/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070214.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, February 14, 2007, Vol. 11, No. 38 Headlines ADELPHIA COMMS: Wants D&O Insurers Purchase Agreement Approved ADVANCED MARKETING: Inks LOI with Baker & Taylor on Asset Sale ADVANCED MARKETING: Taps Houlihan Lokey as Investment Banker ADVANCED MARKETING: Amber-Allen Not Signing with Perseus Books ALLIED HOLDINGS: Teamster Leaders OK Yucaipa Plan to Save Company AMERIGAS PARTNERS: Fitch Holds Senior Notes' Rating at BB+ ANIXTER INT'L: $300 Mil. Senior Unsecured Notes Rated BB- by Fitch ARAMARK CORP: Earns $87.7 Million in Fiscal Quarter Ended Dec. 31 ASSET BACKED: Fitch Cuts Series 2003-HE3 Cl. M5 Cert. Rating to BB ATARI INC: Reports $47.3 Mil. Net Revenue in Quarter Ended Dec. 31 ATLANTIC & WESTERN: S&P Assigns Default Rating to Senior Debt AUDIO VISUAL: S&P Junks Rating on Proposed $60 Million Term Loan AUTOCAM CORP: Moody's Places Corporate Family Rating at B3 AVIS BUDGET: S&P Places Corporate Credit Rating at BB+ BERTRAND CHAFFEE: Wants April 8 to File Schedules and Statements BERTRAND CHAFFEE: Selects Hodgson Russ LLP as Counsel BIG BLUE: Case Summary & 19 Largest Unsecured Creditors C&C APARTMENT: Case Summary & 17 Largest Unsecured Creditors CALPINE CORP: Axford Consulting Wants $1.44 Mil. Commission Paid CALPINE CORP: Wants Court's OK to Pay $23 Mil. to Greenfield Plan CENTENNIAL COMMS: Amends Credit Agreement to Lower Borrowing Cost CENVEO CORP: Moody's Holds B1 Corporate Family Rating CERES CHRISTIAN: Voluntary Chapter 11 Case Summary CLAYMONT STEEL: Prices Private Offering of $105 Mil. Senior Notes CMS ENERGY: Pending Asset Sales Cue S&P's BB Corp. Credit Rating CNET NETWORKS: Debt Payment Prompts S&P to Withdraw Ratings CNET NETWORKS: Files Amended 2005 Annual Report with SEC COLLINS & AIKMAN: Judge Rhodes Okays Beringea as Investment Banker COLLINS & AIKMAN: Wants to Take Part in Pine River's DIP Facility COMMUNICATION INTELLIGENCE: Secures $600K Second Credit Facility COMVERSE TECHNOLOGY: CEO Zeev Bregman Will Resign on March 31 COMVERSE TECH: To Buy $293 Mil. Pref. Stock from Verint Systems CP THOMAS: Voluntary Chapter 11 Case Summary CRT LAND: Voluntary Chapter 11 Case Summary CSK AUTO: Asks NYSE to Extend Deadline to File Annual Report DANA CORP: Unions Fight Proposed Management Restructuring Payments DANA CORP: Unions Want Engine Biz Sale Approval to MAHLE Deferred DAVITA INC: Intends to Offer $400 Million Senior Notes DAVITA INC: Wants to Amend and Restate Senior Secured Credit Loan DESTINY ENTERPRISES: Case Summary and Largest Unsecured Creditor DURA AUTOMOTIVE: Panel Wants Bennett as Special Canadian Counsel DURA AUTOMOTIVE: Wants to Complete Key Management Incentive Plan DYNEGY HOLDING: Fitch Lifts Issuer Default Rating to 'B' from 'B-' EQUITY OFFICE: S&P Withdraws Lowered Corporate Credit Ratings FOAMEX L.P.: S&P Lifts Corp. Credit Rating After Chapter 11 Exit GEORGE'S CANDY: Voluntary Chapter 11 Case Summary GLOBAL POWER: Selects PricewaterhouseCoopers as Auditors GLOBAL POWER: Court Okays Houlihan Lokey as Equity Panel Advisor GLOBAL POWER: Court Sets March 26 as General Claims Bar Date GNC CORP: Moody's Says Buyout Plan Won't Affect Ratings HASBRO INC: Earns $230.1 Million in Year Ended Dec. 31, 2006 HEMAGEN DIAGNOSTICS: Sept. 30 Balance Sheet Upside Down by $707K HEXCEL CORP: Earns $18.8 Million Net Income in 4th Quarter 2006 HOME PRODUCTS: Panel Taps Giuliani Capital as Financial Advisor HUGHES NETWORK: Moody's Rates Proposed $115MM Sr. Term Loan at B1 HUGHES NETWORK: S&P Rates Proposed $115 Mil. Senior Loan at B- IFM COLONIAL: Moody's Puts Ba3 Rating on $225MM Term Loan Facility INFOUSA INC: Declares $0.35 Dividend Per Common Share J.P. MORGAN: Moody's Junks Rating on $3.9 Million Class M Certs. JARDEN CORP: Moody's Affirms B1 Corporate Family Rating KERASOTES SHOWPLACE: Moody's Holds Corporate Family Rating at B2 LEVEL 3 COMMS: New $1 Billion Term Loan Rated B1 by Moody's LODGNET ENTERTAINMENT: Earns $1.8 Million in 2006 MERITAGE MORTGAGE: S&P Cuts Rating on Class B-2 Certificates to B MORGAN STANLEY: Moody's Holds B3 Rating on $2.6MM Class M Certs. NASDAQ: Failed LSE Offer Cues Moody's to Affirm Ba3 Ratings NATIONAL GAS: Trustee Can Access Cash Collateral Until June 30 NMHG HOLDING: Moody's Withdraws All Ratings for Business Reasons NORTHLAKE CDO: Fitch Junks Rating on $14 Million Preference Shares NORTHSTAR CBO: Fitch Junks Rating on $51 Million Class A-3 Notes NOVELIS CORP: Hindalco Deal Prompts Moody's Ratings Review NOVELIS INC: Supplies Aluminum Sheet for GM's 2007 GMC Acadia NOVELIS INC: Hindalco Industries Acquires Firm for $6 Billion NOVELIS INC: Hindalco Merger Cues S&P's Developing CreditWatch OMEGA HEALTHCARE: Earns $55.7 Million in Year Ended December 31 OWENS & MINOR: Earns $7.3 Million in Fourth Quarter Ended Dec. 31 PACIFIC LUMBER: Panel Objects to Scopac's Use of Cash Collateral PACIFIC LUMBER: Scopac Gets Authority to Pay Critical Vendors PINNACLE FOODS: Agrees to $2.16 Billion Buyout by Blackstone Group PINNACLE FOODS: Blackstone Deal Cues S&P's Negative CreditWatch PONTIAC HOSPITAL: S&P Cuts Rating on Series 1993 Bonds to B REMY INT'L: Closes $153.2 Million Diesel Remanufacturing Biz Sale REYNOLDS AMERICAN: Good Performance Cues Moody's Ratings Upgrades RITE AID: Moody's Junks Rating on New $500 Million Senior Notes ROUGE INDUSTRIES: Wants Removal Period Extended Until April 16 SAHODAR INC: Voluntary Chapter 11 Case Summary SAVVIS INC: Dec. 31 Total Stockholders' Deficit Rose to $138 Mil. SCHOONER TRUST: DBRS Puts Low-B Ratings on 6 Certificate Classes SEM REALTY: Case Summary & Three Largest Unsecured Creditors SENIOR HOUSING: Launches Public Offering of 4.5 Million Shares SHAYA DAYTONA: Voluntary Chapter 11 Case Summary SILGAN HOLDINGS INC: Earns $104 Million in Year Ended December 31 SITHE INDEPENDENCE: Fitch Lifts Sr. Bonds' Rating to BB from BB- SPECTRUM BRANDS: Posts $18.8 MM Net Loss in Quarter Ended Dec. 31 STATER BROS: Earns $9.9 Million in Quarter Ended Dec. 24, 2006 STEVEN BEARMAN: Chapter 11 Case Summary STOCKHORN CDO: Fitch Lifts Rating on $5 Mil. Class E Notes to BB+ SUN MICROSYSTEMS: CFO Reaffirms Fourth Quarter Outlook T LANE: Case Summary & 20 Largest Unsecured Creditors TOWER AUTOMOTIVE: Exclusive Plan-Filing Period Extended to Feb. 28 TRUMP ENTERTAINMENT: Posts $10.3MM Loss in Quarter Ended Dec. 31 UIC INSURANCE: U.S. Court Grants Relief Under Sec. 304 UNO RESTAURANT: Weak Sales Cue Moody's to Junk Corp. Family Rating VALASSIS COMMS: Moody's Lowers Corporate Family Rating to B1 VISANT HOLDING: Thompson Dean Resigns as Director WALCO OIL: Voluntary Chapter 11 Case Summary WARNER MUSIC: Operating Income Drops to $80 Mil. in First Qtr 2007 WERNER LADDER: Court Okays 2nd Forbearance Pact with Black Diamond WINDSTREAM CORP: To Offer Private Placement of $500MM Senior Notes WINDSTREAM CORP: Proposed $500MM Senior Notes Rated BB+ by Fitch WINDSTREAM CORP: S&P Rates Proposed $500 Mil. Senior Notes at BB- * Upcoming Meetings, Conferences and Seminars ********* ADELPHIA COMMS: Wants D&O Insurers Purchase Agreement Approved -------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve their settlement and purchase agreement with three insurers; namely, Associated Electric & Gas Insurance Services, Ltd., Federal Insurance Company, and Greenwich Insurance Company. ACOM purchased from the Insurers three directors' and officers' liability insurance policies, which provide $50,000,000 of liability insurance coverage together. The D&O Policies cover: (a) the ACOM Debtors' officers and directors for certain types of liabilities and associated defense costs, if not indemnified by the ACOM Debtors; (b) the ACOM Debtors for sums paid to indemnify officers and directors for certain types of liabilities and associated Defense Costs; and (c) the ACOM Debtors for Defense Costs they incur and for sums they become liable to pay as a result of Securities Claims made against them. ACOM has presented the Insurers with claims for more than $66,000,000 against the D&O Policies, seeking insurance proceeds to cover defense costs for sums paid to indemnify officers and directors, and for those they incur or sums they become liable to pay as a result of Securities Claims made against them. ACOM also has advised the Insurers that it has reached a settlement with the United States Government, by which ACOM has agreed to pay $715,000,000 into a fund used to compensate security holders for losses incurred due to alleged securities fraud by certain officers and directors. ACOM seeks the Insurers' contribution of the full D&O Policy limits of $50,000,000 toward that settlement. The Insurers have denied any responsibility for ACOM's claims against the D&O Policies, contending that: -- the Policies should be declared void ab initio and rescinded due to fraud in their procurement; and -- even if not rescinded, the Policies by their terms do not cover ACOM's claims. The Insurers have been precluded from pursuing their rescission claims and coverage defenses vis-a-vis the ACOM Debtors due to the automatic stay. In 2002, the Insurers commenced an action captioned AEGIS v. Rigas, et al., No. 02-7444 (E.D. Pa.), seeking a declaratory judgment that the D&O Policies are rescinded vis-a-vis all or most of ACOM's directors and officers and, in the alternative, that to the extent the D&O Policies are not rescinded, they nonetheless do not cover any defense costs incurred by or liabilities imposed on those individuals. The Insurers have been precluded from pursuing the claims by preliminary injunctions issued pursuant to Section 105(a) of the Bankruptcy Code staying discovery and most other proceedings in the Coverage Action. However, a Court order in the Coverage Action directs AEGIS to advance funds to pay defense costs incurred by certain directors and officers, which advancements are to be repaid to AEGIS if and when it is determined that its insurance policy is rescinded vis- a-vis those officers and directors, or otherwise does not cover some or all of the advanced defense costs. According to Donald W. Brown, Esq., at Covington & Burling LLP, in New York, as of Nov. 15, 2006, the advancements of funds to pay defense costs incurred by certain directors and officers total $8,994,699. Mr. Brown explains that the Settlement and Purchase Agreement will resolve ACOM and the Insurers' dispute over ACOM's claim that the D&O Policies obligate the Insurers to pay $50,000,000 of the more than $780,000,000 of incurred defense costs and settlement obligations that it paid or to be paid. The Settlement and Purchase Agreement provides that ACOM will sell the three D&O Policies back to the Insurers for $32,500,000 in "Sale Consideration" consisting of: (1) a cash "Purchase Amount" equal to $32,500,000, less the cumulative total amount of advances by AEGIS as of the time of the sale. As of Nov. 21, 2006, the Purchase Amount was approximately $23,505,301; and (2) an "Assignment" of AEGIS' rights to recover sums that it advanced. As of Nov. 21, 2006, AEGIS' had the right to recover $8,994,699. Pursuant to the Settlement and Purchases Agreement, the Purchase Amount will be deposited into a segregated, interest-bearing account, Mr. Brown discloses. Mr. Brown informs the Court that the Assignment will be delivered to a litigation trust, which will assess and, if reasonably feasible, prosecute the assigned rights to reimbursement of advancements. The proceeds of any recovery pursuant to the Assignment will also be deposited in the D&O Policies Proceeds Account. Proceeds paid into the Account will be released only upon further Court approval. Pursuant to Section 363(f) of the Bankruptcy Code, the transaction is free and clear of all claims, liens, encumbrances and interests of any kind in the D&O Policies, which claims, liens, encumbrances and interests will attach to the D&O Policies Proceeds Account, with the same validity and priority as they had in the D&O Policies. The Settlement and Purchase Agreement provides for a mutual release of claims between the ACOM Debtors and the Insurers. Mr. Brown contends that: (a) the sale of the D&O Policies is authorized by Sections 363(f)(4) and 363(f)(5); (b) depositing and holding the Purchase Amount and any proceeds recovered pursuant to the Assignment in the D&O Policies Proceeds Account adequately protects the interests others may have in the D&O Policies. (c) the Settlement and Purchase Agreement constitutes a reasonable resolution of a pending dispute between the ACOM Debtors and the Insurers; (d) the Settlement and Purchase Agreement is a sale of the D&O Policies that, in the ACOM Debtors' business judgment, is reasonable. Initial Objections Several parties object to the ACOM Debtors' request to approve their settlement and purchase agreement with the three insurers. Parties opposed to the agreement are: (a) Michael J. Rigas and James P. Rigas, (b) Peter L. Venetis, and (c) Michael C. Mulcahey. On the Rigases' behalf, Christie Callahan Comerford, Esq., at Dilworth Paxson LLP, in Philadelphia, Pennsylvania, notes that without the consent of the Rigases who are co-insureds under the D&O Policies, the ACOM Debtors and the Insurers are proposing to drastically reduce the proceeds available under the Policies by compromising the available proceeds by at least $17,500,000. The proposed settlement represents a violation of the provisions of the settlement agreement between the ACOM Debtors and the Rigases entered in April 2005, Ms. Comerford asserts. She notes that the Adelphia-Rigases Settlement Agreement provides that ACOM will not oppose payment of defense costs by the Insurers to the Rigases under the D&O Policies. Ms. Comerford also points out that the ACOM Debtors' request also provides for the assignment of certain rights against the Rigases to the ACOM Debtors. Any assignment to ACOM will be futile, as the ACOM Debtors and their assigns, including the Plan Administrator, are precluded from suing the Rigases by the terms of the Adelphia-Rigas Settlement, she asserts. Due to the severability provisions under the AEGIS Policy, there is little risk of rescission as to Michael Rigas or James Rigas, thus, it is not in their interest to give up at least $17,500,000 of coverage to settle the rescission claims, Ms. Comerford avers. The Rigases also complain that the ACOM Debtors are proposing to sell the D&O Policies a critical time -- the Rigases are required to submit expert reports by Jan. 7, 2007, in the litigation pending in the Court of Common Pleas of Philadelphia County. The litigation is a substantial, complex action in which ACOM seeks in excess of $3,000,000,000 in damages from Deloitte & Touche LLP. Deloitte has named the Rigases as additional defendants in the litigation. If the Court approves the Settlement and Purchase Agreement with the Insurers, the Rigases' ability to timely submit the expert reports in the Adelphia v. Deloitte Litigation will be seriously threatened, Ms. Comerford tells Judge Gerber. Moreover, Ms. Comerford maintains that the ACOM Debtors' request is directly contrary to an existing opinion and judgment entered by the Honorable Michael W. Baylson of the U.S. District Court for the Eastern District of Pennsylvania. Ms. Comerford notes that Judge Baylson had concluded that AEGIS was required under applicable Pennsylvania law to advance defense costs pending a court determination of rescission or the policy's exclusion provisions. Mr. Venetis supports the Rigases' objection that the ACOM Debtors' request is directly contrary to Judge Baylson's statement. Representing Mr. Venetis, Mark Garbowski, Esq., at Anderson Kill & Olick, P.C., in New York, contends that the apparent motivation for the proposed sale of the D&O Policies on the part of ACOM is the existence of various potential defenses to coverage the do not apply to Mr. Venetis, like rescission and fraud. Thus, Mr. Venetis will not receive adequate compensation under the ACOM Debtors' settlement with the Insurers. Mr. Garbowski also notes that the proceeds of the Purchase Agreement with the Insurers would be used in part "to pay for counsel for the fund, who could continue to oppose to Mr. Venetis' insurance claims." Thus, the proceeds of insurance designed to protect Mr. Venetis will be used against him, Mr. Garbowski complains. As a result, the Settlement and Purchase Agreement will wipe out Mr. Venetis' claims against the Insurers for extra-contractual remedies like bad faith, Mr. Garbowski argues. The claims cannot be eliminated without Mr. Venetis' approval, Mr. Garbowski asserts. Mr. Garbowski maintains that the insurance proceeds belonging to the directors, Mr. Venetis for example, are not property of the ACOM Debtors' estate. Mr. Mulcahey disagrees with the format of the contemplated mechanism for going forward making payments to the insureds, as more cumbersome and expensive than necessary. Mr. Mulcahey states that the use of a mediator to approve disbursements made by a qualified person acting as an adjuster can serve the intended purposes better than the procedure outlined in the Agreement. A "litigation trust" should be rendered unnecessary by terminating completely the claims and reservations and limitations contained in the policies, Mr. Mulcahey proposes. ACOM Debtors React Donald W. Brown, Esq., at Covington & Burling LLP, in San Francisco, California, says that the fraud claim against John Rigas alone is separate and distinct from the rescission claims of insurers Associated Electric & Gas Insurance Services, Ltd., Federal Insurance Company, and Greenwich Insurance Company. Mr. Brown asserts that the rescission claims are based on a broader range of alleged acts and omissions. The rescission claims are not only limited to Mr. Rigas, but are also directed at James Rigas, Michael Rigas, Peter Venetis, and others as well. AEGIS does not seek to attribute John Rigas' misconduct to the objectors, but seeks rescission as to them based on their own alleged acts or omissions, Mr. Brown explains. The AEGIS policy provides that false and misleading information provided in the application process, if material to the acceptance of the risk, arguably provides grounds for wholesale rescission of the directors and officers' policy in its entirety, regardless of which of the insured D&O may have had subjective knowledge that a claim was likely. Mr. Brown reiterates that there is no similar severability clause in the applications for the Federal and Greenwich policies. Mr. Brown points out that given the rescission risk that the ACOM Debtors and the objectors face due to the Rigases' extensive misconduct, the sale of the D&O Policies for 65% their face value is attributable to a rational business purpose and satisfies Section 363(b). The independent directors, who arguably face the least risk of rescission, have not objected to the Settlement and Purchase Agreement, he notes. Mr. Brown further notes that Section 363(f) is written in the injunctive, not the conjunctive, and if any of the five conditions are met, the ACOM Debtors may sell the D&O Policies, without the objectors' consent, notwithstanding their asserted interests. The interests of the objectors are in bona fide dispute, satisfying Section 363(f)(4), Mr. Brown adds. Also, he says, the objectors could be compelled to accept a money satisfaction of their claims, satisfying Section 363(f)(5). Moreover, the D&O Policies also provide coverage to ACOM. Because ACOM's insured loss far exceed the $50,000,000 coverage limit, ACOM has a clear property interest in the entirety of the policy proceeds, Mr. Brown tells the Court. Contrary to the objectors' claims, the Settlement and Purchase Agreement will not extinguish their alleged interests in the Policies, as the sale proceeds will remain in a segregated escrow account pending further order of the Bankruptcy Court. Thus, the interests of alleged co-insureds are adequately protected, Mr. Brown states. There is no merit to the Rigases' contention that an adversary proceeding is necessary before an injunction may issue, Mr. Brown maintains. As in In re Trans World Airlines, Inc., No. 0100056, 2001 Bakr. LEXIS 723 (Bankr. D.Del.Mar.27,2001), the injunction will simply effectuate ACOM's sale of the D&O Policies free and clear of interests. The Bankruptcy Court has clear authority to enter a channeling injunction requiring the objectors to look to the sale proceeds to satisfy any valid claims they may have. In addition, the Settlement and Purchase Agreement is fully consistent with both the Pennsylvania District Court's ruling on defense cost advances and the 2005 Adelphia-Rigas Settlement Agreement, Mr. Brown contends. The Settlement and Purchase Agreement does not violate the covenant not to sue contained in the Adelphia-Rigas Agreement. The Settlement and Purchase Agreement merely provides for an assignment of AEGIS' rights -- to a litigation trust administered by a Plan Administrator appointed under the Debtors' Fifth Amended Joint Chapter 11 Plan. Whether the Plan Administrator can permissibly sue the Rigases is an issue that need not be resolved until the Administrator actually initiates litigation against them, Mr. Brown relates. Any litigation instituted by the Plan Administrator would be focused on increasing the assets to legitimate beneficiaries of the D&O Policies. Contrary to the objectors' claims, it is appropriate to reserve $500,000 from the sale proceeds escrow account to pay the Plan Administrator's legal fees and related costs, Mr. Brown asserts. Rigases Want ACOM's Request Dismissed In accordance with Case Management Order No. 3 issued by the Court on July 26, 2004, Michael J. Rigas and James P. Rigas provided ACOM's counsel with a declaration by John J. Higson and a list of witnesses and exhibits in support of the objection. The Rigases' counsel asked the ACOM Debtors on Jan. 12, 2007, to comply with Case Order 3 and provide a list of witnesses and exhibits. Peter C. Hughes, Esq., at Dilworth Paxson LLP, in Philadelphia, Pennsylvania, relates that on Jan. 13, 2007, ACOM's counsel indicated that they did not believe an evidentiary hearing was necessary or appropriate, and that the Court need not anymore rule on their request to approve the Purchase Agreement other than what they submitted. Mr. Hughes argues that the ACOM Debtors are required to act in accordance with the Case Order 3 and, by choosing not to do so, it is precluded from presenting any evidence in support of their request. The Court should not afford the ACOM Debtors additional time to comply with Case Order 3 and to continue the hearing on the their request as they already declined invitations to do so, Mr. Hughes asserts. The ACOM Debtors' noncompliance with Case Order 3 was not a mere oversight and since it chose not to request a continuance, its motion should be dismissed, he maintains. Accordingly, the Rigases ask the Court to dismiss the ACOM Debtors' request. 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 entered an order confirming the first modified fifth amended joint Chapter 11 plan of reorganization of Adelphia Communications Corporation and Certain Affiliated Debtors. ADVANCED MARKETING: Inks LOI with Baker & Taylor on Asset Sale -------------------------------------------------------------- Advanced Marketing Services Inc. entered into a letter of intent with Baker & Taylor to sell the majority of its assets, excluding Publishers Group West Inc. The letter of intent is subject to the negotiation of a definitive asset purchase agreement and the United States Bankruptcy Court for the District of Delaware's approval. The asset purchase agreement will be subject to the requirements of Section 363 of the Bankruptcy Code. Once the asset purchase agreement is finalized, the company will file a motion with the Bankruptcy Court to request a bidding procedures hearing, expected to be held on Feb. 16, 2007. Following the completion of the bidding process and an auction, if necessary, the company anticipates a closing by March 15, 2007, as per the requirements of the letter of intent. "We are pleased to enter into this letter of intent with Baker & Taylor and believe it marks a significant milestone in the restructuring of our business," Gary Rautenstrauch, President and CEO of AMS, said. "Baker & Taylor is a recognized leader in the book distribution industry and has the experience to seamlessly assume operations and continue meeting the needs of our customers." "An agreement with AMS will represent an important strategic addition to Baker & Taylor's business," Richard Willis, Chairman, President and CEO of Baker & Taylor, stated. "We are excited about the opportunity to work with AMS to foster and broaden the commitment to customer service and operational excellence that AMS is known for." About Baker & Taylor Based in Charlotte, North Carolina, Baker & Taylor distributes books, video and music products to public and academic libraries. Founded in 1828, the company also distributes books and entertainment products to many of brick and mortar retailers, Internet retailers, as well as thousands of independent book, music and video stores. It serves customers in 125 countries around the world and has six distribution facilities strategically located throughout the country. Baker & Taylor is a portfolio company of Castle Harlan Partners IV, L.P. About Advanced Marketing Based in San Diego, California, Advanced Marketing Services, Inc. (Pink Sheets: MKTSQ) -- 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: Taps Houlihan Lokey as Investment Banker ------------------------------------------------------------ Advanced Marketing Services Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to employ Houlihan Lokey Howard & Zukin Capital Inc. as their investment banker, nunc pro tunc to Dec. 29, 2006. Mark D. Collins, Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware, relates that Houlihan Lokey is one of the leading advisors and investment bankers to troubled companies, both inside and outside of bankruptcy. The firm's Financial Restructuring Group has advised more than 500 transactions, valued in excess of $200 billion, over the past 12 years. The Debtors have chosen Houlihan Lokey to act as their investment banker because the firm has substantial expertise in advising them, and is well qualified to perform the services and represent their interests in the Chapter 11 cases, Mr. Collins explains. As investment banker, Houlihan Lokey will: (a) evaluate the Debtors' strategic options based on Houlihan's initial review; (b) advise the Debtors generally as to available financing and capital restructuring alternatives, including recommendations of specific courses of action; (c) assist the Debtors with the development, negotiation and implementation of a restructuring plan, including participation as an advisor to the Debtors in negotiations with creditors and other parties involved in a restructuring; (d) assist the Debtors, if required, to draft an information memorandum to seek potential new capital, and to solicit, coordinate and evaluate indications of interest regarding a transaction; (e) assist the Debtors with the design of any debt and equity securities or other consideration to be issued in connection with a Transaction; (f) advise the Debtors as to potential mergers or acquisitions, and the sale or other disposition of any of the Debtors' assets or businesses; (g) assist the Debtors in communications and negotiations with its constituents; including, creditors, employees, vendors, shareholders and other parties in interest in connection with any Transaction; (h) assist the Debtors in locating and negotiating debtor-in- possession financing with a new lender to replace the DIP financing with Wells Fargo Foothill, Inc., in effect as of the Effective Date of the Agreement; and (i) render other financial advisory and investment banking services as may be mutually agreed upon by Houlihan and the Debtors. Houlihan Lokey will be paid a flat monthly fee of $150,000 for the first three months of the engagement, and $100,000 per month afterwards. The Debtors will also pay the firm: (1) a Financing Fee upon the consummation of a DIP Financing Transaction on behalf of the Debtors equal to the greater of (i) $750,000 and (ii) 1.25% of the aggregate principal amount of DIP Financing raised or committed; (2) a M&A Transaction Fee equal to a minimum of $1.25 million plus incremental increases; and (3) a $1.25 million Restructuring Transaction Fee. Houlihan Lokey will be reimbursed for all its reasonable out-of- pocket expenses. According to Mr. Collins, Houlihan Lokey's restructuring expertise, as well as its capital markets knowledge, financing skills, and mergers and acquisitions capabilities, some or all of which may be required by the Debtors during the term of the engagement, were important factors in the determination of the amount of the firm's fees. As its compensation will be calculated and paid based on certain transaction fees, Houlihan Lokey will not be required to file time records, Mr. Collins adds. Rather, in its fee applications filed with the Court, Houlihan Lokey would present descriptions of those services provided on behalf of the Debtors and the individuals who provided the professional services. The Debtors would indemnify and hold Houlihan Lokey harmless against liabilities arising out of or in connection with its retention. Christopher R. Di Mauro, managing director at Houlihan Lokey, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Objections (a) Committee The Official Committee of Unsecured Creditors says it is inappropriate and unnecessary at this juncture for the Debtors to retain Houlihan Lokey or any other investment banker. Given the high fees Houlihan Lokey is seeking, there is no benefit to the estates and creditors to retain them at this time, Thomas F. Driscoll III, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, tells Judge Sontchi. Any beneficial services that Houlihan Lokey could realistically provide at this point can be provided by the Debtors' other professionals, Mr. Driscoll maintains. It is also possible that Jefferies & Company, Inc., the Debtors' prepetition investment banker, will make a claim for compensation, he adds. In the event the Court determines that the Debtors can retain Houlihan Lokey, the Committee believes that the terms of its retention must be modified so that: * the provision of the Engagement Letter providing for a Financing Fee is stricken since no refinancing will take place at this point in the Chapter 11 cases; * the M&A Transaction Fee, if allowed at all, will be reduced and modified so that any fee is directly tied to specific value added to the Debtors' estates by Houlihan Lokey's efforts; and * the provision for a Restructuring Transaction Fee is stricken as well. Houlihan Lokey's compensation must be subject to review under Section 330 of the Bankruptcy Code. A greater portion of any monthly fees awarded to Houlihan Lokey should be credited against any M&A Transaction Fee Houlihan may become entitled to in these cases, Mr. Driscoll asserts. (b) U.S. Trustee Kelly Beaudin Stapleton, the United States Trustee for Region 3, reminds the Court that professional fees may not be awarded unless and until the applicant shows that there is a benefit to the estate. The fees must be reasonable and necessary, she adds. Ms. Stapleton notes that Houlihan Lokey's monthly fee, if allowed, should be subject to Section 330 standards, while the various transaction and financing fees should be disallowed under the "improvident" standard set forth in Section 328 and subject to Section 330. Ms. Stapleton asserts that Houlihan Lokey should: -- file applications in accordance with the Bankruptcy Code, Bankruptcy Rules, and the prescripts of any Administrative Order; and -- submit fee applications that set forth a description of the services performed by each of the firm's professional on an hourly basis, the total number of hours spent each month by the professionals, and a breakdown and delineation of monthly expenses. Additionally, Ms. Stapleton says, Houlihan Lokey should provide hourly rates for its professionals. 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: Amber-Allen Not Signing with Perseus Books -------------------------------------------------------------- Amber-Allen Publishing Inc., does not intend to enter into a Publisher Agreement with Perseus Books LLC, Mark Felger, Esq., at Cozen O'Connor, in Wilmington, Delaware, discloses. Debtor-affiliate Publishers Group West Incorporated and Amber- Allen Publishing are parties to a marketing and distribution agreement dated Jan. 1, 2001. As reported in the Troubled Company Reporter on Jan. 31, 2007, Advanced Marketing Services Inc. and its debtor-affiliates asked the United States 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 LLC and Client Distribution Services Inc. Before PGW can assign its rights under the Amber-Allen Distribution Agreement, Amber-Allen has first to sign a publisher agreement with Perseus Books. According to Mr. Felger, due to the exclusive arrangements between PGW and PGW Publishers, PGW's failure to meet its contractual obligations has placed Amber-Allen in a precarious position. Amber-Allen has entrusted PGW with the exclusive marketing and distribution of its titles, and is dependent on payments from PGW as its primary source of income. Mr. Felger asserts that compounding the difficulties experienced by Amber-Allen and other PGW Publishers, the Debtors have been unable to make payments for sales during the high-volume holiday season. As of the Dec. 29, 2006 petition date, PGW owes Amber- Allen in excess of $1,000,000, which amount represents a significant percentage of Amber-Allen's annual revenues. For these reasons, Amber-Allen asks the Court to include these provisions in the order approving the sale of PGW's rights under its distribution agreements to Perseus Books and Client Distribution Services: (a) The Amber-Allen Distribution Agreement is deemed rejected, effective immediately upon entry of the ruling granting the PGW Sale; and (b) Within five business days of entry of that Court ruling, PGW will cooperate with Amber-Allen to return Amber- Allen's books, and Amber-Allen will pay the reasonable freight and handling charges. Perseus Books Meets Agreement Conditions Perseus Books informs the Court that notwithstanding the confusion that has occurred in the publishing community based on an "alleged, but ephemeral, competing proposal," Perseus Books has signed agreements with publishers holding approximately 84% of the prepetition claims of the PGW publishers, therefore, fully satisfying the conditions of the Purchase Agreement with PGW. Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, representing Perseus Books, tells Judge Christopher S. Sontchi that with the exception of the conditions of the Purchase Agreement requiring Court approval for the Debtors' request to sell PGW's rights under the PGW Distribution Agreements to Perseus and CDS, all of the other conditions to the Agreement have been satisfied. Mr. Brady relates that Perseus has put in place funding sufficient to close the transaction almost immediately after the Court's approval of the sale. Thus, if the Court approves the transaction in accordance with the terms of the Purchase Agreement, Perseus Books believes that with the Debtors' anticipated cooperation, the parties should be able to close the transaction promptly by no later than February 15, 2007. According to Mr. Brady, Perseus Books has read numerous quotes in the press about the existence of an alleged competing bid by National Book Network Inc. Mr. Brady clarifies that the Debtors have not advised Perseus Books that they have signed a purchase agreement with NBN. To the extent the Debtors seek to delay the sale hearing to provide NBN a further opportunity to conduct additional due diligence or to address financing concerns, the delay will put the Perseus Books transaction at risk, Mr. Brady continues. While Perseus has met the conditions for the minimum number of consenting publishers under the PGW Distribution Agreements, at least one publisher necessary to the transaction has conditioned its consent on Perseus Books closing the transaction not later than February 15, 2007, Mr. Brady notes. Accordingly, if, for any reason, the transaction is not approved within that time frame, Perseus Books cannot assure the Court that the parties will continue to be in a position to satisfy the conditions to closing. Perseus reserves all of its rights, including its right to refuse to agree to any amendments to the Purchase Agreement requested by persons filing objections to the Debtors' request, and its right to terminate the PGW Distribution Agreements based on the Debtors' conduct or otherwise. 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. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ALLIED HOLDINGS: Teamster Leaders OK Yucaipa Plan to Save Company ----------------------------------------------------------------- The local union leaders of International Brotherhoood of Teamster who represent carhaul workers unanimously approved a plan Monday, Feb. 12, 2007, by a private investment firm to reorganize Allied Holdings Inc. that would protect members' pensions, health and welfare benefits and preserve the union contract, Teamsters General President Jim Hoffa disclosed. Allied, the largest carhaul company in North America, employs about 3,300 Teamsters in the United States. The three-year plan from Yucaipa Cos. requires approval from the U.S. Bankruptcy Court in Atlanta and must be ratified by Teamster members. The plan would adopt economic concessions far less drastic than proposed by Allied's present management. It will preserve members' pensions and health and welfare benefits, with no changes to work rules or contract language. The proposal also calls for the appointment of a new board of directors and CEO on the effective date of the plan. On Feb. 2, 2007, Allied filed a motion in Court seeking to nullify the contract and asking for a reduction of $65 million per year for five years for a total of $325 million from its Teamster employees. Wage concessions in the Yucaipa plan would be 15% total over three years, not to exceed $35 million per year. All those funds would be used to purchase new equipment to be used by Teamsters at Allied. "Allied CEO Hugh Sawyer told our members that if they don't do what he says, he will shut down the company," Mr. Hoffa said. "We have been working with Yucaipa to develop this responsible alternative that will protect our members' futures. We fought to protect Teamster jobs, pensions and health and welfare benefits. I'm proud to say we accomplished those goals." "We have been fighting to make sure our members are protected since well before Allied's bankruptcy filing in July 2005," Fred Zuckerman, Director of the Teamsters Carhaul Division, said. "Our members stuck with us the whole way, including their unanimous approval of a strike vote last June. Our members were adamant about not letting the company continue shelling out management bonuses while members made sacrifice after sacrifice." Mr. Zuckerman said the union will present more specifics of the Yucaipa plan to members in the coming days, including membership meetings beginning this weekend. A ratification vote must be completed by the end of March. "This reorganization plan, though painful, is a bold, innovative solution that's good for our members," Mr. Zuckerman said. "We worked strategically with Yucaipa to protect our members' jobs, their health, welfare and pension benefits and their working conditions." Highlights of the Yucaipa plan: * Allied will pay all health, welfare and pension contributions and any increases while the three-year plan is in effect; * Total concessions are 15 percent, not to exceed $35 million a year for three years. All those funds will be spent on purchasing new equipment to be used by Teamsters at Allied; * Management and non-bargaining unit employees' wages will be frozen for the period of time Teamster wages are frozen with few exceptions; * If Allied exceeds certain EBITDA (earnings before interest taxes depreciation and amortization) targets, the company will return money to members; * Reorganized Allied will rejoin the National Master Automobile Transporters Agreement, will sign successor to NMATA and will rejoin the Employer Association; * All of Allied's operation will remain "covered work" under the work-preservation agreement with a small exception for non-union AXIS. During the first 90 days after the plan takes effect, the union and the company will agree on which parts of Axis will become Teamsters, or whether the non-union parts will be sold; * Concessions cannot be used to compete with NMATA carriers and can only be used to bid on new business; * Teamsters General President Jim Hoffa may appoint a representative to attend Allied board meetings as an observer to monitor the financial performance of the company. Allied will pay up to $10,000 per year for an independent auditor assigned by the Teamsters National Automobile Transporters Industry Negotiating Committee to audit the performance of the business; * And a new CEO, acceptable to the Teamsters, will be hired. Founded in 1903, the International Brotherhood of Teamsters represents more than 1.4 million hardworking men and women in the United States and Canada. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other OTC: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. In their Schedules of Assets and Liabilities filed with the Court, Allied Holdings disclosed $161,248,122 in total assets and $292,306,949 in total liabilities. The Debtors filed a motion with the Court requesting that their exclusive period to file a chapter 11 plan reorganization be extended to Feb. 23, 2007. The Debtors also asked that their exclusive period to solicit acceptances of that plan be extended to Apr. 24, 2007. The hearing on the motion, initially set for Feb. 1, 2007, was rescheduled today, Feb. 14, 2007. AMERIGAS PARTNERS: Fitch Holds Senior Notes' Rating at BB+ ---------------------------------------------------------- Fitch Ratings has affirmed AmeriGas Partners, L.P.'s senior unsecured notes and issuer default rating at 'BB+'. The Rating Outlook is Stable. An indirect subsidiary of UGI Corp. is the general partner and 44% limited partner for APU, which, in turn, is a master limited partnership for AmeriGas Propane, L.P., an operating limited partnership. Approximately $933 million of debt is affected. APU's ratings and Stable Outlook reflect the underlying strength of subsidiary AGP's retail propane distribution network, broad geographic reach, adequate credit metrics, and proven ability to manage product costs under various operating conditions. Additionally, the company's propane cylinder exchange business provides moderate positive cash flow during the summer months when AGP's traditional propane distribution business is relatively slow. APU's rating also reflects the structural subordination of its debt obligations to approximately $150 million of notes at AGP. Over the last several years, APU has refinanced a substantial amount of AGP's debt at the MLP level. APU's financial performance will continue to be affected by weather conditions during the winter heating season, and the company must continue to manage volatile supply costs and customer conservation. The combination of warm weather and elevated commodity prices during the last two winter heating seasons has had a moderately negative impact on APU's credit metrics. Weather during December 2006, a key operating month for the company, was particularly warm and during the first fiscal quarter of 2007 weather overall was 9% warmer than normal. For the latest 12 months ended Dec. 31, 2006, consolidated EBITDA to interest and debt-to-EBITDA equaled 3.5x and 3.7x, respectively. However, Fitch notes that APU's recent financial performance has generally exceeded expectations for company performance under the stress case conditions of a warm weather and high commodity price heating season environment. Cash distributions to APU, defined as EBITDA generated by AGP minus AGP interest expense and maintenance capital expenditures covered interest on APU's stand-alone obligations by 3.7x during the latest 12 months. However, as a consequence of increased outstanding MLP debt, and despite higher expected levels of cash available to APU from AGP, this ratio has declined from earlier levels and distribution coverage of MLP interest is anticipated to fall to approximately 3.5x. The persistence of high propane prices and volatility may lead to further customer conservation, increased bad debt expense, and test APU's ability to sustain gross profit margins. Wholesale propane prices, as measured by postings at Mont Belvieu, Texas, have fallen in recent weeks but remain at historically high levels and exceeded $1.00 per gallon as recently as Dec. 2006. However, APU has managed to effectively pass through propane supply costs to customers and maintain relatively consistent gross margins during periods of volatile weather conditions and commodity prices over the past several years. APU is the nation's largest retail propane distributors with a diverse base of approximately 1.3 million customers in 46 states and current retail sales volumes in excess of 1 billion gallons annually. An indirect subsidiary of UGI Corp. is the general partner and 44% limited partner for APU. APU, in turn, is an MLP for AGP, an operating limited partnership. The company's cylinder exchange business accounts for approximately 10% of total EBITDA. ANIXTER INT'L: $300 Mil. Senior Unsecured Notes Rated BB- by Fitch ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB-' rating to Anixter International's offering of up to $300 million in senior unsecured convertible notes maturing in 2013. Fitch rates Anixter and its wholly owned operating subsidiary, Anixter Inc., as: Anixter -- Issuer Default Rating 'BB+'; and -- Senior unsecured debt 'BB-'. AI -- Issuer Default Rating 'BB+'; -- --Senior unsecured notes 'BB+'; and -- --Senior unsecured bank credit facility 'BB+'. The Rating Outlook is Stable, although similar future debt-financed shareholder friendly actions that result in deteriorating credit protection measures would result in negative rating actions. Fitch expects Anixter to use the proceeds from this offering to reduce debt by approximately $150 million and to repurchase common stock with the remaining portion. Combined with a repurchase program at the beginning of January, Anixter will have repurchased close to 3 million shares this year, roughly 8% of total shares outstanding. Based on financial results as of Dec. 29, 2006 and reflecting the aforementioned convertible note issuance, share repurchase and debt redemption plan, Fitch estimates liquidity on a pro forma basis to be approximately $200 million consisting of: -- Approximately $50 million of cash and cash equivalents; -- A $275 million, five-year revolving credit agreement maturing June 2009 of which approximately $125 million is undrawn and available; -- A $40 million Canadian revolving credit facility expiring June 2009 with a minimal amount remaining undrawn and available; and -- Revolving credit facilities at other foreign subsidiaries totaling approximately $35 million with nominal amounts undrawn and available. In addition, Anixter has a $225 million on-balance-sheet accounts receivable securitization program expiring September 2007 of which approximately $125 million is available. Fitch estimates pro forma total debt is approximately $950 million consisting of: Anixter -- Approximately $160 million accreted value of 3.25% zero coupon convertible senior notes due 2033; and -- Current offering of up to $300 million in senior unsecured convertible notes due 2013. AI -- $200 million 6% senior unsecured notes due 2015; -- Approximately $190 million in borrowings under various credit facilities; and -- Approximately $100 million outstanding under the company's accounts receivable securitization program. Anixter's senior unsecured convertible notes are not guaranteed by AI and, therefore, are structurally subordinated to AI's debt. The ratings and Outlook reflect Anixter's improved operating performance driven by the combination of a stable end-market demand environment, market share gains in the company's small but growing sales of fasteners and C-class components to original equipment manufacturers, and higher EBIT margins due in part to cost savings from integrating recent acquisitions as well as rising copper prices during 2006. Also considered are Anixter's well-diversified product, customer and supplier portfolios, and the information technology distribution industry's ability to generate cash from working capital during a downturn. Fitch also expects that Anixter will continue to be able to generate cash from operations even at growth rates in the low double-digits. Rating concerns mainly center on the company's history of using debt financing for shareholder friendly actions as well as Fitch's expectation that Anixter will continue using free cash flow for a combination of special dividends and acquisitions. Given Anixter's current focus of integrating prior acquisitions, Fitch expects acquisition activity to slow in 2007. Fitch also considers the thin operating EBIT margins associated with the IT distributors and Anixter's unhedged exposure to commodity prices, which would affect operating income negatively if copper prices were to decline significantly. ARAMARK CORP: Earns $87.7 Million in Fiscal Quarter Ended Dec. 31 ----------------------------------------------------------------- Aramark Corp. earned $87.7 million of net income on $3.1 billion of sales for the first quarter of fiscal 2007, compared to $93.1 million of net income on $2.9 billion for the same period last year. Operating income was $172.3 million for the first quarter of fiscal 2007, a 9% increase over the prior year period. Interest and other financing costs, net, for the first quarter of fiscal 2007 increased approximately $1.8 million from the prior year period due principally to higher year-over-year interest rates. At Dec. 29, 2006, the company's balance sheet showed $5.3 billion in total assets, $3.7 billion in total liabilities, and $1.6 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?19aa Total debt increased $208 million during the first quarter due principally to the normal seasonal working capital needs and the acquisition of a regional uniform company. During the first quarter of fiscal 2007, the company borrowed $125 million under its U.S. and Canadian credit facility to repay the company's 7.10% notes that matured on Dec. 1, 2006. At Dec. 29, 2006, there was approximately $330 million of unused committed credit availability under the company's U.S. and Canadian credit facility. As of Dec. 29, 2006, there was approximately $516 million outstanding in foreign currency borrowings. 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. * * * As reported in the Troubled Company Reporter on Jan. 16, 2007, Moody's Investors Service affirmed the Ba3 rating on Aramark Corp.'s proposed $4.15 billion secured term loan and B3 rating on the company's $1.78 billion of proposed senior notes. ASSET BACKED: Fitch Cuts Series 2003-HE3 Cl. M5 Cert. Rating to BB ------------------------------------------------------------------ Fitch has taken rating actions on Asset Backed Securities Corporation's mortgage-pass through certificates: Series 2001-HE2: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'A+'; -- Class B affirmed at 'BBB+'. Series 2001-HE3: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA'; -- Class B affirmed at 'BBB+'. Series 2002-HE1: -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'A+'; -- Class B affirmed at 'BBB-'. Series 2003-HE2: -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-' -- Class M-4 affirmed at 'BBB'; -- Class M-5 rated 'BBB-', placed on Rating Watch Negative. Series 2003-HE3: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB'; -- Class M5 downgraded from 'BBB-' to 'BB'. Series 2003-HE4: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB'; -- Class M5 affirmed at 'BBB-'. Series 2003-HE5: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB'; -- Class M5 affirmed at 'BBB-'. Series 2003-HE6: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'. Series 2003-HE7: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'. Series 2004-HE1: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'. Series 2004-HE2: -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'. Series 2004-HE3: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'A-'; -- Class M5 affirmed at 'BBB+'; -- Class M6 affirmed at 'BBB'; -- Class M7 affirmed at 'BB+'. Series 2004-HE5: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'A-'; -- Class M5 affirmed at 'BBB+'; -- Class M6 affirmed at 'BBB'; -- Class M7 affirmed at 'BB+'. Series 2004-HE6: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'A-'; -- Class M5 affirmed at 'BBB+'; -- Class M6 rated 'BBB', placed on Rating Watch Negative; -- Class M7 rated 'BBB-', placed on Rating Watch Negative. Series 2004-HE7: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'A+'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'A'; -- Class M5 affirmed at 'A-'; -- Class M6 affirmed at 'BBB+'; -- Class M7 affirmed at 'BBB'; -- Class M8 affirmed at 'BBB-'; -- Class M9 affirmed at 'BB+'. Series 2004-HE8: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'A'; -- Class M3 affirmed at 'A-'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'; -- Class M7 rated 'BB+', placed on Rating Watch Negative. Series 2004-HE10: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'; -- Class M7 affirmed at 'BB+'. Series 2005-HE1: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-' -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BBB-'; -- Class M10 affirmed at 'BBB-'; -- Class M11 affirmed at 'BB+'. Series 2005-HE2: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA'; -- Class M2 affirmed at 'AA-'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'A-'; -- Class M5 affirmed at 'BBB+'; -- Class M6 affirmed at 'BBB'; -- Class M7 affirmed at 'BBB-'; -- Class M8 affirmed at 'BB+'. Series 2005-HE3: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BBB-'; -- Class M10 affirmed at 'BB+'; -- Class M11 affirmed at 'BB'. Series 2005-HE4: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BBB-'; -- Class M10 affirmed at 'BB+'; -- Class M11 affirmed at 'BB'; -- Class M12 affirmed at 'BB'. Series 2005-HE5: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA+'; -- Class M3 affirmed at 'AA'; -- Class M4 affirmed at 'AA-'; -- Class M5 affirmed at 'A+'; -- Class M6 affirmed at 'A'; -- Class M7 affirmed at 'A-'; -- Class M8 affirmed at 'BBB+'; -- Class M9 affirmed at 'BBB'; -- Class M10 affirmed at 'BBB-'; -- Class M11 affirmed at 'BB+'; -- Class M12 affirmed at 'BB'. Series 2005-HE6: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'AA-'; -- Class M4 affirmed at 'A+'; -- Class M5 affirmed at 'A'; -- Class M6 affirmed at 'A-'; -- Class M7 affirmed at 'BBB+'; -- Class M8 affirmed at 'BBB'; -- Class M9 affirmed at 'BBB-'; -- Class M10 affirmed at 'BB+'; -- Class M11 affirmed at 'BB'. Series 2005-HE7: -- Class A affirmed at 'AAA'; -- Class M1 affirmed at 'AA+'; -- Class M2 affirmed at 'AA'; -- Class M3 affirmed at 'A'; -- Class M4 affirmed at 'BBB+'; -- Class M5 affirmed at 'BBB'; -- Class M6 affirmed at 'BBB-'; -- Class M7 affirmed at 'BB+'; -- Class M8 affirmed at 'BB'; -- Class M9 affirmed at 'BB'. The collateral in all of the transactions listed above consists of 15 to 30-year fixed-rate and adjustable-rate mortgages primarily secured by first- and second-liens on one to four-family residential properties. The majority of the loans were originated by New Century, Long Beach, Option One, and WMC Mortgage Corp. The servicers include Ocwen Financial Corp., Option One Mortgage Corp., Litton Loan Servicing LP Select Portfolio Servicing, HomEq Servicing Corp., Saxon Mtge. Services, Wells Fargo Home Mortgage, and Countrywide Home Loans, Inc. The affirmations reflect a satisfactory relationship of credit enhancement to future loss expectations. The upgrades reflect an improvement in the relationship of CE to future expected losses. The downgrade of Class M5 for series 2003-HE3 reflects deterioration in the relationship between the bond's CE and future loss expectations, and affects approximately $2.06 million in outstanding certificates. Due to the transaction's relatively large 60+ delinquency buckets, the expected loss on the remaining pool is creating negative rating pressure on the class M5 bond. Losses have exceeded excess spread for three of the past six months and are expected to continue to do so. Once the overcollateralization hits its floor of $3,033,762 the OC amount is projected to decline below its target amount. The classes placed on Rating Watch Negative show signs of increasing credit risk, posing a potential threat to subordinate bonds. Losses in excess of monthly spread have caused OC in these transactions to drop below required levels. Potential losses associated with the delinquent pipeline may exceed monthly excess spread and OC in future periods, causing write-downs on the more subordinate bonds. For series 2001-HE2 and 2001-HE3, the transactions are 66 months and 63 months seasoned and have pool factors of approximately 6% and 5%. The cumulative losses are 2.92% and 1.95%; and the 60+ delinquencies are 29.17% and 34.72%. For series 2002-HE1, the transaction is 59 months seasoned; has a pool factor of 7%; cumulative losses of 2.52%; and 60+ delinquency of 29.9%. For the 2003 vintage, the transactions are seasoned at a range of 36 to 44 months; the pool factors range from 9% to 18%; the cumulative losses range from 0.56% to 1.18%; and the 60+ delinquencies range from 13.89% to 30.98%. For the 2004 vintage, the transactions are seasoned at a range of 24 to 35 months; the pool factors range from 15% to 34%; the cumulative losses range from 0.22% to 0.83%; and the 60+ delinquencies range from 11.3% to 21.98%. For the 2005 vintage, the transactions are seasoned at a range of 17 to 23 months; the pool factors range from 33% to 85%; the cumulative losses range from 0.11% to 0.78%; and the 60+ delinquencies range from 9.01% to 11.09%. ATARI INC: Reports $47.3 Mil. Net Revenue in Quarter Ended Dec. 31 ------------------------------------------------------------------ Atari Inc.'s net revenue for the quarter ended Dec. 31, 2006, was $47.3 million versus $100 million in the comparable year-earlier period. Publishing net revenue was $46 million versus $81.6 million in the prior year, while distribution revenue was $1.3 million versus $18.4 million in the comparable year-earlier period. Net loss for the fiscal 2007 third quarter was $0.7 million compared to a net loss of $4.8 million in the year-earlier period. Income from continuing operations for the third quarter of fiscal 2007 was $1.7 million compared to a loss from continuing operations of $2.3 million in fiscal 2006. Net revenue for the nine-month period ended Dec. 31, 2006, was $95.3 million versus $162.2 million in the comparable year-earlier period. Publishing net revenue was $78.8 million, versus $116.6 million in the prior nine-month period, while distribution revenue was $16.5 million, versus $45.6 million in the comparable year-earlier period. Net loss for the nine-month period was $7.5 million compared to net loss of $62.8 million in the year-earlier period. Loss from continuing operations for the nine-month period of fiscal 2007 was $12.4 million compared to a loss of $54.8 million in fiscal 2006. "Atari continues to focus on improving product quality and is committed to growing shareholder value. Specifically, Never Winter Nights 2, Dragon Ball Z: Budokai Tenkaichi 2 and Test Drive Unlimited achieved our targets of quality and market place acceptance on a global basis," stated David Pierce, President and Chief Executive Officer of Atari. Going Concern Doubt As reported in the Troubled Company Reporter on July 3, 2006, Deloitte & Touche LLP expressed substantial doubt about Atari, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the for the fiscal years ended March 31, 2006 and 2005. The auditing firm pointed to Atari's significant operating losses and the expiration of its line of credit facility. About Atari Inc. New York-based Atari, Inc. (Nasdaq: ATAR) -- http://www.atari.com/ -- develops interactive games for all platforms and is one of the largest third-party publishers of interactive entertainment software in the U.S. The Company's 1,000+ titles include franchises such as The Matrix(TM) (Enter The Matrix and The Matrix: Path of Neo), and Test Drive(R); and mass-market and children's franchises such as Nickelodeon's Blue's Clues(TM) and Dora the Explorer(TM), and Dragon Ball Z(R). Atari Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA (Euronext - ISIN: FR-0000052573), an interactive games publisher in Europe. ATLANTIC & WESTERN: S&P Assigns Default Rating to Senior Debt ------------------------------------------------------------- Standard & Poor's Ratings Services revised its senior secured debt ratings on Atlantic & Western Re Ltd.'s Class A notes to 'D' from 'BB' and Class B notes to 'D' from 'B'. At the same time, Standard & Poor's revised its senior secured debt rating on Atlantic & Western Re II Ltd.'s Class B notes to 'CCC' from 'BB+'. "The ratings on Atlantic & Western Re Ltd.'s notes were revised due to PXRE Reinsurance Ltd.'s (PXRE), the ceding insurer in the transaction, failure to make the quarterly premium payment due on Feb. 8, 2007," said Standard & Poor's credit analyst Gary Martucci. The premium payment is needed to make the quarterly interest payment due to noteholders. The 8-K report filed by PXRE Group Ltd. on Feb. 9, 2007, stated that the Board of Directors concluded it was unlikely that PXRE Group Ltd. would ultimately pursue a strategic alternative that would allow it to utilize the coverage available under the Reinsurance Agreement in light of the extremely high attachment point under the Reinsurance Agreement. Based on the 8-K information filed on Feb. 12, 2007, by PXRE Group Ltd., management has indicated they expect to make the Feb. 8 premium payment on May 8, 2007, as well as the scheduled premium payment due on May 8 and the early termination event premium. The principal needed to redeem the notes is held in a collateral account. It is expected that the outstanding principal amount will be redeemed in full upon the early amortization. Although Standard & Poor's recognizes management's intention to make the payments required under the reinsurance agreement, Standard & Poor's ratings also address the timeliness of the payments. Because the Feb. 8 payment will not be made until after the grace period allowed under the transaction documents, the issuer is in default of its obligations. The revision on Atlantic & Western Re II Ltd.'s Class B notes to 'CCC' was based on Standard & Poor's interpretation of management's intentions as set forth in the 8-K filed Feb. 9. It was disclosed that PXRE Group Ltd.'s board of directors may pursue strategic alternatives that do not involve significant catastrophe exposures. If they do not, then it is likely that these notes would be redeemed before the scheduled maturity. To effect an early redemption, PXRE would be expected to not make a required premium payment, which would result in a default on the notes. This rating action does not imply that the noteholders are at greater risk of loss. Rather the rating action is meant to convey that the notes are more likely to amortize early and that a default must occur to achieve this result. AUDIO VISUAL: S&P Junks Rating on Proposed $60 Million Term Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating and stable outlook to Audio Visual Services Corp. At the same time, Standard & Poor's assigned a bank loan rating of 'B', at the same level as the corporate credit rating on AVSC, and recovery rating of '2' to the proposed $255 million first-lien credit facilities of subsidiary Audio Visual Services Group Inc. The recovery rating indicates Standard & Poor's expectation of substantial recovery, 80%-100%, of principal in the event of a payment default. The first-lien credit facilities consist of a $30 million revolving credit facility due 2013 and a $225 million term loan B due 2014. Standard & Poor's also assigned a 'CCC+' bank loan rating, two notches lower than the corporate credit rating on AVSC, and recovery rating of '5' to the company's proposed $60 million second-lien term loan due 2014. The recovery rating indicates an expectation of negligible recovery of principal in the event of a payment default. Proceeds from the transaction will be used to fund Kelso & Co.'s acquisition of AVSC. Pro forma for the proposed transaction, total debt outstanding was $285 million as of Sept. 30, 2006. Long Beach, California-based AVSC is a national provider of audiovisual services, equipment rentals, and staging and meeting services. "The ratings on AVSC reflect cash flow concentration in a hotel meetings and conferences business that depends on cyclical business travel," said Standard & Poor's credit analyst Andy Liu. "We also see high customer concentration, meaningful commissions paid to venue-hosting hotels, and high debt leverage and weakened cash flow protection following the acquisition by Kelso." These factors are partially offset by AVSC's good competitive position and increased scale from recent service contract additions. AUTOCAM CORP: Moody's Places Corporate Family Rating at B3 ---------------------------------------------------------- Moody's Investors Service assigned Autocam Corporation a Corporate Family Rating of B3 and a B2, LGD-2, 26% rating on the company's proposed first lien bank debt to be created as part of a proposed financial restructuring. At this time, the pre-restructuring ratings of Autocam Corporation, including its Corporate Family Rating of Ca and Probability of Default Rating of D, are unaffected. Autocam is currently in payment default under portions of its existing debt and is seeking a financial restructuring outside of bankruptcy. If the restructuring is completed as currently contemplated, the pre restructuring ratings of Autocam will be withdrawn and the newly assigned ratings of New Autocam will be affirmed. Because the restructuring is currently a proposal with execution yet to occur, Moody's is maintaining its pre restructuring ratings for Autocam, while assigning ratings for the proposed restructured debt under New Autocam to avoid confusion of the pre and post restructuring ratings. New Autocam's ratings reflect the benefits of reduced indebtedness, improved liquidity and committed funding to complete the company's European operational restructuring program. The ratings consider the company's modest scale, concentration of business awards, and ongoing leverage. The ratings also reflect limited prospects for free cash flow to develop until its French Social Plan is concluded, weak interest coverage during this interim period, and a challenging industry environment. Rating outlooks for both New Autocam and existing Autocam are stable. Autocam did not pay interest on its subordinated notes in mid-December, nor did it pay interest due on its second lien term loans at the end of December. In early January, Autocam executed a term sheet with a subordinated note holder investor group to recapitalize the company. The second lien lenders entered into an agreement with Autocam to defer their interest payment until Feb. 28, 2007, or sooner in certain events. At the expiration of the payment grace period under the subordinated notes in mid-January, cross default provisions in the existing first lien bank documentation were tripped. A standstill agreement with the first lien lenders has been executed and extends until mid-March. Under the investor proposal, a privately negotiated transaction would be structured in which the investors would exchange approximately $138 million of their subordinated notes for new common shares of Autocam Corporation or a newly formed holding company and invest in a new Payment-in-Kind preferred stock issue of $85 million. Substantially all existing ownership interests in Autocam would be extinguished. Participating subordinated note holders would become the controlling shareholders of New Autocam. Proceeds from the new PIK preferred stock would be used to retire Autocam's existing approximately $78 million of second lien debt with the balance after fees and expenses retained as cash. Autocam's and Autocam France SARL's existing first lien bank indebtedness, totaling approximately $108 million, will be refinanced through $150 million of new bank facilities being arranged for New Autocam. Should the refinancing proposal close, ratings on existing Autocam would be withdrawn and the provisional modifier on New Autocam's ratings would be removed. New Autocam would not be required to file future financial statements or other reports with the SEC. The recent rating action was on Dec. 19, 2006, at which time Autocam's Probability of Default Rating was lowered to D from Ca, ratings on its first lien bank debt and subordinated notes were confirmed, and its SGL-4 Speculative Grade Liquidity rating was affirmed. New Autocam's Corporate Family rating of B3 is four notches higher than the comparable rating for Autocam pre-restructuring. This flows from the reduction of approximately $217 million of debt in the new capital structure, an improved liquidity profile arising from un-tapped revolving credit facilities of approximately $30 million, and the provision of sufficient funding to complete the company's Social Plan at its French subsidiaries, a critical element in its plans for an operational turn-around. The rating incorporates the company's modest scale of operations, concentration of business awards, ongoing leverage and weak quantitative metrics anticipated over the coming year. Nonetheless, several factors provide stability to the company's revenues. Business awards are on a multi-year basis with large tier-1 suppliers who would face switching costs were they to consider replacing Autocam. Volumes are somewhat platform neutral given the diverse customer base those tier-1 entities enjoy, and, within its defined markets, the company has leading market shares. The company also benefits from geographic diversification through its presence in major global automotive markets. The stable outlook is supported by the committed funding New Autocam will achieve upon the recapitalization, improved cushion under applicable financial covenants in its bank credit facilities, and the identification of savings/margin enhancement which its approved Social Plan in France is expected to realize over the intermediate term. Should the plan take hold, New Autocam's level of indebtedness would not change significantly over the next two years, but stronger coverage metrics could evolve. The B2 rating on New Autocam's and its European borrowing subsidiary, Autocam France SARL, bank debt reflects an LGD-2, 26% loss given default assessment. With effectively an all bank debt structure, a family recovery rating of 65% was assigned. This high family recovery rating combined with first lien status over substantially all of the borrowers' assets, up-streamed guarantees from certain subsidiaries, and levels of non-debt liabilities, lifts the rating on the bank debt one notch above the Corporate Family Rating. However, as a consequence of the lower expected loss rate, the PDR is impacted and is set at Caa1. Autocam France SARL's bank obligations will be guaranteed by New Autocam, and New Autocam's material domestic subsidiaries and immediate holding company parent. Ratings Assigned: * Autocam Corporation -- Corporate Family Rating, B3; -- First lien term loan for $83 million, B2, LGD-2, 26%; -- First lien revolving credit facility for $17 million, B2, LGD-2, 26%; -- Outlook, stable; and -- Probability of Default Rating, Caa1. * Autocam Corporation France SARL -- Guaranteed First lien term loan for EUR equivalent of $37 million, B2, LGD-2, 26%; and -- Guaranteed First lien revolving credit facility for EUR equivalent of $13 million, B2, LGD-2, 26%. Autocam Corporation, headquartered in Kentwood, Michigan, is a manufacturer of extremely close tolerance precision-machined, metal alloy components, sub-assemblies and assemblies, primarily for performance and safety critical automotive applications. Revenues in 2005 were approximately $350 million from operations in North America, Europe, and Brazil. AVIS BUDGET: S&P Places Corporate Credit Rating at BB+ ------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB+' corporate credit rating to Avis Budget Group Inc., parent of Avis Budget Car Rental LLC. "The rating assignment follows Avis Budget Group's announcement on Friday that it will now guarantee Avis Budget Car Rental's unsecured notes," said Standard & Poor's credit analyst Betsy Snyder. "The ratings on both entities are the same since Avis Budget Car Rental is the primary operating subsidiary of Avis Budget Group." The outlook is stable. Ratings on Avis Budget Group Inc. and its primary operating subsidiary, Avis Budget Car Rental LLC, reflect the strong position of the Avis and Budget car rental brands within the North American on-airport car rental market and access to fleet financings through asset-backed securitizations. However, the company's global car rental operations are more limited than those of its major competitor Hertz Corp. and its consumer truck rental operation is approximately one-third the size of competitor U-Haul International. Avis Budget is the remaining entity of Cendant Corp., after the sale and spin-off of Cendant's other businesses were completed in August 2006. Although the company's financial risk profile is aggressive, with a substantial amount of debt on its balance sheet and a significant portion of its assets secured, its financial profile is somewhat stronger than the industry average. Avis and Budget, which combined account for approximately 91% of consolidated revenues, participate primarily in the on-airport segment of the car rental industry. Their combined market share at U.S. airports is approximately 32%, compared with the 28% share of their major competitor Hertz. Other large on-airport competitors include Vanguard Car Rental USA Holdings Inc., the parent of the Alamo and National brands; unrated Dollar Thrifty Automotive Group, the parent of the Dollar and Thrifty brands; and Enterprise Rent-A-Car Co. Avis focuses on the commercial traveler while Budget concentrates on the leisure traveler. The on-airport segment is heavily reliant on airline traffic. Demand tends to be cyclical, and can also be affected by global events such as wars, terrorism, and disease outbreaks. Avis Budget's credit ratios are not expected to improve materially over the near to intermediate term. Incremental debt to purchase new vehicles will offset increasing cash flow. If the company were to reduce debt or add equity to its capital structure, the outlook could be revised to positive. An outlook revision to negative is considered less likely, absent a general downturn in the car rental industry. BERTRAND CHAFFEE: Wants April 8 to File Schedules and Statements ---------------------------------------------------------------- The Bertrand Chaffee Hospital and its debtor-affiliate, Jennie B. Richmond Chaffee Nursing Home Company Inc., ask the United State Bankruptcy Court for the Western District of New York to extend, until April 8, 2007, the period within which they can file their schedules of assets and liabilities, and statement of financial affairs. The Debtors tell the Court that the 15-day automatic extension is not sufficient for them to complete their schedules and statement. In addition, the Debtors' limited staff to perform the required internal review of its business also prompted the extension request. Headquartered in Springville, New York, The Bertrand Chaffee Hospital and its debtor-affiliate, Jennie B. Richmond Chaffee, Nursing Home Company, operates hospital facilities and serves a rural population of 55,000 people in approximately 525 square miles in a three county area of Erie, Wyoming and Cattaraugus counties. The Debtors filed for Chapter 11 protection on Feb. 7, 2007 (Bankr. W.D. NY Case No. 07-00470). Gary M. Graber, Esq., and Julis S. Kreher, Esq., at Hodgson Russ LLP, represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' bankruptcy proceedings. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BERTRAND CHAFFEE: Selects Hodgson Russ LLP as Counsel ----------------------------------------------------- The Bertrand Chaffee Hospital and its debtor-affiliate, Jennie B. Richmond Chaffee Nursing Home Company Inc., ask the U.S Bankruptcy Court for the Western District of New York for permission to employ Hodgson Russ LLP as their counsel. Hodgson Russ will: a. advise the Debtors of its rights, powers, and duties as debtors and debtor-in-possession continuing to operate and manage their business and properties under chapter 11 of the Bankruptcy Code; b. prepare, on behalf of the Debtors, any necessary and appropriate applications, motions, draft orders, other pleadings, notices, schedules and other documents, and reviewing financial and other reports to be filed in these chapter 11 cases; c. advise the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices and other papers that may be filed and served in these chapter 11 cases; d. advise the Debtors with respect to, and assisting in the negotiation and documentation of, financing agreements, debt and cash collateral orders and related transactions; e. review the nature and validity of any liens asserted against the Debtors' property and advising the Debtors concerning the enforceability of the liens; f. advise the Debtors regarding their validity to initiate actions to collect and recover property for the benefit of their estates; g. counsel the Debtors in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization and related documents; h. advise and assist the Debtors in connection with any potential property dispositions; i. advise the Debtors concerning executory contract and unexpired lease, assumptions, assignments and rejections and lease restructuring and recharacterizations; j. assist the Debtors in reviewing, estimating and resolving claims asserted against the Debtors' estates; k. commence and conduct any and all litigation necessary or appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 11 estates or otherwise further the goal of completing the Debtors' successful reorganization; l. provide general corporate, litigation, regulatory and other non-bankruptcy services as requested by the Debtors; and m. appear in Court on behalf of the Debtors as needed in connection with the foregoing and otherwise; n. perform any other necessary or appropriate legal services in connection with these chapter 11 cases for or on behalf of the Debtors. The Debtors' application did not disclose the billing rates of the firm's professionals. The Debtors, however, agreed to pay the firm on an hourly basis for this engagement. To the best of the Debtors' knowledge the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Springville, New York, The Bertrand Chaffee Hospital and its debtor-affiliate, Jennie B. Richmond Chaffee, Nursing Home Company, operates hospital facilities and serves a rural population of 55,000 people in approximately 525 square miles in a three county area of Erie, Wyoming and Cattaraugus counties. The Debtors filed for Chapter 11 protection on Feb. 7, 2007 (Bankr. W.D. NY Case No. 07-00470). Gary M. Graber, Esq., and Julis S. Kreher, Esq., at Hodgson Russ LLP, represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' bankruptcy proceedings. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BIG BLUE: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Big Blue Corporation P.O. Box 6616 Caguas, PR 00826-6616 Bankruptcy Case No.: 07-00653 Chapter 11 Petition Date: February 12, 2007 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Carlos Rodriguez Quesada Law Office of Carlos Rodriguez Quesada P.O. Box 9023115 San Juan, PR 00902-3115 Tel: (787) 724-2867 Fax: (787) 724-2463 Total Assets: $2,464,411 Total Debts: $958,985 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Angel L. Perez, President Capital Loan $102,000 Urb. Montehiedra to Corporation Guaraguao 144 San Juan, PR 00926 Environmental Quality $85,000 Board-ELA PR P.O. Box 11488 San Juan, PR 00910 Ford Credit Vehicle Lease $52,537 P.O. Box 364189 San Juan, PR 00936-4189 Doral Bank Credit Line $41,525 Plaza Bairoa Branch Carr. #1 Zona Industrial Villa Blanca Caguas, PR 00725 Banco de Desarrollo Economico Business $37,344 P.O. Box 2134 Machinery Loan San Juan, PR 00922-2134 Ryder Vehicle Lease $36,800 P.O. Box 2542 Toa Baja, PR 00951-2542 EuroBank Business Loan $21,282 P.O. Box 191009 San Juan, PR 00919-1099 Alco High Tech Container Equipment Supply $18,728 P.O. Box 90000 PMB 3028 Corozal, PR 00783 Interspace Ind. Corp. Property Lease $18,473 P.O. Box 5864 Caguas, PR 00726 First Leasing Vehicle Lease $17,546 P.O. Box 11852 San Juan, PR 00910-1852 Aramburo ESSO Services Fuel $16,355 Carr. 189 Km. 2.6 Salida a Gurabo Caguas, PR 00726 Light Gas Corp. Gas $13,141 P.O. Box 1155 Salinas, PR 00751 Banco Popular de Puerto Rico Credit Line $11,800 San Alfonso Branch Caguas, PR Lcda. Rosa Echevarria Services $8,750 212 La Serrania Caguas, PR 00725 Placido Gonzalez Real Property $8,596 P.O. Box 1151 Rental Caguas, PR 00726 Progressive Finance & Investment Insurance Financing $8,483 P.O. Box 42004 San Juan, PR 00940 San Miguel Corp. Promotions $7,880 Sabanera del Rio #402 Camino Las Trinitarias Gurabo, PR 00778 AEE Utilities $7,364 P.O. Box 363508 San Juan, PR 00936-3508 CRIM Municipal Taxes $7,118 P.O. Box 195387 San Juan, PR 00919-5387 C&C APARTMENT: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: C & C Apartment Complex, LLC 3251 Steiner Street San Francisco, CA 94123 Bankruptcy Case No.: 07-30171 Chapter 11 Petition Date: February 13, 2007 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Michael Heath, Esq. 3251 Steiner Street San Francisco, CA 94123 Tel: (415) 931-4207 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pacific Manor $1,875,000 1228 Grauwyler Road Irving, TX 75061 Azelea Plaza $510,000 826 Blaylock Drive Dallas, TX 75203 Stanley Lee $150,000 P.O. Box 5356 Oakland, CA 94605 Dallas County Taxes $68,725 Whorton Insurance $34,000 TXU Energy $31,552 Irving Water Utilities $30,000 Eagle Electric $6,000 Ronald Smeberg $3,000 Law Offices of Michael Heath $3,000 Atmos Energy Corp. $1,800 Duncan Disposal $1,100 Verizon $544 Hocutt, Inc. $520 Sprint $460 The Envirotrol Company, Inc. $400 JBeans Call Plus $216 CALPINE CORP: Axford Consulting Wants $1.44 Mil. Commission Paid ---------------------------------------------------------------- Axford Consulting LP asks the U.S. Bankruptcy Court for the Southern District of New York to allow and compel payment of an administrative priority expense claim for its 3% commission of $1,440,000 from Calpine Corp. and its debtor-affiliates' sale of certain turbine equipment to Consorcio Pacific Rim Energy Yucal Place HTE for $48,000,000. Axford Consulting is in the business of brokering sales of turbine generator equipment and providing consulting services regarding the turbine generator industry. Mark Axford is the majority owner and limited partner of Axford Consulting. W. Timothy Miller, Esq., at Taft, Stettinius & Hollister LLP, in Cincinnati, Ohio, relates that prior to the Debtors' bankruptcy filing, the Debtors engaged Axford Consulting to sell several excess turbines. In February 2005, Mr. Axford was contacted by David Whisenhunt at Wood Group Power Solutions, an installer of turbine equipment, who inquired whether Axford Consulting could locate three turbine units for the Wood Group to sell to Pacific Rim. Accordingly, Mr. Axford inquired from the Debtors whether they had any turbine equipment available to sell to an unnamed purchaser. In response, the Debtors stated that they had turbines not in use and are interested in selling them. According to Mr. Miller, Axford Consulting and the Debtors had an oral agreement that Axford Consulting would introduce the Debtors to agents of Pacific Rim and that Axford Consulting would serve at the Debtors' direction as an intermediary to facilitate negotiations between the parties for the sale of three Siemens Westinghouse 501FD-2 Econopac turbine generators. In exchange, the Debtors agreed to pay Axford Consulting a 3% commission of the sale price if they ultimately sold the subject turbine generators to Pacific Rim. The Debtors later commented that the 3% commission was high and that it should be lowered. Axford Consulting didn't consent to the proposed reduction of the commission, Mr. Miller notes. Mr. Axford then received a proposal from the Debtors for the sale of three turbine generator sets to Pacific Rim for $57,000,000, and for the parties to enter into a long term service agreement with an estimated annual value to the Debtors of $4,000,000. However, in March 2005, the Pacific Rim negotiations came to an end due to the parties reaching an impasse on the sale price, allocation of the transportation costs, the duration of the long term service agreement, and any spare parts requirement, Mr. Miller relates. By October 2006, the Debtors served Axford Consulting with a Notice for the sale of certain turbines. The Sale Notice did not identify the buyer or the type of equipment being auctioned, Mr. Miller points out. The Sale Notice did not disclose that the Turbines that were the subject of the earlier negotiations that Axford Consulting initiated between Pacific Rim and the Debtors were the equipment proposed to be sold and that Axford Consulting would not be entitled to any commission, Mr. Miller informs the Court. Mr. Miller asserts that Axford Consulting has provided a benefit to the Debtors' estate for which it has not been compensation and with respect to which the Debtors failed to inform the Court upon seeking the Court's approval to sell the Turbines to Pacific Rim. Thus, Axford is entitled to an allowed administrative expense claim for $1,440,000 and the prompt payment of the claim, Mr. Miller maintains. Mr. Miller argues that applying either Texas or California law, a contract for a commission on the sale of goods is outside of the statute of frauds and does not need to be in writing to be enforceable. Furthermore, the Debtors clearly recognized Axford Consulting as its intermediary given the number of phone calls and e-mails going back and forth between the parties regarding Pacific Rim, Mr. Miller adds. About Calpine Corporation Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company previously produced a portion of its fuel consumption requirements from its own natural gas reserves. However, in July 2005, the company sold substantially 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). CALPINE CORP: Wants Court's OK to Pay $23 Mil. to Greenfield Plan ----------------------------------------------------------------- Calpine Corp. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to make an additional $23,000,000 contribution to the non-recourse project level financing for Greenfield Energy Center LP. The Court previously authorized the Debtors to take all actions necessary to effectuate the Greenfield Project. Intervening events, however, have delayed closing of the Greenfield Financing Transaction: 1. Calpine Energy Services Canada, Ltd., a Canadian Debtor and 50% shareholder in the General Partner, has refused to transfer its ownership interest to another wholly owned Calpine entity or pledge its ownership interest to the project lenders as required under the project financing documents. 2. The Canadian Debtors have filed an avoidance action in the Court of Queen's Bench of Alberta, alleging that the U.S. Debtors' limited partnership interest had been transferred for insufficient consideration prepetition. David R. Seligman, Esq., at Kirkland & Ellis LLP, in New York, relates, that the U.S. and Canadian Debtors are in discussions to reach a global resolution of all cross-border issues including issues related to the Greenfield Project. Pending resolution of the issues, the Debtors are required to inform Mitsui & Co., Ltd., its joint venturer, whether they intend to make an additional capital contribution of up to $23,000,000, on or before March 5, 2007, or risk the dilution of its 50% ownership interest in the Greenfield Project. The Debtors must make the additional $23,000,000 capital contribution within 10 business days after March 5, 2007, to prevent dilution, according to Mr. Seligman. 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). CENTENNIAL COMMS: Amends Credit Agreement to Lower Borrowing Cost ----------------------------------------------------------------- Centennial Communications Corp. has amended its senior secured credit facility, lowering the interest rate on term loan borrowings by 25 basis points through a reduction in the LIBOR spread from 2.25% to 2.00%. As of Nov. 30, 2006, Centennial had $550.0 million of term loan borrowings outstanding under its senior secured credit facility. "This amendment is an important milestone as we renew our commitment to deleveraging and improve our financial flexibility and strength," Michael J. Small, Centennial's chief executive officer, said. Headquartered in Wall, New Jersey, Centennial Communications Corp. (NASDAQ: CYCL) -- http://www.centennialwireless.com/-- provides regional wireless and integrated communications services in the United States and the Puerto Rico with approximately 1.1 million wireless subscribers and 387,500 access lines and equivalents. The US business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. * * * Centennial Communications' 10% Senior Floating Rate Notes due 2013 carry Moody's Investors Service's Caa1 rating, Standard & Poor's CCC rating and Fitch's CCC rating. CENVEO CORP: Moody's Holds B1 Corporate Family Rating ----------------------------------------------------- Moody's Investors Service confirmed the B1 corporate family rating of Cenveo Corporation and assigned a Ba3 rating to its proposed senior secured bank facility intended to fund the acquisition of Cadmus Communications Corporation for approximately $430 million. Moody's also changed LGD assessments on Cenveo debt securities to reflect the proposed liability structure in accordance with Moody's Loss Given Default Methodology and confirmed all other existing Cenveo ratings. The ratings outlook is negative. The action concludes the Cenveo review for downgrade, which commenced December 27 following Cenveo's plan to acquire Cadmus. Ratings for Cadmus remain on review for downgrade; Moody's will withdraw Cadmus ratings upon close of the proposed transaction and repayment of existing Cadmus debt. The B1 corporate family rating incorporates high financial risk of the combined entity, industry concerns, and Cenveo's acquisitive management. However, the successful track record of cost reduction, good liquidity and a modestly improved business profile pro forma for the acquisition support the rating. Furthermore, Moody's believes the proposed credit agreement will curtail incremental sizeable acquisitions over the intermediate term, until Cenveo's leverage has declined. The negative outlook incorporates the potential for continued debt-financed acquisitions and Moody's concerns that Cenveo may be unable to translate its margin improvements into positive free cash flow. Historically, high cash restructuring costs and negative working capital movements have delayed the expected transition to free cash flow. The outlook would likely revert to stable with a clear trajectory toward sustained positive free cash flow and a less acquisitive track record. The rating anticipates continued moderate sized, leverage accretive acquisitions. Such acquisitions would not necessarily constrain Cenveo from achieving a stable outlook, provided integration necessitated limited cash restructuring and the acquired entities contributed positive cash flow. The pace, number, and magnitude of future acquisitions will continue to influence the rating. These are the rating actions: * Cenveo Corporation -- Corporate Family Rating, Confirmed at B1; -- Senior Secured Bank Credit Facility, Assigned Ba3, LGD3, 35%; -- Senior Subordinated Notes, Confirmed at B3, LGD 5, 87%; -- Senior Unsecured Notes, Confirmed at B2, LGD 5, 73%; and -- Outlook, Changed To Negative From Rating Under Review Headquartered in Stamford, Connecticut, Cenveo Corporation is a leading provider of envelopes, offset and digital printing services, and printed office products with annual revenue of approximately $1.6 billion. Headquartered in Richmond, Virginia, Cadmus Communications Corporation provides end-to-end integrated graphic communications and content processing services to professional publishers, not- for-profit societies, and corporations. Its annual revenue is approximately $450 million. CERES CHRISTIAN: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Ceres Christian Terrace 1859 Richard Way Ceres, CA 95307 Bankruptcy Case No.: 07-90149 Chapter 11 Petition Date: February 13, 2007 Court: Eastern District of California (Modesto) Judge: Robert S. Bardwil Debtor's Counsel: David C. Johnston, Esq. 1020 15th Street, Suite 10 Modesto, CA 95354-1132 Tel: (209) 578-9009 Fax: (209) 578-5909 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. CLAYMONT STEEL: Prices Private Offering of $105 Mil. Senior Notes ----------------------------------------------------------------- Claymont Steel Inc., a wholly owned subsidiary of Claymont Steel Holdings Inc., has priced its private offering of $105 million aggregate principal amount of senior notes due 2015 at an annual interest rate of 8.875%. The Notes offering was part of a refinancing of the company's existing debt. The company intended to use the net proceeds of both the Notes offering and its new $80 million senior secured revolving credit facility to redeem the company's outstanding senior secured floating rate notes due 2010, redeemable at 103% of the outstanding principal amount thereof, plus payment of accrued and unpaid interest. The aggregate redemption price of the notes on Feb. 28, 2007 would be $186.2 million. Upon completion of the refinancing and the redemption of the existing senior notes, the company expected its annual interest expense to be reduced by $8 million. About Claymont Steel Headquartered in Claymont, Delaware, Claymont Steel Inc. (Nasdaq:PLTE) -- http://www.claymontsteel.com/-- manufactures and sells custom discrete steel plate in North America. The company sells to end-users in the bridge making, ship building, heavy equipment, railcars, and tool and die industries. Rolling capacity at the Claymont mill is approximately 500,000 tons per year. * * * Claymont Steel Inc.'s 8-7/8% Senior Notes due 2015 carry Moody's Investors Service's B3 rating and Standard & Poor's CCC+ rating. CMS ENERGY: Pending Asset Sales Cue S&P's BB Corp. Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit ratings on CMS Energy Corp. and its main subsidiary, Consumers Energy Co., on CreditWatch with positive implications. The rating action follows a series of steps that CMS has implemented to strengthen credit quality, including the sale of Panhandle Eastern Pipeline in 2003, the suspension of its common dividend in 2003, and pending asset sales for more than $1 billion. "These actions are consistent with CMS' strategy to focus on North American properties, primarily its Consumers Energy utility," said Standard & Poor's credit analyst Ralph A. DeCesare, CFA. Expected proceeds from the reported sales of noncore assets will help pay down parent company debt and improve overall credit metrics. Standard & Poor's intends to resolve the CreditWatch listing after examining CMS' business plan in further detail, particularly its focus on core utility Consumers Energy, the size of and commitment to any noncore investments, and its financial structure going forward. CNET NETWORKS: Debt Payment Prompts S&P to Withdraw Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services removed its 'CCC+' corporate credit and other ratings on CNET Networks Inc. from CreditWatch where they had been placed with developing implications on Oct. 20, 2006. Standard & Poor's then withdrew its ratings. The actions were taken after the company repaid its $125 million 0.75% senior convertible notes due 2024 using cash on hand and bank debt. Bond trustees had accelerated the maturity on the convertible notes because CNET failed to file its quarterly reports with the SEC. CNET NETWORKS: Files Amended 2005 Annual Report with SEC --------------------------------------------------------- CNET Networks Inc. has filed with the United States Securities and Exchange Commission an amended annual report on Form 10-K/A for the year ended Dec. 31, 2005. The company amended its Annual Report for the year ended Dec. 31, 2005, as filed on March 16, 2006, to restate its consolidated financial statements for the years ended Dec. 31, 2005, 2004 and 2003 and the related disclosures. The amended Annual Report also includes the restatement of selected consolidated financial data as of and for the years ended Dec. 31, 2005, 2004, 2003, 2002 and 2001, and the unaudited quarterly financial data for each of the quarters in the years ended Dec. 31, 2005 and 2004. The company's decision to restate its financial results was based on the results of an independent review of its stock option accounting that was conducted under the direction of a special committee of the Board of Directors established in May 2006. The corrections to the accounting for non-cash stock compensation expense for stock options resulted in a reduction in previously reported income before income taxes of $6.3 million and $9.0 million for the years ended Dec. 31, 2005 and 2004, respectively. The corrections to the accounting for non-cash stock compensation expense for stock options resulted in an increase in the loss before income taxes of $8.1 million, $22.6 million and $18.4 million for the years ended Dec. 31, 2003, 2002 and 2001, respectively. In connection with the restatement of stock compensation expense, the company is also restating the pro forma disclosures for stock compensation expense required under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation. In connection with the restatement, the company has made certain additional adjustments to its historical consolidated financial statements. These items were not previously recorded because in each case, and in the aggregate, the underlying errors were not considered material to our consolidated financial statements. The adjustments consisted of: reclassifications of certain foreign transactional taxes on the company's consolidated statements of operations and other tax reclassifications on its consolidated balance sheets; and other adjustments to operating expenses for previously known errors and corrections to its provision for income tax resulting from computational errors. The adjustments resulted in reductions to previously reported income before income taxes of $1.7 million and $0.6 million for the years ended Dec. 31, 2005 and 2004, respectively, and in reductions to previously reported loss before income taxes of $0.2 million and $0.4 million for the years ended Dec. 31, 2003, and 2002, respectively. The effect of these adjustments on previously reported loss before income taxes for the year ended Dec. 31, 2001 was negligible. Restated Results For the year ended Dec. 31, 2005, CNET Networks' net income rose to $19,583,000 from net income of $1,839,000 in the prior year. Total revenues for the period also increased to $354,209,000 from total revenues of $291,967,000 in the year ended Dec. 31, 2004. The company's balance sheet at Dec. 31, 2005, showed total assets of $455,566,000, total liabilities of $203,030,000, and total stockholders' equity of $252,536,000. Full-text copies of the company's restated financial statements for the year ended Dec. 31, 2005, are available for free at: http://researcharchives.com/t/s?19cc About CNET Networks Inc. Headquartered in San Francisco, Calif., CNET Networks Inc. (Nasdaq: CNET) -- http://www.cnetnetworks.com/-- is an interactive media company that builds brands for people and the things they are passionate about, such as gaming, music, entertainment, technology, business, food, and parenting. The Company's leading brands include CNET, GameSpot, TV.com, MP3.com, Webshots, CHOW, ZDNet and TechRepublic. Founded in 1993, CNET Networks has a strong presence in the US, Asia and Europe including Russia, Germany, Switzerland, France and the United Kingdom. * * * On Oct. 23, 2006, Standard & Poor's Ratings Services lowered its ratings on CNET Networks Inc., including lowering the corporate credit rating to 'CCC+' from 'B', and placed the ratings on CreditWatch with developing implications. COLLINS & AIKMAN: Judge Rhodes Okays Beringea as Investment Banker ------------------------------------------------------------------ The Honorable Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan authorized Collins & Aikman Corp. and its debtor-affiliates to employ Beringea LLC as investment banker, nunc pro tunc to Dec. 8, 2006. Notwithstanding anything to the contrary in the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, any Court orders or guidelines regarding submission and approval of fee applications, Beringea is not required to maintain time records for services rendered. The Troubled Company Reporter on Feb. 8, 2007, relates that as part of the Debtors' sale process, Beringea will assist in marketing and selling different and unrelated assets in the Plastics business. Beringea will handle the plants located in Evart, Michigan; Windsor, Ontario; Belvidere, Illinois; St. Louis, Missouri; and Mississuaga, Ontario. Specifically, Beringea will: -- conduct sell-side due diligence on their assigned plants; -- determine the fair market value of the Plants; -- organize a data room, virtual or otherwise; -- coordinate acquirer due diligence; -- negotiate a stalking horse bid, if appropriate; -- assist in the preparation of management presentations; -- identify prospective parties to a transaction; -- prepare information on the plastics businesses; -- assist in conducting auctions of the Plastics businesses; -- disseminate information to prospects; and -- provide testimony at hearings, as requested. Beringea and the Debtors had agreed, in an engagement letter, to a five-month term, wherein each party may terminate the Agreement by giving a 15-day prior written notice. The Debtors will pay Beringea non-refundable $68,500 cash advisory fee upon signature of the Agreement; and $65,000 monthly fee, the first payment due on Jan. 8, 2007, and on the eighth day of each succeeding month. Beringea will be reimbursed for its out-of-pocket expenses. If the Debtors concluded a transaction during the term of the engagement, or Beringea advised the Debtors with respect to an offer, agreement, commitment or letter of intent with a potential buyer during the term that leads to a concluded transaction with the potential buyer within six months of the termination of the Agreement, the Debtors will compensate Beringea with a transaction fee paid on or before closing of a transaction. Consideration for separate transactions will be accumulated for purposes of determining the applicable percentage. Transaction fees for an individual transaction will be based on the applicable percentage for the incremental consideration added to the accumulated sum by virtue of the individual transaction. Cumulative Consideration Applicable % ------------------------ ------------ Less than or equal to $10,000,000 3.50% More than $10,000,000 1.00% If transaction fees are due, the aggregate sum of the transaction fees should not be less than $350,000. Beringea will credit all non-refundable cash advisory fees to reduce any transaction fees payable. Kevin M. Heckman, a member of the firm, informed the Court that the Beringea does not hold or represent any adverse interest to the Debtors' estates. The firm has connections and relationships with potential parties-in-interest that includes Huron Valley Steel Corp., ArvinMeritor, Inc., and Clarion Technologies Inc. A Beringea employee is also the spouse of Collins & Aikman Corp.'s director of International Taxation and an officer of one of the Debtors. Beringea do not believe that the connections create a conflict of interest regarding the Debtors in their Chapter 11 cases. Mr. Heckman added that certain Beringea employees may have business associations with certain potential parties-in-interest. Beringea has not and will not represent the interests of these clients in the Debtors' Chapter 11 cases, Mr. Heckman assured the Court. Mr. Heckman attested that Beringea is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants to Take Part in Pine River's DIP Facility ----------------------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to be a participating customer in the debtor-in- possession financing facility of Pine River Plastics Inc., and to enter into a subordinated participation agreement and inter- customer agreement. Before filing for bankruptcy, Pine River Plastics supplied automotive parts to the Debtors for incorporation in the end- production of various automobiles manufactured by certain of the Debtors' major original-equipment-maker customers, including DaimlerChrysler Corp. and General Motors Corp. Pine River is a critical supplier of the Debtors; it supplies the automotive parts on a just-in-time basis. Pine River sought Chapter 11 protection on Feb. 1, 2007, presently pending before Judge Phillip J. Shefferly in the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division. To fund its postpetition operations, Pine River has entered into a debtor-in-possession credit facility with PNC Bank, N.A. As a condition to obtaining the DIP Financing Facility, certain customers, each representing over 5% of Pine River's annual business, including the Debtors, were required to participate in the DIP Financing Facility, and, inter alia, enter into the subordinated participation agreement. Patrick J. Kukla, Esq., at Carson Fischer, P.L.C., in Bloomfield Hills, Michigan, tells the Court that if the Debtors do not participate and enter into the Subordinated Participation Agreement and a related inter-customer agreement, Pine River will cease to produce automotive parts for the Debtors. The Debtors' estates could incur substantial damage claims from DCC and GM, he warns. In consideration of the Debtors' agreement to participate and enter into the two agreements, Pine River and its Lender agreed to enter into an access agreement, which provides the Debtors, and the other participating Customers, with the right to access Pine River's facility, if Pine River defaults, to ensure production of the automotive parts. A copy of the Access Agreement is available for free at: http://ResearchArchives.com/t/s?19c8 By participating in the DIP Financing Facility, the Debtors agree to provide certain credit enhancements: (a) reconciliation and payment of net prepetition accounts and an agreement not to assert consequential damages with respect to prepetition accounts; (b) a limitation of set-offs against prepetition and postpetition accounts; (c) an agreement to purchase inventory if certain events occur; (d) a change of postpetition payment terms to net seven days or equivalent expedited basis; and (e) an agreement not to resource production until Feb. 23, 2007. Under the Subordinated Participation Agreement, the Debtors agree to purchase from Lender subordinated participations in the DIP Financing Facility, which will be made available to Pine River as incremental overformula advances. The significant terms of the Subordinated Participation Agreement include: -- The participations will be purchased and owned as determined by the Intercustomer Agreement; and -- Unless and until the Lender's portion of the DIP loans have been repaid in full; all other costs, expenses and obligations of Pine River to the Lender have been repaid in full; and the Lender's commitment have been terminated, the Participating Customers will set off or recoup any amounts owed by Pine River to them on account of the participations against any amounts owed by the Participating Customers to Pine River. A copy of the Subordinated Participation Agreement is available for free at http://ResearchArchives.com/t/s?19c9 The terms of the Inter-customer Agreement are: (x) Each Participating Customer will give at least seven days' prior written notice to the other Participating Customers of the dates on which its parts production program will be resourced to a new supplier, and on which the resourcing activities will substantially complete; (y) For the period before completion of their resourcing, the Debtors agree to fund 17.7% of Pine River's out-of-formula Financing needs (less the $1,400,000 to be funded by Pine River's Lender) arising under its DIP Loans; and (z) After the Debtors' resourcing is completed, they will fund all incremental, identifiable labor cots of Pine River incurred after resourcing related to the removal of the Debtors' tooling and inventory. A copy of the Intercustomer Agreement is available for free at: http://ResearchArchives.com/t/s?19ca The Debtors are to be compensated for the Debtors' financial contributions under the DIP Financing Facility and Subordinated Participation Agreement, and Intercustomer Agreement, by DCC and GM in accordance with the Customer Agreement and corresponding protocol previously approved by the Court. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMMUNICATION INTELLIGENCE: Secures $600K Second Credit Facility ---------------------------------------------------------------- Communication Intelligence Corp. has established a second credit facility with the same shareholder that provided the credit facility it announced on Aug. 14, 2006. The new facility, as with the prior one, was established pursuant to a note and warrant purchase agreement. The terms of the agreement allow the company to borrow, on demand, through March 31 2007, an aggregate principal amount of up to $600,000. Upon each draw, the company will be required to issue warrants to purchase a pro rata number of shares of its common stock, with a maximum number of 3,111,000 to be issued if the entire $600,000 is drawn. The notes will bear interest at the rate of 15% per annum payable quarterly in cash. The warrants will have a three-year life and an exercise price of $0.51. In the event the facility is not fully drawn, the company will issue to the investor, as a standby commitment fee, a pro rata portion of 250,000 shares of the company's common stock, based upon the amount not drawn relative to the maximum amount available under the facility. The warrants will include piggyback registration rights, for the underlying shares, to participate in certain future registrations of the company's common stock. The company has fully drawn the $600,000 available on the first credit facility. "We decided to draw on the first facility prior to its expiration and to establish a new facility in order to ensure a stable transition to market take-off and self-funding operations," Guido DiGregorio, CIC's Chairman & CEO, stated. "I anticipate that 2007 is the year that the eSignature market will transition from a developing market to a market in take-off. I believe orders and commitments in late November and December of 2006 represent breakthrough milestones that will ultimately lead to accelerating and sustained sales growth. "Although virtually none of these yearend wins were revenue recognizable in the fourth quarter, they appear to indicate that the market take-off we have been pursuing for the past two years, ever since our record setting financial performance in 2004, has begun. We fully recognized, and have now fully experienced, that the process of getting into market take-off demands maintaining product leadership as the market evolves through second and then third generation products. "I believe we have maintained our product leadership and competitive positioning throughout 2006 by responding rapidly and effectively to the need for multi-modal and web based offerings and then, late last year, to a further demand for a server side signing product that pit us against competitors whose total focus is server side solutions. We responded with, and won with a fourth generation product that I believe stabilizes the product evolution issues and opens the door to sustained sales growth. We continue working with our top-tier insurance and banking early adopters, having delivered a proof of concept late last year from which we anticipate follow-on orders we have been pursuing. "In addition, we have strengthened our sales growth potential by leveraging agreements with large enterprise software solution providers. For instance, we have established and significantly enhanced our relationship and selling efforts with Adobe and its channel partners. Our partnership with Adobe, as reported in three press releases since April of 2006, that includes joint participation at trade shows and online seminars, has significantly accelerated the awareness of the benefits of our eSignature technology while leveraging joint selling efforts. "And, as previously disclosed in June of 2006, we won a license agreement with IntegraSys, a business unit of Fiserv, the $4 billion financial services solution provider that is taking credit unions paperless with our eSignature technology and we more recently announced an agreement licensing our entire suite of eSignature products to Oracle. As the largest enterprise software company in the world, we are excited about the revenue potential Oracle can provide through this relationship and possible integration of our solutions within several high volume financial services applications. "In addition, we recently signed a strategic partnership agreement with Cognizant, a leading provider of global IT software solutions with revenues of $1.4 billion, to provide complete workflow solutions for the financial services industry. We are delighted to be partnering with the #1 IT services company as ranked by Business Week." "I believe, that this credit facility achieves our objective of keeping shareholder dilution to a minimum while having sufficient cash available to ensure a stable transition to market take-off and self-funding operations," Mr. DiGregorio also stated. About CIC Based in Redwood Shores, California, Communication Intelligence Corporation (OTC Bulletin Board: CICI) -- http://www.cic.com/-- supplies electronic signature solutions for business process automation in the Financial Industry and a leader in biometric signature verification. CIC's products enable companies to achieve paperless workflow in their eBusiness processes by enabling them with "The Power to Sign Online(R)" with multiple signature technologies across virtually all applications. Industry leaders such as AIG, Charles Schwab, Prudential, Nationwide (UK) and Wells Fargo chose CIC's products to meet their needs. CIC sells directly to enterprises and through system integrators, channel partners and OEMs. Going Concern Doubt As reported in the Troubled Company Reporter on Nov. 29, 2006, Stonefield Josephson, Inc., expressed substantial doubt about Communication Intelligence's ability to continue as a going concern after it audited the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the company's significant recurring operating losses and accumulated deficit. COMVERSE TECHNOLOGY: CEO Zeev Bregman Will Resign on March 31 ------------------------------------------------------------- Zeev Bregman, the chief executive officer of Comverse Inc., a subsidiary of Comverse Technology Inc., has decided to leave the company on March 31, 2007. Yaron Tchwella, the President of Comverse Inc.'s InSight Open Services Environment (Messaging) Group and a 10-year veteran of the company, has been named president and will lead Comverse Inc. after Mr. Bregman's departure. Mr. Bregman will work closely with Mr. Tchwella and Comverse Technology's Board of Directors to ensure a smooth transition. Yaron Tchwella is a member of Comverse, Inc.'s Senior Management team who began his tenure at Comverse, Inc. in 1997, and who has held several senior management and product development positions. In 2000, he was assigned to establish Comverse, Inc.'s U.S. Research & Development center, and in 2001 was named Vice President of Professional Services, Americas. In 2002, he was named Vice President and General Manager of Comverse Americas Services, where he was responsible for product development, delivery and customer service in Comverse Americas. He became President of Comverse, Inc.'s entire messaging business in 2003. "Zeev has led a fundamental transformation of Comverse, Inc. -- steering it through the telecom crisis, significantly increasing revenues and building it from a narrowly focused voice mail business into a market leading, diversified communications software company," Mark C. Terrell, Chairman of Comverse Technology's Board stated. "Comverse, Inc. has become a truly global company, with a greatly expanded customer base and a well earned reputation for bold technological innovations. While we will certainly miss him, we respect his decision to leave the company and thank him for his years of dedicated service." "After nearly 20 years with Comverse, Inc. -- including more than six years as CEO -- I have decided to leave the company to explore other opportunities, as well as to spend more time with my family," Mr. Bregman commented. "I have enormous confidence in our employees and our management team, and in the expertise of our new Board of Directors. I look forward to working with Yaron and everyone else involved to ensure that this transition takes place smoothly, with no effect on our services to customers or our intense focus on delivering value to our investors. The best interests of the company remain my first priority." "We are pleased that Yaron Tchwella has agreed to lead Comverse, Inc.'s business," Mr. Terrell also said. "Yaron is a talented, experienced executive with a strong track record of success, deep knowledge of our operations, products and customers and a thorough understanding of the challenges resulting from changing industry dynamics." CEO Search The Comverse Technology Board recently launched a search for a new Chief Executive Officer, who will be responsible for the strategy of Comverse Technology and the performance of its operations. "The Comverse Technology Board is moving systematically to put new leadership in place and to assess corporate structure and opportunities," Mr. Terrell said. "The new CEO will work with the Board in its ongoing review of Comverse Technology's businesses and areas of competitive opportunity and to effect strategies that serve the interests of investors, customers and employees." About Comverse Technology Headquartered in New York City, Comverse Technology, Inc. (NASDAQ: CMVT) -- http://www.comverse.com/-- through its Comverse, Inc. subsidiary, provides software and systems enabling network-based multimedia enhanced communication and billing services. The company's Total Communication portfolio includes value-added messaging, personalized data and content-based services, and real- time converged billing solutions. Over 450 communication and content service providers in more than 120 countries use Comverse products to generate revenues, strengthen customer loyalty and improve operational efficiency. Other Comverse Technology subsidiaries include: Verint Systems (NASDAQ: VRNT), which provides analytic software-based solutions for communications interception, networked video security and business intelligence; and Ulticom (NASDAQ: ULCM), which provides of service enabling signaling software for wireline, wireless and Internet communications. * * * As reported in the Troubled Company Reporter on Feb. 5, 2007, Standard & Poor's Ratings Services kept its 'BB-' corporate credit and senior unsecured debt ratings on New York-based Comverse Technology Inc. on CreditWatch with negative implications, where they were placed on March 15, 2006. COMVERSE TECH: To Buy $293 Mil. Pref. Stock from Verint Systems --------------------------------------------------------------- Comverse Technology Inc. agreed to purchase up to $293 million in perpetual preferred stock from its majority-owned Verint Systems Inc. subsidiary, in order to finance, in part, Verint's planned acquisition of Witness Systems for $27.50 per share, as disclosed by Verint on Feb. 12, 2007. "This investment advances the Comverse Technology Board's goal of maximizing value for shareholders, while preserving the company's flexibility on future choices regarding all of its assets," Mark C. Terrell, Chairman of Comverse Technology's Board of Directors stated. "It is consistent with the Board's ongoing review of Comverse Technology's businesses, corporate structure and areas of competitive opportunity, and underscores the Board's commitment to enhancing, preserving and unlocking the value of all of its businesses and investments. As Verint's majority shareholder, we recognize and support the value creation potential of Verint's strategic acquisition of Witness Systems. Comverse Technology's financial support of the transaction will help facilitate a powerful combination, with significant synergies and increased opportunities for growth." Verint Systems is a provider of analytic software-based solutions for security and business intelligence, and Witness Systems is a provider of workforce optimization software and services. The convergence of Witness' workforce optimization and Verint's actionable intelligence will create a broad portfolio of contact center and enterprise performance solutions, delivering a compelling new vision for the customer-centric enterprise. The preferred stock investment, which will pay an initial dividend of 4.25 per annum, subject to certain adjustments, can be offered for resale should Comverse Technology so desire. It will be convertible into Verint common stock, following a vote of Verint's shareholders to authorize issuance of underlying common shares, at a 12.5% premium to the weighted average price of Verint's shares during the 25 days prior to closing. Comverse Technology's preferred stock investment in Verint is subject to certain closing conditions. Deutsche Bank Securities served as exclusive financial advisor to Comverse Technology in connection with this transaction. Headquartered in New York City, Comverse Technology, Inc. (NASDAQ: CMVT) -- http://www.comverse.com/-- through its Comverse, Inc. subsidiary, provides software and systems enabling network-based multimedia enhanced communication and billing services. The company's Total Communication portfolio includes value-added messaging, personalized data and content-based services, and real- time converged billing solutions. Over 450 communication and content service providers in more than 120 countries use Comverse products to generate revenues, strengthen customer loyalty and improve operational efficiency. Other Comverse Technology subsidiaries include: Verint Systems (NASDAQ: VRNT), which provides analytic software-based solutions for communications interception, networked video security and business intelligence; and Ulticom (NASDAQ: ULCM), which provides of service enabling signaling software for wireline, wireless and Internet communications. * * * As reported in the Troubled Company Reporter on Feb. 5, 2007, Standard & Poor's Ratings Services kept its 'BB-' corporate credit and senior unsecured debt ratings on New York-based Comverse Technology Inc. on CreditWatch with negative implications, where they were placed on March 15, 2006. CP THOMAS: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: CP Charles Thomas II 3769 Camino Cermenon Yorba Linda, CA 92886 Bankruptcy Case No.: 07-10399 Type of Business: The Debtor is the chief auditor at Thomas & Associates Inv. Inc., which is located in Beverly Hills, Calif. He has been employed in that company for six years. Chapter 11 Petition Date: February 12, 2007 Court: Central District Of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Michael G. Spector, Esq. Law Offices of Michael G. Spector 2677 North Main Street, Suite 320 Santa Ana, CA 92705 Tel: (714) 835-3130 Fax: (714) 558-7435 Total Assets: $2,172,050 Total Debts: $1,236,549 The Debtor has no unsecured creditors who are not insiders. CRT LAND: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: CRT Land Company Inc. 6200 Lake Ming Road, Suite C-2 Bakersfield, CA 93306 Bankruptcy Case No.: 07-10401 Type of Business: The Debtor develops real estate. Chapter 11 Petition Date: February 13, 2007 Court: Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: D. Max Gardner, Esq. Young Wooldridge, LLP 1800 30th Street, 4th Floor Bakersfield, CA 93301-5298 Tel: (661) 327-9661 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. CSK AUTO: Asks NYSE to Extend Deadline to File Annual Report ------------------------------------------------------------ CSK Auto Corporation has submitted a request to the New York Stock Exchange for an additional one-month extension to file its 2005 Annual Report on Form 10-K for its fiscal year ended Jan. 29, 2006. On November 2006, the Exchange had granted the company a four-month extension until Feb. 28, 2007, to file its 2005 Form 10-K with the Securities and Exchange Commission. Although the company has made substantial progress in its restatement, CSK Auto is seeking the additional one-month extension in order to complete its restatement process. The company will communicate the decision of the Exchange as soon as practicable. CSK Auto is in the process of restating its financial statements for each of the two fiscal years 2003 and 2004, selected consolidated financial data for each of the four fiscal years 2001 through 2004 and interim financial information for each of its quarters in fiscal year 2005. These restatements are being made to reflect matters reviewed in the course of an Audit Committee- led investigation of accounting practices and the resulting adjustments to prior period financial statements. Based in Phoenix, Arizona, CSK Auto Corporation (NYSE: CAO) -- http://www.cskauto.com/-- is the parent company of CSK Auto, Inc., a specialty retailer in the automotive aftermarket. As of Jan. 29, 2006, the Company operated 1,273 stores in 22 states under the brand names Checker Auto Parts, Schuck's Auto Supply, Kragen Auto Parts and Murray's Discount Auto Parts. * * * As reported in the Troubled Company Reporter on Oct. 26, 2006, in connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. and Canadian retail sector, the rating agency confirmed its B1 Corporate Family Rating for CSK Auto Corporation. DANA CORP: Unions Fight Proposed Management Restructuring Payments ------------------------------------------------------------------ The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL- CIO, CLC, ask the U.S. Bankruptcy Court for the Southern District of New York to approve the Unions Advisors Agreement and deny approval of the Management Restructuring Payments. The Unions point out that the Debtors combined two separate, unrelated requests into one motion. As reported in the Troubled Company Reporter on Feb. 7, 2007, the Debtors asked the Court to: (a) extend the Divestiture Order to include the Restructuring Agreements; and (b) allow them to make payments to individuals who may be "managers" or "consultants" as defined in Section 503(c)(3). The Debtors also sought authority from the Court to pay reasonable fees and out-of-pocket expenses of the Unions' Advisors, subject to: (a) a cap of $1,000,000 for fees and $100,000 for expenses; (b) the terms under the Union Letter Agreement; and (c) certain advisor payment procedures. The two requests have nothing to do with each other, Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon, LLP, in New York, contends. "The Debtors' consolidated motion is unfortunate to the extent that it imparts any suggestion that the Union Advisors Agreement is related to the proposed Management Restructuring Payments, which it is not." The Unions support approval of the Union Advisors Agreement. The Unions, however, oppose approval of the proposed Management Restructuring Payments. The Debtors have proposed to pay up to $3,500,000 for their managers and consultants. Ms. Ceccotti asserts that the Debtors have ignored the potential consequences of implementing a payment program for a select group of their employees while seeking Section 1113/1114 remedies aimed squarely at the hourly employees and retirees. The potential harm to employee morale and the ability to conduct an orderly wind-down of the businesses militate strongly against approval of the proposed pay-out program, Ms. Ceccotti emphasizes. Moreover, Ms. Ceccotti points out, the Debtors' proposal is remarkably short on details, which leaves the Court with little basis to determine whether the program is otherwise reasonable. The Debtors also failed to explain how they determined that $3,500,000 was an appropriate amount or provide any details concerning how individual payments would be determined. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Unions Want Engine Biz Sale Approval to MAHLE Deferred ----------------------------------------------------------------- The United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Industrial and Service Workers International Union and International Union, United Automobile, Aerospace and Agricultural Implement Workers of America do not oppose a going- concern sale of Dana Corp. and its debtor-affiliates' engine products business to MAHLE GmbH. They, however, ask the U.S. Bankruptcy Court for the Southern District of New York to withhold approval of the proposed sale pending discussions with MAHLE regarding its assumption of the collective bargaining agreements, including the retiree benefits obligations. The Unions also ask the Court to direct the Debtors to promptly provide relevant information concerning the precise costs of the retiree health and life insurance obligations for those who would be excluded under the asset purchase agreement as currently drafted. The Unions have previously asked the Debtors to let any prospective buyers bargain over any proposed changes of the collective bargaining agreements to be affected by the sale of the Engine Products Business. Unfortunately, no substantive discussions regarding the assumption of the CBAs or the issue of retiree benefit obligations pursuant to the sale of the Engine Products Business have transpired, Babette A. Ceccotti, Esq., at Cohen, Weiss and Simon, LLP, in New York, tells the Court. The Unions maintain that the Asset Purchase Agreement between the Debtors and MAHLE GmbH did not meet the requirements of their CBAs. Ms. Ceccotti says that under federal labor law, the Debtors have an obligation to bargain with the Unions in a meaningful manner and at a meaningful time over any changes to their CBAs. The Unions object to the designation of $0 as cure amount for the CBAs governing employees at the Debtors' facilities in Caldwell, Ohio; Muskegon, Michigan; and Franklin, Kentucky. Ms. Ceccotti says the Debtors have outstanding obligations of: -- not less than $75,300 under the Caldwell CBA; -- not less than $13,200 for the Muskegon CBA; -- at least $3,000 under the Muskegon CBA for unpaid early retirement match payments to certain UAW-represented individuals under the Dana Employees' Stock Purchase Program; and -- cure costs for the monetary obligations for life insurance benefits and the Muskegon individual retiree accounts for those retirees the APA purports to exclude from the assumption of liabilities in light of a breach of the CBAs. Lexington Responds Lexington Olive Branch, LLC, leases to the Debtors premises located at 7670 Hacks Cross Road, in Olive Branch, Mississippi. The term of the Lease will expire in February 2016. In December 2006, the Debtors proposed to sell their Engine Products Group to MAHLE GmbH. Among the assets to be transferred by the Debtors, as part of the proposed sale, is their Lease with Lexington. Having assumed the Lease, the Debtors are authorized to assign the Lease to any party after providing adequate assurance of future performance by the assignee, Harvey Strickon, Esq., at Paul, Hastings, Janofsky & Walker, LLP, in New York, relates. Lexington has reviewed MAHLE's publicly available financial statements and is satisfied that MAHLE, as an assignee of the Lease, has the financial capability for future performance under the Lease, Mr. Strickon says. Lexington, however, objects to the assignment of the Lease to any entity other than MAHLE. Should the Debtors seek to assign the Lease to any entity other than MAHLE, Lexington asks that it be provided with sufficient financial information for it to evaluate that assignee's credit worthiness and ability to perform under the Lease before the Court approves any assignment. About Dana Corp. Toledo, Ohio-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Sept. 30, 2005, the Debtors listed $7,900,000,000 in total assets and $6,800,000,000 in total debts. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors' exclusive period to file a plan expires on Sept. 3, 2007. They have until Nov. 2, 2007, to solicit acceptances of that plan. (Dana Corporation Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DAVITA INC: Intends to Offer $400 Million Senior Notes ------------------------------------------------------ DaVita Inc. intends to offer $400 million aggregate principal amount of senior notes due in 2013. The senior notes are part of the same series of debt securities as the $500 million aggregate principal amount of 6-5/8% senior notes that were issued in March 2005. The private offering, which is subject to market and other conditions, will be made within the United States only to qualified institutional buyers, and outside the U.S. only to non-U.S. investors under regulation S of the Securities Act of 1933. The company intends to use the net proceeds of the offering to repay a portion of outstanding amounts under the term loan portion of its senior secured credit facilities. Headquartered in El Segundo, California, DaVita Inc. (NYSE: DVA) is a leading provider of dialysis services for patients suffering from chronic kidney failure. The company provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 41 states, as well as Washington, D.C. As of March 31, 2006, DaVita operated or managed over 1,200 outpatient facilities serving approximately 98,000 patients * * * On Nov. 11, 2006, Moody's Investors Service affirmed the company's senior secured revolving credit facility due 2011 at Ba2; senior secured term loan A at Ba2; and senior secured term loan B at Ba2. The ratings outlook changed to positive from stable DAVITA INC: Wants to Amend and Restate Senior Secured Credit Loan ----------------------------------------------------------------- DaVita Inc. is seeking an amendment and restatement to its existing Senior Secured Credit Facilities primarily to reduce the margin over LIBOR that the company pays as interest under the existing Term Loan B. The outstanding balances on the Senior Secured Term Loan A and Senior Secured Term Loan B are approximately $279 million and $2,106 million, respectively. The company also reaffirms its operating income guidance for 2006 of $690-$700 million, excluding the valuation gain on the Alliance and Product Supply Agreement with Gambro Renal Products Inc. Headquartered in El Segundo, California, DaVita Inc. (NYSE: DVA) is a leading provider of dialysis services for patients suffering from chronic kidney failure. The Company provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 41 states, as well as Washington, D.C. As of March 31, 2006, DaVita operated or managed over 1,200 outpatient facilities serving approximately 98,000 patients * * * On Nov. 11, 2006, Moody's Investors Service affirmed the company's senior secured revolving credit facility due 2011 at Ba2; senior secured term loan A at Ba2; and senior secured term loan B at Ba2. The ratings outlook changed to positive from stable DESTINY ENTERPRISES: Case Summary and Largest Unsecured Creditor ---------------------------------------------------------------- Debtor: Destiny Enterprises, LLC 7220 East Mary Sharon Drive Unit 148 Scottsdale, AZ 85262 Bankruptcy Case No.: 07-00542 Type of Business: The Debtor's affiliate, Sunrise International LLC, filed for chapter 11 protection on May 24, 2005 (Bankr. D. Ariz. Case No. 05-09335). Another of its affiliate, Destiny Opportunities Inc., filed for chapter 11 protection on March 9, 2006 (Bankr. D. Ariz. Case No. 06- 00593). Chapter 11 Petition Date: February 12, 2007 Court: District of Arizona (Phoenix) Debtor's Counsel: Jon S. Musial, Esq. Law Office of Jon S. Musial 8230 East Gray Road Scottsdale, AZ 85260 Tel: (480) 951-0669 Fax: (602) 922-0653 Total Assets: $6,545,100 Total Debts: $5,627,328 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Greenburg Traurig LLC Guaranty $40,000 2375 East Camelback Road Suite 700 Phoenix, AZ 85016 DURA AUTOMOTIVE: Panel Wants Bennett as Special Canadian Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Dura Automotive Systems Inc. and its debtor-affiliates' bankruptcy cases seeks authority from the U.S. Bankruptcy Court for the District of Delaware to retain Bennett Jones LLP as its special Canadian counsel, effective as of Jan. 18, 2007. Nick Walsh, Chairman of the Creditors Committee, tells the Court that Bennett Jones was selected because its Bankruptcy and Restructuring Department has extensive experience in the fields of bankruptcy and creditors' rights under Canadian insolvency law. In addition to acting as counsel for significant parties-in- interest in Canadian restructuring cases including Stelco Inc, Canada's largest steel company; Doman Industries; and AT&T Canada, Bennett Jones has also substantial experience in Canada/U.S. cross-border cases including Laidlaw Inc., Pioneer Chemicals, Mirant Energy, General Chemical Industrial Products and Teleglobe Inc. The Creditors Committee has engaged Bennett Jones to perform a review of certain security interest in collateral located in Canada in respect of a Fifth Amended and Restated Credit Agreement, dated May 3, 2005, among Dura Automotive Systems, Inc., as parent guarantor; the subsidiary guarantors party thereto, Dura Operating Corp., as borrower; Dura Automotive Systems (Canada), Ltd., as borrower; Bank of America, N.A., as collateral agent and syndication agent; and JPMorgan Chase Bank, N.A., as administrative agent. The Creditors Committee will also rely on Bennett Jones, to the extent necessary, for counsel with respect to other Canadian legal issues. As special Canadian counsel, Bennett Jones will be paid on an hourly basis, based on its customary billing rates, which are subject to periodic adjustments: Profession Hourly Rate ---------- ----------- Partners $450 - $800 Associates $260 - $515 Legal Assistants $120 - $180 Bennett Jones will also be reimbursed for out-of-pocket expenses incurred in connection with the Debtors' Chapter 11 cases, including, inter alia, word processing, secretarial time, telecommunications, photocopying, postage and package delivery charges, court fees, transcript costs, travel expenses, expenses for "working meals" and computer-aided research. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Wants to Complete Key Management Incentive Plan ---------------------------------------------------------------- Dura Automotive Systems Inc. and its debtor-affiliates seek authority, pursuant to Section 363(b) and 503(c)(3) of the Bankruptcy Code, from the U.S. Bankruptcy Court for the District of Delaware to complete their Key Management Incentive Plan implemented on Aug. 21, 2006, and make all attendant payments upon notice to the counsel to: (a) the Official Committee of Unsecured Creditors; (b) their postpetition secured lenders; and (c) the ad hoc committee of certain of their prepetition second lien secured lenders. The Debtors believe that, ordinarily, an incentive program can be undertaken in the ordinary course of business without the need for any further Court approval. Nonetheless, the Debtors are mindful that, as part of a global resolution of issues among the Debtors and parties-in-interest, the Court has specifically ordered the Debtors to seek further Court order before making any payments related to a key management incentive plan. In February 2006, the Debtors and their non-debtor affiliates launched their "50 Cubed" operational restructuring plan, which is designed to enhance performance optimization, worldwide efficiency and financial results. The restructuring plan's goal is increasing profitability by 50% of its worldwide operations through either product movement or facility closures. The 50 Cubed Plan is scheduled to be completed by the end of 2007. It also included shifting certain of the company's operations to lower-cost countries so that 50% of the company's revenues would be generated by Dura Automotive Systems, Inc.'s "best-in-cost facilities," which is to result in five to 10 facilities worldwide being closed. To achieve the estimated $40,000,000 in annual savings, the 50 Cubed Plan will require certain one-time, front-end costs associated with moving entire assembly operations and associated equipment across continents. The Company's goal is to complete the transition while spending more than $100,000,000 in plant relocation costs, severance payments and capital expenditures. In early 2006, the company also knew that the 50 Cubed Plan, by itself, would not be enough to bring back to health, Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, informs the Court. The company needed to cut overhead as well. The company's senior management determined that gross profit margins could be further improved by eliminating approximately 510 salaried and hourly positions in Canada, the United States and Western Europe that were not directly involved in production. The company recently completed the 510 Program at an estimated cost of $2,800,000 in severance payments made to certain of the 513 indirect workers whose positions were eliminated by December 31, 2006. The 510 Program has eliminated approximately $26,800,000 in annual salary and wages costs. Historically, the Debtors compensated a core management team of approximately 150 key employees through salary, equity-based long-term incentive plans and an annual bonus plan. In October 2006, the Debtors cancelled their employee discount stock purchase plan and suspended their equity-based long-term incentive plan. The Debtors did not make any payments under the Annual Bonus Plan in 2006 with respect of the 2005 Plan, and will not be making any payments under that Plan until February 2008 at the earliest, Mr. Madron relates. Mr. Madron tells the Court that the virtual elimination of performance-based compensation has severely eroded the competitiveness of the Debtors and their non-debtor affiliates' compensation program. In mid-2006, the Debtors and their affiliates commissioned Hewitt Associates LLC to provide a report on the competitiveness of the salary structure. In its report, Hewitt determined that the total compensation levels for certain identified officers were approximately 24.9% below the industry average. In mid-2006 until the present, the Company needs to singularly focus its key management employees on fulfilling their goals set forth in the 50 Cubed Plan, the 510 Program and related restructuring efforts, Mr. Madron relates. Thus, the company determined that targeted financial incentives for working toward those specific goals would further motivate these key employees to complete the company's global operational restructuring on time and under budget. Accordingly, the company developed the Key Management Incentive Plan that tied highly targeted bonuses for approximately 55 key management employees who are primarily responsible for implementing the 50 Cubed Plan and the 510 Program and achieving their goals. The individual targets were set based upon a percentage of the sum of each individual's total target direct compensation. The maximum aggregate amount payable under the KMIP is approximately $6,800,000. According to Mr. Madron, the KMIP is flexible by design and does not have fixed award dates, although the performance period runs through December 31, 2007 -- the Debtors' target for the completion of the 50-Cubed Plan and the 510 Program. The flexibility is critical to maximizing the effect of the incentives on the KMIP participants, he asserts. The Compensation Committee -- a group of three independent directors who have no direct interest in the KMIP -- has the discretion to make the meaningful awards when it determines that the Company has made substantial and measurable progress in achieving, at first interim and then the final, 50 Cubed Plan and 510 Plan milestones. KMIP payments are determined by the company's progress in four specific areas: (a) Moving production for 2,000 positions to "best-in-cost" and facilities in lower-cost countries by December 31, 2007; (b) Completing the 50 Cubed Plan at or under budget of approximately $100,000,000; (c) Eliminating at least 510 indirect labor positions by December.31, 2006; (d) Achieving personal goals as set by each participant's manager in support of the above three activities. "These aggressive and well-defined metrics provide targets for KMIP participants to meet that are congruent with, and directly support achievement of, the formidable goals articulated in the Company's 50 Cubed Plan and 510 Program," Mr. Madron says. Providing those targeted incentives helps maximize the likelihood that the company will meet the restructuring goals on time and under budget. The company and the Compensation Committee purposely did not tie the KMIP incentive payments to the company's current financial performance, Mr. Madron notes. He explains that the Company's present financial condition results from a multitude of factors that were in place many months ago, most of which are macroeconomic in nature. Mr. Madron adds that tying KMIP incentives to short-term performance would ignore the fact that the company's operational restructuring is designed to spend money now to put the company on stronger financial footing for the foreseeable future. Therefore, short-term financial results are not indicative of whether management's restructuring efforts are succeeding, he asserts. Moreover, the present financial results would also eliminate the KMIP's intention, which is to further motivate KMIP participants to singularly focus on the company's operational restructuring, Mr. Madron tells the court. On Aug. 21, 2006, the board of directors approved, and the company implemented, the KMIP. On Sept. 29, 2006, the Debtors made their first payments to participants, in the aggregate amount of $952,480, or 14.4% of the total KMIP goals on a weighted basis. Mr. Madron informs the Court that the commencement of the Debtors' Chapter 11 cases has not altered: -- the Company's need to complete its operational restructuring on time and under budget; -- the need to singularly focus key employees on the task at hand. Since the Debtors' bankruptcy filing, management has remained motivated, and the company has continued to move down the path to success, Mr. Madron says. "The Debtors cannot afford to allow this momentum to slacken." Thus, on Jan. 18, 2007, the Compensation Committee approved a further award of 16.9% of the $6,800,000 award pool based upon achievements in the four KMIP metrics as of December 31, 2006. The Compensation Committee took this action at year-end largely in light of the company's highly successful, and ahead-of- schedule, completion of the 510 Program. In addition to completing the 510 Program, the company had also made substantial progress in its goal of completing the 50 Cubed Plan on time, and under budget, before year's end. In particular, as of Dec. 31, 2006, production based upon 823 positions in Canada, the United States and Western Europe had been shifted to LCC facilities in Eastern Europe and Mexico, and "best in cost" facilities in the United States and Canada. For award purposes, the company considered only the production shifted to LCC facilities, or approximately 740 positions. Production shifts related to 83 positions from donor facilities to "best in cost" facilities within Canada and the United States were not taken into account for purposes of determining the KMIP interim milestone accomplishments. As with the first payout, the Compensation Committee did not consider the favorable, below-budget performance in determining interim milestone achievements and the concomitant KMIP payments, Mr. Madron notes. Instead, no credit will be considered for any interim "below budget" milestones until the Company has finished the job in its entirety. Thus, payments with respect to "on budget" performance will not be made until, at least, late 2007, and will depend upon when all 50 Cubed Plan actions are finally completed. According to Mr. Madron, the company believes that the 50 Cubed Plan can be completed on time and under budget, "but it has no illusions about the attendant risks and uncertainties". The company similarly has no doubt that the concerted and focused efforts of its management team are vital to the Company's future success. The bonus targets set forth in the KMIP will continue to push key employees to complete the company's operational restructuring on time and under budget, Mr. Madron tells the Court. In short, the company developed the KMIP, and seeks to continue making payments pursuant to its terms, in order to further motivate key employees to drive forward, and expeditiously conclude a successful operational restructuring for the benefit of all the company's constituents. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DYNEGY HOLDING: Fitch Lifts Issuer Default Rating to 'B' from 'B-' ------------------------------------------------------------------ Fitch Ratings upgraded the issuer default ratings of Dynegy Inc. and Dynegy Holding Inc. to 'B' from 'B-' and removed the ratings from Rating Watch Evolving. The Rating Outlook of Dynegy, Inc. and Dynegy Holding, Inc. is Stable. In addition, the senior secured bonds of Sithe Independence Funding Corp, a separately secured project financed entity owned by Dynegy, have been upgraded to 'BB' from 'BB-'. Approximately $3.2 billion of outstanding debt is affected by the rating action. The rating upgrades are based upon the expectation of an improved risk profile of the companies upon the acquisition of 8,184 MWs of generation assets from the LS Power Group and expectation that Dynegy, as an owner of wholesale power assets, will benefit from higher pricing in wholesale power markets as reserve margins continue to tighten and existing hedges are replaced at current market prices. Fitch expects liquidity will be sufficient to meet needs for the next several years. The acquisition of the LSP assets would result in a generation asset mix that will be more diverse in terms geography, fuel and dispatch. Additionally, the acquisition of the LSP assets will result in a reduction of Dynegy's commodity price exposure as the output of most of the LSP assets are hedged or contracted. The reduction in the consolidated risk profile stemming from the addition of the LSP assets is partially offset by increased commodity risk exposure from the company's Illinois base load plants as a fixed price contract for those assets expired at year-end 2006. However, Fitch expects the expiration of Dynegy's contract with Illinois Power to increase EBITDA by $60 million to $70 million in 2007 as the fixed price in the former contract was approximately 40% below current market prices. Moreover, the Midwest assets include relatively efficient base-load coal plants that are expected to run when available. Fitch's ratings concerns include the projected high leverage for the combined merger company with estimated debt-to-EBITDA for the year ending 2007 to be 5.75 to 6x. In addition, Fitch will be looking for a demonstrated ability to effectively manage commodity risk exposure especially in light of its increased price risk exposure for its Illinois assets as well as the need to manage LSP's hedged positions. Dynegy is engaged in the generation and sale of wholesale electric power. Dynegy owns approximately 11,739 megawatts of wholesale power assets. LSP owns and operates approximately 8,305 megawatts of wholesale power assets. The generation portfolio of the combined company would be located in the Midwest, West and Northeast. Affected Ratings: Dynegy Inc. -- IDR upgraded to 'B' from 'B-'. Dynegy Holdings, Inc. -- IDR upgraded to 'B' from 'B-'; -- Secured bank facilities upgraded to 'BB/RR1' from 'BB-/RR1'; -- Second priority notes upgraded to 'BB/RR1' from 'B+/RR1'; -- Senior unsecured upgraded to 'B+/RR3' from 'B-/RR4'. Dynegy Capital Trust I -- Trust preferred upgraded to 'CCC+/RR6' from 'CCC/RR6'. Sithe Independence Funding Corp. -- Secured bonds upgraded to 'BB' from 'BB-'. EQUITY OFFICE: S&P Withdraws Lowered Corporate Credit Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Equity Office Properties Trust and its operating subsidiary, EOP Operating L.P., to 'BB' from 'BBB'. These ratings were subsequently withdrawn. In addition, the ratings on the preferred stock and senior unsecured debt also were lowered and then withdrawn. In the interim, all ratings remained on CreditWatch negative, where they were placed Nov. 21, 2006. Approximately $10.2 billion of securities were affected. These rating actions follow the leveraged $39 billion acquisition of Equity Office by Blackstone Acquisition Trust, an affiliate of The Blackstone Group. According to the preliminary proxy statement filed with the SEC, Blackstone had debt financing commitments for up to $29.6 billion. Equity Office's senior unsecured notes were tendered at a premium after bondholders successfully blocked attempts by Blackstone to circumvent make-whole premium provisions governing the senior unsecured notes. This high-profile victory by Equity Office's bondholders is the latest example of the benefit of restrictive bond covenants contained in most REIT indentures relative to those of other corporate sectors. Like the unsecured notes issued by most REITs, Equity Office's senior unsecured notes were governed by these covenants: -- Debt to total assets was limited to less than 60% with total assets defined as total undepreciated assets; i.e., cost basis; -- Secured debt to total assets was limited to less than 40%; -- Unencumbered assets (at cost basis) to unsecured debt had to be maintained at or above 150%; and -- EBITDA to interest coverage had to be greater than 1.5x. Approximately 98% of Equity Office's $8.4 billion of senior unsecured notes were tendered. Another $1.5 billion of exchangeable notes, which contained provisions for a change of control, will initially be exchanged at a rate of $1,351 per $1,000 of par value. Approximately $361 million of preferred stock will be exchanged for Blackstone preferred equity with similar terms. The registration of these securities has been terminated. Equity Office was the nation's largest owner of office properties, with a national portfolio of 543 properties aggregating 103 million square feet. The Blackstone Group is a global private investment and advisory firm that has previously acquired REITs, including CarrAmerica Realty Corp. and Trizec Properties Inc. Ratings Lowered And Subsequently Withdrawn Equity Office Properties Trust Final Interim Rating Rating From ------- ------- ---- Corporate credit NR BB/Watch Neg/-- BBB/Watch Neg/-- Preferred stock NR B+/Watch Neg BBB-/Watch Neg EOP Operating L.P. Final Interim Rating Rating From ------- -------- ---- Corporate credit NR BB/Watch Neg/-- BBB/Watch Neg/-- Senior unsecured NR BB/Watch Neg BBB/Watch Neg FOAMEX L.P.: S&P Lifts Corp. Credit Rating After Chapter 11 Exit ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Linwood, Pennsylvania-based Foamex L.P. to 'B' from 'D', following the company's emergence from bankruptcy Monday, Feb. 12, 2007. Standard & Poor's affirmed all other ratings. The outlook is stable. "The ratings reflect the company's exposure to volatility in raw material prices and economic cycles, customer concentration, pricing and volumes vulnerable to weak automotive fundamentals in North America, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robyn Shapiro. "The rating also reflects the company's leading market share and manageable debt maturity schedule." With revenues of about $1.4 billion, Foamex is the leading manufacturer and distributor of flexible polyurethane and advanced polymer foam products, focused mainly on North America. The company's foam products business, serves the bedding, furniture and consumer products industries with a mixture of commodity and specialty cushioning foams. Automotive products that covered 30% of sales include foam rolls and laminate products manufactured for seat covers and other interior soft-trim applications. Carpet cushion products that covered 15% of sales consist of carpet underlay utilizing scrap foam generated by the company as well as outside sources. Foamex also maintains a technical foams business, covering 10% of sales, that offers more attractive margins and growth opportunities due to higher value-added applications and technological innovation. Overall, the business is vulnerable to consumer spending trends and the level of activity in the automotive and housing sectors. The company's customer concentration is a limiting factor, with the largest customer in the automotive products segment. The top five customers in 2005 represented about 27% of total sales. The company's selection of proprietary products and production techniques offsets some exposure to higher volume commodity-like products. In addition, Foamex's network of strategically located manufacturing sites in North America provides a competitive advantage for distribution because certain types of foams are expensive to transport. Movements in raw material costs, particularly toluene diisocyanate and polyol, can affect Foamex's production economics and profit margins. Feedstock costs will be affected by oil price trends and can have an impact on near-term profit margins. The escalation of raw material costs during 2005 and the decline in operating margins that ensued highlights a key risk factor, particularly during times of rapid cost increases and lower demand linked to difficult economic conditions. While Foamex should be able to continue to pursue price increases to offset any escalation in raw materials costs, this may occur with some time lag and the company may not be able to fully recover the increase in costs. Operating margins before depreciation and amortization are expected to remain in the 10%-12% range, a substantial improvement from the 7% level achieved in 2005. Although the company has had meaningful productivity gains through its restructuring efforts to control costs and reduce overhead, a significant slowdown in demand or rising costs could cause margins to decline. Foamex entered voluntary bankruptcy protection on Sept. 19, 2005, prompted by the company's high leverage combined with a material decline in operating performance. Operating performance had deteriorated because of significant price increases in the company's raw materials combined with a bond maturity, lack of liquidity, and a downturn in one of the company's primary end markets, the automotive industry. However, increased operating efficiencies resulting from restructuring initiatives and price increases implemented by management have led to a meaningful improvement in operating results over the last 12 months. Sustained improvement in operating performance despite potential softening end markets, including housing and automotive, along with strengthening credit ratios would provide upside potential for the prospective rating over the intermediate term. GEORGE'S CANDY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: George's Candy Shop, Inc. P.O. Box 2206 Mobile, AL 36652 Bankruptcy Case No.: 07-10368 Type of Business: The Debtor produces sweets and candy products. Chapter 11 Petition Date: February 12, 2007 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Irvin Grodsky, Esq. Irvin Grodsky, P.C. P.O. Box 3123 Mobile, AL 36652-3123 Tel: (251) 433-3657 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. GLOBAL POWER: Selects PricewaterhouseCoopers as Auditors -------------------------------------------------------- Global Power Equipment Group and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ PricewaterhouseCoopers LLP as its tax advisors and auditors, nunc pro tunc to Feb. 2, 2007. PricewaterhouseCoopers will: a) prepare and sign the Debtors' federal tax returns for the tax years starting Jan. 1, 2005 through Dec. 31, 2006; b) prepare and sign federal tax returns for a number of the Debtors' foreign subsidiaries for the tax years starting Jan. 1, 2005 through Dec. 31, 2006, and assist in the preparation of forms and related computations for the foreign tax credit; c) prepare and sign the Debtors' state corporate income tax returns, for the tax years starting Jan. 1, 2005 through Dec. 31, 2006; d) serve as the Electronic Return Originator with respect to the tax returns that must be filed electronically; and e) provide the Debtors with additional tax services as requested, including, but not limited to, providing recurring tax consulting services, assisting with matters involving tax authorities, and preparing additional tax forms. Among other things, PricewaterhouseCoopers will also: a) perform consolidated audits of the Debtors' financial statements related to the years ended Dec. 31, 2005, and, if expressly requested by the Debtors, Dec. 31, 2006; b) audit management's assessment of the effectiveness of the Debtors' internal control over financial reporting and the effectiveness of management's internal control over financial reporting for the period under audit; and c) report to the Debtors any matter discovered that may require material modifications to the quarterly financial information so that it conforms to generally accepted accounting principles. The firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $585 - $802 Managers/Senior Managers $342 - $446 Associate/Senior Associates $118 - $225 Administration $77 - $105 David S. Colwell, a PricewaterhouseCoopers member, assures the Court that his firm does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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. The Debtors' exclusive period to file a chapter 11 plan expires on April 26, 2007. GLOBAL POWER: Court Okays Houlihan Lokey as Equity Panel Advisor ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized, on a final basis, the Official Committee of Equity Security Holders appointed in the Chapter 11 cases of Global Power Equipment Group Inc. and its debtor-affiliates, to retain Houlihan Lokey Howard & Zukin Capital, Inc., as its financial advisor, nunc pro tunc to Nov. 9, 2006. As reported in the Troubled Company Reporter on Dec. 29, 2006, Houlihan Lokey is expected to: a. perform due diligence on the Debtors' businesses, as well as their prospects and the markets in which they compete; b. evaluate the assets and liabilities of the Debtors; c. analyze and review the financial and operating statements of the Debtors; d. analyze the business operations, business plans and forecasts of the Debtors; e. evaluate all aspects of the Debtors' DIP financing; cash collateral usage and adequate protection therefor; any exit financing in connection with any chapter 11 plan of reorganization and any budgets relating thereto; and any employee retention programs or similar proposed compensation plan or program; f. assist the Equity Committee, as needed, in identifying potential alternative sources of liquidity in connection with any chapter 11 plan or otherwise; g. provide specific valuation and other financial analyses as the Equity Committee may require in connection with the Cases; h. represent the Equity Committee in negotiations with the Debtors, the official committee of unsecured creditors of the Debtors and third parties with respect to any of the foregoing; i. provide testimony in court on behalf of the Equity Committee, if necessary; j. assess the financial issues and options concerning: * the sale of any assets of the Debtors and/or their non- debtor affiliates, either in whole or in part, and * the Debtors' chapter11 plan(s) or any other chapter 11 plan(s); and k. provide other customary services as may reasonably be requested by the Equity Committee. Joel L. Klein, Chair of the Committee, disclosed that Houlihan Lokey will be paid post-petition under the terms of the Engagement Agreement: a. $100,000 per month in cash from the Effective Date through termination of the Engagement Agreement. The first Monthly Fees will be paid on the first date permitted by the Court, and then, subject to the orders governing payment of interim compensation of retained professionals in these Cases, on each monthly anniversary of the Effective Date; plus b. a transaction fee payable upon the consummation of each "Transaction" equal to 2% of the first $23,500,000 of the "Aggregate Equity Holder Recoveries", 3% of the next $14,100,000 of Aggregate Equity Holder Recoveries and 4% of Aggregate Equity Holder Recoveries in excess of $37,600,000. c. Houlihan Lokey's monthly fees and transaction fees will be payable in cash, provided however that Houlihan Lokey's total cash compensation will be capped at $3,000,000. Any amount due to and payable to Houlihan Lokey in excess of $3,000,000 will be payable "In Kind" (i.e., in the same manner and currency/form as and when received by equity holders). Houlihan Lokey would also seek reimbursement for reasonable out-of pocket expenses incurred. Mr. Klein assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not hold nor represent any interest adverse to the Debtors' estates. 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. The Debtors' exclusive period to file a chapter 11 plan expires on April 26, 2007. GLOBAL POWER: Court Sets March 26 as General Claims Bar Date ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware set 4:00 p.m. E.S.T., on March 26, 2007, as the deadline for all persons owed money by Global Power Equipment Group Inc. and its debtor-affiliates on account of claims arising prior to Sept. 28, 2006. The Court also set April 26, 2007, as the deadline for asserting claims by a co-debtor, surety, or guarantor under Section 501(b) of the Bankruptcy Code. Additionally, governmental units have until April 18, 2006 to file proofs of claim against any of the Debtors. Copies of written proofs of claim must be sent or hand delivered on or before the respective bar dates to: Global Power Equipment Group, Inc. c/o Alix Partners LLC 2100 McKinney Avenue, Suite 800 Dallas, Texas 75201 About Global Power Based 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. The Debtors' exclusive period to file a chapter 11 plan expires on April 26, 2007. GNC CORP: Moody's Says Buyout Plan Won't Affect Ratings ------------------------------------------------------- Moody's Investors Service stated that the intention of Ares Management and the Ontario Teachers' Pension Plan to buy GNC Parent Corporation from Apollo Management has no immediate impact on the company's ratings or stable rating outlook. The LBO that was publicized on Feb. 9, 2007, is consistent with previous disclosures that the current owners were exploring strategic alternatives such as the sale of the company. The total enterprise value of the transaction is approximately $1.65 billion. As further particulars regarding the acquisition and its financing plans become available, the ratings or outlook could be adjusted. These are GNC's ratings: -- Corporate family rating of B3; -- Probability of Default Rating of B3; -- Senior secured bank loan of Ba3, LGD-1, 4%; -- $150 million of 8.625% senior notes due 2010 of B1, LGD-2, 25%; -- $215 million of 8.5% senior subordinated notes due 2010 of B3, LGD-4, 56%; and -- $425 million notes due 2011 issued by GNC Parent Corp. of Caa2, LGD-5, 84%. General Nutrition Centers, Inc., with headquarters in Pittsburgh, Pennsylvania, retails and manufactures vitamins, minerals, and nutritional supplements domestically and internationally through about 5850 company operated and franchised stores. Revenue for the twelve months ending September 2006 approached $1.5 billion. HASBRO INC: Earns $230.1 Million in Year Ended Dec. 31, 2006 ------------------------------------------------------------ Hasbro Inc. reports record net earnings of $230.1 million for the year ended Dec. 31, 2006. This compares with $212.1 million of net income in 2005. For the fourth quarter ended Dec. 31, 2006, the company reports net earnings of $108.3 million, compared with $94.3 million of net income last year. For the year, worldwide net revenues were $3.2 billion, an increase of 2.1% or $63.9 million, compared with $3.1 billion a year ago. The 2006 results included $284.9 million in STAR WARS revenue, compared with $494.1 million in the prior year. For the fourth quarter, the company reported worldwide net revenues of $1.1 billion, an increase of 4.1% or $44.2 million. "2006 was another good year for Hasbro, we achieved the highest net earnings in the history of the company," Hasbro President and Chief Executive Officer Alfred J. Verrecchia said. "Our performance for both the quarter and year is a solid indication of the success we have had in growing our core brands. Given the exceptional performance of Star Wars in 2005, it is particularly meaningful to have grown revenue 2.1% for the year and 4.1% for the quarter. "As we look ahead, we have momentum in our core brands and commitment to continued innovation. With the richest and most diversified toy and game product line in the industry, including product tied to upcoming releases of the Transformers and Spider- Man movies, we're very excited about the opportunities for 2007," Mr. Verrecchia concluded. North American segment revenues, which include all of the company's toys and games business in the United States, Canada, and Mexico, were $2.1 billion for the year compared with $2 billion a year ago, reflecting strong performances from Littlest Pet Shop, Clue, Playskool, Monopoly, Transformers, Nerf, Play-Doh, and Magic: The Gathering. The segment reported an operating profit of $276 million for the year compared with $165.7 million last year, as adjusted to include the impact of stock-based compensation. In addition to the higher revenues, the improvement in operating profit reflected lower amortization and royalty expenses, as well as a decline in inventory obsolescence expenses. International segment revenues for the year were $959.3 million compared with $988.6 million a year ago and included a $24.3 million favorable impact from foreign exchange. The results reflect declines in Furby, Star Wars, and Duel Masters, partially offset by strong performance from a number of core brands including Littlest Pet Shop, Playskool, Transformers, and MONOPOLY. The International segment reported an operating profit of $90.9 million for the year compared to an operating profit of $106.4 million in 2005, as adjusted to include the impact of stock-based compensation expense. The decline in operating profit was primarily due to lower revenues. During the fourth quarter, the company repurchased approximately 1.6 million shares of common stock at a total cost of $39.5 million. For the year, the company purchased 22.8 million shares at a total cost of $456.7 million. Since June of 2005, Hasbro has repurchased approximately 25.2 million shares, at a total cost of $504.8 million. "I am pleased we delivered our sixth consecutive year of earnings growth," Hasbro Chief Financial Officer David Hargreaves said. "Our balance sheet remains strong and our operating margin at 11.9% is very close to the near-term target of 12% that we have been articulating for a number of years," Mr. Hargreaves concluded. The quarter and full year results for 2006 were impacted by the Lucas mark to market adjustment. For the quarter and full year periods in 2006, the impact of the mark to market adjustment for the Lucas warrants was a non-cash expense of $24 million and $31.8 million, respectively. This compares to non-cash income of $1 million and $2.1 million, respectively, for the comparable periods in 2005. 2006 net earnings also include stock-based compensation due to the required implementation of SFAS 123R at the beginning of the year. Net earnings prior to fiscal 2006 did not include stock-based compensation. Additionally, the 2005 results include a tax impact of $25.8 million for the repatriation of foreign earnings under the American Jobs Creation Act. The company reported full year Earnings Before Interest, Taxes, Depreciation and Amortization of $515.7 million compared with $521.6 million in 2005. Headquartered in Pawtucket, Rhode Island, Hasbro Inc. (NYSE: HAS) -- http://www.hasbro.com/-- provides children's and family leisure time entertainment products and services, including designing, manufacturing, and marketing games and toys ranging from traditional to high-tech. Branded toys include Playskool, Tonka, Milton Bradley, Parker Brothers, Tiger, and Wizards of the Coast. The company has operations in Australia, France, Hong Kong, and Mexico, among others. * * * Moody's Investors Service affirmed Hasbro Inc.'s (P)Ba1 rating for subordinated debt. HEMAGEN DIAGNOSTICS: Sept. 30 Balance Sheet Upside Down by $707K ---------------------------------------------------------------- Hemagen Diagnostics' balance sheet at Sept. 30, 2006, showed total assets of $4,388,772, total liabilities of $5,096,559, and a stockholders' deficit of $707,787, compared to $5,337,588 in total assets, $6,355,894 in total liabilities, and a stockholders' deficit of $89,637 at Sept. 30, 2005. Net income for the year ended Sept. 30, 2006, was $313,000, which included a gain on sale of a building of $865,000, compared to a net loss of $1,337,000 during the prior fiscal year. Operating Loss for the year ended Sept. 30, 2006, was $63,000 as compared to an operating Loss of $875,000 in the prior fiscal year. This decrease in operating loss is mainly attributed to higher gross margins from the previous year. After adjusting for non-cash charges including depreciation, amortization, non-cash interest, and other non-cash charges, the net income for the year ended Sept. 30, 2006 was $413,000 compared to a net loss of $820,000 for the year ended Sept. 30, 2005. Revenues for the year ended Sept. 30, 2006, decreased 4% to $7,250,000 compared to $7,586,000 during the prior fiscal year ended Sept. 30, 2005. The overall decrease in sales resulted from $286,000 of decreased sales in the company's Analyst(R) product line, $278,000 of decreased sales in the company's Raichem product line, and was offset by $148,000 of increased sales of the company's Virgo autoimmune and infectious disease products line. The Analyst(R) product line sales declines mainly resulted from lower sales to physician office laboratories and the distributors that support that market. The decrease in the company's Raichem division resulted from the loss of sales to certain top customers. The increase in the Virgo product line sales mainly resulted from growth at the company's Brazilian subsidiary. Gross Margins for fiscal year 2006 were 36% as compared to 25% in fiscal year 2005. The gross margins for the year increased 11% in the current year 2006 as a result of lower production costs and higher production levels in certain product lines as compared to fiscal 2005. At Sept. 30, 2006, Hemagen had $151,000 of cash on hand, working capital of $2,927,000 and a current ratio of 3.3 to 1.0. At the prior fiscal year end, the company had $272,000 of cash on hand, working capital of $1,683,000 and a current ratio of 1.65 to 1.0. In the prior year the current ratio was affected by a construction loan for the company's new facility that was purchased in June 2005 that was to be used for the company's new corporate headquarters. Therefore, $650,000 of debt was classified as short-term obligations that would have been converted to permanent long term financing once the build out was completed. The current ratio was also negatively affected by the borrowings on the traditional line of credit facility which was mainly used for the acquisition and expenses related to the corporate facility. In July the building was sold and the company recognized a gain on sale of $865,000 and all loans related to the building including the working capital line were paid off at that time. In addition, the company has a working capital line of credit for up to $500,000 based on the domestic receivables and inventory of the company and which provides for interest at the rate of the Prime Rate plus 3/4%. At Sept. 30, 2006 the company had no outstanding borrowings on this line of credit. Commenting on the results, William P. Hales, the company's president and chief executive officer said, "We are pleased to announce earnings and improved margins. We are optimistic about fiscal year 2007 revenues and certain new product introductions that are set to take place this year." About Hemagen Diagnostics Based in Columbia, Maryland, Hemagen Diagnostics, Inc. (OTC: HMGN.OB) -- http://www.hemagen.com/-- is a biotechnology company that develops, manufactures, and markets more than 150 FDA-cleared proprietary medical diagnostic test kits used to aid in the diagnosis of certain autoimmune and infectious diseases. Internationally, the company sells its products primarily through distributors. Hemagen's products are used in many of the largest Laboratories, Hospitals, and Blood Banks around the world. The company focuses on markets that offer significant growth opportunities. * * * For the fiscal year ended Sept. 30, 2006, Hemagen Diagnostics had total assets of $4,388,772, total liabilities of $5,096,559, and a stockholders' deficit of $707,787, compared to $5,337,588 in total assets, $6,355,894 in total liabilities, and a stockholders' deficit of $89,637 for the fiscal year 2005. The company also had an accumulated deficit of $23,503,209 at Sept. 30, 2006, compared to $23,816,135 at Sept. 30, 2005. HEXCEL CORP: Earns $18.8 Million Net Income in 4th Quarter 2006 --------------------------------------------------------------- Hexcel Corporation earned $18.8 million of net income from continuing operations for the fourth quarter ended Dec. 31, 2006, compared to $136.2 million in the same period of 2005. The fourth quarter of 2006 net income includes a gain on the sale of a joint venture interest, while in the same period of 2005, the company's net income included the benefit of the reversal of the majority of the company's valuation allowance against its net U.S. deferred tax assets, which resulted in a benefit to the tax provision of $119.2 million. Operating income for the fourth quarter was $19.1 million compared to $25.4 million for the same quarter last year. Operating income in the fourth quarter of 2006 includes $9.3 million of business consolidation and restructuring expense and $1.1 million of transaction costs associated with the company's divestiture activities. Operating income of $106.4 million in 2006 was $4.5 million higher than the $101.9 million reported in 2005. Net income from continuing operations was $65.0 million for 2006 compared to $139.8 million in 2005. The company reported net sales of $299.2 million for the fourth quarter of 2006, 7.5% higher than the $278.2 million reported for the same period in 2005. For the full year of 2006, net sales were $1.19 billion as compared to $1.14 billion in 2005, an increase of 4.7%. David E. Berges, Chairman, President, & CEO of the company, commented, "This was another strong quarter of double-digit growth in revenues from the commercial aerospace market demonstrating the diversity of our customer base. Aerospace sales growth during the quarter was led by a strong year-on-year increase in revenues from Boeing and their subcontractors, but we also saw solid growth in revenues from sales to regional aircraft, engines and nacelle applications. As expected, revenues from Airbus were essentially flat year-on-year as the supply chain adjusted to the delays in the A380 program. As described in our 2007 Outlook published in December, we expect that our 2007 year-on-year Airbus sales comparisons will be tougher, particularly in the first half, due to the push-out in the A380 deliveries; however, we continue to expect revenue growth over 10% from Boeing and other commercial aerospace programs." "Industrial sales included a strong 29% year-over-year growth in wind energy sales for the quarter. Ballistics sales, while down 30% from last year were up 36% from the third quarter reflecting the momentum stimulated as new funding by Congress started to flow to our military body armor customers. While Space & Defense revenues were still sluggish due to inventory corrections, there were signs that this adjustment is coming to a conclusion." "Incremental gross margins were consistent with our historic trend at 30% for the quarter despite the initial start-up costs of our new carbon fiber and precursor lines. Our operations have done a tremendous job in bringing the U.S. capacity on line ahead of schedule. While we still have some work to do to complete the shake-down of the new lines, we should start earning a contribution on these new assets before the end of this quarter." "We completed the sale of our interest in TechFab LLC during December and the proceeds were reflected in reduced net debt. This joint venture was associated with our non-core Reinforcement businesses. We are on track to complete the sale of our Architectural business in France during the first quarter of 2007 and are making progress on the remaining elements of the portfolio review. Meanwhile our plans to create a fully integrated composites organization are now being implemented, and will begin to impact our performance in 2007." "2006 has been a year of accomplishment and transition despite the short-term disappointments of the A380 delays and the decline in ballistics revenues. The actions coming out of our portfolio review to tighten our strategic focus and to strengthen our organization lay the foundation for continued revenue and margin growth. Our carbon capacity expansion positions us to begin to support the growing demand for intermediate modulus and high strength fiber led by the launch of Boeing's 787 & 747-8 and Airbus' A350XWB; all aircraft with significantly higher levels of composite materials than their predecessors." Mr. Berges concluded, "2007 will be a year of focus for Hexcel. We will be focused on the realignment of Hexcel's organization; focused on winning positions on new platforms at our largest customers; focused on our manufacturing capacity expansion; focused on developing new markets for our materials; and focused on meeting our margin expansion goals. Execution of these plans will position Hexcel for accelerated revenue and earnings growth in 2008 as the production of the Boeing 787 and Airbus A380 ramp up." About Hexcel Corp. Based in Stamford, Connecticut, Hexcel Corporation (NYSE/PCX: HXL) -- http://www.hexcel.com/-- develops, manufactures and markets lightweight, high-performance reinforcement products, composite materials and composite structures for use in commercial aerospace, space and defense, electronics, and industrial applications. In Europe, the company maintains operations in Spain, France, UK, Belgium, Austria, and Italy. * * * As reported in the Troubled Company Reporter on Oct. 4, 2006, Moody's Investors Service confirmed its B1 Corporate Family Rating for Hexcel Corporation, and held its B3 rating on the company's 6.75% Senior Subordinated Notes due 2015, in connection with the implementation of its new Probability-of-Default and Loss-Given- Default rating methodology. Additionally, Moody's assigned an LGD5 rating to those debentures, suggesting noteholders will experience a 78% loss in the event of a default. HOME PRODUCTS: Panel Taps Giuliani Capital as Financial Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Home Products International Inc. and Home Products International-North America Inc.'s chapter 11 cases asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Giuliani Capital Advisors LLC as its financial advisor, nunc pro tunc to January 3, 2007. Before the Committee was formed, Giuliani assisted an ad hoc committee of holders of the Debtors' outstanding 9.625% Senior Subordinate Notes due 2008 in structuring, evaluating, and negotiating a restructuring of the Debtors. As financial advisor, the firm will: (a) assist the Official Committee in the analysis of the Debtors' business plans, cash flow forecasts, financial projections, and cash flow reporting; (b) advise the Official Committee with respect to available capital restructuring, sale, and financing alternatives for the Debtors, including recommending specific courses of action, and assisting with the design, structuring, and negotiation of alternative restructuring or transaction structures; (c) advise the Official Committee regarding financial information prepared by the Debtors and in the Official Committee's coordination of communication with interested parties and their advisors; (d) advise the Official Committee in preparing for, meeting with, and presenting information to interested parties and their advisors; (e) advise the Official Committee, and coordinate with counsel to the Official Committee, in the development of a restructuring plan for the Debtors and in the negotiation with parties-in-interest or in the sale of a portion or substantially all of the Debtors' assets, whether structured as a stock transfer, merger, purchase, and assumption transaction or other business combination; (f) advise the Official Committee as to the Debtors' proposals from third parties for new sources of capital or the sale of the Debtors; and (g) other services as may be reasonably requested in writing from time to time by the Official Committee and as agreed by the firm. The firm charges a monthly advisory fee of $75,000. In connection with either a recapitalization or restructuring of the Debtors, either out-of-court or through a bankruptcy, the firm will be entitled to a $500,000 transaction fee payable upon the successful consummation of that transaction. The firm will credit against the Transaction Fee (i) $73,750, (ii) one-half of the first Monthly Advisory Fee actually paid to Giuliani, plus (iii) all other Monthly Advisory Fees in full actually paid to Giuliani until that Transaction Fee is fully credited. In connection with its work for the Ad Hoc Committee, the Debtors paid Giuliani $223,857 in prepetition fees and expenses. It included the $75,000 advance payment. Phil Van Winkle, a managing director at Giuliani Capital Advisors LLC, assures the Court that his firm does not hold or represent any interest adverse to the Debtors and their estates, and has no connection to the Debtors, their creditors, and other known significant parties-in-interest in the Debtors' cases. About Home Products Headquartered in Chicago, Illinois, Home Products International, Inc. -- http://www.hpii.com/-- designs, manufactures, and markets ironing boards, covers, and other high-quality, non-electric consumer houseware products. The Debtor's product lines include laundry management products, bath and shower organizers, hooks, hangers, home and closet organizers, and food storage containers. Their products are sold under the HOMZ brand name, and are distributed to hotels, discounters, and other retailers such as Wal-Mart, Kmart, Sears, Home Depot, and Lowe's. The company and its affiliate, Home Products International-North America, Inc., filed for chapter 11 protection on Dec. 20, 2006 (Bankr. D. Del. Case Nos. 06-11457 and 06-11458). Ronald Barliant, Esq., and Kathryn A. Pamenter, Esq., at Goldberg Kohn, Bell, Black, Rosenbloom & Moritz, Ltd., and Mark D. Collins, Esq., and Michael J. Merchant, Esq., at Richards, Layton & Finger P.A. represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million and $100 million and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan of reorganization expires on April 18, 2007. HUGHES NETWORK: Moody's Rates Proposed $115MM Sr. Term Loan at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Hughes Network Systems, LLC's proposed $115 million senior unsecured term loan, due 2014. In addition, the ratings agency also affirmed the B1 corporate family rating, the B1 rating on the existing $450 million senior notes due 2014 and the Ba1 rating on the $50 million senior secured revolving credit facility. The proceeds of the new term loan will be used primarily to fund capital expenditures and for general corporate purposes. HNS' ratings broadly reflect Moody's expectations for negative free cash flow due to capital spending and delays associated with the company's SPACEWAY 3 satellite, continuing challenges from terrestrial-based competition, and the relatively low margins, offset by modest leverage of about 5.0x and good interest coverage at over 2.5x, proforma for the proposed transaction at year-end 2006 and using Moody's standard analytic adjustments. Moody's has taken these ratings actions related to HNS: -- Corporate Family Rating affirmed at B1 -- Probability of Default affirmed at B1 -- New Sr. Unsecured Term Loan due 2014 assigned B1, LGD-4, 53% -- 9.5% Sr. Unsecured Notes due 2014 affirmed at B1, LGD-4, 53% -- Sr. Secured Revolving Credit due 2011 affirmed at Ba1, LGD-1, 1% The outlook on all ratings is stable. Hughes Network Systems, headquartered in Germantown, Maryland, is a global provider of broadband satellite networks and services to the VSAT enterprise market and the largest satellite based Internet access provider to the North American consumer market. The company generated over $859 million in revenues in 2006. HUGHES NETWORK: S&P Rates Proposed $115 Mil. Senior Loan at B- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Germantown, Maryland-based satellite services provider Hughes Network Systems LLC's proposed $115 million senior unsecured term loan due 2014. Simultaneously, the outlook on the company was revised to negative from stable due to the further delay in the launch of Spaceway 3 to early 2008 which will defer anticipated EBITDA improvement. The corporate credit rating is affirmed at 'B' as are the 'BB-' bank loan rating and '1' recovery rating on the company's $50 million senior secured revolving credit facility. The senior unsecured term loan rating of 'B-' is based on preliminary documentation subject to receipt of final information. Pro forma total debt is approximately $611 million and includes roughly $42 million in customer premise equipment financing. Proceeds from the senior unsecured term loan will be used for general corporate purposes, including constructing or acquiring additional satellites or financing merger and acquisition opportunities. "The outlook revision is due to the further delay of about one year in the launch of Spaceway 3 to early 2008," said Standard & Poor's credit analyst Naveen Sarma. "As a result, we expect EBITDA margin expansion and positive discretionary cash flow generation will also be delayed until 2009." If Spaceway is successfully launched, Standard & Poor's would expect EBITDA margins to expand from the current 14% range to the high-teens level. In addition, Standard & Poor's would expect the cost savings from reduced transponder leasing would help drive positive discretionary cash flow in 2009. The ratings reflect mature revenue prospects for the company's core enterprise services. It also reflects uncertain long-term growth prospects for small business and consumer applications, potential operating and financial risks from the launch of and uncertain business prospects for Spaceway 3, and a highly leveraged financial profile with no expectations of positive discretionary cash flow generation until 2009. Tempering factors include HNS' leading position in the very small aperture terminal industry, a degree of revenue stability from three- to five-year contracts with large enterprise customers, and the VSAT technology's ability to provide ubiquitous, point-to-multipoint connectivity, which partly buffers competitive pressure from terrestrial networks. HNS is the leading provider of VSAT satellite networking services to domestic and international enterprises, small and midsize businesses, and consumers. IFM COLONIAL: Moody's Puts Ba3 Rating on $225MM Term Loan Facility ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 rating with stable outlook to the CFR and $225 million secured Term Loan B Facility of IFM Colonial Pipeline 2, LLC, an indirectly 100% owned entity of IFM Wholesale Trust based in Melbourne, Australia. The proceeds of the loan will be used to finance the debt portion of IFMUS' planned acquisition of 15.8% interest in Colonial Pipeline Company based in Atlanta, Georgia, plus financing fees. IFMUS is not expected to issue any other debt so there is no difference between its CFR rating and the bank loan rating. IFMUS is a special purpose entity established by IFM Trust to hold its anticipated 15.8% interest in Colonial and has no other function. The loan transaction is a structured deal contained within a "closed cash system." The bank loan assumes a high dependence on the continuation of high dividend payouts emanating from Colonial with lesser reliance on the ability of IFM Trust to help cover any possible shortfalls from the receipt of Colonial dividends during the five-year period of the $225 million term loan. Although Colonial has previously targeted a high dividend payout approximating 100% of anticipated annual earnings, they could also suspend their dividends in order to cover large capital expenditure programs, clean-up oil spills, strengthen their balance sheet, compensate for asset impairments or settle government litigations, as they did in the fourth quarter of 2000. Any sizeable reduction in Colonial dividends could have a detrimental affect on IFMUS' ability to service its loans. While there are certain features in the proposed credit structure that tend to enhance the five-year term loan such as: security granted by IFMUS in a first priority lien on its 15.8% equity interest in Colonial, access to a debt service reserve funded one-time for six months once the loan debt service coverage ratio falls below 1.25x, debt to dividends received and dividends received to interest expense financial covenants and IFMUS' conservative leverage of approximately 35%, there is limited support from the Australian parent. Moreover, IFM Trust is a passive investor and at the receiving end of cash dividends from its international infrastructure investments with the various operating companies having first claim on the available cash prior to any distributions being made. It is therefore subordinated to the needs of the overseas operating companies and the claims on cash that their lenders have on these operations. Therefore, the Ba3 CFR and loan rating of IFMUS reflects the non-guaranteed nature of ongoing cash inflows that are expected to come either from Colonial or from IFM Trust, on which the Borrower fully depends for its debt service requirements as it has no other investments to liquidate or cash sources with which to make the interest and loan amortization payments on the Term Loan B Facility, which matures on the fifth year. Any shortfall in cash received from Colonial that cannot be met by IFM Trust making timely cash infusions, could result in payment default, although the underlying value of the Colonial shares as loan collateral may eventually realize full loan and interest repayment. IFMUS is a newly-created special purpose limited liability company registered in the State of Delaware for the purpose of acquiring a 15.8% interest in Colonial. It is an indirectly-owned 100% entity of IFM Trust. IFM Trust was recently established to hold international infrastructure assets such as the 15.8% interest in Colonial. IFM Trust is in turn owned by other trust and funds that total approximately 40 superannuation funds making various investments under the Australian pension system. Colonial is an interstate common carrier of petroleum products delivering gasoline, kerosene, home-heating oil and jet fuel from the Gulf Coast refining area to cities and airports in the Southeast and along the East Coast of the US through a 5,500 mile pipeline stretching from Houston, Texas to Linden, New Jersey with approximately 75% of its revenues governed by the FERC index tariff method. It is based in Atlanta, Georgia, and is privately owned. INFOUSA INC: Declares $0.35 Dividend Per Common Share ----------------------------------------------------- infoUSA Inc.'s Board of Directors has declared a dividend of 35 cents per common share composed of a regular cash dividend of 25 cents per common share and a special dividend of 10 cents per share. The dividend is payable March 5, 2007, to shareholders of record on Feb. 16, 2007. As of Dec. 31, 2006, the end of the company's fiscal year, the company had 55,460,322 shares outstanding. About infoUSA Headquartered in Omaha, Nebraska, infoUSA Inc. (NASDAQ: IUSA) -- http://www.infoUSA.com/-- provides business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Founded in 1972, infoUSA owns a proprietary database of 250 million consumers and 14 million businesses under one roof. * * * As reported in the Troubled Company Reporter on Nov. 21, 2006, Moody's affirmed the Ba2 rating on $275 million in first lien credit facilities of infoUSA Inc. Concurrently, Moody's has affirmed the corporate family rating of infoUSA at Ba3. Moody's also said the outlook is stable. J.P. MORGAN: Moody's Junks Rating on $3.9 Million Class M Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes, downgraded the ratings of two classes and affirmed the ratings of 10 classes of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2002- CIBC4: -- Class A-2, $128,752,693, Fixed, affirmed at Aaa -- Class A-3, $403,153,000, Fixed, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $31,957,000, Fixed, affirmed at Aaa -- Class C, $33,954,000, Fixed, upgraded to Aa1 from Aa2 -- Class D, $9,986,000, Fixed, upgraded to Aa3 from A2 -- Class E, $23,967,000, WAC, upgraded to Baa1 from Baa2 -- Class F, $11,984,000, WAC, affirmed at Baa3 -- Class G, $13,981,000, Fixed, affirmed at Ba1 -- Class H, $11,984,000, Fixed, affirmed at Ba2 -- Class J, $3,994,000, Fixed, affirmed at Ba3 -- Class K, $5,992,000, Fixed, affirmed at Ba1 -- Class L, $7,989,000, Fixed, downgraded to B3 from B2 -- Class M, $3,995,000, Fixed, downgraded to Caa2 from Caa1 As of the Jan. 12, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 12.3% to $700.8 million from $799 million at securitization. The Certificates are collateralized by 114 mortgage loans ranging in size from less than 1.0% to 9.5% of the pool with the top 10 loans representing 30.5% of the pool. Sixteen loans, representing 17.3% of the pool, have defeased and are collateralized by U.S. Government securities. Two loans have been liquidated from the pool resulting in aggregate realized losses of approximately $6.9 million. Currently there are three loans, representing 2.9% of the pool, in special servicing. Moody's estimates aggregate losses of $5.7 million for all the specially serviced loans. Twenty-seven loans, representing 19.6% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 operating results for 98.1% of the performing loans. Moody's loan to value ratio for the conduit component is 83.8%, compared to 85.1% at Moody's last full review in September 2005 and compared to 90.0% at securitization. Moody's is upgrading Classes C, D and E due to stable overall pool performance, defeasance and increased credit support. Class C was upgraded on December 8, 2006 based on a Q tool based portfolio review. Moody's is downgrading Classes L and M due to losses from specially serviced loans and LTV dispersion. Based on Moody's analysis, 17.2% of the conduit pool has an LTV greater than 100.0%, compared to 14.1% at last review and compared to 4.1% at securitization. The shadow rated loan is the Highland Mall Loan, $66.7 million (9.5%), which is secured by the borrower's interest in a 1.1 million square foot regional mall located in Austin, Texas. The center is anchored by Dillard's, which operates two stores, and Macy's. J.C. Penney, which originally was the fourth anchor, vacated the mall at year-end 2006. As of June 2006 the mall was 85.9% occupied, the same as at last review. However, occupancy has dropped to 73.5% as a result of J.C. Penney vacating the mall. The borrower is a joint venture between General Growth Properties, Inc. and The Simon Property Group. Moody's current shadow rating is Ba2, compared to Ba1 at last review. The top three conduit loans represent 8.3% of the pool. The largest conduit loan is the Sugarland Crossing Loan, which is secured by a 256,500 square foot power center located approximately 27 miles from Washington, D.C. in Sterling, Virginia. As of June 2006 the property was 100% occupied, essentially the same as last review. The center is anchored by Burlington Coat Factory, Shoppers Food and The Room Store. Moody's LTV is 79.4%, compared to 82.6% at last review. The second largest conduit loan is the Oak Park Town Center Loan, $16.3 million (2.3%), which is secured by a 168,000 square foot retail center located nine miles north of Chattanooga in Hixson, Tennessee. As of September 2006 the property was 100% occupied, compared to 91.2% at year-end 2005. The property is shadow anchored by a Super Wal-Mart. Major tenants include Goody's Family Clothing, Marshall's, Office Depot and Old Navy. Although occupancy has improved since securitization, the property's performance has been impacted by lower expense recoveries. Moody's LTV is 99.8%, compared to 84.9% at last review. The third largest conduit loan is the Springdale Plaza Loan, $16 million (2.3%), which is secured by an 188,000 square foot retail center located in suburban Cincinnati, Ohio. Major tenants include Bed Bath & Beyond, Circuit City and Michaels. As of September 2006 the center was 90.4% occupied, compared to 91.5% at last review. Moody's LTV is 77.7% compared to 75.1% at last review. The pool collateral is a mix of retail, office and mixed use, U.S. Government securities, multifamily and industrial and self storage. The collateral properties are located in 29 states plus the District of Columbia. The top five state concentrations include California, North Carolina, Florida, Virginia and Tennessee. JARDEN CORP: Moody's Affirms B1 Corporate Family Rating ------------------------------------------------------- Moody's Investors Services has affirmed the B1 corporate family rating for Jarden Corporation following the upsizing of the company's proposed aggregate senior subordinated offering from $400 million to $650 million. The rating outlook remains positive. Moody's also upgraded the rating on the company's senior secured bank facility from Ba3 to Ba2, and affirmed the B3 rating on the senior subordinated notes. The upgrade of the senior secured debt reflects the reduced LGD assessment on that facility following the issuance of the incremental senior subordinated debt, which provides additional junior capital support to the senior secured facility. These are the rating actions: -- Corporate Family Rating affirmed at B1 -- Senior Subordinated Debt, B3, LGD5, 83% from LGD5, 86% This rating was upgraded and LGD Assessment amended: -- Senior Secured Bank Loan, Ba2, LGD2, 29% from Ba3, LGD3, 34% Jarden Corporation is a leading manufacturer and distributor of niche consumer products used in and around the home. The company's primary segment include Consumer Solutions, Branded Consumables, and Outdoor. Headquarted in Rye, New York the company reported consolidated net sales of approximately $3.85 billion for the 12-month period ending Dec. 31, 2006. KERASOTES SHOWPLACE: Moody's Holds Corporate Family Rating at B2 ---------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family rating of Kerasotes Showplace Theatres LLC and assigned a B1 rating to its proposed amended senior secured bank credit facility. The proposed amendment increases the size of its term loan by $75 million, with proceeds expected to fund acquisitions of 13 additional theaters and 153 screens. The B2 corporate family rating can absorb the approximately half-turn increase in leverage to approximately 6x debt-to-EBITDA pro forma for the transaction from approximately 5.5x for the trailing twelve months through Sept. 30. The outlook remains stable. These are the rating actions: * Kerasotes Showplace Theatres LLC -- Affirmed B2 corporate family rating -- Affirmed B3 probability of default rating -- Assigned B1 senior secured bank rating, LGD 2, 29% The B2 corporate family rating for Kerasotes Showplace Theatres LLC continues to reflect high financial risk, sensitivity to product from movie studios, lack of scale, a weak industry growth profile, and concerns that the company's aggressive expansion will not yield desired returns. Good liquidity, attractive concession margins, a strong competitive position in its targeted smaller markets, and an improving asset base support the rating. Kerasotes Showplace Theatres, LLC, operates motion picture theaters in the Midwestern and upper Midwestern regions of the United States, including Illinois, Indiana, Iowa, Ohio, Missouri and Minnesota. The company currently operates 685 screens in 81 locations. Its revenue for the 12 months ended Sept. 30, 2006, was approximately $175 million. LEVEL 3 COMMS: New $1 Billion Term Loan Rated B1 by Moody's ----------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to Level 3 Financing Inc.'s new $1 billion term loan and a B3 rating to the $1 billion fixed and floating rate notes at Financing. The proceeds from the new offerings will be used to refinance existing debt, fund acquisitions or capital expenditures. Moody's has affirmed Level 3 Communications, Inc.'s corporate family rating at Caa1 with a stable outlook, as the pro-forma leverage is expected to remain in the 8.5x range, as Moody's expects the company to use the additional liquidity to refinance higher coupon debt. In addition, the rating agency expects the company to commence generating free cash flow late in 2008. Moody's has also affirmed the ratings of existing debt at Level 3. The existing debt at Financing was downgraded one notch to B3, given the increased debt level at that entity. Moody's will withdraw the ratings upon redemption of the existing 12 7/8% senior discount notes due 2010, which the company plans to call following the completion of the new notes offering. Moody's has taken these ratings actions: * Level 3 Communications, Inc -- Corporate Family Rating Affirmed Caa1 -- Probability of Default Rating Affirmed Caa1 -- Senior Notes Affirmed Caa2, LGD5-78% -- Senior Euro Notes Affirmed Caa2, LGD5-78% -- Convertible Senior Notes Affirmed Caa2, LGD5-78% -- Convertible Subordinated Notes Affirmed Caa3, LGD6-94% The outlook is satble. * Level 3 Financing, Inc -- New $1,000 million Term Loan Assigned B1, LGD1-4% -- Existing Senior Secured Term Loan Affirmed B1, LGD1-3% (to be withdrawn) -- New Senior Notes Assigned B3, LGD3-38% -- Senior Floating Rate Notes Downgraded to B3, LGD3-38%, from B2, LGD3-30% -- Senior Notes Downgraded to B3, LGD3-38%, from B2, LGD3-30% The outlook is stable. The Caa1 rating reflects the overall high business risk for the long-haul carrier industry, Level 3's high financial risk and continued cash burn, which is partly mitigated by its very good near-term liquidity. In addition, the company faces challenges in integrating its six acquisitions announced in the past year. Although Broadwing, which was recently acquired by Level 3, offers primarily the same services as Level 3's core business, prior acquisitions of metropolitan telecommunications companies represent a new line of business for Level 3, and it puts the company in competition with some of its larger customers, giving rise to potential channel conflicts. The stable outlook reflects Moody's views that Level 3 will continue to achieve synergies from its acquisitions as it focuses on the core telecommunications business, and the expectation that should acquisition activity continue, it will not materially impact the company's credit profile. Moody's also notes that while the company's leverage decline over the past 18 months was driven by EBITDA growth, the company's increased visibility in the equity markets has opened opportunities to reduce its absolute debt levels. Level 3 is a leading nationwide communications service provider with sales of $3.3 billion in 2006, excluding the revenues of Software Spectrum business which the company sold during 3Q 2006. The company's headquarters are located in Broomfield, Colorado. LODGNET ENTERTAINMENT: Earns $1.8 Million in 2006 ------------------------------------------------- LodgeNet Entertainment Corporation reported net income for 2006 of $1.8 million compared to a net loss of $7 million in 2005. For 2006, revenue was $288.2 million, an increase of 4.5% compared to 2005. The company also reported $21.7 million in net free cash flow for 2006 as compared to $12.8 million in 2005. For the fourth quarter, revenue increased 3.1% to $69.6 million as compared to $67.5 million in the fourth quarter of 2005. The company reported a net loss of $0.1 million for the quarter versus a net loss of $2.3 million for the same period a year ago. "2006 was a historic year for the company as its focus on growth, profitability and cash flow generation produced the milestone result we have been long working toward -- positive net income." said Scott C. Petersen, LodgeNet President and CEO. "The combination of growth in revenue and a reduction in depreciation and interest expenses produced net income of $1.8 million, a remarkable improvement over a net loss of $20.8 million in 2004 and $7 million in 2005." "We executed on our strategy of expanding our networks and integrating a broader array of solutions for our customers," continued Petersen. "Within our core lodging business, average Guest Pay revenue per room for the year increased 2.2% with per- room revenue from other interactive services increasing 4%. A key driver of revenue growth was the increasing influence of our digital system, which presents a broader array of entertainment choices to the hotel guest and is now installed in 73% of our interactive room base. In addition, our strategic initiatives to expand our network, including healthcare facilities and travel centers, produced $3.6 million of revenue, which was approximately 30% of our revenue growth during the year, a solid start into these two promising new markets." "The execution of our business plan also produced a significant increase in the level of cash flow generated by our business," said Gary H. Ritondaro, LodgeNet Senior Vice President and CFO. "In 2006, net free cash flow was $21.7 million, an increase of 70% over the $12.8 million we generated in 2005, and over three times the $6.3 million we earned in 2004. This was accomplished as we continued to expand our digital room base, which increased by more than 100,000 rooms in 2006. As a result, we reduced long-term debt by $21.5 million. At year-end, our consolidated total leverage ratio was 2.7x." "As we look to 2007, we are focused on building upon our strategy of expanding our networks and integrating additional market-valued solutions," continued Petersen. "Our recent acquisition of StayOnline presents an excellent opportunity to drive additional revenue streams through our customer base by providing high-speed Internet access solutions and services -- one of the most highly demanded services of the traveling business person. In addition, we plan to expand our presence in the healthcare and travel center markets, both of which represent meaningful opportunities to generate new revenue from the sale of our interactive television systems and the delivery of service provided by our nationwide technical organization. Lastly, our pending acquisition of On Command holds the promise of creating significant new benefits for our lodging customers and shareholders as we combine the technologies and talents of these two organizations." Headquartered in Sioux Falls, South Dakota, LodgeNet Entertainment Corporation (NASDAQ:LNET) -- http://www.lodgenet.com/-- provides cable, video-on-demand and video game entertainment services to the lodging industry. As of Sept. 30, 2006, the company provided interactive and basic cable television services to approximately 6,100 hotel properties serving over one million rooms. The company's balance sheet, at Sept. 30, 2006, showed $268.9 million in total assets and $331.3 million in total liabilities, resulting in a $62.4 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on Nov. 2, 2006, Moody's affirmed the 'B1' rating for both the Corporate Family Rating and Probability of Default Rating of LodgeNet Entertainment, the 'Ba1' rating for both the company's Senior Secured Revolver and Senior Secured Term Loan, and the 'B2' rating for the company's 9.5% Senior Sub Notes. Moody's said the outlook is positive. MERITAGE MORTGAGE: S&P Cuts Rating on Class B-2 Certificates to B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Class B-2 from Meritage Mortgage Loan Trust 2005-1 to 'B' from 'BB' and placed it on CreditWatch with negative implications. In addition, the 'BB+' rating on class B-1 from series 2004-1 was placed on CreditWatch with negative implications. At the same time, the ratings on various Meritage Mortgage Loan Trust transactions, including those mentioned above, were affirmed. The downgrade and CreditWatch placement of class B-2 from series 2005-1 are based on performance that has allowed monthly losses to consistently outpace monthly excess interest, causing overcollateralization (O/C) to fall to $1.2 million, below its target of $4.6 million. In addition, loss projections indicate that this trend could continue and cause credit support for this class to erode further. As of the January 2007 distribution date, cumulative losses for series 2005-1 totaled 1.55% of the original pool balance. Total delinquencies were 18.06% of the current pool balance, and severe delinquencies were 9.82%. The CreditWatch placement of the rating on class B-1 from series 2004-1 reflects the $21.1 million of loans that are severely delinquent, compared with the $3.6 million in remaining credit support provided by O/C. Standard & Poor's will closely monitor the performance of the classes with ratings on CreditWatch. If monthly-realized losses decline to a point at which they no longer outpace monthly excess interest, and the level of O/C has not been further eroded, Standard & Poor's will affirm the ratings on these classes and remove them from CreditWatch. Conversely, if losses continue to outpace excess interest, and the level of O/C continues to decline, Standard & Poor's will take further negative rating actions on these classes. The affirmations are based on loss coverage percentages that are sufficient to maintain the current ratings. Total delinquencies ranged from 13.92% to 33.59%, and severe delinquencies ranged from 8.4% to 22.98%. Cumulative losses ranged from 0.47% to 2.16%. Credit support is provided by a combination of O/C, excess interest, and subordination. The collateral for these transactions consists of fixed- and adjustable-rate first-lien mortgage loans secured by one- to four-family residential properties. Rating Lowered And Placed On Creditwatch Negative Meritage Mortgage Loan Trust Rating Series Class To From ------ ----- -- ---- 2005-1 B-2 B/Watch Neg BB Rating Placed On Creditwatch Negative Meritage Mortgage Loan Trust Rating Series Class To From ------ ----- -- ---- 2004-1 B-1 BB+/Watch Neg BB+ Ratings Affirmed Meritage Mortgage Loan Trust Series Class Rating ------ ----- ------ 2003-1 1-A1, II-A2 AAA 2003-1 M-1 AA 2003-1 M-2 A+ 2003-1 M-3 A 2003-1 M-4 A- 2003-1 M-5 BBB+ 2003-1 M-6 BBB 2003-1 M-7 BBB- 2004-1 I-A1, II-A2 AAA 2004-1 M-1 AA 2004-1 M-2 AA- 2004-1 M-3 A+ 2004-1 M-4 A 2004-1 M-5 A- 2004-1 M-6 BBB+ 2004-1 M-7 BBB 2004-1 M-8 BBB- 2004-2 I-A1, II-A2, II-A3 AAA 2004-2 M-1,M-2 AA+ 2004-2 M-3 AA 2004-2 M-4 AA- 2004-2 M-5 A+ 2004-2 M-6 A 2004-2 M-7 A- 2004-2 M-8 BBB+ 2004-2 M-9 BBB 2004-2 M-10 BBB- 2004-2 B-1 BB+ 2004-2 B-2 BB 2005-1 I-A1,I-A2,II-A2,II-A3 AAA 2005-1 M-1,M-2 AA+ 2005-1 M-3,M-4 AA 2005-1 M-5 AA- 2005-1 M-6 A+ 2005-1 M-7 A 2005-1 M-8 A- 2005-1 M-9 BBB+ 2005-1 M-10 BBB 2005-1 M-11 BBB- 2005-1 B-1 BB+ 2005-2 I-A1,II-A1,II-A2,II-A3 AAA 2005-2 M-1,M-2 AA+ 2005-2 M-3,M-4 AA 2005-2 M-5 AA- 2005-2 M-6 A+ 2005-2 M-7 A 2005-2 M-8 A- 2005-2 M-9 BBB+ 2005-2 M-10 BBB 2005-2 M-11 BBB- 2005-3 A-1,A-2,A-3,A-4,A-5 AAA 2005-3 M-2,M-3 AA+ 2005-3 M-4,M-5 AA 2005-3 M-6 AA- 2005-3 M-7 A+ 2005-3 M-8 A 2005-3 M-9 A- 2005-3 B-1 BBB+ 2005-3 B-2 BBB MORGAN STANLEY: Moody's Holds B3 Rating on $2.6MM Class M Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of 13 classes of Morgan Stanley Dean Witter Capital I Trust 2001-TOP 5, Commercial Mortgage Pass-Through Certificates, Series 2001-TOP5: -- Class A-2, $15,445,575, Fixed, affirmed at Aaa -- Class A-3, $136,593,000, Fixed, affirmed at Aaa -- Class A-4, $517,000,000, Fixed, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $31,259,000, Fixed, affirmed at Aaa -- Class C, $28,655,000, Fixed, upgraded to Aa2 from Aa3 -- Class D, $10,420,000, Fixed, upgraded to A1 from A2 -- Class E, $20,840,000, WAC, upgraded to Baa1 from Baa2 -- Class F, $13,025,000, WAC, affirmed at Baa3 -- Class G, $10,420,000, Fixed, affirmed at Ba1 -- Class H, $10,420,000, Fixed, affirmed at Ba2 -- Class J, $7,815,000, Fixed, affirmed at Ba3 -- Class K, $5,210,000, Fixed, affirmed at B1 -- Class L, $5,210,000, Fixed, affirmed at B2 -- Class M, $2,604,000, Fixed, affirmed at B3 As of the Jan 16, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 20.8% to $825.3 million from $1.0 billion at securitization. The Certificates are collateralized by 130 mortgage loans ranging in size from less than 1.0% to 6.2% of the pool, with the top 10 loans representing 34.8% of the pool. The largest loan in the pool is shadow rated investment grade. Seventeen loans, representing 8.5% of the pool, have defeased and are collateralized by U.S. Government securities. Two loans have been liquidated from the trust, resulting in minimal realized losses. Currently there are no loans in special servicing. Fifteen loans, representing 10.9% 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 97.1% and 64.7%, respectively, of the pool. Moody's loan to value ratio for the conduit component is 71.0%, compared to 76.3% at Moody's last full review in August 2005 and compared to at securitization. Moody's is upgrading Classes C, D and E due to increased credit support and stable overall pool performance. The shadow rated loan is the Manufactured Home Communities Portfolio Loan at $47.1 million (5.7%), which is secured by seven manufactured housing communities located in Florida, suburban Phoenix, suburban Denver and Las Vegas. The portfolio totals 2,105 units and each community has a full complement of amenities. As of June 2006, the portfolio was 90.5% occupied, essentially the same as at last review. The loan sponsor is Manufactured Home Communities, Inc., a major owner/operator of manufactured housing communities. Moody's current shadow rating is Baa3, the same as at last review. The top three conduit loans represent 13.6% of the outstanding pool balance. The largest conduit loan is the Apache Mall Loan at $55.6 million (6.2%), which is secured by the borrower's interest in a 752,000 square foot regional mall located approximately 70 miles southeast of Minneapolis in Rochester, Minnesota. The center is anchored by Sears, Marshall Field's, J.C. Penney and Herberger's and is the dominant mall in its trade area. As of December 2005 the property was 97.6% occupied, essentially the same as at last review. The loan sponsor is General Growth Properties, Inc. Moody's LTV is 55.5%, compared to 56.8% at last review. The second conduit loan is the Great American Technical Center Loan at $34.5 million (4.2%), which is secured by two office/R&D buildings totaling 237,000 square feet located in Santa Clara, California. The property is part of the 5.5 million square foot Marriott Business Park. This formerly investment grade shadow rated loan is now treated as part of the conduit component due to a decline in performance. At securitization the property was 100.0% leased to three tenants. However two tenants vacated upon lease expiration in November 2004 and the property's sole tenant is Broadcom. Although the Santa Clara office/R&D market has slightly improved since last review, rental rates are significantly below the rates in effect at securitization. Moody's LTV is 91.3%, compared to 71.0% at securitization. The third largest conduit loan is the Great Western Savings Building Loan at $26.6 million (3.2%), which is secured by a 153,000 square foot Class A office building located in downtown Berkeley, California. As of September 2006 the property was 86.1% occupied, compared to 95.0% at last review. Major tenants include Power Bar Inc. and MPR Associates, Inc. Performance has been impacted by decreased occupancy. Moody's LTV is 80.6%, compared to 78.9% at last review. The pool's collateral is a mix of office, retail, industrial and self storage, multifamily and U.S. Government securities. The collateral properties are located in 25 states. The highest state concentrations are California, Minnesota, Florida, Georgia and New Jersey. All of the loans are fixed rate. NASDAQ: Failed LSE Offer Cues Moody's to Affirm Ba3 Ratings ----------------------------------------------------------- Moody's Investors Service confirmed the Ba3 ratings of The NASDAQ Stock Market Inc. following NASDAQ's Feb. 10, 2007 disclosure that its Final Offer to acquire all of the common shares of the London Stock Exchange Group PLC has lapsed. NASDAQ's rating outlook is stable. This concludes Moody's review that commenced on Nov. 20, 2006. The stable outlook on the Ba3 ratings reflects the operational improvements achieved by NASDAQ in the last several years, including the strong performance in 2006. Though event risk associated with the LSE stake continues to be present, over the past three years NASDAQ has reengineered its businesses and reclaimed market share in trading of NASDAQ-listed securities. As a result, the firm is generating improved cash flow which the firm can apply to debt reduction if it chooses. However, there remains uncertainty about how the firm will deploy its improving free cash flow, as the global exchange industry consolidates. "The major unknown regarding future debt levels at NASDAQ is its role in the ongoing domestic and global consolidation of trading platforms," said Moody's Senior Vice President Peter Nerby. "The company is an aggressive consolidator and we expect this to continue." The potential for upward movement in NASDAQ's ratings is limited, reflecting the possibility that NASDAQ may initiate another debt-financed offer to acquire the LSE in the future. This event risk limits the upward potential in NASDAQ's ratings, even if operating performance and leverage measures improve during 2007. Moody's regards NASDAQ's 28.75% stake in the LSE as a long-term strategic investment, which Moody's believes the company intends to hold. However, in the event that the position was sold, proceeds would likely be used to reduce indebtedness, which would sharply improve NASDAQ's credit metrics, including leverage and coverage measures. However, NASDAQ's current Debt/EBITDA ratio of 4.9x is high for a Ba3-rated company. These ratings of NASDAQ were confirmed at Ba3, with a stable outlook: -- Corporate Family Rating at Ba3 -- $750 million, six-year Senior Term Loan B Facility at Ba3 -- $75 million, five-year Revolving Credit Facility at Ba3 -- $434.8 million six-year Term Loan C Facility at Ba3 NASDAQ operates a leading US stock exchange and reported earnings of $30.2 million for 3Q06. NATIONAL GAS: Trustee Can Access Cash Collateral Until June 30 -------------------------------------------------------------- The Hon. A Thomas Small of the U.S. Bankruptcy Court for the Eastern District of North Carolina authorized Richard M. Hutson, II, the Chapter 11 Trustee for National Gas Distributors LLC, to continue using the cash collateral securing repayment of its prepetition obligations to First-Citizens Bank & Trust Company and Chatham Investment Fund QP II, LLC, until June 30, 2007. Chatham Investment Fund QP II and Chatham Investment Fund II, LLC, initially objected while Branch Banking and Trust Company and First-Citizens Bank & Trust Company asked the Court to prohibit the use of cash collateral. The Trustee promised to limit the use of the lenders' cash collateral based on an interim budget, a copy of which is available for free at http://ResearchArchives.com/t/s?19cb First-Citizens holds a first lien on the Debtor's accounts receivable and its proceeds. Chatham Investment holds a second lien on the Debtor's accounts receivable and a first lien on all tangible and intangible assets of the Debtor, including "deposit accounts" as defined in the Uniform Commercial Code. The Trustee will provide the lenders with adequate protection of their liens. National Gas Distributors, LLC -- http://www.gaspartners.com/-- supplied natural gas, propane, and oil to industrial, municipal, military, and governmental facilities. As of mid-December 2005, the Company effectively ceased business operations due to inadequate remaining capital and its inability to arrange for the purchase and delivery of natural gas to its customers. The Company filed for bankruptcy on January 20, 2006 (Bankr. E.D.N.C. Case No. 06-00166). Ocie F. Murray, Jr., Esq., at Murray Craven & Inman LLP represented the Debtor in its restructuring efforts. Richard M. Hutson, II, serves as the Chapter 11 Trustee, and is represented by Emily C. Weatherford, Esq., and John A. Northen, Esq., at Northen Blue LLP. When the Debtor filed for bankruptcy, it estimated between $1 million to $10 million in assets and $10 million to $50 million in debts. NMHG HOLDING: Moody's Withdraws All Ratings for Business Reasons ---------------------------------------------------------------- Moody's Investors Service withdrew all of the ratings for NMHG Holding Co., which include: * corporate family rating of B2; * probability of default rating of B2; * senior secured term loan rating of B1, LGD3, 40%; and * stable outlook. Moody's also withdrew the stable outlook for NACCO Materials Handling Group, Inc. Moody's has withdrawn these ratings for business reasons. NMHG is a wholly owned subsidiary of NACCO Materials Handling Group, Inc. NMHG, headquartered in Portland, Oregon, is a major manufacturer of industrial lift trucks under the Hyster and Yale brand names. NORTHLAKE CDO: Fitch Junks Rating on $14 Million Preference Shares ------------------------------------------------------------------ Fitch downgrades three and affirms two classes of notes issued by Northlake CDO I. These rating actions are the result of Fitch's review process and are effective immediately: -- $174,000,000 class I-MM floating-rate notes affirmed at 'AAA/F1'; -- $56,000,000 class I-A floating-rate notes affirmed at 'AAA'; -- $45,000,000 class II floating-rate notes downgraded to 'A' from 'AA'. -- $13,051,481 class III floating-rate notes downgraded to 'BB' from 'BBB'; and -- $14,000,000 preference shares downgraded to 'C' and assigned a Distressed Recovery rating of 6' from 'BB'. Northlake CDO I is a cash collateralized debt obligation managed by Deerfield Capital Management LLC which closed Feb. 26, 2003. The portfolio is composed of residential mortgage backed securities, commercial mortgage backed securities, asset backed securities, and CDOs. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and conducted cash flow modeling for various default timing, interest rate scenarios, and prepayment assumptions to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since last review, there has been an increase in the par value of the assets for which Fitch does not expect a full par recovery. The weighted average coupon and spread declined to 6.65% from 6.75% and 2.43% from 2.45%, respectively. The additional mezzanine par value coverage test is currently failing and is projected to remain out of compliance in most of the future periods. As a result, preference shares are unlikely to receive the remaining principal. In addition, the 1.4% increase in a three-month LIBOR since last review is projected to compress excess spread in the future. Approximately half of the portfolio is fixed-rate assets which Fitch expects to amortize slower than the reduction in the notional of the interest rate swap, which terminates in March 2012. The ratings of the class I-MM, I-A, and II notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class III notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares addresses the ultimate payment of a 2% internal rate of return. Additionally, the 'F1' rating on the class I-MM notes is based on the support provided to the notes by the put agreement provided by AIG Financial Products Corp. NORTHSTAR CBO: Fitch Junks Rating on $51 Million Class A-3 Notes ---------------------------------------------------------------- Fitch downgrades one class of notes and withdraws ratings on one class of notes issued by Northstar CBO 1997-2 Ltd./Corp. These rating actions are effective immediately: -- $51,456,985 class A-3 notes downgraded to 'C/DR6' from 'CC/DR4'; and -- The 'C/DR5' rating on the class B notes is withdrawn. Northstar 1997-2 is a collateralized bond obligation which closed July 15, 1997 and is managed by ING Investment Management Company. Since the last review on Dec. 2, 2005 all performing collateral in the portfolio has been sold, and according to the Jan. 2, 2007 trustee report only two defaulted assets remain in the portfolio. The class B noteholders reached an agreement with Dresdner Bank, with whom they had a $10 million letter of credit, to redeem 100% of the notes on the July 17, 2006 payment date and thus are no longer outstanding. The class A-3 notes were able to stay current on interest payments through the Jan. 15, 2006 payment date with the use of principal proceeds to pay the interest shortfall. After interest shortfalls were paid, the remaining principal proceeds were used to amortize the A-3 notes. The class A-3 notes began deferring interest on the July 17, 2006 payment date, and have deferred a total of $2.6 million of interest proceeds to date. On the Jan. 16, 2007 payment date, all interest and some principal proceeds were used to pay fees. The remaining principal proceeds were used to pay approximately $103,000 of the current interest due on the class A-3 notes. The remaining $1.7 million of interest due was deferred. The class A-3 notes have received approximately 43% of their original principal balance to date. This downgrade is a result of the CBO's insufficient ability to generate interest and principal proceeds to fully pay interest and principal on the A-3 notes going forward. Fitch is keeping the rating on the class A-3 notes outstanding pending possible recovery on the defaulted assets. Fitch plans to closely monitor this transaction and withdraw ratings when appropriate. NOVELIS CORP: Hindalco Deal Prompts Moody's Ratings Review ---------------------------------------------------------- Moody's Investors Service placed the ratings of Novelis Inc. and its subsidiary, Novelis Corporation, under review for possible downgrade. The review is prompted by the company's report that it has entered into a definitive agreement with Hindalco Industries Limited, one of India's largest non-ferrous metals companies, for Hindalco to acquire Novelis in an all-cash transaction which values Novelis at approximately $6.0 billion, including approximately $2.4 billion of debt. Under the terms of the agreement, Novelis shareholders will receive $44.93 in cash for each outstanding common share. The review for downgrade reflects Moody's concerns that the transaction could be accompanied by an increased level of debt at Novelis to accomplish the acquisition. The review for Novelis's ratings will focus on the completion of the proposed transaction, including the final composition of debt within Novelis and Hindalco, pro-forma credit metrics, the strategic positioning of the combined company, and the potential for a change in financial philosophy at Novelis. Although the transaction has been approved by both companies' boards, Novelis shareholders must still agree to the deal with a two-thirds majority vote. The transaction also remains subject to regulatory approvals. To the extent existing debt at Novelis is repaid, the relevant ratings will be withdrawn. On Review for Possible Downgrade: * Novelis Corporation -- Ba2 Guaranteed Senior Secured Term Loan B, Placed on Review for Possible Downgrade * Novelis Inc. -- B1 Corporate Family Rating, Placed on Review for Possible Downgrade -- B1 Probability of Default Rating, Placed on Review for Possible Downgrade -- Ba2 Guaranteed Senior Secured Revolving Credit Facility, Placed on Review for Possible Downgrade -- Ba2 Guaranteed Senior Secured Term Loan B, Placed on Review for Possible Downgrade -- B2 Guaranteed Senior Global Notes, Placed on Review for Possible Downgrade Outlook Actions: * Novelis Corporation -- Outlook, Changed To Rating Under Review From Stable * Novelis Inc. -- Outlook, Changed To Rating Under Review From Stable Headquartered in Atlanta, Georgia, Novelis is the world's largest producer of aluminum rolled products. In the trailing twelve months ended Sept. 30, 2006, the company had total shipments of approximately 3.2 million tons and generated approximately $9.4 billion in revenues. NOVELIS INC: Supplies Aluminum Sheet for GM's 2007 GMC Acadia ------------------------------------------------------------- General Motors Corp. has selected Novelis Inc. to supply aluminum sheet for the hood of the all-new 2007 GMC Acadia, the brand's first crossover SUV. The aluminum sheet for the Acadia will be supplied from Novelis rolling mills in Oswego, N.Y., and Kingston, Ont. "The automotive market is a key growth segment for Novelis," Buddy Stemple, Vice President and General Manager of Novelis North America's Specialty Products Group, said. "The award of this business signifies the growing demand for light-weight solutions and further demonstrates our ability to deliver innovative products and services to the market." The Acadia is now available in North American showrooms. Built on GM's new unibody Lambda platform, the new crossover vehicle delivers car-like handling and available seating for up to eight adults. Based in Atlanta, Georgia, Novelis, Inc., (NYSE: NVL) (TSX: NVL) -- http://www.novelis.com/-- provides customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America, and South America. The company operates in 11 countries and has around 13,000 employees. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. The company has facilities in Hongkong, Malaysia, Canada, U.S. and Switzerland, among others. * * * As reported in the Troubled Company Reporter on Sept. 7, 2006, Moody's Investors Service downgraded Novelis Inc.'s corporate family rating to B1 from Ba3, the bank revolver rating to Ba3 from Ba2, the bank term loan rating to Ba3 from Ba2, and senior unsecured notes to B2 from B1. Moody's also downgraded Novelis Corp.'s bank term loan rating to Ba3 from Ba2. NOVELIS INC: Hindalco Industries Acquires Firm for $6 Billion ------------------------------------------------------------- Hindalco Industries Ltd. entered into a definitive agreement with Novelis Inc. to acquire the company in an all-cash transaction. The deal values Novelis at around $6 billion, including approximately $2.4 billion of debt. Under the terms of the agreement, Novelis shareholders will receive $44.93 in cash for each outstanding common share. Hindalco is a leader in Asia's aluminum and copper industries, and is the flagship company of the Aditya Birla Group, a $12-billion multinational conglomerate, with a market capitalization in excess of $20 billion. After the transaction, Hindalco, with Novelis, will be the world's largest aluminum rolling company, one of the biggest producers of primary aluminum in Asia, and India's leading copper producer. "The acquisition of Novelis is a landmark transaction for Hindalco and our Group," Aditya Birla Group Chairman Kumar Mangalam Birla said. "It is in line with our long-term strategies of expanding our global presence across our various businesses and is consistent with our vision of taking India to the world. The combination of Hindalco and Novelis will establish a global integrated aluminum producer with low-cost alumina and aluminum production facilities combined with high-end aluminum rolled product capabilities. The complementary expertise of both these companies will create and provide a strong platform for sustainable growth and ongoing success." "After careful consideration, the Board has unanimously agreed that this transaction with Hindalco delivers outstanding value to Novelis shareholders. Hindalco is a strong, dynamic company," Novelis Acting CEO Ed Blechschmidt said. "The combination of Novelis' world-class rolling assets with Hindalco's growing primary aluminum operations and its downstream fabricating assets in the rapidly growing Asian market is an exciting prospect. Hindalco's parent, the Aditya Birla Group, is one of the largest and most respected business groups in India, with growing global activities and a long-term business view." "There are significant geographical market and product synergies, Debu Bhattacharya, Managing Director of Hindalco and Director of Aditya Birla Management Corp. Ltd., said. "Novelis is the global leader in aluminum rolled products and aluminum can recycling, with a global market share of about 19%. Hindalco has a 60% share in the currently small but potentially high-growth Indian market for rolled products. Hindalco's position as one of the lowest cost producers of primary aluminum in the world is leverageable into becoming a globally strong player. The Novelis acquisition will give us immediate scale and a global footprint." The transaction has been unanimously approved by the Boards of Directors of both companies. The closing of the transaction is not conditional on Hindalco obtaining financing. The transaction will be completed by way of a plan of arrangement under applicable Canadian Law. It will require the approval of 66-2/3% of the votes cast by shareholders of Novelis Inc. at a special meeting to be called to consider the arrangement followed by Court approval. The transaction is also subject to certain other customary conditions, including the receipt of regulatory approvals. The transaction will be completed in the second quarter of 2007. About the Aditya Birla Group The Aditya Birla Group -- http://www.adityabirla.com/-- participates in a wide range of market sectors including, viscose staple fiber, non-ferrous metals, cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilizers, sponge iron, insulators, financial services, telecom, BPO and IT services. About Hindalco Headquartered in Mumbai, India, Hindalco Industries Ltd. -- http://www.hindalco.com/-- is structured into two strategic businesses, aluminum and copper, with 2006 revenues of approximately $2.6 billion. Hindalco's integrated operations and operating efficiency have positioned the company as Asia's largest integrated primary producer of aluminum and among the most cost- efficient producers globally. Its copper smelter is the world's largest custom smelter at a single location. Hindalco stock is publicly traded on the Bombay Stock Exchange and the National Stock Exchange of India Ltd. Its current market capitalization is $4.3 billion. About Novelis Inc. Based in Atlanta, Georgia, Novelis, Inc., (NYSE: NVL) (TSX: NVL) -- http://www.novelis.com/-- provides customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America, and South America. The company operates in 11 countries and has around 13,000 employees. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. The company has facilities in Hongkong, Malaysia, Canada, U.S. and Switzerland, among others. NOVELIS INC: Hindalco Merger Cues S&P's Developing CreditWatch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Novelis Inc., including the 'BB-' long-term corporate credit rating, on CreditWatch with developing implications after the company reported a definitive agreement to be acquired by Hindalco Industries Ltd. This CreditWatch placement means the ratings could be raised, lowered, or affirmed depending on the currently unknown sequence of events. The ratings on Novelis or its rated debt could also be withdrawn as details of the financing package are revealed. All of Novelis' rated debt instruments--the $1.4 billion unsecured notes and the $1.8 billion secured credit facilities--include change-of-control provisions that could trigger their redemption. "Novelis' credit profile continues to be pressured by unexpectedly volatile profitability and higher interest expenses stemming from amendments on its senior secured credit facilities," said Standard & Poor's credit analyst Donald Marleau. "Furthermore, persistently high metals prices are contributing to higher debt-financed working capital investments," Mr. Marleau added. The company's liquidity remains exposed to its volatile earnings, although the financial covenants were relaxed through March 31, 2008, such that the company should maintain adequate access under its $500 million revolving credit facility. Standard & Poor's does not rate Hindalco, but the company appears to have a good credit profile, with attractive primary aluminum assets and a solid financial risk profile, offset by low and volatile profitability in its copper assets and a strong growth orientation. The credit implications of Hindalco's ownership by the Aditya Birla Group are unclear. Standard & Poor's will resolve the CreditWatch only after the companies outline the final ownership structure and financing package. OMEGA HEALTHCARE: Earns $55.7 Million in Year Ended December 31 --------------------------------------------------------------- Omega Healthcare Investors Inc. reported $13.4 million of net income on $36.2 million of operating revenues for the fourth quarter ended Dec. 31, 2006, compared with $21 million of net income on $28.4 million of operating revenues for the same period in 2005. For the twelve-month period ended Dec. 31, 2006, the company reported $55.7 million of net income on $135.7 million of operating revenues, compared with $38.8 million of net income on $109.6 million of operating revenues in 2005. Operating expenses for the three months ended Dec. 31, 2006, totaled $13 million, comprised of $8.8 million of depreciation and amortization expense, $3.1 million of general and administrative expenses, a non-cash provision for uncollectible accounts receivable of $800,000 and $300,000 of restricted stock expense. General and administrative expenses of $3.1 million included approximately $1.2 million of professional fees related to the amendments filed on Dec. 14, 2006 to restate the company's annual report on Form 10-K for the year ended Dec. 31, 2005, and its quarterly reports on Form 10-Q for the three-month periods ended March 31, 2006, and June 30, 2006. Other income and expense for the three months ended Dec. 31, 2006, was a net expense of $9.4 million and was primarily comprised of $11.9 million of interest expense, $400,000 of non-cash interest expense, a $3.6 million gain associated with investments in a preferred stock and subordinated note and $600,000 decrease in the fair value of a derivative. Operating expenses for the twelve months ended Dec. 31, 2006, totaled $46.6 million, comprised of $32.1 million of depreciation and amortization expense, $9.2 million of general and administrative expenses (which includes $1.2 million of restatement related expenses), a non-cash provision for uncollectible accounts receivable of $800,000 and $4.5 million of restricted stock expense. Other income and expense for the twelve months ended Dec. 31, 2006, was a net expense of $31.8 million and was primarily comprised of $42.2 million of interest expense, $5.4 million of non-cash interest expense, a $2.7 million gain on the sale of Sun common stock, a $3.6 million gain associated with investments in a preferred stock and subordinated note and a $9.1 million increase in the fair value of a derivative. At Dec. 31, 2006, the company's balance sheet showed $1.2 billion in total assets, $709.9 million in total liabilities, and $465.4 million in total stockholders' equity. About Omega Healthcare Headquartered in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At Dec. 31, 2006, the company owned or held mortgages on 239 skilled nursing facilities and assisted living facilities with approximately 27,302 beds located in 27 states and operated by 32 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on June 29, 2006, Fitch upgraded Omega Healthcare Investors' senior unsecured notes to 'BB' from 'BB-' and its preferred stock to 'B+' from 'B'. Additionally, Fitch assigned the company's secured credit facility at 'BB+'. The Outlook on all Ratings is Stable. OWENS & MINOR: Earns $7.3 Million in Fourth Quarter Ended Dec. 31 ----------------------------------------------------------------- Owens & Minor Inc. earned $7.3 million of net income on $1.6 billion of revenues for the fourth quarter ended Dec. 31, 2006, compared with $15.7 million of net income on $1.2 billion of revenues in the same period last year. Revenue growth in the fourth quarter included the contribution of approximately $282 million in revenue from the recent acquisition of the acute-care distribution business of McKesson Medical- Surgical. Excluding the contribution from the acquired business, revenue grew at a very strong 12.7%. "After a very busy year at Owens & Minor, we are looking forward to rapid integration of the acquired McKesson business, as well as opportunities for growing these new customer relationships in 2007," said Craig R. Smith, president & chief executive officer of Owens & Minor. For the quarter, gross margin was 10.6% of revenue, compared to 10.8% in the same period last year. The company attributed the slight decline in gross margin to the transition of a large volume of new and converted customer accounts. Selling, general and administrative expenses for the quarter, which reflected the fourth quarter charge in the direct-to-consumer business and additional costs associated with transitioning the McKesson acquisition, were 9.1% of revenue, compared to 7.8% in the same period last year. Owens & Minor reported $48.7 million of net income on revenue of $5.5 billion in 2006, compared with $64.4 million of net income on revenue of $4.8 billion in 2005. Reported revenue included approximately $282 million from the recent acquisition of the McKesson business. Excluding revenue from the acquisition, revenue growth was 8.9% for the year. Gross margin for the year was 10.8% of revenue, improved from 10.7% in 2005. Selling, general and administrative expenses for the full year was 8.5% of revenue, compared to 7.9% last year. This increase was driven primarily by increases in the allowance for doubtful accounts receivable for the direct-to-consumer business and the costs associated with the transition of the acute-care business. As a result, operating earnings for 2006 were 1.9% of revenue, down from 2.4% in 2005. At Dec. 31, 2006, the company's balance sheet showed $1.7 billion in total assets, $1.1 billion in total liabilities, and $547.4 million in total stockholders' equity. Net Cash Used in Operating Activities In addition to the increases in working capital related to the McKesson transition, Owens & Minor used cash in 2006 to fund strong organic revenue growth, resulting in negative operating cash flow of $73.6 million for the year. Uses of cash included increased inventory levels and higher receivables. Acquisition Transition Update Effective Sept. 30, 2006, Owens & Minor acquired certain assets of the acute-care distribution business of McKesson Medical-Surgical for approximately $168 million, including approximately $122 million in net inventory. Owens & Minor anticipates that the acquisition will add in excess of $900 million in annual revenues to Owens & Minor. Owens & Minor and McKesson are now at the mid-point of a comprehensive, six-month coordinated plan to transition the acute- care customers, facilities and inventory to Owens & Minor. Transition activities include complex tasks such as developing inventory demand forecasts, cross-referencing product data files, converting customers and their contracts to Owens & Minor systems, expanding selected facilities, conducting training for teammates, moving inventory to Owens & Minor facilities, and upgrading mainframe computer capacity. To date, more than 50% of the customer base has been converted and three of the acquired distribution facilities have been closed. The conversion effort has progressed smoothly and remains on schedule to be completed in March 2007, as originally planned. About Owens & Minor Headquartered in Richmond, Virginia, Owens & Minor Inc. (NYSE: OMI) -- http://www.owens-minor.com/-- is a distributor of national name-brand medical and surgical supplies, and a healthcare supply chain management company. With a diverse product and service offering and distribution centers throughout the United States, the company serves hospitals, integrated healthcare systems, alternate care locations, group purchasing organizations, the federal government and consumers. A FORTUNE 500 company, Owens & Minor also provides technology and consulting programs that enable healthcare providers to maximize efficiency and cost-effectiveness in materials purchasing, improve inventory management and streamline logistics across the entire medical supply chain--from origin of product to patient bedside. * * * As reported in the Troubled Company Reporter on Nov. 7, 2006, Moody's Investors Serice affirmed its Ba2 Corporate Family Rating on Owens & Minor Inc. and held its Ba2 rating on the company's 6.35% Notes due 2016. PACIFIC LUMBER: Panel Objects to Scopac's Use of Cash Collateral ---------------------------------------------------------------- The Ad Hoc Committee of Timber Noteholders of Scotia Pacific Company LLC opposes Scopac's use of the cash collateral beyond that contemplated in the second interim cash collateral order, because Scopac has not satisfied any of the conditions of the order as of Feb. 5, 2007. Specifically, the Ad Hoc Committee argues that Scopac failed to (i) file detailed budgets to its secured lenders and to renegotiate further use of the cash collateral, and (ii) furnish weekly reports to its secured lenders. As reported in the Troubled Company Reporter on Jan. 24, 2007, Scopac obtained the U.S. Bankruptcy Court for the Southern District of Texas' authority, on an interim basis, to use cash collateral in which Bank of America National Trust and Savings Association and Bank of New York Trust Company NA each possess an interest, including funds in the Scheduled Amortization Account, a reserve account used to support principal payments on the Timber Notes. As of Jan. 18, 2007, approximately $42,500,000 in funds was on deposit in the SAR account. Scopac required immediate access to Cash Collateral to fund payroll obligations and payment of necessary operating expenses. Scopac's principal debt consists of more than $700,000,000 of secured obligations owed in respect of the Timber Notes, more than 90% of which claims are owned by the Noteholder Committee's members. The Timber Notes are senior secured obligations of Scopac, secured by, inter alia, the Debtor's timber and related proceeds. Mr. Melko contends that Scopac has made no showing that the Noteholder Committee members' interest in the Timber Notes will be adequately protected. Moreover, in the absence of a budget, the Court has no indication that Scopac can make cash payments or provide the Noteholder Committee members with an additional or replacement lien, or that it is able to provide the "indubitable equivalent" of the Noteholder Committee members' interest in their collateral, Mr. Melko says. The Court set a final hearing tomorrow, Feb. 15, 2007, to consider Scopac's cash collateral request. About Pacific Lumber Headquartered in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transactions pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq., William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr. , Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co- counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co-counsel. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors' exclusive period to file a chapter 11 plan expires on May 18, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 4, http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Scopac Gets Authority to Pay Critical Vendors ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, granted authority to Scotia Pacific Company LLC, at its discretion, to pay all or a portion of the prepetition claims of certain critical vendors up to an aggregate of $198,000, subject to the condition that Scopac may only pay the Critical Vendor Claims identified on the critical vendor list provided to the counsel of the Official Committee of Unsecured Creditors on Feb. 3, 2007. As reported in the Troubled Company Reporter on Feb. 6, 2007, Scopac sought the Court's permission to pay, in the ordinary course of business and in its sole discretion, the prepetition fixed, liquidated and undisputed claims of the Critical Vendors. Scopac further asked the Court to allow it to pay Critical Vendors up to $200,000, if the amounts reflected in its books and records are not accurate. Shortly before its bankruptcy filing, Scopac informed the Court that it undertook the process of identifying and selecting the vendors, suppliers and service providers that were critical to its business. According to Scopac, it evaluated which vendor payments will be critical to avoid business interruption by considering which vendors: -- have the right to impose statutory mechanic's and materialmen's, common carrier or possessory liens on Scopac's property; -- are parties to executory contracts and whose prepetition claims would have to be paid in full if Scopac elected to assume the vendors' contracts; -- supplied goods to Scopac in the ordinary course of its business within 20 days before the Petition Date; and -- have reclamation rights. Scopac sought the Court's authority to satisfy, according to customary terms, up to 100% of a Critical Vendor Claim on these conditions: (a) The Claims will be paid by check or by wire transfer of funds; and (b) By accepting payment, the Critical Vendor agrees to continue extending credit and supplying materials, equipment, goods and services to Scopac. About Pacific Lumber Headquartered in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transactions pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jeffrey L. Schaffer, Esq., William J. Lafferty, Esq., and Gary M. Kaplan, Esq., at Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr. , Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co- counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. John F. Higgins, Esq., and James Matthew Vaughn, Esq., at Porter & Hedges LLP, is Scotia Pacific's co-counsel. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors' exclusive period to file a chapter 11 plan expires on May 18, 2007. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 4, http://bankrupt.com/newsstand/or 215/945-7000). PINNACLE FOODS: Agrees to $2.16 Billion Buyout by Blackstone Group ------------------------------------------------------------------ Pinnacle Foods Group Inc. has entered into a definitive agreement to be acquired by affiliates of The Blackstone Group, a private investment and advisory firm, for approximately $2.16 billion in cash and the assumption of certain obligations. "Pinnacle is a great company that has made tremendous progress over the past three and a half years in revitalizing its brands, building its market presence and positioning itself for long-term strength and success," C. Dean Metropoulos, Executive Chairman of Pinnacle Foods and, through CDM Group, a member of Pinnacle's current ownership group, said. "The transaction announced today speaks volumes about how much we have accomplished together since 2003. I am confident that under the ownership of The Blackstone Group and the continuing leadership of Jeff Ansell and his colleagues on Pinnacle's management team, Pinnacle employees, customers, business partners and investors can expect more great things from Pinnacle in the years ahead." "The men and women of Pinnacle Foods are extremely excited to partner with The Blackstone Group," Jeffrey Ansell, Chief Executive Officer of Pinnacle Foods, who joined the Company last July after twenty-five years at Procter & Gamble, where he was a Corporate Officer, said. "Pinnacle's portfolio of well-known brands has a deep heritage and a strong consumer following, and we look forward to building and strengthening our iconic brands." Upon completion of the transaction, Mr. Metropoulos will be succeeded as Chairman by Roger Deromedi, former Chief Executive Officer of Kraft Foods Inc. Pinnacle Foods produces a number of leading consumer brands including Duncan Hines baking mixes, Vlasic pickles, Hungry Man and Swanson frozen dinners, Log Cabin and Mrs. Buttersworth's syrups, Armour canned meat, Lender's bagels, Aunt Jemima breakfast foods, Celeste pizza and Van de Kamp's and Mrs. Paul's seafood. The company employs more than 3,000 individuals, owns seven manufacturing facilities in the United States, and generates approximately $2.1 billion in annual gross sales. Pinnacle Foods is jointly owned by affiliates of J.P. Morgan Partners, LLC (CCMP Capital Advisors, LLC manages their investment in Pinnacle Foods), by J.W. Childs Associates, L.P., by CDM Group (an investment company controlled by C. Dean Metropoulos), and by former bondholders of Aurora Foods Inc. The sale of Pinnacle Foods to The Blackstone Group is the latest corporate transformation story involving Mr. Metropoulos, who in addition to his current role as Executive Chairman of Pinnacle Foods is head of C. Dean Metropoulos & Co., a Greenwich, Connecticut-based private equity investment and management firm. With twenty years of private-equity investment experience as both a CEO and investor, Mr. Metropoulos assembled and led the investor group that acquired Aurora Foods out of bankruptcy in March 2004, merged it with Pinnacle Foods, and transformed the combined enterprise into the dynamic, successful and profitable food industry powerhouse. In March 2006, its operational transformation by then complete, Pinnacle acquired Armour canned meats, the number-two canned meat brand and number-one brand in Vienna Sausage, from Dial Corporation. In July 2006, Mr. Metropoulos recruited Jeffrey P. Ansell to replace him as CEO and to be the steward of the Pinnacle business going forward. Mr. Ansell came to Pinnacle from Procter & Gamble, where he was President of The Iams Company (Pet Health and Nutrition). "We build companies for the long term," Mr. Metropoulos said. "We are very proud of what we have accomplished at Pinnacle Foods over the past three and a half years and proud that both strategic and financial buyers have had great success in buying businesses we have rebuilt." Under the agreement and plan of merger executed, an affiliate of The Blackstone Group is expected to merge with Crunch Holding Corp., the direct owner of Pinnacle Foods. The owners of Crunch Equity Holding, LLC and the Boards of Directors of Pinnacle Foods and Crunch Holding Corp. have unanimously approved the transaction. The transaction is subject to satisfaction of customary conditions and is expected to close in the first half of 2007. Lehman Brothers is acting as financial advisor to Pinnacle and is providing acquisition financing for the transaction. Centerview Partners and Blackstone Corporate Advisory are serving as financial advisors to Blackstone. Simpson Thacher & Bartlett LLP acted as Blackstone's legal counsel. Pinnacle's legal advisor was Vinson & Elkins LLP. About Pinnacle Foods Group Pinnacle Foods Group Inc. -- http://www.pinnaclefoodscorp.com/-- manufactures and markets branded convenience food products in the United States and Canada. Its product range includes frozen dinners and entrees, frozen seafood, breakfasts, bagels, pickles, peppers and relish, baking mixes and frostings, and syrups and pancake mixes. The company primarily offers its products through its broker network to traditional classes of trade, including grocery wholesalers and distributors, grocery stores and supermarkets, convenience stores, mass and drug merchandisers and warehouse clubs. It also distributes its products through foodservice and private label channels. PINNACLE FOODS: Blackstone Deal Cues S&P's Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on packaged foods company Pinnacle Foods Group Inc., including the 'B+' corporate credit rating, on CreditWatch with negative implications. Cherry Hill, New Jersey-based Pinnacle Foods had about $972 million of total debt outstanding as of Sept. 24, 2006. "The CreditWatch listing follows the company's announcement that it has entered into a definitive agreement to be acquired by affiliates of The Blackstone Group for approximately $2.16 billion in cash and the assumption of certain obligations," said Standard & Poor's credit analyst Christopher Johnson. Under the agreement and plan of merger, an affiliate of The Blackstone Group is expected to merge with Crunch Holding Corp., the surviving entity and direct owner of Pinnacle Foods. The CreditWatch listing reflects a more aggressive financial policy than had been previously incorporated within the prior ratings, as Standard & Poor's believes that a portion of the acquisition price will be financed with debt. "To resolve the CreditWatch listing, we will meet with management to discuss financial policies and operating strategies, and evaluate the ultimate financing and terms of this transaction," added Mr. Johnson. PONTIAC HOSPITAL: S&P Cuts Rating on Series 1993 Bonds to B ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Pontiac Hospital Finance Authority, Michigan's series 1993 bonds, issued for North Oakland Medical Center, to 'B' from 'BB-', reflecting a weakened financial profile characterized by steadily increasing operating losses and minimal liquidity. The rating outlook is negative. "If North Oakland Medical Center's 2007 audit shows significant financial progress, the outlook could be returned to stable," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "Furthermore, if both the privatization and merger are completed with anticipated results, the outlook for the credit will be more positive." A lower rating is currently precluded by: -- a new management team, which has concrete plans to implement a turnaround; -- a decision by the board to pursue an affiliation strategy given the competitive and over-bedded local service area; and, -- management's efforts to restructure the hospital's relationship with the City of Pontiac in a way that would convert NOMC into a private corporation. Between fiscals 2001 and 2005, the hospital lost more than $20 million cumulatively from operations. In fiscal 2006, NOMC lost $8.5 million from operations, compared to a loss of $6 million in fiscal 2005. NOMC's turnaround changes include terminating the contracts of non-producing physicians, which saves about $2.5 million annually, reducing salary expense by eliminating costly agency and overtime usage, and increasing the number of salaried staff. The negative outlook reflects the fact that there are no concrete financial results available yet to confirm the success of management's plan. "We have confidence in the new management team; however, the number of obstacles to overcome is significant and several strategies are also dependent on agreement from third parties, which is outside management's control," added Ms. Keller Macdonald. "A higher rating would be contingent on achieving breakeven financial performance and debt service coverage approaching 2x for several consecutive years." The lowered rating affects $40.8 million in rated debt. REMY INT'L: Closes $153.2 Million Diesel Remanufacturing Biz Sale ----------------------------------------------------------------- Remy International Inc. reported the closing of the sale of its light and medium truck diesel engine and component remanufacturing business conducted by Franklin Power Products, Inc. and International Fuel Systems, Inc. to Caterpillar Inc. Total cash proceeds were $153.2 million, including $3.2 million of an estimated post-closing purchase price adjustment. The company does not anticipate the purchase price will change materially when final post-closing adjustments are determined. "We are pleased that we were able to complete the sale of these non-core businesses," John Weber, President and Chief Executive Officer, said. "Available proceeds from the sale were used to reduce our debt burden while the company continues to focus on improving margins of its core businesses and to delever its balance sheet." As reported in the Troubled Company Reporter on Feb. 5, 2007, the company amended its senior secured revolving credit and term loan facility to effectuate the sale. Under the terms of the amendment, the first $50 million of proceeds from the transaction have been deposited in a restricted account, pledged as collateral to the company's lenders under the Senior Credit Facility and available for withdrawal only with the required consent of senior lenders. To pay certain expenses related to the transaction and make a required distribution of available cash to a joint venture partner of the Business, the company retained $7.8 million of the proceeds. The remaining $95.4 million was used to repay outstanding revolver borrowings under the Senior Credit Facility. The revolving portion of the senior credit facility was permanently reduced by $40 million, from $160 million to $120 million. The company estimates its liquidity to be $98.2 million, consisting of unrestricted cash and cash equivalents of $22.7 million and permitted availability under the company's revolving credit facility of approximately $75.5 million as of the closing date and after application of sale proceeds. Rothschild Inc. is assisting the company in exploring strategic alternatives to delever its balance sheet and enhance its liquidity position, which continues to be affected by debt service and other requirements and automotive industry pressures. About Remy International Headquartered in Anderson, Indiana, Remy International, Inc., manufactures, remanufactures and distributes Delco Remy brand heavy-duty systems and Remy brand starters and alternators, diesel engines, locomotive products and hybrid power technology. The Company also provides a worldwide components core-exchange service for automobiles, light trucks, medium and heavy-duty trucks and other heavy-duty, off-road and industrial applications. Remy was formed in 1994 as a partial divestiture by General Motors Corporation of the former Delco Remy Division, which traces its roots to Remy Electric, founded in 1896. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Moody's Investors Service lowered Remy International, Inc.'s Corporate Family Rating to Caa3 from Caa1; Probability of Default Rating to Caa2 from B3; second priority secured notes to Caa3 from B3; guaranteed senior unsecured notes to Caa3 from Caa1; and the guaranteed senior subordinated notes to Ca from Caa2. REYNOLDS AMERICAN: Good Performance Cues Moody's Ratings Upgrades ----------------------------------------------------------------- Moody's Investors Service upgraded the long-term debt ratings of Reynolds American Inc., and its subsidiaries, including the company's corporate family rating which was raised to Ba1 from Ba2. The rating agency also affirmed RAI's revolving credit and term loan bank facility ratings of Baa2 and its speculative grade liquidity rating of SGL-2. The rating outlook on the long-term ratings is positive. These actions reflect: 1) the diminished litigation risk inherent in the company's tobacco business, 2) the early integration success of Conwood, 3) the positive contribution by Brown & Williamson to RAI's overall market position, and 4) Moody's expectation that the company will continue to improve its free cash flow and maintain strong credit metrics. The ratings upgrade recognizes both the moderating litigation environment, as well as the significant progress the company has achieved in successfully integrating its merger with B&W and its acquisition of Conwood over the last three years. "These strategic transactions, combined with RAI's brand portfolio realignment, which focuses on key, growth brands, should further strengthen the company's U.S. market share and solid financial credit profile", says Moody's Vice President Janice Hofferber. Moody's also recognizes the product diversification achieved by RAI's participation in the growing, smokeless tobacco category, as well as the improved market share position gained by adding B&W brands in the mature U.S. cigarette market. RAI's Ba1 corporate family rating is supported by the company's strong brand portfolio, product innovation, improving profitability and pricing flexibility, offset in part by the litigation risk that its R.J. Reynolds Tobacco Company subsidiary continues to face. While RAI's market position and credit metrics score at the Baa or single-A ratings range, its overall ratings are restrained by the declining cigarette per capita consumption trends in the U.S., as well as the threat of additional anti-smoking laws, regulations and excise taxes. In addition, while acquisitions and mergers have provided some critical product diversification in the growing smokeless tobacco category, as well as improved market share positions in the mature cigarette market, RAI's primary source of operating income continues to be generated by its U.S. cigarette subsidiary. Moody's also notes that the corporate family rating reflects the prospects for improved profitability as a result of the company's brand portfolio realignment and merger integration efforts. However, the full benefits of these initiatives are not likely to be fully materialized for several years and are not without potential execution risk. RAI's ratings also reflect Moody's expectation that the company's financial policies, including dividends, share repurchase and acquisition policies, will remain appropriate and not materially impact the company's strong credit metrics. Finally, while litigation risk is greatly diminished as a ratings factor, RAI's ratings will continue to be shaded by up to two notches for its Ba or lower scores on a number of litigation related factors, including the number of lawsuits that RJRT continues to face and the high percentage of consolidated operating cash flow derived from this subsidiary. RAI's positive outlook reflects Moody's expectation that the company will maintain its strong profitability and ample free cash flow by successfully implementing its strategy of focusing on several key investment brands, driving further cost reduction, and successfully integrating and growing its Conwood and Lane smokeless tobacco businesses. The positive outlook also anticipates continued improvement in the current litigation environment. An upgrade to investment grade would require clear evidence that RAI's brand segmentation strategy and diversification efforts had resulted in the company achieving its financial targets of sustained strong profitability and strong free cash flow. More importantly, financial policies would need to be appropriate for an investment grade issuer, including dividend payout ratios, acquisitions and share repurchase programs that are sufficiently conservative to provide the company ample financial cushion. Accordingly, the company would need to sustain credit metrics including Debt/EBITDA and EBIT/Interest of no more than 2.3x and no less than 6x, respectively. In addition to a stable competitive landscape and strong financial profile, an upgrade would also require further positive developments in the litigation environment. These ratings of Reynolds American Inc. were upgraded: -- Corporate Family Rating to Ba1 from Ba2; -- Probability of Default rating to Ba1 from Ba2; -- $2,938 million senior secured global notes due 2007-2018 to Ba2, LGD4, 66% from Ba3, LGD4, 66%; These ratings of R.J. Reynolds Tobacco Holdings, Inc. were upgraded: -- $161 million guaranteed unsecured notes due 2007-2015 to Ba2, LGD5, 74% from Ba3, LGD5, 73%; and -- $89 million unsecured notes due 2007-2013 to Ba2, LGD6, 96% from B1, LGD6, 96%. These ratings of Reynolds American Inc. were affirmed: -- $550 million senior secured revolving credit facility, affirmed at Baa2, LGD2, 13%; -- $1,542 million senior secured term loan facility, affirmed at Baa2, LGD2, 13%; and -- Speculative Grade Liquidity Rating of SGL-2. Outlook is positive. The rating action does not affect Moody's ratings of tobacco revenue-backed bonds, which are currently under review, direction uncertain. In its review of the tobacco bonds, Moody's considers the legal challenges to the ongoing payments under the Master Settlement Agreement. Such risks include: (a) litigation initiated against the major tobacco companies party to the MSA and the likelihood that negative outcomes could result in the failure of one or more of these companies; (b) litigation threatening the enforceability of the MSA, the Model Statutes or the complementary legislation; and, (c) litigation questioning the diligent enforcement of the Model Statutes by the states. Moody's also reviews trends in tobacco consumption and OPM's market share and anticipated FDA approval of smoking cessation products. In particular, Moody's believes that Freedom Holdings v. Spitzer continues to present the most significant legal risk to tobacco settlement-backed deals because of its ramifications to the enforceability of the MSA, the New York's Model Statute and the complementary legislation and, if adversely decided against the state, its use as precedent in other jurisdictions. Reynolds American Inc. is the ultimate parent company of wholly owned subsidiaries, R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company, Lane Limited and Conwood Holdings, Inc. Sales for the last twelve months ending Dec. 31, 2006 were $8.5 billion. RITE AID: Moody's Junks Rating on New $500 Million Senior Notes --------------------------------------------------------------- Moody's Investors Service rated the proposed secured notes of Rite Aid Corporation at B3 and the proposed senior notes at Caa2. All other long-term ratings were downgraded at the same time. Proceeds from the new notes will be used to refinance existing debts, including refinancing the 2011 senior secured notes and paying down the revolving credit facility. The downgrade acknowledges Moody's opinion that, following the pending acquisition of Eckerd and Brooks from Jean Coutu Inc., the company's credit metrics will meaningfully deteriorate and obtaining post-merger operating efficiencies will prove challenging given the weak store level revenue and profitability of a typical Eckerd store. The negative outlook considers the possibility that the post- transaction credit profile could be weaker than currently anticipated, as well as the challenges in achieving the promised post-merger operating efficiencies and improving credit metrics. This concludes the review for downgrade that commenced on Aug. 25, 2006. Ratings assigned: -- $300 million NEW 10-year second-lien secured notes at B3, LGD4, 54%; and -- $500 million NEW 8-year senior unsecured notes at Caa2, LGD5, 89%. These ratings are lowered: -- $358 million 8.125% second-lien secured notes due 2010 to B3, LGD4, 54% from B2; -- $300 million 9.5% second-lien secured notes due 2011 to B3, LGD4, 54% from B2; -- $200 million 7.5% second-lien secured notes due 2015 to B3, LGD4, 54% from B2; -- $150 million 6 1/8% senior notes due 2008 to Caa2, LGD5, 89% from Caa1; -- $148 million 9.25% senior notes due 2013 to Caa2, LGD5, 89% from Caa1; -- $185 million 6 7/8% senior debentures due 2013 to Caa2, LGD5, 89% from Caa1; -- $295 million 7.7% senior notes due 2027 to Caa2, LGD5, 89% from Caa1; -- $128 million 6 7/8% senior notes due 2028 to Caa2, LGD5, 89% from Caa1; -- Corporate family rating to B3 from B2; -- Probability of default rating to B3 from B2. This rating is affirmed: -- Liquidity Rating at SGL-3. Moody's has withdrawn its ratings on the 4 3/4% convertible notes that were repaid in December 2006 and the 7 1/8% convertible notes that were repaid in January 2007. The rating on the 2011 secured notes will be withdrawn following completion of this transaction. Moody's does not rate the $1.75 billion secured revolving credit facility or the $145 million secured term loan. The downgrade of the corporate family rating to B3 reflects Moody's opinion that the acquisition will weaken Rite Aid's credit profile over the medium-term, given its expectation that credit metrics will weaken from current levels, the likely integration challenges from adding the Eckerd and Brooks stores, and the ongoing need to access the capital markets as different parts of the $7 billion in post-transaction debt periodically come due. The company intends to acquire the U.S. subsidiary of The Jean Coutu Group Inc. That subsidiary, the Jean Coutu Group USA Inc., operates 1859 Eckerd and Brooks drugstores primarily in the Eastern United States. Consideration of $3.4 billion to be paid to Coutu will be composed of $1.45 billion cash and the assumption of Jean Coutu's $850 million senior subordinated notes, plus the issuance of 250 million Rite Aid shares. If Coutu's senior subordinated notes are not assumed by Rite Aid, Rite Aid has lender commitments to increase cash consideration by the equivalent amount. While Coutu's U.S. operations generated fiscal 2006 EBITDA of $368 million, excluding non-recurring charges, an additional $2.3 billion of funded debt plus assumption of the Eckerd and Brooks leases will exacerbate Rite Aid's already high leverage. Moody's believes that post-transaction debt to EBITDA could exceed 7x and free cash flow to debt could fall below 1%. The large scale of this acquisition relative to Rite Aid's existing store base and Eckerd's long history of weak operating performance pose substantial integration challenges. Strategically, however, the acquisition will give Rite Aid greater density and scale in its important Eastern markets with pro-forma revenue of about $27 billion. Several important tasks have been completed since the August 25 transaction report. The shareholders of Rite Aid and Jean Coutu have each approved the transaction. Rite Aid has arranged the funding, including a $1.125 billion accordion to the term loan, that will fund the acquisition cash consideration. However, several key steps remain unfinished including deciding whether Rite Aid will assume Jean Coutu's senior subordinated notes and resolution of possible antitrust concerns. Rite Aid's corporate family rating of B3 considers weak credit metrics such as high leverage and limited free cash flow to debt, the company's aggressive financial policy in which leverage is increasing to acquire the poorly performing Eckerd chain, and the weak performance of the Rite Aid and Eckerd stores compared to best-in-class drugstore operators. Also weighing down the overall rating are the risks associated with the company's ongoing need to refinance its sizable debts in the capital markets, the high level of fixed charges relative to EBITDA, and Moody's opinion that both Rite Aid and Eckerd have a store maintenance backlog. However, benefiting the ratings are the company's geographic diversification, the relative lack of revenue and cash flow seasonality of a drugstore operator, and Moody's expectation that sales of prescription pharmaceuticals will continue to increase at a solid pace. Given the negative outlook, an upgrade over the medium-term is unlikely. Ratings could decline if the post-transaction credit profile is weaker than currently anticipated or if over the next 12 to 18 months if the company is unable to obtain a substantial part of the anticipated $150 million in post-merger operating efficiencies by improving performance at the Eckerd stores. Specifically, if the transaction or integration challenges are likely to result in negative free cash flow on a sustained basis, ratings could be lowered. The rating outlook could be revised to stable if there are reasonable prospects that cash flow will become positive and that the integration will largely proceed according to plan. Rite Aid Corporation, headquartered in Camp Hill, Pennsylvania, is the third largest domestic drug store chain with 3323 stores in 27 states and the District of Columbia. Revenue for the fiscal year ended Dec. 2, 2006 equaled $17.7 billion. The company intends to purchase the U.S. operations, comprised of approximately 1859 Eckerd and Brooks stores, of Jean Coutu Group Inc. ROUGE INDUSTRIES: Wants Removal Period Extended Until April 16 -------------------------------------------------------------- Rouge Industries and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, until April 16, 2007, the time within which they can file notices of removal of civil actions. The Debtors tell the Court that when they filed for bankruptcy on Oct. 23, 2003, they were party to 61 civil actions pending in various Courts. Immediately after filing for bankruptcy, the Debtors focused their efforts on obtaining approval and consummating the asset sale to SeverStal North America Inc. After the asset sale was consummated, the Debtors began to devote substantial amount of their time to winding down their affairs and addressing outstanding issues including claims administration, statutory lien analysis, employee and retiree benefit matters, avoidance action analysis and recoveries, investigation of potential claims and causes of action, disposition of remaining non-cash assets, cash collateral, plan formulation and other estate administrative matters. Headquartered in Dearborn, Michigan, Rouge Industries Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272). Adam G. Landis, Esq., at Landis Rath & Cobb LLP and Alicia Beth Davis, Esq., at Morris Nichols Arsht & Tunnell represent the Debtors. Kurt F. Gwynne, Esq., and Richard Allen Keuler, Jr., Esq., at Reed Smith LLP serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. On Dec. 19, 2003, the Court approved the sale of substantially all of the Debtors' assets to SeverStal N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005. SAHODAR INC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Sahodar, Inc. c/o Sesha Iyengar Registered Agent 40 Glenwood Avenue Woodbridge, NJ 07095 Bankruptcy Case No.: 07-11835 Chapter 11 Petition Date: February 12, 2007 Court: District of New Jersey (Trenton) Debtor's Counsel: Melinda D. Middlebrooks, Esq. Middlebrooks Shapiro & Nachbar, P.C. 140 Eagle Rock Avenue Roseland, NJ 07068-0609 Tel: (973) 228-1616 Fax: (908) 687-9090 Total Assets: $2,277,500 Total Debts: $2,000,000 The Debtor does not have any creditors who are not insiders. SAVVIS INC: Dec. 31 Total Stockholders' Deficit Rose to $138 Mil. ----------------------------------------------------------------- SAVVIS Inc.'s balance sheet at Dec. 31, 2006, showed total assets of $467,019,000 and total liabilities of $605,354,000 resulting in a total stockholders' deficit of $138,335,000. The company's total stockholders' deficit at Dec. 31, 2005, stood at $132,009,000. The company's revenue for 2006 totaled $764.0 million, compared to $667.0 million in 2005. SAVVIS achieved income from operations of $25.5 million for the year, and its consolidated net loss was $44.0 million, compared to a net loss of $69.1 million in the previous year. For the fourth quarter of 2006, revenue totaled $200.7 million, compared to $171.5 million in the fourth quarter of 2005 and $193.7 million in the third quarter of 2006. SAVVIS achieved income from operations of $11.6 million in the fourth quarter, and its consolidated net loss was $6.8 million, compared to a net loss of $13.1 million in the fourth quarter of 2005 and a net loss of $13.6 million in the third quarter of 2006. Cost of revenue, which excludes depreciation, amortization, and accretion, was $118.4 million for the fourth quarter 2006, up 7% from a year ago and 2% from the prior quarter. Gross profit, defined as total revenue less cost of revenue, was $82.3 million, up 36% from a year ago and 7% from the third quarter 2006. Gross profit as a percentage of total revenue was 41% in the current quarter, up from 35% a year earlier and 40% in the prior quarter. Adjusted EBITDA of $36.0 million increased 61% from $22.3 million a year earlier, and 10% from $32.8 million in the previous quarter. Fourth-quarter operating cash flow was $41.0 million and cash capital expenditures were $22.1 million. Commenting on the results, Phil Koen, SAVVIS' chief executive officer, said, "This was a year of significant progress for SAVVIS, with important achievements in operations, capital structure and financial performance. The fourth-quarter results, with excellent cash flow and expanded margins, build on a strong track record of accomplishment. SAVVIS is offering solutions that are changing the way businesses manage information technology. Our model of IT infrastructure as a service delivers solid performance and cost-of-ownership advantages to our customers. Strong market demand is creating value for our stockholders." Total revenue for the fourth quarter increased 17% from a year ago and 4% from the third quarter, primarily reflecting strong growth in hosting revenue. Virtualized utility services contributed $10.3 million of managed hosting revenue, up 145% from a year ago and 16% from the third quarter. Managed hosting services contributed 46% of hosting revenue. Managed IP VPN revenue increased 16% from the prior year and was relatively flat compared to the previous quarter. SAVVIS is transitioning from a strategy of selling virtual private networks on a stand-alone basis to one of selling VPNs as part of an integrated IT infrastructure solution. In addition, as SAVVIS begins the deployment of the company's previously-announced next- generation network, customers may delay purchase of managed network services. SAVVIS expects to go to market with its next- generation network in the third quarter of 2007, and begin to install customers in the fourth quarter. Revenue from Reuters, SAVVIS' largest customer, declined to $20.8 million in the fourth quarter, reflecting reduced revenue from Telerate, which had been SAVVIS' second-largest customer prior to its acquisition by Reuters in 2005. Management anticipates that revenue from the Telerate business, currently approximately $7 million per quarter, will continue to decline over the next two quarters, resulting in total revenue from Reuters of $50-60 million for the full year 2007. Cost of revenue was $118.4 million, including $1.2 million of non- cash equity-based compensation costs, in the current quarter, resulting in gross profit as a percentage of total revenue, or gross margin, of 41% in the current quarter, up from 35% in the same quarter last year and 40% in the third quarter. The improvement in gross margin reflects SAVVIS' scalable business model and ongoing cost-optimization efforts. Income from operations was $11.6 million in the fourth quarter, compared to $2.8 million in the same period last year and $4.1 million in the third quarter 2006. SAVVIS' consolidated net loss was $6.8 million in the fourth quarter, compared to $13.1 million in the same period last year and $13.6 million in the third quarter 2006. The current quarter net loss included a total of $7.2 million of non-cash compensation charges, compared to $1.2 million in the fourth quarter of 2005 and $7.9 million in the third quarter of 2006. In the fourth quarter of 2006, SAVVIS recorded a tax provision of $1.9 million related primarily to U.S. alternative minimum tax for the tax year 2006. While the company used previously generated Net Operating Loss (NOL) deductions for income tax purposes, IRS regulations limit the use of NOL deductions to 90% for alternative minimum tax purposes. Cash Flow Net cash provided by operating activities was $41.0 million in the fourth quarter, compared to $31.3 million in the same period last year and $37.6 million in the third quarter 2006. Cash capital expenditures for the fourth quarter 2006 totaled $22.1 million. SAVVIS' cash position at Dec. 31, 2006, was $98.7 million, compared to $78.1 million at Sept. 30, 2006. In 2006, SAVVIS increased its cash position by $37.5 million and paid down the outstanding balance of $58.0 million under its revolving credit facility. About SAVVIS SAVVIS Inc. (NASDAQ:SVVS) -- http://www.savvis.net/-- provides IT infrastructure services for enterprise applications. The company has IT services platform in North America, Europe, and Asia. SCHOONER TRUST: DBRS Puts Low-B Ratings on 6 Certificate Classes ---------------------------------------------------------------- Dominion Bond Rating Service assigned provisional ratings to the following classes of Schooner Trust, Series 2007-7 Commercial Mortgage Pass-Through Certificates: -- Class A-1 at AAA -- Class A-2 at AAA -- Class XP at AAA -- Class XC at AAA -- Class B at AA -- Class C at A -- Class D at BBB -- Class E at BBB (low) -- Class F at BB (high) -- Class G at BB -- Class H at BB (low) -- Class J at B (high) -- Class K at B -- Class L at B (low) Finalization of ratings is contingent upon receipt of final documents conforming to information already received. The collateral consists of 72 fixed-rate loans secured by 73 multi-family and commercial properties. The portfolio has a balance of $427,572,194. Although approximately 50.2% of loan collateral is located in Ontario, this is mitigated by Ontario being the largest province with a highly urbanized population. Based on DBRS's site inspections, 6.9% of the sample properties were considered to have excellent property quality and 26.9% of the sample to have above-average property quality. Fifty-five per cent of the pool provides for full or partial recourse to the loans. The collateral properties are predominantly located in urban locations. DBRS shadow-rates one loan -- MTS Building, representing 9.6% of the pool -- investment grade at BBB (low). The investment-grade shadow-rated loans indicate the long-term stability of the underlying assets. The pool weighted-average DBRS-stressed term debt service coverage ratio is 1.35x; the weighted-average DBRS-stressed refinance DSCR is 1.39x. The DBRS-stressed loan-to-value is 81.5% and seven loans, 16.8% of the pool, have a DBRS-stressed LTV greater than 90%. SEM REALTY: Case Summary & Three Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: SEM Realty Associates LLC 311 Crosby Avenue Deal, NJ 07723 Bankruptcy Case No.: 07-11976 Debtor-affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- 10 Neptune LLC 07-11974 Type of Business: The Debtors' affiliate, Solomon Dwek, filed for chapter 11 protection on February 9, 2007 (Bankr. D. N.J. Case No. 07-11757). Chapter 11 Petition Date: February 13, 2007 Court: District of New Jersey (Trenton) Debtors' Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver 25 Abe Voorhees Drive Manasquan, NJ 08736 Tel: (732) 223-8484 Fax: (732) 223-2416 Estimated Assets Estimated Debts ---------------- --------------- SEM Realty Less than $10,000 $1 Million to Associates LLC $ 100 Million 10 Neptune LLC $1 Million to $1 Million to $100 Million $100 Million A. SEM Realty Associates LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ PNC Bank, N.A. Monies Owed $22,993,731 Two Tower Center Boulevard 23rd Floor East Brunswick, NJ 08816 B. 10 Neptune LLC's Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jack Hakim $5,900,000 4 Tulip Court Oakhurst, NJ 07755 UBS Payne Weber $3,200,000 c/o Capmark P.O. Box 905111 Charlotte, NC 28290 SENIOR HOUSING: Launches Public Offering of 4.5 Million Shares -------------------------------------------------------------- Senior Housing Properties Trust has commenced a public offering of 4.5 million common shares with: * UBS Investment Bank and Morgan Stanley were the joint book- running managers; * Merrill Lynch & Co., RBC Capital Markets and Wachovia Securities as joint lead managers; and * Ferris, Baker Watts Inc., Janney Montgomery Scott LLC, Morgan Keegan & Co., Inc., Oppenheimer & Co., Raymond James and Stifel Nicolaus as co-managing underwriters. SNH will use the proceeds of this offering to repay borrowings outstanding under its revolving credit facility and for general business purposes. It was contemplated that the underwriters be granted a 30-day option to purchase up to an additional 675,000 common shares to cover over-allotments. About Senior Housing Properties Based in Newton, Massachusetts, Senior Housing Properties Trust (NYSE: SNH) -- http://www.snhreit.com/-- is a real estate investment trust that owns senior living properties throughout the USA. As of Sept. 30, 2006, the REIT owned $1.8 billion of senior living properties with approximately 24,000 living units located in 33 states. * * * As reported in the Troubled Company Reporter on Dec. 8, 2006, Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and senior unsecured debt ratings assigned to Senior Housing Properties Trust. The outlook is stable. As reported in the Troubled Company Reporter on Nov. 30, 2006 Moody's Investors Service affirmed the ratings of Senior Housing Properties Trust at Ba2 and raised the rating outlook to positive. SHAYA DAYTONA: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Shaya Daytona LLC 550 Biltmore Way, Suite 103 Coral Gables, FL 33134 Bankruptcy Case No.: 07-10919 Chapter 11 Petition Date: February 13, 2007 Court: Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Drew S. Sheridan, Esq. Drew S. Sheridan, P.A. 7765 Southwest 87 Avenue, Suite 102 Miami, FL 33173 Tel: (305) 596-3368 Total Assets: $1,201,000 Total Debts: $4,401,368 The Debtor did not file a list of its 20 largest unsecured creditors. SILGAN HOLDINGS INC: Earns $104 Million in Year Ended December 31 ----------------------------------------------------------------- Silgan Holdings Inc. reported $104 million of net income on $2.7 billion of net sales for the year ended Dec. 31, 2006, compared with $87.6 million of net income on $2.5 billion of net sales for the year ended Dec. 31, 2005. Results for 2005 included a non-cash pre-tax charge of $11.2 million for the loss on early extinguishment of debt. The increase in sales was largely the result of the acquisition of the international closures operations. Higher average selling prices across all businesses primarily as a result of the pass through of higher raw material costs, partially offset by volume declines in the metal food and plastic container businesses, also contributed to the increase. "We are pleased with the very positive financial results for the fourth quarter and full year in spite of the challenges that 2006 presented, with adjusted net income per diluted share increasing 14.7% for the full year" said Tony Allott, President and CEO. "Stronger than anticipated results from our recently acquired international closures operations contributed to an overall positive performance from our closures business for the year. Our plastic container business continued to improve its operating margin through cost reductions and productivity improvements even as volumes suffered due to tepid demand levels, partially attributable to inventory corrections. Our metal food container business, which had been impacted by poor crop yields on the West Coast, ended the year on a much stronger note," continued Mr. Allott. "In addition, we exit 2006 with positive momentum as we have completed the acquisitions of Cousins-Currie and substantially all of the White Cap closures businesses, made significant capital investments in our core operations and implemented three significant rationalization programs to reduce our overall cost structure. As a result, we are optimistic about an even stronger 2007 and continued shareholder value creation," concluded Mr. Allott. Income from operations for 2006 was $214.6 million, an increase of $5.6 million as compared to $209 million for 2005, while operating margin decreased to 8% from 8.4% for the same periods. The increase in income from operations was primarily due to the acquisition of the international closures operations and strong operating performance in the domestic closures operations, partially offset by the impact of rationalization charges of $16.4 million and lower volumes in the metal food and plastic container businesses. The decrease in operating margin of 0.4% was primarily the result of the rationalization charges in 2006, which reduced operating margin by 0.6%. Interest and other debt expense before the loss on early extinguishment of debt for the full year 2006 was $59.2 million, an increase of $9.8 million as compared to 2005. This increase was due to higher outstanding borrowings as a result of the acquisitions completed in 2006 and the effects of higher market interest rates. Loss on early extinguishment of debt for 2006 of $200,000 was $11 million lower than in 2005, which is directly attributable to the mid-year refinancing of the company's bank credit facility in 2005. About Silgan Holdings Headquartered in Stamford, Connecticut, Silgan Holdings Inc. (NASDAQ: SLGN) -- http://www.silganholdings.com/-- is a leading manufacturer of consumer goods packaging products. Silgan operates 69 manufacturing facilities in North and South America, Europe and Asia. In North America, Silgan is the largest supplier of metal containers for food products and a leading supplier of plastic containers for personal care products. In addition, Silgan is a leading worldwide supplier of metal, composite and plastic vacuum closures for food and beverage products. * * * As reported in the Troubled Company Reporter on May 24, 2006, Moody's Investors Service raised the Corporate Family Rating for Silgan Holdings Inc. and ratings on Silgan's senior secured first lien credit facilities from Ba3 to Ba2 and changed the outlook from positive to stable. SITHE INDEPENDENCE: Fitch Lifts Sr. Bonds' Rating to BB from BB- ---------------------------------------------------------------- Fitch Ratings upgrades the issuer default ratings of Dynegy, Inc and Dynegy Holding, Inc. to 'B' from 'B-' and removed the ratings from Rating Watch Evolving. The Rating Outlook of Dynegy, Inc. and Dynegy Holding, Inc. is Stable. In addition, the senior secured bonds of Sithe Independence Funding Corp, a separately secured project financed entity owned by Dynegy, have been upgraded to 'BB' from 'BB-'. Approximately $3.2 billion of outstanding debt is affected by the rating action. The rating upgrades are based upon the expectation of an improved risk profile of the companies upon the acquisition of 8,184 MWs of generation assets from the LS Power Group and expectation that Dynegy, as an owner of wholesale power assets, will benefit from higher pricing in wholesale power markets as reserve margins continue to tighten and existing hedges are replaced at current market prices. Fitch expects liquidity will be sufficient to meet needs for the next several years. The acquisition of the LSP assets would result in a generation asset mix that will be more diverse in terms geography, fuel and dispatch. Additionally, the acquisition of the LSP assets will result in a reduction of Dynegy's commodity price exposure as the output of most of the LSP assets are hedged or contracted. The reduction in the consolidated risk profile stemming from the addition of the LSP assets is partially offset by increased commodity risk exposure from the company's Illinois base load plants as a fixed price contract for those assets expired at year-end 2006. However, Fitch expects the expiration of Dynegy's contract with Illinois Power to increase EBITDA by $60 million to $70 million in 2007 as the fixed price in the former contract was approximately 40% below current market prices. Moreover, the Midwest assets include relatively efficient base-load coal plants that are expected to run when available. Fitch's ratings concerns include the projected high leverage for the combined merger company with estimated debt-to-EBITDA for the year ending 2007 to be 5.75 to 6x. In addition, Fitch will be looking for a demonstrated ability to effectively manage commodity risk exposure especially in light of its increased price risk exposure for its Illinois assets as well as the need to manage LSP's hedged positions. Dynegy is engaged in the generation and sale of wholesale electric power. Dynegy owns approximately 11,739 megawatts of wholesale power assets. LSP owns and operates approximately 8,305 megawatts of wholesale power assets. The generation portfolio of the combined company would be located in the Midwest, West and Northeast. Affected Ratings: Dynegy Inc. -- IDR upgraded to 'B' from 'B-'. Dynegy Holdings, Inc. -- IDR upgraded to 'B' from 'B-'; -- Secured bank facilities upgraded to 'BB/RR1' from 'BB-/RR1'; -- Second priority notes upgraded to 'BB/RR1' from 'B+/RR1'; -- Senior unsecured upgraded to 'B+/RR3' from 'B-/RR4'. Dynegy Capital Trust I -- Trust preferred upgraded to 'CCC+/RR6' from 'CCC/RR6'. Sithe Independence Funding Corp. -- Secured bonds upgraded to 'BB' from 'BB-'. SPECTRUM BRANDS: Posts $18.8 MM 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. STATER BROS: Earns $9.9 Million in Quarter Ended Dec. 24, 2006 -------------------------------------------------------------- Stater Bros. Holdings Inc. earned $9.9 million of net income on $904.1 million of sales for the first quarter ended Dec. 24, 2006, compared with $3.3 million of net income on $867 million of sales for the same period ended Dec. 25, 2005. The increase sales in the first quarter of fiscal 2007 is the result of opening new stores, an increase in like store sales and the timing of Christmas day, the only day of the year that the company's stores are closed. Christmas day fell in the second quarter in fiscal 2007 and in the first quarter in fiscal 2006, which had the effect of adding an extra sales day to the first quarter of fiscal 2007. Gross profit increased $15.2 million to $241.9 million in the first quarter of fiscal 2007 from $226.7 million in the first quarter fiscal 2006. The increase is attributed primarily to the company's efforts to reduce the level of promotional discounting during the current year's Thanksgiving and Christmas holidays. Selling, general and administrative expenses increased $3 million in the first quarter of fiscal 2007 compared to the first quarter of fiscal 2006. As a percentage of sales, selling, general, and administrative expenses decreased, due primarily to a reduction of approximately 1%, as a percentage of sales, in union insurance and union bonuses, which was offset, in part, by an increase of 0.3%, as a percentage of sales, in option expense. Interest income was $2.8 million and $2.5 million for the first quarters of fiscal 2007 and 2006, respectively. Interest expense was $14.3 million in the first quarter of fiscal 2007 compared to $14.6 million in the first quarter of fiscal 2006. At Dec. 24, 2006, the company's balance sheet showed $1,057,646,000 in total assets, $1,058,823,000 in total liabilities, resulting in a $1.2 million total stockholders' deficit. Full-text copies of the company's consolidated financial statements for the thirteen weeks ended Dec. 24, 2006, are available for free at http://researcharchives.com/t/s?19b5 Construction of New Distribution Facilities Stater Bros. Markets Inc. has commenced construction of new corporate office and distribution facilities on approximately 160 acres of real property located on the former Norton Air Force Base in the City of San Bernardino, California. The NAFB site will be used to relocate and consolidate Markets' corporate office and all distribution facilities to a single integrated facility from the 13 distribution buildings at 7 different locations in 4 cities currently in use. The projected net cost of the facility is approximately $295 million. The company has expended $16.2 million on the new corporate office and distribution facilities, of which $3.5 million has been classified as a long-term receivable related to a tax increment to be received in future years. Funding of the new corporate office and distribution facilities will come from cash allocated from the proceeds of the $525 million of 8.125% Senior Notes due June 15, 2012, and the $175 million of Floating Rate Senior Notes due June 15, 2010. About Stater Bros. Holdings Based in Colton, California, Stater Brothers Holdings Inc. -- http://www.staterbros.com/-- operates 162 full service supermarkets in the United States. The grocery chain also owns and operates milk and juice processor Santee Dairies aka Heartland Farms. Founded in 1936 by twin brothers Leo and Cleo Stater, Stater Bros. is owned by La Cadena Investments, a general partnership consisting of Stater Bros. chairman and chief executive officer, Jack Brown. * * * As reported in the Troubled Company Reporter on Oct. 4, 2006, Moody's Investors Service affirmed its B1 corporate family rating for Stater Bros. Holdings Inc. and its B1 rating on the company's guaranteed senior unsecured Global Notes. Additionally, Moody's assigned an LGD4 rating to these bonds, suggesting noteholders will experience a 57% loss in the event of default. STEVEN BEARMAN: Chapter 11 Case Summary --------------------------------------- Debtor: Steven A. Bearman, Esq. dba The Bearman Law Firm 12123 Longs Peak Lane Humble, TX 77346 Bankruptcy Case No.: 07-31139 Type of Business: The Debtor is a personal injury trial lawyer. Chapter 11 Petition Date: February 13, 2007 Court: Southern District of Texas (Houston) Debtor's Counsel: Aaron Keiter, Esq. The Keiter Law Firm, P. C. 4545 Mt. Vernon Houston, TX 77006-5815 Tel: (713) 706-3636 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of his 20 largest unsecured creditors. STOCKHORN CDO: Fitch Lifts Rating on $5 Mil. Class E Notes to BB+ ----------------------------------------------------------------- Fitch upgrades and affirms these classes of notes issued by Stockhorn CDO, Limited, effective immediately: -- $11,500,000 class A notes affirmed at 'AAA'; -- $10,000,000 class B notes upgraded to 'AA+' from 'AA-'; -- $3,000,000 class C-1 notes upgraded to 'A+' from 'BBB+'; -- $5,500,000 class C-2 notes upgraded to 'A+' from 'BBB+'; -- $3,000,000 class D notes upgraded to 'A-' from 'BBB-'; -- $2,000,000 class D notes upgraded to 'A-' from 'BBB-'; and -- $5,000,000 class E notes upgraded to 'BB+' from 'BB-'. Stockhorn is a static-pool, synthetic collateralized debt obligation structured by Swiss Re Capital Markets. The CDO was established in July 2002 to issue approximately $40 million in notes that reference a $500 million portfolio of investment grade credit default swaps. The proceeds of the notes were utilized to enter into a deposit swap with Swiss Re Financial Products, which expires in August 2007. The upgrades are due to the continued seasoning of the transaction as well as adequate first loss protection. Stockhorn has six months until the scheduled termination of the deal. Due to the narrowing window of time before the scheduled expiration of the transaction, the required credit enhancement levels have declined, thus improving the adequacy of protection to all classes of notes. The ratings of the notes address the timely payment of interest and the ultimate payment of principal. SUN MICROSYSTEMS: CFO Reaffirms Fourth Quarter Outlook ------------------------------------------------------ Sun Microsystems Inc. is on track to reach its 4% operating profit margin goal for the fourth fiscal quarter ended June 30, 2007, The Associated Press reports citing the company's chief financial officer. CFO Michael Lehman did not provide new guidance for the third fiscal quarter ended March 31, 2007, the AP notes. Sun, however, previously gave a forecast for revenues between $3.38 billion (EUR2.61 biliion) and $3.45 billion (EUR2.66 billion) for the said third quarter. As reported in the Troubled Company Reporter on Jan. 25, 2007, Sun reported $3.56 billion in revenues for the second fiscal quarter ended Dec. 31, 2006, an increase of 7% as compared with $3.33 billion for the second fiscal quarter of 2006. For the second quarter ended Dec. 31, 2006, Sun reported net income of $126 million as compared with a net loss of $223 million for the second quarter of fiscal 2006. About Sun Microsystems Headquartered in Santa Clara, California, Sun Microsystems, Inc. (Nasdaq: SUNW) -- http://www.sun.com/-- provides products and services for network computing. It provides network computing infrastructure solutions that consist of computer systems, network storage systems, support services, and professional and knowledge services. * * * Sun Microsystems, Inc.'s 7.65% Senior Notes due Aug. 15, 2009, carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. T LANE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------- Debtor: T. Lane Corporation dba All-Tex Exteriors dba All-Tex Painting & Carpentry dba All-Tex Windows dba All-Tex Electrical Services dba All-Tex Plumbing Solutions dba All-Tex General Contracting 1431 Walnut Lane Kingwood, TX 77339 Bankruptcy Case No.: 07-31126 Type of Business: The Debtor installs beautiful and sturdy pergolas, arbors, and lattice shade covers. The Debtor also provides free estimates. See http://www.alltexexteriors.com/ Chapter 11 Petition Date: February 12, 2007 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Barbara Mincey Rogers, Esq. Rogers, Anderson & Bensey PLLC 2200 North Loop West, Suite 310 Houston, TX 77018 Tel: (713) 957-0100 Fax: (713) 957-0105 Financial Condition as of January 31, 2007: Total Assets: $238,361 Total Debts: $1,209,093 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo SBA Lending Security $341,091 P.O. Box 659700 Agreement San Antonio, TX 78286-0700 Wells Fargo Line of Credit Goods and services $114,819 P.O. Box 659700 San Antonio, TX 78286-0700 KPRC TV (Channel 2) Goods and services $99,088 P.O. Box 200930 Houston, TX 77216 Norandex Goods and services $80,774 Visa Goods and services $56,863 ABC Supply Co. Goods and services $56,719 Contractors Turnkey Services Goods and services $50,189 Inc. Bank of America (RLOC) Goods and services $48,253 Metals USA Bldg. Prod. Goods and services $41,065 EMBARQ (RH Donneley Goods and services $32,726 Advertising) KHOU (Channel 11) Goods and services $31,994 McCauley Lumber Co. Goods and services $29,645 AT&T Yellow Pages Goods and services $28,883 KTRK-TV (Channel 13) Goods and services $28,651 Pride-Co Plumbing Goods and services $24,317 American Express (92008) Goods and services $17,742 American Express (Delta) Goods and services $16,917 Chase Mastercard Goods and services $16,665 American Express (11008) Goods and services $16,338 Sams Card Discover Goods and services $11,868 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 ruled that Tower Automotive Inc. and its debtor-affiliates' exclusivity hearing is adjourned until Feb. 28, 2007. Judge Gropper extended the Debtors' time to file a plan 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 until May 3, 2007; and (b) solicit acceptances of that plan until 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). TRUMP ENTERTAINMENT: Posts $10.3MM Loss in Quarter Ended Dec. 31 ---------------------------------------------------------------- Trump Entertainment Resorts Inc. reported a loss from continuing operations of $10.3 million for the quarter ended Dec. 31, 2006 compared to a loss from continuing operations of $26.1 million for the three months ended Dec. 31, 2005. For the year ended Dec. 31, 2006, the company's loss from continuing operations was $19.1 million. Operating results from continuing operations for the year ended Dec. 31, 2006, were impacted by: * From July 5 to 7, the forced closing of all Atlantic City casino operations as a result of the New Jersey budget stalemate; * an agreement reached with the South Jersey Transportation Authority on September 2006 to settle certain issues; * a $1.7 million cash settlement as a reduction of general and administrative expenses at Trump Marina in the third quarter; * 2006 corporate development expenses approximately $7.5 million, compared to $5.6 million in 2005, primarily related to the company's unsuccessful efforts to secure a gaming license in Philadelphia; * a reduction of the company's net interest expenses to $43.7 million, as well as a reduction of depreciation and amortization of $5.1 million compared to 2005; * the commencement of the $110 million first phase of the company's renovation capital program; * the construction of a new, $250 million, 786-room hotel tower at the Taj Mahal; * introduction of several labor efficiency programs, which led to a $4.8 million reduction in labor costs net of benefit and other cost increases; * the increase of cash room, food and beverage revenues by approximately $10 million; * completion of the installation of a company-wide data warehouse; and * completion of the installation of a hotel yield management system. Renovation Projects Commenting on the results, Mark Juliano, the company's chief operating officer, said, "Once again, we were able to post increases in net revenues and adjusted EBITDA for the quarter, as we continue to focus our efforts on streamlined operations and marketing to more profitable customers. The first phase of our renovation capital projects has made a noticeable physical difference at our properties, particularly at the Taj Mahal and Plaza, and we believe that we will substantially complete the $110 million first phase of our renovation capital in the first quarter of 2007. "Across the company, we have completed the renovation of all of our standard hotel rooms. At the Taj Mahal, we have completed the first phase of the Spice Road promenade redevelopment project, as well as the new state-of-the-art casino lounge, a new Asian gaming area and a noodle bar. At Trump Plaza, the new 24-hour restaurant, the gaming floor renovation, new suites and a new casino lounge were all completed last year. At Trump Marina, we have also made significant progress in our master planning process." "We will continue to improve the physical appeal of our properties by beginning the second phase of our renovation capital improvement program, which we expect to occur through the first quarter of 2008 and to cost approximately $140 million. Building upon the momentum we realized in the second half of 2006 as a result of the major overhaul of the casino floor and other areas of the Plaza, this next phase of our capital projects will include significant physical changes at each of our properties. These changes are being designed to significantly enhance our customer experience and add value in customer segments in which we have identified revenue opportunity." Achieved Goals James B. Perry, Chief Executive Officer and President stated, "2006 was a year of many significant accomplishments for Trump Entertainment Resorts. When I became CEO and President of the Company, we outlined a series of specific initiatives that we would undertake to improve our net revenues and our operating margins. Today, we have accomplished many of these important goals, and believe that they will yield additional positive results in 2007." "Across our properties, the introduction of new customer segmentation has given us the ability to focus on higher-value customers while increasing cash sales. At the same time, we recognized the continued need to streamline our management processes and achieve payroll savings, and have made substantial progress in realizing these cost savings. In 2007, we plan to continue to reduce payroll costs and to increase retail cash sales, as well as to continue to reduce our gaming cost of sales, in order to drive continued margin improvement. The installation of our data warehouse and yield management systems should begin to benefit our operations in 2007. We have substantially refocused our consumer marketing campaigns and introduced new branding initiatives to promote the overall company, while capitalizing on our physical assets by introducing unique and distinct positioning for each of our properties in the marketplace. "In mid-2007, we plan to introduce a new, unified players' card that will further allow us to capitalize on our diverse and significant marketplace presence. This system will provide the foundation to help drive revenue through new customer loyalty and cross-property play initiatives. While we were disappointed by not receiving a Pennsylvania gaming license, our development efforts continue in multiple locations as we actively seek opportunities to expand the Trump brand and gaming operations expertise both domestically and abroad. "We expect 2007 to be a year of both opportunities and challenges. In 2007, gaming at Pennsylvania racetracks and the proposed partial smoking ban in Atlantic City will have an impact on our operations. While it is too early to predict the impact, we are actively devising strategies to address them in order to minimize any financial strain, including both capital projects and operational initiatives that are designed to substantially enhance the guest experience at our properties." Capital Structure The company reported that as of Dec. 31, 2006 it had cash of $100 million excluding $27.4 million of cash restricted in use by the agreement governing the sale of Trump Indiana. The company indicated total debt had decreased by $30.5 million since Dec. 31, 2005 to $1,407 million at Dec. 31, 2006. Capital expenditures for the year ended Dec. 31, 2006 were approximately $129 million, consisting of $48 million maintenance capital, $63 million renovation, and $18 million for the Taj Mahal Tower. 2007 Outlook The company provided the following insights into 2007: 1) continued improvement in operating performance is expected throughout 2007, and the company continues to pursue the goal of obtaining industry average margins in the second half of the year; 2) due to the uncertainty of the impact of the competition from Pennsylvania and the proposed partial smoking ban in Atlantic City, the company does not feel it is prudent to give specific guidance as to operating performance at this time. The company's intention is to monitor these events and provide more specific guidance by mid-year; 3) the expected expense for stock based compensation for 2007 is approximately $4 million. Stock based compensation is a non-cash operating expense; 4) depreciation expense should be approximately $75 million for the year ended Dec. 31, 2007; 5) interest expense for 2007 will be approximately $120 million to $125 million, net of capitalized interest; 6) In 2007, the company expects to record a non-cash charge- in-lieu of income taxes of $3.0 million to $5.0 million; 7) capital expenditures are expected to be as follows: -- Renovation and updating capital of $130 to $140 million; -- Taj Mahal Tower of $100 to $110 million; -- Maintenance and technology of $45 to $50 million; and -- 2007 estimated range of $275 to $300 million. About Trump Entertainment Based in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. (Nasdaq: TRMP) -- http://www.trumpcasinos.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005. The Plan took effect on May 20, 2005. * * * As reported in the Troubled Company Reporter on Oct. 18, 2006, Moody's Investors Service confirmed Trump Entertainment Resorts Holdings L.P.'s B3 Corporate Family Rating in connection with Moody's implementation of Probability-of-Default and Loss-Given- Default rating methodology. UIC INSURANCE: U.S. Court Grants Relief Under Sec. 304 ------------------------------------------------------ The Honorable James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York has issued an order granting UIC Insurance Company Ltd., relief under Section 304 of the U.S. Bankruptcy Code. The order recognizes the Debtor's foreign proceedings in the High Court of Justice of England and Wales and granted UIC Insurance injunctive relief that will give full force and effect to a Scheme of Arrangement in the United States. The Debtor is subject to a collective proceeding currently pending before the English High Court, in accordance with a Scheme of Arrangement pursuant to Section 425 of the Companies Act 1985 between the Debtor and its Scheme Creditors. On Aug. 13, 1996, Ipe Jacob and Nigel Ruddock were appointed joint provisional liquidators for UIC Insurance. On Oct. 6, 2006, the English Court sanctioned the Scheme of Arrangement, which became effective on Nov. 6, 2006. Judge Peck said that UIC's Scheme of Arrangement will be given full force and effect in the United States and will be binding and enforceable against any Scheme Creditor. Judge Peck also added that the valuation statement of the Scheme Officers will be final and binding on the company and any Scheme Creditors. Judge Peck further enjoined all persons and entities from taking any action inconsistent with the Scheme. He said all persons and entities are permanently enjoined from: a. repossessing, transferring, or disposing any Scheme Assets in the U.S. to any person other than the Scheme Officers; b. commencing or continuing any action or legal proceeding in connection with any Scheme Claim against the company or any Scheme Asset in the U.S.; c. enforcing any judicial, quasi-judicial, administrative or regulatory judgment, assessment or order, or arbitration award against the company with respect to any Scheme Claim; d. drawing down in excess of any letter of credit established by the company in connection with any Scheme Claim; and e. withdrawing from, setting off against, or applying property that is the subject of any trust or escrow agreement in which the company has an interest in excess of amounts expressly authorized by the terms of the contract and other agreement in relation to any Scheme Claim. Judge Peck required all persons or entities in possession, custody, or control of Scheme Assets to turn over and account for those assets to the Scheme Officers. Judge Peck also required all persons and entities that are beneficiaries of letters of credit established by the company or parties to any trust, escrow, or similar arrangements in which the company has an interest, and which are Scheme Assets, to: a. provide notice to the Scheme Officers' U.S. Counsel, Chadbourne & Parke LLP, of any drawdown, withdrawal from, set off against, or other application of property, together with information sufficient to permit the Scheme Officers to assess the property, including the date and amount of the drawdown, and a copy of any contract related to the trust or agreement; and b. turn over and account to the Scheme Officers all funds resulting from such drawdown, withdrawal, setoff, or other application in excess of amounts expressly authorized by the terms of the contract. Judge Peck further required any person or entity that is a party to any action or legal proceeding in which the company is or was named as a party to place the Scheme Officers' U.S. Counsel, Chadbourne & Parke LLP, on the master service list, and to take other steps necessary to ensure that Chadbourne will receive: a. copies of any and all documents served by the parties of those actions or legal proceedings; and b. any and all correspondence or other documents circulated to parties named in the master service list. Copies of Judge Peck's order and the Scheme of Arrangement are available upon written request to: Howard Seife, Esq. Francisco Vazquez, Esq. Chadbourne & Parke LLP 30 Rockefeller Plaza New York, NY 10112 Tel: (212) 408-5100 Creditors have until noon on March 7, 2007, to submit completed claim forms to the Scheme Officers in the United Kingdom. UIC Insurance Company Limited filed a petition under Section 304 of the U.S. Bankruptcy Code on Aug. 16, 1996 (Bankr. S.D.N.Y. Case No. 96-44385). UNO RESTAURANT: Weak Sales Cue Moody's to Junk Corp. Family Rating ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of Uno Restaurants Holdings, Corps $142 million, 10% senior secured notes to Caa2 from Caa1 and corporate family rating to Caa1 from B3. The outlook is negative. Ratings downgraded are; -- Corporate family rating to Caa1 from B3 -- Probability of Default rating to Caa1 from B3 -- $142 million second-lien senior secured notes rated to Caa2, LGD4, 61% from Caa1, LGD4, 60% Ratings affirmed are; -- Speculative Grade Liquidity Rating of SGL-4 The rating outlook is negative. The Caa1 corporate family rating reflects the company's persistently high leverage, modest coverage, and negative free cash flow generation, as well as a history of weak same store sales, negative traffic patterns, cost pressures, and geographic concentration. Also constraining the ratings is the considerable competitive pressures in casual dining segment overall. The ratings due take into consideration the company's progress at extending the Uno brand beyond its historical image as a pizza restaurant, the predictability of the royalty stream from franchisees, and a relatively updated store base. Uno Restaurants Holding Corp, headquartered in Boston, Massachusetts, operates and franchises 212 "Uno Chicago Grill" casual dining restaurants principally in New England and the Mid-Atlantic. Revenue for the fiscal year ending October 1, 2006 was approximately $314 million. VALASSIS COMMS: Moody's Lowers Corporate Family Rating to B1 ------------------------------------------------------------ Moody's Investors Service downgraded Valassis Communications, Inc.'s Corporate Family rating to B1 from Ba1 and the company's existing senior notes to Ba2 from Ba1, concluding the review for downgrade initiated in connection with the proposed $1.2 billion acquisition of ADVO, Inc. The downgrade reflects the significant increase in debt-to-EBITDA leverage to approximately 6.2x from 2.6x that will result from funding the acquisition with debt. Moody's also assigned a Ba2 rating to the proposed $820 million senior secured credit facility, composed of a $120 million revolver, $540 million term loan and a $160 delayed draw term loan. The ratings on the credit facilities reflect anticipated support of $590 million of junior debt. The rating outlook is stable. Downgrades: * Valassis Communications, Inc. -- Corporate Family Rating, Downgraded to B1 from Ba1 -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Ba2, LGD2, 26 from Ba1, LGD4, 56 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2, LGD2, 26 from Ba1, LGD4, 56 Ratings Assigned: * Valassis Communications, Inc. -- Guaranteed Senior Secured Credit Facility, Assigned Ba2, LGD2, 26 Outlook Actions: * Valassis Communications, Inc. -- Outlook, Changed To Stable From Rating Under Review The B1 Corporate Family rating reflects the company's high leverage, moderate growth prospects, and the challenges associated with: 1) stabilizing free-standing insert and shared mail businesses that are experiencing significant margin pressure, 2) continuing ADVO's transition to a new enterprise resource planning system, and 3) integrating two companies involved in contentious litigation related to the enforceability of the merger agreement. The rating also reflects that the ADVO acquisition will improve Valassis' product and customer diversity, and enhance the company's scale and reach in media services. The stable rating outlook reflects Moody's expectation that Valassis will capitalize on its strong market positions in shared mail, targeted marketing, and FSI, and realize cost savings from integrating the two companies to generate a moderate level of free cash flow that the company will use to reduce debt. Moody's anticipates that this will result in debt-to-EBITDA leverage declining to approximately 5.0x within 18-24 months of the acquisition closing. Valassis Communications, Inc. headquartered in Livonia, Michigan, offers a wide range of promotional and advertising products including newspaper advertising and inserts, sampling, direct mail, targeted marketing, coupon clearing and consulting and analytic services. Annual revenue will approximate $2.5 billion upon completion of the ADVO acquisition. VISANT HOLDING: Thompson Dean Resigns as Director ------------------------------------------------- Visant Holding Corp. reported that Thompson Dean, a director and member of the Executive Committee of the Registrant, and Visant Corporation and Visant Secondary Holdings Corp., the Registrant's subsidiaries, resigned effective on date from his directorships with these entities in connection with the expiration of his consulting arrangement with Credit Suisse First Boston LLC with respect to such companies. No replacement has been named at this time. Headquartered in Armonk, New York, Visant is a leading marketing and publishing services enterprise servicing school affinity, direct marketing, fragrance and cosmetics sampling, and educational publishing markets. The company recorded revenues of $1.5 billion in fiscal 2005. * * * As reported in the Troubled Company Reporter on Jan. 4, 2007, Moody's Investors Service affirmed Visant Holding Corp.'s Corporate Family rating at B1, and Senior Notes' rating at B3. WALCO OIL: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Walco Oil Company, Inc. P.O. Box 700 Richton, Mississippi 39476 Bankruptcy Case No.: 06-50275 Type of Business: The Debtor is an oil petroleum retailer. Chapter 11 Petition Date: April 13, 2006 Court: Southern District of Mississippi Judge: Edward Gaines Debtor's Counsel: Craig M. Geno, Esq. Harris & Geno, PLLC 587 Highland Colony Parkway P.O. Box 3380 Ridgeland, MS 39157 Tel: (601) 427-0048 Fax: (601) 427-0050 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. WARNER MUSIC: Operating Income Drops to $80 Mil. in First Qtr 2007 ------------------------------------------------------------------ Warner Music Group Corp. reported its first-quarter financial results for the period ended Dec. 31, 2006. Financial Highlights -- Total revenue of $928 million for the first quarter of fiscal 2007 decreased 11% from the prior-year quarter. -- Digital revenue was $100 million, or 11% of total revenue in the quarter, up 45% from $69 million in the prior-year quarter and down 4% sequentially from $104 million in the fourth quarter of fiscal 2006. -- Operating income declined 44% to $80 million in the quarter compared to $144 million in the prior-year quarter. -- Operating income before depreciation and amortization declined 31% to $140 million from $202 million in the prior- year quarter. "Last year's successes provide an excellent foundation on which to build. As expected, we faced unusually difficult year-over-year comparisons this quarter, which do not reflect our prospects for the fiscal year," said Edgar Bronfman, Jr., Warner Music Group's Chairman and CEO. "We remain the leader in the music industry's digital transformation, having concluded a series of key partnership agreements and having reached the $100 million threshold in digital revenue for two consecutive quarters. Even in the face of a challenging market backdrop, we continue to deliver value to our shareholders and aggressively seek new opportunities for growth." Michael Fleisher, Warner Music Group's Executive Vice President and CFO, added: "As we have previously discussed, based on the timing of our releases, we expect 2007 to be a back-end-weighted year. We manage our performance on a full-year basis, and are confident about the 2007 fiscal year." A full-text copy the company's Form 10Q regulatory filing is available for free at http://ResearchArchives.com/t/s?19c5 Warner Music Group Corp. (NYSE: WMG) -- http://www.wmg.com/-- is a music company that operates through numerous international affiliates and licensees in more than 50 countries. * * * As reported in the Troubled Company Reporter on Nov. 2, 2006, Standard & Poor's Ratings Services raised its long-term corporate credit and senior secured ratings on Warner Music Group Corp. to 'BB-' from 'B+'. At the same time, Standard & Poor's raised its senior subordinated debt rating on WMG to 'B' from 'B-', two notches below the 'BB-' corporate credit rating. S&P said the outlook is stable. Warner Music Group Corp. carries Fitch Ratings' BB- issuer default rating assigned in May 2006. WERNER LADDER: Court Okays 2nd Forbearance Pact with Black Diamond ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved a second forbearance agreement between Werner Holding Co. (DE) Inc. aka Werner Ladder Company, its debtor-affiliates, and a group of lenders led by Black Diamond Commercial Finance LLC, The CIT Group/Business Credit Group, and Morgan Stanley Senior Funding. The new Forbearance Agreement will, among others, allow the Debtors to determine whether a sale or a standalone reorganization process will maximize the value of their estates. Additionally, it will ensure Werner's continued access to all the funds necessary to operate its business and to complete its operational and financial restructuring. Commenting on the Court's decision, James J. Loughlin, Jr., Werner's interim chief executive officer, said, "We are pleased that the [C]ourt has approved our [S]econd [F]orbearance [A]greement with Black Diamond. This agreement provides Werner with the financial flexibility to complete its restructuring and continue positioning our business for long-term success." Asset Sale Pursuant to the Court-approved Second Forbearance Agreement, the Debtors agreed to sell substantially all of their assets to Black Diamond 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. The Debtors 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. Second Forbearance Agreement Under the Second Forbearance Agreement, the Debtors and Black Diamond agreed that the forbearance period will run through the earlier of: (i) May 17, 2007; (ii) the date that the Debtors breach their obligations under the Second Forbearance Agreement; (iii) the occurrence or existence of any event of default under the debtor-in-possession financing agreement documents other than a subject default; and (iv) the failure to occur of certain milestones. If the Debtors file a confirmable plan of reorganization with the Court by March 20, 2007, the Debtors and Black Diamond will negotiate further extension of the Second Forbearance Agreement. Milestones Under the Second Forbearance Agreement, Black Diamond requires the Debtors to satisfy these milestone dates: Jan. 29, 2007 Deadline to complete and deliver to all creditor constituencies the pro-forma projections through December 31, 2009, premised upon action plan and 2007 Budget, and the form and content that are reasonably satisfactory to Black Diamond and Jim Loughlin, as Corporate Restructuring Officer and Interim Chief Executive Officer of the Debtors Feb. 15, 2007 Deadline for the Debtors to file a motion pursuant to 11 U.S.C. Sec. 363 to approve (i) bid procedures for a sale of substantially all of their assets and (ii) payment of work fees and expense reimbursement in connection with an exit facility as part of a confirmable Plan Feb. 16, 2007 Deadline for the Debtors to complete Information memorandum and other related materials that can be utilized in connection with an emergence strategy, provided that the Debtors will (i) continue to consult in good faith and on a frequent, periodic basis with the DIP Lenders, and (ii) deliver a draft of the Information Memorandum by February 8 March 7, 2007 Deadline for the Debtors to obtain a Court order approving the Procedures Motion March 20, 2007 Deadline for the Debtors to file a confirmable Plan or elect to exclusively pursue the 363 Sale April 20, 2007 Deadline to mail cure notices pursuant to Section 365 of the Bankruptcy Code, given that a confirmable Plan is not filed by March 20 May 1, 2007 363 Sale Auction May 7, 2007 Deadline for the Debtors to obtain a Court order approving the 363 Sale May 17, 2007 Deadline to close the 363 Sale The Debtors will pay forbearance fees totaling $123,750. The Debtors will also grant the DIP Lenders call protection of 101% of the amount of the outstanding loans under the DIP Agreement through May 31, 2007, if the DIP is refinanced by another lender; provided that the amount but will not be payable if the loan is repaid from proceeds of the 363 Sale or exit financing under a confirmable Plan. The parties further agreed that 100% of the net asset sale proceeds will be used to repay the DIP Term Loan, except for individual assets sales with net proceeds less than $5,000. Borrowings & Letter of Credit In consideration for the Debtors' agreement to comply with the milestones and conditions, the DIP Lenders agreed that, before the filing of the Procedures Motion, the Debtors will not make any revolver draws. If the Procedures Motion is filed by February 15, then up to $3,500,000 can be drawn on the Revolver through March 7. Thereafter, during the Forbearance Period, the Debtors can borrow: * March 7, 2007, through March 31, 2007: Maximum Revolver Balance during the period capped at $10,500,000; * April 1, 2007, through April 30, 2007: Maximum Revolver Balance during the period capped at $15,500,000; and * May 1, 2007, through May 17, 2007: Maximum Revolver Balance capped at $14,500,000. During the Second Forbearance Period, the Debtors may ask for the issuance of up to $5,000,000 in the aggregate of letters of credit -- subject to satisfactory DIP Agent review -- plus additional letters of credit in amounts and for purposes to be agreed upon by the DIP Agent in good faith. The Debtors' obligations to comply with the financial covenants under the DIP Agreement will be suspended through the Second Forbearance Period. The Debtors will not participate in any hedging transaction or make any payments on pension obligations during the Second Forbearance Period. In addition, the Debtors will not make any products liability payments to claimants in excess of $490,000 during the Second Forbearance Period. A full-text copy of the Second Forbearance Agreement is available at no charge at: http://bankrupt.com/werner2ndforbearanceagreement.pdf Plan Update The Court has extended the Debtors' exclusive period to file a plan of reorganization until Thursday, Feb. 15, 2007, however the Court ruled that the deadline will be extended until March 9, 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. About Werner Ladder 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. WINDSTREAM CORP: To Offer Private Placement of $500MM Senior Notes ------------------------------------------------------------------ Windstream Corporation intends to offer $500 million aggregate principal amount of senior notes due 2019. The offering is expected to be completed this month, subject to market and other conditions. Windstream intends to use the net proceeds from the offering to repay approximately $500 million of amounts outstanding under the term loan portion of its senior secured credit facilities. Windstream is also seeking the consent of lenders to an amendment and restatement of its $2.9 billion senior secured credit facilities. Windstream is seeking to amend and restate its senior secured credit facilities to, among other things: * reduce the interest rate payable under tranche B of the term loan portion of the facilities; modify the pre-payment provisions; * modify certain covenants to permit the consummation of the split-off of its directory publishing business; and * make other specified changes. The company expects to complete the amendment and restatement in February 2007. Headquartered in Little Rock, Arizona, Windstream Corporation (NYSE: WIN) -- http://www.windstreamcomm.com/-- provides voice, broadband and entertainment telecommunications services in 16 states with approximately 3.3 million access lines in service. WINDSTREAM CORP: Proposed $500MM Senior Notes Rated BB+ by Fitch ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to Windstream Corporation's proposed offering of $500 million of senior unsecured notes due 2019. Proceeds from the offering will be used to repay a portion of its senior secured Term Loan B facility, which currently has $1.9 billion outstanding. The new notes will rank equally with Windstream's existing $2.546 billion of senior unsecured notes. Windstream's issuer default rating is 'BB+' and the rating outlook is stable for all ratings. Concurrent with the refinancing announcement, Windstream disclosed that it will seek the consent of its lenders to amend and restate its senior secured credit facilities to reduce the interest rate on its Term Loan B facility, modify the prepayment provisions, modify certain covenants to permit the consummation of the anticipated split-off of its directory business and to make other specified changes. The company expects to complete this action in February 2007. Windstream's issuer default rating of 'BB+' and Stable Outlook incorporates expectations for Windstream to generate strong operating cash flow, stable credit-protection metrics and to have access to ample liquidity. The company's business profile should be relatively stable due to its primarily rural operations. Fitch forecasts Windstream's dividend payout ratio as a percentage of its net free cash flow in the 70%-75% range. Fitch expects the company to maintain a relatively stable leverage ratio, with debt-to-EBITDA in the 3.2x-3.3x range over the next few years. Pro forma for the mid-2006 merger with Valor Communications Group, Inc., gross debt-to-operating EBITDA was 3.3x in 2006. Liquidity is supported by the company's undrawn $500 million revolving credit facility, which will be in place until July 2011. Debt maturities in the next several years, including the required amortization of its term credit facilities, are nominal. Fitch believes that the company's rural footprint provides it with modestly lower exposure to competition than the urban-based regional Bell operating companies. Thus far, Windstream's primary competition has been from wireless substitution for voice services and cable modem competition for their high-speed data services. In 2007, Fitch expects Windstream to experience increased pressure on its revenues and cash flow from competition from cable operators for voice services. At year-end 2006, cable telephony reached approximately 40% of Windstream's access lines. Windstream will need to be successful in mitigating this pressure by growing revenue from new services, including the continued deployment of high-speed data services, and by including satellite-provided video services in its bundle. In addition, the company will attempt to mitigate pressure on cash flow through cost controls and the realization of synergies arising from the combination of its predecessor companies' operations. On Dec. 13, 2006, Windstream reported the split-off of its directory publishing business in a tax-free transaction. The total value of the transaction is $525 million and will consist of up to $250 million of debt and an exchange for approximately $275 million in common stock. The company entered into an agreement with Welsh, Carson, Anderson & Stowe, a private equity firm that currently owns approximately 4.1% of Windstream. As part of the transaction, Windstream in effect will exchange shares in the directory business for this stake. Prior to the close of the transaction, the publishing subsidiary will distribute to Windstream approximately $220 million of debt, and pay a $30 million special dividend. Windstream will exchange all or a portion of the debt for existing debt, which will be retired. The $30 million from the special dividend, which represents the tax basis in the directory business, will be used to retire debt or repurchase common equity. The transaction is expected to be completed in 2007. Fitch believes the transaction will have a neutral to slightly delevering effect on Windstream. The effect on free cash flow is expected to be neutral after taking into consideration lower income taxes, lower interest payment and lower dividend requirements. At Dec. 31, 2006, Windstream had approximately $5.5 billion in outstanding debt and $387 in cash and short-term investments. Windstream's credit facilities consist of a $500 million five-year revolving credit facility and $2.4 billion in term credit facilities. The term credit facilities are composed of a Tranche A facility of $500 million outstanding which matures in July 2011 and a Tranche B facility of $1.9 billion outstanding which matures in July 2013. The credit facilities are secured by assets in a portion of Windstream's regulated wireline business as well as by the assets of its unregulated businesses. Regulated subsidiaries that required the approval of the transaction, or approval of a grant of a guarantee, by state regulators did not provide a guarantee to the senior secured credit facilities. Principal financial covenants in the credit facilities require a minimum interest coverage ratio of 2.75x and a maximum leverage ratio of 4.5x. There will be limitations on capital spending, and the dividend will be limited to the sum of excess free cash flow and net cash equity issuance proceeds subject to pro forma leverage of 4.5x or less. WINDSTREAM CORP: S&P Rates Proposed $500 Mil. Senior Notes at BB- ----------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB-' rating to Little Rock, Arkansas-based Windstream Corp.'s proposed offering of $500 million senior notes due 2019. The rating on the new notes is two notches below the corporate credit rating, reflecting the significant amount of secured debt in the capital structure. All other ratings on Windstream Corp are affirmed. The outlook is negative. Proceeds from the offering will be used to repay $500 million outstanding under the term loan portion of the company's senior secured credit facilities. The notes will be issued under Rule 144A with registration rights. "The ratings reflect an aggressive shareholder-oriented financial policy, accelerating competition for voice and data services from cable operators, and flat-to-declining revenues from Windstream's mature local telephone business," said Standard & Poor's credit analyst, said Standard & Poor's credit analyst Susan Madison. Tempering factors include the company's position as the dominant provider of local and long distance telecommunications services in secondary and tertiary markets, which may experience less aggressive cable voice over Internet protocol deployment; growth potential from data and Internet services; solid operating margins; and moderate capital requirements. Windstream is a rural local exchange carrier providing voice and data communication services to about 3.2 million access lines in 16 states in the midwestern and southeastern U.S. and parts of New York and Pennsylvania. The company's small competitive local exchange carrier business is not a material rating consideration. Windstream was formed through the merger of ALLTEL Corp.'s wireline business with Valor Communications Group Inc. Debt outstanding at Dec. 31, 2006, totaled about $5.5 billion. * * * As reported in the Troubled Company Reporter, Dec. 19, 2006, Moody's Investors Service affirmed Windstream Corporation's Ba2 corporate family on the reported split-off of its directory publishing business to affiliates of Welsh, Carson, Anderson and Stowe. * 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; http://www.beardaudioconferences.com/ March 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION The Great Debate Sydney, Australia Contact: http://www.turnaround.org/ March 14-15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Atlanta, GA Contact: http://www.turnaround.org/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Management Event Long Island, NY Contact: http://www.turnaround.org/ March 15-18, 2007 NATIONAL ASSOCIATION OF BANKRUTPCY TRUSTEES NABT Spring Seminar Ritz-Carlton Buckhead, Atlanta, GA Contact: http://www.NABT.com/ March 15, 2007 TURNAROUND MANAGEMENT ASSOCIATION Martini Madness Cocktail Reception with Geraldine Ferraro Westin Buckhead, Atlanta, GA Contact: 678-795-8103 or http://www.turnaround.org/ March 20, 2007 THOMSON WEST LEGALWORKS Insurance and Reinsurance Allocation Superbowl New York, NY Contact: http://www.westlegalworks.com/ March 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION The Next Wave of Distressed Businesses: A Panel Discussion South Florida Contact: http://www.turnaround.org/ March 21, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ March 27, 2007 TURNAROUND MANAGEMENT ASSOCIATION "The Six Keys of Sustained Profitable Growth" Rodney Page, Senior Partner of Blue Springs Partners Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, TX Contact: http://www.turnaround.org/ March 29-31, 2007 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Chapter 11 Business Reorganizations Scottsdale, AZ Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 5, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Case Study "When Everything Goes Wrong" University of Florida, Gainesville, FL Contact: http://www.turnaround.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. 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; http://renaissanceamerican.com/ May 29, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon - Bankruptcy Judges Panel Citrus Club, Orlando, FL Contact: http://www.turnaround.org/ May 30-31, 2007 FINANCIAL RESEARCH ASSOCIATES Distressed Debt Harvard Club, New York, NY Contact: http://www.frallc.com/ June 4-7, 2008 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 24th Annual Bankruptcy & Restructuring Conference JW Marriott Spa and Resort, Las Vegas, NV Contact: http://http://www.airacira.org// June 6-8, 2007 TURNAROUND MANAGEMENT ASSOCIATION 5th Annual Mid-Atlantic Regional Symposium Borgata Hotel Casino & Spa Atlantic City, NJ Contact: http://www.turnaround.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, IL Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800; http://www.abiworld.org/ June 21-22, 2007 BEARD GROUP AND RENAISSANCE AMERICAN CONFERENCES Tenth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel - Chicago Contact: 800-726-2524; 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; http://www.turnaround.org/ October 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ October 30, 2007 TURNAROUND MANAGEMENT ASSOCIATION Crisis Communications With Employees,Vendors and Media Centre Club, Tampa, FL Contact: http://www.turnaround.org/ November 14, 2007 TURNAROUND MANAGEMENT ASSOCIATION Dinner South FL Contact: 561-882-1331 or http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, CA Contact: 1-703-739-0800; http://www.abiworld.org/ December 19, 2007 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner TBA, South FL Contact: 561-882-1331 or http://www.turnaround.org/ January 10, 2008 TURNAROUND MANAGEMENT ASSOCIATION Luncheon University Club, Jacksonville, FL March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, FL Contact: http://www.turnaround.org/ April 3-6, 2008 AMERICAN BANKRUPTCY INSTITUTE 26th Annual Spring Meeting The Renaissance, Washington, DC Contact: http://www.abiworld.org/ June 12-14, 2008 AMERICAN BANKRUPTCY INSTITUTE 15th Annual Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, MI Contact: http://www.abiworld.org/ August 16-19, 2008 AMERICAN BANKRUPTCY INSTITUTE 13th Annual Southeast Bankruptcy Workshop Ritz-Carlton, Amelia Island, FL Contact: http://www.abiworld.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, AZ Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott New Orleans, LA Contact: 312-578-6900; 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, 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 ***