claim is allowed as an administrative expense or priority claim, the claim may impair the Debtors' ability to obtain the requisite financing necessary to emerge from their Chapter 11 cases. The Withdrawal Liability Claim is not entitled to priority status under the Bankruptcy Code, Mr. Graber reminds the Court. If the Withdrawal Liability Claim is deemed an administrative expense or priority claim, the Debtors will be required to fully satisfy the $6,000,000 claim -- the payment of which may significantly impair the Debtors' ability to maintain the level of earnings and liquidity required by the lenders under the Debtors' proposed exit financing. If the lenders of the Debtors' proposed exit financing are not certain of the Debtors' ability to maintain the requisite level of earnings and cash flow, the lenders may not be willing to finalize the terms of the financing. Without the financing, Debtors will not be able to consummate their confirmed Plan of Reorganization, Mr. Graber tells Judge Kaplan. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) PILGRIM'S PRIDE: Completes Acquisition of Gold Kist --------------------------------------------------- Pilgrim's Pride Corporation completed its acquisition of Gold Kist Inc., following its recently completed successful tender offer, which created the world's leading chicken company. "We are extremely pleased that the final step in our successful acquisition of Gold Kist has now been completed," said Lonnie "Bo" Pilgrim, chairman of Pilgrim's Pride. "We begin 2007 as the preeminent player in the chicken industry, positioned for long- term growth, leadership and value creation for our customers and stockholders." "We believe the acquisition of Gold Kist will be a transforming event for Pilgrim's Pride, not only by creating the industry leader but by making us a stronger and even more efficient company," O.B. Goolsby, Jr., Pilgrim's Pride president and chief executive officer, added. "This acquisition will further enhance our long-standing reputation for providing outstanding customer service and product innovation, delivering greater value to our stockholders, employees and other constituencies. The integration process is already well under way and we are committed to ensuring a smooth transition of ownership and integration for our customers." As a result of the transaction, Gold Kist is now a wholly owned subsidiary of Pilgrim's Pride. All remaining outstanding shares of Gold Kist have been converted into the right to receive $21 per share in cash. About Gold Kist Based in Atlanta, Georgia, Gold Kist Incorporated (NASDAQ: GKIS) -- http://www.goldkist.com/-- operates a fully integrated chicken production, processing and marketing business. Gold Kist's production operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Moody's Investors Service's held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its $100 million 9.25% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. As reported in the Troubled Company Reporter on Dec. 6, 2006, Standard & Poor's Ratings Services reported that its 'BB' corporate credit rating and other ratings on the second-largest U.S. poultry processor, Pilgrim's Pride Corp., remain on CreditWatch with negative implications, where they were originally placed Aug. 21, 2006. PILGRIM'S PRIDE: Plans Offering of $450 Million Unsecured Notes --------------------------------------------------------------- Pilgrim's Pride Corporation intends to offer, subject to market and other conditions, an aggregate of approximately $450 million of its unsecured notes. Pilgrim's Pride will use the net proceeds of the offering to refinance indebtedness incurred in connection with the acquisition of Gold Kist Inc. A definitive agreement relating to the proposed offering of the notes has not been entered into by Pilgrim's Pride and there can be no assurances that the notes offering will be consummated. If and when issued, the notes will be issued under a shelf registration statement, which has been filed with, and declared effective by, the Securities and Exchange Commission. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corp. (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the United States, Mexico and in Puerto Rico. Pilgrim's Pride employs approximately 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Moody's Investors Service's held its Ba2 Corporate Family Rating for Pilgrim's Pride Corp. In addition, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's note issues, including an LGD6 rating on its $100 million 9.25% Sr. Sub. Global Notes Due Nov. 15, 2013, suggesting noteholders will experience a 95% loss in the event of a default. As reported in the Troubled Company Reporter on Dec. 6, 2006, Standard & Poor's Ratings Services reported that its 'BB' corporate credit rating and other ratings on the second-largest U.S. poultry processor, Pilgrim's Pride Corp., remain on CreditWatch with negative implications, where they were originally placed Aug. 21, 2006. PIMA COUNTY: S&P Pares Rating on Revenue Bonds to BB from BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Pima County Industrial Development Authority, Arizona's series 2003A and 2006 education revenue bonds, supported by Paragon Management Inc., to 'BB' from 'BB+'. The outlook is negative. The downgrade is based on the school's poor management of its funds, which has led to a decline in cash and unrestricted net assets and the violation of the bond covenant related to a minimum fund balance. The negative outlook reflects uncertainty and challenges related to the implementation of the proposed action plan and the return to a stable financial condition. Fiscal 2006 results indicate an operating deficit of roughly $475,000--mainly due to a lack of expenditure controls. Unrestricted net assets at the end of fiscal 2006 totaled a paltry $7,292, which is significantly below the estimated $700,000 required by the bond covenants. Lax expenditure controls, coupled with a concentration of budgetary power, resulted in excessive nonbudgeted expenditures, including the hiring of nonbudgeted personnel and expenditures related to a possible school expansion. The trustee, however, has agreed to waive its right to accelerate loan payments. As a result, there have been noteworthy changes made to the bylaws of the school--specifically related to financial reporting and expenditure approvals. In addition, the CEO, who was also chairman of the board of directors, has resigned his position. An action plan has been drafted by school management and adopted by the board. The plan is projected to have a positive budgetary impact of roughly $275,000 for fiscal 2007, with future savings of roughly $865,000 annually. Should financial difficulties continue and reserve levels not rebound to an adequate and required level, the rating could be lowered further. In addition, while the possible expansion of the school to include a high school has apparently been put on hold, the current rating reflects the uncertainty regarding the potential expansion's size and the school's ability to increase enrollment to a level that would produce adequate debt service coverage related to the issuance of additional bonds--particularly if the new expansion is situated at a separate location from its current site. The addition of a substantial amount of debt in a relatively short period would pose challenges related to facility and growth management. For fiscal 2007, management is projecting a surplus of roughly $260,000. To assist with cash flow needs during the fiscal year, however, a short-term loan has been obtained in the amount of $600,000, payable within 18 months. PROPEX INC: S&P Pares Corporate Credit Rating to B- from B+ ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Propex Inc., including its corporate credit rating to 'B-' from 'B+'. The outlook is stable. The downgrade reflects concerns that difficult operating conditions are likely to forestall Propex's ability to meaningfully improve its highly leveraged financial profile during the next couple of years. The potential for lower-than-expected residential construction activity and the possibility for further declines in the domestic housing markets could cause earnings and cash flow to be weaker than previously expected. "While Propex's liquidity position is satisfactory and supportive of credit quality, we believe the current level of uncertainty in operating trends raises the potential for financial covenant violations during the next several quarters," said Standard & Poor's credit analyst David Bird. "We expect that Propex will successfully negotiate relief as necessary, but ratings will be constrained until the company's operating performance results in improved measures of credit quality." The ratings on Propex reflect the company's vulnerable business position as a niche producer of primary and secondary carpet backing and geosynthetic and industrial fibers for mature and competitive end markets, and a highly leveraged financial profile. Chattanooga, Tennessee-based Propex is a leading producer of polypropylene fabrics and fibers used in primary and secondary carpet backing, geosynthetic and industrial applications, and concrete fiber reinforcement, with about $750 million in annual sales and $458 million of total debt outstanding. RAMBO IMAGING: Case Summary & Largest Unsecured Creditor -------------------------------------------------------- Debtor: Rambo Imaging, LLP 6000 South Mopac Expressway Austin, TX 78749-1113 Bankruptcy Case No.: 07-10041 Chapter 11 Petition Date: January 8, 2007 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Joseph D. Martinec, Esq. Martinec, Winn, Vickers & McElroy, P.C. 600 Congress Avenue, Suite 500 Austin, TX 78701 Tel: (512) 476-0750 Fax: (512) 476-0753 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Strasburger & Price, LLP $238,124 P.O. Box 849037 Dallas, TX 75284-9037 REDPRAIRIE CORP: S&P Holds Corporate Credit Rating at B ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Waukesha, Wisconsin-based RedPrairie Corp. The outlook is stable. Standard & Poor's also affirmed the existing ratings on the senior secured first-lien and second-lien bank loans, including the $20 million term loan B added to the facility, to provide for the acquisition of StorePerform Technologies. The ratings on RedPrairie reflect its narrow product focus within a highly competitive and consolidating marketplace, moderately acquisitive growth strategy, and high debt leverage. These are only partly offset by a largely recurring revenue base, supported by a broad customer base and relatively stable operating margins. RedPrairie is a global provider of supply chain execution software and services for warehouse, labor and transportation management activities, coordinating interaction between manufacturers, distributors, wholesalers and retailers. Pro forma for the proposed bank facilities, RedPrairie will have approximately $215 million of operating lease-adjusted total debt. The market for supply chain execution software is highly fragmented, with no clear market leader. In addition to competing with other supply chain specialist vendors such as Manhattan Associates, RedPrairie also competes with tier-one players such as Oracle and SAP, each of whom possesses greater scale and broader product breadth, in addition to being much better capitalized. A relatively broad and diverse customer base, along with retention rates in the high-90% area, support revenue visibility over the intermediate term; however, a continued focus on improving product functionality and servicing capabilities will be a key to RedPrairie maintaining, or improving, its competitive position over the longer term. "The acquisition of StorePerform Technologies bolsters RedPrairie's presence on the front end of the supply chain process, namely within the retail store, providing functionality around such activities as workforce management," said Standard & Poor's credit analyst Stephanie Crane Mergenthaler. "RedPrairie has been acquisitive over the past few years, growing revenues from about $70 million in 2003 to a pro forma revenue base expected to exceed $200 million in 2006. However, RedPrairie's acquisitions have been less frequent than some of its peers, and integration success is more apparent." While the rating incorporates our expectation for continued moderate acquisition activity in this rapidly consolidating market, Standard & Poor's expects acquisitions to be modestly sized over the next several quarters. Despite a very narrow product focus and exposure to a highly competitive and consolidating marketplace, a broad and diverse customer base, along with relatively stable operating margins provide ratings stability. A revision of the outlook to negative could follow increased acquisition activity or any shareholder initiatives, while a revision of the outlook to positive would likely be a function of substantial, and sustained, improvement to the company's debt leverage profile, likely the result of successful integration of BlueCube and continued progress in growing the customer base. RIGEL CORP: Court Approves $6.4 Mil. Asset Sale to WKS Restaurant ----------------------------------------------------------------- Anthony H. Mason, the chapter 7 trustee appointed in Rigel Corporation's bankruptcy case, obtained permission from the U.S. Bankruptcy Court for the District of Arizona to sell 11 restaurants, free and clear of liens and encumbrances, to WKS Restaurant Corporation for $6.4 million. The 11 restaurants are: Store Name Location Purchase Price ---------- -------- -------------- Arizona Mills Tempe, Arizona $862,500 Peoria Peoria, Arizona $100,000 Scottsdale Scottsdale, Arizona $662,500 Avondale Avondale, Arizona $762,500 El Con Tucson, Arizona $812,500 Auto Mall Tucson, California $812,500 Superstition Mesa, Arizona $100,000 Agua Fria Phoenix, Arizona $762,500 Albuquerque Albuquerque, New Mexico $862,500 Albuquerque Albuquerque, New Mexico $562,500 Albuquerque Albuquerque, New Mexico $100,000 The assets to be sold consist of the estate's interest in certain commercial real estate leasehold agreements, specifically all equipment, supplies, inventory, furniture and furnishings, and all other personal property located at each location. Upon execution of an Asset Purchase Agreement between the trustee and WKS, $50,000 will be paid and an additional $75,000 will be deposited upon entry of a final order approving the sale. The $6.275 million will be paid at closing. A full-text copy of the Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?185d Headquartered in Tempe, Arizona, Rigel Corporation, is a Krispy Kreme franchisee. The Company also operates Godfather's Pizza, KFC, and Bruegger's Bagels' franchises. The Company filed for chapter 11 protection on Aug. 9, 2006 (Bankr. D. Ariz. Case NO. 06-02480). Michael W. Carmel, Esq., at Michael W. Carmel, Ltd., represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. The Court converted the Debtor's chapter 11 case to a chapter 7 proceeding on Aug. 15, 2006. Anthony H. Mason is the Chapter 7 Trustee. ROGERS COMMS: Moody's Lifts Corp. Family Rating to Ba1 from Ba2 --------------------------------------------------------------- Moody's Investors Service upgraded the Corporate Family Rating and Probability of Default rating of Rogers Communications Inc. as well as the Senior Secured ratings of Rogers Cable Inc. and Rogers Wireless Inc. to Ba1 from Ba2, and upgraded the Senior Subordinated rating of Wireless to Ba2 from B1. Related LGD ratings remain unchanged. These ratings have also been placed under review for further possible upgrade. This action is based upon Moody's expectation that RCI's EBITDA in fiscal 2008 will be approximately $600 million higher than the level expected by Moody's in 2006, and the company will generate nearly $1.5 billion of free cash flow over the next two years, the combination of which could reduce Debt/EBITDA to approximately 2x should all cash flow be dedicated to debt reduction. Moody's, however, expects the company to manage to a target leverage ratio that is somewhat higher. RCI is competitively very well positioned, as it owns both the largest wireless operator as well as the largest cable operator in the protected, oligopolistic Canadian market, augmented by the additional diversification of a valuable media subsidiary. Strong growth will continue from the wireless, cable telephony and digital video products, although telephony video product and incumbent telephony deregulation will both pose threats. The risk also remains that RCI may redirect more cash flow than expected to some combination of capital expenditures, acquisitions, or buybacks/dividends. The review will focus on management's intent regarding its target capital structure and its views regarding any possible re- leveraging of the company in the future for shareholder benefits, a strategic acquisition or capital investment opportunities. The review will also consider the risks and opportunities facing the company over the next few years as the cable and telephony industries converge and compete with each other more vigorously in the same product suite accompanied by reduced government regulation. Ratings affected by this action: Upgraded * Rogers Communications Inc. -- Corporate Family Rating, upgraded to Ba1 from Ba2 -- Probablility of Default Rating, upgraded to Ba1 from Ba2 * Rogers Wireless Inc. -- Senior Secured Rating, upgraded to Ba1 from Ba2 -- Senior Subordinated Rating, upgraded to Ba2 from B1 * Rogers Cable Inc. -- Senior Secured Rating, upgraded to Ba1 from Ba2 Outlook Actions: * Rogers Communications Inc. -- Changed to Rating under Review for possible upgrade, from Positive Outlook * Rogers Wireless Inc. -- Changed to Rating under Review for possible upgrade, from Positive Outlook * Rogers Cable Inc. -- Changed to Rating under Review for possible upgrade, from Positive Outlook Rogers Communications Inc. is a communications company that owns all of Rogers Cable Inc., Canada's largest cable company, Rogers Wireless Inc., Canada's largest wireless operator, and Rogers Media Inc., which owns radio, TV, sports and publishing assets. All companies are headquartered in Toronto, Ontario, Canada. RONALD JOHNSON: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Ronald W. Johnson P.O. Box 791 Dillon, MT 59725 Bankruptcy Case No.: 07-60017 Chapter 11 Petition Date: January 9, 2007 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtor's Counsel: Gary S. Deschenes, Esq. Deschenes & Sullivan P.O. Box 3466 Great Falls, MT 59403-3466 Tel: (406) 761-6112 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. ROYAL YACHT: Wants Buddy Ford as Bankruptcy Attorney ---------------------------------------------------- Royal Yacht Club LLC asks the U.S Bankruptcy Court for the Middle District of Florida for permission to employ Buddy D. Ford, P.A., as its attorney. Buddy Ford will: a) give the Debtor legal advice with respect to its powers and duties as Debtor and debtor-in-possession in the continued operation of its business and management of its property; if appropriate; b) prepare, on the behalf of the Debtor, necessary applications, answers, orders, reports, complaints, and other legal papers and appear at hearings thereon; and c) perform all other legal services for the Debtor as debtor-in-possession which may be necessary herein, and it is necessary for the Debtor as debtor-in-possession to employ this attorney for the professional services. The Debtor tells the Court that the firm will be employed under a general retainer agreement of $15,000 and cost retainer of $1,039. Buddy D. Ford, Esq., president of the firm, will bill $250 per hour for this engagement. To the best of the Debtor's knowledge the firm 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. Mr. Ford can be reached at: Buddy D. Ford, Esq. President Buddy D. Ford, P.A. 115 North MacDill Avenue Tampa, FL 33609 Tel: (813) 877-4669 Fax: (727) 733-8994 http://www.tampaesq.com/ Headquartered in Saint Petersburg, Florida, Royal Yacht Club LLC owns a an 86-unit condo hotel resort on the Intercoastal waterway overlooking Clearwater Bay. The company filed for chapter 11 protection on Dec. 21, 2006 (Bankr. M.D. Fl. Case No. 06-07320). Buddy D. Ford, Esq., at Buddy D. Ford, P.A., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed for protection from its creditors, it estimated assets of $19,175,000 and debts of $7,218,000. ROYAL YACHT: Section 341(a) Meeting Scheduled on January 24 ----------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of Royal Yacht Club LLC's creditors, at 1:30 p.m., on Jan. 24, 2007, at 501 E. Polk Street, Timber Annex in Room 100-B, Tampa in Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Saint Petersburg, Florida, Royal Yacht Club LLC owns a an 86-unit condo hotel resort on the Intercoastal waterway overlooking Clearwater Bay. The company filed for chapter 11 protection on Dec. 21, 2006 (Bankr. M.D. Fl. Case No. 06-07320). Buddy D. Ford, Esq., at Buddy D. Ford, P.A., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed for protection from its creditors, it estimated assets of $19,175,000 and debts of $7,218,000. SANKATY HIGH: Fitch Holds Low-B Rating on $33.5 Million of Notes ---------------------------------------------------------------- Fitch affirms all classes of notes issued by Sankaty High Yield Partners III, L.P. These affirmations are the result of Fitch's review process and are based on trustee information as of Nov. 30, 2006. These rating actions are effective immediately: --$95,000,000 class A-1A first senior secured variable-funding notes affirmed at 'AAA'; --$105,000,000 equivalent class A-1B first second senior secured variable-funding multi-currency notes affirmed at 'AAA'; --$35,000,000 class A-1C first senior secured variable-funding swingline notes affirmed at 'AAA'; --$220,000,000 class A-1 first senior secured floating-rate notes affirmed at 'AAA'; -- $22,500,000 second senior loans affirmed at 'AA'; -- $14,000,000 class A-2 second senior secured floating-rate notes affirmed at 'AA'; -- $29,500,000 class B third senior secured fixed-rate notes affirmed at 'A'; -- $11,000,000 class B third senior secured floating-rate notes affirmed at 'A'; -- $7,500,000 class C senior subordinated secured fixed-rate notes affirmed at 'BBB'; -- $43,000,000 class C senior subordinated secured floating- rate notes affirmed at 'BBB'; -- $3,500,000 class D subordinated secured fixed-rate notes affirmed at 'BB'; -- $17,500,000 class D subordinated secured floating-rate notes affirmed at 'BB'; and, -- $12,500,000 class E junior subordinated secured floating- rate notes affirmed at 'B' Sankaty High Yield Partners III L.P. is structured as a market value collateralized debt obligation, which invests the proceeds of its note issuance in a diverse portfolio of bank loans, high yield securities, and mezzanine and special situation investments. Founded in 1998, Sankaty Advisors, LLC is the credit affiliate of Bain Capital Inc. The ratings are based upon the asset pool, the advance rates applicable to those assets and the credit enhancement provided to the various rated classes of debt through subordination and unrated equity capital. The ratings assigned to all classes of notes address the likelihood that the investors will receive timely payment of interest and ultimate payment of principal. STAGE ONE: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Stage One, Inc. P.O. Box 2597 Chattanooga, TN 37409 Bankruptcy Case No.: 06-14567 Type of Business: The Debtor provides lighting equipment services. Chapter 11 Petition Date: December 29, 2006 Court: Eastern District of Tennessee (Chattanooga) Judge: John C. Cook Debtor's Counsel: Bruce C. Bailey, Esq. Chambliss, Bahner and Stophel Two Union Square, Suite 1000 Chattanooga, TN 37402 Tel: (423) 756-3000 Fax: (423) 265-9574 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cornerstone Bank Equipment and $557,000 6401 Lee Highway, Suite B Accounts Chattanooga, TN 37421 Ben & Katie Jumper Equipment $259,756 c/o Miller & Martin, PLLC 832 Georgia Avenue Suite 1000 Chattanooga, TN 37402 Right Way Logistics $28,000 P. O. Box 11422 Murfreesboro, TN 37129 Safeway Services, Inc. $18,757 1124 Lance Road Norfolk, VA 23502 Tip Trailer Leasing $15,123 75 Remittance Drive Suite 1333 Chicago, IL 60654 Steeldeck N.Y., Inc. $7,871 143-145 Banker Street Brooklyn, NY 11222 Ansur America $7,385 1 Mutual Avenue Frankenmuth, MI 48787 Enterprise Truck Rental $6,643 209 Seaboard Lane Franklin, TN 37067 Touring Resources $6,586 P.O. Box 5510 Atlanta, GA 31107 Lesco, Inc. $5,721 c/o Jeffrey L. Cleary, PLLC 801 Broad Street, Suite 503 Chattanooga, TN 37402 American Express $4,976 P.O. Box 53852 Phoenix, AZ 85072 TMB $2,500 100 Asia Place Carlstadt, NJ 07072 Tomcat Truss $1,430 2160 Commerce Drive Midland, TX 79703 Ferrellgas $824 One Liberty Plaza, MD 40 Liberty, MO 64068 Staples $410 P.O. Box 639020 Des Moines, IA 50368 Allied Waste $314 1018 E. 38th Street Chattanooga, TN 37407 Office Depot $62 c/o Certegy Payment Recovery Services 11601 Roosevelt Blvd. Saint Petersburg, FL 33716 STALLION OILFIELD: Moody's Places Corporate Family Rating at B2 --------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating and probability of default rating to Stallion Oilfield Services Ltd. Moody's also assigned a B3, LGD4, 63% rating to Stallion's proposed offering of $300 million senior unsecured notes due 2015 and a Ba2, LGD1, 9% rating to its $125 million senior secured revolver. The outlook is stable. Proceeds from the notes will be used to retire a term B loan and revolver borrowings outstanding under the existing senior secured credit facility and to fund acquisitions. Simultaneously with the closing of the notes offering, Stallion will amend and restate the credit facility to increase the senior secured revolver capacity from $70 million to $125 million. "Stallion's B2 corporate family rating reflects the substantial valuation and performance risks inherent in its rapid acquisition pace during top of the cycle market conditions and resulting high leverage, partially offset by the company's strong niche market position," Pete Speer, Moody's Vice-President/Senior Analyst commented. Including the 4th quarter 2006 acquisitions and $45 million equity contribution, Stallion had total pro forma assets of approximately $450 million at Sept. 30, 2006, compared to much larger and better capitalized oilfield services competitors like National Oilwell Varco, Inc. and Superior Energy Services, Inc., and national rental equipment companies like the equipment rental operations of Hertz Corporation. Moody's estimates that the book value of property, plant and equipment is approximately $220 million and tangible net worth will be approximately $40 million, providing limited tangible asset cover for the notes considering the senior secured facilities priority claim. The book value of PP&E reflects recent acquisition valuations and those assets would likely decline in value in the event of a market downturn. Stallion will have high leverage following the $300 million notes offering on estimated pro forma EBITDA generated in strong market conditions. At Sep. 30, 2006, pro forma Debt/Capitalization was 67% and pro forma Debt/LTM EBITDA was 3.9x. The ratings are also restrained by Stallion's short operating history that makes it difficult to predict how the business will perform in a downturn; its aggressive growth strategy and the inherent challenges and risks of integrating over ten acquisitions that have more than tripled the company's size within the past twelve months; and the cyclical nature of Stallion's business, which is directly linked to the volatile U.S. onshore drilling cycle. The ratings are supported by the strength of Stallion's market position in the basins in which it operates, particularly its largest business line, workforce accommodations, where the company believes it currently has a 30% share of the overall onshore drilling market in the United States and is more than twice as large as its nearest competitor. Stallion holds a dominant position in the Gulf Coast and Rocky Mountain workforce accommodations market and is further expanding its position in the Permian basin in a pending acquisition. The company has an experienced management team with a history of successfully closing and integrating acquisitions within the oilfield services sector. Stallion is controlled by funds managed by Riverstone Holdings LLC and The Carlyle Group, private equity firms with extensive energy industry investment experience. Carlyle/Riverstone has designated a portion of their investment funds for additional equity investments in Stallion to fund acquisitions, albeit at Carlyle/Riverstone's discretion. The stable outlook is supported by Moody's expectation that market conditions will remain supportive but no longer as buoyant as the past two years. The recent decline in natural gas prices may reduce the growth in drilling activity or even result in a moderate decline from recent levels. Moody's also expects Stallion to meet its 2007 projections for earnings and cash flows and continue to make acquisitions to strengthen its market position or add further geographic diversification in the U.S. in its existing service lines and to use meaningful equity funding in large acquisitions. A positive outlook is possible if Stallion materially increases its scale and strengthens the durability of its business through strategically consistent and reasonably priced acquisitions combined with effective de-leveraging through equity funding that lowers its Debt/EBITDA and Debt/Capitalization below 2.5x and 60% in strong market conditions. Ratings could be pressured if Stallion were to materially increase its present leverage through debt funded acquisitions, aggressive growth capital expenditures and/or distributions to equity holders. Also, a significant or prolonged deterioration in onshore U.S. drilling activity resulting from lower commodity prices could dramatically decrease EBITDA and cash flows for Stallion. Under that scenario, Stallion could possibly violate senior secured credit facility debt covenants and face other difficulties that could result in a negative outlook or rating downgrade. Stallion Oilfield Services Ltd., a private company headquartered in Houston, Texas, is a provider of wellsite support and construction and logistic services to E&P companies and drillers throughout the United States and offshore Gulf of Mexico. STRUCTURED ADJUSTABLE: Fitch Junks Rating on Class B5 Certificates ------------------------------------------------------------------ Fitch Ratings has upgraded two, downgraded one and affirmed three classes of Structured Adjustable Rate Mortgage Loan Trust residential mortgage-backed certificates: Series 2004-11: -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA+'; -- Class B2 upgraded to 'AA' from 'A+'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 downgraded to 'CC/DR3' from 'B' and removed from Rating Watch Negative. The affirmations on the above classes reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $29.78 million of certificates. The negative rating action taken on class B5 affects $788,686 of outstanding certificates and reflects deterioration in the relationship between CE and expected losses. The upgrades reflect an improvement in the relationship between CE and future loss expectations and affects approximately $4.88 million of outstanding certificates. The upgraded classes have experienced growth of at least 3x their initial CE levels since the closing date. December 2006 remittance information indicates that 3.27% of the pool is currently over 90 days delinquent of which 1.43% is currently in REO and 1.27% in Foreclosure. Preliminary data from the servicer regarding expected liquidation values of the loans in FC and REO indicate that much, if not all, of the remaining CE for class B5 will be eliminated. Class B5 currently has 0.47% of credit support remaining. Monthly losses have averaged $16,359 for the past three months. Cumulative losses as a percent of the original collateral balance are 0.06%. The mortgage loans were originated by various banks and other mortgage lending institutions. The largest percentage of originations were those made by Aurora Loan Services Inc. The mortgage loans were acquired by Lehman Brothers Holdings Inc. The transaction consists of adjustable rate, conventional, fully amortizing mortgage loans, substantially all of which have original terms to stated maturity of 30 years. The mortgage loans provide for an interest rate adjustment of every six-month or one- month period, based on the six-month LIBOR index or the one-month LIBOR index. Approximately 93.66% of the mortgage loans at closing provide for interest-only payments and have an interest-only period for the first five to 10 years after origination. The mortgage loans are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. SARM 2004-11 is seasoned 29 months and the pool factor is 15%. STRUCTURED ASSET: Fitch Junks Rating on Class B4 Certificates ------------------------------------------------------------- Fitch Ratings has taken rating actions on Structured Asset Security Corp.'s residential mortgage-backed certificates: Series 2005-S1: -- Class A2 affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA+'; -- Class M3 affirmed at 'AA'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A'; -- Class M7 affirmed at 'A-'; -- Class M8 affirmed at 'BBB+'; -- Class B1 affirmed at 'BBB'; -- Class B2 affirmed at 'BBB-'; -- Class B3 rated 'BBB-' is placed on Rating Watch Negative; and -- Class B4 downgraded to 'C/DR5' from 'CC/DR4'. Series 2005-S2: -- Class A2 affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB+'; -- Class M9 affirmed at 'BBB'; -- Class M10 affirmed at 'BBB-'; -- Class B1 affirmed at 'BB+'; and -- Class B2 downgraded to 'B' from 'BB' and removed from Rating Watch Negative. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $320.82 million of outstanding certificates. CE is in the form of subordination, overcollateralization and excess spread. The negative rating actions, affecting approximately $21.86 million of outstanding certificates, reflect deterioration in the relationship between CE and expected losses. Approximately 7.5% of the pool for series 2005-S1 is more than 60 days delinquent. The OC amount is currently $0 or roughly $10 million below its target amount. In five of the past six months, the excess spread has not been sufficient to cover the monthly losses incurred and as a result, class B4 has defaulted. Monthly losses have averaged $749,572 for the past three months. Cumulative losses as a percent of the original collateral balance are 2.3%. For series 2005-S2, approximately 7.8% of the pool is more than 60 days delinquent. The OC amount is currently $7,784,106, or approx. $4.8 million below its target amount. In four of the past six months, the excess spread has not been sufficient to cover the monthly losses incurred. Monthly losses have averaged $636,205 for the past three months. Cumulative losses as a percent of the original collateral balance are 2.65%. The transactions are seasoned from a range of 20 to 21 months and the pool factors range from approximately 37% to 42%. The mortgage pools consist of conventional, fixed rate, fully- amortizing and balloon, second lien residential mortgage loans. The mortgage loans were acquired by Lehman Brothers Holdings Inc. from various banks and other mortgage lending institutions and are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. STRUCTURED ASSET: Expected Losses Prompt Fitch's Ratings Downgrade ------------------------------------------------------------------ Fitch Ratings has taken rating actions on Structured Asset Investment Loan Trust's residential mortgage-backed certificates: Series 2003-BC8: -- Classes 2A, 3A2, 3A3, AIO affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 downgraded to 'BBB' from 'BBB+'; -- Class M5 downgraded to 'BB' from 'BBB'; and -- Class B downgraded to 'BB-' from 'BBB-'. Series 2003-BC12: -- Classes 1A, 2A, 3A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 downgraded to 'BBB' from 'BBB+'; -- Class M5 downgraded to 'BB+' from 'BBB'; -- Class M6 downgraded to 'BB+' from 'BBB-'; and -- Class B downgraded to 'B' from 'BB'. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $297.11 million of outstanding certificates. CE is in the form of subordination, overcollateralization and excess spread. The negative rating actions, affecting approximately $28.72 million of outstanding certificates, reflect deterioration in the relationship between CE and expected losses due to higher than expected delinquencies and losses as well as OC below its target amount. Approximately 20.8% of the pool for series 2003-BC8 is more than 60 days delinquent. The OC amount is currently $1,827,672 below its target amount of $5,417,847. In five of the past six months, the excess spread has not been sufficient to cover the monthly losses incurred. Monthly losses have averaged $395,332 for the past 3 months. Cumulative losses as a percent of the original collateral balance are 0.92%. Approximately 17.6% of the pool for series 2003-BC12 is more than 60 days delinquent. The OC amount is currently $2,125,396 below its target amount of $5,337,788. For the past six months, the excess spread has not been sufficient to cover the monthly losses incurred. Monthly losses have averaged $574,932 for the three months. Cumulative losses as a percent of the original collateral balance are 0.96%. Series 2003-BC8 is seasoned 40 months and the pool factor is 16%. Series 2003-BC12 is seasoned 37 months and the pool factor is 17%. The mortgage pools consist of fixed- and adjustable-rate, fully- amortizing and balloon, first and second lien conventional residential mortgage loans having an original term of no more than 30 years. The mortgage loans were originated or acquired by various originators or their correspondents in accordance with such originator's respective underwriting standards and guidelines and are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. STT LAND: U.S. Trustee will Meet Creditors on January 31 -------------------------------------------------------- The U.S. Trustee for Region 16 will convene a meeting of STT Land LLC's creditors at 2:00 p.m., on Jan. 31, 2007, at Room 1-159, 411 West Fourth Street, in Santa Ana, California. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Newport Beach, California, STT Land LLC invests in stock and real estate property. The Debtor filed for chapter 11 protection on Dec. 26, 2006 (Bankr. C.D. Calif. Case No. 06- 12444). Alan J. Friedman, Esq., at Irell & Manella represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets of $12,829,800 and debts of $6,386,619. SUPERVALU INC: Earns $113 Million in Fiscal Quarter Ended Dec. 2 ---------------------------------------------------------------- Supervalu Inc.'s net earnings for the third fiscal quarter ended Dec. 2, 2006, increased to $113 million from $75 million in the same fiscal quarter in 2005. Operating earnings for the third fiscal quarter ended Dec. 2, 2006, were $367 million, compared with $142 million for the third fiscal quarter ended Dec. 3, 2005. Net sales for the quarter was $10.7 billion, compared with $4.7 billion for the comparable quarter last year. The company's balance sheet at Dec. 2, 2006, showed strained liquidity with total current assets of $4.8 billion and total current liabilities of $5 billion. Total stockholders' equity stood at $5.2 billion. Jeff Noddle, chairman and chief executive officer, said, "Our reported third quarter earnings per share of $0.54 was in line with our guidance and represents another strong quarter as a retail powerhouse. "We are seeing great progress on many fronts, including double- digit earnings per share growth when adjusted for charges. When including the acquired operations, we also saw improvement in our identical store sales in the quarter and progress in our remodeling program. In addition, we are pleased to announce the fiscal 2008 capital program of approximately $1.2 billion, supporting our commitment to invest heavily in Supervalu's retail fleet primarily through new stores and remodels, bringing innovative new features to many of our stores across the country." Segment Results Retail Food Segment - Third quarter retail net sales were $8.4 billion, compared with $2.5 billion in the prior year quarter. The sales increase primarily reflects the acquisition of Albertson's premier retail properties. Identical store sales growth on a combined basis increased 60 basis points in the third quarter. The acquired stores identical store sales growth in the quarter increased 1.1%. Identical store sales growth, for stores in existence prior to the acquisition, was a negative 1.3%. Reported retail operating earnings for the third quarter was $327 million compared to $104 million last year's third quarter. As of the end of the third quarter, the company's retail store network of 2,499 stores includes approximately 928 combination stores, 393 food stores, and 1,178 limited assortment grocery stores. Included in the total store counts are 120 fuel centers and 856 licensed limited assortment food stores. Supply Chain Services Segment - Third quarter net sales for supply chain services were $2.2 billion, an increase of approximately 1.2% from last year. Reported supply chain services operating earnings for the third quarter were $70 million compared with $54 million in last year's third quarter. Reported operating earnings as a percent of sales were 3.1% compared to 2.4% in last year's third quarter. The increase is primarily from contract cancellation fees related to exited supply arrangements and sales leverage. Other Items General corporate expense for the third quarter was $30 million compared with $16 million last year primarily reflecting pre-tax one-time transaction costs of approximately $16 million and $1 million pre-tax of expense from the adoption of FAS 123R related to stock option expensing. One-time transaction costs primarily include retention bonuses and consultant fees. Net interest expense for the third quarter was $183 million compared to $23 million last year reflecting the assumption of debt and new borrowings from the acquisition. Total debt to capital was approximately 65% at the end of the third quarter compared with approximately 37% at fiscal 2006 year- end. In the quarter, approximately 3 million shares were repurchased at an average price of $30.82 under the company's share repurchase programs. As of Dec. 2, 2006, the company had 207 million shares outstanding. About Supervalu Headquartered in Eden Prairie, Minnesota, Supervalu Inc., (NYSE:SVU) is a supermarket chain, with more than 2,500 stores, including the core supermarket operations of Albertson's, Inc., acquired on June 2, 2006. Supervalu also has a food distribution business serving more than 5,000 grocery stores. * * * On Oct 25, 2006, Moody's Investors Service assigned a rating of B1 and a Loss-Given-Default assessment of LGD4 (60%) to Supervalu Inc.'s $500 million senior unsecured notes. The outlook remains stable. TERWIN MORTGAGE: Fitch Junks Rating on Class B-5 Certificates ------------------------------------------------------------- Fitch Ratings has taken various rating actions on Terwin RMBS Trust's issues: Series 2005-5SL: -- Class A affirmed at 'AAA'; -- Class M-1a affirmed at 'AA'; -- Class M-1b affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BBB-'; -- Class B-4 affirmed at 'BB+'; and -- Class B-5 downgraded to 'CCC' from 'BB', assigned 'DR2' and removed from Rating Watch Negative. Series 2005-7SL: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'A+'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'A-'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BBB'; -- Class B-5 affirmed at 'BBB-'; -- Class B-6, rated 'BB+', placed on Rating Watch Negative; and -- Class B-7PI downgraded to 'B' from 'BB'. The mortgage loans consist of fixed-rate subprime mortgage loans secured entirely by second-lien mortgages on residential properties. The mortgage loans have various originators, which include Ameriquest Mortgage Company and Impac Funding Corporation. Chase Home Finance, LLC is the master servicer and Specialized Loan Servicing, LLC is the servicer for all of the mortgage loans. The affirmations affect approximately $417.54 million in outstanding certificates. The downgrades of class B-5 of series 2005-5SL and class B-7PI of series 2005-7SL affect approximately $23.89 million of the outstanding certificates. Class B-6 of series 2005-7SL is placed on Rating Watch Negative, affecting approximately $5.85 million of the outstanding certificates. The negative actions on the classes of the above transactions are due to a decline in the overcollateralization amount. The OC deterioration is a result of losses associated with the mortgage pools as well as a reduction in the dollar amount of excess spread due to much faster-than-expected prepayments and rising interest rates. Based on the performance to date, it is expected that the OC of these transactions will not reach their target amounts. The low OC balances increase the credit risk of the subordinate bonds, as indicated by the downgrades and Rating Watch Negative status. The OC of series 2005-5SL currently equals 0.45% of the original collateral balance, as compared to a target level of 4% of the original collateral balance. Monthly losses have exceeded XS in recent months causing the OC to decline significantly from $6.17 million to $2.95 million. The six-month average loss net of XS is approximately $340,000, which would result in the depletion of the OC within the next eight months. The current OC of $2.95 million equates to 1.18% of the current collateral balance. The target OC of $26 million equates to 10.42% of the current collateral balance. The cumulative loss is $12.56 million or 1.93% of the original collateral balance. The transaction is seasoned 19 months and has a pool factor of 38%. The OC of series 2005-7SL currently equals 1.28% of the original collateral balance, as compared to a target level of 4% of the original collateral balance. Monthly losses have exceeded XS in the last three months causing the OC to decline from $7.42 million to $5.74 million. The six-month average loss net of XS is approximately $434,000, which would result in the depletion of the OC within the next 13 months. The current OC of $5.74 million equates to 2.77% of the current collateral balance. The target OC of $18 million equates to 8.7% of the current collateral balance. The cumulative loss is $9.09 million or 2.02% of the original collateral balance. The transaction is seasoned 17 months and has a pool factor of 46%. TOTES ISOTONER: S&P Places Corporate Credit Rating at B ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Cincinnati, Ohio-based umbrellas, gloves, rainwear and other weather-related accessories distributor totes Isotoner Corp. The rating outlook is negative. At the same time, Standard & Poor's assigned its loan and recovery ratings to totes' proposed secured bank financing, which consists of a $125 million first-lien term loan due 2012 and a $65 million second-lien term loan due 2013. The first-lien facility is rated 'B' with a recovery rating of '2', indicating the expectation for substantial recovery of principal in the event of a payment default. The second-lien loan is rated 'CCC+' with a recovery rating of '5', indicating the expectation for negligible recovery of principal in the event of a default. These ratings are based on preliminary offering statements and are subject to review upon final documentation. Proceeds from the proposed bank loan, along with borrowings from a proposed $85 million asset-based revolving credit facility, will be used by the equity sponsor, MidOcean Partners, to finance the acquisition of totes. Standard & Poor's estimate that totes will have about $194 million in total debt outstanding upon the closing of the transaction. totes is a designer, distributor, and marketer of men's, women's, and children's branded accessory and apparel items. The company sells mainly to mass merchants, department stores, and national chain store retailers in the U.S., Canada, and Europe. Products are sold under the totes, Isotoner, Raines, and ESNY brand names. Pro forma for the acquisition of ESNY in October 2006, the company's sales are about $317 million. "The 'B' rating reflects totes' participation in the mature accessories segment of the highly fragmented and competitive apparel industry, its narrow product portfolio, the very seasonal and weather dependence nature of its sales, customer concentration, and a highly leveraged financial profile," said Standard & Poor's credit analyst Susan Ding. "These factors are somewhat mitigated by the well-known totes and Isotoner brands. We assign a high degree of business risk to the apparel manufacturing industry because of intense competition, low barriers to entry, and the commodity nature of certain items, such as umbrellas and gloves." TOWER AUTOMOTIVE: Equity Rights Offering Terminated --------------------------------------------------- Tower Automotive disclosed that on Jan. 10, 2007, investment funds managed by Strategic Value Partners LLC, Wayzata Investment Partners LLC and Stark Investments notified Tower that they terminated their Dec. 19, 2006 Commitment Letter to underwrite an equity rights offering. Tower has received other proposals from interested investors and continues to evaluate those proposals with the goal of completing its restructuring process in the first half of 2007. Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. (OTC Bulletin Board: TWRAQ) -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. The Debtors' exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. Their exclusive period to solicit acceptances of that plan expires on Mar. 30, 2007. TRANSDIGM GROUP: Moody's Places B1 Corp. Family Rating on Review ---------------------------------------------------------------- Moody's Investors Service has placed the ratings of TransDigm, Inc. on review for possible downgrade. This action was prompted by the company's disclosure that it had entered into a definitive agreement to purchase Aviation Technologies Inc. for approximately $430 million in cash. TransDigm expects to finance this acquisition primarily through issuance of senior and subordinated debt. This acquisition is expected to close in February 2007. The ATI transaction represents a large, levered acquisition that could potentially increase the company's risk profile and leverage. By far the company's largest acquisition over recent years, the $430 million price is approximately equal to total expenditures on acquisitions over the last nine years and is estimated to increase TransDigm's revenue base by about 25%. Moody's believes that, at about 11 times pro forma trailing EBITDA, the ATI acquisition is fully-priced, although ratios like this have become common in the commercial aerospace sector. Moreover, since the company plans to finance the transaction entirely through use of additional debt, Moody's estimates that pro forma leverage will likely exceed 5.5X, which is high relative to the company's current B1 Corporate Family Rating. The review will focus on the ultimate leverage that will ensue due to the financing of this acquisition and the likelihood of rapid and substantial de-levering through use of operating cash flows, as well as an assessment of the strategic rationale behind the acquisition. The review will also take into account the structure of the acquisition financing and the effects that it will have on the ratings of individual debt instruments. In addition, Moody's will consider the risk associated with the integration of ATI's operations relative to developments in the commercial aircraft supplier aftermarket segment. Headquartered in Cleveland, Ohio, TransDigm Inc. is a manufacturer of highly engineered aerospace components to commercial airlines, aircraft maintenance facilities, original equipment manufacturers and various agencies of the U.S. Government. The company had FY 2006 revenues of $435 million. UNITED SURGICAL: S&P Pares Corp. Credit Rating to B+ from BB- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Addison, Texas-based surgical facilities owner and operator United Surgical Partners International Inc. to 'B+' from 'BB-'. At the same time, the rating was placed on CreditWatch with negative implications, after the report that the company has agreed to be acquired by UNCN Acquisition Corp., an affiliate of Welsh, Carson, Anderson & Stowe. The transaction is valued at about $1.8 billion. "We expect that the transaction will include the issuance of a significant amount of new debt," said Standard & Poor's credit analyst David Peknay. "The corporate credit rating may be lowered further because we believe the company's financial profile will be substantially weakened." The existing bank debt is expected to be replaced. The ratings on this debt will be withdrawn at that time. Standard & Poor's expects to review the financing plans before resolving the CreditWatch listing. USPI owns and operates about 140 surgical facilities. UNION ACCEPTANCE: Court Enters Final Decree & Closes Chap. 11 Case ------------------------------------------------------------------ White River Capital, Inc. disclosed that its Union Acceptance Company LLC subsidiary has "fully administered" its Chapter 11 plan of reorganization and the U.S. Bankruptcy Court for the Southern District of Indiana issued a final decree and closed UAC's Chapter 11 bankruptcy case on Jan. 5, 2007. Mark Ruh, President and Chief Operating Officer, stated, "We are very pleased to have UAC reach this milestone. We achieved a great deal during the restructuring and reorganization of UAC." Martin Szumski, Chief Financial Officer, commented, "For as long as the loan portfolio of UAC continues to run off, we believe we have positioned this subsidiary to significantly contribute to the consolidated earnings of White River." About White River Capital White River Capital, Inc. (Pink Sheets:WRVC) is the holding company for Coastal Credit LLC and Union Acceptance Company LLC. About Coastal Credit Coastal Credit LLC is a specialized subprime auto finance company, headquartered in Virginia Beach, Virginia, engaged primarily in acquiring retail installment sales contracts from both franchised and independent automobile dealers which have entered into contracts with purchasers of used and, to a much lesser extent, new cars and light trucks, and servicing the contract portfolio. Coastal Credit commenced operations in Virginia in 1987 and conducts business in twenty one states - Alaska, Arizona, California, Colorado, Delaware, Florida, Georgia, Hawaii, Kansas, Louisiana, Maryland, Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia and Washington - through its seventeen branch locations. The Coastal Credit receivables portfolio, net of unearned finance charges, was $97.0 million at September 30, 2006. About Union Acceptance Union Acceptance Company LLC is a specialized auto finance company, based in Indianapolis, Indiana, which holds and oversees its portfolio of approximately $84.8 million in non-prime auto receivables, as of September 30, 2006. Union Acceptance filed a petition for reorganization under Chapter 11 of the Bankruptcy Code in the Southern District of Indiana, Indianapolis Division of the U.S. Bankruptcy Court on October 31, 2002 to facilitate a financial restructuring. On August 8, 2003, the Court confirmed UAC's Second Amended Plan of Reorganization. UAC emerged from bankruptcy on the effective date of the Plan, September 8, 2003. The confirmed Plan prescribes that available cash resources and cash flows released over time from the retained interest be used to repay creditors in their order of priority. Holders of senior and senior subordinated notes received new limited-recourse restructured notes reflecting these rights. For convenience, holders of smaller unsecured claims were entitled to elect a discounted repayment in exchange for early payout. As reported in the Troubled Company Reporter on March 12, 2005, as a result of the revaluation of retained interest and the associated impact on future cash flows, UAC has estimated that approximately $65 million of liabilities confirmed in the Plan will not likely be paid. UNIVERSAL BEHAVIORAL: Involuntary Chapter 11 Case Summary --------------------------------------------------------- Alleged Debtor: Universal Behavioral Services Community Mental Health Center, Indianapolis, Inc. aka Universal Behavorial Services CMHC Indianapolis, Inc. 3950 North Meridian Street Indianapolis, IN 46208 Case Number: 07-00186 Involuntary Petition Date: January 10, 2007 Chapter: 11 Court: Southern District of Indiana (Indianapolis) Petitioners' Counsel: Jennifer L. Graham, Esq. 1111 East 54th Street, Suite 138 Indianapolis, IN 46220 Tel: (317) 257-7641 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Stacia Hill Wages $4,779 11763 Kittery Drive Fishers, IN 46037 Dan Prober Wages $4,112 920 East 62nd Street, Suite M-4 Indianapolis, IN 46220 Randy Ballinger Wages $2,540 825 Stewart Road Anderson, IN 46012 Derek Baume Wages $3,322 961 3rd Avenue Northwest Carmel, IN 46032 Angel Martin Wages $2,478 6713 Winnock Drive Indianapolis, IN 46220 Carol Naylor Wages $2,455 1451 North Drexel Avenue Indianapolis, IN 46201 Herb Troyer Wages $1,924 112 Glenwood Lane Fishers, IN 46038 Jennifer L. Graham, Esq. Legal Fees $7,490 1111 East 54th Street Suite 138 Indianapolis, IN 46220 Tel: (317) 257-7641 VAXGEN INC: James Panek Replaces Lance Gordon as President and CEO ------------------------------------------------------------------ VaxGen Inc. has restructured to significantly reduce operating costs and is actively pursuing avenues to enhance shareholder value through a strategic transaction. Additionally, the company announced that Lance K. Gordon, Ph.D., has resigned as VaxGen's president, chief executive officer, and executive director. He will remain as an adviser to the company. VaxGen's Board of Directors unanimously appointed James P. Panek, VaxGen's executive vice president, as its new president and CEO and appointed him to fill the board vacancy left by Dr. Gordon. "Lance Gordon was the architect of VaxGen's strategy to become a leader in biodefense and to develop its now significant capabilities in process development and GMP biopharmaceutical manufacturing," VaxGen board chairman Randall L-W. Caudill said. "In addition, under his leadership, VaxGen played a pivotal role in the establishment of Celltrion, an undertaking which recently culminated in the realization of substantial financial benefit through the sale of VaxGen's holdings in Celltrion. The entire board thanks him for his contributions and wishes him the best in his future endeavors." Mr. Caudill continued: "I know I also speak for the board in expressing our strong confidence in Jim Panek. Jim joined VaxGen nearly five years ago and has repeatedly demonstrated superb leadership, a broad knowledge of biopharmaceutical drug development, and a thorough understanding and tireless pursuit of VaxGen's strategic objectives. I look forward to working closely with him as we assess our options for maximizing shareholder value and pursue a new direction for the company." Strategic Alternatives VaxGen has retained Lazard to advise the company in exploring strategic alternatives. The process is being overseen by Mr. Caudill, former co-head of Investment Banking for Prudential Securities, and will entail a broad evaluation of potential M&A opportunities. Mr. Caudill will be joined in this effort by Franklin M. Berger, CFA, a VaxGen director and former Managing Director, Equity Research, and Senior Biotechnology Analyst at J.P. Morgan Securities, Inc. "In addition to the $96.6 million in cash, cash equivalents and short-term securities that VaxGen held as of Dec. 31, 2006, the company has a number of significant assets of potential value to an acquirer or merger partner," Mr. Caudill said. "We are already in early-stage discussions with several potential strategic partners and intend to aggressively pursue our opportunities to develop and realize the full value of all our capabilities and assets." 51% Workforce Reduction As a result of the restructuring, VaxGen estimates that the company's workforce will decrease by approximately 51% and its monthly net cash expenditures will be halved to less than $3 million. The company will incur a one-time cash restructuring cost of approximately $3 million related to employee separation expenses. The restructuring follows a decision by the Department of Health and Human Services on Dec. 19, 2006, to cancel VaxGen's Strategic National Stockpile contract to provide 75 million doses of its recombinant anthrax vaccine for civilian biodefense. VaxGen is also pursuing remedies to eliminate the potential liability associated with the U.S. government's termination for default of the company's SNS contract. VaxGen owns a recombinant protein manufacturing facility in South San Francisco capable of producing proteins in either microbial or mammalian cell systems. The 1,000-liter facility is currently used to manufacture the recombinant bulk protein antigen for VaxGen's anthrax vaccine candidate. As part of the restructuring plan, VaxGen has substantially downsized its Manufacturing and Quality Assurance/Quality Control functions, but has retained the resources needed to develop, manufacture, test and release cGMP product at commercial scale, albeit at a reduced throughput. The company will also retain capabilities necessary should it transfer its anthrax vaccine technology. "We remain confident in the eventual success of our anthrax vaccine candidate, and believe it has substantial value to companies with the resources and expertise to pursue its further development," Mr. Panek said. The restructuring also preserves the functions associated with the preparation and filing of VaxGen's outstanding financial statements with the Securities and Exchange Commission and the anticipated relisting of its common stock. Mr. Panek has more than 25 years of experience in the biotechnology and pharmaceutical industries. He joined VaxGen in February 2002 as Senior Vice President of Manufacturing Operations and was promoted to Executive Vice President in June 2006. Before joining VaxGen, Mr. Panek was Senior Vice President of Product Operations at Genentech Inc. During his tenure at Genentech, he led the development of one of the world's largest biotechnology manufacturing operations, and played pivotal roles in the FDA approval and launch of recombinant products to treat pediatric growth hormone deficiency (Nutropin(R) and Protropin(R), heart attack (Activase(R) and TNKase(RM), non-Hodgkin's lymphoma (Rituxan(R) and breast cancer (Herceptin(R). VaxGen (Pink Sheets: VXGN.PK) -- http://www.vaxgen.com/-- is a biopharmaceutical company based in Brisbane, California. VESCOR DEV'T: Files Amended Disclosure Statement on Chap. 11 Plan ----------------------------------------------------------------- Vescor Development 3 LLC and its debtor-affiliates, BDL 2 LLC and EDL 5 LLC, delivered their first amended disclosure statement accompanying their Joint Plan of Reorganization to the United States Bankruptcy Court for the District of Nevada. Treatment of Claims Under the Amended Plan, the Class 1 Claims of Apex Holding Company LLC totaling $53,800,939 will receive a $5,754,535 cure payment and payment of actual damages established at the confirmation hearing on the Plan. The Class 2 Claims of Apex Utility Holding Company LLC totaling $1,546,650 will receive $231,980 cure payment and payment of actual damages will also be established at the confirmation hearing on the Plan. Class 3 Miscellaneous Secured Claims and Classes 5,6, and 7 General Unsecured Claims, if any such claims are filed, will be paid in full with interest. BDL 2's Sale/Leaseback Claims are entitled to a payment on the effective date of the Plan and pursuant to the Promissory Note for each of the four claimants. Any default in the Intercompany Claims among the Debtors will be cured and the claims will be reinstated. All equity interests in the Debtors will be retained. About Vescor Headquartered in Henderson, Nevada, Vescor Development 3 LLC is a real estate developer. The company and two of its affiliates filed for chapter 11 protection on Aug. 16, 2006 (Bankr. D. Nev. Case No. 06-12094. Laurel E. Davis, Esq., at Lionel Sawyer & Collins serves as the Debtors counsel. No Official Committee of Unsecured Creditors has been appointed in this case. When Vescor filed for protection from its creditors, it listed total assets of $109,570,385 and total debts of $63,290,195. WEEKS LANDING: Hires Gerard McHale as Chief Restructuring Officer ----------------------------------------------------------------- Weeks Landing LLC and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida in Fort Myers to employ Gerard A. McHale and the firm Gerard A. McHale, P.A., as their chief restructuring officer. Gerard McHale will: a. evaluate the liquidity needs of each of the companies and negotiate, if appropriate, the terms of additional DIP financing; b. evaluate each of the investment properties and assist in the development of a specific marketing plan with regard to each; c. negotiate with and verify the financial capacity of all potential buyers and transaction partners, including RCMP Enterprises, LLC; d. represent the companies in dealings and negotiations with creditors; e. advise the Debtors in managing and complying with requirements of the Chapter 11 case; f. perform financial analysis of development plans for any of the properties and assist the debtor in negotiating with lenders, securing additional financing, and meeting custodial and reporting requirements prospectively; and g. assist in the development and implementation of a transaction. Mr. McHale will bill $275 per hour for his work. In addition, if the Debtors completes a transaction via a plan of reorganization, sale, or other transaction resulting in the full payment to the holders of allowed administrative, priority, secured, and general unsecured claims, Michele Pessin, the principal of the Debtors, will also pay Mr. McHale a success fee, if: 1) a transaction is completed on or before April 1, 2007, the success fee will equal 20% of the value of any cash or non- cash distribution received from the equity security holders of the company under the transaction; 2) a transaction is completed on or before June 1, 2007, the success fee will equal 15% of the value of any cash or non- cash distribution received from the equity security holders of the company under the transaction; 3) a transaction is completed on or before Aug. 1, 2007, the success fee will equal 10% of the value of any cash or non- cash distribution received from the equity security holders of the company under the transaction. To the best of the Debtor's knowledge, Mr. McHale is a "disinterested person" as that phrase is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Bonita Springs, Florida, Weeks Landing, LLC, owns the Weeks Fish Camp. The Debtor and three of its affiliates filed for chapter 11 protection on Apr. 14, 2006 (Bankr. M.D. Fla. Case No. 06-01721). Jordi Guso, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' cases. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. WERNER LADDER: Judge Carey Appoints Warren Smith as Fee Auditor --------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware has appointed Warren H. Smith & Associates P.C. as fee auditor to act as special consultant to the Court for professional fee and expense review and analysis. Specifically, Warren Smith will: (1) review quarterly interim and final fee applications filed with the Court; (2) discuss with the applicant certain questions, issues, or disputes concerning an Interim Fee Application within 30 days after the later of the due date of a quarterly Interim Fee Application, or service on the auditor of the Fee Application; (3) file with the Court a final report for each quarterly Interim Fee Application within 30 days after filing an initial report, or 20 days after receipt of an Applicant's response to the Initial Report; (4) serve a Final Report to the affected Applicant in a format designed to opine whether the Applicant's proposed fees meet the applicable standards of Section 330; and (5) always be available for deposition and cross-examination by the Debtors, the Official Committee of Unsecured Creditors, the U.S. Trustee, and other interested parties. Warren Smith's fees and expenses will be subject to review pursuant to Rule 706(b), and will be paid from Werner Holding Co. (DE) Inc. aka Werner Ladder Company and its debtor-affiliates' estate as an administrative expense under Section 503(b)(2) of the Bankruptcy Code. The Court directs all applicants filing monthly and quarterly fee applications to send to Warren Smith the Application, including the fee detail containing the time entries, within Jan. 25, 2006. The Order does not limit the statutory rights and obligations of interested parties in the Debtors' cases, including the rights of parties-in-interest to object to Monthly, Quarterly Interim, or Final Fee Applications. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co- counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. The Debtors's exclusive period to file a plan expires on Jan. 15, 2007. (Werner Ladder Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000) WERNER LADDER: Court Approves Mercer as Human Resources Consultant ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave Werner Holding Co. (DE) Inc., aka Werner Ladder Company, and its debtor- affiliates permission to employ Mercer Human Resources Consulting Inc., in connection with the review of their compensation and benefits program in their Chapter 11 cases, nunc pro tunc to Aug. 10, 2006. Specifically, Mercer will: (a) conduct a review of the Debtors' existing compensation and benefits programs and assist the Debtors in developing revised programs; (b) provide expert testimony, to the extent necessary, with regard to compensation benefits matters; (c) provide other services as agreed upon by the Debtors and Mercer. Mercer will be paid on an hourly basis. The rates charged by Mercer's personnel range from $150 to $700 per hour. Mercer will also seek reimbursement for reasonable travel and out-of-pocket expenses that originate with outside vendors and legal counsel retained by Mercer. The Debtors will indemnify Mercer from any litigation costs associated with actual or threatened actions, proceedings or investigations relating to or arising out of its services provided to the Debtors, except for the firm's gross negligence, bad faith or willful misconduct. As reported in the Troubled Company Reporter on Oct. 3, 2006, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, asserted that one of the most critical elements of the Debtors' ability to successfully reorganize is a proper incentive program for their employees. With Mercer's assistance, the Debtors will be able to conform their compensation programs to current market trends and thereby develop an appropriate program at a reasonable cost, Mr. Brady said. He noted that the Debtors have filed two motions to continue their employee compensation programs. After extensive discovery and two hearings, the Debtors only were able to obtain partial relief on their request to make payments under their Business Optimization Bonus plan. The Debtors believe that it is important to hire Mercer in order to: (a) evaluate, develop, and revise compensation and benefits programs designed to meet market standards and the Debtors' important goal of adequately compensating employees; (b) enable them to inform parties-in-interest, including the Creditors Committee, of market comparables; and (c) provide evidence to the Court, if necessary, as to the reasonableness of any program. John Dempsey, a principal with Mercer, assured the Court that the firm is a "disinterested person" pursuant to Sections 101(14) and 1107(b) of the Bankruptcy Code. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co- counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. The Debtors's exclusive period to file a plan expires on Jan. 15, 2007. (Werner Ladder Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000) * BOOK REVIEW: Working Together: 12 Principles for Achieving Excellence in Managing Projects, Teams, and Organizations ------------------------------------------------------------ Author: James P. Lewis Publisher: Beard Books Paperback: 208 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/158798279X/internetbankrupt Henry Berry of Turnarounds & Workouts said in December 2006: Working Together is about the passionate implementation of a set of management principles that were instrumental in the development of new airplanes at the Boeing Company and, in particular, the groundbreaking Boeing 777 aircraft. The chief engineer of the Boeing 777 program when it was undertaken in the early 1980s was Alan Mulally. He was soon promoted to general manager of the project and, in 1986, was named president of Commercial Airplanes. Mr. Mulally remained with Boeing for 37 years, eventually leading Boeing Commercial Airplanes to a turnaround that began in 1996. And if the name sounds more than familiar, it should: in September 2006, Ford Motor Company named Mr. Mulally as its new President and CEO, citing his record of success during his long tenure at Boeing. Through all of those years, Mr. Mulally made the "working together" principles and practices his gospel. He has been a vocal advocate of both the principles and this book by James Lewis even during his highly visible transition to Ford. Working Together chronicles the application of Mulally's leadership principles during his years at Boeing, especially during the execution of the 777 project. The 12 principles espoused in "working together" comprise a management philosophy that enabled Boeing "to dramatically increase production on all of our airplanes, improve our entire production system, and develop a number of new airplanes all simultaneously," as Mr. Mulally notes in the Foreword to the book. The value and effectiveness of working together is conveyed in a dramatic way by the author. Mr. Lewis introduces the high stakes that Boeing faced in developing the 777. At first, the company bit off more than it could chew. Fired by the enthusiasms and passions of employees exemplified by Mr. Mulally, Boeing pursued an ideal that exceeded its capacity to meet. At one point, Boeing had to "stop global production for lack of parts." Boeing was losing money, risking its future, and disappointing its customers, investors, and employees. But the roots of its problems were basically a lack of proper preparedness and organization. With Mr. Mulally in charge, operations were revised according to the model of working together. Work processes were reinforced, reinvigorated, and closely monitored. Practices such as focused agendas for meetings, clear assignments, communication among disparate employee segments, solicitation of input, and keeping a project on track, were implemented. Boeing underwent a transformation from a company in danger of permanently damaging its reputation and competence, to a company that reaffirmed its preeminence in the field of airplane design and production. As he took over the reins at Ford, Mr. Mulally observed that many of the challenges he addressed in commercial airline manufacturing are analogous to the issues he will now face at the car manufacturing giant. He stated, "I'm looking forward to working closely with Bill [Ford] in the ongoing turnaround of this great company. I'm also eager to begin engagement with the leadership team. I believe strongly in teamwork and I fully expect that our efforts will be a productive collaboration." James P. Lewis is President of Lewis Institute, Inc., a training and consulting company specializing in project management, which he founded in 1981. He also teaches seminars on the subject in the United States, England, and Asia. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Ronald C. Sy, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2007. 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 $775 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 ***