/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070315.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, March 15, 2007, Vol. 11, No. 63 Headlines 1396 FIFTH: Case Summary & Nine Largest Unsecured Creditors ADVANCED MEDICAL: IntraLase Purchase Cues S&P to Remove Neg. Watch AFINSA BIENES: Representatives File Ch. 15 Petition in New York AFINSA BIENES: Voluntary Chapter 15 Petition Summary AKS STEEL: Gets $850 Million Asset-Based Loan from Bank of America ALLEGHENY TECH: Good Performance Cues S&P's Positive CreditWatch AMERICAN HOME: S&P Affirms B Ratings on 2 Certificate Classes AMWINS GROUP: Planned IPO Cues S&P to Revise Outlook to Stable AMY NORRIS: Case Summary & 12 Largest Unsecured Creditors ANGIOTECH PHARMA: Moody's Cuts Corp. Family Rating to B2 from B1 ASBURY AUTOMOTIVE: S&P Rates Proposed $150 Mil. Sr. Notes at B AUGUSTA TISSUE: Case Summary & 20 Largest Unsecured Creditors BANC OF AMERICA: Fitch Holds Low-B Ratings on 32 Cert. Classes BAUSCH & LOMB: Recalls 12 Lots of ReNu MultiPlus(R) Solution BERRY PLASTICS: Covalence Merger Cues Moody's to Review Ratings BERRY PLASTICS: Covalence Merger Cues S&P to Hold B Rating CALPINE CORP: Judge Lifland Okays Dickstein as Special Counsel CALPINE CORP: Court Okays $242 Mil. Power Systems Sale to Alstom CAMBIUM LEARNING: S&P Rates $158 Million Senior Facilities at B CATHOLIC CHURCH: Court Denies San Diego's Motion to Seal Some Docs CHIQUITA BRANDS: Inks Plea Agreement with U.S. Attorney and DOJ CKE RESTAURANTS: S&P Rates $320 Mil. Secured Credit Facility at BB CLEAR CHANNEL: Resets Special Meeting of Shareholders to April 19 COLLINS & AIKMAN: Files Litigation Trust Allocation CONTINENTAL AIRLINES: Moody's Lifts Ratings on Good Results COVALENCE SPECIALTY: Merger Prompts Moody's to Review Ratings COVALENCE SPECIALTY: Merger Cues S&P to Hold B Corp. Credit Rating CREDIT SUISSE: Moody's Holds B3 Rating on $2 Mil. Class O Certs. CREDIT SUISSE: Moody's Cuts Rating on Class E Certificates to Ba1 CVS CORP: Underscores Benefits of Caremark Merger CVS CORP: Concurs with ISS Recommendation on Caremark Merger DAIMLERCHRYSLER AG: Chrysler's Feb. Pre-Owned Vehicle Sales Up 9% DAIMLERCHRYSLER: CEO Meets with Governor on Chrysler Group Status DAIMLERCHRYSLER AG: UAW President Wants Chrysler Group Retained DAIMLERCHRYSLER AG: Investors Want "Chrysler" Dropped from Name DANA CORP: Discloses Non-Union Retirees Pact With Retiree Panel DANA CORP: Reaches Agreement With IAMAW to Resolve Union's Claims DELPHI CORP: Plans to Offer Rights to Purchase Up to 56.7MM Shares DELTA AIR: Amends Code Share Agreements with Mesa Air Group DELTA AIR: Amends Fixed-Free Agreements with Republic Airways DILLARDS INC: Earns $155 Million in Period Ended February 3 DLJ COMMERCIAL: Fitch Holds B- Rating on $15.6MM Class B-7 Certs. DOLLAR GENERAL: Inks $7.3 Billion Agreement with Kohlberg Kravis DOMINO'S PIZZA: Accepts $30 Per Share Tender Offer E*TRADE FIN'L: Sells Part of E*Trade Australia Stake E*TRADE FINANCIAL: 2006 Net Income Increases to $629 Million EL PASO CORP: Moody's Lifts Corporate Family Rating to Ba3 from B2 ENERGY PARTNERS: S&P Cuts Corporate Credit Rating to B from B+ FORD MOTOR: Mulally Says Company Has Realistic Business Plan FORD MOTOR: UAW Local 863 Wins New Investment in Sharonville Plant FORD MOTOR: Investors Speculate on Jaguar & Land Rover Sale FORD MOTOR: DBRS Says Aston Sale May Not Warrant Rating Actions GENERAL MOTORS: 2006 Net Loss Decreases to $2 Billion GLACIER FUNDING II: Fitch Holds BB Rating on $4MM Class D Notes GLACIER FUNDING III: Fitch Holds Rating BB+ on Class D Notes GMAC COMMERCIAL: Fitch Holds Low-B Ratings on 2 Cert. Classes GMAC: Fitch Affirms Long-Term Issuer Default Rating at BB+ GOODYEAR TIRE: Fitch Holds Junk Rating on Senior Unsecured Debt GRANITE BROADCASTING: Reports 2006 Net Revenues of $128 Million GREGG KOECHLEIN: Case Summary & 19 Largest Unsecured Creditors GREY WOLF: Earns $219.9 Million for Fiscal Year 2006 GS MORTGAGE: Fitch Holds Rating on $28.2MM Class G Certs. at B HEALTHSOUTH CORP: Amends Credit Facilities to Lower Interest Rates IIS INTELLIGENT: Wants Shareholders to Vote Against Liquidation INTERACTIVE SYSTEMS: Eisner LLP Raises Going Concern Doubt INTERACTIVE SYSTEMS: Posts $1MM Net Loss in 1st Qtr. Ended Dec. 31 ISORAY INC: Posts $1.9 Million Net Loss in Quarter Ended Dec. 31 JUNIPER NETWORKS: CFO Robert Dykes and EVP Robert Sturgeon Resigns JUNIPER NETWORKS: Files Annual Report & Delayed Quarterly Reports KIRKLAND KNIGHT: Cash Collateral Hearing Scheduled Tomorrow LAGUARDIA ASSOCIATES: Court Confirms U.S. Bank's Liquidation Plan LB-UBS: Moody's Holds Rating on $3 Mil. Class S Certificates at B3 LOWTHERBROTHER LLC: Case Summary & 14 Largest Unsecured Creditors MAGNOLIA VILLAGE: Wants to Sell Nevada Properties for $24 Million MAGNOLIA VILLAGE: Wants Exclusive Solicitation Period Extended MALDEN MILLS: Polartec Completes Acquisition of Malden's Assets MSX INTERNATIONAL: Plans $200 Mil. Senior Secured Notes Offering MSX INTERNATIONAL: S&P Lifts Corporate Credit Rating to B- NEENAH PAPER: Completes Fox Valley Purchase for $52 Million NEENAH PAPER: Enters Fourth Amendment to Credit Pact With JPMorgan NEW CENTURY: Disclosures Cue NYSE to Suspend Securities Trading NEW CENTURY: Barclays Demands Payment of $900 Mil. Loan Obligation NEW CENTURY: Four State Regulators Issue Cease and Desist Orders NOMURA CRE: S&P Rates $12 Mil. Class O Certificates at B- ORANGE HOSPITALITY: Case Summary & 3 Largest Unsecured Creditors PACE UNIVERSITY: Moody's Cuts Rating and Says Outlook is Negative PACIFIC LUMBER: Scotia Hires Gibson Dunn as Insolvency Counsel PACIFIC LUMBER: Gets Interim Nod to Hire Blackstone as Advisor PLATFORM LEARNING: Hires Fred Gunzel as Interim CFO PLATFORM LEARNING: Hires Gotbaum as Chief Restructuring Officer PLY GEM: S&P Rates $768 Million Senior Secured Bank Loan at B+ PORTRAIT CORP: Has Until May 28 to Remove Civil Actions POST PROPERTIES: Good Performance Cues Moody's Positive Outlook PRIDE INTERNATIONAL: Earns $68.9 Million in Quarter Ended Dec. 31 RADIANT ENERGY: Further Delays Filing of 2006 Report to March 17 REFCO INC: RCM Trustee Objects to 18 Claims Totaling $240 Million REFCO INC: RCM Trustee Objects to Carlos Sevilleja's $4.2MM Claim REJ PROPERTIES: Voluntary Chapter 11 Case Summary SANDRIDGE ENERGY: Moody's Rates $1 Billion Senior Loan at B3 SCOTTISH RE: Ernst & Young Raises Going Concern Doubt SELECT MEDICAL: Add-on Cues S&P to Affirm B Bank Loan Rating SIERRA HEALTH: Earns $140.4 Million in Year Ended December 31 SIERRA HEALTH: May Incur Losses in 2007 Due to Product Offering SIERRA HEALTH: Inks Indemnity Agreements with Directors & Officers SMURFIT-STONE: Subsidiary Plans to Issue $675 Million Senior Notes SOLUTIA INC: Reports Status of Litigations as of Dec. 31, 2006 SPECTRUM BRANDS: Poor Performance Cues S&P's Negative Outlook SPORTSMAN'S LINK: Case Summary & 20 Largest Unsecured Creditors STANDARD MOTOR: Reports Net Sales of $169 Million in 2006 4th Qtr. STATION CASINOS: Earns $110.2 Million in Year Ended December 31 SUN HEALTHCARE: Plans $200 Million Senior Sub. Notes Offering TECHNICAL OLYMPIC: Moody's Cuts Corp. Family Rating to B2 from B1 TENET HEALTHCARE: Net Loss Increases to $803 Million in 2006 TOWER AUTOMOTIVE: Posts $65.1 Mil. Net Loss in Qtr. Ended Sept. 30 TOWER AUTOMOTIVE: Sells Greenville Facility for $1.375 Million TRW AUTO: Wants to Buy Back $1 Bil. and EUR211 Mil. Senior Notes TRW AUTOMOTIVE: S&P Rates Proposed Senior Unsecured Notes at BB- TXU ELECTRIC: S&P Rates Proposed $1 Billion Senior Notes at BB UNITA PACKING: Case Summary & 20 Largest Unsecured Creditors UNITED RENTALS: Earns $224 Million in Fiscal 2006 US AIRWAYS: Moody's Holds Corporate Family Rating at B3 US ONCOLOGY: Issues $425MM Debt Securities to Pay Existing Notes USEC INC: Senior VP and General Counsel Tim Hansen to Resign WINDSTREAM CORP: Earns $545.3 Million in Year Ended December 31 WRIGHT INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors YUKOS OIL: Dutch Laws Ban Sale of 49% Transpetrol Stake * Karen Gottwald Joins Hilco Financial as Senior Vice President * Patrick Baskette Joins Troutman Sanders' Public Affairs Group * Thomas Dupuis Joins Chadbourne & Parke's Los Angeles Office * Cadwalader Wickersham Adds Four Partners from Weil Gotshal * Bracewell & Giuliani Adds 2 New Partners from Bingham McCutchen * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 1396 FIFTH: Case Summary & Nine Largest Unsecured Creditors ----------------------------------------------------------- Debtor: 1396 Fifth Street, LLC 1396 5th Street Oakland, CA 94607 Bankruptcy Case No.: 07-40744 Chapter 11 Petition Date: March 13, 2007 Court: Northern District of California (Oakland) Judge: Randall J. Newsome Debtor's Counsel: Stephen D. Finestone, Esq. 456 Montgomery Street, 20th Floor San Francisco, CA 94104 Tel: (415) 421-2624 Total Assets: $4,790,100 Total Debts: $2,960,187 Debtor's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Beta, Inc. Trade Debt $234,052 dba Banta Architects c/o Peter Molgard One Embarcadero Center Suite 2600 San Francisco, CA 94111 Treadwell & Rollo Trade Debt $43,324 555 Montgomery Street 13th Floor San Francisco, CA 94111 Utility Consulting & Design $38,000 190 Hubbel Street, Suite 101 San Francisco, CA 94107 Murphy, Burr & Curry Trade Debt $20,000 TEC dba Accutite Trade Debt $17,318 Telemon Engineers Trade Debt $17,000 ACIES Trade Debt $15,000 Capital Stone Group $12,000 SGH Trade Debt $10,000 ADVANCED MEDICAL: IntraLase Purchase Cues S&P to Remove Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services removed its ratings on Advanced Medical Optics Inc. from CreditWatch with negative implications, where they were placed on Jan. 8, 2007, reflecting the company's intention to acquire IntraLase Corp. for $808 million. The 'BB-' ratings are affirmed, and the outlook is stable. The rating on Santa Ana, California-based AMO reflects technology risk, competitive risks, and the ophthalmic company's aggressive efforts to build upon its well-established position as a midsize player in the industry. These efforts, however, have broadened its product and geographic diversity and provided a leadership position in its markets. Although AMO generates solid cash flow, its debt leverage is high. "AMO's diversified product base should mitigate downside potential in the event that laser vision correction sales are less robust than anticipated," said Standard & Poor's credit analyst Cheryl E. Richer, "but the company's propensity for acquisitions and share repurchases preclude a higher rating for the foreseeable future." AFINSA BIENES: Representatives File Ch. 15 Petition in New York --------------------------------------------------------------- Madrid-based Stamp dealer Afinsa Bienes Tangibles SA's duly authorized foreign representatives, Javier Diaz Galvez, Benito Aguera Marin, and Ana Fernandez Daza, filed a chapter 15 petition with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on March 13, 2007. On May 9, 2006, Spanish authorities under the supervision of the Spanish High Court closed Afinsa Bienes' offices, suspended its operations, and began invetigation into potentially illegal activities allegedly committed by Afinsa Bienes and certain of its officers and directors. Those alleged activities include money laundering, fraud, tax evasion, and criminal insolvency. It has been alleged that Afinsa Bienes had been engaged in a massive Ponzi scheme built on worthless stamps, with Afinsa Bienes' assets siphoned off in bogus transactions. It has been estimated that there may be in excess of 143,000 contracts on which some EUR4.2 billion may be owing by Afinsa Bienes, the overwhelming amount of which is likely owing to creditors in Spain, Thomas L. Kent, Esq., at Paul, Hastings, Janofsky & Walker LLP in New York, said. On May 11, 2006, a claim for the declaration Afinsa Bienes' bankruptcy was presented to Mercantile Court No. 6 in Madrid, Spain. Subsequently, on July 14, 2006, the Spanish Court declared Afinsa Bienes insolvent and appointed the Foreign Representatives to oversee the Debtor. Afinsa Bienes owns a 67% equity iterest in Escala Group Inc. that is headquartered in New York. The equity interest is directly owned by its 100%-owned subsidiary, Auctentia S.L. Afinsa Bienes allegedly entered into certain exclusive supply agreements with Escala. Escala became Afinsa Bienes's exclusive supplier of certain collectivle materials, mainly stamps. In exchange for those services, Afinsa Bienes was allegedly obliged to pay Escala a processing fee. It is believed that those transactions represent a significant portion of Escala's sales, revenues and gross profits for the fiscal years ended June 30, 2006, 2005, and 2004, Mr. Kent further said. Commencing in May 2006, a number of purported class action lawsuits were filed against Escala, Afinsa Bienes, and Auctentia and their respective officers and directors. The lawsuits allege that certain filings made to the U.S. Securities and Exchange Commission and other public statements contained false and misleading information, which resulted in damages when the plaintiffs purchased Escala's securites from Sept. 5, 2003, through May 8-10, 2006. The various class actions were consolidated at In re Escala Group Inc. Securities Litigation, Master File O6-cv-3518 (U.S. District Court, S.D.N.Y.). Virginia Retirement System was appointed lead plaintiff for the purported class action. Afinsa Bienes Tangibles SA -- http://www.afinsa.es/eng/-- is a private company organized under the laws of Spain. The company is a wholesaler and retailer of stamps, coins, art works and other collectables. Thomas L. Kent, Esq., Anthony Princi, Esq., and Jennifer A. Mo, Esq., at Paul, Hastings, Janofsky & Walker LLP represent the Debtor. When the petitioners filed a chapter 15 petition, they estimated more than $100 million in assets and debts. AFINSA BIENES: Voluntary Chapter 15 Petition Summary ---------------------------------------------------- Petitioners: Javier Diaz Galvez Benito Aguera Marin Ana Fernandez Daza Foreign Representatives Debtor: Afinsa Bienes Tangibles SA Genova, 26 Madrid 28004 Spain Case No.: 07-10675 Type of Business: Afinsa Bienes Tangibles SA is a private company organized under the laws of Spain. The company is a wholesaler and retailer of stamps, coins, art works and other collectables. See http://www.afinsa.es/eng/ Chapter 15 Petition Date: March 13, 2007 Foreign Court: Mercantile Court No. 6 in Madrid, Spain U.S. Court: Southern District of New York (Manhattan) U.S. Judge: James M. Peck Petitioners' Counsel: Thomas L. Kent, Esq. Anthony Princi, Esq. Jennifer A. Mo, Esq. Paul, Hastings, Janofsky & Walker 75 East 55th Street New York, NY 10022 Tel: (212) 318-6060 Fax: (212) 230-7899 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million AKS STEEL: Gets $850 Million Asset-Based Loan from Bank of America ------------------------------------------------------------------ Bank of America Business Capital provided an $850 million revolving credit facility to AK Steel Corporation. The asset- based loan will be used to refinance existing debt and to provide for the company's growing working capital needs. Bank of America also will provide letters of credit as well as cash management and foreign exchange products and services. The credit facility was fully underwritten by Banc of America Securities. "Having been a participant in the client's previous credit facility, we were able to tailor a financial solution to meet their unique borrowing needs," Bank of America Business Capital President Joyce White said. "The new credit facility should provide the financial flexibility for management to focus on its growth strategy." Bank of America Business Capital is an asset-based lender, with nearly 20 offices serving the United States, Canada and Europe. It provides companies with senior secured loans, cash management, interest rate and foreign exchange risk management, and a broad array of capital markets products. About AKS Steel Headquartered in Middletown, Ohio, AK Steel Corporation (NYSE:AKS) -- http://www.aksteel.com/-- produces flat-rolled carbon, stainless and electrical steel products, as well as carbon and stainless tubular steel products, for the automotive, appliance, construction and manufacturing markets. The company operates seven steelmaking and finishing plants located in Indiana, Kentucky, Ohio and Pennsylvania. * * * The company's 7-3/4% Senior Notes due 2012 carry Moody's Investors Service's B2 rating and Standard & Poor's B+ rating. ALLEGHENY TECH: Good Performance Cues S&P's Positive CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Pittsburgh, Pennsylvania- based Allegheny Technologies Inc. on CreditWatch with positive implications. "The action reflects the company's improved business and financial profile, currently robust industry conditions, particularly strong end-user demand from the company's aerospace customers, and debt reduction," said Standard & Poor's credit analyst Marie Shmaruk. "Through healthy product pricing coupled with the ability to pass through spiking raw material prices, Allegheny has been able to internally fund its capital expenditures, generate significant cash balances, improve its credit metrics, and somewhat shift its product mix away from commodity sheet products." Allegheny is one of the largest specialty steel and alloy manufacturers in North America. "In resolving the CreditWatch, we will review the company's operating plans and its significant capital program and evaluate the sustainability of its strong financial performance over a range of business conditions," Ms. Shmaruk said. AMERICAN HOME: S&P Affirms B Ratings on 2 Certificate Classes ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on 31 classes of certificates issued by American Home Mortgage Assets Trust's series 2005-1 and 2005-2. The affirmations reflect sufficient current and projected credit support percentages at the respective rating categories as of the February 2007 reporting period. Loss protection for structure group three of series 2005-1 is provided by overcollateralization (O/C), subordination, and limited amounts of excess interest. O/C declined slightly below its target of $2.31 million by $130,323 during the February 2007 reporting period. Credit enhancement is provided by subordination for structure group six of series 2005-1 and for both structure groups in series 2005-2. Losses have been minimal for both transactions and it does not appear that delinquencies will cause adversity to the pools in the future. As of the February 2007 remittance period, structure group three from series 2005-1 and structure group one from series 2005-2 have realized $370,816 and $65,233 in cumulative losses, respectively, while the other pools remain free of any losses. Serious delinquencies for both structure groups in series 2005-1 are 8.06% and 0.92%, respectively. Serious delinquencies (90-plus days, foreclosure, REO) for both structure groups in series 2005-2 are 7.04% and 9.56%, respectively. Series 2005-1 and series 2005-2 are 15 and 13 months seasoned, respectively. The ratings remain stable and the performance of these transactions remains consistent with original expectations. The underlying collateral consists of Alt-A, fixed-, adjustable- rate, and hybrid ARM first-lien mortgage loans. Ratings Affirmed American Home Mortgage Assets Trust Series Class Rating ------ ----- ------ 2005-1 1-A-1, 2-A-1, 2-A-2-1 AAA 2005-1 2-A-2-2, R-I, R-II, 3-A-2-1 AAA 2005-1 3-A-1-1, 3-A-1-2, 3-A-2-2 AAA 2005-1 3-M-1 AA 2005-1 3-M-2 A 2005-1 3-M-3 BBB 2005-1 3-M-4 BBB- 2005-1 C-B-5 B 2005-2 1-A-1, 1-X, R-I, 2-A-1-A AAA 2005-2 2-A-1B, R-II AAA 2005-2 1-B-1, 2-B-1 AA 2005-2 1-B-2, 2-B-2 A 2005-2 1-B-3, 2-B-3 BBB 2005-2 1-B-4, 2-B-4 BB 2005-2 1-B-5, 2-B-5 B AMWINS GROUP: Planned IPO Cues S&P to Revise Outlook to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' counterparty credit and senior debt ratings on AmWINS Group Inc. and revised its outlook on the company to stable from negative. The rating actions follow AmWINS's recently reported IPO plans. "The outlook was revised to stable due to the company's demonstrated ability to maintain margins in the last few quarters," explained Standard & Poor's credit analyst Tracy Dolin. "In addition, AmWINS is committed to redeeming a proportional amount of debt from the proceeds of its planned IPO." The counterparty credit rating on AmWINS reflects its enhanced competitive position following the acquisition of Stewart Smith Group in April 2005. The company's EBITDA margins improved to 24.4% in 2006 compared with 17% in 2004. AmWINS's diversified revenue base--consisting of property/casualty brokerage, specialty underwriting, and group benefits segments--helps manage earnings through market cycles. Offsetting these strengths is its limited track record since beginning operations in 2002 as a single, independent entity. In addition, there are inherent integration and execution risks imbedded in AmWINS's growth by acquisition strategy and in its roll-up infrastructure. As of year-end 2006, the ratio of adjusted intangible assets to total capital was 87%, consistent with Standard & Poor's interactively rated group of insurance brokers that also have high ratios of intangible assets to total capital. The large amount of goodwill is attributable to the company's rapid growth through acquisitions, including the Stewart Smith acquisition. Good earnings in 2006 contributed to an improved adjusted debt-to capital ratio of 66% compared with 72% in the prior year. Offsetting Standard & Poor's concerns are the company's history of generating positive cash flow, prospective lower interest expenses, and the expectation that IPO generated cash flow might be utilized to pay down debt ahead of scheduled amortization. Standard & Poor's believes that the company will continue to remain cash-flow positive and meet its restrictive covenants in the near-to-intermediate term. GAAP pretax interest coverage of more than 2.5x is expected for year-end 2006, with total debt-to- capital of less than 40%. Standard & Poor's expects that the company will achieve EBITDA margins in excess of its three-year average of 21.7%. As of Dec. 31, 2006, the company's EBITDA margin measured about 24.4%. Standard & Poor's would consider revising the outlook to positive once the company has established a track record of increased margins and lower debt levels. In the near term, management might be distracted from its operating goals as it dedicates significant time and resources to operate as a public company for the first time. AmWINS faces the formidable task of maintaining capital management conservatism while it increases its strategic acquisition appetite. Simultaneously, AmWINS will be challenged to grow organically in a softening excess and surplus rate environment compared with prior favorable years. Standard & Poor's would consider a negative outlook should the company's margins compress, precipitating it to operate at the boundaries of its restrictive debt covenants. AMY NORRIS: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Amy Felker Norris aka Amy F. Cooper dba Kids R Kids 433 Albermarle Drive Tullahoma, TN 37388 Bankruptcy Case No.: 07-10864 Type of Business: Kids R Kids provides established educational programs in which children can grow from infancy through their elementary school years. http://www.kidsrkids.com Chapter 11 Petition Date: March 5, 2007 Court: Eastern District of Tennessee (Chattanooga) Debtor's Counsel: Thomas E. Ray, Esq. Samples, Jennings, Ray & Clem PLLC 130 Jordan Drive Chattanooga, TN 37421 Tel: (423) 892-2006 Fax: (423) 892-1919 Estimated Assets: $1 Million to $100 Million Estimated Debts : $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Neal Cooper $250,000.00 9607 Way Cross Circle Ooltewah, TN 37363 Kids R Kids International $140,000.00 LLC 1625 Executive Drive Duluth, GA 30096 Internal Revenue Service $90,000.00 PO Box 21126 Philadelphia, PA Hunter Norris $35,000.00 Billy Felker $30,000.00 GMAC 2004 Chevy $23,798.12 Suburban Carl E. Levi 2005 Property $20,000.00 tax (secured) Chattanooga City $20,000.00 American Express $7,495.86 Target Visa $6,592.88 Bellsouth $3,523.75 Adorno & Yoss GM Master Card $3,144.40 ANGIOTECH PHARMA: Moody's Cuts Corp. Family Rating to B2 from B1 ---------------------------------------------------------------- Moody's Investors Service downgraded Angiotech Pharmaceuticals, Inc.'s Corporate Family Rating to B2 from B1 with a stable ratings outlook. The SGL-3 rating is affirmed. The B2 Corporate Family Rating reflects lower revenue and EBITDA guidance for 2007 related to a drop in royalty revenue from Boston Scientific's Taxus drug-eluting stent. In 2006, royalties from the sale of Taxus accounted for almost 50% of the company's annual revenues. Based on updated cash flow projections, Moody's believes that the company's cash flow coverage of debt and other financial metrics are more reflective of a B2-rated company. Currently, Angiotech's implied rating under Moody's Global Medical Products and Device Methodology is a "B2" based on its December 2006 financial statements. Angiotech's speculative grade liquidity assessment of SGL-3 reflects the absence of access to external liquidity, lower revenue and cash flow guidance and deteriorating operating trends. While Moody's expects that Angiotech still has sufficient coverage of working capital, capital expenditures and other expenses over the next twelve months, given its current cash position and free cash flow; however, the company's financial flexibility remains limited. Downgraded: * Corporate Family Rating, B2 from B1 * Probability of Default Rating, B1 from Ba3 * $325 Senior Unsecured Notes, B1, LGD3, 46% from Ba3 * $250 Senior Subordinated Notes, B3, LGD6, 91% from B2 Affirmed: * Speculative Grade Liquidity assessment, SGL-3 * Family LGD assessment LGD4, 65% The ratings outlook is stable. Angiotech Pharmaceuticals, Inc., founded in 1992, based in Vancouver, Canada, is a specialty pharmaceutical company that focuses on drug-device combinations and drug-loaded surgical biomaterial implants. The company reported over $315 million in total revenue for the twelve months ended Dec. 31, 2006. ASBURY AUTOMOTIVE: S&P Rates Proposed $150 Mil. Sr. Notes at B -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' ratings to Asbury Automotive Group Inc.'s proposed $150 million senior subordinated notes due 2017 and $100 million subordinated convertible notes due 2012. The notes rank equally with all of Asbury's existing and future senior subordinated indebtedness. Net proceeds from the debt issue are expected to be used to repay Asbury's $250 million 9% senior subordinated notes due 2012. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. The New York-based publicly held automotive dealership group had total balance sheet debt of $477 million at Dec. 31, 2006. The rating outlook is stable. Asbury's good brand mix and revenue diversity, as well as its stable revenue sources, should result in sustained credit quality appropriate for the rating. The outlook could be revised to negative if demand in the highly competitive automotive sector substantially deteriorates, pressuring earnings and cash flow, or if acquisitions and initiatives to enhance shareholder value lead to increased debt leverage. On the other hand, the outlook could be revised to positive if Asbury improves its profit margins by realizing operating efficiencies, if it adopts a more conservative financial policy, and if it slows its pace of acquisitions, at the same time strengthening the balance sheet. AUGUSTA TISSUE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Augusta Tissue Mill, LLC 3452 Cookie Road Augusta, GA 30906 Bankruptcy Case No.: 07-10452 Type of Business: The Debtor manufactures tissue and napkins. See http://www.augustatissue.com/ Chapter 11 Petition Date: March 12, 2007 Court: Southern District of Georgia (Augusta) Judge: Susan D. Barrett Debtor's Counsel: J. Benjamin Kay, III, Esq. 1111 Wachovia Building, 699 Broad St. Augusta, GA 30901 Tel: (706) 722-2008 Fax: (706) 722-0832 Estimated Assets: Unknown Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ KAL Industrial Services, Inc. $600,556 P.O. Box 211569 Augusta, GA 30917 Carter Electric $334,153 3940 Washington Road Martinez, GA 30907 BKB Construction, Inc. $282,299 P.O. Box 132 Oconto Falls, WI 54154 G.E. Supply $170,066 P.O. Box 100275 Atlanta, GA 30384 Flow Automation $121,833 970 Syscon Road Burlington, Ontario Canada L7L 5S2 Georgia Power $95,984 North Carolina Motors $76,274 Augusta Fire Protection, Inc. $58,900 SW & B Construction $58,554 Hercules Inc. $54,819 Stearns Bank N.A. $53,286 Frischkorn, Inc. $42,504 Aurora Specialty Chemistries $34,878 APV $31,856 Scale Systems, Inc. $27,577 Albany International $26,883 SM Services, Inc. $24,479 Conn-Weld Industries, Inc. $24,280 Infinite Energy, Inc. $22,596 Process Technical Sales, Inc. $15,572 BANC OF AMERICA: Fitch Holds Low-B Ratings on 32 Cert. Classes -------------------------------------------------------------- Fitch Ratings has affirmed Banc of America Alternative Loan Trust's mortgage pass-through certificates: Series ALT 2004-5 Total Pools 1-3: -- Classes 1-A-1, 1-PO, 2-A-1, 2-PO, 3-A-1, 3-A-2, 3-A-3, 3-IO, 3-PO, 30-B-IO and CB-IO affirmed at 'AAA'; -- Class 30-B1 affirmed at 'AA'; -- Class 30-B2 affirmed at 'A'; -- Class 30-B3 affirmed at 'BBB'; -- Class 30-B4 affirmed at 'BB'; and -- Class 30-B5 affirmed at 'B'. Series ALT 2004-5 Pool 4: -- Classes 4-A-1, 4-A-2, 4-IO and 4-PO affirmed at 'AAA'; -- Class 4-B1 affirmed at 'AA'; -- Class 4-B2 affirmed at 'A'; -- Class 4-B3 affirmed at 'BBB'; -- Class 4-B4 affirmed at 'BB'; and -- Class 4-B5 affirmed at 'B'. Series ALT 2004-6 Total Pools 1-3: -- Classes 1-A-1, 1-IO, 1-X-PO, 2-A-1, 2-IO, 2-X-PO, 3-A-1, 3- A-2, 3-A-3, 3-IO and 3-X-PO affirmed at 'AAA'; -- Class 30-B1 affirmed at 'AA'; -- Class 30-B2 affirmed at 'A'; -- Class 30-B3 affirmed at 'BBB'; -- Class 30-B4 affirmed at 'BB'; and -- Class 30-B5 affirmed at 'B'. Series ALT 2004-6 Pool 4: -- Classes 4-A-1, 4-IO, 15-PO and 4-X-PO affirmed at 'AAA'; -- Class 4-B1 affirmed at 'AA'; -- Class 4-B2 affirmed at 'A'; -- Class 4-B3 affirmed at 'BBB'; -- Class 4-B4 affirmed at 'BB'; and -- Class 4-B5 affirmed at 'B'. Series ALT 2004-7 Total Pools 1-3: -- Classes 1-A-1, 1-IO, 1-X-PO, 2-A-1, 2-A-2, 2-IO, 2-X-PO, 3- A-1, 3-A-2, 3-A-3, 3-A-4, 3-IO and 3-X-PO affirmed at 'AAA'; Series ALT 2004-7 Total Pools 4 & 5: -- Classes 4-A-1, 4-IO, 4-15-PO , 4-X-PO, 5-A-1, 5-15-PO, 5-IO and 5-X-PO affirmed at 'AAA'; -- Class 15-B1 affirmed at 'AA'; -- Class 15-B2 affirmed at 'A'; -- Class 15-B3 affirmed at 'BBB'; -- Class 15-B4 affirmed at 'BB'; and -- Class 15-B5 affirmed at 'B'. Series ALT 2004-8 Total Pools 1 & 2: -- Classes 1-CB-1, 1-IO, 1-X-PO, 2-CB-1, 2-IO and 2-X-PO affirmed at 'AAA'; -- Class 30-B1 affirmed at 'AA'; -- Class 30-B2 affirmed at 'A'; -- Class 30-B3 affirmed at 'BBB'; -- Class 30-B4 affirmed at 'BB'; and -- Class 30-B5 affirmed at 'B'. Series ALT 2004-8 Pool 3: -- Classes 3-A-1, 15-IO, 15-PO and 3-X-PO affirmed at 'AAA'; -- Class 15-B1 affirmed at 'AA'; -- Class 15-B2 affirmed at 'A'; -- Class 15-B3 affirmed at 'BBB'; -- Class 15-B4 affirmed at 'BB'; and -- Class 15-B5 affirmed at 'B'. Series ALT 2004-12 Total Pools 1 - 4: -- Classes 1-CB-1, 15-IO, 15-PO, 2-CB-1, 3-A-1, 3-IO, 30-PO, 4- A-1 and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-1 Total Pools 1 & 2: -- Classes 1-CB-1 to 1-CB-5, 15-IO, 15-PO, 2-A-1, 30-PO and CB- IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-2 Total Pools 1 - 4: -- Classes 1-CB-1 to 1-CB-5, 15-IO, 2-CB-1, 3-A-1, 4-A-1, A-PO and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-3 Total Pools 1 & 2: -- Classes 1-CB-1 to 1-CB-4, 2-A-1, A-PO and A-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-4 Total Pools 1 - 3: -- Classes CB-1 to CB-13, CB-R, 15-IO, 2-A-1, 3-A-1, A-PO and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-5 Total Pools 1 - 5: -- Classes 1-CB-1 to 1-CB-7, 1-CB-R, 2-CB-1, 3-CB-1, 4-CB-1, 5- CB-1 to 5-CB-3, CB-PO and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B' Series ALT 2005-6 Total Pools 1 - 7: -- Classes 1-CB-1 to 1-CB-10, CB-R, CB-IO, 2-CB-1 to 2-CB-3, 3-CB-1, 4-CB-1, 5-A-1 to 5-A-6, 5-IO, 15-IO, 6-A-1, 7-A-1 and A-PO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2005-7 Total Pools 1 - 3: -- Classes CB-1 to CB-5, CB-R, CB-PO, 2-CB-1, 3-CB-1 and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. Series ALT 2006-1: -- Classes 1-CB-1, 1-CB-R, 2-CB-1, 3-CB-1, 4-CB-1, CB-PO and CB-IO affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; and -- Class B5 affirmed at 'B'. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $3.4 billion in outstanding certificates as of the Feb. 26, 2007 distribution date. The underlying collateral in these transactions consists of fixed- rate and adjustable-rate, conventional, fully-amortizing mortgage loans secured by first liens on one- to four-family residential properties. Bank of America, N.A., which is rated 'RPS1' by Fitch for Prime & ALT-A transactions, is the servicer for these loans. The transactions listed above are seasoned from a range of 13 months to 33 months. The pool factors range from 58% to 90%. The cumulative losses on these transactions range from 0% to 0.04% of respective original collateral balances. BAUSCH & LOMB: Recalls 12 Lots of ReNu MultiPlus(R) Solution ------------------------------------------------------------ Bausch & Lomb has initiated a limited voluntary recall from distribution centers and retail shelves in the United States and specific other countries of 12 lots of ReNu MultiPlus lens care solution made at its plant in Greenville, South Carolina because they contain an elevated level of trace iron. This may result in discoloration of the solution in some bottles, and the shelf life of the product may be shortened to less than its two-year expiration date, due to a potential loss of effectiveness over time. The company has received no reports of serious adverse events associated with these lots and believes virtually all of the affected product, manufactured about a year ago, has already been used by consumers. Bausch & Lomb has notified the U.S. Food and Drug Administration of this voluntary action. About a million bottles of solution from nine of the 12 lots were originally distributed in the United States. Product from the 12 affected lots was also distributed in Canada, Latin America, Korea and Taiwan, where it is also being recalled. The company initiated an investigation after receiving three customer reports of discolored solution. The root cause of the discoloration was determined to be an elevated level of trace iron in a single batch of raw material sourced from an outside supplier. Iron is an element present at trace levels - measured in parts per billion - in many compounds used in manufacturing food, drug, medical device and cosmetic products for human use. The elevated level of trace iron could combine with other compounds in the solution to cause discoloration which signals that the solution may be losing effectiveness over time. "The health and safety of consumers is our top priority," said Angela J. Panzarella, vice president and head of Bausch & Lomb's global vision care business. "With detailed and specific information about the distribution of the affected product, and good information about consumer use patterns, we are highly confident that virtually all of the affected product was used before it began to lose effectiveness. We're now in the process of confirming with distributors and retailers that there is no product still available for sale anywhere." "We are confident we have identified the source of the problem and we are taking appropriate measures designed to avoid a recurrence," Panzarella said. Bausch & Lomb does not expect the costs associated with this limited recall will have a significant impact on its financial results. If consumers notice that their lens care solution appears to be discolored, they should discard it, as it may be losing effectiveness. The recalled lots all carry the expiration date "2008 - 03 on the bottle. Consumers who have bottles from the lot numbers listed below should check the company's web site at http://www.bausch.com/productrecallor call the consumer affairs line (1-866-259-8255) to arrange for a replacement. lot numbers subject to recall are: * GC6030 * GC6037 * GC6038 * GC6045 * GC6048 * GC6052 * GC6061 * GC6063 * GC6072 * GC6073 * GC6080 * GC6085 About Bausch & Lomb Headquartered in Rochester, New York, Bausch & Lomb Inc. -- http://www.bausch.com/-- develops, manufactures, and markets eye health products, including contact lenses, contact lens care solutions, and ophthalmic surgical and pharmaceutical products. The company is organized into three geographic segments: the Americas; Europe, Middle East, and Africa; and Asia (including operations in India, Australia, China, Hong Kong, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand). In Latin America, the company has operations in Brazil and Mexico. * * * On Feb. 2, 2007, Moody's Investors Service downgraded Bausch & Lomb Inc.'s senior unsecured debt to Ba1 and continues to review all ratings for possible downgrade. Moody's also assigned the company a Ba1 Corporate Family Rating. BERRY PLASTICS: Covalence Merger Cues Moody's to Review Ratings --------------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of Berry Plastics Holdings Corporation and Covalence Specialty Materials Corporation on review for possible downgrade. The review follows the companys' report that they have entered into a definitive agreement pursuant to which Berry will merge with CSMC in a stock-for-stock merger. The merger is expected to occur in April 2007 and the transaction is subject to the receipt of required regulatory approvals. Following the merger, Ira Boots, Chairman and Chief Executive Officer of Berry Group, and Brent Beeler, Chief Operating Officer of Berry Group, will remain in the same roles with the combined company, which will be known as Berry Plastics Group, Inc. Immediately following the merger, the two entities will be combined as a direct subsidiary of New Berry Group. New Berry Holding will remain the primary obligor in respect of CSMC's Senior Subordinated Notes due 2016, Berry's Second Priority Senior Secured Fixed Rate Notes due 2014 and Second Priority Senior Secured Floating Rate Notes due 2014. The outstanding credit facilities of CSMC and Berry are expected to be refinanced at the time of the closing with a $400 million asset based revolving credit facility and a $1.2 billion senior secured term loan facility. Moody's expects the combined entity to have adjusted debt to EBITDA of about 6.9x and adjusted EBIT to interest coverage of about 1.0x. To the extent that debt instruments of the two companies are refinanced as part of the transaction, the ratings will be withdrawn. Moody's said that the combined company should benefit from increased scale and sound liquidity over the near term. In addition, Berry is expected to realize significant cost savings from the consolidation of such activities as manufacturing and back-office functions. Moody's review of New Berry Holding's ratings will focus primarily on the amount and timing of potential cost savings and management's operational and competitive strategy for the combined entity. Currently, Moody's anticipates that the rating downgrade for the Corporate Family Rating, if any, would be limited to one notch. In the event of a Corporate Family Rating downgrade to B2, the $1.2 billion senior secured term loan will likely be rated two notches above the Corporate Family Rating at Ba3, while the senior secured second lien facilities would likely be rated one notch below at B3 and the subordinated notes two notches below at Caa1. The notching contemplates that the collateral for the $1.2 billion senior secured term loan will be encumbered by the priority claim of the asset based revolver and a resulting deficiency claim. In the absence of a downgrade of the Corporate Family Rating, the $1.2 billion senior secured term loan will likely be rated two notches above the Corporate Family Rating at Ba2, while the senior secured second lien facilities would likely be rated one notch below at B2 and the subordinated notes two notches below at B3. Under review for possible downgrade: * Berry Plastics -- The B1 Corporate Family Rating -- The B1 Probability of Default Rating -- The Ba1, LGD2, 18% rated $200 million senior secured revolver due 2012 -- The Ba1, LGD2, 18% rated $675 million senior secured first lien term loan B due 2013 -- The B2, LGD4, 62% rated $225 million senior secured second lien FRN's due 2014 -- The B2, LGD4, 62% rated $525 million senior secured second lien notes due 2014 -- The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. Under review for possible downgrade: * Covalence Specialty -- The B1 Corporate Family Rating -- The B1 Probability of Default Rating -- The Ba3, LGD3, 34% rated $300 million senior secured term loan C due 2013. -- The B2, LGD4, 62% $175 million senior secured second lien term loan due 2013. -- The B3, LGD5, 86% rated $265 million senior subordinated notes due 2016. The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. Based in Evansville, Indiana, Berry Plastics Holdings Corporation is one of the world's leading suppliers of rigid plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended Dec. 30, 2006 amounted to approximately $1.4 billion. Headquartered in Bedminster, New Jersey, Covalence Specialty Materials Corporation is predominantly a North American manufacturer of polyethylene-based plastic film, packaging products, bags, and sheeting in a wide range of sizes, gauges, strengths, stretch capacities, clarities and colors. End markets include Industrial, Building Products, Specialty/Custom, Institutional, Retail, and Flexible Packaging. Consolidated net revenue for the twelve months ended Sept. 30, 2006 is approximately $1.7 billion. BERRY PLASTICS: Covalence Merger Cues S&P to Hold B Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit ratings on Berry Plastics Holding Corp. and Covalence Specialty Materials Corp. following the report that their holding company parents have entered into a definitive agreement to merge in a stock-for-stock transaction. The transaction is expected to close in April 2007, subject to regulatory approval. If the transaction is consummated, the outlook on the combined company will be stable. "The affirmation of the corporate credit ratings recognizes the strength of the merged business and the potential that the company will improve its highly aggressive financial profile to acceptable levels for the current ratings within the next couple of years," said Standard & Poor's credit analyst Liley Mehta. The outstanding credit facilities of both companies are expected to be refinanced at closing with a $400 million asset-based revolving credit facility (unrated) and a $1.2 billion senior secured term loan facility. Berry's $750 million of second-priority senior secured notes due 2014 and Covalence's $265 million of subordinated notes due 2016 are expected to remain outstanding. The rated Berry and Covalence entities will be combined to form New Berry Holding, which is expected to be the issuer of all the group's debt. At closing, total debt (adjusted to include capitalized operating leases and unfunded postretirement liabilities) will be about $2.7 billion. Based on preliminary terms and conditions, Standard & Poor's assigned a 'B' corporate credit rating to New Berry Holding. The rating agency also assigned a 'B+' senior secured debt rating to New Berry's proposed eight-year $1.2 billion term loan with a recovery rating of '1', indicating its expectation that lenders would fully recover their principal in a payment default scenario. The ratings on the existing bank credit facilities of both companies will be withdrawn upon refinancing. Any increase in the amount of the proposed term loan would prompt a ratings reassessment. At the same time, Standard & Poor's placed the ratings on Berry's second-priority senior secured notes on CreditWatch with positive implications. If there is no change to the proposed transaction and related refinancing, the rating agency will raise the ratings on these notes to 'B-' from 'CCC+' and change the related recovery rating to '3' from '4'. The new ratings indicate our expectation that noteholders would experience meaningful (50%-80%) recovery of principal in a payment default. Standard & Poor's affirmed its 'CCC+' rating on Covalence's subordinated notes. With more than $3.2 billion in annual sales, Berry Plastics will rank among the largest packaging companies in North America, with leading positions in both the rigid and flexible plastic packaging segments. While primarily domestic in terms of geographic coverage, the company will boast an impressive operating footprint with approximately 65 manufacturing facilities throughout the U.S., serving an array of end markets and customers. The concentration of customers will be diminished somewhat through the merger, and the combined administrative and manufacturing operations will likely present opportunities to realize synergies. However, the large scale of the businesses to be integrated will represent a meaningful execution risk and operating uncertainty until tangible progress is achieved. CALPINE CORP: Judge Lifland Okays Dickstein as Special Counsel -------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Calpine Corp. and its debtor-affiliates permission to employ Dickstein Shapiro, LLP, as their special counsel, pursuant to Sections 327(e) and 328 of the Bankruptcy Code. As reported in the Troubled Company Reporter on Feb. 28, 2007, Since October 2001, Dickstein Shapiro has represented the Debtors in a variety of matters, principally serving as their counsel with respect to matters pending before the Federal Energy Regulatory Commission. Dickstein has also represented the Debtors in its bankruptcy cases as an ordinary course professional. Currently, Dickstein is representing the Debtors in connection with on-going FERC proceedings relating to the existing Reliability-Must-Run Agreements between the Debtors and the California Independent System Operator Corporation. Dickstein also is advising the Debtors regarding compensation under the Federal Power Act and California Public Utilities Commission orders for newly required Resource Adequacy contracts. As special counsel, Dickstein will continue to represent the Debtors with respect to the FERC-related matters; and continue to assist them in connection with the prosecution, negotiation and ultimate settlement of pending FERC proceedings and the negotiation, drafting and implementation of valuable Resource Adequacy contracts as well as other related regulatory matters that may arise before the FERC. David R. Seligman, Esq., at Kirkland & Ellis LLP, in New York, says Dickstein's representation of the Debtors involves: -- negotiations with multiple parties regarding settlement of on-going disputes; -- preparation and defense of rate filings made at FERC with respect to compensation under the RMR Agreements during 2006 and 2007; and -- drafting and implementation of Resource Adequacy contracts between Debtors and California utilities. -- advising on federal energy regulatory matters that may arise under or be related to the RMR Agreements or Resource Adequacy contracts. As of Feb. 21, 2007, the Debtors have paid $305,570 in fees to Dickstein. On Feb. 12, 2007, Dickstein filed a fee application seeking allowance of $146,493 in fees, in excess of the compensation limitation of OCP Order. The Debtors expect that Dickstein will continue billing approximately $50,000 per month for its services. Hence, Mr. Seligman says Dickstein will exceed the aggregate cap of $500,000 imposed by the OCP Order. The Debtors will pay Dickstein based on its hourly billing rates: Professional Hourly Rates ------------ ------------ Partners $425 - $625 Associates $225 - $440 Paraprofessionals $150 - $175 The Debtors will also reimbursed Dickstein for any necessary out- of-pocket expenses. Mark L. Perlis, Esq., a partner at Dickstein, assured the Court that his firm does not represent any interest adverse to the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Perlis discloses that his firm received: -- $194,842 from the Debtors during the year immediately preceding the Petition Date for fees and expenses; and -- $14,319 in the ordinary course of the Debtors' business during the 90-day period before the Petition Date for fees and expenses. Mr. Perlis further disclosed that Dickstein has represented or currently represents, these creditor in matters unrelated to the Debtors' bankruptcy proceedings: * Angelo Gordon & Co., LP; * Credit Suisse First Boston; * Dow Chemical Co.; * Duke Energy Corp.; and * HSBC Bank Canada; * KeySpan Energy Corp.; * Loews Corporation; * Merrill Lynch; * Pacific Gas and Electric Co. and PG&E Corp.; * Portland Natural Gas Transmission System; * Sempra Energy; * Siemens AG; * Tampa Electric Company/TECO Energy Inc.; * Tennessee Valley Authority; * TransCanada Pipelines; * U.S. Bancorp; * Wilmington Trust Company/Wilmington Trust Corp. 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. The Debtors' exclusive period to file chapter 11 plan of reorganization expires on June 20, 2007. (Calpine Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). Calpine Corp. has until June 20, 2007, to file a plan, and until Aug. 20, 2007, to solicit acceptances of that plan. CALPINE CORP: Court Okays $242 Mil. Power Systems Sale to Alstom ---------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Calpine Corp. and its debtor-affiliates for the sale of substantially all of the assets of Power Systems Mfg., LLC, a subsidiary of Calpine, to Alstom Power, Inc. for a cash purchase price of $242 million. The asset sale will advance Calpine's restructuring program to further focus the Company's resources on those core business activities involving the production and sale of power in key markets in which Calpine can best compete. On Mar. 5, 2007, the Debtors conducted an auction for the sale of substantially all of Power Systems Mfg.'s assets. At the Auction, Alstom Power, Inc., offered to purchase the PSM Assets for $242,000,000. Calpine Chief Executive Officer Robert P. May stated, "The sale of PSM represents another successful step toward emerging from Chapter 11 as a stronger, more competitive power company. We continue to identify and execute on opportunities that generate near-term results and enhance the long-term value of Calpine for all of our stakeholders. The sale of PSM represents a new beginning for PSM to grow and strengthen its business. For Calpine, the sale will eliminate the capital commitment associated with the research, development and manufacturing of turbine components, while maintaining our ability to enhance our operations with the purchase of innovative PSM turbine products and services." The Debtors determined that Alstom Power submitted the best and highest bid for the PSM Assets. Patrick Kron, Chairman and CEO of Alstom, declared: "This deal will strengthen Alstom's position in the US market, where gas turbine service shows strong growth driven by increasing plant utilization and more stringent emission limits. PSM is ideally positioned to benefit from the high growth of sales and profit in this favourable market Alstom will give PSM the financial stability, technological backing and access to a larger customer base to market its products." Alstom Power will assume all of PSM's liabilities, including the liabilities with respect to the Unmatured Employment Claims and the interest accrued on the $6,000,000 in Unmatured Employment Claims for the period from Jan. 17, 2007, to the Closing Date. All persons and entities holding liens or interests in the Acquired Assets in any way relating to PSM, the Acquired Assets, the operation of PSM's business before the Closing Date or the transfer of the Acquired Assets to Alstom Power are forever barred, estopped and permanently enjoined from asserting them against Alstom Power and its successors. All entities that are in possession of some or all of the Acquired Assets on the Closing Date are directed to surrender those Assets to Alstom Power. Holders of liens against PSM, its estate, or any of the Acquired Assets who did not object or who withdrew their objections to the Sale Motion are deemed to have consented to the Sale. PSM will assume and assign each of the Assigned Contracts to Alstom Power, free and clear of all Liens other than the Permitted Liens and Assumed Liabilities. United Technologies is deemed as the Back-Up Bidder, the Court rules. The Back-Up Bidder is directed to deposit with the Escrow Agent an additional $10,000,000. A full-text copy of the 56-page Alstom Power APA is available for free at http://ResearchArchives.com/t/s?1b52 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. The Debtors' exclusive period to file chapter 11 plan of reorganization expires on June 20, 2007. (Calpine Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). Calpine Corp. has until June 20, 2007, to file a plan, and until Aug. 20, 2007, to solicit acceptances of that plan. CAMBIUM LEARNING: S&P Rates $158 Million Senior Facilities at B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating and negative outlook to Cambium Learning Inc. Standard & Poor's also assigned a 'B' bank loan rating, with a recovery rating of '2', to the company's $158 million senior secured credit facilities. The recovery rating indicates expectation of substantial recovery of principal in the event of a payment default. The facilities consist of a $30 million revolving credit facility due 2013 and a $128 million term loan B due 2013. Natick, Massachusetts-based Cambium Learning had pro forma total debt of $185 million at Dec. 31, 2006. "The ratings reflect the company's short operating history as a consolidated entity, challenges inherent in managing its fast growth, and high debt leverage," said Standard & Poor's credit analyst Hal F. Diamond. These factors somewhat offset the company's position as a provider of supplemental educational products for the growing market niches serving underperforming and special education students. These niches should continue to grow as school-level accountability for student performance increases. The company is also highly dependent on the continued availability of federal funding programs. CATHOLIC CHURCH: Court Denies San Diego's Motion to Seal Some Docs ------------------------------------------------------------------ The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California in San Diego denied the request of The Roman Catholic Bishop of San Diego to seal portions of documents disclosing names of victims of sexual abuse but said accusers' names can be kept secret, The Associated Press reports. Any documents listing names or addresses of accusers can be kept under seal until April 11, 2007, to give plaintiffs time to respond, Judge Adler added. According to the report, Judge Adler ordered San Diego and attorneys representing more than 140 plaintiffs who filed abuse claims to agree on a method to redact names of alleged victims who wish to be anonymous. Susan G. Boswell, Esq., at Quarles & Brady LLP, in Tucson, Arizona, proposed counsel for San Diego, told the Court she's willing to negotiate a mechanism to seal the confidential names, as long as it didn't slow the bankruptcy proceedings, the AP reports. Union-Tribune's Objection In a letter addressed to Judge Adler of the U.S. Bankruptcy Court for the Southern District of California, the San Diego Union- Tribune notified the Court that they intend to file an objection to the request filed by The Roman Catholic Bishop of San Diego to seal the names of the Sexual Abuse Claimants. The Union-Tribune asked Judge Adler not to rule on the request yet and to provide them reasonable time to retain counsel and to file their objection. The Union-Tribune further requested that it be served with all future motions to seal documents, or other pleadings filed by San Diego. The Court granted the Union-Tribune's request. About San Diego Diocese Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. The Diocese's exclusive period to file a chapter 11 plan of reorganization expires on June 27, 2007. (Catholic Church Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). CHIQUITA BRANDS: Inks Plea Agreement with U.S. Attorney and DOJ --------------------------------------------------------------- Chiquita Brands International Inc. said Wednesday that it entered into a plea agreement with the United States Attorney's Office for the District of Colombia and the National Security Division of the U.S. Department of Justice relating to the previously disclosed investigation by the government into payments made by the company's former banana-producing subsidiary in Colombia to certain groups designated under U.S. law as foreign terrorist organizations. Chiquita voluntarily disclosed the payments to the government in April 2003. Under the terms of the agreement, the company will plead guilty to one count of Engaging in Transactions with a Specially-Designated Global Terrorist, and will pay a fine of $25 million, payable in five equal annual installments, with interest. The company said it will continue to cooperate with the government in any continuing investigation into the matter. The company previously recorded a reserve in 2006 of the full $25 million fine amount in anticipation of reaching a settlement with the government. The agreement is subject to approval and acceptance by the United States District Court for the District of Colombia. CEO's Statement Commenting on the agreement with the U.S. Department of Justice, Fernando Aguirre, the company's chairman and chief executive officer, said, "The information filed is part of a plea agreement, which we view as a reasoned solution to the dilemma the company faced several years ago." "In 2003, Chiquita voluntarily disclosed to the Department of Justice that its former banana-producing subsidiary had been forced to make payments to right- and left-wing paramilitary groups in Colombia to protect the lives of its employees. The company made this disclosure shortly after senior management became aware that these groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to make payments to such organizations. Since voluntarily disclosing this information, Chiquita has continued to cooperate with the DOJ's investigation," Mr. Aguirre continued. "The payments made by the company were always motivated by our good faith concern for the safety of our employees. Nevertheless, we recognized - and acted upon - our legal obligation to inform the DOJ of this admittedly difficult situation. The agreement reached with the DOJ is in the best interests of the company," he added. Amendment of Credit Pact with Operating Unit As reported in the Troubled Company Reporter on Mar. 14, 2007, Chiquita and its operating subsidiary, Chiquita Brands L.L.C., entered into an amendment effective March 7, 2007, of their credit agreement dated as of June 28, 2005, with a syndicate of banks, financial institutions and other institutional lenders. The Amendment addressed the treatment under the Credit Agreement of a $25 million charge for the potential settlement of a contingent liability related to the U.S. Department of Justice's investigation of the company in connection with payments made by its former Colombian subsidiary. Even without the Amendment, the company said it was in compliance with the financial covenants under the Credit Agreement at Dec. 31, 2006. According to the company, the Amendment, which makes certain adjustments in the calculation of financial covenants relating to the charge and certain legal fees and expenses, affords the company greater flexibility to remain in compliance with the financial covenants under the Credit Agreement in future periods. U.S. Department of Justice Probe In a press statement dated Feb. 22, 2007, Chiquita disclosed that in April 2003, the company's management and audit committee, in consultation with the board of directors, voluntarily disclosed to the U.S. Department of Justice that its former banana-producing subsidiary in Colombia, which was sold in June 2004, had made payments to certain groups in that country which had been designated under United States law as foreign terrorist organizations. Following the voluntary disclosure, the Justice Department undertook an investigation, including consideration by a grand jury. In March 2004, the Justice Department advised that, as part of its criminal investigation, it would be evaluating the role and conduct of the company and some of its officers in the matter. In September and October 2005, the company was advised that the investigation was continuing and that the conduct of the company and some of its officers and directors was within the scope of the investigation. During the fourth quarter of 2006, the company commenced discussions with the Justice Department about the possibility of reaching a plea agreement. As a result of the discussions, and in accordance with the guidelines set forth in SFAS No. 5, the company has recorded a reserve of $25 million in its financial statements for the quarter and year ended Dec. 31, 2006. The amount reflects liability for payment of a proposed financial sanction contained in an offer of settlement made by the company to the Justice Department. The $25 million would be paid out in five equal annual installments, with interest, beginning on the date judgment is entered. The Justice Department has indicated that it is prepared to accept both the amount and the payment terms of the proposed $25 million sanction. According to the company, negotiations are ongoing, and there can be no assurance that a plea agreement will be reached or that the financial impacts of any such agreement, if reached, will not exceed the amounts currently accrued in the financial statements. Furthermore, the company said that the agreement would not affect the scope or outcome of any continuing investigation involving any individuals. In the event an acceptable plea agreement between the company and the Justice Department is not reached, the company believes the Justice Department is likely to file charges, against which the company would aggressively defend itself. The company is unable to predict the financial or other potential impacts that would result from an indictment or conviction of the company or any individual, or from any related litigation, including the materiality of such events. About Chiquita Brands Cincinnati, Ohio-based Chiquita Brands International, Inc. (NYSE: CQB) -- http://www.chiquita.com/-- markets and distributes fresh food products including bananas and nutritious blends of green salads. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide, including Panama. * * * In November 2006, Moody's Investors Service downgraded its ratings for Chiquita Brands LLC., as well as for its parent Chiquita Brands International Inc. Moody's said the outlook on all ratings is stable. Standard & Poor's Ratings Services also lowered its ratings on Cincinnati, Ohio-based Chiquita Brands International Inc., including its corporate credit rating, from 'B+' to 'B'. S&P said the ratings remain on CreditWatch with negative implications where they were placed on Sept. 26. CKE RESTAURANTS: S&P Rates $320 Mil. Secured Credit Facility at BB ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Carpinteria, California-based CKE Restaurants Inc. The outlook is stable. At the same time, Standard & Poor's assigned a 'BB' rating to CKE's $320 million secured revolving credit facility. The loan is comprised of a $200 million revolver five-year loan and a $120 million six-year term loan. The credit facility is rated 'BB', one notch higher than the corporate credit rating on CKE, with a recovery rating of '1', indicating the expectation for full recovery of principal in the event of a payment default. Proceeds from the loan will be used primarily to refinance the existing credit facility and for working capital, LOCs, capital expenditures, and general corporate purposes. "Improved operating performance at both concepts," said Standard & Poor's credit analyst Diane Shand, "together with a healthier balance sheet, should offer rating stability and provide the company with the flexibility to continue to reinvest in its brands." CLEAR CHANNEL: Resets Special Meeting of Shareholders to April 19 ----------------------------------------------------------------- Clear Channel Communications Inc.'s Board of Directors has rescheduled the special meeting of shareholders regarding the proposed merger with the group led by Thomas H. Lee Partners L.P. and Bain Capital Partners LLC and has set a new record date. Clear Channel shareholders of record as of March 23, 2007, will be entitled to vote at the special meeting which will now be held on April 19, 2007. Clear Channel's disinterested directors continue to unanimously recommend that all Clear Channel shareholders vote FOR the proposed merger. The action by the board was unanimously approved by the disinterested directors, with management and other interested directors recusing themselves. The company stated, "The disinterested directors of the Clear Channel Board considered the substantial trading volume in Clear Channel shares since the original record date for the special meeting, and as the original record date no longer reflects Clear Channel's current stockholder base, determined to set a new record date to better align the economic and voting interests of all Clear Channel shareholders. The move will allow shareholders who have purchased shares since the original record date and who currently have economic stakes in the company to participate in the vote." The disinterested directors also concluded that postponing the special meeting until April 19 was necessary in light of the time required to prepare a revised proxy statement, mail the proxy statement to Clear Channel's shareholder base as of the new record date and give current shareholders -- many of whom did not become shareholders until after the original record date -- a meaningful opportunity to review the new proxy materials and arrive at an informed judgment. Clear Channel wants to ensure that the important decision about the future of the company is made by its current shareholders. The special meeting will be held at 8:00 a.m. Central Time at the Westin Riverwalk Hotel, 420 Market Street, San Antonio, Texas. November last year, Reuters reported that Clear Channel and its directors faced a suit in a Texas state court following the company's $18.7 billion merger agreement with Bain and Thomas H. Lee Partners. The class action, which charged the company with breaching their fiduciary duties by agreeing to sell the company, was filed with the District Court for the 166th Judicial District in Bexar County. The lawsuit disclosed that the defendants "are acting contrary to their fiduciary duty to maximize value on a change in control of the company," the Reuters said. Clear Channel reported revenues of $7.07 billion and income before discontinued operations of $688.8 million for the full year 2006. About Clear Channel Communications Based in San Antonio, Texas, Clear Channel Communications Inc. -- http://www.clearchannel.com/-- (NYSE:CCU) is a global leader in the out-of-home advertising industry with radio and television stations and outdoor displays in various countries around the world. Aside from the U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. * * * Clear Channel's long-term local and foreign issuer credits carry Standard & Poor's BB+ rating. In addition, the company's senior unsecured debt and long-term issuer default ratings were placed by Fitch at BB- on Nov. 16, 2006. COLLINS & AIKMAN: Files Litigation Trust Allocation --------------------------------------------------- Collins & Aikman Corp. and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Eastern District of Michigan a litigation trust allocation, as set forth in Articles I and V of the Amended Disclosure Statement for the First Amended Joint Plan. The Official Committee of Unsecured Creditors has agreed to the allocation of the litigation recovery interests. The impaired classes of Class 5, general unsecured claims; Class 6, senior note claims and Pension Benefit Guaranty Corp. claims; and Class 7, senior subordinated note claims, will receive their pro rata share of the percentage of the Tranche B Litigation Recovery Interests allocated to the classes. Class 5 Claims 14% Class 6 Claims 86% Class 7 Claims 0% In accordance with the subordination provisions of the Senior Subordinated Note Indenture, the Tranche B Litigation Recovery Interests that would have been allocated to Class 7 will be allocated to Class 6. Class 7 Claims holders will not receive a recovery under the Plan until holders of allowed Senior Note Claims have been paid in full plus any additional amounts required to be paid pursuant to the Senior Note Indenture. For purposes of distributions to Holders of Allowed Claims in Class 6, until the Allowed Claims have been paid in full, the amount of Senior Note Claims will be increased by the amount of Senior Subordinated Note Claims for an aggregate claim amount in respect of the Senior Note Claims of approximately $949,000,000. 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 $2,856,600,000 in total debts. The Debtors' disclosure statement explaining their First Amended Joint Chapter 11 Plan was approved on Jan. 25, 2007. (Collins & Aikman Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). CONTINENTAL AIRLINES: Moody's Lifts Ratings on Good Results ----------------------------------------------------------- Moody's Investors Service raised the ratings of Continental Airlines, Inc. debt - corporate family rating to B2, senior unsecured to B3 and preferred stock to Caa1 -- as well as the ratings of certain tranches of Continental's Enhanced Equipment Trust Certificates. Moody's also affirmed Continental's SGL-2 rating, the ratings of the EETCs not upgraded, and the Loss Given Default rating of LGD5 - 74%. The outlook remains stable. "Moody's upgrades follow Continental's first full year of net profit in over three years on the strength of better unit revenues and yields, combined with good control over operating costs", noted George Godlin of Moody's Investors Service. Also, the airline completed the normally challenging winter season with a strong cash position exceeding $2 billion. Still strong passenger demand combined with some softening of fuel prices and better hedging of fuel price volatility should continue to support continued modest profit gains over the near term. With the solid airline operations resulting in steadily better financial performance, debt protection metrics have improved to be within the range of other issuers at the B2 corporate family rating. Debt to EBITDA of 6.7x and EBIT to Interest of 1.4x at Dec. 31, 2006, while improved, are still at the weaker end of the range however. Moody's notes that Continental's cost structure remains among the highest of the legacy carriers. The company has continued focus on controlling costs, particularly important because certain of Continental's routes are susceptible to competition from Low Cost Carriers. Continental's adherence to a steady aircraft re-fleeting plan, resulted in one of the lowest average-age fleets in the industry with cost savings through lower maintenance expense and high fuel efficiency, and which may provide Continental the ability to differentiate its product. A relatively young fleet has lowered Continental's fuel and maintenance expense, but the re-fleeting strategy has resulted in a weak capital structure and a history of increasing debt, however. The robust cash position provides Continental with some insulation from economic shocks and unanticipated near-term expenses. While the company enjoys good access to capital markets at this time, substantially all of the company's assets are encumbered and access to external sources of liquidity could suffer if economic conditions worsen. Most EETC ratings were increased be one notch to reflect the upgrade of the corporate family rating to B2. Those ratings affirmed considered the debt outstanding for each class relative to the estimated value of the collateral supporting the transactions, and Moody's notching practices for rating EETC's. The stable outlook reflects the expectation of steadily improving operating and financial performance over the near term resulting primarily from somewhat better revenue yield while the company controls growth in unit costs, as well as solid cash balances. Downward pressure on the ratings could occur with an EBITDA margin lower than 15%, or if debt to EBITDA exceeds 8x or EBIT to interest expense falls to close to 1x. The rating could be raised further if growth in internally-generated cash flows sufficient to sustain EBIT to interest greater than 2x, retained cash flow to debt greater than 15%, with higher cash balances. Upgrades: * Continental Airlines, Inc. -- Corporate Family Rating, Upgraded to B2 from B3 -- Multiple Seniority Shelf, Upgraded to a range of Caa1 to B3 from a range of Caa2 to Caa1 -- Senior Secured Enhanced Equipment Trust, Upgraded to a range of B2 to Baa2 from a range of B3 to Baa3 -- Senior Secured Equipment Trust, Upgraded to Ba2 from Ba3 -- Senior Secured Shelf, Upgraded to Ba3 from B1 -- Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to B3 from Caa1 -- Senior Unsecured Regular Bond/Debenture, Upgraded to B3 from Caa1 Continental Airlines, Inc. based on Houston Texas, operates the world's 5th largest passenger airline with service throughout the Americas, Europe, the Middle East and Asia. COVALENCE SPECIALTY: Merger Prompts Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service placed the long-term debt ratings of Berry Plastics Holdings Corporation and Covalence Specialty Materials Corporation on review for possible downgrade. The review follows the companys' report that they have entered into a definitive agreement pursuant to which Berry will merge with CSMC in a stock-for-stock merger. The merger is expected to occur in April 2007 and the transaction is subject to the receipt of required regulatory approvals. Following the merger, Ira Boots, Chairman and Chief Executive Officer of Berry Group, and Brent Beeler, Chief Operating Officer of Berry Group, will remain in the same roles with the combined company, which will be known as Berry Plastics Group, Inc. Immediately following the merger, the two entities will be combined as a direct subsidiary of New Berry Group. New Berry Holding will remain the primary obligor in respect of CSMC's Senior Subordinated Notes due 2016, Berry's Second Priority Senior Secured Fixed Rate Notes due 2014 and Second Priority Senior Secured Floating Rate Notes due 2014. The outstanding credit facilities of CSMC and Berry are expected to be refinanced at the time of the closing with a $400 million asset based revolving credit facility and a $1.2 billion senior secured term loan facility. Moody's expects the combined entity to have adjusted debt to EBITDA of about 6.9x and adjusted EBIT to interest coverage of about 1.0x. To the extent that debt instruments of the two companies are refinanced as part of the transaction, the ratings will be withdrawn. Moody's said that the combined company should benefit from increased scale and sound liquidity over the near term. In addition, Berry is expected to realize significant cost savings from the consolidation of such activities as manufacturing and back-office functions. Moody's review of New Berry Holding's ratings will focus primarily on the amount and timing of potential cost savings and management's operational and competitive strategy for the combined entity. Currently, Moody's anticipates that the rating downgrade for the Corporate Family Rating, if any, would be limited to one notch. In the event of a Corporate Family Rating downgrade to B2, the $1.2 billion senior secured term loan will likely be rated two notches above the Corporate Family Rating at Ba3, while the senior secured second lien facilities would likely be rated one notch below at B3 and the subordinated notes two notches below at Caa1. The notching contemplates that the collateral for the $1.2 billion senior secured term loan will be encumbered by the priority claim of the asset based revolver and a resulting deficiency claim. In the absence of a downgrade of the Corporate Family Rating, the $1.2 billion senior secured term loan will likely be rated two notches above the Corporate Family Rating at Ba2, while the senior secured second lien facilities would likely be rated one notch below at B2 and the subordinated notes two notches below at B3. Under review for possible downgrade: * Berry Plastics -- The B1 Corporate Family Rating -- The B1 Probability of Default Rating -- The Ba1, LGD2, 18% rated $200 million senior secured revolver due 2012 -- The Ba1, LGD2, 18% rated $675 million senior secured first lien term loan B due 2013 -- The B2, LGD4, 62% rated $225 million senior secured second lien FRN's due 2014 -- The B2, LGD4, 62% rated $525 million senior secured second lien notes due 2014 -- The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. Under review for possible downgrade: * Covalence Specialty -- The B1 Corporate Family Rating -- The B1 Probability of Default Rating -- The Ba3, LGD3, 34% rated $300 million senior secured term loan C due 2013. -- The B2, LGD4, 62% $175 million senior secured second lien term loan due 2013. -- The B3, LGD5, 86% rated $265 million senior subordinated notes due 2016. The Speculative Grade Liquidity Rating is SGL-2 and it will be revisited upon conclusion of the proposed transaction. Based in Evansville, Indiana, Berry Plastics Holdings Corporation is one of the world's leading suppliers of rigid plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended Dec. 30, 2006 amounted to approximately $1.4 billion. Headquartered in Bedminster, New Jersey, Covalence Specialty Materials Corporation is predominantly a North American manufacturer of polyethylene-based plastic film, packaging products, bags, and sheeting in a wide range of sizes, gauges, strengths, stretch capacities, clarities and colors. End markets include Industrial, Building Products, Specialty/Custom, Institutional, Retail, and Flexible Packaging. Consolidated net revenue for the twelve months ended Sept. 30, 2006 is approximately $1.7 billion. COVALENCE SPECIALTY: Merger Cues S&P to Hold B Corp. Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit ratings on Berry Plastics Holding Corp. and Covalence Specialty Materials Corp. following the report that their holding company parents have entered into a definitive agreement to merge in a stock-for-stock transaction. The transaction is expected to close in April 2007, subject to regulatory approval. If the transaction is consummated, the outlook on the combined company will be stable. "The affirmation of the corporate credit ratings recognizes the strength of the merged business and the potential that the company will improve its highly aggressive financial profile to acceptable levels for the current ratings within the next couple of years," said Standard & Poor's credit analyst Liley Mehta. The outstanding credit facilities of both companies are expected to be refinanced at closing with a $400 million asset-based revolving credit facility (unrated) and a $1.2 billion senior secured term loan facility. Berry's $750 million of second-priority senior secured notes due 2014 and Covalence's $265 million of subordinated notes due 2016 are expected to remain outstanding. The rated Berry and Covalence entities will be combined to form New Berry Holding, which is expected to be the issuer of all the group's debt. At closing, total debt (adjusted to include capitalized operating leases and unfunded postretirement liabilities) will be about $2.7 billion. Based on preliminary terms and conditions, Standard & Poor's assigned a 'B' corporate credit rating to New Berry Holding. The rating agency also assigned a 'B+' senior secured debt rating to New Berry's proposed eight-year $1.2 billion term loan with a recovery rating of '1', indicating its expectation that lenders would fully recover their principal in a payment default scenario. The ratings on the existing bank credit facilities of both companies will be withdrawn upon refinancing. Any increase in the amount of the proposed term loan would prompt a ratings reassessment. At the same time, Standard & Poor's placed the ratings on Berry's second-priority senior secured notes on CreditWatch with positive implications. If there is no change to the proposed transaction and related refinancing, the rating agency will raise the ratings on these notes to 'B-' from 'CCC+' and change the related recovery rating to '3' from '4'. The new ratings indicate our expectation that noteholders would experience meaningful (50%-80%) recovery of principal in a payment default. Standard & Poor's affirmed its 'CCC+' rating on Covalence's subordinated notes. With more than $3.2 billion in annual sales, Berry Plastics will rank among the largest packaging companies in North America, with leading positions in both the rigid and flexible plastic packaging segments. While primarily domestic in terms of geographic coverage, the company will boast an impressive operating footprint with approximately 65 manufacturing facilities throughout the U.S., serving an array of end markets and customers. The concentration of customers will be diminished somewhat through the merger, and the combined administrative and manufacturing operations will likely present opportunities to realize synergies. However, the large scale of the businesses to be integrated will represent a meaningful execution risk and operating uncertainty until tangible progress is achieved. CREDIT SUISSE: Moody's Holds B3 Rating on $2 Mil. Class O Certs. ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 20 classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2004-C3: -- Class A-2, $44,923,240, Fixed, affirmed at Aaa -- Class A-3, $209,402,000, Fixed, affirmed at Aaa -- Class A-4, $102,918,000, Fixed, affirmed at Aaa -- Class A-5, $694,474,000, WAC Cap, affirmed at Aaa -- Class A-1-A, $329,159,619, Fixed, affirmed at Aaa -- Class A-X, Notional, affirmed at Aaa -- Class A-SP, Notional, affirmed at Aaa -- Class B, $45,084,000, WAC Cap, affirmed at Aa2 -- Class C, $14,345,000, WAC Cap, affirmed at Aa3 -- Class D, $28,690,000, WAC Cap, affirmed at A2 -- Class E, $16,395,000, WAC Cap, affirmed at A3 -- Class F, $20,493,000, WAC Cap, affirmed at Baa1 -- Class G, $16,394,000, WAC Cap, affirmed at Baa2 -- Class H, $22,542,000, WAC, affirmed at Baa3 -- Class J, $8,198,000, WAC Cap, affirmed at Ba1 -- Class K, $6,147,000, WAC Cap, affirmed at Ba2 -- Class L, $8,198,000, WAC Cap, affirmed at Ba3 -- Class M, $6,148,000, WAC Cap, affirmed at B1 -- Class N, $6,147,000, WAC Cap, affirmed at B2 -- Class O, $2,050,000, WAC Cap, affirmed at B3 As of the Feb. 16, 2007, distribution date, the transaction's aggregate certificate balance has decreased by approximately 2.1% to $1.60 billion from $1.64 billion at securitization. The Certificates are collateralized by 174 mortgage loans. The loans range in size from less than 1.0% to 9.6% of the pool, with the top 10 loans representing 42.5% of the pool. The pool includes one investment grade shadow rated loan, representing 3.2% of the outstanding pool balance. Five loans, representing 10.7% of the pool, have defeased and are secured by U.S. Government securities. The pool's largest loan, One Park Avenue of $154.0 million (9.6%), has defeased. There have been no loans liquidated from the pool and no losses. Currently one loan, representing less than 1.0% of the pool, is in special servicing. There are no losses projected from this loan at the present time. Twenty-four loans, representing 8.2% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and partial-year 2006 operating results for 95.6% and 83.5%, respectively, of the performing loans. Moody's loan to value ratio for the conduit component is 91.7%, compared to 91.1% at securitization. The shadow rated loan is the Mizner Park Loan of $51.1 million (3.2%), which is secured by a leasehold interest in a mixed-use property located in Boca Raton, Florida. The subject is part of a larger property known as Mizner Park, which includes office, retail and residential components. Only the office and retail portions secure this loan. Built in phases between 1991 and 1996, and renovated in 1999, the collateral includes six buildings containing 504,463 square feet. The office space is allocated between a seven-story office building (163,818 square feet) and a low-rise office plaza (104,108 square feet). The combined office components represent 53.1% of the collateral's net rentable area. The retail portion totals 236,537 square feet and is comprised of the ground level space as well as a free-standing retail building. As of July 2006 the overall occupancy level was 88.4%, essentially the same as at securitization (88.7%). The loan sponsor is The Rouse Company. Moody's current shadow rating is Baa2, the same as at securitization. The three largest conduit loans represent 17.1% of the pool. The largest conduit loan is the Pacific Design Center Loan of $150.0 million (9.4%), which is secured by a 961, 859 square foot office complex located in West Hollywood, California. The two main buildings are known as the Blue Building and the Green Building, due to their colored glass exteriors. The Blue Building was constructed in 1976 and contains 587,859 square feet, which is mostly utilized as design showroom space. The Green Building is a nine-story office and showroom facility constructed in 1988. In addition to the showroom and office space, the property also houses a 384-seat theater and screening room, conference facilities, a two-story gallery leased to the Museum of Contemporary Art, a fitness facility, a seven-level parking garage and two restaurants. The property also includes a 1.5 acre landscaped plaza with an open-air amphitheater. As of December 2006 the property was 87.4% occupied, compared to 79.6% at securitization. The two largest leases are with affiliates of Interpublic Group and represent 21.9% of the leased square footage through July 2015 and January 2017. IPG is an advertising and marketing conglomerate. The loan is interest only for the first three years of its term converting to a 28-year schedule thereafter. Moody's LTV is 80.2%, the same as at securitization. The second largest conduit loan is the 160 West 24th Street Loan of $73.6 million (4.6%), which is secured by a 204-unit, 18-story multifamily property located in the Chelsea submarket of New York City. The improvements were constructed between 1987 and 1999. The property is 100.0% master leased to ExecuStay under a lease through January 2017, with two five-year renewal options. However, the lease can be terminated at any time subject to a termination fee of $15.6 million that is guaranteed by Marriott International, Inc. The termination penalty increases through July 2011 reaching a maximum of $17.6 million, reducing to $11.1 million thereafter. Moody's LTV is 87.1%, compared to 90.3% at securitization. The third largest conduit loan is the Centro Gran Caribe Loan of $50.7 million (3.2%), which is secured by a 387,437 square foot enclosed retail mall located in Vega Alta, Puerto Rico approximately 23 miles west of the San Juan CBD. The property was originally built as two distinct retail properties with separate ownership. Subsequently the properties were joined and are now physically connected by an enclosed, air-conditioned pedestrian walkway. As of December 2006 occupancy was 94.1%, compared to 95.7% at securitization. Financial performance has been stable to moderately higher since securitization. The loan was interest only for the first two years of its term but now amortizes on a 28-year schedule. Moody's LTV is 83.0%, compared to 85.4% at securitization. The pool's collateral is a mix of: * office and mixed use (35.2%) * retail (28.0%) * multifamily and manufactured housing (20.5%) * U.S. Government securities (10.7%) * industrial and self storage (3.9%) * lodging (1.7%) The collateral properties are located in 30 states, Puerto Rico and the District of Columbia. The highest state concentrations are: * California (25.4%) * Texas (11.6%) * New York (10.7%) * Florida (6.8%) * Michigan (6.8%) All of the loans are fixed rate. CREDIT SUISSE: Moody's Cuts Rating on Class E Certificates to Ba1 ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of three classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-CND1 and placed the ratings of eight classes on review for possible downgrade or further possible downgrade: -- Class A-1, $39,095,638, Floating, affirmed at Aaa -- Class A-2, $152,000,000, Floating, currently rated Aaa; on review for possible downgrade -- Class A-X-1, Notional, currently rated Aaa on review for possible downgrade -- Class A-X-3, Notional, currently rated Aaa; on review for possible downgrade -- Class A-Y, Notional, currently rated Aaa; on review for possible downgrade -- Class B, $16,000,000, Floating, currently rated Aaa; on review for possible downgrade -- Class C, $15,000,000, Floating, downgraded to A2 from Aa2; on review for further possible downgrade -- Class D, $22,000,000, Floating, downgraded to Baa3 from A2; on review for further possible downgrade -- Class E, $4,825,229, Floating, downgraded to Ba1 from A2; on review for further possible downgrade The Certificates are collateralized by three senior participation interests. As of the Feb. 15, 2007, distribution date, the transaction's aggregate certificate balance has decreased by approximately 62.6% to $248.9 million from $665.8 million at securitization as a result of the payoff of five loans originally in the pool. Moody's placed Classes C, D and E on review for possible downgrade on July 27, 2006 due to performance issues related to the Royal Palm and Hotel 71 Loans. Moody's is downgrading Classes C, D and E and leaving them on review for further possible downgrade due to the foreclosure action initiated by the holder of the Hotel 71 mezzanine loan and the subsequent Chapter 11 bankruptcy filing by the Hotel 71 mezzanine borrower. Additionally, the Royal Palm Hotel Loan is in default as it has passed its March 9, 2007 maturity date and does not qualify for an extension. Classes A-2, A-X-1, A-X-3, A-Y and B have been placed on review for possible downgrade as well. Three loans remain in the pool: * the Marriott Hawaii Hotel Portfolio Loan (43.4%) * the Royal Palm Loan (30.1%) * the Hotel 71 Loan (26.5%) Both the Royal Palm, located in Miami Beach, Florida and Hotel 71, located in the Chicago, Illinois CBD, are hotel properties that had been financed for acquisition, renovation, and conversion into condo-hotels. No condominium unit sales have closed at either properties to date and both are being marketed for sale. The Royal Palm Hotel Loan matured on March 9, 2007, and the Hotel 71 Loan matures on April 9, 2007. Negotiations are proceeding between the master servicer and the Royal Palm borrower whereby certain terms and conditions of the loan documents would be waived to permit an extension. To-date no agreement has been reached. The Hotel 71 Loan currently does not meet its loan extension requirements either and it is not anticipated to pay off at maturity. The Marriott Hawaii Hotel Portfolio Loan is secured by two hotel properties -- the Waikoloa Beach Marriott (545 room) located in Waikoloa, Hawaii and the Wailea Marriott (521 rooms) located in Wailea, Hawaii. Both hotels are undergoing extensive renovations. Construction is proceeding and completion is expected in 2007. CVS CORP: Underscores Benefits of Caremark Merger ------------------------------------------------- At Bank of America's 2007 Consumer Conference in New York City, CVS Corporation addressed its solid recent performance and key drivers for future growth, as well as the strategic rationale and many anticipated benefits of its pending merger with Caremark Rx, Inc. "Over the past three years, our sales grew at a compound annual growth rate of 18%, while operating profit and earnings per share increased 19% and 15%, respectively," Tom Ryan, Chairman, CEO and President of CVS Corporation, stated. "Our pending merger with Caremark should create opportunities for new sources of revenue and earnings growth." CVS and Caremark have conservatively estimated annual cost synergies of $500 million. In addition, they expect to achieve between $800 million and $1 billion in incremental revenues in 2008 and significantly more thereafter. The incremental revenues are expected to be generated by the differentiated new offerings that only a drugstore/PBM combination can provide. The company provided expectations for free cash flow and diluted earnings per share of the combined company. In 2008, CVS/Caremark is expected to generate more than $3 billion in free cash flow while adding between 8 and 10 cents to diluted EPS. The company anticipates even more growth in 2009, with free cash of more than $3.5 billion and diluted EPS accretion of between 14 and 18 cents. "We look forward to receiving CVS and Caremark shareholder approval for our transformational combination this week, and to closing our merger shortly thereafter," continued Mr. Ryan. "I am confident that this merger will accelerate our growth and look forward with great anticipation to the future of CVS/Caremark Corporation." About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is a retail pharmacy in the U.S. and operates approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on March 8, 2007, Moody's Investors Service confirmed the Ba1 rating of CVS Corp.'s $125 million Series A-2 lease obligations. CVS CORP: Concurs with ISS Recommendation on Caremark Merger ------------------------------------------------------------ CVS Corporation is pleased that Institutional Shareholders Services Inc. has recommended that Caremark Rx, Inc. shareholders support the proposed merger with CVS. In addition, in response to Express Scripts' announcement that its current offer to acquire Caremark is its "best and only" offer, CVS urged Caremark shareholders to consider that the highly conditional nature of Express Scripts' "smoke and mirrors" offer may well leave them with a transaction on reduced terms or no deal at all should they vote down the merger with CVS. Consider just some of the many risks inherent in Express Scripts' hostile offer: * Regulatory Risk The FTC and the 22 State Attorneys General investigating the anti-competitive implications of Express Scripts' hostile bid may never approve such a transaction. * Shareholder Approval Risk Express Scripts shareholders may well vote down this ill- conceived transaction. * Financing Condition Risk In light of the highly leveraged nature of its bid and the significant business risk associated with several months of regulatory delay, Express Scripts may never obtain the necessary financing to acquire Caremark. In addition, Express Scripts has left itself the ability to walk away in the event of any adverse developments in Caremark's business (such as material client defections), an adverse change in general market conditions or even an act of war or terrorist attack. All of this calls into question whether or not Express Scripts even seeks to pursue a transaction or is merely attempting to disrupt the CVS/Caremark transaction. Shareholders should also note that in the unlikely event that the Express Scripts/Caremark deal was to be completed, Caremark shareholders would own a 57% interest of an overleveraged company with a junk credit rating unable to make the necessary investment in its own business. In contrast, CVS' best and final offer provides Caremark shareholders with real and immediate value, including: * A special cash dividend of $7.50 per share payable at or promptly after closing of the merger to Caremark shareholders of record as of the close of business on the day immediately preceding the closing date of the merger. * A cash tender offer promptly following the closing of the CVS/Caremark merger for 150 million (or about 10%) of its outstanding shares at a fixed price of $35 per share, reflecting our confidence in the value proposition of this strategic combination. * A merger that is solidly accretive to earnings and cash flow in 2008 and growing thereafter. * A combined company that is expected to retain a solid investment grade rating. "We are delighted that ISS is recommending shareholders support the powerful combination that stands to be created through the union of these two companies," Tom Ryan, Chairman, President and CEO of CVS, said. "Our offer not only provides Caremark shareholders with immediate financial benefits, but it will also give shareholders of both companies the opportunity to begin realizing the long-term value only our transaction can provide. In stark contrast, Express Scripts' highly conditional offer cannot mask its inability to provide Caremark with any real assurance that it is serious about pursuing its bid, threatening to leave Caremark shareholders alone at the altar should they decide to vote down our transaction. We look forward to gaining shareholder approval for our deal at CVS' and Caremark's respective shareholder votes later this week." The special meeting of CVS shareholders to approve the transaction will be held on March 15, 2007 and the special meeting of Caremark shareholders for the same purpose will be held on March 16, 2007. CVS urges Caremark shareholders to vote FOR the CVS/Caremark merger. CVS shareholders who have questions about the proposed merger, or need assistance in voting your shares, please call the firm assisting CVS in the solicitation of proxies: Morrow & Co., Inc. Toll Free: (800) 245-1502 (Banks and Brokers may call collect at (203) 658-9400) Caremark shareholders who have questions about the proposed merger, or need assistance in voting your shares, please call the firm assisting Caremark in the solicitation of proxies: Innisfree M&A Incorporated Toll Free: (877) 750-9498 (Banks and Brokers may call collect at (212) 750-5833) About Caremark Rx Caremark Rx Inc. (NYSE: CMX) -- http://www.caremark.com/-- provides comprehensive prescription benefit management services to over 2,000 health plans, including corporations, managed care organizations, insurance companies, unions and government entities. Caremark operates a national retail pharmacy network with over 60,000 participating pharmacies, seven mail service pharmacies, and nine call centers, which have been recognized for customer satisfaction excellence by J.D. Power & Associates. Caremark also has 21 specialty pharmacies accredited by the Joint Commission on Accreditation of Healthcare Organizations, and 21 disease management programs through Accordant(R) accredited by the National Committee for Quality Assurance. About Express Scripts Headquartered in St. Louis, Missouri, Express Scripts, Inc. -- http://www.express-scripts.com/-- provides integrated PBM services to over 50 million members, including network-pharmacy claims processing, home delivery services, benefit-design consultation, drug-utilization review, formulary management, disease management, and medical- and drug-data analysis services. The Company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients or their physicians, and provides extensive cost-management and patient- care services. Express Scripts serves thousands of client groups, including managed-care organizations, insurance carriers, employers, third-party administrators, public sector, and union- sponsored benefit plans. About CVS Corp. CVS Corp. (NYSE: CVS) -- http://www.cvs.com/-- is a retail pharmacy in the U.S. and operates approximately 6,200 retail and specialty pharmacy stores in 43 states and the District of Columbia. With more than 40 years in the retail pharmacy industry, CVS serves the healthcare needs of all customers through its CVS/pharmacy stores; its online pharmacy, CVS.com; its retail- based health clinic subsidiary, MinuteClinic; and its pharmacy benefit management, mail order and specialty pharmacy subsidiary, PharmaCare. * * * As reported in the Troubled Company Reporter on March 8, 2007, Moody's Investors Service confirmed the Ba1 rating of CVS Corp.'s $125 million Series A-2 lease obligations. DAIMLERCHRYSLER AG: Chrysler's Feb. Pre-Owned Vehicle Sales Up 9% ----------------------------------------------------------------- Continuing on the momentum started in January, DaimlerChrysler AG's Chrysler Group reported that its Five Star(R) dealers set a new February record of 10,187 Certified Pre-Owned Vehicle sales in 2007, a 9% increase compared with February 2006 sales of 9,309 units. Year-to-date sales also set a new record with 19,298 units, rising 9% from year-to-date sales in 2006. Boosted by sales of the Jeep(R) Grand Cherokee (1,215 units) and the Jeep Liberty (669 units), total Jeep sales accelerated 31% in February. In addition, both Dodge and Chrysler brand sales rose 4% for the month. Year-to-date sales were also up across the board with Chrysler brand up 6%, Jeep brand up 26%, and the Dodge brand up 3%. "With America's Hottest Product's offered at our Five Star dealers, Chrysler, Jeep and Dodge brands appeal to customers on many levels and continue to set sales records," DaimlerChrysler Motors Remarketing Director Peter Grady said. "In our quest to deliver a great product to our customers, vehicles undergo a rigorous 125-point inspection to ensure only the highest quality products are driven off our Five Star lots," he said. The Chrysler Group offers one of the most comprehensive Certified Pre-Owned Vehicle programs in the industry. For a vehicle to be certified under the Chrysler Group's used-vehicle program, it must be a 2002 through 2007 model pre-owned vehicle with less than 65,000 miles and pass a stringent 125-point inspection. The Chrysler Group's CPO vehicles are backed by an eight- year/80,000-mile powertrain limited warranty, 24-hour, 365-day full roadside assistance with a $35 per day rental car allowance and a three-month or 3,000-mile Maximum Care warranty, in addition to a Carfax Vehicle History Report and buyback guarantee. Marketed as "Brand Spankin' Used(R)," the Chrysler Group's CPO vehicles are sold only through Chrysler, Jeep and Dodge dealerships that have earned the automaker's Five Star certification. Five-Star certification is a comprehensive validation of the dealership's facilities, operational processes, salesperson and technician training accreditation as well as customer satisfaction survey ratings. Approximately 2,100 Chrysler Group dealerships in the United States are certified Five Star dealers. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER: CEO Meets with Governor on Chrysler Group Status ----------------------------------------------------------------- Michigan Gov. Jennifer Granholm met with DaimlerChrysler AG Chief Executive Dieter Zetsche in Stuttgart earlier this week, The Associated Press reports. The governor stressed that she hopes Chrysler Group will remain in the state no matter who owns the company, AP adds. "I wanted to make sure that he knew ... how important it is for us to retain the investment, and have Daimler or DaimlerChrysler or Chrysler grow in Michigan," she said in a telephone interview with AP. "He certainly was very understanding of that message." According to that report, the governor also told her hope that DaimlerChrysler would consider Michigan when it looks to build a $3 billion powertrain plant. "I told him that Michigan is the right place for that investment given the clustering of suppliers, R and D (research and development) and manufacturers," she further said in AP's interview. "He was very open to that. However, the decision has not been made." The governor said Mr. Zetsche told her that Michigan is already an excellent business partner, the AP notes. "I feel optimistic that there will be a strong DaimlerChrysler or Chrysler presence in Michigan in some shape or form," she said to AP. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER AG: UAW President Wants Chrysler Group Retained --------------------------------------------------------------- The United Auto Workers President Ron Gettelfinger said DaimlerChrysler AG' Chrysler Group should remain in the family, various news agencies report. "I've been around the process long enough to know that I'm not ready to concede that the Chrysler Group is going to come out of DaimlerChrysler," Mr. Gettelfinger told radio station WJR-AM in Detroit in an interview. According to reports, Mr. Gettelfinger added that he hopes that if ever Chrysler will be sold, it will be to a car company. Mr. Gettelfinger is a member of DaimlerChrysler's supervisory board. He will represent the UAW in negotiating labor contracts with Chrysler Group, General Motors Corp, and Ford Motor Co. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER AG: Investors Want "Chrysler" Dropped from Name --------------------------------------------------------------- DaimlerChrysler AG shareholders have recommended that the company remove "Chrysler" from its name and revert to its old moniker -- Daimler-Benz AG -- and reincorporate under new European guidelines, Bloomberg News reports. "Maintaining a corporate name that evokes associations with the failure of the business combination with Chrysler is detrimental to the image of the corporation and its products," shareholders Ekkehard Wenger and Leonhard Knoll wrote in an amendment to the agenda for the April 4 annual meeting published on the company's Web site. The shareholders' motion has heightened the tension between them and the board following DaimlerChrysler CEO Dieter Zetsche's Feb. 14, 2007, announcement that "all options are on the table" for Chrysler, including a possible sale. Investors have been demanding for Chrysler's disposal since DaimlerChrysler's inception in 1998, Bloomberg states. In response to the motion, the company's management board said on its Web site: "The DaimlerChrysler name is established all over the world. There are no grounds to change the name of the corporation." About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam, and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DANA CORP: Discloses Non-Union Retirees Pact With Retiree Panel --------------------------------------------------------------- Dana Corp. and its debtor-affiliates and the Official Committee of Non-Union Retirees have reached an agreement regarding the non- pension retiree benefits for non-union retirees, Michael L. DeBacker, Dana Corporation's vice president, general counsel and secretary, disclosed in a regulatory filing with the Securities and Exchange Commission. The Non-Union Retirees Agreement provides that: (a) the Debtors will assist the Retirees Committee in establishing a tax-exempt Voluntary Employees' Beneficiary Association trust for the non-union retirees; and (b) the Debtors will fund the VEBA Trust through an initial contribution of $25,000,000 to be made during the bankruptcy proceedings and an additional contribution of $53,000,000 to be made on or after their emergence from bankruptcy. In exchange, the Debtors will be released from obligations for post-retirement health and welfare benefits for the non-union retirees. According to Mr. DeBacker, the U.S. Bankruptcy Court for the Southern District of New York has authorized the Debtors' request to eliminate their RetireeFlex and other post-retirement welfare benefits for all active salaried and hourly non-union workers in the United States effective April 1, 2007. Details of the Non-Union Retirees Agreement have not yet been filed with the Court as of March 14, 2007. 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. 36; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DANA CORP: Reaches Agreement With IAMAW to Resolve Union's Claims ----------------------------------------------------------------- Dana Corp. disclosed in a regulatory filing with the Securities and Exchange Commission that it has reached a settlement with the International Association of Machinists and Aerospace Workers union. The IAMAW represents 215 hourly employees at Dana's sealing products plant in Robinson, Ill. The salient terms of the IAMAW Settlement are: (a) Dana Corp. will pay $2,250,000 to IAMAW resolve all of the union's claims for non-pension retiree benefits with respect to retirees and active employees it represents. (b) Dana Corp. will not terminate the non-pension retiree benefits before July 1, 2007. (c) A new three-year collective bargaining agreement will cover the Robinson plant. Michael L. DeBacker, Dana Corp.'s vice president, general counsel and secretary, says the company are moving forward with its efforts to modify or reject the CBAs and retiree welfare benefits provided to the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America; and the United Steelworkers, and is seeking to negotiate consensual agreements with these unions. 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. 36; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DELPHI CORP: Plans to Offer Rights to Purchase Up to 56.7MM Shares ------------------------------------------------------------------ Delphi Corporation submitted a registration statement on Form S-1 with the U.S. Securities and Exchange Commission on March 7, 2007, relating to a proposed offering of rights to purchase up to 56,700,000 shares of Delphi common stock. The Rights Offering is being made in connection with the Debtors' Equity Purchase and Commitment Agreement with affiliates of Appaloosa Management L.P. and Cerberus, according to Delphi Corp. President and Chief Executive Officer Rodney O'Neal. Under the Rights Offering, each holder of Delphi common stock will receive one right for each share held. Each right entitles the holder to purchase a share of reorganized Delphi common stock at $35 per full share. Delphi is distributing the rights at no charge, Mr. O'Neal relates. The rights may be transferred to another holder before the expiration of the Rights Offering, which is due to occur prior to the hearing date for the confirmation of a plan of reorganization. Shares of Reorganized Delphi common stock will only be issued after a Chapter 11 plan becomes effective. There will be 101,000,000 shares of common stock and 34,285,716 shares of Senior Convertible Preferred Stock of Reorganized Delphi on the Effective Date, Mr. O'Neal reports. Delphi discloses that it will realize gross proceeds of $1,984,500,000 from the sale of shares of Reorganized Delphi common stock under the Rights Offering, regardless of the number of rights exercised, as a result of the Backstop Commitment of the Plan Investors. The Debtors will use the net proceeds from the Rights Offering and the $1,400,000,000 from the additional equity investments in Reorganized Delphi by the Plan Investors, together with exit financing borrowings and cash-on-hand, to make payments contemplated by the Plan and for general corporate purposes, Mr. O'Neal says. When available, Delphi relates that a final written prospectus may be obtained from Delphi Investor Relations either by submitting a request through the Web site at http://investor.delphi.comor by mailing: Delphi Corporation ATTN: Investor Relations 5725 Delphi Drive Troy, Michigan 48098. MC: 483-400-621, A full-text copy of Delphi's registration statement filed with the Securities and Exchange Commission is available at: http://ResearchArchives.com/t/s?1aed Plan Investors Offer Part of Delphi Stake to Other Investors In a regulatory filing with the Securities and Exchange Commission, Appaloosa Management L.P. discloses that A-D Acquisition Holdings, LLC; Harbinger Del-Auto Investment Company, Ltd.; Dolce Investments LLC; UBS Securities LLC; and certain third-party additional investors entered into an additional investor agreement dated March 5, 2007. Pursuant to the Additional Investor Agreement, the Initial Investors committed to sell to the Additional Investors a portion of any Direct Subscription Shares and Unsubscribed Shares that may be purchased by the Initial Investors under the Equity Purchase and Commitment Agreement. The aggregate maximum amount of Direct Subscription Shares and Unsubscribed Shares that may be sold pursuant to the Additional Investor Agreement would be approximately 44,857,166, assuming that the Plan Investors are required to purchase all the shares of Delphi Corporation's common stock under the Rights Offering, Appaloosa says. The Additional Investor Agreement further provides that the Initial Investors will share with the Additional Investors a portion of any Standby Commitment Fee and Alternate Transaction Fee that they may receive under the EPCA. A full-text copy of the Additional Investor Agreement filed with the Securities and Exchange Commission is available for free at: http://ResearchArchives.com/t/s?1b54 About Delphi Corporation Troy, Mich.-based Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. (Delphi Corporation Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). DELTA AIR: Amends Code Share Agreements with Mesa Air Group ----------------------------------------------------------- Mesa Air Group Inc. reached an agreement with Delta Air Lines Inc. for an amendment to and assumption of its existing Delta Connection Agreement, as well as for a new code share agreement to operate 14 CRJ-900 regional jet aircraft. The agreements are subject to approval by the U.S. Bankruptcy Court for the Southern District of New York. After service begins pursuant to the Expansion DCA and the Amended DCA, the Mesa regional jet fleet flying for Delta will consist of 14 CRJ-900s and 36 ERJ-145s. Expansion DCA The Expansion DCA authorizes Mesa to operate 14 CRJ-900 regional jet aircraft as a Delta Connection Carrier for a term of up to ten years. This new service is expected to begin in September 2007. The compensation structure for the Expansion DCA will be similar to the structure in the existing Delta Connection agreement, except in these areas: * The CRJ-900 aircraft will be owned by Delta and leased to Mesa for a nominal amount. * No mark-up or incentive compensation will be paid on fuel costs above a certain level or on fuel provided by Delta. Amended DCA The Amended DCA provides for, among other things: * Adding six additional ERJ-145 aircraft to the scope of existing DCA for up to three years beginning immediately. * Commencing in August 2008, the removal of eight of the original 30 ERJ-145 aircraft at a rate of three aircraft per month. * Mesa receiving a general unsecured claim of $35 million as part of Delta's bankruptcy proceedings in connection with the amendment. Such claim is in full and final satisfaction of any and all claims Mesa may have against Delta for pre- petition debt. "We are delighted that Delta has once more demonstrated confidence in Mesa and provided us this opportunity to expand our valued partnership," Mesa Chairman and CEO, Jonathan Ornstein said. "Since we began flying for Delta in October 2005 our people have worked hard to provide a high quality product to our Delta Connection customers and we would like to thank them for their important contribution." "We look forward to continuing to work closely with Delta to deliver the best customer service experience possible to our passengers and to ensure that Mesa continues to make a positive contribution to Delta's success," Mr. Ornstein added. "Delta is pleased to be expanding our relationship with Freedom Airlines," Shawn Anderson Delta's vice president in charge of the Delta Connection said. "The addition of these capable new aircraft -- the CRJ-900 -- into their program in a two-class configuration will be a clear winner for our customers." About Mesa Air Group Mesa Air Group Inc. (Nasdaq: MESA) -- http://www.mesa-air.com/-- operates 199 aircraft with over 1,300 daily system departures to 173 cities, 43 states, the District of Columbia, Canada, and Mexico. Mesa operates as US Airways Express, Delta Connection, and United Express under contractual agreement with US Airways, Delta Air Lines, and United Airlines, respectively, and independently as Mesa Airlines and go! On June 9, 2006, Mesa launched inter-island Hawaiian service as go! -- http://www.iflygo.com/ This new operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and generates revenue in excess of $1 billion annually. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. Plan Update The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the adequacy of the Debtors' disclosure statement. The hearing to consider confirmation the Debtors' plan is scheduled on April 25, 2007. DELTA AIR: Amends Fixed-Free Agreements with Republic Airways ------------------------------------------------------------- Republic Airways Holdings Inc.'s operating subsidiaries Chautauqua Airlines and Shuttle America have amended their fixed-fee agreements with Delta Air Lines Inc. Currently the two airlines operate a total of 55 Embraer regional jets on behalf of Delta, which represents approximately 30% of Republic Airways' current fleet. The amended agreements are subject to bankruptcy court approval. Key terms of the amended agreements are: -- Beginning in September 2008, all 15 thirty-seven-seat E135 aircraft currently operated by Chautauqua will be removed from the Delta Connection program at a rate of 2 aircraft per month; -- Reimbursement on Chautauqua's remaining 24 fifty seat E145 and Shuttle America's 16 seventy seat E170 aircraft will be permanently reduced by approximately 3%, effective on the latter of the court approval date or May 1, 2007; -- Delta will surrender 100% of its warrants on approximately 3.4 million shares of Republic Airways common stock. These warrants represented approximately 1.0 million shares included in the company's diluted share count at Dec. 31, 2006; and -- Republic Airways will be granted a pre-petition, unsecured, general claim in the amount of $91 million in Delta's Chapter 11 bankruptcy case. "Republic Airways is pleased to support Delta Air Lines in their restructuring efforts," Bryan Bedford, Chairman, President and CEO of Republic Airways Holdings, said. "The affirmation of our amended Chautauqua Airlines and Shuttle America jet service agreements is a positive development for our employees and shareholders." "We are pleased to have secured the support of our trusted partner Republic Airways, helping us to successfully compete in the current environment while meeting our restructuring goals," Shawn Anderson, Delta's Vice President of Delta Connection, said. "The Republic management team and its employees have proven to be a great partner that delivers a consistent quality experience to our passengers at competitive costs. We look forward to a long and fruitful partnership." About Republic Airways Based in Indianapolis, Indiana, Republic Airways Holdings (NASDAQ:RJET) is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on over 1,000 flights daily to 93 cities in 36 states, Canada and Mexico through airline services agreements with six major U.S. airlines. All of the airlines' flights are operated under their airline partner brand, such as AmericanConnection, Delta Connection, United Express, US Airways Express, Continental Express and Frontier Airlines. The airlines currently employ approximately 3,800 aviation professionals and operate 181 regional jets. With the affirmation of these two jet service agreements, Republic Airways will operate under fixed-fee agreements for 6 different airline partners with expiration terms ranging from 2012 to 2020. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (OTC: DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. Plan Update The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the adequacy of the Debtors' disclosure statement. The hearing to consider confirmation the Debtors' plan is scheduled on April 25, 2007. DILLARDS INC: Earns $155 Million in Period Ended February 3 ----------------------------------------------------------- Dillards Inc. reported net income of $155 million for the 14 weeks ended Feb. 3, 2007, compared to net income of $98.5 million for the 13 weeks ended Jan. 28, 2006. Included in net income for the 14 weeks ended Feb. 3, 2007, is a pretax interest credit of $10.5 million and a net income tax benefit of $64 million. Included in net income for the 13 weeks ended Jan. 28, 2006, are pretax impairment charges of $55.3 million. Also included in net income for the 13 weeks ended Jan. 28, 2006, is a $28.2 million hurricane recovery gain and a net $35.1 million tax benefit recorded due to the sale of a subsidiary by the company. Net income for the 53 weeks ended Feb. 3, 2007, was $245.6 million compared to net income of $121.5 million for the 52 weeks ended Jan. 28, 2006. Included in net income for the 53 weeks ended Feb. 3, 2007, are the following items: -- The above-mentioned pretax interest credit of $10.5 million and a net income tax benefit of $64 million which includes $18.3 million for the change in a capital loss valuation allowance. Both the pretax interest credit and the income tax benefit are related to statute expirations and audit settlements with federal and state authorities for multiple tax years. -- A pretax gain on the sale of the company's interest in a mall joint venture of $13.5 million. -- Settlement proceeds of $6.5 million received from the Visa Check/Mastermoney Antitrust litigation. -- A pretax charge of $21.7 million for a memorandum of understanding reached in a litigation case. -- Recognition of an income tax benefit of approximately $5.8 million for the change in a capital loss valuation allowance due to capital gain income and $6.5 million due to the release of tax reserves. Net sales for the 14 weeks ended Feb. 3, 2007, were $2.4 billion, compared with net sales for the 13 weeks ended Jan. 28, 2006, of $2.338 billion. Net sales for the 53 weeks ended Feb. 3, 2007, were $7.647 billion, compared with net sales for the 52 weeks ended Jan. 28, 2006 of $7.56 billion. Gross margin declined 80 basis points of sales for the 14 weeks ended Feb. 3, 2007, compared to the 13 weeks ended Jan. 28, 2006. The decline is due to a $28.2 million hurricane recovery gain recorded in the prior year fourth quarter related to insurance settlements received covering inventory losses incurred in the 2005 hurricane season. Excluding the effect of the prior year insurance gain, gross margin improved 40 basis points of sales during the 14 weeks ended Feb. 3, 2007, as a result of the company's disciplined approach to merchandise and inventory control during the period. Exclusive of the prior year effect of the insurance gain, lower markdowns were partially offset by lower markups during the period. Advertising, selling, administrative and general expenses were $577.6 million and $552.5 million for the quarters ended Feb. 3, 2007, and January 28, 2006, respectively. The increase primarily reflects the additional expense of a 14th week of operations compared to 13 weeks in the prior year. Additionally, as a result of the company's improved performance during the year, incentive compensation to store managers, merchants and management significantly increased during the fourth quarter. Partially offsetting the increase in SG & A expenses are significant savings in workers' compensation and general liability expense due to more efficient claims management and advertising expense savings arising from the company's repositioning of its advertising efforts. Interest and debt expense was $26.5 million for the 14 weeks ended Feb. 3, 2007, and $26.4 million for the 13 weeks ended Jan. 28, 2006. As of Feb. 3, 2007, letters of credit totaling $76.8 million were outstanding under the company's $1.2 billion revolving credit facility. About Dillard's Inc. Headquartered in Little Rock, Arkansas, Dillards Inc. (NYSE: DDS) -- http://www.dillards.com/-- is one of the nation's largest fashion apparel and home furnishing retailers. The company's stores operate with one name, Dillard's, and span 29 states. Dillard's stores offer a broad selection of merchandise, including products sourced and marketed under Dillard's exclusive brand names. * * * As reported in the Troubled Company Reporter on Oct. 13, 2006, Moody's Investors Service affirmed its B2 Corporate Family Rating for Dillards Inc. DLJ COMMERCIAL: Fitch Holds B- Rating on $15.6MM Class B-7 Certs. ----------------------------------------------------------------- Fitch upgrades DLJ Commercial Mortgage Corp.'s commercial mortgage pass-through certificates, series 1998-CG1: -- $66.5 million class B-4 to 'A+' from 'A-'; -- $15.6 million class B-5 to 'A-' from 'BBB'. In addition, Fitch affirms these classes: -- $641.6 million class A-1B at 'AAA'; -- $39.1 million class A-1C at 'AAA'; -- Interest-only class S at 'AAA'; -- $39.1 million class A-2 at 'AAA'; -- $78.2 million class A-3 at 'AAA'; -- $23.5 million class A-4 at 'AAA'; -- $70.4 million class B-1 at 'AAA'; -- $23.5 million class B-2 at 'AAA'; -- $15.6 million class B-3 at 'AAA'; -- $27.4 million class B-6 at 'BB+'; and -- $15.6 million class B-7 at 'B-'. Fitch does not rate the $13.8 million class C certificates. Class A-1A has been paid in full. The upgrades are the result of increased subordination levels due to additional paydown and defeasance since Fitch's last rating action. To date, 62 loans (33.9%) have defeased. As of the February 2007 distribution date, the pool's aggregate certificate balance has decreased 31.6% since issuance to $1.07 billion from $1.56 billion. Currently, there is one asset in special servicing with minimal losses expected. The loan is secured by a retail property located in Jackson, Mississippi. The decline in occupancy is a result of the anchor tenant, which occupied 72% of the center, vacating in early 2006. The special servicer is marketing the property. Fitch expects losses will be absorbed by the non-rated class C. The transaction's three credit assessed loans (12.7%) remain investment grade due to their stable performance. One of the loans, Resurgens Plaza, has fully defeased. Rivergate Apartments (7.4%) is an apartment property located in Manhattan, New York. As of March 2007, the property's occupancy has remained at 97% since issuance. The Camargue (2.3%) is an apartment property also located in Manhattan. As of March 2007, the property's occupancy is 96% compared to 99% at issuance. DOLLAR GENERAL: Inks $7.3 Billion Agreement with Kohlberg Kravis ---------------------------------------------------------------- Dollar General Corp. has entered into an agreement to be acquired by affiliates of Kohlberg Kravis Roberts & Co. L.P. in a transaction with a total value of approximately $7.3 billion, including approximately $380 million of net debt. Under the terms of the agreement, the shareholders of Dollar General will receive $22 in cash for each share of Dollar General common stock they hold, representing a premium of approximately 31% over Dollar General's closing share price of $16.78 on March 9, 2007 and a premium of approximately 29% over the average closing share price during the previous 30 trading days. "We are very pleased to announce a transaction that provides excellent value for our shareholders, representing a significant premium and the certainty of cash," said David A. Perdue, Chairman and Chief Executive Officer of Dollar General. "Our Board of Directors firmly believes that this is the right transaction for our shareholders, employees and customers. Going forward, employees will benefit from the continuity of a solid business plan and new investments in the future of the business. Our customers will continue to enjoy the convenience, value and great service that they've come to expect from Dollar General over our proud 68-year history." The merger is subject to the approval of Dollar General shareholders, customary closing conditions and regulatory approvals. The transaction is expected to close in the third quarter of 2007. Michael M. Calbert, a Member of KKR, said, "Dollar General is an outstanding company with a strong market presence and a rich legacy. We have worked closely with many retail companies in driving success and unlocking value, and we look forward to partnering with the Dollar General team to position the company for future growth." The Board of Directors of Dollar General unanimously approved the merger agreement and has recommended that Dollar General shareholders vote in favor of the transaction. Debt financing for the transaction has been committed by Goldman Sachs and Lehman Brothers, subject to customary terms and conditions. Lazard and Lehman Brothers are financial advisors to Dollar General and Wachtell, Lipton, Rosen & Katz is its legal counsel. Goldman Sachs is acting as financial advisor to KKR. Simpson Thacher & Bartlett LLP is acting as legal advisor to KKR. Goodlettsville, Tenn.-based Dollar General Corp. (NYSE: DG) -- http://www.dollargeneral.com/-- is a Fortune 500(R) discount retailer with 8,276 neighborhood stores as of Nov. 24, 2006. Dollar General stores offer convenience and value to customers by offering consumable basic items that are frequently used and replenished, such as food, snacks, health and beauty aids, and cleaning supplies, as well as a selection of basic apparel, house wares, and seasonal items at everyday low prices. * * * Moody's Investors Service confirmed Dollar General Corp.'s Ba1 corporate family rating and downgraded its Ba1 rating on the company's $200 million 8-5/8% senior unsecured notes to Ba2 in connection with the rating agency's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology. DOMINO'S PIZZA: Accepts $30 Per Share Tender Offer -------------------------------------------------- Domino's Pizza, Inc. disclosed the final results of its modified "Dutch auction" equity tender offer, which expired at 5:00 p.m., Eastern time, on March 9, 2007. In accordance with the terms and subject to the conditions of the offer, Domino's Pizza has accepted for purchase 2,242 shares of its common stock, at a purchase price of $30 per share, for a total purchase price of $67,260. All shares purchased in the tender offer will receive the same price. Domino's Pizza is pleased with the results of the tender offer and will continue with its recapitalization plan. Payment for shares accepted for purchase will be made promptly by American Stock Transfer and Trust Company, the depositary for the tender offer. J.P. Morgan Securities Inc., Lehman Brothers Inc. and Merrill Lynch & Co. acted as dealer managers for the tender offer. The information agent for the tender offer was MacKenzie Partners, Inc. The depositary for the offer was American Stock Transfer and Trust Company. Persons with questions regarding the tender offer should contact MacKenzie Partners, Inc. at (800) 322-2885 (toll free) or (212) 929-5500 (collect). About Domino's Pizza Headquartered in Ann Arbor, Michigan, Domino's Pizza Inc. (NYSE:DPZ) -- http://www.dominos.com/-- through its primarily franchised system, operates a network of 8,190 franchised and company-owned stores in the United States and more than 50 countries. Founded in 1960, the company has more than 500 stores in Mexico. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of nearly $5 billion in 2005, comprised of $3.3 billion domestically and $1.7 billion internationally. As of Dec. 31, 2006, Domino's Pizza's balance sheet showed a $564.9 million stockholders' deficit compared with a $511 million at Jan. 1, 2006. E*TRADE FIN'L: Sells Part of E*Trade Australia Stake ---------------------------------------------------- E*Trade Financial Corp. has sold more than one-third of its 6.5% stake in takeover target E*Trade Australia Ltd., a sign the U.S. company won't vie with Australia & New Zealand Banking Group Ltd. for the online broker, the Wall Street Journal says, citing staff and wire service reports. According to the Journal, a notice to the Australian Stock Exchange showed E*Trade Financial sold A$9.6 million of E*Trade Australia shares at A$4.18 each. The E*Trade Financial family of companies provides financial services including trading, investing, banking and lending for Retail and Institutional customers. Securities products and services are offered by E*Trade Securities LLC (NASD/SIPC Member). Bank and lending products and services are offered by E*Trade Bank, a Federal savings bank, FDIC Member, or its subsidiaries. * * * As reported in the Troubled Company Reporter on Oct. 25, 2006, Standard & Poor's Ratings Services raised its counterparty credit rating on E*TRADE Financial Corp. to 'BB-' from 'B+'. The outlook is stable. As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service upgraded the senior unsecured rating of E*TRADE Financial to Ba2 from B1. The rating outlook remains positive. E*TRADE FINANCIAL: 2006 Net Income Increases to $629 Million ------------------------------------------------------------ E*TRADE Financial Corp., for the year ended Dec. 31, 2006, reported a net income of $628.85 million on total net revenues of $2.42 billion, versus a net income of $430.41 million on total net revenues of $1.7 billion for the year ended Dec. 31, 2005. Net operating interest income after provision for loan losses continues to be the company's largest source of revenue and represents 56 percent of total net revenue for 2006, an increase to $1.35 billion for 2006, as compared with $817.08 million in 2005. Total expense excluding interest increased to $1.41 billion for 2006, as compared with $1.05 billion in 2005. Income tax expense from continuing operations increased to $302 million for 2006, as compared with 2005. The increase in income tax expense was principally related to the increase in pre- tax income over the comparable periods. The company's effective tax rate for 2006 was 32.5 percent, as compared with 34 percent for 2005. The company's net gain from discontinued operations was $2 million for 2006. During 2006 and 2005, its discontinued operations included operating results from the company's professional agency business E*TRADE Professional Trading LLC. It recognized a gain of around $2.6 million, net of tax, in 2006. As of Dec. 31, 2006, the company had total assets of $53.73 billion and total liabilities of $49.54 billion, resulting to total shareholders' equity of $4.19 billion. The company recorded accumulated other comprehensive loss of $201.47 million as of Dec. 31, 2006, versus $175.71 million a year earlier. Unrestricted cash and cash equivalents totaled $1.21 billion in 2006. Significant Events of Year 2006 The company purchased RAA, a Dallas, Texas-based investment advisor managing over $1 billion in assets, in the third quarter of 2006. On Dec. 27, 2006, the company moved the listing of the Company's common stock from the NYSE to the NASDAQ under the symbol ETFC. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b5e Corporate Debt The company has senior notes, mandatory convertible notes, and convertible subordinated notes that amounted to $1.84 billion as of Dec. 31, 2006. Its senior notes, with an aggregate amount of $1.4 billion, consisted of 8% Senior Notes Due June 2011, 7-3/8% Senior Notes due September 2013, and 7-7/8% Senior Notes Due December 2015. All of the senior notes are unsecured and will rank equal in right of payment with all of the company's existing and future unsubordinated debt and will rank senior in right of payment to all existing and future subordinated debt of the company. The company's issued 6-1/8% Mandatory Convertible Notes Due November 2018 with a face value of $450 million in November 2005. Its 6% Convertible Subordinated Notes Due February 2007 has an aggregate principal amount of $650 million. In September 2005, the company entered into a $250 million, three- year senior secured revolving credit facility and was secured by certain company assets. The facility is for general corporate purposes, including regulatory capital needs arising from acquisitions. Draws under the secured facility bear interest, at the company's option, at adjusted LIBOR plus 2% or prime plus 1%. Undrawn facility funds currently bear commitment fees of 0.25% per annum payable quarterly in arrears. At Dec. 31, 2006, no amounts were outstanding under this credit facility. As of Dec. 31, 2006, the Company was in compliance with all covenants under its corporate senior debt. About E*TRADE Financial E*TRADE Financial Corp. (NasdaqGS: ETFC) -- http://www.etrade.com/ -- offers retail investing and trading products and services, including automated order placement and execution of market and limit equity, futures, options, exchange-traded funds, and bond orders; real-time streaming quotes, commentary, and news; advanced trading platforms for traders; personalized portfolio tracking; and access to about 7,000 nonproprietary and proprietary mutual funds. * * * As reported in the Troubled Company Reporter on Oct. 25, 2006, Standard & Poor's Ratings Services raised its counterparty credit rating on E*TRADE Financial Corp. to 'BB-' from 'B+'. The outlook is stable. As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service upgraded the senior unsecured rating of E*TRADE Financial to Ba2 from B1. The rating outlook remains positive. EL PASO CORP: Moody's Lifts Corporate Family Rating to Ba3 from B2 ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings on the debt and supported obligations of parent company El Paso Corporation (Corporate Family Rating to Ba3 from B2). Moody's also upgraded El Paso's four fully-owned pipeline subsidiaries: * El Paso Natural Gas Company * Southern Natural Gas Company * Tennessee Gas Pipeline Company * Colorado Interstate Gas Company The subsidiaries' senior unsecured ratings are upgraded to Baa3 from Ba1. The Ba3 Corporate Family Rating of El Paso Exploration & Production Company were confirmed. The rating outlook is positive for the El Paso family of companies. The pipelines' Corporate Family and Loss Given Default ratings were withdrawn as a result of their upgrade to investment grade. These rating actions end a review for possible upgrade begun on Feb. 28, 2007, and follow El Paso's disclosure of using up to $3.3 billion of the ANR Pipeline sale proceeds to retire parent company debt. "El Paso is a recovering credit," says Moody's Vice President Mihoko Manabe. "The pace of recovery could quicken with the decrease in interest expense that will follow the debt retirement, if not held back by E&P." After nearly five years of financial distress and company restructuring, El Paso returned to profitability in 2006 and looks capable of sustaining it, now with lower debt, its exit from non-core businesses substantially complete, and the elimination of a number of its contingent liabilities. The retirement of approximately $3 billion of debt and the elimination of $744 million of ANR debt would reduce almost a quarter of El Paso's consolidated debt and interest expense, though the company would still be leveraged on an absolute basis with $12 billion of debt. Holding all else equal with EBIT at 2006 levels, EBIT/interest coverage ratios would improve by about a third from 1.4x in 2006 to 1.9 times. The upgrade in El Paso's Ba3 Corporate Family Rating reflects its progress in decreasing parent-level debt and legacy energy merchant assets and obligations. The gap between the parent's and the pipelines' Corporate Family Ratings has narrowed from four to three notches, the parent's rating more reflecting the investment-grade credit qualities of pipeline subsidiaries that make up the majority of El Paso's consolidated cash flow and enterprise value. The notching of ratings among El Paso and its pipeline subsidiaries may get closer over time if El Paso continues to regain financial health and to progress toward investment-grade status. Less burdened now by parent debt, the pipelines' ratings are lifted into investment grade. However, at Baa3 the pipelines remain rated lower than they would be on a standalone basis because of their ownership by the Ba3-rated El Paso. If the pipelines were rated on a standalone basis, their strong market positions and solid financial performance would indicate an average rating of Baa1 according to Moody's rating methodology for pipelines. El Paso's ratings remain constrained by the relative operational weaknesses of E&P and the parent debt's structural subordination to subsidiary debt, particularly E&P's over $1 billion of debt. E&P's Ba3 Corporate Family Rating benefits from an affiliation with an improving parent company. On a standalone basis, E&P would be B1 at best, based on its very high F&D costs and weak reserve replacement record. The positive outlook acknowledges the upward momentum in El Paso's credit quality that could result in further upgrade of its ratings in the next 12 months if E&P demonstrates sufficient progress in meeting the company's production volume targets and improving its cash-on-cash returns as measured by the leveraged full-cycle ratio. El Paso's credit facilities were upgraded to Ba1, LGD2, 26% from Ba3, LGD2, 26% and its senior unsecured debt was upgraded to Ba3, LGD4, 51% from B2, LGD4, 52%. The 4.75 % Trust Convertible Preferred Securities of El Paso Energy Capital Trust I were upgraded to B2, LGD6, 96% from Caa1, LGD6, 96%. The senior unsecured debentures of El Paso Tennessee Pipeline Co. were upgraded to Ba3, LGD4, 51% from B2, LGD4, 52%. The Performance-Linked Trust Securities of El Paso Performance- Linked Trust were upgraded to Ba3, LGD4, 51% from B2, LGD4, 52%. These are the rating actions: Upgrades: * El Paso Corporation -- Corporate Family Rating, Upgraded to Ba3 from B2 -- Subordinate Conv./Exch. Bond/Debenture, Upgraded to B2 from Caa1 -- Senior Secured Bank Credit Facility, Upgraded to Ba1 from Ba3 -- Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to Ba3 from B2 -- Senior Unsecured Medium-Term Note Program, Upgraded to a range of 51 - LGD4 to Ba3 from a range of 52 - LGD4 to B2 -- Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from B2 Headquartered in Houston, Texas, El Paso Corporation is engaged principally in natural gas transmission and production. ENERGY PARTNERS: S&P Cuts Corporate Credit Rating to B from B+ -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Gulf of Mexico-focused independent exploration and production company Energy Partners Ltd. to 'B' from 'B+'. The downgrade follows the company's report that it has concluded its strategic review process. Consequently, management will proceed with a $200 million share repurchase program. At the same time, Standard & Poor's revised the CreditWatch implications on the company from developing to negative. As of Dec. 31, 2006, New Orleans, La.-based Energy Partners had $317 million in long-term debt and proved reserves of 58 million barrels of oil equivalent (51% oil; 76% proved developed). Energy Partners reported that it has not received a definitive offer from a third-party buyer. The strategic review process followed Energy Partners' failed bid to acquire rival Stone Energy Corp. and the recent expiration of ATS Inc.'s hostile bid to acquire Energy Partners in late 2006. "The downgrade reflects an expected further increase to debt leverage over the near term and ongoing concern regarding the company's ability to improve operating performance over the intermediate to longer term," said Standard & Poor's credit analyst Jeffrey Morrison. The negative CreditWatch listing reflects the likelihood that ratings could be either affirmed or lowered in the near term. Standard & Poor's expect to resolve the CreditWatch listing after meeting with management to gain greater clarity regarding permanent financing plans and other capital structure considerations, operational expectations for the company in the upcoming year, the expected timing of planned asset sales, and future financial policy. FORD MOTOR: Mulally Says Company Has Realistic Business Plan ------------------------------------------------------------ Ford Motor Co. Chief Executive Alan Mulally told Congress on Wednesday that the company has a strong and realistic plan to turn around its troubled business, Reuters reports. According to the report, Mr. Mulally said in written testimony for a U.S. House of Representatives Energy and Commerce subcommittee that Ford's business strategies must be flexible. Reuters also cited Mr. Mulally as saying that the plan is beginning to show results in strong sales of vehicles like the new Edge crossover. More than two weeks ago, Ford estimated $11,182 million in total life-time costs for restructuring actions. Of the total $11,182 million of estimated costs, Ford said that $9,982 million has been accrued in 2006 and the balance, which is primarily related to salaried personnel-reduction programs, is expected to be accrued in the first quarter of 2007. The company expects a curtailment gain for other postretirement employee benefit obligations related to hourly personnel separations that occur in 2007, which gain the company expects to record in 2007. Of the estimated costs, those relating to job bank benefits and personnel-reduction programs also constitute cash expenditure estimates. The restructuring cost estimates relate to the automaker's previously announced commitment to accelerate its restructuring plan, referred to as Way Forward plan. The "Way Forward" plan includes closing plants and laying off up to 45,000 employees. Ford, which incurred a $12,613 million net loss on $160,123 million of total sales and revenues for the year ended Dec. 31, 2006, said in a regulatory filing with the Securities and Exchange Commission that its overall market share in the United States has declined in each of the past five years, from 21.1% in 2002 to 17.1% in 2006. The decline in overall market share primarily reflects a decline in the company's retail market share, which excludes fleet sales, during the past five years from 16.3% in 2002 to 11.8% in 2006, the automaker said. Ford also reported a $16.9 billion decrease in its stockholders' equity at Dec. 31, 2006, which, according to the company, primarily reflected 2006 net losses and recognition of previously unamortized changes in the funded status of the company's defined benefit postretirement plans as required by the implementation of Statement of Financial Accounting Standards No. 158, offset partially by foreign currency translation adjustments. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. FORD MOTOR: UAW Local 863 Wins New Investment in Sharonville Plant ------------------------------------------------------------------ The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America members at Local 863 in Sharonville, Ohio, have secured an agreement from Ford Motor Co. to invest $200 million for retooling to build a new, fuel- efficient transmission, union officials said. "This shows what we can accomplish when we work together to preserve good-paying manufacturing jobs in the United States," UAW President Ron Gettelfinger said. "Our members earned this agreement," UAW Vice President Bob King added. "Ford understands our extraordinary commitment to world- class productivity and efficiency." "This is great news for our members, for Ford Motor Co. and for our communities," said Lloyd Mahaffey, director of UAW Region 2B, which covers the state of Ohio. "Our members build world-class quality, and this is a great opportunity to build the fuel-efficient transmissions that will power the Ford vehicles of the future." About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 280,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. FORD MOTOR: Investors Speculate on Jaguar & Land Rover Sale ----------------------------------------------------------- Ford Motor Company's recent sale of its Aston Martin brand has led investors to wonder if the automaker will capitalize on the current popularity of luxury brands and market its British Jaguar and Land Rover units, John D. Stoll writes for the Wall Street Journal. As reported in the TCR-Europe on March 13, Ford has entered into a definitive agreement to sell Aston Martin, its prestigious sports car business, to a consortium comprised of David Richards, John Sinders, Investment Dar, and Adeem Investment Co., for GBP479 million (US$925 million). Ford has said before that it isn't putting its Jaguar and Land Rover brands on the market right now, although the company has not closed the doors on a sale as it is still considering its options, WSJ states. Ford CEO Alan Mulally revealed in January that he might consider selling the company's Jaguar brand, threatening about 8,000 car workers' jobs. According to the WSJ report, analysts say there has been a higher demand for luxury cars lately as compared with light vehicles, signaling a marked boost in the luxury goods market. However, selling the Jaguar and Land Rover units may prove to be quite the challenge for Ford and potential investors, as it would dismantle the Premier Automotive Group strategy, which the company introduced in 1999 to cash in on the boom in luxury-car demand, WSJ relates. Jaguar is part of the Premier Automotive Group -- the organization under which all of Ford's European brands are grouped -- including other brands like Volvo and Land Rover. In Ford's second quarter results, the segment incurred US$180 million in net loss. The company's management said the decline in earnings in the PAG segment primarily reflected unfavorable currency exchange related to the expiration of favorable hedges, adjustments to warranty accruals for prior model-year vehicles, mainly at Land Rover and Jaguar, and lower market share at Volvo associated with new model changeovers, offset partially by favorable product and market mix and lower overhead costs. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures and distributes automobiles in 200 markets across six continents. With more than 280,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury, and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3 billion of senior convertible notes due 2036. FORD MOTOR: DBRS Says Aston Sale May Not Warrant Rating Actions --------------------------------------------------------------- Dominion Bond Rating Service said that Ford Motor Company has announced that it has entered into a definitive agreement to sell Aston Martin to a consortium of investors in a transaction valued at $925 million. Ford will also retain a $77 million investment in Aston Martin. DBRS believes that the sale is beneficial to Ford but is not material enough to warrant any rating actions. The transaction is expected to close during the second quarter of 2007 and is subject to customary closing conditions, including applicable regulatory approvals. Ford had announced on August 2006 that it intended to explore strategic options for the Aston Martin business as part of the company's plan to restructure its automotive operations. DBRS believes the transaction is a positive development. The proceeds from the sale will add to the company's liquidity to fund the execution of the "Way Forward" plan, Ford's restructuring program to restore its North American automotive operations. Aston Martin competes in the luxury segment, which is not a critical component to the success of Ford's automotive operations. The divestiture of Aston Martin will have minimal negative impact on the company's profitability. The conclusion of the sale will also remove a distraction from senior management. Nevertheless, DBRS notes that Ford continues to face significant challenges to turn around its deteriorating performance. The company has indicated that its North American operations are not expected to be profitable before 2009. These concerns are reflected in the Negative trend on the ratings of Ford and its finance subsidiaries. To change the trend to Stable, the Company needs to demonstrate consistent progress in executing its Way Forward plan in its North American operations. More importantly, the company's UAW contract expires in September 2007. The company needs to secure a new labour agreement with the UAW, addressing issues such as "jobs bank" and inflexible work rules, to enable it to become competitive with the Asian producers without any extended labour disruptions. Conversely, any signs of stalling in executing the Way Forward plan and disruptive labour actions during contract negotiations may lead to negative rating actions. GENERAL MOTORS: 2006 Net Loss Decreases to $2 Billion ----------------------------------------------------- General Motors Corp. reported net income for 2006, excluding special items, of $2.2 billion, compared with a net loss of $3.2 billion in 2005, marking a $5.4 billion improvement. Including special items, GM had a net loss of $2.0 billion for 2006, compared with a net loss of $10.4 billion in the year-ago period. GM earned record revenue of $207 billion in 2006, compared with $195 billion in 2005. "We needed 2006 to be a big year, and it was," GM Chairman and CEO Rick Wagoner said. "Our performance last year reflects the significant progress we've made toward transforming GM into a more competitive, global business focused on long-term, sustainable success. The improvement is a credit to our employees, union partners, dealers and suppliers worldwide. It's also validation that our strategy is working, and faster than many people thought possible." "But nobody at GM is declaring victory, because we all know there is still a lot more work to do to achieve our goals of steady growth, solid profitability and positive cash flow generation. We're confident that the momentum we generated in 2006 will continue to build through this year and beyond," Mr. Wagoner added. GM's net income in the fourth quarter 2006 was $180 million excluding special items. These results compare to a net loss of $936 million in the year ago period. Including the net favorable effect of all special items, GM's net income was $950 million in the fourth quarter of 2006, compared with a loss of $6.6 billion in the fourth quarter of 2005. GM had revenue of $51.2 billion in the fourth quarter 2006, compared with $51.7 billion in the same period a year ago, with the decline more than accounted for by the exclusion of GMAC revenue starting Dec. 1, 2006. The reported results for the fourth quarter 2006 include special items totaling $770 million after tax. These are primarily attributable to gains related to GMAC transaction-related items and the sale of the GM desert proving ground property, partially offset by costs related to previously announced GM restructuring items. GM Automotive Operations Net income from global automotive operations for 2006 improved by more than $5.7 billion, totaling $422 million on an adjusted basis, excluding special items (reported net loss of $3.2 billion). Adjusted net income for GM's automotive operations in the fourth quarter 2006 was $228 million (reported net income of $194 million), compared with an adjusted loss of $1.2 billion in the year-ago period. GM sold 9.1 million vehicles worldwide in 2006. For the second consecutive year, unit sales outside of the U.S. surpassed domestic sales with almost 5 million units, or 55 percent of global volume. GM Europe (GME), GM Asia Pacific (GMAP), and GM Latin America, Africa and the Middle East (GM LAAM) all set regional sales records, with GME exceeding 2 million units, GMAP topping 1.25 million units, and LAAM surpassing 1 million units for the first time. GM North America (GMNA) posted a $5 billion earnings improvement in 2006, with an adjusted net loss of $779 million (reported net loss of $4.6 billion). In the fourth quarter of 2006, GMNA recorded its fourth consecutive quarter of more than $1 billion improvement in adjusted earnings. GMNA had an adjusted net loss of $14 million in the fourth quarter 2006 (reported net income of $50 million), versus an adjusted loss of $1.4 billion in the same quarter 2005. The calendar year improvement was realized despite a 207,000 unit reduction in GMNA production to balance inventory with deliveries, and reflects continued significant reductions in structural costs related to health care, manufacturing and workforce attrition, as well as positive sales mix and the impact of the company's product and value focused sales and marketing strategy. GM reduced structural costs in North America by $6.8 billion in 2006, exceeding its target of $6 billion, and remains on-track to deliver the previously announced $9 billion of annual structural cost savings in 2007(versus 2005 structural cost levels). GM's progress in globalizing its product development, powertrain and manufacturing operations, combined with aggressive GMNA turnaround actions, are driving these significant structural cost reductions. GM reduced its global automotive structural cost from over 34 percent of revenue in 2005 to 30 percent of revenue in 2006, an impressive first step toward GM's goal of cutting structural cost to 25 percent of revenue by 2010. "We made very significant progress in 2006 toward our 25 percent structural cost goal," Mr. Wagoner said. "At the same time, we continue to invest heavily in future products, technology and growth markets. GM plans to increase its global capital spending from $7.5 billion in 2006, to between $8.5 and $9 billion in 2007 and 2008." GM's commitment to quality and design leadership was reinforced in 2006 with strong consumer and media reception to GM's newest cars and trucks, including the Chevrolet Tahoe, GMC Yukon, and Cadillac Escalade full-size utilities; GMC Sierra and Chevrolet Silverado full-size pickups; the Saturn Aura midsize sedan; Opel Corsa small car; and the Holden Commodore fullsize sedan. In addition, early public reaction to the Saturn Outlook and GMC Acadia midsize crossovers, introduced late in 2006, has been positive. GME posted its first full year of profitability since 1999 with adjusted earnings of $227 million for 2006 (reported net loss of $225 million). GME had an adjusted loss of $8 million in the fourth quarter 2006 (reported net loss of $119 million), compared to net income of $5 million in the year-ago quarter. GME revenue in the fourth quarter 2006 was $9 billion, up from $8.1 billion in the same quarter 2005. Contributing to GME's improved performance during the year was strong revenue growth due to record volume of over 2 million units, and continued structural cost reductions. "The actions we've taken in Europe to reduce structural cost and re-energize our product lineup is making a big impact on the business," Mr. Wagoner noted. "And our multi-brand approach in Europe is really getting traction. The Opel/Vauxhall brands are strengthening, led by products like the all-new Corsa and segment- leading Meriva and Zafira. And, the Chevrolet brand again achieved record sales, while Saab and Cadillac also demonstrated strong growth. And we're especially pleased with our progress in Russia, where GM sales grew 73 percent in 2006." GMAP delivered adjusted earnings of $441 million in 2006 (reported net income of $1.2 billion), compared with $557 million in 2005, with the decline totally attributable to the loss of Suzuki equity income in 2006, as a result of the divestiture of most of GM's holdings in Suzuki Motor Corp. For the fourth quarter of 2006, GMAP's adjusted earnings were $122 million (reported net income of $135 million), consistent with the same quarter 2005 earnings of $124 million. Record 2006 sales of GM Daewoo products contributed to GM's continued strong performance in the region, headlined by sales gains of 32 percent in China and 19 percent in Korea. "The AP region remains the core of GM's global growth strategy. In 2006, GM advanced its leading position in China, again improving its market share to almost 12 percent. We also announced plans to add a new assembly plant in India to take advantage of opportunities in that important market, and we continue to grow in Korea," Mr. Wagoner said. GM's LAAM region delivered its best financial performance in 10 years with adjusted earnings of $533 million in 2006 (reported net income of $490 million), an improvement of $381 million over 2005. GMLAAM also recorded adjusted and reported fourth quarter earnings of $128 million, up from adjusted earnings of $63 million in the same quarter of 2005. These improvements were driven by record revenue and volume for the region, and significant gains at GM do Brasil. "By cost-effectively leveraging GM's products and resources from around the world, GM LAAM has been able to take advantage of growth opportunities throughout the region, achieving milestone sales of over 1 million units and impressive revenue and profit results," Mr. Wagoner said. GMAC On a standalone basis, GMAC Financial Services reported 2006 net income of $2.1 billion, compared with net income of $2.3 billion in 2005. GMAC's operating earnings for 2006, excluding two significant items, amounted to $2.0 billion, compared to $2.7 billion of operating earnings in 2005. For the fourth quarter of 2006, GMAC had net income of $1.0 billion, up from $112 million in the fourth quarter of 2005. The 2006 fourth quarter results include a $791 million after-tax benefit related to deferred tax liabilities that GMAC transferred to GM when GMAC converted to a Limited Liability Company (LLC). Conversely, fourth quarter 2005 results included the impact of goodwill impairment charges of $439 million after-tax. Excluding the LLC benefit, GMAC operating earnings for the fourth quarter 2006 were $225 million, compared to $551 million in the year-ago period. On November 30, 2006, GM closed the previously announced transaction to sell 51 percent controlling interest in GMAC to an investor consortium led by Cerberus Capital. As a result of the closing of the GMAC transaction, GMAC results through November were fully consolidated in GM's reporting, and December results were reflected on an equity income basis for GM's remaining 49 percent interest. After adjusting GMAC results for equity income in December, dividends to GM on preferred stock and various transaction-related items, GM reported an adjusted net loss of $284 million associated with GMAC for the fourth quarter 2006, and net income of $1.5 billion for the calendar year. Going forward, GM will record GMAC results on an equity income basis. Based on GMAC's results, GM will refund approximately $1 billion to GMAC, in the form of a capital contribution, to restore its adjusted tangible equity balance as of Nov. 30, 2006, to the $14.4 billion level that was agreed upon in conjunction with the 51 percent sale of GMAC. The amount of the refund reflects reduced tangible book value at Nov. 30, 2006, principally caused by a deterioration in GMAC's Residential Capital, LLC (ResCap) earnings, changes in GMAC deferred tax balances and the restatement of prior financial results. For additional details on GMAC 2006 fourth quarter and calendar- year financial results, see the company's earnings release dated March 13, 2007, on the company web site at http://www.gmacfs.com/ Cash and Liquidity GM achieved positive adjusted operating cash flow for the fourth quarter 2006 of approximately $300 million, an improvement of $1.4 billion compared to the fourth quarter 2005. Cash, marketable securities, and readily-available assets of the Voluntary Employees' Beneficiary Association (VEBA) Trust totaled $26.4 billion at December 31, 2006, up from $20.4 billion on September 30, 2006. In addition to the impact of favorable operating cash flow in fourth quarter, this reflects the impact of distributions received from the closing of the sale of the 51 percent interest in GMAC. Financial Restatements GM previously disclosed that it had understated its stockholders' equity as of Dec. 31, 2001, and subsequent periods by approximately $500 million related to deferred tax liabilities and taxation of foreign currency translation. GM confirmed a final adjustment to stockholders' equity as of January 1, 2002, of $245 million. GM also previously disclosed it would be restating its financial statements for 2002 through the third quarter of 2006 largely due to hedge accounting. The following chart provides a summary of the impact of the restatements on reported net income for the 2002-2006 periods. ($Ms) GM Reported Net Income (after-tax GAAP) Q1-Q32006 2005 2004 2003 2002 --------- ---- ---- ---- ---- Previously reported (3,025) (10,567) 2,804 3,859 1,574 Adjustments 97 150 (103) (334) 161 Restated results (2,928) (10,417) 2,701 3,525 1,735 These results had no impact on cash flow for any of the restated periods. GM said it will file its annual report on Form 10-K with the Securities and Exchange Commission today. $1 Billion GMAC Settlement As reported yesterday in the Troubled Company Reporter, GM agreed to pay approximately $1 billion in settlement charges to GMAC Financial Services by the end of the first quarter in relation to a change in the lending arm's balance sheet, John D. Stoll of The Wall Street Journal wrote. The cash settlement is related to the impact that problems in the subprime mortgage segment, which focuses on borrowers with low credit scores, have had on GMAC's book value, WSJ said, citing people familiar with the settlement. As reported in the Troubled Company Reporter on Dec. 1, 2006, GM completed the sale of a 51% interest in GMAC to a consortium of investors led by Cerberus FIM Investors LLC and including wholly owned subsidiaries of Citigroup Inc., Aozora Bank Ltd., and The PNC Financial Services Group Inc. The transaction was intended to preserve the mutually beneficial relationship between GM and GMAC, while improving GMAC's access to cost- effective funding. In addition, the sale of the controlling interest in GMAC was intended to provide significant liquidity to GM that will support its North American turnaround plan, finance global growth initiatives, and strengthen its balance sheet. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader since 1931. Founded in 1908, GM employs about 284,000 people around the world. It has manufacturing operations in 33 countries including Belgium, France, Germany, India, Mexico, and its vehicles are sold in 200 countries. GM sells cars and trucks under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GLACIER FUNDING II: Fitch Holds BB Rating on $4MM Class D Notes ---------------------------------------------------------------- Fitch affirms five classes of notes issued by Glacier Funding CDO II, Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $293,335,668 class A-1 notes 'AAA'; -- $70,000,000 class A-2 notes 'AAA'; -- $65,750,000 class B notes 'AA'; -- $18,940,258 class C notes 'BBB'; -- $4,000,000 class D notes 'BB'. Glacier II is a collateralized debt obligation (CDO) that closed Oct. 12, 2004 and is managed by Terwin Money Management, LLC. Glacier II exited its substitution period in February 2007 and currently contains about 83.8% residential mortgage-backed securities in its portfolio, with other diversified structured finance assets & real-estate investment trust (REIT) debt comprising the remaining portion. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since Fitch's last rating action in February 2006 the collateral has continued to exhibit stable performance. The weighted average rating factor has remained stable at 3.5 ('BBB+/BBB') as of the most recent trustee report dated February 8, 2007. All overcollateralization (OC) ratios have increased slightly since Fitch's last review and remain passing their minimum covenants. The interest coverage (IC) ratios have decreased slightly since the last review, but are still above their respective trigger levels. As of the most recent trustee report there were no defaulted assets, and approximately 3% of the portfolio was rated below 'BBB-'. The ratings of the class A-1, class A-2, and class B 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 ratings of the class C and class D notes address 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. Fitch will continue to monitor and review this transaction for future rating adjustments. GLACIER FUNDING III: Fitch Holds Rating BB+ on Class D Notes ------------------------------------------------------------ Fitch affirms five classes of notes issued by Glacier Funding CDO III, Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $330,071,959 class A-1 notes 'AAA'; -- $64,114,697 class A-2 notes 'AAA'; -- $40,605,975 class B notes 'AA'; -- $24,221,108 class C notes 'BBB'; and -- $2,849,542 class D notes 'BB+'. Glacier III is a collateralized debt obligation that closed July 29, 2005 and is managed by Terwin Money Management LLC. Glacier III will exit its substitution period in November 2007 and currently has a portfolio composed primarily of residential mortgage-backed securities, with the remaining balance consisting of diversified structured finance assets and real estate investment trust debt. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since Fitch's last rating action in May 2006 the collateral has continued to exhibit stable performance. The weighted average rating factor has remained stable at 3.7 as of the most recent trustee report dated Jan. 29, 2007. All overcollateralization (OC) ratios are currently near the same levels reported at the time of Fitch's last review and continue to pass their minimum triggers. Although the interest coverage (IC) ratios have decreased slightly since the last review, they are all still passing their respective trigger levels. As of the most recent trustee report there were no defaulted assets, and approximately 2.6% of the portfolio was rated below 'BBB-'. The ratings of the class A-1 notes, class A-2 notes, and class B 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 ratings of the class C and class D notes address 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. GMAC COMMERCIAL: Fitch Holds Low-B Ratings on 2 Cert. Classes ------------------------------------------------------------- Fitch upgrades GMAC Commercial Mortgage Securities, Inc.'s mortgage pass-through certificates, series 2000-C3: -- $35.1 million class E to 'AAA' from 'AA+'. Fitch also affirms these classes: -- $33.3 million class A-1 at 'AAA'; -- $851.4 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $54.0 million class B at 'AAA'; -- $57.1 million class C at 'AAA'; -- $12.1 million class D at 'AAA'; -- $19.1 million class F at 'AA-'; -- $8.0 million class G at 'A+'; -- $9.9 million class H at 'A'; -- $25.5 million class J at 'BBB'; -- $4.5 million class K at 'BBB-'; -- $9.6 million class L at 'BB'; -- $15.9 million class M at 'B'; -- $3.2 million class N at 'B-'; -- $3.2 million class O at 'CCC'; -- $12.6 million class S-MAC-1 at 'A-'; -- $8.9 million class S-MAC-2 at 'BBB'; -- $5.3 million class S-MAC-3 at 'BB+'; and -- $14.1 million class S-MAC-4 at 'BB'. Fitch does not rate classes P and S-AM. Class S-AM corresponds to the interest in the subordinate companion loan to the Amerisuites Portfolio. Classes S-MAC-1, S-MAC-2, S-MAC-3, and S-MAC-4 represent the interest in the trust fund corresponding to the junior portion of the MacArthur Center loan. The rating upgrade reflects increased credit enhancement due to loan payoffs and scheduled amortization, as well as the additional defeasance of 12 loans (8%) since the last Fitch rating action. Forty loans (28.3%) have been defeased to date. As of the February 2007 distribution date, the pool's certificate balance has decreased 9.3% to $1.2 billion from $1.32 billion at issuance. Currently, there are four specially serviced loans (1%) in the transaction. The largest specially serviced loan (0.4%) is a 168,775 square foot retail shopping center in Rockingham, North Carolina and is 60 days delinquent. The loan transferred to special servicing in January 2007 due to payment default. The property's anchor tenant vacated in November 2006. The special servicer is assessing workout strategies with respect to this loan. The second largest specially serviced loan (0.4%) consists of eleven apartment buildings located around the Quad Cities in Illinois and Iowa and is in foreclosure. Fitch-projected losses on the specially serviced loans are expected to be absorbed by the nonrated class P. Fitch reviewed the transaction's three credit assessed loans and their underlying collateral. Due to their stable performance, the senior portions of the loans retain their investment grade credit assessments. The Arizona Mills loan (11.5%) is secured by a 1.23 million square feet regional mall and is located in Tempe, Arizona. Occupancy as of October 2006 has increased to 98.8% from 97.3% as of year-end 2005. The MacArthur Center loan (7.9%) is secured by 528,846 sq. ft. in a 942,662 sf regional mall in Norfolk, Virginia. Occupancy remains at 100% as of November 2006, unchanged from YE 2005. The AmeriSuites loan (2.4%) is secured by eight limited service, cross-collateralized, cross-defaulted hotels located in eight states. As of September 2006, the occupancy remains stable at 72%, compared with 71% as of September 2005. GMAC: Fitch Affirms Long-Term Issuer Default Rating at BB+ ---------------------------------------------------------- Fitch Ratings has affirmed GMAC LLC's long-term Issuer Default Rating at 'BB+' and maintains the Positive Rating Outlook. Approximately $100 billion of debt is affected by this action. A complete list of ratings is detailed at the end of this release. The affirmation follows the release of GMAC's 4Q06 and full year results. GMAC's results reflect significant weakness from its wholly owned subsidiary, Residential Capital LLC, as well as restatements for FAS 133-Accounting for Derivatives and Hedging Activities. In addition, GMAC stated that General Motors will contribute approximately $1.0 billion to GMAC as a purchase price adjustment, which will be paid at the end of the first quarter. During the quarter, GMAC incurred a few material one-time gains and losses. First, the company recognized a $791 million benefit related to its conversion to a limited liability company. The company also recognized a $568 million gain in its insurance business due to a rebalancing of the company's investment portfolio from equity into fixed income. GMAC also incurred charges related to the transaction with Cerberus, which affected the automotive finance business. GMAC's full-year results also reflect goodwill writedowns of $695 million after-tax. Excluding these items, Fitch believes operating performance in the automotive finance and insurance businesses were sound and should improve over time as the company continues to fully execute its business plan. The early returns of GMAC's efforts to diversify its auto-related business activity have been positive, but come off a low base. Fitch's Rating Outlook includes an expectation that GMAC will continue to develop meaningful and reliable sources of diversified revenue. Fitch is affirming GMAC's current ratings and Outlook reflecting Fitch's view that the company's new ownership remains committed to improving GMAC's credit profile, expanding diversified financing and insurance businesses and addressing any weaknesses within the organization. Moreover, Fitch believes that GMAC's liquidity remains solid and improving. For example, GMAC completed a dealer floorplan securitization which did not contain a trigger related to a Chapter 11 bankruptcy. Nonetheless, Fitch believes that weakness at ResCap could slow rating momentum at GMAC. Ratings affirmed with a Positive Rating Outlook: GMAC LLC GMAC International Finance B.V. GMAC Bank GmbH General Motors Acceptance Corporation, Australia General Motors Acceptance Corp. of Canada Limited -- Long-term IDR 'BB+'; -- Senior debt 'BB+'; -- Short-term Issuer 'B'; and -- Short-term debt 'B'. General Motors Acceptance Corp. (N.Z.) Ltd. -- Long-Term IDR 'BB+'; -- Short-term Issuer 'B'; and -- Short-term debt 'B'. GMAC Australia (Finance) Limited General Motors Acceptance Corporation (U.K.) -- Short-term Issuer 'B'; and -- Short-term debt 'B'. GOODYEAR TIRE: Fitch Holds Junk Rating on Senior Unsecured Debt --------------------------------------------------------------- Fitch Ratings has affirmed ratings for The Goodyear Tire & Rubber Company and revised the Rating Outlook to Stable from Negative. -- Issuer Default Rating 'B'; -- $1.5 billion first lien credit facility 'BB/RR1'; -- $1.2 billion second lien term loan 'BB/RR1'; -- $300 million third lien term loan 'B/RR4'; -- $650 million third lien senior secured notes 'B/RR4'; and -- Senior unsecured debt 'CCC+/RR6'. Goodyear Dunlop Tires Europe B.V. (GDTE) -- EUR505 million European secured credit facilities 'BB/RR1' At Dec. 31, 2006, GT had approximately $7.2 billion of debt outstanding, prior to a paydown of bank debt in January. The revision to a Stable Outlook reflects Fitch's expectation for further improvement in GT's operating profile as it recovers from the labor strike and continues to implement its cost-savings plan. The settlement of the strike at the end of 2006 also served to mitigate concerns about further deterioration in GT's capital structure. Increases in GT's debt during 2006 provided funds to cover costs of the strike and the establishment of a Voluntary Employees' Beneficiary Association (VEBA) trust for $1 billion. The VEBA is subject to government approval and will be funded by cash and up to $300 million of stock. Ongoing rating concerns include high levels of debt that increased temporarily to $7.2 billion at the end of 2006 from $5.4 billion at the end of 2005. In addition, GT faces significant cash requirements that could contribute to negative cash flow in 2007. These requirements include pension contributions, capital expenditures, an increase in working capital requirements as GT rebuilds inventory, and debt and interest payments. Cash flow could improve in 2008 when GT plans to close the Tyler Texas plant and as it realizes additional cost savings. GT also expects domestic pension contributions to decline in 2008. Other rating concerns include an improving but still high cost structure in North America, high raw material costs, weak demand in North America, and competitive pricing in certain other markets. These concerns are partly offset by ongoing operating cost savings and from annual cash savings estimated by GT at $145 million from the transfer of OPEB liabilities to the VEBA trust. GT's efforts to rationalize its operations and build stronger marketing capabilities were partly reflected in its 2006 results that included record sales of $20 billion. Improved pricing and product mix contributed to a 7% increase in revenue per tire and helped offset the negative impact on revenue from lower tire unit sales. Operating profit was significantly affected by strike costs of approximately $361 million in 2006, and GT estimates additional strike-related costs in 2007 will be $205 million to $240 million. Liquidity at the end of 2006 included cash balances of $3.9 billion, part of which was used in January 2007 to pay down $873 million on GT's $1.5 billion first lien credit facility. Remaining cash will be available to help fund the VEBA trust, pension contributions (estimated by GT at $700 million-$750 million in 2007 including $550 million-$575 million for domestic plans), and capital expenditures of $750 million-$800 million. GT also had $660 million of current debt at the end of 2006. Liquidity could potentially be strengthened from an eventual sale of the Engineered Products business and from any issuance of common shares. Cash proceeds from such sources, together with any improvement in operating cash flow, could support GT's long-term plan to reduce leverage substantially from current levels. GRANITE BROADCASTING: Reports 2006 Net Revenues of $128 Million --------------------------------------------------------------- Granite Broadcasting Corp. reported fourth quarter and full-year 2006 results. Net revenue increased to $37.27 million for the fourth quarter of 2006, as compared with $32.71 million for the same quarter in 2005. Decreases in local non-political and national non-political revenue were more than offset by $5.4 million of incremental political revenue and the inclusion of the results of the Binghamton, New York station, which was acquired on July 26, 2006. Station operating expenses increased to $26.48 million for the quarter. Decreases in selling, general and administrative expenses and reduced programming expense were more than offset by a non-cash charge in the quarter related to the write down of film assets at the Company's Detroit station and the inclusion of a full quarter of operating expenses related to the Binghamton station. Full Year Results Net revenue increased to $128.02 million for the full year 2006, as compare with $117.61 million in 2005. Decreases in national non-political revenue and network compensation were more than offset by $9 million of incremental political revenue and the inclusion of revenue from the Binghamton station as of July 26, 2006. Station operating expenses for the full year did not increase versus the prior year, remaining flat at $92.19 million in 2006, as compared with $92.18 million in 2005. Decreases in programming costs and administrative expenses were offset by the non-cash write down of film assets at the company's Detroit station and the inclusion of the operating expenses from the Binghamton station as of July 26, 2006. "Revenue from the new station we operate in Binghamton, strong political revenue and solid non-political local growth, particularly in Detroit, Duluth and Fresno, all contributed to our revenue performance. This combined with prudent cost controls resulted in a 41 percent increase in Broadcast Cash Flow for 2006," Commenting on the results, W. Don Cornwell, chairman and chief executive officer, commented. "Our stations have done a great job overcoming various hurdles in 2006, including a soft automotive advertising market and reduced network compensation. Our sales initiatives have added $7 million in new local direct business this year, and we continue to drive our local business with many new projects for 2007," John Deushane, chief operating officer, said. About Granite Broadcasting Headquartered in New York, Granite Broadcasting Corp. -- http://www.granitetv.com/-- owns and provides programming, sales and other services to 23 channels in 11 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; Duluth, Minnesota-Superior, Wisconsin; Binghamton, New York; Utica, New York and Elmira, New York. The company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches about 6 percent of all U.S. television households. The company and five of its debtor-affiliates filed for chapter 11 protection on Dec. 11, 2006 (Bankr. S.D.N.Y. Case No. 06-12984). Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, it estimated assets of $443,563,020 and debts of $641,100,000. The Debtors' exclusive period to file a plan expires on April 10, 2007. GREGG KOECHLEIN: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Gregg W. Koechlein Diane B. Kennedy P.O. Box 34595 Reno, NV 89533 Bankruptcy Case No.: 07-50228 Chapter 11 Petition Date: March 13, 2007 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtors' Counsel: Michael Lehners, Esq. 429 March Avenue Reno, NV 89509 Tel: (775) 786-1695 Fax: (775) 786-0799 Total Assets: $3,391,115 Total Debts: $2,734,497 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Blanch Brouilland Loan $110,000 1301 Salem St. Chico, CA 95928 Bank of America Mult. Accounts $90,000 P.O. Box 17504 Wilmington, DE 19884 Chase Mult. Accounts $65,000 Bank One Card Servicers 800 Brooksedge Boulevard Westerville, OH 43081 Sierra Cabinets and Mult. Accounts $30,000 Closets, Inc. Cedars-Sinai Medical Center Medical Bills $27,000 American Express Mult. Accounts $26,000 Wells Fargo Credit Card $13,776 Mult. Accounts $6,500 Bank of America Credit Card $15,911 Mercedes-Benz Financial Lease Deficiency $15,000 Citicard Credit Card $10,957 Nordstrom Credit Card $10,421 Western Nevada Supply Items Purchases $10,384 American Express Credit Card $9,304 Wells Fargo Bank Mult. Accounts $8,000 Whaley Custom Tile Services $7,870 3D Electric, LLC Services $5,979 Macy's Mult. Accounts $5,000 WF Finance Loan $4,688 CSMC Emergency Dept. Phys. Medical Bills $3,600 GREY WOLF: Earns $219.9 Million for Fiscal Year 2006 ---------------------------------------------------- Grey Wolf, Inc. had a net income of $219.95 million for the year ended Dec. 31, 2006, versus $120.63 million for the previous year. It had revenues of $945.52 million for the year 2006, compared with $696.97 million for the year 2005. In 2006, the company recorded $11.89 million in gain on the sale of assets and $4.15 million in gain on insurance proceeds. The company's balance sheet as of Dec. 31, 2006, showed $1.08 billion in total assets and $553.19 in total liabilities, resulting to $533.79 million in stockholders' equity. The company increased its cash and cash equivalents to $229.77 million in 2006 from $173.14 million in 2005. It also increased its restricted cash amounts to $817,000 in 2006 from $780,000 in 2005. The significant changes in the company's financial position from Dec. 31, 2005 to Dec. 31, 2006 are an increase in working capital of $54.3 million, an increase in net property and equipment of $108.2 million, and an increase in shareholders' equity of $164.6 million. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b46 New Rig Purchases During 2006, the company purchased six new 1,500 horsepower rigs for a total of $91.6 million. As of Feb. 20, 2007, three of these rigs were working. One of the remaining three new rigs is scheduled for delivery later in the first quarter of 2007, one in the second quarter, and the last rig is expected by the end of the third quarter. After deployment of these rigs our rig fleet will total 121 rigs. Projections for 2007 During the first quarter of 2007, the company expects to average 108 to 110 rigs working with six to eight of these rigs performing turnkey services. In addition, average daywork revenue per rig day is expected to increase by $200 to $300 with little or no change in average daywork operating expenses per day as new rigs enter the market and the effect of the higher term contract dayrates from the fourth quarter term contract renewals is realized. Depreciation expense of about $20.7 million, interest expense of about $3.5 million and an effective tax rate of about 37 percent are expected for the first quarter of 2007. Based upon the remaining payments for the new rig purchases and 2007 rig activity, capital expenditures for the full year 2007 are projected to be $130 million to $140 million. About Grey Wolf Houston, TX-based Grey Wolf, Inc. -- http://www.gwdrilling.com/-- through its subsidiaries, provides onshore contract drilling services to the oil and gas industry. It conducts its operations primarily in drilling markets of Ark-La-Tex, Gulf Coast, Mississippi/Alabama, south Texas, Rocky Mountain, and the Mid- Continent markets in the United States. * * * Moody's Investors Service confirmed its Ba3 Corporate Family Rating for Grey Wolf Inc., and revised its rating on the company's 3.75% Senior Unsecured Guaranteed Convertible Notes Due 2023 to B1 from Ba3. GS MORTGAGE: Fitch Holds Rating on $28.2MM Class G Certs. at B -------------------------------------------------------------- Fitch Ratings upgrades GS Mortgage Securities Corp. II 1998-GL II commercial mortgage pass-through certificates: -- $70.5 million class E to 'AAA' from 'AA'; In addition, these classes are affirmed by Fitch: -- $27.5 million class at A-1 'AAA'; -- $694.3 million class at A-2 'AAA'; -- $91.6 million class B at 'AAA'; -- $84.6 million class C at 'AAA'; -- $98.6 million class D at 'AAA'; -- $63.4 million class F at 'BBB-'; -- $28.2 million class G at 'B'; and -- Interest-only class X 'AAA'. The upgrade is due to the defeasance of the URS, Tharaldson A, and Americold loans and the partial defeasance of the Tharaldson B loan since Fitch's previous rating action. As of the February 2007 distribution date, 69.95% of the transaction has defeased, an increase of 41% since Fitch's previous review. Through amortization and earlier payoff of two loans, the balance of the transaction has declined by 17.8% to $1.16 billion from $1.41 billion at issuance. The remaining non-defeased or partially defeased loans include: * the Tharaldson B loan (12.9%), of which 41.1% is defeased, * Green Acres Mall (12.1%), * Marriott Desert Springs Hotel (7.37%)/, and * the Crystal City Pool (5.79%), of which 21.9% has defeased. All loans, except the Marriott Desert Springs, maintain investment grade credit characteristics. While showing improvement in occupancy and income over the past several years, the Marriott Desert Spring's net cash flow remains below expectations at issuance largely due to increased expenses. Occupancy at the Green Acres Mall in Valley Stream, New York was 88% as of November 2006 and recent improvements at the mall have been completed. At issuance the mall was 91% occupied. Year-end 2006 financial information on this loan is not available at this time. However, a review of the November 2006 rent roll and mid-year 2006 financial statements indicate there has not been any material change in the performance of the property since Fitch's previous rating action in August 2006. At that time, Fitch reported a stressed debt service coverage ratio of 1.91x based on YE 2005 performance. The overall occupancy at the Crystal City Pool, two office buildings in the Arlington VA Pentagon submarket, has declined to 83.9% as of January 2007 as the result of a decline in occupancy at the 2000 North 15th Street building. The loan remains on the servicer's watch list and Fitch will continue to monitor the loan's performance. HEALTHSOUTH CORP: Amends Credit Facilities to Lower Interest Rates ------------------------------------------------------------------ HealthSouth Corporation has amended its existing Senior Secured Credit Facilities to lower the applicable interest rates and modify certain other covenants. Amended interest rates on the Term Loan B are LIBOR plus 2.50%. The applicable rate on the Tranche A letter of credit facility is also reduced to 2.5%. The interest rates on the outstanding revolving credit facility remain the same. The amendment also gives the company the appropriate approvals for its divestiture activities. "We are pleased to take this step, which will save the Company approximately $16 million annually in interest and fees," John Workman, HealthSouth's Chief Financial Officer, said. "In addition, it moves us one step closer to completing the repositioning plan announced in August 2006." About HealthSouth Headquartered in Birmingham, Alabama, HealthSouth Corporation (OTC Pink Sheets: HLSH) -- http://www.healthsouth.com/-- is the largest provider of rehabilitative health care and ambulatory surgery services in the United States, with 978 facilities and approximately 33,000 full- and part-time employees. The company provides these services through a national network of inpatient and outpatient rehabilitation facilities, outpatient surgery centers, diagnostic centers, and other health care facilities. Health South Corp.'s balance sheet at Dec. 31, 2006, showed $3.359 billion in total assets, $4.885 billion in total liabilities, $271.1 million in minority interest, and $387.4 million in convertible perpetual stock, resulting in a $2.184 billion total stockholders' deficit. IIS INTELLIGENT: Wants Shareholders to Vote Against Liquidation --------------------------------------------------------------- I.I.S. Intelligent Information Systems Ltd. has convened an Annual General Meeting of Shareholders to be held on April 17, 2007 at 11:30 am Israeli time. Shareholders of record at the close of business on March 8, 2007 are entitled to notice of and to vote at the Meeting. The main purpose of the meeting is to decide on the proposed termination of the voluntary liquidation of the company and to thereby allow the company's executive management to seek to find and, subject to approval by the company's Board of Directors and shareholders in accordance with Israeli law, combine with another business enterprise in order to capitalize on the company's status as a publicly-traded company in the United States securities markets having some available cash, and thereby potentially increase the share price and possibly increase shareholder value. The Liquidators have reviewed certain potential businesses for this purpose. In the opinion of the Liquidators, the most promising proposal received to date is a possible merger with Witech Communications Ltd., an Israeli start-up company engaged in the field of video transmission using wireless communications. IIS has signed a non-binding memorandum of agreement with Witech and its controlling shareholders with respect to a merger with and into IIS such that, following the merger, shareholders of Witech will hold 50% of the issued and outstanding shares of IIS. The shareholders of IIS are not being requested at this stage to approve a merger with Witech or any other transaction; however, in the event that the shareholders of the company approve the termination of the voluntary liquidation proceedings and the nomination of directors, the company will proceed with its due diligence regarding Witech, then may proceed to the negotiation and execution of definitive agreements based on the principle terms agreed and may provide a bridge loan to Witech in the amount of $1,500,000. The definitive merger agreements and related transactions will be subject to separate shareholder approval. Other items on the agenda at the meeting are: (a) to receive and consider the Liquidator's Report and the Audited Consolidated Financial Statements of the company and its subsidiary for the years ended Dec. 31, 2004, 2005 and 2006; (b) to appoint directors to the company's Board of Directors (including two external directors in accordance with the Israeli Companies Law, 1999) to assume office subject to the termination of the voluntary liquidation of the company and to determine the compensation of the external directors; (c) to appoint the company's auditors for the fiscal year ending Dec. 31, 2007 and to authorize the Board of Directors to fix the remuneration of the auditors in accordance with the volume and nature of their services, and (d) to authorize the company to procure Directors and Officers insurance. A full-text copy of the Liquidators Report is available for free at http://ResearchArchives.com/t/s?1b5a A full-text copy of the company's 2006 Annual Report is available for free at http://ResearchArchives.com/t/s?1b5b A full-text copy of the Notice of Annual General Meeting of Shareholders is available for free at: http://ResearchArchives.com/t/s?1b5c Headquartered in Ramat Gan, Israel, I.I.S. Intelligent Information Systems Limited (Pink Sheets: IISLF) -- http://www.iislf.com/-- is engaged in the development, manufacture, marketing and service of data communication and intelligent peripheral products targeted at the International Business Machines mid-range, IBM mainframe and open systems computing environments. It owns 25% of Enargis Storage Solution Ltd., which designs, develops and provides enterprise storage solutions for the Internet small-computer systems interface. It also owns 38.9% of StoreAge Networking Technologies Ltd., which is engaged in Storage Virtualization Management technology that develops and provides storage- networking solutions to the enterprise market with a focus on storage area network architecture. The company's agent in the United States is Brown Raysman Millstein Felder & Steiner LLP located at 900 Third Avenue in New York City. INTERACTIVE SYSTEMS: Eisner LLP Raises Going Concern Doubt ---------------------------------------------------------- Eisner LLP in New York raised substantial doubt about Interactive Systems Worldwide Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2006, and 2005. The auditor pointed to the company's net losses, cash outflow, and need for additional financing to meet its forecasted cash requirements during fiscal 2007. For the fiscal year ended Sept. 30, 2006, the company reported a $4,721,000 net loss applicable to common stockholders on $111,000 of revenues, compared with a $7,314,000 net loss on $162,000 of revenues in the comparable period in 2005. At Sept. 30, 2006, the company's balance sheet showed $3,172,000 in total assets, $999,000 in total liabilities, and $2,173,000 in total stockholders' equity. The company's stockholders' equity at Sept. 30, 2005, stood at $5,847,000. The company's accumulated deficit at Sept. 30, 2006, rose to $25,574,000 compared with $20,874,000 at Sept. 30, 2005. A full-text copy of the company's 2006 annual report is available for free at http://ResearchArchives.com/t/s?1b4f Interactive Systems Worldwide Inc. (Nasdaq: ISWI) designs, develops, and patents a proprietary software system, the SportXction System, which enables play-by-play wagering during the course of live sporting events. ISWI, through its wholly owned subsidiary Global Interactive Gaming, operates the SportXction(R) System in the U.K., in conjunction with established media and traditional wagering partners. The system can accept wagers from the Internet, handheld wireless devices, interactive televisions, and standalone kiosks. The system can be used for any live broadcast event worldwide. INTERACTIVE SYSTEMS: Posts $1MM Net Loss in 1st Qtr. Ended Dec. 31 ------------------------------------------------------------------ Interactive Systems Worldwide, Inc., reported $55,000 in revenues for the fiscal first quarter ended Dec. 31, 2006, as compared with $30,000 during the same period in the prior year. The increase was due to the company's recent agreement with Hipodromo de Agua Caliente S.A. de C.V. Net loss applicable to common stockholders for the three months ended Dec. 31, 2006, were $1,088,000 compared with $1,303,000 during the same quarter last year. The decrease in the net loss is primarily due to the company's cost reduction initiatives and elimination of its interest expense during this fiscal year. Since announcing its year-end results, the company has continued to take action to reduce its expenses, and it estimates that its cash costs will be approximately $200,000 per month for the upcoming quarter. The company has also signed a non-binding letter of intent with Techmatics Inc. to jointly develop and market a new product that enables fixed-odds exotic race betting while satisfying pari- mutuel regulations. As part of this proposed transaction, Techmatics would invest $1.8 million in ISWI, in exchange for 2.4 million shares of common stock. Bernard Albanese, ISWI's chief executive officer, said: "We are working diligently to improve the company's operating performance and continue discussions with other potential strategic partners. "The company is pleased with the early results of our recent launches with Ladbrokes and Sportingbet and encouraged by the increases in wagering volume. "We expect continued increases in revenues in the coming quarters. We continue to make progress in the marketing efforts of our SportXction(TM) product, as well as our existing racing product. We are hopeful that these efforts will lead to one or more agreements over the next several months." Based on its current level of revenues and costs, the company anticipates that its existing resources including the expected return of a rent deposit for GIG's vacated leased property will be adequate to fund its capital and operating requirements through May 31, 2007. If the $1.8 million investment from Techmatics is received, this would provide adequate capital to fund the company's current operations through at least calendar 2007. The company cannot provide assurance that it will be able to successfully close the Techmatics transaction or execute an alternative strategic transaction, or that revenues will significantly increase. Cost of revenues for the three months ended Dec. 31, 2006, was $126,000, as compared with $168,000 during the same period in the prior year. The decrease in Fiscal 2007 was primarily due to lower amortization expenses associated with capitalized product enhancements that had become fully amortized. Research and development expense for the three months ended Dec. 31, 2006, was $111,000, as compared with $269,000 during the same period in the prior year. The decrease in Fiscal 2007 was primarily due to certain development costs, which met the criteria for capitalization and lower payroll costs. General and administrative expenses for the three months ended Dec. 31, 2006, were $860,000, as compared with $781,000 during the same period in the prior year. The increase was primarily due to a provision for anticipated costs associated with GIG's terminated office lease and increased non-cash compensation expense associated with warrants and common stock which were issued to consultants during the second half of Fiscal 2006, partially offset by lower payroll costs. Interest income for the three months ended Dec. 31, 2006, was $21,000, as compared to interest expense of $49,000 during the same period in the prior year. In Fiscal 2007, interest earned represents interest earned from cash and short-term investments. In Fiscal 2006, the company incurred non-cash interest expense from its outstanding Debentures, which was satisfied through the issuance of shares of Common Stock. Other income for the three months ended Dec. 31, 2005, represents the change in value of the company's liability associated with the registration rights agreements entered in connection with its private placements. As of Dec. 31, 2006, the company had liquid resources totaling $1,239,000. These include cash and cash equivalents in the amount of $739,000 and investments in the amount of $500,000. Investments at Dec. 31, 2006, consist of Auction Rate Securities issued by corporate entities with remaining auction days less than 28 days. At Dec. 31, 2006, the company's balance sheet showed $2,343,000 in total assets, $1,147,000 in total current liabilities, and $1,196,000 in total stockholders' equity. Full-text copies of the company's fiscal first quarter financials are available for free at http://ResearchArchives.com/t/s?1b50 Interactive Systems Worldwide Inc. (Nasdaq: ISWI) designs, develops, and patents a proprietary software system, the SportXction System, which enables play-by-play wagering during the course of live sporting events. ISWI, through its wholly owned subsidiary Global Interactive Gaming, operates the SportXction(R) System in the U.K., in conjunction with established media and traditional wagering partners. The system can accept wagers from the Internet, handheld wireless devices, interactive televisions, and standalone kiosks. The system can be used for any live broadcast event worldwide. Going Concern Doubt Eisner LLP in New York raised substantial doubt about Interactive Systems Worldwide Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Sept. 30, 2006, and 2005. The auditor pointed to the company's net losses, cash outflow, and need for additional financing to meet its forecasted cash requirements during fiscal 2007. ISORAY INC: Posts $1.9 Million Net Loss in Quarter Ended Dec. 31 ---------------------------------------------------------------- IsoRay, Inc. reported a $1,918,449 net loss on $1,414,155 of total revenues for the quarterly period ended Dec. 31, 2006, compared to a net loss of $1,979,224 on $486,247 of total revenues in the same prior year period, in its quarterly financial statements for the three months ended Dec. 31, 2006. At Dec. 31, 2006, the company's balance sheet showed $7,914,750 in total assets, $3,012,937 in total liabilities, and $4,901,813 in stockholders' equity, compared to total assets of $5,655,939, total liabilities of $2,770,229, a stockholders equity of $2,885,710 at June 30, 2006. The company's accumulated deficit widened from $13,546,261 at June 30, 2006, to $18,392,145 at Dec. 31, 2006. The company generated sales of $1,414,155 during the three months ended Dec. 31, 2006, compared to sales of $486,247 during the quarter ended Dec. 31, 2005. The increase of $927,908 or 191% is due to increased sales volume of the company's 131Cs brachytherapy seed for the treatment of prostate cancer. During the three months ended Dec. 31, 2006, the company sold its 131Cs seed to 33 different medical centers as compared to 15 centers during the corresponding period of 2005. Going Concern Doubt In its Form 10-Q for the quarter ended Dec. 31, 2006, the company says that large operating losses and accumulated deficit, among other things, raise substantial doubt about its ability to continue as a going concern. The company's management plans to raise additional financing, including the sale of additional equity or borrowings, and grow the revenues of our core product while continually analyzing other market opportunities. However, no assurance can be given that such financing will be completed on terms acceptable to the Company or that the company will be able to meet its revenue targets. The company relates that if it isn't able to obtain additional financing and grow revenues, it may have to curtail its business or cease operations. A full-text copy of the company's financial statements for the quarterly period ended Dec. 31, 2006, is available for free at http://researcharchives.com/t/s?1b27 About IsoRay Inc. IsoRay, Inc. fka Century Park Pictures Corporation has no operations, assets or liabilities since its fiscal year ended Sept. 30, 1999 through June 30, 2005. The company merged with IsoRay Medical, Inc., on May 27, 2005, and the merger closed on July 28, 2005. As a result of the merger, the company changed its name to IsoRay, Inc. IsoRay Medical sells IsoRay 131Cs brachytherapy seed for the treatment of prostate cancer. JUNIPER NETWORKS: CFO Robert Dykes and EVP Robert Sturgeon Resigns ------------------------------------------------------------------ Juniper Networks Inc.'s Executive Vice President and Chief Financial Officer, Robert Dykes, and Executive Vice President for Service Layer Technology Group, Robert Sturgeon, will be resigning in connection with the company's ongoing review of its growth plans and requirements to achieve its desired scale. Mr. Dykes has driven significant advances in streamlining Juniper's manufacturing processes and has led the company's finance, legal, IT, investor relations and manufacturing organizations. He will continue in his current role with Juniper through the end of April. Mr. Sturgeon has been instrumental in the development of Juniper's customer service organization and in guiding the company through the first phase of its enterprise business strategy. He will continue in his current role with Juniper through the end of March. The company said neither resignation was the result of any disagreement on any matters relating to the company's operations, policies or practices. About Juniper Networks Headquartered in Sunnyvale, Calif., Juniper Networks Inc. -- http://www.juniper.net/-- designs and sells products and services that provide customers with Internet Protocol network solutions. The company's solutions are incorporated into the global Web of interconnected public and private networks across media, including voice, video and data, travel to and from end users around the world. The company's network infrastructure solutions enable service providers and other network-intensive businesses to support and deliver services and applications on a low-cost integrated network. During the year ended Dec. 31, 2005, the Company completed five acquisitions: Kagoor Networks, Inc., Redline Networks, Inc, Peribit Networks, Inc., Acorn Packet Solutions, Inc., and Funk Software, Inc. During 2005, the company's operations were organized into three segments: Infrastructure, Service Layer Technologies Products, and Service. The company has sales and development offices in the Asia Pacific, including India and China. * * * As reported in the Troubled Company Reporter on Feb. 13, 2007, Standard & Poor's Ratings Services' BB/Watch Neg/B-1 corporate credit and other ratings on Sunnyvale, Calif.-based Juniper Networks Inc. remain on CreditWatch with negative implications, where they were placed on May 22, 2006. JUNIPER NETWORKS: Files Annual Report & Delayed Quarterly Reports ----------------------------------------------------------------- Juniper Networks, Inc., has filed with the Securities and Exchange Commission its Annual Report on Form 10-K for the year ended Dec. 31, 2006, as well as its previously delayed Quarterly Reports on Form 10-Q for the second and third quarters of 2006. These filings contain financial statements that were restated as a result of the stock option review, including those required to be restated for prior periods. The company said its periodic filings with the SEC are now current. With these filings and additional submissions previously delivered to NASDAQ, Juniper believes that it has now regained compliance with the requirements for continued listing on the NASDAQ Global Select Market; however, the company awaits confirmation of compliance from NASDAQ. Juniper's Consolidated Statements of Operations show: 2nd Quarter 3rd Quarter Year Ended Ended 6/30/06 Ended 9/30/06 12/31/06 ------------- ------------- ---------- Total Revenues $567,469,000 $573,567,000 $2,303,580,000 Net Income (Loss) ($1,206,456,000) $58,274,000 ($1,001,437,000) Juniper's Balance Sheets show: 6/30/06 9/30/06 12/31/06 ------- ------- -------- Current Assets $2,057,049,000 $2,294,941,000 $2,521,806,000 Total Assets $7,040,271,000 $7,205,848,000 $7,368,395,000 Current Debts $663,595,000 $690,663,000 $762,617,000 Total Debts $475,086,000 $488,282,000 $490,694,000 Stockholders' Equity $5,901,590,000 $6,026,903,000 $6,115,084,000 Full-text copies of the company's financials are available for free at: -- Second Quarter Ended June 30, 2006 http://ResearchArchives.com/t/s?1b60 -- Third Quarter Ended Sept. 30, 2006 http://ResearchArchives.com/t/s?1b61 -- Annual Report Ended Dec. 31, 2006 http://ResearchArchives.com/t/s?1b62 About Juniper Networks Headquartered in Sunnyvale, Calif., Juniper Networks Inc. (NASDAQ: JNPR) -- http://www.juniper.net/-- designs and sells products and services that provide customers with Internet Protocol network solutions. The company's solutions are incorporated into the global Web of interconnected public and private networks across media, including voice, video and data, travel to and from end users around the world. The company's network infrastructure solutions enable service providers and other network-intensive businesses to support and deliver services and applications on a low-cost integrated network. During the year ended Dec. 31, 2005, the Company completed five acquisitions: Kagoor Networks, Inc., Redline Networks, Inc, Peribit Networks, Inc., Acorn Packet Solutions, Inc., and Funk Software, Inc. During 2005, the company's operations were organized into three segments: Infrastructure, Service Layer Technologies Products, and Service. The company has sales and development offices in the Asia Pacific, including India and China. * * * As reported in the Troubled Company Reporter on Feb. 13, 2007, Standard & Poor's Ratings Services' BB/Watch Neg/B-1 corporate credit and other ratings on Sunnyvale, Calif.-based Juniper Networks Inc. remain on CreditWatch with negative implications, where they were placed on May 22, 2006. KIRKLAND KNIGHT: Cash Collateral Hearing Scheduled Tomorrow ----------------------------------------------------------- The U.S Bankruptcy Court for the Northern District of California will convene a hearing at 10:00 a.m., on Mar. 16, 2007, at the Santa Rosa Court Room, to consider, on a final basis, Kirkland Knightsbridge LLC's request to use Madison Capital Group's cash collateral. As reported in the Troubled Company Reporter on Jan. 23, 2007, the Court authorized the Debtor, on an interim basis, to use cash collateral securing repayments of its obligations to Madison Capital. As reported in the Troubled Company Reporter on Dec. 14, 2006, the Debtor and its affiliate, Kirkland Cattle Company, on Feb. 2, 2004, jointly borrowed $20,000,000 from The Travelers Insurance Co. The loan was to be used in consolidating and refinancing obligations as well as for working capital. The loan was later assigned to Met Life Insurance Company of Connecticut and then finally assigned to Madison Capital Group LLC. The Debtor says that this loan was evidenced by a promissory note, deed of trust, and other collateral documentation. Pursuant to the loan documents, Madison Capital holds lien on the Debtor's grape crop, certain other personal property, and their proceeds. The Debtor said it needs the cash to pay ongoing operational expenses in order to promulgate a plan of reorganization, and to pay postpetition payroll and other critical operating expenses. To provide Madison Capital with adequate protection required under Sections 361(2) and 363(e) under the U.S. Bankruptcy Code for any diminution in the value of its collateral, the Debtor will grant Madison Capital replacement liens to the same extent, validity and priority as the prepetition liens. The Debtor believed that, even without the replacement lien, Madison Capital Group is adequately protected for the use of its cash collateral because the loan is secured by a first deed of trust on real property assets of the debtor and its affiliate Kirkland Cattle Company worth well in excess of $75,000,000. Kirkland Knightsbridge LLC dba Kirkland Ranch Winery -- http://www.kirklandranchwinery.com/-- operates vineyards and wineries in the Napa Valley region and breeds cattle for commercial consumption. The company filed a chapter 11 petition on September 21, 2006 (U.S. Bankr. N.D. Calif. Case No. 06-10628). The company's affiliate, Kirkland Cattle Company, filed a separate chapter 11 petition in the same court under Case No. 06-10630. John H. MacConaghy, Esq. at MacConaghy and Barnier, PLC represents the Debtors in their restructuring efforts. When the Debtors sought protection from their creditors, they listed assets and debts between $10 million to $100 million. LAGUARDIA ASSOCIATES: Court Confirms U.S. Bank's Liquidation Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania confirmed the Third Amended Chapter 11 Liquidation Plan filed by U.S. Bank National Association, as successor in interest to SunTrust Bank, for Field Hotel Associates LP, a debtor-affiliate of LaGuardia Associates LP. As reported in the Troubled Company Reporter on Mar. 23, 2006, SunTrust Bank, fka United States Trust Company, is the successor indenture trustee to a Sept. 1, 1998 guaranty and security agreement entered into by the Debtor to secure the Debtor's obligations to make rental payments under its lease agreement with the New York City Industrial Development Agency. Treatment of Claims Under its Plan, U.S. Bank proposes to pay Class 1 Other Priority Claims in full on the effective date. Class 3 Secured Tax Claims and the Class 2 Secured Claim of U.S. Bank will be paid using all of the net sales proceeds resulting from the sale of the Debtor's property. Holders of Class 4 Other Secured Claims will receive in full satisfaction of their claims either: a) payment in full of the Allowed Other Secured Claim in Cash from the distribution fund on the effective date of the Plan; or b) the Debtor will abandon the property that secures the Allowed Other Secured Claim to the holder of the Allowed Other Secured Claim. Each holder of Class 5 General Unsecured Claims will, in full satisfaction of their Allowed General Unsecured Claim, receive one or more distributions from the distribution fund in an amount equal to its pro rata share of the distribution fund. Class 5 Claims are also entitled to have a first priority right to receive the first $200,000 of cash proceeds from the sale of the Key Man Insurance Policy. The Class 6 Deficiency Claim of U.S. Bank will be calculated by adding together: i) any portion of the Allowed U.S. Bank Secured Claim that is determined by the Court or agreed to be an Allowed Unsecured Claim; ii) all sums guaranteed, carved out, or advanced by U.S. Bank for the payment of creditors under the Plan, including, without limitation the bondholders unsecured contribution and the Class 5 Guaranty Amount; and iii) the derivative claims fees. The Secured Claim of the estate of Joseph Selig under Class 7 is entitled to one or more distributions in cash from the distribution fund after all claims in the previous classes are paid in full. As of the closing date, the liens, if any, of Selig on the Debtor's property will be extinguished and released. Mr. Selig holds a $12,539,947 mortgage on the Debtor's property. Class 8 Affiliated Unsecured Claim Holders will receive one or more distributions from the distribution fund in an amount equal to its pro rata share of the distribution fund after all claims in the previous classes are paid in full. Holders of interest in the Debtor will be paid any amount remaining in the distribution fund after payment in full of all claims in prior classes, in accordance with the holder's respective ownership interest in the Debtor. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=070123221629 Headquartered in King of Prussia, Pennsylvania, LaGuardia Associates, L.P., owns and operates the 358-room Crowne Plaza Hotel located at 104-04 Ditmars Boulevard in East Elmhurst, New York. The Company and its debtor-affiliate filed for chapter 11 protection on October 29, 2004 (Bankr. E.D. Pa. Case No. 04-34514). Martin J. Weis, Esq., at Dilworth Paxon LLP represent the Debtors in their restructuring. Ashely M. Chan, Esq., and Myron Alvin Bloom, Esq., at Hangley Aronchick Segal & Pudlin represent the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it estimated assets and liabilities of $10 to $50 million. LB-UBS: Moody's Holds Rating on $3 Mil. Class S Certificates at B3 ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of 18 classes of LB-UBS Commercial Mortgage Trust 2004-C2, Commercial Mortgage Pass-Through Certificates, Series 2004-C2: -- Class A-1, $76,808,166, Fixed, affirmed at Aaa -- Class A-2, $267,000,000, Fixed, affirmed at Aaa -- Class A-3, $144,000,000, Fixed, affirmed at Aaa -- Class A-4, $558,483,000, Fixed, affirmed at Aaa -- Class X-CL, Notional, affirmed at Aaa -- Class X-CP, Notional, affirmed at Aaa -- Class B, $15,433,000, Fixed, upgraded to Aaa from Aa1 -- Class C, $13,889,000, Fixed, upgraded to Aa1 from Aa2 -- Class D, $12,346,000, Fixed, upgraded to Aa2 from Aa3 -- Class E, $16,976,000, Fixed, affirmed at A1 -- Class F, $13,890,000, WAC, affirmed at A2 -- Class G, $21,605,000, WAC, affirmed at A3 -- Class H, $12,347,000, WAC, affirmed at Baa1 -- Class J, $10,802,000, WAC, affirmed at Baa2 -- Class K, $12,347,000, WAC, affirmed at Baa3 -- Class L, $4,629,000, WAC, affirmed at Ba1 -- Class M, $4,630,000, WAC, affirmed at Ba2 -- Class N, $3,087,000, WAC, affirmed at Ba3 -- Class P, $3,086,000, WAC, affirmed at B1 -- Class Q, $3,087,000, WAC, affirmed at B2 -- Class S, $3,086,000, WAC, affirmed at B3 As of the Feb. 16, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.9% to $1.21 billion from $1.23 billion at securitization. The Certificates are collateralized by 84 mortgage loans. The loans range in size from less than 1.0% to 15.5% of the pool, with the top 10 loans representing 64.9% of the pool. The pool includes four investment grade shadow rated loan, representing 29.8% of the outstanding loan balance. Five loans, representing 18.5% of the pool, have defeased, including the top loan -- 666 Fifth Avenue ($187.5 million -- 15.5%). There have been no loans liquidated from the trust and therefore no realized losses. Currently there are no loans in special servicing. Fifteen loans, representing 10.8% 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 98.0% and 77.3%, respectively, of the performing loans. Moody's loan to value ratio for the conduit component is 92.6%, compared to 96.4% at securitization. Moody's is upgrading Classes B, C and D due to increased subordination levels and defeasance. The largest shadow rated loan is the GIC Office Portfolio Loan of $150.0 million (12.4%), which is a pari passu interest in a $700.0 million first mortgage loan. The loan is secured by 12 office properties totaling 6.4 million square feet and located in seven states. The highest geographic concentrations are Chicago, San Francisco and suburban Philadelphia. The portfolio is 90.6% occupied, essentially the same as at securitization. The Chicago concentration is comprised of two buildings -- the AT&T Corporate Center (1.5 million square feet; 37.1%) and the USG Building (928,000 square feet; 18.9%). The performance of these properties has declined slightly since securitization. The loan sponsor is Prime Plus Investments, Inc., a private REIT wholly owned by the Government of Singapore Investment Corporation (Realty) Pte Ltd. The loan matures in January 2014 and is structured with an initial five-year interest only period. Moody's current shadow rating is A2, the same as at securitization. The second largest shadow rated loan is the Somerset Collection Loan of $125.5 million (10.4%), which is a 50.0% pari passu interest in a $251.0 million first mortgage loan. The loan is secured by the borrower's interest in a 1.4 million square foot regional mall located in Troy, Michigan. The mall is the dominant mall in its trade area and is anchored by Macy's, Nordstrom, Saks Fifth Avenue and Neiman Marcus. The property is 97.7% occupied, essentially the same as at securitization. The property is also encumbered by a B Note which is held outside the trust. The loan is interest only for its entire 10-year term. Moody's current shadow rating is A2, the same as at securitization The third largest loan is the Farmers Market Loan of $43.1 million (3.6%), which is secured by a 228,339 square foot mixed use property (retail & office) built in 1940 and renovated in 2002. As of June 2006 occupancy was 98.4%, compared to 84.1% at securitization. The largest tenants are: The Ant Farm, LLC and The Children's Place. Performance has been stable since securitization. Moody's current shadow rating is A2, the same as at securitization. The fourth largest loan in the pool is the Ruppert Yorkville Towers Loan of $38.8 million (3.2%), which is secured by the borrower's interest in a high-rise multifamily tower complex located on the Upper East Side submarket of Manhattan. The complex was completed in 1975 and converted to a condominium structure in 2003. Upon conversion to condominium ownership, 825 units were sold to insiders with the remaining 432 units held by the borrower. In addition, the complex has 53,810 square feet of commercial space and 557 parking spaces. The collateral for this loan includes the unsold residential units, unsold storage units, commercial and garage space. The unsold units are either vacant, occupied by market rate tenants or occupied by pre-conversion tenants at below market rental rates. The units occupied by pre-conversion tenants are governed by an agreement determining future rents. As these units are vacated, the rents are reset to market rates. In addition, as existing leases expire, rents on those units may also rise to full market for the existing tenants. The majority of existing tenants pay significantly below market rents. However, rents are expected in increase over time as tenants renew or as units are converted to market. As of September 2006 occupancy was 98.0%, compared to 97.5% at securitization. Net operating income has improved by approximately 30.0% since securitization. Moody's current shadow rating is Aaa, the same as at securitization. The three largest conduit exposures represent 14.6% of the pool. The largest conduit exposure is the Maritime Plaza I and II Loans of $76.3 million (6.3%), which is secured by two office buildings with an aggregate of 345,736 square feet. Built in 2001 and renovated in 2003, the properties are situated at the intersection of M Street and 12th Street in Washington, DC. As of December 2006, occupancy was 89.0% compared to 85.1% at securitization. The largest tenant is Computer Sciences. Financial performance has been stable since securitization. Moody's LTV is 98.1% compared to 99.2% at securitization. The second largest conduit loan is the Inland Center Loan of $54.0 million (4.5%), which is secured by a 1,050,253 square foot regional mall (221,445 square feet is collateral) located in San Bernardino, California. The building was constructed in 1966 and renovated in 2001 and is anchored by Sears, Macy's and Harris-Gottschalks. As of September 2006 the property was 76.0% leased due to an anchor tenant, Macy's (18.0% GLA), vacating the property. The center was 93.5% occupied at securitization. The property's performance in calendar year 2006 dropped significantly compared to calendar year. However, performance remained in line with calendar year 2004. The loan is interest only for its entire term. Moody's LTV is 99.8%, the same as at securitization. The third largest conduit loan is the 280 Metro Center Loan of $46.0 million (3.8%), which is secured by the borrower's interest in a 351,816 square foot anchored retail center located in Colma, California, 10 miles south of San Francisco, California. The property was constructed in 1986. The property is 100.0% occupied, the same as at securitization. The property is anchored by Marshalls, Nordstrom Rack and Bed Bath & Beyond. Net cash flow has been stable since securitization. Moody's LTV is 94.8% compared to 98.6% at securitization. The pool's collateral is a mix of: * retail (40.4%) * office (24.9%) * U.S. Government securities (18.5%) * multifamily and manufactured housing (13.3%) * industrial and self storage (1.6%) * lodging (1.3%). The collateral properties are located in 27 states and the District of Columbia. The highest state concentrations are: * California (28.2%) * Michigan (13.3%) * New York (9.8%) * Texas (8.3%) * Illinois (7.9%). All of the loans are fixed rate. LOWTHERBROTHER LLC: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: LowtherBrothers, LLC dba Mountain Top Properties of Minnesota LLC dba Red Rock Properties of Minnesota LLC dba Sycamore Investments LLC dba Greenstreet Builders LLC 410 North 10th Street Lake City, MN 55041 Bankruptcy Case No.: 07-30809 Type of Business: The Debtor is a real estate development company. See http://www.lowtherbrothers.com/ Chapter 11 Petition Date: March 13, 2007 Court: District of Minnesota (St Paul) Judge: Nancy C. Dreher Debtor's Counsel: Thomas Flynn, Esq. Larkin Hoffman Daly & Lindgren, Ltd. 7900 Xerxes Avenue South, Suite 1500 Bloomington, MN 55431 Tel: (952) 896-3362 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Home Federal Savings Bank Bank Loan $1,874,406 c/o Brad Krehbiel 1016 Civic Center Drive Northwest Rochester, MN 55901-1891 Americana Community Bank Bank Loan $700,000 c/o Brad Mathiowetz 300 Main Street West Sleepy Eye, MN 56085-1332 U of Wisconsin Foundation Contract $350,000 c/o Russell N. Howes 1848 University Avenue Madison, WI 53708-8860 Swanson, Doug & Vicki Personal Loan $150,000 10271 Hampton Drive Anchorage, AK 99507-6229 Do It Best Corp. Trade Debt $126,797 P.O. Box 868 Fort Wayne, IN 46801-0868 Bank of America Credit Card $22,536 AOPA Visa Bank of America Credit Card $19,638 Alaska Airline Visa Bob Ewers Contracting Trade Debt $5,513 Custom Contracting Services Trade Debt $5,157 Capital One Trade Debt $3,434 Brewer Heating & Cooling Trade Debt $1,678 Johnson Jaekel & Riutzel Trade Debt $1,460 ComforTech Inc. Trade Debt $1,020 U.S. Bank N.A. Credit Card $393 MAGNOLIA VILLAGE: Wants to Sell Nevada Properties for $24 Million ----------------------------------------------------------------- Magnolia Village LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada to sell its retail commercial and office real property at Lakeside and South McCarran Boulevard in Reno, Nevada, to Nathan L. Topol for $24 Million. Specifically, the Debtors are selling its Magnolia Village, which consists of approximately 4.86 acres and 71,500 square feet. Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., tells the Court that the sale will generate sufficient fund and resources in which to pay 100% of the Debtor's allowed claims. The Debtors have no other significant assets other than some cash on hand, accounts receivable, miscellaneous office equipment totaling $366,593. Mr. Topol will assume all of the Debtors' leases associated with tenants of the property. However, he will not assume any contract, leases or other agreements concerning the property, and its maintenance and operation. About Magnolia Village Based in Reno, Nevada, Magnolia Village LLC, is a luxurious resort-style Class A Office Park. The company and its affiliates filed for chapter 11 protection on Sept. 8, 2006 (Bankr. D. Nev. Case No. 06-51649). Stephen R. Harris, Esq. at Belding, Harris & Petroni Ltd. represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When Magnolia Village filed for protection from its creditors, it listed estimated assets between $10 million and $50 million and debts between $100,000 to $500,000. MAGNOLIA VILLAGE: Wants Exclusive Solicitation Period Extended -------------------------------------------------------------- Magnolia Village LLC and its debtor-affiliates asks the United States Bankruptcy Court for the District of Nevada for permission to further extend, until June 5, 2007, their exclusive period to solicit acceptances of their Chapter 11 Plan of Reorganization. Stephen R. Harris, Esq., at Belding, Harris & Petroni Ltd., reminds the Court that the Debtors filed their Joint Chapter 11 Plan on Jan. 5, 2007. Mr. Harris contends that pursuant to the requirements set forth in the Bankruptcy Code, the Debtors' period to exclusively solicit acceptances of their plan expired on March 7, 2007. Mr. Harris tells the Court that the hearing to consider the adequacy of the Disclosure Statement explaining the Debtors' plan is still ongoing and the extension will give the Debtors sufficient time to have their plan confirmed. The Court continued the hearing on the Disclosure Statement to May 7, 2007. Treatment of Claims Under the Plan As reported in the Troubled Company reporter on Feb. 13, 2007, the Debtors' Plan proposes to pay the secured claims of CW Advisors and LNR Partners according to their contractual agreements with no modifications. These secured claims will be also be paid according to contractual agreements but with modification on the term due date, which claims will now due Nov. 1, 2007, or upon sale of the Debtors' real properties, whichever is earlier: a) Class 2 Secured Claim of First Independent Bank; b) Class 3A Secured Claim of First National Bank of Nevada; and c) Class 3B Secured Claim of First National Bank of Nevada. The secured claim of Krump Construction, which consists of a mechanic's lien recorded in a junior position priority against the real property of Magnolia Double, will be paid upon closing of the successful sale of the real property, assuming sufficient proceeds exist after paying all senior secured loans, or on Nov. 1, 2007, whichever date is earlier. Holders of General Unsecured Claims will receive pro rata share of their allowed claims. Those claims will bear a 6% interest per annum from Sept. 8, 2006. The Potential Securities Claims and Other Claims of the Class A Non-Member Investors in MBP Equity Partners LLC will be paid through an interest bearing account from proceeds of the sale of the Debtors' real properties. MBP Equity Partners is a 100% member of the Debtors. The investors have filed state court actions against the Debtors for, among other things, securities fraud and for rescission of their purchase of securities of MBP Equity Partners. The payment is pending further Court order either through an adversary proceeding or claim proceeding or by confirmation of any award or judgment obtained in the state court action, which liquidates the amount due to the investors. The Equity Claims of MBP Equity Partners I, LLC will not be modified. Plan Funding Distribution under the Plan will be sourced from the sale of the Debtors' real properties. As reported in the Troubled Company Reporter on Feb. 7, 2007, Magnolia Village will be selling its real property complex located at 6900 South McCarran Boulevard in Reno, Nevada for $24,000,000. The Magnolia Village real property complex consists of a 205,016 square feet office park with retail space and a central three- story office building. Three debtor-affiliates will also be selling these real properties for a total purchase price of $22,362,500: Seller Property ------ -------- Magnolia Double R.I., LLC three commercial buildings and two vacant land parcels at Sandhill, in Reno, Nevada Magnolia South Meadows III, LLC office building at Gateway Drive, in Reno, Nevada Magnolia South Meadows IV, LLC office building at Double Eagle Court, in Reno, Nevada A full-text copy of the Disclosure Statement explaining the Debtors' Joint Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=070212033047 About Magnolia Village Based in Reno, Nevada, Magnolia Village LLC, is a luxurious resort-style Class A Office Park. The company and its affiliates filed for chapter 11 protection on Sept. 8, 2006 (Bankr. D. Nev. Case No. 06-51649). Stephen R. Harris, Esq. at Belding, Harris & Petroni Ltd. represents the Debtors. No Official Committee of Unsecured Creditors has been appointed in this case. When Magnolia Village filed for protection from its creditors, it listed estimated assets between $10 million and $50 million and debts between $100,000 to $500,000. MALDEN MILLS: Polartec Completes Acquisition of Malden's Assets --------------------------------------------------------------- Polartec LLC has completed the acquisition of the assets of Malden Mills Industries, Inc. Polartec, LLC will continue manufacturing operations at its Lawrence and Methuen, Massachusetts, Hudson, New Hampshire, and Shanghai, China plants. Michael Spillane, who served as CEO of Malden Mills during the past three years, has been named the CEO of Polartec, LLC. The balance of the management team from Malden Mills will transition to their respective positions within the new company. Earlier this month, members of the Unite HERE! Union who manufacture Polartec(R) products overwhelmingly voted to accept a new three-and-a-half-year contract with Polartec, LLC that ensures their continued employment at the new company. Regarding the launch of Polartec, LLC, CEO Michael Spillane said, "This day represents a fresh start for our Polartec(R) products, brand, and employees. For the first time in more than a decade, we are able to completely focus on the needs of our customers, which calls for developing, manufacturing and marketing technology solutions in performance fabrics. The distractions of the past are now behind us and we begin today to work on our future." Greg Segall, Chairman of Polartec, LLC and Managing Partner of Chrysalis Capital Partners, L.P. commented, "We are very pleased with this transaction, and look forward to working with the management team and other employees as they focus on executing their operating plan." About Malden Mills Based in Lawrence, Massachusetts, Malden Mills Industries, Inc. -- http://www.polartec.com/-- develops, manufactures, and markets Polartec(R) performance fabrics. Polartec(R) products range from lightweight wicking base layers to insulation to extreme weather protection and are utilized by the best clothing brands in the world. In addition, Polartec(R) fabrics are used extensively by all branches of the United States military, including the Army, Navy, Marine Corps, Air Force, and Special Operations Forces. The company also has operations in Germany, Spain, France and the U.K. The company filed for chapter 11 protection on Nov. 29, 2001 (Bankr. Mass. Case No. 01-47214). The Court confirmed the Debtor's plan on Aug. 14, 2003. The company and four of its affiliates filed their second chapter 11 petitions on Jan. 10, 2007 (Bankr. D. Del. Case Nos. 07-10048 through 07-10052). Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, PC, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $1 million to $100 million and estimated debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on May 10, 2007. On Jan. 12, 2007, the Delaware Bankruptcy Court transferred the case to the U.S. Bankruptcy Court for the District of Massachusetts (Case No. 07-40124). As reported in the Troubled Company Reporter on Mar. 13, 2007, Malden Mills had asked the Court to convert their chapter 11 cases to a chapter 7 liquidation proceeding. MSX INTERNATIONAL: Plans $200 Mil. Senior Secured Notes Offering ---------------------------------------------------------------- MSX International Inc. plans to offer $200,000,000 principal amount of senior secured notes due 2012, which the company intends to use the net proceeds of the offering to repay certain existing indebtedness. The notes are expected to be issued as units by certain of its subsidiaries in France, Germany and the United Kingdom in a private placement and resold by the initial purchaser to qualified institutional buyers under Rule 144A and Regulation S under the Securities Act of 1933. The company said that the notes are expected to be guaranteed on a senior secured basis by the company and each of its existing and future domestic subsidiaries, by each issuer and by certain subsidiaries in the United Kingdom. The offering will be subject to market and other conditions. About MSX International Headquartered in Warren, Michigan, MSX International Inc. -- http://www.msxi.com/provides outsourced technical business services and human capital services to the automotive industry. The company has over 3,600 employees in eighteen countries. * * * As reported in the Troubled Company Reporter on Dec. 28, 2006, Moody's Investors Service downgraded the ratings of MSX Internationals Inc.'s $65.5 million 11% senior secured notes due 2007 to B1 and $130 million 11.375% senior subordinated notes due 2008 to Caa2. MSX INTERNATIONAL: S&P Lifts Corporate Credit Rating to B- ---------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit ratings on Southfield, Michigan-based MSX International Inc. to 'B-' from 'CCC+'. Standard & Poor's also assigned its 'CCC+' bank loan rating and a recovery rating of '3' to MSX's proposed $200 million senior secured debt used to repay near-term maturities, indicating the expectation of meaningful (50%-80%) recovery of principal in a payment default scenario. When the transaction is closed and the company's existing debt has been refunded, Standard & Poor's intends to withdraw the ratings on MSX's $75.5 million senior secured debt and $130 million subordinated debt. The company had total balance-sheet debt of $203 million as of Dec. 31, 2006, pro forma for the transaction. In addition, $49 million of PIK debt and $115 million of preferred stock, which mature after the date of the proposed notes, are held by the equity sponsor at the holding company. The outlook is stable. The upgrade reflects resolution of two concerns; near-term maturities and lack of visibility regarding the company's earnings capacity. Regarding the first point, the company's proposed refinancing and changes to the terms of the sponsor held debt and preferred will shift near-term maturities out about five years and lower cash interest expense. On the second point, MSX appears to have stabilized earnings through achievement of new business wins in its core warranty business segment that serves the auto dealer network. The company's business profile remains vulnerable, however. The risk remains that loss of traditional business to the OEMs, especially to the company's largest customer, could accelerate in the near term and may not be offset by new business. NEENAH PAPER: Completes Fox Valley Purchase for $52 Million ----------------------------------------------------------- Neenah Paper, Inc., has completed the purchase of Fox Valley Corporation, which owns Fox River Paper Company, LLC. Fox River is a producer of premium fine papers with well-known brands including STARWHITE(R), SUNDANCE(R), ESSE(R), and OXFORD(R). The company has manufacturing plants in California, Massachusetts, Ohio, and Wisconsin and will become part of Neenah Paper's existing fine paper business. At the effective time of the merger, the outstanding shares of Fox Valley will automatically be converted into the right to receive $52,000,000 in cash less expenses and other payables. "This acquisition allows us to strengthen our Fine Paper business by providing added scale and the ability to offer a broader array of premium branded products and better service to our customers. In addition, we expect to realize important economic benefits as we integrate the two businesses," Chief Executive Officer and Chairman of the Board Sean Erwin said. "Coupled with our purchase last October of the German technical products business, this acquisition is a wonderful fit with our strategy to transform into a leading premium fine paper and technical products company and to grow profitably to create value for our customers and stakeholders." A full-text copy of the merger agreement is available for free at: http://ResearchArchives.com/t/s?1b57 Housatonic Mill Closure Neenah Paper plans to close permanently one of the fine paper plants acquired in the recent purchase of Fox River Paper. The Housatonic mill, located near Great Barrington, Mass., has annual production capacity of approximately 15,000 tons per year and is expected to cease manufacturing operations by the end of the second quarter. Housatonic was the smallest of four fine paper plants Neenah acquired as part of the Fox River acquisition. "This is a necessary part of our plan to integrate Fox River in a manner that will result in a competitive long term cost structure for our combined operations. "The Housatonic mill was not profitable due to its small size, cost structure and pricing of many of the grades made there. Closing the mill allows us to eliminate costs and improve margins while still serving the needs of key customers," Mr. Erwin said. "Selected products made at Housatonic will be produced at our other sites, where we have available capacity and the ability to make these grades at a lower cost. We realize this decision will result in hardship for our employees at Housatonic and the local community and will be working to assist them through this difficult transition." The company said it expected to incur one-time cash costs of approximately $3 million for severances and other charges related to the closure. Ongoing annual savings of approximately $5 million are expected from the elimination of fixed costs and increased manufacturing efficiencies, although these savings would not be realized immediately due to product transition costs expected to be incurred in 2007. Headquartered in Alpharetta, Georgia, Neenah Paper (NYSE: NP) -- http://www.neenah.com/-- manufactures and distributes premium and specialty paper grades, with brands such as CLASSIC(R), ENVIRONMENT(R), KIMDURA(R) and MUNISING LP(R), Gessner(R) and varitess(R). The company also produces and sells bleached pulp, primarily for use in the manufacture of tissue and writing papers. Neenah Paper has manufacturing operations in Wisconsin, Michigan, Nova Scotia, Canada, and Bruckmuhl, Feldkirchen-Westerham and Lahnstein, Germany. * * * As reported in the Troubled Company Reporter on Sept. 8, 2006, Moody's Investors Service affirmed Neenah Paper Inc.'s corporate family rating at B1, $150 million senior secured revolving credit facility at Ba3, and $225 million senior unsecured notes at B1. Moody's said the outlook remains stable. NEENAH PAPER: Enters Fourth Amendment to Credit Pact With JPMorgan ------------------------------------------------------------------ Neenah Paper, Inc., and certain of its subsidiaries as co-borrowers or guarantors entered into a fourth amendment to a credit agreement dated as of Nov. 30, 2004, with JPMorgan Chase Bank, N.A., as agent for the lenders on March 1, 2007. The Fourth Amendment, among other things, (i) increases its secured revolving line of credit from $165,000,000 to $180,000,000, and (ii) makes other definitional, administrative and covenant modifications to the Credit Agreement in the purchase of the outstanding stock of Fox Valley Corporation, which owns Fox River Paper Company, LLC. Fox Valley and Fox River will become guarantors under the Credit Agreement. They will also become subsidiary guarantors with respect to the company's $225,000,000 7-3/8% Senior Notes due 2014, issued under the Nov. 30, 2004, Indenture between the company and The Bank of New York Trust Company, N.A., as trustee. The company's ability to borrow under the Credit Agreement, as amended, is restricted by: (a) the total line commitment ($180,000,000), (b) the company's borrowing base, and (c) the applicable cap on the amount of "senior credit facilities" under the Indenture. The company's borrowing base has been modified to incorporate the current assets of Fox and Fox River. After giving effect to the Fox River acquisition, the company's borrowing base will support availability under the line of $180,000,000.00 (excluding amounts currently outstanding). As part of financing the acquisition and certain related expenses and obligations, the company borrowed $54 million in principal under the Credit Agreement on March 1, 2007, increasing the total amount outstanding under the Credit Agreement as of such date to approximately $111 million. All principal amounts outstanding under the Credit Agreement are due and fully payable on the date of termination of the Credit Agreement. While the Fourth Amendment increases the total commitment available to the company, no assurance can be given that it will meet the requirements to borrow the full amount available under the Credit Agreement. The Credit Agreement, as amended, contains events of default customary for financings of this type, including failure to pay principal or interest, materially false representations or warranties, failure to observe covenants and other terms of the revolving credit facility, cross-defaults to other indebtedness, bankruptcy, insolvency, various ERISA violations, the incurrence of material judgments and changes in control. Headquartered in Alpharetta, Georgia, Neenah Paper (NYSE: NP) -- http://www.neenah.com/-- manufactures and distributes premium and specialty paper grades, with brands such as CLASSIC(R), ENVIRONMENT(R), KIMDURA(R) and MUNISING LP(R), Gessner(R) and varitess(R). The company also produces and sells bleached pulp, primarily for use in the manufacture of tissue and writing papers. Neenah Paper has manufacturing operations in Wisconsin, Michigan, Nova Scotia, Canada, and Bruckmuhl, Feldkirchen-Westerham and Lahnstein, Germany. * * * As reported in the Troubled Company Reporter on Sept. 8, 2006, Moody's Investors Service affirmed Neenah Paper Inc.'s corporate family rating at B1, $150 million senior secured revolving credit facility at Ba3, and $225 million senior unsecured notes at B1. Moody's said the outlook remains stable. NEW CENTURY: Disclosures Cue NYSE to Suspend Securities Trading --------------------------------------------------------------- The New York Stock Exchange has determined that New Century Financial Corporation's common stock (NEW), its 9.125% Series A Cumulative Redeemable Preferred Stock (NEW Pr A) and its 9.75% Series B Cumulative Redeemable Preferred Stock (NEW Pr B) are no longer suitable for continued listing on the NYSE and will be suspended immediately. The NYSE made this decision based upon the company's recent filings with the Securities and Exchange Commission regarding the uncertainty of its current liquidity position. Following suspension, the company's securities will be quoted on the Pink Sheets under these ticker symbols: * Common Stock - NEWC * 9.125% Series A Cumulative Redeemable Preferred Stock - NEWCP * 9.75% Series B Cumulative Redeemable Preferred Stock - NEWCO New Century has a right to a review of this determination by a Committee of the Board of Directors of the NYSE. Application to the SEC to delist the issue is pending the completion of applicable procedures, including any appeal by the company of the NYSE staff's decision. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. * * * As reported in the Troubled Company Reporter on March 13, 2007, New Century Financial Corporation disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on March 9, 2007, it received a letter from Morgan Stanley Mortgage Capital Inc. notifying the company of certain purported defaults, that Morgan Stanley was accelerating certain obligations under the Morgan Stanley Agreement, and Morgan Stanley was discontinuing financing to the company under the Morgan Stanley Agreement. NEW CENTURY: Barclays Demands Payment of $900 Mil. Loan Obligation ------------------------------------------------------------------ New Century Financial Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that Barclays Bank PLC terminated its master repurchase agreement dated March 31, 2006, as amended to date, with the company, certain of its subsidiaries, and Sheffield Receivables Corporation. On March 12, 2007, the company received a notice of default and reservation of rights from Barclays, alleging that certain events of default, as defined in the Master Repurchase Agreement have occurred. The company subsequently received a combined Notice of Event of Default, Notice of Repurchase Date and Notice of Termination Date from Barclays, dated March 13, 2007. The March 13 notice reiterates Barclays' allegations that certain Events of Default have occurred and purports to accelerate to March 14, 2007, the obligation of the company's subsidiaries to repurchase all outstanding mortgage loans financed under the Barclays Agreement and to terminate the Barclays Agreement as of that same date. Under the Barclays Agreement, the acceleration would require the immediate repayment of the repurchase obligation on March 14, 2007. The company estimates that the aggregate repurchase obligation of its subsidiaries under the Barclays Agreement was approximately $900 million as of March 12, 2007. The company is a guarantor under the Barclays Agreement. Ceased Loan Application Acceptance As reported in the Troubled Company Reporter on Mar. 9, 2007, as a result of its current constrained funding capacity, New Century elected to cease accepting loan applications from prospective borrowers effective immediately while the company seeks to obtain additional funding capacity. The company expected to resume accepting applications as soon as practicable, however, there can be no assurance that the company will be able to resume accepting applications. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. * * * As reported in the Troubled Company Reporter on Mar. 13, 2007, Standard & Poor's Ratings Services lowered its counterparty credit rating on New Century Financial Corp. to 'D' from 'CC'. The ratings on the senior unsecured debt and preferred stock remain on CreditWatch with negative implications. In addition, Dominion Bond Rating Service downgraded the Issuer Rating of New Century Financial Corporation to C from CCC. The rating remains Under Review with Negative Implications. As reported in the Troubled Company Reporter on Mar. 9, 2007, Fitch Ratings downgraded New Century Mortgage Corporation's, a subsidiary of New Century Financial Corp., residential primary servicer rating for subprime product to 'RPS4' from 'RPS3+', and places the rating on Watch Negative. According to Fitch, an 'RPS4' rated servicer may not be acceptable for new residential mortgage-backed security transactions unless additional support or structural features are incorporated. The Rating Watch Negative indicates that further downgrades are possible, depending upon the stability of the servicer's portfolio and financial condition and the company's ability to obtain satisfactory amendments to or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding. NEW CENTURY: Four State Regulators Issue Cease and Desist Orders ---------------------------------------------------------------- New Century Financial Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that it has been engaged in recent ongoing discussions with its state regulators regarding the company's funding constraints and the impact on consumers who are in various stages of the loan origination process with the Company. The company relates that it has advised the regulators that it has ceased accepting loan applications and that at this time, the company and its subsidiaries are unable to fund any mortgage loans, including mortgage loans for those consumers who were already in the loan origination process with the company. In addition, the company said it has been and is continuing to work cooperatively with the regulators to mitigate the impact on the affected consumers, including transferring pending loans and loan applications to other mortgage lenders. According to the company, it has also been providing daily reports to its various regulators regarding the status of loans in process in their states, as well as responding to ad hoc information requests. Cease and Desist Orders On March 13, 2007, the company and certain of its subsidiaries received cease and desist orders from regulators in the States of Massachusetts, New Hampshire, New Jersey and New York. The cease and desist orders contain allegations that certain of the company's subsidiaries have engaged in violations of applicable state law, including, among others, failure to fund mortgage loans after a mortgage closing, failure to meet certain financial requirements, including net worth and available liquidity, and failure to timely notify the state regulators of defaults and terminations under certain of its financing arrangements. The cease and desist orders seek to restrain the subsidiaries from taking certain actions, including, among others, engaging in further violations of state law, taking new applications for mortgage loans in the relevant jurisdiction, and paying dividends or bonuses to officers, directors or shareholders of the applicable subsidiaries. The cease and desist orders also seek to cause the subsidiaries to affirmatively take certain actions, including the creation of escrow accounts to hold fees relating to pending mortgage applications, the transfer to other lenders of the outstanding mortgage applications and unfunded mortgage loans held by the subsidiaries, and the provision of regular information to the state regulators regarding the subsidiaries' activities in the applicable state, including the status of all outstanding mortgage applications and unfunded mortgage loans in that state. Certain of the cease and desist orders also require one or more of the subsidiaries to show cause why their license should not be revoked or why administrative penalties should not be assessed. The cease and desist orders generally become permanent if not promptly appealed by the applicable subsidiaries. The company said it is reviewing the orders and accordingly has not yet determined whether it will appeal all or any portion of any of the orders. Subject to its funding limitations, the company intends to comply with the orders pending any such appeal. The company anticipates that similar orders will be received by the Company or its subsidiaries from additional states in the future and does not undertake, and expressly disclaims, any obligation to update this disclosure for any such additional orders or for any developments with respect to the cease and desist orders. The company intends to continue to cooperate with its regulators in order to mitigate the impact on consumers resulting from the company's funding constraints. Ceased Loan Application Acceptance As reported in the Troubled Company Reporter on Mar. 9, 2007, as a result of its current constrained funding capacity, New Century elected to cease accepting loan applications from prospective borrowers effective immediately while the company seeks to obtain additional funding capacity. The company expected to resume accepting applications as soon as practicable, however, there can be no assurance that the company will be able to resume accepting applications. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. * * * As reported in the Troubled Company Reporter on Mar. 13, 2007, Standard & Poor's Ratings Services lowered its counterparty credit rating on New Century Financial Corp. to 'D' from 'CC'. The ratings on the senior unsecured debt and preferred stock remain on CreditWatch with negative implications. In addition, Dominion Bond Rating Service downgraded the Issuer Rating of New Century Financial Corporation to C from CCC. The rating remains Under Review with Negative Implications. As reported in the Troubled Company Reporter on Mar. 9, 2007, Fitch Ratings downgraded New Century Mortgage Corporation's, a subsidiary of New Century Financial Corp., residential primary servicer rating for subprime product to 'RPS4' from 'RPS3+', and places the rating on Watch Negative. According to Fitch, an 'RPS4' rated servicer may not be acceptable for new residential mortgage-backed security transactions unless additional support or structural features are incorporated. The Rating Watch Negative indicates that further downgrades are possible, depending upon the stability of the servicer's portfolio and financial condition and the company's ability to obtain satisfactory amendments to or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding. NOMURA CRE: S&P Rates $12 Mil. Class O Certificates at B- --------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Nomura CRE CDO 2007-2 Ltd./Nomura CRE CDO 2007-2 LLC's $950.0 million CDO. The preliminary ratings are based on information as of March 13, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the economics of the collateral, the geographic and property type diversity of the collateral, and the backup advancing provided by the trustee. Preliminary Ratings Assigned Nomura CRE CDO 2007-2 Ltd. Nomura CRE CDO 2007-2 LLC Preliminary Class Rating amount ----- ------ ----------- A-1R AAA $75,000,000 A-1 AAA $471,131,250 A-2 AAA $60,681,250 B AA $70,537,500 C AA- $26,600,000 D A+ $27,075,000 E A $20,425,000 F A- $21,612,500 G BBB+ $24,937,500 H BBB $20,187,500 J BBB- $25,175,000 K BB+ $22,800,000 L BB $8,787,500 M BB- $5,700,000 N B+ $8,075,000 O B- $12,825,000 Preferred shares NR $48,450,000 NR -- Not rated. ORANGE HOSPITALITY: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Orange Hospitality Group, Incorporated 332 Caroline Street Orange, VA 22960 Bankruptcy Case No.: 07-60404 Type of Business: The Debtor owns a hotel. Chapter 11 Petition Date: March 9, 2007 Court: Western District of Virginia (Lynchburg) Judge: William E. Anderson Debtor's Counsel: Andrew S. Goldstein, Esq. Magee Foster Goldstein & Sayers P.O. Box 404 Roanoke, VA 24003 Tel: (540) 343-9800 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million Debtor's Three Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Joanne D. Graziano $450,000 Executrix for the Estate of Alfred A. Devivi c/o C. Conner Crook, Esq. Boyle, Baine, Reback & Slayton 420 Park Street Charlottesville, VA 22902 Hospitality International $1,000 1726 Montreal Circle, Suite 110 Tucker, GA 30084-6809 Commissioner of Revenue for Orange County $1 119 Belleview Avenue Orange, VA 22960 PACE UNIVERSITY: Moody's Cuts Rating and Says Outlook is Negative ----------------------------------------------------------------- Moody's Investors Service has lowered the underlying rating on Pace University to Ba1 from Baa3. The rating action impacts $127.2 million of rated debt issued through the Dormitory Authority of the State of New York. The University's Series 1997, 2000, and 2005 bonds are also rated Aaa based on municipal bond insurance provided by MBIA. The rating outlook has been revised to negative from stable. The rating action reflects Moody's concerns about pressure on Pace's near-term liquidity and future operating performance, and need to take on additional debt for seasonal cash flow purposes as a result of the recent unexpected enrollment decline in fall 2006. Legal Security: Loan payments are a general obligation of the University secured by debt service reserve funds and a security interest in Pledged Revenues (including tuition and fees) equal to maximum annual debt service. The University's obligations to the Authority under the Loan Agreement are additionally secured by a mortgage on certain property, which is not initially pledged to bondholders unless an event of default occurs and the bond insurer requests that the Authority assign the mortgage to the Trustee. Debt-Related Rate Derivatives: Pace has entered into an interest rate swap agreement to swap its Series 2005A bonds to a fixed rate. Under the swap agreement with Merrill Lynch Capital Services (with an unconditional guarantee provided by Merrill Lynch & Co.), Pace pays a fixed rate and receives a percentage of LIBOR. As of June 30, 2006, the fair value of the swap is recognized as a $2.7 million asset on the University's balance sheet. Moody's has factored its analysis of the swap and termination events into the underlying rating. Strengths: * Elevated gift revenue ($21.7 million of average annual gift revenue over the past three years), with the University in the early stages of a $100 million capital campaign, which includes goals of raising $45 million for endowment, $25 million in support of annual operations, and $30 million toward construction of a new business school facility * Large operating size ($262 million in revenue, 10,226 full-time equivalent enrollment) and relatively high net tuition per student ($18,191 in FY 2006) as a result of Pace's professional degree offerings including business, law, and nursing; * Multiple real estate holdings in various New York City area locations in Manhattan and nearby Westchester County. Challenges: * Declining full-time equivalent enrollment (10,226 FTE in fall 2006, a 6% drop from fall 2005), with a significantly weaker yield on admitted freshmen in fall 2006 (76.1% freshmen selectivity and 18.1% yield); the University is in the process of making changes to its enrollment management procedures and department including recruitment of new personnel. * Slowed growth of net tuition revenue and a 2% decline in net tuition per student in FY 2006, a significant credit concern since the University relies on student charges for over 85% of its operating revenue. * Deterioration of operating performance (-4.7% operating deficit in FY 2006) and weak operating cash flow (3.3% operating cash flow margin in FY 2006). As a result of the unexpected enrollment declines as well as expense growth, the University is projecting an operating deficit for FY 2007 in the $15-16 million range. * Thin balance sheet liquidity and recent assumption of additional debt to assist with seasonal cash flow needs. The University had approximately $20 million of unrestricted cash and investments at the close of FY 2006 (roughly the same amount as outstanding on unsecured line of credit), compared to nearly $274 million of annual operating expenses. * Complex multi-campus structure serving unrelated student markets and causing reduced operating effectiveness and diffused brand identity in the student market Recent Developments: Pace's total full-time equivalent enrollment declined 6% in fall 2006, with 1,131 entering freshmen compared to an average of closer to 1,500 entering freshmen in the five previous fall semesters. Management attributes the fall 2006 decline to various factors including implementation of a 19% freshmen tuition increase, lack of success with guaranteed tuition plan, and mismanagement of distribution of financial aid awards. In response to this unexpected enrollment decline, Pace has discontinued the guaranteed tuition plan for incoming students and expects to keep tuition levels flat in fall 2007 (except for law school tuition). The University also plans to increase the freshmen tuition discount, and the interim director of enrollment management is now reporting directly to the President. The enrollment declines coupled with expense growth have placed pressure on the University's operating performance. In Moody's opinion, the University's ability to re-grow enrollment and significantly improve operations could take several years and presents increased credit risk in the near term. The University is in the midst of the budgeting process for FY 2008 as well as preparing multi-year budget projections. In order to assist with seasonal cash flow needs, the University has structured a $62 million borrowing of unsecured taxable notes. These notes have replaced the $25 million unsecured line of credit, approximately $20 million of which was outstanding at the close of FY 2006. Outlook: The negative outlook reflects Moody's concerns about the University's ability to stabilize enrollment levels and improve annual cash flow generation. Further deterioration of operating performance and weaker debt service coverage could pressure the rating lower over a roughly two year timeframe. What could change the rating -- up Significant growth of liquid financial resources to better cushion debt and operations coupled with stronger annual cash flow and growing enrollment. What could change the rating -- down Further enrollment declines and pressure on net tuition per student; further deterioration of operating cash flow; additional borrowing without compensating growth of financial resources. Key Indicators: * Total Full-Time Equivalent (FTE) Enrollment: 10,226 FTE * Freshmen Selectivity: 76.1% * Freshmen Matriculation: 18.1% * Total Financial Resources: $49.3 million * Adjusted Total Financial Resources (adding back $56.8 million post-retirement liability): $106.1 million * Pro-Forma Direct Debt: $197.8 million (including $62 million of unsecured taxable notes) * Expendable Financial Resources-to-Direct Debt: -0.1x * Adjusted Expendable Financial Resources-to-Debt: 0.2x (adding back post-retirement liability) * Adjusted Expendable Financial Resources-to-Operations: 0.1x (adding back post-retirement liability) * Average Operating Margin: -1.8% * Operating Cash Flow Margin: 3.3% * Average Debt Service Coverage: 1.9 times * Reliance on Student Charges: 85.3% Rated Debt: * Series 1997: Ba1 underlying rating/Aaa insured (MBIA) * Series 2000: Ba1 underlying rating/Aaa insured (MBIA) * Series 2005A and B: Ba1 underlying long-term rating/NR short- term rating/Aaa insured (MBIA) * Series 2000 Insured Lease Revenue Bonds (State Judicial Institute): A1 underlying rating/Aaa insured (included as indirect debt of the University) PACIFIC LUMBER: Scotia Hires Gibson Dunn as Insolvency Counsel -------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Texas has granted authority to Scotia Pacific Company LLC to hire Gibson, Dunn & Crutcher LLP, as its general insolvency counsel. Scopac Chief Financial Officer Gary L. Clark related that Gibson Dunn is intimately familiar with Scopac's business and financial affairs. The firm had worked closely with Scopac's management in connection with its restructuring and reorganization efforts, and had become well acquainted with Scopac's corporate history. As a result, Gibson Dunn had developed relevant experience and expertise regarding Scopac that will assist it in providing effective and efficient services in the Debtor's Chapter 11 case. As Scopac's general insolvency counsel, Gibson Dunn is expected to: (a) advise Scopac of its rights, powers and duties as a debtor-in-possession under Chapter 11; (b) prepare, on Scopac's behalf, all necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules, and other documents and review all financial and other reports to be filed in the Debtor's Chapter 11 case; (c) advise Scopac concerning, and prepare responses to, applications, motions, other pleadings, notices, and other papers that may be filed and served in this Chapter 11 case, and the related Chapter 11 cases of Scotia Development LLC, The Pacific Lumber Company, Britt Lumber Co., Inc. and Salmon Creek LLC; (d) advise Scopac with respect to, and assist in the negotiation and documentation of, financing agreements and related transactions; (e) review the nature and validity of any liens asserted against Scopac's property and advise Scopac concerning the enforceability of those liens; (f) advise Scopac regarding its ability to initiate actions to collect and recover property for the benefit of its estate; (g) counsel Scopac in connection with the formulation, negotiation, and promulgation of a plan of reorganization and related documents; (h) advise and assist Scopac in connection with any potential property dispositions; (i) advise Scopac concerning executory contract and unexpired lease assumptions, assignments and rejections and lease restructurings; (j) assist Scopac in reviewing, estimating, and resolving claims asserted against Scopac's estate; (k) commence and conduct any and all litigation necessary or appropriate to assert rights held by Scopac, protect assets of Scopac's Chapter 11 estate, or otherwise further the goal of completing Scopac's successful reorganization; (l) provide corporate, employee benefit, environmental, litigation, tax, and other general non-bankruptcy services to Scopac to the extent that it is requested; and (m) perform all other necessary or appropriate legal services in connection with the Chapter 11 case for or on behalf of Scopac. As compensation, Gibson Dunn's professionals will be paid their normal hourly rates, subject to periodic adjustment to reflect economic, experience and other factors: Attorneys Hourly Rate --------- ----------- Kathryn A. Coleman, Esq. $655 Frederick Brown, Esq. $615 For the past six months, Scopac paid Gibson Dunn approximately $658,153 on account of services rendered and expenses incurred by the firm relating to Scopac. The Retainer, adjusted for any accrued unpaid prepetition fees and expenses, has a current balance of $314,661, which will be held as security for Gibson Dunn's postpetition services and related expenses. Kathryn A. Coleman, Esq., a partner at Gibson Dunn, assured the Court that the firm neither holds nor represents any interest adverse to Scopac's estates and is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code. 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. 7, http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Gets Interim Nod to Hire Blackstone as Advisor -------------------------------------------------------------- Judge Richard S. Schmidt of the United States Bankruptcy Court for the Southern District of Texas, gave Pacific Lumber Company and its debtor-affiliates authority, on an interim basis, to employ The Blackstone Group L.P. as its financial advisor. Blackstone's Scope of Employment As reported in the Troubled Company Reporter on Feb. 22, 2007, Blackstone Group will: (a) assist in the evaluation of PALCO's businesses and prospects; (b) assist in the development of PALCO's long-term business plan and related financial projections; (c) assist in the development of financial data and presentations to the Court, the Board of Directors, various creditors and other third parties; (d) analyze PALCO's financial liquidity; (e) evaluate PALCO's debt capacity and alternative capital structures; (f) analyze various restructuring scenarios and the potential impact of these scenarios on the ability to maximize PALCO's estate; (g) provide strategic advice with regard to the Plan; (h) assist in the evaluation of and raising of debt and equity as new financing; (i) participate in negotiations among the Debtors and its creditors, suppliers, lessors and other interested parties, as appropriate; (j) value securities offered by PALCO in connection with a plan; (k) provide expert witness testimony as needed; and (l) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a plan as requested and mutually agreed. Blackstone's anticipated services do not encompass: (a) other investment banking services or transactions that may be undertaken at PALCO's request; (b) responsibility for designing or implementing any initiatives to improve PALCO's operations, profitability, cash management or liquidity; (c) representations or warranties about PALCO's ability to successfully improve its operations, maintain or secure sufficient liquidity to operate its business, raise new financing on any particular set of terms or successfully consummate a plan. After considering various alternative candidates, Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, relates that PALCO selected Blackstone as its financial advisor because of the firm's diverse experience and extensive knowledge in the fields of advisory services and bankruptcy. PALCO will pay Blackstone these fees for the financial advisory services contemplated: 1. A $50,000 monthly advisory fee commencing on the Effective Date, and payable on each monthly anniversary of the Effective Date with the final payment due on March 18, 2007; 2. An ongoing monthly fee based on the level of work required of Blackstone payable commencing on April 18, 2007; 3. A $850,000 restructuring fee payable after the consummation of a plan; 4. A debt financing fee of 2% of the total facility size of any debt financing arranged by Blackstone; and 5. An equity financing fee of 4% of the total equity capital secured by Blackstone from third party sources. Steven Zelin, senior managing director of Blackstone, relates that the firm was retained by PALCO on a prepetition basis to represent it in its restructuring and reorganization efforts, and was paid a $200,000 retainer and a $25,000 expense advance. In January 2007, the Firm received an additional $39,133 for actual out-of-pocket expenses. Mr. Zelin assures the Court the Blackstone is a "disinterested person" as defined under Section 101(14) of the Bankruptcy Code. Blackstone's members and employees are not: -- creditors, equity security holders or insiders of PALCO; and -- and were not directors, officers or employees of PALCO, within two years before the Petition Date. Official Committee's Objections As reported in the Troubled Company Reporter on March 1, 2007, the Official Committee of Unsecured Creditors asked the Court to deny the Debtors' request to hire Blackstone Group for these reasons: 1. There is no urgency to retain the services of Blackstone. 2. The Debtors' applications to retain Blackstone should be considered at the same time. 3. The proposed compensation structure in favor of Blackstone appears to be overly generous. LaSalle's Objections LaSalle Business Credit LLC and LaSalle Bank National Association also opposed the Debtors' request to hire Blackstone citing: 1. The fact that Scotia Pacific Company LLC has also sought to retain Blackstone as a financial advisor to perform a virtually identical list of services presents significant, inherent conflicts. 2. The size of the fees sought by Blackstone and about pre- determining them at this early stage of PALCO's cases when it is unclear what value Blackstone will be able to add to the Debtors' efforts to reorganize. Hiring Blackstone as advisor for Scopac and for the PALCO Debtors is not a good idea because Blackstone would be compromised by the need to serve two masters with divergent interests, Henry J. Haim, Esq., at Bracewell & Giuliani LLP, in Houston, Texas, points out. Blackstone's hands will be tied by its conflicting duties almost whenever it is called to assist the Debtors' most pressing business issues, Mr. Haim adds. Furthermore, the pre-approval of the reasonableness of Blackstone's Success Fees prejudices LaSalle and other creditors from dissenting to its appropriateness in the future, Mr. Haim contends. Accordingly, LaSalle asks Judge Richard S. Schmidt to deny the Application or, at least make the payment of any Success Fees subject to Court approval at a subsequent hearing. Scopac's Request As reported in the Troubled Company Reporter on Mar. 13, 2007, the Court had granted, on an interim basis, authority to Scotia Pacific Company LLC to employ Blackstone Group as its financial advisor. 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. 7, http://bankrupt.com/newsstand/or 215/945-7000). PLATFORM LEARNING: Hires Fred Gunzel as Interim CFO --------------------------------------------------- Platform Learning Inc. obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Fred Gunzel at Tatum LLC, as its interim chief financial officer. The Debtor told the Court that Mr. Gunzel will remain as interim CFO for an initial term of six months starting on Dec. 11, 2006, and thereafter automatically renewable for 30-day periods. Fred Gunzel is expected to work with the Debtor's senior management team, board of directors and professionals, and oversee the Debtor's financial activities. Mr. Gunzel, managing partner of Tatum LLC, will bill the Debtor $20,000 per month. He is entitled to receive reimbursement for his current monthly medical coverage and other expenses. Tatum LLC, Mr. Gunzel's employer, will be paid $5,000 per month as resource fee. Mr. Gunzel assured the Court that he is a "disinterested person" as that term is defined is Section 101(14) of the Bankruptcy Code. Mr. Gunzel can be reached at: Fred Gunzel Tatum LLC 230 Park Avenue, 10th Floor New York, New York 10169 Tel: (201) 891-5931 http://www.tatumllc.com/ Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PLATFORM LEARNING: Hires Gotbaum as Chief Restructuring Officer --------------------------------------------------------------- Platform Learning Inc. obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Joshua Gotbaum as its chief restructuring officer. Mr. Gotbaum is expected to: a) review the Debtor's operations, finances, systems and other aspects of its business; b) recommend changes or improvements to the business and implement those changes as appropriate, subject to input from the Board of Directors; c) meet the with the Debtor's clients, employees, suppliers, lenders, creditors and others with an interest in the Debtor's business; d) oversee and manage the Debtor's Chapter 11 reorganization process, particularly with respect to the development and negotiation of Chapter 11 plan of reorganization; and e) perform other duties as requested by the Board. The Debtor will pay Mr. Gotbaum $1,000 per week for his work, plus reimbursement for coach-level travel and other valid expenses. Additionally, Mr. Gotbuam will submit to the Court quarterly reports for compensation earned. To the best of the Debtor's knowledge Mr. Gotbaum does not hold any interest adverse to the Debtor's estates or creditors. Based in Broad Street, New York, Platform Learning Inc. -- http://www.platformlearning.com/-- provides supplemental educational services through its Learn-to-Succeed tutoring program to students attending public schools. The Company filed for chapter 11 protection on June 21, 2006 (Bankr. S.D.N.Y. Case No. 06-11391). David M. Bass, Esq., and Eric W. Sleeper, Esq., at Herrick Feinstein LLP represent the Debtor in its restructuring efforts. Edward Joseph LoBello, Esq., at Blank Rome LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $21,026,148, and total debts of $36,933,490. PLY GEM: S&P Rates $768 Million Senior Secured Bank Loan at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior secured bank loan and '1' recovery ratings to the $768.5 million amended and restated first-lien credit facilities of Ply Gem Industries Inc. based on preliminary terms and conditions. The proposed financing consists of a $688.5 million term loan and an $80 million revolving credit facility. The first-lien facilities are rated one notch higher than the corporate credit rating on PGI. The '1' recovery rating indicates the expectation of full recovery of principal in the event of a payment default. Proceeds will be used to repay the $583.5 million outstanding under the existing first-lien term loan and to fully repay the $105 million second-lien term loan. Standard & Poor's will withdraw the ratings on the previous facilities upon completion of the proposed transaction. "In assessing downside risk, we believe that long, sharp drops in housing starts and in repair and remodeling activity, margin compression, or increased competition could cause a default," said Standard & Poor's credit analyst Pamela Rice. "We believe there would continue to be a viable business model driven by the company's solid positions in the vinyl siding and window markets. Therefore, we believe that lenders would achieve the greatest recovery value through reorganization of the company rather than liquidation." Ratings List: * Ply Gem Industries Inc. -- Corporate Credit Rating, B/Stable/-- Ratings Assigned: -- $688.5 million Senior securedterm loan, B+, Recovery rating: 1 -- $80 million revolving credit facility, B+, Recovery ratiung: 1 PORTRAIT CORP: Has Until May 28 to Remove Civil Actions ------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York gave Portrait Corporation of America Inc. and its debtor- affiliates until the earlier of plan confirmation and May 28, 2007, to remove prepetition civil actions. The Debtors are currently party to numerous State Court Actions. The Debtors pointed out that this is simply not the time for them to be reviewing state court litigations for purposes of removal. The Debtors recently filed their proposed plan of reorganization and an accompanying disclosure statement with the Court. The Debtors want to obtain Court approval of their plan by the end of April 2007. Before that, the Debtors must obtain Court approval of their disclosure statement; prepare for the voting and claims resolution processes; and obtain exit financing necessary to consummate the Plan. The Debtors say they need more time to make fully informed decisions concerning removal of the State Court Actions. Portrait Corporation of America, Inc. -- http://pcaintl.com/-- provides professional portrait photography products and services in North America. The Company operates portrait studios within Wal-Mart stores and Supercenters in the United States, Canada, Mexico, Germany and the United Kingdom. The Company also operates a modular traveling business providing portrait photography services in additional retail locations and to church congregations and other institutions. Portrait Corporation and its debtor-affiliates filed for Chapter 11 protection on Aug. 31, 2006 (Bankr S.D. N.Y. Case No. 06-22541). John H. Bae, Esq., at Cadwalader Wickersham & Taft LLP, represents the Debtors in their restructuring efforts. Berenson & Company LLC serves as the Debtors' financial advisor and investment banker. Kristopher M. Hansen, Esq., at Stroock & Stroock & Lavan LLP represents the Official Committee of Unsecured Creditors. Peter J. Solomon Company serves as financial advisor for the Committee. At June 30, 2006, the Debtor had total assets of $153,205,000 and liabilities of $372,124,000. The Debtors' submitted a Joint Chapter 11 Plan of Reorganization and Disclosure Statement explaining that Plan on Jan. 31, 2007. POST PROPERTIES: Good Performance Cues Moody's Positive Outlook --------------------------------------------------------------- Moody's Investors Service raised the outlook for the Baa3 senior unsecured and Ba1 preferred stock ratings of Post Properties, Inc. and Post Apartment Homes, LP to positive, from stable. The rating agency cited improvement in the REIT's credit metrics and improved diversification in its apartment portfolio. Post has made meaningful progress in addressing key challenges highlighted by Moody's, most notable of which have been the reduction in leverage, improvement in coverage, and lower exposure to Atlanta. Effective leverage has been reduced to 42% of gross assets at year end 2006 from 50% in 2003, and fixed charge coverage is above 2.4x, significantly better than 1.7x in 2003. As well, Moody's acknowledges that growth prospects for Atlanta remain among the highest in the nation; however, the metro area has experienced excess supply issues in the past, and the company had generated over 60% of its net operating income from the city as recently as 2003. Post is poised to lower the Atlanta NOI contribution to below 40%, a level from which Moody's takes meaningfully more comfort. Finally, Moody's also notes the REIT's progress in lowering secured debt to less than 14% at year end 2006 from over 19% in 2003; Moody's expects further improvement in the near term. Moody's would upgrade Post's ratings should the REIT successfully reduce its exposure to Atlanta to below 40% of NOI while maintaining effective leverage below 45% of gross assets and fixed charge coverage greater than 2.4x. Conversely, if Post Properties fails to uphold or improve upon the progress it has made in any of these areas, Moody's will likely return the outlook to stable without raising the REIT's ratings. An increase in secured debt relative to gross assets above 15% would also likely stabilize the rating at the Baa3 level. The outlook was revised to positive from stable for these ratings: * Post Properties, Inc. -- Ba1 preferred stock; and -- Ba1 preferred shelf * Post Apartment Homes, LP -- Baa3 senior unsecured; and -- Baa3 senior unsecured shelf In its most recent rating action with respect to Post, Moody's lowered the REIT's senior debt to Baa3 from Baa2 and changed the outlook to stable in July 2003. Post Properties, Inc is a multifamily REIT headquartered in Atlanta, Georgia, USA and has operations in nine markets across the country. Post Properties owns 21,745 apartment homes in 61 communities. The company focuses on developing and managing garden and high density urban apartments. In addition, the Post Properties develops condominiums and converts existing apartments to for-sale multifamily communities. PRIDE INTERNATIONAL: Earns $68.9 Million in Quarter Ended Dec. 31 ----------------------------------------------------------------- Pride International Inc. reported net income of $68.9 million on revenues of $669.2 million for the fourth quarter ended Dec. 31, 2006. Net income increased 70% compared to net income of $40.6 million reported for the fourth quarter of 2005, while revenues rose 21% compared to revenues of $551 million during the fourth quarter of 2005. Results for the fourth quarter included expenses of $14.4 million resulting from the early termination of certain existing agency relationships associated with five of the company's semisubmersible rigs in Brazil; $4.9 million relating to the Audit Committee's ongoing investigation; and $3.9 million resulting from the impairment of two platform rigs in the company's Offshore segment and three workover rigs in its Latin America Land segment. In November 2006, the company announced the acquisition of its partner's interest in the joint venture companies that owned the two dynamically positioned, deepwater semisubmersible rigs Pride Rio de Janeiro and Pride Portland, increasing the company's ownership in the two units from 30% to 100%. As a result of the transaction, revenues for the fourth quarter increased by $8 million related to the amortization of deferred credits associated with contracts acquired. Operating costs declined by $7.8 million due to the elimination of lease payments on the two rigs. Depreciation expense increased $5 million, and interest expense increased by $2 million, due primarily to the addition of $284.1 million of joint venture debt to the company's balance sheet. For the year ended Dec. 31, 2006, net income totaled $296.5 million on revenues of $2.495 billion, compared to net income of $128.6 million on revenues of $2.033 billion in 2005. At Dec. 31, 2006, the company's balance sheet showed $5.097 billion in total assets, $2.435 billion in total liabilities, $28.3 million in minority interest, and $2.633 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b40 Louis A. Raspino, President and Chief Executive Officer of Pride International Inc., stated, "The company achieved record financial results in 2006 as a result of improving fleet dayrates and activity. These financial results were accomplished despite an active rig maintenance and upgrade schedule that included 10 rigs entering shipyards in 2006 combined with a moderating U.S. Gulf of Mexico jackup dayrate environment. The offshore drilling industry continues to experience strong customer demand in most offshore drilling regions, producing exceptional contracting opportunities for our floating rig fleet. The company concluded 2006 with a record revenue backlog of approximately $5.7 billion, providing an excellent foundation for cash flow growth in 2007 and beyond. In addition, 2006 will be remembered for the company's excellent safety performance, which was the best in its history and followed record safety performance in 2005." Raspino added, "With the completion of the Brazilian joint venture acquisition in November 2006, combined with the acquisition of our partner's joint venture interest in Angola in late 2005, the company has made an aggregate investment of approximately $700 million in technically advanced deepwater assets. These investments, combined with the January 2007 appointment of an executive team capable of leading our Latin America Land and E&P Services segments on a standalone basis, and the continued sale of non-strategic assets, which totals approximately $250 million since late 2004, is evidence of the company's continued progress toward a strategic focus on offshore drilling with a greater exposure to the high-specification floater segment. During 2007, we will intensify our efforts regarding the pursuit of other value-adding growth opportunities." For the 12 months ended Dec. 31, 2006, cash flow from operations totaled $611.7 million, up from $321.9 million in 2005. The company reported total debt at Dec. 31, 2006 of $1.386 billion, representing a $319.5 million increase from total debt at Sept. 30, 2006. The increase in total debt during the quarter related to the acquisition of the Brazilian joint venture, including net borrowings of $50 million under the revolving credit facility to fund the purchase and the consolidation of $284 million of joint venture debt. Capital expenditures during the fourth quarter ended Dec. 31, 2006, were $130 million, resulting in total capital expenditures for the year of $356 million compared to capital expenditures of $157 million for 2005. About Pride International Headquartered in Houston, Texas, Pride International Inc. (NYSE: PDE) -- http://www.prideinternational.com/-- provides onshore and offshore contract drilling and related services in more than 25 countries, operating a diverse fleet of 277 rigs, including two ultra-deepwater drillships, 12 semisubmersible rigs, 28 jackups, 16 tender-assisted, barge and platform rigs, and 214 land rigs. * * * As reported in the Troubled Company Reporter on Oct. 5, 2006, Moody's Investors Service affirmed its Ba1 Corporate Family Rating for Pride International Inc. RADIANT ENERGY: Further Delays Filing of 2006 Report to March 17 ---------------------------------------------------------------- Radiant Energy Corp. moved its expected filing date of the company's annual financial statements for the year ended Oct. 31, 2006, from March 9, 2007, as previously reported, to on or before March 17, 2007. The company has informed the Ontario Securities Commission that it cannot timely file its financial report for the year 2006 that was due for filing on Feb. 28, 2007. The Commission has issued a Management and Insider Cease Trade Order, prohibiting the trading of the company's securities by its senior officers, directors, insiders, and significant shareholders. The order will be lifted once the company files the required year-end financial statements. About Radiant Energy Based in Port Colborne, Ontario, Radiant Energy Corp. (TSX: RDT) -- http://www.radiantenergycorp.com/-- through its wholly owned subsidiary Radiant Aviation Services developed and sells the only infrared alternative to traditional glycol-based aircraft deicing. Its fully patented InfraTek(R) systems are approved for use by the FAA. Before the introduction of InfraTek, spraying with glycol was the only feasible method to satisfy FAA safety guidelines for ensuring that aircraft are properly deiced before take-off. At July 31, 2006, the company's balance sheet showed a stockholders' deficit of $12,093,699, as compared with a deficit of $11,269,492 at Oct. 31, 2005. REFCO INC: RCM Trustee Objects to 18 Claims Totaling $240 Million ----------------------------------------------------------------- Mark S. Kirschner, the duly appointed Plan Administrator and Chapter 11 trustee for Refco Capital Markets, Ltd.'s estate, ask the U.S. Bankruptcy Court for the Southern District of New York to rule on 18 invalid proof of claims aggregating approximately $240,000,000. The Subject Claims are: Claimant Claim No. Claim Amount -------- -------- ------------ Carlos Fradique 11400 $5,524,340 Corporex Investment, LLC 10077 33,223 Dante Canonica 9934 179,540 9935 350,610 Geshoa Structured Finance Ltd. 11443 9,560,708 14177 10,134,755 Jose Maria Gregorio 11019 17,070 Markwood Investments Ltd. 12260 144,206,978 Minglewood Investments, LLC 1679 2,796,619 PM Petromanagement Limited 9879 669,200 Quercus Investments Ltd. 9933 5,277,684 Reserve Invest (Cyprus) Ltd. 11392 14,199,476 Rocky Systems Corp. 9923 486,271 RR Investment Company Ltd. 11837 42,565,793 Swix Currency Fund Limited 9938 2,473,118 Vedat Barha 9943 1,030,168 Vipasa Int'l. Investments Corp. 10134 - Armand Marquis 1368 - Specifically, the RCM Administrator asserts that: (a) the Marquis Claim should be disallowed because it does not hold any liability owing to RCM or any of the other Debtors; (b) the Fradique Claim, which was based on the claimant's foreign exchange account as of the Petition Date; and the Corporex Claim, which arose from an account containing digital options, should be classified as RCM FX/Unsecured Claims instead of being RCM Securities Customer Claims pursuant to the Debtors' Chapter 11 Plan; (c) seven claims filed by PM Petromanagement, Mr. Canonica, Quercus Investments, Rocky Systems, Swix Currency, and Vedat Barha -- the FX customers who attempted to buy U.S. Treasury Bills with their FX account proceeds after the RCM Petition Date, should be reclassified as RCM FX/Unsecured Claims since their requested T-Bill purchases were not consummated as of the Petition Date; (d) Geshoa's Claim No. 14177 is inconsistent with RCM's books and records, while its Claim No. 11443 should be disallowed and expunged because it is duplicative to Claim No. 14177; (e) the Gregorio Claim, which is alleged to be funds wrongly transferred to an RCM account before the Petition Date, has an inappropriate value and should be treated as an RCM FX unsecured Claim; (f) the Markwood Claim should be disallowed because it is inconsistent with RCM's books and records; (h) three claims filed by Minglewood, RIC, and RR Investment are inconsistent with RCM's books and records, and, thus should be disallowed; and (i) the Vipasa Claim, which was filed in respect of a securities account with a negative balance, was not amended, and thus should be disallowed and expunged in its entirety. Moreover, the RCM Administrator seeks a scheduling order governing certain procedures to resolve the Subject Claims. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2007. (Refco Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REFCO INC: RCM Trustee Objects to Carlos Sevilleja's $4.2MM Claim ----------------------------------------------------------------- Marc S. Kirschner, as the duly appointed administrator and Chapter 11 Trustee of Refco Capital Markets, Ltd.'s estate, asks the Court to disallow and expunge Claim 10136 filed by Carlos Sevilleja asserting not less than $4,235,972 in connection with Mr. Sevilleja's account at RCM. Tina L. Brozman, Esq., at Bingham McCutchen LLP, in New York, relates that before Refco Inc. and its debtor-affiliates' bankruptcy filing, Mr. Sevilleja and RCM entered into a master agreement and executed various transactions in the Account, which left RCM owing $4,235,972 to Mr. Sevilleja. Within 90 days before its bankruptcy filing, RCM separately transferred an aggregate of $105,000,000 from the Account to Mr. Sevilleja. Subsequently, the RCM Trustee filed a complaint against Mr. Sevilleja to recover the Preferential Transfers. Mr. Sevilleja also filed its claim as a result of the Transactions under the Agreement. Under Section 547(b) of the Bankruptcy Code, Ms. Brozman notes that the RCM Trustee may avoid the Preferential Transfers because Mr. Sevilleja was a creditor of RCM at all times. Ms. Brozman adds that the Preferential Transfers: (i) were made for the benefit of Mr. Sevilleja on account of a previous debt owed by RCM before the Preferential Transfers were made; (ii) were made while RCM was insolvent; (iii) were made within 90 days before the Petition Date; and (iv) enabled Mr. Sevilleja to receive more than he would have received if (x) the Preferential Transfers had not been made, (y) the case was a Chapter 7 case, and (z) he had received payment of the debt provided by the Bankruptcy Code. Ms. Brozman further contends that under Section 550, the RCM Trustee may recover the Preferential Transfers, including interest and costs since (i) they are avoidable under Section 547, and (ii) Mr. Sevilleja is the initial transferee of the Preferential Transfers, or the immediate transferee of that initial transferee. Ms. Brozman insists that the Claim should be disallowed because Mr. Sevilleja has not paid the amount of the Preferential Transfers, or turned over any property, to RCM. About Refco Inc. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2007. (Refco Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REJ PROPERTIES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: REJ Properties, Inc. 3156 East Patrick Lane, Suite 1 Las Vegas, NV 89120 Bankruptcy Case No.: 07-11280 Type of Business: The Debtor filed for chapter 11 protection on Sept. 7, 2005 (Bankr. N.D. Calif. Case No. 05- 45050). Chapter 11 Petition Date: March 12, 2007 Court: District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Elis R. Aldecoa, Esq. Brian R. Davis, Esq. Hayes Davis Ellingson McLay Scott, LLP 203 Redwood Shores Parkway, Suite 480 Redwood City, CA 94065 Tel: (650) 637-9100 Fax: (650) 637-8071 Total Assets: $19,200,00 Total Debts: $5,300,00 The Debtor did not file a list of its 20 largest unsecured creditors. SANDRIDGE ENERGY: Moody's Rates $1 Billion Senior Loan at B3 ------------------------------------------------------------ Moody's Investors Service assigned a B2 corporate family rating to SandRidge Energy, Inc. Under the Loss Given Default methodology, Moody's assigned a B3, LGD4, 63% to its $1 billion senior unsecured term loan, which includes a $650 million 8-year fixed rate and $350 million 7-year floating rate tranche. SD can defer cash interest for 4 years under the fixed rate tranche. If, by April 30, 2008, SD does not offer to exchange the term loan for a 144A senior unsecured note with registration rights, the loan spread begins rising by up to 50 basis points. The rating outlook is stable. With extremely high leverage on productive reserves, a negative outlook is possible: * if production or cash flow weaken for 2 to 3 consecutive quarters; * if SD's drilling program cannot grow production considerably at competitive full-cycle costs; or * leverage rises on reserves and production. Depending on the degree to which its credit has firmed, SD's planned late 2007 IPO may be central to its ratings. Moody's exploration and production methodology maps SD to a B3 corporate family rating, one notch below the assigned corporate family rating. The B2 rating gains uplift from: * notably deep junior capital backing from SD's CEO and strong equity sponsors; * the CEO's capital and reputational commitment to SD's success; * a strong management and technical team track record; * SD's scale and visible history, though at far lower levels of drilling activity than planned; * third party engineering on 99% of reserves, including 400 proven undeveloped locations; and * the added governance of seasoned equity sponsors, augmenting SD's own capital discipline as it mounts a drilling surge. The core credit issue is the scale and productivity of drilling activity that SD can mount and sustain at its core remote Pinon Field in the West Texas Overthrust play. It will need to substantially boost production relative to debt and heavy staffing costs and establish that its drilling inventory can generate sustained growth at competitive production and finding and development costs. Pinon is geologically highly complex and still comparatively new to the new SD team. SD posted competitive Pinon results while running 7 rigs though time will reveal if Pinon has ample high quality drilling locations to sustain the pending 22 rig program. Results within its 400 Pinon PUD locations will be core to 2007 and 2008 performance and Moody's will begin to see emerging productivity patterns from SD's Pinon/WTO probable and possible locations. The drilling ramp-up in highly complex geology precedes a large 3D seismic program SD will acquire over the next 3 years. However, SD believes that it has a fairly confidence level of the subsurface from well control data garnered a total of 275 wells drilled and produced by the sector. SD's ratings are restrained by extremely high leverage on funded PD reserve volumes, production and cash flow, and total proven reserve volumes (debt plus FAS 69 capex divided by total reserves). SD has a proportionally very small foundation of PD reserves. Book debt is $1.1 billion and adjusted debt is $1.490 billion after applying a 75% debt weighting to preferred stock. Cash flow after capital spending will be negative well into 2008. Unit economics and surface infrastructure needs are also impacted by the very high CO2 content of one of its key Pinon producing zones. The ratings anticipate acquisitions if the Pinon ramp up is insufficiently productive. The ratings are further supported by: * the visible record of the NEG and SD properties at current rig activity; * SD's ownership of rigs enhances its control over rig availability; * SD's productive presence in other well established regions; and * possible incremental support from Mr. Ward or SD's other sponsors if incremental funds are needed during temporary under performance. Additionally, the WTO area appears to have historically been under-exploited. SD also operates an average of 95% of its WTO properties and it benefits by controlling its own rig fleet and other midstream activity in the WTO area. Together with approximately $300 million of new private equity proceeds, term loan proceeds will: * repay $200 million of senior secured revolver debt, * refinance an $850 million senior unsecured bridge loan incurred when SD acquired NEG Oil & Gas LLC, and * pre-fund a portion of the $693 million 2007 capital program. The pro-forma capital structure includes: * $625 million of common equity * $448 million of convertible preferred stock * the $1 billion term loan * $62 million of secured debt backing rig acquisitions and construction. SD currently has no borrowings under its $300 million secured borrowing base revolver. The revolver is documented for $700 million and the term loan grants a secured debt carve out of the greater of $700 million or 30% of consolidated net tangible assets. CEO Tom Ward invested $560 million of common and $55 million of preferred equity in SD. Mr. Carl Icahn retains a $244 million common equity stake through American Real Estate Partners' as partial compensation for NEG. Ares Management, L.P. has signed to invest approximately $200 million of private common equity. Other well known private capital groups have invested in SD's convertible preferred shares. Netherland & Sewell and DeGoyler and McNaughton engineered approximately 99% of SD's proven reserves. SD estimates 167 mmboe of year-end 2006 proven reserves. A very low 32% is proven developed producing, 6% is proven developed non-producing, and a resulting very low 38%, or 62.4 mmboe, is PD reserves. Total reserves map to a low Ba rating while PD's map to a single B. Approximately 10 mmboe per year of production is modest, mapping to a low single B. Moody's estimates a PD reserve life of 6.2 years. Moody's assesses diversification as low. Production averaged 23,333 boe/day (140 mcfe/day) from January 1 to March 4, 2007, hurt by a 40 day shut-in of GOM production and a 28 day shut-in of 50% of Gulf Coast production due to pipeline incidents. Production is averaging 27,667 boe/day (166 mcfe/day) after pipeline repairs and 10 new WTO well completions. Average pro-forma fourth quarter 2006 production was 26,178 boe/day, exiting 2006 at 26,667 boe/day. SD's leverage on PD reserves and on total proven maps to a low Caa rating. Leverage on retained cash flow after sustaining capital spending is in the B/Caa range. SD's preferred stock-adjusted leverage on PD reserves of $23.89/PD boe and leverage excluding preferred stock is approximately $18/PD boe, both at the highest end of Moody's rated E&P universe. Leverage on total proven reserves (debt plus FAS 69 future development costs, divided by proven reserves) is also high at approximately $14.29/boe, mapping to the Caa category. Preferred stock adjusted leverage on production is a very high $55,890/boe of production. Regarding reinvestment risk, for year-end 2006, SD posted 3-year all sources reserve replacement costs of roughly $13/boe and 3-year drillbit finding and development costs of $6.30/boe. One year all sources reserve replacement costs are somewhat over $15/boe. Three-year all sources replacement costs map to a B rating. While all-sources results reflect the up-cycle NEG acquisition, that result is muted by NEG's high content of low value PUD reserves needing heavy drilling and development outlays to bring to production. Drillbit finding and development costs will likely rise as SD drills and develops booked PUD reserves. SD will also be funding significant surface infrastructure costs. SD's pro-forma total unit full cycle costs are temporarily exceptionally high due to high front-end costs for a major staffing ramp-up and very high unit interest expense and preferred dividends. Roughly $50/boe of fourth quarter 2006 full-cycle costs map below the Caa rating range, versus a $40/boe realized price on production. However, these costs include temporarily very high G&A, up sharply from $6/boe in 2005 and which SD believes will approach $5/boe by year-end 2007. Very high unit interest and dividend expense of roughly $13/boe would fall to the extent production grows. Unit production costs are estimated to be somewhat over $10/boe, high for a mostly natural gas producer but partly due to the higher production CO2 flood activity of PetroSource. SandRidge Energy, Inc. is headquartered in Oklahoma City, Oklahoma. SCOTTISH RE: Ernst & Young Raises Going Concern Doubt ----------------------------------------------------- Ernst & Young LLP, in Charlotte, North Carolina, expressed substantial doubt about Scottish Re Group Limited's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's net loss for the year ended Dec. 31, 2006, retained deficit at Dec. 31, 2006, deteriorating financial performance, and worsening liquidity and collateral position. Scottish Re Group Limited reported a net loss of $231.6 million for the fourth quarter ended Dec. 31, 2006, compared with net income of $60.8 million for the prior year period. For 2006, the company reported a net loss of $366.7 million, compared with net income of $130.2 million for the prior year. "We are disappointed with the results for the quarter, but are pleased with our ability to maintain our business throughout this very difficult period. Although the consequences of the rating downgrades have continued to impact our operating results, we are confident that the proposed transaction with MassMutual Capital and Cerberus will significantly improve our financial situation and stabilize the company as we move into the second quarter of 2007," said Paul Goldean, Chief Executive Officer of Scottish Re Group Limited. The net operating loss for the fourth quarter was primarily attributable to these factors: -- 5% higher than expected mortality in the North America segment of approximately $11 million; -- Unfavorable lapse experience in the North America segment of approximately $14 million; -- The reversal of an expected recovery from a specific client of approximately $15 million due to corrected data from the client; -- The write-off of goodwill and unrecoverable deferred acquisition costs of approximately $34 million and $12 million, respectively, related to the International segment; -- Tax expense of $118.2 million principally related to a $91 million valuation allowance established on deferred tax assets. The valuation allowance resulted from a specific tax planning strategy no longer being available to the company. The other components of the higher tax expense primarily related to valuation allowance movements on deferred tax assets based on actual results of legal entity statutory income and movements in statutory reserves for the period; and -- Higher operating expenses of approximately $14 million, including legal, directors' fees and the relocation of the company's offices from Windsor to London, plus higher collateral finance facility and interest costs as a result of the rating downgrades and liquidity situation of approximately $8 million. Total revenues for the quarter ended Dec. 31, 2006, decreased to $668.2 million from $675 million for the prior year period, a decrease of 1%. Excluding realized gains and losses and the change in value of the embedded derivatives, total revenues for the quarter increased to $675.5 million from $666 million for the prior year period, an increase of 1.4%. Total revenues for the year ended Dec. 31, 2006, increased to $2.451 billion from $2.297 billion for the prior year, an increase of 6.7%. Excluding realized gains and losses and the change in value of the embedded derivatives, total revenues for the year ended Dec. 31, 2006, increased to $2.473 billion from $2.302 billion for the prior year, an increase of 7.4%. Total benefits and expenses increased to $783 million for the fourth quarter ended Dec. 31, 2006, from $615.8 million for the prior year period, an increase of 27.2%. Total benefits and expenses increased to $2.598 billion for the year ended Dec. 31, 2006, from $2.183 billion for the prior year, an increase of 19%. The company's operating expense ratio (which is the ratio of operating expenses to total revenue excluding realized gains and losses and the change in value of embedded derivatives) for 2006 was 6.2%, as compared to an operating expense ratio of 5 for the prior year. For the fourth quarter, the company had a pre-tax loss of $114.8 million before minority interest as compared to a pre-tax profit of $59.2 million for the prior year period. Income tax expense for the fourth quarter was $118.2 million compared to an income tax benefit of $1.2 million in the same year period. For 2006, the company had a pre-tax loss of $147.5 million before minority interest as compared to a pre-tax profit before minority interest of $113.6 million for the prior year. Income tax expense for 2006 was $220.6 million compared to an income tax benefit of $16.4 million in the prior year. The change in effective tax rate in the fourth quarter compared to the prior year is primarily related to valuation allowance movements on deferred tax assets. At Dec. 31, 2006, the company's balance sheet showed $13.436 billion in total assets, $12.227 billion in total liabilities, $7.9 million in minority interest, $143.7 million in Mezzanine Equity, and $1.057 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b43 MassMutual Merger On Nov. 26, 2006, the company entered into a Securities Purchase Agreement with MassMutual Capital Partners LLC, a member of the MassMutual Financial Group, and SRGL Acquisition, LLC, an affiliate of Cerberus Capital Management, L.P. whereby, subject to the terms and conditions set forth in the Securities Purchase Agreement, the Investors will each purchase 500,000 of the company's convertible cumulative participating preferred shares, which will be newly issued, and which shares may be converted into an aggregate of 150,000,000 ordinary shares, subject to certain adjustments, if any, at any time and will automatically convert on the ninth anniversary of the issue date if not previously converted. About Scottish Re Scottish Re Group Ltd. -- http://www.scottishre.com/-- is a global life reinsurance company. Scottish Re has operating businesses in Bermuda, Grand Cayman, Guernsey, Ireland, Singapore, the United Kingdom and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re (U.S.) Inc. and Scottish Re Limited. SELECT MEDICAL: Add-on Cues S&P to Affirm B Bank Loan Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on specialty hospital operator Select Medical Corp. (B/Negative/--). The affirmation follows the company's increase in the size of its senior secured term loan B by $100 million, to $670 million and includes the 'B+' bank loan rating and '1' recovery rating on the loan. The recovery rating indicates the expectation for full recovery of principal in the event of a payment default. Select will use the proceeds of this loan, along with a $146 million draw from its revolving credit facility to finance the $245 million acquisition of the outpatient rehabilitation business from HealthSouth Corp. Pro forma for the transaction, total debt, including its holding company notes, will be approximately $1.8 billion. "The negative outlook," said Standard & Poor's credit analyst David P Pecknay, "reflects the potential for a lower rating if Select is unable to soften the consequences of eroding earnings and if its hospital transition plan falls short of expectations with regard to the LTACH regulatory change for hospital-within-a- hospital facilities." SIERRA HEALTH: Earns $140.4 Million in Year Ended December 31 ------------------------------------------------------------- Sierra Health Services, Inc. had net income of $140.47 million for the year ended Dec. 31, 2006, as compared with a net income of $120.01 million for a year earlier. Total operating revenues were $1.71 billion in 2006, versus $1.38 billion in 2005. The company listed $809.41 million in total assets and $592.7 million in total liabilities, resulting to $216.71 million in total stockholders' equity. It reported cash and cash equivalents of $58.91 million as of Dec. 31, 2006, as compared with $88.05 million as of Dec. 31, 2005. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b26 Sierra Share Repurchase Program From Jan. 1, 2006 through Dec. 31, 2006, the company purchased 6.6 million shares of its common stock, in the open market or through negotiated transactions, for $243.1 million at an average cost per share of $36.98. Since the repurchase program began in early 2003 and through Dec. 31, 2006, the company purchased, in the open market or through negotiated transactions, 28.7 million shares for $630.8 million at an average cost per share of $22.01. Contractual Obligations The company's long-term debt consists of 2-1/4% senior convertible debentures issued in March 2003 and a credit facility. The company also occupies premises and utilizes equipment under operating leases that expire at various dates through 2016. Its total contractual obligations as of Dec. 31, 2006, were $298.57 million. The company also has a $3.4 million long-term liability for transition services related to its sale of CII Financial, Inc. that the company is required to provide through Dec. 31, 2009. About Sierra Health Services, Inc. Headquartered in Las Vegas, Nevada, Sierra Health Services, Inc. (NYSE: SIE) -- http://www.sierrahealth.com/-- is a diversified health care services company that operates health maintenance organizations, indemnity insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. * * * As reported in the Troubled Company Reported on March 14, 2007, Standard & Poor's Ratings Services placed its 'BB+' counterparty credit rating on Sierra Health Services Inc. on CreditWatch with positive implications. SIERRA HEALTH: May Incur Losses in 2007 Due to Product Offering --------------------------------------------------------------- Sierra Health Services, Inc. expects to incur a loss in its 2007 fiscal year from the enhanced version of its Medicare Part D Prescription Drug Program product offering. Based on its claims experience for the month of January, Sierra expects pharmacy costs on this product to be higher than previously projected. For the month of January, the only month for which full claims data is currently available, the Company has incurred pre-tax losses of approximately $3 million, or $2 million after tax, from the enhanced product. After completing discussions with the Centers for Medicare and Medicaid Services and analyzing data, including additional claims history, Sierra expects to develop a best estimate of the losses associated with the enhanced product and record a premium deficiency reserve in the first quarter, for the entire 2007 period. This best estimate is expected to be developed within the next 45 to 60 days. The company's earnings per share guidance for 2007 did not include a contribution from the enhanced PDP product. Sierra remains comfortable with its original guidance of $2.30 to $2.40 per diluted share, excluding the expected impact of losses for this enhanced product. In January, Sierra began offering an enhanced version of its PDP, which provides prescription drug benefits through the coverage gap or "donut hole." As of Jan. 31, 2007, approximately 42,000 beneficiaries have enrolled in this product. The company continues to offer a basic Medicare PDP product, similar to its 2006 offering, which does not provide prescription drug benefits through the coverage gap. As of Jan. 31, 2007, approximately 163,000 beneficiaries are enrolled in the basic product. The basic product is expected to generate pre-tax income of approximately $11 million to $14 million for the year 2007. Sierra's bid proposal for its enhanced PDP product was based upon independent actuarial assumptions of membership characteristics and expected drug utilization. Claims experience for the month of January indicates an unanticipated level of adverse risk selection beyond that which was anticipated in the bid proposal. Sierra is currently pursuing various strategies to mitigate these expected losses and will work closely with CMS in their implementation. Sierra offers its stand-alone PDP in 30 states and the District of Columbia through its subsidiary, Sierra Health and Life Insurance Company, Inc. About Sierra Health Services, Inc. Headquartered in Las Vegas, Nevada, Sierra Health Services, Inc. (NYSE: SIE) -- http://www.sierrahealth.com/-- is a diversified health care services company that operates health maintenance organizations, indemnity insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. * * * As reported in the Troubled Company Reported on March 14, 2007, Standard & Poor's Ratings Services placed its 'BB+' counterparty credit rating on Sierra Health Services Inc. on CreditWatch with positive implications. SIERRA HEALTH: Inks Indemnity Agreements with Directors & Officers ------------------------------------------------------------------ Sierra Health Services, Inc., disclosed that it entered into separate Indemnity Agreements with each of its directors and with a number of its officers and its subsidiaries' officers. Each of the Indemnity Agreements, which contain identical provisions, provides, subject to specified exceptions, that the company will indemnify the other party to the Indemnity Agreement to the fullest extent permitted by Nevada law and the articles of incorporation and bylaws of the Company in proceedings commenced by third parties, in derivative actions, and in situations where the other party is a witness or threatened to be made a witness. Each Indemnity Agreement also provides for contribution in situations where indemnification is not available, and contains provisions regarding advancement of expenses and the company's obligation, subject to specified qualifications, to maintain directors' and officers' liability insurance coverage. Among the corporate officers who have separate Indemnity Agreements with the company are: * Anthony M. Marlon, M.D., Chairman of the Board and Chief Executive Officer; * Jonathon W. Bunker, President and Chief Operating Officer; * Frank E. Collins, Senior Executive Vice President, Legal and Administration; * Donald J. Giancursio, Senior Vice President, Sales and Marketing; * Paul H. Palmer, Senior Vice President, Chief Financial Officer and Treasurer; * Darren G.D. Sivertsen, Senior Vice President, Operations; * Marc R. Briggs, Vice President, and Chief Accounting Officer; and * Lawrence S. Howard, Senior Vice President, Program Office. The directors, in addition to Dr. Marlon, who signed Indemnity Agreements with the company are: * Charles L. Ruthe, * Albert L. Greene, * Thomas Y. Hartley, * Michael E. Luce, and * Anthony L. Watson. Amendment to Bylaws The company's borad of directors, on March 11, 2007, adopted Amended and Restated Bylaws in which Sections 7.01 and 7.02 were amended to provide for indemnification of the company's directors, officers, employees and agents of the company to the maximum extent presently permitted under Nevada law. The changes to the Company's bylaws are consistent with the revisions to Nevada Revised Statutes Section 78.7502 adopted by the Nevada Legislature in 2001, and provide that the Company shall also indemnify its directors and officers if they are not liable pursuant to Nevada Revised Statutes Section 78.138. About Sierra Health Services, Inc. Headquartered in Las Vegas, Nevada, Sierra Health Services, Inc. (NYSE: SIE) -- http://www.sierrahealth.com/-- is a diversified health care services company that operates health maintenance organizations, indemnity insurers, military health programs, preferred provider organizations and multispecialty medical groups. Sierra's subsidiaries serve more than 1.2 million people through health benefit plans for employers, government programs and individuals. * * * As reported in the Troubled Company Reported on March 14, 2007, Standard & Poor's Ratings Services placed its 'BB+' counterparty credit rating on Sierra Health Services Inc. on CreditWatch with positive implications. SMURFIT-STONE: Subsidiary Plans to Issue $675 Million Senior Notes ------------------------------------------------------------------ Smurfit-Stone Container Corporation reported that its wholly owned subsidiary, Smurfit-Stone Container Enterprises, Inc., plans to issue up to $675 million of Senior Notes, maturing in 2017. The New Notes will be issued in a private placement to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and outside the United States in compliance with Regulation S under the Act. The net proceeds from the issuance of the New Notes, together with additional borrowings under SSCE's senior secured credit facility, will be used to repurchase all of SSCE's outstanding 93/4% Senior Notes due 2011. Headquartered in Chicago, Illinois, Smurfit-Stone Container Corporation (Nasdaq: SSCC) is a publicly traded holding company that operates through a wholly owned subsidiary company, Smurfit- Stone Container Enterprises Inc. The company is an integrated producer of containerboard and corrugated containers (paper-based industrial packaging) and is a large collector, marketer, and exporter of recycled fiber. Smurfit-Stone operates approximately 180 facilities throughout North America and employs approximately 25,200 people. * * * As reported in the Troubled Company Reporter on March 13, 2007, Dominion Bond Rating Service confirmed the Senior Unsecured Debt rating of Smurfit-Stone Container Corporation at B (high). The trend is Stable. SOLUTIA INC: Reports Status of Litigations as of Dec. 31, 2006 -------------------------------------------------------------- Solutia Inc. disclosed in its 2006 annual report on Form 10-K submitted to the U.S. Securities and Exchange Commission that due to the size and nature of its business, it is a party to numerous legal proceedings. (1) Anniston Partial Consent Decree On August 4, 2003, the United States District Court for the Northern District of Alabama approved a partial consent decree in the action United States of America v. Pharmacia Corp. and Solutia. It provides for Pharmacia and Solutia to sample certain residential properties and their soils to check if PCBs are at a level of 1 part per million or above, to conduct a remedial investigation and feasibility study to provide information for the selection by the Environmental Protection Agency of a cleanup remedy for the Anniston, Alabama PCB site, and to pay EPA's past response costs and future oversight costs. The decree also provided for the creation of an educational trust fund of approximately $3,000,000 to be funded over a 12-year period to provide supplemental education services for children in west Anniston. The District Court issued an order on June 30, 2005, authorizing Solutia and Pharmacia to suspend clean up at the Anniston site under the Anniston Consent Decree. In July 2006, Solutia and Pharmacia reached an agreement with EPA that clarifies the extent of remaining obligations under the Anniston Consent Decree and the coordination of the work with the lead site clean-up being performed by others, and by which Solutia and Pharmacia will forego the opportunity to suspend their obligations under the Anniston Consent Decree pursuant to the June 30, 2005 order. Solutia and Pharmacia preserved their rights under the agreement to continue to argue that the contribution protection afforded certain other potentially responsible parties performing lead site cleanup should not be effective as to them. (2) Penndot Case Solutia provided a $20,000,000 letter of credit to secure a portion of Pharmacia's obligations with respect to an appeal bond issued in its case in the Commonwealth Court of Pennsylvania by the Commonwealth of Pennsylvania, seeking damages for PCB contamination in the Transportation and Safety Building in Harrisburg, Pennsylvania, that it claimed necessitated the demolition of the building. On May 25, 2006, the Supreme Court of Pennsylvania reversed in whole and remanded in part the trial court decision against Pharmacia. The letter of credit used to secure the appeal bond was released and Solutia recognized a gain in its consolidated statement of operations during the second quarter of 2006. (3) Flexsys-Related Litigations Antitrust authorities in the U.S., Europe and Canada are continuing to investigate past commercial practices in the rubber chemicals industry, including the practices of Flexsys, Solutia's joint venture with Akzo Nobel. The European Commission issued its findings from its investigation in 2005, without levying any fines against Flexsys. Investigations regarding the industry may still be on-going in the U.S. and Canada -- no findings have been made in either country yet. A number of purported civil class actions have been filed against Flexsys and other producer of rubber chemicals on behalf of indirect purchasers of rubber chemical products. All, except two pending cases, have been dismissed, or are currently subject to tentative settlements. (4) Cash Balance Plan Litigation Since October 2005, current or former participants in Solutia's employees' pension plan have filed three class actions alleging that the Pension Plan is discriminatory based upon age and that the lump sum values of individual account balances are miscalculated. None of the Debtors, and no individual or entity other than the Pension Plan, has been named as defendant in any of the cases. Two of the cases are still pending in the Southern District of Illinois against Monsanto and Monsanto Company Pension Plan and Pharmacia Cash Balance Pension Plan, Pharmacia, Pharmacia and Upjohn, Inc., and Pfizer Inc. On Sept. 4, 2006, a consolidated class action complaint was filed against the Pension Plan. Motions for class certification were filed in late 2006 against the each of the defendants. Briefing was completed in January 2007. The motion is still pending before the Court. (5) Dickerson V. Feldman On October 7, 2004, a purported class action styled Dickerson v. Feldman, et al., was filed in the U.S. District Court for the Southern District of New York against a number of defendants, including former officers and employees of Solutia and its Employee Benefits Plans Committee and Pension and Savings Funds Committee. The action alleged breach of fiduciary duty under Employee Retirement Income Security Act and sought to recover alleged losses to the Solutia Savings and Investment Plan during the period Dec. 16, 1998, to Oct. 7, 2004. On March 30, 2006, the District Court dismissed the action on grounds that the Dickerson parties lacked standing to sue and for failure to state a claim on which relief could be granted. On April 3, 2006, Dickerson filed an appeal in the U.S. Court of Appeals for the 2nd Circuit. Oral judgment was scheduled on Feb. 12, 2007. (6) Solutia Inc. v. FMC Corp. Solutia filed the suit Solutia v. FMC Corp. in Circuit Court in St. Louis County, Missouri, against FMC over the failure of purified phosphoric acid technology provided by FMC to Astaris, the 50/50 joint venture formed by both parties. Solutia dismissed the case and filed an adversary proceeding in the Bankruptcy Court on Feb. 20, 2004. On March 29, 2005, the New York District Court granted in part and denied in FMC's motion to dismiss. Solutia's causes of action for breaches of warranty and fiduciary duty, negligent misrepresentation, fraud and fraud in the inducement were not dismissed. The parties have completed all fact discovery and cross motions for summary judgment. The District Court ruled that Solutia may still be entitled to punitive damages in addition to its claims for out-of-pocket and lost profit damages. A bench trial is scheduled to begin on April 2007. (7) Ferro Antitrust Investigation Competition authorities in Belgium and several other European countries are investigating past commercial practices of certain companies engaged in the production and sale of butyl benzyl phthalates. The Belgian Competition Authority has Ferro Belgium sprl, a subsidiary of Ferro Corp., under investigation. Ferro's BBP European business was purchased from Solutia in 2000. Solutia was indemnified and has exercised its right, pursuant to the purchase agreement relating to Ferro's acquisition of the business. SESA, a European non-debtor subsidiary of Solutia, along with Ferro Belgium and two other BBP producers, was identified as a party under investigation with respect to its ownership of the business from 1997 to 2000. Solutia and SESA are fully cooperating with the BCA in its investigation. SESA will have an opportunity to submit comments to the BCA and at a subsequent oral hearing, which date has not yet been determined. (8) DOL Investigation of SIP Plan The Department of Labor informed Solutia in 2005, through the Benefits Security Administration, that it wanted to conduct an investigation on Solutia's SIP plan. Solutia fully cooperated with DOL throughout its investigation. On Dec. 6, 2006, DOL reported that it appeared Solutia, through its fiduciaries, breached its fiduciary obligations and violated provisions of ERISA with respect to the SIP Plan. DOL offered Solutia an opportunity to voluntary discuss how the alleged violations may be corrected. Solutia has submitted additional information to support its request for reconsideration of the DOL's findings. (9) Solutia Canada Inc. v. INEOS Americas LLC Solutia negotiated a stock and asset sale agreement for the sale of its Resimenes & Additives business to UCB S.A. in late 2002. Solutia agreed to exclude LaSalle assets and entered into the LaSalle toll agreement wherein Solutia Canada Inc., will operate the LaSalle Plant for the benefit of UCB. In return, UCB would pay Solutia Canada for all of its actual, direct and indirect costs incurred in connection with the services under the LTA. The LTA was eventually assigned by UCB to Cytec Industries, Inc., then to INEOS Americas LLC. On Jan. 31, 2006, INEOS notified Solutia Canada of its intention to terminate the LTA as of Jan. 31, 2008, in compliance with the terms of the LTA. Solutia Canada estimates the overall termination costs and shutdown of the LaSalle Plant to be CAD 31,000,000. INEOS has disputed the amount. Both parties were unable to resolve the issue. Solutia Canada filed in the Quebec Court in December 2006, a suit against INEOS for breach of contract. The case is pending. (10) TCEQ Administrative Enforcement Proceeding On Aug. 11, 2006, the executive director of the Texas Commission on Environmental Quality commenced an administrative enforcement proceeding against Solutia alleging certain violations of the State of Texas air quality program. The Executive Director requests that an administrative penalty amount be assessed and that Solutia undertake corrective actions. On Sept. 1, 2006, Solutia asserted affirmative defenses and requested a contested enforcement case hearing. No date has been set yet for a hearing. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SPECTRUM BRANDS: Poor Performance Cues S&P's Negative Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Atlanta, Georgia-based Spectrum Brands Inc. to negative from developing, and affirmed all of the company's existing ratings, including its 'CCC+' corporate credit rating. "The revised outlook is based on the company's continued very high debt leverage and weak liquidity, and follows the company's announced refinancing plans," said Standard & Poor's credit analyst Patrick Jeffrey. Spectrum Brands reported recently that it plans to commence an exchange offer and consent solicitation to refinance its $350 million 8.5% senior subordinated notes due 2013. In addition, the company plans to refinance its senior secured credit facility with a new $1.6 billion six-year bank facility. As a result, the company will rely on internally generated cash flow in the near term for operating liquidity until it obtains a new revolving credit facility. "This represents a significant near-term concern for the company's liquidity if it faces further operating challenges," added Mr. Jeffrey. However, the company expects to have about $100 million of available cash upon completion of the transaction to help fund its operations. The ratings on Spectrum Brands reflect the company's poor operating performance over the past year, very high leverage, marginal liquidity, and very aggressive acquisition history. SPORTSMAN'S LINK: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Sportsman's Link, Inc. 596 Bobby Jones Expressway, 21-A Augusta, GA 30907-5300 Tel: (706) 210-7283 Bankruptcy Case No.: 07-10454 Type of Business: The Debtor manufactures and markets fishing and hunting equipment, and firearms. Chapter 11 Petition Date: March 13, 2007 Court: Southern District of Georgia (Augusta) Debtor's Counsel: Scott J. Klosinski, Esq. Klosinski Overstreet, LLP Suite 7, George C. Wilson Court Augusta, GA 30909 Tel: (706) 863-2255 Fax: (706) 863-5885 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Southern Bank UCC Financing $800,000 2455 Highway 88 Statement P.O. Box 1587 Hephzibah, GA 30815 Henry's Tackle $451,998 P.O. Box 60990 Charlotte, NC 28260 Bill Hicks $271,022 15155 23rd Avenue North Minneapolis, MN 55447-4740 Pitman Creek $71,353 Shimano $48,474 Benelli $40,956 Rocky $40,295 G-Loomis $35,716 Richmond County Tax $33,772 Comissioner Pure Fishing $32,158 Davidsons $31,021 Trans-America Finance Trailers - $30,056 Corporation Arctic Cut UCC Financing Statement Hicks $29,340 Carhartt $23,842 Daiwa $18,804 Ellet Brothers $18,519 Costa Del Mar $9,480 Stoeger $7,136 P.O. Box 64192 Baltimore, MD 21264-4192 American Rod & Gun $4,996 On-Time Feeders $5,537 STANDARD MOTOR: Reports Net Sales of $169 Million in 2006 4th Qtr. ------------------------------------------------------------------ Standard Motor Products Inc. reported consolidated net sales of $169 million for the fourth quarter ended Dec. 31, 2006, compared with consolidated net sales of $172.1 million during the same period in 2005. Losses from continuing operations for the fourth quarter of 2006 were $1.5 million, compared to a loss from continuing operations of $5.7 million in the fourth quarter of 2005. However, this included a loss of $3.2 million on the divestiture of the European Temperature Control business. Consolidated net sales for 2006 were $812 million, compared to consolidated net sales of $830.4 million in 2005. Earnings from continuing operations for 2006 were $9.2 million, compared to a loss from continuing operations of $1.8 million in 2005. Excluding the $3.2 million loss incurred from the European Temperature Control divestiture, earnings from continuing operations would have been $12.4 million. Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' Chairman and Chief Executive Officer, said, "Despite the slight drop in sales, which was concentrated in Temperature Control, we were pleased with the earnings improvement in 2006, especially with the continued improvement in Engine Management gross margin. Our Engine Management gross margin was 25.8% in the fourth quarter of 2006, compared with 18.7% in the fourth quarter of 2005. For the full year, the figures were 24.6% in 2006 versus 20.1% in 2005. The increase resulted from continuing operating improvements-increased manufacturing, improved pricing, additional sourcing from low cost areas-plus the fact that the one time costs of the Dana integration are now substantially behind us. "We continue to work on additional improvements. We previously announced our plans to close our Puerto Rico manufacturing facility, and we recently announced our proposal to close our Long Island City plastic molding operation. The majority of the combined production from both facilities will go to a new operation in Reynosa, Mexico. We estimate one time costs of $9 million, and annual savings, once the moves are complete, of $9 million. We anticipate the moves will occur over the next 18-24 months. "We are also pleased to announce that we are gaining additional business from original equipment (OE) and original equipment service providers (OES). The new business amounts to approximately $25 million annualized and will begin in the second half of 2007. The OE and OES customers are both domestic and international based, and they will purchase electronics, ignition and temperature control-related product lines." About Standard Motor Headquartered in Long Island City, New York, Standard Motor Products Inc. (NYSE: SMP) -- http://smpcorp.com/-- manufactures and distributes replacement parts for motor vehicles in the automotive aftermarket industry. The company supplies Engine Management and Temperature Control parts for motor vehicles - domestic and imported, new as well as older vehicles. Parts are sold throughout the U.S., Canada, Central and South America, Europe and Asia, by traditional warehouse distributors and auto parts stores, as well as major retail stores. Standard Motor Products Inc has more than 20 factories and distribution centers throughout the U.S., Puerto Rico, Canada, Europe and the Far East. Lawrence I. Sills, grandson of the company's founder, is the current Chairman of the Board and Chief Executive Officer, and John Gethin is President and Chief Operating Officer. * * * As reported in the Troubled Company Reporter on Feb. 9, 2006, Moody's Investors Service lowered the ratings for Standard Motor Products Inc. Corporate Family Rating to B3 from B1. STATION CASINOS: Earns $110.2 Million in Year Ended December 31 --------------------------------------------------------------- Station Casinos Inc. reported net income of $110.2 million on net revenues of $1.339 billion for the year ended Dec. 31, 2006, compared with net income of $161.9 million on net revenues of $1.108 billion for the year ended Dec. 31, 2005. Year over year net revenues increased primarily due to the opening of Red Rock Casino Resort Spa on April 18, 2006. Consolidated operating income increased 3.3% to $316.1 million in 2006 from consolidated operating income of $305.9 million in 2005, primarily as a result of the increase in consolidated net revenues, offset by operating expenses for Red Rock as well as preopening expenses of $29.5 million in 2006 as compared to $6.6 million in 2005. During the year ended Dec. 31, 2006, income before income tax and net income were reduced by approximately $2.2 million and $1.4 million, respectively, as a result of adopting SFAS 123R. Interest expense, net of capitalized interest, increased 113.7% to $171.7 million in 2006 as compared to $80.4 million in 2005. Gross interest expense increased approximately $100.3 million due to an increase in long-term debt of approximately $1.5 billion in 2006 and an increase in the weighted average cost of debt to 6.7% in 2006 from 6.2% in 2005. Capitalized interest increased approximately $7.4 million in 2006 as compared to 2005 primarily due to interest capitalized for the construction of Red Rock. For the years ended Dec. 31, 2006, and 2005, the company recorded $6.8 million and $6.9 million, respectively, in interest and other expense related to its unconsolidated joint ventures. During 2005, the company redeemed the remaining $16.9 million of outstanding 8-3/8% senior notes due 2008 and $17.4 million of outstanding 9-7/8% senior subordinated notes due 2010. As a result of these redemptions, the company recorded a loss on early retirement of debt of approximately $1.3 million to reflect the write-off of the unamortized loan costs, unamortized discount and call premium. At Dec. 31, 2006, the company's balance sheet showed $3.716 billion in total assets and $3.903 billion in total liabilities, resulting in a $186.9 million total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $201.6 million in total current assets available to pay $251.9 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b58 At Dec. 31, 2006, the company had approximately $843 million available under its Revolving Facility. The company also had $116.9 million in cash and cash equivalents as of Dec. 31, 2006, virtually all of which is used for day-to-day operations of the casinos. About Station Casinos Station Casinos Inc. (NYSE: STN) -- http://www.stationcasinos.com/ -- owns and operates Red Rock Casino Resort and Spa, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company and The Greens in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community. * * * As reported in the Troubled Company Report on Dec. 6, 2007, Moody's Investors Service placed the ratings of Stations Casinos Inc.'s Ba2 corporate family rating, Ba2 probability of default rating, Ba2 senior unsecured note rating, and Ba3 senior subordinated note rating on review for possible downgrade after the disclosure that a group of investors led by Frank J. Fertitta III, chairman and chief executive officer of Station, Lorenzo J. Fertitta, vice chairman and president of Station, and Colony Capital Acquisitions LLC, an affiliate of Colony Capital LLC, offered to acquire all of the company's outstanding shares of common stock for $82 per share in cash, or about $4.7 billion. SUN HEALTHCARE: Plans $200 Million Senior Sub. Notes Offering ------------------------------------------------------------- Sun Healthcare Group Inc. intends to offer $200 million aggregate principal amount of senior subordinated notes due in 2015. 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 United States only to non-U.S. investors under regulation S of the Securities Act of 1933. The company will use the net proceeds of the offering, together with other funds, to complete the acquisition of Harborside Healthcare Corporation. The acquisition is expected to close in the second quarter of 2007, subject to certain closing conditions that include regulatory and other approvals. Sun Healthcare Group, Inc., with executive offices located in Irvine, California, owns SunBridge Healthcare Corporation and other affiliated companies that operate long-term and postacute care facilities in many states. In addition, the Sun Healthcare Group family of companies provides therapy through SunDance Rehabilitation Corporation, medical staffing through CareerStaff Unlimited, Inc., and home care through SunPlus Home Health Services, Inc. The Company filed for chapter 11 protection on Oct. 14, 1999 (Bankr. D. Del. Case No. 99-03657). Mark D. Collins, Esq., and Christina M. Houston, Esq., at Richards, Layton & Finger, P.A., represent the Debtor. The Court confirmed the Debtor's chapter 11 Plan on Feb. 6, 2002, and the Plan took effect on Feb. 28, 2002. * * * Moody's Inverstors Service assigned Sun Healthcare's $345 million Senior Secured Term Loan due 2014 at Ba2 and$200 million Senior Subordinated notes due 2015 at B3. The ratings outlook is stable. TECHNICAL OLYMPIC: Moody's Cuts Corp. Family Rating to B2 from B1 ----------------------------------------------------------------- Moody's Investors Service lowered the ratings of Technical Olympic USA, Inc., including its corporate family rating to B2 from B1, senior unsecured notes to B3 from B2, and senior sub debt to Caa1 from B3. The ratings were taken off review for downgrade, concluding the review that was commenced on Sept. 27, 2006. The ratings outlook is negative. The downgrades were triggered by the challenging covenant compliance environment that TOA faces in 2007, even absent additional debt from a possible settlement with the lenders of its Transeastern joint venture; the increasing likelihood that TOA will take on additional debt as a result of a possible resolution of the Transeastern issue; a land supply that exceeds seven years; and difficult market conditions exacerbated by the company's heavy Florida concentration. The negative outlook reflects Moody's expectation that the company's earnings will continue to decline in 2007, even after excluding land impairment and option abandonment charges. This will put continued pressure on related credit metrics, particularly interest coverage, gross margins, and return on assets. In addition, adjusted debt leverage, already somewhat aggressive, is likely to rise as a result of a possible conclusion of the difficulties at Transeastern-a troubling development at this stage of the homebuilding cycle. These are the rating actions: * Corporate family rating downgraded to B2 from B1; * Probability of default rating downgraded to B2 from B1; * Senior unsecured debt rating downgraded to at B3 from B2; * LGD assessment and rate on the senior unsecured debt changed to LGD4, 65% from LGD4, 58%; * Senior subordinated debt downgraded to Caa1 from B3; * LGD assessment and rate on the senior subordinated debt changed to LGD5, 89% from LGD5, 88%. Going forward, the ratings could be reduced again if any of these were to occur: * if the company were to begin generating more than modest losses from continuing operations (excluding land impairment and option abandonment charges); * if cash flow on an LTM (last 12-month) basis were to remain negative; * if the company's interest coverage declines to the point where only a substantial improvement in projected rolling four quarter EBITDA or a sizable reduction in interest expense could prevent the company from violating its covenant; * if adjusted debt leverage were to exceed 65%. The outlook and ratings could stabilize if the company's land position were to be reduced significantly, free cash flow were to turn positive, and adjusted debt leverage were to be reduced well below 55%. Headquartered in Hollywood, Florida, Technical Olympic USA, Inc. builds and sells single family homes largely for the move-up homebuyer. It also operates captive mortgage origination and title insurance service companies. It is 67%- owned by Technical Olympic S.A. Homebuilding revenues and net income for the LTM period ended Sept. 30, 2006 were approximately $2.4 billion and $119 million, respectively. TENET HEALTHCARE: Net Loss Increases to $803 Million in 2006 ------------------------------------------------------------ Tenet Healthcare Corp. incurred a net loss of $803 million for the fiscal year ended Dec. 31, 2006, an increase from a net loss of $724 million for the previous year. Its net operating revenues for 2006 were $8.7 billion, as compared with $8.61 billion for 2005. The increased net loss in 2006 was largely contributed to increase in total operating expenses, which was partially offset by income from discontinued operations of $66 million. The company had a loss from discontinued operations of $402 million a year earlier. Net inpatient revenues for the year ended Dec. 31, 2006, were $5.92 billion, an increase from $5.8 billion for the year ended Dec. 31, 2005. Net outpatient revenues were $2.48 billion in 2006, as compared with $2.49 billion in 2005. As of Dec. 31, 2006, the company's balance sheet listed total assets of $8.53 billion and total liabilities of $8.27 billion, resulting to $264 million in total shareholders' equity. The company held $784 million in cash and cash equivalents as of Dec. 31, 2006, down from $1.37 billion a year earlier. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b2c New Revolving Credit Facility In September 2006, the company accepted a commitment from a group of banks for a five-year, $800 million senior secured revolving credit facility, which it closed in November 2006, thereby replacing its $250 million letter of credit facility. The revolving credit facility is collateralized by patient accounts receivable, and can be increased to $1 billion depending on the amount of eligible receivables outstanding. Standard & Poor's lowered its credit rating on the company's senior unsecured notes two notches to CCC+ due to the large amount of priority debt that now exists. However, S&P changed its outlook on the company's corporate credit rating from negative to stable, reflecting Tenet's recently improved managed care pricing, better expense management, asset divestiture plan and the elimination of key litigation risks. On the other hand, Moody's lowered its credit rating on the company's unsecured notes one notch to Caa1, but also affirmed the corporate family rating of B3. In addition, Moody's changed its rating outlook on the company's corporate family rating from negative to stable. Changes in Public Accountant In January 2007, the company's audit committee had selected Deloitte & Touche LLP as the company's new independent registered public accounting firm for the year ending Dec. 31, 2007. The engagement of Deloitte & Touche will be submitted for ratification by company shareholders at its May 2007 annual meeting. About Tenet Healthcare Tenet Healthcare Corp. (NYSE: THC) -- http://www.tenethealth.com/ -- through its subsidiaries, owns and operates acute care hospitals and related health care services. The company owns or leases physician practices, captive insurance companies, and various other ancillary health care businesses, including outpatient surgery centers, diagnostic imaging centers, occupational and rural health care clinics. * * * Tenet Healthcare Corp.'s $800 million senior secured revolving credit facility due 2011 carries Standard & Poor's Ratings Services' 'BB-' loan and recovery ratings. TOWER AUTOMOTIVE: Posts $65.1 Mil. Net Loss in Qtr. Ended Sept. 30 ------------------------------------------------------------------ Tower Automotive, Inc., and Subsidiaries Consolidated Balance Sheet As of September 30, 2006 (In Thousands) Assets Current Assets Cash and cash equivalents $103,443 Accounts receivable 371,427 Inventories 125,744 Prepaid tooling and Other 114,727 ------------ Total Current Assets $715,341 ------------ Property, plant and equipment, net 964,184 Investment in joint ventures 246,514 Goodwill 163,096 Other assets, net 125,855 ------------ Total Assets $2,214,990 ============ Liabilities and Stockholders' Deficit Current Liabilities Not Subject to Compromise: Current maturities of long-term debt and capital lease obligations $134,158 Current portions of DIP borrowings 650,000 Accounts payable 327,396 Accrued liabilities 186,907 ------------ Total current liabilities $1,298,461 ------------ Liabilities subject to compromise: $1,279,838 ------------ Non-Current Liabilities Not Subject to Compromise: Long-term debt, net of current maturities 105,514 Debtor-in-possession borrowings - Capital lease obligations, net 29,632 Other non-current liabilities 114,714 ------------ Total non-current liabilities $249,860 ------------ Commitments and Contingencies Stockholders' deficit: Preferred Stock - Common stock 666 Additional paid-in-capital 681,843 Accumulated deficit (1,257,729) Deferred compensation plans - Accumulated other comprehensive income (loss) 11,375 Treasury stock (49,324) ------------ Total Stockholders' deficit ($613,169) ------------ Total Liabilities and Stockholders' deficit $2,214,990 ============ Tower Automotive, Inc., and Subsidiaries Statement of Consolidated Operations Three Months Ended September 30, 2006 (In Thousands) Revenues $615,668 Cost of sales 607,788 ------------ Gross profit $7,880 Selling, general and administrative expense 32,176 Restructuring & asset impairment charges, net 22,793 Other operating income - ------------ Operating loss ($47,089) ------------ Interest expense $23,590 Interest income (339) Chapter 11 and related reorganization items 2,742 ------------ Loss before provision for income taxes, equity in earnings of joint ventures, and minority interest (73,082) (Benefit) Provision for income taxes (5,847) ------------ Loss before equity in earnings of joint ventures, and minority interest (67,235) Equity in earnings of joint ventures, net of tax 4,065 Minority interest, net of tax (1,995) ------------ Net loss ($65,165) ============ Tower Automotive, Inc., and Subsidiaries Statement of Consolidated Cash Flows Nine Months Ended September 30, 2006 (In Thousands) Operating Activities: Net loss ($150,887) Adjustments required to reconcile net loss to net cash provided by (used in) operating activities: Chapter 11 & related reorganization items, net 36,058 Non-cash restructuring and impairment, net 35,372 Depreciation 120,892 Deferred income tax provision (benefit) (13,105) Equity in earnings of joint ventures, net (18,282) Change in working capital & other operating items 3,849 ------------ Net cash provided by operating activities 13,897 Investing Activities: Cash disbursed for purchase of property, plant and equipment (93,671) Cash proceeds from asset disposal 32,664 ------------ Net cash used in investing activities (61,007) Financing Activities: Proceeds from borrowings 22,621 Repayments of borrowings (56,859) Proceeds from DIP credit facility 564,500 Repayments DIP credit facility (445,500) ------------ Net cash provided by financing activities 84,762 ------------ Net change in cash and cash equivalents 37,652 Cash & Cash Equivalents, beginning of period 65,791 ------------ Cash and Cash Equivalents, end of period $103,443 ============ A full-text copy of Tower Automotive, Inc.'s Quarterly Report for the period ended September 30, 2006, filed with the Securities and Exchange Commission on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?1b2f 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. The Debtors' exclusive plan-filing deadline is extended to March 21, 2007, pending a hearing on that date. (Tower Automotive Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TOWER AUTOMOTIVE: Sells Greenville Facility for $1.375 Million -------------------------------------------------------------- The Honorable Allen L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York authorizes Tower Automotive, Inc., and Tower Services, Inc., to sell real property located in Greenville, Montcalm County, Michigan, to Greenville Tower, LLC, for $1,375,000, free and clear of liens, claims and encumbrances. Judge Gropper also approves their asset purchase agreement with Greenville Tower. The Greenville Facility includes all related buildings, fixtures and improvements, de minimis equipment, and personal property. Judge Gropper says the property to be sold will not include any personal property that was manufactured by Fuji Technica, Inc., or any of its affiliates. Fuji is a secured creditor of Tower Automotive, Inc., and Tower Automotive Technology, Inc. Fuji objected to proposed sale to protect its lien on certain dies in the equipment to be sold. Fuji also requested that any Court ruling authorizing the sale provide that Fuji's liens attach to the proceeds. Judge Gropper notes that as agreed by Tower Automotive and Greenville Tower, the Purchase Agreement is revised to correct a typographical error and to read that: * Greenville Tower will be given access to the Premises during normal business hours to perform an ASTM E1528 Transaction Screen or an ASTM E1527 Phase I Site Assessment; and * Greenville Tower will pay the cost of the Environmental Assessment. Judge Gropper further rules that each of the Debtors' creditors is authorized and directed on or before the Closing to execute the documents, and take all other actions as may be necessary to release its Interests in or Claims against the Greenville Facility, if any, as those Interests or Claims may have been recorded or otherwise exist. Because the expected proceeds from the proposed asset sale exceed $1,000,000, the sale is not subject to the Court's ruling for the sale or abandonment of de minimis assets, Anup Sathy, Esq., at Kirkland & Ellis LLP, in Chicago tells the Court. Mr. Sathy relates that the Greenville Facility is a 155,000- square foot manufacturing facility located on 10 acres of land in Greenville, Michigan. R.J. Tower Corporation constructed the original building in 1874 and there have been four subsequent additions. The Greenville Facility was used for casting iron products until 1955 when R.J. Tower entered the automobile market and began using the building for metal stampings and welded assemblies. The Debtors effectively acquired the Greenville Facility in April 1993, and continued producing stampings and assemblies, which were sold to its primary customer, Ford, and other Tier 1 suppliers. In early 2006, in connection with their overall restructuring strategy to reduce fixed costs by reducing and consolidating the number of operating locations, the Debtors determined that the work being performed at the Greenville Facility could be better accommodated in existing floor space at its other manufacturing plants. In anticipation of shutting down the Greenville Facility, Tower Automotive enlisted the assistance of the commercial real estate firm CB Richard Ellis to assist it in locating potential purchasers for the Facility. The property was placed on the market with an initial asking price of $1,650,000. CB Richard initiated an extensive marketing campaign for the sale of the property on all levels: nationally, regionally, statewide and at the local level, Mr. Sathy notes. Despite the breadth of the Marketing Campaign, however, there was little interest generated for the Facility. The highest and only bid received for the Greenville Facility was that of Greenville Tower for $1,375,000 -- equivalent to approximately $8.87 per square foot. After arm's-length negotiations, Tower Automotive agreed to sell the Greenville Facility to Greenville Tower for $1,375,000, pursuant to the terms and conditions of the Purchase Agreement. The sale of the Greenville Facility is further contingent on the Greenville Tower's ability to secure an acceptable lease on the site within the Inspection Period, as defined by the Purchase Agreement. Pending the Court's approval of the Purchase Agreement, CB Richard has continued to market the property. As of Feb. 15, 2007, no additional interest has been generated. Furthermore, pursuant to the Purchase Agreement and the Listing Agreement, upon closing, Tower Automotive is responsible for paying a one-time fee to CB Richard equal to 6% of the Purchase Price in consideration for CB Richard's postpetition services rendered to Tower Automotive in connection with marketing the Greenville Facility. The Debtors submit that the transaction, as embodied in the Purchase Agreement, is highly favorable and is in the best interests of their estates and creditors. A full-text copy of the Agreement is available for free at: http://ResearchArchives.com/t/s?1b37 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. The Debtors' exclusive plan-filing deadline is extended to March 21, 2007, pending a hearing on that date. (Tower Automotive Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). TRW AUTO: Wants to Buy Back $1 Bil. and EUR211 Mil. Senior Notes ---------------------------------------------------------------- TRW Automotive Holdings Corp., through its subsidiary TRW Automotive Inc., has commenced tender offers to repurchase any and all of its outstanding: * $825 million 9-3/8% Senior Notes due 2013, * EUR130 million 10-1/8% Senior Notes due 2013, * $195 million 11% Senior Subordinated Notes due 2013 and * EUR81 million 11-3/4% Senior Subordinated Notes due 2013. In conjunction with the tender offers, the company also commenced consent solicitations to eliminate substantially all the covenants and certain events of default and to modify the provisions relating to defeasance of the Notes. The tender offers and consent solicitations are being made pursuant to the company's Offer to Purchase and Consent Solicitation Statement dated March 12, 2007. Holders who properly tender and deliver their consents to the proposed amendments on or prior to 5:00 p.m., New York City time, on March 23, 2007, unless extended or earlier terminated, will be eligible to receive the total consideration with respect to the applicable series of Notes, which includes a consent payment equal to $30 per $1,000 principal amount of the tendered 9-3/8% Senior Notes and 11% Senior Subordinated Notes and EUR30 per Euro 1,000 principal amount of the tendered 10-1/8% Senior Notes and 11-3/4% Senior Subordinated Notes. Total consideration for the Dollar Notes will be determined using standard market practice of pricing to the first redemption date. As such, the Dollar Notes will be priced at a fixed spread of 50 basis points over the bid-side yield on the 4-5/8% Treasury Notes due Feb. 29, 2008. The prices will be determined at 10:00 a.m., New York City time, on March 21, 2007, based on a yield determined by the Treasury bid-side prices reported by the Bloomberg Government Pricing Monitor or any recognized quotation source selected by Lehman Brothers Inc., as representative of the Dealer Managers in its sole discretion if the Bloomberg Government Pricing Monitor is not available or is manifestly erroneous. With respect to the Euro Notes, the total consideration will be determined using standard market practice of pricing to the first redemption date. As such, the Euro Notes will be priced at a fixed spread of 50 basis points over the bid-side yield on the 4-1/4% German OBL due Feb. 15, 2008. The prices will be determined at 10:00 a.m., New York City time, on March 21, 2007, based on a yield determined by the German OBL bid-side prices reported by the Bloomberg Government Pricing Monitor or any recognized quotation source selected by the Representative, or one of its affiliates, in its sole discretion if the Bloomberg Government Pricing Monitor is not available or is manifestly erroneous. Holders who properly tender after the Consent Date but on or prior to the Expiration Date will be eligible to receive the tender offer consideration applicable to such series of Notes, which equals the total consideration less the consent payment. In addition, all Notes accepted for payment will be entitled to receipt of accrued and unpaid interest in respect of such Notes from the last interest payment date prior to the applicable settlement date to, but not including, the applicable settlement date. The tender offers will expire at midnight, New York City time, on April 6, 2007, unless extended or earlier terminated. Settlement for all Notes tendered on or prior to the Consent Date and accepted for payment is expected to be promptly following the satisfaction of the Financing Condition. Settlement for all Notes tendered after the Consent Date, but on or prior to the Expiration Date, is expected to be promptly following the Expiration Date. Consummation of the tender offers, and payment for the tendered notes, is subject to the satisfaction or waiver of certain conditions, including obtaining debt financing, in an amount and on terms acceptable to the company, sufficient to pay for all Notes tendered. Holders may withdraw their tenders and revoke their consents at any time on or prior to 5:00 p.m., New York City time, on the Consent Date, but not thereafter. Holders who wish to tender their Notes must consent to the proposed amendments and holders may not deliver consents without tendering their related Notes. Holders may not revoke consents without withdrawing the Notes tendered pursuant to the applicable tender offer. Lehman Brothers, Banc of America Securities LLC, Deutsche Bank Securities, Goldman, Sachs & Co. and Merrill Lynch & Co. are each acting as a Dealer Manager and Solicitation Agent for the tender offers and the consent solicitations. The Depositary is The Bank of New York and the Information Agent is Global Bondholder Services Corporation. Requests for documentation should be directed to: 1) Global Bondholder Services Corporation Telephone (866) 924-2200 2) The Bank of New York Attention: William Buckley 101 Barclay Street, 7 East, New York, New York 10286 Telephone (212) 815-5788 Fax (212) 298-1915 3) The Bank of New York (Luxembourg) S.A. Aerogolf Center -- 1A Hoehenhof L-1736 Senningerberg, Luxembourg Telephone +(352) 34 20 90 5637 Questions regarding the tender offers and the consent solicitations should be directed to Lehman Brothers at (800) 438- 3242 (toll- free) or (212) 528-7581 (collect). About TRW Headquartered in Livonia, Michigan, TRW Automotive Holdings Corp. (NYSE:TRW) -- http://www.trwauto.com/-- is an automotive supplier. Through its subsidiaries, the company employs approximately 63,800 people in 26 countries including Brazil, China, Germany and Italy. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. * * * Fitch Ratings affirmed TRW Automotive Holdings Corp.'s BB Issuer Default Rating, BB+ Senior secured bank lines, BB- Senior unsecured notes, and B+ Senior subordinated unsecured Notes on September 2006. TRW AUTOMOTIVE: S&P Rates Proposed Senior Unsecured Notes at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to TRW Automotive Inc.'s proposed senior unsecured notes. The refinancing is expected to lower TRW's interest expense and modestly extend maturities. At the same time, Standard & Poor's affirmed its ratings on the Livonia, Michigan-based auto supplier, including its 'BB+' long- and 'A-3' short-term corporate credit ratings. The outlook is stable. TRW had $3 billion in total balance sheet debt outstanding at Dec. 31, 2006. The notes will be issued in three tranches: * $670 million due 2014; * EUR250 million due 2014; and * $500 million due 2017. TRW is expected to use the net proceeds to purchase outstanding debt pursuant to the cash tender offers that recently began: * $825 million 9.37% senior notes due 2013; * EUR130 million 10.12% senior notes due 2013; * $195 million 11% senior subordinated notes due 2013; and * EUR81 million 11.75% senior subordinated notes due 2013. TRW's upside ratings potential is restricted by the company's moderately heavy debt burden, by its large debt-like postretirement benefit obligations, and by its exposure to the cyclical and competitive automotive original equipment market. The downside risk is limited by TRW's leading market positions and good revenue diversity. Standard & Poor's could revise the outlook to positive if TRW were able to continue permanent debt reduction. TXU ELECTRIC: S&P Rates Proposed $1 Billion Senior Notes at BB -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' rating to TXU Electric Delivery Co.'s planned $800 million floating rate senior unsecured notes due 2008 and its 'BB' rating to TXU Energy Co. LLC's planned $1 billion floating rate senior unsecured notes due 2008. The companies are concurrently issuing the notes as part of a 144A program. Both ratings were placed on CreditWatch with negative implications. All the ratings on TXU Corp. (BB/Watch Neg/--) and its units are on CreditWatch pending its planned acquisition by an investor group led by Kohlberg Kravis Roberts & Co. and Texas Pacific Group. TXU Electric Delivery plans to use the proceeds of the notes to reduce short-term debt, which includes commercial paper, advances from affiliates, and borrowings from its liquidity facilities. TXU Energy plans to use the proceeds to free up capacity from its liquidity facilities by repaying borrowings on these facilities. As a result, the issuances won't increase either company's debt levels. TXU Electric Delivery and TXU Energy are wholly owned subsidiaries of Dallas, Texas-based TXU, which owns regulated and unregulated electricity assets in Texas. The company had $12.6 billion in debt at the end of 2006. UNITA PACKING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Unita Packing Co., Inc. 41 Comstock Parkway Cranston, RI 02921-2003 Bankruptcy Case No.: 07-10373 Chapter 11 Petition Date: March 8, 2007 Court: District of Rhode Island (Providence) Judge: Arthur N. Votolato Debtor's Counsel: Andrew S. Richardson, Esq. Boyajian Harrington & Richardson 182 Waterman Street Providence, RI 02906 Tel: (401) 273-9600 Total Assets: $310,805 Total Debts: $4,337,560 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Midwest Business Bank loan $1,431,113 c/o Colson Services Corp. Collateral: Bowling Green Station 213,099 New York, NY 10274-0942 Unsecured: $1,218,014 Vincent Vicario Collateral: $1,000,000 110 Boylston Drive $228,094 Cranston, RI 02921-3425 Unsecured: $985,005 Tomadini Trade debt $193,954 Via Benedetto Marcello 7 Pordenone Italia 33170 Bilginoglu Trade debt $126,538 AKCAY CAD HO:253 Gaziemir, Izmir Orlando Foods Trade debt $117,023 Colombo Importing U.S. Trade debt $113,646 Blue Valley Foods Trade debt $93,284 Oesse Foods Inc. Trade debt $91,560 Antonio Rodenas Meseguer Trade debt $90,368 Citizens Bank $76,431 Sipa, S.R.L. Trade debt $53,849 Med USA Corp. Trade debt $52,525 Joseph Caragol, Inc. Trade debt $48,951 Italverde Trading Inc. Trade debt $48,370 Arthur Schuman, Inc. Trade debt $47,106 New England Specialty Trade debt $42,894 Conservas Alguazas S.L. Trade debt $34,325 Nestle USA, Inc. Trade debt $27,638 East Coast Olive Oil Trade debt $25,170 Toschi Vignola S. R. L. $24,289 UNITED RENTALS: Earns $224 Million in Fiscal 2006 ------------------------------------------------- United Rentals, Inc. reported $3.64 billion in total revenues and a net income of $224 million for the year ended Dec. 31, 2006, compared with total revenues of $3.28 billion and a net income of $187 million for the previous year. Revenues in 2006 increased due to the increases in equipment rentals of $192 million, sales of rental equipment of $31 million, new equipment sales of $27 million, contractor supplies sales of $84 million, and service and other revenues of $18 million. Total costs of revenues for the years 2006 and 2005 were $2.35 billion and $2.17 billion, respectively. The company's balance sheet showed total assets of $5.36 billion and total liabilities of $3.82 billion, resulting to total stockholders' equity of $1.53 billion as of Dec. 31, 2006. Liquidity and Capital Resources As of Dec. 31, 2006, the company had (i) $492 million of borrowing capacity available under the revolving credit facility portion of its senior secured credit facility; (ii) $275 million of borrowing capacity available under its accounts receivable securitization facility; and (iii) cash and cash equivalents of $119 million. The company believes that its existing sources of cash will be sufficient to support existing operations over the next 12 months. In the third quarter of 2006, the company prepaid $400 million of its outstanding term loan using $200 million of available cash and $200 million borrowed under its accounts receivable securitization facility. In 2006, the company disclosed a redemption of $76 million of its 6-1/2% Convertible Quarterly Income Preferred Securities, at a price of 101.3 percent. In October 2006, the company amended its existing accounts receivable securitization facility, which provides for generally lower borrowing costs, by increasing the facility size from $200 million to $300 million. Additionally, the maturity date has been extended from May 2009 to October 2011. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1b36 About United Rentals, Inc. Greenwich, Conn.-based United Rentals Inc. (NYSE: URI) -- http://unitedrentals.com/-- is an equipment rental company, withan integrated network of more than 760 rental locations in 48states, 10 Canadian provinces, and Mexico. The company's 12,000 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R). * * * Moody's Investors Service confirmed its B1 Corporate Family Rating for United Rentals (North America), Inc. US AIRWAYS: Moody's Holds Corporate Family Rating at B3 ------------------------------------------------------- Moody's Investors Service affirmed the debt ratings of US Airways Group, Inc. and its subsidiaries: * corporate family rating of B3 * and assigned a B2 rating and a loss given default of LGD3, 42% to a new senior secured term loan. Moody's also raised the outlook to positive from stable. The change to positive outlook reflects improvement to the operating profitability, and to the leverage and interest coverage metrics since the merger of US Airways Inc. and America West Airlines in September 2005. The strong current revenue market has provided US Airways with moderate pricing power. As a result, credit metrics improved sharply over the past year. EBIT margin during 2006 was 10.5%, and the company is likely to remain profitable during 2007 given the solid demand expected. EBIT to interest expense of 1.7x and debt to EBITDA of 5.8x at Dec. 31, 2006 are now moderately better than similarly-rated issuers, although the company's refleeting plan starting during 2008 could increase indebtedness. The B3 corporate family rating also considers some uncertainty relating to incremental cost savings from the merger and the ability of the airline to expand into more profitable markets, as well as preserve the high cash balances given the capital spending plans. Despite much-improved profitability, US Airways has a relatively high cost structure when compared to other Low Cost Carriers. However, the network does produce considerably more revenue per revenue passenger mile also when compared to other LCC's. High costs may limit future profit gains because the airline operates in some of the more competitive US markets which are susceptible to competition from other LCC's. Productivity remains constrained by the large workforce produced by the merger, but the company has successfully negotiated some wage and benefit concessions through the bankruptcy process. Profitability gains have largely been from revenue improvement, and the company will need to address its cost structure in order to materially enhance profitability. The senior secured term loan will refinance a currently outstanding term loan and will be secured by certain aircraft, spare parts, gates, route authority, some cash and other assets. The facility includes a covenant to maintain appraised value of collateral to the outstanding loan amount of greater than 1.25x, which could require the company to pledge additional assets should the appraised value decline meaningfully over time. The collateral package in this new loan is somewhat greater than the collateral in the loan it refinanced, as the company has added a modest amount of domestic slots. Downward pressure on the ratings could occur if the EBITDA margin is lower than 11%, if debt to EBITDA exceeds 10x or if EBIT to interest expense weakens to approach the 1x level. The rating could be raised if internally generated cash flows and profits are sustained through the peak travel season, resulting in a continued EBIT to interest expense ratio greater than 1.5x and retained cash flow to net debt greater than 10%, along with cash balances at approximately currently levels Assignments: * US Airways Group, Inc. -- Senior Secured Bank Credit Facility, Assigned a rating of B2 and loss given default of LGD3 - 42 Outlook Actions: * America West Airlines, Inc. -- Outlook, Changed To Positive From Stable * US Airways Group, Inc. -- Outlook, Changed To Positive From Stable * US Airways, Inc. -- Outlook, Changed To Positive From Stable US Airways Group, Inc., based in Tempe, Arizona, through its subsidiaries operates the 6th largest airline in the US with service throughout the U.S. as well as Canada, the Caribbean, Latin America, and Europe. US ONCOLOGY: Issues $425MM Debt Securities to Pay Existing Notes ---------------------------------------------------------------- US Oncology Holdings, Inc., has issued an aggregate $425 million principal amount of its senior unsecured floating rate toggle notes due 2012. The floating rate toggle notes are general unsecured obligations of the company, and bear cash interest at a rate per annum, reset semi-annually, equal to six-month LIBOR plus the applicable spread. The applicable spread will be 4.50% from the issue date to March 14, 2009, 5.00% from March 15, 2009 to March 14, 2010, and 5.50% from March 15, 2010 and thereafter. The notes will mature on March 15, 2012. Subject to certain limitations, at the option of the company, interest on the notes may be paid either entirely in cash, entirely by increasing the principal amount of the notes, or by paying 50% in cash and 50% by increasing the principal amount of the notes. PIK interest will accrue on the notes at a rate per annum equal to the cash interest rate plus 0.75%. The net proceeds from the issuance of the unsecured floating rate toggle notes are being used to refinance the company's existing senior floating rate notes, including payment of a redemption premium on those notes, to pay a dividend to the company's stockholders, and to pay related fees and expenses. In connection with the issuance of the unsecured floating rate toggle notes, the Company amended its senior secured credit facility to, among other things, allow for the issuance of the notes and the use of net proceeds from the issuance. The unsecured floating rate toggle notes were issued and sold in a private offering to institutional investors pursuant to Rule 144A and Regulation S under the Securities Act of 1933. US Oncology Holdings, Inc., a holding company, is the parent company of US Oncology Inc. Headquartered in Houston, Texas, US Oncology, Inc. provides comprehensive cancer-care services through a network of more than 1,000 affiliated physicians. The company provides affiliated physician practices with administrative and billing support, access to advanced treatments and technologies at integrated community-based cancer care centers, therapeutic drug management programs and cancer-related clinical research studies. * * * As reported in the Troubled Company Reporter on March 8, 2007, Standard & Poor's Ratings Services assigned its 'B-' rating to US Oncology Holdings Inc.'s $400 million senior unsecured floating rate PIK toggle notes due March 2012. As reported in the Troubled Company Reporter on March 1, 2007, Moody's assigned a B3 rating to US Oncology Holdings Inc.'s proposed offering of $400 million of senior unsecured PIK toggle notes. Moody's expects the proceeds of the notes to repay the existing floating rate notes and to finance a shareholder dividend. Moody's also affirmed the B1 Corporate Family Rating and changed the rating outlook to negative from stable. USEC INC: Senior VP and General Counsel Tim Hansen to Resign ------------------------------------------------------------ USEC Inc. reported that Timothy Hansen, senior vice president, general counsel and secretary is planning to leave the company this summer. Mr. Hansen has worked for USEC since 1994 and held a series of positions with progressively higher responsibility. He left the company briefly in late 2004 and returned in early 2005. Mr. Hansen said he will be making a career change, and both he and his wife will be pursuing advanced degrees in education. "I have thoroughly enjoyed many challenges and opportunities in my 13 years at USEC and developed a deep respect for the commitment and dedication of the company's employees. This was not an easy decision, but my family and I are ready to pursue a path for personal growth that we wanted to begin in 2004. There's no perfect time to make a career change, but we've decided our time to begin is now," Hansen said. Chairman James R. Mellor said the Company was sorry to lose a senior officer with the knowledge, skills and temperament that Hansen has demonstrated throughout his tenure at USEC. "I asked Tim to return to USEC in 2005 during the period when I was the interim chief executive officer. I told him that I needed his counsel, and he set aside his career change plans at that time. We wish Tim and his family well as they embark on a new path. I think Tim will do a great job at anything he does and working with young people is certainly a noble goal to pursue." President and Chief Executive Officer John K. Welch said, "Tim has been an integral member of senior management and a strong leader within the Company. He was invaluable to me when I joined USEC. We've benefited from his experience at USEC from its early days, as well as his insight on the issues facing the nuclear industry [Fri]day. "We especially appreciate the advance notice that Tim has provided, which will allow time for a smooth transition to new leadership of our legal function," Welch added. About USEC Inc. Headquartered in Bethesda, Maryland, USEC (NYSE: USU) is a leading global supplier of low enriched uranium to nuclear power plants and is the exclusive executive agent for the US Government under the Megatons to Megawatts program with Russia. The company had revenues of $1.8 billion in 2006. * * * As reported in the Troubled Company Reporter on Feb. 19, 2007, Moody's Investors Service placed USEC's Corporate Family Rating at B1 and Senior Unsecured Regular Bond/Debenture at B2 on review for a possible downgrade. WINDSTREAM CORP: Earns $545.3 Million in Year Ended December 31 --------------------------------------------------------------- Windstream Corp. reported net income of $545.3 million on revenues of $3.033 billion for the year ended Dec. 31, 2006, compared with net income of $374.3 million on revenues of $2.923 billion for the year ended Dec. 31, 2005. Revenues increased $109.8 million as compared with 2005, due primarily to the acquisition of Valor Communications Group Inc. Excluding the acquisition, revenues decreased $112.5 million, primarily due to the increase in intercompany eliminations due to the discontinuance of the application of Statement of Financial Accounting Standard ("SFAS") No. 71, and the loss of access lines. Average revenue per wireline customer, however, increased four percent from a year ago to $75.29 due primarily to growth in broadband revenues. Operating income increased 42 percent to $898.8 million in 2006 from $633.8 million in 2005, primarily reflecting the acquisition of Valor Communications, the termination of a licensing agreement with Alltel Corp. as of June 30, 2006, and a decline in depreciation and amortization resulting from reductions in depreciable lives for certain assets associated with studies performed during 2005 and 2006. Interest expense increased $190.5 million, or 997 percent, in 2006. In conjunction with the spin-off from Alltel Corp. and merger with Valor Communications which was completed on July 17, 2006, the company borrowed approximately $4.9 billion of long-term debt under a credit facility and through the issuance of senior notes, and assumed $400 million principal value of additional senior notes from Valor Communications. These borrowings, along with $181 million of debt issued by the company's wireline operating subsidiaries, resulted in approximately $5.5 billion of long-term debt at Dec. 31, 2006. Income tax expense increased $8.4 million in 2006. The increase in income tax expense in 2006 is due to the increase in income before income taxes, partially offset by a settlement received from the Internal Revenue Service during 2006 related to taxes paid during 1997 through 2003. The company's effective tax rate in 2006 was 38.3 percent, compared to 41.3 percent in 2005. Windstream determined in the third quarter of 2006 that it is no longer appropriate to continue the application of SFAS No. 71 for reporting its financial results. Accordingly, Windstream Corp. recorded a non-cash extraordinary gain of $99.7 million in 2006, as required by the provisions of SFAS No. 101, "Regulated Enterprises - Accounting for the Discontinuation of the Application of FASB Statement No. 71." At Dec. 31, 2006, the company's balance sheet showed $8.03 billion in total assets, $7.56 billion in total liabilities, and $469.8 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1b63 About Windstream Windstream Corp. -- http://www.windstream.com/-- provides voice, broadband and entertainment services to customers in 16 states. The company has approximately 3.2 million access lines. * * * As reported in the Troubled Company Reporter on Feb. 15, 2007, Moody's Investors Service assigned a Ba3 rating to the proposed $500 million senior note issuance of Windstream Corporation. WRIGHT INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Wright Industries, Inc. 100 Poplar Street Pittsburgh, PA 15223 Bankruptcy Case No.: 07-21384 Type of Business: The Debtor is an underground utility contractor. See http://www.wright-industries.com/ Chapter 11 Petition Date: March 6, 2007 Court: Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: D. Alexander Barnes, Esq. Edmond M. George, Esq. Michael D. Vagnoni, Esq. Obermayer Rebmann Maxwell Hippel LLP One Penn Center 19th Floor 1617 John F. Kennedy Boulevard Philadelphia, PA 19103-1895 Tel: (215) Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Gerry Toscani $425,838 711 Garwood Road Moorestown, NJ 08057 43rd Street Concrete & Asphalt Co. $393,831 One 43rd Street Pittsburgh, PA 15201 Heritage Agency $291,011 Heritage Building 100 Purity Road Pittsburgh, PA 15235 McClymonds Supply & Transit $245,147 Jim Robinson $130,700 Tim Hickman $104,800 Circle R Safety $99,232 Gino Scatena, Sr. $88,907 Monarch Oil Company $86,445 Martinelli Construction Co., Inc. $73,943 Matcon Diamond, Inc. $56,983 Superior Utility Excavation $55,000 Dunbar Consulting & Accounting $49,440 American Express Corp. Card $30,200 Equitable Resources Utilities $24,607 Lindy Paving, Inc. $22,744 Absolute Equipment $17,911 Pittsburgh Tire Services, Inc. $15,400 Knickerbocker Russell Co., Inc. $15,270 Buchana Ingersol PC $12,886 YUKOS OIL: Dutch Laws Ban Sale of 49% Transpetrol Stake ------------------------------------------------------- OAO Yukos Oil Co. does not intend to assert in a Dutch court that its subsidiary, Yukos Finance BV, has a right to participate in the sale of a 49% stake in Transpetrol a.s., RosBusinessConsulting reports citing Nikolai Lashkevich, spokesperson for Yukos bankruptcy receiver Eduard Rebgun. According to RBC, Yukos Oil and Yukos Finance serve as beneficiaries to a trust company in Holland where the Transpetrol stake is currently retained. However, RBC says, Dutch laws ban Mr. Rebgun from selling its asset. Mr. Rebgun revealed that the stake is being appraised without adding when the process will be completed. As reported in the Troubled Company Reporter-Europe on Aug. 16, 2006, Mr. Rebgun, in his capacity as court-appointed insolvency manager for Yukos Oil, fired Bruce Misamore and David Godfrey of Yukos Finance after a Dutch court ruled that he was within his rights to call for an extraordinary meeting to discharge the officers. The decision, which Mr. Rebgun claims was authorized by shareholders, paved the way for creditors to take control of Yukos Finance's main assets, including: -- a 54% stake in Lithuanian refinery Mazeikiu Nafta AB, worth almost $1.5 billion; and -- a 49% stake in Transpetrol, worth between $100 million and $200 million. The Slovakian government, which holds the remaining 51% in Transpetrol, indicated last year that it is trying to reinforce its position over the company by repurchasing the 49% stake it sold to Yukos in 2002. The Slovak government has until mid-2007 to veto any effort of the Russian company to sell its stake. About Transpetrol Transpetrol a.s. -- http://www.transpetrol.sk/-- operates the Slovak part of the Druzhba oil pipeline through which about 10 million tons of Russian oil flow to western Europe annually. About Yukos Oil Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. On March 10, 2006, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a $1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. * Karen Gottwald Joins Hilco Financial as Senior Vice President --------------------------------------------------------------- David Chisholm, CEO of Hilco Financial, LLC, announced that Karen J. Gottwald has joined the firm as Senior Vice President. Karen will specialize in loan originations for Hilco Financial as the company continues to establish its leadership in special situation, asset-backed bridge lending. Before joining Hilco Financial, Karen had been in senior-level loan origination roles with several prominent lending institutions. Most recently, she was with the Chicago office of CSG Investments, Inc., where she oversaw originations, structuring, and documentation of secured facilities ranging from $5 million to $500 million. Earlier, she had been with CIT Business Credit and Deutsche Banc Alex Brown. Karen also served as a loan collateral examiner and portfolio analyst, adding depth to her knowledge and experience as an originator. Karen, who is based in Hilco's Northbrook, Ill., office, will team with Tony DeMonte, Executive Vice President and head of North American business development. She and Tony will share national coverage responsibility. Ms. Gottwald can be reached at: Karen Gottwald Senior Vice President Hilco Financial, LLC 5 Revere Drive, Suite 430 Northbrook, IL 60062 Tel: (847) 849-2912 Cell: (847) 612-0593 kgottwald@hilcofinancial.com * Patrick Baskette Joins Troutman Sanders' Public Affairs Group --------------------------------------------------------------- Troutman Sanders Public Affairs Group LLC disclosed the addition of Patrick Baskette as President -- Public Policy Group. TSPAG is a wholly owned subsidiary of Troutman Sanders LLP. He will manage the firm's state lobbying network, procurement network, as well as the federal coalition and grasstops practice. Mr. Baskette comes to Troutman Sanders from The Dewey Square Group, where he coordinated the firm's grassroots and coalition services from 1997 to 2006. His experience has involved managing political issues and coalition campaigns in more than 45 states. He has managed national grassroots projects, including Fast Track, MFN-China, and bankruptcy and healthcare reform. Additionally, he has coordinated numerous strategic issues relating to bankruptcy, class action and securities reform; environmental, food and beverage, healthcare, and international and domestic aviation issues; international trade agreements; telecommunications; and utility mergers and deregulation. Mr. Baskette has had a distinguished career on Capitol Hill, where he served as chief of staff to Congressman Owen Pickett, special assistant to Senator Joe Biden's staff and southern coordinator for Mr. Biden's presidential campaign. "We are thrilled to have Patrick join our team," Pete Robinson, chairman and CEO of Troutman Sanders Public Affairs Group, said. "His experience managing state networks, national grassroots projects, strategic project initiatives and coalition campaigns will be a great asset to our clients." Mr. Baskette received a B.A. from The University of Memphis in 1979 and a M.A. from The American University in 1982. About Troutman Sanders' Public Affairs Group Troutman Sanders Public Affairs Group LLC is a full-service government relations and issue management firm with offices in Atlanta, Richmond, Tampa and Washington, D.C. The Group advocates its clients' public policy issues and needs at the federal, state and local levels. About Troutman Sanders Troutman Sanders LLP, founded in 1897, is an international law firm with over 600 attorneys serving clients from offices in Atlanta, Hong Kong, London, New York, Newark, Norfolk, Raleigh, Richmond, Tysons Corner, Shanghai, Virginia Beach and Washington, D.C. The full-service firm provides advice and counsel in over 30 legal practice areas and is committed to delivering professional service throughout all its locations. * Thomas Dupuis Joins Chadbourne & Parke's Los Angeles Office ------------------------------------------------------------- Thomas I. Dupuis has joined the international law firm of Chadbourne & Parke LLP's renewable energy practice as a partner in the Los Angeles office. The move marks the third lateral partner hire and seventh overall hire in Los Angeles for this practice in 2007, expanding Chadbourne's global presence in the renewable energy area. "We are pleased to bring Tom on board," Chadbourne Managing Partner Charles K. O'Neill said. "His skills complement and deepen the capabilities we offer our energy clients on the West Coast and elsewhere." Mr. Dupuis joins Chadbourne from the Los Angeles law firm of Morgan, Lewis & Bockius. In addition to his work in renewable energy, Mr. Dupuis' substantial experience in commercial real estate will complement Chadbourne's practice in that area as well. In renewable energy, Mr. Dupuis will be working closely with Edward Zaelke and Adam Umanoff, two other partners who in February joined Chadbourne's renewable energy practice in Los Angeles from Morgan Lewis. Mr. Zaelke and Mr. Umanoff are both widely recognized as leading attorneys involved in renewable energy development. In addition, associates John Ha, Lloyd MacNeil and Chris Pelliccioni and paralegal Lois LeBar have either joined or are in the process of joining Chadbourne, all from Morgan Lewis. Chadbourne's Los Angeles office continues to actively recruit associates. On March 7, former New York Governor George Pataki and his Chief of Staff John Cahill joined Chadbourne's New York office to focus on energy, environmental and corporate matters. Messrs. Dupuis, Zaelke and Umanoff expect to collaborate with them on a range of projects. In his previous position, Mr. Dupuis, 38, was a member of the Business and Finance Practice Group. His practice there included the development, purchase and sale of energy projects, with a focus on wind power. His work in the area included siting (including wind park and transmission easements and ground leases), acquiring governmental approvals and permits, construction, and negotiating and documenting turbine purchase and warranty agreements, agreements to engineer, procure and construct projects, and agreements for the purchase and sale of wind power projects. In addition to his energy background, Mr. Dupuis comes to Chadbourne with over 12 years of legal experience in a range of real estate and commercial transactions. His work includes real estate acquisitions and sales, development, construction, leasing, debt and equity financing, joint ventures, land use matters, project development and project finance and corporate transactions. Mr. Dupuis holds a B.S. from Northwestern University and a J.D. from the University of Southern California Law Center, where he received Order of the Coif honors, was a member of the Southern California Law Review and was associate editor of the Southern California Interdisciplinary Law Journal. About Chadbourne & Parke Chadbourne & Parke LLP -- http://www.chadbourne.com/-- an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, private funds, corporate finance, energy, communications and technology, commercial and products liability litigation, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. Major geographical areas of concentration include Central and Eastern Europe, Russia and the CIS, and Latin America. The Firm has offices in New York, Washington, DC, Los Angeles, Houston, Moscow, St. Petersburg, Warsaw (through a Polish partnership), Kyiv, Almaty, Tashkent, Beijing, and a multinational partnership, Chadbourne & Parke, in London. * Cadwalader Wickersham Adds Four Partners from Weil Gotshal ------------------------------------------------------------ Cadwalader, Wickersham & Taft LLP has disclosed that Deryck A. Palmer, Esq., John J. Rapisardi, Esq., George A. Davis, Esq., and Andrew M. Troop, Esq. will join the firm as partners in the Financial Restructuring Department, based in New York. Each is currently a partner in the Business Finance & Restructuring Department of Weil, Gotshal & Manges LLP. The four bring over 85 collective years of restructuring experience to Cadwalader's already thriving practice, having represented debtors, creditors, lenders, and investors in complex domestic and international business reorganizations, debt restructurings, and distressed mergers and acquisitions in a wide array of industries, including healthcare, automotive, telecommunications, airline, energy, financial, retail, and manufacturing. Together, they have represented debtors in some of the largest and most complex bankruptcy cases, including Saint Vincents Catholic Medical Centers, WestPoint Stevens, IMPATH Inc., Bethlehem Steel Corporation, Doctor's Community Health Care Corporation, Syratech Corporation, Sunbeam Corporation, Marvel Entertainment, Inc., Carmike Cinemas, Inc., Global Star, Metallurg, Olympia & York, F&M Distributors, Drexel Burnham Lambert, Texaco, Inc., and United Healthcare Newark Children's Hospital. They have also represented lenders, committees and major creditor groups in numerous recent high-profile cases, including Calpine Corporation, Delta Airlines, US Airways, Independence Air, Owens Corning, Safety Kleen, Solutia, Tower Automotive, Kaiser Aluminum & Chemical Corporation, Mirant, Iridium, Pliant Corporation, Eagle Pitcher, Genesis Health Care, Mariner Post-Acute Care, Mariner Health Care, Centennial Health Care, Galey & Lord, WCI Steel, Weirton Steel, Cable and Wireless, FAO Schwarz, Aladdin Casino and Hotel, Montgomery Ward I, NSM Steel, Trump Atlantic City Casinos, FPA, MedPartners, and PhyCor. Most recently, they have been involved in three major out-of-court restructurings: Detroit Medical Center,; Florida Healthplans and a major sports franchise. They also have extensive expertise in international cross-border restructurings, including unparalleled experience advising investors with regard to Chinese restructuring law. Cadwalader Chairman and Managing Partner Robert O. Link, Jr. stated, "We are thrilled to have these well-regarded and highly experienced lawyers join our firm. Their impressive record of transactions and client base will greatly enhance our global restructuring capacity and provide us with phenomenal opportunities for cross-selling and growth. We look forward to capitalizing on the many synergies between our practices." Bruce R. Zirinsky, the Chairman of the firm's Financial Restructuring Department, stated, "I have worked with these fantastic lawyers for much of my career, and am delighted to have them join our practice. The addition of this team of top restructuring lawyers, with wide-ranging connections and experience, to our already strong and diverse restructuring practice, is a major step in accomplishing many of our strategic goals. It will broaden our representation of the corporations, financial institutions and advisory firms that form Cadwalader's core client base, substantially enhance our ability to handle a greater number of large U.S. and multinational restructuring matters, and add to our already deep knowledge and experience in the health care industry. In addition, we will be able to take on a broader role in distressed company investments and acquisitions, continue to capitalize on cross-border work in collaboration with our London office, and develop a robust Asian restructuring presence through our Beijing office." Mr. Palmer was recently recognized by Turnarounds and Workouts as one of the nation's "Outstanding Bankruptcy Lawyers." He serves as the co-vice-chair of the American Bar Association's Business Bankruptcy Committee's Healthcare Working Group and as a member of the New York State Bar Association's Committee on Bankruptcy and Committee on Courts and Community. Also an adjunct professor of law at New York Law School, he teaches advanced topics in bankruptcy and corporate reorganization and lectures at many other law schools nationwide. He is a frequent commentator and consultant on issues relating to Chinese bankruptcy laws. Mr. Palmer received his B.A. from Syracuse University and his J.D. from the University of Michigan. Mr. Rapisardi is included in the 2007 edition of The Best Lawyers in America and identified as "highly recommended counsel" in the PLC Cross-border Restructuring and Insolvency Handbook for 2006- 2007. He was also ranked in the 2005, 2006, and 2007 editions of Chambers USA: America's Leading Lawyers for Business, which said Mr. Rapisardi's "star continues to rise in the healthcare industry" and that "interviewees value his integrity, calling him 'as honest as the day is long'." Currently the bankruptcy columnist for the New York Law Journal and an adjunct professor of law at Pace Law School, Mr. Rapisardi publishes frequently and lectures extensively on a variety of subjects, including cross- border restructurings and Chinese bankruptcy law. He received his B.S. from Fordham University, his J.D. from Pace University School of Law, and his LL.M. (with a concentration in corporate and commercial law) from New York University School of Law. Mr. Davis was selected for the 2007 edition of The Best Lawyers in America. He was also recognized as a "rising star" by Chambers in 2005 and ranked in Chambers in 2006 and 2007, in which it was said that Mr. Davis "stands out due to his success in building consensus among groups with extremely different viewpoints." Turnarounds and Workouts also named Mr. Davis as one of the top ten outstanding young restructuring lawyers in 2005. He is a frequent writer and speaker on restructuring topics and an active member of the Committee on Bankruptcy and Corporate Reorganizations of the Association of the Bar of the City of New York. He received his B.S., magna cum laude, from SUNY at Binghamton and his J.D., with distinction, from Hofstra University School of Law. Mr. Troop has been included in The Best Lawyers in America since 2002. He was recently honored by Nightingale Health Care News as one of the top ten health care transaction lawyers of the year. He lectures regularly on a wide array of topics, including the intersection of nonprofit and financial restructuring laws and healthcare restructuring issues. Mr. Troop is committed to pro bono work, and was honored in 2006 by the Asian American Lawyers Association of Massachusetts for his representation of the interests of Asian and Hispanic Americans. He received his B.A., cum laude, from Amherst College and his J.D., cum laude, from Northwestern University School of Law. "We are excited to bring our talents to Cadwalader's already impressive practice. Given our relationships and experiences with Cadwalader's restructuring group and our shared vision regarding the future of the practice, we believe that Cadwalader offers a strong platform from which to make an investment in a truly international bankruptcy practice - capabilities shared by few firms in the world," stated Mr. Palmer. About Cadwalader, Wickersham & Taft Cadwalader, Wickersham & Taft LLP -- http://www.cadwalader.com/-- established in 1792, is an international law firm, with offices in New York, London, Charlotte, Washington and Beijing. Cadwalader serves a diverse client base, including top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in antitrust, banking, business fraud, corporate finance, corporate governance, environmental, healthcare, insolvency, insurance and reinsurance, litigation, mergers and acquisitions, private client, private equity, real estate, regulation, securitization, structured finance, and tax. * Bracewell & Giuliani Adds 2 New Partners from Bingham McCutchen ----------------------------------------------------------------- Bracewell & Giuliani LLP has disclosed that Evan D. Flaschen, Esq. and Gregory W. Nye, Esq. will join the firm as partners. Both are currently partners in the Financial Restructuring Group at Bingham McCutchen LLP. It is expected that a number of financial restructuring attorneys from Bingham will follow Mr. Flaschen and Mr. Nye in their move to Bracewell. This addition provides Bracewell with one of the most highly regarded financial restructuring practices in the world and adds depth to Bracewell's private funds practice, which includes representing "special situations" and distressed investment funds. Mr. Flaschen and Mr. Nye represent hedge and private equity funds, institutional investors, secured lenders, insurance companies and other financial institutions, as well as acquirers of distressed assets, in complex workouts and insolvency matters, with a particular emphasis on major corporate and multinational restructurings. "With the arrival of Evan and Greg, we've taken the logical next step toward broadening our practice offerings in the New York region and deepening our financial restructuring practice," said Patrick C. Oxford, managing partner of Bracewell & Giuliani. "Their arrival highlights our continuing focus on adding top talent in key practice areas throughout the firm. Moreover, this shows that our client-driven growth strategy in New York continues to be very successful. The seed we planted two years ago when we opened in New York with Rudy Giuliani as our new named partner continues to bear substantial fruit," said Mr. Oxford. Bracewell's latest addition adds to its growing global capabilities. Mr. Flaschen has been named twice to Euromoney's list of the Top 25 "Best of the Best" insolvency lawyers in the world. In addition, he was the only U.S. restructuring lawyer included in Asialaw's "Leading Lawyers 2006." "Greg and I are very excited to join Bracewell & Giuliani. Bracewell is not only a world class law firm, but also a true partnership where the needs of the clients and the people always come first," said Mr. Flaschen. About Bracewell & Giuliani The law firm of Bracewell & Giuliani LLP -- http://www.bracewellgiuliani.com/-- has approximately 400 attorneys and 9 offices worldwide. The firm's extensive complement of practices encompasses business transactions, litigation and government relations, including a specific focus on bank finance and securities law, tax, corporate restructuring, intellectual property, environmental law, labor and employment law, energy and telecommunications regulation, and federal and state legislative strategies. Bracewell serves a wide array of U.S. and international clients, including Fortune 500 companies and government and public entities. About Bingham McCutchen Bingham McCutchen LLP -- http://www.bingham.com/-- is an international law firm with 950 attorneys in 13 offices. The firm represents clients in high-stakes litigation, complex financing and financial regulatory issues, government affairs, and a wide variety of sophisticated corporate and technology matters. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent chapter 11 cases filed with assets and liabilities below $1,000,000: In re Performance Manufacturing, Inc. Bankr. W.D. Wis. Case No. 07-10725 Chapter 11 Petition filed March 1, 2007 See http://bankrupt.com/misc/wiwb07-10725.pdf In re Rashmee, Inc. Bankr. N.D. Tex. Case No. 07-30959 Chapter 11 Petition filed March 1, 2007 See http://bankrupt.com/misc/txnb07-30959.pdf In re Robert C. Grantham, III Bankr. W.D. Tenn. Case No. 07-21940 Chapter 11 Petition filed March 1, 2007 See http://bankrupt.com/misc/tnwb07-21940.pdf In re O & M Halal, Inc. Bankr. E.D. Pa. Case No. 07-11241 Chapter 11 Petition filed March 2, 2007 See http://bankrupt.com/misc/paeb07-11241.pdf In re Pedi-Care Pediatric Clinic, P.C. Bankr. E.D. Mich. Case No. 07-44155 Chapter 11 Petition filed March 2, 2007 See http://bankrupt.com/misc/mieb07-44155.pdf In re Ronald Lee Russell Bankr. W.D. Pa. Case No. 07-21354 Chapter 11 Petition filed March 4, 2007 See http://bankrupt.com/misc/pawb07-21354.pdf In re Lombard Apothecary, Inc. Bankr. E.D. Pa. Case No. 07-11310 Chapter 11 Petition filed March 5, 2007 See http://bankrupt.com/misc/paeb07-11310.pdf In re Valerie Willis Bankr. C.D. Calif. Case No. 07-11718 Chapter 11 Petition filed March 5, 2007 See http://bankrupt.com/misc/cacb07-11718.pdf In re All Star Cleaning & Preservation Inc. Bankr. W.D. Wash. Case No. 07-10930 Chapter 11 Petition filed March 6, 2007 See http://bankrupt.com/misc/wawb07-10930.pdf In re Best Buy Furniture, Inc. Bankr. D. Ariz. Case No. 07-00950 Chapter 11 Petition filed March 6, 2007 See http://bankrupt.com/misc/azb07-00950.pdf In re Alonso & Sons, LLC Bankr. D. Md. Case No. 07-12105 Chapter 11 Petition filed March 7, 2007 See http://bankrupt.com/misc/mdb07-12105.pdf In re Bear Express Transportation, Inc. Bankr. N.D. Ga. Case No. 07-63942 Chapter 11 Petition filed March 7, 2007 See http://bankrupt.com/misc/ganb07-63942.pdf In re L.R. Gregory & Son, Inc. Bankr. N.D. Ill. Case No. 07-04008 Chapter 11 Petition filed March 7, 2007 See http://bankrupt.com/misc/ilnb07-04008.pdf In re Thomas Tuck Zaruba Bankr. D. Alaska Case No. 07-00100 Chapter 11 Petition filed March 7, 2007 See http://bankrupt.com/misc/akb07-00100.pdf In re Toddler's Center, Inc. Bankr. E.D. Mich. Case No. 07-44490 Chapter 11 Petition filed March 7, 2007 See http://bankrupt.com/misc/mieb07-44490.pdf In re Ambulancias Emergencias Del Sur Inc. Bankr. D. P.R. Case No. 07-01172 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/prb07-01172.pdf In re DeSimone's Personal Care Home, Inc. Bankr. W.D. Pa. Case No. 07-21468 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/pawb07-21468.pdf In re Dong Hae Kim Bankr. M.D. Tenn. Case No. 07-01634 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/tnmb07-01634.pdf In re Mercury3i.com, Inc. Bankr. E.D. N.Y. Case No. 07-70775 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/nyeb07-70775.pdf In re Refrigeration Service, Inc. Bankr. E.D. Mich. Case No. 07-44530 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/mieb07-44530.pdf In re Silver Chain, LLC Bankr. W.D. Tex. Case No. 07-10406 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/txwb07-10406.pdf In re TRE, LLC Bankr. N.D. Ala. Case No. 07-01091 Chapter 11 Petition filed March 8, 2007 See http://bankrupt.com/misc/alnb07-01091.pdf In re Impact Autoglass, Inc. Bankr. D. Ariz. Case No. 07-00353 Chapter 11 Petition filed March 9, 2007 See http://bankrupt.com/misc/azb07-00353.pdf In re Heaven's Five, LLC Bankr. D. Ariz. Case No. 07-01022 Chapter 11 Petition filed March 9, 2007 See http://bankrupt.com/misc/azb07-01022.pdf In re Patricia A. Malloy Bankr. D. Mass. Case No. 07-11393 Chapter 11 Petition filed March 9, 2007 See http://bankrupt.com/misc/mab07-11393.pdf In re Pergot, LLC Bankr. D. Nev. Case No. 07-11177 Chapter 11 Petition filed March 9, 2007 See http://bankrupt.com/misc/nvb07-11177.pdf In re Joseph S. Ozment Bankr. W.D. Tenn. Case No. 07-22233 Chapter 11 Petition filed March 10, 2007 See http://bankrupt.com/misc/tnwb07-22233.pdf In re Jean J. Gilles Bankr. D. Mass. Case No. 07-11434 Chapter 11 Petition filed March 12, 2007 See http://bankrupt.com/misc/mab07-11434.pdf In re Mattress Now, Inc. Bankr. E.D. N.C. Case No. 07-00501 Chapter 11 Petition filed March 12, 2007 See http://bankrupt.com/misc/nceb07-00501.pdf In re Oasis of Hope Church Bankr. E.D. N.C. Case No. 07-00913 Chapter 11 Petition filed March 12, 2007 See http://bankrupt.com/misc/nceb07-00913.pdf In re Richmond Lighting Corp. Bankr. D. N.J. Case No. 07-13331 Chapter 11 Petition filed March 12, 2007 See http://bankrupt.com/misc/njb07-13331.pdf In re Sehat Properties, LLC Bankr. D. Ore. Case No. 07-30819 Chapter 11 Petition filed March 12, 2007 See http://bankrupt.com/misc/orb07-30819.pdf In re Columbia Home Corp. Bankr. D. Md. Case No. 07-12325 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/mdb07-12325.pdf In re DeSoto Gym, Inc. Bankr. N.D. Tex. Case No. 07-31251 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/txnb07-31251.pdf In re Melvin Gene Tharp Bankr. W.D. Okla. Case No. 07-10727 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/okwb07-10727.pdf In re Noteable Auto & Truck Sales, LLC Bankr. M.D. Tenn. Case No. 07-01762 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/tnmb07-01762.pdf In re Ortolani Jewelers Bankr. D. N.J. Case No. 07-13426 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/njb07-13426.pdf In re Rizzo's Restaurant, Inc. Bankr. E.D. Pa. Case No. 07-11511 Chapter 11 Petition filed March 13, 2007 See http://bankrupt.com/misc/paeb07-11511.pdf ********* 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, Jason A. Nieva, Cherry A. Soriano-Baaclo, Melvin C. Tabao, Melanie C. Pador, 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 ***