/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070213.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 13, 2007, Vol. 11, No. 37 Headlines ACIH INC: Moody's Affirms Junk Rating on Discount Notes ADELPHIA COMMS: Effective Date of Reorganization Plan is Today ADELPHIA COMMS: Wants TWC Stock Public Sale Procedures Approved ADELPHIA COMMS: Wants to Implement 2007 Employee Incentive Program ADVANCED MARKETING: Wants PGW Employee Retention Program Approved ADVANCED MARKETING: NBN Files Bid to Buy PGW Distribution Rights ADVANTA CORP: Earns $84.2 Million In Year Ended December 31 ALCATEL-LUCENT: Performed Well Despite Weak Results Says Fitch AMERICAN TOWER: Fitch Lifts Senior Notes' Rating to BB+ from BB- AMERIQUEST MORTGAGE: Moody's Places B1 Rated Certs. on Review AMERISOURCEBERGEN: Earns $122.2 Million in Quarter Ended Dec. 31 ANDREW CORP: Charles Nicholas Retires as Chairman of the Board ARAMARK CORP: Completes Merger with Private Investment Group ARAMARK CORP: Fitch Rates $1.78 Bil. Senior Unsecured Notes at B- ASARCO LLC: AR Sacaton, et al. Tap Baker Botts as Bankr. Counsel ASARCO LLC: Committee Taps Bates White as Asbestos Consultant AUDIO VISUAL: $60 Mil. Senior Secured Facility Rated B3 by Moody's AVAYA INC: Earns $71 Million in Fiscal Quarter Ended December 31 ACXIOM CORP: Earns $24.9 Mil. in 3rd Fiscal Quarter Ended Dec. 31 BAUSCH & LOMB: Files 2005 Annual Report with SEC CALPINE CORP: Court Approves Sutherland Asbill as Special Counsel CENTRAL GARDEN: Reports $3 Million Net Loss for Qtr. Ended Dec. 30 CITIGROUP MORTGAGE: DBRS Rates $4.7 Mil. Class M-11 Certs. at BB CONEXANT SYSTEMS: Earns $7.4 Million in Fiscal 2007 First Quarter COUDERT BROTHERS: Accepting File Retrieval Notices Until April 30 CREDIT SUISSE: Moody's Holds Junk Rating on $19MM Class I Certs. CREDIT SUISSE: Moody's Hold Rating on $18MM Class L Certs. at Ba1 CSFB ABS: S&P Cuts Rating on Series 2002-HE1 Class B Certs. to BB DAVITA INC: Loan Add-on Cues S&P to Hold BB- Corp. Credit Rating DAVITA INC: Moody's Rates New $400 Mil. Senior Unsecured Notes B1 DELPHI CORP: Wants to Sell Brake Hose Biz to Harco Mfg. for $9.8MM EASTLAND CLO: $48 Million Class D Notes Rated BB by S&P EASTMAN KODAK: Details Major Restructuring by End of 2007 EDDIE BAUER: CEO and Board Member Fabian Mansson Resigns ELCOM INT'L: Selects John Halnen as Interim President & CEO ESTERLINE TECH: S&P Affirms BB Long-Term Corporate Credit Rating EXECUTE SPORTS: Sells Academy Snowboard Rights Back to Owners EXIDE TECH: Posts $11.2 Million Net Loss in Quarter Ended Dec. 31 FLEXTRONICS: Earns $119 Million Net Income in Qtr Ended Dec. 31 FLOWSERVE CORP: Fitch Rates Senior Secured Bank Facilities at BB FOAMEX INT'L: Emerges from Chapter 11 Bankruptcy Protection FULTON STREET: Fitch Cuts Rating on $5.9 Mil Class C Notes to B- FUNCTIONAL RESTORATION: Trustee Wants Grobstein as Accountants GEOEYE INC: Pays $50 Million Loan Used to Acquire Space Imaging GLOBAL POWER: Has Until April 26 to File Chapter 11 Plan GLOBAL TEL*LINK: Moody's Holds Corporate Family Rating at B1 GNC CORP: Possible Company Sale Cues S&P's Negative CreditWatch GRANT FOREST: S&P Cuts Long-Term Corporate Credit Rating to 'B+' GSAMP TRUST: Moody's Rates Class B-2 Certificates at Ba2 GSC PARTNERS: Moody's May Upgrade Ba3 Rating on $10MM Cl. B Notes GSMSC NET: Moody's Puts Low-B Ratings on Class N3 and N4 Notes HERTZ CORP: Additional Debt Cues S&P's BB- Corporate Credit Rating IFM COLONIAL: S&P Places Corporate Credit Rating at 'BB+' JUNIPER NETWORKS: Stock Options Probe Cues S&P's Negative Watch KYPHON INC: Moody's Lifts B1 Rating on $300 Mil. Senior Revolver LAIDLAW INTERNATIONAL: FirstGroup To Purchase Shares for $3.6 Bil. LAIDLAW INT'L: Merger Does Not Affect Low-B Ratings, Moody's Says LB-UBS: Moody's Holds Junk Rating on $4.9 Million Class N Certs. LB-UBS: S&P Assigns Low-B Ratings to $51 Million Debentures LEAR CORP: Carl Icahn Deal Prompts S&P's Negative CreditWatch LEVEL 3 COMM: Posts $237 Million Net Loss in Quarter Ended Dec. 31 MAGNOLIA VILLAGE: Wants Plan Confirmation Date Moved to June 5 MERITAGE HOMES: Fitch Holds Unsecured Credit Facility Rating at BB MERRILL LYNCH: Moody's Affirms B2 Rating on $5 Mil. Class G Certs. MORGAN STANLEY: Moody's Lifts Junk Rating on Class G Certs. to B2 MORGAN STANLEY: S&P Rates $9 Million Class Q Certificates at B- NASDAQ STOCK: Fails in $5.3 Billion Bid for London Stock Exchange NATIONAL BEDDING: Moody's Junks Rating on $210 Mil. Sr. Facility NATIONAL BENEVOLENT: Weil Gotshal Malpractice Suit Dismissed NAVIOS MARITIME: Buys Kleimar's Share Capital for $165.6 Million NEWCOMM WIRELESS: Governmental Units Can File Claims Until May 28 PACIFIC COAST: Moody's Rates $96 Mil. Class B Senior Notes at B3 PHILLIPS-VAN: Enters Licensing Pact with Timberland Company PITTSFIELD WEAVING: Ct. Extends Cash Collateral Access to Feb. 17 PORT BARRE: $185 Million Credit Facilities Rated B+ by S&P PRIMEDIA INC: Board Approves Sale of Enthusiast Media Segment PSS WORLD: Earns $11.1 Million in Quarter Ended Dec. 29, 2006 RAMP SERIES: S&P's Junk Rating on Series 2004-SL3 Class B-2 Certs. READER'S DIGEST: S&P Puts 'B' Rating on $1.46 Billion Facilities REAL ESTATE: Fitch Rates $20 Million Class B12 Notes at B- REDWOOD CAPITAL: Moody's Rates $250 Million Debentures at Ba2 RENAISSANCE HOME: S&P Cuts Ratings on Class B Certificates to BB RESIDENTIAL ASSET: Fitch Rates $5.9MM Class B Certificates at BB+ RESOURCE REAL: Fitch Holds B Rating on $28 Million Class K Notes RITE AID: Fitch Junks Rating on $500 Million Senior Notes due 2015 RITE AID: S&P Puts B+ Rated $300 Mil. Senior Notes on Neg. Watch RIVERSIDE ENERGY: S&P Holds B Rating, Revises Outlook to Stable ROCKY MOUNTAIN: S&P Revises Outlook Despite Calpine's Bankruptcy SAINT VINCENTS: Files Plan of Reorganization in New York SAINT VINCENTS: Judge Hardin Okays Property Sale to New Prospect SERTA: Moody's Junks Rating on $210 Million Senior Facility SPECIALTY UNDERWRITING: Fitch Cuts Class B-2 Certs. Rating to BB SPECTRUM BRANDS: Posts $18.8MM Net Loss in Quarter Ended Dec. 31 TECH DATA: Appoints Thomas Morgan to Board of Directors THERMA-WAVE: Posts $2.3 Million Net Loss in Quarter Ended Dec. 31 THERMADYNE IND: Selling South African Portfolios for $18.2 Million TOWER AUTOMOTIVE: Exclusive Plan-Filing Period Extended to Feb. 28 TRINSIC INC: Wants to Hire Bankruptcy Services as Claims Agent VALENCE TECHNOLOGY: Sells $1 Million Common Stock to West Coast VERSO PAPER: S&P Cuts Corporate Credit Rating to B from B+ VESTA INSURANCE: XL Files Adversary Proceeding on Insurance Policy VESTA INSURANCE: XL Insurance Wants Stay Lifted to Pay Legal Fees VICORP RESTAURANTS: Posts $6.1 Million Net Loss for 4th Qtr. 2006 VICORP RESTAURANTS: Posts $7.9 Mil. Net Loss for Fiscal Year 2006 VISANT CORP: Moody's Holds Corporate Family Rating at B1 WERNER LADDER: Can File Notices of Removal Until March 7, 2007 WERNER LADDER: To Sell Substantially All Assets for $255,750,000 WERNER LADDER: Court Moves Exclusive Plan Filing Period to Feb. 15 WILLOWBEND NURSERY: Wants to Sell Agricultural Nursery Business WINIMO REALTY: Auction on Albany Terminal Set for March 30 XERIUM TECH: Weak Performance Prompts Moody's Ratings Downgrade YUKOS OIL: U.S.-Based Chevron Eyes Bankrupt Assets ZANETT INC: CEO Guazzoni Buys 550,000 Shares for $1.1 Million * Upcoming Meetings, Conferences and Seminars ********* ACIH INC: Moody's Affirms Junk Rating on Discount Notes ------------------------------------------------------- Moody's Investors Service maintained ACIH's corporate family rating of B2 and discount notes rated Caa1, as well as the B1 rating on Atrium Companies, Inc. senior secured revolver and term loan B facilities on review for possible downgrade pending the receipt of bank waivers and amendments and approval of its pending acquisition of a window manufacturer, as presented to Moody's. "[W]e plan to affirm the company's ratings and assign a negative ratings outlook upon the company being granted the appropriate waivers and amendments as well as approval of its pending acquisition by its bank group," said Moody's analyst Paul Aran. ACIH is an intermediate holding company that is structurally below Atrium Corporation, the ultimate parent company, but resides above Atrium Companies, Inc., the primary operating company. Moody's affirmed the company's speculative grade liquidity rating at SGL-4 to reflect the current tightness under the company's financial covenants. Atrium was placed on review October 30, 2006 to reflect concerns related to its acquisition strategy, covenant compliance, and business performance. These ratings for ACIH remain under review for possible downgrade: -- Corporate Family Rating, rated B2 -- Probability of Default Rating, rated B2 -- $174 million senior discount notes due 2012, rated Caa1, LGD6, 90% Moody's has also maintained these ratings for Atrium Companies, Inc. under review for possible downgrade: -- $378.5 million senior secured term loan B, due 2012, rated B1, LGD3, 37% -- $50 million senior secured revolving credit facility, due 2011, rated B1, LGD3, 37% The Speculative Grade Liquidity assessment for ACIH was affirmed: -- Speculative Grade Liquidity Rating, SGL-4 The company's outlook is expected to be changed to negative upon Moody's conclusion of the ratings review. The negative outlook would be in place to reflect the anticipated and continued impact of the homebuilding and remodeling slowdown on Atrium's sales and cash flow generation. The negative outlook would consider the company's geographic sales mix as Atrium has significant revenue contribution from markets that are currently experiencing a slowdown; the markets include Florida, Arizona, California, and Nevada. However, a significant portion of its revenues come from Texas and other markets that are believed to be under less pressure. The speculative grade liquidity rating of SGL-4 reflects the expectation that the company's free cash flow generation will be slightly positive over the next four quarters. The SGL rating also reflects increased tightness under the covenants governing the senior secured credit facilities due to softening market conditions. Atrium has access to a $50 million revolving credit facility that is used intermittently for working capital purposes. Moody's considers the credit facility to be small relative to the company's overall size. Atrium also has access to a $60 million accounts receivable securitization facility with projected availability of approximately $20 million. However, rating triggers under this program may affect the company's ability to access this facility. Headquartered in Dallas, Texas, Atrium Companies, Inc. is one of the largest window manufacturers in the United States. Revenues for 2005 were $787 million. ADELPHIA COMMS: Effective Date of Reorganization Plan is Today -------------------------------------------------------------- The effective date of its First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization of Adelphia Communications Corporation and Certain Affiliated Debtors, dated as of Jan. 3, 2007, as Confirmed, will occur today, Feb. 13, 2007. The Distribution Record Date for distributions under the Plan to holders of Notes Claims and Equity Interests will be Feb. 13, 2007 at 4:00 p.m. (Eastern Standard Time). Jan. 10, 2007 at 4:00 p.m. (Eastern Standard Time) remains the Distribution Record Date for holders of all Claims other than Notes Claims and Equity Interests. Initial distributions will commence today, Feb. 13, 2007. Creditor inquiries regarding distributions under the Plan should be directed to creditor.inquiries@adelphia.com 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. 163; 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. ADELPHIA COMMS: Wants TWC Stock Public Sale Procedures Approved --------------------------------------------------------------- Adelphia Communications Corp. and its debtor-affiliates anticipate that their Fifth Amended Plan of Reorganization will enable them to distribute the Time Warner Cable Inc. Class A Common Stock to creditors pursuant to Section 1145 of the Bankruptcy Code, and without the need for a public sale. To comply with existing contractual obligations under the Registration Rights Agreement previously approved by the Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York, the ACOM Debtors must pursue a "dual track" strategy until the commencement of distributions under the Fifth Amended Plan: (a) seek confirmation of the Fifth Amended Plan; and (b) pursuant to the Registration Rights Agreement, under certain circumstances, sell the TWC Stock pursuant to a public sale. The ACOM Debtors have been taking and must continue to take certain steps to prepare for the Public Sale of the TWC Stock as they pursue confirmation of the Plan. Accordingly, the ACOM Debtors seek the Court's authority to: (a) approve certain procedures relating to their potential sale pursuant to a firm fully underwritten public sale of no less than 33-1/3% -- inclusive of any shares sold pursuant to the overallotment options granted to the Underwriters -- of the TWC Stock received by the ACOM Debtors and the Escrow Agent in connection with the Sale Transaction; (b) allow the Debtors to enter into an underwriting agreement with certain underwriters, in connection with the Public Sale and other agreements as necessary or advisable to effectuate the Public Sale; and (c) allow the sale of the TWC Stock to be offered in the Public Sale to the Underwriters free and clear of Interests. Registration Rights Agreements ACOM had sold substantially all of its assets to Time Warner NY Cable LLC and Comcast Corporation, and entered into a Registration Rights Agreement. Under the Registration Rights Agreement and the Purchase Agreements, the ACOM Debtors are required, within three months of the relevant TWC registration statement being declared effective by the Securities and Exchange Commission, to sell at least 33- 1/3% of the TWC Stock in a single firm commitment underwritten public offering unless prior to that time, the ACOM Debtors consummate a plan of reorganization, pursuant to which either: (a) at least 75% of the then remaining TWC Stock, other than the shares held by the Escrow Agent pursuant to the Escrow Agreement, is distributed to the creditors as long as the stock is approved for listing on The New York Stock Exchange or The Nasdaq National Market within two weeks; or (b) 90% of the TWC Stock, other than shares held pursuant to the Escrow Agreement, is distributed to the creditors. If the Fifth Amended Plan is timely confirmed and TWC is able to obtain the requisite approval for listing, the Plan will satisfy the Plan Requirement. On Oct. 18, 2006, TWC filed a Registration Statement on Form S-1 with the SEC. On Nov. 14, 2006, TWC received initial comments from the SEC. The ACOM Debtors expect TWC and the SEC to resolve those comments promptly, so that TWC will be in a position in the relative near term to have the Registration Statement declared effective by the SEC. Underwriter Selection Process Pursuant to the Registration Rights Agreement, Time Warner and the ACOM Debtors are required to select three nationally recognized investment banking firms to serve as the lead book- running managing underwriters for the Public Sale and, as determined by TWC, additional Managing Underwriters and nationally recognized investment banking firms as co-lead managers. In September 2006, the Debtors and Time Warner conducted an extensive selection process in which the parties met and considered numerous sophisticated, qualified, and nationally recognized investment banks for the positions of the Managing Underwriters. Concurrently with the selection process, the ACOM Debtors made several presentations to and solicited the input of representatives of the Official Committee of Unsecured Creditors regarding the investment banks. The Creditors Committee subsequently met with representatives from several investment banking firms. In mid-September 2006, Time Warner notified the ACOM Debtors of its intent to select three investment banking firms to serve as Managing Underwriters for the Public Sale of the TWC Stock. After further consultation with the Creditors Committee, the ACOM Debtors selected two additional investment banking firms to serve as Managing Underwriters for the Public Sale of the TWC Stock. The Managing Underwriters are represented by Shearman & Sterling LLP, which also represents Rembrandt Technologies, L.P., in an adversary proceeding initiated against certain ACOM entities. The ACOM Debtors have discussed with Shearman & Sterling the dual representation. The firm believes that it has no ethical barriers to that dual representation and, in any event, has represented that it has established sufficient ethical walls between the attorneys representing Rembrandt and those representing the Managing Underwriters so as to eliminate the potential risk of information leakage detrimental to these estates. At Time Warner's request, the ACOM Debtors have agreed not to disclose the names of the investment banking firms selected to serve as Managing Underwriters. The ACOM Debtors will file a notice by December 16, 2006, with the Court disclosing the names of the five investment banking firms selected to act as Managing Underwriters. Public Sale Process Pursuant to Section 2.1 of the Registration Rights Agreement, Time Warner, the ACOM Debtors and the Managing Underwriters will determine the date on which the initial offering efforts, in connection with the Public Sale of the TWC Stock, occur. To ensure the timeliness of the decision-making necessary in connection with the Public Sale and to ensure that the Creditors Committee has decision-making authority in connection with the Public Sale Process, the ACOM Debtors have agreed with the Committee to establish a panel, comprising representatives of the ACOM Debtors and of the Committee. The Public Sale Committee will determine: (a) an initial price range for which the TWC Stock will be offered to the public during the road show, in which Time Warner and the Underwriters will meet with potential investors to market the TWC Stock, and in any Preliminary Prospectus and any modifications thereto; (b) the offering price of the TWC Stock; (c) the timing of the Public Sale, including whether to extend the timing of the offering beyond the date the Registration Statement is declared effective by the SEC; (d) whether to extend the Public Sale by up to 72 hours in certain circumstances as provided in the Registration Rights Agreement; and (e) the number of shares of TWC Stock, if any, in excess of the 33-1/3% required to be sold by the Debtors that will be included in the Public Sale. The ACOM Debtors expect that when the road show is nearly complete, Time Warner will ask the SEC to declare the Registration Statement effective. Alternatively, it is possible that Time Warner will seek to have the Registration Statement declared effective prior to the commencement of the road show in order to start the three-month period in which the Debtors must, subject to certain exceptions, effect the Public Sale. In no case later than three months after the Registration Statement is declared effective, the Public Sale Committee will determine the Offering Price of the TWC Stock, after consultation with Time Warner, and in accordance with the recommendations of the Managing Underwriters. At that time, the ACOM Debtors, the Underwriters, and Time Warner will execute the Underwriting Agreement and related agreements. Underwriting Agreement Prior to the Public Sale, the ACOM Debtors, Time Warner and the Underwriters will execute the Underwriting Agreement to memorialize and effectuate the sale of the TWC Stock to the Underwriters in connection with the Public Sale. Pursuant to the Underwriting Agreement, among other things, the ACOM Debtors will sell the stock to the Underwriters for a purchase price. The difference between the Purchase Price and the Offering Price -- the Gross Spread -- expressed as a percentage of the Offering Price, which is a negotiated percentage, represents the "fee" earned by the Underwriters for their services and for accepting the underwriter's risk and potential liability. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, relates that the Gross Spread has been heavily negotiated between the ACOM Debtors and the Underwriters. The Gross Spread represents a price for those services and risk that is at market. Given the experience of the Underwriters and the critical role they play in effectuating a successful Public Sale, the Debtors believe the Gross Spread is reasonable. Additional salient terms of the Underwriting Agreement are: (a) the Underwriters can purchase up to an additional 15% of the shares of TWC Stock initially being offered in the Public Sale at the Purchase Price within 30 days of execution of the Underwriting Agreement solely for the purpose of covering overallotments made in connection with the Public Sale. (b) the Shares will be transferred to the Managing Underwriters free and clear of all liens, claims, encumbrances and interests of any kind or nature. (c) Time Warner and the ACOM Debtors agree with the Underwriters that they will not, subject to certain exceptions, during the period ending no later than 180 days after the date of the final Prospectus -- the Lock-Up Period" -- without the prior written consent as required by the Underwriting Agreement, offer, sell, contract to sell, pledge, or otherwise distribute or dispose of any of the outstanding shares of TWC Class A and or Class B Common Stock, other than the TWC Stock sold in the Public Sale, or any securities convertible into, or exercisable or exchangeable for, shares of the stock; or publicly announce an intention to effect any of the transaction. (d) The ACOM Debtors agree to indemnify and hold harmless Time Warner and each Underwriter against any and all losses, claims, liabilities or damages to which they or any of them may become subject that arise out of: * any untrue statement of a material fact contained in the Registration Statement, in any prospectus, or in any road show; or * the omission to state a material fact required to be stated or necessary to make the statements not misleading. The ACOM Debtors also agree to reimburse each indemnified party for any legal or other expenses reasonably incurred in connection with investigating or defending any of those loss, but only with reference to the Selling Stockholder Information. (e) The ACOM Debtors agree that, as contemplated by the Registration Rights Agreement, they will be responsible for the fees, disbursements and expenses of their counsel and accountants, except to the extent those accountant's expenses are contemplated to be paid by Time Warner pursuant to the Purchase Agreements. Underwriting Agreement Form Filed The Debtors have delivered to the Court the form of the Underwriting Agreement in connection with the public sale of the Time Warner Cable Inc. Class A Common Stock. Pursuant to the Underwriting Agreement, among other things, the ACOM Debtors will sell the TWC Stock to certain underwriters for a purchase price. A copy of the Underwriting Agreement form is available for free at http://researcharchives.com/t/s?19b4 Debtors File Gross Spread Under Seal The ACOM Debtors obtained permission from Judge Gerber to file under seal the Gross Spread and related materials, and be made available only to: (i) counsel to the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders; (ii) the United States Trustee for the Southern District of New York; (iii) counsel to the Underwriters; (iv) and other parties as the Court order, or agreed by the ACOM Debtors. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, contends that the fee structure embodied in the Gross Spread is sensitive business information and must be filed under seal. If the fee structure is disclosed prior to the consummation of the Public Sale, the Underwriters will insist upon a structure that is less favorable for the ACOM Debtors, Ms. Chapman asserts. The ACOM Debtors maintain that the Gross Spread is reasonable considering the characteristics of the Public Sale, the experience of the Underwriters and the critical role they play in effectuating a successful transaction. The Gross Spread represents a market rate for transactions similar to the Public Sale. Ms. Chapman contends that the disclosure of the Gross Spread will impact the ACOM Debtors' ability to achieve the maximum value for the TWC Stock to be sold in the Public Sale, thereby resulting in potentially increased costs to the estates. Disclosure of the Gross Spread or any of the related materials, objections and evidence is not necessary for the protection of the public, the ACOM Debtors' creditors or third parties. 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. 163; 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. ADELPHIA COMMS: Wants to Implement 2007 Employee Incentive Program ------------------------------------------------------------------ Adelphia Communications Corp. and its debtor-affiliates and the Official Committee of Unsecured Creditors seek authority from the U.S. Bankruptcy Court for the Southern District of New York to implement an incentive and retention program for certain key employees who remain employed by the Debtors after confirmation of the ACOM Debtors' Modified Fifth Amended Joint Chapter 11 Plan. Representing the ACOM Debtors, Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, relates that the Covered Employees continue to face uncertainty regarding their employment. This uncertainty, occasioned by the appeal and subsequent stay of the Confirmation Order, likely will cause a mass exodus of the Covered Employees at a critical juncture, Ms. Chapman asserts. In anticipation initially of a December 2006 or, subsequently, an early January 2007 Effective Date, the majority of the Covered Employees had been scheduled to leave the ACOM Debtors' employ on Feb. 28, 2007. The delay due to the pendency of the appeal and the stay obtained by a group of bondholders of Senior Notes of Adelphia Communications Corp. has forced the ACOM Debtors to revise their staffing plan, Ms. Chapman says. The need to retain personnel to implement tasks relating to the operation of the ACOM Debtors' remaining business, closing the Plan, and the pressing need to commence work on an audit for 2006 have compelled the ACOM Debtors to attempt to retain the employees notwithstanding the fact that they have been given their termination notices. Ms Chapman tells the Court. The ACOM Debtors estimate that the proposed 2007 KERP, including the incremental payroll obligations resulting from retention of the Covered Employees for a longer period of time than originally anticipated, will cost $5,200,000. Ms. Chapman maintains that the estimated $5,200,000 costs are directly attributable to the delayed Effective Date caused by the stay proceedings. The damage to the ACOM Debtors' estates will be substantially greater if the Effective Date will not occur, she adds. Ms. Chapman asserts that the remaining tasks to be accomplished cannot be performed by outside contractors, who lack the historical knowledge of the ACOM Debtors' business and operations, without significant difficulty and needless cost. The cost of hiring contractors also far outweighs the incremental cost to the ACOM Debtors' estates of the proposed 2007 KERP. No one can predict with certainty when the Effective Date of the Plan, and thus the transfer of oversight responsibility to a Plan Administrator, will occur, Ms. Chapman notes. Without a program in place to compensate Covered Employees for the uncertainty associated with their continued employment, the ACOM Debtors and the Creditors Committee are concerned that significant personnel will depart in the near term, at great cost to the estates. 2007 KERP Under the terms of the 2007 KERP, the ACOM Debtors seek to provide incentives to the Covered Employees to remain in the their employ through the end of May 2007, and in a few cases through the end of July 2007. The 2007 KERP is comprised of two components: (a) a standard compensation component; and (b) a discretionary component for certain key Covered Employees. The 2007 KERP provides for continuing compensation of the Covered Employees beyond their previously scheduled termination date in accordance with the Post-Closing Incentive Program or Extended Employee Post-Closing Incentive Program formulas. For those Covered Employees working under the Post-Closing Incentive Program, the extension of their employment will entitle them to a larger bonus under the program, as the calculation of such bonus corresponds to the length of an employee's service. For those Covered Employees working under the Extended Employee Post-Closing Incentive Program who were originally scheduled to terminate as of Feb. 28, 2007, the termination date would have entitled them to an EKERP Bonus of 50% of their Adjusted Base Salary for the months August 2006 through November 2006, and 75% of their Adjusted Base Salary for the months December 2006 through February 2007. By extending these Covered Employees' terms through May 31, 2007, the employees will be entitled to an additional 75% of Adjusted Base Salary for the months of March and April, and 100% of Adjusted Base Salary for the month of May. Covered Employees whose terms are extended from Feb. 28, 2007 through July 31, 2007 will be entitled to an additional 75% of Adjusted Base Salary for the months of March and April and 100% of Adjusted Base Salary for the months of May, June and July. Discretionary 2007 KERP Awards The ACOM Debtors believe that the 2007 KERP will provide compensation to the Covered Employees sufficient to retain the needed personnel. Nevertheless, Ms. Chapman says, certain of the Covered Employees stand out as uniquely critical to the ACOM Debtors' remaining operations, and a departure of even one of these key Covered Employees could have a "domino" effect resulting in more widespread attrition. Accordingly, the ACOM Debtors and the Creditors Committee seek the Court's authority to make discretionary awards to up to five Covered Employees to induce them to remain in the ACOM Debtors' employ for a longer period of time than originally contemplated. Discretionary 2007 KERP Awards will be distributed in accordance with the same procedure for distributing Discretionary EKERP Awards. The ACOM Debtors' Chief Executive Officer will consult with the Creditors Committee prior to making any Discretionary 2007 KERP Awards if the award is more than 50% of the formulaic EKERP bonus. As a further layer of oversight, each Discretionary 2007 KERP Award will be subject to the approval of Quest Turnaround Advisors, LLC, as the Plan Administrator. The ACOM Debtors propose to award Discretionary 2007 KERP Awards totaling $1,350,000. 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. 163; 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 confirmed Adelphia Communications Corp. and its debtor-affiliates' first modified fifth amended joint Chapter 11 plan of reorganization. ADVANCED MARKETING: Wants PGW Employee Retention Program Approved ----------------------------------------------------------------- Advanced Marketing Services Inc. and its debtor-affiliates previously asked the U.S. Bankruptcy Court for the District of Delaware for authority to sell Publishers Group West Inc.'s rights under its distribution agreements with various publishers to Perseus Books LLC, and Client Distribution Services Inc. The Debtors now ask the Court for authority to implement a PGW Employee Retention Program, which provides bonuses to certain PGW key employees in providing transition services in connection with the aforementioned Perseus transaction -- the PGW Transition Services Bonus Plan. To preserve the Debtors' ability to effect the Perseus transaction, including the provision of the transition services, PGW must retain key employees in numerous departments, including sales and merchandise, logistics and accounting, Mark D. Collins, Esq., at Richards, Layton & Finger, PA, at Wilmington, Delaware, relates. According to Mr. Collins, the Debtors have determined that the total anticipated cost of the PGW Employee Retention Program is $750,850. The PGW Employee Retention Program applies to approximately 117 employees, but none of the PGW Key Employees are officers of the Debtors. Pursuant to the PGW Transition Services Bonus Plan, the PGW Key Employees are eligible to receive bonuses in the range of $303 to $45,900, based on: (1) a consideration of their compensation in effect upon their approval for participation in the PGW Transition Services Bonus Plan; (2) employment position classification; and (3) continued employment with PGW on July 31, 2007. The total cost of the bonuses payable to PGW Key Employees under the PGW Employee Retention Program will be paid by Perseus, Mr. Collins notes. Hence, the direct cost to the PGW estate that would otherwise be incurred to retain its key employees to maintain operations pending a going concern sale will be paid by the buyer of PGW's assets. Mr. Collins adds that the implementation of the PGW Key Employee Retention Program is contingent on the Court's approval of the Perseus transaction. Mr. Collins asserts that the Debtors considered a number of factors in designing the PGW Employee Retention Program in conjunction with Perseus, including industry standards, PGW's historic practices, and the nature of its business. The potential costs associated with the loss of employees would be far in excess of the cost of the PGW Employee Retention Program. The successful consummation of the Perseus transaction, in turn, relies on retaining employees with the knowledge and skill of PGW's business to perform the transition services, Mr. Collins asserts. PGW's employees, and in particular the PGW Key Employees, are critical to performing the transition services. "The loss of key employees would lead to further work force attrition as employee morale would deteriorate with the departures and concomitant increased work demands on remaining employees," Mr. Collins says. 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. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANCED MARKETING: NBN Files Bid to Buy PGW Distribution Rights ---------------------------------------------------------------- National Book Network Inc. made a competing and superior bid to purchase Publishers Group West Inc.'s rights under its distribution agreements with various publishers, Rich Publishing LLC disclosed in its objection to the proposed sale to Perseus Books LLC, and Client Distribution Services Inc. As reported in the Troubled Company Reporter on Jan. 31, 2007, Advanced Marketing Services Inc. and its debtor-affiliates asked the U.S. Bankruptcy Court for the District of Delaware for authority to sell Publishers Group West's rights under its distribution agreements with various publishers to Perseus Books and Client Distribution Services Inc. The Court set a hearing yesterday, Feb. 12, 2007, to consider the Debtors' request to sell PGW's rights under its distribution agreements with various publishers to Perseus Books and CDS. NBN's Offer NBN offered to pay 85 cents on the dollar for the claims of all PGW publishers, Rich Publishing said. The NBN offer was announced, in part, by Richard Freese, president of PGW, who observed that all PGW publishers remain "free to enter into an offer with NBN," according to Rich Publishing. NBN is a sales, marketing, and distribution company servicing North American and overseas publishers of commercial fiction and nonfiction books and audio titles. Founded in 1986, NBN is a subsidiary of The Rowman & Littlefield Publishing Group, Inc., one of North America's largest academic publishers. NBN is headquartered in Lanham, Maryland. Parties Object to Sale Seven parties filed objections to the proposed sale of PGW's rights under its distribution agreements to Perseus Books and CDS: (1) Wells Fargo Wells Fargo Foothill, Inc., contends that the proposed buyer protections are inappropriate under the circumstances since the proposed sale results in no cash or other monetary compensation to the Debtors or the estate. The break-up fee will come out from the Debtors' pocket. Wells Fargo further notes that (i) Perseus' administrative claim must be junior to Wells Fargo's administrative claim since Wells Fargo was granted a superpriority administrative claim enjoying priority over all other unsecured obligations, and (ii) procedures to protect PGW's accounts receivable must be established. (2) Carus Carus Publishing Group wants the order authorizing the sale to reflect that PGW is authorized to assume its distribution agreements with those publishers that have entered into publisher agreements with Perseus and other successful bidder, which assumption will occur prior to their assignment. Carus further asks the Court to hold that no payments made prepetition to consenting publishers pursuant to assumed agreements can be recovered under Section 547 of the Bankruptcy Code or otherwise by PGW. (3) Creditors Committee The Official Committee of Unsecured Creditors argues that the Debtors' request fails to allow adequate time for the postpetition solicitation of other purchasers and for competitive bidding. Although productive negotiations are ongoing among the purchasers, the Debtors, and the Committee regarding the terms of the Transaction Documents, the Committee informs the Court that: * it objects to the requirement that Advanced Marketing Services, Inc., be responsible for the Administrative Amount because AMS should not be obligated to incur any expense that is the responsibility of PGW; * the Transaction Documents must specify that CDS is responsible for all costs related to the transition involving the PGW Sale under the Transition Services Agreement; specify the exact amounts of PGW's and AMS's costs for which the Purchasers will be responsible; and set forth a dispute resolution process; * the Transaction Documents fail to provide that Perseus Books guarantee all of the obligations of CDS under the agreements; and * the proposed Purchaser Protection is inappropriate under the circumstances. The Committee reserves its right to withdraw its objections in whole, or in part, as issues are resolved. (4) Elsevier Elsevier, Inc., as successor-in-interest to CMP Media LLC, objects to the sale insofar as PGW seeks to assume an executory contract with CMP and assign that contract to the proposed purchasers without complying with the assumption, assignment and cure requirements. Elsevier also objects to the sale insofar as it purports to transfer title to books owned by Elsevier, but are currently held by PGW as a bailee. (5) Rich Publishing According to Rich Publishing LLC, it objects to the sale insofar as there is a superior offer outstanding for the same PGW assets. Rich Publishing wants the Court to postpone for at least two weeks, the hearing on the request until the NBN offer process has developed and other competing bids, if any, are presented. (6) LearningExpress LearningExpress, LLC, objects to the PGW Sale to the extent that it seeks to assume and assign its Distribution Agreement with PGW without providing for (i) a cure of all pre- and post-Petition Date defaults of PGW under the Agreement, and (ii) adequate assurance of future performance by a proposed purchaser, including with respect to its Loan Agreement with PGW. LearningExpress notes that it is willing to consider alternate proposals, including from PGW, Perseus Books, or possibly other potential purchasers. (7) NAB Society for the Study of Native Arts and Sciences, doing business as North Atlantic Books, asserts that the sale unfairly prejudices publishers, like itself, whose contracts will not be assigned to the proposed purchasers. Any benefits seems to inure only to creditor-publishers whose agreements are being assigned to the Purchasers at the expense of those publishers whose agreements will be rejected, NAB says. 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. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVANTA CORP: Earns $84.2 Million In Year Ended December 31 ----------------------------------------------------------- Advanta Corp. reported fourth quarter net income of $18.2 million and net income from continuing operations of $84.2 million for the year ended Dec. 31, 2006. Net income for the year ended Dec. 31, 2006, was $85 million. "Our 2006 full year Business Cards earnings increased by over 50%, and our managed receivables grew by almost 39%; we added 56% more new customers, and our managed net credit loss rate dropped by 230 basis points to 3.41%. We had a great year! Most importantly we continued to strengthen and build on the foundation for the burgeoning results we expect to see going forward," said Dennis Alter, the company's chairman and chief executive officer. Ending managed receivables grew to $5.2 billion at Dec. 31, 2006, with full year new customers totaling approximately 371,000. Ending owned receivables grew 29% during the year to $1.1 billion, and the full year net credit loss rate on owned receivables decreased 218 basis points to 3.19%. 2006 customer transaction volume totaled $12.3 billion, a 26% increase over 2005. About Advanta Advanta Corp. (NASDAQ: ADVNB, ADVNA) -- http://www.advanta.com/-- is the only credit card issuer (through Advanta Bank Corp.) exclusively focused on the small business credit card market. * * * As reported in the Troubled Company Reported on Dec. 13, 2006, Fitch Ratings affirmed the long-term Issuer Default Rating of Advanta Corp. and Advanta Bank Corp. at 'BB-". The Rating Outlook is revised to Positive from Stable. ALCATEL-LUCENT: Performed Well Despite Weak Results Says Fitch -------------------------------------------------------------- Fitch Ratings reported that Alcatel-Lucent has managed expectations well and apparently received good support from the capital markets, despite what was a relatively weak but well-flagged set of full-year financial results. The results support Fitch's downgrade of Alcatel to 'BB' from 'BBB-' on Dec. 8, 2006 upon completion of the Lucent merger. "It is interesting that a well-trailed profit warning in January and a step-up in restructuring initiatives announced [Fri]day, combined with a relatively weak set of results, have resulted in a positive reaction from the equity markets for Alcatel-Lucent this morning," says Stuart Reid, a Director in Fitch's European TMT team. "While the company provided somewhat reassuring guidance for 2007, Fitch believes considerable work remains before the company might justify a move back into the investment-grade world". Alcatel-Lucent results included a fall in pro-forma sales by 1.7% to EUR18.2 billion, at a time when equipment vendors generally have been reporting healthy levels of growth. Stripping out the impact of restructuring, impairments and share-based compensation, operating income fell to EUR1,025 million reflecting a pro-forma margin of 5.6%. Coupled with relatively weak cash flows and a more leveraged balance sheet, the agency believes the current rating of 'BB' to be fully justified. While it is too early to conclude too much from Alcatel-Lucent's figures, the weakness in the company's North American mobile revenues in 2006 - the key strategic benefit contributed by Lucent - is a concern. Although Ericsson, which reported last week, also suffered an erosion in sales from the region in 2006, its strong overall revenue and earnings growth confirm the benefits of the geographic diversity that that company enjoys. In terms of cash flow performance, analysis is obscured by the fact that Alcatel-Lucent's numbers only benefit from one month's consolidation of the merged entity. They nonetheless confirm Fitch's reservations at the time of the downgrade in December 2006 that cash flow would be weakened and that the company's capitalization would suffer as a result of the merger. On a consolidated basis Alcatel-Lucent reported negative free cash flow of around EUR500 million for the year. While credit default spreads generally have benefited from technical conditions in recent months, Fitch views the tightening in Alcatel-Lucent's credit spreads in recent months somewhat difficult to rationalize. Fitch would want to see an improvement in operating margins and free cash flow before any change in the Outlook might be considered. While the company has articulated a clear road map to improved profitability, including the escalation in headcount cuts from 9,000 to 12,500, execution risk remains. Cash costs related to the restructuring will weigh on cash flow and liquidity, although M&A risk is considered relatively low given the challenges at hand. AMERICAN TOWER: Fitch Lifts Senior Notes' Rating to BB+ from BB- ---------------------------------------------------------------- Fitch Ratings has upgraded the ratings on American Tower Corp. and its subsidiaries as: American Tower Corp -- Issuer Default rating to 'BB+' from 'BB-'; -- Senior Unsecured notes to 'BB+' from 'BB-'. American Towers Inc. -- IDR to 'BB' from 'BB-'. SpectraSite Communications Inc. -- IDR to 'BB' from 'BB-'. ATI's senior subordinated debt and senior secured credit facility are affirmed at 'BB+' and 'BBB-' respectively. SpectraSite's senior secured credit facility is affirmed at 'BBB-'. The Rating Outlook is Stable. American Tower's ratings upgrade reflect the strong operating performance which exceeded Fitch's financial projections as well as the increased scale that has resulted in improved free cash flow. AMT's operating characteristics remain favorable, resulting in some of the highest profitability measures for all of corporate credits and reflective of the lower business risk, which results in a predictable and growing cash flow stream generated primarily from investment grade national wireless operators. Fitch believes these characteristics more than offset AMT's moderate financial policy with its sizable share repurchase program and relatively high financial leverage for its rating category. AMT should continue to meaningfully improve its operating metrics due to scale benefits and the expectations for continued wireless industry demand driven by footprint expansion, improved coverage, minute growth and increasing demand for wireless data services as operators focus infrastructure upgrades on high-speed wireless data. During the fourth quarter of 2006, AMT completed financial restatements related to its past stock option practices and announced a remediation plan to address the material weaknesses in its internal control over financial reporting. Fitch believes AMT has made progress at resolving the internal control issues and has reasonable plans to address these weaknesses that should be resolved over the coming quarters. American Tower's liquidity position is solid when considering its free cash flow, cash on hand, undrawn revolver capacity and share repurchase program. American Tower's cash balance at the end of the third quarter 2006 was $207 million. The ATI credit facility consists of a $300 million revolving credit facility, a $750 million term loan A and a $250 million delay draw term loan. ATI has fully drawn the term loan A and the delay draw term loan and has the majority of its revolving facility available. The SCI credit facility consists of a $250 million revolving credit facility, a $700 million Term Loan A and a $200 million delay draw term loan. SCI has fully drawn the $700 million term loan A and drawn $25 million of the delayed draw term loan. The remaining $175 million undrawn portion of the delayed draw term loan component was canceled during the fourth quarter of 2007. As of Sept. 30, 2006, the majority of SpectraSite's $250 million revolving credit facility was undrawn. Each of the credit facilities has a term of five years, maturing in full on Oct. 27, 2010. ATI and SCI have a total borrowers leverage ratio and interest coverage covenant that each subsidiary currently has considerable cushion. AMT reported a cash tender offer for its 5% convertible notes due 2010 that note holders could have put to the company in February. As of Jan. 16, 2007, approximately $252 million of the notes were outstanding. AMT will use cash and borrowings under its ATI credit facility to finance the repurchases of these notes. AMT has indicated the company will also likely raise additional capital in 2007, which may include a securitization of a portion of its tower assets as well as new or incremental credit facilities to maintain financial flexibility. The credit facilities at ATI and SCI have incremental capacity of $500 million and $250 million respectively. Fitch views a potential securitization as likely having a modest positive impact overall on the ratings depending on the transaction's final structure. Over the rating horizon, Fitch also expects AMT to refinance the majority of its debt and simplify its capital structure to remove the current restrictions under its debt indentures. With the continued sustainability of low capital investment and strong operating performance, Fitch expects American Tower to meaningfully increase free cash flow over the next several years. For 2006, expectations are for consolidated free cash flow to exceed $475 million. Since American Tower is well within its net consolidated leverage target range of 4x-6x, Fitch expects the majority of excess cash flow and cash on hand will be used to repurchase shares. Prior to the suspension of the program in 2006, the Company had repurchased a total of 11.8 million shares of its Class A common stock for approximately $358 million. The company expects to complete the remaining $392 million under the program by the end of February 2007, at which time, Fitch expects AMT to initiate a new program of at least comparable size. Over the rating horizon, Fitch has expectations for high single digit to low double digit EBITDA growth and stable leverage for AMT, with adjusted debt to EBITDAR in the upper 4x range. However, it is likely that debt will likely increase moderately over the next couple of years. AMERIQUEST MORTGAGE: Moody's Places B1 Rated Certs. on Review ------------------------------------------------------------- Moody's Investors Service has placed on review for possible downgrade nine certificates from six deals originated in 2002, 2003 and 2004 by Ameriquest Mortgage Securities Inc. The transactions are backed by adjustable- and fixed-rate subprime mortgage loans. The Quest Trust 2004-X1 transaction is backed by "scratch and dent" seasoned and reperforming subprime mortgage loans. The reviews are based on the analysis of the current credit enhancement levels provided by excess spread, overcollateralization, subordinate classes, and in some cases mortgage insurance relative to the expected loss. These are the rating actions: Review for possible downgrade: * Ameriquest Mortgage Securities Inc -- Series 2002-C, Class M2, Current Rating B1, under review for possible downgrade -- Series 2003-2, Class M3, Current Rating Baa3, under review for possible downgrade -- Series 2003-2, Class M4, Current Rating Ba3, under review for possible downgrade -- Series 2003-6, Class M6, Current Rating Baa3, under review for possible downgrade -- Series 2003-13, Class M6, Current Rating Baa3, under review for possible downgrade -- Series 2004-R2, Class M9, Current Rating Baa3, under review for possible downgrade, -- Quest Trust 2004-X1, Class M2, Current Rating Baa1, under review for possible downgrade -- Quest Trust 2004-X1, Class M3, Current Rating Baa2, under review for possible downgrade -- Quest Trust 2004-X1, Class M4, Current Rating Baa3, under review for possible downgrade AMERISOURCEBERGEN: Earns $122.2 Million in Quarter Ended Dec. 31 ---------------------------------------------------------------- AmerisourceBergen Corp. reported $122.2 million of net income for the first quarter of fiscal 2007, compared with $97.3 million of net income for the same period last year. Operating revenue was $15.7 billion in the first quarter of fiscal 2007 compared to $13.5 billion for the same period last year, a 16 percent increase. Bulk deliveries in the quarter decreased 8 percent to $1 billion from $1.1 billion in last fiscal year's first quarter. "The December quarter's excellent performance exceeded our expectations and provides strong momentum for the remainder of fiscal 2007," said R. David Yost, AmerisourceBergen's Chief Executive Officer. "Operating revenue was a record $15.7 billion, and our outstanding earnings per share results were driven by strong performance in our traditional distribution business as well as the continued strength of our specialty distribution business. "We enhanced shareholder value by repurchasing a significant amount of our stock and doubling our dividend. Our balance sheet remains strong, and we continue to have excellent financial flexibility." Consolidated operating income in the quarter increased 25 percent to $208.9 million, primarily due to an improved gross margin and productivity gains in the Pharmaceutical Distribution segment. "In the first quarter of fiscal 2007, outstanding operating results were driven by stronger than expected performance in our distribution businesses supported by our expanding service offerings," said Kurt J. Hilzinger, AmerisourceBergen's President and Chief Operating Officer." Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at: http://researcharchives.com/t/s?19a9 About AmerisourceBergen AmerisourceBergen (NYSE:ABC) -- http://www.amerisourcebergen.com/ -- is one of the world's largest pharmaceutical services companies serving the United States, Canada and selected global markets. AmerisourceBergen's service solutions range from pharmacy automation and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education. AmerisourceBergen is headquartered in Valley Forge, Pennsylvania, and employs more than 13,000 people. * * * As reported in the Troubled Company Reporter on Nov. 7, 2006, Moody's Investors Service affirmed AmerisourceBergen Corp.'s Ba1 Corporate Family Rating. ANDREW CORP: Charles Nicholas Retires as Chairman of the Board -------------------------------------------------------------- Andrew Corp. reported that Charles R. Nicholas has retired as chairman of the company's board of directors. Mr. Nicholas joined the company as treasurer in 1980 and was named vice president of finance in 1982, chief financial officer in 1986, and executive vice president of administration and finance and chief financial officer in 1995. He served as a director and vice chairman of the board from 2000 until 2004, when he became chairman of the board. Headquartered in Westchester, Illinois, Andrew Corp. (NASDAQ:ANDW) -- http://www.andrew.com/-- designs, manufactures and delivers equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries including, among others, these Latin American countries: Argentina, Bahamas, Belize, Barbados, Bermuda and Brazil. Andrew is an S&P 500 company Founded in 1937. * * * As reported the Trouble Company Reporter on Dec. 28, 2006, Standard & Poor's Ratings Services revised its CreditWatch implications on Andrew Corp. to positive from negative. The 'BB' corporate credit and 'B+' subordinated debt ratings were placed on CreditWatch with negative implications on Aug. 10, 2006. ARAMARK CORP: Completes Merger with Private Investment Group ------------------------------------------------------------ ARAMARK Corp. disclosed the completion of the acquisition of ARAMARK by an investor group led by Joseph Neubauer, chairman and chief executive officer of ARAMARK, and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC. "We are pleased to complete this transaction," said Neubauer, who will remain Chairman and Chief Executive Officer of ARAMARK. "I am particularly grateful for the support we have received from our people who have worked hard to deliver outstanding performance over many years, and our senior managers who will further dedicate themselves by making a significant investment in the company. "This merger opens a new and exciting chapter in ARAMARK's history. The new structure will enable us to fully unleash the company's potential. Today, we are positioned to drive greater innovation, pursue strategic opportunities, and build sophisticated, long-term solutions that deliver the most value for our clients and customers around the world. "As we invest in new strategies that will define the future of our industry, we will continue to build on our heritage of delivering value to our employees, our partners, our clients and our customers. We remain dedicated to providing outstanding experiences, environments and outcomes each and every day for our clients around the world." On Aug. 8, 2006, ARAMARK said it had signed a definitive merger agreement under which the private investor group would acquire ARAMARK in a transaction valued at approximately $8.3 billion, including the assumption or repayment of approximately $2 billion of debt. On Dec. 20, 2006, ARAMARK held a special meeting of its stockholders, at which 86% of the outstanding votes and 97% of the votes actually cast voted in favor of the adoption of the merger agreement. Under the terms of the agreement, ARAMARK shareholders are entitled to receive $33.80 in cash for each share of ARAMARK common stock held. About GS Capital Partners Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking firms. Goldman Sachs is also a global leader in private corporate equity and mezzanine investing. Established in 1992, the GS Capital Partners Funds are part of the firm's Principal Investment Area in the Merchant Banking Division. With $8.5 billion in committed capital, GS Capital Partners V is the current primary investment vehicle for Goldman Sachs to make privately negotiated equity investments. About CCMP Capital CCMP Capital Advisors LLC is a leading private equity firm formed in August 2006 by the former buyout/growth equity investment team of JPMorgan Partners, a private equity division of JPMorgan Chase. CCMP Capital is a registered investment adviser with the Securities and Exchange Commission. About J.P. Morgan Partners J.P. Morgan Partners LLC is a private equity division of JPMorgan Chase & Co., one of the largest financial institutions in the United States. JPMP has invested over $15 billion worldwide in consumer, media, energy, industrial, financial services, healthcare and technology companies since its inception in 1984. About Thomas H. Lee Partners Thomas H. Lee Partners, L.P. is one of the oldest and most successful private equity investment firms in the United States. Since its founding in 1974, THL Partners has invested approximately $12 billion of equity capital in more than 100 businesses with an aggregate purchase price of more than $90 billion, completed over 200 add-on acquisitions for portfolio companies, and generated superior returns for its investors and partners. About Warburg Pincus LLC Warburg Pincus has been a leading private equity investor since 1971. The firm currently has approximately $16 billion of assets under management with an additional $4 billion available for investment in a range of sectors including consumer and retail, industrial, business services, healthcare, financial services, energy, real estate and technology, media and telecommunications. About Aramark Corp. Headquartered in Philadelphia, Pennsylvania, Aramark Corporation (NYSE: RMK) -- http://www.aramark.com/-- is a professional services organization, providing food services, facilities management, hospitality services, and uniforms and career apparel to health care institutions, universities and school districts, stadiums and arenas, businesses, prisons, senior living facilities, parks and resorts, correctional institutions, conference centers, convention centers, and public safety professionals around the world. Aramark has approximately 240,000 employees serving clients in 18 countries. ARAMARK CORP: Fitch Rates $1.78 Bil. Senior Unsecured Notes at B- ----------------------------------------------------------------- Fitch has downgraded the Issuer Default Rating for both ARAMARK Corporation and its wholly owned subsidiary, ARAMARK Services, Inc. to 'B' from 'BB-' and has rated the new financing of ARAMARK Corporation: -- $600 million revolving senior secured credit facility due 2013 'BB-/RR2'; -- $4.15 billion senior secured term loans due 2014 'BB-/RR2'; -- $250 million senior secured synthetic letter of credit facility due 2013 'BB-/RR2'; and -- $1.78 billion senior unsecured notes due 2015 'B-/RR5'. In addition, the rating for the $250 million senior unsecured notes due 2012 was lowered to 'CCC+/RR6' from 'BB-'. The ratings are removed from Rating Watch Negative. The Rating Outlook is Stable. The action follows ARAMARK's recent disclosure that its leveraged buyout had been completed. The action finalizes Fitch's review of the rating following the company's Aug. 8, 2006 report that the company's board of directors had agreed to accept a management buyout offer from a group of investors led by chairman and CEO, Joseph Neubauer. The merger, valued at approximately $8.6 billion, was financed through approximately $2 billion in equity commitments with the remainder consisting of various debt instruments noted above. Fitch expects to withdraw its 'BB-' unsecured bank facility rating and withdraw its 'BB-' senior unsecured rating for ARAMARK's existing notes due 2007 and 2008 with the successful completion of debt tender offers planned for late February. The ratings reflect ARAMARK's substantially higher leverage ratio and debt service requirements following the completion of its LBO and Fitch's expectations for significantly reduced free cash flow. Pro forma Sept. 29, 2006 total adjusted leverage is expected to be approximately 7.2x with interest coverage at approximately 1.9x. Fitch expects credit protection measures to remain near pro forma levels through the intermediate term. The ratings also incorporate potential margin pressure from competitive pricing and higher operating costs. The ratings and outlook reflect ARAMARK's leading positions in its core services, brand recognition, a well diversified customer portfolio, and high customer retention rates. In addition, ARAMARK's operating performance has been relatively stable through various market conditions, including the company's exposure to unforeseen events over the last couple of years. The Stable Outlook is also supported by the company's adequate liquidity position pro forma the proposed transaction, which includes $103 million of pro forma cash and approximately $450 million available under its revolving credit facility. The company also has a $250 million accounts receivable securitization program. Fitch believes that ARAMARK will have limited ability to improve its credit protection measures in the next few years. However the company's stable organic revenue growth and solid market positions should limit any significant deterioration of credit measures. According to company filings, the 2012 notes are only guaranteed by ARAMARK's holding company and will not be guaranteed by ARAMARK's operating subsidiaries, thereby resulting in structural subordination of these notes in relation to all of the new debt issuances which will be fully and unconditionally guaranteed by substantially all of the company's domestic material operating subsidiaries. The indenture for the 2012 bonds generally provides no protection from a change in control event and does not limit the company's ability to incur additional indebtedness. The recovery ratings and notching reflect Fitch recovery expectations under a distressed scenario. ARAMARK's recovery ratings reflect Fitch's expectation that the enterprise value of the company, and hence, recovery rates for its creditors, will be maximized in a restructuring scenario, rather than a liquidation. The 'RR2' recovery rating for the company's credit facilities reflects Fitch belief that 71%-90% recovery is reasonable given its priority position. The recovery rating of 'RR5' for the $1.78 billion of senior unsecured notes due 2015 reflects that 11%-30% recovery is reasonable and 'RR6' for the $250 million 5% senior unsecured notes due 2012 reflects Fitch's estimate that negligible recovery would be achievable due to their position in the capital structure. 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. ASARCO LLC: AR Sacaton, et al. Tap Baker Botts as Bankr. Counsel ---------------------------------------------------------------- In December 2006, three of ASARCO LLC's subsidiaries, AR Sacaton, LLC, ASARCO Exploration Company, Inc., and Southern Peru Holdings LLC, filed petitions under Chapter 11. Accordingly, AR Sacaton, ASARCO Exploration and Southern Peru seek authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ Baker Botts, L.L.P., as their bankruptcy counsel, nunc pro tunc to Dec. 12, 2006. As the Subsidiary Debtors' counsel, Baker Botts, among other things, will: -- advise the Subsidiary Debtors with respect to their rights and obligations as debtors and other areas of bankruptcy law; -- assist the Subsidiary Debtors in exploring restructuring alternatives, and developing and implementing a reorganization strategy; -- develop, negotiate and promulgate a Chapter 11 plan of reorganization for the Subsidiary Debtors and prepare a disclosure statement; -- represent the Subsidiary Debtors at all hearings and proceedings; and -- render general, non-bankruptcy legal services as the Subsidiary Debtors may seek from time to time, including, without limitation, environmental, corporate, real estate, litigation, tax and other matters. The Subsidiary Debtors have few assets and current operations. Thus, ASARCO LLC will pay for Baker Botts' services, Douglas E. McAllister, the Subsidiary Debtors' president, says. For this same reason, Baker Botts will not keep separate time entries for the Subsidiary Debtors. Baker Botts will be paid according to these hourly rates: Professional Hourly Rate ------------ ----------- Partners $400 - $725 Associates $215 - $395 Paralegals $120 - $200 Paralegal Clerks $50 - $105 Baker Botts will also be reimbursed for any necessary and reasonable out-of-pocket expenses. Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas, assures the Court that his firm does not represent any interest adverse to the Subsidiary Debtors, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. 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. 38; 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 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. ASARCO LLC: Committee Taps Bates White as Asbestos Consultant ------------------------------------------------------------- The Official Committee of Unsecured Creditors for ASARCO LLC seeks permission from the U.S. Bankruptcy Court for the Southern District of Texas to retain Bates White LLC as its consultant on asbestos and silica-related matters, nunc pro tunc to Jan. 25, 2007. As the Committee's consultant, Bates White will: (a) estimate the number and value of present and future asbestos and silica personal injury claims; (b) assist the Committee in negotiations with various parties; (c) render expert testimony as required by the Committee; (d) assist the Committee in preparing expert testimony or reports and in the evaluation of reports and testimony by other experts and consultants; and (e) provide other advisory services as may be requested by the Committee from time to time. Bates White will be paid according to its hourly rates: Professional Hourly Rates ------------ ------------ Senior Partner $750 Partner $525 Principal $425 Manager $350 Senior Consultant $325 Consultant II $275 Consultant I $250 Programmers $250 Project Coordinator $250 Project Assistant $190 Interns $125 Bates White will also be reimbursed for any reasonable and necessary out-of-pocket expenses. Charles Bates, president and senior partner of Bates White LLC, assures the Court that his firm does not represent any interest adverse to the Committee, the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. 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. 38; 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. AUDIO VISUAL: $60 Mil. Senior Secured Facility Rated B3 by Moody's ------------------------------------------------------------------ Moody's Investors Service assigned ratings to Audio Visual Services Group Inc. in connection with the pending leveraged buyout of its parent holding company, Audio Visual Services Corporation. Moody's assigned a B1 Corporate Family rating, a Ba3 to the $255 million senior secured first lien credit facility and a B3 to the $60 million senior secured second lien facility. The ratings outlook is stable. On Feb. 7, 2007, Kelso & Company entered into a definitive agreement to acquire AVSC in a leveraged buyout for a total enterprise value of approximately $413.4 million, including fees and expenses. The transaction is expected to be financed with a $225 million senior secured first lien term loan, a $60 million senior secured second lien term loan and an equity contribution of $128.4 million. A new $30 million senior secured first lien revolver will be undrawn at close. The borrower under the new first and second lien credit facilities will be Audio Visual Services Group, Inc., an indirect wholly- owned subsidiary of AVSC. Moody's expects to withdraw the ratings on the existing secured credit facility of AVSC upon the closing of the transaction since such debt is expected to be repaid with the proceeds from the new financing package. Despite a substantial increase in leverage resulting from the acquisition by Kelso, the company's pro forma credit metrics position the company solidly in the B1 rating category. The ratings benefit from long standing relationships and long term contracts with major hotel chain customers and good growth prospects in the intermediate term. The key constraints on the ratings include revenue concentration with top hotel chain customers, significant capital expenditure requirements and dependence on business travel, which is subject to variability based on the strength of the economy and other factors. Moody's assigned these ratings to Audio Visual Services Group, Inc.: -- $30 million first lien revolving credit facility due 2013, Ba3, LGD3, 37% -- $225 million first lien term loan facility due 2014, Ba3, LGD3, 37% -- $60 million second lien term loan facility due 2014, B3, LGD5, 88% -- Corporate family rating, B1 -- Probability of default rating, B1 These ratings are subject to Moody's review of final documentation. Moody's affirmed these ratings of Audio Visual Services Corporation: -- $20 million senior secured revolving credit facility due 2010, Ba3, LGD2, 28% -- $73 million senior secured term loan facility due 2011, Ba3, LGD2, 28% -- Corporate family rating, B1 -- Probability of default rating, B2 The stable ratings outlook anticipates solid revenue and EBITDA growth in 2007 as the company benefits from strong demand for audiovisual services at existing hotels and continues to add new hotels in both North America and Europe. AVSC is the leading provider of audiovisual and event technology support to hotels, event production companies, trade associations, convention centers and corporations in North America and Europe. AVSC reported revenues of $529 million for the twelve month period ended Sept. 30, 2006. AVAYA INC: Earns $71 Million in Fiscal Quarter Ended December 31 ---------------------------------------------------------------- Avaya Inc. reported net income of $71 million for the first quarter of ended Dec. 31, 2006, compared with net income of $71 million for the same period in fiscal 2006. Avaya's first fiscal quarter 2007 revenues increased 2.5 percent to $1.28 billion compared to $1.25 billion in the same period last year. Avaya shipped more than one million IP lines for the third consecutive quarter. Avaya noted that during the first quarter of fiscal 2006 it experienced delays and disruption in the delivery of its products to customers due to changes made in its warehousing and distribution operations and estimates the impact on revenue in the quarter was approximately $20 million. "During the first quarter, we invested in our business to extend our technology leadership, effectively managed costs and expenses, attracted new talent to our senior management team and delivered solid bottom line results," said Lou D'Ambrosio, Avaya's president and chief executive officer. "We will continue to be relentlessly focused on our three priorities: strategy, execution and culture." The company reported operating income for the first fiscal quarter of 2007 of $90 million. Operating income for the first fiscal quarter of 2006 was $107 million. Avaya ended the quarter with cash of $895 million, relatively flat with the fourth quarter of fiscal 2006. The provision for income taxes in the quarter benefited from discrete tax benefits, including a retroactive extension of the U.S. federal research and development tax credit. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19ba About Avaya Inc. Headquartered in Basking Ridge, New Jersey, Avaya, Inc. (NYSE:AV) -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90% of the FORTUNE 500(R). Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. * * * In January 2005, Moody's Investors Service upgraded the senior implied rating of Avaya Inc. to Ba3 from B1. Moody's said the ratings outlook is positive. ACXIOM CORP: Earns $24.9 Mil. in 3rd Fiscal Quarter Ended Dec. 31 ----------------------------------------------------------------- Acxiom Corp. reported $24.9 million net income on $352.8 million of revenues for the third fiscal quarter ended Dec. 31, 2006, compared with $27.3 million of net income on $347.4 million of revenues for the same period in 2005. "Our earnings continue to improve on a sequential basis but are not in line with our expectations due to slower than expected revenue growth," Company Leader Charles D. Morgan said. "We continue to execute our company-wide initiatives to create more value for our clients and drive more rapid revenue growth. We expect to see more from those efforts over the next several quarters." Income from operations was $51.3 million for the quarter ended Dec. 31,2006, compared to $52.7 million for the same period last year. Interest expense increased to $14.9 million from $8.6 million in the same quarter a year ago. The increase reflects the $600 million term loan completed in September 2006. Proceeds from the term loan were used to retire debt and buy back approximately 11 million shares of Acxiom stock. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19a8 About Acxiom Based in Little Rock, Arkansas, Acxiom Corporation (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's solutions are Customer Data Integration technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States, Europe, Australia and China. * * * As reported in the Troubled Company Reporter on Sept. 7, 2006, Standard & Poor's Ratings Services assigned its loan and recovery ratings to Little Rock, Arkansas-based Acxiom Corp.'s proposed $800 million secured first-lien financing. The first-lien facilities consist of a $200 million revolving credit facility and a $600 million term loan. They are rated 'BB' with a recovery rating of '2'. BAUSCH & LOMB: Files 2005 Annual Report with SEC ------------------------------------------------ Bausch & Lomb Inc. filed its annual report on Form 10-K for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on Feb. 7, 2007. The company was unable to timely file its 2005 Annual Report due to: -- ongoing independent investigations conducted by the Board of Directors' Audit Committee; -- expanded year-end procedures that were not complete; -- expanded procedures with respect to the accounting for income taxes that were not complete; and -- continued efforts to complete the company's assessment of its internal control over financial reporting. As a result of the Audit Committee's investigations and the expanded procedures, the company identified errors made in the application of generally accepted accounting principles that impacted previously reported financial statements. Consequently, management determined that it should restate its previously issued: -- consolidated financial statements for fiscal years ended Dec. 27, 2003, and Dec. 25, 2004; -- financial information for the fiscal years ended 2001 and 2002 (including a cumulative increase to 2001 beginning retained earnings of $34,000,000); and -- financial reports for the first and second quarters of 2005. The company included the restated financial statements for the years 2003 and 2004 in the 2005 annual report. Financials For the year ended Dec. 31, 2005, the company reported $19,200,000 of net income on $2,353,800,000 of net sales, compared with $153,900,000 of net income on $2,233,500,000 of net sales for the fiscal year ended Dec. 25, 2004. At Dec. 31, 2005, the company had $3,416,400,000 in total assets, $2,108,000,000 in total liabilities, and $1,283,900,000 in total shareholders' equity. A full-text copy of the company's 2005 annual report is available for free at http://ResearchArchives.com/t/s?19c0 Headquartered in Rochester, New York Bausch & Lomb Inc. -- http://www.bausch.com/-- develops, manufactures, and markets eye health products, including contact lenses, contact lens care solutions, and ophthalmic surgical and pharmaceutical products. The company is organized into three geographic segments: the Americas; Europe, Middle East, and Africa; and Asia (including operations in India, Australia, China, Hong Kong, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand). * * * As reported in the Troubled Company Reporter on Feb. 6, 2007, Moody's Investors Service downgraded Bausch & Lomb Inc.'s senior unsecured debt to Ba1 and continues to review all ratings for possible downgrade. Moody's also assigned the company a Ba1 Corporate Family Rating. CALPINE CORP: Court Approves Sutherland Asbill as Special Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Calpine Corp. and its debtor-affiliates to employ Sutherland, Asbill & Brennan, LLP, as their special counsel for certain energy matters pursuant to Sections 327(e) and 328 of the Bankruptcy Code. Sutherland will continue to represent the Debtors with respect to the FERC-related matters and will continue to assist them in policy or rulemaking proceedings at FERC. Since 2001, Sutherland, Asbill & Brennan, LLP, has represented the Debtors and certain of their affiliates with respect to credit and risk issues, energy derivatives, forward contracts, netting arrangements and other energy trading issues, among other things. Sutherland continues to represent the Debtors in their Chapter 11 cases as an ordinary course professional. Currently, Sutherland represents the Debtors in these matters: (a) Two pipeline rate cases before the FERC in which the Debtors are trying to minimize the cost of delivering natural gas to their plants. (b) Proceedings before the Federal Energy Regulatory Commission and related appellate litigation in which claims for refund have been asserted against them. (c) A proceeding to improve competitive conditions and access to markets in certain regions of the country. As of Jan. 19, 2007, the Debtors have paid Sutherland $431,875 in accordance with the Ordinary Course Professional Order. The Debtors expect to continue to pay Sutherland $50,000 to $75,000 per month for its services. Thus, Sutherland will exceed the $500,000 aggregate cap imposed by the OCP Order. The Debtors will pay Sutherland in its customary hourly rates: Professional Hourly Rate ------------ ----------- Partners $345 - $710 Associates $210 - $410 Paraprofessionals $95 - $350 The Debtors will also reimburse Sutherland for any reasonable out-of-pocket expenses. Keith R. McCrea, Esq., at Sutherland, Asbill & Brennan, LLP, in Houston, Texas, assures the Court that his firm does not represent any interest adverse to the Debtors or their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. McCrea says Sutherland has billed $522,265 for work performed for the Debtors since the Petition Date. Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially all of its remaining domestic oil and gas assets to Rosetta Resources Inc. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). The Debtors' exclusive period to propose a reorganization plan expires on June 20, 2007. CENTRAL GARDEN: Reports $3 Million Net Loss for Qtr. Ended Dec. 30 ------------------------------------------------------------------ Central Garden & Pet Company incurred a $3 million net loss for the first quarter ended Dec. 30, 2006, compared to net income of $2.6 million, in the same period last year. At Dec. 30, 2006, the company's balance sheet showed $1.5 million in total assets, $806,464 in total liabilities, and $727,359 total stockholders' equity. Depreciation and amortization for the quarter was $6.8 million compared to $5.2 million in the year ago period. Branded product sales increased 14%. Sales of other manufacturers' products declined 11%. Organic sales decreased 3%. The company reported net sales of $317 million, an increase of 8% from $293 million in the comparable fiscal 2006 period. Income from operations for the quarter decreased 39% to $5.9 million from $9.8 million in the year ago period. Net sales for the Garden Products segment were $115 million, a decrease of 8% from $126 million in the comparable fiscal 2006 period. The Garden Products operating loss was $2.1 million compared to a loss of $0.5 million in the year ago period. Branded product sales decreased 4%. Sales of other manufacturers' products declined 27%. Organic sales decreased 10%. Net sales for the Pet Products segment were $202 million, an increase of 21% from $167 million in the comparable fiscal 2006 period. Operating income for the Pet Products segment was $18 million relatively unchanged from a year ago. Branded product sales increased 28%. Sales of other manufacturers' products declined 1%. Organic sales increased 3%. "Our results for the quarter are disappointing and consistent with our preannouncement on January 22. These results reflect a late quarter shift in purchases by lawn & garden retailers, lower sales and a mix shift within the pet bird and small animal categories and extraordinary increases in grain costs," noted Glenn Novotny, President and Chief Executive Officer of Central Garden & Pet. "These and certain other factors are impacting our expectations for the full fiscal year 2007, and we have revised our outlook accordingly. Other factors affecting the year include lower sales and profits in aquatics due primarily to a large retailer announcement that it will no longer sell live fish in many of its stores; execution challenges in our garden distribution operations that are being addressed aggressively; and the impact of a later than anticipated start-up of new garden manufacturing capacity due to construction delays." Net sales for fiscal 2007 are now projected to be between $1.72 and $1.75 billion. Operating income is expected to be between $144 and $150 million. Net income is expected to be between $60 and $65 million. The corresponding earnings per fully diluted share before the distribution of the special 2-for-1 Class A Common stock dividend is expected to be between $2.50 and $2.65. After the distribution of the special stock dividend, earnings per fully diluted share is expected to be between $0.83 and $0.88. This guidance does not assume any additional acquisitions. "The fundamentals of our business remain solid. We have strong leadership positions in two great industries. Our portfolio of leading brands positions us to grow the business through innovation, improved operations and strategic acquisitions," concluded Mr. Novotny. "We are focused on executing our strategic plan and committed to growing our market share and improving returns to our shareholders." A full-text copy of the company's financial report for Quarter Ended Dec. 30, 2006 is available for free at: http://ResearchArchives.com/t/s?19bc Headquartered in Walnut Creek, California, Central Garden & Pet Company (NASDAQ: CENT) -- http://www.central.com/-- markets and produces branded products for the lawn & garden and pet supplies markets. Products are sold to specialty independent and mass retailers. The company also provides a host of other regional and application-specific garden and pet brands and supplies. The company has approximately 5,000 employees, primarily in North America and Europe. * * * As reported in the Troubled Company Reporter on Sept. 28, 2006, Moody's Investors Service affirmed its Ba3 corporate family rating for Central Garden and Pet Company. Additionally, Moody's held its Ba2 probability-of-default rating on the company's $350 million senior secured revolver. CITIGROUP MORTGAGE: DBRS Rates $4.7 Mil. Class M-11 Certs. at BB ---------------------------------------------------------------- Dominion Bond Rating Service assigned these ratings to the Asset- Backed Pass-Through Certificates, Series 2007-WFHE1 issued by Citigroup Mortgage Loan Trust 2007-WFHE1. -- $185.4 million Class A-1 rated at AAA -- $78.0 million Class A-2 rated at AAA -- $47.4 million Class A-3 rated at AAA -- $33.1 million Class A-4 rated at AAA -- $18.5 million Class M-1 rated at AA (high) -- $21.7 million Class M-2 rated at AA -- $6.9 million Class M-3 rated at AA (low) -- $7.8 million Class M-4 rated at A (high) -- $8.3 million Class M-5 rated at "A" -- $6.3 million Class M-6 rated at A (low) -- $4.9 million Class M-7 rated at A (low) -- $4.0 million Class M-8 rated at BBB (high) -- $4.5 million Class M-9 rated at BBB -- $6.5 million Class M-10 rated at BBB (low) -- $4.7 million Class M-11 rated at BB The AAA ratings on the Class A Certificates reflect 23.00% of credit enhancement provided by the subordinate classes, initial and target overcollateralization and monthly excess spread. The AA (high) rating on Class M-1 reflects 18.85% of credit enhancement. The AA rating on Class M-2 reflects 14.00% of credit enhancement. The AA (low) rating on Class M-3 reflects 12.45% of credit enhancement. The A (high) rating on Class M-4 reflects 10.70% of credit enhancement. The "A" rating on Class M-5 reflects 8.85 % of credit enhancement. The A (low) rating on Class M-6 reflects 7.45% of credit enhancement. The A (low) rating on Class M-7 reflects 6.35% of credit enhancement. The BBB (high) rating on Class M-8 reflects 5.45% of credit enhancement. The BBB rating on Class M-9 reflects 4.45% of credit enhancement. The BBB (low) rating on Class M-10 reflects 3.00% of credit enhancement. The BB rating on Class M-11 reflects 1.95% of credit enhancement. The ratings on the Certificates also reflect the quality of the underlying assets and the capabilities of Wells Fargo Bank, N.A. as Servicer, as well as the integrity of the legal structure of the transaction. U.S. Bank National Association will act as Trustee. The Certificate holders will receive the benefits of an interest rate cap agreement with a strike of 6.5% with Bear Stearns Financial Products Inc. Interest and principal payments collected from the mortgage loans will be distributed on the 25th day of each month commencing in February 2007. Interest will be paid first to the Class A Certificates on a pro rata basis and then sequentially to the subordinate certificates. Until the step-down date, principal collected will be paid exclusively to the Class A Certificates unless their respective note balances have been reduced to zero. After the step-down date, and provided that certain performance tests have been met, principal payments will be distributed among all classes on a pro rata basis. Additionally, provided that certain performance tests have been met, the level of overcollateralization may be allowed to step down to 3.90% of the then-current balance of the mortgage loans but no less than 0.50% of original collateral balance. All mortgage loans in the Underlying Trust were originated or acquired by Wells Fargo Bank, N.A. As of the cut-off date, the aggregate principal balance of the mortgage loans is $447,648,541. The weighted average mortgage rate is 8.633%, the weighted average FICO is 617, and the weighted average combined loan-to-value ratio is 83.84%. CONEXANT SYSTEMS: Earns $7.4 Million in Fiscal 2007 First Quarter ----------------------------------------------------------------- Conexant Systems Inc. reported $7.4 million of net income on $245.5 million of revenues for the first quarter of fiscal 2007, compared with $7.3 million of net income on $245.9 million of revenues for the same period of fiscal 2006. Core operating expenses increased in the first quarter of fiscal 2007 to $93.6 million as a result of increased investments in new product development. Core operating expenses in the year-ago quarter were $83.1 million. Core operating income was $16 million compared to $13 million in the first quarter of fiscal 2006. "In the first fiscal quarter, despite a clearly challenging market environment, the Conexant team delivered financial results that met the expectations we set entering the quarter," said Dwight W. Decker, Conexant chairman and chief executive officer. At Dec. 31, 2006, the company's balance sheet showed $1.9 billion in total assets, $1.3 billion in total liabilities, and $531.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19af About Conexant Systems Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDA: CNXT) -- http://www.conexant.com/-- designs, develops and sells semiconductor system solutions that connect personal access products such as set-top boxes, residential gateways, PCs and game consoles to voice, video and data processing services over broadband and dial-up connections. Key semiconductor products include digital subscriber line and cable modem solutions, home network processors, broadcast video encoders and decoders, digital set-top box components and systems solutions, and the company's foundation dial-up modem business. * * * As reported in the Troubled Company Reporter on Oct. 31, 2006, Moody's Investors Service assigned a B1 rating to the senior secured floating rate notes and a Caa1 rating to the corporate family rating of Conexant Systems Inc. Moody's also assigned a Probability of default rating of Caa1, a LGD-2 rating for the senior secured notes and a SGL-3 speculative grade liquidity rating. The rating outlook is stable. COUDERT BROTHERS: Accepting File Retrieval Notices Until April 30 ----------------------------------------------------------------- On Jan. 22, 2007, the U.S. Bankruptcy Court for the Southern District of New York authorized Coudert Brothers LLP to dispose of certain client files remaining in its possession. Parties who believe that their file(s) are in the possession of the Debtor may retrieve those file(s) by completing and returning a file retrieval form no later than Apr. 30, 2007. File retrieval forms are available at http://www.kccllc.net/coudert/ Files may also be retrieved by contacting the Debtor's bankruptcy counsel: Klestadt & Winters LLP 17th Floor 292 Madison Avenue New York 10017 Tel: (212) 972-3000 Fax: (212) 972-2245 Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The firm had operations in Australia and China. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor in its restructuring efforts. Brian F. Moore, Esq., and David J. Adler, Esq., at McCarter & English, LLP, represent the Official Committee Of Unsecured Creditors. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of $18,261,380. The Debtor's exclusive period to file a plan of reorganization expires on May 20, 2007. CREDIT SUISSE: Moody's Holds Junk Rating on $19MM Class I Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of seven classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1998-C2: -- Class A2, $916,635,429, Fixed, affirmed at Aaa -- Class AX, Notional, affirmed at Aaa -- Class B, $105,600,000, Fixed, affirmed at Aaa -- Class C, $105,600,000, Fixed, affirmed at Aaa -- Class D, $105,500,000, Fixed, affirmed at Aaa -- Class E, $28,800,000, Fixed, upgraded to Aaa from Aa1 -- Class F, $105,600,000, Fixed, upgraded to Ba1 from Ba2 -- Class G, $19,200,000, Fixed, upgraded to Ba2 from Ba3 -- Class H, $47,900,000, Fixed, affirmed at B3 -- Class I, $19,200,000, Fixed, affirmed at C As of the Jan. 20, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 24.0% to $1.5 billion from $1.9 billion at securitization. The Certificates are collateralized by 194 mortgage loans ranging in size from less than 1% to 5.4% of the pool, with the top 10 loans representing 41.5% of the pool. The pool consist of one shadow rated loan, representing 4.6% of the pool, a conduit component, representing 32% of the pool, and a credit tenant lease component, representing 12% of the pool. The balance is collateralized by 69 loans, representing 51.4% of the pool, which have been defeased and been replaced with U.S. Government securities. The largest defeased loans include Intell/Reichmann Portfolio, 260-261 Madison Avenue and Patriot American Portfolio. Twelve loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $34.1 million. Four loans, representing 2.3% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $200,000 for all of the specially serviced loans. Twenty-eight loans, representing 10.8% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 operating results for approximately 91.1% of the performing loans and partial year 2006 operating results for approximately 32.7% of the performing loans. Moody's loan to value ratio for the conduit component is 89.1%, compared to 88.5% at last review and compared to 88.9% at securitization. Moody's is upgrading Classes E, F and G due to a large percentage of defeased loans and the improved performance of the shadow rated loan. Moody's upgraded Classes D and E on Dec. 8, 2006 based on a Q tool based portfolio review. The shadow rated loan is the 180 Water Street Loan at $66.9 million (4.6%), which is secured by a 505,000 square foot office building located in the Financial District submarket of New York City. The property is 100% leased to the City of New York Department of Citywide Administrative Services under a long-term lease which expires in June 2018. The loan matures in August 2013. Moody's current shadow rating is A3, compared to Ba1 at last review and compared to Ba2 at securitization. The top three non-defeased conduit exposures represent 10.8% of the outstanding pool balance. The largest non-defeased conduit exposure is the Butera Portfolio at $74.3 million (5.1%), which is secured by a portfolio of seven industrial properties, five office buildings and two retail centers. Built between 1986 and 1998, the properties are primarily located within the Washington-Baltimore MSA and total 1.4 million square feet. The average occupancy of the portfolio is 92%, compared to 95% at last review and compared to 98.5% at securitization. Moody's LTV is 89.2%, compared to 91.5% at last review and compared to 95.8% at securitization. The second largest non-defeased conduit exposure is the Koll Corporate Plaza Loan at $49.4 million (3.4%), which is secured by a 612,253 square foot office park. The property consists of six, four-story office buildings and is located in Iselin, New Jersey approximately 20 miles southwest of Manhattan. As of June 2006 occupancy was 67%, compared to 68% at year-end 2005 and compared to 91% at securitization. The property lost tenants in calendar year 2002 and has had difficulty competing with newer properties in the area. Competing Class A properties are offering comparable rents. Overall performance has declined because of a decrease in revenue and an increase in operating expenses. Moody's LTV is in excess of 100%, the same as at last review and compared to 88.6% at securitization. The third largest non-defeased conduit exposure is the Camco Portfolio Loan at $33.7 million (2.3%), which is secured by two retail properties and one industrial property totaling 547,000 square feet. The properties are located in North Richland Hills and Irving. Both cities are located between Dallas and Fort Worth, Texas. Current occupancy is 91.2%, compared to 93.8% at securitization. Performance has improved since Moody's last review due to increased revenue. Moody's LTV is 96.1%, compared to in excess of 100% at last review and compared to 90.2% at securitization. The CTL component includes 35 loans secured by properties under bondable, triple-net or double-net leases. The largest exposures are Motel 6/Accor SA and CVS. The pool's collateral is a mix of U.S. Government securities, office, CTL, retail, industrial and self storage, multifamily and manufactured housing, lodging and healthcare. The collateral properties are located in 47 states plus the District of Columbia. The highest state concentrations are New York, Texas, Maryland, New Jersey and California. All of the loans are fixed rate. CREDIT SUISSE: Moody's Hold Rating on $18MM Class L Certs. at Ba1 ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of eight classes and affirmed the ratings of six classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-TFL2: -- Class A-1, $50,702,678, Floating, affirmed at Aaa -- Class A-2, $181,500,000, Floating, affirmed at Aaa -- Class A-X-1, Notional, affirmed at Aaa -- Class A-X-2, Notional, affirmed at Aaa -- Class B, $37,000,000, Floating, upgraded to Aaa from Aa1 -- Class C, $35,000,000, Floating, upgraded to Aaa from Aa2 -- Class D, $16,000,000, Floating, upgraded to Aa1 from Aa3 -- Class E, $14,000,000, Floating, upgraded to Aa2 from A1 -- Class F, $21,000,000, Floating, upgraded to Aa3 from A2 -- Class G, $17,500,000, Floating, upgraded to A2 from A3 -- Class H, $16,500,000, Floating, upgraded to A3 from Baa1 -- Class J, $17,000,000, Floating, upgraded to Baa1 from Baa2 -- Class K, $14,500,000, Floating, affirmed at Baa3 -- Class L, $18,600,000, Floating, affirmed at Ba1 The Certificates are collateralized by eight mortgage loans or mortgage loan participations. As of the Jan. 16, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 53.7% to $439.3 million from $948.1 million at securitization as a result of the payoff of 10 loans initially in the pool. The remaining loans range in size from 6.6% to 27.3% of the pool. Moody's is upgrading Classes B, C, D, E, F, G, H, and J due to improved credit support for the Certificates resulting from loan payoffs and the satisfactory performance of the collateral supporting the remaining loans. The Bay Area Office Portfolio Loan is supported by four cross-collateralized office properties containing 1.4 million square feet of rentable area. The properties are located in San Francisco, Foster City and San Rafael, California. At securitization, overall occupancy was 54.8% although substantial improvement was anticipated. As of December 2006 occupancy had increased to 76.1%. The loan sponsors are Sterling American Property, Inc. and Hines Interests. Moody's current net cash flow and loan to value ratio are $16.7 million and 64%, compared to $16.8 million and 63.4% at securitization. Moody's current shadow rating is Baa3, the same as at securitization. The Westin Hotel Portfolio Loan is supported by two resort hotels containing a total of 899 rooms. The Westin La Paloma is a 487-room hotel located on 174 acres in Tucson, Arizona. The Westin Hilton Head, located in Hilton Head, South Carolina, contains 412 rooms. Net cash flow for calendar year 2005 exceeded Moody's expectations. RevPAR increased by 1.2% and EBITDA by 7% for the first nine months of 2006 as compared to the same period the previous year. The loan is sponsored by Starwood Capital Group Global, L.L.C. Moody's net cash flow and LTV are $16.3 million and 58.6%, compared to $15.8 million and 60.5% at securitization. Moody's current shadow rating is Baa3, the same as at securitization. The Walton Street-Renaissance Mayflower & Renaissance Scottsdale Cottonwoods Loan is supported by two full service hotels containing a total of 828 rooms. The Renaissance Mayflower is a 657-room hotel located in Washington D.C. The Renaissance Scottsdale Cottonwoods, which is located in Scottsdale, Arizona, contains 171 rooms. Net cash flow for calendar year 2005 was approximately 5.5% less that Moody's expectations, which anticipated performance improvement once the common areas, meeting rooms and restaurants at the hotel were renovated at an estimated cost of $7.1 million. These capital projects took place in 2006 and have negatively impacted group business and banquet revenue for the first nine periods of 2006. The loan sponsor is Walton Street Real Estate Fund, IV, L.P. Moody's net cash flow and LTV are $14.5 million and 55.3%, compared to $14.7 million and 54.7% at securitization. Moody's current shadow rating is Baa1, the same as at securitization. The Walton Street-Renaissance Chicago Loan is supported by a 553-room full service hotel located in Chicago, Illinois. Net cash flow for calendar year 2005 met Moody's expectations. Performance for the first nine months of 2006 increased by 25.6% compared to the comparable prior year period on both a RevPAR and a net cash flow basis. The loan sponsor is Walton Street Real Estate Fund, IV, L.P. Moody's net cash flow and LTV are $8.7 million and 54.2%, compared to $8 million and 59.1% at securitization. Moody's current shadow rating is Baa1, compared to Baa3 at securitization. The remaining three loans are shadow rated as: -- The Castleton Office Park Portfolio Loan at Baa3; -- the Walton Street-Renaissance Esmeralda Resort & Spa Loan at Ba1; and, -- the Walton Street-Renaissance Vinoy Resort & Golf Club at Baa1. CSFB ABS: S&P Cuts Rating on Series 2002-HE1 Class B Certs. to BB ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B mortgage pass-through certificates from CSFB ABS Trust Series 2002-HE1 to 'BB' from 'BBB' and placed it on CreditWatch with negative implications. At the same time, ratings were affirmed on the remaining four classes from this transaction. The downgrade and CreditWatch placement reflect the continued erosion of credit support for the class due to monthly net losses that have significantly exceeded monthly excess interest cash flow. As a result, the overcollateralization had been reduced to about 0.23% as of the January 2007 distribution period, compared with a target of 0.50%. In addition, total delinquencies were approximately 45% of the outstanding pool balance, and severe delinquencies represented roughly 24.11%. The transaction has incurred cumulative realized losses totaling approximately 3.59% of the original pool balance. The transaction is 59 months seasoned and has paid down to approximately 9.04% of its original size. Standard & Poor's will continue to closely monitor the performance of this transaction. If losses decline to a point at which they no longer exceed excess interest, and the level of O/C has not been further eroded, Standard & Poor's will affirm the rating and remove it from CreditWatch. Conversely, if losses continue to exceed excess interest and further erode O/C, Standard & Poor's will take additional negative rating actions. Credit support is provided by subordination, O/C, and excess spread. The collateral consists of 30-year, fixed or adjustable rate, fully amortizing subprime mortgage loans secured by first liens on one- to four-family residential properties. Rating Lowered And Placed On Creditwatch Negative CSFB ABS Trust Series 2002-HE1 Mortgage Pass-Through Certificates Series 2002-He1 Rating ------ Class To From ----- -- ---- B BB/Watch Neg BBB Ratings Affirmed CSFB ABS Trust Series 2002-HE1 Mortgage Pass-Through Certificates Series 2002-He1 Class Rating ----- ------ A-1, A-2 AAA M-1 AA+ M-2 A DAVITA INC: Loan Add-on Cues S&P to Hold BB- Corp. Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on DaVita Inc.'s unsecured financing, following the company's $400 million add-on to its unsecured senior notes due March 2013. "The refinancing lowers the company's interest expense by about $4 million," explained Standard & Poor's credit analyst Jesse Juliano. "The proceeds from the note issuance will be used to repay a portion of its term loan debt." As a result of this and other debt prepayment, the ratings on the senior secured bank lines, which consist of a $250 million secured revolving credit facility due in 2011, a $280 million senior secured term loan A due in 2011, and a $1.7 billion senior secured term loan B due in 2012, were revised to 'BB' with a recovery rating of '1', indicating that lenders can have a high expectation of recovery of principal in the event of a payment default. Other existing ratings on DaVita, including the 'BB-' corporate credit rating, were affirmed. The rating outlook is stable. The ratings on DaVita Inc. reflect the company's dependence on the treatment of a single disease, rendering it vulnerable to cuts or insufficient increases in third-party reimbursement rates. The ratings also reflect the company's cost-management challenges and DaVita's aggressive financial policies. These factors are partly offset by the stabilizing effects of the company's recurring revenue stream, its large clinic network with a leading U.S. market position, and its attractive growth prospects. While DaVita's profitability and cash flow appear strong, Standard & Poor's remains concerned about the company's very aggressive capital structure. As of Sept. 30, 2006, DaVita had $3.82 billion of debt outstanding. Total lease-adjusted debt to EBITDA is about 5x but should decline over time. The company's financial flexibility should provide cushion for operating shortfalls, given its strong operating cash flow, revolving credit facility availability, and lack of material debt maturities until its term loans come due in 2011. DAVITA INC: Moody's Rates New $400 Mil. Senior Unsecured Notes B1 ----------------------------------------------------------------- Moody's assigned a B1 rating to DaVita Inc.'s new issuance of up to $400 million of senior unsecured notes. The issuance of up to $400 million of additional unsecured notes is not expected to have an effect on DaVita's leverage metrics as Moody's expects further repayment of the outstanding term loans with the proceeds. Moody's understands that the terms of the new notes will be essentially the same as the existing senior unsecured notes. Moody's also upgraded DaVita's Corporate Family Rating to Ba3 from B1. This rating was assigned: -- $400 million of senior unsecured notes, rated B1, LGD4, 68% Ratings are subject to receipt and review of final documentation. DaVita, Inc., headquartered in El Segundo, California, is an independent provider of dialysis services in the U.S. for patients suffering from end-stage renal disease. As of Dec. 31, 2006, DaVita operated or managed 1,300 outpatient facilities in 42 states, as well as Washington D.C., serving approximately 103,000 patients. Moody's estimates that DaVita had revenue of approximately $4.7 billion for the twelve months ended Sept. 30, 2006. DELPHI CORP: Wants to Sell Brake Hose Biz to Harco Mfg. for $9.8MM ------------------------------------------------------------------ Delphi Corp. and its debtor-affiliates seek authority from the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to sell their Brake Hose Business and certain of Delphi Technologies Inc.'s intellectual property related to the Brake Hose Business to Harco Mfg. for $9,800,000, free and clear of liens, claims, and encumbrances, subject to higher and better bids. The Debtors supply a complete array of brake hose assemblies for various vehicles from small automobiles to mid-size trucks. The Debtors operate the Brake Hose Business as part of the Chassis Systems Product Business Unit within their Automotive Holdings Group Division. The Debtors deliver brake hose components to Harco Brake Systems Inc. for final assembly. Harco Manufacturing Group LLC, an affiliate of Harco Brake, then ships the finished products to General Motors Corporation. The Debtors are a Tier I supplier to GM and a Tier II supplier to several Tier I brake hose assembly suppliers to GM. The Debtors' brake hose product line has been an ongoing business concern since 1936, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. In 1997, the brake hose final assembly operation was moved to Harco Mfg. The Debtors inform the Court that the Brake Hose Business does not fit within the anticipated product portfolio under their transformation plan. The Debtors believe they lack a global manufacturing presence in the Brake Hose product line to make the Business grow. The Debtors, however, believe that as a stand alone business unencumbered by legacy costs, the Brake Hose product line could be a profitable and competitive business line. When the Debtors' long-term supply agreement with Harco Mfg. expired in 2004, Delphi Automotive Systems LLC and Harco Mfg. executed an extension of the term of the Agreement through Dec. 31, 2007, under a Brake Hose Assembly Contract Policy Statement. The Policy Statement, among other things, provides that: -- DAS will pay Harco $2,500,000 in cancellation costs if the Brake Hose Business is in-sourced or completely exited by DAS; -- Harco is entitled to a right of first refusal to buy the brake hose business before any alternative purchaser is considered by DAS; and -- Harco or an alternative purchaser of the Business must assume the Statement, whereby the Debtors would have no further obligations under it. Since early 2005, the Debtors exerted efforts to market the Brake Hose Business and ultimately, determined that Harco Mfg.'s bid is the best offer for the Business. Subsequently, the Debtors and Harco Mfg. entered into a Purchase Agreement for the sale for Brake Hose Business on Jan. 25, 2007. The salient terms of the Purchase Agreement are: * The Purchase Price represents $9,750,000 for the Acquired Assets and $50,000 for the Intellectual Property; * Harco will place $500,000 of the Purchase Price into an escrow account, and another $750,000 into an indemnity escrow account; * Harco is entitled to a $294,000 Break-Up Fee if the Debtors sell, transfer, lease, or otherwise dispose the Acquired Assets to another party; and * The Debtors will reimburse Harco, up to $100,000, for reasonable and actual out-of-pocket fees and expenses it incurred in connection with the transactions contemplated by the Agreement upon the Agreement's termination when: -- the Closing fails to occur within 90 days after the Court approves the Sale; or -- the Court fails to enter a Sale Order by May 25, 2007, or the Sale Order is subject to a stay or injunction. In the event Harco Mfg. is entitled to receive both the Break-Up Fee and the Expense Reimbursement, Harco Mfg. will only be awarded with the larger of the two amounts. The Agreement does not provide for a transfer of the Business's workforce to Harco Mfg. Under a manufacturing services agreement to be entered into at the Sale's Closing, the Debtors' hourly employees will continue to produce brake hose products for a maximum period of 12 months. Under a transition services agreement, salaried employees of the Business will support those activities for a similar period. The Business's hourly workforce is represented by the United Steel, Paper And Forestry, Rubber, Manufacturing, Energy, Allied Industrial And Service Workers International Union. The Debtors are currently negotiating with the USW to obtain the labor union's waiver of any no-sale clause contained in agreements between Delphi Corporation and the USW prior to the Closing, Mr. Butler informs the Court. Pursuant to the Agreement, the Debtors also seek to assume and assign certain executory contracts, unexpired leases, and liabilities to Harco Mfg. or an alternative purchaser. To the extent that any defaults exist under the Assumed and Assigned Contracts or Leases, the Debtors intend to cure those defaults prior to any assumption and assignment. A full-text copy of the Harco Sale and Purchase Agreement is available for free at http://ResearchArchives.com/t/s?1928 Bidding Procedures To maximize the value of their property, the Debtors seek to subject the proposed sale to better and higher offers. Accordingly, the Debtors ask the Court to approve uniform bidding procedures to govern the sale of the Brake Hose Business. For a potential bidder to become a Qualified Bidder, it must: -- execute a confidentiality agreement; -- provide certain financial assurances as to its ability to close a transaction; and -- submit a preliminary purchase proposal. The Debtors propose to establish 11:00 a.m., March 2, 2007, as the Bid Deadline. For a bid to be deemed a Qualified Bid, it must be received by the Bid Deadline and, among other things, must have a value greater than the aggregate value of the Purchase Price, the Break-Up Fee, and $500,000. The Bid must not be conditioned on bid protections and must include a commitment to consummate the purchase of the Acquired Assets within 15 days after the Court approves the alternative purchase. If the Debtors receive a Qualified Bid, they will conduct an auction of the Acquired Assets before March 20, 2007. A full-text copy of the proposed Bidding Procedures for the sale of the Brake Hose Business is available for free at http://ResearchArchives.com/t/s?1971 The Court will conduct a hearing on March 22, 2007, to consider the Proposed Sale. 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). EASTLAND CLO: $48 Million Class D Notes Rated BB by S&P ------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to the Eastland CLO Ltd./Eastland CLO Corp. $1.4081 billion floating-rate notes. The preliminary ratings are based on information as of Feb. 9, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The credit enhancement provided to each class of notes through the subordination of cash flows to the more junior classes and preference shares; -- The transaction's cash flow structure, which has been subjected to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Eastland CLO Ltd./Eastland CLO Corp. Class Rating Amount ----- ------ ------------ A-1 AAA $100,000,000 A-2a AAA $825,600,000 A-2b AAA $206,000,000 A-3 AA $78,500,000 B A $81,500,000 C BBB $68,500,000 D BB $48,000,000 Preference shares NR $123,500,000 NR -- Not rated. EASTMAN KODAK: Details Major Restructuring by End of 2007 --------------------------------------------------------- Eastman Kodak Company has reported significant progress in the implementation of its digital business strategy, led by new product introductions across its consumer and commercial portfolio, the continued integration and growth of its Graphic Communications Group, and accelerated cost reductions that will follow the divestiture of its Health Group. At a meeting with investors, Kodak detailed the plan that it is following to generate profitable digital growth in 2007 and to position itself for further success in 2008 and beyond. The presentation also covered Kodak's plan to complete its major business restructuring by the end of 2007, as the company progresses toward its target business model. The company expects that target business model to yield gross profit margins of 28% to 29% with earnings from operations equal to 8% to 9% of revenue in 2009. "During the past three years we have made visible and significant progress in creating the new Kodak," Eastman Kodak Company Chairman and Chief Executive Officer Antonio M. Perez said. "We have built the industry's leading provider of products and services for commercial printers, and this week we launched a long-awaited breakthrough value proposition for consumers in the inkjet market. In 2007, we are continuing to move aggressively to complete the transformation of our business operations and fully implement a business model which will power our future success in digital markets." Business Units Poised for Profitable Growth During 2006, the company's Consumer Digital Group made significant progress in achieving its digital operating model, delivering a $132 million improvement in earnings and positive cash contribution for the year. For 2007, the company expects Consumer Digital Group revenues to be steady on a year-over-year basis, driven by new product introductions in consumer inkjet and image sensors and growth in the Kodak Gallery and Kodak Picture Kiosks, partially offset by declines in consumer paper. The company forecasted improved earnings for CDG, driven by image sensors, home printing, the Kodak Gallery, Kodak Picture Kiosks and consumer paper, plus the benefit from the company's ongoing intellectual property licensing program. "As an early investor in digital technology, Kodak has amassed a sizeable amount of extremely valuable intellectual property," Mr. Perez said. "We are committed to generating value from that asset by using it to drive business partnerships, provide the company with access to new markets and additional technology, and to generate earnings and cash." For 2007, the company expects revenue and earnings from intellectual property licensing of at least $250 million. The Graphic Communications Group continues to remain ahead of its integration plan and, in 2007, the company expects the business to grow digital revenue between 6% and 9% with expanding earnings. Key areas of profitable growth and market leadership for GCG include digital plates, inkjet-printing solutions, document imaging, electrophotographic digital printing, and workflow software. Financial Priorities Kodak remains focused on three priorities as it continues to transform its business: net cash generation, digital earnings from operations, and digital revenue growth. For 2007, on a continuing operations basis, Kodak expects net cash generation (formerly investable cash flow) of $100 million to $200 million after restructuring disbursements of approximately $600 million and an aggressive introduction plan for inkjet products. The company also expects to generate digital earnings from operations of $200 million to $300 million on digital revenue growth of 3% to 5%. "As we enter the final year of our transformation, we are focused on completing the restructuring of our traditional operations, reducing debt, and refining our cost model in order to create a foundation for sustainable and profitable growth," Eastman Kodak Company Chief Financial Officer Frank S. Sklarsky said. "We continue to generate sufficient cash in order to fund these efforts, and also to support the launch of key new products that will drive our future growth in revenue and earnings." Achieving the Targeted Cost Model The company has set a goal of building a business model to achieve sustained success in digital markets, supported by achieving selling, general, and administrative expenses level equal to 14% to 15% of revenue by 2009. For 2006, the company's selling, general, and administrative expenses level was approximately 18% of revenue. "Our manufacturing cost reductions are in the final stages of implementation," Mr. Sklarsky said. "We defined what had to be done and the team has moved aggressively to do it. We are now bringing the same focus and intensity to driving reductions in our SG&A expenses in order to achieve our target business model." As part of achieving these cost reductions, the company expects to make restructuring payments of $575 million to $625 million in 2007, with a focus on addressing the anticipated cost overhang following the completion of its Health Group divestiture. By the end of 2007, the company expects to have made substantial progress in establishing a business model that will support sustained profitable growth in the digital markets in which it operates. Job Cuts Kodak's restructuring program was first announced in January 2004 and updated in July 2005 and August 2006. As of August 2006, the program anticipated the elimination of 25,000 to 27,000 positions and charges totaling $3 billion to $3.4 billion. During the fourth quarter of 2006, the company eliminated approximately 1,200 positions, bringing the program's total to-date to approximately 23,400 positions along with cumulative charges of $2.7 billion. Based on the restructuring and selling, general, and administrative expenses reduction actions to-date, and an understanding of the remaining actions to conclude these activities by the end of 2007, influenced by the divestiture of the Health Group, the company now expects that the total employment reductions will be in the range of 28,000 to 30,000 positions and total charges will be in the range of $3.6 billion to $3.8 billion. The company expects that these actions will allow it to conclude its major restructuring program by the end of 2007. "Kodak is now a company comprised of numerous leading digital businesses with diverse sources of sales and earnings, coupled with strong intellectual property positions," Mr. Perez said. "Our dramatic operational improvements during the past three years have created a solid foundation from which Kodak will become a growing digital company with innovative new products and services, attractive margins and strong cash generation." About Eastman Kodak Co. Headquartered in Rochester, New York, Eastman Kodak Co. (NYSE: EK) -- http://www.kodak.com/-- develops, manufactures, and markets digital and traditional imaging products, services, and solutions to consumers, businesses, the graphic communications market, the entertainment industry, professionals, healthcare providers, and other customers. * * * As reported in the Troubled Company Reporter on Feb. 2, 2007, Moody's Investors Service reviewed Eastman Kodak Company's ratings for possible downgrade including Corporate Family Rating at B1, Senior Unsecured Rating at B2, and Senior Secured Credit Facilities at Ba3. EDDIE BAUER: CEO and Board Member Fabian Mansson Resigns -------------------------------------------------------- Eddie Bauer Holdings Inc. disclosed the resignation of its President, Chief Executive Officer and Board member, Fabian Mansson. Howard Gross, a member of the Board, has been named Interim CEO as the Board conducts a search for a permanent CEO. Mr. Gross has over 35 years of experience in the retail apparel industry, having served as President and CEO of Limited Stores and Victoria's Secret Stores, as well as CEO of the Hub Distributing, Millers Outposts, and Levi's Outlet Stores divisions of American Retail Group, Inc. "On behalf of the entire Board, I'd like to thank Fabian for his leadership over the past four and a half years," William End, Chairman of the Board, said. "He guided the Company through its difficult reorganization and the early stages of its turnaround and restored positive sales momentum this past Holiday season with the refocusing of the Company's product line. We wish him well in his future endeavors." "Our Board is committed to taking the necessary actions to put Eddie Bauer on a path to improve its performance and capitalize on the strong potential of its brand," Mr. Gross commented. "We are moving forward thoughtfully and expeditiously to position the Company to execute its turnaround strategy." At a special stockholders meeting held Feb. 8, 2007, an insufficient number of shares were voted in favor of approving the company's proposed sale to Eddie B Holding Corp., a company owned by affiliates of Sun Capital Partners Inc. and Golden Gate Capital. As a result, the Board is evaluating appropriate next steps for the company to effectuate its turnaround. Headquartered in Redmond, Washington, Eddie Bauer Holdings Inc. (NASDAQ: EBHI) -- http://www.eddiebauer.com/-- is a specialty retailer that sells casual sportswear and accessories for the "modern outdoor lifestyle." Established in 1920 in Seattle, Eddie Bauer products are available at approximately 380 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebaueroutlet.com/ The company also participates in joint venture partnerships in Japan and Germany and has licensing agreements across a variety of product categories. Eddie Bauer employs approximately 10,000 part-time and full-time associates in the United States and Canada. * * * As reported in the Troubled Company Reporter on Oct. 13, 2006, Moody's Investors Service confirmed Eddie Bauer Inc.'s B2 Corporate Family Rating. Moody's also confirmed its B2 rating on the company's 300 million term loan. ELCOM INT'L: Selects John Halnen as Interim President & CEO ----------------------------------------------------------- Elcom International Inc. disclosed that John E. Halnen, the company's president and chief executive officer, will serve as its principal financial officer and principal accounting officer on an interim basis until such time the company appoints a new officer to serve in those positions. Although he does not have a specific financial background, Mr. Halnen has served as the chief executive officer of the company since December 2005, as president of the company since November 2000 and as a Director of the company since June 2003. Mr. Halnen served as the company's principal financial officer and principal accounting officer during the period of July 21, 2006 to Oct. 2, 2006, prior to the hiring of Mr. Bogonis. Paul Bogonis, vice president of finance and controller, is no longer employed effective Feb. 6, 2007. The company is in discussions with Mr. Bogonis related to final severance arrangements. Going Concern Doubt Vitale, Caturano & Company Ltd. expressed substantial doubt about Elcom International's ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2005. The auditing firm pointed to the company's net losses every year since 1998, has an accumulated deficit of $126,252,000 as of Sept. 30, 2006. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?1712 Elcom International, Inc. (OTC Bulletin Board: ELCO and AIM: ELC and ELCS) -- http://www.elcominternational.com/-- operates Elcom Inc., an international B2B Commerce Service Provider offering affordable solutions for buyers, sellers and commerce communities to automate many or all of their purchasing processes and conduct business online. PECOS, Elcom's remotely hosted flagship solution, enables enterprises of all sizes to achieve the many benefits of B2B eCommerce without the burden of infrastructure investment and ongoing content and system management. ESTERLINE TECH: S&P Affirms BB Long-Term Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB' long-term corporate credit rating, on Esterline Technologies Corp. The outlook is stable. "Although the pending debt-financed acquisition of CMC Electronics Inc. [not rated] will result in a material deterioration in Esterline's currently strong for the rating financial measures, expected debt reduction should restore appropriate ratios in the next 12 months," said Standard & Poor's credit analyst Christopher DeNicolo. However, the $335 million acquisition limits the company's flexibility for further acquisitions until leverage is reduced. The increased debt would result in Esterline's pro forma debt to EBITDA rising to approximately 4.5x from 2.6x in fiscal 2006, with a similar deterioration in other credit protection measures. CMC designs and manufactures a range of electronics for aviation applications including GPS, heads-up displays, enhanced vision systems, electronic flight bags, and flight management systems. The acquisition will improve Esterline's system integration capabilities. The ratings on Esterline reflect the company's exposure to the competitive and cyclical commercial aerospace market, an active acquisition program, and modest size compared with some competitors, offset somewhat by a diversified revenue base and acceptable profitability. Bellevue, Washington-based Esterline designs and manufacturers highly engineered products and systems for defense and aerospace customers, as well as for general industrial applications. Products include lighted switches and displays for commercial and military aircraft, temperature and pressure sensors for engines, and electronic countermeasures. Revenues in recent years have benefited from acquisitions, military sales, and the recovery in the commercial aftermarket. The Advanced Materials unit produces high-performance silicone elastomer products, electronic warfare countermeasure products, and combustible ordnance. The company's Sensors & Systems unit provides temperature and pressure sensors for aircraft turbine engines, fluid regulation systems, and motion control components. Avionics & Controls produces technology interface systems, lighted switches, displays and control products for commercial and military aircraft. Esterline's revenue base is fairly balanced between military, commercial aerospace, and industrial markets. The firm's products are used on wide range of commercial and military airplanes, with no one aircraft type accounting for more than 5% of revenues. Firm backlog was $654 million as of Oct. 27, 2006. A diversified revenue base and good growth in key markets should enable Esterline to reduce debt with free cash flow and restore leverage and other credit protection measures to more appropriate levels. The outlook could be revised to negative if leverage does not decline as expected or there are further debt-financed acquisitions. It is unlikely the outlook will be revised to positive in the intermediate term. EXECUTE SPORTS: Sells Academy Snowboard Rights Back to Owners ------------------------------------------------------------- Execute Sports Inc. has sold and transferred the Academy Snowboard brand. Deal points included the transfer of all liabilities, current receivables and all rights to the brand back to the original owners. Execute Sports has decided to shut down the Academy Snowboards, acquired in November 2006 as part of the Pacific Sports Group, Inc. acquisition, after a year of disappointing sales and sub- standard production. "The sale of Academy was pivotal in the successful restructuring of the company," Geno Apicella, CEO of Execute Sports, said. "In lieu of the situation, the best possible deal was made, reducing Execute's outstanding debt while finding a perfect home for the brand. With the sale of Academy, Execute Sports will continue to focus on its growing Watersports business. Credit must be given to Execute Sports' board members for completing this deal in a swift and efficient manner. Execute Sports could not be happier with the final results and Execute Sports wish the brand and its new owners a new-found success in the future." About Execute Sports Headquartered in San Clemente, California, Execute Sports, Inc. (OTCBB:EXCS) -- http://www.executesports.com/-- markets and sells water sports clothing, apparel, and motorcycle accessories. On March 3, 2005, the company changed its name from Padova International U.S.A. Inc. to Execute Sports Inc. Going Concern Doubt As reported in the Troubled Company Reporter on June 5, 2006, Bedinger & Company, in Concord, California, raised substantial doubt about Execute Sports's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring losses from operations. EXIDE TECH: Posts $11.2 Million Net Loss in Quarter Ended Dec. 31 ----------------------------------------------------------------- Exide Technologies Inc. reported an $11.2 million net loss on $769.7 million of sales for the fiscal 2007 third quarter ended Dec. 31, 2006, compared with a $27.7 million net loss on $733.4 million of sales for the fiscal 2006 third quarter. Excluding the favorable impact of currency, sales were essentially flat year-over-year. "The somewhat lower unit volumes in both our Transportation North America and Transportation Europe and Rest of World businesses continue to be the result of our intended program to increase profitability," said Gordon Ulsh, President and CEO. "An unseasonably warm December on both continents put further downward pressure on volume." The fiscal 2007 third quarter net loss included an approximate $9.2 million after-tax impairment charge relating to the company's Nanterre, France former manufacturing facility held for sale. The decreased net loss is partially the result of improved gross margins driven by higher pricing and continued productivity gains, which more than offset the impact of lower volumes. Results for the current quarter included a tax benefit of $2.9 million versus a tax provision in the prior year period of $3.5 million. Interest expense, net was $4.4 million higher in the current quarter due to higher average debt levels and higher interest rates. At Dec. 31, 2006, the company's balance sheet showed $2.1 billion in total assets, $1.8 billion in total liabilities, $14 million in minority interest, and $299.5 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19b0 About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. FLEXTRONICS: Earns $119 Million Net Income in Qtr Ended Dec. 31 ---------------------------------------------------------------- Flextronics International Ltd. earned $119 million of net income on $5.4 billion of net sales for the third quarter ended Dec. 31, 2006, compared with $42 million of net income on $4.1 billion of net sales for the same period ended Dec. 31, 2005. Net sales increased $1.3 billion due to new program wins from various customers. Gross profit during the quarter ended Dec. 31, 2006, increased $115.6 million to $289.1 million, or 5.3% of net sales, from $173.5 million, or 4.2% of net sales, during the quarter ended Dec. 31, 2005. Fiscal 2006 third quarter cost of sales included $63.1 million in restructuring charges related to the impairment, lease termination, exit costs and other charges related to the disposal and exist of certain real estate owned and leased by the company. The company did not incur any restructuring charges in the fiscal 2007 quarter. Selling, general and administrative expenses amounted to $135.9 million, or 2.5% of net sales, during the quarter ended Dec. 31, 2006, compared to $96.2 million, or 2.4% of net sales, during the quarter ended Dec. 31, 2005. During the quarter ended Dec. 31, 2005, the company recognized $7.7 million of charges related to the retirement of Michael E. Marks from his position as Chief Executive Officer, of which approximately $5.9 million was paid during the quarter, and the remaining amount was paid in July 2006. Interest and other expense, net was $16.8 million during the quarter ended Dec. 31, 2006, compared to $21.9 million during the quarter ended Dec. 31, 2005, a decrease of $5.1 million. Income from continuing operations was $118.6 million in the current quarter compared to $37.6 million in the previous quarter. The fiscal 2005 quarter income from continuing operations included an approximate $12.2 million benefit reduction in previously recorded valuation allowances for deferred tax assets, and $4.3 million income from discontinued operations related to the divestiture of the software development and solutions business in September 2006. At Dec. 31, 2006, the company's balance sheet showed $12.7 billion in total assets, $5.6 billion in total liabilities, and $6.1 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19b3 Sale of Software Development Business In September 2006, the company completed the sale of its software development and solutions business to Software Development Group, nka Aricent, an affiliate of Kohlberg Kravis Roberts & Co. The company received aggregate cash payments of approximately $688.5 million, an eight-year $250 million face value promissory note with a paid-in-kind interest coupon fair valued at approximately $204.9 million and retained a 15% ownership interest in Aricent, fair valued at approximately $57.1 million. Acquisition of IDW On Nov. 30, 2006, the company completed its acquisition of 100% of the outstanding common stock of IDW, a manufacturer and designer of high quality liquid crystal displays, modules and assemblies, in a stock-for-stock merger. The aggregate purchase price was approximately $299.6 million. Liquidity Position As of Dec. 31, 2006, the company had cash and cash equivalents of $909.2 million and bank and other borrowings of $1.5 billion. About Flextronics Headquartered in Singapore, Flextronics International Ltd. (NasdaqGS: FLEX) -- http://www.flextronics.com/-- provides complete design, engineering and manufacturing services to automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEMs. * * * As reported in the Troubled Company Reporter on Feb. 7, 2007, Moody's Investors Service revised the outlook on Flextronics International Ltd. to stable from negative, while affirming its corporate family rating to Ba1. FLOWSERVE CORP: Fitch Rates Senior Secured Bank Facilities at BB ---------------------------------------------------------------- Fitch Ratings has initiated coverage of Flowserve Corporation and assigned these ratings: --Issuer Default Rating 'BB'; --Senior secured bank facilities 'BB'; The Rating Outlook is Stable. Flowserve had slightly more than $650 million of debt outstanding at Sept. 30, 2006. The ratings incorporate Flowserve's product and geographic diversification within the flow control industry, its leading market positions, and strong demand across many of its end markets. Other rating strengths include a conservative debt structure, ample liquidity and declining leverage. The company has consistently reduced debt over the past several years, and segment operating income has also been improving. Rating concerns include weak controls over financial reporting, a number of potential litigation liabilities, further rationalization required in the company's management information systems, and cyclicality in many of Flowserve's end-markets. Concerns about cyclicality are mitigated by the substantial portion of aftermarket business, long term growth in international markets which represent more than half of total revenue, and a favorable outlook for long term investment in the oil and gas industries. Much of the senior management team has been replaced since early 2004, and the company is gradually consolidating its and management information systems. Increases in bookings and revenue from the important oil, gas and process industries have contributed to improving operating results despite a number of ongoing challenges involving financial controls and potential litigation liabilities. Fitch anticipates that as Flowserve eventually resolves these issues, the company's financial profile could improve further. SEC filings were brought current as of Sept. 30, 2006 but the company is still addressing material weaknesses as disclosed in its financial statements. The challenges surrounding Flowserve's financial controls and management information systems follow a period of acquisitions and mergers several years ago under a previous management team. The company is currently taking steps to boost its accounting and compliance capabilities and has implemented a program to gradually upgrade and integrate the large number of disparate information systems currently in place. The completion of this effort will be important to Flowserve's ability to implement operating strategies, maintain its competitive position and control costs related to financial reporting. Potential litigation liabilities represent additional rating concerns, including asbestos, shareholder lawsuits, export control laws, and investigations of Flowserve's compliance with the U.N. Oil-for-Food Program. These potential liabilities are reduced by insurance coverage. While the effectiveness of such coverage is difficult to ascertain, the ratings incorporate Fitch's view that, in the absence of unexpectedly large awards against it, Flowserve's net litigation liabilities are not likely to result in a substantial use of cash. Improved results through the first nine months of 2006 benefited by comparison with 2005 when Flowserve recorded certain non-recurring costs. These costs included the extinguishment of debt as well as losses from the General Services Group that was divested in 2005. Stronger operating results have been partly offset by high professional fees as Flowserve addresses its financial control weaknesses and upgrades its finance and compliance capabilities. Operating margins have improved in recent periods, rising modestly to 7.8% for the first nine months of 2006. They can be expected to improve further when professional fees eventually decline and as Flowserve increases sourcing from low-cost locations and takes other steps to control costs. Flowserve's long term target for operating margins is 15%. The company has used most of its free cash flow in recent years to reduce debt and leverage. At Sept. 30, 2006, Flowserve had reduced debt/EBITDA to 2.24x compared to levels above 4x prior to 2004. Going forward, however, improving operating trends and cash flow should support discretionary spending for potential acquisitions and share repurchases. Share repurchases were recently implemented partly to offset the impact of employee stock option plans that were unexercisable while SEC filings were delinquent. Despite the increase in Flowserve's discretionary spending, Fitch believes the company is likely to maintain leverage near current levels over the long term and could potentially report stronger financial measures in the absence of acquisition opportunities. Debt at Sept. 30, 2006 totaled $654 million, consisting primarily of a $562 million term loan under its domestic credit facilities and an $85 million borrowing from the European Investment Bank. The EIB borrowing, which was backed by a letter of credit issued under a $400 million domestic bank revolving credit, was repaid in December 2006. Liquidity was supported by $52 million of cash and the $400 million revolver. Flowserve's domestic bank facilities are secured by substantially all of its domestic assets and 65% of the capital stock of certain foreign subsidiaries. The facilities contain a comprehensive set of covenants that were put in place while the company was delinquent on its SEC filings, and the company was well within its covenant limits at Sept. 30, 2006. The bank revolver and term loan mature in 2010 and 2012, respectively, and would become unsecured if Flowserve maintains investment grade ratings, as defined in the agreement, for at least 90 days. FOAMEX INT'L: Emerges from Chapter 11 Bankruptcy Protection ----------------------------------------------------------- The Plan of Reorganization of Foamex International Inc. has become effective and the company has successfully emerged from chapter 11 bankruptcy protection. In accordance with the Plan, holders of allowed claims will be satisfied in full in cash. Additionally, the company's equityholders will retain their interests in Foamex, subject to dilution as a result of the issuance of additional common stock in connection with the rights offering, the call option and any common stock to be issued under the proposed Management Incentive Plan and the existing Key Employee Retention Program or upon exercise of any stock options. Foamex has begun to make the initial distributions required under the Plan, and expects to finish making all distributions required to be made on or about the effective date by Feb. 15, 2007. New Executive Management The company also disclosed that Mr. Gregory J. Christian, who had been Executive Vice President, Chief Restructuring Officer, Chief Administrative Officer, and General Counsel of Foamex, has been named President of the company, effective immediately. Mr. Christian, who joined the company in 1996, will also continue to serve on the company's Board of Directors. "This is an extraordinary day for Foamex," Raymond E. Mabus, Chairman and Chief Executive Officer of Foamex, said. "It marks the close of one of the most challenging times in the history of the company, and more importantly, it is the beginning of a new era. Foamex is emerging as a stronger, leaner company, with a reinvigorated business and the financial flexibility needed to compete and be the industry leader. We have worked diligently with our employees, advisors and stakeholders to reach this point. "Central to our turnaround has been our efforts to transform the business from a traditional foam manufacturer to a market-focused provider of polyurethane foam-based solutions and specialty comfort products. Innovation is the cornerstone of our future. We are partnering with our customers to develop specialty solutions for diverse markets, while still continuing to be a full service provider of high quality products to the traditional markets we serve. We believe that executing this strategy, coupled with discipline, hard work and operational excellence will ensure our future success. "Emerging from chapter 11 is extremely gratifying. I am pleased to say that the results of our restructuring process exceeded everyone's expectations -- a true testament to the hard work of our employees, our restructuring team, and all of our stakeholders. Our situation is highly unusual in that all of Foamex's creditors will be paid in full in cash, and our equityholders will have the opportunity to retain their interests in Foamex. Today's news, combined with our operational performance, provides strong evidence that we have good momentum and a promising future. "Additionally, I would like to congratulate Greg on his well- deserved promotion to President of Foamex. This is truly a testament to the invaluable contributions he has made to the Company and the central role he played in the reorganization process. We look forward to his many contributions in the years ahead in this new capacity. "I would also like to express thanks to Andy Thompson, Executive Vice President of Foam and Technical Products, and Don Phillips, Executive Vice President of Automotive Products. With Greg, they have been instrumental in effectuating Foamex's turnaround and the Company's strategic shift. As I've said, Foamex has a bright future and I look forward to working with these three leaders and the rest of our talented employees as we take Foamex to the next level." With the company's emergence from bankruptcy, Foamex has a new seven-member board of directors. The members are Messrs. Mabus and Christian; Mr. Thomas M. Hudgins, retired Partner, Ernst & Young LLP; Mr. Robert B. Burke, Founder and Chief Executive Officer of Par IV Capital Management, LLC; Mr. Seth Charnow of the D. E. Shaw Group; Mr. Eugene I. Davis, Chairman and Chief Executive Officer of PIRINATE Consulting Group, LLC; and Gregory E. Poling, President of Grace Davison Chemicals, an operating segment of W.R. Grace & Co., and Vice President of W.R. Grace & Co. Headquartered in Linwood, Pennsylvania, Foamex International Inc. (FMXIQ.PK) -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The company also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. On Feb. 2, 2007, the Court confirmed the Debtors' Second Amended Joint Plan of Reorganization. FULTON STREET: Fitch Cuts Rating on $5.9 Mil Class C Notes to B- ---------------------------------------------------------------- Fitch has affirmed five classes and downgraded one class of notes issued by Fulton Street CDO, Ltd. and its co-issuer Fulton Street CDO Funding Corp. These rating actions are effective immediately: -- $169,522,174 class A-1A notes affirmed at 'AAA'; -- $139,384,899 class A-1B notes affirmed at 'AAA'; -- $34,000,000 class A-2 notes affirmed at 'AA'; -- $9,186,975 class B-1 notes affirmed at 'BBB'; -- $10,207,000 class B-2 notes affirmed at 'BBB'; and -- $5,982,979 class C notes downgraded to 'B-/DR1' from 'B/DR1'. Fulton is a collateralized debt obligation that closed March 27, 2002 and is managed by Clinton Group, Inc. Fulton ended its revolving period on April 20, 2006. The collateral supporting the CDO is composed of a diversified portfolio of residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, corporate debt securities, and collateralized debt obligations. The downgrade to the class C notes is the result of declining performance measures, such as overcollateralization ratios and weighted average coupon. According to the most recent trustee report dated Jan. 16, 2007, class C OC test continues to fail, 99.4% versus a trigger of 100%. The WAC has decreased to 7.61% with respect to a minimum covenant of 7.65%. The class C notes have deferred interest the past two payment periods. Over that time, the notional balance on the class C notes has increased by approximately $354,109. The affirmations to the class A-1, A-2 and B notes are due to positive structural features which have caused the senior notes to delever. The failure of the B OC test, 100.9% versus a trigger of 101%, causes available interest proceeds to be used to delever the senior notes. Prior to April 2014, available principal collections can be used to pay unpaid class B interest, which aids the B notes in certain scenarios. Fitch believes that the structural features in the deal and portfolio composition warrant the affirmation of the ratings of the class A-1, A-2 and B notes. The ratings on the class A-1A, A-1B and A-2 notes address the timely payment of interest and principal; the ratings on the class B-1, B-2 and C notes address the ultimate payment of interest and principal. The class A-1A and A-1B notes have a legal final maturity of April 2032; the class A-2, B-1, B-2, and C notes have a legal final maturity of April 2037. Fitch will continue to monitor and review this transaction for future rating adjustments. FUNCTIONAL RESTORATION: Trustee Wants Grobstein as Accountants -------------------------------------------------------------- David K. Gottlieb, the Chapter 11 Trustee for Functional Restoration Medical Center Inc.'s bankruptcy case, asks the U.S Bankruptcy Court for the Central District of California for permission to employ Grobstein, Horwath & Company LLP as his accountants. The firm will: a. investigate and analyze transfers made to or on behalf of insiders; b. investigate and analyze potential preference payments made within 90 days of the Debtor's bankruptcy filing; c. provide litigation support to the extent support is appropriate and required; d) investigate for potential fraudulent transfers; e) accounting services relative to record reconstruction and tax return preparation; f) assist the trustee in analyzing the financial condition of the Debtor and preparation of necessary projections and forecasts; g) provide forensic accounting support as necessary; and h) provide accounting support as may be required. Alan L. Kahn, CPA of the firm, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. A list of the firm's professionals billing rates is available for free at http://ResearchArchives.com/t/s?19b9 Mr. Kan can be reached at: Alan L. Kahn, CPA Grobstein, Horwarth & Company LLP 15233 Ventura Blvd., 9th Floor Sherman Oaks, CA 91403 Tel: (818) 501-5200 Fax: (818) 501-7040 Headquartered in Encino, California, Functional Restoration Medical Center, Inc., is the second largest owner and operator of MRI centers in Southern California. The Debtor filed for chapter 11 protection on Mar. 9, 2006 (Bankr. C.D. Calif. Case No. 06-10306). Daniel A. Lev, Esq., at SulmeyerKupetz, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its estimated assets and debts between $10 million and $50 million. GEOEYE INC: Pays $50 Million Loan Used to Acquire Space Imaging --------------------------------------------------------------- GeoEye Inc. disclosed the final payment on a $50 million credit facility that it drew down in January 2006 to fund the acquisition of the assets of Colorado-based Space Imaging. While the two and one-half year facility did not have an amortization repayment schedule, it was structured to be repaid from excess cash flow generated by the assets purchased from Space Imaging. Given the performance of the operation, the company has been able to repay this facility with cash flow generated within calendar year 2006. In conjunction with this repayment, the preferred stock that was issued in connection with the loan will be cancelled. "Our board of directors and executive team are very pleased that the company's and our employees' performance have enabled us to repay this loan in such a short period of time -- just about a year after the completion of the Space Imaging acquisition," Matt O'Connell, GeoEye's president and chief executive officer, said. "After completing the Nasdaq listing last fall and repaying this debt, the company is now positioned to seek new opportunities and growth," Henry Dubois, GeoEye's executive vice president and chief financial officer, stated. "The integration of Space Imaging is complete and the team is now in place across all of our operational locations to support GeoEye-1 when launched later this year," Bill Schuster, GeoEye's chief operating officer, said. "The IKONOS satellite, its 255 million square kilometer archive, and, most importantly, the top- notch employees were a terrific investment from which we continue to find value." About GeoEye Headquartered in Dulles, Virginia, GeoEye (Nasdaq: GEOY) -- http://www.geoeye.com/-- is a commercial imaging satellites operator. GeoEye was a result of ORBIMAGE's acquisition of Space Imaging in January 2006. The company provides geospatial data, information and value-added products for the national security community, strategic partners, resellers and commercial customers. GeoEye operates three Earth imaging satellites: OrbView-2, OrbView-3 and IKONOS and possesses a network of regional ground stations, a robust image archive, and geospatial imagery processing capabilities. * * * Geoeye Inc.'s 14.8668% Senior Secured Floating Rate Notes due 2012 carry Standard & Poor's B- rating. GLOBAL POWER: Has Until April 26 to File Chapter 11 Plan -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Global Power Equipment Group Inc. and its debtor-affiliates until April 16, 2007, to file their plan of reorganization and until June 25, 2007, to solicit acceptances of that plan. The Debtors' exclusive period to file a chapter 11 plan expired on Jan. 26, 2007. Although much has been achieved in terms of transitioning their business into Chapter 11 administration, the Debtors note that a substantial amount of work remains to be done before they will be able to propose a plan consistent with their fiduciary duties to maximize value, including the development and testing of a business plan and an analysis of the Debtors' intercompany claims. Until a reliable business plan can be developed, vetted and validated, coupled with an analysis of intercompany issues, efforts to propose and file a plan of reorganization will be futile, the Debtors said. Headquartered in Tulsa, Oklahoma, Global Power Equipment Group Inc. aka GEEG Inc. -- http://www.globalpower.com/-- provides power generation equipment and maintenance services for its customers in the domestic and international energy, power and infrastructure and service industries. The Company designs, engineers and manufactures a range of heat recovery and auxiliary equipment primarily used to enhance the efficiency and facilitate the operation of gas turbine power plants as well as for other industrial and power-related applications. The Company has facilities in Plymouth, Minnesota; Tulsa, Oklahoma; Auburn, Massachusetts; Atlanta, Georgia; Monterrey, Mexico; Shanghai, China; Nanjing, China; and Heerleen, The Netherlands. The Company and 10 of its affiliates filed for chapter 11 protection on Sept. 28, 2006 (Bankr. D. Del. Case No 06-11045). Attorneys at White & Case LLP and The Bayard Firm, P.A., represent the Debtors. The Official Committee of Unsecured Creditors appointed in the Debtors' cases has selected Landis Rath & Cobb LLP as its counsel. As of Sept. 30, 2005, the Debtors reported total assets of $381,131,000 and total debts of $123,221,000. GLOBAL TEL*LINK: Moody's Holds Corporate Family Rating at B1 ------------------------------------------------------------ Moody's Investors Service affirmed Global Tel*Link Corporation's B1 corporate family and senior secured ratings following the company's report of its intention to increase the size of its term facility by a further $10 million and distribute the additional proceeds to shareholders. The ratings reflect a B2 probability of default and loss given default assessment of LGD 3, 31% for the senior secured bank debt. The outlook is stable. While the incremental debt proceeds will increase GTEL's initial adjusted leverage to roughly 4.4x, the ratings have been affirmed because the increase in leverage is only modest and Moody's expects this metric to reduce to roughly 4x by the end of 2008, albeit primarily through earnings improvement rather than absolute debt reduction. Moody's notes, however, that GTEL's ability to withstand any unexpected operational challenges within its B1 rating through the next couple of years is now limited. Ratings Affirmed at B1 LGD 3, 31%: -- $20 million senior secured revolver due 2012 -- $120 million senior secured term loan due 2013 -- $50 million senior secured delayed draw term loan due 2013 -- $10 million senior secured synthetic L/C facility due 2013 - $40 million senior secured delayed draw synthetic L/C facility due 2013 Global Tel*Link Corporation, based in Mobile, Alabama, is majority owned by The Gores Group, LLC and provides telecommunications services to correctional facilities. GNC CORP: Possible Company Sale Cues S&P's Negative CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services' ratings on General Nutrition Centers Inc., including the 'B' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Dec. 22, 2006 following the company's report that it was no longer contemplating a public offering, but that it would continue to evaluate strategic alternatives, including a possible sale of the company that would be financed with a substantial amount of additional debt. "On Feb. 9, 2007, Ares Management LLC and the Ontario Teachers' Pension Plan announced that they had signed a definitive agreement to acquire GNC Parent Corp., the parent company of GNC, from Apollo Management, L.P.," explained Standard & Poor's credit analyst Jackie Oberoi. "GNC's enterprise value is estimated at $1.65 billion for this transaction." The ratings on Pittsburgh, Pennsylvania-based GNC reflect a highly leveraged capital structure, with total lease-adjusted debt pro forma for the company's recent pay-in-kind note issuance of about 6.8x. Standard & Poor's will continue to monitor developments related to GNC's sale. GRANT FOREST: S&P Cuts Long-Term Corporate Credit Rating to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Grant Forest Products Inc. to 'B+' from 'BB'. The outlook is negative. The downgrade stems from a sharp increase in the company's cash burn, as EBITDA has turned negative amid very weak oriented strand board prices, while capital expenditures for two new OSB mills have increased because of higher-than-expected labor, concrete, and steel costs. Consequently, the company is compelled to raise additional debt of $125 million to preserve liquidity through the completion of the new mills. Grant's operating income declined sharply during 2006, and is expected to remain at very weak levels during 2007 in light of weak OSB pricing conditions. Nevertheless, the improved liquidity should help moderate further deterioration of its credit risk during the current industry downturn. The rating reflects: (a) the company's high debt leverage; (b) narrow product focus in OSB, a plywood substitute; and (c) volatile earnings and cash flow. These factors are partially offset by the company's good fiber integration and its modern, cost-efficient facilities. "Grant faces increased medium-term credit risk from the substantially debt-financed construction of two large OSB mills, although these new mills will improve the company's cost profile and operating diversity, and will mitigate its foreign exchange exposure," said Standard & Poor's credit analyst Donald Marleau. The company has traditionally maintained a moderate capital structure, quickly repaying debt incurred to fund its growth capital expenditures. Grant's liquidity is weak pending the completion of its $125 million financing. Although the company currently has $26 million in cash and about $159 million available under its first-lien credit facility, the combination of minimal EBITDA generation in the coming quarters and more than $130 million of capital expenditures in 2007 will cause a rapid drain on its cash resources. Absent a further operating cash drain or capital cost overruns, the addition of $125 million of liquidity should enable the company to complete its growth capital expenditures in 2007. The outlook is negative. Persistently low OSB prices and the consequent weak cash flow, combined with the company's large capital expenditures will consume considerable liquidity through 2007. Nevertheless, the rating is supported by committed credit facilities to construct the two new, low-cost OSB mills. If industry conditions remain weak for a protracted period or if capital expenditures increase unexpectedly again, either of which contributes to materially higher debt or weaker liquidity, the rating could be lowered. Grant has a good track record of reducing debt on completion of its growth capital expenditures, and Standard & Poor's expects that the company will return to a moderate financial profile after the Allendale and Clarendon mills are complete, and will benefit significantly from the new assets. GSAMP TRUST: Moody's Rates Class B-2 Certificates at Ba2 -------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued by GSAMP Trust 2007-FM1, and ratings ranging from Aa1 to Ba2 to the mezzanine and subordinate certificates in the transaction. The securitization is backed by adjustable and fixed rate, subprime residential mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, excess spread, and interest rate swap and interest rate cap agreements between the trust and Goldman Sachs Mitsui Marine Derivatives Products, L.P. Moody's expects collateral losses to range from 5.25% to 5.75%. Fremont Investment & Loan will service the loans and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Fremont Investment & Loan its servicer quality rating of SQ3+ as primary servicer of subprime residential mortgage loans. Furthermore, Moody's has assigned Wells Fargo Bank, N.A. its top servicer quality rating of SQ1 as master servicer of residential mortgage loans. These are the rating actions: GSAMP Trust 2007-FM1 Mortgage Pass Through Certificates, Series 2007-FM1 Class A-1, Assigned Aaa Class A-2A, Assigned Aaa Class A-2B, Assigned Aaa Class A-2C, Assigned Aaa Class A-2D, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa1 Class M-8, Assigned Baa2 Class M-9, Assigned Baa2 Class B-1, Assigned Ba1 Class B-2, Assigned Ba2 GSC PARTNERS: Moody's May Upgrade Ba3 Rating on $10MM Cl. B Notes ----------------------------------------------------------------- Moody's Investors Service placed on watch for possible upgrade the rating on the notes issued in 2001 by GSC Partners CDO Fund II, Limited, a high yield collateral bond obligation issuer: * The $10,000,000 Class B Floating Rate Subordinated Notes Due 2013 -- Prior Rating: Ba3 -- Current Rating: Ba3, on watch for possible upgrade The rating action reflects the significant delevering of the transaction, according to Moody's. GSMSC NET: Moody's Puts Low-B Ratings on Class N3 and N4 Notes -------------------------------------------------------------- Moody's Investors Service has assigned ratings ranging from A3 to B3 to the GSMSC Net Interest Margin Securities, Series 2007-NIM1. The notes are backed primarily by a 92% interest in the Class X-1 and Class P certificates issued by GSR Mortgage Loan Trust 2006- OA1, a securitization of first lien, adjustable rate residential mortgage loans with a negative amortization feature. The cash flows available to repay the notes are most significantly impacted by the level of prepayments, as well as the timing and the amount of losses on the underlying mortgage pool. Moody's applied various combinations of loss and prepayment scenarios to evaluate the cash flows to the rated notes. These are the rating actions: * GSMSC 2007-NIM1, LTD * GSMSC Net Interest Margin Securities, Series 2007-NIM1 -- Class N1, Assigned A3 -- Class N2, Assigned Baa3 -- Class N3, Assigned Ba3 -- Class N4, Assigned B3 HERTZ CORP: Additional Debt Cues S&P's BB- Corporate Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its bank loan and recovery ratings on Hertz Corp.'s senior secured bank facility, following the report that the company will increase its first-lien ABL facility to $1.8 billion from $1.6 billion and apply approximately $550 million of the ABL to repay term loan borrowings. Pro forma for the increase, the facility will consist of the $1.8 billion ABL due 2012 maturity, extended from the previous 2010 maturity; and approximately $1.4 billion outstanding on the term loan and a $250 million synthetic letter-of-credit facility, both due 2010. All facilities were also amended to reflect improved pricing. The ABL is rated 'BB+', two notches above Hertz Corp.'s corporate credit rating and the term loan and synthetic letter-of-credit facilities are rated 'BB', one notch above the corporate credit rating. Each of the facilities has a recovery rating of '1', indicating a high expectation of full recovery of principal in the event of payment default. Rating List: * Hertz Corp. -- Corporate Credit Rating, BB-/Negative/ Rating Affirmed: * Hertz Corp. -- Senior Secured Bank Facility affirmed at BB+/BB -- Recovery Rating: 1 IFM COLONIAL: S&P Places Corporate Credit Rating at 'BB+' --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' corporate credit rating to IFM Colonial Pipeline 2 LLC, a domestic subsidiary of Australian-based Industry Funds Management. Standard & Poor's also assigned a 'BBB-' rating to IFM Holdco's $225 million senior secured credit facility. In addition, the facility was also assigned a '1' recovery rating, indicating the expectation of full recovery of principal in a default scenario. Driven primarily by Standard & Poor's recovery rating, the senior secured rating is one notch above the corporate credit rating. The outlook is stable. IFM Holdco intends to use the proceeds from the $225 million senior secured facility along with $424 million of equity to purchase a 15.8% equity interest in Colonial Pipeline Co. from CITGO Petroleum Corp. IFM Holdco has a satisfactory business profile and an aggressive financial profile. Ratings are buoyed by the strong business profile of Colonial, a unique refined products pipeline which accesses 13 major refineries in the Gulf Coast and terminates in end markets representing about 15% of the U.S. population. Absent any major operational difficulties, which are considered remote risks, the ratings will likely remain stable for the foreseeable future. Expansion projects appropriately supported with long-term contracts with creditworthy shippers and that do not materially alter balance sheet fundamentals are reflected in the rating. "Rating or outlook improvement is unlikely, unless financial policy is significantly changed," said Standard & Poor's credit analyst Charles J. LaPorta. "Downward ratings or outlook changes could be precipitated by operational problems that could persist, or if corporate strategy was shifted to introduce new business or financial risks into Colonial's credit profile," he continued. JUNIPER NETWORKS: Stock Options Probe Cues S&P's Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services' BB/Watch Neg/B-1 corporate credit and other ratings on Sunnyvale, California-based Juniper Networks Inc. remain on CreditWatch with negative implications, where they were placed on May 22, 2006. "The CreditWatch placement followed Juniper's announcement that it had received a request for information from the office of the U. S. Attorney for the Eastern District of New York relating to the company's granting of stock options," said Standard & Poor's credit analyst Bruce Hyman. On Dec. 20, 2006, the company reported the completion of the independent investigation in that matter. The investigation found: (a) numerous instances in which grant dates were chosen to give favorable prices; (b) serious concerns regarding certain former management; and, (c) insufficient exercise of responsibility by management for the stock option process. The company expects to file its June and September 2006 forms 10-Q during the first quarter of 2007; additionally the company has been notified that continued NASDAQ listing will require it to file those documents by February 12, 2007. The ratings will remain on CreditWatch until the company is in compliance with all listing requirements and has timely filed all required financial statements, and an assessment of the longer-term effect of its stock options disclosures can be made. Juniper's substantial liquidity should provide sufficient resources for R&D and administrative expenses, strategic investments and working capital, and also cushion the downside risk to the rating. The ratings continue to reflect the company's broadening business base, continued good market position in the networking equipment and information security markets, and its moderate financial profile, tempered by the challenges of rapid growth in a highly competitive, rapidly evolving market, and the potential for continued industry volatility. Juniper supplies high-performance routers and network security products, used in carrier and enterprise networks, competing against industry leader Cisco Systems Inc. and others. The company has distribution arrangements with Alcatel Lucent, Ericsson, Siemens AG, and Avaya Inc. Ericsson's planned acquisition of Redback Systems Inc. could reduce Juniper's sales through that channel over time. Juniper's sales were $596 million in the December quarter, up 4% sequentially, while full-year sales of $2.3 billion were up 12% from 2005. KYPHON INC: Moody's Lifts B1 Rating on $300 Mil. Senior Revolver ---------------------------------------------------------------- Moody's Investors Service upgraded the rating of Kyphon Inc.'s $300 million senior secured revolver to Ba1 from B1 following the issuance of $400 million in convertible senior unsecured notes. Kyphon will use the proceeds from the notes and borrowings under its revolving credit facility to pay down its $425 million senior secured term loan. Moody's will withdraw the rating for the senior secured term loan when it is paid. Under the new capital structure, the senior secured revolver benefits from the increased support provided by the newly issued convertible notes. The ratings outlook is stable. Moody's affirmed these ratings: -- Corporate Family Rating, B1, but changed the LGD assessment to LGD4, 50%, from LGD3, 35%; and, -- Speculative Grade Liquidity Rating, SGL-1. Moody's upgraded these ratings: -- $300 million Revolving Credit Facility, to Ba1, LGD2, 15% from B1, LGD3, 34%; and -- Probability of Default Rating, to B1from B2. Kyphon develops and markets medical devices designed to restore spinal function and diagnose low back pain using minimally invasive technologies. The company's products are used in balloon kyphoplasty for the treatment of spinal fractures caused by osteoporosis or cancer, and in the Functional Anaesthetic Discography procedure for diagnosing low back pain due to degenerative disc disease. The company has expanded into lumbar spinal stenosis treatment following their recent acquisition of St. Francis. The company reported about $407.8 million of revenues for the year ended Dec. 31, 2006. LAIDLAW INTERNATIONAL: FirstGroup To Purchase Shares for $3.6 Bil. ------------------------------------------------------------------ Laidlaw International Inc. has entered into a merger agreement with FirstGroup PLC under which FirstGroup will acquire all of the outstanding common shares of the company in an all cash transaction valued at approximately $3.6 billion, including the assumption of $800 million of debt. Under the terms of the agreement, the company shareholders will receive $35.25 for each outstanding share of the company common stock. The transaction has been approved by the Board of directors of Laidlaw International, which has agreed to recommend to Laidlaw stockholders that they vote in favor of the transaction. The merger is conditioned upon approval by the stockholders of both the company and FirstGroup and certain regulatory approvals, as well as other customary closing conditions. "Our goal for the past four years has been to develop, demonstrate and deliver shareholder value" Kevin Benson, President and Chief Executive Officer of Laidlaw International, said. "We believe this transaction is the epitome of that goal and represents an excellent opportunity for both companies' employees and shareholders. The combination of the company and FirstGroup will bring together well known brands and well respected companies that share a very strong focus on employee and customer satisfaction. It will provide a sound economic and operational base from which to continue many of the efficiency initiatives that we have underway." "FirstGroup's acquisition of the company will considerably enhance FirstGroup's existing activities in North America, which themselves have grown strongly since we first invested in the U.S. in 1999" Moir Lockhead, Chief Executive of FirstGroup, added. "The improved earnings and strong cash flows arising from the acquisition will strengthen the Group's position. FirstGroup aims to be the leader in delivering safe, reliable, innovative and sustainable transport services. The company is an established, well run company that shares our commitment to safety and delivering high quality services to our customers and communities we serve." About Laidlaw International Headquartered in Arlington, Texas, Laidlaw International, Inc. (NYSE:LI) -- http://www.laidlaw.com/-- is the largest school bus operator in the United States and Canada, providing student transportation services to more than a thousand school districts, operating a fleet of approximately 41,000 buses. The company transports approximately two million students each school day to and from school. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represented the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. LAIDLAW INT'L: Merger Does Not Affect Low-B Ratings, Moody's Says ----------------------------------------------------------------- Moody's Investors Service reported that the acquisition of Laidlaw International Inc. by First Group plc does not, at this time, affect Moody's ratings of Laidlaw: -- Corporate Family of Ba2 -- senior secured of Ba1, -- senior unsecured of B1 -- Speculative Grade Liquidity of SGL-2 The outlook is outlook. The transaction contemplates the acquisition of Laidlaw by First Group for cash consideration of $3.6 billion. The disclosure by First Group indicates that the existing debt of Laidlaw of approximately $800 million will be repaid from the cash consideration upon the closing of the sale. If so, Moody's will withdraw the ratings of the debt repaid at such time. Moody's also notes that a change of control of Laidlaw is an event of default pursuant to the terms of the existing Credit Agreement, which supports the expectation that the existing credit facilities will be repaid upon closing of the transaction. However, if the credit facilities are not repaid or the remainder of the 10.75% unsecured notes due 2011 are not redeemed, Moody's will consider the treatment of the instruments in the resulting capital structure and the nature of the support, if any. The completion of the transaction is subject to approvals from the shareholders of both companies and from regulatory authorities. Laidlaw International, Inc., headquartered in Naperville, Illinois, is the leading provider of outsourced school bus services in the US and Canada; and the 100% owner of Greyhound Inc., North America's largest provider of inter-city passenger bus services. Laidlaw also provides para-transit services to many U.S. municipalities through its public transit segment. LB-UBS: Moody's Holds Junk Rating on $4.9 Million Class N Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the rating of one class and affirmed the ratings of 14 classes of LB-UBS Commercial Mortgage Trust 2000-C4, Commercial Mortgage Pass-Through Certificates, Series 2000-C4: -- Class A-1, 16,281,596, Fixed, affirmed at Aaa -- Class A-2, $619,257,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $42,460,000, Fixed, affirmed at Aaa -- Class C, $39,963,000, Fixed, affirmed at Aaa -- Class D, $12,488,000, Fixed, affirmed at Aa1 -- Class E, $7,493,000, Fixed, affirmed at Aa2 -- Class F, $17,483,000, Fixed, affirmed at A1 -- Class G, $12,489,000, Fixed, upgraded to Baa1 from Baa2 -- Class H, $22,479,000, Fixed, affirmed at Ba1 -- Class J, $12,488,000, Fixed, affirmed at Ba2 -- Class K, $7,493,000, Fixed, affirmed at Ba3 -- Class L, $7,493,000, Fixed, affirmed at B1 -- Class M, $9,990,000, Fixed, affirmed at B3 -- Class N, $4,996,000, Fixed, affirmed at Caa1 As of the Jan. 18, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 15.9% to $840 million from $999.1 million at securitization. The Certificates are collateralized by 147 mortgage loans ranging in size from less than 1% to 9.6% of the pool, with the top 10 loans representing 33.9% of the pool. The pool includes two investment grade shadow rated loans and a credit tenant lease component, representing 13.9% and 1.8%, respectively, of the pool. Forty-six loans, representing 30.8% of the pool, have defeased and are secured by U.S. Government securities. Nine loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $5.3 million. Currently there are five loans in special servicing, representing 1.8% of the pool. Moody's estimates aggregate losses of $3.7 million for all of the specially serviced loans. Thirty four loans, representing 7.2% 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 80.6% and 83.7%, respectively, of the performing non-defeased loans. Moody's loan to value ratio for the conduit component is 79.4%, compared to 83.7% at Moody's last full review in May 2005. Moody's is upgrading Class G due to defeasance, stable overall pool performance and increased subordination levels. Classes B, C, D, E, F and G were upgraded on Dec. 8, 2006 based on a Q tool based portfolio review. The largest shadow rated loan is the Westfield Shoppingtown South Shore Loan at $80.9 million (9.6%), which is secured by the borrower's interest in a 1.2 million square foot regional mall located in Bay Shore, New York. The center is anchored by Macy's, Sears, J.C. Penney and Lord & Taylor. All of the anchors are part of the collateral except for Lord & Taylor, which is on a ground lease. As of November 2006 the in-line space was 88.4% occupied, compared to 93.7% at securitization. Moody's current shadow rating is A2, the same as at last review. The second shadow rated loan is the Westfield Shoppingtown Plaza Camino Real Loan at $36.0 million (4.3%), which is secured by the borrower's interest in a 1.1 million square foot regional mall located approximately 35 miles north of San Diego in Carlsbad, California. The center is anchored by Macy's, which operates two stores, Sears and J.C. Penney. None of the anchors are part of the collateral. As of September 2006 the in-line space was 95.8% occupied, compared to 89% at securitization. Moody's current shadow rating is Aaa, the same as at last review. The top three conduit loans represent 10.2% of the outstanding pool balance. The largest conduit loan is the Johnson City Mall Loan at $38.8 million (4.6%), which is secured by a 545,000 square foot regional mall located in Johnson City, Tennessee. The center is anchored by Belk, J.C. Penney, Sears and Goody's. As of September 2006, the center was 95.5% occupied, essentially the same as at last review. Average sales for the in-line stores in calendar year 2005 were $388 per square foot, compared to $364 at last review. Moody's LTV is 64.8%, compared to 77.3% at last review. The second largest conduit loan is the Tompkins Square Apartments Loan at $25.4 million (3%), which is secured by a 123-unit multifamily property located in the East Village area of New York City. The property is 100% occupied, the same as at last review and at securitization. Moody's LTV is 76.3%, compared to 77.8% at last review. The third largest conduit loan is the 136 Madison Avenue Loan at $21.2 million (2.5%), which is secured by a 284,000 square foot office building located in midtown Manhattan. As of October 2006, the property was 100% occupied, compared to 93.5% at last review. The largest tenants include Bestform Inc. and Interpublic Group of Companies. Moody's LTV is 51.3%, compared to 65% at last review. The pool's collateral is a mix of retail, U.S. Government securities, multifamily, office and mixed use, lodging, industrial and self storage, CTL, and healthcare. The collateral properties are located in 25 states. The highest state concentrations are New York, Florida, Virginia, Tennessee and Texas. All of the loans are fixed rate. LB-UBS: S&P Assigns Low-B Ratings to $51 Million Debentures ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to LB-UBS Commercial Mortgage Trust 2007-C1's $3.71 billion commercial mortgage pass-through certificates series 2007-C1. The preliminary ratings are based on information as of Feb. 9, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property type diversity of the loans. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.25x, a beginning LTV of 105.9%, and an ending LTV of 102.2%. Preliminary Ratings Assigned LB-UBS Commercial Mortgage Trust 2007-C1 Recommended Preliminary credit Class Rating amount support ----- ------ ----------- ----------- A-1 AAA $62,000,000 30.000% A-2 AAA $211,000,000 30.000 A-3 AAA $225,000,000 30.000 A-AB AAA $95,000,000 30.000 A-4 AAA $1,156,051,000 30.000 A-1A AAA $850,172,000 30.000 A-M AAA $371,318,000 20.000 A-J AAA $315,620,000 11.500 B AA+ $27,849,000 10.750 C AA $55,697,000 9.250 D AA- $37,132,000 8.250 E A+ $18,566,000 7.750 F A $32,490,000 6.875 X-CP(1) AAA $1,723,844,500 N/A X-W(1) AAA $1,856,588,417 N/A X-CL(1) AAA $1,856,588,417 N/A G A- $32,491,100 6.000 H BBB+ $41,773,000 4.875 J BBB $41,773,000 3.750 K BBB- $51,056,000 2.375 L BB+ $9,283,000 2.125 M BB $9,283,000 1.875 N BB- $9,283,000 1.625 P B+ $4,642,000 1.500 Q B $9,283,000 1.250 S B- $9,283,000 1.000 T NR $37,131,833 N/A BMP(2) NR $33,457,011 N/A (1) Interest-only class with a notional amount. (2) The BMP Class is specific to the non-pooled portion of the Bethany Maryland Portfolio Loan. N/A -- Not applicable. NR -- Not rated. LEAR CORP: Carl Icahn Deal Prompts S&P's Negative CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Southfield, Michigan-based Lear Corp. to 'B' from 'B+' and placed its ratings on CreditWatch with negative implications following Lear's that it had agreed to be acquired by Carl Icahn- controlled American Real Estate Partners, L.P. AREP has offered to purchase Lear for $36 per share in cash, or more than $2 billion. AREP currently owns about 20% of Lear. "The downgrade reflects our expectation that the transaction will result in an increase in debt at Lear," said Standard & Poor's credit analyst Robert Schulz. The CreditWatch resolution will focus on the post-transaction capital structure and any shifts in the company's business strategies, whether from the Icahn transaction or as a result of any other bids that may arise. The 'B+' rating on Lear's senior secured bank debt is affirmed and is not on CreditWatch, since we expect that change in control language in the bank agreement means that the bank facility will be replaced at closing. While some of the senior unsecured debt issues also contain change in control language, the offer by AREP does not trigger change in control provisions in those bonds. Lear, an automotive supplier, has total debt of about $3.7 billion, including the present value of operating leases and underfunded employee benefit liabilities. Although Lear has strong market positions, good growth prospects outside of North America, and fair financial flexibility, its operating performance has been challenged by severe industry pressures that caused credit protection measures to weaken in recent years. Lear reported improved results during 2006, following very poor performance during 2005 when full-year EBITDA fell by 35%. Core operating earnings, as defined by Lear to exclude restructuring costs and special charges, increased by 22% in 2006, but still remain relatively low. Cash from operating activities, before the net change in accounts receivable sold but after capital spending, was $116 million in 2006, compared to a negative $419 million in 2005. Lear has agreed to sell its U.S. interior components operations to a joint venture controlled by Wilbur Ross, following a similar transaction for its European business. LEVEL 3 COMM: Posts $237 Million Net Loss in Quarter Ended Dec. 31 ------------------------------------------------------------------ Level 3 Communications Inc. reported a net loss of $237 million on revenues of $846 million for the fourth quarter ended Dec. 31, 2006, compared to a net loss of $128 million on $875 million of revenues for the third quarter of 2006. For the full year 2006, consolidated revenue was $3.38 billion, compared to $1.72 billion in 2005. Included in the net loss for the fourth quarter was a $54 million loss on the extinguishment of debt. Included in the net loss for the third quarter was a gain of $33 million associated with the sale of Software Spectrum. "Level 3 had a strong fourth quarter," said James Q. Crowe, CEO of Level 3. "Organic core revenue growth was 8 percent during the quarter and 25 percent annualized for the full year 2006, which excludes the benefits of acquisition and termination revenue. This growth is a result of ongoing customer demand and a healthy industry operating environment. We expect these positive trends to continue in 2007." Communications Revenue Communications revenue for the fourth quarter 2006 was $830 million, versus $858 million for the previous quarter. Communications revenue decreased as a result of declines in other communications services revenue and SBC Contract Services. The company recognized $8 million in termination revenue during the fourth quarter 2006 and less than $1 million in termination revenue during the third quarter 2006. Communications revenue for 2006 was $3.31 billion, compared to $1.6 billion in 2005. Communications Cost of Revenue Communications cost of revenue for the fourth quarter 2006 declined to $311 million, versus $368 million in the previous quarter. Cost of revenue decreased during the quarter primarily due to lower expenses associated with SBC Contract Services revenue, partially offset by increases from a full quarter of costs associated with TelCove and Looking Glass. For the full year 2006, communications cost of revenue was $1.5 billion. Communications SG & A Expenses Communications SG&A expenses were $365 million for the fourth quarter 2006, versus $333 million for the previous quarter. The fourth and third quarter 2006 Communications SG&A expenses include $32 million and $18 million, respectively, of non-cash compensation expense. SG&A expenses increased in the fourth quarter primarily due to a full quarter of expenses associated with TelCove and Looking Glass. The company also accelerated integration-related expenses associated with 2006 acquisitions. Communications SG&A expenses were $1.3 billion for 2006, versus $761 million for 2005. SG&A expenses increased during 2006 due to additional headcount and other expenses as a result of the acquisition of WilTel Communications, Progress Telecom, ICG Communications, Looking Glass Networks and TelCove. Acquisitions On Jan. 3, 2007, Level 3 completed the purchase of Broadwing Corporation. Under the terms of the agreement, Level 3 paid Broadwing stockholders $8.18 of cash plus 1.3411 shares of Level 3 common stock for each share of Broadwing common stock outstanding at closing. In total, Level 3 paid approximately $744 million of cash and issued approximately 122 million shares of common stock. On Jan. 23, 2007, Level 3 closed on the purchase of SAVVIS's CDN business. Level 3 paid $132.5 million in cash to acquire certain assets, including network elements, customer contracts and intellectual property used in SAVVIS's CDN business. About Level 3 Headquartered in Broomfield, Colorado, Level 3 Communications Inc. (Nasdaq: LVLT) -- http://www.level3.com/-- is an international communications company. The company provides a comprehensive suite of services over its broadband fiber optic network including Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice services and voice over IP services. * * * As reported in the Troubled Company Reporter on Dec. 20, 2006, Standard & Poor's Ratings Services affirmed all ratings on Level 3, including the company's 'CCC+' corporate credit rating. MAGNOLIA VILLAGE: Wants Plan Confirmation Date Moved to June 5 -------------------------------------------------------------- Magnolia Village LLC and its debtor-affiliates ask the United States Bankruptcy Court for the District of Nevada to extend their exclusive period to gain confirmation of their previously filed Plan of Reorganization from March 7, 2007, to June 5, 2007. The Debtors tell the Court that it will not be possible for them to obtain confirmation of their Plan within the 180-day exclusive period due to the availability of the Court's calendar and the noticing requirements under the Bankruptcy Code. Additionally, in open Court on Feb. 1, 2007, the Debtors voluntarily agreed to continue the hearing on the disclosure statement explaining their Plan from Feb. 27, 2007, to a later date, if necessary, although they are not certain at this time if that will be necessary, conditioned on their exclusivity rights being preserved. The Court will convene a hearing at 2:00 p.m. on March 7, 2007, to consider the Debtors' request. Treatment of Claims Under the Plan The Debtors' Plan proposes to pay the secured claims of CW Advisors and LNR Partners according to their contractual agreements with no modifications. These secured claims will be also be paid according to contractual agreements but with modification on the term due date, which claims will now due Nov. 1, 2007, or upon sale of the Debtors' real properties, whichever is earlier: a) Class 2 Secured Claim of First Independent Bank; b) Class 3A Secured Claim of First National Bank of Nevada; and c) Class 3B Secured Claim of First National Bank of Nevada. The secured claim of Krump Construction, which consists of a mechanic's lien recorded in a junior position priority against the real property of Magnolia Double, will be paid upon closing of the successful sale of the real property, assuming sufficient proceeds exist after paying all senior secured loans, or on Nov. 1, 2007, whichever date is earlier. Holders of General Unsecured Claims will receive pro rata share of their allowed claims. Those claims will bear a 6% interest per annum from Sept. 8, 2006. The Potential Securities Claims and Other Claims of the Class A Non-Member Investors in MBP Equity Partners LLC will be paid through an interest bearing account from proceeds of the sale of the Debtors' real properties. MBP Equity Partners is a 100% member of the Debtors. The investors have filed state court actions against the Debtors for, among other things, securities fraud and for rescission of their purchase of securities of MBP Equity Partners. The payment is pending further Court order either through an adversary proceeding or claim proceeding or by confirmation of any award or judgment obtained in the state court action, which liquidates the amount due to the investors. The Equity Claims of MBP Equity Partners I, LLC will not be modified. Plan Funding Distribution under the Plan will be sourced from the sale of the Debtors' real properties. As reported in the Troubled Company Reporter on Feb. 7, 2007, Magnolia Village will be selling its real property complex located at 6900 South McCarran Boulevard in Reno, Nevada for $24,000,000. The Magnolia Village real property complex consists of a 205,016 square feet office park with retail space and a central three- story office building. Three debtor-affiliates will also be selling these real properties for a total purchase price of $22,362,500: Seller Property ------ -------- Magnolia Double R.I., LLC three commercial buildings and two vacant land parcels at Sandhill, in Reno, Nevada Magnolia South Meadows III, LLC office building at Gateway Drive, in Reno, Nevada Magnolia South Meadows IV, LLC office building at Double Eagle Court, in Reno, Nevada A full-text copy of the Disclosure Statement explaining the Debtors' Joint Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=070212033047 About Magnolia Village Based in Reno, Nevada, Magnolia Village LLC, is a luxurious resort-style Class A Office Park. The company and its affiliates filed for chapter 11 protection on Sept. 8, 2006 (Bankr. D. Nev. Case No. 06-51649). Stephen R. Harris, Esq. at Belding, Harris & Petroni Ltd. represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When Magnolia Village filed for protection from its creditors, it listed estimated assets between $10 million and $50 million and debts between $100,000 to $500,000. MERITAGE HOMES: Fitch Holds Unsecured Credit Facility Rating at BB ------------------------------------------------------------------ Fitch affirms Meritage Homes Corporation's as: -- Issuer Default Rating 'BB'; -- Senior unsecured 'BB'; and, -- Unsecured bank credit facility 'BB'. The rating applies to approximately $479 million in senior notes and the $850 million revolving credit facility. The Rating Outlook has been changed from Positive to Stable. A Positive Outlook was predicated on the assumption that credit metrics would further improve and then be generally maintained for a reasonable period of time. Prospects of that occurring over the next few quarters or even next twelve months appear unlikely due to the broadly deteriorating housing market. The housing sector is in the midst of a meaningful, multi-year downturn. Meritage has been increasing its sales and marketing efforts, focusing on reducing speculative inventory, reducing its lot supply, reassessing land positions, renegotiating option contracts and reducing overhead and direct construction costs. During this current downturn Meritage, like most builders, has leveraged the financial flexibility of land options, walking away from over priced lots. These builders have also reported meaningful charges associated with write downs of land values. Fitch anticipates a lesser amount of these non-cash real estate charges will be reported by Meritage in 2007. Fitch expects Meritage will continue to manage its liquidity as is appropriate for this current housing downturn. Coverage ratios are expected to be lower in 2007. Ratings for Meritage are based on the company's successful execution of its business model, conservative land policies and geographic and product line diversity. The company has been an active consolidator in the homebuilding industry which has led to above average growth during the seven years concluding 2005, but had kept leverage levels somewhat higher than its peers until the past few years. Management has also exhibited an ability to quickly and successfully integrate its acquisitions. In any case, now that the company has reached current scale there may be relatively less use of acquisitions going forward and acquisitions are likely to be smaller relative to Meritage's current size. Risk factors include the inherent cyclicality of the homebuilding industry. The ratings also manifest the company's aggressive, yet controlled growth strategy and Meritage's capitalization and size. Currently, the company's EBITDA, EBIT and FFO to interest ratios tend to be somewhat stronger than the average public builder, while its turnover ratio is higher and its leverage, FFO adjusted leverage and debt to EBITDA ratios are better. Although the company has certainly benefited from the generally strong housing market of recent years, a degree of profit enhancement is also attributed to purchasing, design and engineering, access to capital and other scale economies that have been captured by the large national and regional public homebuilders in relation to non-public builders. These economies, the company's presale operating strategy and return on equity and return on assets orientation provide the framework to soften the margin impact of declining market conditions in comparison to previous cycles. Meritage's ratio of sales value of backlog to debt, consistently at least 2x from 1997 to 2005, was 1.6x as of year end 2006: still a reasonably comfortable cushion. Meritage's sales are reasonably dispersed among its 14 metropolitan markets. Typically, about 70-75% of home deliveries are to first and second time trade up buyers, 10-15% to entry level buyers, 5% are to luxury home buyers and 5-10% to active adult buyers. The company is positioned in six of the ten largest single family markets in the country. The company was ranked in 2005 among the ten largest builders in Phoenix/Mesa, Ft. Worth/Arlington, Austin/Roundrock, Tucson, Oakland, Stockton, California, Dallas/Plano/Irving, San Antonio, Naples/Marcos Island, Florida and Pittsburgh by Builder Magazine. Meritage employs quite conservative land and construction strategies. The company typically options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. Meritage extensively uses lot options. The use of non-specific performance rolling options gives the company the ability to renegotiate price/terms or void the option which limits down side risk in market downturns and provides the opportunity to hold land with minimal investment. As of Dec. 31, 2006, 83% of its lots were controlled through options - a higher percentage than almost all other public builders. Total lots, including those owned, were approximately 44,075 at Dec. 31, 2006. This represents a 4.2 year supply based on trailing 12 months deliveries. Typically 85-90% of its homes are pre-sold. The balance are homes under construction or homes completed in advance of a customer's order. Meritage's inventory of presold homes under construction was 47.4% as of Sept. 30, 2006, representing very liquid assets. Land held for development usually represents 1-6% of real estate inventories and was only 0.3% as of Sept. 30, 2006. Meritage has limited off balance sheet activities, excluding the option activities. The company has only one housing joint venture, but participates in approximately 20 land development JVs. The company also participates in financial services JVs in certain markets. The profits generated are primarily fees for originating mortgages and gain on sale of servicing. Meritage and/or its JV partners occasionally provide limited repayment guarantees on debt of certain unconsolidated entities on a pro rata share basis. As of Sept. 30, 2006, the company had limited repayment guarantees of about $43.6 million. Meritage's unconsolidated JVs debt/capitalization ratio was 65.2% as of Sept. 30, 2006, while net debt to capitalization was 63.3%. Meritage's consolidated debt/capitalization ratio was 44.2% as of Sept. 30, 2006 and 42.2% as of Dec. 31, 2006. Meritage has completed eleven acquisitions since going public in 1996. The company has also entered markets on a 'greenfield' basis. The acquisitions have enabled the company to build its position, often broadening product and customer bases in existing markets. They have also enabled the company to enter new markets. The combinations typically were funded by debt and to a lesser degree by stock. Frequently, there were earn-outs which reduced risk and served to retain key management. Now that Meritage has reasonable scale there may be less use of acquisitions going forward. On average acquisitions are likely to be smaller relative to Meritage's current size. Fitch believes that management would balance debt and stock as acquisition currency to at least maintain current credit ratios. In any case, Fitch does not expect the company to make consequential acquisitions, while the housing market is contracting. Meritage's liquidity is ample. As of Dec. 31, 2006, the company had $57 million in cash and equivalents and $449 million in borrowing availability on its $850 million revolving credit facility, maturing May 2010. The company has irregularly purchased moderate amounts of its stock in the past. The company repurchased $105.4 million in common stock in 2006. $52 million of which was purchased from John Landon, the company's former co-CEO and co-chairman. The current remaining repurchase authorization is $130.2 million. In mid-May 2006 the company's co-chairman and co-CEO, John R. Landon resigned. Mr. Landon had been with Meritage since 1997 when Texas-based Legacy Homes, a company founded in 1987, merged with Monterey Homes to form Meritage Homes. Steve Hilton, the company's other co-chairman and co-CEO remained as the sole chairman and CEO. In mid-October 2006, Meritage reported the appointment of Steve Davis as executive VP - national homebuilding operations, reporting to Steve Hilton. MERRILL LYNCH: Moody's Affirms B2 Rating on $5 Mil. Class G Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of seven classes of Merrill Lynch Mortgage Loans Inc., Commercial Mortgage Pass-Through Certificates, Series 2000-Canada 3: -- Class A-1, $19,799,836, Fixed, affirmed at Aaa -- Class A-2, $131,400,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $7,727,000, Fixed, affirmed at Aaa -- Class C, $8,372,000, Fixed, affirmed at Aaa -- Class D, $10,304,000, WAC, upgraded to A2 from A3 -- Class E, $2,576,000, WAC, upgraded to Baa2 from Baa3 -- Class F, $7,084,000, Fixed, affirmed at Ba2 -- Class G, $5,151,000, Fixed, affirmed at B2 As of the Jan. 15, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 23.3% to $197.6 million from $257.6 million at securitization. The Certificates are collateralized by 41 mortgage loans ranging in size from less than 1% to 7.9% of the pool, with the top 10 loans representing 46.8% of the pool. Three loans, representing 6.5% of the pool, has defeased and are collateralized with Canadian Government securities. The pool has not experienced any losses since securitization and currently there are no loans in special servicing. Seven loans, representing 9.4% of the pool, are on the master servicer's watchlist. Moody's was provided with full year 2005 financials for 70.7% of the pool. Moody's loan to value ratio is 60.5%, compared to 66.5% at Moody's last full review in April 2005 and compared to 73.4% at securitization. Moody's is upgrading Classes D and E due to stable pool performance and increased subordination levels. Classes C and D were upgraded on December 8, 2006 based on a Q tool based portfolio review. The top three loans represent 20.9% of the pool: The largest loan is the Woodside Square Shopping Center Loan at $15.7 million (7.9%), which is secured by a 291,000 square foot shopping center located in Toronto, Ontario. As of March 2006 the property was 86.9% leased, compared to 95% at last review. The center is anchored by Food Basics Supermarket and Winners Department Store. The property's financial performance has declined since last review due to the decrease in occupancy. Moody's LTV is 64.7%, compared to 63.2%, at last review. The second largest loan is the Somerset House Loan at $14.9 million (7.5%), which is secured by a 138-unit congregate care facility located in Victoria, British Columbia. As of December 2006, the property was 99.6% occupied, essentially the same as at last review. Moody's LTV is 76.7%, compared to 77.3% at last review. The third largest loan is the Delta St. John's Loan at $10.9 million (5.5%), which is secured by a 276-room full service hotel located in St. John's, Newfoundland. The hotel's performance has improved since securitization due to higher room rates and loan amortization. Moody's LTV is 61.1%, compared to 65.2% at last review. The pool's collateral consists of retail, multifamily, lodging, industrial and self storage, Canadian Government securities and office. The collateral properties are located in six Canadian provinces. The top three province concentrations are Ontario, Alberta and British Columbia. All of the loans are fixed rate. Approximately 40.5% of the pool is recourse to the respective borrowers. MORGAN STANLEY: Moody's Lifts Junk Rating on Class G Certs. to B2 ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of five classes of Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series 1997-XL1: -- Class A-3, $101,962,627, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $22,636,000, Fixed, affirmed at Aaa -- Class C, $22,636,000, Fixed, affirmed at Aaa -- Class D, $45,271,000, Fixed, upgraded to Aaa from Aa1 -- Class E, $45,271,000, Fixed, upgraded to Aaa from A2 -- Class G, $26,408,000, Fixed, upgraded to B2 from Caa2 -- Class H, $460,053, Fixed, affirmed at C As of the Feb. 5, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 59.4% to $306.1 million from $754.5 million at securitization as a result of the payoff of six loans, the liquidation of the Westgate Mall and Westshore Mall Loans and loan amortization. The four remaining loans range in size from 15.1% to 39.2% of the pool based on current principal balances. Two of the remaining loans, which comprise 66.2% of the aggregate certificate balance, have defeased in their entirety -- 605 Third Avenue and Edens & Avant. Moody's current loan to value ratio for the non-defeased portion of the pool is 51.7%, compared to 70.6% at last review. Moody's is upgrading Classes D, E and G due to additional loan payoffs, defeasance, scheduled loan amortization and the improved performance of the Grand Kempinski Hotel Loan. The Fashion Mall Loan at $57.4 million (18.7%) is secured by a leasehold interest in Keystone at the Crossing Fashion Mall, an enclosed two-anchor regional mall located in the northern suburbs of Indianapolis, Indiana. The property is anchored by Saks Fifth Avenue and Parisian and contains approximately 682,912 square feet, of which 349,222 square feet is mall shop gross leasable area. Saks Fifth Avenue replaced Jacobson's in September 2003. Property performance has been stable. Comparable in-line tenant sales were $548 per square foot in calendar year 2005 and are projected to be $572 per square foot in calendar year 2006.The loan sponsor is Simon Property Group, L.P. Moody's LTV is 40.3%, compared to 43.4% at Moody's last review. Moody's current shadow rating is Aaa, compared to Aa1 at last review. The Grand Kempinski Hotel Loan at $46.2 million (15.1%) is secured by a 528-room hotel currently flagged as the Hotel Intercontinental Dallas. The hotel features extensive meeting and banquet facilities and is located in north Dallas, Texas. Historically the property has performed well below Moody's expectations with the borrower funding shortfalls. However, performance has significantly improved over the past two years. Extensive hotel-wide renovations have been completed including all but 39 of the guestrooms. For the nine-month period ending September 2006, occupancy was 67.5%. RevPAR for the same period was $75.88, compared to $77.58 at securitization. Moody's LTV is 79.4%, compared to in excess of 100% at last review. Moody's current shadow rating is B1, compared to Caa2 at last review. MORGAN STANLEY: S&P Rates $9 Million Class Q Certificates at B- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Morgan Stanley Capital I Trust 2007-HQ11's $2.42 billion commercial mortgage pass-through certificates series 2007-HQ11. The preliminary ratings are based on information as of Feb. 9, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the fiscal agent, the economics of the underlying loans, and the geographic and property type diversity of the loans. These classes are being offered publicly: -- Class A-1 -- Class A-1A -- Class A-2 -- Class A-3 -- Class A-AB -- Class A-4 -- Class A-M -- Class A-J -- Class B -- Class C -- Class D -- Class E -- Class F -- Class G Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.35x, a beginning LTV of 111.9%, and an ending LTV of 106.8%. The pool includes seven loans that consist of related loans that are cross-defaulted and cross-collateralized with each other. For the purposes of this report, each of these loan groups is considered to be one loan. Preliminary Ratings Assigned Morgan Stanley Capital I Trust 2007-HQ11 Recommended Preliminary credit Class Rating amount support ----- ------ ----------- ----------- A1 AAA $44,400,000 30.000% A2 AAA $196,200,000 30.000% A3 AAA $356,000,000 30.000% AAB AAA $59,300,000 30.000% A4 AAA $680,573,000 30.000% A1A AAA $355,879,000 30.000% AM AAA $241,765,000 20.000% AJ AAA $190,389,000 12.125% B AA+ $18,133,000 11.375% C AA $36,264,000 9.875% D AA- $24,177,000 8.875% E A+ $12,088,000 8.375% F A $21,155,000 7.500% G A- $24,176,000 6.500% H BBB+ $27,199,000 5.375% J BBB $24,176,000 4.375% K BBB- $33,243,000 3.000% L BB+ $9,066,000 2.625% M BB $6,044,000 2.375% N BB- $9,066,000 2.000% O B+ $3,022,000 1.875% P B $9,066,000 1.500% Q B- $9,067,000 1.125% S NR $27,198,574 30.000% X* AAA $2,417,646,574 30.000% *Interest-only class with a notional amount. N -- Not rated. Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process. Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the rating, it receives no payment for doing so, except for subscriptions to its publications. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. Disclaimers | Privacy Notice | Terms of Use | Regulatory Disclosures | Site Map | Contact Us | Help Copyright (c) 2007 Standard & Poor's, a Division of The McGraw- Hill Companies, Inc. All rights reserved NASDAQ STOCK: Fails in $5.3 Billion Bid for London Stock Exchange ----------------------------------------------------------------- Nasdaq Stock Market Inc. failed in its bid to takeover the London Stock Exchange PLC. LSE shareholders rejected Nasdaq's $5.3 billion bid on Feb. 10, 2007, reports say. Nasdaq said that only 0.41% of LSE's ordinary shares were tendered and accepted. Its existing 28.75% share of LSE's stock plus the newly accepted shares fell short of the 50% it needed to begin taking control of the London exchange. Nasdaq Chief Executive Officer Bob Greifeld, in a statement to the media, said, "Nasdaq will continue to pursue other opportunities to build on its existing position as the world's largest electronic equities exchange and we look forward to maintaining our strong track record of creating shareholder value through our industry-leading business model and strategy." According to various news articles, the LSE is in talks with the Tokyo Stock Exchange to explore a strategic alliance. LSE previously indicated that Nasdaq's $24.42 offer is too low. Nasdaq, on the other hand, refused to up the ante because it believes that LSE's stock is overvalued. The Nasdaq Stock Market Inc. -- http://www.nasdaq.com/-- is the largest electronic equity securities market in the United States with approximately 3,200 companies. * * * In December 2006, Standard & Poor's Rating Services lowered its long-term counterparty credit rating on The Nasdaq Stock Market Inc. to 'BB' from 'BB+'. S&P affirmed the 'BB+' rating on Nasdaq's existing bank loan facility, which financed the initial 29% stake in the London Stock Exchange, and revised the Recovery Rating to '1' from '2'. The ratings were removed from CreditWatch Negative where they were placed on Nov. 20, 2006. S&P said the outlook is stable. At the same time, Standard & Poor's assigned its 'BB+' bank loan rating to $750 million senior secured Term Loan B, $2 billion senior secured Term Loan C, and $75 million revolver issued by Nasdaq, as well as the $500 million senior secured Term Loan C issued by Nightingale Acquisition Ltd., a U.K.-based subsidiary of Nasdaq. The rating agency assigned a Recovery Rating of '1', which indicates full recovery of principal in the event of default. In addition, Standard & Poor's assigned its 'B+' rating to $1.75 billion senior unsecured bridge loan issued by Nasdaq and NAL. Moody's Investors Service assigned in April 2006 ratings to three bank facilities of The Nasdaq Stock Market Inc.: a $750 million Senior Secured Term Loan B, a $1.1 billion Secured Term Loan C, and a $75 million Senior Secured Revolving Credit Facility. Moody's said each facility is rated Ba3 with a negative outlook. NATIONAL BEDDING: Moody's Junks Rating on $210 Mil. Sr. Facility ---------------------------------------------------------------- Moody's Investors Service assigned a B1 to National Bedding's, dba Serta, senior secured first lien facility and a Caa1 rating to Serta's senior secured 2nd lien facility. At the same time, Moody's downgraded Serta's corporate family rating and probability of default rating to B2. The rating outlook is stable. The 1st and 2nd lien are being amended and restated with the proceeds to be used to refinance part of the redeemable 12% preferred stock held by shareholders. "With this transaction, the company's financial sponsors have replaced equity capital with senior (secured) debt, but adding incremental financial risk for creditors in the process" said Kevin Cassidy, Vice President/Senior Analyst at Moody's. "[T]he rating downgrades reflect this more aggressive financial posture and the increase in leverage, which will constrain any upwards rating momentum in the near term." However, Mr. Cassidy also stated that "the company's steady cash flow and expected future focus on delevering provide a buffer against the uncertainty in consumer spending, high raw material prices and softness in the housing market that could otherwise jeopardize projected operating results." The ratings for both the senior secured 1st lien credit facility, which is comprised of a $400 million term loan and a $50 million revolver, and the senior secured 2nd lien facility, reflect both the overall probability of default of the company and their respective estimated loss given default assessments of LGD3 and LGD 5. Both facilities benefit from the full guarantees of subsidiaries and an all asset pledge. Ratings assigned: -- $400 million senior secured 1st lien term loan at B1, LGD3, 33%; -- $50 million senior secured revolving credit facility at B1, LGD3, 33%; and -- $210 million senior secured second lien facility at Caa1, LGD5, 84%. Ratings downgraded: -- Corporate family rating to B2 from B1; and -- Probability of default rating to B2 from B1. National Bedding Company, based in Hoffman Estates, Illinois, is a major manufacturer of mattresses under the Serta brand name. Net sales for the LTM period ended September 2006 approximated $725 million. NATIONAL BENEVOLENT: Weil Gotshal Malpractice Suit Dismissed ------------------------------------------------------------ The Honorable Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, entered an order dismissing National Benevolent Association's adversary proceeding (Bankr. W.D. Tex. Adv. Pro. No. 05-5134) against its lead bankruptcy counsel, Weil Gotshal & Manges LLP. The suit alleged that the high-profile New York law firm misled the organization into filing for bankruptcy with disastrous results. Judge King says that National Benevolent's contentions that the Chapter 11 cases were unnecessary, ill-conceived and never should have been filed constitute a collateral attack on the Court's orders approving the sale of the business for $210 million and confirming the Debtor's plan of reorganization that returned 100% to creditors with interest. Judge King says the company should have raised those complaints before entry of those two orders. National Benevolent knew the facts giving rise to its claims against the law firm but chose to keep their potential claims "under the radar" until well after confirmation, Judge King observes, while simultaneously arguing that confirmation of its plan was in the best interests of itself and its creditors. The doctrine of judicial estoppel prohibits the assertion of such inconsistent positions, Judge King says. Weil Gotshal's $10 million fee application remains subject to review by Judge King in National Benevolent's chapter 11 case. Daniel Sheehan, Esq., at Daniel Sheehan & Associates LLP, represents National Benevolent. A full-text copy of National Benevolent's Post-Confirmation Complaint, filed Sept. 14, 2005, is available at no charge at: http://ResearchArchives.com/t/s?19c3 Headquartered in Saint Louis, Missouri, The National Benevolent Association of the Christian Church (Disciples of Christ) -- http://www.nbacares.org/-- manages more than 70 facilities financed by the Department of Housing and Urban Development and owns and operates 18 other facilities, including 11 multi-level older adult communities, four children's facilities and three special-care facilities for people with disabilities. The non- profit organization filed for chapter 11 protection on February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represented the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed more than $200 million in debts and assets at that time. The organization emerged from chapter 11 protection on April 15, 2005. NAVIOS MARITIME: Buys Kleimar's Share Capital for $165.6 Million ---------------------------------------------------------------- Navios Maritime Holdings Inc. has acquired all of the outstanding share capital of Kleimar N.V. for $165.6 million. It was anticipated that the net cash paid for the shares would be $140.3 million, taking into account the cash retained on Kleimar's balance sheet and certain proceeds from an asset sale. "Navios has achieved a number of benefits resulting from this acquisition," Angeliki Frangou, Chairman and CEO of Navios, stated. These are: * A strong foothold in the capesize sector, which was in great demand for transporting iron ore and coal to Asia and elsewhere. * Expanded blue chip client list, considering Kleimar's reputation with steel companies, utilities and other industrial houses. Kleimar conducted business with Total, Arcelor, Constellation Energy and BAO Steel. * Increased ability to capture information relating to the transport of commodities essential for building infrastructure. "The business model of Kleimar was similar to that of Navios; Kleimar has owned vessels, long term chartered-in vessels at rates below current market rates, purchase options and an established COA business," Ms. Frangou continued. Kleimar's application of this business model complemented Navios' panamax/handymax platform. Kleimar's extensive COA business was an additional diversification in Navios's business." The purchase of Kleimar was financed with existing cash on Navios's balance sheet and Navios's $120 million revolver credit facility with HSH Nordbank and Commerzbank AG. Navios expected that the resulting use of debt would be in line with Navios's current leverage. Navios expected this transaction to be accretive to shareholders, both from a cash flow and earnings standpoint. S. Goldman Advisors LLC, HSH Corporate Finance GmbH, and Investments and Finance Ltd. represented Navios in this transaction. Clarkson PLC assisted Kleimar in this transaction. About Kliemer Kleimar is a Belgian maritime transportation company established in 1993. Kleimar has 11 employees and is an owner and operator of capesize and panamax vessels used in transporting cargoes. It also has an extensive Contract of Affreightment business, a large percentage of which involves transporting cargo to Chinaut Navios Maritime. About Navios Maritime Based in Norwalk, Connecticut, Navios Maritime Holdings Inc. (Nasdaq: BULK, BULKU, BULKW) -- http://www.navios.com/-- is an integrated global seaborne shipping company, specializing in the worldwide carriage, trading, storing, and other related logistics of international dry bulk cargo transportation. The company also owns and operates a port/storage facility in Uruguay and has in-house technical ship management expertise. It has offices in Piraeus, Greece, South Norwalk, Connecticut and Montevideo, Uruguay. * * * Navios Maritime's 9-1/2% Senior Notes due 2014 carry Moody's Investors Service's B2 rating and Standard & Poor's B rating. NEWCOMM WIRELESS: Governmental Units Can File Claims Until May 28 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico set May 28, 2007, as the deadline for governmental units to file their proofs of claim against NewComm Wireless Services Inc. The Court previously set Feb. 7, 2007, as the last day for persons holding claims that arose prior to Nov. 28, 2006, to file their proofs of claim against the Debtor. Proofs of claim must be mailed or delivered on or before the May 28 Bar Date to: NewComm Wireless Services Inc. Claims Docketing Center c/o Logan & Company Inc. 546 Valley Road Upper Montclair, NJ 07043 Based in Guaynabo, Puerto Rico, NewComm Wireless Services Inc. is a PCS company that provides wireless service to the Puerto Rico market. The company is a joint venture between ClearComm, L.P. and Telefonica Larga Distancia. The company filed for chapter 11 protection on Nov. 28, 2006 (Bankr. D. P.R. Case No. 06-04755). Carmen D. Conde Torres, Esq., at C. Conde & Assoc. and Peter D. Wolfston, Esq., at Sonnenschein Nath & Rosenthal LLP represent the Debtor in its restructuring efforts. Mark J. Wolfson, Esq. at Foley & Lardner LLP and Sergio A. Ramirez de Arellano, Esq., at Sergio Ramirez de Arrelano Law Office represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it reported assets and liabilities of more than $100 million. PACIFIC COAST: Moody's Rates $96 Mil. Class B Senior Notes at B3 ----------------------------------------------------------------- Moody's Investors Service has taken action on notes issued by Pacific Coast CDO Ltd., a collateralized debt obligation issuer: *The $450,000,000 Class A First Priority Senior Secured Floating Rate Notes due 2036 -- Prior Rating: Aa2 -- Current Rating: Aa2 and on watch for possible downgrade * The $96,000,000 Class B Second Priority Senior Secured Floating Rate Notes due 2036 -- Prior Rating: Ba1 and on watch for possible downgrade -- Current Rating: B3 According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, as well as the occurrence of asset defaults and par losses. As reported in the December 2006 trustee report, the weighted average rating factor of the portfolio was 2053, significantly higher than the transaction's trigger level of 475. The overcollateralization test for the Class A and Class B notes was reported at 85.3%. Additionally, the interest coverage test for the Class A and Class B notes was reported at 108.68%. PHILLIPS-VAN: Enters Licensing Pact with Timberland Company ----------------------------------------------------------- Phillips-Van Heusen Corporation has entered into a licensing arrangement with The Timberland Company to design, source and market men's and women's casual sportswear under the Timberland brand in North America. The company will assume management of the men's apparel line in Fall 2008 and launch a women's line in Fall 2009. Distribution of the Timberland brand product will be principally through department and specialty stores, as well as Timberland's own full price and outlet retail stores. It is estimated that the men's line will be available in approximately 600 department store doors in Fall 2008, in addition to specialty store distribution. Sales of Timberland brand apparel in North America were approximately $70 million in 2006. Phillips-Van Heusen expects to incur a total of approximately $5 million of start-up costs in 2007, associated with design, merchandising and selling expense. The company continues to estimate that, including these start-up expenses, 2007 earnings per share will be in the $2.97-$3.05 range, which also excludes the impact of the acquisition of Superba, completed in January 2007, which is expected to be modestly accretive. "Our partnership with Timberland pairs the apparel design, logistics and marketing expertise of PVH with the strength and heritage of the Timberland brand" Emanuel Chirico, Chief Executive Officer of Phillips-Van Heusen Corporation said. "Timberland is an authentic outdoor traditional brand which has a unique positioning. It will complement the company's strong stable of brands and enable us to reach a broader spectrum of consumers." "We are pleased to enter into this agreement with a powerful partner like Phillips-Van Heusen" Jeffrey Swartz, Timberland President and CEO said. "They have the capabilities to help us maximize our brand potential through an improved apparel offering and strengthened distribution under the Timberland label. With their impressive portfolio of high-quality premium brands and our shared commitment to responsible manufacturing, I believe we are poised for success." Phillips-Van Heusen Corporation (NYSE:PVH) -- http://www.pvh.com/ -- owns and markets the Calvin Klein brand worldwide. It is a shirt company that markets a variety of goods under its own brands: Van Heusen, Calvin Klein, IZOD, Arrow, Bass and G.H. Bass & Co., Geoffrey Beene, Kenneth Cole New York, Reaction Kenneth Cole, BCBG Max Azria, BCBG Attitude, Sean John, MICHAEL by Michael Kors, Chaps, and Donald J. Trump Signature. * * * As reported in the Troubled Company Reporter on Dec. 14, 2006, Moody's Investors Service upgraded Phillips Van Heusen Corporation's corporate family rating to Ba2 from Ba3. The company's senior secured notes were upgraded to Baa3 from Ba1 and the company's senior unsecured notes were upgraded to Ba3 from B1. The company's probability of default rating was also upgraded to Ba2 from Ba3. PITTSFIELD WEAVING: Ct. Extends Cash Collateral Access to Feb. 17 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Hampshire authorized Pittsfield Weaving Company to continue using the cash collateral securing repayment of its obligations to CapitalSource Financial LLC through Feb. 17, 2007. As adequate protection, the Debtor granted CapitalSource replacement liens or security interests in and to all of the Debtor's postpetition assets of the same kinds and types as the cash collateral. The replacement liens will be continuing, perfected security interests in and to the postpetition cash collateral and will have priority as the perfected security interests held by CapitalSource when the Debtor filed for bankruptcy on Sept. 20, 2006. The Debtors will use the cash collateral to pay the costs and expenses incurred in the ordinary course of business during the period between Jan. 3, 2007, and Feb. 17, 2007. The Debtor says it has not lost any sales since filing for bankruptcy and continues to receive new orders from customers. V.F. Corp., the Debtor's largest customer, has assured the Debtor that it will continue to place orders with the Debtor. The Debtor further says that its business and assets have far more value in reorganization than in liquidation. The Debtor values the inventory on its books at more than $3,500,000 on a lesser of cost or wholesale basis. CapitalSource pleaded in its Verified Writ of Replevin filed in the Superior Court for Merrimack County, New Hampshire that the inventory had an orderly value of $1.9 million -- a difference of $1,600,000. If converted to accounts receivable, the inventory has even more value as collateral. Papers filed with the Court did not indicate how much the Debtor owes CapitalSource. Based in Pittsfield, New Hampshire, Pittsfield Weaving Company -- -- http://www.pwcolabel.com/-- provides brand identification to the apparel and soft goods industries, and manufactures woven and printed labels and RFID/EADS solutions. The company filed it chapter 11 protection on Sept. 20, 2006 (Bankr. D. NH Case No. 06-11214). Williams S. Gannon, Esq., at William S. Gannon PLLC represent the Debtor in its restructuring efforts. Bruce A. Harwood, Esq., at Sheehan Phinney Bass + Green, PA serves as counsel to the Official Committee of Unsecured Creditors. Pittsfield Weaving estimated its assets and debts at $10 million to $50 million when it filed for protection from its creditors. PORT BARRE: $185 Million Credit Facilities Rated B+ by S&P ---------------------------------------------------------- Standard & Poor's Rating Services assigned a 'B+' issue rating and '3' recovery rating to Port Barre Investments LLC's $185 million credit facilities consisting of $65 delayed draw million term loan A and $120 million term loan B. The outlook is stable. The '3' recovery rating represents a meaningful recovery of principal in a default scenario. Proceeds of the loan will be used for the development and construction of two 6.75 billion cubic feet high deliverability salt-dome caverns, in St. Landry Parish, Louisiana, as well as to fund initial base gas requirements, and a debt service reserve. The project which will be 45 miles north of Henry Hub will have interconnections with multiple interstate pipelines. The stable outlook reflects Standard & Poor's near-term expectation as construction proceeds. The ratings could be pressured by significant construction delays or cost overruns, or if a shift in market fundamentals supports lower storage rates, while a significant percentage of the project's storage capacity remains uncontracted. However, as construction risks subside, and with significant storage capacity under firm storage contracts, the rating could gain positive momentum. PRIMEDIA INC: Board Approves Sale of Enthusiast Media Segment ------------------------------------------------------------- The Board of Directors of PRIMEDIA Inc. has authorized the company to explore the sale of its Enthusiast Media segment. The company has retained Goldman Sachs and Lehman Brothers to manage this process. "The Board believes the market environment is extremely favorable for the sale of Enthusiat Media" Dean Nelson, Chairman, President and CEO of PRIMEDIA, said. "We have spent considerable time reviewing strategic options for the company and have been exploring, at the Board's direction, a possible spin off of our consumer source division, creating two distinct publicly traded companies. We have received a favorable IRS ruling and virtually completed complying with the Securities and Exchange Commission regulations. Therefore, spinning off the Consumer Source business remains an option. "However, given the multiples PRIMEDIA received from the sale of the Outdoors Group and the particularly strong investment and debt markets, the Board believes the best course of action for PRIMEDIA shareholders is exploring the complete sale of Ethusiat Media," Mr. Nelson said. "In addition, we are seeing positive results from our online and product investments, which we believe will be valued by potential acquirers. We believe there will be strong appetite for our leading brands." Mr. Nelson added, "The company will apply the proceeds from the sale to pay down debt." Enthusiat Media is a media company in the U.S. with over 70 publications, 90 websites and over 65 events, with revenues of over $500 million in 2006. The company owned Motor Trend; Automobile; Hot Rod; Automotive.com; Power and Motoryacht; and Surfer. PRIMEDIA Inc. -- http://www.primedia.com/-- is a targeted media company which owns more than 200 brands that connect buyers and sellers through print publications, web sites, events, newsletters, and video programs. * * * Moody's Investors Service assigned a B2 8-7/8% $500 million Senior Notes Rating Due 2001 to PRIMEDIA Inc., while Standard & Poor's placed a B rating on the notes. PSS WORLD: Earns $11.1 Million in Quarter Ended Dec. 29, 2006 ------------------------------------------------------------- PSS World Medical Inc. reported $11.1 million of net income on $458.6 million of net sales for the third quarter ended Dec. 29, 2006, compared with $12.4 million of net income on $423.8 million of net sales for the same period ended Dec. 30, 2005. David A. Smith, President and Chief Executive Officer, commented, "Our team delivered a very good quarter for both customers and shareholders. Our customer solution programs continue to drive above-market revenue growth, and we continue to leverage that growth in our operating results, generating both profit and cash flow above our expectations." Net sales for the quarter ended Dec. 29, 2006, for the Physician Business increased by 13.6%, while net sales for the Elder Care Business decreased by 3.4%. Income from operations for the quarter ended Dec. 29, 2006, was $17.9 million compared with income from operations for the quarter months ended Dec. 30, 2005, of $20.6 million. Results for the third quarter of fiscal year 2007 included a $7.1 million write-down of influenza vaccine, resulting from cancellation of customer orders due to an oversupply of vaccine in the market and, to date, a mild flu season. David M. Bronson, Executive Vice President and Chief Financial Officer, commented, "Despite continued investment in globally sourced inventory, the company reported another strong quarter of cash flow from operations, leading us to raise our goal for the full year to $65 - $68 million. Approximately $15 million of cash was returned to shareholders through share repurchases during the quarter of about 748,000 shares. We are generating solid leverage on our infrastructure resulting in capital expenditures slightly below our expectations for this year." At Dec. 29, 2006, the company's balance sheet showed $787.7 million in total assets, $419.6 million in total liabilities, and $368.1 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 29, 2006, are available for free at http://researcharchives.com/t/s?19bb About PSS World Based in Jacksonville, Florida, PSS World Medical Inc. (NASDAQ: PSSI) -- http://www.pssworldmedical.com/-- is a national distributor of medical products to physicians and elder care providers through its two business units. * * * In August 14, 2006, Standard & Poor's Ratings Services raised its ratings on PSS World Medical Inc. The corporate credit rating was raised to 'BB' from 'BB-'. The rating outlook is stable. RAMP SERIES: S&P's Junk Rating on Series 2004-SL3 Class B-2 Certs. ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on class B-2 from Residential Asset Mortgage Products Inc. Series 2004-SL3 Trust. Concurrently, the ratings on class B-2 from RAMP Series 2004-SL2 and class B-1 from RAMP Series 2004-SL3 Trust were lowered and placed on CreditWatch with negative implications. At the same time, the ratings on classes B-1 and B-2 from RAMP Series 2003-SL1 Trust and the rating on class B-1 from RAMP Series 2004-SL2 Trust were placed on CreditWatch negative. Lastly, the ratings on the remaining classes from various RAMP Trust transactions, including those mentioned above, were affirmed. RAMP is an affiliate of Residential Funding Corp. The lowered ratings and negative CreditWatch placements reflect recent collateral performance that has eroded the available credit support for these transactions. During the past two remittance periods, RAMP Series 2004-SL2 Trust has experienced $95,120 in realized losses, which has reduced available credit support to $195,018 for class B-2. During the January 2007 remittance period, $5.50 million in loans were categorized as severely delinquent. RAMP Series 2004-SL3 Trust experienced a net loss of $148,580, causing a $29,226 principal write-down to class B-2. In addition, the available credit support for class B-1 has been reduced to $74,183. RAMP Series 2004-SL3 Trust has $1.965 million in loans that are severely delinquent. The CreditWatch placements affecting the ratings on classes B-1 and B-2 from RAMP Series 2003-SL1 Trust reflect the amount of loans that are severely delinquent compared with the available credit support. The deal has $2.4 million in severe delinquencies, an amount that is significantly more than each class' available credit support: $440,482 for class B-1 and $175,656 for class B-2. Standard & Poor's will continue to closely monitor the performance of these transactions. If delinquencies translate into losses, S&P will take further negative rating actions. Conversely, if delinquency performance improves, S&P will affirm the ratings and remove them from CreditWatch. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for the RAMP transactions, with the exception of those with a seasoned loan designation, is generally provided by subordination, excess spread, and overcollateralization. These specific RAMP SL transactions are supported solely by subordination. The underlying collateral for these transactions consists of fixed- or adjustable-rate, first- or second-lien loans secured primarily by one- to four-family residential properties. Rating Lowered RAMP Trust Mortgage Asset-Backed Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-SL3 B-2 CCC B+ Ratings Lowered And Placed On Creditwatch Negative RAMP Trust Mortgage Asset-Backed Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2004-SL2 B-2 B/Watch Neg BB 2004-SL3 B-1 B/Watch Neg BB Ratings Placed On Creditwatch Negative RAMP Trust Mortgage Asset-Backed Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2003-SL1 B-1 A-/Watch Neg A- 2003-SL1 B-2 BB/Watch Neg BB 2004-SL2 B-1 BBB+/Watch Neg BBB+ Ratings Affirmed RAMP Trust Mortgage Asset-Backed Pass-Through Certificates Series Class Rating ------ ----- ------ 2002-SL1 A-I-3, A-I-IO, A-II-1 AAA 2002-SL1 A-II-2, A-II-3, A-II-4, M-I-1 AAA 2002-SL1 M-I-2 A 2002-SL1 M-I-3 BBB 2003-SL1 A-I-1, A-II-1, A-III-1 AAA 2003-SL1 A-IV-1, A-I-IO, A-I-PO AAA 2003-SL1 A-IO, A-PO AAA 2003-SL1 M-1, M-2 AA+ 2003-SL1 M-3 AA 2004-KR1 A-I-2 AAA 2004-KR1 M-II-1 AA+ 2004-KR1 M-I-1 AA 2004-KR1 M-II-2 A+ 2004-KR1 M-I-2 A 2004-KR1 M-I-3 A- 2004-KR1 M-I-4 BBB+ 2004-KR1 M-I-5, M-II-3 BBB 2004-KR1 M-I-6 BBB- 2004-KR2 A-I-2, A-II-2 AAA 2004-KR2 M-I-1, M-II-1 AA 2004-KR2 M-I-2, M-II-2 A 2004-KR2 M-I-3 A- 2004-KR2 M-I-4 BBB+ 2004-KR2 M-I-5, M-II-3 BBB 2004-SL1 A-I-1, A-I-2, A-II, A-III AAA 2004-SL1 A-IV, A-V, A-VI, A-VII, A-VIII AAA 2004-SL1 A-IX, A-PO, A-IO-1, A-IO-2 AAA 2004-SL1 M-I-1, M-II-1 AA 2004-SL1 M-I-2 A+ 2004-SL1 M-I-3, M-II-2 A 2004-SL1 M-I-4 A- 2004-SL1 M-I-5 BBB+ 2004-SL1 M-I-6, M-II-3 BBB 2004-SL1 M-I-7 BBB- 2004-SL1 B-II-1 BB 2004-SL1 B-II-2 B 2004-SL2 A-I, A-II, A-III, A-IV, A-I-IO AAA 2004-SL2 A-I-PO, A-IO, A-PO AAA 2004-SL2 M-1 AA+ 2004-SL2 M-2 AA 2004-SL2 M-3 A+ 2004-SL3 A-I, A-II, A-III, A-IV, A-I-IO AAA 2004-SL3 A-I-PO, A-IO, A-PO AAA 2004-SL3 M-1 AA+ 2004-SL3 M-2 A 2004-SL3 M-3 BBB 2004-SL4 A-I, A-II, A-III, A-IV, A-V AAA 2004-SL4 A-IO, A-PO AAA 2004-SL4 M-1 AA 2004-SL4 M-2 A 2004-SL4 M-3 BBB 2004-SL4 B-1 BB 2004-SL4 B-2 B 2005-EFC1 A-I-1, A-I-2, A-I-3, A-I-4 AAA 2005-EFC1 A-II AAA 2005-EFC1 M-1 AA+ 2005-EFC1 M-2 AA 2005-EFC1 M-3 AA- 2005-EFC1 M-4 A+ 2005-EFC1 M-5 A 2005-EFC1 M-6 A- 2005-EFC1 M-7 BBB+ 2005-EFC1 M-8 BBB 2005-EFC1 M-9 BBB- 2005-EFC1 B-1 BB+ 2005-EFC1 B-2 BB 2005-EFC2 A-1, A-2, A-3 AAA 2005-EFC2 M-1 AA+ 2005-EFC2 M-2 AA 2005-EFC2 M-3, M-4 AA- 2005-EFC2 M-5 A+ 2005-EFC2 M-6 A 2005-EFC2 M-7 A- 2005-EFC2 M-8 BBB+ 2005-EFC2 M-9 BBB 2005-EFC2 M-10 BBB- 2005-EFC3 A-I-1, A-I-2, A-I-3, A-II AAA 2005-EFC3 M-1, M-2 AA+ 2005-EFC3 M-3 AA 2005-EFC3 M-4 AA- 2005-EFC3 M-5 A+ 2005-EFC3 M-6 A 2005-EFC3 M-7 A- 2005-EFC3 M-8 BBB+ 2005-EFC3 M-9 BBB 2005-EFC3 M-10 BBB- 2005-EFC4 A-1, A-2, A-3 AAA 2005-EFC4 M-1, M-2 AA+ 2005-EFC4 M-3 AA 2005-EFC4 M-4 AA- 2005-EFC4 M-5 A+ 2005-EFC4 M-6 A 2005-EFC4 M-7 A- 2005-EFC4 M-8 BBB+ 2005-EFC4 M-9 BBB 2005-EFC4 M-10 BBB- 2005-EFC5 A-1, A-2, A-3, M-1 AAA 2005-EFC5 M-2, M-3 AA+ 2005-EFC5 M-4 AA 2005-EFC5 M-5 AA- 2005-EFC5 M-6 A+ 2005-EFC5 M-7 A 2005-EFC5 M-8 A- 2005-EFC5 M-9 BBB 2005-EFC5 M-10 BBB- 2005-EFC6 A-I-1, A-I-2, A-I-3, A-II AAA 2005-EFC6 M-1, M-2, M-3 AA+ 2005-EFC6 M-4, M-5 AA 2005-EFC6 M-6 A+ 2005-EFC6 M-7 A 2005-EFC6 M-8 BBB+ 2005-EFC6 M-9 BBB 2005-EFC7 A-I-1, A-I-2, A-I-3, A-I-4 AAA 2005-EFC7 A-II AAA 2005-NC1 A-I-1, A-I-2, A-I-3, A-I-4 AAA 2005-NC1 A-II AAA 2005-SL1 A-I, A-II, A-III, A-IV, A-V AAA 2005-SL1 A-VI, A-VII, A-IO, A-PO AAA 2005-SL2 A-I, A-II, A-III, A-IV, A-V AAA 2005-SL2 A-IO, A-PO AAA 2005-SL2 M-1 AA 2005-SL2 M-2 A 2005-SL2 M-3 BBB 2005-SL2 B-1 BB 2005-SL2 B-2 B 2006-EFC1 A-1, A-2, A-3 AAA 2006-EFC1 M-1 AA+ 2006-EFC1 M-2 AA+ 2006-EFC1 M-3 AA 2006-EFC1 M-4 AA- 2006-EFC1 M-5 A+ 2006-EFC1 M-6 A 2006-EFC1 M-7 A- 2006-EFC1 M-8 BBB 2006-EFC1 M-9 BBB- 2006-EFC2 A-1, A-2, A-3, A-4 AAA 2006-EFC2 M-1S AA+ 2006-EFC2 M-2S AA 2006-EFC2 M-3S AA- 2006-EFC2 M-4 A+ 2006-EFC2 M-5 A 2006-EFC2 M-6 A- 2006-EFC2 M-7 BBB+ 2006-EFC2 M-8 BBB 2006-EFC2 M-9 BBB- 2006-EFC2 B BB+ 2006-NC1 A-1, A-2, A-3 AAA 2006-NC1 M-1 AA+ 2006-NC1 M-2, M-3, M-4 AA 2006-NC1 M-5 A+ 2006-NC1 M-6 A 2006-NC1 M-7 A- 2006-NC1 M-8 BBB+ 2006-NC1 M-9 BBB- 2006-NC2 A-1, A-2, A-3 AAA 2006-NC2 M-1 AA+ 2006-NC2 M-2, M-3 AA 2006-NC2 M-4 AA- 2006-NC2 M-5 A+ 2006-NC2 M-6 A 2006-NC2 M-7 A- 2006-NC2 M-8 BBB 2006-NC2 M-9 BBB- 2006-NC2 B-1 BB+ 2006-NC3 A-1, A-2, A-3 AAA 2006-NC3 M-1 AA+ 2006-NC3 M-2, M-3 AA 2006-NC3 M-4 AA- 2006-NC3 M-5 A+ 2006-NC3 M-6 A 2006-NC3 M-7 A- 2006-NC3 M-8 BBB+ 2006-NC3 M-9 BBB 2006-NC3 M-10 BBB- READER'S DIGEST: S&P Puts 'B' Rating on $1.46 Billion Facilities ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating and negative outlook to RDA Holding Co., the company formed by private equity firm Ripplewood Holdings LLC. to purchase Reader's Digest Association Inc. At the same time, Standard & Poor's lowered its ratings on Reader's Digest Association, including lowering the corporate credit rating to 'B' from 'BB', reflecting the increase in financial risk resulting from the leveraged acquisition, and removed the ratings from CreditWatch, where they were placed with negative implications on Aug. 15, 2006. The outlook is negative. Standard & Poor's also assigned a 'B' bank loan rating, with a recovery rating of '3', to the company's $1.46 billion first-lien senior secured credit facilities. The recovery rating indicates an expected meaningful recovery of principal in the event of a payment default. The facilities consist of a $300 million revolving credit facility due 2013 and a $1.16 billion term loan B due 2014. Standard & Poor's also assigned its 'CCC+' bank loan rating to the company's $750 million senior subordinated notes due 2017. Pro forma total debt at Dec. 31, 2006, was $1.91 billion. "The ratings reflect the company's heightened debt leverage, trend of lower profitability, and Standard & Poor's expectation of only modest discretionary cash generation," said Standard & Poor's credit analyst Hal F. Diamond. "These factors are minimally offset by its market positions in the highly competitive publishing and direct marketing businesses." Standard & Poor's remains concerned about Reader's Digest's business risk and uncertain long-term growth prospects. REAL ESTATE: Fitch Rates $20 Million Class B12 Notes at B- ---------------------------------------------------------- Fitch assigns ratings to notes issued by Real Estate Synthetic Investment Finance Limited Partnership 2007-A and RESI Finance DE Corporation 2007-A: -- $13,004,423,602 class A Risk Band 'AAA'; -- $131,318,000 class B1 Risk Band 'AA+'; -- $69,678,000 class B2 Risk Band 'AA-'; -- $6,699,000 class B3 Floating Rate Notes, Due February 2039 'AA-'; -- $26,799,000 class B4 Floating Rate Notes, Due February 2039 'A+'; -- $13,399,000 class B5 Floating Rate Notes, Due February 2039 'A'; -- $26,799,000 class B6 Floating Rate Notes, Due February 2039 'A-'; -- $20,099,000 class B7 Floating Rate Notes, Due February 2039 'BBB+'; -- $20,099,000 class B8 Floating Rate Notes, Due February 2039 'BBB'; -- $13,399,000 class B9 Floating Rate Notes, Due February 2039 'BBB-'; -- $20,099,000 class B10 Floating Rate Notes, Due February 2039 'BB'; -- $13,399,000 class B11 Floating Rate Notes, Due February 2039 'B+'; and -- $20,099,000 class B12 Floating Rate Notes, Due February 2039 'B-'. REDWOOD CAPITAL: Moody's Rates $250 Million Debentures at Ba2 ------------------------------------------------------------- Moody's Investors Service assigned ratings to five classes of notes issued by Redwood Capital IX, Ltd. Moody's Ratings: * Ba2 to the $125,000,000 Series 1 Class A Principal At-Risk Variable Rate Note due Jan. 9, 2008; * Ba2 to the $125,000,000 Series 1 Class B Principal At-Risk Variable Rate Note due Jan. 9, 2008; * Baa3 to the $18,000,000 Series 1 Class C Principal At-Risk Variable Rate Note due Jan. 9, 2008; * Ba3 to the $20,000,000 Series 1 Class D Principal At-Risk Variable Rate Note due Jan. 9, 2008; and * B3 to the $12,000,000 Series 1 Class E Principal At-Risk Variable Rate Note due Jan. 9, 2008. Moody's rating addresses the ultimate cash receipt of all required interest and principal payments as provided by the governing documents, and is based on the expected loss posed to the noteholders relative to the promise of receiving the present value of such payments. The ratings of the Notes are primarily derived from the conclusion of analyses performed by Moody's of the occurrence probabilities of earthquakes in California over the risk period covered, as well as the amounts lost should such events occur. In addition, the ratings also consider the credit strength of the swap counterparty, the credit strength of the sponsor, and the effectiveness of the documentation in conveying the risks inherent in the structure. RENAISSANCE HOME: S&P Cuts Ratings on Class B Certificates to BB ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the class M-1 asset-backed certificates issued by Renaissance Home Equity Loan Trust 2002-1 to 'AAA' from 'AA+'. Concurrently, the 'BBB' rating on class B from this transaction was placed on CreditWatch negative. At the same time, the ratings on the class B certificates from Renaissance Home Equity Loan Trust's series 2002-2 and 2002-3 were lowered to 'BB' from 'BBB' and placed on CreditWatch with negative implications. Lastly, the ratings were affirmed on the remaining classes from various Renaissance Home Equity Loan Trust transactions, including those mentioned above. The raised rating reflects: -- An increased credit support percentage that is currently at least 2.50x the loss coverage level associated with the raised rating; -- Series 2002-1 is currently unable to step down its credit support because it is failing its delinquency trigger; and, -- The collateral balance for series 2002-1 has paid down to less than 15% of its original size, and the senior certificates have paid down completely. The lowered ratings and CreditWatch placements reflect collateral performance that has caused monthly losses to exceed monthly excess interest. This pattern has caused overcollateralization in the affected securitizations to fall below their respective targets. As of the January 2007 remittance period, O/C for series 2002-2 and 2002-3 had fallen to 0.33% and 0.31% of the original pool balances, respectively, below their targets of 0.5%. In addition, each of the affected transactions has a notable percentage of loans in its collateral pool that are severely delinquent: 25.23% in series 2002-2 and 24.79% in series 2002-3. In the case of series 2002-1, the amount of O/C has fallen to $1.153 million, which is below its target of $1.499 million. Furthermore, approximately $8.530 million in loans are severely delinquent. Standard & Poor's will closely monitor the performance of the transactions with ratings on CreditWatch. If monthly losses subside to a point at which they no longer outpace monthly excess interest, and the level of O/C has not been further compromised, Standard & Poor's will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to exceed excess interest cash flow, thereby further stressing O/C, Standard & Poor's will take additional negative rating actions. The affirmations reflect sufficient levels of credit support to maintain the current ratings, despite moderate to high delinquencies. Credit support for the transactions is provided by subordination, excess interest, and overcollateralization. In some cases, the senior certificates receive additional credit support provided by a 'AAA' rated bond insurance provider. The collateral consists of either fixed- or adjustable-rate home equity first- and second-lien subprime loans secured by one- to four-family residential properties. Rating Raised Renaissance Home Equity Loan Trust Asset-Backed Certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 M-1 AAA AA+ Ratings Lowered And Placed On Creditwatch Negative Renaissance Home Equity Loan Trust Asset-Backed Certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-2 B BB/Watch Neg BBB 2002-3 B BB/Watch Neg BBB Rating Placed On Creditwatch Negative Renaissance Home Equity Loan Trust Asset-Backed Certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 B BBB/Watch Neg BBB Ratings Affirmed Renaissance Home Equity Loan Trust Asset-Backed Certificates Series Class Rating ------ ----- ------ 2002-1 M-2 A 2002-2 A AAA 2002-2 M-1 AA 2002-2 M-2 A 2002-3 *A AAA 2002-3 M-1 AA 2002-3 M-2 A 2002-4 *A AAA 2002-4 M-1 AA 2002-4 M-2 A 2002-4 B BBB 2003-1 *A AAA 2003-1 M-1 AA 2003-1 M-2 A 2003-1 B-A BBB 2003-1 B-F BBB 2003-2 A AAA 2003-2 M-1 AA 2003-2 M-2A A 2003-2 M-2F A 2003-2 M-3 BBB+ 2003-2 M-4 BBB 2003-3 A AAA 2003-3 M-1 AA 2003-3 M-2A, M-2F A 2003-3 M-3 A- 2003-3 M-4 BBB+ 2003-3 M-5 BBB 2003-3 M-6 BBB- 2003-4 A-1, A-3 AAA 2003-4 M-1 AA 2003-4 M-2A, M-2F A 2003-4 M-3 A- 2003-4 M-4 BBB+ 2003-4 M-5 BBB 2003-4 M-6 BBB- 2004-1 AV-1, AV-3 AAA 2004-1 M-1 AA 2004-1 M-2 A 2004-1 M-3 A- 2004-1 M-4 BBB+ 2004-1 M-5 BBB 2004-1 M-6 BBB- 2004-2 AF-1,*AF-2,*AF-3,*AF-4,*AF-5, *AF-6 AAA 2004-2 *AV-2, *AV-3 AAA 2004-2 M-1 AA+ 2004-2 M-2 AA 2004-2 M-3 AA- 2004-2 M-4 A+ 2004-2 M-5 A 2004-2 M-6 A- 2004-2 M-7 BBB+ 2004-2 M-8 BBB 2004-2 M-9 BBB- 2004-3 *AF-3, *AF-4, *AF-5, *AF-6 AAA 2004-3 AV-1, AV-2A, AV-2B AAA 2004-3 M-1 AA+ 2004-3 M-2 AA 2004-3 M-3 AA- 2004-3 M-4 A+ 2004-3 M-5 A 2004-3 M-6 A- 2004-3 M-7 BBB+ 2004-3 M-8 BBB 2004-3 M-9 BBB- 2004-4 AF-3, AF-4, AF-5, AF-6 AAA 2004-4 AV-2, AV-3 AAA 2004-4 MF-1 AA+ 2004-4 MF-2, MV-1 AA 2004-4 MF-3 AA- 2004-4 MF-4 A+ 2004-4 MF-5, MV-2 A 2004-4 MF-6 A- 2004-4 MF-7 BBB+ 2004-4 MF-8, MV-3 BBB 2004-4 MF-9, MV-4 BBB- 2005-1 AF-2, AF-3, AF-4, AF-5, AF-6 AAA 2005-1 AV-1, AV-2, AV-3 AAA 2005-1 M-1 AA+ 2005-1 M-2 AA 2005-1 M-3 AA- 2005-1 M-4 A+ 2005-1 M-5 A 2005-1 M-6 A- 2005-1 M-7 BBB+ 2005-1 M-8 BBB 2005-1 M-9 BBB- 2005-2 AF-2, AF-3, AF-4, AF-5, AF-6 AAA 2005-2 AV-1, AV-2, AV-3 AAA 2005-2 M-1 AA+ 2005-2 M-2 AA 2005-2 M-3 AA- 2005-2 M-4 A+ 2005-2 M-5 A 2005-2 M-6 A- 2005-2 M-7 BBB+ 2005-2 M-8, N BBB 2005-2 M-9 BBB- 2005-3 AF-1, AF-2, AF-3, AF-4, AF-5, AF-6 AAA 2005-3 AV-1, AV-2, AV-3 AAA 2005-3 M-1, M-2 AA+ 2005-3 M-3 AA 2005-3 M-4 AA- 2005-3 M-5 A+ 2005-3 M-6 A 2005-3 M-7 A- 2005-3 M-8 BBB+ 2005-3 M-9 BBB- 2005-3 N BBB 2005-4 A-1A, A-1F, A-2, A-3, A-4, A-5, A-6 AAA 2005-4 M1, M2 AA+ 2005-4 M3, M4 AA 2005-4 M5 AA- 2005-4 M6 A+ 2005-4 M7 A 2005-4 M8 A- 2005-4 M9 BBB 2005-4 M10 BBB- 2005-4 N BBB 2006-1 AF-1, AF-2, AF-3, AF-4, AF-5, AF-6 AAA 2006-1 AV-1, AV-2, AV-3 AAA 2006-1 M-1 AA+ 2006-1 M-2 AA 2006-1 M-3 AA- 2006-1 M-4 A+ 2006-1 M-5 A 2006-1 M-6 A- 2006-1 M-7 BBB+ 2006-1 M-8 BBB 2006-1 M-9, M-10, BBB- 2006-2 AF-1, AF-2, AF-3, AF-4, AF-5, AF-6 AAA 2006-2 AV-1, AV-2, AV-3 AAA 2006-2 M-1, M-2 AA+ 2006-2 M-3, M-4 AA 2006-2 M-5 A+ 2006-2 M-6 A 2006-2 M-7 A- 2006-2 M-8 BBB 2006-2 M-9, M-10 BBB- *Denotes bond-insured classes. RESIDENTIAL ASSET: Fitch Rates $5.9MM Class B Certificates at BB+ ----------------------------------------------------------------- Residential Asset Securities Corporation series 2007-KS1, is rated by Fitch Ratings: -- $172.3 million class A-1 'AAA'; -- $51.4 million class A-2 'AAA'; -- $79.5 million class A-3 'AAA'; -- $29.3 million class A-4 'AAA'; -- $16.1 million class M-1S 'AA+'; -- $14.4 million class M-2S 'AA+'; -- $8.5 million class M-3S 'AA+'; -- $7.8 million class M-4 'AA'; -- $7.6 million class M-5 'AA-'; -- $6.8 million class M-6 'A+'; -- $6.8 million class M-7 'A-'; -- $4.9 million class M-8 'BBB+'; -- $4.4 million class M-9 'BBB'; and -- $5.9 million privately offered class B 'BB+'. The 'AAA' rating on the senior certificates reflects the 21.4% initial credit enhancement provided by 3.8% class M-1S, the 3.4% class M-2S, the 2% class M-3S, the 1.85% class M-4, the 1.8% class M-5, the 1.6% class M-6, the 1.6% class M-7, the 1.15% class M-8, the 1.05% class M-9, the 1.4% privately offered class B, along with overcollateralization. The initial and target OC is 1.75%. In addition, the ratings reflect the strength of the transaction's legal and financial structures and the attributes of the mortgage collateral. The ratings also reflect the strength of the servicing capabilities represented by Homecomings Financial Network, Inc., rated 'RPS1' by Fitch, and Residential Funding Corporation as master servicer. The collateral pool consists of 2,775 fixed-rate and adjustable-rate first lien and junior lien mortgage loans and totals $423,028,360 as of the cut-off date. The weighted average original loan to value ratio is 81.78%. The average outstanding principal balance is $152,443 the weighted average coupon is 8.4291% and the weighted average remaining term to maturity is 353 months. 75.3% of the loans have prepayment penalties. The loans are geographically concentrated in California and Florida. The loans were sold by RFC to RASC, the depositor. Prior to assignment to the depositor, RFC reviewed the underwriting standards for the mortgage loans and purchased all the mortgage loans from mortgage collateral sellers who participated in or whose loans were in substantial conformity with the standards set forth in RFC's AlterNet program. The AlterNet program was established primarily for the purchase of mortgage loans made to borrowers that may have imperfect credit histories, higher debt to income ratios or mortgage loans that present certain other risks to investors. The depositor, a special purpose corporation, deposited the loans in the trust, which then issued the certificates. For federal income tax purposes, an election will be made to treat the trust as one or more real estate mortgage investment conduits. RESOURCE REAL: Fitch Holds B Rating on $28 Million Class K Notes ---------------------------------------------------------------- Fitch affirms all classes of Resource Real Estate Funding CDO 2006-1 notes as: -- $129,370,000 class A-1 floating rate at 'AAA'; -- $5,000,000 class A-2 FX fixed rate at 'AAA': -- $17,420,000 class A-2 FL floating rate at 'AAA'; -- $6,900,000 class B floating rate at 'AA'; -- $20,700,000 class C floating rate at 'A+'; -- $15,520,000 class D floating rate at 'A-'; -- $20,700,000 class E floating rate at 'BBB+'; -- $19,830,000 class F floating rate at 'BBB'; -- $17,250,000 class G floating rate at 'BBB-'; -- $12,930,000 class H floating rate at 'BBB-'; -- $14,660,000 class J fixed rate at 'BB'; and, -- $28,460,000 class K fixed rate at 'B'. Deal Summary: RRE 2006-1 is a revolving commercial real estate cash flow collateralized debt obligation, which closed on Aug. 10, 2006. It was incorporated to issue $345,000,000 of floating- and fixed-rate notes and preferred shares. As of the Jan. 19, 2007 trustee report, the CDO was invested in a portfolio of commercial mortgage whole loans and A-notes, B-notes, commercial real estate mezzanine loans, and cash. The CDO is also permitted to invest in real estate-related corporate and bank debt, credit tenant leases, commercial mortgage-backed securities, and commercial real estate CDO securities. The portfolio is selected and monitored by Resource Real Estate, Inc. RRE 2006-1 has a five-year reinvestment period, during which if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends in August 2011. Asset Manager: RRE originates, acquires, invests in, and manages a diversified portfolio of commercial real estate loans and securities, including whole loans, B-notes, mezzanine loans and CMBS investments on behalf of Resource Capital Corp., an externally managed, real estate investment trust. RRE has approximately $1 billion of assets under management. RRE's business lines also include the resolution of a portfolio of one-off restructured commercial mortgages acquired between 1991 and 1998; the sponsorships of private equity funds that invest in stable multifamily properties on a nationwide basis; and the structuring and management of tenant-in-common investment interests in real property. RRE is a wholly owned subsidiary of Resource America, Inc. RAI is a publicly traded specialized asset management company that manages $13.6 billion in assets as of Dec. 31, 2006, including 23 CDOs within its core competency sectors including financial institutions, real estate, ABS, syndicated loans and commercial finance. Performance Summary: As of the January 2007 trustee report, the CDO maintains a significant amount of reinvestment flexibility. The Fitch poolwide expected loss is 30.125% compared to a covenant of 51.50%. This results in an above average cushion of 21.375%. Since closing, the pool has migrated towards a higher quality pool of loans, primarily the result of an increased portion of whole loans as compared to close. The Fitch stressed loan to value has decreased to 98.6% from 102.2% and Fitch stressed debt service coverage, excluding condo conversions, has increased to 1.11x from 1.07x at close. With the ramp up of nearly 16% of the portfolio, the weighted average spread has been maintained since close at 3%. The WAS remains above the covenant of 2.75%. The weighted average coupon has also been stable at 7.8% and remains above the 7% covenant. Of the pool, 16.9% of the loans are fixed-rate and unhedged and within the covenants. The weighted average life has increased slightly to 2.1 years from 2 years at close, which continues to imply that the loans will fully turnover during the reinvestment period. The over-collateralization ratios of all classes have remained stable since close while the interest coverage ratios have improved over the same period. The improvement in the IC ratios is attributed to converting cash balances to loan investments. Both tests are above their covenants as of the January 2007 trustee report. Although reinvestment cushion is above average, upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. Collateral Analysis: Since close the portfolio has migrated to a higher concentration of whole loans/A-notes. During this time, two whole loans/A- notes, and one mezzanine loan were added to the pool while one mezzanine loan was paid off. The portfolio's largest asset type exposure continues to be hotels, which has increased to 30.9% from 21.65% at close. The second largest asset type exposure is retail at 15.26%. All property type concentrations are within the covenants. The pool has below average loan diversity relative to other CRE CDOs. The pool currently consists of 22 loans and the Fitch LDI score is 550, compared to the covenant of 580. No loan represents more than 8% of the ramped portfolio. The CDO is well within all of its geographic location covenants with the largest exposure located in New York. RITE AID: Fitch Junks Rating on $500 Million Senior Notes due 2015 ------------------------------------------------------------------ Fitch has assigned ratings to Rite Aid Corporation's new notes: -- $300 million senior secured notes due 2017 'BB-/RR1'; -- $500 million senior unsecured notes due 2015 'CCC+/RR5'. The proceeds of the new offerings will be used to redeem $300 million 9.5% senior secured notes due February 2011 and replenish the $1.75 billion revolving credit facility that was used to retire the company's $250 million 4.75% convertible notes due December 2006 and its $185 million 7.125% senior unsecured notes due January 2007. In addition, Fitch has affirmed and removed these ratings from Rating Watch Negative: Rite Aid: -- Issuer Default Rating 'B-'; -- $1.75 billion bank credit facility 'BB-/RR1'; -- $558 million 2nd lien senior secured notes 'BB-/RR1'; -- $906 million senior unsecured notes 'CCC+/RR5'. Fitch has also downgraded this rating and removed it from Rating Watch Negative: The Jean Coutu Group Inc.: -- $850 million 8.5% senior subordinated notes to 'CCC-/RR6' from 'CCC+/RR5'. The Rating Outlook is Stable. The ratings assume that Rite Aid completes its acquisition of 1,858 drug stores from The Jean Coutu Group for $3.4 billion comprising $1.45 billion in cash, 250 million newly issued Rite Aid common shares, and the assumption of $850 million senior subordinated notes. The ratings also assume that while store closures are likely, the contribution from these stores will be less than $60 million of EBITDA, a level which would allow Rite Aid to terminate the transaction. The transaction has received shareholder approval but is still awaiting FTC approval and is anticipated to close during the first quarter of fiscal 2007. If the company receives approval and the transaction is completed as currently anticipated, Fitch expects to rate the company's Rite Aid's new term loans, which will be used to fund the acquisition, as: -- $1.25 billion term loans 'BB-/RR1'. These terms loans, along with the revolving credit facility, will have a first lien on the company's cash, accounts receivable, investment property, inventory and scrip lists, and is guaranteed by all U.S. subsidiaries of Rite Aid. The company's senior secured notes have a second lien on the same collateral as the revolver and term loan, and are guaranteed by all Rite Aid and Jean Coutu domestic subsidiaries. If Rite Aid does not receive the necessary regulatory approvals and does not complete the transaction as anticipated, Fitch will review the company's operating and capital structure and will adjust the ratings as appropriate. In that case, the ratings most likely to change are the company's senior unsecured notes. The ratings consider the risk associated with integrating 1,858 Brooks and Eckerd stores with Rite Aid's existing store base and improving operations at these stores, the higher leverage of about 7x following the completion of the transaction, operating statistics that trail those of competitors, and the intense competition in the drug retailing sector. The ratings also reflect Rite Aid's operating strategy to focus on its store base and in-store service levels, the positive demographics of the drug retailing industry, as well as the benefits from leveraging a larger store base. Pro forma for the transaction, Rite Aid will have about 5,000 stores and generate about $28 billion in revenues. RITE AID: S&P Puts B+ Rated $300 Mil. Senior Notes on Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Harrisburg, Pennsylvania-based Rite Aid Corp.'s $300 million senior secured notes due in 2017 and its 'B-' rating to the company's $500 million senior unsecured notes due in 2015. "These ratings are placed on CreditWatch with negative implications," said Standard & Poor's credit analyst Diane Shand. All other ratings on Rite Aid, including the 'B+' corporate credit rating, remain on CreditWatch with negative implications, where they were placed on Aug. 24, 2006. The notes offering are being made pursuant to a shelf registration statement with the SEC. Proceeds from the offering will be used to redeem all of Rite Aid's $300 million outstanding 9.5 notes due February 2011 and for general corporate purposes. They will also replenish the company's $1.75 billion revolving credit facility that was used to retire all of its $250 million outstanding 4.75% convertible notes due December 2006 and all of its $185 million outstanding 7.125% senior unsecured notes due January 2007. Rite Aid's ratings were placed on CreditWatch on Aug. 24, 2006, after the company said it agreed to acquire all of the U.S.-based Eckerd and Brooks drugstores from Quebec, Canada-based Jean Coutu Group Inc. in a transaction valued at about $3.4 billion. Although the purchase consideration includes 250 million of Rite Aid common stock, Rite Aid will also finance another $1.45 billion and assume $850 million of Jean Coutu's long-term debt. After including Standard & Poor's estimate of the present value of the acquired operating leases and EBITDA, Rite Aid's leverage is expected to increase to around 7.5x on a pro forma basis, from 7.0x at the end of 2005. The increased financial risk and challenges of integrating the acquired stores could result in a lower credit rating. Standard & Poor's review of the rating will also factor in several positives. The acquisition should greatly strengthen Rite Aid's position in the U.S. drugstore industry and make the company a more formidable competitor against CVS Corp. and Walgreen Co. Rite Aid will acquire 1,858 drugstores, including 337 Brooks stores and 1,521 Eckerd stores, all located primarily on the East Coast and in the Mid-Atlantic states. RIVERSIDE ENERGY: S&P Holds B Rating, Revises Outlook to Stable --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to stable from negative and affirmed its 'B' rating on Rocky Mountain Energy Center LLC's and Riverside Energy Center LLC's senior secured term loans due 2011. Rocky Mountain Energy Center and Riverside Energy Center are power generation projects that are wholly owned indirect subsidiaries of Calpine Corporation. "The outlook revision reflects the diminished risk that the projects could be adversely affected by the bankruptcy of their ultimate parent, Calpine Corp.," said Standard & Poor's credit analyst Michael Scholder. "At the same time, Standard & Poor's affirmed its '1' recovery rating on each project's loan, indicating the expectation of full recovery of all principal in the event of a default," Mr. Scholder said. The Riverside Energy Center, located in Beloit, Wisconsin, is a 617 MW natural gas fired, combined-cycle electric generating plant that sells most of its output to Wisconsin Power & Light Co. and Madison Gas & Electric Co. under contracts through mid-2013. The Rocky Mountain Energy Center, located in Weld County, Colorado, is a 601 MW natural gas fired, combined-cycle power generation plant that sells substantially all of its output to Public Service Co. of Colorado through mid-2014 and up to 90 MW for the subsequent three and a half years. The financings for Riverside Energy Center's $368.5 million senior secured term loan and Rocky Mountain Energy Center's $264.9 million senior secured term loan are due in 2011. ROCKY MOUNTAIN: S&P Revises Outlook Despite Calpine's Bankruptcy ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to stable from negative and affirmed its 'B' rating on Rocky Mountain Energy Center LLC's and Riverside Energy Center LLC's senior secured term loans due 2011. Rocky Mountain Energy Center and Riverside Energy Center are power generation projects that are wholly owned indirect subsidiaries of Calpine Corporation. "The outlook revision reflects the diminished risk that the projects could be adversely affected by the bankruptcy of their ultimate parent, Calpine Corp.," said Standard & Poor's credit analyst Michael Scholder. "At the same time, Standard & Poor's affirmed its '1' recovery rating on each project's loan, indicating the expectation of full recovery of all principal in the event of a default," Mr. Scholder said. The Riverside Energy Center, located in Beloit, Wisconsin, is a 617 MW natural gas fired, combined-cycle electric generating plant that sells most of its output to Wisconsin Power & Light Co. and Madison Gas & Electric Co. under contracts through mid-2013. The Rocky Mountain Energy Center, located in Weld County, Colorado, is a 601 MW natural gas fired, combined-cycle power generation plant that sells substantially all of its output to Public Service Co. of Colorado through mid-2014 and up to 90 MW for the subsequent three and a half years. The financings for Riverside Energy Center's $368.5 million senior secured term loan and Rocky Mountain Energy Center's $264.9 million senior secured term loan are due in 2011. SAINT VINCENTS: Files Plan of Reorganization in New York -------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates has filed a proposed Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York. The proposed Plan of Reorganization seeks to provide an equitable return to all creditors, including the holders of trade claims, the Pension Benefit Guaranty Corporation (PBGC -- on account of the pension plan), and pre-petition medical malpractice claimants, while providing for the long-term feasibility of the organization's operations. "Saint Vincent's restructuring is a visible example of the challenging healthcare environment that faces all health care systems in New York, and we are proud to emerge from this process with a capital structure that allows us to re-invest wisely in our healthcare mission," Guy Sansone, President, CEO and Chief Restructuring Officer of Saint Vincents. "With this plan, we anticipate emerging from bankruptcy by the middle of 2007 as a financially sustainable healthcare organization poised to meet the diverse healthcare needs of New Yorkers and offering the best environment for our patients, physicians, employees, community, and other key constituents." The proposed Plan provides all Saint Vincents creditors who timely filed claims in the Chapter 11 case with a realistic chance that their claims will be paid in full over time. The reorganized Saint Vincents will be focused on a core health care mission, anchored by St. Vincent's Hospital Manhattan and St. Vincent's Hospital Westchester, skilled nursing facilities in Brooklyn and Staten Island, behavioral health and home care services throughout the Metropolitan area, and sponsorship of the US Family Health Plan under contract with the Department of Defense. In addition to strengthening St. Vincent's on an operational and financial level, there is a strengthened leadership team. In late 2006, Alfred E. Smith, IV agreed to chair the board for the system. He plans on expanding and reconstituting the board to build strong new relationships with donors, elected officials, and our community to benefit all the facilities and programs of the organization. Saint Vincents also continues to discuss its desire to meet modern-day healthcare needs by constructing a new, state-of-the- art facility after emergence from bankruptcy to better serve its patients at St. Vincent's Hospital Manhattan. The goal is to make sure the hospital is fulfilling its mission and meeting the healthcare needs of its patients and the community, now and for years to come. "Saint Vincents is deeply grateful to all constituents involved for their participation in a transparent process, including setting aside individual special interests to reach a comprehensive solution for all," explained Mr. Sansone. Those constituents include the system's Debtor-In-Possession lender, GE Healthcare Financial Services, the Dormitory Authority of the State of New York, the City of New York, our labor union partners, the unsecured creditors, pre-petition medical malpractice claimants, PBGC, vendors, managed care companies, and most of all our physicians, nurses, employees and the communities that we serve. Plan Elements The core of the Plan is exit financing that will refinance the existing debtor-in-possession credit facility, provide adequate funding to the non-union pension plan, and make payments to trade creditors and prepetition medical malpractice claimants. Specific elements of the proposed plan include: -- an initial distribution to the trade creditors of at least 80 cents on the dollar, with a path for them to potentially have their claims paid in full over time. -- the continuation of Saint Vincents pension plan, keeping benefits in place for current employees and retirees. It also provides an approach to meet future funding obligations. -- a funding schedule for the payment over time of pre-petition medical malpractice claims as they are liquidated. The "New" Saint Vincents Saint Vincents has re-engineered the way it operates its business, to implement the lessons of fiscal responsibility that it has learned. Operational and financial targets will be set for each operating division. Discipline will be maintained to meet those targets, and to ensure the success of the system. These and other changes will help restore Saint Vincents as one of New York's leading healthcare institutions once it emerges from bankruptcy. Most creditors have maintained relationships with Saint Vincents throughout the bankruptcy and it expects to continue and grow relationships with vendors such as Siemens, Cardinal, Aramark, and Medtronic. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. SAINT VINCENTS: Judge Hardin Okays Property Sale to New Prospect ---------------------------------------------------------------- The Honorable Adlai S. Hardin, Jr., of the U.S. Bankruptcy Court for the Southern District of New York granted the request of Saint Vincents Catholic Medical Centers of New York and its debtor- affiliates to sell its real property in Brooklyn to New Prospect Holding Corporation. As reported in the Troubled Company Reporter on Dec. 28, 2006, the Debtors have entered into a contract of sale with New Prospect Holding Corporation dated Dec. 12, 2006, pursuant to the planned sale. Prospect Holding has been selected as the "stalking horse" for the purposes of the bidding process and auction for the Properties. The Debtors agreed to sell certain real property located at 1482 Prospect Place, Brooklyn, New York, Block 1368, Lot 16 and 1496-1522 Prospect Place, Brooklyn, New York, Block 1368, Lots 22, 23, 24, 25, 26, 27 and 28 to Prospect Holding subject to higher and better offers received through a bidding process and auction. Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Properties are vacant lots near the former St. Mary's Hospital, which was closed during the Debtors' Chapter 11 cases. The Debtors have received authority to sell much of the real estate on which that hospital had operated to The Backer Group LLC, which sale is expected to close in the coming weeks. Because the Properties were not included in the St. Mary's sale, and the Debtors have no continued use for the Properties, they are disposing of the Properties through a separate sale. The Debtors engaged Massey Knakal Realty Services to assist in locating likely buyers for the Properties beginning in June 2005. Massey Knakal fielded offers for 1496-1522 Prospect Place from 12 potential purchasers. Prospect Holding's offer of $2,400,000 was the highest "as is" offer for that property. Prospect Holding also expressed an interest in other properties surrounding St. Mary's, including 1482 Prospect Place, for which nine bids were received. Prospect Holding submitted a bid of $230,000 for 1482 Prospect Place, which was equal to the highest bid received at that time for that property, and offered a larger deposit than the other bidders had offered. The Debtors decided to sell both properties to Prospect Holding as part of a single transaction. Following negotiations, Saint Vincent Catholic Medical Centers entered into the Purchase Agreement with Prospect Holding. The Purchase Agreement The Purchase Agreement contemplates that SVCMC will sell and Prospect Holding will purchase the Properties for the purchase price of $2,630,000, which will be paid in this manner: (i) upon execution of the Purchase Agreement, Prospect Holding paid a $131,500 initial downpayment to SVCMC; (ii) upon its receipt of written notice from SVCMC that all the required approvals have been obtained, Prospect Holding will immediately pay to SVCMC a $131,500 supplemental downpayment; and (iii) at the closing of title to the Properties, Prospect Holding will pay the remaining $2,367,000 to SVCMC. SVCMC and Prospect Holding agree that apportionments will be made between the parties at the Closing, including apportionment of real estate taxes to the extent applicable. The Properties are to be sold and purchased subject to certain permitted exceptions, which will not constitute grounds for objection by Prospect Holding to the Closing, and SVCMC will have no obligation to remove any of the Permitted Exceptions as a condition to Prospect Holding's obligation to purchase the Properties in accordance with the Purchase Agreement. The Debtors are requesting that the Properties be sold free of transfer and similar taxes under Section 1146(c) of the Bankruptcy Code. In the event that any taxes are payable by reason of the Sale of the Properties, the taxes will be paid by SVCMC. In the event a transaction with a different qualified bidder is consummated, Prospect Holding will be entitled to a $70,000 break-up fee and reimbursement of certain de minimis expenses related to title examination and preparation of a survey. A full-text copy of the Purchase Agreement is available for free at http://researcharchives.com/t/s?1790 Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 46 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SERTA: Moody's Junks Rating on $210 Million Senior Facility ----------------------------------------------------------- Moody's Investors Service assigned a B1 to National Bedding's, dba Serta, senior secured first lien facility and a Caa1 rating to Serta's senior secured 2nd lien facility. At the same time, Moody's downgraded Serta's corporate family rating and probability of default rating to B2. The rating outlook is stable. The 1st and 2nd lien are being amended and restated with the proceeds to be used to refinance part of the redeemable 12% preferred stock held by shareholders. "With this transaction, the company's financial sponsors have replaced equity capital with senior (secured) debt, but adding incremental financial risk for creditors in the process" said Kevin Cassidy, Vice President/Senior Analyst at Moody's. "[T]he rating downgrades reflect this more aggressive financial posture and the increase in leverage, which will constrain any upwards rating momentum in the near term." However, Mr. Cassidy also stated that "the company's steady cash flow and expected future focus on delevering provide a buffer against the uncertainty in consumer spending, high raw material prices and softness in the housing market that could otherwise jeopardize projected operating results." The ratings for both the senior secured 1st lien credit facility, which is comprised of a $400 million term loan and a $50 million revolver, and the senior secured 2nd lien facility, reflect both the overall probability of default of the company and their respective estimated loss given default assessments of LGD3 and LGD 5. Both facilities benefit from the full guarantees of subsidiaries and an all asset pledge. Ratings assigned: -- $400 million senior secured 1st lien term loan at B1, LGD3, 33%; -- $50 million senior secured revolving credit facility at B1, LGD3, 33%; and -- $210 million senior secured second lien facility at Caa1, LGD5, 84%. Ratings downgraded: -- Corporate family rating to B2 from B1; and -- Probability of default rating to B2 from B1. National Bedding Company, based in Hoffman Estates, Illinois, is a major manufacturer of mattresses under the Serta brand name. Net sales for the LTM period ended September 2006 approximated $725 million. SPECIALTY UNDERWRITING: Fitch Cuts Class B-2 Certs. Rating to BB ---------------------------------------------------------------- Fitch has downgraded one class and affirmed 13 classes, one of which was also removed from Rating Watch Negative, from two Specialty Underwriting & Residential Finance asset-backed certificates trusts: Series 2003-BC1: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB+'; and -- Class B-2 downgraded to 'BB' from 'BBB'. Series 2005-AB1: -- Class A-1A, A-1B, and A-1C affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB-'; and -- Class B-3 affirmed at 'BB' and removed from Rating Watch Negative. The collateral for the aforementioned trusts consist primarily of fixed- and adjustable-rate sub-prime mortgage loans secured by first or second liens on real properties. The loans were acquired by Merrill Lynch Mortgage Lending, Inc. from various originators and were originated in accordance with the SURF underwriting guidelines. SURF acts as program administrator for the seller, Merrill Lynch Mortgage Lending, Inc., and its loan acquisition program facilitates the purchase by Merrill Lynch Mortgage Lending, Inc. of eligible nonconforming loans from various SURF- approved originators. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $184 million of outstanding certificates. The downgrade of class B-2 from series 2003-BC1 reflects the deterioration in the relationship of CE to future loss expectations and affects $1.2 million in outstanding certificates. Since Fitch's last review of series 2003-BC1 in October 2006, the trust suffered four consecutive months in which the excess spread exceeded monthly collateral losses causing a steady deterioration of the overcollateralization. As of the January 2007 remittance period, the OC is approximately $500,000 less than the OC target. Class B-3 from series 2005-AB1 was previously placed on Rating Watch Negative pending expected subsequent recoveries to the trust due to loans that were requested by SURF to be repurchased by the seller. Recoveries were posted to the trust in December 2006 and the OC was able to build to the target amount. The servicer for series 2003-BC1 is Litton Loan Servicing. The servicer for series 2005-AB1 is Wilshire Credit Corporation. Both servicers are rated 'RPS1' by Fitch Ratings, which is the highest servicer rating available by Fitch. SPECTRUM BRANDS: Posts $18.8MM Net Loss in Quarter Ended Dec. 31 ---------------------------------------------------------------- Spectrum Brands Inc. reported an $18.8 million net loss for the first quarter ended Dec. 31, 2006, compared with a net income of $2.3 million for the same period ended Jan. 1, 2006. Spectrum Brands Inc. reported first quarter net sales of $564.6 million for the quarter ended Dec. 31, 2006, compared with first quarter net sales of $566.3 million last year. Reported net sales exclude sales from the company's Home & Garden division, which is being accounted for as discontinued operations pending completion of an ongoing sale process. Global battery sales declined six percent year over year, as strong results from Latin America were offset by sales declines in North America and Europe/ROW. Sales of Remington branded products increased by seven percent on a worldwide basis. Global Pet reported growth of four percent. Favorable foreign exchange rates had a $16.2 million positive impact on net sales during the quarter, mostly driven by the strong Euro. Gross profit and gross margin for the quarter were $208.9 million and 37.0 percent, respectively, versus $224.0 million and 39.6 percent for the same period last year. Restructuring and related charges of $6 million were included in the current quarter's cost of goods sold; cost of goods sold in the comparable period last year included $1.3 million in similar charges. Increased raw material costs, primarily zinc, were the most significant driver of the decline in gross margin. The company generated operating income of $37.5 million versus $67.6 million in fiscal 2006's first quarter. The primary reasons for the decline were increased advertising and marketing expense of approximately $14 million and higher commodity costs, including an increase of $7 million in zinc costs. Commenting on the results of the quarter, Spectrum Brands President and Chief Executive Officer David Jones stated, "Our first quarter results reflect progress in a number of areas, despite a challenging environment, and we are confident that we are taking the right actions for the long-term to build our brands, reduce costs and create sustainable value. "We are focused on the successful completion of the divestiture of our Home & Garden business, a key milestone in the strategic review we began last July. We anticipate that the proceeds from this transaction will enable us to reduce outstanding debt and leverage and will allow us more flexibility to focus on strengthening our remaining businesses. With the assistance of Goldman Sachs, we are continuing to consider further strategic options to improve our capital structure, including potential additional asset sales." Corporate expenses were $26.6 million as compared to $22.8 million in the prior year period, primarily attributable to increased deferred compensation accruals when compared with fiscal 2006, which included no such accruals. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a consumer products company and a supplier of batteries and portable lighting, lawn and garden care products, specialty pet supplies, shaving and grooming and personal care products, and household insecticides. Spectrum Brands' products are sold by the world's top 25 retailers and are available in more than one million stores in 120 countries around the world. The company has manufacturing and distribution facilities in China, Australia and New Zealand, and sales offices in Melbourne, Shanghai, and Singapore. * * * As reported in the Troubled Company Reporter on Oct. 11, 2006, Moody's Investors Service confirmed Spectrum Brands Inc.'s B3 Corporate Family Rating in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given- Default rating methodology. TECH DATA: Appoints Thomas Morgan to Board of Directors ------------------------------------------------------- Tech Data Corporation appointed Thomas I. Morgan to its board of directors. Mr. Morgan was elected to Tech Data's board, effective immediately. Mr. Morgan has successfully led companies in a variety of industries, including most recently Hughes Supply, Inc., repair and maintenance products, where he served as chief executive officer from May 2003 until March 2006 when the company was purchased by The Home Depot. Under his leadership, revenues of Hughes Supply expanded from $3 billion to $5.4 billion. Mr. Morgan joined Hughes Supply in 2001 as president and chief operating officer. Before that, he served as chief executive officer of EnfoTrust Network, Value America and US Office Products. Mr. Morgan began his career with Genuine Parts Company, where he held positions of increasing responsibility throughout the organization. He concluded his 22-year career with GPC in 1997 serving as executive vice president of S.P. Richards Co., a $1.1 billion subsidiary of GPC. Mr. Morgan holds a bachelor's degree in business administration from the University of Tennessee. He also serves on the boards of Rayonier, Inc., Waste Management and ITT Educational Services. "We are pleased to have Thomas Morgan join Tech Data's board of directors. His broad operating knowledge coupled with a track record of accomplished leadership will assist Tech Data's continued advancement as a technology supply chain leader," said John Y. Williams, chair of Tech Data's governance and nominating committee. "His experience and knowledge of distribution operations make him a great addition to our board. We look forward to his contributions." Founded in 1974, Tech Data Corporation (NASDAQ GS:TECD) -- http://www.techdata.com/-- is a leading distributor of IT products, with more than 90,000 customers in over 100 countries. The company's business model enables technology solution providers, manufacturers and publishers to cost-effectively sell to and support end users ranging from small-to-midsize businesses to large enterprises. Tech Data is ranked 107th on the FORTUNE 500(R). * * * As reported in the Troubled Company Reporter on Dec. 19, 2006, Moody's Investors Service assigned a Ba2 rating to Tech Data Corporation's proposed offering of up to $350 million convertible senior notes due 2026 and affirmed the company's Ba1 corporate family rating and Ba1 probability of default rating. THERMA-WAVE: Posts $2.3 Million Net Loss in Quarter Ended Dec. 31 ----------------------------------------------------------------- Therma-Wave Inc. reported a $2.3 million net loss on $18.9 million of revenues for the third fiscal quarter ended Dec. 31, 2006, compared with a $3.8 million net loss on $15.4 million of revenues for the same period ended Jan. 1, 2006. Boris Lipkin, Therma-Wave's president and chief executive officer, stated, "The strength of our sequential and year-over-year revenue growth during the fiscal third quarter of 2007 reflects the success of our products as well as our ability to meet our customers evolving needs for next generation advanced metrology production solutions. "We are pleased with our bookings for the quarter coming in at $21.8 million representing a sequential increase of 16%. As we move forward with completing the recently announced acquisition with KLA-Tencor Corporation we continue to focus on delivering to our customers advanced technology products in the areas of thin film and optical critical dimension (OCD) metrology. Looking forward, we feel the proposed integration of Therma-Wave with KLA- Tencor will extend our latest metrology technologies to our customer base." Gross margin for the fiscal third quarter 2007 was 34.5% compared to 34.8% in the year ago period. Cash and cash equivalents totaled $14.7 million as of Dec. 31, 2006, reflecting cash utilization of $2.9 million during the fiscal third quarter. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?19a7 Merger Agreement On Jan. 8, 2007, Therma-Wave announced that the company signed a definitive Merger Agreement with KLA-Tencor Corp. Under the agreement, KLA-Tencor Corp. agreed to acquire Therma-Wave through a cash tender offer for $1.65 per share, or approximately $75 million. The tender offer is scheduled to expire at 12:00 midnight, Eastern Time, on Wednesday, Feb. 14, 2007. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close by March 31, 2007. Going Concern Doubt As reported in the Troubled Company Reporter on June 20, 2006, PricewaterhouseCoopers, LLP, in San Jose, California, raised substantial doubt about Therma-Wave Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended April 2, 2006. The auditor pointed to the cCompany's recurring net losses and negative cash flows from operations. About Therma-Wave Based in Fremont, California, Therma-Wave Inc. (NASDAQ: TWAV) -- http://www.thermawave.com/ -- develops, manufactures and markets process control metrology systems used in the manufacture of semiconductors. Therma-Wave offers products to the semiconductor manufacturing industry for the measurement of transparent and semi-transparent thin films, for the measurement of critical dimensions and profile of IC features, and for the monitoring of ion implantation and activation processes. THERMADYNE IND: Selling South African Portfolios for $18.2 Million ------------------------------------------------------------------ Thermadyne Industries Inc., a wholly owned subsidiary of Thermadyne Holdings Corporation, entered into a sale of shares and claims agreement with Thermaweld Industries Limited. The effective date of the agreement is Dec. 1, 2006. Pursuant to the Agreement, the company agreed to divest these indirect wholly owned South African subsidiaries as part of the company's evaluation of its non-core operations: -- Maxweld & Braze Pty. Ltd.; and -- Thermadyne South Africa Ltd. Maxweld & Braze and Thermadyne South Africa are wholly owned subsidiaries of Thermadyne Industries. The closing of the divestitures is expected to take place in approximately four to six weeks. Pursuant to the terms of the agreement, the company agreed to sell all of the outstanding shares of Maxweld & Braze and Thermadyne South Africa to the buyer, in exchange for R130,000,000, which by today's conversion rate is equivalent to approximately $18.2 million, R100,000,000 of which is payable at closing. Subject to satisfaction of certain indemnification obligations pursuant to the terms of the Agreement, the remaining R30,000,000 of the Purchase Price is payable on or before the third anniversary of the closing date; provided that to the extent such amount is not paid at closing, it shall accrue interest at the rate of 14% percent per annum, compounded annually in arrears; provided further that the maximum amount of the balance, as adjusted shall not exceed R44,446,000. The company said that the agreement contains customary representations and warranties. Based in St. Louis, Missouri, Thermadyne Holdings Corporation (Pink Sheets: THMD) -- http://www.Thermadyne.com/-- markets cutting and welding products and accessories under a variety of brand names including Victor(R), Tweco(R), Arcair(R), Thermal Dynamics(R), Thermal Arc(R), Stoody(R), and Cigweld(R). Its common shares trade under the symbol THMD.PK. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service, in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. manufacturing sector, confirmed the Caa1 Corporate Family Rating for Thermadyne Holdings Corporation, as well as the Caa2 rating on the company's $175 Million 9.25% Senior Subordinate Notes due Feb. 1, 2014. Those debentures were assigned an LGD5 rating suggesting noteholders will experience a 73% loss in the event of default. TOWER AUTOMOTIVE: Exclusive Plan-Filing Period Extended to Feb. 28 ------------------------------------------------------------------ In a bridge order, the Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York rules that Tower Automotive Inc. and its debtor-affiliates' hearing is adjourned until Feb. 28, 2007. The Exclusive Periods are extended through and including Feb. 28, 2007. The Debtors asked Judge Gropper to further extend, without prejudice, their exclusive periods to: (a) file a plan of reorganization to May 3, 2007; and (b) solicit acceptances of that plan to June 29, 2007. While the Debtors believed that they have made significant progress in preparing and distributing a draft Chapter 11 Plan to the Official Committee of Unsecured Creditors, negotiations are ongoing, Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, told Judge Gropper. The Debtors stressed that their ability to formulate a Chapter 11 Plan is predicated upon obtaining a substantial equity investment, possibly implemented through a rights offering. As evidence of the their good faith efforts to negotiate the terms of an equity investment, late in December 2006, the Debtors obtained the Court's permission to indemnify and pay fees to certain investment funds managed by Strategic Value Partners LLC, Wayzata Investment Partners LLC and Stark Investments pursuant to a Backstop Commitment Letter and Restructuring Term Sheet, Mr. Sathy notes. While the Debtors later withdrew the Term Sheet Motion after receiving a notice of termination from the Initial Committed Purchasers, the Debtors continued to evaluate other alternatives. Moreover, if the Debtors are unable to locate a suitable investor, the Debtors may consider alternative exit structures that would be implemented through a Plan, Mr. Sathy said. The Debtors have continued to update the Creditors Committee's advisors regarding these discussions. Mr. Sathy maintained that the Debtors' Exclusive Periods should be extended because: (a) The Debtors' Chapter 11 cases are large and complex; (b) The Debtors have made considerable progress in their Chapter 11 cases, are paying their obligations as they come due and are effectively managing their business and preserving the value of their assets; and (c) The Debtors have been actively working with the Creditors Committee and other key parties-in-interest to facilitate the Debtors' emergence from bankruptcy as soon as possible. Creditors Committee's Objection The Creditors Committee asked the Court to deny the Debtors' request for extension because the Debtors have not met their increased burden of showing that "cause" exists for purposes of extending their Exclusive Periods for a ninth time. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, asserted that the Debtors have not earned another extension of their Exclusive Periods as the continuance of the Exclusive Periods will only further impede the reorganization of the Debtors' Chapter 11 cases, do further damage to the value of the estates and likely further diminish creditors' recoveries. Mr. Dizengoff asserted that the Debtors' situation has significantly deteriorated due to, among other things, the Debtors' singular focus on a failed equity raise, and is thus fundamentally different than it was in November 2006, when the Debtors last sought and received an extension. The Creditors Committee did not object to the Debtors' prior requests for extensions of their Exclusive Periods, recognizing that the Debtors deserved an opportunity to develop an exit strategy for the Chapter 11 cases, and to formulate a viable Plan that could be negotiated with the Committee, Mr. Dizengoff said. As of Jan. 26, 2007, the Debtors have failed to formulate, let alone file a feasible Plan. Mr. Dizengoff further asserted that the draft Plan sent to the Creditors Committee, as the Debtors' concede, was only a draft that did not contain any of the substance that would be necessary to even begin plan negotiations. The Committee believed that an open process at this juncture -- a process with no restrictions on the ability of parties-in- interest to formulate and propose a Plan -- is necessary to salvage the value of the Debtors' estates for the benefit of creditors and enable the conclusion of the Debtors' Chapter 11 cases. As evidence of the Creditors Committee's commitment to, and the prospects of, an open process, the Committee believed it is close to finalizing: (i) a commitment letter and term sheet with a strategic investor seeking to purchase substantially all of the Debtors' North American assets; and (ii) a plan term sheet based on the proposed sale. Headquartered in Grand Rapids, Michigan, Tower Automotive Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRINSIC INC: Wants to Hire Bankruptcy Services as Claims Agent -------------------------------------------------------------- Trinsic, Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of Alabama for authority to employ Bankruptcy Services LLC as their notice and claims agent. Bankruptcy Services will: a. prepare and serve required notices in the Debtors' bankruptcy cases; b. file with the Clerk's Office a certificate or affidavit of service within five business days after mailing of a particular notice; c. maintain copies of all proofs of claims and proofs of interest filed; d. maintain official claims registers; e. implement necessary security measures to ensure the completeness and integrity of the claims registers; f. transmit to the Clerk's Office a copy of the claims register on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g. maintain an updated mailing list for all entities that have filed a proof of claim or interest, which list shall be available upon request of a party in interest or the Clerk's Office; h. provide public access for examintaon of copies of proofs of claim or interest without charge during the regular business hours; i. record all transfers of claims and provide notice of such transfers; j. comply with applicable federal, state, municipal, and local statutes, ordinances, rules, regulations, orders, and other requirement; k. provide temporary employees to process claims, as necessary; and l. promptly comply with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe. Documents submitted to the Court did not indicate the Firm's professional fees. The Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Trinsic Inc. Based in Tampa, Florida, Trinsic, Inc. and its debtor-affiliates - - http://www.ztel.com/and http://www.trinsic.com/-- offer competitive local-exchange carrier services to residential and business customers. They lease network assets from incumbent carriers to offer alternative local and long-distance voice and data services. The companies operate 189,000 residential local access lines and 40,000 business lines. Trinsic Communications, Inc. is the principal operating subsidiary of the companies. Trinsic, Inc. and its debtor-affiliates, Trinsic Communications, Inc., Touch 1 Communications, Inc., Z-Tel Network Services, Inc., and Z-Tel Consumer Services, LLC filed for Chapter 11 protection n February 7, 2007 (Bankr. S.D. Ala. Case No. 07-10320 through 07- 10324). Christopher S. Strickland, Esq., at Levine, Block & Strickland, LLP, and Donald M. Wright, Esq., at Sirote & Permutt, P.C., represent the Debtors in their restructuring efforts. When Trinsic, Inc. filed for protection from its creditors, it listed total assets of $27,581,354 and total liabilities of $48,287,786. VALENCE TECHNOLOGY: Sells $1 Million Common Stock to West Coast --------------------------------------------------------------- Valence Technology Inc. sold $1 million of its common stock to West Coast Venture Capital Inc., an affiliate of Carl E. Berg of the company's chairman of the board. The proceeds will be used to fund corporate operating needs and working capital. Under the terms of the purchase, the company issued 657,894 shares of our common stock, par value $0.001 per share, in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. West Coast Venture Capital purchased these shares at $1.52 per share. The purchase price per share equaled the closing bid price of our common stock as of Jan. 31, 2007, the last trading day prior to the date of the Agreement. A full-text copy of the letter of agreement is available for free at http://ResearchArchives.com/t/s?19bd Going Concern Doubt As reported in the Troubled Company Reporter on July 5, 2006, Deloitte & Touche LLP expressed substantial doubt about Valence's ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ending March 3, 2006. Deloitte & Touche pointed to the Company's recurring losses from operations, negative cash flows from operations and net stockholders' capital deficiency. About Valence Headquartered in Austin, Texas, Valence Technology, Inc., -- http://www.valence.com/-- develops and markets battery systems using Saphion(R) technology, the industry's first commercially available, safe, large-format Lithium-ion rechargeable battery technology. Valence Technology holds an extensive, worldwide portfolio of issued and pending patents relating to its Saphion technology and lithium-ion rechargeable batteries. The company has facilities in Texas, Las Vegas, Nevada, and Suzhou and Shanghai, China. VERSO PAPER: S&P Cuts Corporate Credit Rating to B from B+ ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Verso Paper Holdings LLC to 'B' from 'B+'. At the same time Standard & Poor's assigned a 'B' corporate credit rating to Verso's parent company Verso Paper Finance Holdings LLC and a 'CCC+' rating to Verso Finance's proposed $250 million senior unsecured loan due 2013, based on preliminary terms and conditions. The outlook is stable on both companies. Proceeds from the loan will be used to pay a dividend to Apollo Management, Verso's equity sponsor. The rating on the new loan is two notches below the corporate credit rating and reflects the instrument's structural subordination. "The downgrade reflects Verso's weaker financial risk profile as a result of the new debt issue at Verso Finance, which increases total debt on a pro forma basis to $1.4 billion," said Standard & Poor's credit analyst John Kennedy. "Prior to this action our ratings recognized the company's initially high leverage but also incorporated expectations that Verso would use free cash flow during 2006, a period of relatively favorable industry conditions, to reduce debt. However, the additional leverage stemming from the new term loan and the now weaker price environment will make it challenging for the company to achieve those expectations. Also, we believe this debt-financed distribution to the equity holders reflects a more aggressive financial policy that is inconsistent with a 'B+' corporate credit rating." Verso, based in Memphis, Tennessee, is the leading coated groundwood paper producer in North America. Reasonable near-term prospects for coated-paper markets should allow Verso to generate free cash flow. However, the company's capital structure will continue to be very aggressive because of its heavy debt burden. In addition, limited organic growth opportunities exist in North America's highly cyclical and competitive coated-paper industry. "We could revise the outlook to negative if a significant industry downturn occurred and resulted in weaker financial metrics or strained liquidity or if the company's debt levels increased," Mr. Kennedy said. "We are less likely to revise the outlook to positive because of the company's very aggressive financial policies." VESTA INSURANCE: XL Files Adversary Proceeding on Insurance Policy ------------------------------------------------------------------ XL Specialty Insurance Company seeks a judgment from the U.S. Bankruptcy Court for the Northern District of Alabama declaring that, pursuant to the express wishes of certain of Vesta Insurance Group Inc.'s directors and officers, it should not cancel the extension of a policy it issued to Vesta. XL Specialty issued to Vesta a Management Liability and Company Reimbursement Policy No. ELU 090835-05 for the claims-made policy period December 31, 2005 to December 31, 2006, with an extension period of December 31, 2006 to December 31, 2007. The maximum aggregate Limit of Liability for such coverage is $25,000,000. On August 4, 2006, Vesta exercised its right to purchase an extension of the coverage provided by the Policy. Vesta paid an additional $1,250,000 in premium for the extension. Pursuant to the terms of the Policy, the extension changes the Policy Expiration Date to December 31, 2007, which means that the Policy, subject to its terms and conditions, provides coverage for any claims for a Wrongful Act, Company Wrongful Act or Employment Practices Wrongful Act made on or before December 31, 2007. Lloyd T. Whitaker, the Plan Trustee for Vesta under its Third Amended Chapter 11 Plan of Liquidation, has requested that XL cancel the extension and return the premium. On the other hand, former Vesta Directors and Officers David W. Lacefield; Norman Gayle III; Michael J. Gough; Owen Vickers; and Alan Farrior, who are entitled to reimbursement of defense expenses under the Policy, have requested that XL keep the extension in place. Messrs. Lacefield and Gayle were chief executive officers and members of Vesta's Board of Directors. Messrs. Gough, Vicker, and Farrior were members of Vesta's Board. In view of these competing demands by the Plan Trustee and the Officers, XL has commenced the adversary proceeding to seek a judicial resolution of this issue. Representing XL, Jennifer A. Harris, Esq., at Burr & Forman, LLP, in Birmingham, Alabama, nonetheless, asserts that the XL Policy makes clear through the priority of payments provision that its primary purpose is the protection of Vesta's directors and officers. As a result, the preference of the Officers should control, she says. Accordingly, Ms. Harris asserts, XL is entitled to a declaration that it may not cancel the extension. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered an order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VESTA INSURANCE: XL Insurance Wants Stay Lifted to Pay Legal Fees ----------------------------------------------------------------- XL Insurance Company again seeks relief from the automatic stay, to the extent applicable, to advance or pay certain legal fees and expenses to certain directors and officers of Vesta Insurance Group Inc. or its subsidiaries, under a directors and officers liability policy issued by XL to Vesta. Jennifer A. Harris, Esq., at Burr & Forman, LLP, in Birmingham, Alabama, relates that since XL presented its initial request before the U.S. Bankruptcy Court for the Northern District of Alabama, it has received a substantial amount of correspondence from directors and officers of Vesta or its subsidiaries requesting coverage under Management Liability and Company Reimbursement Policy No. ELU 090835-05, issued to Vesta for the claims-made policy period Dec. 31, 2005 to Dec. 31, 2006, with an extension period of Dec. 31, 2006, to Dec. 31, 2007. More than 30 directors and officers of Vesta and its subsidiaries have either written directly to XL or been the subject of one or more demand letters, or in one instance, a lawsuit against them. On Dec. 8, 2006, the Bankruptcy Court entered an order permitting XL to advance defense expenses to certain directors and officers in the Luther S. Pate v. David W. Lacefield, et al., Civil Action No. CV-06-4257 pending before the Circuit Court of Jefferson County, Alabama, up to and including those incurred on November 29, 2006, and to advance Defense Expenses to defendants David Lacefield and Norman Gayle incurred in connection with their Rule 2004 Examinations. XL is now seeking leave to commence advancement of Defense Expenses to the Directors and Officers from whom it has received notice. Ms. Harris tells the Bankruptcy Court that advancement is necessary to investigate and respond to notices; to defend the lawsuit titled Affirmative Insurance Holdings, Inc., et al. v. Hopson B. Nance, et al.; and to defend any other lawsuits against the directors and officers that may arise out of the demand letters, which include significant demands for monetary damages. The advancement will remain subject to a reservation of all rights and defenses available to XL Specialty under the XL Policy and applicable law. The individual insured persons will also execute a written undertaking to repay any amounts advanced if it is ultimately determined that the amounts are not covered under the XL Policy, Ms. Harris says. The XL Policy's priority of payments provision subordinates the indemnification payments under Insuring Agreement B, and securities claim payments under Insuring Agreement C, to payments to the directors and officers under Insuring Agreement A. Ms. Harris notes that the Bankruptcy Court is not required to determine whether or not the policy proceeds are property of the estate. XL merely seeks relief from the stay for the purposes of advancing reasonable fees, costs and expenses incurred by or on behalf of the individual Insured Persons. Officers Seek Payment of Expenses Alan Farrior; Mr. Gayle; Michael Gough; Owen Vickers; Donald Thornton; Robert Batlivala; Ehney Camp, III; Walter Beale, Jr.; Steve Windom; and Thomas Chana are current and former officers or directors of Vesta or J. Gordon Gaines, Inc. Messrs. Farrior, Gayle, Gough and Vickers are defendants in the Pate Action. The Bankruptcy Court has stayed the proceedings in the Pate Action and the plaintiff is currently appealing the decision. Mitchell D. Greggs, Esq., at Lightfoot, Franklin & White, L.L.C., in Birmingham, Alabama, states that the demands from various entities claiming damages arising from the directors and officers' actions create an immediate threat of litigation against the interested parties. Mr. Greggs asserts that XL Specialty's request pay the directors and officers' defense expenses under the terms of the Policy should be approved, as the payments are intended to provide a direct benefit to the individual directors and officers. "The interested parties will suffer substantial harm if they are prevented from recovering defense costs in the face of current and imminent litigation, because they will be unable to mount an effective defense," Mr. Greggs tells the Bankruptcy Court. The directors and officers need the proceeds now in order to defend against ongoing and imminent claims for which the XL Policy provides coverage, he adds. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered an order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. (Vesta Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). VICORP RESTAURANTS: Posts $6.1 Million Net Loss for 4th Qtr. 2006 ----------------------------------------------------------------- In its financial results for the fourth fiscal quarter ended Nov. 2, 2006, VICORP Restaurants Inc. posted a $6.1 million net loss for the fourth quarter of 2006, compared to a net loss of $0.6 million in the comparable period of 2005. Net revenues for the fourth quarter of 2006 were $142.6 million, a 9.7% increase from net revenues of $129.9 million reported in the fourth quarter of 2005. The increase in the net revenue resulted from sales at the 22 new restaurants, net of closures, opened or acquired throughout fiscal 2006. Comparable restaurant sales for the fourth quarter of 2006 declined 3.0% versus the previous year's fourth quarter. Comparable restaurant sales for Village Inn and Bakers Square decreased 2.2% and 3.7%, respectively. Operating profit was $1.3 million in the fourth quarter of 2006 versus $7.1 million in the fourth quarter of 2005, principally due to lower restaurant operating profit, as well as higher overhead expenses, losses on disposition of assets and asset impairments. Food cost as a percentage of restaurant sales was flat at 25.2% in the fourth quarter of 2006 versus the comparable period of 2005, as increased pricing offset increases in commodity costs on a percentage basis and cost allocations from the pie manufacturing operations to the restaurants were somewhat lower in the quarter. Labor costs as a percentage of restaurant sales increased to 34.3% in 2006 versus 33.4% in the comparable quarter of 2005. Labor costs increased as a percentage of restaurant sales partially due to negative leverage associated with year-over-year store-level wage increases during a quarter of same store sales decline, as well as higher percentage labor costs in the significant number of restaurants opened over recent quarters. Other operating expenses increased by 2.1 points as a percentage of restaurant sales primarily due to a 1.7 point increase in rent expenses in the fourth quarter of 2006. The increase in percentage occupancy costs in the fourth quarter of 2006 versus the comparable period of 2005 was largely a result of negative leverage associated with normal increases in occupancy costs relative to the decline in comparable restaurant sales, as well as higher percentage occupancy costs associated with the immature newly opened restaurants. Debra Koenig, CEO, commented, "We are disappointed with the comparable sales declines in both of our concepts in the fourth quarter. We are significantly affected by the sales slump that has beleaguered many of the restaurant industry's largest casual dining chains. This negative sales environment shows no signs of abating. Nonetheless, we remain optimistic regarding several initiatives, including new feature menu offerings, aggressive pricing and a strong emphasis on store execution. Despite having scaled back our new store expansion, we continue to be pleased with the results of our new store strategy. During the fourth quarter, we opened 5 new restaurants, bringing the total for fiscal 2006 to 27 new restaurants opened or acquired. In addition, we have opened 5 new Village Inn locations to date in fiscal 2007. In total, we expect to open 9 new Village Inn restaurants in fiscal 2007." About Vicorp Restaurants Based in Denver, Colorado, Vicorp Restaurants, Inc. (NASDAQ: VRES) -- http://www.vicorpinc.com/-- operates and franchises about 400 family-style, medium-priced restaurants in the US -- mainly in Arizona, California, Florida, the Rocky Mountain region, and the upper Midwest. Its restaurant chains include Village Inn, known primarily for its breakfast menu and pies, and Bakers Square, serving lunch and dinner and emphasizing fresh-baked pies. The company makes all of its pies through VICOM, its bakery production division, which operates three baking plants. About 95 of the restaurants are run by franchisees. The company is majority owned by Chicago-based investment firm Wind Point Partners. * * * As reported in the Troubled Company Reporter on Feb. 8, 2007, Standard & Poor's Ratings Services lowered its ratings on VICORP Restaurants Inc., including the corporate credit rating, to 'B-' from 'B'. At the same time, Standard & Poor's also lowered the rating on the senior unsecured notes to 'CCC+' from 'B-'. The notes are rated one notch lower because of the significant amount of priority debt ahead of the unsecured notes. The downgrade reflects continued erosion in the company's credit measures during 2006, as margins and EBITDA deteriorated because of declines in same-store sales and negative leveraging from higher labor, manufacturing, and other costs. The outlook is negative. Additionally, as reported in the Troubled Company Reporter on Nov. 9, 2006, Moody's Investors Service confirmed the B2 Corporate Family Rating for Vicorp Restaurants, Inc., and held its B3 rating on the company's $126.5 million, Guaranteed 10.5% Senior Unsecured Notes due on April 2011, in connection with the implementation of its new Probability-of-Default and Loss-Given- Default rating methodology for the Restaurant sector. Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 62% loss in the event of a default. VICORP RESTAURANTS: Posts $7.9 Mil. Net Loss for Fiscal Year 2006 ----------------------------------------------------------------- In its annual financial report for the fiscal year ended Nov. 2, 2006, VICORP Restaurants Inc. reported a $7,871,000 net loss on $466,308,000 of total revenues for the fiscal year ended Nov. 2, 2006, compared to a net income of $3,463,000 on total revenues of $439,345,000 for the fiscal year ended Nov. 3, 2005. At Nov. 2, 2006, the company's balance sheet showed $395,242,000 in total assets and $330,840,000 in total liabilities, resulting in a $63,347,000 stockholders' equity, compared to total assets of $412,265,000, total liabilities of $339,331,000, and a stockholders' equity of $71,871,000 at Nov. 3, 2005. The company's November 2 balance sheet also showed strained liquidity with $41,396,000 in total current assets available to pay $54,084,000 in total current liabilities coming due within the next 12 months. Increased Costs Total revenues increased by $27 million, or 6.1%, to $466.3 million in fiscal 2006, from $439.3 million for fiscal 2005. The increase was largely due to operating 22 more locations in fiscal 2006 compared to fiscal 2005 offset by seven extra days in fiscal 2005 compared to fiscal 2006. However, the company experienced a 2.1% decrease in same unit sales for fiscal 2006 over fiscal 2005. The company explains that the majority of its direct competitors have been experiencing similar declining sales and restaurant analysts believe this is a result of increasing utility and gas prices being absorbed by consumers. Food costs increased by $3.2 million, or 3.0%, to $108.8 million in fiscal 2006, from $105.6 million for fiscal 2005. The decrease was driven primarily by menu price increases exceeding commodity price increases. Labor costs increased by $9.9 million, or 7.5%, to $141.9 million in fiscal 2006, from $132.0 million for fiscal 2005, while labor costs as a percentage of restaurant revenues increased slightly to 33.4% from 32.4% over these periods. The relative increase in labor costs was due to lower operating efficiency, increased average wage due to minimum wage increases, negative leverage associated with the same store sales declines and labor inefficiencies at the new restaurants in start up mode. Manufacturing operating expenses increased by $10.6 million, or 42.5%, to $35.4 million in fiscal 2006 from $24.8 million for fiscal 2005. This increase was primarily due to higher third party pie sales. Manufacturing operating expenses as a percentage of manufacturing revenues increased from 93.1% to 98.0% over these periods. A full-text copy of the company's Fiscal 2006 Annual Report is available for free at http://researcharchives.com/t/s?19bf About Vicorp Restaurants Based in Denver, Colorado, Vicorp Restaurants, Inc. (NASDAQ: VRES) -- http://www.vicorpinc.com/-- operates and franchises about 400 family-style, medium-priced restaurants in the US -- mainly in Arizona, California, Florida, the Rocky Mountain region, and the upper Midwest. Its restaurant chains include Village Inn, known primarily for its breakfast menu and pies, and Bakers Square, serving lunch and dinner and emphasizing fresh-baked pies. The company makes all of its pies through VICOM, its bakery production division, which operates three baking plants. About 95 of the restaurants are run by franchisees. The company is majority owned by Chicago-based investment firm Wind Point Partners. * * * As reported in the Troubled Company Reporter on Feb. 8, 2007, Standard & Poor's Ratings Services lowered its ratings on VICORP Restaurants Inc., including the corporate credit rating, to 'B-' from 'B'. At the same time, Standard & Poor's also lowered the rating on the senior unsecured notes to 'CCC+' from 'B-'. The notes are rated one notch lower because of the significant amount of priority debt ahead of the unsecured notes. The downgrade reflects continued erosion in the company's credit measures during 2006, as margins and EBITDA deteriorated because of declines in same-store sales and negative leveraging from higher labor, manufacturing, and other costs. The outlook is negative. Additionally, as reported in the Troubled Company Reporter on Nov. 9, 2006, Moody's Investors Service confirmed the B2 Corporate Family Rating for Vicorp Restaurants, Inc., and held its B3 rating on the company's $126.5 million, Guaranteed 10.5% Senior Unsecured Notes due on April 2011, in connection with the implementation of its new Probability-of-Default and Loss-Given- Default rating methodology for the Restaurant sector. Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 62% loss in the event of a default. VISANT CORP: Moody's Holds Corporate Family Rating at B1 -------------------------------------------------------- Moody's Investors Service changed the outlook of Visant Holding Corporation to positive from developing. The outlook change reflects expected improvement in Visant's credit profile due to both potential debt repayment with proceeds from the sale of Von Hoffman and strong fundamental operating performance. Moody's also affirmed the B1 corporate family rating and all other ratings for Visant and its operating subsidiary Visant Corporation. On Jan. 3, R.R. Donnelley and Sons Company reported the acquisition of Von Hoffman from Visant for approximately $413 million in cash. Moody's would consider a Ba3 corporate family rating with sustainable leverage of approximately 5x debt-to-EBITDA as well as sustainable free cash flow-to-debt of approximately 5%, which Moody's believes Visant could achieve over the next year through a combination of organic cash flow growth and debt repayment. The outlook would likely revert to stable if Moody's anticipated leverage would remain in the mid to high 5x range due to substantial, debt financed acquisitions or equity rewards, or a deterioration of fundamental performance. Visant's B1 corporate family rating reflects it high leverage, somewhat aggressive financial policy, and concerns over increasing competition in the direct marketing space. Visant's solid and improving EBITDA margins, good liquidity, and its market leading position and high customer retention rate in the relatively more stable Jostens segment supports the rating. Given its free cash flow generating capacity and sponsor ownership, the company's balance between debt reduction, acquisitions, and equity rewards will continue to influence its ratings. In Moody's view, Visant's current debt agreements limit the potential for a meaningful equity return at this time. However, Moody's remains cognizant of the likelihood of some return of capital over the intermediate term, noting that the Visant subordinated discount notes and Visant Corporation subordinated notes can be redeemed at the end of 2008. If Visant applies proceeds from Von Hoffman to debt reduction, Moody's will evaluate ratings on individual securities in accordance with the Loss Given Default Methodology at that time. Notching on individual securities could change. These are the rating actions: * Visant Holding Corp. -- Outlook, Changed To Positive From Developing -- B1 Corporate Family Rating Affirmed -- B3 Senior Notes Rating Affirmed * Visant Corporation -- Ba2 Senior Secured Bank Rating Affirmed -- B2 Senior Subordinated Notes Rating Affirmed Visant, a leading marketing and publishing services enterprise, services school affinity, direct marketing, fragrance and cosmetics sampling and educational publishing markets. The company maintains headquarters in Armonk, New York, and its annual revenue is approximately $1.5 billion. WERNER LADDER: Can File Notices of Removal Until March 7, 2007 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the deadline for Werner Holding Co. (DE) Inc. aka Werner Ladder Company and its debtor-affiliates to file notices of removal of any and all civil actions pending as of their bankruptcy filing through and including March 7, 2007. Pursuant to Section 1452 of the Bankruptcy Code and Rules 9006 and 9027 of the Federal Rules of Bankruptcy Procedure, the Debtors sought the extension without prejudice to: (a) any position they may take regarding whether Section 362 of the Bankruptcy Code applies to stay any given civil action pending against them; and (b) their right to seek further extensions of the period in which they may remove civil actions pursuant to Bankruptcy Rule 9027. Kara Hammond Coyle, Esq., at Young, Conaway, Stargatt & Taylor, LLP in Wilmington, Delaware, told the Court that since their bankruptcy filing, the Debtors have been focused on implementing an operational restructuring plan pursuant to which, they are in the process of moving over 80% of their unit production to facilities in Juarez, Mexico, and sourcing their products from China. The Debtors have also been working diligently to produce a 2007 operating budget two months earlier than their normal budgeting process, Ms. Coyle said. Additionally, the Debtors have been reviewing their operations to identify, among other things, additional ways to streamline their business operations, eliminate unprofitable operations, and increase the profitability of their businesses. Moreover, Ms. Coyle attested, the Debtors have been required to respond to time-consuming diligence requests, litigation and discovery demands. Ms. Coyle further said that the Debtors have not had an opportunity to fully investigate all of the State Court Actions to determine whether removal is appropriate. Thus, the requested extension is necessary to ensure that the Debtors' decisions are fully informed and consistent with the estates' best interests. Ms. Coyle assured the Court that the extension would not prejudice any party to a proceeding, that the Debtors may ultimately seek to remove, from seeking the remand of the action under 28 U.S.C. Section 1452(b) at the appropriate time. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co- counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. The Debtors's exclusive period to file a plan expired on Jan. 15, 2007. (Werner Ladder Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000) WERNER LADDER: To Sell Substantially All Assets for $255,750,000 ---------------------------------------------------------------- Werner Holding Co. (DE) Inc. has agreed to sell substantially all of its assets to Black Diamond Capital Management and Brencourt Advisors, LLC, for approximately $255,750,000 in cash and contributed first lien debt. The sale is subject to negotiation of definitive documentation. Werner said the purchase offer sets certain target dates, including: (a) approval of bid procedures by March 7, 2007, (b) an auction, if necessary, by May 1, 2007, and (c) a sale hearing on May 7, 2007. The proposal requires a closing by May 17, 2007, which can be extended if certain regulatory approvals are required. BDCM and Brencourt did not specify how much of the $255,750,000 Sale Price is cash and how much is debt, Bloomberg News reports. "We are very pleased to have entered into this agreement with [BDCM] and Brencourt, which demonstrates that we are well on our way to completing our restructuring and positioning our business to be well capitalized and viable long into the future. This agreement substantiates the progress Werner has made with its operational restructuring and the underlying value of the Werner franchise," James J. Loughlin, Jr., interim Chief Executive Officer of Werner, stated in a company press release. "With this agreement, we expect the business to exit chapter 11 before the end of the second quarter," Mr. Loughlin added. "We are pleased to have entered into this agreement with Brencourt and Werner and look forward to continuing our support of the Werner business," Steven Deckoff, Managing Principal of BDCM, said. The Debtors have been focused on implementing an operational restructuring plan pursuant to which, they are in the process of moving over 80% of their unit production to facilities in Juarez, Mexico, and sourcing their products from China. Founded in 1995, BDCM is an alternative asset management firm with approximately $10,000,000,000 under management in a combination of distressed-debt or private equity funds, hedge funds and structured vehicles. BDCM has offices in Greenwich, Connecticut; Lake Forest, Illinois; and London, United Kingdom. Brencourt was formed in 2001 as a registered investment advisor to various alternative investment funds. Brencourt currently manages approximately $2,000,000,000 in assets and has offices in both New York and United Kingdom. Investor Group Raises Bid Following the Debtors' sale agreement with Black Diamond, the Ad Hoc Committee of Second Lien Claimholders notified the U.S. Bankruptcy Court for the District of Delaware that the Investor Group has raised its offer to purchase substantially all of the Debtors' assets from $175,000,000 to $262,000,000. The Investor Group's Revised Offer tops the recent $255,750,000 purchase offer from Black Diamond Capital Management LLC and Brencourt Advisors LLC by $6,000,000. The Revised Offer, among other things, provides for: (1) payment in full, in cash, of outstanding obligations under the Court-approved Superpriority DIP Credit and Guaranty Agreement and the First Lien Credit Facility; (2) payment of the professional fee carve-outs under the proposed Second Forbearance Agreement; (3) payment of professional fees during the wind-down of the Debtors' Chapter 11 cases after closing of the sale, which amount is currently estimated to be as much as $1,250,000; (4) assumption by the buyers of the Debtors' (i) ordinary course postpetition liabilities related to vendors, (ii) prepetition critical vendor amounts, (iii) obligations under customer programs, whether arising before or after the Petition Date, (iv) ordinary-course-of-business liabilities to employees, and (v) product liability claims of ongoing customers as of the Sale Closing; and (5) assumption of certain additional liabilities for approximately $15,000,000. The Investor Group have created WH Acquisition Co. (DE), Inc., to acquire the Debtors' assets. A full-text copy of the Investor Group's proposed Asset Purchase Agreement is available at no charge at: http://researcharchives.com/t/s?19be The Debtors expect to file with the Court by Feb. 15, 2007, a formal request to establish bidding procedures and conduct an auction, which is currently anticipated to occur on May 1. The Investor Group consists of holders of secured claims under the Debtors' first and second lien credit facilities, and holders of a substantial portion of the Debtors' unsecured 10% Senior Subordinated Notes. Investor Group Offer Vs. BDCM-Brencourt Offer Representing the Second Lien Committee, James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, tells the Court that after the Investor Group delivered its original $175,000,000 purchase offer to the Debtors, the parties entered into substantive negotiations regarding specific terms of the purchase offer. For them to accept the offer, the Debtors require the Investor Group to deliver: (i) a written support of the Official Committee of Unsecured Creditors for the purchase offer; and (ii) a waiver by the Creditors Committee of any claims against certain agents and lenders under the First and Second Lien Credit Facilities. The Investor Group agreed to those terms and submitted a revised offer to the Debtors on February 1, 2007, which they valued at approximately $215,000,000. On the same date, several hours after the Investor Group delivered the final form of its purchase offer, the Debtors announced that they received an offer from BDCM and Brencourt that they valued as a "better offer," Mr. O'Neill relates. However, Mr. O'Neill notes, the Debtors did not condition their acceptance of the term sheet on delivery by BDCM and Brencourt of the Creditors Committee's Written Support and the Waiver. Mr. O'Neill points out that the BDCM-Brencourt proposal offers the lenders under the First Lien Credit Facility only equity securities in the entity that will acquire the Debtors' assets; unlike the Investor Group's proposal to pay in cash, in full, the claims of the agent and lenders under that facility. As a result, the BDCM-Brencourt Offer to credit bid the First Lien Credit Facility debt is now "dead on arrival," he asserts. In addition, the BDCM-Brencourt Offer leaves the Creditors Committee with claims against the agents and lenders under the First and Second Lien Credit Facilities, but with no funds to prosecute those claims, Mr. O'Neill contends. In contrast, the Investor Group Offer contemplates a settlement with the Creditors Committee in which unsecured creditors will be entitled to purchase up to $25,000,000 of the equity in the entity acquiring the Debtors' assets and a litigation reserve and wind-down amount would be funded by the Investor Group, in exchange for allowance of claims. Thus, Mr. O'Neill maintains, not only is the Investor Group a $6,000,000,000 higher bid for the Debtors' assets -- it is also worth million dollars more as a result of the Creditors Committee's claims settlement. Creditors Panel Supports Revised Offer In its opposition to the Debtors' first forbearance agreement with Black Diamond Commercial Finance L.L.C., and its response to the Debtors' recent request to extend their exclusivity periods, the Creditors Committee reminds the Court that it gave notice of its conditions to a sale. With respect to those conditions, the Investor Group has agreed that: (a) the Creditors Committee will be entitled to appoint a board member of the Investor Group entity that will acquire the Debtors' assets; (b) the unsecured creditors will be entitled to acquire up to $25,000,000 of equity of that entity; (c) there will be a wind-down fund for post-closing professional fees; and (d) competing bids will be required to provide terms of comparable value to unsecured creditors. Subject to documentation acceptable to the Creditors Committee and negotiation of certain remaining issues between the parties, the Creditors Committee supports the Investor Group's Revised Offer, as well as the sale process under Section 363 of the Bankruptcy Code. The Creditors Committee will also consider alternative transactions, which provide the same or better consideration to the general unsecured creditors as the Revised Offer. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co- counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. The Debtors's exclusive period to file a plan expired on Jan. 15, 2007. (Werner Ladder Bankruptcy News, Issue Nos. 18 & 19; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/ or 215/945-7000) WERNER LADDER: Court Moves Exclusive Plan Filing Period to Feb. 15 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has extended Werner Holding Co. (DE) Inc. aka Werner Ladder Company and its debtor-affiliates' exclusive periods to file a plan of reorganization until Feb. 15, 2007, and to solicit acceptances of that plan until Apr. 16, 2007. However, the Court ruled, the Plan Filing Period will be extended until March 9, 2007, and the Solicitation Period will be extended until May 8, 2007, if the Debtors file a motion seeking approval of: (i) bid procedures for the sale of all or substantially all of their assets pursuant to Sections 363 and 105 of the Bankruptcy Code; and (ii) at their sole option, payment of fees and expense reimbursement in connection with an exit facility for a Plan. As reported in the Troubled Company Reporter on Jan. 30, 2007, the Debtors asked the Court to extend their exclusive periods to file a plan of reorganization through March 9, 2007, and to solicit acceptances of that plan through May 8, 2007. The Debtors' exclusive period to file a plan expired on Jan. 15, 2007. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, told the Court that the Debtors' Chapter 11 cases are large and complex, with a prepetition capital structure that includes two secured prepetition credit facilities, a public bond issuance, thousands of trade creditors, and several classes of stock. He added that the Debtors have prepetition debts of more than $1,100,000,000 listed on their scheduled liabilities. Mr. Brady also told the Court that the Debtors have delivered to parties-in-interest an operating budget for 2007, and have recently begun negotiations with their creditors in formulating a consensual plan of reorganization. Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co- counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. The Debtors's exclusive period to file a plan expired on Jan. 15, 2007. (Werner Ladder Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000) WILLOWBEND NURSERY: Wants to Sell Agricultural Nursery Business --------------------------------------------------------------- Willowbend Nursery Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio in Cleveland for authority to sell substantially all of their assets including 334.17 acres of land for agricultural nursery operation. The Debtors also seek authority to assume and assign to the buyer executory contracts and unexpired leases related to the assets for sale. For further information regarding the sale, contact the Debtors' chapter 11 trustee: Andrew Suhar, Esq. Suhar & Macejko LLC 1101 Metropolitan Tower P.O. Box 1497 Youngstown, OH 44501 Tel: (330) 744-9007 Fax: (330) 744-5857 Mr. Suhar was appointed on Nov. 3, 2006, pursuant to a Court- approved request of Fifth Third Bank for a chapter 11 trustee in the Debtors' bankruptcy cases. Headquartered in Perry, Ohio, Willowbend Nursery, Inc. -- http://www.willowbendnursery.com/-- owns and operates a nursery and grow quality bareroot plants & shrubs. The company and its affiliates filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-14353). When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million and $10 million and estimated debts between $10 million and $50 million. WINIMO REALTY: Auction on Albany Terminal Set for March 30 ---------------------------------------------------------- Cibro Petroleum Products Inc., an affiliate of Winimo Realty Corp., is selling its terminal and storage facility for ethanol and petroleum products located at the Port of Albany in New York, including its lease with the Albany Port District Commission comprising approximately 33 acres of land. The Albany Terminal includes rail facilities, riverfront shipping docks, and storage tank capacity in excess of 2,000,000 bbl. The Albany Terminal will be sold thru an auction at 10:00 a.m. on March 30, 2007, at the offices of Andrews Kurth LLP, 450 Lexington Avenue in New York. Cibro Petroleum previously entered into an asset purchase agreement with Logibio LLC on Dec. 22, 2006. Logibio will purchase the Albany Terminal, subject to better offers, for $6.25 million in cash plus assumption of certain liabilities. The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved the Debtors' bidding procedures on Jan. 26, 2007. Copies of the asset purchase agreement, the bidding procedures, and diligence materials can be obtained from Jonathan Levine, Esq., at Andrews Kurth LLP at (212) 850-2816. Judge Drain will conduct a sale hearing at 10:00 a.m. on April 2, 2007. Winimo Realty Corp., Cibro Petroleum Products Inc., and other affiliates filed for chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of New York (jointly administered under Case No. 92-40026). Paul N. Silverstein, Esq., and Jonathan Levine, Esq., at Andres Kurth LLP represent the Debtors. Steven M. Golub, Esq., and Remy J. Ferrario, Esq., at Golub & Golub LLP represent the Official Committee of Unsecured Creditors. XERIUM TECH: Weak Performance Prompts Moody's Ratings Downgrade --------------------------------------------------------------- Moody's Investors Service downgraded the long term debt and corporate family ratings of Xerium Technologies Inc. and maintained a stable outlook. In addition, Moody's affirmed Xerium's speculative grade liquidity rating of SGL-3 due to the recent amendment of its bank credit facility. The downgrade reflected Moody's belief that Xerium's operating performance will remain weak relative to historic norms as increased competition in its main markets has reduced growth prospects and pressured margins. Xerium's customers in North America and Europe continue to struggle operationally due to a slowdown in global paper production and significant overcapacity. Moody's believes that this trend will continue with the closure of additional mills and further downtime at existing facilities in North America and Europe, Xerium's main markets. Moody's also anticipates that volume losses in 2006 will take longer than expected to recover and that recent investments in developing economies will take several years before they have a meaningful positive impact on cash flow. In response to the changes in the paper and board industry, Xerium continues to realign its manufacturing footprint. The company is still in the process of rebounding from production inefficiencies in North America, delays in achieving benefits from cost reduction initiatives, and a difficult pricing environment for certain of its products. Challenges remain in the clothing segment, as the company has recently experienced losses in market share and volume in Europe. At the same time, Xerium's roll covers business has improved due to an improved market position in North America, offsetting the flat operating performance within the clothing segment. Moody's believes the impact of these factors, coupled with the company's inability to increase prices, particularly within clothing products, will continue to negatively affect operating performance over the next two to three years. Furthermore, the uncertainty, variability, and sustainability of the company's free cash flows better reflect a B2 corporate family rating at this time. The B2 corporate family rating incorporates the company's sizable market position and moderate geographic diversity. However, the ratings also reflect the limited scope and modest size of the company's operations in developing countries that hold the greatest potential for future sales growth. Xerium's elevated business risk due to its focus on the paper industry, its potential for bolt-on acquisitions, high debt levels, lack of meaningful free cash flow, and potential dividend requirements constrain the ratings. Due to Xerium's business risks and limited product diversity, Moody's would expect the company to generate stronger credit metrics than many other B2 rated industrial companies. On Jan. 20, 2006, Moody's changed Xerium's outlook to negative from stable due to the same challenges addressed above. Specifically, Moody's stated that if the company fails to improve operating performance and fails to generate any free cash flow in the near term, the ratings could be lowered. Other factors that could negatively impact the ratings would be a deterioration in paper industry fundamentals resulting in a further decline in paper production, weaker liquidity, or a larger-than-anticipated debt financed acquisition. In Moody's opinion, many of these factors may materialize in the short-term and will continue to negatively impact the company's financial metrics. As a result, the ratings have been lowered. Downgrades: * Xerium Technologies, Inc. -- Corporate Family Rating, Downgraded to B2 from B1 -- Senior Secured Term Loan, Downgraded to B2 from B1 -- Senior Secured Revolving Credit Facility, Downgraded to B2 from B1 -- Probability of Default Rating, Downgraded to B2 from B1 Outlook Actions: * Xerium Technologies, Inc. -- Outlook, Changed To Stable From Negative Xerium Technologies, Inc., headquartered in Youngsville, North Carolina, is a manufacturer and supplier of consumable products used primarily in the production of paper. YUKOS OIL: U.S.-Based Chevron Eyes Bankrupt Assets -------------------------------------------------- The battle to take over the assets of OAO Yukos Oil Co. is underway as Chevron Corp. becomes the first U.S. firm to express an interest in entering the bidding race for the bankrupt Russian oil producer, according to published reports. The U.S.-based company joins other global energy investors, including a consortium comprised of Italy's Eni SpA and Enel SpA, in the intense competition for Yukos' remaining assets, Greg Walters of the Wall Street Journal relates. The remaining assets of what was once Russia's largest oil producer include refineries and two oil production units. These assets, which are due to be liquidated this year, are initially valued at more than $22 billion as of January 2007. An unidentified source told Russian daily Vedomosti last month that the company's final market value could be slightly over $20 billion, $4 billion short of the total creditor claims against Yukos. The sale of Yukos's assets will begin following the completion of the valuation process this month. As reported in the Troubled Company Reporter-Europe on Oct. 26, 2006, Yevgeny Neiman, general director of Roseco, one of the five valuers in the consortium, said Yukos's assets may be sold at a discount after appraisers complete the valuation of the company's properties. "The discount on the liquidation price will depend on which asset we are valuing. The discount could be 10 percent or it could be 90 percent," Mr. Neiman said. According to WSJ, most observers believe the Kremlin will maintain tight, though informal, control over the auction proceedings even amidst promises of an open and fair process from the office of Yukos liquidator, Eduard Rebgun. The sale of Yukos' assets will begin following the completion of the valuation process. Analysts believe Russian-based Rosneft Oil and Gazprom have the most advantage in taking over choice assets through the liquidation sale, WSJ adds. They also do not discount the possibility of other bidders, which include Surgutneftegas as a potential bidder for Tomskneft. Chevron spokeswoman Irina Rybalchenko declined comment. In a Troubled Company Reporter-Europe report on Oct. 26, 2006, Yevgeny Neiman, general director of Roseco, one of the five valuers in the consortium, said Yukos's assets may be sold at a discount after appraisers complete the valuation of the company's properties. "The discount on the liquidation price will depend on which asset we are valuing. The discount could be 10 percent or it could be 90 percent," he said. About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a US$1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. ZANETT INC: CEO Guazzoni Buys 550,000 Shares for $1.1 Million ------------------------------------------------------------- Zanett Inc. CEO Claudio Guazzoni has acquired 550,000 shares of its Common Stock at a price of $2.00 per share, for a total of $1.1 million. The shares were purchased from co-founder David McCarthy in a private transaction. The company disclosed that it has entered into a lock-up agreement with Mr. McCarthy on the balance of the shares as of Feb. 1, 2007. The lock-up agreement prohibited Mr. McCarthy from disposing of his Zanett common stock shares into the public markets. The agreement has a year term, which will expire on Jan. 31, 2008. "For a while now, I have been thinking that the stock was not reflecting its proper value," CEO Claudio Guazzoni stated. "I am very happy to have increased my holdings at levels that I believe to be very attractive and profitable for me in the long run. I am committed to growing value for all of Zanett's shareholders. "Zanett was excited by the prospects that 2007 brings. The company believed that it was well positioned in the Commercial well as in the Government Divisions. In 2006 Zanett achieved record revenues and realized continued strong cash profitability. Now Zanett carried this energy into 2007, better positioned than ever with solid business momentum, possessing positive potential for organic growth prospects, and equipped with a strong M&A pipeline." About Zanett Inc. Headquartered in New York, Zanett Inc. (Nasdaq:ZANE) -- http://www.zanett.com/-- is an information technology company that provides customized IT solutions to Fortune 500 corporations, mid-market companies, and classified government agencies involved in Homeland Defense and Homeland Security. The company operates in two segments: Commercial Solutions and Government Solutions. Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt Zanett's ability to continue as a going concern after auditing the company's financial statements for the fiscal year ended Dec. 31, 2005. The auditing firm pointed to the company's recurring losses from operations and working capital deficiency. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Upcoming Meetings, Conferences and Seminars February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ February 7-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS VALCON: Hedge Funds, Distressed Debt, Risk and Restructurings Red Rock Casino, Resort and Spa, Las Vegas, NV Contact: http://http://www.airacira.org// February 8, 2007 INSTITUTIONAL INVESTOR EVENTS Corporate Restructuring & Investing in Post-Crisis Latin America Forum New York, NY Contact: http://www.iievents.com/ February 8-11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Certified Turnaround Professional (CTP) Training NY/NJ Contact: http://www.turnaround.org/ February 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION 9th Annual TMA Symposium Four Seasons Hotel, Toronto, ON Contact: http://www.turnaround.org/ February 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Marketing Strategies available to the Turnaround Practitioner Sydney, Australia Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION 3rd Annual Martini Networking Event Gibson's Steakhouse, Chicago, IL Contact: 815-469-2935 or http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Valuation Outlook - What's in Store for 2007 University Club, Portland, OR Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Window of Opportunity: Maximizing Value in a Retail Bankruptcy Denver Athletic Club, Denver, CO Contact: http://www.turnaround.org/ February 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Men's College Basketball & Networking Wachovia Center, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ February 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION Wharton Restructuring Conference The Wharton School Philadelphia, PA Contact: http://www.turnaround.org/ February 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Brisbane, Australia Contact: http://www.turnaround.org/ February 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Gordon Biersch Brewery Restaurant, Miami, FL Contact: 561-882-1331 or http://www.turnaround.org/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA PowerPlay - Atlanta Thrashers Philips Arena, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ February 22, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA-NOW Networking & Panel: Discussing Women's Networking Issues PBI, Philadelphia, PA Contact: 215-657-5551 or http://www.turnaround.org/ February 25-26, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Marriott Park City, UT Contact: http://www2.nortoninstitutes.org February 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Member Appreciation FREE Happy Hour Maggianos, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ February 27, 2007 PRACTISING LAW INSTITUTE Intercreditor Agreements & Bankruptcy Issues Workshop San Francisco, CA Contact: www.pli.edu February 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION Devil Rays Turnaround Centre Club, Tampa, FL Contact: http://www.turnaround.org/ February 27-28, 2007 EUROMONEY INSTITUTIONAL INVESTOR 5th Annual Corporate Restructuring Summit Sheraton Park Lane Hotel, London, UK Contact: http://www.euromoneyplc.com/ March 1, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 2, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Bankruptcy Battleground West Regency Beverly Wilshire, Los Angeles, CA Contact: http://www.abiworld.org/ March 6, 2007 BEARD AUDIO CONFERENCES Distressed Claims Trading Audio Conference Recording Contact: 240-629-3300; 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Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ April 12, 2007 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC 4th Spring Luncheon and Founders Awards Washington, DC Contact: http://www.iwirc.org/ April 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ April 12, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - East JW Marriott, Washington, DC Contact: http://www.abiworld.org/ April 19-20, 2007 BEARD GROUP AND RENAISSANCE AMERICAN CONFERENCES Eighth Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures, and Restructurings The Millennium Knickerbocker Hotel - Chicago Contact: 800-726-2524; http://renaissanceamerican.com/ April 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION Wine Tasting Social TBA, Long Island, NY Contact: 631-251-6296 or http://www.turnaround.org/ April 20, 2007 TURNAROUND MANAGEMENT ASSOCIATION Breakfast meeting with Chapter President, Bruce Sim Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ April 24, 2007 TURNAROUND MANAGEMENT ASSOCIATION "Why Prospects Become Clients" Mark Fitzgerald, President of Sales Training Institute Inc Centre Club, Tampa, FL Contact: http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Jacksonville Zoo Turnaround University Club, Jacksonville, FL Contact: http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION 1st Annual Credit & Bankruptcy Symposium Golf/Spa Outing Fox Hopyard Golf Club, East Haddam, CT Contact: 203-265-2048 or http://www.turnaround.org/ April 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spa Outing Mohegan Sun, Uncasville, CT Contact: 203-265-2048 or http://www.turnaround.org/ April 26-27, 2007 TURNAROUND MANAGEMENT ASSOCIATION 1st Annual Credit & Bankruptcy Symposium Mohegan Sun, Uncasville, CT Contact: http://www.turnaround.org/ April 26-28, 2007 ALI-ABA Fundamentals of Bankruptcy Law Philadelphia, PA Contact: http://www.ali-aba.org April 29 - May 1, 2007 INTERNATIONAL BAR ASSOCIATION International Insolvency Conference Zurich, Switzerland Contact: http://www.ibanet.org/ May 4, 2007 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts for Young Practitioners - NYC Alexander Hamilton US Custom House, SDNY New York, NY Contact: http://www.abiworld.org/ May 7, 2007 AMERICAN BANKRUPTCY INSTITUTE 9th Annual New York City Bankruptcy Conference Millennium Broadway Hotel & Conference Center New York, NY Contact: http://www.abiworld.org/ May 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Annual TMA Atlanta Golf Outing White Columns, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ May 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ May 16, 2007 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Marriott North, Fort Lauderdale, FL Contact: http://www.turnaround.org/ May 17-18, 2007 TURNAROUND MANAGEMENT ASSOCIATION 6th Annual Great Lakes Regional Conference Renaissance Quail Hollow Resort, Painesville, OH Contact: http://www.turnaround.org/ May 24-25, 2007 BEARD GROUP AND RENAISSANCE AMERICAN CONFERENCES Fourth Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel - London, UK Contact: 800-726-2524; 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http://renaissanceamerican.com/ June 26, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel Centre Club, Tampa, FL Contact: http://www.turnaround.org/ June 28 - July 1, 2007 NORTON INSTITUTES Norton Bankruptcy Litigation Institute Jackson Lake Lodge, Jackson Hole, WY Contact: http://www2.nortoninstitutes.org July 12, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel University Club, Jacksonville, FL Contact: http://www.turnaround.org/ July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ July 18, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ July 25-28, 2007 AMERICAN BANKRUPTCY INSTITUTE 12th Annual Southeast Bankruptcy Workshop The Sanctuary, Kiawah Island, SC Contact: http://www.abiworld.org/ August 9-11, 2007 AMERICAN BANKRUPTCY INSTITUTE 3rd Annual Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay Cambridge, MD Contact: http://www.abiworld.org/ September 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Southwest Bankruptcy Conference Four Seasons Las Vegas, NV Contact: http://www.abiworld.org/ August 23-26, 2007 NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES NABT Convention Drake Hotel, Chicago, IL Contact: http://www.nabt.com/ August 28, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Healthcare Panel Centre Club, Tampa, FL Contact: http://www.turnaround.org/ September 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION Buying and Selling Troubled Companies Marriott North, Fort Lauderdale, FL Contact: http://www.turnaround.org/ September 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ September 25, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Retail Panel Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ October 11, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL Contact: 561-882-1331 or http://www.turnaround.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, FL Contact: http://www.ncbj.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place Boston, MA Contact: 312-578-6900; 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http://www.turnaround.org/ December 4-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 20th Annual Winter Leadership Conference Westin La Paloma Resort & Spa Tucson, AZ Contact: http://www.abiworld.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, AZ Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, NV Contact: http://www.ncbj.org/ June 21-24, 2009 INSOL 8th International World Congress TBA Contact: http://www.insol.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, FL Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, LA Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers-the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Privacy Rights, Protections & Pitfalls in Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES When Tenants File -- A Landlord's BAPCPA Survival Guide Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Market Opportunities Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES BAPCPA One Year On: Lessons Learned and Outlook Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Surviving the Digital Deluge: Best Practices in E-Discovery and Records Management for Bankruptcy Practitioners and Litigators Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Deepening Insolvency - Widening Controversy: Current Risks, Latest Decisions Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES KERPs and Bonuses under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Diagnosing Problems in Troubled Companies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Equitable Subordination and Recharacterization Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Tara Marie A. Martin, Frauline S. Abangan, 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 ***