/raid1/www/Hosts/bankrupt/TCR_Public/070206.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, February 6, 2007, Vol. 11, No. 31
Headlines
ADELPHIA COMMS: Can Access Wachovia Bank's Cash Collateral
ADELPHIA COMMS: Equity Claims Distribution Postponed Indefinitely
ADVANCED MARKETING: Has Until March 9 to File Schedules
ADVANCED MARKETING: Committee Objects to Wells Fargo DIP Financing
AEP INDUSTRIES: Earns $24.4 Million in 2006 4th Fiscal Quarter
AIRTRAN HOLDINGS: Discloses Proposed Slate for Midwest Air's Board
AIRTRAN HOLDINGS: Extends Exchange Offer to March 8
ALLIED HOLDINGS: Morgan Stanley Objects to Equity Panel Formation
ALLIED HOLDINGS: Wants to Renew Canada Insurance Policies with AIG
AMERICAN MEDIA: To Discuss Restated Financial Results with Lenders
AMERISERV FINANCIAL: Improved Liquidity Cues Fitch to Lift Ratings
ARVINMERITOR INC: Earns $7 Million in First Quarter Ended Dec. 31
ARVINMERITOR INC: Shareholders Elect New Board Members
ASARCO LLC: Objects to Branin's Lift Stay Plea
ATLANTIC BROADBAND: Improved Performance Cues S&P's Positive Watch
AUDIOVOX CORP: David Geise Named as Accessory Division Senior VP
AVETA INC: Poor Performance Prompts S&P to Downgrade Ratings to B-
AZ CHEM: S&P Junks Rating on Proposed $136 Mil. 2nd-Lien Term Loan
BAUSCH & LOMB: Sluggish Revenue Growth Cues Moody's to Cut Rating
BLUE THUNDER: Case Summary & 43 Largest Unsecured Creditors
BOSTON SCIENTIFIC: Earns $277 Million in Fourth Quarter 2006
BOSTON SCIENTIFIC: Moody's Affirms Ratings with Negative Outlook
BRICKELL YACHT: U.S. Trustee Wants Case Dismissed or Converted
BRICKMAN GROUP: Debt Payment Cues Moody's Ratings Withdrawal
CA INC: Moody's Holds Negative Outlook After Earnings Report
CATHOLIC CHURCH: Davenport Victims' Names Remain Confidential
CATHOLIC CHURCH: Portland Wants Settlement with Insurers Approved
CATHOLIC CHURCH: Spokane Files Amended Joint Plan & Disclosure
CELESTICA INC: Fitch Holds Low-B Ratings & Revises Outlook to Neg.
CERADYNE INC: Receives $113 Million Ceramic Body Armor Order
CINEMARK USA: Likely Debt Reduction Cues Moody's Positive Outlook
CMS ENERGY: Sells Argentina & Michigan Portfolio for $180 Million
COLLINS & AIKMAN: Can Obtain Financing Under Customer Agreement
COMM 2003: Moody's Holds Low-B Ratings on $38 Million Certificates
CONGOLEUM CORP: Judge Ferguson Says Plan Must Be Modified
CORUS ENTERTAINMENT: Earns CDN$36.7 Mil. in Quarter Ended Nov. 30
COTT CORP: Declining Organic Sales Prompt S&P to Lower Ratings
COUNTRYSIDE POWER: Court Okays Settlement Pact with U.S. Energy
DANA CORP: Gets Approval to Amend Postpetition Credit Facility
DANA CORP: Wants E&Y's Work Expanded to Add Internal Audit Task
DELPHI CORP: Judge Drain Suspends Proceedings on 1113/1114 Motion
DELPHI CORP: Wants Barclays Bank Settlement Pact Approved
DOMTAR INC: Weyerhaeuser Deal Prompts S&P to Affirm Ratings
DOMTAR INC: Moody's Rates New $1.55 Billion Senior Facility at Ba1
ESTERLINE TECH: CMC Buyout Cues Moody's to Eye Possible Downgrade
EUROPEAN REINSURANCE: U.S. Court Grants Relief Under Chapter 15
EUROPEAN REINSURANCE: England High Court Approves Solvent Scheme
FORD CREDIT: Strong Performance Prompts S&P's Positive CreditWatch
FORD MOTOR: January Sales off 19% and Daily Rentals Down 16%
GAP INC: Marka Hansen Named as Gap North America President
HILCORP ENERGY: S&P Holds Rating on $475 Million Senior Notes at B
HOME PRODUCTS: Panel Wants Fried Frank as Lead Bankruptcy Counsel
HOME PRODUCTS: Panel Wants Pachulski Stang as Local Bankr. Counsel
INDEPENDENCE I: Moody's Cuts Rating on $50 Million Notes to B3
INFOR GLOBAL: Moody's Junks Rating on $1.275 Billion Senior Notes
INTERSTATE BAKERIES: Has Until June 2 to File Chapter 11 Plan
KYPHON INC: Prices $350 Million Convertible Senior Notes
LANDMARK CDO: Moody's Lifts Rating on Class D-1 and D-2 Notes
LA PETITE: Moody's Withdraws Long-Term Debt Ratings
LODGENET ENT: Unit Completes $15 Million StayOnline Acquisition
MAAX HOLDINGS: Reports 5.9% Sales Decrease in 2007 3rd Fiscal Qtr.
MAXIMUM SPINDLE: Case Summary & 29 Largest Unsecured Creditors
MERIDIAN AUTOMOTIVE: Feb. 12 Set as Administrative Claims Bar Date
MORGAN STANLEY: Moody's Holds Low-B Ratings on $38.7 Mil. Certs.
MORGAN STANLEY: Moody's Holds Junk Rating on Class M Certificates
MORGAN STANLEY: S&P Lifts Ratings on Class E and F Certificates
MORTGAGE LENDERS: Files for Bankruptcy Protection in Delaware
MORTGAGE LENDERS: Case Summary & 19 Largest Unsecured Creditors
NATIONAL STEEL: Fitch Rates $450 Mil. 9.875% Perpetual Notes at BB
NATIONAL WINE: Debt Redemption Cues Moody's to Withdraw Ratings
NELLSON NUTRACEUTICAL: Milbank Wins Enterprise Valuation Trial
NEW YORK WESTCHESTER: Files Schedules of Assets and Liabilities
NEW YORK WESTCHESTER: Wants Weiser LLP as Accountants
NEWARK GROUP: Moody's Rates Proposed $90 Million Term Loan at Ba3
NORTHWEST AIRLINES: Taps Navigant as Appraiser and Consultant
NORTHWEST AIRLINES: Wants to Repay $15.3 Mil. GMAC Promissory Note
OASIS GRACELAND: Case Summary & 20 Largest Unsecured Creditors
PACIFIC LUMBER: Obtains Interim Authority to Pay Critical Vendors
PACIFIC LUMBER: Scotia Pacific Wants to Pay Critical Vendor Claims
PATRIOT MOTORCYCLE: Posts $1.97MM Net Loss in Qtr. Ended Dec. 31
PEOPLE'S CHOICE: Voluntary Chapter 11 Case Summary
PIER 1 IMPORTS: Reports $110 Million in Sales for January 2007
PIERRE FOODS: Reports $127.1MM in Revenues for Qtr. Ended Dec. 2
PLASTECH ENGINEERED: S&P Holds BB Rating on $225 Million Facility
PLATFORM LEARNING: Has Until May 17 to Decide on E&Y Sublease
READER'S DIGEST: Stockholders Okay Ripplewood Merger Deal
RELIANT ENERGY: Fitch Puts Low-B Ratings on Positive Watch
RF CUNNINGHAM: Can Reject Corporate Headquarters Lease
SAVE OUR SPRINGS: May File For Bankruptcy After Losing a Lawsuit
SEA CONTAINERS: GNER Hints Probable Bid for East Coast Main Line
SEA CONTAINERS: U.S. Trustee Appoints SeaCon Services' Committee
SEARS HOLDINGS: Discloses Kmart and Sears Comparable Store Sales
SIMMONS COMPANY: S&P Junks Rating on Proposed $275 Mil. PIK Loan
STATION CASINOS: Panel Confirms Cash-Based Incentive Plan for 2007
SUNCOM WIRELESS: Moody's Places Junk Ratings on Review
SUPERCLICK INC: Bedinger & Company Raises Going Concern Doubt
TD AMERITRADE: Fitch Lifts Long-Term Rating to BB+ from BB
U.S. Energy: Court Approves Country Settlement Agreement
WENDY'S INTERNATIONAL: Earns $94.3 Million for Year Ended 2006
WIZZARD SOFTWARE: Posts $1.2 Mil. Net Loss in Qtr. Ended Sept. 30
* Lorie Beers Joins KPMG's Special Situations Group
* Milbank Tweed Wins Valuation Trial in Nellson Nutra's Case
* Large Companies with Insolvent Balance Sheets
*********
ADELPHIA COMMS: Can Access Wachovia Bank's Cash Collateral
----------------------------------------------------------
The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the
Southern District of New York approved Adelphia Communications
Corp. and its debtor-affiliates' cash collateral, security and
letter of credit issuance agreement with Wachovia Bank, N.A.
Debtors' DIP Facility
The Court had approved the ACOM Debtors' Fourth Amended and
Restated Credit and Guaranty Agreement dated Mar. 17, 2006, with a
group of lenders led by J.P. Morgan Securities Inc., and Citigroup
Global Markets Inc., as joint bookrunners and co-lead arrangers.
The DIP Facility provided for, among others, a $1,300,000,000
credit facility, comprised of an $800,000,000 revolving credit
facility and a $500,000,000 term loan.
Pursuant to the terms of Section 2.04(d) of the DIP Facility,
letters of credit that were issued by Wachovia Bank, National
Association, as the fronting bank under the DIP Facility, were
permitted, at the ACOM Debtors' election, to remain outstanding
after the termination of the DIP Facility, provided that, among
other things:
(i) the letters of credit were not permitted to expire later
than Oct. 8, 2006; and
(ii) the obligations of the ACOM Debtors with respect to those
letters of credit were collateralized, either with cash or
"back-to-back" letters of credit in an amount equal to at
least 110% of the then undrawn stated amount of all
letters of credit issued by Wachovia that were to remain
outstanding after the Termination Date.
Prior to the consummation of their sale of substantially all of
their assets to Time Warner Cable and Comcast Corporation, and in
the ordinary course of the operation of their cable businesses,
the ACOM Debtors incurred obligations to various third parties,
including, among others, franchise authorities, lessors,
contractors and providers of insurance to the ACOM Debtors'
employees. The third-party entities, in each case, required the
ACOM Debtors to provide letters of credit to guaranty their
payment and other obligations to the third parties.
Upon the consummation of the Sale Transaction:
(a) the ACOM Debtors repaid all of the Loans outstanding under
the DIP Facility; and
(b) in connection with the wind down of the ACOM Debtors'
relationships with key vendors and other third parties
during the balance of their Chapter 11 cases, the ACOM
Debtors elected to keep all of the letters of credit that
were outstanding at that time in full force and effect;
(c) the Debtors deposited into a bank account maintained with
Wachovia an aggregate of $87,660,590 in cash. The
$87,660,590 cash, together with $979,000 already deposited
in that Cash Collateral Account upon the closing of the
Sale Transaction, was equal to 110% of the undrawn face
amount of all of the then outstanding letters of credit.
Subsequent to the closing of the Sale Transaction, the
beneficiaries of certain letters of credit have returned those
letters of credit to Wachovia undrawn and marked cancelled.
Prior to the Petition Date, Wachovia also issued letters of
credit for certain of the ACOM Debtors pursuant to the terms of
Applications and Agreements for Irrevocable Standby Letters of
Credit. The ACOM Debtors' obligations with respect to the
letters of credit issued by Wachovia pursuant to the Prepetition
Letter of Credit Applications are collateralized through the Cash
Collateral Account with cash equal to 110% of the undrawn stated
amount of the Prepetition Letters of Credit.
As of Oct. 31, 2006, the aggregate undrawn face amount of all
of the Outstanding Letters of Credit and the Prepetition Letters
of Credit is approximately $18,511,005 and the aggregate amount
on deposit in the Cash Collateral Account is approximately
$20,887,480.
The ACOM Debtors anticipate that a substantial number of the
Outstanding L/Cs and Prepetition L/Cs will be returned to
Wachovia without being drawn upon, in which:
(a) the Outstanding L/Cs or Prepetition L/Cs, as applicable,
will be cancelled; and
(b) the cash currently held by Wachovia as collateral in
respect thereof will be returned to the Debtors.
While they anticipate the cancellation of a substantial number of
the Outstanding L/Cs and Prepetition L/Cs, pursuant to
contractual requirements, the ACOM Debtors will be required to
continue to maintain certain of the L/Cs as their Chapter 11
cases proceed to conclusion.
Results
The ACOM Debtors' Court-approved Cash Collateral Agreement with
Wachovia will enable the Debtors to:
(i) extend to Oct. 7, 2007, the expiration date of the
Outstanding L/Cs and the Prepetition L/Cs with those third
parties to which the Debtors currently have an obligation
to maintain an active letter of credit; and
(ii) obtain additional letters of credit from Wachovia, to the
extent required, during the balance of their Chapter 11
cases. Wachovia will issue additional letters of credit,
which will have an expiration date of no later than
October 7, 2007.
In addition, pursuant to the Court-approved agreement, the ACOM
Debtors can now continue to maintain the Cash Collateral Account
to serve as security for their obligations to Wachovia in respect
of the Outstanding L/Cs, the Prepetition L/Cs, and any additional
letters of credit that may be issued by Wachovia pursuant to the
terms of the L/C Agreement.
In connection with maintaining the Cash Collateral Account with
Wachovia, the ACOM Debtors can also continue the security
interests and Liens on the Collateral that currently exist for the
benefit of Wachovia under the terms of the DIP Facility.
The principal provisions of the L/C Agreement are:
(a) The provisions of the DIP Facility and other documents
that survived the repayment of the DIP Facility and that
applied to the Outstanding Letters of Credit will no
longer be of any further force and effect. All
Outstanding Letters of Credit and New Letters of Credit
will be governed exclusively by the terms of those letters
of credit and the L/C Agreement;
(b) From and after the effective date of the L/C Agreement,
all Prepetition Letters of Credit will be deemed issued
pursuant to the L/C Agreement, and will no longer be
subject to the terms and conditions set in the
Applications and Agreements for Irrevocable Standby Letter
of Credit. The ACOM Debtors' obligations under the
Prepetition Letters of Credit will be entitled to the same
rights, benefits, protections and privileges as the
Obligations in respect of the other Letters of Credit;
(c) The ACOM Debtors will keep on depositing in the Cash
Collateral Account and will maintain at all an amount
equal to 110% of the then undrawn stated amount of all
Letters of Credit that are then outstanding;
(d) In the event that any Letter of Credit expires in
accordance with its terms, or is replaced, terminated or
returned to Wachovia undrawn and marked cancelled, or in
the event that the face amount of any Letter of Credit is
reduced, Wachovia will return to ACOM the excess, if any,
of:
(i) the remaining amount on deposit in the Cash
Collateral Account on the date that Wachovia will
make the payment; over
(ii) the sum of 110% of the aggregate undrawn face amount
of all Letters of Credit that remain outstanding,
and any obligations in respect of the outstanding
Letters of Credit that have become due and payable
but remain unpaid on that date.
(e) As security for the payment of all obligations of the ACOM
Debtors under the L/C Agreement, the security interests in
and liens on the collateral previously granted under the
DIP Facility, an Amended and Restated Security and Pledge
Agreement and previous Court orders will not be cancelled
or discharged, and will continue in full force and effect.
Accordingly, the obligations of the Debtors in respect of
the Letters of Credit will continue to be:
* pursuant to Section 364(c)(1) of the Bankruptcy
Code, entitled to Superpriority Claim Status;
* pursuant to Section 364(c)(2), secured by a
perfected first priority security interest and Lien
on the Collateral; and
* pursuant to Section 364(d)(1), secured by a
perfected first priority, senior priming security
interest and Lien on the Collateral that is subject
to any of the Primed Liens, which priming security
interest and Lien will continue to be senior in all
respects to the interests in the Collateral of the
Prepetition Lenders of the ACOM Debtors.
After the effective date of the ACOM Debtors' Plan of
Reorganization, the continuing security interest in and
Lien on the Collateral granted under the L/C Agreement
will continue as a first priority perfected security
interest, and will not be cancelled or discharged as a
result of the Plan's effective date;
(f) Each ACOM Debtor may request that Wachovia issue a New
Letter of Credit. Wachovia will issue a New Letter of
Credit, provided that:
-- the cash collateralization requirements are
satisfied; and
-- the aggregate undrawn face amount of all Letters of
Credit would not exceed $20,000,000 after giving
effect to the issuance of the New Letter of Credit;
and
(g) The ACOM Debtors will reimburse drafts drawn under each
Letter of Credit not later than the first Business Day
after the date of draw and will bear interest from the
date of draw until the reimbursement obligation is
satisfied at the interest rates specified in the L/C
Agreement.
To the extent that the ACOM Debtors do not satisfy their
reimbursement obligation, Wachovia will be permitted,
without notice to any person and without further Court
action, to withdraw from the Cash Collateral Account an
amount equal to the amount of the reimbursement obligation
owed in satisfaction of that obligation.
A full-text copy of the Wachovia L/C Agreement is available for
free at http://researcharchives.com/t/s?196a
About Adelphia Comms
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television
company. Adelphia serves customers in 30 states and Puerto Rico,
and offers analog and digital video services, Internet access and
other advanced services over its broadband networks. The Company
and its more than 200 affiliates filed for Chapter 11 protection
in the Southern District of New York on June 25, 2002. Those
cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represents the Debtors in their
restructuring efforts. PricewaterhouseCoopers serves as the
Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman,
LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the
Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11 protection
on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through
06-10642). Their cases are jointly administered under Adelphia
Communications and its debtor-affiliates chapter 11 cases.
(Adelphia Bankruptcy News, Issue No. 162; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
As reported in the Troubled Company Reporter on Jan. 9, 2007, the
Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the
Southern District of New York entered an order confirming the
first modified fifth amended joint Chapter 11 plan of
reorganization of Adelphia Communications Corporation and Certain
Affiliated Debtors.
ADELPHIA COMMS: Equity Claims Distribution Postponed Indefinitely
-----------------------------------------------------------------
Adelphia Communications Corp. disclosed that it intended to set:
* Jan. 10, 2007, as the record date for distributions for
holders of claims in the Bank Claims Classes, Trade Claims
Classes, and Other Unsecured Claims Classes; and
* Jan. 17, 2007, as the record date for holders of claims
in Notes Claims Classes and holders of Equity Interests
The Debtors now notify parties-in-interest that the Distribution
Record Date for holders of Notes Claims and Equity Interests will
postponed sine die.
Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New
York, clarifies that the Distribution Record Date for holders of
all claims other than the Notes Claims and Equity Interests will
remain on Jan. 10, 2007.
About Adelphia Comms
Based in Coudersport, Pa., Adelphia Communications Corporation
(OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television
company. Adelphia serves customers in 30 states and Puerto Rico,
and offers analog and digital video services, Internet access and
other advanced services over its broadband networks. The Company
and its more than 200 affiliates filed for Chapter 11 protection
in the Southern District of New York on June 25, 2002. Those
cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represents the Debtors in their
restructuring efforts. PricewaterhouseCoopers serves as the
Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman,
LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the
Official Committee of Unsecured Creditors.
Adelphia Cablevision Associates of Radnor, L.P., and 20 of its
affiliates, collectively known as Rigas Manged Entities, are
entities that were previously held or controlled by members of the
Rigas family. In March 2006, the rights and titles to these
entities were transferred to certain subsidiaries of Adelphia
Cablevision, LLC. The RME Debtors filed for chapter 11 protection
on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through
06-10642). Their cases are jointly administered under Adelphia
Communications and its debtor-affiliates chapter 11 cases.
(Adelphia Bankruptcy News, Issue No. 162; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
As reported in the Troubled Company Reporter on Jan. 9, 2007, the
Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the
Southern District of New York has entered an order confirming the
first modified fifth amended joint Chapter 11 plan of
reorganization of Adelphia Communications Corporation and Certain
Affiliated Debtors.
ADVANCED MARKETING: Has Until March 9 to File Schedules
-------------------------------------------------------
The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court
for the District of Delaware extended the time within which
Advanced Marketing Services Inc. and its debtor-affiliates must
file their Schedules and Statements under Rule 1007 of the Federal
Rules of Bankruptcy Procedure, through and including Mar 9, 2007.
As reported in the Troubled Company Reporter on Jan. 24, 2007,
the Debtors asked the Court to extend to Mar. 29, 2007, the
deadline for them to file:
-- schedules of assets and liabilities;
-- a schedule of current income and expenditure;
-- a schedule of executory contracts and unexpired leases; and
-- a statement of financial affairs.
Under Rule 1007(b) of the Federal Rules of Bankruptcy Procedure
and Rule 1007-1(b) of the Local Rules of Bankruptcy Practice and
Procedure of the U.S. Bankruptcy Court for the District of
Delaware, the Debtors are required to file their Schedules and
Statements within 30 days after they file for bankruptcy.
Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, told the Judge Sontchi that because
of the substantial size and scope of the Debtors' business, the
complexity of their financial affairs, the limited staffing
available to perform the required internal review of their
accounts and affairs, and the press of business incident to the
commencement of their cases, the Debtors were unable to assemble,
prior to the Petition Date, all of the information necessary to
complete and file the Schedules and Statements.
The Debtors will not be in a position to complete the Schedules
and Statements within the time specified in Bankruptcy Rule 1007
and Local Rule 1007-1(b), Mr. Heath related. Completing the
Schedules and Statements for each of the Debtors, Mr. Heath
explains, will require the collection, review and assembly of
information from multiple locations throughout the United States.
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., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP,
represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark
D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as 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. 4;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ADVANCED MARKETING: Committee Objects to Wells Fargo DIP Financing
------------------------------------------------------------------
The Official Committee of Unsecured Creditors and Simon &
Schuster Inc. contend the DIP Facility offers no benefit to
Advanced Marketing Services Inc. and its debtor-affiliates and
would only serve to improve the secured lenders' position.
As reported in the Troubled Company Reporter on Jan. 10, 2007, the
Court authorized the Debtors, on an interim basis, to dip their
hands into the DIP financing facility arranged by Wells Fargo
Foothill.
The Committee also asserts that the DIP Facility effectuates
cross-collateralization of pre- and postpetition debt. The
Committee wants denied the proposed payment of the prepetition
obligations first from the proceeds of Wells Fargo Foothill's
collateral.
Causes of action under Section 549 of the Bankruptcy Code should
also be excluded from Foothill's collateral, the Committee
suggests.
The Committee also wants more time to review the extent, validity
and priority of the prepetition lenders' liens, as well as any
claims against the lenders. The Committee says the 60-day probe
period in the DIP Motion is too short. The Committee also wants
equal access to information.
Simon & Schuster says if the Interim DIP Order becomes a final
order, unsecured creditors will be irreparably harmed and unduly
prejudiced. Representing Simon & Schuster, Craig A. Wolfe, Esq.,
at Kelley Drye & Warren LLP, in New York, says unsecured
creditors stand to lose the most in the Debtors' cases. He
explains that the DIP Loan Facility provides no real benefit to
the Debtor and is simply a mechanism for the senior lenders to
force a quick liquidation of Debtor's businesses while being paid
substantial fees in the process.
Simon & Schuster sold books and multimedia products to the Debtor.
It asserts a $26,000,000 prepetition clam against the Debtor.
During the 45-day period prior to the Dec. 29, 2006, Simon &
Schuster delivered goods aggregating $5,105,629, including
$2,146,126 in goods delivered within 20 days before Debtor's
bankruptcy filing.
LearningExpress LLC objects to the DIP Financing Motion to the
extent that the Debtors' request:
(a) seeks to eliminate its rights of set-off and recoupment
on account of amounts the Debtors owe against amounts
LearningExpress owes to the Debtors;
(b) grants the Debtors' lenders right, title or interest in
LearningExpress' books, any of its copyrights, trademarks
and intellectual property rights or the proceeds of sale
of its books; and
(c) impairs its reclamation rights.
LearningExpress is a party to a September 2004 marketing and
distribution agreement with Advanced Marketing Services Inc.,
and Publishers Group West Incorporated. LearningExpress is also
a borrower under a prepetition loan agreement with PGW.
Representing LearningExpress, Michael E. Foreman, Esq., at
Proskauer Rose LLP, in New York, relates that as of the Petition
Date, PGW owes LearningExpress approximately $167,000 on account
of book sales. In addition, PGW is holding LearningExpress'
books with estimated market value of $2,000,000 to $2,500,000.
Rich Publishing says the Debtors' request is unclear regarding
any effort by the Debtors' senior secured lender to obtain or
assert a lien against the books PGW holds under their bailment
arrangement. Rich Publishing is a party to a marketing and
distribution agreement with PGW. It asserts a $4,500,000 claim
against PGW.
Rich Publishing, hence, wants any order approving the Debtors'
request to recognize that Rich Publishing retains title to all of
its books in PGW's possession and no lien or interest granted to
the Debtors' lenders extends to or includes Rich Publishing's
books or intellectual property in PGW's possession.
Avalon Publishing, Inc., supplies books and other items to PGW
under an April 2006 Marketing and Distribution Agreement. Avalon
holds a $3,900,000 prepetition claim and an unliquidated
administrative priority claim against PGW.
Representing Avalon, Mark Minuti, Esq., at Saul Ewing, LLP, in
Wilmington, Delaware, asserts that any of Avalon's products in
the Debtors' possession, or coming into their possession, should
not be subject to any lien, claim or encumbrance in favor of the
Senior Lenders or their agent under the Debtors' existing loan
documents.
Carus Publishing Group also has a marketing and distribution deal
with PGW. Carus also wants any final order approving the
Debtors' request to reflect that the Debtors have no lien or
ownership interest in Carus' books, and the Books remain property
of Carus free of any claim of the Debtors' Lenders.
Meredith Corporation and Leisure Arts, Inc., ask the Court that
any Final Order entered with respect to the DIP Motion must make
clear that each of their set-off, recoupment and reclamation
rights remain preserved and unimpaired.
Meredith and Leisure assert that the Debtors:
(a) may not be permitted to prime or impair their set-off and
recoupment rights; and
(b) seek effectively to prime their right to reclaim their
reclamation goods even though their rights in the
reclamation goods are prior to the rights of the
postpetition lender.
Nowhere in the DIP Motion or proposed final order, Meredith says,
do the Debtors propose to reserve the set-off rights.
Foothill Responds
Wells Fargo Foothill Inc., as agent to the Debtors' DIP Lenders,
tells Judge Sontchi that the Debtor and PGW creditors erroneously
argue that the DIP Facility provides the Debtors with no
availability.
Foothill points out that the Debtors enjoy sufficient liquidity
and availability as a result of -- and only because of -- the DIP
Facility. Moreover, the DIP Facility does not improve the
lender's position in any way, Foothill attests.
Foothill clarifies that the DIP Facility does not effectuate
cross-collateralization of pre- and postpetition debt because it
does not secure prepetition debt with postpetition assets.
Foothill also notes that the payment of the Debtors' prepetition
obligations first from the proceeds of the collateral is a common
feature of postpetition financing, particularly in large complex
Chapter 11 bankruptcies.
The practice, which is referred to as a "roll-up," Foothill says,
makes sense:
-- on a practical level, the first proceeds coming to foothill
postpetition are in fact proceeds of prepetition
collateral; and
-- roll-ups are typically approved where the secured creditor
is oversecured because there is no harm to other creditors
and no preferential benefit to the secured creditor.
Foothill says the Court may impose any remedy, including
disgorgement, if it turns out that Foothill is not oversecured.
With regard to the Qualified Transaction Timeline, Foothill says
it is merely the tail end of a very long and intensive process in
which the Debtors attempted to accomplish a strategic transaction
to resolve significant financial and operational issues. The
Debtors, Foothill points out, have for more than six months
actively pursued buyers, refinancings and other deals -- to no
avail.
Foothill says it is willing to provide some flexibility in the
timeline.
Foothill also insists that its limited liens on avoidance actions
and on recoveries under Section 549 are reasonable. That DIP
provision, Foothill explains, is designed to protect it in the
event it makes payments on account of the Professional Fee Carve
Out, and then comes up short after the liquidation of collateral.
The provision, Foothill says, protects against professionals
obtaining a windfall at Foothill's expense in the form of the
carve out plus, as administrative claimants, the proceeds of
avoidance actions.
Foothill agrees that whatever rights to setoff or recoupment the
vendors have should be retained. However, Foothill notes that
Section 9-404 of the Uniform Commercial Code addresses the
relative priorities between a secured creditor and the holder of
a setoff right. A security in an account is subject to the right
of an account debtor to setoff against the account, but only if
that right accrued before the account debtor received
authenticated notice of the security interest in the account.
Foothill believes that most, if not all, of the Debtor's creditors
received that notice, eliminating the seniority of their setoff
rights.
Foothill also reminds Judge Sontchi that in asset-based lending,
the concept of eligible inventory, or inventory included in the
borrowing base, is typically a smaller subset of inventory
collateral. Hence, if PGW's transactions with its vendors are
true bailments, Foothill says its security interest likely does
not attach to the books.
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., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP,
represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark
D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as 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. 4;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AEP INDUSTRIES: Earns $24.4 Million in 2006 4th Fiscal Quarter
--------------------------------------------------------------
AEP Industries Inc. has released financial results for its fiscal
year ended Oct. 31, 2006.
Net income for the fourth fiscal quarter of 2006 was
$24.4 million, compared to a net loss of $11.1 million in the
fourth fiscal quarter of 2005. Net income for the fiscal year
2006 was $62.9 million, compared to a net loss of $50.6 million
in the prior year.
Net sales increased 2.2% in the fourth quarter of fiscal 2006 to
$207.2 million compared with $202.8 million in the fourth quarter
of fiscal 2005. The increase in net sales was the result of a
9.2% increase in unit prices partially offset by a 7.3% decrease
in sales volume during the fourth quarter of fiscal 2006 as
compared to the same period in fiscal 2005. The increase in net
sales also includes a net positive impact of foreign exchange of
$1.9 million.
Net sales for the fiscal year ended Oct. 31, 2006, increased
$69.4 million, or 9.5%, to $802.1 million compared with
$732.7 million for the fiscal year ended Oct. 31, 2005. The
increase in net sales was the result of a 13.6% increase in unit
prices partially offset by a 3.7% decrease in sales volume during
fiscal 2006 as compared to fiscal 2005. The increase in net sales
also includes a net positive impact of foreign exchange of
$0.7 million.
"The company is extremely happy to report record earnings of
$62.9 million and diluted EPS of $7.35 per share for fiscal 2006,"
stated Brendan Barba, Chairman and Chief Executive Officer.
"These exceptional earnings are the result of actions taken by the
company in prior years. The company believes future earnings will
be positively impacted by our fiscal 2006 accomplishments which
include the following:
-- the company committed to a plan and initiated steps to
liquidate their U.K. operations during the fourth quarter
of fiscal 2006;
-- the company entered the final stages of the liquidation of
our FIAP (Italy) and Spanish operations with final
liquidation expected during the first quarter of fiscal
2007;
-- the company purchased a total of 850,000 shares of our
common stock from Third Point on Aug. 2 and 3 2006, for an
aggregate purchase price of $30.6 million utilizing cash on
hand coupled with borrowings under our Credit Facility;
-- the company completed the sale of our Bordex operation in
July 2006;
-- the company completed the sale of our Gainesville, Texas
facility in June 2006;
-- the company completed the sale of certain assets held for
sale: our FIAP (Italy) land and building in January 2006
and our Edmonton (Canada) land and building in April 2006;
-- the company completed the disposition of our Belgium
operations in February 2006;
-- the company acquired the business and certain operating
assets of Mercury Plastic Inc.'s Bowling Green, Kentucky
facility in February 2006; and
-- the company made approximately $36.4 million of capital
expenditures during fiscal 2006 related primarily to the
early buyout of certain machinery leases totaling $4.3
million, the purchase of a warehouse in Waxahachie, Texas
for $3 million, and the purchase and installation of six
new production lines: one new custom line in our
Pennsylvania plant that started operating in January 2006,
two new custom lines in our California plant that started
in September 2006, two new custom lines in our Texas
plant, with one having started in June 2006 and the other
in August 2006, and one new cast stretch line in our North
Carolina plant that started in March 2006."
Liquidation of U.K. Operations
During the fourth quarter of fiscal 2006, the company initiated
steps to liquidate its U.K. operations and, therefore, reevaluated
the carrying value of the net assets of the UK operations. The
company determined that the book value of the U.K. assets
exceeded its fair value, and as a result, the company recorded
a $2.2 million impairment charge taken against the assets of the
U.K. company.
The company also recorded a $2.4 million liability related to
funding of the U.K.'s defined pension contribution plan. The
total loss of $4.6 million was recorded during the fourth
quarter of fiscal 2006 and is included in the pre-tax loss from
discontinued operations.
About AEP Industries
AEP Industries Inc. (Nasdaq: AEPI) -- http://www.aepinc.com/--
manufactures and markets plastic packaging films, including
polyethylene, polyvinyl chloride and polypropylene flexible
packaging products for the industrial and agricultural
applications. AEP operates in eight countries in North America,
Europe and Asia Pacific. On Feb. 10, 2005, the company disposed
off AEP Industries Packaging France SAS and on March 25, 2005, the
Group disposed off Termofilm SpA. On Feb. 23, 2006, the company
acquired Mercury Plastics Inc.
* * *
Moody's Investors Service's confirmed its Ba3 Corporate Family
Rating for AEP Industries and its B1 rating on the company's
$175 million 7.875% Senior Notes Due 2015. Moody's assigned the
debentures an LGD4 rating suggesting noteholders will experience a
69% loss in the event of a default.
AIRTRAN HOLDINGS: Discloses Proposed Slate for Midwest Air's Board
------------------------------------------------------------------
AirTran Holdings, Inc., the parent of AirTran Airways, has
proposed a slate of nominees for the Board of Directors of Midwest
Air Group, Inc. AirTran said it would nominate Jeffrey Erickson,
Charles Kalmbach and John Albertine as directors to Midwest's
board at the airline's next annual meeting of shareholders.
"While this slate of director candidates, if elected, will not
constitute a majority of the members of the Board, we believe it
is vital that the Midwest shareholders' interests be represented
inside of the Boardroom," Joe Leonard, AirTran's chairman and
chief executive officer, said.
Mr. Leonard said that AirTran was taking this action because it
believes that those charged with fiduciary obligations are more
concerned about their own positions than permitting the owners of
Midwest to accept AirTran's offer.
"How far is the current Midwest management willing to go to
convince Midwest stakeholders that its deeply flawed 'stay-the-
course' plan is superior to AirTran's, despite the contrary
evidence that shows that the combination would create scale,
efficiencies and growth opportunities far beyond what Midwest
could achieve independently is something all Midwest shareholders
should ask," Mr. Leonard said. "With the average tenure of the
board being 14 years, and with some members serving up to 23
years, shareholders should also ask if the Board and management's
entrenchment is really serving the best interests of all
shareholders?"
Brief Biography of the Nominees
1) Jeffrey Erickson
Mr. Erickson recently retired as President and CEO of Atlas Air
Worldwide Holdings, Inc. and continues as a member of its Board of
Directors. Previously, Mr. Erickson served as President and Chief
Operating Officer of Atlas Air, Inc., a subsidiary of AAWW.
Before joining Atlas, Mr. Erickson was President and CEO of Trans
World Airlines including the period of its emergence from
bankruptcy in 1995.
Earlier, Mr. Erickson was President and CEO at Reno Air, where he
was in charge of planning, financing and organizing that new
carrier, which operated throughout the 1990s before being acquired
by American Airlines in 1999. He also served as President and
Chief Operating Officer at Midway Airlines, following operations
experience with Aloha Airlines and Continental Airlines, and
engineering experience at Pan American World Airways.
Mr. Erickson received his B.A. in Aeronautical Engineering from
Rensselaer Polytechnic Institute and a M.A. in Transportation
Planning and Engineering from Polytechnic University.
2) Charles Kalmbach
Mr. Kalmbach recently concluded his tenure at DBM, INC., (Drake,
Beam, Morin), as President and Chief Executive Officer.
Previously he served as Princeton University's first senior vice
president for administration to share responsibility for
operations of the University with the President and Provost.
Before that, Mr. Kalmbach served as Global (Practice) Managing
Partner for Accenture, Managing Partner of PriceWaterhouse, and
Engagement Leader and Practice Leader for McKinsey & Company.
He received his Ph. D., M.A., and B.S.E. from Princeton
University, Applied Mathematics and Mechanics (Department of
Aerospace and Mechanical Sciences), and a J.D. from the University
of Pennsylvania.
3) John Albertine
Mr. Albertine is the Chairman, CEO and founder of Albertine
Enterprises, an economic consulting and merchant banking firm
located in Washington, D.C. He previously served as CEO of JAM
Shoe Concepts, and was an Associate Professor of Economics at Mary
Washington College.
Mr. Albertine is a current member of Virginia Governor's Board of
Economic Advisors, and a trustee of the Virginia Retirement
System. He was appointed by President Reagan as Chair of the
Presidential Aviation Safety Commission. He received his Ph.D.
from the University of Virginia.
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 Dec. 15, 2006,
Standard & Poor's Ratings Services affirmed its ratings on AirTran
Holdings Inc. and its primary operating subsidiary, AirTran
Airways Inc., including the 'B-' corporate credit rating on
AirTran Holdings.
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.
AIRTRAN HOLDINGS: Extends Exchange Offer to March 8
---------------------------------------------------
AirTran Holdings, Inc., the parent of AirTran Airways, extended
its Exchange Offer, originally due to expire on Feb. 8, 2007,
until March 8, 2007, at 12:01 midnight Eastern Standard Time.
AirTran said that because Midwest Air Group, Inc., has refused to
allow the company to communicate directly with shareholders,
AirTran had to go to Court to enable it to do so. AirTran said
that it decided to extend its offer so that Midwest's shareholders
can receive all the information they need. AirTran was advised by
The Bank of New York, the exchange agent for the offer, that, as
of 5:00 p.m. EST, on Jan. 31, 2007, a total of 38,966 shares of
Midwest common stock were tendered pursuant to the offer. Except
for the extension of the expiration date, all of the other terms
of the exchange offer remain as set forth in the preliminary
prospectus dated Jan. 11, 2007, and all supplements thereto and
the related letter of transmittal.
On Jan. 25, 2007, Midwest's management recommended that
shareholders reject AirTran's offer to combine Midwest and AirTran
to form a stronger, more competitive airline, ignoring the
significant premium and long term value that the exchange offer of
$13.25 in cash and AirTran stock would provide to shareholders.
Yet again Midwest rebuffed AirTran's offer without meeting with
AirTran to carefully review the merits of the proposed
combination.
Midwest's management has taken its stance despite the compelling
evidence that, by any measure -- financial, network revenue and
diversity, opportunities for employees, fleet plan, cost
structure, growth for the greater Milwaukee region, and most
significantly, the shareholder value creation model AirTran has
put forth -- the merits of combining AirTran and Midwest are
superior to Midwest's "stay-the-course, go-it-alone" plan.
Midwest's management is also taking its unilateral stance despite
the many uncertainties it faces in Midwest's future competitive
environment and the threat that other airlines will quickly move
in and push Midwest out of its position in Milwaukee.
The Midwest Board is apparently content to trust the value of the
shareholders' investment to an uncertain plan put forth by
Midwest's management that envisions a scenario whereby it believes
that as a stand alone company, and assuming no further competition
into the markets it presently serves and stable fuel prices, it
can achieve earnings per share growth in 2007 that is nearly twice
as great as the earnings growth estimated by Wall Street analysts.
Midwest's management offered no substantive basis for what can
only be described as an extremely optimistic projection, only the
hope that "market conditions in the industry will continue to
improve and increasingly favor high quality carriers like Midwest.
AirTran believes that Midwest management's refusal to fully
contemplate the compelling benefits of combining with AirTran
raises serious corporate governance and transparency questions.
* Why is Midwest's management trying to prevent AirTran from
communicating directly with shareholders about AirTran's
plan? By that AirTran was forced to go to court in order to
make Midwest's management comply with law. In letter to
shareholders, AirTran stated that it believes that if
Midwest's management is so confident about it's "stay-the-
course, go-it-alone plan," it should provide a level playing
field for its shareholder to fairly consider AirTran's
proposal.
* Why is the Midwest management team trying to mislead its
employees and the Milwaukee community by claiming that the
AirTran plans will create job losses? AirTran has laid out
in detail how its plan will create many more jobs in the
Milwaukee region than Midwest now provides.
* Why should shareholders trust Midwest's management's "stay-
the-course" plan given the abysmal financial performance of
Midwest in the past? Are shareholders content with merely a
very small profit in one year out of the past five -- and a
huge net loss for the past five years (in excess of
$126 million, based on Midwest's SEC filings and 2006
earnings releases)?
* Why is Midwest's management lining up Wisconsin politicians
to lobby regulators to find some fault with our plan?
AirTran relates that it believes that the competitive
environment for Midwest is likely to worsen, especially if,
as some observers have noted, Northwest Airlines emerges from
its Chapter 11 proceeding and re-enters the markets currently
served by Midwest, thereby putting new pressures upon
Midwest. By contrast, AirTran's plan envisions creating a
stronger, more diversified airline, better able to withstand
competition, offering greater job security to employees and
more service to Milwaukee and the other cities currently
served by Midwest.
* Similarly, why did Midwest's management also fail to tell
shareholders, until required to do so by Securities and
Exchange Commission disclosure regulations, that it paid
$100,000 for, and based its recommendation to shareholders
upon, the advice of an "independent" aviation consulting firm
whose chairman has been a Midwest director for over 20 years?
That consulting firm was requested to provide its advice to
the very same Board committee that is headed by the
consulting firm's own chairman.
In order to be certain that shareholders have all the information
needed, AirTran have decided to extend the expiration its exchange
offer until March 8, 2007.
Shareholders with questions about how to tender their shares may
call AirTran's Information Agent: Innisfree M&A Incorporated Toll-
free at (877) 456-3422 (from the US and Canada) or (412) 232-3651
(from outside the US and Canada). Banks and Brokers call collect
to (212) 750-5833.
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 Dec. 15, 2006,
Standard & Poor's Ratings Services affirmed its ratings on AirTran
Holdings Inc. and its primary operating subsidiary, AirTran
Airways Inc., including the 'B-' corporate credit rating on
AirTran Holdings.
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.
ALLIED HOLDINGS: Morgan Stanley Objects to Equity Panel Formation
-----------------------------------------------------------------
Morgan Stanley Senior Funding, Inc., as agent, for each of the
term loans A, B and C, co-syndication agent and lender under
Allied Holdings, Inc. and its debtor-affiliates' Debtor-In-
Possession Credit Facility, asks the Honorable Ray Mullins of the
U.S. Bankruptcy Court for the Northern District of Georgia to deny
the request of the Ad Hoc Equity Holders Committee and the Rutland
Family to create an Official Committee of Equity Security Holders.
In addition to the issues raised by the Debtors, the Official
Committee of Unsecured Creditors, the United States Trustee, and
Yucaipa American Alliance Fund I, L.P., Morgan Stanley objects to
an appointment of an official committee of equity security
holders for three primary reasons:
(1) the Debtors and the DIP Lenders have not made tangible
progress in developing a consensual plan of reorganization
and with the recent extension of the revolver portion of
the DIP Facility, the DIP Lenders believe that it is time
to resolve the Chapter 11 case, particularly with the
opposed positions of the various constituencies;
(2) the Debtors' liabilities are increasing, their costs have
not been reduced, and further delay could erode their
liquidity and enterprise value to the point of
jeopardizing the economic interests of the term lenders
under the DIP Facility; and
(3) the Ad Hoc Equity Committee and the Rutland Family have
failed to, and cannot, present any new evidence to the
Court to be considered, and there is no evidence in the
record that there is value in the estates for the benefit
of the equity holders.
Jesse H. Austin, III, Esq., at Paul Hastings Janofsky & Walker,
LLP, in Atlanta, Georgia, says, in the event that the Ad Hoc
Committee and the Rutland Family are successful in making a
substantial contribution to the Debtors' Chapter 11 cases, they
have the ability under Section 503(b) of the Bankruptcy Code to
make a claim against the estates. Until that time, the estates
cannot afford to have additional administrative expenses
incurred, and the DIP Lenders believe the expenses will
potentially impinge on the value of their collateral.
Mr. Austin notes that neither the Ad Hoc Equity Committee nor the
Rutland Family have not offered any new facts, supported by
evidence, that otherwise alters the mix of information previously
before the Court when it denied similar relief. The fact that
the Debtors, the Creditors Committee, the U.S. Trustee, and the
Agents are unified in their opposition to the appointment of an
official equity committee demonstrates the request's lack of
merit and the shared interest in preserving the limited resources
of the estates, Mr. Austin points out.
According to Mr. Austin, the primary remaining missing piece for
a successful reorganization relates to the collective bargaining
agreements with the unions and the implementation of those values
into the Debtors' business plan to support a Plan. The CBAs will
not be fixed by appointing an equity committee rather it will
diminish the Debtors' liquidity without foreseeable benefit.
Moreover, Mr. Austin notes, the U.S. Trustee had the option and
chose not to form an equity committee and consistently has
opposed the request. The board of directors of Allied Holdings,
Inc., continues to be comprised of equity holders. Similar to
the prior request, the Ad Hoc Equity Committee and the Rutland
Family have the burden of proof and have failed to carry it in
their renewed request.
As the only continuing source of funds during bankruptcy for the
Debtors, Morgan Stanley is sensitive to expenditures associated
with the appointment of a committee for equity security holders.
Mr. Austin emphasizes that the funds expended arguing over
whether to appoint a committee, let alone the actual appointment,
are unwise allocations of scarce resources as "generally no
equity committee should be appointed when it appears that a
debtor is hopelessly insolvent because neither the debtor nor the
creditors should have to bear the expense of negotiating over the
terms of what is in essence a gift." Instead, these efforts
should be redirected to forming a plan and assisting the Debtors'
emergence from bankruptcy, Mr. Austin adds.
About Allied Holdings
Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other
OTC: AHIZQ.PK) -- 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. In their Schedules of Assets
and Liabilities filed with the Court, Allied Holdings disclosed
$161,248,122 in total assets and $292,306,949 in total
liabilities. (Allied Holdings Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/
or 215/945-7000)
The Debtors filed a motion with the Court requesting that their
exclusive period to file a chapter 11 plan reorganization be
extended to Feb. 23, 2007. The Debtors also asked that their
exclusive period to solicit acceptances of that plan be extended
to Apr. 24, 2007. The hearing on the motion, initially set for
Feb. 1, 2007, has been rescheduled to Feb. 14, 2007.
ALLIED HOLDINGS: Wants to Renew Canada Insurance Policies with AIG
------------------------------------------------------------------
Allied Holdings Inc. and its debtor-affiliates ask the Hon. Ray
Mullins of the U.S. Bankruptcy Court for the Northern District of
Georgia, for permission to enter into and renew certain insurance
policies and agreements with certain affiliates of American
International Group, Inc., related to their insurance policies
in Canada.
The insurance policies, which are renewable annually, include
commercial general liability, automobile liability, excess
liability, commercial umbrella liability, special risks
liability, property liability and others.
The Debtors considered several options in connection with their
insurance renewal process and solicited bids from several
insurance carriers. The Debtors received and accepted a proposal
for casualty insurance, dated Jan. 10, 2007, from AIG.
The Renewal Agreement provides all requested liability coverage.
The total estimated cost of the 2007 Canadian Insurance Programs
with AIG, including premiums, is CDN2,498,285.
Pursuant to the Renewal Agreement, the Debtors agree to make
certain payments and reimbursements to AIG, including payments on
account of premiums, premium taxes, surcharges and assessments,
funding of claims payment funds for losses under the policies and
expenses allocated within their insurance deductibles, other
expenses within the insurance deductible but not allocated to
specific losses, certain related claim service fees and certain
paid losses and loss adjustment expenses.
As security for their payment and performance under the Renewal
Agreement, the Debtors are required to provide to AIG security
interests in and liens on the collateral and security provided by
the Debtors to AIG and clean, irrevocable, evergreen letters of
credit issued by a bank or other financial institution for the
benefit of AIG.
In connection with the renewal of the Canadian Insurance
Programs, AIG is holding collateral in the aggregate amount of
CDN6,875,000 in cash and letters of credit posted by Allied.
AIG has conditioned maintenance of the Canadian Insurance
Programs upon entry of a Court order that:
a. authorizes the Debtors to enter into the Renewal Agreement
with AIG to renew the Canadian Insurance Programs and
execute all documentation necessary to enter the pact;
b. in the event of default by the Debtors under the Canadian
Insurance Programs, authorizes AIG to exercise all
contractual rights in accordance with the terms of the
Insurance Programs and applicable law without further
Court order;
c. grants administrative priority pursuant to Section 503(b)
of the Bankruptcy Code to AIG for reimbursement
obligations and any other obligations under the Canadian
Insurance Programs, subject to the Carve-Out provided
under the Court's final order authorizing the Debtors to
obtain DIP financing;
d. authorizes AIG to carry out the terms and conditions of
the Canadian Insurance Programs;
e. declares that the Canadian Insurance Programs may not be
altered by any plan of reorganization filed in the
Debtors' Chapter 11 cases and will survive any plan filed
by the Debtors;
f. declares that the terms and conditions of the Canadian
Insurance Programs govern the Debtors' rights against any
collateral held by AIG;
g. declares that AIG will not be required, except as provided
by the terms of the Canadian Insurance Programs and the
Renewal Agreement, to return any part of the security it
holds for the Insurance Programs without adequate
protection for its interest in that security; and
h. declares that no administrative claim bar date will apply
to any claims of AIG that it may assert in the Debtors'
bankruptcy cases.
The failure to obtain Bankruptcy Court approval for the execution
of the Renewal Agreement by March 17, 2007, constitutes grounds
for cancellation of the insurance policies.
The Debtors, together with Marsh Canada Ltd., the insurance
broker, have researched the insurance markets and available
programs and have been unable to locate another insurer willing
and able to provide insurance coverage on the same or better
terms as provided by AIG, Harris B. Winsberg, Esq., at Troutman
Sanders LLP, in Atlanta, Georgia, discloses.
Mr. Winsberg notes that without the insurance policies, the
Debtors will be unable to operate their businesses in Canada.
The Debtors have determined in their sound business judgment that
the Canadian Insurance Programs with AIG remain the most
beneficial option for them and their estates. The Debtors are
also confident that, in entering the Renewal Agreement with AIG,
they will have adequately insured their business, protected the
interests of their estates and allowed them to continue
successful operations.
Moreover, Mr. Winsberg says, without the insurance coverage
provided by the Renewal Agreement, the Debtors would be unable to
comply with contractual, state law and other regulatory insurance
requirements or satisfy the U.S. Trustee debtor-in-possession
guidelines with respect to maintenance of adequate insurance
coverage, which would jeopardize their business operations and
the value of their estates.
About Allied Holdings
Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other
OTC: AHIZQ.PK) -- 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. In their Schedules of Assets
and Liabilities filed with the Court, Allied Holdings disclosed
$161,248,122 in total assets and $292,306,949 in total
liabilities. (Allied Holdings Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/
or 215/945-7000)
The Debtors filed a motion with the Court requesting that their
exclusive period to file a chapter 11 plan reorganization be
extended to Feb. 23, 2007. The Debtors also asked that their
exclusive period to solicit acceptances of that plan be extended
to Apr. 24, 2007. The hearing on the motion, initially set for
Feb. 1, 2007, has been rescheduled to Feb. 14, 2007.
AMERICAN MEDIA: To Discuss Restated Financial Results with Lenders
------------------------------------------------------------------
American Media Operations Inc. will host a conference call to
update the bank lenders under the company's credit agreement with
respect to its business and the restatement of its financial
statements.
The company will discuss its financial results for certain
completed financial periods.
The slides that will be used by the company in conjunction with
the conference call will be available until 5:30 p.m., on Friday,
Feb. 9, 2007.
Business Update
Results for the December 2006 quarter are below forecast
* Soft newsstand circulation at Star is the primary driver
* On a year-over-year basis, Bank EBITDA for the December 2006
quarter is estimated to be slightly lower than the prior
year, with cost cuts partly offsetting top-line weakness
-- $23.9 million in Bank EBITDA for December 2005 quarter
versus $21.5 million in Bank EBITDA for the December 2006
quarter
Management has developed an action plan to be implemented in the
March quarter that is estimated to generate $36.6 million of
incremental Bank EBITDA and substantially enhance the company's
cash flow profile
* $19.4 million of cost savings
* $17.2 million of revenue enhancements
The company expect strong year-over-year financial performance for
the March 2007 quarter, which is expected to benefit from:
* Recovery in Star newsstand sales
* Substantially lower SG&A expenses
* Comparison to relatively weak March 2006 results
A full-text copy of the slides relating to the financial results
is available for free at: http://ResearchArchives.com/t/s?1967
About American Media
Headquartered in Boca Raton, Florida, American Media Operations
Inc., is a publisher of celebrity, health and fitness, and Spanish
language magazines, including Star, Shape, Men's Fitness, Fit
Pregnancy, Natural Health, and The National Enquirer. AMI also
owns Distribution Services, Inc.
* * *
As reported in the Troubled Company Reporter on Sept. 4, 2006,
Moody's Investors Service downgraded all of its ratings for
American Media Operations Inc., including the company's
$60 million Senior Secured Revolving Credit Facility Due 2012 and
$450 million Senior Secured Term Loan Due 2013, which ratings were
lowered to B2 from B1.
In addition, Moody's downgraded its ratings on the company's
$150 million 8.875% Senior Subordinated Notes Due 2011 and
$400 million 10.25% Senior Subordinated Notes Due 2009 to Caa3
from Caa1.
Moody's also junked the company's B2 Corporate Family Rating. The
rating outlook is negative.
AMERISERV FINANCIAL: Improved Liquidity Cues Fitch to Lift Ratings
------------------------------------------------------------------
Fitch Ratings has upgraded the Long-term Issuer Default Rating of
AmeriServ Financial, Inc. to 'BB-' from 'B+' and AmeriServ
Financial Bank to 'BB' from 'BB-'.
In addition, Fitch upgraded AmeriServ Capital Trust I preferred
stock rating to 'B' from 'B-' and removed the recovery rating
'RR6' reflecting the IDR upgrade.
The Outlook remains Positive for ASRV. For ASRVB, the Outlook has
been revised to Stable.
The upgrade is reflective of ASRV's improved liquidity at the
parent company and positive earnings trend, which supports the
company's ability to service the trust preferred debt outstanding.
Fitch believes the likelihood of a deferral on the trust preferred
dividend in the near to medium term has lessened.
Additionally, the removal in February 2006 of the Memorandum of
Understanding entered into with regulators allows management to
focus more on the execution of its strategic goals to grow core
earnings and improve financial performance. The company has
addressed concerns cited in the MOU with the successful
implementation of initiatives to improve credit quality and credit
administration processes, strengthen capital and reduce interest
rate risk.
Fitch believes the bank's positive earnings trend will be
sustainable leading to improved profitability measures. Although
earnings trends are positive, improved profitability measures and
enhanced core earnings will drive future progress on the ratings
front.
The Positive Outlook for the holding company reflects Fitch view
that given continued earnings momentum, the ability to upstream
dividends from the bank without regulatory approval would further
improve the parent company's ability to meet its financial
obligations and ASRV's overall financial profile.
Fitch upgrades these ratings and maintains a Positive Outlook:
AmeriServ Financial, Inc.
-- Long-term IDR to 'BB-' from 'B+'.
Fitch upgrades this rating and revises Outlook to Stable:
AmeriServ Financial Bank
-- Long-term IDR rating to 'BB' from 'BB-'.
Fitch upgrades these ratings:
AmeriServ Financial Bank
-- Long-term deposits to 'BB+' from 'BB';
-- Individual to 'C/D' from 'D';
AmeriServ Capital Trust I
-- Trust preferred to 'B' from 'B-'.
Fitch affirms these ratings:
AmeriServ Financial, Inc.
-- Short-term at 'B';
-- Individual at 'D';
-- Support at '5'.
AmeriServ Financial Bank
-- Short-term rating at 'B';
-- Short-term deposits at 'B';
-- Support at '5'
Fitch withdraws this rating:
AmeriServ Capital Trust I
-- Recovery Rating for Trust preferred of 'RR6'.
Fitch's Recovery Ratings are a relative indicator of creditor
recovery prospects on a given obligation within an issuers'
capital structure in the event of a default.
ARVINMERITOR INC: Earns $7 Million in First Quarter Ended Dec. 31
-----------------------------------------------------------------
ArvinMeritor Inc. reported financial results for its first
fiscal quarter ended Dec. 31, 2006. Highlights include:
-- Sales from continuing operations of $2.3 billion, up 12%
from the same period last year.
-- Income from continuing operations, before special items,
was US$11 million compared to $12 million in the same
period last year.
-- Net income on a GAAP basis was $7 million compared to
$34 million last year.
-- Full-year EPS outlook for continuing operations, before
special items, of $1.15 to $1.25, as previously
forecasted.
"We are operating in a difficult environment in the passenger car,
light-duty truck, and commercial vehicle segments," Chip McClure,
Chairman, CEO and President said. In an effort to address the
ongoing challenges, and create value for our shareowners, we are
making good progress and are on track with our recently announced
initiative, Performance Plus. By proactively taking control of
our future through this global transformational initiative, while
at the same time maintaining focus on improving our operational
and financial performance, we will emerge a stronger, more dynamic
global organization."
First-Quarter Fiscal Year 2007 Results
For the first quarter of fiscal year 2007, ArvinMeritor posted
sales from continuing operations of $2.3 billion, a 12% increase
from the same period last year. The impact of foreign currency
translation and strong sales in Commercial Vehicle Systems in
North America and Europe were partially offset by a decrease in
domestic original equipment manufacturers light vehicle production
and a strike at a customer's facility in Brussels, Belgium, which
temporarily shut down an ArvinMeritor door module facility.
EBITDA, before special items, was $86 million, down $2 million
from the same period last year. This decrease is partially due to
higher than anticipated costs associated with the simultaneous
launch of a new axle product line and a new ERP system in Europe.
Income from continuing operations was $11 million compared to
$28 million a year ago. This decrease reflects a one-time,
pre-tax gain of $23 million in the first fiscal quarter of
2006 from the sale of the CVS off-highway brake assets. Net
income was $7 million compared to $34 million last year, a
decrease of $27 million.
Outlook
The company reduced its fiscal year 2007 forecast for light
vehicle production to 15.3 million vehicles in North America,
down from 15.8 million forecasted last quarter. The company's
forecast for Western Europe is unchanged at 16.1 million
vehicles.
ArvinMeritor's forecast for North American Class 8 truck
production is 235,000 units in fiscal year 2007 (200,000 for the
2007 calendar year), unchanged from our prior forecast. The
company's fiscal year 2007 forecast for heavy and medium truck
volumes in Western Europe is 475,000 units, up from the previous
forecast of 419,000 units.
The company anticipates sales from continuing operations in
fiscal year 2007 in the range of $8.9 to $9.1 billion, and
the outlook for full-year diluted earnings per share from
continuing operations to be in the range of $1.15 to $1.25.
Cash flow guidance for fiscal year 2007 is $75 million to
$125 million, as previously forecast. This guidance excludes
gains or losses on divestitures, restructuring costs, and other
special items, including potential extended customer shutdowns
or production interruptions.
"We are focused on redefining ArvinMeritor by creating a culture
of operational, commercial and individual excellence," Mr. McClure
said. "Our vision is to be a global systems provider focused
on our target markets, deliver strong financial performance and
drive even greater value for our shareowners, employees and
customers."
About ArvinMeritor
Headquartered in Troy, Michigan, ArvinMeritor, Inc. (NYSE: ARM)
-- http://www.arvinmeritor.com/-- is a supplier of a broad range
of integrated systems, modules and components to the motor vehicle
industry. The company serves light vehicle, commercial truck,
trailer and specialty original equipment manufacturers and certain
aftermarkets. ArvinMeritor employs approximately 29,000 people at
more than 120 manufacturing facilities in 25 countries. It
maintains 23 facilities in Venezuela, Brazil and Argentina.
* * *
As reported in the Troubled Company Reporter on Jan. 25, 2007,
Standard & Poor's Ratings Services lowered its ratings on
automotive components supplier ArvinMeritor Inc., including its
long-term corporate credit rating to 'BB-' from 'BB'.
In addition, Standard & Poor's removed the ratings from
CreditWatch, where they had been placed on Sept. 26, 2006, with
negative implications. The 'B-1' short-term corporate credit
rating on the Troy, Michigan-based company was affirmed.
The outlook is stable.
As reported in the Troubled Company Reporter on Jan. 23, 2007,
Moody's Investors Service has downgraded ArvinMeritor's Corporate
Family Rating to Ba3 from Ba2. Ratings on the company's secured
bank obligations and unsecured notes were lowered one notch as a
result.
ARVINMERITOR INC: Shareholders Elect New Board Members
------------------------------------------------------
ArvinMeritor, Inc., held its annual shareowners meeting on
Jan. 26, 2007, at its corporate headquarters. At the meeting,
shareowners voted to elect Rhonda L. Brooks, Ivor J. Evans,
Charles G. McClure and William R. Newlin, to the Board of
Directors with terms expiring in 2010. In addition, the
shareowners approved the selection of Deloitte & Touche LLP, as
the company's auditors, and approved the adoption by the Board
of Directors of the 2007 Long-Term Incentive Plan.
ArvinMeritor Chairman, Chief Executive Officer and President,
Charles McClure presented the company's vision for growth and
profitability, and highlighted the company's recently launched
global transformation program, Performance Plus.
About ArvinMeritor
Headquartered in Troy, Michigan, ArvinMeritor, Inc. (NYSE: ARM)
-- http://www.arvinmeritor.com/-- is a supplier of a broad range
of integrated systems, modules and components to the motor vehicle
industry. The company serves light vehicle, commercial truck,
trailer and specialty original equipment manufacturers and certain
aftermarkets. ArvinMeritor employs approximately 29,000 people at
more than 120 manufacturing facilities in 25 countries. It
maintains 23 facilities in Venezuela, Brazil and Argentina.
* * *
As reported in the Troubled Company Reporter on Jan. 25, 2007,
Standard & Poor's Ratings Services lowered its ratings on
automotive components supplier ArvinMeritor Inc., including its
long-term corporate credit rating to 'BB-' from 'BB'.
In addition, Standard & Poor's removed the ratings from
CreditWatch, where they had been placed on Sept. 26, 2006, with
negative implications. The 'B-1' short-term corporate credit
rating on the Troy, Michigan-based company was affirmed.
The outlook is stable.
As reported in the Troubled Company Reporter on Jan. 23, 2007,
Moody's Investors Service has downgraded ArvinMeritor's Corporate
Family Rating to Ba3 from Ba2. Ratings on the company's secured
bank obligations and unsecured notes were lowered one notch as a
result.
ASARCO LLC: Objects to Branin's Lift Stay Plea
----------------------------------------------
ASARCO LLC and its debtor-affiliates ask the Hon. Richard S.
Schmidt of the U.S. Bankruptcy Court for the Southern District of
Texas to deny the Branin Classes' request to lift the automatic
stay to permit them to foreclose their security interests in the
escrow accounts in ASARCO LLC's bankruptcy case.
As reported in the Troubled Company Reporter on Jan. 17, 2007,
in March 1993, numerous entities commenced a class action
environmental lawsuit entitled Donald Branin, et al., v. ASARCO,
Inc., in the U.S. District Court for the Western District of
Washington. The Branin Class members sought claims for injuries
caused by pollutants discharged from ASARCO's smelter located in
Ruston, Washington. The Branin Action was settled in 1995.
As of Aug. 9, 2005, ASARCO owes $1,174,481 to the Branin
Classes.
Bruce J. Borrus, Esq., at Riddell Williams, P.S., in
Seattle, Washington, asserted that the Branin Claim is secured by
perfected security interests in two escrow accounts established in
1995 and held by Key Bank as escrow agent:
1. ASARCO Medical Reimbursement Account, having a balance of
$280,257, as of December 2006; and
2. ASARCO Property Value Account, having a balance of
$761,190, as of December 2006.
ASARCO Responds
Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble & Culbreth
& Holzer, P.C., in Corpus Christi, Texas, points out that the
Branin Classes has admitted that there are no longer any unpaid
medical monitoring claims or property damages claims.
As a result, the terms of the documents creating the Medical
Reimbursement and Property Value Accounts require that the
remaining funds be paid over to ASARCO LLC, Mr. Holzer contends.
The Accounts are necessary to ASARCO's effective reorganization,
Mr. Holzer asserts. Mr. Borrus had contended that ASARCO lacked
equity in the Escrow Accounts and the Accounts are not necessary
for the company's effective reorganization.
Branin Classes Talk Back
Bruce J. Borrus, Esq., at Riddell Williams, P.S., Seattle,
Washington, asserts that ASARCO's objection is not supported by
any declarations or documentary evidence. It offers neither
evidence nor argument to rebut the validity and perfection of the
Branin Classes' security interest and contains merely conclusory
allegations.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered
with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case
was converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
(ASARCO Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for
the Southern District of Texas in Corpus Christi had extended the
Debtors' exclusive period to file a plan of reorganization until
April 6, 2007, and their exclusive period to solicit acceptances
of that plan until June 6, 2007.
ATLANTIC BROADBAND: Improved Performance Cues S&P's Positive Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Quincy,
Massachusetts-based Atlantic Broadband Finance LLC to positive
from negative. All ratings, including the 'B' corporate credit
rating, on this cable television operator are affirmed.
"The outlook revision reflects an improved operating performance
over the past few quarters," said Standard & Poor's credit analyst
Naveen Sarma.
Annualized subscriber losses have moderated to less than 1% from
the mid-single-digit percent level in 2005, and Atlantic has seen
continued double-digit growth in high-speed data subscribers and
the successful launch of telephony services in most of its
markets.
The positive outlook incorporates S&P's belief that the local
telephone companies will not aggressively roll out a facilities-
based video offering within the majority of Atlantic's
territories. Verizon Communications Inc. is Atlantic's principal
competitor, operating in Atlantic's Pennsylvania and
Delaware/Maryland territories, while AT&T Inc. competes against
Atlantic in the Miami Beach, Florida, and South Carolina markets.
Currently Verizon offers its fiber-optic FiOS video product
to less than 10,000 of Atlantic's subscribers in the DelMar
territories, which is less than 5% of total subscribers.
Standard & Poor's believes it is unlikely in the intermediate term
that Verizon would deploy FiOS in the second-tier, lower-density
Pennsylvania territories, which account for two-thirds of
Atlantic's subscribers.
The ratings continue to reflect a highly leveraged financial
profile, aggressive competition from the direct-to-home satellite
TV providers and local telephone companies, integration risks
associated with the G-Force acquisition, cost disadvantages from
small company size, and minimal discretionary cash flow.
Tempering factors include the company's position as the dominant
provider of pay-TV services in its markets and growth potential
from high-speed data, digital video services, and cable telephony.
Atlantic operates cable systems serving roughly 230,000 equivalent
basic subscribers. About two-thirds of the customers are in
mature, smaller markets in western Pennsylvania, while the rest
are in faster-growing Miami Beach, DelMar, and South Carolina.
Atlantic is controlled by investment company, ABRY Partners LLC.
Atlantic had total funded debt outstanding, pro forma for its
November 2006 acquisition of G-Force, of about $540 million as of
Sept. 30, 2006. Atlantic acquired G-Force's 21,000 subscribers in
South Carolina for $62 million. The acquisition was financed with
$55 million in cash, which was raised by amending its existing
bank facility, and a $7 million seller note.
AUDIOVOX CORP: David Geise Named as Accessory Division Senior VP
----------------------------------------------------------------
The Board of Directors of Audiovox Corp. elected David Geise
as Senior Vice President of the Audiovox Accessory Division in
connection with the company's acquisition of Thomson's Americas
consumer electronics accessory business on Jan. 29, 2007.
Mr. Geise, 56, served in various sales and operational capacities
at Thomson Americas, including:
-- President of Thomson Multimedia Canada Limited from
September 2005 thru January 2007.
-- Vice President of Consumer Accessory Solutions from 2001 to
December of 2004.
-- Vice President of Connectivity Business Development from
January 2005 thru August 2005.
-- Vice President, of International-Americas, from
June 2006 thru January 2007.
As reported in the Troubled Company Reporter on Feb. 2, 2007,
Audiovox Corp. has completed its acquisition of Thomson's Americas
consumer electronics accessory business for a total purchase price
of approximately $59 million, which includes the working capital
adjustment.
On Dec. 21, 2006, the company has acquired the rights to the RCA
brand for Consumer Electronics accessories. The acquisition also
includes the Recoton, Spikemaster, Ambico and Discwasher brands
for use on any products and the Jensen, Advent, Acoustic Research
and Road Gear brands for accessory products. The company already
owns Jensen, Advent, Acoustic Research and Road Gear brands for
electronics products as part of prior acquisitions.
"We are pleased to have closed on this transaction and believe
the assimilation of Thomson's product lines and personnel into
our operations will be seamless," Patrick Lavelle, President and
CEO of Audiovox stated, "as we sell to many of the same customers
and have already taken the steps to streamline our operations in
anticipation of this deal. "This acquisition significantly
enhances our brand portfolio, strengthens our position in the
consumer electronics accessories business and puts us in a
better position to generate higher returns for our
shareholders."
About Audiovox
Audiovox Corp. (Nasdaq: VOXX) -- http://www.audiovox.com/-- is an
international supplier and value added service provider in the
consumer electronics industry. The company conducts its business
through subsidiaries and markets mobile and consumer electronics
products both domestically and internationally under several of
its own brands. It also functions as an original equipment
manufacturer supplier to a wide variety of customers, through
several distinct distribution channels.
* * *
Moody's Investors Service assigned a B2 issuer rating to Audiovox
Corp. and placed a B1 rating on the company's bank loan debt.
AVETA INC: Poor Performance Prompts S&P to Downgrade Ratings to B-
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
ratings on Aveta Inc. and its affiliates to 'B-' from 'B' and
placed them on CreditWatch with negative implications.
"This action follows the company's announcement that operating
performance in fourth-quarter 2006 will be weak and that cash flow
will be materially lower than previously expected for full-year
2006," explained Standard & Poor's credit analyst Joseph
Marinucci.
"The diminished performance is attributed mostly to unfavorable
and broad based medical utilization development, primarily
incurred during the second half of 2006, in the company's core
Puerto Rican marketplace," Mr. Marinucci added.
"This adverse development impairs the company's primary source of
earnings, which diminishes earnings quality overall."
Furthermore, Standard & Poor's believes that margin pressure is
likely to persist or worsen into the first half of 2007 because
remediation initiatives may require an extended period of time to
fully implement.
Aveta's full-year 2006 pro forma cash flow is now expected to be
$137 million-$152 million, which is materially below the company's
pro forma expectation $182 million-$192 million. This could lead
to a breach of certain financial covenants set forth in its credit
agreement, which could result in the immediate termination of its
$20 million revolver and cause its credit agreement loan balance
of $481 million to become payable immediately. This would create
a significant liquidity problem for the company if the lending
group does not elect to waive its enforcement rights.
Standard & Poor's expects to conduct follow-up discussions with
Aveta's management team in February and March in connection with
the above referenced. Shortly thereafter, Standard & Poor's may
affirm or lower Aveta's ratings and/or issue either a stable or
negative longer-term outlook.
AZ CHEM: S&P Junks Rating on Proposed $136 Mil. 2nd-Lien Term Loan
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit ratings to AZ Chem Sweden Holdings AB and its wholly owned
U.S. subsidiary AZ Chem US Inc. The outlook on the Sweden-based
producer of pine-based specialty chemicals is stable.
At the same time, Standard & Poor's assigned its 'B' bank loan
ratings and its recovery ratings of '2' to AZ Chem US Inc.'s
proposed $190 million first-lien secured credit facilities,
consisting of a $50 million revolving credit facility, and a
$140 million term loan, and to AZ Chem Sweden AB's proposed
$100 million first-lien term loan.
Standard & Poor's also assigned a 'CCC+' rating and a '5' recovery
rating to AZ Chem US Inc.'s proposed $136 million second-lien term
loan.
Both borrowers are wholly owned subsidiaries of AZ Chem
Sweden Holdings AB. The obligations of AZ Chem Sweden AB under
the proposed European term loan are guaranteed by AZ Chem Sweden
Holdings AB, most European subsidiaries, the U.S. borrower, its
parent, and subsidiaries. The bank loan ratings are based on
preliminary terms and conditions.
Total debt, pro forma for the transaction, including the present
value of capitalized operating leases, is estimated at
$403 million for the fiscal year ended Dec. 31, 2006.
"The ratings reflect a vulnerable business position in a
specialized niche for pine-based chemicals, with moderate
operating profit margins, some concentration of revenue among key
customers, and a highly leveraged financial profile," said
Standard & Poor's credit analyst Paul Kurias.
"These risk factors are partly offset by the company's favorable
market shares and global presence in its business, the stability
of operating profit margins reflecting satisfactory pricing power
and relatively stable non-hydrocarbon-based raw material costs,
and a focus on growing the contribution from value-added
products."
The company will be controlled by Rhone Capital III L.P. or its
affiliates after Rhone signed a definitive agreement to acquire
the pine-chemical business of the erstwhile Arizona Chemical
Division from International Paper Co. in December 2006.
BAUSCH & LOMB: Sluggish Revenue Growth Cues Moody's to Cut Rating
-----------------------------------------------------------------
Moody's Investors Service downgraded Bausch & Lomb, Inc.'s senior
unsecured debt to Ba1 and continues to review all ratings for
possible downgrade.
The rating agency also assigned a Ba1 Corporate Family Rating.
According to Moody's, the downgrade primarily reflects the belief
that revenue growth will be sluggish for 2007 and lower than
Moody's previous expectations. This belief is based on a slower
than anticipated recovery of the company's contact lens and lens
care businesses in Asia, sluggish growth in the U.S. contact lens
market, and the loss of significant market share in the lens care
segment since the recall of MoistureLoc.
Moody's believes that it will take the company approximately
2 to 3 years to regain the lost market share in the lens care
market.
The downgrade also reflects heightened uncertainty about the
effectiveness of internal accounting controls and the reliability
of management's recent financial guidance.
Moody's review will focus primarily on the strength and direction
of financial forecasts, the company's ability to file timely
financial statements with the Securities and Exchange Commission,
lenders' and noteholders' willingness to continue extending
waivers pertaining to BOL's failure to file timely financial
statements and the outlook for BOL's near term financial
flexibility.
Moody's previous rating action on BOL occurred on March 23, 2006
when the company's ratings were placed on review for possible
downgrade after the company's failure to file financial statements
with the SEC.
These ratings were assigned:
-- Ba1 Corporate Family Rating; and
-- Ba1 Probability of Default Rating.
These ratings were downgraded:
-- $133.2 million senior unsecured notes due 2007 to Ba1,
LGD4, 52% from Baa3;
-- $50 million senior unsecured notes due 2008 to Ba1,
LGD4, 52% from Baa3;
-- $160 million senior unsecured convertible notes due 2023 to
Ba1, LGD4, 52% from Baa3;
-- $0.4 million senior unsecured debentures due 2026 to Ba1,
LGD4, 52% from Baa3; and,
-- $66.4 million senior unsecured debentures due 2028 to Ba1,
LGD4, 52% from Baa3.
Moody's anticipates assigning a Speculative Grade Liquidity rating
subsequent to the company's filing of all delinquent financial
statements with the SEC.
Headquartered in Rochester, New York, Bausch & Lomb, Inc. is a
leading worldwide provider of eye care products, including contact
lens, lens care, ophthalmic pharmaceuticals and surgical products.
BLUE THUNDER: Case Summary & 43 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Blue Thunder Auto Transport, Inc.
3475 Corporate Way Suite A
Duluth, GA 30096
Bankruptcy Case No.: 07-61268
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Blue Thunder Logistics, Inc. 07-61269
Auto Carrier Holding Incorporated 07-61270
Auto Carrier Leasing, Inc. 07-61272
Type of Business: The Debtors provide vehicle distribution and
transportation services to both pre-owned and
new vehicle markets, as well as, other segments
of the automotive and car rental industries.
The Debtors transport automobiles manufactured
by General Motors, Chrysler, Volvo, Volkswagen
and Lexus among others. The Debtors employ
approximately 337 employees and own 415 power
units and 430 trailer units.
Auto Carrier Holding is a holding company that
owns 100% of the stock of the other Debtors.
Blue Thunder Auto provides the day to day
operations and is the employer of the drivers,
mechanics, administrative and management
personnel. Blue Thunder Logistics is the party
to the contracts with the different automobile
manufacturers for whom the Debtors provide
transportation services and other related
equipment. Auto Carrier Leasing owns the trucks
that provide the transportation services and
other related equipment.
See http://www.bluethunderlogistics.com/
Chapter 11 Petition Date: January 30, 2006
Court: Northern District of Georgia (Atlanta)
Judge: Paul W. Bonapfel
Debtors' Counsel: J. Carole Thompson Hord, Esq.
John A. Christy, Esq.
Schreeder, Wheeler & Flint, LLP
1100 Peachtree Street Northeast
Suite 800
Atlanta, GA 30309-4516
Tel: (404) 954-9858
Fax: (404) 681 1046
Estimated Assets Estimated Debts
---------------- ---------------
Blue Thunder Auto $1 Million to $1 Million to
Transport, Inc. $100 Million $100 Million
Blue Thunder Logistics, $100,000 to $1 Million to
Inc. $1 Million $100 Million
Auto Carrier Holding $10,000 to $100,000 to
Incorporated $100,000 $1 Million
Auto Carrier Leasing, Inc. $1 Million to $1 Million to
$100 Million $100 Million
A. Blue Thunder Auto Transport, Inc.'s 20 Largest Unsecured
Creditors:
Entity Claim Amount
------ ------------
Swift Transportation Co. Inc. $19,548,946
220 South 75th Avenue
Phoenix, AZ 85043
Ameriquest $574,567
457 Haddonfield Road, Suite 220
Cherry Hill, NJ 08002
St. Paul Travelers $513,854
One Tower Square
Hartford, CT 06183
Hays Group Inc. $450,000
80 South 8th Street, Suite 7
Minneapolis, MN 55402
Bisys Retirement Services $212,475
200 Dryden Road
Dresher, PA 19025
SGS Automotive Services, Inc. $99,060
Boydstun Metal Works Inc. $94,283
Motor Transport Underwriters, Inc. $87,750
T-Chek Systems, Inc. $84,512
Gray, Plant, Mooty, Mooty & Bennett, PA $79,373
Thelen Reid & Priest LLP $74,685
Boulay Heutmaker Zibell & Co PLLP $68,627
Hays Companies $63,196
New England Truck Stop $50,707
Qualcomm Inc. $48,170
Microtel Inn & Suites $39,545
Fleet Pride $37,861
Barnes Group Inc. $29,621
Metlife Small Business Center $28,806
CTS Service, Inc. $25,812
B. Blue Thunder Logistics, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Swift Transportation Co. Inc. $17,700,135
2200 South 75th Avenue
Phoenix, AZ 85043
General Motors $502,151
1908 Colonel Sam Drive
Oshawa, ON L1H-8P7
Daimler Chrysler Corp. $343,439
100 Chrysler Drive
Auburn Hills, MI 48326
URS Midwest $294,357
10701 Middlebelt Road
Romulus, MI 48174
VWOT Traffic & Transportation $283,427
3800 Hamlin Road
Auburn Hills, MI 48326
Cal Tex Auto Movers $222,825
Southeast Toyota Dist. $205,932
Supreme Auto Transport Inc. $162,234
Translogic Auto Carriers $126,934
Volvo Cars North America, LLC $112,285
Infinity Transport Company $110,617
Northside Transportation LLC $109,611
Penta Auto Transport $104,350
Saab Cars USA, Inc. $99,305
Continental Transport Inc. $68,331
Toyota Logistics Services $63,474
Auto Transport Group $47,874
Raytrans Trucking $45,046
P.A.T. Auto Transport $42,839
Billy Sellers Transport Inc. $36,553
C. Auto Carrier Holding Inc.'s 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Wells Fargo Business Credit, Inc. $24,000,000
90 South Seventh Street
Minneapolis, MN 55479
Wells Fargo Business Credit, Inc. $2,400,000
90 South Seventh Street
Minneapolis, MN 55479
D. Auto Carrier Leasing, Inc.'s Largest Unsecured Creditor:
Entity Claim Amount
------ ------------
Swift Transportation Co. Inc. $17,700,135
220 South 75th Avenue
Phoenix, AZ 85043
BOSTON SCIENTIFIC: Earns $277 Million in Fourth Quarter 2006
------------------------------------------------------------
Boston Scientific Corp. reported its financial results for the
fourth quarter and full year ended Dec. 31, 2006, as well as
guidance for net sales and earnings per share for the first
quarter of 2007.
Fourth Quarter 2006
Net sales for the fourth quarter of 2006 were $2.065 billion
as compared to $1.540 billion for the fourth quarter of 2005.
Reported net income for the fourth quarter of 2006 was
$277 million on approximately 1.5 billion weighted average shares
outstanding. Reported results for the fourth quarter of 2006
included net special credits of $127 million that consisted
primarily of a $133 million one-time tax benefit for the reversal
of tax accruals previously established for offshore unremitted
earnings.
Reported net income for the fourth quarter of 2005 was
$334 million on approximately 830 million weighted average shares
outstanding.
Adjusted net income for the quarter, excluding net special credits
and amortization and stock compensation expense, was $306 million.
Adjusted net income for the fourth quarter of 2005, excluding net
special charges and amortization and stock compensation expense,
was $373 million. Operating cash flow for the fourth quarter of
2006 was approximately $365 million.
For 2007, the company concluded that forecasting the rate of
growth in the cardiac rhythm management market and the drug-
eluting stent market will be difficult, given the events and
volatility in both markets during 2006. Since these two markets
are so significant to the Company's forecasted results of
operations in 2007, the Company believes it is appropriate to
provide guidance only for the first quarter. The ranges for
earnings set forth below are driven largely by market growth,
mix of product sales and resulting gross margin rates.
The company estimates net sales for the first quarter of 2007
of between $2 billion and $2.1 billion. Adjusted earnings per
share, excluding net special charges and amortization and stock
compensation expense are estimated to range between $0.15 and
$0.21 per share. The Company estimates earnings per share on a
GAAP basis of between $0.04 and $0.10 per share.
"The past year was a transforming one for Boston Scientific and
its vision for the future," said Jim Tobin, President and CEO of
Boston Scientific. "I want to thank our employees for all their
hard work. Over the past several years we have fundamentally
diversified our company by entering the microelectronics device
space through the acquisitions of Guidant and Advanced Bionics,
two important growth engines. As we look forward, we are
confident the growth story at Boston Scientific will continue."
Headquartered in Natick, Massachusetts, Boston Scientific
Corporation (NYSE: BSX) -- http://www.bostonscientific.com/--
develops, manufactures and markets medical devices used in a broad
range of interventional medical specialties.
BOSTON SCIENTIFIC: Moody's Affirms Ratings with Negative Outlook
----------------------------------------------------------------
Moody's Investors Service affirmed Boston Scientific Corporation's
ratings but changed the rating outlook to negative from stable.
This action is based on concerns that despite fourth quarter
sequential improvement in ICD sales, higher uncertainty regarding
drug-eluting stent (DES) sales and prospects for lower cash flow
levels during fiscal 2007 result in a weaker credit profile.
"Lingering uncertainty regarding DES usage, coupled with a much
more crowded US field by 2008 provides significant downside risk
for the company," says Diana Lee, a healthcare analyst at Moody's.
"Although ICD sales may begin to show recovery, this may not
provide enough of a cash flow offset to sustain an investment
grade rating," Mr. Lee continues.
Outstanding regulatory matters could pressure sales growth, while
any negative court rulings could impede de-leveraging efforts.
Using Moody's Global Medical Products & Device Methodology, BSX's
implied rating is a "Ba1" based on Sept. 30, 2006 financial
statements. Moody's believe that if the company's cash flow
levels continue to be constrained by lower sales trends, the
methodology-implied rating may not approach "Baa3" over the
intermediate term, increasing the likelihood of a downgrade.
Moody's understands that BSX management has stated its intent to
focus on debt reduction.
"If accelerated debt reduction occurs, we would evaluate whether
that would alter our opinion on the negative outlook," added Mr.
Lee.
Ratings affirmed with a negative outlook:
* Boston Scientific Corporation
-- Baa3 senior unsecured notes
-- Baa3 senior shelf
-- Ba1 subordinated shelf
-- Ba2 preferred stock
-- Prime-3 short-term rating
Boston Scientific Corporation, headquartered in Natick,
Massachusetts, is a worldwide developer, manufacturer and marketer
of medical devices, specializing in a broad range of
interventional and cardiac rhythm management devices.
BRICKELL YACHT: U.S. Trustee Wants Case Dismissed or Converted
--------------------------------------------------------------
Felicia S. Turner, the U.S. Trustee Region 21, asks the United
States Bankruptcy Court for the Southern District of Florida to
dismiss Brickell Yacht Club's chapter 11 case, or in the
alternative, convert the case to a chapter 7 liquidation
proceeding.
Failure to Comply with Procedures
The Trustee tells the Court that on Jan. 4, 2007, one day after
the Debtor filed for bankruptcy, she sent the Debtor a copy of the
United States Trustee's Operating Guidelines And Reporting
Requirements For Debtors In Possession And Trustees.
The Trustee relates that the Guidelines provide that failure to
comply with the Guidelines may result in motions to dismiss or
convert this case, for the appointment of a chapter 11 trustee or
examiner, or for the imposition of sanctions.
Under Paragraph 4 of the Guidelines, a Debtor is required to
immediately close all pre-petition bank accounts and to
immediately open general, payroll and tax accounts, in accordance
with the Guidelines requirements, at a depository approved by the
U.S. Trustee. The Guidelines also require the Debtor, within 10
days of the filing of its bankruptcy petition, to provide the U.S.
Trustee with a sworn statement describing all pre-petition
accounts by depository name, account number and account name and
verifying that the accounts have been closed.
Further, Paragraph 10 of the Guidelines requires the Debtor to
submit to the U.S. Trustee, within 10 days of it bankruptcy
filing, copies of the Debtor's most recent audited and unaudited
financial statements.
The Trustee discloses that the Debtor has failed to satisfy these
two guidelines.
The Debtor has also failed to file its "Chapter 11 Case Management
Summary."
Motions to Modify Stay
The Trustee tells the Court that there are two motions filed to
modify the stay to allow secured creditors to proceed with
foreclosure proceedings. The Trustee contends that if these
motions are granted, or the Debtor enters an agreement with the
movants, unsecured creditors may not realize any benefit from the
value of the property, which is scheduled at $20 million in value,
and receive no distribution in this case.
Related Filings
The Trustee further discloses that the principal of the Debtor,
Juan Abel Barroso-Pino, had previously filed for bankruptcy under
chapter 13 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 04-
50435). That case was dismissed.
The Trustee says that Mr. Barroso-Pino, as principal, also filed
the chapter 11 cases of these two companies:
* On The Bay Yacht Club LLP (Bankr. S.D. Fla. Case No.
06-16419); and
* Brickell Bay Entertainment Company (Bankr. S.D. Fla.
Case No. 02-41043).
These two cases were also dismissed.
About Brickell Yacht
Based in Miami, Florida, Brickell Yacht Club develops waterfront
real estate. The company filed for chapter 11 protection on
Jan. 3, 2007 (Bankr. S.D. Fla. Case No. 07-10040). Robert C.
Meyer, Esq., in Miami, Florida, represents the Debtor. When the
Debtor filed for protection from its creditors, it listed total
assets of $20,500,000 and total debts of $8,942,086.
BRICKMAN GROUP: Debt Payment Cues Moody's Ratings Withdrawal
------------------------------------------------------------
Moody's has withdrawn the ratings of the Brickman Group, Ltd.,
including its Ba3 corporate family rating, its Ba3 probability-of-
default rating, its Baa3 senior secured bank credit facility
rating, and its Ba3 senior subordinated debt rating, following the
report that the company had repaid the debt in full.
Headquartered in Langhorne, Pennsylvania, and dating back to 1939,
The Brickman Group, Ltd. is one of the largest providers of
commercial landscape maintenance services in the United States.
CA INC: Moody's Holds Negative Outlook After Earnings Report
------------------------------------------------------------
Moody's Investors Service comments that it is maintaining the
negative outlook for CA Inc. after the company's fiscal third
quarter 2007 reported earnings.
"CA's fiscal third quarter results provide evidence of its
bookings and billings growth, reversing previous negative trends"
commented John Moore, VP/Senior Analyst.
"Moody's is monitoring CA's negative rating outlook pending
further evidence of organic business growth," Mr. Moore added.
The company's Ba1 senior unsecured rating reflects its large
portfolio of mission critical software product offerings and
installed base of a diverse set of creditworthy clients, which in
isolation is similar to cross industry A3 rated peers.
However, the Ba1 rating also reflects:
* uncertainties surrounding the effectiveness of its internal
financial controls;
* its unsettled fulfillment of the terms of the Deferred
Prosecution Agreement;
* moderate financial leverage which Moody's believes could
increase with the potential resumption of its share
repurchase program;
* its modest returns on assets; and,
* competitive challenges impacting its core mainframe and Unix
products.
The negative outlook reflects challenges the company has to revive
organic growth, implement effective financial controls, remediate
material weaknesses to its financial reporting, and contain costs.
While the earnings report reversed the negative operating trends
exhibited by CA in prior reports, Moody's believes that CA's
organic sales traction and management of its financial controls
require further proof of execution through subsequent quarterly
reports.
Moody's estimates that the company's LTM December 2006 client
billings grew by about $170 million or 4%, excluding higher
upfront client payments of about $120 million received in the
December 2006 quarter. Moody's notes that this $170 million
growth was slightly less than the company's LTM December 2006
$504 million cash acquisition spending. In addition, LTM December
2006 total bookings grew by approximately 3%.
Moody's estimates that CA generated approximately $800 million LTM
December 2006 free cash flow adjusted for leases. Moody's expects
the company's free cash flow will be negatively affected in the
near term by about $200 million higher annualized tax payments the
company anticipates to incur, in addition to the potential for a
diminution of upfront client payments from the approximate
$120 million higher level of upfront payments that the company
received in its December 2006 quarter as well as upfront payments
received in prior periods. Moody's notes that FY 2006 cash flow
from operations benefited from higher than usual upfront client
payments, as indicated by the $285 million year over year increase
in deferred subscription revenue recorded in the liability section
of its balance sheet.
Moody's also notes that the company yesterday affirmed its fiscal
2007 cash flow from operations guidance of between $900 million
and $1 billion. The company also expects to continue to evaluate
ongoing business performance and market conditions before making a
decision on the implementation of additional share repurchases.
In the September 2006 quarter, CA repurchased approximately
$1 billion of shares.
Headquartered in Islandia, New York, CA, Inc. is an enterprise
software vendor for enterprise management, security, and storage
applications.
CATHOLIC CHURCH: Davenport Victims' Names Remain Confidential
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Iowa
authorized the Diocese of Davenport to file under seal portions of
documents that disclose the names of victims of sexual abuse,
including:
-- Schedule D (Creditors Holding Secured Claims) and
Schedule F (Creditors Holding Unsecured Non-Priority
Claims);
-- the creditor mailing list; and
-- any other pleadings, reports, and documents filed from time
to time.
The Diocese will prepare a Master Anonymous Claimants List, which
will be filed under seal. The MACL will:
* identify known claimants who have not previously disclosed
their names publicly in other court proceedings;
* each of the anonymous claimants and their last-known
address; and
* assign to each of the known claimant a "Doe number."
The MACL, when received by the Clerk of the Court, will be filed
on the docket and will be immediately sealed until further Court
order. A copy of the MACL will be forwarded to the Office of the
U.S. Trustee.
Claimants' names and addresses will be added to the MACL as they
become known or when they come forward to participate in
Davenport's Chapter 11 case. The Diocese will file an amended
MACL under seal and provide a copy to the U.S. Trustee's office.
Claimants' names and addresses will be retained in the MACL to
the extent that the claimants desire to remain anonymous.
All future pleadings, documents, claims and other materials filed
with the Court will refer to anonymous claimants according to
their Doe number so as not to reveal their identity.
The Diocese's counsel must file a certificate of service with the
Court indicating that service of any pleadings, documents, claims
and other materials has been made on an anonymous claimant by
referring to his or her Doe number.
The Diocese of Davenport in Iowa filed for chapter 11 protection
(Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006. Richard
A. Davidson, Esq., at Lane & Waterman LLP, represents the
Davenport Diocese in its restructuring efforts. In its schedules
of assets and liabilities, the Davenport Diocese reported
$4,492,809 in assets and $1,650,439 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 77; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
CATHOLIC CHURCH: Portland Wants Settlement with Insurers Approved
-----------------------------------------------------------------
The Archdiocese of Portland in Oregon asks the Hon. Elizabeth L.
Perris of the U.S. Bankruptcy Court for the District of Oregon to:
* approve the form of the agreements with its insurers;
* authorize the Archdiocese to sell back its insurance
policies to the insurers, in accordance with the agreements,
free and clear of all liens, claims, encumbrances, and other
interests;
* find that all claims held by future claimants are "claims"
as defined in Section 101(5) of the Bankruptcy Code;
* find that insurers are good faith purchasers entitled to the
protection of Section 363(m) of the Bankruptcy Code; and
* find that the agreements and the sale of the policies comply
with the bankruptcy code and other applicable law.
Portland's insurers are:
-- ACE Property and Casualty Insurance Company,
-- Safeco Insurance Company of America,
-- General Insurance Company of America,
-- Lloyd's,
-- Interstate Fire & Casualty Insurance Company,
-- St. Paul Mercury Indemnity Company,
-- St. Paul Fire and Marine Insurance Company,
-- Oregon Insurance Guaranty Association,
-- Employers Surplus Lines Insurance Company, and
-- Centennial Insurance Company.
Disputes arose between Archdiocese of Portland in Oregon and its
insurers concerning the existence and terms of the insurance
policies.
Teresa H. Pearson, Esq., at Miller Nash LLP, in Portland, Oregon,
relates that in light of:
* the significant costs to the estate to litigate its coverage
claims against its insurers,
* the considerable time it will take to obtain a final
determination of the Archdiocese's rights and claims under
the insurance policies,
* the risk that the Archdiocese may not prevail in litigation
of the issues,
* the likelihood that the losing party would appeal any
judgment, thus delaying ultimate resolution of the disputes
potentially for years, and
* the desire to obtain promptly the maximum value from the
insurers under the insurance policies to use toward the
resolution of tort claims,
the Archdiocese determined that it is in the best interest of its
estate and its creditors to reach a negotiated resolution of the
disputes between itself and its insurers.
Portland and its insurers engaged in good faith, extensive
arm's-length negotiations to attempt to reach a comprehensive
resolution of the coverage disputes.
On June 20, 2006, the Archdiocese and ACE Property and Casualty
Insurance Company engaged in a full-day mediation with John
Barker, a well-respected mediator with vast experience in
insurance matters. As a result of that mediation, the
Archdiocese and ACE agreed on the essential terms of a settlement
between them. The Archdiocese and ACE then began negotiation on
the details of the settlement agreement, which took until
Sept. 14, 2006, to resolve and finalize.
On August 17 to 18, September 11 to 15, October 9 to 12, October
18 to 19, and November 7, the Archdiocese mediated claims against
its insurers -- other than ACE -- with Judges Michael R. Hogan
and Lyle C. Velure, as mediators. As a result of that mediation,
the Archdiocese and seven of its insurers agreed on the essential
terms of settlements between them.
According to Ms. Pearson, the Archdiocese and those insurers then
began negotiation on the details of the settlement agreements,
which involved additional sessions with Judges Hogan and Velure
on November 3, and December 7 to 8, 2006, to resolve and
finalize.
The principal terms of the settlement agreements are:
(a) The insurers will pay these amounts to Portland in an
interest-bearing and separate asset account:
Insurer Amount
------- ------
Safeco Insurance Company of America and
General Insurance Company of America $35,000,000
Certain Underwriters at Lloyd's, London
and Certain London Market Companies 7,500,000
Interstate Fire & Casualty Insurance 2,300,000
Company
St. Paul Mercury Indemnity Company and
St. Paul Fire and Marine Insurance Company 2,150,000
Oregon Insurance Guaranty Association 1,800,000
ACE Property and Casualty Insurance Company 1,500,000
Employers Surplus Lines Insurance Company 1,100,000
Centennial Insurance Company 400,000
-----------
$51,750,000
===========
(b) Portland will use all funds received solely towards the
resolution of Tort Claims;
(c) Portland and the Insurers will grant complete mutual
releases to each other;
(d) the Archdiocese will sell all of its interests:
-- in the Aetna policy, and all of its interests, if any,
in that portion of the original Aetna Insurance Company
policy for the period between July 1, 1972, and
July 25, 1974, which was cancelled by Aetna effective
July 1, 1972, to ACE;
-- in all insurance policies issued by Centennial to the
Archdiocese for the period between June 30, 1981, and
July 2, 1987, to Centennial;
-- in all insurance policies issued by ESLIC to the
Archdiocese for the period between June 20, 1967,
through July 25, 1973, to ESLIC;
-- in all insurance policies issued by Interstate to the
Archdiocese for the period before July 1, 1986, to
Interstate;
-- in all insurance policies issued by Lloyds to the
Archdiocese for the period on or before July 1, 1993,
to Lloyds;
-- in all of its interests in (i) Mission Insurance
Company policy number M 70658 for the policy period
July 25, 1970, to July 25, 1973; and (ii) Midland
Insurance Company policy numbers UL - 2600 for the
policy period July 1, 1972, to July 1, 1975, and UL
288232 for the policy period July 1, 1975, to July 1,
1978, to OIGA;
-- in all insurance policies issued by Safeco to the
Archdiocese to Safeco; and
-- in all insurance policies issued by St. Paul to the
Archdiocese to St. Paul; and
(d) The settlements are conditioned upon, among other things
(i) the U.S. Bankruptcy Court for the District of Oregon
issuing an order approving the settlements, (ii) the U.S.
District Court for the District of Oregon dismissing with
prejudice and without costs or attorney fees all claims
asserted in the adversary proceedings by the insurers and
the Archdiocese against each other.
A full-text copy of the ACE Settlement Agreement is available for
free at http://ResearchArchives.com/t/s?1946
A full-text copy of the Centennial Settlement Agreement is
available for free at http://ResearchArchives.com/t/s?1947
A full-text copy of the ESLIC Settlement Agreement is available
for free at http://ResearchArchives.com/t/s?1948
A full-text copy of the Interstate Settlement Agreement is
available for free at http://ResearchArchives.com/t/s?1949
A full-text copy of the Lloyds Settlement Agreement is available
for free at http://ResearchArchives.com/t/s?194a
A full-text copy of the OIGA Settlement Agreement is available
for free at http://ResearchArchives.com/t/s?194b
A full-text copy of the Safeco Settlement Agreement is available
for free at http://ResearchArchives.com/t/s?194c
A full-text copy of the St. Paul Settlement Agreement is
available for free at http://ResearchArchives.com/t/s?194d
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents
the Official Tort Claimants Committee in Portland, and scores of
abuse victims are represented by other lawyers. David A. Foraker
serves as the Future Claimants Representative appointed in the
Archdiocese of Portland's Chapter 11 case. In its Schedules of
Assets and Liabilities filed with the Court on July 30, 2004, the
Portland Archdiocese reports $19,251,558 in assets and
$373,015,566 in liabilities. (Catholic Church Bankruptcy News,
Issue No. 77; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CATHOLIC CHURCH: Spokane Files Amended Joint Plan & Disclosure
--------------------------------------------------------------
The Diocese of Spokane, the Tort Claimants Committee, the Future
Claims Representative, and the Executive Committee of the
Association of Parishes delivered an Amended Plan of
Reorganization, and a Disclosure Statement describing the Plan to
the U.S. Bankruptcy Court for the Eastern District of Washington
on Feb. 1, 2007.
The Amended Plan sets forth proposed payments to creditors and
how much of the proposed $48,000,000 pool of funds will be made
available to them. As previously reported, the pool would be
raised from (i) the liquidation of the Diocese's assets as
necessary, (ii) insurance settlements, and (iii) contributions by
the Parishes and certain other Participating Catholic Entities.
Pursuant to the Amended Plan, all Allowed Claims, except Tort
Claims, will be paid by the Reorganized Debtor. The total
allowed amount of Claims for each class of claims scheduled by
the Diocese or filed by Creditors are:
Total
Class Description Allowed Amount
----- ------------ --------------
N/A Administrative Expense Claims $7,000,000
N/A Priority Tax Claims $3,777
1 Priority Employee Unsecured Claims $7,756
2 Priority Unsecured Claims $0
3 Secured Claims $44,625
4 General Unsecured Convenience Claims $17,869
5 Deposit and Loan Claims and Other $4,396,664
Parish and Catholic Entity
Secured and Unsecured Claims
6 General Unsecured Claims $238,570
7 Tort Claims more than $40,000,000
8 Priest Retirement Claims $4,500,000
Holders of Administrative Expense Claims, Priority Tax Claims,
and Classes 2, 3, 4 and 6 Claims will recover 100% of the Total
Allowed Claim Amounts.
According to the Plan, scheduled and filed Priority Employee
Unsecured Claims total $17,301, of which $7,756 remains unpaid.
The Claims have been, and will continue to be, satisfied by the
Reorganized Debtor, which will assume and honor its policies
regarding the Claims after the Plan Effective Date.
No Priority Unsecured Claims were scheduled or filed, except
priority tax claims treated as Unclassified Priority Tax Claims.
General Unsecured Claims aggregating $1,120,131 have been
scheduled and filed. The Plan Proponents estimate that $256,439
of the General Unsecured Claims will be allowed. In addition,
Claims totaling $17,869 are entitled to priority payment as
General Unsecured Convenience Claims, and the balance of $238,570
will be paid as General Unsecured Claims. Each holder of an
Allowed General Unsecured Claim will be paid in full in Cash by
the Reorganized Debtor in two equal installments, plus interest.
The Parishes and Catholic Entities have filed claims related to
the Disputed Real and Personal Property totaling approximately
$182,000,000. The claims will be disallowed pursuant to the
Plan. Deposit and Loan Claims totaling $4,396,664 will be
allowed. Deposit and Loan Claims will be paid in part from the
proceeds of the DLF Loans, with the balance paid in accordance
with an agreement between the Reorganized Debtor and the Parishes
and Catholic Entities to be negotiated outside the Plan.
However, the Deposit and Loan Claims will not be paid until
$47,000,000 of the Diocese's Note has been paid.
The DLF Loans refer to all outstanding loans payable to the
Diocese's Deposit and Loan Fund.
The Diocese sponsors the Priest Retirement Plan, which is a
defined benefit plan. As of June 30, 2005, the Diocese stated
that its unfunded liability to the Priest Retirement Plan was
approximately $4,500,000 based on an actuarial analysis conducted
for and on behalf of the Diocese. Spokane will provide the
actuarial analysis upon request.
Each holder of an Allowed Priest Retirement Claim will be paid on
an on-going basis by the Reorganized Debtor in accordance with
the Priest Retirement Plan. Only current monthly retirement
payments may be paid until the Diocese's $48,000,000 Note is paid
in full.
Payment
Before December 31, 2007, these claims will be paid from the
Diocese's future income:
* $262,775 per month of pre-confirmation Ordinary Course
Administrative Expense Claims and post-confirmation ordinary
course expenses for the Diocese's day-to-day operating
expenses;
* $17,869 of General Unsecured Claims; and
* approximately $25,000 per month for current Priest
Retirement Claims.
Approximately $41,000,000 of the fund pool will be paid to Tort
Claimants while the remaining $7,000,000 will be allocated for
unpaid Professional Fees. The Diocese's future income will also
be tapped to pay the Claims, if necessary.
The Diocese is required to pay at least $47,000,000 for Tort
Claimants and Professional Fees on or before December 31, 2007.
Allocation of $41 Million for Tort Claims
The Plan Proponents estimate that after pending claims objections
are resolved, at least 175 individual Tort Claims and an unknown
number of Future Tort Claims will remain to be dealt with under
the Plan.
The Amended Plan provides for payments of approximately
$40,000,000 to holders of Convenience, Compromise, Settled
Compromise, Matrix, Settled Matrix, Litigation, and Non-Releasing
Litigation Tort Claims. The Proponents believe that the Allowed
amount of all the Tort Claims will exceed $40,000,000.
The Amended Plan also provides for payments of $1,000,000, plus
an undetermined amount from the Future Claims Commitment, for
Future Tort Claims-Initial, and an undetermined amount for Future
Tort Claims-Extended from the Reorganized Debtor's insurance.
Matrix Protocol
For Matrix Tort Claimants who elect to have the Tort Claim
Reviewer determine where their Claims should be placed relative
to other Claims, a Matrix with four tiers ranging from $15,000 to
$74,999 in the lowest tier, and $750,000 to $1,500,000 in the
highest tier, will be used.
The Plan Proponents note that a copy of the Matrix Protocol will
be filed at a later date.
Release of Claims
Under the Amended Plan, Tort Claimants must execute and deliver a
Release of Claims to be treated as a holder of a Convenience Tort
Claim, a Compromise Tort Claim, a Settled Compromise Tort Claim,
a Matrix Tort Claim, a Settled Matrix Tort Claim, or a Litigation
Tort Claim. Those who receive a particular treatment will share
in both the Estate Fund and the Release Fund. Tort Claimants who
elect treatment as a holder of a Non-Releasing Litigation Tort
Claim share in the Estate Fund but do not share in the Release
Fund.
The Estate Fund is estimated to be approximately $18,250,000
while the Release Fund is estimated to be approximately
$22,750,000.
Parishes' Notes
On the Effective Date, the Parishes will purchase all of
Spokane's interest in certain real property to which the Diocese
holds record title, and personal property used by the Parishes in
conjunction with the real property, for $14,000,000 to be
allocated to the Estate Fund. Certain Parishes will also pay the
Reorganized Debtor an additional $2,000,000 to be allocated to
the Release Fund. The total $16,000,000 obligation will be
evidenced by:
(a) a $10,000,000 Parishes' Note 1 executed by all of the
Participating Parishes jointly and severally payable on or
before Dec. 31, 2007;
(b) a $5,000,000 Parishes' Note 2 executed by Cathedral of Our
Lady of Lourdes Parish, Assumption of the Blessed Virgin
Parish, St. Augustine Parish, St. Mary Parish, Spokane
Valley, Immaculate Heart Retreat Center -- the Note 2
Parishes -- jointly and severally payable on or before
Oct. 1, 2007; and
(c) a $1,000,000 Parish Note 3 executed by Our Lady of Lourdes
Parish and its Parish Entity -- the Note 3 Parish --
jointly and severally payable on or before Oct. 1, 2009.
Collateral
The Diocese's $48,000,000 Note is secured by substantially all of
the assets of the Reorganized Debtor, including:
* the $10,000,000 Parishes' Note 1;
* the $5,000,000 Parishes' Note 2;
* the $1,000,000 Parish Note 3;
* $6,450,000 in Cash and other property from the
Participating Catholic Entities; and
* $20,000,000 plus accruing interest in Insurance Settlements.
A full-text copy of Spokane's First Amended Plan is available for
free at http://ResearchArchives.com/t/s?1976
A full-text copy of Spokane's Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?1977
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. 77; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CELESTICA INC: Fitch Holds Low-B Ratings & Revises Outlook to Neg.
------------------------------------------------------------------
Fitch Ratings has changed its Ratings Outlook for Celestica Inc.
to Negative from Stable and affirmed these ratings:
-- Issuer default rating at 'BB-';
-- Unsecured credit facility at 'BB-';
-- Senior subordinated debt at 'B+'.
Fitch's action affects approximately $750 million of debt.
The Ratings and Negative Outlook reflect:
-- negative operational issues that precipitated a drop in
demand from telecom customers which, when combined with
seasonal factors, led to a sequential decline in revenue and
profitability in the 4th Quarter of FY 2006;
-- expectations for continued declines in revenue and EBIT
margin in the first half of 2007 due to customer attrition
as management attempts to resolve its execution issues;
-- limited financial leverage with total debt/operating EBITDA
of 2.9x along with a net cash position for the company at
the end of 2006; and,
-- modest but positive free cash flow over the past two
quarters.
Ratings concerns center on:
-- the potential for continued declines in revenue beyond the
first half of 2007;
-- further weakening in operating metrics due to lower than
expected revenue and/or continued execution issues;
-- limited liquidity in the revolving credit facility due to a
leverage covenant which currently limits additional debt
incurrence to approximately $60 million, although Fitch
believes Celestica will be able to renew this facility
before it expires in June 2007 and potentially improve
liquidity; and,
-- significant customer concentration with the top ten
customers accounting for approximately 60% of revenue
including IBM and Cisco, both of which were 10% customers in
2006.
In addition, Celestica is highly dependent on the communication
and information technology sectors which combined account for
roughly 75% of total revenue.
Ratings strengths include:
-- limited debt maturities until 2011;
-- a well established customer base and significant scale in
core markets; and,
-- positive long-term trends towards increased outsourcing of
manufacturing services across numerous industries.
Fitch believes that a decline in operating metrics beyond that
expected during the first half of 2007 or a lack of improvement to
operations in the second half of 2007 could lead to further
negative ratings action, as could the further incurrence of debt.
Conversely, significant improvements in operating performance
including successfully correcting customer attrition issues could
stabilize the ratings.
As of Dec. 31, 2006, liquidity was adequate with no near-term debt
maturities and was supported by approximately $804 million of cash
and cash equivalents and an undrawn $600 million senior unsecured
revolving credit facility expiring June 2007.
The leverage covenant contained within the credit agreement
currently limits the incurrence of additional debt to
approximately $60 million. Celestica also has a committed
agreement providing the company with the ability to sell up to
$250 million of accounts receivable to a third party financial
institution plus additional receivables at the discretion of the
purchaser, which expires November 2007.
As of Dec. 31, 2006, total debt was approximately $750 million and
consisted primarily of $500 million 7.875% senior subordinated
notes due 2011, and $250 million 7.625% senior subordinated notes
due 2013.
CERADYNE INC: Receives $113 Million Ceramic Body Armor Order
------------------------------------------------------------
Ceradyne Inc. received a $113 million delivery order for Enhanced
Small Arms Protective Inserts from the U.S. Army, Aberdeen Proving
Ground in Maryland.
This new delivery order is scheduled to be shipped beginning April
2007 through early September 2007. This delivery order will be
shipped against a larger indefinite delivery quantity contract
announced earlier.
Dave Reed, Ceradyne President North American Operations,
commented: "This delivery order is the largest single ESAPI order
ever received by the company. It represents an increase in the
shipping rates of approximately 17% to the U.S. Army compared to
2006. Utilizing the Lexington, Kentucky facility and the Costa
Mesa and Irvine, California plants, we expect to meet the Army's
quality and delivery requirements. We believe that the increase
in delivery rates is due to our prior quality and delivery
performance. We are committing the Company's development and
production resources in order to fulfill the Army's immediate
and longer term requirements."
Based in Costa Mesa, California, Ceradyne, Inc., (Nasdaq: CRDN)
-- http://www.ceradyne.com/-- develops, manufactures and markets
advanced technical ceramic products and components for defense,
industrial, automotive and consumer applications.
* * *
Ceradyne's $50 million revolving credit facility due 2009 carries
Standard & Poor's BB- rating. The Company's credit rating is also
rated BB- by Standard & Poor's.
CINEMARK USA: Likely Debt Reduction Cues Moody's Positive Outlook
-----------------------------------------------------------------
Moody's Investors Service changed the outlook for Cinemark, Inc.
to positive from stable. The outlook change reflects the
potential for additional debt reduction with proceeds from the
proposed initial public offering of Cinemark Holdings, Inc.,
which, when combined with possible debt reduction from the
proposed initial public offering of National CineMedia, Inc. could
reduce leverage to at or slightly below 6x debt-to-EBITDA.
Moody's also affirmed Cinemark's B1 corporate family rating.
Moody's would consider an upgrade when the company demonstrates a
clear trajectory towards leverage in the mid 5 times debt-to-
EBITDA range, which could be achieved through either debt
repayment or a combination of debt repayment and organic growth.
Additionally, a Ba3 rating would require cash flow from operations
less capital expenditures of around 5% of debt.
Moody's will evaluate the likely use of proceeds from both the
initial public offering of Cinemark Holdings, Inc. and the
National CineMedia, Inc. transaction when further details are
available, and will assess the potential impact on free cash flow
of Cinemark's likely dividend strategy as a public company. If
leverage does not decline below the 6x level since the two public
offerings, the outlook will likely be returned to stable.
These are the rating actions:
* Cinemark, Inc.
-- Outlook, Changed To Positive From Stable
* Cinemark USA, Inc.
-- Outlook, Changed To Positive From Stable
The B1 corporate family rating for Cinemark reflects currently
high leverage, sensitivity to product from movie studios, and a
weak industry growth profile, offset by expectations for continued
positive free cash flow and the advantages of scale and geographic
diversity. Modest upside cash flow benefits from increased
advertising also support the rating.
Cinemark, Inc. operates approximately 400 theaters and 4,400
screens in the United States and Latin America. The third largest
motion picture exhibitors in the United States with annual revenue
of approximately $1.6 billion, the company maintains its
headquarters in Plano, Texas.
CMS ENERGY: Sells Argentina & Michigan Portfolio for $180 Million
-----------------------------------------------------------------
CMS Energy Corp. signed a binding letter of intent to sell a
portfolio of its businesses in Argentina and northern Michigan
non-utility natural gas assets for $180 million.
A principal subsidiary of CMS Energy, CMS Enterprises, signed the
binding letter of intent with the Michigan-based Lucid Energy,
whose financial partners include Sociedad Argentina de Energia
S.A., an Argentine company.
The proposed sale, subject to negotiation and execution of a
definitive purchase-sale agreement, is expected to close in the
first half of 2007. Proceeds from the sale will be used to reduce
debt and invest in the company's utility, Consumers Energy.
The assets being sold include all of CMS Enterprises' electric
generating plant interests in Argentina, and its interest in the
TGM natural gas pipeline business in Argentina. CMS Enterprises
will maintain its interest in the TGN natural gas business in
Argentina, which remains subject to a potential sale to the
government of Argentina.
In Michigan, the sale includes CMS Enterprises' natural gas
pipelines and processing assets: the Antrim natural gas processing
plant, 155 miles of associated gathering lines, and interests
in three special purpose gas transmission pipelines that total
110 miles.
The company also announced that it plans to conduct an auction
to sell a second portfolio of assets: its Atacama combined gas
pipeline and power generation businesses in Argentina and Chile,
its electric generating plant in Jamaica, and its CPEE electric
distribution business in Brazil.
The sale of those businesses is expected to be completed by the
end of 2007.
The company had announced its plan last year to sell a majority of
its interest in CPEE through a planned initial public offering in
Brazil, and will retain that as an option, pending the indications
from the auction
About CMS Energy
CMS Energy Corporation (NYSE: CMS)-- http://www.cmsenergy.com/--
is a Michigan-based company that has as its primary business
operations an electric and natural gas utility, natural gas
pipeline systems, and independent power generation. Through its
regulated utility subsidiary, Consumers Energy Co., the company
provides natural gas and electricity to almost 60% of nearly
10 million customers in Michigan's lower-peninsula counties.
* * *
As reported in the Troubled Company Reporter on Oct. 16, 2006,
Moody's Investors Service lowered its Corporate Family Rating for
CMS Energy Corp. to Ba2 from Ba1, in connection with its new
Probability-of-Default and Loss-Given-Default rating methodology.
Moody's Investors Service assigned a Ba3 9-7/8 Senior Notes rating
due 2007 to CMS Energy Corp. Fitch Ratings also assigned a BB-
9-7/8 Senior Notes rating due 2007 to the company.
COLLINS & AIKMAN: Can Obtain Financing Under Customer Agreement
---------------------------------------------------------------
The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for
the Eastern District of Michigan approves Collins & Aikman Corp.
and its debtor-affiliates' request on a final basis regarding
customer agreement.
The Customer Agreement and all agreements attached to it are
approved. The Access Agreement is approved. The Debtors are
authorized to obtain financing under the Customer Agreement under
Section 364(b) of the Bankruptcy Code.
The financing provided by the Customers under the Customer
Agreement will be entitled to the full protection of
Section 364(e).
Any inventory purchased by a Customer pursuant to the Customer
Agreement will be sold free and clear of all liens, claims and
encumbrances, pursuant to Section 363(f), with all liens, claims
and encumbrances attaching only to the sale proceeds in the same
validity, extent and priority as immediately prior to the
transaction, subject to the rights, claims and defenses of the
Debtors and other parties-in-interest.
Excluding Unpaid Tooling and Supplier Tooling, the Customers own,
free and clear of all liens, claims and encumbrances all tooling,
dies, test and assembly figures, gauges, jigs, patterns, casting
patterns, cavities, molds and documentation -- collectively,
Customer Tooling -- used in the production of their respective
component parts.
The Customers will have the right to immediate possession of the
Customer Tooling and Unpaid Tooling used at any unsold plastics
plants, or immediately upon obtaining the rights to resource the
parts produced using the Customer Tooling and Unpaid Tooling at
any of the other plants, without further Court order or payment
by the Customers of any kind. However, certain conditions in the
case of Unpaid Tooling apply:
-- The Customer has paid the Supplier all undisputed amounts
of the relevant tooling purchase order;
-- The Supplier reserves any claim or right to payment for
the disputed amounts against the respective Customer; and
-- In the event the disputed claim or right to payment is not
resolved and paid within 30 days after any Unpaid Tooling
has been delivered to a Customer, the Supplier may require
the Customer that they enter into non-binding mediation to
attempt to resolve the dispute. The Supplier may file an
action to prosecute its claim for the disputed amounts.
The Customers will have an option to purchase at the Debtors'
cost all Supplier Tooling free and clear of all liens, claims and
encumbrances, with these attaching only to the sale proceeds, and
without further order of the Court and upon payment, take
immediate possession of the Supplier Tooling.
The Debtors will reserve $149,000 on behalf of the tool fixtures
supplied to the Debtors by D&F Corporation that are sold or
otherwise transferred to a Customer.
The amounts the Debtors have received for Customer Tooling,
Unpaid Tooling and Supplier Tooling produced, repaired, or
modified by H.S. Die & Engineering, Inc., pursuant to engineering
changes or otherwise, will be deemed to be segregated, and all
liens, claims and encumbrances of H.S. Die on the H.S. Die
Tooling will attach to the H.S. Die Deemed Segregated Proceeds.
The Debtors will pay H.S Die postpetition amounts for the H.S.
Die Tooling in the ordinary course of business in accordance with
the Debtors' contractual obligations to H.S. Die.
The stipulation between the State of New Hampshire Department of
Environmental Services, and Collins & Aikman and its Debtor-
affiliates is approved, and the objection withdrawn.
The Customer Agreement is not intended to, nor will it, prejudice
or compromise Brown Corporation's ability to object to any
assignment of third party supply arrangements to which Brown is a
party. The Debtors will be deemed to have segregated $800,000
for amounts allegedly owed to Brown. The Brown fund will not be
deemed Debtors' property until Brown's lien rights are
determined.
The Debtors will be deemed to have segregated and hold $853,100
for amounts allegedly owed to Active Mould, also known as Active
Burgess, on behalf of the tool fixtures supplied to the Debtors
by Active Mould that are sold or transferred to a Customer
pursuant to the Customer Agreement.
Active Mould's Joinder
Ryan D. Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield
Hills, Michigan, stated that although the Debtors' request did
not indicate that the Interim Order would approve the sale of
estate property free and clear of liens as required by the Local
Bankruptcy Rule 6004-1, it appeared that the Interim Order would,
in fact, result in the sale or disposition of tooling free and
clear of the liens of Active Mould & Design Ltd., a creditor of
the Debtors.
Accordingly, Active Mould joined the objection of D&F Corporation
to the Interim Order and requested the Court not to permit the
Debtors to sell or otherwise dispose of tooling or any other
assets free and clear of its liens.
New Hampshire Stipulation
The State of New Hampshire Department of Environmental Services
and the Debtors have reached a resolution to New Hampshire's
objection, and agree that:
-- Nothing in the Motion or the Customer Agreement is
intended nor may be deemed to relieve the Debtors of any
obligations that they may have under applicable New
Hampshire environmental laws, regulations or permits,
including without limitation, the groundwater management
permit for the Farmington, New Hampshire facility dated
August 30, 2002;
-- The Debtors represent that they intend to continue to
comply with their obligations under the laws, regulations
and permits in the ordinary course of business and that
they have sufficient funds until the expected confirmation
of a plan in their Chapter 11 cases;
-- Nothing in the Motion, Customer Agreement, or Stipulation
is intended to, nor will it be deemed, to prejudice the
rights of the Debtors or the State with respect to any
future disposition or abandonment of the Farmington Plan
or any other New Hampshire facility or the treatment of
claims or defenses of the State and the Debtors against
one another;
-- The State withdraws its objection; and
-- Neither the Debtors, their successors nor their assigns
will take the position that the Customer Agreement, or any
term, in any way restricts the rights of the State with
respect to the administration and enforcement of
environmental laws and regulations or any environmental
permit held by the Debtors with respect to the Farmington
Plant.
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. 50;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
COMM 2003: Moody's Holds Low-B Ratings on $38 Million Certificates
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings of six classes and
affirmed the ratings of 12 classes of COMM 2003-LNB1, Commercial
Mortgage Pass-Through Certificates:
-- Class A-1, $131,749,815, Fixed, affirmed at Aaa
-- Class A-1A, $174,470,660, Fixed, affirmed at Aaa
-- Class A-2, $347,583,000, Fixed, affirmed at Aaa
-- Class X-1, Notional, affirmed at Aaa
-- Class X-2, Notional, affirmed at Aaa
-- Class B, $28,553,000, Fixed, upgraded to Aaa from Aa2
-- Class C, $12,691,000, Fixed, upgraded to Aaa from Aa3
-- Class D, $19,036,000, Fixed, upgraded to Aa3 from A2
-- Class E, $10,575,000, Fixed, upgraded to A1 from A3
-- Class F, $10,576,000, Other Non-Fixed, upgraded to A3 from
Baa1
-- Class G, $8,460,000, Other Non-Fixed, upgraded to Baa1 from
Baa2
-- Class H, $12,691,000, Other Non-Fixed, affirmed at Baa3
-- Class J, $16,921,000, Other Non-Fixed, affirmed at Ba1
-- Class K, $4,230,000, Other Non-Fixed, affirmed at Ba2
-- Class L, $5,287,000, Other Non-Fixed, affirmed at Ba3
-- Class M, $4,231,000, Other Non-Fixed, affirmed at B1
-- Class N, $4,230,000, Other Non-Fixed, affirmed at B2
-- Class O, $3,172,000, Other Non-Fixed , affirmed at B3
As of the Jan. 10, 2007 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 4.6%
to $807.1 million from $846.0 million at securitization. The
Certificates are collateralized by 92 mortgage loans ranging in
size from less than 1.0% to 8.1% of the pool, with the 10 largest
loans representing 48.4% of the pool. The pool includes four
shadow rated investment grade loans, representing 24.6% of the
pool. Nine loans, representing 13% of the pool, have defeased and
are secured by U.S. Government securities.
No loans have been liquidated from the pool. Currently there are
three loans, representing less than 1% of the pool, in special
servicing. Moody's projects aggregate losses of approximately
$2.5 million from the specially serviced loans. Fourteen loans,
representing 7.6% of the pool, are on the master servicer's
watchlist.
Moody's was provided with full-year 2005 and partial 2006
operating results for 97.5% and 92.2%, respectively, of the pool.
Moody's loan to value ratio for the conduit component is 91.9%,
compared to 93.2% at securitization. Moody's is upgrading Classes
B, C, D, E, F and G due to stable overall pool performance,
defeasance and increased credit support.
The largest shadow rated loan is the 75 Rockefeller Plaza Loan,
$650 million (8.1%), which is secured by a 578,2000 square foot
office building that is part of the Rockefeller Center complex in
New York City. The property is 100% leased to Time Warner
Companies Inc. under a 21-year triple net lease that is
coterminous with the loan maturity. The loan is interest only for
its entire term. Moody's current shadow rating is A3, the same as
at securitization.
The second shadow rated loan is the Westfield Shoppingtown
Portfolio Loan, $56.8 million (7%), which represents a 33.9% pari
passu interest in a first mortgage loan secured by the borrower's
interest in two regional malls located in California. The loan
sponsor is Westfield America, Inc., a publicly traded REIT. Both
centers reflect a middle to upper middle-market price orientation.
Westfield Shoppingtown Galleria at Roseville Mall is a 1 million
square foot center anchored by Macy's, Nordstrom, J.C. Penney and
Sears. Westfield Shoppingtown Main Place Mall is a 1.1 million
square foot center that is anchored by Macy's and Nordstrom. At
securitization this center also included two Robinsons-May stores,
but they both closed in March 2006 following the merger of
Federated Department Stores and Robinsons-May parent, The May
Department Stores Company. Moody's current shadow rating is Aa2,
the same as at securitization.
The third shadow rated loan is the Chandler Fashion Center Loan,
$51.1 million (6.3%), which represents a 49.0% pari passu interest
in a first mortgage loan secured by the borrower's interest in a
1.3 million square foot super-regional mall located approximately
18 miles southeast of downtown Phoenix in Chandler, Arizona. The
center includes an open-air village component and reflects a
middle to upper middle-market price orientation. The center is
anchored by Dillard's, Macy's, Nordstrom and Sears. The loan
sponsor is the Macerich Company, a publicly traded REIT. Moody's
current shadow rating is Aa1, compared to Aa2 at securitization.
The fourth shadow rated loan is the 1669 Collins Avenue Loan,
$25.6 million (3.2%), which is secured by the leased fee interest
in the land under the Ritz-Carlton Hotel in South Beach, Florida.
Moody's current shadow rating is Aa1, the same as at
securitization.
The top three conduit loans represent 13.2% of the outstanding
pool balance. The largest conduit loan is the Gateway Center BJ's
Loan, $43.2 million (5.3%), which is secured by a 152,500 square
foot portion of a 640,000 square community center located in
Brooklyn, New York. The collateral is 100% leased to BJ's
Wholesale Club and several restaurant tenants. The property is
shadow anchored by Home Depot, Target, Bed Bath & Beyond and
Marshall's. Moody's LTV is 89.8%, compared to 93.2% at
securitization.
The second largest conduit loan is the Palladium at Birmingham
Loan, $37.2 million (4.6%), which is secured by two retail
properties in Birmingham, Michigan. The properties total 150,000
square feet. Palladium Retail is a 124,500 square foot
entertainment center. Willits Retail consists of three
ground-floor condominium units that total 25,400 square feet. The
two properties are 100% occupied. Moody's LTV is 94.5%, compared
to 99.2% at securitization.
The third largest conduit loan is the Redland Center Loan,
$26.7 million (3.3%), which is secured by a 134,000 square foot
office condominium located in Rockville, Maryland. The property
is 100.0% leased to the General Services Administration for a
10-year term that expires in March 2013. The property is occupied
by the Department of Health and Human Services. Moody's LTV is
94.9%, compared to 99.6% at securitization.
The pool's collateral is a mix of retail, office, multifamily,
U.S. Government securities, industrial, land, CTL, mixed use,
lodging and healthcare. The collateral properties are located in
30 states. The highest state concentrations are New York,
Georgia, Michigan, California and Pennsylvania. All the loans are
fixed rate.
CONGOLEUM CORP: Judge Ferguson Says Plan Must Be Modified
---------------------------------------------------------
Congoleum Corporation reported Monday that the Hon. Kathryn C.
Ferguson of the U.S. Bankruptcy Court for the District of New
Jersey issued a ruling on motions filed by insurers seeking to
prevent confirmation of its most recent reorganization plan.
In her opinion, the judge found that certain aspects of
Congoleum's plan must be modified to comply with the requirements
of the U.S. Bankruptcy Code.
Roger S. Marcus, Chairman of the Board, commented, "Although I was
disappointed by the ruling, we now have clear direction from the
court on what aspects of our plan need to be changed. With this
guidance I believe we can craft a plan that should satisfy the
court. It is better that these issues were surfaced now, before
we incurred the time and expense of soliciting another plan, than
if they had arisen at the confirmation hearing. Our goal is to
have a plan confirmed, and knowing exactly what the court expects
moves us a step closer to achieving that."
Mr. Marcus continued, "As far as timing and cost, we are hopeful
that all parties involved in negotiating our next plan will share
our sense of urgency as they did at the mediation last summer. I
think it is possible we could have a plan ready for confirmation
by late in the third quarter of 2007. While this delay will add
somewhat to the cost, we believe the $22 million cash on hand at
the end of 2006, together with the cash the business continues to
generate, should enable us to meet our obligations for a
reasonable level of fees and expenses through the end of the
year."
About Congoleum Corp.
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:
CGM) -- http://www.congoleum.com/-- manufactures and sells
resilient sheet and tile floor covering products with a wide
variety of product features, designs and colors. The Company
filed for chapter 11 protection on Dec. 31, 2003 (Bankr. D. N.J.
Case No. 03-51524) as a means to resolve claims asserted against
it related to the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent
the Debtors in their restructuring efforts. Elihu Insulbuch,
Esq., at Caplin & Drysdale, Chartered, represents the Asbestos
Claimants' Committee. R. Scott Williams serves as the Futures
Representative, and is represented by lawyers at Orrick,
Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S.
Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the
Official Committee of Unsecured Bondholders. When Congoleum filed
for protection from its creditors, it listed $187,126,000 in total
assets and $205,940,000 in total debts.
Plan Update
In March 2006, Congoleum filed a new amended plan of
reorganization. In addition, an insurance company, Continental
Casualty Company, and its affiliate, Continental Insurance
Company, filed a plan of reorganization and the Official Committee
of Bondholders, representing holders of the Company's 8-5/8%
Senior Notes due August 1, 2008, also filed a plan of
reorganization.
In May 2006, the Bankruptcy Court ordered all parties in interest
in Congoleum's reorganization proceedings to participate in global
mediation discussions. Several mediation sessions took place from
June through September 2006. During the initial mediation
negotiations, Congoleum reached an agreement in principle, subject
to mutually agreeable definitive documentation, with the Asbestos
Claimants Committee, the Future Claimants' Representative, and the
Company's controlling shareholder, American Biltrite, Inc., on
certain terms of an amended plan of reorganization, which
Congoleum filed and proposed jointly with the ACC on August 11,
2006.
CNA and the Bondholders' Committee jointly filed a new, competing
plan on Aug. 18, 2006 and each withdrew its prior plan of
reorganization. Following further mediated negotiations,
Congoleum, the ACC, the FCR, ABI and the Bondholders' Committee
reached agreement on terms of a new amended plan, which was the
tenth plan. Congoleum filed this plan jointly with the ACC on
Sept. 15, 2006. Following the Bondholders' Committee's withdrawal
of support for CNA's plan, CNA filed an amended plan of
reorganization.
On October 23, 2006, Congoleum and the ACC jointly filed a revised
version of the Tenth Plan which reflected minor technical changes
agreed to by the various parties supporting Congoleum's plan. On
Oct. 26, 2006, the Bankruptcy Court held a hearing to consider the
adequacy of the disclosure statements with respect to the Tenth
Plan and the CNA Plan and to hear arguments on respective summary
judgment motions that the Tenth Plan and the CNA Plan are not
confirmable as a matter of law.
The Bankruptcy Court provisionally approved the disclosure
statements for both the Tenth Plan and the CNA Plan subject to the
Bankruptcy Court's ruling on the respective summary judgment
motions which are pending. Because the Tenth Plan and Eleventh
Plan are substantially identical, the Company believes rulings
issued with respect to the Tenth Plan will also apply to the
Eleventh Plan.
CORUS ENTERTAINMENT: Earns CDN$36.7 Mil. in Quarter Ended Nov. 30
-----------------------------------------------------------------
Corus Entertainment Inc. has released its first quarter financial
results, led by strong revenue growth from its broadcasting
businesses.
"The positive momentum of last year has continued in our first
quarter results in terms of both ratings and revenues," said
John Cassaday, President and Chief Executive Officer, Corus
Entertainment. "Strong advertising and subscription growth from
specialty television and solid national advertising sales in radio
were the major contributors to our positive results."
First Quarter Results
Consolidated revenues for the first quarter ended Nov. 30, 2006
were CDN$209.2 million, up 7% from CDN$195.3 million last year.
Consolidated segment profit was CDN$79.9 million, up 15% from
$69.8 million last year. Net income for the quarter was
CDN$36.7 million, compared to CDN$31.4 million last year.
Corus Television contributed quarterly revenues of CDN$122.6
million, up 10% from CDN$111.5 million last year, led by continued
specialty advertising growth of 13% and subscriber growth of 11%.
Quarterly segment profit increased to CDN$60.5 million, up 15%
from CDN$52.6 million last year.
Corus Radio revenues were CDN$75.6 million, up 4% from
CDN$72.4 million last year. Segment profit was CDN$23.6 million,
up 8% from the prior year.
Corus Content revenues were CDN$11.7 million, down 10% from
CDN$13.1 million last year. Segment profit was $1 million,
compared to break even last year.
"During the first three months of this fiscal year, our team has
executed well on our strategic initiatives," said Heather Shaw,
Executive Chair, Corus Entertainment Inc. "We will continue to
focus on operational excellence to ensure we deliver strong
results to our shareholders."
SOX Certification
On Nov. 29, 2006, Corus successfully completed its first-year
Sarbanes-Oxley 404 certification relating to internal control over
financial reporting, with no material weaknesses to report.
"We are pleased to have reached this significant milestone," said
Tom Peddie, Senior Vice President and Chief Financial Officer,
Corus Entertainment Inc. "Corus is committed to the highest
standards in corporate governance."
About Corus Entertainment
Corus Entertainment Inc. (TSX: CJR.B; NYSE: CJR) --
http://www.corusent.com/-- is a Canadian-based media and
entertainment company. The company services specialty
television and radio and operates pay television, advertising and
digital audio services, television broadcasting, children's book
publishing and children's animation. The company's multimedia
entertainment brands include YTV, Treehouse, W Network, Movie
Central, Nelvana, Kids Can Press and radio stations including
CKNW, CKOI and Q107. Corus creates engaging branded entertainment
experiences for its audiences across multiple platforms. A
publicly traded company, Corus is listed on the Toronto (CJR.B)
and New York (CJR) exchanges.
* * *
As reported in the Troubled Company Reporter on June 16, 2005,
Standard & Poor's Ratings Services revised its outlook on Corus
Entertainment Inc. to stable from negative and affirmed its 'BB'
long-term corporate credit rating on the company.
COTT CORP: Declining Organic Sales Prompt S&P to Lower Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Toronto-based private label soft drink manufacturer Cott Corp., by
one notch, including its long-term corporate credit rating, to
'B+' from 'BB-'.
The outlook is negative.
The downgrade reflects the many challenges Cott faces including
declining organic sales and profitability, significant senior
management turnover in the past couple of years, inefficient
operations, weakness in internal financial controls, and
participation in the difficult carbonated soft drinks industry.
"Given the magnitude of these issues and the expectation of higher
raw material costs (including aluminum) in 2007, we believe that
Cott will remain challenged for some time before management can
turn around operations," said Standard & Poor's credit analyst
Lori Harris.
The ratings on Cott reflect its below-average business risk
profile stemming from a narrow product portfolio, customer
concentration, and small size in a sector dominated by companies
with substantially greater financial resources and market
presence. Furthermore, the company's weak operating
performance has resulted in an ongoing decline in operating margin
since 2003.
These factors are partially offset by Cott's adequate credit
protection and solid market position as the leading private label
manufacturer and marketer of take-home CSDs in the U.S., the U.K.,
and Canada. Cott competes in the mature and highly competitive
CSD market by securing a strong private label share. Despite this
defensive operating strategy, the company is vulnerable to pricing
and market share actions by its primary competitors.
Cott is the world's leading retailer-brand beverage supplier and
the fourth-largest manufacturer of CSDs. Core geographic
operations are in the U.S., the U.K., and Canada, with North
America remaining Cott's most important market.
The negative outlook reflects S&P's concerns about the challenges
the company faces given its weak operating performance. The
ratings could be lowered with continued deterioration in Cott's
operations or weakness in credit protection measures or liquidity.
In the medium term, there are limited prospects for the ratings to
be raised. The outlook could be revised to stable if the company
demonstrates improved operating performance and credit measures.
COUNTRYSIDE POWER: Court Okays Settlement Pact with U.S. Energy
---------------------------------------------------------------
U.S. Energy Biogas Corp. disclosed Monday that that the U.S.
Bankruptcy Court for the Southern District of New York has
approved the settlement agreement reached between USEB and
Countryside Power Income Fund and announced on January 16, 2007.
The approved settlement agreement enables USEB and its parent,
U.S. Energy Systems, Inc., to establish new financing for USEB
that should enable it to pay all of its creditors in full, exit
bankruptcy quickly, and support the growth of the business for the
benefit of USEY's shareholders.
"We are very pleased that USEB is continuing on an expedited path
through its restructuring," said Asher E. Fogel, Chairman of USEB
and Chief Executive Officer of USEY. "The Court's approval of our
settlement agreement should facilitate full payment of existing
creditors' claims. Moreover, it means that USEB can move forward
to establish new financing, its management can capitalize on
USEB's attractive growth opportunities, and USEY's shareholders
can benefit from the value of USEB."
Terms of the Settlement
The settlement provides for Countryside Canada Power Inc, a
subsidiary of Countryside, to have an allowed secured claim of
approximately $99,000,000, of which $3,000,000 has been paid by
USEY.
Under the settlement, the secured claim is the only allowed claim
that Countryside will have in the Chapter 11 case. As a result of
the settlement, Countryside has no claim concerning USEB's
April 8, 2004 Royalty Agreement with Countryside, nor any claim
against USEY under its April 8, 2004 Development Agreement with
Countryside.
The settlement provides for USEB to make an installment cash
payment of $30,000,000 against the remaining $96,000,000 of
Countryside's claim on or before March 31, 2007, with the
remaining balance of the secured claim due on or before maturity
at May 31, 2007. USEB stated that it intends to make the
$30,000,000 installment payment as soon as practicable in order to
minimize its interest expenses. Other significant terms of the
settlement agreement are described in USEB's January 16, 2007
press release.
Hunton & Williams LLP serves as legal advisor to USEB. Wilmer
Cutler Pickering Hale and Dorr LLP serves as special counsel to
USEY in connection with USEB's Chapter 11 cases.
About U.S. Energy
Based in Avon, Connecticut, U.S. Energy Biogas Corp., a subsidiary
of U.S. Energy Systems Corp. (Nasdaq:USEY) --
http://www.usenergysystems.com/-- develops landfill gas projects
in the United States. Formerly known as Zahren Alternative Power
Corporation or ZAPCO, the company was formed in May 2001 after
ZAPCO's acquisition by U.S. Energy Systems, Inc. Currently, the
Debtor owns and operates 23 LFG to energy projects with 52
megawatts of generating capacity. The Debtor and 31 of its
affiliates filed separate voluntary chapter 11 petitions on
Nov. 29, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12827 through 06-
12857). Joseph J. Saltarelli, Esq., at Hunton & Williams
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
estimated assets and debts of more than $100 million.
About the Fund
Based in London, Ontario, Countryside Power Income Fund
(TSX: COU.UN) -- http://www.countrysidepowerfund.com/-- has
investments in two district energy systems in Canada, with a
combined thermal and electric generation capacity of approximately
122 megawatts, and two gas-fired cogeneration plants in California
with a combined power generation capacity of 94 megawatts. In
addition, the Fund has an indirect investment in 22 renewable
power and energy projects located in the United States, which
currently have approximately 51 megawatts of electric generation
capacity and sold approximately 710,000 MMBtus of boiler fuel in
2005. The Fund's investment in the projects consists of loans to,
and a convertible royalty interest in, U.S. Energy Biogas Corp.
* * *
As reported in the Troubled Company Reporter on Dec. 11, 2006,
U.S. Energy Biogas Corp.'s delinquent reporting of its financial
statements and its subsequent bankruptcy filing constituted a
default under Countryside Power Income Fund's CDN102 million
Credit Facility with USEB.
Prior to USEB's filing for bankruptcy, the Fund had suggested a
reorganization of USEB's Credit Facility. USEB, however, chose to
file for chapter 11 protection, asserting, among other things,
that its business is "operationally healthy" and that the "flawed"
Loan impairs its current capital structure.
The Fund is seeking to secure payment of all amounts pursuant to
the agreements governing the USEB Loan. The Loan default,
if not waived, could prevent the Fund from making distributions to
its unitholders, in whole or in part.
DANA CORP: Gets Approval to Amend Postpetition Credit Facility
--------------------------------------------------------------
The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for
the Southern District of New York authorizes Dana Corp. and its
debtor-affiliates to amend their postpetition credit facility to
provide for:
(a) a $200,000,000 increase of their term loan commitments;
(b) a 0.25% increase of the annual rate at which interest
accrues on amounts borrowed under the term facility;
(c) reduction of certain minimum global EBITDAR covenant
levels and an increase of the annual amount of cash
restructuring charges excluded in the calculation of
EBITDAR;
(d) the implementation of a corporate restructuring of their
European non-Debtor subsidiaries to facilitate the
establishment of a European credit facility and improve
treasury and cash management operations; and
(e) their ability to receive and retain proceeds from the
trailer axle asset sales that closed on January 5, 2007,
without potentially triggering a mandatory repayment to
the lenders of the amount of proceeds received.
The Debtors, the Guarantors, and Citicorp North America, Inc., as
Administrative Agent for the Incremental Term Lenders, entered
into an Amended and Restated Credit Agreement on Jan. 25, 2007.
Pursuant to the Amendment, the Debtors can borrow up to
$900,000,000 in the term loan portion of its DIP Facility.
Moreover, each Revolving Credit Lender that executes a
counterpart to the Amendment will be paid an amendment fee in an
amount equal to 0.125% in respect of its Revolving Credit
Commitment, which will be earned on the Effective Date of the
Amendment and become due and payable upon the funding of all or
any portion of the Incremental Term Facility.
The Debtors expect the increase in the Term Loan Facility to
alleviate their short-term liquidity issues, but may need to seek
additional financing to complete their restructuring initiatives,
Michael L. DeBacker, the Debtors' vice president and general
counsel, says in a filing with the Securities and Exchange
Commission.
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. 31;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
DANA CORP: Wants E&Y's Work Expanded to Add Internal Audit Task
---------------------------------------------------------------
Dana Corp. and its debtor-affiliates seek authority from the U.S.
Bankruptcy Court for the Southern District of New York to expand
the scope of Ernst & Young LLP's services to include certain
internal audit tasks, nunc pro tunc to Jan. 1, 2007.
The Internal Audit Services include, among others:
(a) providing a client service charter for approval by the
Management and the Audit Committee every year;
(b) conducting a risk assessment focused on the Debtors'
articulated areas of risk and concern
(c) finalizing an annual audit plan and an annual budget;
(d) enhancing the Debtors' understanding of and compliance
with legislation like Section 404 of the Sarbanes-Oxley
Act;
(e) providing pragmatic review and assessment of controls over
financial reporting;
(f) recommending improvements of efficiency and control of
business processes related to the Debtors' information
technology; and
(g) providing reports and results from the performance of risk
assessment procedures.
The Debtors' Internal Audit Department has historically provided
the Internal Audit Services. As a consequence of the expansion
of E&Y's employment, the Audit Department will no longer be
maintained, Corinne Ball, Esq., at Jones Day, in New York,
relates.
Certain of the Audit Department's 33 employees will be offered
reassignments within the Debtors' business or terminated or
offered employment with E&Y, Ms. Ball says.
The Debtors believe that outsourcing of the Internal Audit
Services will result in greater efficiencies and potentially
significant cost savings for the benefit of their Chapter 11
estates. E&Y's provision of the Internal Audit Services on an
hourly basis will eliminate the burdensome costs and
inefficiencies associated with employee downtime and will help
ensure that the Debtors only receive and pay for Internal
Auditing Services as and when needed.
The Debtors estimate that the elimination of those inefficiencies
through the proposed outsourcing program could result in annual
savings of as much as $3,000,000.
The Debtors will pay E&Y according to its customary hourly rates:
U.S. UK & German Other Int'l. Other
Level Personnel Personnel Personnel Specialist
----- --------- ----------- ------------- ----------
Partner/
Principal/
Executive Dir. $345 $525 $380 $490 - $650
Senior Manager $250 $370 $275 $300 - $550
Manager $200 $310 $220 $250 - $500
Senior $143 $245 $157 $200 - $375
Staff $110 $160 $121 $145 - $180
The Debtors will also reimburse E&Y for any necessary and
reasonable out-of-pocket expenses and applicable taxes.
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. 31;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
DELPHI CORP: Judge Drain Suspends Proceedings on 1113/1114 Motion
-----------------------------------------------------------------
In light of the approval of the Honorable Robert D. Drain of the
U.S. Bankruptcy Court for the Southern District of New York of
Delphi Corporation's Framework Agreements with, among others,
Appaloosa Management L.P., and in connection with the continuing
out-of-Court discussions among the Debtors and the Respondents,
Judge Drain indefinitely suspends further proceedings on the
1113/1114 Motion.
At the Debtors' behest, Judge Drain will conduct a chambers
conference with the Debtors and the Respondents within five
business days of the termination of either of the Equity Purchase
and Commitment Agreement or the Plan Framework Support Agreement
to set a hearing date on the 1113/1114 Motion.
Judge Drain will conduct an in-person, in-camera chambers
conference pursuant to Section 105(d)(1) of the Bankruptcy Code
with the Debtors, the Respondents, and the Official Committee of
Equity Security Holders at 3:00 p.m., on April 25, 2007, so that
the Court can be apprised by the Parties of the status of the
Framework Agreements and negotiations regarding the consensual
resolution of the 1113/1114 Motion.
Parties are permitted to participate telephonically in the
chambers conference and the status conference.
The date by which the Court must issue a ruling on the 1113/1114
Motion pursuant to Sections 1113(d)(2) and 1114(k)(2) of the
Bankruptcy Code is extended, with the consent of the Debtors and
the Respondents and to the extent required by statute, to May 1,
2007.
If the Debtors have filed a disclosure statement on or prior to
May 1, 2007, the Section 1113(d)(2) and 1114(k)(2) dates will be
further extended, with the consent of the Debtors and the
Respondents and to the extent required by statute, to July 31,
2007.
As reported in the Troubled Company Reporter on Dec. 15, 2006,
Delphi is seeking to reject its collective bargaining agreements
with unions and to modify obligations to provide insurance
benefits for its hourly retirees. To restructure its U.S.
operations, Delphi is planning to cut 4/5 of its 33,100 U.S.
hourly workers, close 21 of its 29 U.S. union plants and slash
wages and benefits for workers who stay.
The Section 1113-1114 proceedings began May 9, 2006, with opening
statements by Delphi, the UAW, other objecting unions -- IUE-CWA,
USW, IAM, IBEW and IUOE -- the Official Committee of Unsecured
Creditors and others.
Troy, Mich.-based Delphi Corporation (OTC: 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 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. 56; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DELPHI CORP: Wants Barclays Bank Settlement Pact Approved
---------------------------------------------------------
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 approve their Settlement Agreement with Barclays Bank
PLC.
Delphi Corporation entered into a master swap agreement with
Barclays Bank PLC on Nov. 23, 2001.
Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York,
relates that in October 2005, Barclays executed an early
termination of the Agreement and was then required, under the
Master Agreement, to make a termination payment to Delphi.
Barclays Bank subsequently represented that it owed Delphi
$10,178,261 as the termination payment provided for by the Master
Agreement. Barclays Bank later recalculated the Termination
Payment to equal $9,044,399, Mr. Berger cites.
When Delphi made proper demands on Barclays for the payment and
delivery of the Termination Payment, Barclays asserted that it
had a right to withhold payment of all or part of the
Termination Payment to protect its alleged setoff rights on
account of any indemnification payment obligations that may be
owed to it by Delphi pursuant to, and in connection with:
-- the indemnity provisions of the Master Agreement;
-- the prepetition issuance of certain Delphi bonds by
Barclays Capital Inc; an affiliate of Barclays Bank; and
-- claims that have been asserted against Barclays Capital in
a class action filed in the Southern District of New York.
Delphi contended that it does not owe any indemnification
obligation to Barclays Bank because, inter alia, the Bank was
neither an issuer of the Bonds nor was it named as a defendant in
the Litigation, Mr. Berger informs the Court. Moreover, the
issuance of the Bonds by Barclays Capital was wholly unrelated to
the Master Agreement and the parties' rights and obligations
under the Master Agreement.
To resolve their dispute, the parties engaged in arm's-length
negotiations and have agreed to enter into a settlement.
The parties' Settlement Agreement provides that Barclays will pay
Delphi $9,044,399 as Termination Payment in full and final
satisfaction of any and all claims Delphi may have against
Barclays for the return of the Termination Payment. In exchange,
Delphi will release and waive any claims, charges, causes of
action and avoidance actions it may assert or may have been able
to assert against Barclays, its affiliates, employees, and agents
regarding the Termination Payment.
Mr. Berger asserts that the Settlement Agreement:
-- eliminates a material risk of an unfavorable litigation
outcome;
-- avoids significant costs, uncertainties and delays
attendant to any litigation and possible resulting
judgment; and
-- provides for a waiver of all claims Barclays may possess
against the Debtors in relation to the Termination Payment,
except for those concerning Barclays' rights pursuant to
the Final DIP Order and the DIP Refinancing Order.
Troy, Mich.-based Delphi Corporation (OTC: 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 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. 56; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DOMTAR INC: Weyerhaeuser Deal Prompts S&P to Affirm Ratings
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on Domtar
Inc. after reviewing the company's proposed combination with
Weyerhaeuser Co.'s fine papers division.
At the same time, the ratings were removed from CreditWatch
with developing implications, where they were placed Aug. 24,
2006. The 'BB-' long-term corporate credit rating on Domtar will
be carried over to the newly formed entity, Domtar Corp., as will
the 'B+' senior unsecured debt rating and the 'B-' global scale
and P-4 Canadian national scale preferred share ratings.
The outlook is stable.
Standard & Poor's will assign a rating to the company's proposed
$1.55 billion secured bank loans after reviewing the transaction
documentation over the coming days.
"The ratings on Domtar reflect the company's aggressive financial
risk profile and its unstable profitability and cash flow caused
by volatile prices for its commodity paper, pulp, and lumber
products," said Standard & Poor's credit analyst Donald Marleau.
"These weaknesses are offset by the company's strong position in
the concentrated uncoated freesheet market and its good cost
profile," Mr. Marleau added.
Domtar's combination with Weyerhaeuser's fine paper assets and the
December 2006 sale of its 50% interest in Norampac Inc. are
positive for the combined entity's credit quality, as the
transaction reduces debt leverage markedly while strengthening the
company's market position in the North American uncoated freesheet
market and improving its cost profile, which is a critical success
factor in this commodity market.
Nevertheless, Domtar faces slowly declining demand for uncoated
freesheet and has fairly aggressive debt leverage, both of which
were the major drivers of the negative outlook on the ratings
before the announcement of the transaction.
The stable outlook is predicated on a slow, steady decline in
demand for uncoated freesheet in North America. The high degree
of concentration in this market should permit the orderly
rationalization of high-cost capacity as demand drops, thereby
maintaining a reasonable industry-wide supply-demand balance and
supporting profitable prices.
On the other hand, an accelerated decline in demand would have a
negative effect on Domtar's credit profile, as it would likely be
compelled to reduce its high-cost capacity at a faster rate than
its competitors. Upward pressure on the company's outlook or
rating would necessitate a lasting improvement in its
profitability or debt reduction, such that fully adjusted debt to
EBITDA would decline to below 3.5x, funds from operations to debt
would improve to 20%-25%, and EBITDA interest coverage would
exceed 4x.
DOMTAR INC: Moody's Rates New $1.55 Billion Senior Facility at Ba1
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 corporate family rating
to Domtar Corporation and a Ba1 senior secured rating to the
company's new $1.55 billion credit facility. A speculative grade
liquidity rating of SGL-2 was also assigned.
Moody's also affirmed the B2 senior unsecured rating for bonds and
debentures issued by subsidiary company, Domtar Inc.
The new company's rating outlook is stable.
The rating action responds to the company having initiated
activities to implement financing arrangements that anticipate a
previously reported business combination, closing in early March.
Moody's in-depth review of the new company's business prospects
and expected financial performance concluded with an assessment
that Domtar Corporation's credit profile warrants a Ba3 corporate
family rating. Since the new credit facilities are guaranteed by
key operating subsidiaries and with the guarantees being secured
by asset pledges, the rating on the new credit facilities is
notched up from the Ba3 CFR to Ba1.
Since Domtar Inc. will be part of a company whose consolidated
credit profile is stronger than its' own, there is a positive
rating influence on Domtar Inc.'s senior unsecured notes and
debentures. However, this is off-set by the combination of
security arrangements afforded its' new parent company's credit
facilities and the lack of protection provided by indentures to
prevent Domtar Inc.'s assets and cash flow from being used to
service Domtar Corporation's obligations. Moody's therefore
determined that the credit profile of Domtar Inc.'s bonds and
debentures had not changed, and, accordingly, the relevant
unsecured ratings were affirmed at B2.
Moody's also assigned a speculative grade liquidity rating of
SGL-2, based on expectations of positive free cash flow and ample
unused credit capacity committed for an extended term to maturity.
With these rating actions and given a balance of near-to-mid term
rating influences, the outlook is stable.
On Aug. 23, 2006, Domtar Inc. and Weyerhaeuser Company jointly
reported that the two companies had agreed to combine Domtar Inc.
with Weyerhaeuser's fine paper, paper-grade pulp and related
assets to create a new company to be named Domtar Corporation.
The business combination is expected to be completed in early
March. The new company will make a $1.35 billion cash payment to
Weyerhaeuser as partial consideration for the assets being
contributed. Remaining consideration will be common shares
providing a 55% interest in the new company. Domtar Inc.'s
shareholders will receive the other 45% of Domtar Corporation's
common shares.
In addition, Weyerhaeuser is transferring its' Domtar Corporation
shares to its' shareholders. Consequently, the new company will be
widely held. Domtar Corporation is to be a publicly traded
company, registered in the United States, and will report in US
dollars with its financial statements prepared in accordance with
US GAAP.
Domtar proposes to fund its $1.35 billion cash payment to
Weyerhaeuser from the proceeds of a new $800 million term loan,
plus the approximately $500 million in proceeds from Domtar Inc.'s
divestiture of its' 50% interest in Norampac Inc., with a portion
of Domtar Inc.'s softwood lumber duty refund making up the
balance.
Assignments:
* Domtar Corporation
-- Corporate Family Rating, Assigned Ba3
-- Senior Secured Bank Credit Facility, Assigned a range of
21 - LGD2 to Ba1
-- Senior Secured Bank Credit Facility, Assigned a range of
21 - LGD2 to Ba1
-- Speculative Grade Liquidity Rating, Assigned SGL-2
Outlook Actions:
* Domtar Corporation
-- Outlook, Assigned Stable
* Issuer: Domtar Inc.
-- Outlook, Changed To No Outlook From Developing
Withdrawals:
* Domtar Inc.
-- Corporate Family Rating, Withdrawn, previously rated B1
-- Senior Unsecured Shelf, Withdrawn, previously rated B1
Headquartered in Montreal, Quebec, Domtar Corporation is the
largest producer of uncoated woodfree paper in North America. The
company also operates a paper distribution business and produces
lumber and other wood products.
ESTERLINE TECH: CMC Buyout Cues Moody's to Eye Possible Downgrade
-----------------------------------------------------------------
Moody's Investors Service has placed the ratings of Esterline
Technologies Corporation on review for possible downgrade.
This action was prompted by the company's report on Feb. 1, 2007
that it had entered into a definitive agreement to purchase CMC
Electronics Inc. from Onex Corporation for approximately
$335 million in cash. Esterline expects to finance this
acquisition primarily through issuance of additional debt. This
acquisition is expected to close in March 2007.
Moody's primary concern, prompting this review, is the potential
increase in leverage and decrease in cash flow relative to debt
that will result from this acquisition. The CMC purchase is the
company's largest acquisition over recent years: the $335 million
price is approximately equal to total expenditures on acquisitions
over the last three years and is estimated to increase Esterline's
revenue base by about 20%.
Moody's believes that the acquisition price, estimated at 18x pro
forma trailing EBITDA, is high even relative to the high multiples
currently seen in the sector. However, Esterline estimates a
purchase multiple of approximately 12x EBITDA on a forward
12 months basis. Since the company plans to finance the
transaction entirely through use of additional debt, leverage is
expected to increase significantly. Moody's estimates that pro
forma Debt/EBITDA will likely exceed 4x, which is high relative to
the company's current Ba2 Corporate Family Rating.
Moody's assessment of near term cash flow generation and the
potential for material debt reduction over the next 12 months will
be a key factor in determining whether this review concludes with
an affirmation of ratings, a downgrade, or a change in the
ratings' outlook.
The review will also focus on the form of debt to be used to
finance the purchase of CMC as the priority and amount of
increased debt will affect the ratings of the company's
outstanding subordinated notes. The notes are rated Ba3, one
notch below the Corporate Family Rating. Under Moody's LGD
Methodology, the addition of a substantial amount of debt senior
to the subordinated notes could result in a downgrade of those
notes, even if the Corporate Family Rating is confirmed at the
current Ba2.
Moody's expects to conclude this review prior to the close of the
CMC acquisition.
Esterline Technologies Corporation, headquartered in Bellevue,
Washington, serves aerospace and defense customers with products
for avionics, propulsion and guidance systems. The company
operates in three business segments: Avionics and Controls,
Sensors and Systems and Advanced Materials. The company had FY
2006 revenues of $972 million.
EUROPEAN REINSURANCE: U.S. Court Grants Relief Under Chapter 15
---------------------------------------------------------------
The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the
Southern District of New York issued an order granting Europaische
Ruckversicherungs-Gesselschaft in Zurich (European Reinsurance
Company of Zurich), relief under Chapter 15 of the U.S. Bankruptcy
Code.
Kevin McAtee, in his capacity as foreign representative for the
Debtor, filed the chapter 15 petition on Dec. 21, 2006.
The order recognizes the Debtor's foreign proceedings in the High
Court of Justice of England and Wales and granted European
Reinsurance injunctive relief that will give full force and effect
to a Scheme of Arrangement in the United States.
English Proceeding
The Debtor is subject to a collective proceeding currently
pending before the English High Court, in accordance with a
Solvent Scheme of Arrangement pursuant to Section 425 of the
Companies Act 1985 between the company and its Scheme Creditors.
On Jan. 15, the English Court sanctioned the Scheme of
Arrangement, which became effective on Jan. 23.
Except as provided in the Scheme of Arrangement, all Scheme
Creditors are required to:
(a) turn over and account to the Scheme Manager for any
property of the Debtor that is related to the Scheme
Business and located in the U.S. or any proceeds thereof,
of which they have possession, custody or control;
(b) deliver to the Scheme Manager any documents of the Debtor
that relate to the Scheme Business or may be required by
the Scheme Manager; and
(c) notify the Scheme Manager on claims against the Debtor or
its property arising out of the Scheme Business in which
ERZ is a party and put the Petitioner's U.S. counsel on
the master service list.
Mr. McAtee is represented in the U.S. by:
Jennifer C. DeMarco, Esq.
Sara M. Tapinekis, Esq.
Clifford Chance
31 West 52nd Street
New York, NY 10019
Tel: (212) 878-8569
Fax: (212) 878-8375
Chapter 15 of the U.S. Bankruptcy Code, which became effective
Oct. 17, 2005, broadens the mechanism through which
representatives of non-U.S. proceedings might obtain relief,
including injunctive relief, in the United States, expands the
powers of U.S. Bankruptcy Courts, and enhances the rights of
both U.S. and non-U.S. creditors.
RGM Pool
European Reinsurance, a wholly owned subsidiary of Swiss
Reinsurance Company, Zurich, conducts a portion of its business
as a member of a pool of four companies that transacted
insurance and reinsurance business from August 1963 until
November 1966, including some multiyear policies as a result of
which coverage may be extended until 1969. The business of the
RGM Pool was written through the agency of Reinsurance Group
Managers Ltd. Other members of the Pool include:
* Mercantile & General Reinsurance Company Ltd.
* NRG Victory Reinsurance Ltd.
* Guildhall Insurance Company Ltd.
The RGM Pool ceased writing new business in November 1966 and
currently is in run-off. The Pool is currently managed by PRO
Insurance Solutions Ltd. as a run-off specialist.
As of Dec. 31, 2006, European Reinsurance's balance sheet showed
$18.2 billion of total assets and $17.2 billion of total
liabilities.
Scheme of Arrangement
The Scheme of Arrangement applies solely to European Reinsurance's
portfolio of business written through the Pool.
The Debtor commenced the English proceeding to obtain the
English Court's approval of the Scheme of Arrangement.
A scheme of arrangement becomes legally binding when:
(a) a majority in number representing not less than 75% in
value of creditors vote in favor of the scheme;
(b) the court subsequently enters and order sanctioning the
scheme of arrangement; and
(c) a copy of that order is delivered to the registrar of
companies for registration.
The Debtor estimates about 3,200 potential scheme creditors with
claims likely to vary widely.
The Scheme establishes Dec. 31, 2006, as the Ascertain Date,
which is the date as of which claims will be valued in
accordance with the Scheme.
The Debtor believes that a solvent scheme will be the most
efficient method of making full payment to Scheme Creditors in
the short practicable time.
The Scheme provides for the appointment of:
* PricewaterhouseCoopers LLP as Scheme Adviser to provide
the Debtor with advice necessary to facilitate and
implement the Scheme of Arrangement; and
* PRO Insurance Solutions as Scheme Manager, who will have
power to manage and control the business.
Jennifer C. DeMarco, Esq., of Clifford Chance U.S. LLP, who
represents the Debtor, tells the Court that the Scheme's primary
objective is to conclude the run-off of the Scheme Business
earlier than would be the case if the pre-Scheme of Arrangement
run-off were to continue until all claims had materialized and
been agreed upon and paid in the ordinary course.
Mr. McAtee sought the relief as a requirement to give effect to
the Scheme of Arrangement in the U.S. and to prevent the Scheme
and the English Proceeding from being frustrated.
Europaische Ruckversicherungs-Gesellschaft in Zurich aka European
Reinsurance Company of Zurich -- http://www.rgmpool.com/-- is a
wholly owned subsidiary of Swiss Reinsurance Company, Zurich. The
company filed a chapter 15 petition on Dec. 21, 2006 (Bankr.
S.D.N.Y. Case No. 06-13061). Jennifer C. DeMarco, Esq., and
Sara M. Tapinekis, Esq., at Clifford Chance represent the Debtor.
PRO Insurance Solutions Ltd. is the Scheme Manager,
PricewaterhouseCoopers LLP is the Scheme Advisor, and George Maher
is the Independent Adjudicator.
EUROPEAN REINSURANCE: England High Court Approves Solvent Scheme
----------------------------------------------------------------
The High Court of Justice of England and Wales sanctioned
Jan. 15, the solvent scheme of arrangement made between
Europaische Ruckversicherungs-Gesellschaft in Zurich (European
Reinsurance Company of Zurich) and its scheme creditors pursuant
to section 425 of the Companies Act 1985.
The scheme of arrangement was voted on and approved by the two
classes of ERZ's scheme creditors at their respective scheme
meetings on Dec. 20, 2006.
The solvent scheme became effective Jan. 23, when an official copy
of the order was delivered to the Registrar of Companies in
England and Wales.
Scheme creditors are required to submit completed claim forms in
respect of their scheme liabilities to the company on or before
the final claims submission date at 5:00 p.m. on July 23, 2007.
Completed claim forms should be submitted to:
The Scheme Manager
Attn: Kevin McAfee or Dave Armstrong
Bruton Court
Bruton Way
Gloucester GL1 1DA
United Kingdom
Tel: +44 (0) 1452 310 171
E-mail: pro-rgmpoolhelpline@pro-ltd.co.uk
Information on the Solvent Scheme and a version of the claim form
is available at: http://www.rgmpool.com/
Europaische Ruckversicherungs-Gesellschaft in Zurich aka European
Reinsurance Company of Zurich -- http://www.rgmpool.com/-- is a
wholly owned subsidiary of Swiss Reinsurance Company, Zurich. The
company filed a chapter 15 petition on Dec. 21, 2006 (Bankr.
S.D.N.Y. Case No. 06-13061). Jennifer C. DeMarco, Esq., and Sara
M. Tapinekis, Esq., at Clifford Chance represent the Debtor. PRO
Insurance Solutions Ltd. is the Scheme Manager,
PricewaterhouseCoopers LLP is the Scheme Advisor, and George Maher
is the Independent Adjudicator.
FORD CREDIT: Strong Performance Prompts S&P's Positive CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
15 classes of notes and certificates from eight Ford Credit Auto
Owner Trust securitizations originated between 2004 and 2005
on CreditWatch with positive implications.
The positive CreditWatch placements reflect the strong performance
of the underlying collateral pools of prime automobile loan
receivables originated by Ford Motor Credit Co., combined with
increased credit enhancement as a percent of the current pool
balances, which can be used to cover losses.
In addition, current cumulative net losses are below Standard &
Poor's initial expectations.
Each transaction contains a nondeclining reserve account of 0.50%
of its initial pool balance, while series 2004-2, 2005-1, 2005-2,
2005-3, and 2005-4 are supported by a fixed overcollateralization
amount. The reserve account and fixed O/C amount for each deal
remain at their required levels and continue to grow as a percent
of the current amortizing pool balances.
Additionally, each trust contains a sequential pay structure that
has increased the amount of subordination as a percent of its
amortizing pool balance. Furthermore, each of the eight trusts is
structured with yield-supplement O/C to supplement shortfalls in
yield, and is available to cover losses after all payments of
interest have been made in the collateral pools.
Over the next one to two months, Standard & Poor's will review the
collateral pools and the remaining credit enhancement for each of
the eight transactions and determine whether upgrades are
warranted.
Ratings Placed On Creditwatch Positive
Ford Credit Auto Owner Trust
Rating
------
Series Class To From
------ ----- -- ----
2004-A C AA/Watch Pos AA
2004-A D BBB+/Watch Pos BBB+
2005-1 B AA/Watch Pos AA
2005-2 B AA/Watch Pos AA
2005-3 B AA/Watch Pos AA
2005-4 B AA/Watch Pos AA
2005-A B A/Watch Pos A
2005-A C BBB/Watch Pos BBB
2005-A D BB/Watch Pos BB
2005-B B A/Watch Pos A
2005-B C BBB/Watch Pos BBB
2005-B D BB/Watch Pos BB
2005-C B A/Watch Pos A
2005-C C BBB/Watch Pos BBB
2005-C D BB/Watch Pos BB
FORD MOTOR: January Sales off 19% and Daily Rentals Down 16%
------------------------------------------------------------
Ford Motor Co. reported that January 2007 sales declined 19%
compared with a year ago, as a result of a proposed reduction in
sales to daily rental companies.
Sales to daily rental companies were cut by 65%.
"All of us at the company are focused on restructuring our
business to be profitable at lower volumes and offering more
of the products people want, including more cars and more
crossovers," said Mark Fields, Ford's President of The Americas.
"We are focusing more of our attention on retail customers and
reducing sales to daily rental companies sharply. The company's
customers benefit from this plan because their vehicles' residual
values will improve -- a trend we already are seeing with our
newest products."
The resale values of the company's newest products have improved
by as much as 11 percentage points -- with Ford closing the gap on
many Asian competitors -- according to the Automotive Leasing
Guide. Residual values have improved 2 percentage points compared
with the prior model year for the 2007 Ford Fusion sedan, 6 points
better for the 2007 Lincoln Navigator, 9 points better for the
2007 Ford Expedition and 11 points better for the 2008 Ford
Escape. The company's new 2007 Edge crossover has resale values
higher than Toyota Highlander and Nissan Murano.
January marked the first full month on sale for the company's new
crossover utilities -- the Ford Edge and Lincoln MKX. Edge sales
were 5,586 and MKX sales were 1,699. In fact, the Edge post
higher sales in its introduction month than did Ford's popular
Fusion in its first month.
Dealers reported higher retail sales for the company's 2007 model
mid-size cars, the Ford Fusion, Mercury Milan, and Lincoln MKZ.
In addition, the all-new Ford Expedition and Lincoln Navigator
full-size SUVs extended their winning streaks into 2007.
Expedition sales have been higher than a year ago for five months
in a row and Navigator sales have been up the last four months.
The company's Ford Escape and Mercury Mariner utility vehicles
posted sharply higher retail sales in advance of a new 2008 model,
which now is being shipped to dealers from Ford's Kansas City
Assembly Plant.
The company saw lower sales for its popular F-Series pickup truck
in January, which compares with a strong performance for America's
best-selling pickup last year. The company expects softness in
new home construction to adversely affect full-size pickup sales
through the first half of 2007.
About Ford Motor Co.
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, the company's core and affiliated automotive
brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln,
Mazda, Mercury and Volvo. Its automotive-related services include
Ford Motor Credit Company and The Hertz
Corporation.
* * *
As reported in the Troubled Company Reporter on 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 $3 billion of senior convertible notes due
2036.
GAP INC: Marka Hansen Named as Gap North America President
----------------------------------------------------------
Gap Inc. disclosed that Marka Hansen, 53, president of Banana
Republic, has been named president, Gap North America, effective
immediately. Ms. Hansen will report directly to Bob Fisher, Gap
Inc.'s interim president and CEO. Ms. Hansen succeeds Cynthia
Harriss, 54, who has resigned from the company.
"During the past twenty years, Marka has developed a unique blend
of deep merchandising expertise, extensive leadership experience
and a real appreciation for the company's culture and creative
heritage," said Mr. Fisher. "Marka also has demonstrated through
her tenure at Banana Republic that she understands what it takes
to lead an iconic apparel brand."
"I'm excited about the opportunity to lead the company's flagship
brand," said Ms. Hansen. "While there are challenges that lay
ahead, with the support of the extremely passionate, talented and
committed Gap brand team, I'm confident that together we can
reclaim Gap brand's authority in casual apparel."
Ms. Hansen began her career with the company in 1987 as a
merchandise manager for Banana Republic. She joined Gap's
International division in 1993 as vice president of merchandising
leading the brand's expansion into Europe and Japan, and was
promoted to senior vice president in 1995. She briefly led Gap
Inc.'s Human Resources organization beginning in 2000, before
being promoted to executive vice president of Gap adult
merchandising in 2002. Ms. Hansen became president of Banana
Republic in 2003.
"I want to thank Cynthia for her incredible efforts at both our
Outlet business and Gap brand over the past three years," said Mr.
Fisher. "We all appreciate her hard work and wish her well in the
future."
Gap Inc. (NYSE: GPS) -- http://www.gapinc.com/-- is an
international specialty retailer offering clothing, accessories
and personal care products for men, women, children and babies
under the Gap, Banana Republic, Old Navy, Forth & Towne and
Piperlime brand names. Gap Inc. operates more than 3,100 stores
in the United States, the United Kingdom, Canada, France, Ireland
and Japan. In addition, Gap Inc. is expanding its international
presence with franchise agreements for Gap and Banana Republic in
Southeast Asia and the Middle East.
* * *
As reported in the Troubled Company Reporter on Jan. 10, 2007,
Fitch has downgraded its ratings on The Gap Inc.'s Issuer Default
Rating to 'BB+' from 'BBB-' and Senior unsecured notes to 'BB+'
from 'BBB-'. The Rating Outlook is Negative.
As reported in the Troubled Company Reporter on Nov. 21, 2006,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured ratings on San Francisco-based The Gap Inc.
to 'BB+' from 'BBB-'. S&P said the outlook is stable.
HILCORP ENERGY: S&P Holds Rating on $475 Million Senior Notes at B
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' rating on oil
and gas exploration and production company Hilcorp Energy I L.P.'s
senior unsecured notes due 2015, which the company proposes to
increase by $175 million, to a total of $475 million.
The corporate credit rating on Hilcorp is 'B+'. The outlook is
stable.
Houston, Texas-based Hilcorp had $576 million of balance sheet
debt as of Sept. 30, 2006.
Standard & Poor's expects Hilcorp to use the proceeds to repay
borrowings under the company's credit facility, tender for the
remaining $150 million of senior notes due in 2010, and for
general corporate purposes, including acquisitions.
"The stable outlook on Hilcorp reflects our expectation that the
company will manage its high financial leverage incurred to make
acquisitions and will limit cost increases," said
Standard & Poor's credit analyst Ben Tsocanos.
The ratings on Hilcorp reflect a weak business risk profile and
aggressive financial leverage.
Hilcorp is a small, privately held limited partnership that
acquires, develops, and produces crude oil and natural gas, mainly
from onshore Texas and South Louisiana properties.
HOME PRODUCTS: Panel Wants Fried Frank as Lead Bankruptcy Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Home
Products International Inc. and Home Products International-North
America Inc.'s bankruptcy cases asks the Honorable Christopher S.
Sontchi of the U.S. Bankruptcy Court for the District of Delaware
to retain Fried, Frank, Harris, Shriver & Jacobson LLP as its
bankruptcy counsel, nunc pro tunc to Jan. 3, 2007.
The Committee also asks the Court to retain Pachulski Stang Ziehl
Young Jones & Weintraub LLP as its local counsel. Fried Frank and
Pachulski Stang will ensure that there is no unnecessary
duplication of efforts.
Fried Frank will:
a. provide legal advice with respect to the Official
Committee's rights, powers, and duties in the Debtors'
chapter 11 cases;
b. assist the Official Committee in its analysis and
negotiation of any plan of reorganization and related
corporate documents;
c. review, analyze, and advise the Official Committee with
respect to documents filed with the Court and respond on
behalf of the Official Committee to any and all
applications, motions, answers, orders, reports, and other
pleadings in connection with the administration of the
Debtors' estates in their chapter 11 cases; and
d. perform any other legal services requested by the Official
Committee in connection with their chapter 11 cases and the
confirmation and implementation of a plan of reorganization
in their chapter 11 cases.
Gary L. Kaplan, Esq., a partner at Fried, Frank, Harris, Shriver &
Jacobson, disclosed that the firm's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Brad Eric Scheler, Esq. Partner $995
Gary L. Kaplan, Esq. Partner $650
Jennifer Rodburg, Esq. Associate $525
Adrian Feldman, Esq. Associate $445
Katie Dang, Esq. Associate $315
Michael Birnbaum Legal Assistant $185
Mr. Kaplan assures the Court that the firm does not represent or
hold any interest adverse to the Debtors or their estates and is
disinterested pursuant to Section 101(14) of the Bankruptcy Code.
About Home Products
Headquartered in Chicago, Illinois, Home Products International,
Inc. -- http://www.hpii.com/-- designs, manufactures, and markets
ironing boards, covers, and other high-quality, non-electric
consumer houseware products. The Debtor's product lines include
laundry management products, bath and shower organizers, hooks,
hangers, home and closet organizers, and food storage containers.
Their products are sold under the HOMZ brand name, and are
distributed to hotels, discounters, and other retailers such as
Wal-Mart, Kmart, Sears, Home Depot, and Lowe's.
The company and its affiliate, Home Products International-North
America, Inc., filed for chapter 11 protection on Dec. 20, 2006
(Bankr. D. Del. Case Nos. 06-11457 and 06-11458). Ronald
Barliant, Esq., and Kathryn A. Pamenter, Esq., at Goldberg Kohn,
Bell, Black, Rosenbloom & Moritz, Ltd., and Mark D. Collins, Esq.,
and Michael J. Merchant, Esq., at Richards, Layton & Finger P.A.
represent the Debtors. When the Debtors filed for protection from
their creditors, they listed estimated assets between $1 million
and $100 million and debts of more than $100 million. The
Debtors' exclusive period to file a chapter 11 plan of
reorganization expires on April 18, 2007.
The Debtors' exclusive period to file a chapter 11 plan expires on
June 12, 2007.
HOME PRODUCTS: Panel Wants Pachulski Stang as Local Bankr. Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Home
Products International Inc. and Home Products International-North
America Inc.'s bankruptcy cases asks the Honorable Christopher S.
Sontchi of the U.S. Bankruptcy Court for the District of Delaware
to retain Pachulski Stang Ziehl Young Jones & Weintraub LLP as its
local bankruptcy counsel, nunc pro tunc to Jan. 3, 2007.
The Committee also asks the Court to retain Fried, Frank, Harris,
Shriver & Jacobson LLP as its lead bankruptcy counsel. Pachulski
Stang and Fried Frank will ensure that there is no unnecessary
duplication of efforts.
Pachulski Stang will:
a. provide legal advice and assistance to the Committee in its
consultation with the Debtors relative to their
administration of their reorganization;
b. review and analyze all applications, motions, orders,
statements of operations, and schedules filed with the Court
by the Debtors or third parties, advise the Committee as to
their propriety, and, after consultation with the Committee,
take appropriate action;
c. prepare necessary applications, motions, answers, orders,
reports, and other legal papers on behalf of the Committee;
d. represent the Committee at hearings held before the Court
and communicate with the Committee regarding the issues
raised, as well as the decisions of the Court; and
e. perform all other legal services for the Committee, which
may be necessary and proper in the Debtors' chapter 11
cases.
Laura Davis Jones, Esq., a partner at Pachulski Stang Ziehl Young
Jones & Weintraub, discloses that the firm's professionals bill:
Professional Hourly Rate
------------ -----------
Laura Davis Jones, Esq. $750
Curtis A. Hehn, Esq. $375
Louise Tuschak $180
Ms. Jones assures the Court that the firm is disinterested
pursuant to Section 101(14) of the Bankruptcy Code.
Hearing
Judge Sontchi will convene a hearing at 10:00 a.m. on Feb. 20,
2007, to consider the Committee's request. Objections, if any,
must be submitted by 4:00 a.m. on Feb. 15, 2007.
About Home Products
Headquartered in Chicago, Illinois, Home Products International,
Inc. -- http://www.hpii.com/-- designs, manufactures, and markets
ironing boards, covers, and other high-quality, non-electric
consumer houseware products. The Debtor's product lines include
laundry management products, bath and shower organizers, hooks,
hangers, home and closet organizers, and food storage containers.
Their products are sold under the HOMZ brand name, and are
distributed to hotels, discounters, and other retailers such as
Wal-Mart, Kmart, Sears, Home Depot, and Lowe's.
The company and its affiliate, Home Products International-North
America, Inc., filed for chapter 11 protection on Dec. 20, 2006
(Bankr. D. Del. Case Nos. 06-11457 and 06-11458). Ronald
Barliant, Esq., and Kathryn A. Pamenter, Esq., at Goldberg Kohn,
Bell, Black, Rosenbloom & Moritz, Ltd., and Mark D. Collins, Esq.,
and Michael J. Merchant, Esq., at Richards, Layton & Finger P.A.
represent the Debtors. When the Debtors filed for protection from
their creditors, they listed estimated assets between $1 million
and $100 million and debts of more than $100 million. The
Debtors' exclusive period to file a chapter 11 plan of
reorganization expires on April 18, 2007.
The Debtors' exclusive period to file a chapter 11 plan expires on
June 12, 2007.
INDEPENDENCE I: Moody's Cuts Rating on $50 Million Notes to B3
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on notes
issued in 2000 by Independence I CDO, Ltd.:
* The $223,500,000 Class A First Priority Senior Secured
Floating Rate Notes due 2030
-- Prior Rating: Aa2, on watch for possible downgrade
-- Current Rating: Baa2
* The $50,000,000 Class B Second Priority Senior Secured
Floating Rate Notes due 2035
-- Prior Rating: Ba3, on watch for possible downgrade
-- Current Rating: B3
The rating actions reflect the overall deterioration in the credit
quality of the transaction's underlying collateral portfolio.
As reported in the December 2006 trustee report, the weighted
average rating factor of the portfolio was 1670, significantly
higher than the transaction's trigger level of 450.
Similarly, the weighted average spreadof the portfolio stood at
1.61%, below the trigger level of 1.8%, and the weighted average
coupon was 8.02% compared to the trigger level of 8.25%. The
overcollateralization test for the Class A notes and the Class B
notes was reported to be 91.707%, versus the trigger level of
105.75%.
INFOR GLOBAL: Moody's Junks Rating on $1.275 Billion Senior Notes
-----------------------------------------------------------------
Moody's affirmed Infor Global Solutions Holdings Ltd.'s B3
corporate family rating and updated the company's individual debt
ratings in accordance with its refinancing of a $1.425 senior
subordinated bridge facility rated Caa2 with a combination of an
additional $200 million to its existing first lien term loan rated
B1 and a new $1.275 billion second lien term loan rated Caa2.
These are the rating actions:
-- $150 million Senior Secured Revolving Credit Facility due
6yr, to B1, LGD3, 31% from B1, LGD2, 25%
-- $2.44 billion Senior Secured First Lien due 6 yr, to B1,
LGD3, 31% from B1, LGD2, 25%
-- $1.275 billion Senior Secured Second Lien due, rated Caa2,
LGD5, 84%
This rating will be withdrawn:
-- $1.675 billion Senior Subordinated Notes, from Caa2, LGD5,
80%
Currently Infor is six months into the integration process of its
recent acquisition SSA Global Technologies and merger with
Extensity S.A.R.L., two companies that were digesting their own
acquisitions including Systems Union for Extensity.
Although Infor's acquisition strategy is to acquire companies with
complementary product lines and to maintain those product lines,
the company undertakes significant rationalization activities
including reducing headcount which remain in progress. Although
Moody's views positively Infor's past success at integrating
acquired firms, the relative size of the recent acquisitions, the
high leverage and management's stated intentions to continue to
grow through acquisitions constrain the company's B3 corporate
family rating.
Moody's continues to view positively the company's leading market
positions across multiple verticals within mid-market enterprise
software applications and its historically strong renewal rates in
excess of 90%. It appears that Infor has been able to achieve
substantial cost reductions in the current integration process
however it is too soon to determine if there has been any negative
effects on the business or customer base as a result.
Additionally, Moody's notes that the company faces growing threats
from larger competitors including SAP who are expanding their
presence in the mid-market space.
Infor Global Solutions Holdings Ltd., headquartered in Alpharetta,
Georgia and a Cayman Islands exempted company, is a global
provider of financial and enterprise applications software.
INTERSTATE BAKERIES: Has Until June 2 to File Chapter 11 Plan
-------------------------------------------------------------
The United States Bankruptcy Court for the Western District of
Missouri extended to June 2, 2007, Interstate Bakeries Corp. and
its debtor-affiliates' exclusive periods to file a plan of
reorganization. The Court also extended to Aug. 1, 2007, their
exclusive period to file and solicit acceptances of that plan.
J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP,
in Chicago, Illinois, asserted that the Debtors require additional
time to:
* negotiate additional long-term extensions with their
unions,
* refine their business plan,
* complete the valuation analysis and explore exit financing
alternatives necessary to develop the plan of
reorganization, and
* hire a new, long-term CEO and allow that individual, as well
as the two other new directors an opportunity to adequately
review the Debtors' operations.
Mr. Ivester assured the Court that there is no harm in granting
the requested extensions because they will be without prejudice
to the right of any party to request a termination of exclusivity
at any time.
Besides, Mr. Ivester continued, the Debtors' relations with their
various constituent groups -- the prepetition secured lender
steering group, the Creditors' Committee and the Equityholders'
Committee -- remain strong. The relationships have been fostered
to a great degree by the Debtors' attempts to keep the groups
well informed through regular meetings and prompt provision of
requested information.
Mr. Ivester noted that the Debtors' restructuring efforts have
borne fruit. Cost-cutting initiatives have reduced fixed costs by
approximately $440,000,000, and new products have been introduced
to reduce the historical decline in white bread sales.
In addition, the Debtors are in talks with their unions and have
completed or commenced negotiations of long-term extensions for
most of the 420 collective bargaining agreements with union-
represented employees.
Given these circumstances, the Debtors' request to extend their
Exclusive Periods is justified, Mr. Ivester told Judge Venters.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S. The Company and seven of
its debtor-affiliates filed for chapter 11 protection on
September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric
Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $1,626,425,000 in total assets and
$1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior
subordinated convertible notes due Aug. 15, 2014, on Aug. 12,
2004) in total debts. The Debtors' exclusive period to file a
chapter 11 plan expires on June 2, 2007. (Interstate Bakeries
Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000).
KYPHON INC: Prices $350 Million Convertible Senior Notes
--------------------------------------------------------
Kyphon Inc. disclosed the pricing of $175 million aggregate
principal amount of Convertible Senior Notes due 2012 and
$175 million aggregate principal amount of Convertible Senior
Notes due 2014 in a private offering to qualified institutional
buyers.
Upon the occurrence of certain events, the notes will be
convertible into cash up to the principal amount, and if
applicable, shares of common stock in respect of any conversion
value above the principal amount, based on an initial conversion
rate of 17.1951 shares of common stock per $1,000 principal amount
of notes, which is equivalent to an initial conversion price of
approximately $58.16 per share.
The company granted to the initial purchasers a 30-day option
to purchase up to $25 million aggregate principal amount of
additional notes of each series to cover overallotments.
Interest on the notes due 2012 will be paid semiannually at a rate
of 1% per year and interest on the notes due 2014 will be paid
semiannually at a rate of 1.25% per year. Holders of the notes
may require the company to repurchase the notes for cash equal to
100% of the principal amount to be repurchased plus accrued and
unpaid interest upon the occurrence of certain types of
fundamental changes.
In connection with the offering, the company entered into
convertible note hedge transactions which are intended to reduce
the potential dilution to the company's common stockholders upon
any conversion of the notes. The company also entered into
warrant transactions concurrently with the offering.
The company has been advised that, in connection with establishing
a hedge of the convertible note hedge and warrant transactions,
the counterparties to those transactions or their affiliates
expect to enter into various derivative transactions with respect
to the company's common stock concurrently with or shortly after
the pricing of the notes. The counterparties or their affiliates
may also enter into or unwind various derivative transactions with
respect to Kyphon's common stock and purchase or sell Kyphon's
common stock in secondary market transactions following the
pricing of the notes.
The company intends to use a portion of the net proceeds of
the offering to pay the cost of the convertible note hedge
transactions. This cost will be partially offset by proceeds that
the company expects to receive from the sale of the warrants.
If the initial purchasers exercise their option to purchase
additional notes, the company expects to use a portion of the
net proceeds from the sale of additional notes to enter into
additional convertible note hedge transactions.
The company may also enter into additional warrant transactions,
which would result in additional proceeds to the company. The
company intends to use the remaining net proceeds of the offering
to retire approximately $310 million of the $425 million senior
syndicated bank term loan used to complete the acquisition of St.
Francis Medical Technologies.
Headquartered in Sunnyvale, Calif., Kyphon Inc. (Nasdaq:KYPH)
develops and markets medical devices to restore spinal function
and low back pain. The company's products are also used in
balloon kyphoplasty for the treatment of spinal fractures caused
by osteoporosis or cancer
* * *
As reported in the Troubled Company Reporter on Dec. 26, 2006,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Sunnyvale, California-based medical device
manufacturer Kyphon Inc. The rating outlook is positive.
LANDMARK CDO: Moody's Lifts Rating on Class D-1 and D-2 Notes
-------------------------------------------------------------
Moody's Investors Service has upgraded the ratings on the notes
issued in 2001 by Landmark CDO Ltd., a high yield structured
finance collateralized debt obligation:
* The $20,000,000 Class B Second Priority Floating Rate Notes
Due 2013
-- Prior Rating: A1, on watch for possible upgrade
-- Current Rating: Aa1
* The $10,000,000 Class C-1 Third Priority Floating Rate Notes
Due 2013
-- Prior Rating: Baa2, on watch for possible upgrade
-- Current Rating: A2
* The $16,000,000 Class C-2 Third Priority Fixed Rate Notes Due
2013
-- Prior Rating: Baa2, on watch for possible upgrade
-- Current Rating: A2
* The $7,000,000 Class D-1 Fourth Priority Floating Rate Notes
Due 2013
-- Prior Rating: Ba2, on watch for possible upgrade
-- Current Rating: Baa3
* The $2,000,000 Class D-2 Fourth Priority Fixed Rate Notes Due
2013
-- Prior Rating: Ba2, on watch for possible upgrade
-- Current Rating: Baa3
The rating actions reflect the ongoing delevering of the
transaction, according to Moody's.
LA PETITE: Moody's Withdraws Long-Term Debt Ratings
---------------------------------------------------
Moody's Investors Service withdrew the long-term debt ratings of
La Petite Academy, Inc. after the acquisition of the company's
assets by A.B.C. Learning Centres Limited for $330 million and the
refinancing of the existing facilities on Jan. 26, 2007.
These ratings are affected:
-- The B2 rated Corporate Family Rating.
-- The Ba2, LGD2, 21% $20 million senior secured first lien
revolver due 2011;
-- The Ba2, LGD2, 21% $110 million senior secured first lien
term loan due 2012;
-- The B3, LGD4, 69% $85 million senior secured second lien
term loan due 2013.
A.B.C. Learning Centres Limited, based in Brisbane, Australia, is
the world's largest publicly traded provider of childcare services
and recently entered the US market through the acquisition of two
other US childcare companies: Learning Care Group Inc in January
2006 and Children's Courtyard in August 2006.
La Petite Academy, Inc., based in Chicago, Illinois, is the second
largest, for-profit, preschool provider in the United States. La
Petite offers educational, developmental and child care programs
that are available on a full-time or part-time basis for children
between six weeks and twelve years old.
LODGENET ENT: Unit Completes $15 Million StayOnline Acquisition
---------------------------------------------------------------
LodgeNet Entertainment Corp. reported that its wholly-owned
subsidiary LodgeNet StayOnline Inc., has completed the acquisition
of StayOnline Inc., including its technology and intellectual
property, for $15 million.
"The closing of this transaction is an important step forward in
the execution of our corporate strategy to expand our networks and
integrate high value solutions for our customers," said Scott C.
Petersen, LodgeNet President and CEO. "StayOnline's expertise and
solid relationships, combined with our significant resources will
allow us to enhance the array of IP-based solutions we can deliver
to our customers, all backed by our unparalleled nationwide
customer service organization. Connectivity is one of the most
essential services requested by hospitality customers, and this
transaction clearly creates a leading solution for hoteliers and
their guests."
A full-text copy of the company's Asset Purchase Agreement is
available for free at: http://ResearchArchives.com/t/s?195e
Headquartered in Sioux Falls, South Dakota, LodgeNet Entertainment
Corporation (NASDAQ:LNET) -- http://www.lodgenet.com/-- provides
cable, video-on-demand and video game entertainment services to
the lodging industry. As of Sept. 30, 2006, the company provided
interactive and basic cable television services to approximately
6,100 hotel properties serving over one million rooms.
The company's balance sheet, at Sept. 30, 2006, showed
$268.9 million in total assets and $331.3 million in total
liabilities, resulting in a $62.4 million stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on Nov. 2, 2006,
Moody's affirmed the 'B1' rating for both the Corporate
Family Rating and Probability of Default Rating of LodgeNet
Entertainment, the 'Ba1' rating for both the company's Senior
Secured Revolver and Senior Secured Term Loan, and the 'B2' rating
for the company's 9.5% Senior Sub Notes. Moody's said the outlook
is positive.
MAAX HOLDINGS: Reports 5.9% Sales Decrease in 2007 3rd Fiscal Qtr.
------------------------------------------------------------------
In its quarterly financial results for the third quarter ended
Nov. 30, 2006, MAAX Holdings Inc. had net sales for the third
quarter of fiscal year 2007 decreased 5.9% to $113.2 million from
net sales of $120.3 million for the third quarter of fiscal year
2006.
Operating income for the fiscal 2007 third quarter decreased by
$5.7 million, or 86%, from $6.7 million in the third quarter of
fiscal year 2006 to $1 million in the third quarter of fiscal year
2007.
Performance in Individual Sectors
Net sales decreased by $5.6 million, or 5.2% in our Bathroom
sector, compared with the third quarter of fiscal 2006, to reach
$101.4 million. The company's third quarter results have been
impacted by a noticeable slowdown in housing construction
activities in the United States which has been partly offset by
new products introduction and sale price increases. Sales were
also favorably impacted by the stronger Canadian dollar.
Operating income for the company's Bathroom Sector decreased by $7
million to $1.4 million for the third quarter of fiscal 2007, due
mainly to lower revenues combined with an increase in freight and
raw materials costs, primarily oil-based commodities and aluminum.
Sales from the company's Spa Sector were impacted by weak market
conditions in the third quarter. Net sales decreased $1.5 million
or 11% to $11.8 million for the third quarter of fiscal 2007.
Operating loss improved by $1.3 million, to $0.4 million for the
third quarter of fiscal 2007 in spite of lower revenues. The
company recorded $1.1 million of restructuring expenses last year
in relation with the closure of our plant in Beamsville and the
consolidation of our production at our Chandler, Arizona facility.
Financial position
Free cash flow for the third quarter of fiscal year 2007 and
for the nine months ended Nov. 30, 2006 were $17.8 million and
$1.5 million compared with $10.7 million and $36.8 million,
respectively, for the same periods last year. The improvement
in cash flow in the third quarter results mainly from a lower
investment in working capital due to seasonal factors as well as
specific initiatives undertaken to improve the company's working
capital. The decrease for the nine months ended Nov. 30, 2006
resulted principally from a lower contribution of working capital,
the expiration of our foreign exchange forward contracts and the
company's lower profitability. Total net debt of $463.4 million
as of Nov. 30, 2006 increased from Feb. 28, 2006 levels of
$457.1 million.
Exit of the Kitchen Cabinetry Sector
On Aug. 31, 2006, the company announced its plan to exit the
Cabinetry sector by the sale of all its assets. Currently,
substantially all of the long-lived assets and intangible assets
of the sector were sold. The company is now reporting its
Cabinetry sector as discontinued operations.
Subsequent Event
On Jan. 9, 2007, MAAX Corporation, Beauceland and certain
subsidiaries of Beauceland entered into a Credit and Guaranty
Agreement with Brookfield Bridge Lending Fund Inc., as agent and
lender, and the other lenders signatory thereto from time to
time. The New Credit Agreement provides for a $175 million term
loan and a $40 million revolving credit facility, which will
provide for ongoing working capital requirements and for general
corporate purposes. MAAX used amounts borrowed under the New
Credit Agreement to repay in full amounts owed to the lenders
under MAAX's senior secured credit facility.
In connection with the consummation of the transactions
contemplated by the New Credit Agreement, MAAX paid a commitment
fee to the lenders in the amount of $4.3 million, incurred
approximately $1.4 million of related fees and will expense
previously recorded financing costs related to MAAX's senior
secured credit facility in an amount equal to approximately
$4.2 million.
Amounts borrowed under the New Credit Agreement will mature in
June 2009. Interest on loans denominated in Canadian dollars will
bear interest in an amount equal to the Canadian Dollar bankers'
acceptance rate plus 4.35% per year, and will be payable monthly.
Interest on loans denominated in U.S. dollars will bear interest
at a rate based on a LIBOR rate plus 4.35% per year, and will be
payable monthly.
About MAAX Holdings
MAAX Holdings, Inc. -- http://www.maax.com/-- is a manufacturer
of bathroom products and spas for the residential housing market.
The company's products are available through plumbing wholesalers,
bath and spa specialty boutiques and home improvement centers.
The company currently operates 24 manufacturing facilities and
independent distribution centers throughout North America and
Europe.
MAAX Corporation is a subsidiary of Beauceland Corporation, itself
a wholly owned subsidiary of MAAX Holdings, Inc.
* * *
As reported in the Troubled Company Reporter on Jan. 18, 2007,
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Quebec-based bathroom fixtures manufacturer MAAX
Holdings Inc. to 'CCC-' from 'CCC+'.
At the same time, Standard & Poor's lowered its rating on the
company's senior discount notes to 'CC' from 'CCC-'. The long-
term corporate credit rating on MAAX's subsidiary, MAAX Corp., was
also lowered to 'CCC-' from 'CCC+'.
In addition, Standard & Poor's withdrew its 'CCC+' bank loan
rating, with a recovery rating of '3', on MAAX Corp.'s secured
bank facilities because they were repaid, and lowered the long-
term debt rating on the subsidiary's senior subordinated debt
notes to 'CC' from 'CCC-'.
The outlook for both companies is negative.
MAXIMUM SPINDLE: Case Summary & 29 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Maximum Spindle Utilization, Inc.
fka MSU, Inc.
635 South Mapleton Street
Columbus, IN 47201
Bankruptcy Case No.: 07-00634
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Maximum Engineering, Inc. 07-00635
Type of Business: The Debtor designs special machinery.
See http://www.msuinc.com/
Chapter 11 Petition Date:
Court: Southern District of Indiana (Indianapolis)
Judge: Basil H. Lorch III
Debtors' Counsel: Jeffrey M. Hester, Esq.
Lara B. O'Dell, Esq.
William J. Tucker & Associates, LLC
429 North Pennsylvania Street, Suite 100
Indianapolis, IN 46204-1816
Tel: (317) 833-3030
Fax: (317) 833-3031
Total Assets Total Debts
------------ -----------
Maximum Spindle Utilization, Inc. $2,008,249 $7,746,208
Maximum Engineering, Inc. $149,500 $1,907,820
A. Maximum Spindle Utilization, Inc.'s 20 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sterling Bank Guaranty $577,524
2550 North Loop West
Suite 600
Houston, TX 77092
Fifth Third Bank Potential claim $501,552
Capitol Center for rejection of
251 North Illinois executory contract
Suite 1000
Attn: Sales Support Manager
Indianapolis, IN 46204
Internal Revenue Service 941 Tax $468,930
P.O. Box 21126 (liens appear to
Philadelphia, PA 19114 have been filed):
Internal Revenue Service - 4th quarter 2004
P.O. Box 21126 $18,555
Philadelphia, PA 19114 - 2nd quarter 2005
$90,971
- 4th quarter 2005
$145,125
GE Capital Corporation Guaranty $446,645
635 Maryville Centre Drive
Suite 120
Saint Louis, MO 63141
Fleetguard, Inc. Business trade $157,660
P.O. Box 91864 debt
Chicago, IL 60693
MainSource Guaranty $81,670
Steigerwalt, Harold Promissory note $60,000
Haggard & Stocking Business trade $48,116
debt
Financial Pacific Accelerated balance $38,919
of remaining
payments due under
lease
Shelton, Jim Promissory note $24,400
Katz Sapper & Miller Accounting services $13,941
Austin Design Group Commissions $10,665
Excel Tool Business trade $10,298
debt
Van Ausdall & Farrar Business trade $8,869
debt
Gear Company of America Business trade $8,159
debt
Steigerwalt, Robert Reimbursement for $5,965
school expenses
and mileage
MeasureAll, Inc. Business trade $5,250
debt
Schasney, Jill Reimbursement for $5,137
school expenses
FirstComp Insurance Company Insurance services $3,869
Technical Equipment Business trade $3,649
debt
B. Maximum Engineering, Inc.'s Nine Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sterling Bank Guaranty $577,524
2550 North Loop West
Suite 600
Houston, TX 77092
GE Capital Corporation Guaranty $446,645
635 Maryville Centre Drive
Suite 120
Saint Louis, MO 63141
National Bank of Collateralized $483,037
Indianapolis guaranty
107 N. Pennsylvania Street
Suite 700
Indianapolis, IN 46204
MainSource Bank Guaranty $81,670
595 Banta Street
Franklin, IN 46131
Internal Revenue Service 941 Tax $52,820
P.O. Box 21126 (liens appear to
Philadelphia, PA 19114 have been filed):
- 1st quarter 2005
$12,430
- 2nd quarter 2005
$18,392
- 4th quarter 2005
$20,563
Katz Sapper & Miller Accounting services $654
800 E. 96th Street
Suite 500
Indianapolis, IN 46240
Indiana Dept. of Revenue Withholding tax Unknown
Compliance Division
100 North Senate Street
Room N203
Indianapolis, IN 46204
Indiana Dept. of Workforce Unemployment tax Unknown
Development
10 North Senate Avenue
Room SE106
Indianapolis, IN 462042277
Premier Capital Corporation Guaranty Unknown
151 North Delaware Street
Suite 750
Indianapolis, IN 46204
MERIDIAN AUTOMOTIVE: Feb. 12 Set as Administrative Claims Bar Date
------------------------------------------------------------------
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware fixes Feb. 12, 2007, as the Administrative
Claims Bar Date.
All applications for final allowance of fees of Reorganized
Meridian Automotive Systems Inc. and its debtor-affiliates or the
Official Committee of Unsecured Creditors' bankruptcy
professionals and all other requests for payment of
Administrative Expense Claims must be filed with the Clerk of the
Bankruptcy Court and served on the Reorganized Debtors, so as to
be actually received on or before Feb. 12 by:
* Meridian Automotive Systems, Inc.
999 Republic Drive, Suite 200
Allen Park, MI 48101
Fax No. (313) 253-4026
* Sidley Austin, LLP
One South Dearborn Street
Chicago, IL 60603
Attn: Paul S. Caruso
Fax No. (312) 853-7036
* Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
100 West Street, 17th Floor
Wilmington, DE 19801
Attn: Robert S. Brady
Fax No. (302) 571-1253
* Office of the United States Trustee
J. Caleb Boggs Federal Building
844 King Street, Suite 2207
Lockbox 35
Wilmington, DE 19801
Attn: Joseph J. McMahon, Jr.
Fax No. (302) 573-6497
Any Administrative Expense Claim that is not filed and served by
the Administrative Claims Bar Date will be discharged and forever
barred.
Headquartered in Dearborn, Mich., Meridian Automotive Systems
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. Judge Walrath has confirmed the Revised Fourth
Amended Reorganization Plan of Meridian. (Meridian Bankruptcy
News, Issue No. 49; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
MORGAN STANLEY: Moody's Holds Low-B Ratings on $38.7 Mil. Certs.
----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of four classes and
affirmed the ratings of 12 classes of Morgan Stanley Dean Witter
Capital I Trust 2002-TOP7, Commercial Mortgage Pass-Through
Certificates, Series 2002-TOP7:
-- Class A-1, $125,851,132, Fixed, affirmed at Aaa
-- Class A-2, $572,335,000, Fixed, affirmed at Aaa
-- Class X-1, Notional, affirmed at Aaa
-- Class X-2, Notional, affirmed at Aaa
-- Class B, $24,236,000, Fixed, affirmed at Aaa
-- Class C, $29,083,000, Fixed, upgraded to Aa1 from A1
-- Class D, $7,271,000, Fixed, upgraded to Aa3 from A2
-- Class E, $7,271,000, Fixed, upgraded to A1 from A3
-- Class F, $12,118,000, Fixed, upgraded to Baa1 from Baa2
-- Class G, $7,271,000, WAC, affirmed at Baa3
-- Class H, $10,906,000, Fixed, affirmed at Ba1
-- Class J, $8,483,000, Fixed, affirmed at Ba2
-- Class K, $7,271,000, Fixed, affirmed at Ba3
-- Class L, $4,847,000, Fixed, affirmed at B1
-- Class M, $4,847,000, Fixed, affirmed at B2
-- Class N, $2,424,000, Fixed, affirmed at B3
As of the Jan. 16, 2007 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 14.3%
to $830.6 million from $969.4 million at securitization.
The Certificates are collateralized by 137 loans ranging in size
from less than 1% to 7.4% of the pool with the top 10 loans
representing 29.4% of the pool. The pool includes three shadow
rated loans, which represent 11.7% of the current outstanding
balance. Eleven loans, representing 7.6% of the pool, have
defeased and are collateralized by U.S. Government securities.
Three loans have been liquidated from the trust, resulting in
realized losses of approximately $3.3 million. Currently there
are two loans, representing 2.3% of the pool, in special
servicing. Moody's is estimating aggregate losses of
approximately $1.7 million for the specially serviced loans.
Thirteen loans, representing 6.5% of the pool, are on the master
servicer's watchlist.
Moody's was provided with full year 2005 and partial year 2006
operating results for approximately 97.1% and 77.6%, respectively,
of the pool. Moody's weighted average loan to value ratio for the
conduit component is 68.8%, compared to 71.1% at Moody's last full
review in September 2005 and compared to 76.2% at securitization.
Although the overall performance of the pool has improved since
securitization, LTV dispersion has increased. Based on Moody's
analysis, 7.3% of the conduit component has a LTV greater than
100%, compared to 3.6% at last review and compared to 0.0% at
securitization. Moody's is upgrading Classes C, D, E and F due to
increased credit support, improved pool performance and
defeasance.
The largest shadow rated loan is the Woodfield Mall Loan at
$61.8 million (7.4%), which represents a participation interest in
a $244.3 million first mortgage loan secured by the borrower's
interest in Woodfield Mall. Woodfield Mall is a 2.2 million
square foot super-regional mall located 25 miles northwest of
downtown Chicago in Schaumburg, Illinois. Anchor stores include
Nordstrom, Marshall Field's, Lord & Taylor, J.C. Penney and Sears.
Performance has improved since securitization due to increased
revenues and stable expenses. Comparable in-line sales were
$533 per square foot for calendar year 2005, compared to $510 per
square foot in calendar year 2004. The borrower is a joint
venture between the California Public Employees' Retirement System
and General Motors Pension Trust. The property is also encumbered
by a B Note which is held outside the trust. Moody's current
shadow rating is Aaa, compared to Aa1 at last review.
The second shadow rated loan is the Renaissance Terrace Apartments
Loan at $18.8 million (2.3%), which is secured by a 285-unit
luxury multifamily property located in North Brunswick, New
Jersey. As of December 2005 the property was 91% leased, compared
to 94.4% at last review and compared to 97.2% at securitization.
The property's performance has been impacted by increased
expenses. Moody's current shadow rating is Baa3, compared to Baa1
at last review.
The third shadow rated loan is the Route 9 Plaza Loan at
$16.8 million (1.9%), which is secured by a 265,000 square foot
retail center located eight miles southeast of New Brunswick in
Old Bridge, New Jersey. The property is 100% occupied, the same
as at last review and at securitization. The center is anchored
by Wal-Mart and Home Depot. Moody's current shadow rating is
Baa3, the same as at last review.
The top three conduit loans represent 8.9% of the outstanding pool
balance. The largest conduit loan is the Plaza di Northridge Loan
at $27.6 million (3.3%), which is secured by a 159,000 square foot
community shopping center located in Northridge, California. The
property, which is 99% occupied. Anchors include DSW Shoe
Warehouse, Linens-n-Things and Gelson's Market. Moody's LTV is
77.5%, compared to 81.4% at last review.
The second largest conduit loan is the Midtown Square Shopping
Center Loan at $26.5 million (3.2%), which is secured by 193,000
square feet of a 557,000 square foot power retail center located
in Troy, Michigan. The collateral is shadow anchored by Target,
Home Depot and Kohl's and is anchored by Farmer Jack. Moody's LTV
is 81.4%, compared to 82.6% at last review.
The third largest conduit loan is the 520-526 Route 17 Paramus
Loan at $19 million (2.3%), which is secured by a 120,000 square
foot retail center located in Bergen County, New Jersey. The
property is 100.0% leased to Home Depot under a lease expiring in
2015. Moody's LTV is 74.1%, compared to 75.3% at last review.
The pool's collateral is a mix of retail, multifamily, office and
mixed use, industrial and self storage and U.S. Government
securities. The collateral properties are located in 28 states
and Washington, D.C. The highest state concentrations are
California, New Jersey, Illinois, Georgia and Michigan. All of
the loans are fixed rate.
MORGAN STANLEY: Moody's Holds Junk Rating on Class M Certificates
-----------------------------------------------------------------
Moody's Investors Service upgraded the rating of one class and
affirmed the ratings of 16 classes of Morgan Stanley Capital I
Inc., Commercial Mortgage Pass-Through Certificates, Series
2003-TOP11:
-- Class A-1, $86,333,976, Fixed, affirmed at Aaa
-- Class A-2, $175,000,000, Fixed, affirmed at Aaa
-- Class A-3, $165,114,000, Fixed, affirmed at Aaa
-- Class A-4, $561,379,000, Fixed, affirmed at Aaa
-- Class X-1, Notional, affirmed at Aaa
-- Class X-2, Notional, affirmed at Aaa
-- Class B, $31,366,000, WAC, upgraded to Aa1 from Aa2
-- Class C, $32,859,000, WAC, affirmed at A2
-- Class D, $13,443,000, WAC, affirmed at A3
-- Class E, $14,936,000, WAC, affirmed at Baa1
-- Class F, $7,468,000, WAC, affirmed at Baa2
-- Class G, $7,468,000, WAC, affirmed at Baa3
-- Class H, $11,948,000, Fixed, affirmed at Ba2
-- Class J, $2,988,000, Fixed, affirmed at B1
-- Class K, $2,987,000, Fixed, affirmed at B2
-- Class L, $2,987,000, Fixed, affirmed at B3
-- Class M, $2,987,000, Fixed, affirmed at Caa1
As of the Jan. 16, 2007 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 5.3%
to $1.1 billion from $1.2 billion at securitization.
The Certificates are collateralized by 184 mortgage loans ranging
in size from less than 1% to 7.5% of the pool, with the 10 largest
loans representing 29.2% of the pool. The pool includes six
shadow rated loans, representing 15.3% of the pool. Six loans,
including the pool's largest loan, the John Hancock Tower Loan at
$85 million (7.5%), have defeased and are secured by U.S.
Government securities. The defeased loans represent 10.1% of the
pool.
Twenty two loans, representing 9.6% of the pool, are on the master
servicer's watchlist. No loans have been liquidated from the pool
and currently there is one loan, the Troy Technology Park
Portfolio Loan at $24.1 million (2.1%), in special servicing. The
loan, which became REO in January 2005, is secured by 11
flex/industrial buildings totaling 426,500 square feet. The
properties are located in an industrial park in Troy, Michigan and
currently have an overall occupancy rate of 66%. The portfolio is
under contract for sale with an expected closing during the second
quarter of 2007. Moody's estimates a loss of approximately
$2.5 million on this loan.
Moody's was provided with full-year 2005 and partial 2006
operating results for 95.2% and 84.7%, respectively, of the pool.
Moody's loan to value ratio for the conduit component is 72.1%,
compared to 77.2% at Moody's last full review in March 2005 and
compared to 76.8% at securitization. Moody's is upgrading Class B
due to improved overall pool performance and defeasance.
The largest shadow rated loan is the Center Tower Loan at
$68.7 million (6.1%), which is secured by a 462,000 square foot
Class A office building located in Costa Mesa (Orange County),
California. As of October 2006 the property was 89.8% leased,
compared to 91.5% at last review. The largest tenants are Latham
& Watkins, Sheppard Mullin Richter and Lewis, Bisbois, Bisgaar.
Moody's current shadow rating is A1, compared to A3 at last
review.
The second largest shadow rated loan is the Alabama-Arizona
Warehouse Loan at $26.8 million (2.4%), which is secured by two
industrial properties totaling 1.5 million square feet. One
property is located in Montgomery, Alabama and the other is in
Glendale, Arizona. The loan was specially serviced from January
2004 through January 2006 due to the bankruptcy of KB Toys Inc.,
which leased 100% of both buildings. The company emerged from
bankruptcy in August 2005 and the leases were assumed by KB's
parent company. The leases extends through April 2018. Moody's
current shadow rating is Ba2, the same as at last review.
The remaining four shadow rated loans comprise 6.8% of the pool.
The 516 West 34th Street Loan at $23 million (2%) is shadow rated
A2, compared to Baa1 at last review. The ITT Gilfillan Building
Loan at $19.8 million (1.8%) is shadow rated A1, compared to Baa2
at last review. The Rexmere Village MHP Loan at $19.5 million
(1.7%) is shadow rated Aa3, the same as at last review. The 9401
Wilshire Boulevard Loan at $15.2 million (1.3%) is shadow rated
Baa1, compared to Baa2 at last review.
The top three conduit loans represent 5.1% of the outstanding pool
balance. The largest conduit loan is the 1333 Broadway Loan at
$24.4 million (2.2%), which has a Moody's LTV of 82.9%, compared
to 80.9% at last review. The second largest conduit loan is the
Monterey Pines Loan at $17.5 million (1.6%), which has a Moody's
LTV of 71.4%, compared to 69.7% at last review. The third largest
conduit loan is the Crown Point Corporate Center Loan at
$16.2 million (1.4%), which has a Moody's LTV of 76.9%, compared
to 92.2% at last review.
The pool's collateral is a mix of retail, office and mixed use,
industrial and self storage, multifamily, U.S. Government
securities, land/parking garage and lodging. The collateral
properties are located in 35 states. The highest state
concentrations are California, New Jersey, New York, Illinois and
Arizona. All of the loans are fixed rate.
MORGAN STANLEY: S&P Lifts Ratings on Class E and F Certificates
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on five
classes of commercial mortgage pass-through certificates from
Morgan Stanley Dean Witter Capital I Trust 2001-TOP1.
Concurrently, the ratings on six classes from this transaction
were affirmed.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
As of the Jan. 16, 2007, remittance report, the trust collateral
consisted of 136 mortgage loans with an aggregate principal
balance of $793.3 million, compared with 161 loans totaling
$1.16 billion at issuance. The master servicer, Wells Fargo Bank
N.A., reported primarily year-end 2005 financial information for
96% of the pool.
Based on this information and excluding $85.8 million in loans for
which the collateral is defeased, Standard & Poor's calculated a
weighted average debt service coverage of 1.49x, down from 1.63x
at issuance. With the exception of one loan in foreclosure that
is with the special servicer, Capmark Finance Inc., all the loans
in the pool are current. An appraisal eduction amount of
$3.2 million related to the aforementioned delinquent loan is in
effect, as discussed below. To date, the trust has experienced
seven losses totaling $11.8 million, or 1% of initial pool
balance.
The top 10 real estate exposures have an aggregate outstanding
balance of $301 million and a weighted average DSC of 1.32x, down
significantly from 1.50x at issuance. Both DSC figures exclude
the ninth-largest loan for nonreporting. The DSC levels for three
of the top 10 loans are significantly below issuance levels and
are on the master servicer's watchlist, as discussed below.
Additionally, while the sixth-largest loan is not on the
watchlist, a major tenant is rolling in 2008. Standard & Poor's
reviewed the property inspection reports provided by Wells Fargo,
and all but one of the properties were said to be in "good" or
"excellent" condition. The remaining property was reported to be
in "fair" condition.
One of the top 10 real estate exposures exhibited credit
characteristics consistent with those of investment-grade
obligations at issuance and continues to do so. Federal Express
World Tech, the second-largest real estate exposure in the pool,
has a trust balance of $42 million (5%) and is secured by a
390,400-sq.-ft. class A suburban office building in Collierville,
Tennessee.
The reported DSC was 1.77x and occupancy was 100% as of September
2006. Standard & Poor's adjusted net cash flow is comparable to
its level at issuance.
Robinson Plaza, a 177,200-sq.-ft. suburban office building in
Robinson Township, Pennsylvania, secures the sole loan with the
special servicer. The loan of $8.2 million (1%) has a total
exposure of $10.3 million, and the special servicer is in the
process of foreclosing on the property. The loan was transferred
to the special servicer in January 2005 due to the borrower's
inability to service the debt. Occupancy was reported at 50% as
of April 2006. The special servicer plans to list the property
for sale once foreclosure proceedings are finalized. An ARA of
$3.2 million is in effect.
The master servicer's watchlist includes 24 loans totaling
$173.3 million (22%). Three of the top 10 loans are on the
watchlist and represent approximately 51% at $88.6 million of the
loans on the watchlist.
These are the deatail:
-- Santa Monica Place, the largest exposure, has a current
balance of $80 million and is secured by a 560,400-sq.-ft.
enclosed retail mall, of which 277,200 sq. ft. is the
trust's collateral. The loan was placed on the watchlist
due to a low DSC of 0.33x as of March 2006 and low
occupancy of 49% as of September 2006. According to Wells
Fargo, the borrower is planning to completely renovate and
retenant the mall. Construction activities are scheduled
to commence in early 2008 and are expected to be completed
in late 2009.
-- South Oaks Apartments, one of the five cross-
collateralized, cross-defaulted loans at $5 million (1%)
that constitute the third-largest exposure, is on the
watchlist. The loan is secured by a 496-unit garden-style
apartment complex in Houston, Texas, and was placed on the
watchlist because reported DSC was 1.05x and occupancy was
77% as of December 2005. As of September 2006, while
reported occupancy remained just below 80%, DSC had
improved to 1.43x.
-- Grand Design Building, one of the three remaining cross-
collateralized, cross-defaulted loans that make up the
fifth-largest exposure at $28 million (4%), is on the
watchlist due to a low reported DSC of 1.01x as of
Dec. 31, 2006. This loan is secured by a 51,200-sq.-ft.
research/flex industrial building in Sterling Heights,
Michigan. The property is 100% leased to a single tenant.
-- Although the sixth-largest exposure at $23.6 million (3%),
Metro Center, is not on the watchlist, the lease for its
largest tenant, which occupies 82% of the net rentable
area, will expire in July 2008. The borrower for the
291,700 sq. ft. class A office building in Hartford,
Connecticut, reported a DSC of 1.26x and occupancy of 100%
as of September 2006.
The remaining loans on the watchlist have low occupancies, low
DSCs, or upcoming lease expirations.
Standard & Poor's stressed various assets in the mortgage pool as
part of its analysis, including those with the special servicer,
on the watchlist, or otherwise considered credit-impaired. The
resultant credit enhancement levels adequately support the raised
and affirmed ratings.
Ratings Raised
Morgan Stanley Dean Witter
Capital I Trust 2001-TOP1
Commercial Mortgage Pass-Through
Certificates Series 2001-Top1
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
B AA+ AA 15.95%
C AA- A 11.94%
D A A- 10.49%
E BBB- BB+ 7.02%
F BB+ BB 5.75%
Ratings Affirmed
Morgan Stanley Dean Witter
Capital I Trust 2001-TOP1
Commercial Mortgage Pass-Through
Certificates Series 2001-Top1
Class Rating Credit enhancement
----- ------ ------------------
A-2 AAA 20.33%
A-3 AAA 20.33%
A-4 AAA 20.33%
G B 3.38%
X-1 AAA N/A
X-2 AAA N/A
N/A -- Not applicable.
MORTGAGE LENDERS: Files for Bankruptcy Protection in Delaware
-------------------------------------------------------------
Mortgage Lenders Network USA Inc. filed for chapter 11 protection
in the U.S. Bankruptcy Court for the District of Delaware on
Feb. 5, 2007.
Mortgage Lenders, the 15th-largest subprime lender according to
National Mortgage News, laid off more than 800 employees late last
year.
Company president and co-founder Mitchell L. Heffernan said last
month that the company did not properly price an A-plus-plus
product it introduced last year totaling $600 million of mispriced
loans.
The company's license to offer loans has been suspended by
regulators in Connecticut and other states, Kenneth R. Gosselin of
The Hartford Courant said.
Connecticut Banking Commissioner Howard Pitkin issued last month a
temporary order against the company for allegedly failing to fund
93 loans in Connecticut and 1,400 loans in other states for a
possible fine of up to $7 million, Lingling Wei and Marie
Beaudette of Dow Jones report.
Daniel Scouler of Scouler Andrews LLC is the company's chief
restructuring officer.
Middletown, Conn.-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering
a full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The Debtor has a
current servicing portfolio in excess of $19 billion
with over 100,000 accounts.
MORTGAGE LENDERS: Case Summary & 19 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Mortgage Lenders Network USA, Inc.
aka You Would Approve (Service Mark)
aka In Everyone's Best Interest (Service Mark)
dba Family Credit Connection
dba Amerifund
dba Lenders Network
Middlesex Corporate Center
213 Court Street, 11th Floor
Middletown, CT 06457
Tel: (860) 344-5700
Fax: (860) 344-5707
Bankruptcy Case No.: 07-10146
Type of Business: The Debtor is a privately held company offering
a full range of Alt-A/Non-Conforming and
Conforming loan products through its retail and
wholesale channels. The Debtor has a current
servicing portfolio in excess of $19 billion
with over 100,000 accounts.
See http://www.mlnusa.com/
Chapter 11 Petition Date: February 5, 2007
Court: District of Delaware (Delaware)
Judge: Peter J. Walsh
Debtor's Counsel: James E. O'Neill, Esq.
Laura Davis Jones, Esq.
Pachulski Stang Ziehl Young
Jones & Weintraub LLP
P.O. Box 8705
919 North Market Street, 16th Floor
Wilmington, DE 19899-8705
Tel: (302) 652-4100
Fax: (302) 652-4400
Debtor's Notice
Claims and
Balloting Agent: The Trumbull Group, LLC
dba Wells Fargo Trumbull
4 Griffin Road North
Windsor, CT 06095
Tel: (860) 687-5401
Fax: (860) 683-8697
http://www.trumbullgroup.com/
Debtor's Chief
Restructuring
Officer: Scouler Andrews, LLC
225 West Wacker Drive, Suite 1550
Chicago, IL 60606
Tel: (312) 997-1000
Fax: (312) 977-1009
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Merrill Lynch Bank USA Repurchase $36,564,300
c/o James B. Cason Requests/Warehouse
4 World Financial Center Deficiency
22nd Floor
New York, NY 10080
Tel: (212) 449-1219
Fax: (212) 449-9418
Ixis Real Estate Capital Inc. MSR Financing $25,000,000
c/o Gary DiGiuseppe
9 West 57th Street, 36th Floor
New York, NY 10019
Tel: (212) 891-6263
Fax: (212) 591-5777
Wachovia Bank, N.A. Judgment $7,650,134
c/o Steven S. Rand, Esq.
Bruce S. Goodman, Esq.
Eichner, Ellman & Krause LLP
575 Lexington Avenue
New York, NY 10022
Tel: (212) 223-0400
Fax: (212) 753-0396
Goldman Sachs Mortgage Co. Repurchase Requests $4,710,454
c/o Anthony Preisano Warehouse Deficiency
85 Broad Street, 26th Floor
New York, NY 10004
Tel: (212) 855-0393
Fax: (212) 902-3000
Greenwich Capital Repurchase Requests $3,967,685
Financial Products Warehouse Deficiency
c/o Anthony Palmisano
600 Steamboat Road
Greenwich, CT 6830
Tel: (203) 422-4718
Fax: (203) 629-2514
Duffy White Construction, LLC Trade Debt $1,862,094
P.O. Box 838
Ardmore, PA 19003
Tel: (215) 240-2424
Credit-Based Asset Servicing & Repurchase Requests $973,040
Securitization LLC Deficiency
c/o Richard Harper
335 Madison Avenue, 19th Floor
New York, NY 10017
Tel: (212) 850-7719
Countrywide Home Loans, Inc. Repurchase Requests/ $930,400
c/o Michael Schloessman, V.P. Trade Debt
4500 Park Granda CH-42
Calabasas, CA 91302
Tel: (818) 225-3000
Fidelity National Tax Trade Debt $744,850
Service, Inc. dba
LSI Tax Services
P.O. Box 60000
File 74543-8400
San Francisco, CA 94160
Tel: (626) 345-2010
Fax: (949) 442-2222
Freddie Mac Repurchase Requests/ $565,705
Bank One Plaza Trade Debt
Chicago, IL 60673
Tel: (571) 382-3286
Facilitec, Inc. Trade Debt $532,963
P.O. Box 60006
Phoenix, AZ 850820006
Tel: (602) 275-0101
Fax: (602) 275-0202
MTM Technologies, Inc. Trade Debt $422,686
P.O. Box 27986
New York, NY 100877982
Tel: (203) 975-3717
Fax: (203) 975-3701
Tek Systems, Inc. Trade Debt $359,287
P.O. Box 198568
Atlanta, GA 303848568
Tel: (800) 435-2029
Freese Construction Trade Debt $278,665
Company, Inc.
1355 Terrell Mill Road
Building 1470, Suite 100
Marietta, GA 30067
Tel: (770) 693-9102
Fax: (770) 850-9494
Fidelity Information Services Trade Debt $270,987
601 Riverside Drive
Jacksonville, FL 32204
Christopher N. Goodrich Commissions $202,199
25 Sleepy Hollow Road
Sandy Hook, CT 06482
Tel: (203) 364-0649
Siemens Building Trade Debt $176,281
Technologies Inc.
7850 Collections Center Drive
Chicago, IL 60693
The Master's Construction Corp. Trade Debt $174,867
11 West Main Street
P.O. Box 1037
Avon, CT 06001
Tel: (860) 677-2221
Fax: (186) 067-6868
Eric Regh Trade Debt $173,209
110 Greene Street
Suite 1105
New York, NY 10012
Tel: (212) 219-3315
Fax: (212) 219-1846
NATIONAL STEEL: Fitch Rates $450 Mil. 9.875% Perpetual Notes at BB
------------------------------------------------------------------
Fitch Ratings has assigned a BB debt rating to National Steel
S.A.'s $450 Mil. 9.875% Perpetual Notes.
National Steel is a holding company that is 100% indirectly
controlled by Brazil's Steinbruch family. National Steel's sole
asset consists of 100% of the redeemable preferred shares of Acos.
Acos, in turn, is a holding company that owns 100% of Vicunha.
Vicunha is also a holding company that owns 42.74% of the common
shares and controlling interest in Brazilian steel producer
Companhia Siderurgica Nacional.
Fitch Ratings has removed ratings for CSN and related issuances
from Rating Watch Negative.
Companhia Siderurgica Nacional
-- CSN foreign currency and local currency Issuer Default
Ratings'BBB-';
-- Unsecured debt obligations issued by CSN Islands entities
'BBB-'; and,
-- National scale rating and local debenture issuances
'AA(bra)'.
The above ratings have a Stable Rating Outlook.
CSN Export Trust
-- Series 2003-1 'BBB';
-- Series 2004-1 'BBB'; and,
-- Series 2005-1 'BBB'.
National Steel S.A.
-- $450 million 9.875% perpetual notes: 'BB'
These rating actions reflect the fact that CSN was not successful
with its proposed plan to acquire the Corus Group Plc. The
Negative Rating Watch reflected the concern that if CSN had been
successful in its attempt to buy Corus, a material portion of the
transaction could have been funded with CSN's cash and proceeds
from debt issuances.
Fitch's 'BB-' rating on Corus, which was placed on Rating Watch
Negative on Oct. 26, 2006, due to a financing structure proposed
by the successful bidder, India-based Tata Steel Limited, that
would burden Corus with much of the acquisition debt. Tata's
final bid for Corus reached $12 billion.
With annual production capacity of 5.6 million tons of crude steel
and 5.1 million tons of rolled products, CSN ranks as one of the
largest steel producers in Latin America. The company's fully
integrated steel operations, located in the state of Rio de
Janeiro in Brazil, produce steel slabs and hot- and cold-rolled
coils and sheets for the automobile, construction and appliance
industries, among others.
NATIONAL WINE: Debt Redemption Cues Moody's to Withdraw Ratings
---------------------------------------------------------------
Moody's Investors Service withdrew the ratings for National Wine &
Spirits, Inc. because all of its public debt was redeemed on
Jan. 23, 2007.
These ratings were withdrawn:
-- B3 rating for the approximately $77 million 10.125% senior
unsecured notes, due January 2009; LGD4, 50%
-- B2 Corporate Family Rating
-- B2 Probability of Default Rating
National Wine & Spirits is a privately held distributor of
beverage alcohol in the United States.
NELLSON NUTRACEUTICAL: Milbank Wins Enterprise Valuation Trial
--------------------------------------------------------------
Milbank, Tweed, Hadley & McCloy LLP won a dramatic victory for
creditors in an uncommon and exceedingly complex business
valuation trial that was part of a larger bankruptcy proceeding in
historically debtor-friendly Delaware Bankruptcy Court.
Milbank Tweed was the lead trial counsel in the hotly contested
valuation proceeding and represented UBS AG - Stamford Branch.
Nellson Nutraceutical, Inc., the Debtor that filed for Chapter 11
protection on Jan. 28, 2006, hired its own valuation expert.
Los Angeles-based Milbank partner and lead trial attorney Linda
Dakin-Grimm, Esq., commented, "It is very unusual for a Chapter 11
enterprise valuation dispute to go to trial. It is also
remarkable for a bankruptcy judge to disqualify Debtor's valuation
expert along the way."
The trial was held in order to determine the "enterprise value" of
the company in order for the company to develop and file a Chapter
11 reorganization plan.
To conduct the valuation, the company hired their own valuation
expert, while three different creditor groups, including UBS AG -
Stanford Branch as agent for the company's secured lenders, each
hired its own independent expert. The four experts based each of
their valuations on the company's May 2006 long-term business
plan, using valuation methodologies to determine the company's
enterprise value.
According to the 105-page opinion of the Honorable Christopher S.
Sontchi of the U.S. Bankruptcy for the District of Delaware,
evidence presented at the 23-day valuation trial "overwhelmingly
established that the Debtors' business plan had been manipulated
at the direction of and in cooperation with the Debtors'
controlling shareholder to bolster the value of Debtors' business
solely for the purposes of this litigation."
Judge Sontchi also reprimanded the expert hired by the company and
disqualified his valuation, which was $60 to $90 million higher
than that of the other valuation experts.
In his Jan. 18, 2007 opinion, Judge Sontchi valued the company at
$320 million, which was significantly less that what the Debtors
had asserted and not enough for Fremont Partners, which owns
Nellson Nutraceutical, to maintain its equity stake in the
company.
Milbank partners Gregory A. Bray, Esq. and Thomas R. Kreller, Esq.
represent UBS AG - Stamford Branch in the Chapter 11 proceedings.
Milbank associate Jason B. Baim, Esq. worked with Ms. Dakin-Grimm
on the valuation trial. James J. Holman, Esq. and Richard W.
Riley, Esq. of the Philadelphia-based Duane Morris LLP served as
local counsel to UBS AG - Stamford Branch.
About Milbank Tweed
Based in New York City, Milbank, Tweed, Hadley & McCloy LLP --
http://www.milbank.com/-- is a global law firm that for more than
140 years has provided innovative legal solutions in many of the
world's largest, most complex, "first-ever" corporate transactions
and litigation. The company's transactional expertise includes
capital markets, corporate finance and transactions, project
finance, acquisition finance, and other major fields of law
practice. Milbank litigation teams resolve disputes involving
mergers and acquisitions, proxy battles, financings and securities
offerings, intellectual property, white collar crime, and
corporate restructurings, among others.
About Nellson Nutraceutical
Based in Irwindale, California, Nellson Nutraceutical, Inc.,
formulates, makes and sells bars and powders for the nutrition
supplement industry. The Debtors filed for chapter 11 protection
on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski,
Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent
the Debtors in their restructuring efforts. Lawyers at Young,
Conaway, Stargatt & Taylor, LLP, represent an informal committee
of which General Electric Capital Corporation and Barclays Bank
PLC are members. In its Schedules of Assets and Liabilities filed
with the Court, Nellson Nutraceutical reports $312,334,898 in
total assets and $345,227,725 in total liabilities when it filed
for bankruptcy.
NEW YORK WESTCHESTER: Files Schedules of Assets and Liabilities
---------------------------------------------------------------
New York Westchester Square Medical Center delivered its Schedules
of Assets and Liabilities to the U.S. Bankruptcy Court for the
Southern District of New Jersey disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $22,816,000
B. Personal Property $26,467,477
C. Property Claimed
as Exempt
D. Creditors Holding $14,083,327
Secured Claims
E. Creditors Holding $3,815,832
Unsecured Priority Claims
F. Creditors Holding $17,602,929
Unsecured Nonpriority
Claims
----------- -----------
Total $49,283,477 $35,502,088
Headquartered in Bronx, New York, New York Westchester Square
Medical Center -- http://www.nywsmc.org/-- is a not-for-profit,
community acute care hospital and certified stroke center that has
served a working class population in the Bronx community since
1929. Its primary facility, located at 2475 St. Raymond Avenue,
Bronx, New York 10461, houses 205 beds and provides acute adult
medical and surgical care, emergency medicine and ambulatory
services. NYWSMC is a membership corporation whose members are
selected by the New York-Presbyterian Healthcare System, Inc.
The company filed for chapter 11 protection on Dec. 19, 2006
(Bankr. S.D.N.Y. Case No. 06-13050). Burton S. Weston, Esq., at
Garfunkel, Wild & Travis, P.C., represents the Debtor. Louis A.
Scarcella, Esq., and Robert C. Yan, Esq., at Farrell Fritz PC,
represent the Official Committee Of Unsecured Creditors. The
Debtor's exclusive period to file a chapter 11 plan expires on
Apr. 18, 2007.
NEW YORK WESTCHESTER: Wants Weiser LLP as Accountants
-----------------------------------------------------
New York Westchester Square Medical Center asks the U.S.
Bankruptcy Court for the Southern District of New York for
authority to employ Weiser LLP as its accountants and financial
advisors.
Weiser LLP is expected to:
a) update all financial information of the Debtor as of the
chapter 11 filing and assist in the review of the accuracy
of the Debtor's schedules of assets and liabilities and
statement of financial affairs filed with the Court;
b) assist in the preparation of required monthly operating
reports to be filed with the Court;
c) assist the Debtor in the preparation and review of cash
collateral or dip financing projections, financial
statements, long-term cash flow projections, employee
retention and incentive programs, and provide expert
testimony;
d) assist in the review of executory contracts and the
financial impact on the Debtor's ability to reorganize,
including an analysis related to the benefits of assuming or
rejecting certain executory contracts;
e) attend meetings with the parties-in-interest and their
respective advisors in which the Debtor's financing or
financial outlook are a central focus;
f) evaluate the Debtor's business practices to determine ways
to the Debtor could reduce costs and improve the efficiency
of business operations and assist with overall financial
planning, modeling and budgeting;
g) render any assistance as may be necessary in any
investigation which may be undertaken with respect to the
Debtor's prepetition accounts, conduct, property,
liabilities and financial condition, including the review of
books and records for potential voidable transactions and
unenforceable claims;
h) advise and assist the Debtor in identifying restructuring
alternatives, and in preparation and negotiation of a plan
of reorganization, including advising the Debtor on the
restructuring and modification of its existing capital
structure and outstanding debt; and
i) render any other assistance as the Debtor and its counsel
may deem necessary.
Francis G. Conrad, a Weiser LLP partner, discloses that the firm's
professionals bill:
Designation Hourly Rate
----------- -----------
Partner $425 - $540
Manager $275 - $375
Supervisor $225 - $250
Staff $125 - $225
Mr. Conrad 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 Bronx, New York, New York Westchester Square
Medical Center -- http://www.nywsmc.org/-- is a not-for-profit,
community acute care hospital and certified stroke center that has
served a working class population in the Bronx community since
1929. Its primary facility, located at 2475 St. Raymond Avenue,
Bronx, New York 10461, houses 205 beds and provides acute adult
medical and surgical care, emergency medicine and ambulatory
services. NYWSMC is a membership corporation whose members are
selected by the New York-Presbyterian Healthcare System, Inc.
The company filed for chapter 11 protection on Dec. 19, 2006
(Bankr. S.D.N.Y. Case No. 06-13050). Burton S. Weston, Esq., at
Garfunkel, Wild & Travis, P.C., represents the Debtor. Louis A.
Scarcella, Esq., and Robert C. Yan, Esq., at Farrell Fritz PC,
represent the Official Committee Of Unsecured Creditors. The
Debtor's exclusive period to file a chapter 11 plan expires on
Apr. 18, 2007.
NEWARK GROUP: Moody's Rates Proposed $90 Million Term Loan at Ba3
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Newark Group's
proposed $90 million term loan facility. At the same time,
Moody's affirmed the company's B2 corporate family rating and
upgraded the senior subordinated notes rating to B3.
TNG's plan to refinance its former $150 million senior secured
revolving credit facility drove the rating action. The company's
new facilities will include an $85 million five year asset-based
revolving credit facility and a $90 million six year credit-linked
term loan facility, consisting of a $15 million traditional term
loan and a $75 million synthetic letter of credit term loan.
No ratings were assigned to the asset-based revolving credit
facility and Moody's withdrew the ratings on the former revolving
credit facility. Due to the company's improved liquidity profile,
Moody's upgraded the SGL rating to SGL-3 from SGL-4. Proceeds of
the term loan were primarily used to repay the amounts outstanding
under the former credit facility.
The outlook remains stable.
Over the last few years, TNG was impacted by unfavorable costs for
natural gas, recovered paper, and freight. These costs were
difficult to fully pass through to its major customers. As a
result, margins have been compressed, causing the company to
maintain a high level of debt on the balance sheet and weak debt
protection measures.
Recently, however, TNG's operating results have been better than
expected in the first half of its fiscal year. Natural gas costs
have begun to moderate, additional mill closures have been
announced in the recycled paperboard industry, pricing has
increased, and the operating performance at the company's
Fitchburg mill has improved. Even with this progress, however,
Moody's believes that a slowdown in the economy could affect the
favorable pricing, particularly the company's ability to sustain
current price increases. The severity of the slowdown may negate
margin improvement, thus Moody's believes that the company's
leverage over the intermediate period may weaken from the levels
seen over the past two quarters.
Furthermore, cost pressure from the recent increase in recovered
paper prices and a slowdown in the US economy may pressure margins
for the remainder of fiscal 2007. Recovered paper is TNG's
primary raw material and China's strong demand for US recovered
paper has caused prices in the US to rise to approximately
$120/ton over the past month. Other factors that temper the
ratings are the company's commoditized products, weak margins, and
the uncertainty of the effectiveness of recent industry
rationalization.
The upgrade of TNG's speculative grade liquidity rating of SGL-3
reflects Moody's view that the company will be able to fund its
cash needs from internal sources, with the exception of
extraordinary capital expenditures and working capital needs.
Moody's anticipates that free cash flow levels will be relatively
modest and that the company will not be restricted from the new
revolver due to covenants.
At the close of its recent refinancing, TNG will have no revolver
outstandings and excess availability of approximately $60 million.
The upgrade of TNG's senior subordinated notes to B3 from Caa1 was
a function of the new capital structure within Moody's
Loss-Given-Default rating methodology.
The most recent prior rating action for TNG occurred on Sept. 21,
2006. Moody's reported the implementation of its new
Probability-of-Default and LGD rating methodology for the North
American Forest Products sector. At the time, TNG's senior
secured revolving credit facility was revised upward to Ba2 from
B1.
Upgrades:
* Newark Group, Inc.
-- Speculative Grade Liquidity Rating, Upgraded to SGL-3
from SGL-4
Assignments:
* Newark Group, Inc.
-- Senior Secured Bank Credit Facility, Assigned a range of
23 - LGD2 to Ba3
The Newark Group Inc., headquartered in Cranford, New Jersey, is
an integrated producer of 100% recycled paperboard and paperboard
products in North America and Europe.
NORTHWEST AIRLINES: Taps Navigant as Appraiser and Consultant
-------------------------------------------------------------
Northwest Airlines, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to employ Navigant Capital Advisors LLC as their
appraiser and consultant.
Navigant will provide appraisal of:
1. unencumbered assets or asset groups including commercial
aircraft, spare engines, flight training equipment, and
spare parts to assist the Debtors in preparing their
plan of reorganization; and
2. certain major asset categories to provide the basis for
the Debtors' restatement of the values of their tangible
assets for Fresh Start Accounting as of the date of
emergence from bankruptcy, including an estimate of the
remaining useful lives of the assets.
Navigant will be paid for its services at these hourly rates:
Title Hourly Rate
----- -----------
Managing Director $500
Director $400
Associate Director $350
Managing Consultant $300
Senior Consultant $250
Consultant $190
Navigant will limit its fees to an average hourly rate of $265.
Additionally, Navigant intends to manage its time expended on the
project to approximately 2,070 hours, which yields an estimated
total project fee amount of approximately $550,000.
Navigant will bill out of pocket expenses and professional fees
at cost.
The Debtors will indemnify and hold harmless Navigant from any
claims, liabilities, losses and damages related or rising from
the engagement.
Doran V. McClellan, ASA, a director at Navigant, discloses that
Navigant performed:
-- a liquidation and fair value appraisal of personal property
assets of United Air Lines in connection with United's plan
of reorganization and fresh start accounting. The services
were completed by February 1, 2006;
-- a fair value appraisal of the personal property assets of
ATA Airlines for its fresh start accounting in connection
with ATA's emergence from Chapter 11. The services were
completed by June 30, 2006; and
-- a liquidation analysis of certain personal property assets
owned by Mesaba Airlines on behalf of MAIR Holdings, Inc.
The services were completed by October 30, 2005.
Mr. McClellan, however, assures the Court that his firm is a
"disinterested person" within the meaning of Section 101(14) of
the Bankruptcy Code, as modified by section 1107(b) of the
Bankruptcy Code, and as required by Section 327(a). Navigant,
Mr. McClellan says, holds no interest adverse to the Debtors and
their estates.
Mr. McClellan also attests that Navigant did not receive any
amounts from the Debtors in the 90 days prior to the Petition
Date. As of their bankruptcy filing, no amounts were due and
owing from the Debtors to Navigant.
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. (Northwest Airlines Bankruptcy
News, Issue No. 54; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
NORTHWEST AIRLINES: Wants to Repay $15.3 Mil. GMAC Promissory Note
------------------------------------------------------------------
Northwest Airlines, Inc., seeks the U.S. Bankruptcy Court for the
Southern District of New York's authority to repay in full a
$15,300,000 prepetition secured promissory note held by GMAC
Commercial Finance LLC, successor by merger to GMAC Business
Credit LLC.
The Note secured by nearly 1,000 pieces of Northwest's ground
equipment that supports Northwest's operations at airports
throughout the country. The value of the equipment substantially
exceeds the amount outstanding under the Note, and the Note, by
its terms, matured on January 1, 2007.
Currently, Northwest is paying interest on the Note at the
contractual rate as adequate protection under a stipulation with
GMAC CF. The contractual interest rate of the Note is not
favorable to the estate, Bruce R. Zirinsky, Esq., at Cadwalader,
Wickersham & Taft LLP, says.
Mr. Zirinsky also relates that the parties' security agreement
and adequate protection stipulation place certain limitations
upon the Debtor's ability to administer the ground equipment
collateral. Given the relatively small amount outstanding under
the Note, and the hindrances on the Debtor's administration of
the ground equipment collateral in accordance with its
operational needs, the Note represents an administrative burden
on the estate.
Repaying the Note would provide interest expense savings and
operational flexibility to Northwest and is in the best interests
of the estate, Mr. Zirinsky says.
Northwest executed the Promissory Note in favor of Transamerica
in the principal sum of $50,931,783, with a non-default interest
rate of LIBOR plus 2.85% and a maturity of January 1, 2007.
Northwest granted to Transamerica a continuing general first
priority lien on and security interest in its equipment.
Transamerica transferred all of its right, title and interest in
and to the Ground Equipment and the Loan Documents to GMAC CF.
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. (Northwest Airlines Bankruptcy
News, Issue No. 54; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
OASIS GRACELAND: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Oasis Graceland Manor Townhomes and Apartments, LLC
P.O. Box 6897
San Pablo, CA 94806
Bankruptcy Case No.: 07-20933
Chapter 11 Petition Date: January 30, 2007
Court: Western District of Tennessee (Memphis)
Judge: Paulette J. Delk
Debtor's Counsel: John E. Dunlap, Esq.
The Waggoner Law Firm
1433 Poplar Avenue
Memphis, TN 38104
Tel: (901) 276-3334
Fax: (901) 2764715
Total Assets: $1,921,440
Total Debts: $1,412,106
Debtor's Largest Unsecured Creditor:
Entity Claim Amount
------ ------------
Atomic Pest Control $106
237 Elvis Presley Boulevard
Memphis, TN 38116
PACIFIC LUMBER: Obtains Interim Authority to Pay Critical Vendors
-----------------------------------------------------------------
The Pacific Lumber Co., and four debtor-affiliates -- Britt Lumber
Co., Inc., Scotia Development, LLC, Scotia Inn, Inc., and Salmon
Creek LLC -- obtained authority from the U.S. Bankruptcy Court for
the Southern District of Texas, on an interim basis, to pay
critical vendors whose continued supply of goods and services are
needed to avoid disruptions to the Debtors' business.
The Debtors shall satisfy up to 100% of the prepetition debt owed
to a critical vendor on the condition that by accepting payment
under the terms of the Order, the critical vendor agrees to
continue extending credit and supplying materials, equipment,
goods and services to the Debtors in accordance with prepetition
practices.
The Court approval provided, however, that payment to loggers and
haulers shall not exceed the amount of $575,000, unless LaSalle
Bank National Association, LaSalle Business Credit LLC and
Marathon Structured Finance Fund L.P. agree to additional amounts
in writing.
The Pacific Lumber Company, Britt Lumber Co. Inc., Scotia
Development LLC, Scotia Inn Inc., and Salmon Creek LLC utilize
a number of loggers, haulers and other providers of specialized
goods and services in their forest products operations.
Given the Debtors' relatively remote geographic area, their
unique regulatory concerns and the highly specialized nature of
their operations, the Debtors require the type of services
provided by the Vendors that meet their requirements for quality,
quantity, technical specifications and reliability, on a timely
basis, Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble,
Culbreth, & Holzer, P.C., in Corpus Christi, Texas, the Debtors'
proposed bankruptcy counsel, related.
A 3-page list of the Debtors' Critical Vendors is available for
free at http://researcharchives.com/t/s?194f
"[The Debtors depend] upon the continued supply of uninterrupted
goods and services from the Critical Vendors, and, as such,
payment of the prepetition debts owed to the Critical Vendors
will preserve the value of the Debtors' business and ease the
administrative burden on their estates," Mr. Holzer said.
The amount of prepetition debt totals $1,408,858, reflecting
amounts already billed to the Debtors. There may be additional
amounts the Debtors owe to Critical Vendors for other goods and
services provided prior to Jan. 18, 2007, which have not yet
been invoiced, Mr. Holzer added.
About Pacific Lumber
Headquartered in Oakland, California, The Pacific Lumber Company
-- http://www.palco.com/-- and its subsidiaries operate in
several principal areas of the forest products industry,
including the growing and harvesting of redwood and Douglas-fir
timber, the milling of logs into lumber and the manufacture of
lumber into a variety of finished products.
Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber
Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned
subsidiaries of Pacific Lumber.
Scotia Pacific, Pacific Lumber's largest operating subsidiary, was
established in 1993, in conjunction with a securitization
transactions pursuant to which the vast majority of Pacific
Lumber's timberlands were transferred to Scotia Pacific, and
Scotia Pacific issued Timber Collateralized Notes secured by
substantially all of Scotia Pacific's assets, including the
timberlands.
Pacific Lumber, Scotia Pacific, and four other subsidiaries filed
for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case
Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq.,
William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard
Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation
is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq.,
Harlin C. Womble, Jr. , Esq., and Shelby A. Jordan, Esq., at
Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-
counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at
Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead
counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq.,
at Porter & Hedges LLP, is Scotia Pacific's co-counsel.
When Pacific Lumber filed for protection from its creditors, it
listed estimated assets and debts of more than $100 million.
Scotia Pacific listed total assets of $932,000,000 and total debts
of $765,978,335. The Debtors' exclusive period to file a chapter
11 plan expires on May 18, 2007. (Scotia/Pacific Lumber
Bankruptcy News, Issue No. 3, http://bankrupt.com/newsstand/or
215/945-7000).
PACIFIC LUMBER: Scotia Pacific Wants to Pay Critical Vendor Claims
------------------------------------------------------------------
Scotia Pacific Co. LLC seeks the U.S. Bankruptcy Court for the
Southern District of Texas for permission to pay, in the ordinary
course of business and in its sole discretion, the prepetition
fixed, liquidated and undisputed claims of the Critical Vendors.
Scotia Pacific further asks the Court to allow it to pay Critical
Vendors up to $200,000, if the amounts reflected in its books and
records are not accurate.
Scopac seeks the Court's authority to satisfy, according to
customary terms, up to 100% of a Critical Vendor Claim on these
conditions:
(a) The Claims will be paid by check or by wire transfer of
funds; and
(b) By accepting payment, the Critical Vendor agrees to
continue extending credit and supplying materials,
equipment, goods and services to Scopac.
Shortly before Jan. 18, 2007, Scotia Pacific Co. LLC
informs the Court that it undertook the process of identifying
and selecting the vendors, suppliers and service providers that
were critical to its business.
According to Scotia Pacific, it evaluated which vendor payments
will be critical to avoid business interruption by considering
which vendors:
-- have the right to impose statutory mechanic's and
materialmen's, common carrier or possessory liens on
Scopac's property;
-- are parties to executory contracts and whose prepetition
claims would have to be paid in full if Scopac elected to
assume the vendors' contracts;
-- supplied goods to Scopac in the ordinary course of its
business within 20 days before Jan. 18, 2007; and
-- have reclamation rights.
Although a substantial portion of Scotia Pacific's key vendors are
paid by The Pacific Lumber Company, Scotia Pacific pays directly a
handful of vendors for critical goods and services in the ordinary
course of business. Among those Critical Vendors are
professionals who prepare Timber Harvest Plans, software
licensors, and parts and maintenance vendors.
Scotia Pacific's THP Professionals consist of professional
foresters, engineers, geologists and surveyors. Scotia Pacific
states that before harvesting timber in California, companies must
obtain the California Department of Forestry's approval of a
detailed THP for the area to be harvested. THPs must be submitted
by a Registered Professional Forester and are required to include
information regarding the method of proposed timber operations for
a specified area, whether the operations will have any adverse
impact on the environment and if so, the mitigation measures to be
used to reduce any adverse impact.
In connection with the THP preparation and the related modeling
of inventory and harvesting yields, Scopac maintains a highly
specialized GIS system. The GIS system is licensed from the
Software Licensor in the ordinary course of Scopac's business.
On the other hand, the Parts/Maintenance Vendors provide parts
and maintenance services for special machinery used by Scopac's
foresters when creating the THPs.
As of Jan. 18, 2007, Scotia Pacific held outstanding unpaid
invoices from nine THP professionals, one software licensor, and
four Parts/Maintenance Vendors. As of Petition Date, Scopac
estimates that it owed the Critical Vendors $198,000 in the
aggregate.
About Pacific Lumber
Headquartered in Oakland, California, The Pacific Lumber Company
-- http://www.palco.com/-- and its subsidiaries operate in
several principal areas of the forest products industry,
including the growing and harvesting of redwood and Douglas-fir
timber, the milling of logs into lumber and the manufacture of
lumber into a variety of finished products.
Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber
Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned
subsidiaries of Pacific Lumber.
Scotia Pacific, Pacific Lumber's largest operating subsidiary, was
established in 1993, in conjunction with a securitization
transactions pursuant to which the vast majority of Pacific
Lumber's timberlands were transferred to Scotia Pacific, and
Scotia Pacific issued Timber Collateralized Notes secured by
substantially all of Scotia Pacific's assets, including the
timberlands.
Pacific Lumber, Scotia Pacific, and four other subsidiaries filed
for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case
Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq.,
William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard
Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation
is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq.,
Harlin C. Womble, Jr. , Esq., and Shelby A. Jordan, Esq., at
Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-
counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at
Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead
counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq.,
at Porter & Hedges LLP, is Scotia Pacific's co-counsel.
When Pacific Lumber filed for protection from its creditors, it
listed estimated assets and debts of more than $100 million.
Scotia Pacific listed total assets of $932,000,000 and total debts
of $765,978,335. The Debtors' exclusive period to file a chapter
11 plan expires on May 18, 2007. (Scotia/Pacific Lumber
Bankruptcy News, Issue No. 3, http://bankrupt.com/newsstand/or
215/945-7000).
PATRIOT MOTORCYCLE: Posts $1.97MM Net Loss in Qtr. Ended Dec. 31
----------------------------------------------------------------
Patriot Motorcycle Corp. filed its financial statements for the
first quarter ended Dec. 31, 2005, with the Securities and
Exchange Commission on Feb. 2, 2007.
Patriot Motorcycle Corp. reported a $1.97 million net loss on
$1.1 million of net sales for the first quarter ended Dec. 31,
2005, compared with a $669,455 net loss on $942,972 of net sales
for the same period in 2004.
Cost of sales for the quarter ended Dec. 31, 2005, approximated
101.72%, generating a negative gross margin of $18,999 due to the
added cost of rebranding the off-road products.
Operating expenses increased $1.22 million mainly due to increases
in selling, general and administrative, and research and
development expenses.
At Dec. 31, 2005, the company's balance sheet showed
$5.84 million in total assets, $1.19 million in total liabilities,
and $4.65 million in total stockholders' equity.
A full-text copy of the consolidated financial statements is
available for free at http://researcharchives.com/t/s?1969
Going Concern Doubt
As reported in the Troubled Company Reporter on Aug. 3, 2006,
Weinberg & Company P.A., in Boca Raton, Fla., raised substantial
doubt about Patriot Motorcycle Corporation's ability to continue
as a going concern after auditing the company's consolidated
financial statements for the years ended Sept. 30, 2005, and 2004.
The auditor pointed to the company's net loss, negative cash flow
from operations, and accumulated deficit.
About Patriot Motorcycle
Patriot Motorcycle Corp. (Pink Sheets: PMCY) --
http://www.patriotmotorcycles.com-- is the exclusive distributor
of the Patriot OffRoad(TM) line of Dirt Bike motorcycles and All-
Terrain Vehicles and a line of domestic V-Twin custom and
production street bikes branded under the names Steed(R) by
Patriot(TM) 300 Series and Patriot(TM) V-Twin Musclebikes(TM) 200
Series.
PEOPLE'S CHOICE: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: People's Choice Aesthetic Surgery & Medical Day Spa, Inc.
4820 New Broad Street
Orlando, FL 32814
Bankruptcy Case No.: 07-00312
Type of Business: The Debtor operates a cosmetic surgery facility.
Chapter 11 Petition Date: January 31, 2007
Court: Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: Kevin E. Mangum, Esq.
Mangum & Associates PA
5100 Highway 17-92 Suite 200
Casselberry, FL 32707
Tel: (407) 478-1555
Fax: (407) 478-1552
Estimated Assets: $10,000 to $100,000
Estimated Debts: $1 Million to $100 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
PIER 1 IMPORTS: Reports $110 Million in Sales for January 2007
--------------------------------------------------------------
Pier 1 Imports Inc. reported that sales for the four-week period
ended Jan. 27, 2007 aggregated $110,668,000 a decrease of 13.7%
from $128,264,000 last year, and comparable store sales declined
13.2%.
Year-to-date sales of $1,502,713,000 were down 10.1% from
$1,671,240,000 last year, and comparable store sales declined
11.5%.
As reported in the Troubled Company Reporter on Jan. 10, 2007,
For the three months ended Nov. 25, 2006, Pier 1 reported a
$72,718,000 net loss on $402,714,000 of net sales, compared with a
$7,181,000 net loss on $456,690,000 of net sales for the same
period in 2005.
During the third quarter, the company continued to experience a
decline in sales. The company has seen a persistent weakness in
customer traffic throughout the year as retailers in its sector
are competing for market share and consumers' discretionary funds.
To stay with the competition, the company has struggled to find
the right marketing programs and media that will drive traffic to
its stores and increase sales.
During the third quarter, the company slightly shifted its focus
to gifts and decorative items for the holiday season, adding more
unique merchandise that was exclusive, value-priced and had both a
traditional and contemporary appeal to meet customers' decorating
needs.
At Nov. 25, 2006, the company's balance sheet showed
$1,017,881,000 in total assets, $608,346,000 in total liabilities,
and $409,535,000 in total stockholders' equity.
Based in Fort Worth, Texas, Pier 1 Imports Inc. (NYSE:PIR)
-- http://www.pier1.com/-- is a specialty retailer of imported
decorative home furnishings and gifts with Pier 1 Imports(R)
stores in 49 states, Puerto Rico, Canada, and Mexico, and Pier 1
kids(R) stores in the United States.
* * *
As reported in the Troubled Company Reporter on Jan. 19, 2007,
Moody's Investors Service downgraded Pier 1 Imports Inc.'s
corporate family rating to Caa1 from B3 after its continuing
operating struggles and modest performance over the 2006 holiday
season. The rating outlook was revised to negative.
PIERRE FOODS: Reports $127.1MM in Revenues for Qtr. Ended Dec. 2
----------------------------------------------------------------
Pierre Foods Inc. reported net revenues of $127.1 million for the
third quarter ended Dec. 2, 2006, compared to $115.5 million for
the same period ended Dec. 3, 2005.
For the year-to-date period ended Dec. 2, 2006, net revenues were
$331.8 million versus $322.4 million for the year-to-date
period ended Dec. 3, 2005.
The increase during third quarter fiscal 2007 and the fiscal
year 2007 is primarily due to growth in most of the company's
end-market segments and increased net revenues related to the
company's acquisition of Clovervale Farms, Inc., offset by
decreased sales to two large National Accounts restaurant chain
customers, and decreased net revenues due to a net reduction in
sales prices primarily due to declining commodity protein pricing
attributable to market-related pricing contracts with these two
customers.
The Troubled Company Reporter on Aug. 24, 2006 indicated that the
company has agreed to acquire Clovervale Farms and certain of the
real property used in the business for $22.8 million.
About Pierre Foods
Based in Cincinnati, Ohio, Pierre Foods, Inc. --
http://www.pierrefoods.com/-- manufactures and markets high-
quality, differentiated processed food solutions. Pierre produces
a complete line of fully cooked beef, pork, poultry, bakery goods
and convenience sandwiches. The company offers comprehensive food
solutions to its customers, including proprietary product
development, special ingredients and recipes, as well as custom
packaging and marketing programs.
* * *
As reported in the Troubled Company Reporter on Dec 28, 2006,
Moody's Investors Service affirmed the B1 corporate family rating
of Pierre Foods, Inc. and concurrently lowered the debt ratings on
the bank credit facilities to Ba3 from Ba2.
Moody's also confirmed the B3 rating on the $125 million senior
subordinated notes, maturing 2012. The rating outlook is stable.
PLASTECH ENGINEERED: S&P Holds BB Rating on $225 Million Facility
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' bank loan
rating and its '1' recovery rating on Plastech Engineered Products
Inc.'s proposed $225 million first-lien revolving ABL credit
facility, which has been increased from $200 million.
At the same time, Standard & Poor's affirmed its 'B+' rating on
Plastech's proposed $265 million first-lien term loan which has
been increased from $250 million. The recovery rating on the
first-lien term loan has been lowered to '3' from '2' because of
the higher level of first-lien indebtedness relative to
collateral. The new recovery rating indicates the expectation for
meaningful 50%-80% recovery of principal in the event of a
default.
In addition, the 'B-' rating and a '5' recovery rating were
affirmed on Plastech's proposed $100 million second-lien term loan
which has been decreased from $150 million.
The affirmations follow revisions to the proposed credit
facilities that reduce the total commitment to $590 million from
$600 million.
The corporate credit rating on Plastech is B+/Negative/. The
ratings on the Dearborn, Michigan-based auto supplier reflect the
company's weak operating results, high debt leverage, and
constrained liquidity resulting from relatively disappointing
revenues and EBITDA. These challenges will continue
because automotive industry fundamentals remain difficult.
Ratings List:
* Plastech Engineered Products Inc.
-- Corporate credit rating, B+/Negative/--
-- First-lien ABL credit facility, BB
-- Recovery rating at 1
-- First-lien term loan, B+
-- Recovery rating at 3
-- Second-lien term loan, B-
-- Recovery rating at 5
PLATFORM LEARNING: Has Until May 17 to Decide on E&Y Sublease
-------------------------------------------------------------
Ernst & Young U.S., LLP, as sublessor for Platform Learning,
Inc.'s headquarters at 55 Broad Street, in New York, has consented
to a further extension of the Debtor's time to assume or reject
the Sublease.
The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York approved a stipulation between E&Y
and the Debtor, extending the lease decision deadline to
May 17, 2007.
Judge Drain also modified the automatic stay of Section 362 of the
Bankruptcy Code to allow E&Y to apply the existing Security
Deposit under the Sublease of $51,986 to set off or recoup against
certain claims.
The Court directs the Debtor to replenish the Security Deposit by
making eight weekly payments to E&Y of $6,498.
As reported in the Troubled Company Reporter on Dec. 12, 2006, the
Debtor requires continued and uninterrupted operations at its New
York headquarters in order to move forward with the confirmation
of a successful plan of reorganization.
Based in Broad Street, New York, Platform Learning Inc. --
http://www.platformlearning.com/-- provides supplemental
educational services through its Learn-to-Succeed tutoring program
to students attending public schools. The Company filed for
chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No.
06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at
Herrick Feinstein LLP, represent the Debtor in its restructuring
efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP,
represents the Official Committee of Unsecured Creditors. When
the Debtor filed for protection from its creditors, it listed
total assets of $21,026,148, and total debts of $36,933,490.
READER'S DIGEST: Stockholders Okay Ripplewood Merger Deal
---------------------------------------------------------
The Reader's Digest Association Inc. reported that the company's
common stockholders voted to adopt the merger agreement between
the company and entities formed by an investor group led by
Ripplewood Holdings L.L.C.
Shares voted in favor of the adoption of the merger agreement
represented more than 81 percent of the total issued and
outstanding common shares.
On Nov. 16, 2006, the company entered into the definitive merger
agreement pursuant to which the Ripplewood-led investor group will
acquire all of the outstanding common stock of the company for
$17 per share in cash and assume all outstanding debt.
Completion of the merger remains subject to the availability of
the investor group's committed debt and preferred equity financing
for the acquisition and other customary conditions.
The merger is expected to close by the end of February 2007.
Merger Agreement
The company has entered into a merger agreement under which an
investor group led by Ripplewood Holdings L.L.C. will acquire all
of the outstanding common shares of RDA for $17.00 per share. The
transaction is expected to close by the end of February 2007, and
is subject to the funding of the investor group's committed
financing and the approval of the holders of a majority of the
outstanding shares of RDA common stock, as well as other customary
closing conditions. A shareholders meeting to consider adoption
of the merger agreement is scheduled for Feb. 2, 2007.
About Reader's Digest
The Reader's Digest Association Inc. (NYSE: RDA) --
http://www.rda.com/-- is a global publisher and direct marketer
of products that inform, entertain and inspire people of all ages
and cultures around the world. The corporate website is Global
headquarters are located at Pleasantville, New York.
* * *
As reported in the Troubled Company Reporter on Nov. 20, 2006,
Standard & Poor's Ratings Services reported that the 'BB' ratings
on Reader's Digest Association Inc. remain on CreditWatch with
negative implications, where they were placed on Aug. 15, 2006.
RELIANT ENERGY: Fitch Puts Low-B Ratings on Positive Watch
----------------------------------------------------------
Fitch Ratings has placed the ratings of Reliant Energy, Inc. on
Rating Watch Positive:
-- Issuer Default Rating 'B';
-- Senior secured debt 'BB-/RR2';
-- Senior subordinated debt 'B'/RR4'.
Approximately $3.25 billion of debt is affected by the rating
action. The Rating Watch listing reflects a number of recent
developments which Fitch believes will materially improve
Reliant's credit profile.
Most significantly, the commencement of operations under, and the
continued realization of financial benefits from, the
implementation of a credit enhancement structure through Merrill
Lynch for the retail business has significantly reduced liquidity
needs and permitted the redeployment of cash to debt reduction.
In November 2006, Reliant tendered for $275 million convertible
subordinated debentures. The offer has been successfully
subscribed and resulted in the issuance of common shares, plus a
modest cash outlay, for the debt.
In addition to the progress in debt reduction, as part of Fitch's
wholesale market pricing update, Fitch's recovery rating analysis
will likely be revised which may result in more robust valuations
for Reliant's competitive power generating fleet. As described in
Fitch's U.S. Power and Gas 2007 Outlook, the outlook for
competitive generation has improved and is now generally positive
which should benefit Reliant's near term operating results.
Reliant is expected to report 2006 financial results at the end of
February. After a review of the financial reports, Fitch expects
to conclude its review.
RF CUNNINGHAM: Can Reject Corporate Headquarters Lease
------------------------------------------------------
The Honorable Melanie L. Cyganowski of the U.S. Bankruptcy Court
for the Eastern District of New York has allowed R.F. Cunningham &
Co., Inc., to reject an unexpired non-residential real property
lease for the premises known as 191 Terry Road in Smithtown, New
York.
The Debtor used the space as its corporate headquarters. Since
the Debtor is liquidating its assets and will soon cease
operating, it no longer needs an office.
Headquartered in Smithtown, New York, R.F. Cunningham & Company,
is a grain dealer, licensed under the Agriculture and Markets
Law of New York. The company filed for chapter 11 protection on
June 13, 2005 (Bankr. E.D.N.Y. Case No. 05-84105). Harold S.
Berzow, Esq., at Ruskin Moscou Faltischek, P.C., represents the
Debtor in its liquidation efforts. Alan D. Halperin, Esq., and
Ethan D. Ganc, Esq., at Halperin Battaglia Raicht, LLP, represent
the Official Committee Of Unsecured Creditors. When the Debtor
filed for protection from its creditors, it listed $8,416,240 in
total assets and $10,218,229 in total debts.
The Court confirmed the Chapter 11 Plan of Liquidation of R.F.
Cunningham & Co. Inc. and its Official Committee of Unsecured
Creditors on Nov. 15, 2006.
SAVE OUR SPRINGS: May File For Bankruptcy After Losing a Lawsuit
----------------------------------------------------------------
Save Our Springs Alliance may file for chapter 11 protection after
the Texas Supreme Court upheld the Court of Appeals ruling, Kate
Miller Morton of Statesman reported.
The Texas Supreme Court declined Feb. 2 to review the case Save
Our Springs Alliance v. Lazy Nine Municipal Utility District. SOS
Alliance will file a request to reconsider the decision, but such
requests are rarely granted.
In SOS Alliance's challenge to special, developer-sponsored
legislation creating the Lazy Nine Municipal Utility District in
far western Travis County, the courts refused to decide whether
the special district, or "MUD," was created in violation of the
Texas Constitution, as SOS Alliance claimed.
Instead, the lower courts decided that even if the Legislature
created the MUD in violation of the Texas Constitution's
"Conservation Amendment," the courts would refuse to exercise
judicial review and allow the violation to stand.
"Now the Legislature is free to violate the Texas Constitution
when creating privately-owned and controlled governments with
powers to tax, condemn private property, build roads and
utilities, and employ police forces. The courts are now closed to
neighbors and citizens, even when the Legislature clearly fails to
provide the public notice required by the Texas Constitution,"
Save Our Springs Alliance executive director Bill Bunch said.
There are now more than 1,500 special districts (MUDs, water
control improvement districts, etc.) in Texas created by the
Legislature and the Texas Commission on Environmental Quality
under Article 16, Section 59 of the Texas Constitution. Many of
these districts are controlled by a single developer for years,
even decades, after they are formed.
"For the Texas Supreme Court to allow these privately-controlled
governments to spread like weeds across the state with no judicial
oversight is a severe blow to representative democracy, the rule
of law, and the Texas environment," Mr. Bunch says.
In 2004, developers Bill Gunn and Forest City Properties of
Cleveland, Ohio, began seeking approvals for a massive development
in the Hill Country west of Austin. With thousands of homes
proposed for steep hills draining into Bee Creek and Lake Travis,
and sewage dispersal draining to Barton Creek, the so-called
"Sweetwater" development will pollute local waterways and
drastically increase traffic on a dangerous stretch of Highway 71.
Save Our Springs Alliance sued the developers' Municipal Utility
District, claiming that the Legislature created the District
without first providing notice of the legislation to Travis County
and the public as required by Article 16, Section 59 of the Texas
Constitution. SOS Alliance also claimed that the legislation
delegated public, governmental powers to a private developer in
violation of the state constitution.
An out-of-town visiting judge refused to hear SOS Alliance's
claims, finding that the legal doctrines of "quo warranto" and the
"enrolled bill rule" prohibited judicial review. The trial judge
also ordered SOS Alliance to pay the MUD almost $300,000 in
attorney fees.
The Court of Appeals reversed the trial court's ruling on the "quo
warranto" prohibition on judicial review, but upheld the "enrolled
bill rule" prohibition, along with the attorney fee award.
The Supreme Court has allowed the Court of Appeals ruling to stand
despite the fact that the Supreme Court itself had specifically
reviewed the adequacy of the constitutionally required notice when
the Legislature reconfigured the Edwards Aquifer Authority in
1995.
SOS Alliance's appellate attorney, Renea Hicks, commented, "It is
not easy to pick out the worst thing about what's happened in this
case, but I'd nominate the court decision forcing a non-profit
group, which has been instrumental in protecting the Hill Country
and Austin from the ravages of money-driven private development,
to fork over $300,000 to cover the attorney fees of the MUD's
developers."
Mr. Bunch said, "We have been preparing for this possible outcome.
If our request for reconsideration is refused and we cannot settle
the attorney fee award with the MUD, we will take this matter to
federal court. We will also educate the public and potential
homebuyers that the Lazy Nine/Sweetwater development is no place
for citizens who care about the Hill Country, drinking water, or
representative government.
"We will continue to advocate in the court of public opinion and
the court of law for preserving our Hill Country waters and
wildlife for generations to come. This will include protecting
Bee Creek, Barton Creek, and Lake Travis from one of the worst
developments ever drawn on a Travis County plat map."
Save Our Springs Alliance -- http://www.sosalliance.org/-- is a
non-profit organization whose aim is to protect the Edwards
Aquifer in Texas, its springs and contributing streams, and the
natural and cultural heritage of its Hill Country watersheds, with
special emphasis on the Barton Springs Edwards Aquifer.
SEA CONTAINERS: GNER Hints Probable Bid for East Coast Main Line
----------------------------------------------------------------
Great North Eastern Railways hinted it would raise a new bid for
the East Coast Main Line, the franchise it agreed to let go on
Dec. 11, 2006, The Scotsman reports.
According to the report, GNER emphasized it has "no intention of
simply standing on the sidelines," while Virgin/Stagecoach and
FirstGroup lodged interest on the franchise by the
Jan. 15, 2007, deadline.
"We are not confirming at this stage whether we have submitted a
bid for pre-qualification, either with or without another party,"
a spokesman for GNER told Scotsman.
GNER declined to clarify its purpose, but raised an option that
it would join a consortium.
According to the report, the United Kingdom's Department for
Transport would announce on Feb. 9, 2007, a shortlist of
three to five bidders, with an invitation to tender being issued
in March and bids being returned by June. The successful bidder
will be disclosed in July or August, and would run the franchise
from "late autumn" of 2007 until 2015.
About Sea Containers
Headquartered in Hamilton, Bermuda, Sea Containers Ltd. (NYSE:
SCRA, SCRB) -- http://www.seacontainers.com/-- provides passenger
and freight transport and marine container leasing. Registered in
Bermuda, the company has regional operating offices in London,
Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The
company is owned almost entirely by United States shareholders and
its primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On October 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE Arca
after the company's failure to file its 2005 annual report on Form
10-K and its quarterly reports on Form 10-Q during 2006 with the
U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they reported
US$1.7 billion in total assets and US$1.6 billion in total
debts. (Sea Containers Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
The Debtors' exclusive period to file a chapter 11 plan expires on
June 12, 2007.
SEA CONTAINERS: U.S. Trustee Appoints SeaCon Services' Committee
----------------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, Kelly
Beaudin Stapleton, United States Trustee for Region 3, appointed
three creditors willing to serve on the Official Committee of
Unsecured Creditors in Sea Containers Services, Ltd.'s Chapter
11 case:
1. Sea Containers 1983 Pension Scheme Aspen Trustees, Ltd.
Northumberland House, 303-306 High Holbern
London WCIV 7J2, United Kingdom
Attn: Jane Kathryn Fryer
Phone: (44) 207-430-0734
Fax: (44) 207-430-0525
2. Sea Containers 1990 Pension Scheme
c/o Farrington Yates, Esq.
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas,
New York, NY 10020
Phone: (212) 768-6878
Fax: (212) 768-6800
3. Robert George Finch
c/o Katherine Ashton, Esq.
Debevoise & Plimpton LLP
Old Broad Street,
London, UK EC2N 1HQ
Attn: Robert George Finch,
Phone: (44) 207-786-9040
Fax: (44) 207-588-4180
The trial attorney assigned to Sea Containers Services' case is
David L. Buchbinder, Esq.
About Sea Containers
Headquartered in Hamilton, Bermuda, Sea Containers Ltd. (NYSE:
SCRA, SCRB) -- http://www.seacontainers.com/-- provides passenger
and freight transport and marine container leasing. Registered in
Bermuda, the company has regional operating offices in London,
Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The
company is owned almost entirely by United States shareholders and
its primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On October 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE Arca
after the company's failure to file its 2005 annual report on Form
10-K and its quarterly reports on Form 10-Q during 2006 with the
U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they reported
US$1.7 billion in total assets and US$1.6 billion in total
debts. (Sea Containers Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000)
The Debtors' exclusive period to file a chapter 11 plan expires on
June 12, 2007.
SEARS HOLDINGS: Discloses Kmart and Sears Comparable Store Sales
----------------------------------------------------------------
Sears Holdings Corp. disclosed domestic comparable store sales for
the nine-week period ended Dec. 30, 2006 for its Kmart and Sears
stores.
Kmart comparable store sales decreased by 1.2% due to lower
transaction volumes. Apparel sales at Kmart, while negatively
impacted by unseasonably warm weather, increased over the prior
year. Sears domestic comparable store sales declined by 5.6%
reflecting lower lawn and garden and appliance sales partially
offset by an improvement in Sears women's apparel.
Fiscal Year & 4th Quarter Outlook
The company currently expects that net income for its fourth
quarter ending Feb. 3, 2007 will be between $750 million and
$830 million. In the fourth quarter of the prior year, the
company reported net income of $648 million. The current year
fourth quarter estimate includes a combined gain of approximately
$20 million pretax resulting from gains from property sales and
losses related to total return swap investing activities. The
2006 fiscal year ending Feb. 3, 2007 is a 53-week year for the
company. As such, the current year fourth quarter is 14 weeks
versus 13 weeks last year.
For the full year ending Feb. 3, 2007, the company expects net
income to be between $1.42 billion and $1.50 billion, or between
$9.12 and $9.63 per fully diluted share.
The expected results are preliminary and subject to change based
on actual performance in January, as well as year-end adjustments.
The company currently expects to end the fiscal year with
approximately $3.5 billion in cash and cash equivalents,
excluding Sears Canada. The expected cash and cash equivalents
balance indicated does not give effect to any share repurchase,
total return swap investing or property sale activities after
Dec. 30, 2006. Holdings expects to release its fourth quarter and
full-year financial results on or about March 1, 2007 and does not
intend to update this information prior to that date.
During the nine weeks ended Dec. 30, 2006, Holdings did not
repurchase any shares of its common stock through its share
repurchase program. The remaining authority under Holdings'
existing repurchase program is $618 million.
About Sears Holdings
Based in Hoffman Estates, Illinois, Sears Holdings Corp.
(NASDAQ: SHLD) -- http://www.searsholdings.com/-- is a broadline
retailer, with approximately $55 billion in annual revenues, and
with approximately 3,800 full-line and specialty retail stores in
the United States, Canada and Puerto Rico. Sears Holdings is a
home appliance retailer as well as a retailer of tools, lawn and
garden, home electronics, and automotive repair and maintenance.
Key proprietary brands include Kenmore, Craftsman and DieHard, and
a broad apparel offering, including well-known labels as Lands'
End, Jaclyn Smith, and Joe Boxer, as well as the Apostrophe and
Covington brands.
* * *
As reported in the Troubled Company Reporter on June 23, 2006,
Standard & Poor's Ratings Services revised its outlook on Sears
Holdings Corp. to stable from negative. All ratings, including
the 'BB+' corporate credit rating, and the 'B-1' short-term
rating for Sears Roebuck Acceptance Corp., are affirmed.
As reported in the Troubled Company Reporter on Jun 22, 2006,
Fitch affirms its ratings of Sears Holdings Corp. including its
Issuer Default Rating (IDR) at 'BB'; Senior notes at 'BB'; and
Secured bank facility at 'BBB-'.
SIMMONS COMPANY: S&P Junks Rating on Proposed $275 Mil. PIK Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' debt rating
to Atlanta, Georgia-based Simmons Super Holding Company proposed
$275 million senior unsecured PIK toggle term loan due 2012. At
the same time, Standard & Poor's lowered its long term corporate
credit rating on Simmons Company to 'B' from 'B+'.
The outlook is stable.
"The rating downgrade is due to Simmons Company's more aggressive
financial policy and very high debt leverage, as the company is
issuing additional debt to finance a dividend to its
shareholders," said Standard & Poor's credit analyst Susan Ding.
"We had expected the company to reduce debt to EBITDA to below 6x
by the end of 2006. Instead, we estimate adjusted leverage pro
forma for the refinancing will increase to the 7.0x-7.5x range."
The speculative-grade ratings on Simmons Company, which is
analyzed on a consolidated basis with indirect subsidiary Simmons
Bedding Co. and holding company Simmons HoldCo, reflect its narrow
business focus, very aggressive financial policy, and highly
leveraged financial profile. Somewhat mitigating these factors
are the company's well-recognized brands, solid market position,
and the mattress industry's relatively stable demand and
significant barriers to entry.
STATION CASINOS: Panel Confirms Cash-Based Incentive Plan for 2007
------------------------------------------------------------------
The Compensation Committee of the Board of Directors of Station
Casinos Inc. approved the cash bonuses for 2006, annual base
salaries for 2007 and a cash-based incentive plan for 2007
The annual base salaries approved by the Compensation Committee
for the executive officers of the company are the same as the
annual base salaries paid to such executive officers in 2006.
The bonus targets set for 2007 represent the maximum bonuses that
will be available if the Company achieves a specified level of
EBITDA in 2007. Upon receipt of results of operations of the
company for 2007, the Chief Executive Officer will review and
assess the performance of each of the other executive officers
listed above and provide his recommendations thereon to the
Compensation Committee.
The Compensation Committee will review and assess the chief
executive officer's performance. The Compensation Committee will
determine bonuses for the chief executive officer and each of the
other executives based on the Compensation Committee's subjective
and retrospective review and assessment of the performance of each
such executive in 2007 measured by a number of factors, including
the company's financial performance relative to a variety of
different financial metrics, the Company's operational performance
and contributions made by such executive to the Company's
performance.
The Compensation Committee has also retained the ability to award
discretionary bonuses.
A full-text copy of the company's compensatory arrangement is
available for free at http://ResearchArchives.com/t/s?196f
Station Casinos Inc. -- http://www.stationcasinos.com/
-- provides gaming and entertainment to the residents of Las
Vegas, Nevada. Station owns and operates Palace Station Hotel &
Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel &
Casino, Wildfire Casino, and Wild Wild West Gambling Hall & Hotel
in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and
Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset
Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star
Casino and Gold Rush Casino in Henderson, Nevada. Station also
owns a 50% interest in Green Valley Ranch Station Casino, Barley's
Casino & Brewing Company and The Greens in Henderson, Nevada and a
6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In
addition, Station manages Thunder Valley Casino near Sacramento,
California, on behalf of the United Auburn Indian Community.
* * *
As reported in the Troubled Company Report on Dec. 6, 2007,
Moody's Investors Service placed the ratings of Stations Casinos
Inc.'s Ba2 corporate family rating, Ba2 probability of default
rating, Ba2 senior unsecured note rating, and Ba3 senior
subordinated note rating on review for possible downgrade after
the disclosure that it has a received an offer to be acquired by
a group of investors led by Frank J. Fertitta III, chairman and
chief executive officer of Station, Lorenzo J. Fertitta, vice
chairman and president of Station, and Colony Capital Acquisitions
LLC, an affiliate of Colony Capital LLC, to acquire all of the
outstanding shares of common stock of Station for $82 per share
in cash, or about $4.7 billion.
SUNCOM WIRELESS: Moody's Places Junk Ratings on Review
------------------------------------------------------
Moody's lowered the probability of default rating of SunCom
Wireless Inc. to LD, placed the company's Caa3 corporate family
rating under review for possible upgrade and placed its B2 senior
secured, Caa2 senior unsecured and Ca senior subordinate ratings
under review direction uncertain.
At the same time, Moody's affirmed SunCom's SGL-3 speculative
grade liquidity rating and said it would subsequently restore
SunCom's probability of default rating to Caa3 and place that
rating under review for possible upgrade on Monday February 5,
2007.
The rating action comes after the disclosure by Suncom's parent,
SunCom Wireless Holdings, Inc., that it has reached a consensual
agreement with certain bondholders to exchange more than 91% of
SunCom's senior subordinated notes totaling roughly $680 million
for approximately 87% of its common stock. In addition, SWHI
announced it would explore certain strategic alternatives,
including the possible sale of the company.
Moody's notes the debt exchange is subject to shareholder and
other customary approvals and is expected to be completed in the
second quarter of 2007, while the timing of any resolution to the
company's review of its strategic alternatives is uncertain.
Moody's has lowered the company's probability of default rating to
LD now as the rating agency expects the debt exchange to be
completed pursuant to the agreement and views the debt exchange as
a default on the company's senior subordinate obligations. The
probability of default rating will be restored to the same level
as the corporate family rating and placed under review for
possible upgrade following the recognition of the default.
Once the exchange agreement is implemented, SunCom's unadjusted
debt total is expected to reduce by roughly 40% to about
$1 billion, which will provide the company with increased
financial flexibility by reducing annual interest payments by
approximately $62 million. While Moody's continues to expect
SunCom to consume modest amounts of cash for the foreseeable
future, the significant reduction in interest expense will provide
necessary financial breathing room which Moody's believes may
provide the company with an adequate amount of time to potentially
deal with the assortment of operational challenges it faces. The
combination of the expected meaningful reduction in debt and the
potential for SunCom's operational performance to improve has
caused Moody's to place the company's corporate family rating
under review for possible upgrade.
The review will focus on:
1) the potential for SunCom to continue its very recent trend
of subscriber growth and margin improvement; and,
2) the resulting implications for the company to stem its cash
consumptiveness.
SunCom's senior secured, senior unsecured as well as a small
amount of senior subordinated debt will remain outstanding
following the debt exchange. These related ratings have been
placed under review direction uncertain as the company's capital
structure will be meaningfully altered through the debt exchange
transaction and final rating levels are contingent upon resolution
of the corporate family rating.
These ratings have been downgraded:
-- Probability of Default Rating: to LD from Caa3,
subsequently to be restored to Caa3 and placed under review
for possible upgrade
This rating have been placed under review for possible upgrade:
-- Corporate Family Rating Caa3
These ratings have been placed under review direction uncertain:
-- $250 million Senior Secured Term Loan due 2009, B2, LGD1,
3%
-- $714 million 8.5% Senior Notes due 2013, Caa2, LGD 3, 37%
-- $340 million 9.375% Senior Subordinate Notes due 2011, Ca,
LGD5, 83%
-- $391 million 8.75% Senior Subordinate Notes due 2011, Ca,
LGD5, 83%
Headquartered in Berwyn, Pennsylvania, Suncom Wireless, Inc. is a
regional wireless telecommunications service provider operating in
the southeastern US and Puerto Rico.
SUPERCLICK INC: Bedinger & Company Raises Going Concern Doubt
-------------------------------------------------------------
Bedinger & Company in Concord, California, raised substantial
doubt about Superclick Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Oct. 31, 2006. The auditing firm
points to the company's recurring losses from operations.
The company reported a $2,399,604 net loss on $3,946,311 of
net revenues for the year ended Oct. 31, 2006, compared with
$4,284,225 net loss on $3,205,696 of net revenues in the
comparable period of 2005.
At Oct. 31, 2006, the company's balance sheet showed $1,806,695
in total assets and $4,437,812 in total liabilities, resulting in
a $2,631,117 stockholders' deficit.
The company's Oct. 31 balance sheet also showed strained
liquidity with $1,555,628 in total current assets available to
pay $4,411,907 in total current liabilities coming due within the
next 12 months.
A full-text copy of the Company's 2006 Annual Report is available
for free at http://ResearchArchives.com/t/s?1960
About Superclick, Inc.
Superclick, Inc. -- http://www.superclick.com/-- and its wholly
owned Montreal-based subsidiary, Superclick Networks, Inc.,
develops, manufactures, markets and supports the Superclick
Internet Management System in worldwide hospitality, multi-tenant
unit and hospital markets. Superclick provides hotels, MTU
residences and hospital patients and visitors with cost-effective
Internet access and IP-based services utilizing high-speed DSL,
CAT5 wiring, wireless and dial-up modem technologies. Over 100
InterContinental Hotels Group properties have Superclick systems
including Candlewood Suites, Crowne Plaza, Holiday Inn, Holiday
Inn Express, Holiday Inn SunSpree, InterContinental and Staybridge
Suites in Canada and the United States.
TD AMERITRADE: Fitch Lifts Long-Term Rating to BB+ from BB
----------------------------------------------------------
Fitch Ratings upgrades the long-term rating of TD Ameritrade
Holding Corporation's senior debt term-loan borrowings to 'BB+'
from 'BB'.
At the same time, the long-term Issuer Default Rating is affirmed
at 'BB+'.
The Rating Outlook remains Positive for both the senior debt and
the IDR.
TD Ameritrade Holding Corporation's long-term debt consists of
these:
-- $250 million term loan A senior secured notes maturing
Dec. 31, 2011; and,
-- $1.650 billion term loan B senior secured notes maturing
Dec. 31, 2012.
The rating upgrade on the senior long-term debt is based on TD
Ameritrade's progress in paying down debt according to its
schedule. Current debt outstanding is approximately $1.7 billion
at Dec. 31, 2006. AMTD paid back approximately $500 million total
debt between the date of the acquisition close and fiscal year-end
2006. Fitch cites the reduced leverage as a key reason for the
upgrade. At the same time Fitch affirms the IDR rating at 'BB+'
because the issuer's probability of default profile has not
changed radically. AMTD is still in the process of integrating a
large acquisition and while revenues and expense synergies appear
likely to be met, the company faces challenges in establishing
itself as an asset gatherer and diversifying its revenues base to
more fee-based.
Fitch maintains the Positive Outlook because leverage metrics are
improving and because the company is in the process of meeting its
established targets. Debt to equity has already declined over 40%
since deal close. The Positive Outlook also indicates that
continuing to meet synergies and debt reduction targets could
merit higher ratings over the intermediate term.
U.S. Energy: Court Approves Country Settlement Agreement
--------------------------------------------------------
U.S. Energy Biogas Corp. disclosed Monday that that the U.S.
Bankruptcy Court for the Southern District of New York has
approved the settlement agreement reached between USEB and
Countryside Power Income Fund and announced on January 16, 2007.
The approved settlement agreement enables USEB and its parent,
U.S. Energy Systems, Inc., to establish new financing for USEB
that should enable it to pay all of its creditors in full, exit
bankruptcy quickly, and support the growth of the business for the
benefit of USEY's shareholders.
"We are very pleased that USEB is continuing on an expedited path
through its restructuring," said Asher E. Fogel, Chairman of USEB
and Chief Executive Officer of USEY. "The Court's approval of our
settlement agreement should facilitate full payment of existing
creditors' claims. Moreover, it means that USEB can move forward
to establish new financing, its management can capitalize on
USEB's attractive growth opportunities, and USEY's shareholders
can benefit from the value of USEB."
Terms of the Settlement
The settlement provides for Countryside Canada Power Inc, a
subsidiary of Countryside, to have an allowed secured claim of
approximately $99,000,000, of which $3,000,000 has been paid by
USEY.
Under the settlement, the secured claim is the only allowed claim
that Countryside will have in the Chapter 11 case. As a result of
the settlement, Countryside has no claim concerning USEB's
April 8, 2004 Royalty Agreement with Countryside, nor any claim
against USEY under its April 8, 2004 Development Agreement with
Countryside.
The settlement provides for USEB to make an installment cash
payment of $30,000,000 against the remaining $96,000,000 of
Countryside's claim on or before March 31, 2007, with the
remaining balance of the secured claim due on or before maturity
at May 31, 2007. USEB stated that it intends to make the
$30,000,000 installment payment as soon as practicable in order to
minimize its interest expenses. Other significant terms of the
settlement agreement are described in USEB's January 16, 2007
press release.
Hunton & Williams LLP serves as legal advisor to USEB. Wilmer
Cutler Pickering Hale and Dorr LLP serves as special counsel to
USEY in connection with USEB's Chapter 11 cases.
About the Fund
Based in London, Ontario, Countryside Power Income Fund
(TSX: COU.UN) -- http://www.countrysidepowerfund.com/-- has
investments in two district energy systems in Canada, with a
combined thermal and electric generation capacity of approximately
122 megawatts, and two gas-fired cogeneration plants in California
with a combined power generation capacity of 94 megawatts. In
addition, the Fund has an indirect investment in 22 renewable
power and energy projects located in the United States, which
currently have approximately 51 megawatts of electric generation
capacity and sold approximately 710,000 MMBtus of boiler fuel in
2005. The Fund's investment in the projects consists of loans to,
and a convertible royalty interest in, U.S. Energy Biogas Corp.
About U.S. Energy
Based in Avon, Connecticut, U.S. Energy Biogas Corp., a subsidiary
of U.S. Energy Systems Corp. (Nasdaq:USEY) --
http://www.usenergysystems.com/-- develops landfill gas projects
in the United States. Formerly known as Zahren Alternative Power
Corporation or ZAPCO, the company was formed in May 2001 after
ZAPCO's acquisition by U.S. Energy Systems, Inc. Currently, the
Debtor owns and operates 23 LFG to energy projects with 52
megawatts of generating capacity. The Debtor and 31 of its
affiliates filed separate voluntary chapter 11 petitions on
Nov. 29, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12827 through 06-
12857). Joseph J. Saltarelli, Esq., at Hunton & Williams
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
estimated assets and debts of more than $100 million.
WENDY'S INTERNATIONAL: Earns $94.3 Million for Year Ended 2006
--------------------------------------------------------------
Wendy's International Inc. reported financial results for the full
year 2006 and the fourth quarter ended Dec. 31, 2006.
The company completed its spinoff of Tim Hortons in the third
quarter and completed the sale of Baja Fresh Mexican Grill during
the fourth quarter.
During the fourth quarter, the company approved the prospective
sale of Cafe Express. Accordingly, the after-tax operating
results of Tim Hortons, Baja Fresh and Cafe Express now appear
in the "Discontinued Operations" line on the income statement.
2006 Full-Year Results
Total 2006 revenues were $2.4 billion, approximately flat with
2005.
Same-store sales increased 0.8% for U.S. company-owned restaurants
and 0.6% for U.S. franchised restaurants in 2006. The Company
ended the year with seven consecutive months and three consecutive
quarters of positive same-store sales.
"Our new strategic plan enabled us to take important actions
that will help us substantially enhance profitability and create
additional shareholder value," said Chief Executive Officer and
President Kerrii Anderson. "Our plan focuses on the core elements
that have made the Wendy's brand synonymous with quality and
freshness.
"We ended 2006 with strong momentum, positive same-store sales and
significantly reduced costs," Anderson said. "We intend to build
on this momentum and drive even stronger results in 2007 and
beyond, as we examine every facet of our business for
improvement."
Adjusted earnings before interest, taxes, depreciation and
amortization from continuing operations was $220.7 million in
2006, compared to $260.9 million in 2005.
EBITDA from continuing operations was $164 million in 2006,
compared to $304.9 million in 2005.
Reported 2006 pretax income from continuing operations was
$42.5 million compared to $136.8 million in 2005. The company
reported after-tax income from continuing operations of
$37 million in 2006 compared to $82.1 million in 2005.
The company reported full-year net income of $94.3 million in
2006, compared to $224.1 million in 2005. The 2005 results
include Tim Hortons and other discontinued operations for the full
year in 2005, which contributed $141.9 million to 2005 net income,
compared to a $57.3 million contribution for 2006. Discontinued
operations included Tim Hortons only for the first three quarters
of 2006.
A full-text copy of the Wendy's International regulatory filing is
available for free at: http://ResearchArchives.com/t/s?196c
Headquartered in Dublin, Ohio, Wendy's International Inc.
-- http://www.wendysintl.com/-- and its subsidiaries operate,
develop, and franchise a system of quick service and fast casual
restaurants in the United States, Canada, and internationally.
* * *
As reported in the Troubled Company Reporter on Oct. 17, 2006,
Moody's Investors Service held its Ba2 Corporate Family Rating for
Wendy's International Inc.
Additionally, Moody's held its Ba2 ratings on the company's
$200 million 6.25% Senior Unsecured Notes Due 2011 and
$225 million 6.2% Senior Unsecured Notes Due 2014. Moody's
assigned the debentures an LGD4 rating suggesting noteholders will
experience a 54% loss in the event of default.
WIZZARD SOFTWARE: Posts $1.2 Mil. Net Loss in Qtr. Ended Sept. 30
-----------------------------------------------------------------
Wizzard Software Corp. reported a $1.264 million net loss on
$819,590 of revenues for the third quarter ended Sept. 30, 2006,
compared with a $1.428 million net loss on $369,717 of revenues
for the same period in 2005.
At Sept. 30, 2006, the company's balance sheet showed
$2.064 million in total assets, $1.096 in total liabilities,
and $968,175 in total stockholders' equity.
The company's balance sheet at Sept. 30, 2006, also showed
strained liquidity with $662,027 in total current assets available
to pay $1.003 million in total current liabilities.
The increase in revenues was due primarily to the expansion
in the company's healthcare operations.
A full-text copy of the company's regulatory filing available for
free at http://researcharchives.com/t/s?1970
Going Concern Doubt
As reported in the Troubled Company Reporter on June 13, 2006,
Gregory & Associates LLC, in Salt Lake City, Utah, raised
substantial doubt about Wizzard Software'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 since
inception.
About Wizzard Software
Headquartered in Pittsburgh, Pennsylvania, Wizzard Software
Corp. (OTC BB: WIZD.OB) --http://www.wizzardsoftware.com/--
develops and sells desktop and enterprise speech technology,
speech recognition and text-to-speech programming tools,
distributable engines, and speech related consulting services
and support. It also develops talking prescription bill bottles
and offers home healthcare services through its wholly owned
subsidiary Interim Healthcare of Wyoming Inc.
* Lorie Beers Joins KPMG's Special Situations Group
---------------------------------------------------
KPMG Corporate Finance LLC disclosed that Lorie Beers has joined
the firm's Special Situations Advisory Group as managing director.
The Special Situations Advisory Group specializes in assisting
distressed middle market companies maximize their economic
recovery.
In her new role, Ms. Beers will lead the division as it continues
to provide out-of-court and in-court M&A, corporate finance, and
restructuring advisory services to underperforming companies,
debtors, creditors, creditors' committees, equity holders, and
other constituents, all on a national basis.
"Establishing an East Coast presence is an important strategic
milestone for the Special Situations Advisory Group as we expand
our national reach," said Ricardo Chance, managing director and
group head, Special Situations Advisory Group in Orange County,
California. "Lorie is a great fit with our high caliber team of
senior professionals who are well versed in bankruptcy procedures
and capital markets with strong sector knowledge."
Prior to joining KPMG Corporate Finance LLC, Ms. Beers was the
director of business development of Gordian Group LLC where she
was responsible for the firm's client acquisition, marketing
activities, and relationship management. Ms. Beers previously
held positions as the chief operating officer of STC Associates,
an integrated marketing firm in New York City, and as partner in
the bankruptcy and insolvency practice at Kasowitz, Benson, Torres
and Friedman LLP. Ms. Beers has nearly 19 years of experience in
the insolvency and restructuring arena covering a wide range of
industry sectors.
"KPMG Corporate Finance LLC offers something most investment banks
do not -- the combination of global reach, industry
specialization, and unique collaborative corporate culture," said
Ms. Beers. "I am fortunate to join a well-oiled machine and will
continue to elevate the Special Situations Advisory Group to the
next level."
Ms. Beers developed the Complex Financial Restructuring Program
(formerly the Investment Banking Program) for the American
Bankruptcy Institute and has spoken on panels for the ABI and the
Turnaround Management Association. In conjunction with her role
as counsel representing various debtors and creditors in
bankruptcy, Ms. Beers has authored and been quoted in various
national and regional publications, including The Wall Street
Journal, Dow Jones, Bloomberg, Corporate Finance Week, The
American Lawyer, as well as Turnarounds and Workouts.
Ms. Beers holds a JD from the University of Pittsburgh and a BA in
Economics from Dickinson College. She is a member of the ABI and
the TMA.
About KPMG Corporate Finance LLC
KPMG Corporate Finance LLC -- http://www.kpmgcorporatefinance.com/
-- is a financial adviser serving domestic and international
clients. KPMG Corporate Finance offers a full suite of investment
banking and advisory services and the experience and depth of
knowledge in global M&A and project finance to advise clients on
mergers and acquisitions, sales and divestitures, buy-outs,
financings, restructurings, fairness opinions, infrastructure
project finance and other advisory initiatives. Operating in 51
countries, KPMG's Corporate Finance practice comprises more than
1,800 professionals who are able to meet the needs of KPMG's
firms' clients across the globe.
* Milbank Tweed Wins Valuation Trial in Nellson Nutra's Case
------------------------------------------------------------
Milbank, Tweed, Hadley & McCloy LLP won a dramatic victory for
creditors in an uncommon and exceedingly complex business
valuation trial that was part of a larger bankruptcy proceeding in
historically debtor-friendly Delaware Bankruptcy Court.
Milbank Tweed was the lead trial counsel in the hotly contested
valuation proceeding and represented UBS AG - Stamford Branch.
Nellson Nutraceutical, Inc., the Debtor that filed for Chapter 11
protection on Jan. 28, 2006, hired its own valuation expert.
Los Angeles-based Milbank partner and lead trial attorney Linda
Dakin-Grimm, Esq., commented, "It is very unusual for a Chapter 11
enterprise valuation dispute to go to trial. It is also
remarkable for a bankruptcy judge to disqualify Debtor's valuation
expert along the way."
The trial was held in order to determine the "enterprise value" of
the company in order for the company to develop and file a Chapter
11 reorganization plan.
To conduct the valuation, the company hired their own valuation
expert, while three different creditor groups, including UBS AG -
Stanford Branch as agent for the company's secured lenders, each
hired its own independent expert. The four experts based each of
their valuations on the company's May 2006 long-term business
plan, using valuation methodologies to determine the company's
enterprise value.
According to the 105-page opinion of the Honorable Christopher S.
Sontchi of the U.S. Bankruptcy for the District of Delaware,
evidence presented at the 23-day valuation trial "overwhelmingly
established that the Debtors' business plan had been manipulated
at the direction of and in cooperation with the Debtors'
controlling shareholder to bolster the value of Debtors' business
solely for the purposes of this litigation."
Judge Sontchi also reprimanded the expert hired by the company and
disqualified his valuation, which was $60 to $90 million higher
than that of the other valuation experts.
In his Jan. 18, 2007 opinion, Judge Sontchi valued the company at
$320 million, which was significantly less that what the Debtors
had asserted and not enough for Fremont Partners, which owns
Nellson Nutraceutical, to maintain its equity stake in the
company.
Milbank partners Gregory A. Bray, Esq. and Thomas R. Kreller, Esq.
represent UBS AG - Stamford Branch in the Chapter 11 proceedings.
Milbank associate Jason B. Baim, Esq. worked with Ms. Dakin-Grimm
on the valuation trial. James J. Holman, Esq. and Richard W.
Riley, Esq. of the Philadelphia-based Duane Morris LLP served as
local counsel to UBS AG - Stamford Branch.
About Nellson Nutraceutical
Based in Irwindale, California, Nellson Nutraceutical, Inc.,
formulates, makes and sells bars and powders for the nutrition
supplement industry. The Debtors filed for chapter 11 protection
on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski,
Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent
the Debtors in their restructuring efforts. Lawyers at Young,
Conaway, Stargatt & Taylor, LLP, represent an informal committee
of which General Electric Capital Corporation and Barclays Bank
PLC are members. In its Schedules of Assets and Liabilities filed
with the Court, Nellson Nutraceutical reports $312,334,898 in
total assets and $345,227,725 in total liabilities when it filed
for bankruptcy.
About Milbank Tweed
Based in New York City, Milbank, Tweed, Hadley & McCloy LLP --
http://www.milbank.com/-- is a global law firm that for more than
140 years has provided innovative legal solutions in many of the
world's largest, most complex, "first-ever" corporate transactions
and litigation. The company's transactional expertise includes
capital markets, corporate finance and transactions, project
finance, acquisition finance, and other major fields of law
practice. Milbank litigation teams resolve disputes involving
mergers and acquisitions, proxy battles, financings and securities
offerings, intellectual property, white collar crime, and
corporate restructurings, among others.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Accorda Therapeut. ACOR (8) 40 5
AFC Enterprises AFCE (40) 157 4
Affymax Inc. AFFY (114) 61 53
Alaska Comm Sys ALSK (25) 566 26
Alliance Imaging AIQ (18) 674 30
AMR Corp. AMR (514) 30,128 (1,202)
Armstrong World AWI (1,197) 4,721 1,132
Atherogenics Inc. AGIX (136) 197 146
Bare Essentials BARE (620) 139 42
Bearingpoint Inc. BE (46) 1,972 229
Blount International BLT (107) 441 121
CableVision System CVC (5,400) 9,777 (400)
Carrols Restaurant TAST (104) 497 (25)
Centennial Comm CYCL (1,092) 1,422 112
Charter Comm-a CHTR (5,632) 15,198 (999)
Choice Hotels CHH (78) 286 (48)
Cincinnati Bell CBB (679) 1,889 55
Claymont Stell H PLTE (30) 177 112
Clorox Co. CLX (33) 3,624 (540)
Compass Minerals CMP (74) 671 145
Corel Corp. CRE (22) 113 11
Crown Holdings CCK (545) 6,358 106
Crown Media HL CRWN (449) 918 190
Dayton Superior DSUP (171) 281 63
Deluxe Corp DLX (66) 1,267 (462)
Denny's Corporation DENN (231) 454 (73)
Domino's Pizza DPZ (592) 360 (20)
Double-Take Soft DBTK (54) 19 (2)
Dun & Bradstreet DNB (188) 1,450 (203)
Echostar Comm DISH (365) 9,352 1,696
Emeritus Corp. ESC (115) 713 (34)
Emisphere Tech EMIS (5) 34 12
Empire Resorts NYNY (25) 61 (2)
Encysive Pharm ENCY (88) 69 33
Gencorp Inc. GY (96) 1,021 (4)
Graftech International GTI (157) 875 253
Guidance Software GUID (2) 22 (1)
Hansen Medical HNSN (32) 38 33
HealthSouth Corp. HLS (1,339) 3,310 (314)
I2 Technologies ITWO (25) 190 17
ICO Global C-New ICOG (60) 657 (380)
ICOS Corp ICOS (18) 285 112
IMAX Corp IMAX (33) 243 84
Immersion Corp IMMR (22) 47 31
Immunomedics Inc IMMU (21) 50 21
Incyte Corp INCY (66) 465 295
Indevus Pharma IDEV (124) 92 55
Inergy Holdings NRGP (19) 1,647 (12)
Investools Inc. IEDU (64) 120 (79)
IPG Photonics IPGP (31) 115 24
J Crew Group Inc. JCG (55) 414 128
Kaiser Aluminum KALU (3,105) 1,598 123
Koppers Holdings KOP (86) 637 148
Life Sciences LSR (25) 205 23
Ligand Pharm LGND (239) 232 (162)
Lodgenet Entertainment LNET (62) 269 18
McMoran Exploration MMR (18) 431 (27)
Navisite Inc. NAVI (4) 100 (9)
New River Pharma NRPH (65) 170 135
Nexstar Broadc NXST (78) 679 27
Northwest Airlines NWACQ (7,718) 13,498 659
NPS Pharm Inc. NPSP (182) 237 150
Obagi Medical OMPI (51) 50 12
ON Semiconductor ONNN (205) 1,417 266
Qwest Communication Q (2,576) 21,114 (1,569)
Radnet Inc. RDNT (74) 127 (1)
Riviera Holdings RIV (29) 222 10
Rural Cellular RCCC (540) 1,410 164
Rural/Metro Corp. RURL (89) 305 51
Savvis Inc. SVVS (138) 467 25
Sealy Corp. ZZ (188) 933 89
St. John Knits Inc. SJKI (52) 213 80
Sun-Times Media SVN (322) 905 (383)
Town Sports Inte. CLUB (25) 417 (55)
Unisys Corp. UIS (97) 4,064 264
Weight Watchers WTW (103) 935 (72)
Western Union WU (315) 5,321 594
Worldspace Inc. WRSP (1,574) 604 140
WR Grace & Co. GRA (504) 3,620 920
*********
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, Shimero R. Jainga, Ronald C. Sy,
Joel Anthony G. Lopez, Cecil R. Villacampa, Rizande B. Delos
Santos, Cherry A. Soriano-Baaclo, Jason A. Nieva, Melvin C. Tabao,
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 ***