/raid1/www/Hosts/bankrupt/TCR_Public/070322.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 22, 2007, Vol. 11, No. 69
Headlines
20210 TRUST: Voluntary Chapter 11 Case Summary
ACCREDITED HOME: Gets $200 Million Commitment from Farallon
ACCREDITED HOME: Form 10-K Filing Delay Cues Delisting Notice
ACQUATIC CELLULOSE: Peterson Sullivan Raises Going Concern Doubt
ACRO BUSINESS: Court Approves Lighthouse as Management Consultant
ADVANCED MARKETING: Can Pay Employees Under Retention Bonus Plan
ADVANCED MEDICAL: Offering $200 Million of Senior Sub. Notes
ADVANCED MEDICAL: Moody's Rates $200 Million Senior Notes at B2
ADVANCED MEDICAL: S&P Rates $200 Million Senior Notes at B
ADVANTAGE CAPITAL: Dec. 31 Balance Sheet Upside-down by $7.2 Mil.
AFFILIATED COMPUTER: Buyout Offer Cues Fitch's Negative Watch
AFFILIATED COMPUTER: Buyout Offer Cues S&P's Negative CreditWatch
ALLSTATES MOVING: Case Summary & 14 Largest Unsecured Creditors
ATLANTIC COUNTY: Fitch Lifts $53.5 Million Revenue Bonds' Rating
BLOCKBUSTER INC: Inks Amended and Restated Employment Pact w/ CEO
C-BASS: Fitch Puts BB+ Rating on $6 Million Class B-4 Certificates
C2 GLOBAL: Mintz & Partners Expresses Going Concern Doubt
CACI INTERNATIONAL: S&P Withdraws Ratings at the Company's Request
CAMBIUM LEARNING: Moody's Rates Proposed $158MM Facilities at B2
CAREY INT'L: Poor Performance Cues Moody's to Lower All Ratings
CAREY INT'L: Poor Performance Cues S&P Junk Corp. Credit Rating
CATHOLIC CHURCH: Spokane Files Second Amended Plan Supplements
CATHOLIC CHURCH: Spokane $1/Claim Estimation Temporarily Allowed
CATHOLIC CHURCH: Spokane's Solicitation Procedures Established
CATHOLIC CHURCH: Davenport General Claims Bar Date Set for July 26
CDC MORTGAGE: S&P Puts Default Rating on Class B Certificates
CENTENNIAL COMMS: Completes Sale of Unit to Trilogy for $80 Mil.
CEQUEL COMMS: Moody's Rates New $2.325 Billion Term Loan at B1
CITATION CORP: Wants Deloitte as Accountants and Auditors
CITATION CORP: Wants BSI as Claims and Noticing Agent
CITIGROUP MORTGAGE: Moody's Rates Class M-11 Certificates at Ba2
CITIZENS COMMS: Commences Private Offering of Senior Notes
COAST INVESTMENT: Moody's Lifts Rating on $24 Million Notes to B2
COMMUNITY HEALTH: Triad Deal Prompts S&P's Negative CreditWatch
COPELANDS' ENTERPRISES: Court Approves Disclosure Statement
COUDERT BROTHERS: Wants Edwin Matthews as Special Counsel
DANA CORP: Gives Updates on Pre-Tax Income Improvement Initiatives
DANA CORP: Post $739 Million Net Loss in 2006
DISTRIBUTED ENERGY: Losses Cue PwC to Raise Going Concern Doubt
EDDIE BAUER: Moody's Rates Proposed $225 Million Term Loan at B2
EDUCATE INC: Ernst & Young LLP Raises Going Concern Doubt
ENCYSIVEW PHARMACEUTICALS: KPMG LLP Raises Going Concern Doubt
ESCHELON TELECOM: 2006 Net Loss Decreases to $2.78 Million
ESCHELON TELECOM: Inks $710 Mil. Merger Pact with Integra Telecom
FONTAINEBLEAU LAS VEGAS: S&P Rates $1.85 Billion Senior Loan at B
FRANCISCO MENDOZA: Case Summary & 40 Largest Unsecured Creditors
FREMONT GENERAL: Mulls Sale of $4 Bil. Sub-Prime Residential Loans
GATEHOUSE MEDIA: Incurs $1.57 Million Net Loss in Full Year 2006
GLOBAL HOME: Hires Johnson Associates as Compensation Advisor
GLOBAL HOME: Ct. Extends Time to Remove Civil Suits Until July 15
GOODYEAR TIRE: Inks Pact w/ Union on Scheduling, Hiring & Vacation
GRAHAM PACKAGING: Moody's Assigns B1 Rating to Amended Facility
HANCOCK FABRICS: Files for Bankruptcy to Reduce Secured Debt
HANCOCK FABRICS: Case Summary & 31 Largest Unsecured Creditors
HAROLD'S STORES: Posts $3.1 Million Net Loss in Qtr. Ended Feb. 3
HARVEST OPERATIONS: Moody's Cuts Corp. Family Rating to B3 from B2
HEALTH-CHEM: Demetrius Raises Going Concern Doubt in 2005 Report
HESS CORPORATION: Moody's Lifts Debt's Rating to Baa3 from Ba1
HOST HOTELS: S&P Rates Proposed $550 Million Senior Notes at BB
IMPERIAL PETROLEUM: Jan. 31 Balance Sheet Upside-Down by $5.8 Mil.
IMPLANT SCIENCES: Fiscal 2nd Quarter Net Loss Lowers to $441,000
INFRASOURCE SERVICES: Earns $26.14 Mil. in Year Ended December 31
INTEGRATED HEALTH: Wants July 2 Deadline to Remove Civil Actions
JP MORGAN: Fitch Holds Rating on $4MM Class H Certificates at BB-
KAR HOLDINGS: Moody's Rates Proposed $1.7 Billion Sr. Debts at Ba3
KARA HOMES: Mulls Selling Remainder of Hidden Lakes Development
KEVIN WASKO: Case Summary & Nine Largest Unsecured Creditors
LENOX GROUP: Lesa Chittenden Resigns as Lenox Brands President
LIQUIDMETAL TECH: Choi Kim & Park Raises Going Concern Doubt
MICHAEL ZANONE: Case Summary & Seven Largest Unsecured Creditors
MOHEGAN TRIBAL: Moody's Holds Corporate Family Rating at Ba1
MORTGAGE LENDERS: Wells Fargo Wants Servicing Rights Terminated
MORTGAGE LENDERS: Panel Hopes to Resolve Issues with Wells Fargo
MSC 2007-SRR3: Fitch Rates $1.49 Million Class R Notes at B-
NE ENVIRONMENTAL: Voluntary Chapter 11 Case Summary
NORTHWEST AIRLINES: Ad Hoc Panel's Plea to Seal Report Denied
NORTHWEST AIRLINES: Ad Hoc Panel to Appeal Judge Gropper's Ruling
NOVASTAR FINANCIAL: Reduces Workforce by 17%
OCCULOGIX INC: Ernst & Young Expresses Going Concern Doubt
PACIFIC GAS: SC Allows Travelers to Seek Repayment of Legal Fees
PENHALL INT'L: Debt Financing Cues Moody's to Cut Rating to B3
PRUDENTIAL MORTGAGE: Fitch Lifts Rating on Class L Certs. to BB+
PTS: High Debt Leverage Prompts S&P's B+ Corporate Credit Rating
REFCO INC: Plan Administrators Want Protocol on 140 Related Claims
REVLON CONSUMER: Dec. 31 Balance Sheet Upside-Down by $1.22 Bil.
ROTECH HEALTHCARE: Posts $534.1 Mil. Net Loss in Yr. Ended Dec. 31
RURAL/METRO CORP: Lenders Waive Default Due to 10-Q Filing Delay
S-TRAN HOLDINGS: Plan-Filing Extension Objections Due Today
S-TRAN HOLDINGS: Has Until March 31 to Use ACFC's Cash Collateral
SABRE HOLDINGS: Moody's May Junk Rating on $800 Million Notes
SABRE INC: S&P Holds B+ Rating on Proposed $3.5 Billion Facility
SALOMON BROTHERS: Fitch Holds B- Rating on $7 Mil. Class L Certs.
SANITARY AND IMPROVEMENT: Files Disclosure Statement & Plan
SANTA FE: Creditors Have Until April 16 to File Claims
SASCO NIM: DBRS Rates $3.9 Million Class C Certificates. at BB
SBE INC: Posts $1.1 Million Net Loss in Quarter Ended January 31
SENTEX SENSING: Hausse Taylor Raises Going Concern Doubt
SHILOH INDUSTRIES: Discloses Results of Litigation
SOUTH BEACH: Secured Lender Sobe Mezz Selling Collateral on Monday
SPANSION INC: Fitch Holds BB- Rating on $175 Mil. Senior Facility
SPGS SPC: Fitch Rates $1.4 Million Class R Notes at B-
STRATOS GLOBAL: CIP Canada Deal Cues Moody's to Review Ratings
SWEETSKINZ INC: Court Sets April 30 as General Claims Bar Date
TENET HEALTHCARE: Fitch Holds Senior Unsecured Notes' Rating at B-
TRIAD HOSPITALS: Merger Deal Cues S&P to Hold Negative CreditWatch
TRIBUNE CO: Sam Zell Bargains Revised Proposal, WSJ Says
UNIGENE LABORATORIES: Grant Thornton Raises Going Concern Doubt
VALLEY CITY STEEL: Gets Verdict Against Shiloh Industries
VICTORIA INDUSTRIES: Files Restated 2005 Annual Report
VIEW SYSTEMS: Amended 2005 and 2004 Reports Show Higher Net Losses
VIEWPOINT CORP: PricewaterhouseCoopers Raises Going Concern Doubt
WALL STREET UNDERGROUND: Court Sets April 11 as Claims Bar Date
WAYNE READ: Case Summary & 10 Largest Unsecured Creditors
WERNER LADDER: Black Diamond Named as Stalking Horse Bidder
WRAP ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
YDD HOLDINGS: Moody's Junks Rating on Proposed $60. Mil. Sr. Loan
YUKOS OIL: Three More Auctions Set in April to Sell 35 Assets
YUKOS OIL: Rosneft Borrows $22 Billion to Fund Asset Purchase
ZOOMERS HOLDING: Chapter 11 Case Dismissal Hearing Set on June 20
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
20210 TRUST: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: 20210 Trust
20058 Ventura Boulevard
#184 Woodland Hills, CA 91364
Bankruptcy Case No.: 07-10837
Chapter 11 Petition Date: March 19, 2007
Court: Central District Of California (San Fernando Valley)
Judge: Kathleen Thompson
Debtor's Counsel: Michael Jay Berger, Esq.
9454 Wilshire Boulevard 6th Floor
Beverly Hills, CA 90212-2929
Tel: (310) 271-6223
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
The Debtor does not have any creditors who are not insiders.
ACCREDITED HOME: Gets $200 Million Commitment from Farallon
-----------------------------------------------------------
Accredited Home Lenders Holding Co. had received a commitment
for a $200 million term loan from entities managed by Farallon
Capital Management LLC. The proceeds of the loan will fund the
company's general working capital, mortgage loans, and other
corporate needs.
Accredited Home said that the loan will be a secured obligation
of the Company and its subsidiaries. The loan has a five-year
term with an interest rate of 13% per year, and will be able to
be repaid by the Company at any time over the life of the loan,
subject to certain conditions and prepayment fees.
In connection with the term loan, the company will issue Farallon
approximately 3.3 million warrants in a private placement, with an
exercise price equal to $10 per share. The warrants will expire
ten years from their issuance date.
Moreover, Farallon will also receive certain preemptive rights to
purchase additional equity securities of the Company and certain
registration rights with respect to its equity securities in the
company. The closing of the proposed transaction is subject to
completion of definitive documentation, receipt of required third
party and governmental consents and licenses, and certain other
conditions.
A full-text copy of Accredit Home Lenders' the Commitment Letter
is available for free at http://ResearchArchives.com/t/s?1bea
About Accredited Home Lenders
Headquartered in San Diego, California, Accredited Home Lenders
Holding Co. (NASDAQ:LEND) -- http://www.accredhome.com/-- is a
mortgage company operating throughout the U.S. and in Canada.
Founded in 1990, the company originates, finances, securitizes,
services, and sells non-prime mortgage loans secured by
residential real estate.
Waiver
As reported in the Troubled Company Reporter on March 20, 2007,
the company reached an agreement to sell substantially all of its
loans held for sale that are currently funded out of its warehouse
and repurchase credit facilities, asset-backed commercial paper
facility, and its equity. The $2.7 billion of loans held for sale
will be sold at a substantial discount in order to alleviate
recent pressures from margin calls.
While the sale of the loans held for sale has substantially
reduced the Company's debt outstanding in its warehouse and
repurchases facilities, Accredited is continuing to seek waivers
and extensions of waivers of certain financial and operating
covenants, including waivers relating to required levels of net
income and requirements to file the Form 10-K by March 16, 2007.
There can be no assurance that the company will be successful in
receiving any of the required waivers.
ACCREDITED HOME: Form 10-K Filing Delay Cues Delisting Notice
-------------------------------------------------------------
Accredited Home Lenders Holding Co. received notice from the
NASDAQ staff that the company's common stock is subject to
delisting from The NASDAQ Stock Market. NASDAQ issued the notice
because the company failed to file its 2006 Annual Report on Form
10-K before the March 15, 2006, deadline.
The company will request a hearing before the NASDAQ Listing
Qualifications Panel to appeal the determination. The appeal will
stay the delisting of the company's stock from The NASDAQ Stock
Market pending the Panel's decision while the company is working
to file its Form 10-K as soon as possible.
In addition, Accredited announced that a class action lawsuit was
filed against the Company and certain of its officers and
directors. The lawsuit generally alleges that, between November 1,
2005 and March 12, 2007, Accredited issued materially false and
misleading statements regarding the Company's business and
financial results causing the Company's stock to trade at
artificially inflated prices. The Company believes that the
lawsuit has no merit and intends to defend the case vigorously.
As announced previously, Accredited continues to explore various
strategic options, including raising additional capital to enhance
liquidity and provide the Company with the flexibility to retain
or sell originated loans based on an assessment of the best
overall return. Accredited is currently in discussions regarding a
possible financing arrangement with a third party that would
provide additional liquidity. The Company has retained a financial
advisor in this endeavor. There can be no assurance that the
Company will be successful in completing a financing arrangement
or in obtaining the additional liquidity.
About Accredited Home Lenders
Headquartered in San Diego, California, Accredited Home Lenders
Holding Co. (NASDAQ:LEND) -- http://www.accredhome.com/-- is a
mortgage company operating throughout the U.S. and in Canada.
Founded in 1990, the company originates, finances, securitizes,
services, and sells non-prime mortgage loans secured by
residential real estate.
Waiver
As reported in the Troubled Company Reporter on March 20, 2007,
the company reached an agreement to sell substantially all of its
loans held for sale that are currently funded out of its warehouse
and repurchase credit facilities, asset-backed commercial paper
facility, and its equity. The $2.7 billion of loans held for sale
will be sold at a substantial discount in order to alleviate
recent pressures from margin calls.
While the sale of the loans held for sale has substantially
reduced the Company's debt outstanding in its warehouse and
repurchases facilities, Accredited is continuing to seek waivers
and extensions of waivers of certain financial and operating
covenants, including waivers relating to required levels of net
income and requirements to file the Form 10-K by March 16, 2007.
There can be no assurance that the company will be successful in
receiving any of the required waivers.
ACQUATIC CELLULOSE: Peterson Sullivan Raises Going Concern Doubt
----------------------------------------------------------------
Peterson Sullivan PLLC raised substantial doubt on Aquatic
Cellulose International Corp.'s ability to continue as a going
concern after auditing the company's financial statements for the
year ended May 31, 2006 and 2005. The auditing firm reported that
company has not generated positive cash flows from operations and
has an accumulated deficit at May 31, 2006.
For the year ended May 31, 2006, the company incurred a net loss
of $5,106,503, versus a net loss of $1,166,865 for the year ended
May 31, 2005. The company had equity in earnings of leases
totaling $457,243 for 2006, as compared with $91,634 in 2005, as
restated.
The company's balance sheet as of May 31, 2006, showed total
assets of $1,470,959 and total current liabilities of $11,089,198,
resulting to total stockholders' deficit of $9,618,239. Its
accumulated deficit as of May 31, 2006, was $15,036,863.
The company's May 31 balance sheet also showed strained liquidity
with total current assets solely in the form of cash totaling
$83,817 available to pay total current liabilities of $11,089,198.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1bd1
About Aquatic Cellulose
Aquatic Cellulose International Corp. (PNK: AQCI) is a Nevada
corporation originally organized as Aquatic Cellulose Ltd. and was
incorporated in March of 1996. Aquatic acquires and develops
crude oil and natural gas reserves and production principally in
the state of Texas of the U.S.
ACRO BUSINESS: Court Approves Lighthouse as Management Consultant
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Minnesota gave ACRO
Business Finance Corp. permission to employ Lighthouse Management
Group Inc. as its management consultant.
The firm is expected to:
a. provide services to oversee the liquidation of the
Debtor's assets and make recommendation to some funding
banks on how to maximize the value of each of the Debtor's
outstanding loans, and
b. provide the service of Jim Bartholomew as Chief
Restructuring Officer of the Debtor through the
confirmation of its Chapter 11 Plan of Liquidation
The firm tells the Court that it will charge the Debtor on a
bi-weekly basis for its services. The firm's professionals
billing rate are:
Professional Hourly Rate
------------ -----------
James Bartholomew $250
Tim Becker $250
Mark Allen $215
Patrick Finn $215
Mr. Bartholomew, a principal of the firm, assures the Court that
the firm does not hold any interest adverse to the Debtor's estate
and is "disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
Mr. Bartholomew can be reached at:
Jim Bartholomew
Principal
Lighthouse Management Group Inc.
P.O. Box 2057
Stillwater, Minnesota 55082
Tel: (651) 439-5119
Fax: (651) 439-5120
http://lighthousemanagement.com/
Headquartered in Minneapolis, Minnesota, Acro Business Finance
Corp. provides financial services. The Company filed for
chapter 11 protection on July 12, 2006 (Bankr. D. Minn. Case No.
06-41364). Clinton E. Cutler, Esq., and Cynthia A. Moyer, Esq.,
at Fredrikson & Byron, PA, represent the Debtor. No Official
Committee of Unsecured Creditors has been appointed in this case.
When the Debtor filed for protection from its creditors, it
estimated assets and debts between $10 million and $50 million.
ADVANCED MARKETING: Can Pay Employees Under Retention Bonus Plan
----------------------------------------------------------------
The Hon. Judge Christopher S. Sontchi of the U.S. Bankruptcy Court
for the District of Delaware has authorized Advanced Marketing
Services Inc. and its debtor-affiliates to pay key AMS Employees
retention bonuses aggregating $820,000 under the AMS Retention
Bonus Plan.
Judge Sontchi further rules that:
-- the Debtors may use up to $50,000 of the Retention Plan
Fund to add additional individuals to the Retention Plan or
to increase the amount of a particular employee's retention
pay, with the consent of the Official Committee of
Unsecured Creditors. If the Committee does not consent,
the Debtors must obtain prior Court approval.
-- all payments under the Retention Plan will be in lieu of
any other performance bonus, severance pay, or retention
compensation or other plan program.
-- certain individuals which the Debtors propose to include in
the Retention Plan have been deferred from participation in
the Retention Plan and will be considered for participation
by the Court on March 13, 2007, at 10:30 a.m., which, if
approved by the Court, will correspondingly increase the
aggregate amount of the Retention Plan Fund.
The provision for postpetition payments pursuant to the Retention
Plan will be administrative expenses of the estates, Judge
Sontchi says.
As reported in the Troubled Company Reporter on March 6, 2007, the
Debtors asked the Court for approval for the payment of:
a) sale-related incentives to AMS employees including
members of senior management (AMS Management Incentive
Plan)
b) retention plan to certain AMS non-management employees (AMS
Employee Retention Plan)
c) allowing all payments thereunder as administrative expenses
of the estates.
The request was made to ensure the continued availability of
qualified, trained, and motivated personnel and executives
necessary to bring an AMS sale to completion and to oversee and
implement the complicated business arrangements necessary to
effect a sale of the business or its material parts and an
inventory return program.
About Advanced Marketing
Based in San Diego, California, Advanced Marketing Services, Inc.
-- http://www.advmkt.com/-- provides customized merchandising,
wholesaling, distribution and publishing services, currently
primarily to the book industry. The company has operations in the
U.S., Mexico, the United Kingdom and Australia and employs
approximately 1,200 people Worldwide.
The company and its two affiliates, Publishers Group Incorporated
and Publishers Group West Incorporated filed for chapter 11
protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480
through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron,
Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP,
represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark
D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as Local Counsel. When the
Debtors filed for protection from their creditors, they listed
estimated assets and debts of more than $100 million. The
Debtors' exclusive period to file a chapter 11 plan expires on
Apr. 28, 2007. (Advanced Marketing Bankruptcy News, Issue No. 8;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
ADVANCED MEDICAL: Offering $200 Million of Senior Sub. Notes
------------------------------------------------------------
Advanced Medical Optics Inc. intends to offer approximately
$200 million aggregate principal amount of senior subordinated
notes due 2017. The offering will be made only to qualified
institutional buyers and non-U.S. foreign investors in accordance
with Rule 144A and Regulation S, respectively, under the
Securities Act of 1933.
The company said that the notes will be unsecured senior
subordinated obligations of the company. The interest rate
and other terms of the notes will be determined by negotiations
between the company and the initial purchasers of the notes.
The company expects to use the net proceeds from the offering, and
borrowings under a new senior credit facility that it expects to
a. purchase all of the outstanding common stock of IntraLase
Corp., pursuant to the reported Agreement and Plan of
Merger, dated Jan. 5, 2007, by and among Advanced Medical,
IntraLase, and Ironman Merger Corporation;
b. repay, if any, all outstanding indebtedness under its
existing senior credit facility
c. pay related fees and expenses; and
d. pay for other general corporate purposes with any remaining
proceeds.
The offering of the notes is conditioned upon and will be
consummated substantially concurrent with the closing of the
merger with IntraLase.
About IntraLase
Headquartered in Irvine, California, IntraLase Corp. --
http://www.intralase.com -- designs, develops, and manufactures
an ultra-fast laser that is revolutionizing refractive and corneal
surgery by creating safe and more precise corneal incisions.
IntraLase is presently in the process of commercializing
applications of its technology in the treatment of corneal
diseases that require corneal transplant surgery. The company's
proprietary laser and disposable patient interfaces are presently
marketed throughout the United States and 33 other countries.
About Advanced Medical
Based in Santa Ana, California, Advanced Medical Optics, Inc.
(NYSE: EYE) -- http://www.amo-inc.com/-- develops, manufactures
and markets ophthalmic surgical and contact lens care products.
AMO employs approximately 3,600 worldwide. The company has
operations in 24 countries and markets products in 60 countries
including Puerto Rico and Brazil.
ADVANCED MEDICAL: Moody's Rates $200 Million Senior Notes at B2
---------------------------------------------------------------
Moody's Investors Service confirmed Advanced Medical Optics,
Inc.'s B1 Corporate Family Rating and all of its existing debt
ratings.
Concurrently, Moody's assigned these new ratings:
* a Ba1 rating to a $300 million six year senior secured
* Ba1 rating to a $400 million seven year senior secured term
loan B, and
* B2 rating to $200 million senior subordinated notes due 2017.
The rating outlook is stable.
These rating actions conclude the rating review for possible
downgrade that began on Jan. 9, 2007.
Proceeds from the new subordinated notes and term loan B, along
with approximately $172 million under the new revolver and cash
balances at IntraLase Corp., will be used to fund the acquisition
of IntraLase, pay upfront integration costs such as severance
costs, and pay related fees and expenses. The closing of the
transaction is expected in early April 2007. Upon the closing of
the transaction, Moody's will withdraw the ratings on the existing
$300 million senior secured revolver due 2009.
AMO's B1 ratings reflect the application of Moody's Global Medical
Device rating methodology. Using an average of the 12 factors
specified in the methodology, AMO's "methodology-implied" rating
is approximately "Ba3" based on financial data through
Dec. 31, 2006.
Very favorable scores on research and development as a percentage
of sales and adjusted EBIT margin are offset by reliance on
acquisitions, share buybacks and dividends, free cash flow to
adjusted debt, and adjusted debt to EBITDA. Pro forma for the
debt-financed IntraLase acquisition, Moody's anticipates that the
methodology-implied rating will remain at "Ba3", which is one
notch above the actual rating of B1.
The confirmation of the B1 Corporate Family Rating acknowledges
AMO's revenue size, improved profitability and stable free cash
flow.
"Moody's expects that AMO's revenue size will continue to increase
driven by organic growth coupled with additional tuck-in
acquisitions," said Sidney Matti, Moody's analyst.
As a result of revenue growth coupled with cost saving programs,
the company's adjusted EBIT margin improved from 9.3% for the
fiscal year ended Dec. 31, 2004, to 16.9% for the fiscal year
ended Dec. 31, 2006. Moody's anticipates that the company's
operating performance will increase over the near term, as the
IntraLase acquisition will provide AMO with cross-selling
opportunities. Currently, IntraLase's femtosecond laser has 30%
market share, while AMO's excimer laser product is found in a
significant number of LASIK surgery centers.
The B1 Corporate Family Rating also considers the heightened pro
forma leveraged position, highly acquisitive nature and
significant concentration with its top customer segment.
The stable ratings outlook anticipates the company will
successfully integrate IntraLase, benefit from cross-selling
opportunities in the laser vision correction market and experience
continued improved operating performance in the high single digits
within its existing businesses. Additionally, the rating outlook
incorporates Moody's expectation that the company will continue
its acquisition strategy over the near term.
These ratings were confirmed:
-- Ba1, LGD1, 7% rating on the $300 million Senior Secured
Revolver due 2009;
-- B2 rating on the $246 million Convertible Senior
Subordinated Notes due 2024, changed to LGD5, 71% from
LGD4,66%);
-- B1 Probability of Default rating; and
-- B1 Corporate Family Rating.
These ratings were assigned:
-- $300 million Six Year Senior Secured Revolver at Ba1,
LGD2, 15%;
-- $400 million Seven Year Senior Secured Term Loan B at Ba1,
LGD2, 15%; and
-- $200 million Senior Subordinated Notes due 2017 at B2,
LGD5, 71%.
Headquartered in Santa Ana, California, Advanced Medical Optics,
Inc. is a leader in the development, manufacture and marketing of
medical devices for the eye through three major product lines:
cataract/implant, laser vision correction, and eye care. For the
fiscal year ended Dec. 31, 2006, Advanced Medical Optics, Inc.
reported approximately $1 billion in revenues.
ADVANCED MEDICAL: S&P Rates $200 Million Senior Notes at B
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
Santa Ana, California-based Advanced Medical Optics Inc.'s
$200 million senior subordinated notes due 2017.
At the same time, Standard & Poor's assigned its 'BB' bank loan
rating to the company's proposed $700 million senior secured
credit facility, consisting of a $400 million term loan B due 2014
and a $300 million revolving credit facility due 2013.
The facility is rated 'BB', with a recovery rating of '1',
indicating the expectation for full recovery of principal in the
event of a payment default. Proceeds of the facility, in
addition to $200 million of subordinated notes, will be used to
finance the $808 million acquisition of IntraLase Corp., including
related fees and upfront integration costs.
ADVANTAGE CAPITAL: Dec. 31 Balance Sheet Upside-down by $7.2 Mil.
-----------------------------------------------------------------
Advantage Capital Development Corp. reported results for the three
months ended Dec. 31, 2006, with a decrease in net assets from
operations of $157,891, versus $472,359 for the same period a year
earlier.
Total revenues for the three months ended Dec. 31, 2006, were
$52,566, solely from interest income. The company had total
revenues of $89,568 for the three months ended Dec. 31, 2005, of
which, $8,240 is from capital raising fees, $2,291 from factoring
fees, and $79,037 from interest income.
For the nine months ended Dec. 31, 2006, the company had a
decrease in net assets from operations of $327,769 on total
revenues of $157,538. The company had a decrease in net assets
from operations of $1,522,371 on total revenues of $249,331 for
the nine months ended Dec. 31, 2005.
As of Dec. 31, 2006, the company's balance sheet showed total
assets of $1,472,440 and total liabilities of $8,701,502,
resulting to total stockholders' deficit of $7,229,062.
Full-text copies of the company's quarter financials are available
for free at http://ResearchArchives.com/t/s?1bd4
About Advantage Capital
Based in Aventura, Florida, Advantage Capital Development
Corp. is an internally managed, non-diversified, closed-end
investment company. It is formerly known as CEC Industries Corp.
AFFILIATED COMPUTER: Buyout Offer Cues Fitch's Negative Watch
-------------------------------------------------------------
Fitch Ratings has placed Affiliated Computer Services, Inc. on
Rating Watch Negative after the proposed offer from Darwin Deason,
founder and current chairman of ACS, and Cerberus Capital
Management L.P. to acquire the company in a leveraged buyout
transaction valued at $8.2 billion, including existing debt.
Ratings affected:
-- Issuer Default Rating 'BB';
-- Senior secured revolving credit facility at 'BB';
-- Senior secured term loan at 'BB'; and
-- Senior notes at 'BB-'.
Approximately $3.3 billion of debt, including the $1 billion
revolving facility, is affected by Fitch's action.
Resolution of the Negative Rating Watch is contingent on these
factors:
-- The decision reached by ACS' Board of Directors to accept or
reject the offer following a review of the transaction;
-- The degree of leverage utilized in financing the acquisition
should the Board approve the transaction;
-- The acquirer's ability to arrange what Fitch believes will
be approximately $6 billion of debt financing, assuming a
30% equity contribution.
Fitch believes ACS' credit metrics proforma for the transaction
support an IDR in the 'B' category. Based on the proposed offer
price and a 30% equity contribution, Fitch estimates pro forma
leverage may increase to 6.3x from 2.8x as of Dec. 31, 2006 due to
a projected $3.3 billion increase in outstanding debt to
$6 billion in order to finance the transaction.
Fitch believes proforma interest coverage may decline to 1.7x from
7.1x for the latest 12 months ended Dec. 31, 2006.
Fitch believes the majority of outstanding debt will be refinanced
in an LBO transaction. Total debt as of Dec. 31, 2006 was
approximately $2.6 billion, consisting primarily of $1.8 billion
of secured term loans due 2013, $275 million of borrowings under
the revolving credit facility, $250 million of senior notes due
June 2010 and $250 million of senior notes due June 2015.
Under the terms of the credit facility agreement, consummation of
the proposed transaction would be an event of default, requiring
immediate repayment of all outstanding borrowings under the
facility due to a change of control provision and likely violation
of financial covenants in the agreement, including maximum
consolidated total leverage ratio of 4x and interest coverage
covenant of 4.5x.
The indenture governing ACS' $500 million of senior notes offers
no protection in the event of an LBO. ACS previously granted
equal and ratable liens in favor of the holders of the senior
notes in all assets other than accounts receivable when it
obtained the current secured credit facility. The 'BB-' rating
for the senior notes incorporates the fact that the secured credit
facilities have the sole rights to ACS' accounts receivable, which
represented approximately 21% of total assets and 43% of tangible
assets as of Dec. 31, 2006.
Acceleration of principal on the senior notes as a result of ACS'
failure to timely file its 10-K for the year ended June 30, 2006,
remains uncertain due to the company's pending lawsuit against its
Trustee, in which ACS seeks a declaratory judgment affirming its
position that no default has occurred under the indenture.
However, Fitch believes there is a possibility the senior notes
will be refinanced in the proposed transaction to avoid the
uncertainty associated with a sizeable contingent payment relative
to current liquidity and minimal pro forma free cash flow in a
highly leveraged capital structure.
AFFILIATED COMPUTER: Buyout Offer Cues S&P's Negative CreditWatch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' corporate
credit and senior secured ratings on Dallas, Texas-based
Affiliated Computer Services Inc. on CreditWatch with negative
implications.
"The CreditWatch placement follows the announcement that an
investment group led by ACS' founder has offered to buy the
company for about $8.2 billion (including the assumption of
debt)," said Standard & Poor's credit analyst Philip Schrank.
If the LBO is successful, operating lease-adjusted leverage likely
will increase from the 5x threshold incorporated into the current
rating.
Standard & Poor's will monitor any negotiations and respond to any
change in the company's business or financial profile.
ALLSTATES MOVING: Case Summary & 14 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: AllStates Moving, Inc.
4296 San Carlos Drive
Macon, GA 31206
Bankruptcy Case No.: 07-50620
Type of Business: The Debtor is a moving company.
Chapter 11 Petition Date: March 19, 2007
Court: Middle District of Georgia (Macon)
Debtor's Counsel: Neal Weinberg, Esq.
Neal Weinberg, P.C.
P.O. Drawer 7716 3329 Northside Drive
Macon, GA 31209-7716
Tel: (478) 474-4277
Fax: (478) 474-4278
Estimated Assets: $10,000 to $100,000
Estimated Debts: $100,000 to $1 Million
Debtor's 14 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service $60,000
Bankruptcy & Insolvency
P.O. Box 995
Atlanta, GA 30370
Ask Financial $50,356
2600 Eagan Woods Drive, Suite 220
Eagan, MN 55121
AIG, Inc. $42,500
P.O. Box 409
Parsippany, NY 07054
Mattel Insurance S.V.C. $6,800
Nextel Partners $5,800
Lincoln M&S Co., Inc. $3,200
American Redball $3,000
Lamar Companies $2,800
Office Depot credit card $2,541
purchases
Home Depot credit card $1,310
purchases
Claims Management Service $1,000
Radiology Associates $300
N.C.O. Financial $205
Carlyle Van Lines $163
ATLANTIC COUNTY: Fitch Lifts $53.5 Million Revenue Bonds' Rating
----------------------------------------------------------------
During the course of routine surveillance, Fitch upgrades to
'BBB-' from 'B' the rating on approximately $53.5 million in
outstanding Atlantic County Utilities Authority, New Jersey solid
waste system revenue bonds, series 1992.
The Rating Outlook is Stable.
The upgrade to 'BBB-' reflects the ACUA's strong fiscal
management, stable financial operations and debt service coverage,
and ample reserves. While the ACUA has performed well in the face
of a changed competitive environment and substantial litigation,
the low investment grade rating and Stable Rating Outlook largely
reflects the authority's dependence upon continued state subsidies
for debt service payments. While this remains a notable risk,
Fitch believes that consistent state payments over the last nine
fiscal years, including the March 1, 2007, subsidy, provide a
reasonable level of assurance in the state's commitment to
maintaining ACUA's continued stable operations. The trustee has
waived replenishment of the partially depleted debt service
reserve fund as long as state monies continue to flow into the
system. The ACUA must request the funds from the state prior to
each semi-annual debt service payment and while there is no legal
requirement, the state has provided a level subsidy since 2003.
State support for all local solid waste systems in fiscal 2007 is
budgeted at $40 million, representing a de minimis 0.1% of total
state appropriations.
According to audited financial statements, the ACUA is currently
thinly covering debt service payments from net revenues, excluding
state support. The 2005 audit shows debt service coverage of
1.13x from net revenues and 1.83x when the state subsidy is
included. State support has been stable at $5.6 million per year
since 2003 and represents 13% of unaudited 2006 revenues. The
subsidy allows ACUA to dedicate $14 of the $67 per ton blended tip
fee to renewal and replacement to fund maintenance-related capital
expenditures; without it, deferred maintenance would be a large
and growing problem. Audited 2005 results show $4.6 million spent
on capital projects and coverage of operating expenses, debt
service and capital costs from all available revenues at a low
1.18x.
In addition to the state subsidy, strong financial management has
kept the ACUA's fiscal position stable. Unaudited 2006 results
show over $16 million in reserves for operations, land fill
closure, capital and other post employment benefits. The
actuarially accrued OPEB liability for solid waste totals
$6.7 million and only 37% remains unfunded.
The competitive operating environment in the solid waste industry
in the past decade, coupled with ACUA's heavy debt burden,
resulted in the authority's continual reliance on state support.
Under the direction of the State of New Jersey Treasurer's Office,
ACUA drew $5.4 million of its $8.1 million DSRF to make the March
2002 debt service payment. Beginning with the March 2003 debt
service payment, ACUA began receiving the stable state subsidy of
$5.6 million per year. The state subsidy for debt service
payments continues to allow ACUA to reinvest surplus funds into
capital projects for system upkeep given ACUA's low bond rating to
date and lack of capital market access.
BLOCKBUSTER INC: Inks Amended and Restated Employment Pact w/ CEO
-----------------------------------------------------------------
Blockbuster Inc. disclosed Tuesday in a filing with the Securities
and Exchange Commission that the Company and John Antioco,
Blockbuster Chairman and CEO, have entered into an amended and
restated employment agreement that sets forth terms under which
Mr. Antioco will leave the company by the end of 2007.
"I am pleased that we were able to reach this agreement," said
John Antioco, Blockbuster Chairman and CEO. "This revised
employment agreement allows for management continuity and ample
opportunity for an orderly succession by the end of the year. In
the meantime, the board of directors, our management team and I
remain focused on continuing to improve the business, most notably
through BLOCKBUSTER Total Access(TM)."
"John and the company have reached terms that are clearly in the
best interests of the stockholders," said Carl C. Icahn, a member
of the Blockbuster Board of Directors. "I and the rest of the
board remain committed to working with our dedicated management
team to deliver on the company's financial goals for the year and
to continue positioning Blockbuster for improved success now and
into the future."
Under the amended and restated employment agreement, Mr. Antioco
will receive a 2006 bonus of $3.0525 million, which reflects a
compromise between the $2.28 million bonus previously
conditionally offered by the board and $7.65 million, which is the
amount Antioco was entitled to receive under his previous
employment agreement and Blockbuster's 2006 Senior Bonus Plan if
negative discretion was not invoked.
Additionally, at the conclusion of his employment, Antioco will
receive a lump sum payment of $4.9875 million as compared to a
lump sum payment of $13.5 million that he would have been entitled
to receive if he had been terminated without cause or had resigned
for good reason on Dec. 31, 2007, under his previous employment
agreement.
Details of the amended and restated employment agreement are
available for free at http://researcharchives.com/t/s?1bc7
In addition, at a meeting of the Blockbuster board of directors on
March 19, 2007, the board voted to recommend that Blockbuster's
stockholders approve at its annual meeting an amendment to
Blockbuster's certificate of incorporation to eliminate the
classification of the board of directors and to provide for the
annual election of all directors. The board believes that the de-
classification of the board is consistent with best corporate
governance practices.
2006 Results
As reported in the Troubled Company Reporter on Mar. 9, 2007,
Blockbuster Inc. reported net income of $54.7 million for the year
ended Dec. 31, 2006, compared with a net loss of $588.1 million
for 2005.
Revenues for 2006 decreased 3.5% to $5.52 billion from
$5.72 billion for 2005 mostly due to the closure of stores
resulting from accelerated actions to optimize the company's asset
portfolio and a 2.1% decrease in worldwide same-store sales.
At Dec. 31, 2006, the company's balance sheet showed
$3.137 billion in total assets, $2.394 billion in total
liabilities, and $742.4 million in total stockholders' equity.
About Blockbuster
Blockbuster Inc. (NYSE: BBI) -- http://www.blockbuster.com/-- is
a leading global provider of in-home movie and game entertainment,
with over 8,000 stores throughout the Americas, Europe, Asia and
Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 19, 2006,
Standard & Poor's Ratings Services revised its outlook on video
rental retailer Blockbuster Inc. to stable from negative. The
ratings on the Dallas-based company, including the 'B-' corporate
credit rating, were affirmed.
C-BASS: Fitch Puts BB+ Rating on $6 Million Class B-4 Certificates
------------------------------------------------------------------
C-BASS mortgage loan asset-backed certificates, series 2007-SL1,
are rated by Fitch Ratings as:
-- $265,177,000 class A-1 and A-2 (senior certificates) 'AAA';
-- $9,985,000 class M-1 'A';
-- $7,615,000 class M-2 'A-';
-- $8,461,000 class B-1 'BBB+';
-- $7,108,000 class B-2 'BBB';
-- $6,430,000 class B-3 'BBB-'; and
-- $6,431,000 class B-4 'BB+'.
The 'AAA' rating on the privately offered senior certificates
reflects the 22.52% initial credit enhancement provided by the
2.92% privately offered class M-1, 2.22% privately offered class
M-2, 2.47% privately offered class B-1, 2.08% privately offered
class B-2, 1.88% privately offered class B-3, 1.88% privately
offered class B-4, and overcollateralization.
The initial OC is 9.07%. All certificates have the benefit of
excess interest. In addition, the ratings also reflect the
quality of the loans, the soundness of the legal and financial
structures, and the capability of Litton Loan Servicing LLP as
servicer. In addition, the class A certificates will have the
benefit of a financial guaranty insurance policy issued by XL
Capital Assurance Inc., which will guarantee certain distributions
on the class A certificates.
The collateral pool consists of 8,009 fixed, second lien mortgage
loans and totals $342.2 million as of the cut-off date. The
weighted average original loan-to-value ratio is 96.89%. The
average outstanding principal balance is $42,733, the weighted
average coupon is 11.681% and the weighted average remaining term
to maturity is 208 months. The weighted average credit score is
635. The loans are geographically concentrated in California
(17.93%), Florida (15.08%) and Texas (6.35%).
The mortgage loans in the mortgage pool were originated or
acquired by various mortgage loan originators. Approximately
71.21% and 10.69% of the mortgage loans were originated by
Countrywide Home Loans and OwnIt Mortgage Solutions, Inc.
respectively. The remaining mortgage loans were originated by
mortgage loan originators that each originated less than 10% of
the entire pool of mortgage loans.
C2 GLOBAL: Mintz & Partners Expresses Going Concern Doubt
---------------------------------------------------------
Mintz & Partners LLP, in Toronto, Ontario, expressed substantial
doubt about C2 Global Technologies Inc.'s ability to continue as a
going concern after auditing the company's financial statements
for the year ended Dec. 31, 2006. The auditing firm pointed to
the company's recurring losses from operations and net capital
deficiency.
C2 Global Technologies Inc. reported a net loss of $7.7 million
for the year ended Dec. 31, 2006, compared with a net loss of
$18.5 million for the year ended Dec. 31, 2005. The company
reported zero revenues in both 2006 and 2005.
At Dec. 31, 2006, the company's balance sheet showed $1.4 million
in total assets and $1.9 million in total liabilities, resulting
in a $469,000 total stockholders' deficit.
The company's balance sheet at Dec. 31, 2006, also showed strained
liquidity with $73,000 in total current assets available to pay
$1.9 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?1bd2
About C2 Global
Headquartered in Toronto, Ontario, C2 Global Technologies Inc.
(OTC BB: COBT.OB) -- http://www.c-2technologies.com/-- was
incorporated in the State of Florida in 1983 under the name
"MedCross Inc." which was changed to "I-Link Incorporated" in 1997
and to "Acceris Communications Inc." in 2003. In August 2005, the
company changed its name from to "C2 Global Technologies Inc."
C2's business is focused on licensing its patents, which include
two foundational patents in VoIP technology. C2 plans to realize
value from its intellectual property by offering licenses to
service providers, equipment companies and end-users that are
deploying VoIP networks for phone-to-phone communications.
CACI INTERNATIONAL: S&P Withdraws Ratings at the Company's Request
------------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on
Arlington, Virginia-based CACI International Inc., including the
'BB' corporate credit rating, at the request of the company.
Ratings List:
* CACI International Inc.
-- BB Corporate credit rating withdrawn
-- BB Senior secured debt rating withdrawn
CAMBIUM LEARNING: Moody's Rates Proposed $158MM Facilities at B2
----------------------------------------------------------------
Moody's Investors Service assigned a B2 first-time rating to
Cambium Learning, Inc.'s proposed $158 million senior secured
first lien credit facilities, the proceeds of which will be used
to partly finance the planned acquisition of the company by
Veronis Suhler Stevenson.
These are the rating actions:
Assigned:
-- Proposed $30 million senior secured first lien revolving
credit facility, due 2011, B2, LGD3, 37%
-- Proposed $128 million senior secured first lien term loan,
due 2011, B2, LGD3, 37%
-- Corporate Family rating, B3
-- PDR, B3
The rating outlook is stable.
The B3 Corporate Family rating reflects the risks associated with
Cambium's high leverage, rapid growth, the acquisitiveness of its
management, and relatively short track record of operations.
In addition, the ratings recognize the company's vulnerability to
spending on pre-K to 12 intervention solutions products and the
competitive pressure faced by its product offerings. Ratings are
supported by the meaningful cash equity contribution provided by
Cambium's new sponsors, management's ability to improve margins
and generate positive free cash flow, and the diversification of
the company's product and customer base.
The stable outlook largely reflects the reputation and
defensibility of Cambium's niche learning products and the
prospects of continued prioritization of federal funding for
intervention-related educational materials.
On Jan. 29 2007, Veronis Suhler Stevenson, agreed to acquire
Cambium from J.H. Whitney & Co. for $320 million, which will be
funded from proceeds of the proposed term loan and $145 million in
equity.
Lenders will receive a guarantee of an intermediate holding
company and all operating subsidiaries, secured by a pledge of
stock and substantially all assets. The proposed first lien
revolver and first lien term loan are rated one notch higher than
the Corporate Family rating, largely because of the loss
absorption provided by $50 million in unrated senior unsecured
notes.
At closing, Moody's estimates that Cambium's debt will stand at
around a mid seven times multiple of reported FY 2006 EBITDA.
Based upon management's expectation of continued growth, Moody's
considers that leverage could be reduced by over one turn by the
end of 2008.
Headquartered in Natick, Massachusetts, Cambium Learning, Inc. is
a leading provider of intervention solutions designed specifically
for the pre-K-12 at-risk and special education markets. The
company reported sales of $107 million in fiscal 2006.
CAREY INT'L: Poor Performance Cues Moody's to Lower All Ratings
---------------------------------------------------------------
Moody's Investors Service downgraded all of the credit ratings of
Carey International, Inc. After this rating action, the outlook
is changed to negative from stable.
Moody's downgraded these ratings of Carey International:
-- $35 million senior secured first lien revolving credit
facility due 2010, to B1, LGD2, 22% from Ba3, LGD2, 17%;
-- $80 million senior secured first lien term loan B facility
due 2011, to B1, LGD2, 22% from Ba3, LGD2, 17%;
-- $85 million senior secured second lien term loan facility
due 2012, to Caa2, LGD5, 74% from Caa1, LGD4, 63%;
-- Corporate Family Rating, to Caa1 from B3;
-- Probability of Default Rating, to Caa1 from B3;
The ratings outlook has been downgraded to negative from stable.
The downgrade of the corporate family rating to Caa1 from B3
primarily reflects the tight near-term liquidity position that the
company is facing as a result of weaker than anticipated financial
performance during the year ended Dec. 31, 2006, which resulted in
covenant violations. Recent amendments to the company's credit
agreements cleared these violations, although the availability
under the company's revolving credit facility may be reduced,
thereby limiting its external liquidity. The downgrade also
reflects extremely weak interest coverage with EBIT to interest
expense of only 0.6 times for 2006.
The negative ratings outlook reflects the uncertainty surrounding
the company's external liquidity and the potential for further
delays in the rollout of the company's new IT initiative that is
slated to provide material reductions in operating costs.
The ratings could move downward if the company fails to achieve a
material, permanent reduction in debt. Rating pressure could also
materialize in the event that the company's growth initiatives
falter and it fails to achieve targeted savings from its new
information technology rollout, leading to lower profitability
levels and continued negative free cash flows from operations.
Moody's does not foresee an upgrade in the ratings unless there is
a material, permanent reduction of debt achieved with a
concomitant restoration of the company's external liquidity source
to the level of availability that prevailed at time of the last
refinancing of its debt in 2005.
Headquartered in Washington, D.C., Carey is a leading provider of
limousine services serving 550 cities in 65 countries. Revenues
for the year ended November 30, 2006 were approximately
$261 million.
CAREY INT'L: Poor Performance Cues S&P Junk Corp. Credit Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Carey International Inc. to 'CCC+' from 'B-'.
Standard & Poor's also lowered ratings on the revolving credit
facility and term B bank loan to 'CCC+' from 'B-'. In addition,
the rating on the second-lien facility was lowered to 'CCC-' from
'CCC'. However, the rating agency affirmed the '3' recovery
rating on both the revolving credit facility and term B loan
and the '5' recovery rating on the second-lien facility. The
outlook is now developing.
"The downgrade reflects Standard & Poor's heightened concerns over
Carey's liquidity position, which has been hurt by weaker-than-
expected operating performance," said Standard & Poor's credit
analyst Lisa Jenkins.
The ratings on Carey reflect the limousine company's highly
leveraged capital structure, limited liquidity, potential for
covenant issues later in the year, and exposure to cyclical and
competitive end markets with limited barriers to entry.
Demand for Carey's services is affected by economic conditions and
the degree of competition in its various market segments.
Barriers to entry remain relatively low and the company faces many
local competitors in its individual markets. To better deal with
these challenges, Carey has reduced the fixed component of its
cost structure by using independent operators rather than
company-owned vehicles and employees and by upgrading and
centralizing many of its technology and back office functions.
However, costs and delays associated with its technology upgrades
and competitive challenges have put pressure on earnings over the
past two years and have caused the company's liquidity position to
deteriorate.
Carey is especially vulnerable to cyclical, competitive, and cost
pressures due to its limited scale and highly leveraged capital
structure. Debt to EBITDA is aggressive, at over 6x, and the
company currently has limited borrowing capacity under its credit
agreement.
Carey's liquidity is quite constrained and the company could face
covenant issues later in the year. If liquidity does not improve
and covenant compliance becomes an issue, ratings will be lowered.
Conversely, if Carey can improve its liquidity position and
maintain access to its bank lines, ratings could be raised.
CATHOLIC CHURCH: Spokane Files Second Amended Plan Supplements
--------------------------------------------------------------
The Diocese of Spokane, the Official Committee of Tort Claimants,
the Future Claims Representative, and the Executive Committee of
the Association of Parishes delivered to the U.S. Bankruptcy
Court for the Eastern District of Washington copies of their
proposed Matrix Protocol, and a list of creditors specified by
name or claim number and class as set forth in the Second Amended
Joint Plan, including the basis of the claim amounts.
A full-text copy of the Matrix Protocol is available for free at:
http://ResearchArchives.com/t/s?1bce
A full-text copy of the List of Claims is available for free at:
http://ResearchArchives.com/t/s?1bd0
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts.
The Diocese of Spokane, the Tort Claimants Committee, the Future
Claims Representative, and the Executive Committee of the
Association of Parishes delivered an Amended Plan of
Reorganization, and a Disclosure Statement describing that Plan
to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams
approved the disclosure statement on March 8, 2007. (Catholic
Church Bankruptcy News, Issue No. 85; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CATHOLIC CHURCH: Spokane $1/Claim Estimation Temporarily Allowed
----------------------------------------------------------------
The Honorable Patricia C. Williams of the U.S. Bankruptcy Court
for the Eastern District of Washington temporarily allowed and
estimated at $1 per claim, all tort claims that have not been
disallowed, for purposes of voting to accept or reject the Joint
Plan of Reorganization filed by the Diocese of Spokane and the
other Plan Proponents.
The other plan proponents are:
-- the Official Committee of Tort Claimants,
-- the Future Claims Representative, and
-- the Executive Committee of the Association of Parishes
As reported in the Troubled Company Reporter on Feb. 22, 2007,
there are more than 169 remaining unliquidated claims against the
Diocese that will be affected by the estimation. It would be
extremely expensive and time consuming to liquidate the Tort
Claims before confirmation of the Plan. Plan confirmation could
be delayed by as much as six months if Tort Claims are not
temporarily allowed and estimated for voting purposes. Moreover,
without the temporary allowance, the Plan Proponents will be
unable to determine whether holders of Tort Claims have accepted
or rejected the Plan.
Spokane, the Tort Claimants' Committee, the Future Claims
Representative and the Association of Parishes have agreed
to estimation of claims for voting purposes at $1.
Moreover, the Tort Litigants Committee has agreed to recommend
the Plan to its constituents and consents to the estimation. The
Tort Litigants Committee and the Tort Claimants' Committee have
likewise considered the impact of the proposed estimation of
$1 per vote on their constituents and the fact that individuals
who assert large monetary claims will be impacted by equating
their votes with those who may have smaller monetary claims.
Both committees supporte the request based on the cost and time-
savings that will be realized by the proposed estimation process.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts.
The Diocese of Spokane, the Tort Claimants Committee, the Future
Claims Representative, and the Executive Committee of the
Association of Parishes delivered an Amended Plan of
Reorganization, and a Disclosure Statement describing that Plan
to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams
approved the disclosure statement on March 8, 2007. (Catholic
Church Bankruptcy News, Issue No. 85; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CATHOLIC CHURCH: Spokane's Solicitation Procedures Established
--------------------------------------------------------------
The Honorable Patricia C. Williams of the U.S. Bankruptcy Court
for the Eastern District of Washington establishes solicitation
procedures and protocol for confidentiality of ballots of tort
claims in the Diocese of Spokane's Chapter 11 case.
The Court sets April 13, 2007, as the voting deadline.
Spokane's voting agent, BMC Group, Inc., must receive all Ballots
by the Voting Deadline through mail or delivery. Ballots cannot
be sent by fax or e-mail, Judge Williams says.
The Diocese will file a report tabulating the voting results on
or before April 18, 2007.
The Solicitation Packages to be served on the U.S. Trustee;
counsel for the Executive Committee of the Association of
Parishes, the Diocese, the Future Claims Representative and the
Tort Claimants' Committee; counsel for the Tort Litigants
Committee; and all parties-in-interest on the Master Mailing
List, will consist of:
* the Confirmation Hearing Notice;
* the Ballots;
* a pre-addressed, postage pre-paid return envelope;
* the approved Disclosure Statement;
* supplemental solicitation materials;
* the Disclosure Statement Order; and
* letters from the Committees recommending that claimants and
litigants vote to accept the Plan.
The Diocese will publish the Confirmation Hearing Notice in the
Spokane Spokesman Review and Seattle Times/Post-Intelligencer.
The Voting Agent will also publish the Confirmation Hearing
Notice electronically on its Web site at
http://www.bmcgroup.com/dioceseofspokane
The Ballots cast by Tort Claimants in Class 7 will remain
confidential under the terms of a Protocol for Sharing
Confidential Proofs of Claim for Sexual Abuse. Thus, when a Tort
Claimant fills out and sends in his or her Ballot for Class 7,
his or her name, address and telephone number will be kept
confidential, except that the Ballot including name, address and
telephone number will be provided to the attorneys for the
Diocese, its insurers, the Association of Parishes, the Tort
Claimants' Committee, the Tort Litigants' Committee, the Future
Claims Representative and certain other persons identified in the
Protocol, each of whom must have signed an agreement promising to
maintain the confidentiality of the Tort Claimant's identity.
Also, the Ballot, with name, address and telephone number
removed, may be provided to certain other persons identified in
the Protocol.
A full-text copy of Spokane's Solicitation Procedures and
Protocol for Confidentiality of Ballots for Tort Claims is
available for free at http://ResearchArchives.com/t/s?1bcc
Full-text copies of the Committees' Solicitation Letters are
available for free at http://ResearchArchives.com/t/s?1bcd
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts.
The Diocese of Spokane, the Tort Claimants Committee, the Future
Claims Representative, and the Executive Committee of the
Association of Parishes delivered an Amended Plan of
Reorganization, and a Disclosure Statement describing that Plan
to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams
approved the disclosure statement on March 8, 2007. (Catholic
Church Bankruptcy News, Issue No. 85; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
CATHOLIC CHURCH: Davenport General Claims Bar Date Set for July 26
------------------------------------------------------------------
The United State Bankruptcy Court for the Southern District of
Iowa ordered that all claims against the Diocese of Davenport,
including claims for sexual abuse arising prior to the bankruptcy
filing, must be filed no later than July 16, 2007 at 4:00 p.m.,
Central time.
The Diocese has appointed a Claims Agent, AlixPartners, LLP, to
receive and process all claims. All claims must be filed with the
Claims Agent in order to be considered valid. All claims must be
received on or before the Claims Bar Date in order to be
considered valid. Late filed claims will not be allowed.
All sexual abuse claimants must file a Confidential Claim Form
which can be obtained from the Claims Agent or from the Diocese
website. All sexual abuse claims are confidential and the names
of the sexual abuse claimants will not be disseminated to the
public. All sexual abuse claimants will be assigned a
confidential claim number by the Claims Agent as their claims are
received.
The Diocese of Davenport encourages anyone with a claim against
the Diocese to contact the Claims Agent, AlixPartners, LLP, on or
before the Claims Bar Date, July 16, 2007, at 4:00 p.m. Central
time. AlixPartners may be contacted to obtain information
necessary to file a claim by writing to:
Diocese of Davenport
c/o AlixPartners, LLP
2100 McKinney Avenue, Suite 800
Dallas, TX 75201
Tel: (888) 232-0287
Information concerning the process for filing a claim or to obtain
a claim form can also be found at:
-- http://www.davenportdiocese.org/notice
-- http://www.davenportcommittee.com/
Due to the agreement with the creditor's committee,
representatives for the Diocese of Davenport are not available to
provide comments to the media concerning this process.
The Diocese of Davenport in Iowa filed for chapter 11 protection
(Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006.
Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the
Davenport Diocese in its restructuring efforts. Hamid R.
Rafatjoo, Esq., and Gillian M. Brown, Esq., of Pachulski Stang
Zhiel Young Jones & Weintraub LLP represent the Official Committee
of Unsecured Creditors. In its schedules of assets and
liabilities, the Davenport Diocese reported $4,492,809 in assets
and $1,650,439 in liabilities.
CDC MORTGAGE: S&P Puts Default Rating on Class B Certificates
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
B certificates from CDC Mortgage Capital Trust 2001-HE1 to 'D'
from 'CCC'.
Concurrently, the rating on class M-2 was lowered to 'BBB' from
'A' and placed on CreditWatch with negative implications. At the
same time, the 'AAA' rating on class M-1 from the same transaction
was affirmed.
The lowered ratings and CreditWatch placement reflect the
deteriorating performance of the collateral pool. Credit support
for this transaction is derived from a combination of
subordination, excess interest, and overcollateralization (O/C).
Class B was downgraded to 'D' from 'CCC' due to a $21,073
principal write-down as of the February 2007 distribution period.
For the past six months, average monthly losses were approximately
$106,000, while excess spread averaged approximately $25,000.
Based on Standard & Poor's expected loss severity, the class M-2
certificates will not have sufficient credit support for the
original 'A' rating if current loss patterns continue.
As of the February 2007 remittance period, cumulative losses had
reached $4.76 million, or 2.32% of the original pool balance.
Total delinquencies and severe delinquencies (90-plus-days,
foreclosure, and REO) constitute 52.91% and 32.65% of the current
pool balance, respectively.
Standard & Poor's will continue to closely monitor the performance
of the class M-2 certificates. If the delinquent loans cure to a
point at which monthly excess interest begins to outpace monthly
net losses, thereby allowing O/C to build and provide sufficient
credit enhancement, Standard & Poor's will affirm the rating and
remove it from CreditWatch. Conversely, if delinquencies cause
substantial realized losses in the coming months and continue to
erode credit
enhancement, the rating agency will take further negative rating
actions on this class.
The affirmation is based on credit support percentages that are
sufficient to maintain the current ratings.
The collateral backing this transaction consists of pools of
fixed- and adjustable-rate mortgage loans secured by first liens
on one- to four-family residential properties.
Rating Lowered
CDC Mortgage Capital Trust 2001-HE1
Rating
------
Class To From
----- -- ----
B D CCC
Rating Lowered And Placed On Creditwatch Negative
CDC Mortgage Capital Trust 2001-HE1
Rating
------
Class To From
----- -- ---
M-2 BBB/Watch Neg A
Rating Affirmed
CDC Mortgage Capital Trust 2001-HE1
Class Rating
----- ------
M-1 AAA
CENTENNIAL COMMS: Completes Sale of Unit to Trilogy for $80 Mil.
----------------------------------------------------------------
Centennial Communications Corp. completed the sale of its wholly
owned subsidiary, All America Cables and Radio, Inc., to Trilogy
International Partners for approximately $80 million in cash.
"Taking this step to sell our Dominican Republic business is
consistent with our renewed commitment to deleveraging," said
Michael J. Small, Chief Executive Officer of Centennial.
Centennial Communications will redeem $80 million aggregate
principal amount of its $125 million outstanding 10-3/4% senior
subordinated notes due Dec. 15, 2008. The company said that he
redemption will occur on or about April 11, 2007, at face value
with no prepayment penalties.
Trilogy International's exclusive financial adviser was Deutsche
Bank Securities, Inc.
About Centennial Communications
Headquartered in Wall, New Jersey, Centennial Communications Corp.
(NASDAQ: CYCL) -- http://www.centennialwireless.com/-- provides
regional wireless and integrated communications services in the
United States and the Puerto Rico with approximately 1.1 million
wireless subscribers and 387,500 access lines and equivalents.
The U.S. business owns and operates wireless networks in the
Midwest and Southeast covering parts of six states. Centennial's
Puerto Rico business owns and operates wireless networks in Puerto
Rico and the U.S. Virgin Islands and provides facilities-based
integrated voice, data and Internet solutions. Welsh, Carson,
Anderson & Stowe and an affiliate of the Blackstone Group are
controlling shareholders of Centennial.
At Nov. 30, 2006, the company's balance sheet showed a
stockholders' deficit of 1,095,770,000. This compares to a
deficit of $1,064,859 at May 31, 2006.
CEQUEL COMMS: Moody's Rates New $2.325 Billion Term Loan at B1
--------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Cequel
Communications, LLC's new $2.325 billion term loan and affirmed
the company's existing ratings, including its B2 corporate family
rating, B2 probability of default rating and Caa1 rating on its
second lien loan, despite the modest increase in debt following
the re-financing of the company's North Carolina bridge loan.
In Moody's view, the transaction, which consolidates the company's
North Carolina cable assets, does not increase risk materially but
highlights concerns regarding Cequel's shareholder orientation as
proposed changes to the Credit Agreement will also permit the
company to redeem about $135 million of preferred equity over the
near term.
Cequel's B2 corporate family rating continues to incorporate the
risks associated with the company's high leverage at above
7.5x, minimal free cash flow and operational challenges. The
company has had to integrate acquisitions purchased over the
course of 2006 and needs to proceed with investing capital to
deploy advanced services. Supporting the rating is evidence to
date of the progress Cequel has made integrating the company's
operations and the opportunities for revenue and EBITDA expansion
as the company increasingly rolls out data and telephony alongside
video services. Also important to the rating, is the still
attractive market valuation for cable assets. The rating outlook
remains stable.
These are the rating actions:
* Cequel Communications, LLC
* Affirm:
-- Corporate Family Rating at B2
-- Probability of Default Rating at B2
-- Outlook is stable
-- Second Lien Loan Caa1, LDG5, 89%
* Assign:
-- Proposed First Lien Loan B1, LGD3, 38%
Cequel Communications, LLC, was formed in 2006 by consolidation of
the assets of Cebridge Connections with cable systems acquired
from Cox Communications Inc. and Charter Communications Inc. The
company services approximately 1.3 million basic video customers.
The company also provides high speed data and telephony services,
and its pro forma annual revenue for the year ended 2006 was
approximately $1.2 billion.
CITATION CORP: Wants Deloitte as Accountants and Auditors
---------------------------------------------------------
Citation Corp. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Alabama for authority to
employ:
* Deloitte & Touche LLP as their accountants and auditors;
* Deloitte Tax LLP as their tax advisors; and
* Deloitte Financial Advisory Services LLP as their
reorganization consultants,
nunc pro tunc to March 12, 2007.
Josef S. Athanas, Esq., at Latham & Watkins LLP, in Chicago,
Illinois, relates that the Deloitte Entities:
(a) served as the Debtors' accountants, auditors, and tax
advisors in their prior bankruptcy cases and before the
Petition Date;
(b) have extensive and diverse experience, knowledge and
reputation in accounting, auditing, and tax fields, as
well as an understanding of the issues involved in the
Debtors' Chapter 11 cases; and
(c) possess requisite resources and are well qualified to
provide the services required by the Debtors.
As the Debtors' accountants and auditors, Deloitte & Touche will:
(a) audit and report on the Debtors' annual financial
statements for the year ending October 1, 2006;
(b) provide consultation services regarding the Debtors'
consideration of potential accounting and financial
reporting issues;
(c) provide other valuation advisory services arising from
the Debtors' plan to affect a restructuring through the
bankruptcy process;
(d) evaluate the Debtors' pension benefit plans' compliance
with applicable Internal Revenue Code requirements for tax
exempt status;
(e) evaluate the Pension Plans' compliance with the
requirements of the Employee Retirement Income Security
Act of 1974; and
(f) inform the Debtors' management of instances of non-
compliance with IRC or ERISA requirements.
On the other hand, Deloitte Tax will:
(a) assist the Debtors with its overall coordination and
management of the bankruptcy emergence process, including
tax bankruptcy workplan evaluation, management and
execution;
(b) provide tax consultation in connection with the Debtors'
determination of tax impacts and resulting tax reporting
requirements of restructuring the business operations;
settlement of prepetition claims; treatment of
intercompany balances; asset dispositions; damages
relating to rejected leases or other contracts; pending
litigation or disputed claims; reduction in tax
attributes and resulting deferred taxes; and preservation
of tax attributes;
(c) assist the Debtors in determining likely amount of
cancellation of indebtedness income, and assist in
determining the effect of tax attribute reduction under
the bankruptcy exclusion under Section 108 of the IRC and
applicable state tax laws giving consideration to various
elections that may be beneficial for the Debtors;
(d) assist in determining whether (i) an ownership change,
within the meaning of Section 382 of IRC, will occur as a
result of the proposed Plan of Reorganization, and (ii)
it would potentially qualify for and benefit from special
bankruptcy exceptions and applicable state tax laws:
(e) evaluate tax basis in subsidiary stock under applicable
consolidated return regulations and, if there is an
excess loss account for the stock of any subsidiary,
provide tax consulting to the Debtors regarding methods
to minimize income recognition;
(f) advise the Debtors in determining tax treatment of
postpetition interest and reorganization costs;
(g) document, as appropriate, the tax analysis, opinions,
recommendations, conclusions, and correspondence for any
tax issue or other tax matters;
(h) determine if the effect of the ACE market-to-market rules
apply to the Debtors' restructuring; and
(i) recommend the accounting methods and tax elections,
available to the Debtors to mitigate future Federal and
state income tax liabilities.
Moreover, Deloitte FAS will:
(a) assist the Debtors' accounting and finance staff with
accumulation of information for their Chapter 11
proceedings;
(b) provide advice and recommendations designed to assist the
Debtors in preparing their cash management procedures and
invoice cut-off process;
(c) advise the Debtors in setting up reporting processes
required in Chapter 11 proceedings, including Schedules
of Assets and Liabilities and Statements of Financial
Affairs, cash basis reporting, creditor matrix, and other
necessary information;
(d) assist the Debtors' management in assembling, compiling,
and formatting the information necessary to prepare
Chapter 11 first day motions;
(e) assist the Debtors in gathering leases, contracts, and
agreements for their Chapter 11 proceedings;
(f) advise the Debtors' management in developing potential
Chapter 11 execution strategies for operational
functions; and
(g) assist the Debtors in reviewing and reconciling claims
of their creditors, and responding to those creditors
during the Chapter 11 process.
The Deloitte Entities' hourly rates are:
Firm Designation Hourly Rate
---- ----------- -----------
Deloitte & Touche Partner or Director $390 - $450
Senior Manager $325 - $380
Manager $275 - $310
Senior Consultant $200 - $250
Staff $150 - $180
Deloitte Tax Partner, Principal, $765
or Director
Senior Manager 640
Manager 540
Senior Consultant 380
Staff 315
Deloitte FAS Partner, Principal, $550 - $750
or Director
Senior Manager $450 - $650
Manager $350 - $475
Senior Consultant $300 - $400
Staff $275 - $350
Paraprofessionals $225
Ron Edwards, a partner at Deloitte & Touche LLP, discloses that
before the Petition Date:
-- Deloitte & Touche received fees totaling $231,989,
including a $25,000 prepetition retainer;
-- Deloitte Tax received fees aggregating $294,025, including
$50,000 prepetition retainer; and
-- Deloitte FAS received fees totaling 257,453, including a
$125,000 prepetition retainer.
Mr. Edwards assures the Court that the Deloitte Entities do not
represent or hold any interest adverse to the Debtors or their
estates, and each entity is a "disinterested person" as that term
is defined under Sections 101 and 327.
About Citation Corporation
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. The Debtor
and its debtor-affiliates previously filed for protection on Sept.
18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall,
Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represented
the Debtors in their first bankruptcy. Judge Tamara O. Mitchell
confirmed the company's Second Amended Joint Plan of
Reorganization on May 18, 2005.
The Debtor and 11 debtor-affiliates filed for their second
bankruptcy on March 12, 2007 (Bankr. N.D. Ala. Case Nos. 07-01153
to 07-01162). David S. Heller, Esq., at Latham & Watkins LLP, and
Michael Leo Hall, Esq., at Burr & Forman LLP, represent the
Debtors. At Oct. 2005, Citation's balance sheet showed total
assets of $360,243,000 and total debts of $294,702,000. The
Debtors exclusive period to file a chapter 11 plan expires on
July 10, 2007. (Citation Corp. Bankruptcy News, Issue No. 3,
http://bankrupt.com/newsstand/or 215/945-7000).
CITATION CORP: Wants BSI as Claims and Noticing Agent
-----------------------------------------------------
Citation Corp. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Alabama for permission to
employ Bankruptcy Services, L.L.C., as their notice and claims
agent.
Under Rule 2002 of the Federal Rules of Bankruptcy Procedure, a
court may direct a person other than its clerk to give notices,
which must be provided to creditors and parties-in-interest in a
bankruptcy case.
The Debtors believe that the office of the Clerk is not equipped
to efficiently docket and maintain the extremely large number of
proofs of claim that likely will be filed in their Chapter 11
cases.
Specifically, BSI will:
(a) prepare and serve required notices in the Debtors' cases,
including:
-- a notice of commencement of their Chapter 11 cases
and the initial meeting of creditors under Section
341(a) of the Bankruptcy Code;
-- notices of objections to claims and any hearings on
a disclosure statement and confirmation of a plan
of reorganization; and
-- other miscellaneous notices as the Debtors or the
Court may deem necessary or appropriate for an
orderly administration of the Debtors' cases;
(b) file with the Clerk's Office a certificate or affidavit
of service;
(c) maintain copies of any proofs of claim and proofs on
interest filed in the Debtors' cases;
(d) maintain official claims registers in the Debtors' cases
by docketing all proofs of claim and proofs of interest
in a claims database that includes:
* the date the proof of claim or interest was received;
* the claim number assigned to the proof of claim or
interest, and the asserted amount and classification
of the claim; and
* the applicable Debtors against which the claim or
interest is asserted;
(e) implement necessary security measures to ensure
completeness and integrity of the claims registers;
(f) transmit to the Clerk's Office a copy of the claims
registers on a weekly basis, unless requested by the
Clerk's Office on a less frequent basis;
(g) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proofs of interest and make
that list available upon request to the Clerk's Office or
any parties-in-interest;
(h) provide access to the public for examination of copies of
any proofs of claim or proofs of interest filed in the
Debtors' Chapter cases without charge during regular
business hours;
(i) record all transfers of claims pursuant to Rule 3001(e)
and provide notice of those transfers if directed to do so
by the Court pursuant to Rule 2002; and
(k) provide temporary employees to process claims, as
necessary, and comply with other conditions and
requirements as may be prescribed by the Clerk's Office
or the Court.
BSI's hourly rates range from:
Designation Hourly Rate
----------- -----------
Senior Bankruptcy Consultant $225 - $295
Bankruptcy Consultant $185 - $225
IT Programming Consultant $140 - $190
Case Managers $125 - $175
Clerical Staff $40 - $60
Daniel C. McElhinney, BSI's Vice-President of Client Services,
states that the firm will receive a $25,000 retainer from the
Debtors upon the Court's approval of BSI's agreement with the
Debtors.
Mr. McElhinney assures the Court that BSI does not represent or
hold any interest adverse to the Debtors or their estates, and is
a "disinterested person" as that term is defined under Sections
101(14) and 327.
About Citation Corporation
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. The Debtor
and its debtor-affiliates previously filed for protection on Sept.
18, 2004 (Bankr. N.D. Ala. Case No. 04-08130). Michael Leo Hall,
Esq., and Rita H. Dixon, Esq., at Burr & Forman LLP, represented
the Debtors in their first bankruptcy. Judge Tamara O. Mitchell
confirmed the company's Second Amended Joint Plan of
Reorganization on May 18, 2005.
The Debtor and 11 debtor-affiliates filed for their second
bankruptcy on March 12, 2007 (Bankr. N.D. Ala. Case Nos. 07-01153
to 07-01162). David S. Heller, Esq., at Latham & Watkins LLP, and
Michael Leo Hall, Esq., at Burr & Forman LLP, represent the
Debtors. At Oct. 2005, Citation's balance sheet showed total
assets of $360,243,000 and total debts of $294,702,000. The
Debtors exclusive period to file a chapter 11 plan expires on
July 10, 2007. (Citation Corp. Bankruptcy News, Issue No. 3,
http://bankrupt.com/newsstand/or 215/945-7000).
CITIGROUP MORTGAGE: Moody's Rates Class M-11 Certificates at Ba2
----------------------------------------------------------------
Moody's Investors Service has assigned an Aaa rating to the senior
certificates issued by Citigroup Mortgage Loan Trust 2007-AHL1 and
ratings ranging from Aa1 to Ba2 to the subordinate certificates in
the deal.
The securitization is backed by Accredited Home Lenders, Inc.
originated adjustable-rate and fixed-rate subprime mortgage loans
acquired by Citigroup Global Markets Realty Corp. The ratings are
based primarily on the credit quality of the loans, and on the
protection from subordination, excess spread, and
overcollateralization. The ratings also benefit from an interest
rate cap agreement provided by Swiss Re Financial Products
Corporation. Moody's expects collateral losses to range from
4.45% to 4.95%.
Wells Fargo Bank, N.A. will service the loans. Moody's has
assigned Wells Fargo Bank, N.A. its top servicer quality rating of
SQ1 as a primary servicer of subprime loans.
These are the rating actions:
* Citigroup Mortgage Loan Trust 2007-AHL1
* Asset-Backed Pass-Through Certificates, Series 2007-AHL1
Class A-1, Assigned Aaa
Class A-2A,Assigned Aaa
Class A-2B,Assigned Aaa
Class A-2C,Assigned Aaa
Class M-1, Assigned Aa1
Class M-2, Assigned Aa2
Class M-3, Assigned Aa3
Class M-4, Assigned A1
Class M-5, Assigned A2
Class M-6, Assigned A3
Class M-7, Assigned Baa1
Class M-8, Assigned Baa1
Class M-9, Assigned Baa3
Class M-10,Assigned Ba1
Class M-11,Assigned Ba2
The Class A-1, Class M-10 and Class M-11 certificates were sold in
privately negotiated transactions without registration under the
Securities Act of 1933 under circumstances reasonably designed to
preclude a distribution thereof in violation of the Act. The
issuance has been designed to permit resale under Rule 144A.
CITIZENS COMMS: Commences Private Offering of Senior Notes
----------------------------------------------------------
Citizens Communications Company has commenced a private offering
of $750 million aggregate principal amount of senior unsecured
notes, which will consist of a series due in 2015 and a series
due in 2019.
The company intends to use the net proceeds from the offering to
refinance $200 million principal amount of indebtedness incurred
on March 8, 2007 under a bridge loan facility in connection with
the acquisition of Commonwealth Telephone Enterprises Inc.
The company further said that the net proceeds will be used to
redeem, repurchase, or retire for value $495.2 million principal
amount of its 7.625% Senior Notes due 2008. Any remaining net
proceeds will be used to pay integration costs and settle
liabilities associated with the acquisition of Commonwealth.
About Citizen Communications
Based in Stamford, Connecticut, Citizens Communications Company
f.k.a. Citizens Utilities (NYSE: CZN) -- http://www.czn.net/--
provides phone, TV, and Internet services to more than two million
access lines in parts of 23 states, primarily in rural and
suburban markets, where it is the incumbent local-exchange carrier
operating under the Frontier brand.
* * *
In December 2006, Standard & Poor's Ratings Services assigned a
'BB+' rating to $400 million of 7.875% senior unsecured notes due
2027 issued by Stamford, Connecticut-based Citizens Communications
Co.
At the same time, Fitch Ratings assigned a 'BB' rating and Moody's
Investors Service assigned Ba2 rating to the company's proposed
private placement of $250 million senior unsecured notes due 2027.
COAST INVESTMENT: Moody's Lifts Rating on $24 Million Notes to B2
-----------------------------------------------------------------
Moody's Investors Service has taken rating action on the notes
issued in 2000 by Coast Investment Grade 2000-1, Ltd.:
Upgrades:
* The $300,000,000 Class A Floating Rate Senior Secured Notes
due 2015
-- Prior Rating: Aa2, on watch for possible upgrade
-- Current Rating: Aaa
* The $30,000,000 Class B-1 Floating Rate Senior Secured Notes
due 2015
-- Prior Rating: Ba2, on watch for possible upgrade
-- Current Rating: Baa1
* The $10,000,000 Class B-2 Fixed Rate Senior Secured Notes due
2015
-- Prior Rating: Ba2, on watch for possible upgrade
-- Current Rating: Baa1
* The $17,500,000 Class C-1 Floating Rate Senior Secured Notes
due 2015
-- Prior Rating: Caa3, on watch for possible upgrade
-- Current Rating: B2
* The $6,500,000 Class C-2 Fixed Rate Senior Secured Notes due
2015
-- Prior Rating: Caa3, on watch for possible upgrade
-- Current Rating: B2
According to Moody's, the rating actions reflect the significant
delevering of the transaction, with continued paydowns of deferred
interests on Classes B-1, B-2, C-1 and C-2, accompanied by
improvement in the credit quality of the transaction's underlying
collateral portfolio since the last downgrade rating action on
Jan. 22, 2004.
COMMUNITY HEALTH: Triad Deal Prompts S&P's Negative CreditWatch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit rating on Brentwood, Tennessee-based hospital owner and
operator Community Health Systems Inc. on CreditWatch with
negative implications.
Community reported it has entered into a definitive agreement to
acquire Triad Hospitals Inc. in a transaction valued at about
$6.8 billion. This amount is greater than the previous offer
of $6.4 billion by CCMP Capital Advisors and GS Capital Partners
to acquire Triad.
Although the transaction is still subject to regulatory and
shareholder approvals, Community has indicated that if the
transaction goes through as expected the company will issue a
significant amount of new debt that Standard & Poor's believes
will substantially weaken its financial profile.
Standard & Poor's will review the financing plans before resolving
the CreditWatch status. In addition, since the company has
indicated that its existing debt will be replaced with all new
debt, current issue-specific ratings will be withdrawn at that
time.
Community owns and operates 77 hospitals in 22 states.
COPELANDS' ENTERPRISES: Court Approves Disclosure Statement
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the disclosure statement describing the Chapter 11 Plan of
Liquidation co-proposed by Copelands' Enterprises Inc. and its
Official Committee of Unsecured Creditors, Bill Rochelle of
Bloomberg News reports.
According to the report, the Court is set to confirm the Plan on
April 27, 2007.
The Plan, published in the Troubled Company Reporter on Feb. 16,
2007, proposes to pay Class 1 Other Priority Claims and Class 3
Other Secured Claims in full.
Holders of Class 2 Subordinated Note Claims will receive 21% of
their allowed claim while holders of Class 4 General Unsecured
Claims will get 0.2% to 1.9%.
Holders of Equity Interests in the Debtor will not receive any
distributions under the Plan.
Distributions under the Plan will be sourced from the proceeds of
the store closing sales at eleven of the Debtor's store locations.
The winning bidder, a joint venture composed of TSA Stores, Inc.,
Hilco Merchant Resources LLC and Hilco Real Estate LLC, purchased
the subject properties for $21.7 million, predicated on an
aggregare cost value of the Debtor's inventory of $23 million.
Great American Group was the liquidator agent for the sale which
concluded early December 2006.
The Debtors' postpetition business operation was backed by a
$25,000,000 debtor-in-possession financing provided by Wells Fargo
Retail Finance LLC and a $5,000,000 mezzanine loan from Thomas and
James Copeland. Both loans have been paid in full on Nov. 20,
2006.
Based in San Luis Obispo, California, Copelands' Enterprises Inc.
dba Copelands' Sports -- http://www.copelandsports.com/--
operates specialty sporting goods stores. The company filed for
chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No.
06-10853). James E. O'Neill, Esq., and Laura Davis Jones, Esq.,
at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los
Angeles, California, represent the Debtor. Adam G. Landis, Esq.,
at Landis Rath & Cobb LLP represents the Official Committee of
Unsecured Creditors. Clear Thinking Group serves as the Debtor's
financial advisor. When the Debtor filed for protection from its
creditors, it estimated assets and debts between $50 million and
$100 million.
COUDERT BROTHERS: Wants Edwin Matthews as Special Counsel
---------------------------------------------------------
Coudert Brothers LLP asks the U.S. Bankruptcy Court for the
Southern District of New York for permission to employ Edwin S.
Matthews, Jr., Esq., of Baker & Mckenzie LLP, as its special
counsel.
The Debtor discloses that Mr. Matthews was an attorney of Coudert
before joining Baker & McKenzie in September 2005.
The Debtor tells the Court that Mr. Matthews will continue to
represent the Debtor in connection with:
* its claim for attorneys' fees in Donald M. Paradis v.
William J. Brady, et al., Case No. CIV 03-150-N-BLW in the
U.S. District Court for the District of Idaho; and
* a civil action brought by Donald M. Paradis against Kootenai
County in Idaho and certain present and former County
officials under Section 1983 of Title 42 of the US Code.
The Debtor will pay Mr. Matthews, on a contingency fee basis, 50%
of any amount recovered with regards to the cases mentioned.
Mr. Matthews assures the Court that he is disinterested as that
term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Matthews can be reached at;
Edwin S. Matthews, Jr., Esq.
Baker & Mckenzie LLP
1114 Avenue of the Americas
New York, New York 10036
Tel: (212) 626-4100
Fax: (212) 310-1600
http://www.bakernet.com/
Coudert Brothers LLP was an international law firm specializing in
complex cross border transactions and dispute resolution. The
firm had operations in Australia and China. The Debtor filed for
Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case
No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L.
Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor
in its restructuring efforts. Brian F. Moore, Esq., and David J.
Adler, Esq., at McCarter & English, LLP, represent the Official
Committee of Unsecured Creditors. In its schedules of assets and
debts, Coudert listed total assets of $29,968,033 and total debts
of $18,261,380.
DANA CORP: Gives Updates on Pre-Tax Income Improvement Initiatives
-----------------------------------------------------------------
Dana Corp. has previously stated in its Form 10-Q filing with the
Securities and Exchange Commission ended Sept. 30, 2006, that it
was going to undertake several initiatives that will ultimately
result in an aggregate annual pre-tax income improvement of
$405,000,000 to $540,000,000.
Product Profitability Initiative
In its Form 10-K filing ended Dec. 31, 2006, with the SEC, Dana
reports that for product profitability initiative, the company has
reached agreements with customers in 2006 through February 2007
resulting in price increases of approximately $75,000,000 on an
annual basis.
Michael L. DeBacker, Dana's vice president, general counsel and
secretary, discloses that the pricing agreements will generally
extend through the duration of the applicable programs. Some
pricing agreements are conditioned on assumption of the existing
contracts, as amended for pricing and other terms and conditions
through the company's bankruptcy proceedings.
Dana expects to substantially complete the contract pricing
agreements and its decisions whether to assume the contracts, as
amended, in the second quarter of 2007. Dana may be forced to
reject certain contracts if it is unable to reach agreements with
its customers, according to Mr. DeBacker.
Labor and Benefit Costs Initiative
As of Dec. 31, 2006, Dana merged most of its U.S. defined benefit
pension plans into the Dana Corporation Retirement Plan (CashPlus
Plan) to reduce its funding requirements over the next several
years. Dana expects to freeze participation and future benefit
accruals in its U.S. defined benefit pension plans by July 1,
2007, subject to collective bargaining requirements, where
applicable. Dana has also proposed to provide limited employer
contribution to its U.S. defined contribution plans for those
whose benefit accruals are frozen.
Dana intends to take additional steps, subject to applicable
collective bargaining and bankruptcy procedures and approval from
the U.S. Bankruptcy Court for the Southern District of New York,
including:
-- elimination of previously granted but not yet effective
wage increases;
-- freezing of future wage increases;
-- modification of its short-term disability program;
-- elimination of its existing long term disability insurance
program;
-- establishment of inflation limits on the company-paid
portion of healthcare programs; and
-- reduction in company-provided life insurance.
Dana has sought the Bankruptcy Court's permission in February
2007 to reject its CBAs with the United Auto Workers, the United
Steel Workers and the International Association of Machinists.
Dana and IAM agreed to a new three-year collective bargaining
agreement covering hourly employees at the company's Robinson,
Ill., plant.
The UAW and USW have objected to Dana's Rejection Motion and
indicated that their members may organize a strike if the company
rejects their collective bargaining agreements.
Dana's Master Agreement with the UAW, which covers hourly
employees in the Lima, Ohio, and Pottstown, Pennsylvania plants,
has already expired and union workers at those plants are
currently working on a day-to-day basis. Prolonged strikes by
the UAW and USW would not only impact Dana's earnings adversely,
but could also prevent the company from reorganizing
successfully, Mr. DeBacker relates.
Other Post-Employment Benefits Initiatives
Dana also provides other post-employment benefits, including
medical and life insurance, for many U.S. retirees. Dana has
accumulated an Other Post-Employment Benefit obligation that is
disproportionate to the scale of its current business, in part by
assuming retiree obligations in the course of acquiring
businesses and retaining those obligations when divesting
businesses, according to Mr. DeBacker. In addition, the rising
cost of providing an extensive retiree healthcare program has
become prohibitive to Dana, Mr. DeBacker says.
As of Dec. 31, 2006, Dana had approximately $1,500,000,000 in
unfunded OPEB obligations under its domestic postretirement
healthcare plans. Dana estimates that these obligations will
require an average cash outlay of $119,000,000 in each of the
next six years unless they are restructured.
To address the issue, Dana is seeking to terminate its
sponsorship of retiree healthcare programs and the funding of
ongoing retiree healthcare costs associated with those plans.
Dana anticipates that the elimination of future annual OPEB costs
and modification of its U.S. pension programs for union and
non-union populations will result in annual cost savings of
$70,000,000 to $90,000,000.
On March 12, 2007, the Bankruptcy Court approved the elimination
of Dana's retiree healthcare benefit coverage for non-union
active employees, effective April 1, 2007. Dana has also agreed
to contribute $78,000,000 in cash to a trust for non-pension
retirees.
Overhead Costs Initiatives
Dana reports that its overhead costs are too high due to its
historically decentralized operating model and the reduction in
the overall size of its business resulting from recent and
planned divestitures. In the United States, Dana's headcount was
reduced by approximately 9% in 2006 because of a general hiring
freeze and attrition attributable to its bankruptcy filing. Dana
plans to continue with its efforts in reducing overhead costs.
Manufacturing Footprint Initiatives
Dana has completed an analysis of its North American
manufacturing footprint and identified a number of manufacturing
and assembly plants that carry an excessive cost structure or
have excess capacity, Mr. DeBacker states. As part of this
initiative, Dana has:
-- moved its driveshaft machining operations from Bristol,
Virginia, to its acquired operations in Mexico;
-- moved axle assembly operations from Buena Vista, Virginia,
to the facilities in Dry Ridge, Kentucky and Columbia,
Missouri; and
-- began the process of closing three Sealing and Thermal
facilities in the U.S. and one in Canada, a Driveshaft
facility in Charlotte, North Carolina, and a Structures
plant in Canada.
In the fourth quarter of 2006, Dana said it intends to close two
Axle facilities in Syracuse, Indiana, and Cape Girardeau,
Missouri, and two Structures facilities in Guelph and Thorold,
Ontario.
In the first quarter of 2007, Dana also said it will close a
Driveshaft plant in Renton, Washington, which will be integrated
into its Louisville, Kentucky operation.
Dana expects to close four more facilities, with announcements
expected later in 2007, Mr. DeBacker states. The company expects
the manufacturing footprint initiatives to reduce its annual
operating costs by $60,000,000 to $85,000,000.
Company Expect to Save Up to $200M From Initiatives
Dana expects the restructuring initiatives to contribute between
$150,000,000 and $200,000,000 to its base plan forecast for 2007.
The phased-in 2007 contributions from reorganization actions
exclude any contributions from reductions of benefits related to
employees covered by CBAs which are the subject of the March 2007
Bankruptcy Court hearings.
In addition to the U.S. restructuring initiatives, in February
2007, 10 of Dana's subsidiaries located in the United Kingdom and
the trustees of four U.K. defined benefit pension plans entered
into an agreement to compromise and settle the liabilities owed
by its U.K. operating subsidiaries to the pension plans.
The agreement provides for the plan trustees to release the UK
subsidiaries from all pension liabilities in exchange for an
aggregate cash payment of approximately $93,000,000 and the
transfer of 33% equity interest in Dana's axle manufacturing and
driveshaft assembly businesses in the U.K. for the benefit of the
pension plan participants.
Dana expects to record a settlement charge of $150,000,000 to
$170,000,000 in connection with these transactions.
Remaining employees in the U.K. operations will receive future
pension benefits pursuant to a defined contribution arrangement
similar to Dana's intended actions in the U.S.
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. 37;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
DANA CORP: Post $739 Million Net Loss in 2006
---------------------------------------------
Dana Corporation
Consolidated Balance Sheet
As of December 31, 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $719,000,000
Accounts receivable
Trade 1,131,000,000
Other 235,000,000
Inventories 725,000,000
Assets of discontinued operations 392,000,000
Other current assets 122,000,000
--------------
Total current assets 3,324,000,000
Goodwill 416,000,000
Investments and other assets 663,000,000
Investments in equity affiliates 555,000,000
Property, plant and equipment, net 1,776,000,000
--------------
TOTAL ASSETS $6,734,000,000
==============
LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable, including current
portion of long-term debt $293,000,000
Accounts payable 886,000,000
Accrued payroll and employee benefits 225,000,000
Liabilities of discontinued operation 195,000,000
Taxes on income 165,000,000
Other accrued liabilities 322,000,000
--------------
Total current liabilities 2,086,000,000
Liabilities subject to compromise 4,175,000,000
Deferred employee benefits and
other non-current liabilities 504,000,000
Long-term debt 22,000,000
DIP financing 700,000,000
Minority interest in consolidated subsidiaries 81,000,000
--------------
Total liabilities 7,568,000,000
Total shareholders' equity (deficit) (834,000,000)
--------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $6,734,000,000
==============
Dana Corporation
Consolidated Statement of Operations
For the year ended December 31, 2006
Net sales $8,504,000,000
Costs and expenses
Cost of sales 8,166,000,000
Selling, general & administrative expenses 419,000,000
Realignment charges, net 92,000,000
Impairment of goodwill 46,000,000
Impairment of other assets 234,000,000
Other income (expense), net 140,000,000
--------------
Income (loss) from continuing operations before
interest, reorg items & income taxes (313,000,000)
Interest expense 115,000,000
Reorganization items, net 143,000,000
--------------
Loss from continuing operations
before income taxes (571,000,000)
Income tax benefit (expense) (66,000,000)
Minority interests (7,000,000)
Equity in earnings of affiliates 26,000,000
--------------
Income (loss) from continuing operations (618,000,000)
Income (loss) from discontinued operations
before income taxes (142,000,000)
Income tax benefit (expense) 21,000,000
--------------
Loss from discontinued operations (121,000,000)
--------------
Income (loss) before effect of
change in accounting (739,000,000)
Effect of change in accounting -
--------------
Net income (loss) ($739,000,000)
==============
Dana Corporation
Consolidated Statement of Cash Flows
For the year ended December 31, 2006
Net cash flows provided by
(used for) operating activities $52,000,000
Cash flow from investing activities:
Purchases of property, plant and equipment (314,000,000)
Acquisition of business, net of cash received (17,000,000)
Divestiture proceeds -
Proceeds from sales of other assets 54,000,000
Proceeds from sales of leasing
subsidiary assets 141,000,000
Changes in investments and other assets 17,000,000
Payments received on leases and loans 16,000,000
Other 32,000,000
--------------
Net cash flows provided by
(used for) investing activities (71,000,000)
Cash flow from financing activities:
Net change in short-term debt (551,000,000)
Payments on & repurchases of long-term debt (205,000,000)
Proceeds from DIP facility 700,000,000
Issuance of long-term debt 7,000,000
Dividends paid -
Other -
--------------
Net cash flows provided by
(used for) financing activities (49,000,000)
--------------
Net increase (decrease) in
cash & cash equivalents (68,000,000)
Cash and cash equivalents, at beginning of year 762,000,000
Effect of exchange rate changes on cash
balances held in foreign countries 25,000,000
Net change in cash of discontinued operations -
--------------
Cash and cash equivalents, at end of year $719,000,000
==============
A full-text copy of Dana Corp.'s annual report on Form 10-K for
the year ended Dec. 31, 2006, filed with the Securities and
Exchange Commission is available for free at:
http://ResearchArchives.com/t/s?1be8
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. 37;
Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
DISTRIBUTED ENERGY: Losses Cue PwC to Raise Going Concern Doubt
---------------------------------------------------------------
PricewaterhouseCoopers LLP expressed substantial doubt on
Distributed Energy Systems Corp.'s ability to continue as a going
concern after auditing the company's financial statements for the
year ended Dec. 31, 2006. The auditing firm points to the
company's recurring operating losses and cash outflows from
operations.
The company disclosed that it had expected a going concern doubt
statement from its auditors due to unsatisfactory results for the
fourth quarter and full year 2006.
For the full year 2006, the company incurred a net loss of
$53.35 million on total revenues of $45.09 million, versus a net
loss of $16.24 million on total revenues of $44.97 million for the
full year 2005.
The company's balance sheet as of Dec. 31, 2006, showed total
assets of $69.88 million and total liabilities of $23.14 million,
resulting to total stockholders' equity of $46.74 million. Its
accumulated deficit in 2006 totaled $189.26 million, up from
$135.91 million in 2005.
Cash and cash equivalents and marketable securities as of Dec. 31,
2006, stood at $4.91 million and $13.25 million, respectively.
About Distributed Energy
Based in Wallingford, Connecticut, Distributed Energy Systems
Corp. (Nasdaq: DESC) -- http://www.distributed-energy.com/--
creates and delivers products and solutions to the emerging
decentralized energy marketplace, giving users greater control
over their energy cost, quality and reliability. The company
delivers a combination of practical, ready-today energy solutions
and the solid business platforms for capitalizing on the changing
energy landscape.
EDDIE BAUER: Moody's Rates Proposed $225 Million Term Loan at B2
----------------------------------------------------------------
Moody's Investors Service assigned a B2, LGD4, 54% to Eddie Bauer,
Inc.'s proposed $225 million term loan and confirmed its B2
corporate family rating with a negative outlook.
The confirmation reflects the fact that the company will not be
significantly increasing its debt levels as expected given the
shareholder's rejection of the proposed leveraged buyout by
affiliates of Sun Capital Partners and Golden Gate Capital. The
company has decided to no longer pursue a sale of the company and
is instead focusing on its new turnaround initiatives.
As a part of this strategy, it is refinancing its current debt
with the new proposed $225 million term loan and approximately
$75 million of junior capital. The confirmation also reflects the
elimination of a possible covenant violation as a result of the
proposed term loan. This rating action concludes the review for
possible downgrade initiated on Nov. 13, 2006.
However, the rating outlook is negative reflecting that over the
next twelve to eighteen months the company will maintain very weak
credit metrics while it is going through a transitional period as
well as the risk that management might not be able achieve modest
quarter over quarter sales growth.
Ratings assigned:
* $225 million senior secured term loan at B2, LGD4-54%.
Ratings confirmed:
* Corporate Family Rating at B2;
* Probability of Default Rating at B2; and
* $300 million senior secured term loan at B2; LGD4- 55%.
The rating outlook is negative.
The rating on the existing $300 million senior secured term loan
rated B2, LGD4, 55% will be withdrawn upon its termination at the
close of the new $225 million senior secured term loan.
The B2 corporate family rating reflects the company's very weak
credit metrics, its thin profitability, which is well below its
peer group, and its history of mispositioning its merchandise for
the Eddie Bauer brand.
In addition, the corporate family rating reflects the company's
high seasonality with most of its revenue and cash flow from
operations being generated during the fourth quarter in
conjunction with the holiday selling season, and the high fashion
risk associated with specialty apparel. Balancing out these
weaknesses is the company's well recognized brand name, its
multi-channel distribution and national diversification, its
modest scale with approximately $1.0 billion in annual revenues,
and its adequate liquidity. In addition, the company's proposed
term loan eliminates its likely covenant violation and need to
readdress its capital structure and provides the company with the
necessary financial flexibility to support it while it addresses
its recent performance issues.
Ratings would be downgraded should the company not be able to
achieve quarter over quarter top line sales improvements, should
it not be able to raise the junior capital, or should its
liquidity position deteriorate.
In addition, downward rating pressure would develop should the
company's operating performance deteriorate, such that Debt/EBITDA
is likely to be sustained over 7.0x or EBITA/IE is likely to
remain below 1.0x beyond Dec. 31, 2007.
Eddie Bauer Holdings, Inc. is a holding company whose principal
operating subsidiary is Eddie Bauer, Inc. Eddie Bauer, Inc. with
headquarters in Redmond, Washington, is a multi-channel specialty
retailer that sells casual apparel and accessories. The company
offers its products through its 279 retail and 115 outlet stores
in the U.S. and Canada along with its catalogs and e-commerce
sites. In addition, the company participates in joint venture
partnerships in Japan and Germany and has licensing agreements
across a variety of product categories. Eddie Bauer, Inc. had
revenues of approximately $1.0 billion for the year ended
Dec. 31, 2006.
EDUCATE INC: Ernst & Young LLP Raises Going Concern Doubt
---------------------------------------------------------
Ernst & Young LLP in Baltimore, Maryland, expressed substantial
doubt about Educate Inc.'s ability to continue as a going concern
after auditing the company's financial statements for the year
ended Dec. 31, 2006, and 2005. The auditing firm stated that the
company did not comply with covenants of loan agreements with a
syndicate of banks, and that although the company obtained a
waiver of these defaults as of Dec. 31, 2006, it is likely that
the company will need to obtain additional waivers of these
covenants in 2007 to avoid triggering the debt's demand repayment
provisions.
Educate Inc. reported a net loss of $11.9 million on total
revenues of $354.7 million for the year ended Dec. 31, 2006,
compared with net income of $15.4 million on total revenues of
$330.4 million for the year ended Dec. 31, 2005.
Revenues from continuing operations for the year increased 7% to
$354.7 million, driven primarily by growth in the catapult
learning, company-owned centers, educate online and European
business segments.
Total segment operating income decreased to $25.6 million in 2006,
from $62 million in 2005, primarily due to operating losses in the
company-owned centers, educate products, and educate online
segments.
At Dec. 31, 2006, the company's balance sheet showed
$464.8 million in total assets, $259.8 million in total
liabilities, and $205 million in total stockholders' equity.
At Dec. 31, 2006, the company's balance sheet also showed strained
liquidity with $74.1 million in total current assets available to
pay $244.1 million in total current liabilities. At Dec. 31,
2006, the company classified $175.8 million of long-term debt in
default as a current liability, thereby resulting in a working
capital deficit of $170 million.
Non-compliance with Financial Covenants
The company amended its term loan facility during the first
quarter of 2006, increasing the term loan outstanding from
$139 million to $159.7 million at Mar. 31, 2006. Using proceeds
from the term loan amendment, $21.1 million of revolving credit
borrowings were repaid. As of Dec. 31, 2006, the company was not
in compliance with certain financial covenants of the 2005 Term
Loan, as amended. On March 15, 2007, the company obtained a
waiver of violations of these financial covenants as of Dec. 31,
2006, and March 31, 2007, from its bank syndicate.
Management considered attempting to negotiate revised financial
covenants to allow for compliance in 2007 based on projected
operating results. However, because the company has entered into
a definitive merger agreement for the sale of the company and
expects to close that transaction by June 30, 2007, the company
determined it was not prudent to negotiate new terms and incur
additional costs to amend its credit facility.
Merger Agreement
On Jan. 28, 2007, Educate Inc. entered into a definitive Agreement
and Plan of Merger with Edge Acquisition LLC, a company affiliated
with Sterling Partners and Citigroup Private Equity, and with
Christopher Hoehn-Saric, Educate's chairman and chief executive
officer. Under the terms of the Merger Agreement, Educate's
stockholders will receive $8 in cash for each share of Educate
common stock they own. Completion of the merger is subject to
customary closing conditions, including, among others, (i)
approval by Educate's stockholders, (ii) expiration or termination
of the applicable Hart-Scott-Rodino Antitrust Improvements Act
waiting period and (iii) the absence of any order or injunction
prohibiting the consummation of the merger.
About Educate Inc.
Educate Inc. (Nasdaq: EEEE) -- http://educate-inc.com/-- is a
pre-K-12 education company delivering supplemental education
services and products to students and their families. Sylvan
Learning operates the largest network of tutoring centers,
providing supplemental, remedial and enrichment instruction.
Catapult Learning, its school partnership business unit, provides
educational services to public and non-public schools. Its
Educate Products business delivers educational products including
the Hooked on Phonics early reading, math and study skills
programs.
ENCYSIVEW PHARMACEUTICALS: KPMG LLP Raises Going Concern Doubt
--------------------------------------------------------------
KPMG LLP, in Houston, Texas, expressed substantial doubt about
Encysive Pharmaceuticals Inc.'s ability to continue as a going
concern after auditing the company's financial statements for the
years ended Dec. 31, 2006, and 2005. The auditing firm pointed to
the company's recurring losses from operations and net capital
deficiency.
Encysive Pharmaceuticals Inc. reported a net loss of
$109.3 million on total revenues of $19 million for the year ended
Dec. 31, 2006, compared with a net loss of $75.1 million on total
revenues of $14 million for the year ended Dec. 31, 2005.
Revenues in year 2006 increased $5 million, to $19 million from
$14 million in year 2005. The increase is primarily due to higher
royalties earned on higher sales of Argatroban by GlaxoSmithKline
plc (GSK) in year 2006. Royalties increased to $17.4 million,
from $12.9 million in 2005.
Loss from continuing operations increased to $109.4 million in
2006, from loss from continuing operations of $74.9 million in
2005, primarily due to expenses incurred in 2006 for the
anticipated commercial launch of Thelin(TM)in Europe and in the
U.S., if the company receives regulatory approval.
At Dec. 31, 2006, the company's balance sheet showed $63.1 million
in total assets and $156.8 million in total liabilities, resulting
in a $93.7 total stockholders' deficit.
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?1bd8
Cash and cash equivalents at Dec. 31, 2006, were $43.8 million,
compared to $127.9 million at Dec. 31, 2005. The 2006 year-end
cash balance included gross proceeds of $18 million raised through
the sale of the company's common stock, utilizing the company's
equity line of financing with Azimuth Opportunity Ltd.
About Encysive Pharmaceuticals
Headquartered in Houston, Texas, Encysive Pharmaceuticals Inc.
(Nasdaq GM: ENCY) -- http://www.encysive.com/-- is a
biopharmaceutical company engaged in the discovery, development
and commercialization of novel, synthetic, small molecule
compounds to address unmet medical needs. Research and
development programs are predominantly focused on the treatment
and prevention of interrelated diseases of the vascular
endothelium and exploit the company's expertise in the area of the
intravascular inflammatory process, referred to as the
inflammatory cascade, and vascular diseases.
ESCHELON TELECOM: 2006 Net Loss Decreases to $2.78 Million
----------------------------------------------------------
Eschelon Telecom, Inc., reported a $2.78 million net loss on
$274.53 million of total revenues for the year ended Dec. 31,
2006, compared with a $30.99 million net loss on $227.74 million
of total revenues for the prior year period.
"This has clearly been our best year yet," Eschelon President and
Chief Executive Officer Richard A. Smith stated.
"We have proven the ability to scale the business while continuing
to meet or exceed our aggressive financial and operating targets.
Achieving these results during a year in which we are integrating
multiple acquired companies and simultaneously expanding our sales
force and network footprint reflects excellent operating execution
-- a testament to the strength of the business we have built," Mr.
Smith said.
"I am excited about our future as we capitalize on this operating
and financial momentum. We have a base of Associates (a.k.a.
employees) that are making the right decisions -- customer by
customer -- and you see that in our results."
Total revenues for the fourth quarter of 2006 were $76.7 million,
an increase of $6.9 million from the third quarter of 2006 and an
increase of $18.4 million from the fourth quarter of 2005. The
increases were primarily due to the inclusion of the companies
acquired during 2006, new telephone system sales and access line
growth.
Gross profit for the fourth quarter of 2006 was $44.5 million, an
increase of $5.1 million from the third quarter of 2006 and an
increase of $10.7 million from the fourth quarter of 2005. The
increases were primarily due to the inclusion of the companies
acquired during 2006, new telephone system sales and access line
growth.
Sales, general and administrative expenses for the fourth quarter
of 2006 were $29 million, an increase of $3.2 million from the
third quarter of 2006 and an increase of $6.6 million from the
fourth quarter of 2005. The increase from 2005 was primarily due
to the inclusion of companies acquired during 2006, an increase in
costs associated with the sales force expansion, operating taxes
and share-based compensation. The increase from the third quarter
was primarily due to the inclusion of OneEighty Communications and
Mountain Telecommunications.
Adjusted EBITDA for the fourth quarter of 2006 was $16 million, an
increase of $1.9 million from the third quarter of 2006 and an
increase of $4.5 million from the fourth quarter of 2005.
Capital expenditures for the fourth quarter of 2006 were
$21.3 million, an increase of $8.5 million from the third quarter
of 2006 and an increase of $12.4 million from the fourth quarter
of 2005. Capital expenditures typically fluctuate by quarter
depending upon timing of major equipment purchases. The primary
drivers for these increases are the collocation expansion and
line/customer growth, including the addition of approximately
7,000 lines acquired from another carrier during the quarter.
Net income for the fourth quarter of 2006 was $0.01 million,
compared to a loss of $0.6 million in the third quarter of 2006
and a loss of $5.1 million in the fourth quarter of 2005. The
improvements were primarily due to the inclusion of the companies
acquired during 2006 and higher access lines in service.
Cash, restricted cash and available-for-sale securities at
Dec. 31, 2006, were $39.5 million, a decrease of $37.5 million
from the third quarter of 2006. In November, the company paid
approximately $37.3 million to acquire Mountain
Telecommunications, Inc.
At Dec. 31, 2006, the company's balance sheet showed
$330.5 million, $199.1 million, and $131.4 million in total
stockholders' equity.
A full-text copy of the company's 2006 annual report is available
for free at http://ResearchArchives.com/t/s?1bd9
About Eschelon Telecom
Minneapolis-based Eschelon Telecom Inc. (NASDAQ: ESCH) --
http://www.eschelon.com/-- is a facilities-based competitive
communications services provider of voice and data services and
business telephone systems in 45 markets in the western United
States. Eschelon currently employs 1,400 telecommunications and
Internet professionals, serves more than 60,000 business
customers, and has approximately 600,000 access lines in service
throughout its markets in Arizona, California, Colorado,
Minnesota, Montana, Nevada, Oregon, Utah and Washington.
Eschelon Operating Company is a wholly owned subsidiary of
Eschelon Telecom Inc.
* * *
As reported in the Troubled Company Reporter on Nov. 21, 2006,
Moody's Investors Service affirmed Eschelon Operating Company's
corporate family rating at B3 and probability of default rating at
B2. Additionally, Moody's changed the ratings outlook to positive
from stable.
ESCHELON TELECOM: Inks $710 Mil. Merger Pact with Integra Telecom
-----------------------------------------------------------------
Eschelon Telecom, Inc., has signed a definitive agreement to be
acquired by Portland-based Integra Telecom, Inc., a privately held
integrated communications provider offering retail services to
businesses in Oregon, Washington, Utah, Idaho, California,
Arizona, Minnesota, and North Dakota.
Under the terms of the agreement, which was approved by the boards
of directors of both companies, Integra Telecom will acquire
Eschelon for $30.00 a share in cash, which equates to a total
equity value of approximately $566 million on a fully diluted
basis, or an aggregated purchase price of $710 million, including
the repayment of approximately $144 million in Eschelon debt.
Integra will fund the purchase and the refinancing of its existing
debt with $1.2 billion in new capital, including
i) senior secured debt facilities to be placed by Deutsche Bank
Securities and Morgan Stanley Senior Funding, Inc., as Joint
Lead Arrangers and CIBC as Co-Age; and
ii) senior notes to be placed by Deutsche Bank Securities with
CIBC acting as lead manager.
The transaction is subject to the approval of a majority of
Eschelon's shareholders and the satisfaction of customary closing
conditions and regulatory approvals.
"This transaction provides significant benefits for Eschelon's
shareholders -- the $30.00 share price represents a 58% premium to
our price 90 days ago and it represents a 109% improvement over
our price of just one year ago. Our Associates have done an
excellent job in building value for the company and this
transaction indicates that key goal has been accomplished,"
Eschelon Chief Executive Officer Richard A. Smith stated.
"Both companies have an excellent reputation in meeting the needs
of their customers. The market position and financial strength
resulting from this combination well positions the customers and
employees of both companies for the future," Mr. Smith added.
Upon closing, Mr. Smith will join Integra Telecom's Board of
Directors.
"We believe the combination will create the most established, cash
profitable competitive local exchange carrier in our region with
increased market strength, greater financial power and enhanced
product choices, well positioning the customers and employees of
both companies for the future," Integra Telecom Chief Executive
Officer Dudley Slater said.
"We recognize the value and experience of the Eschelon employees
and look forward to welcoming them to the combined organization as
we join together to build upon the successful records of both
companies and create value through the integration," Mr. Slater
added.
The transaction is subject to customary closing conditions and
regulatory approvals. Eschelon expects the sale to be completed
by the end of August 2007.
Latham & Watkins LLP advised Eschelon. Jefferies & Company gave
Eschelon a fairness opinion on the transaction.
Deutsche Bank Securities advised Integra. Perkins & Coie LLP gave
legal advise to Integra.
A full-text copy of the plan of merger is available for free at:
http://ResearchArchives.com/t/s?1bd6
Severance Program
Eschelon has established a severance program for associates who,
due to integration actions, have their position eliminated or
moved more than 40 miles and who do not take another position with
the company.
-- Vice Presidents, five weeks of pay for each year of service;
-- Directors, four weeks of pay for each year of service;
-- Managers/Supervisors, three weeks of pay for each year of
service;
-- Non-Management, two weeks of pay for each year of service;
-- Minimum payment is one week; and
-- Severance pay is pro-rated for partial years of service.
In addition, Integra is offering a 5% salary bonus paid as a
"stay" bonus to all Eschelon non-sales and non-executives
associates who stay with the company at least six months post
completion of the transaction. Non-sales and non executive
associates whose positions are eliminated will receive a 25%
severance payment in addition to the normal Eschelon severance
payment.
About Integra Telecom
Integra Telecom, Inc. -- http://www.integratelecom.com/--
provides voice, data and Internet communications to thousands of
business and carrier customers in eight Western states, including
Arizona, California, Idaho, Minnesota, North Dakota, Oregon, Utah
and Washington. The company owns and operates a best-in-class
fiber-optic network comprised of eight metropolitan access
networks, a nationally acclaimed tier one Internet and data
network and a 4,700-mile high-speed long haul network. Primary
equity investors in the company include Bank of America Capital
Investors, Boston Ventures and Nautic Equity Partners. Integra
Telecom and Electric Lightwave are registered trademarks of
Integra Telecom Inc.
About Eschelon Telecom
Minneapolis-based Eschelon Telecom Inc. (NASDAQ: ESCH) --
http://www.eschelon.com/-- is a facilities-based competitive
communications services provider of voice and data services and
business telephone systems in 45 markets in the western United
States. Eschelon currently employs 1,400 telecommunications and
Internet professionals, serves more than 60,000 business
customers, and has approximately 600,000 access lines in service
throughout its markets in Arizona, California, Colorado,
Minnesota, Montana, Nevada, Oregon, Utah and Washington.
Eschelon Operating Company is a wholly owned subsidiary of
Eschelon Telecom Inc.
* * *
As reported in the Troubled Company Reporter on Nov. 21, 2006,
Moody's Investors Service affirmed Eschelon Operating Company's
corporate family rating at B3 and probability of default rating at
B2. Additionally, Moody's changed the ratings outlook to positive
from stable.
FONTAINEBLEAU LAS VEGAS: S&P Rates $1.85 Billion Senior Loan at B
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Fontainebleau Las Vegas Holdings LLC. The rating
outlook is negative.
At the same time, Standard & Poor's assigned its loan and recovery
ratings to the proposed $1.85 billion senior secured credit
facility to be borrowed by FLVH subsidiary Fontainebleau Las Vegas
LLC and its affiliate, Fontainebleau Las Vegas II LLC. The
facility consists of a $1 billion revolving credit due 2012 and an
$850 million delayed draw term loan due 2014. This secured debt
is rated 'B' (at the same level as the corporate credit rating on
FLVH) with a recovery of '2', indicating the expectation for
substantial recovery of principal in the event of a payment
default.
Proceeds from the proposed bank facility, combined with expected
second mortgage notes and equity contributions, will be used to
help fund the construction of the company's approximately
$2.4 billion Fontainebleau Resort & Casino on the Las Vegas Strip.
The facility and an expected second mortgage note issue are
contingent upon an equity infusion into FLVH of at least
$430 million.
Pro forma for the proposed bank facility and expected notes
offering, and assuming peak borrowing needs, FLVH will have about
$2.4 billion in total debt outstanding.
"The corporate credit rating on FLVH reflects its high amount of
peak debt, execution risk in building and operating a property of
this size, the presence of well-established competitors with
greater financial resources, a somewhat disadvantaged market
location, and reliance on a single source of cash flow," said
Standard & Poor's credit analyst Michael Scerbo.
"In addition, since the property will target a higher-end
customer, the status of the economy in 2009 and 2010 could
materially affect operating results post-opening. These factors
are somewhat tempered by the majority owner's past success in
developing properties in Las Vegas, the management team's
experience operating properties on the Las Vegas Strip, the
Fontainebleau's close proximity to the city's largest convention
center, and a capital structure that provides adequate cushion in
the event initial operating results are weaker than expected,
driven by an equity contribution of more than $400 million,
including a $50 million liquidity reserve account."
Fontainebleau Las Vegas Holdings LLC is a wholly owned subsidiary
of Fontainebleau Resorts LLC --an entity owned primarily by the
principals behind Turnberry Associates, a real estate development
company, former executives of Mandalay Resort Group, and private
investors.
Fontainebleau Resorts was formed in early 2005 to develop and
operate Fontainebleau branded leisure and gaming properties
throughout the world. FLVH was formed in 2006 to design, develop,
construct, own, and operate Fontainebleau Las Vegas, a casino
resort on the Las Vegas Strip. The asset, which will be located
on the northern portion of the Strip at the site of the old El
Rancho, is scheduled to break ground in the next few months with
completion currently scheduled for September 2009.
FRANCISCO MENDOZA: Case Summary & 40 Largest Unsecured Creditors
----------------------------------------------------------------
Lead Debtor: Francisco Mendoza, Inc.
dba JJ Alvarez
dba Empresas Mendoza
dba YPSO
dba Mueblerias Mendoza
P.O. Box 1277
Cayey, PR 00737
Bankruptcy Case No.: 07-01474
Debtor-affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Comercial Mendoza, Inc. 07-01476
Inversiones Mendoza, Inc. 07-01477
Inmobiliaria Mendoza Del Norte, Inc. 07-01478
Chapter 11 Petition Date: March 21, 2007
Court: District of Puerto Rico (Old San Juan)
Debtors' Counsel: Carmen D. Conde Torres, Esq.
C. Conde & Associates
254 San Jose Street, 5th Floor
San Juan, PR 00901-1523
Tel: (787) 729-2900
Fax: (787) 729-2203
Estimated Assets Estimated Debts
---------------- ---------------
Francisco Mendoza, Inc. $1 Million to Unknown
$100 Million
Comercial Mendoza, Inc. $50,000 to $100,000 to
$100,000 $500,000
Inversiones $10 Million to Less than
Mendoza, Inc. $50 Million $50,000
Inmobiliaria Mendoza Less than Less than
Del Norte, Inc. $50,000 $50,000
A. Francisco Mendoza, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Leo Burnett $2,033,483
268 Mu¤oz Rivera Avenue
San Juan, PR 00918
IBM Corp. $816,765
P.O. Box 7247-0298
Philadelphia, PA 19170
Capri S.E. - Los Colobos $339,678
P.O. Box 363148
San Juan, PR 00936-4668
JJ Alvarez $298,163
129 Calle Balboa
Mayaguez, PR 00681
Mente Creativa $239,945
P.O. Box 7891
Guaynabo, PR 00970-7891
Capri, S.E. - Humacao $238,671
Secretario De Hacienda $209,516
G.E. Appliances Caribbean $199,895
New Port Investments $197,949
AEE $145,405
Whirlpool Corp. $144,874
Jose J. Alvarez $128,772
Roberto Ledesma Ins. $109,100
Inversiones Rafael A. Soto, Inc. $83,277
Ramallo Bros. Printing Inc. $80,406
A.I. Credit Corp. $67,003
Ryder Puerto Rico $59,198
Trailer Bridge Inc. $57,439
Rotta Moveis $56,042
Sony De Puerto Rico $53,453
B. Comercial Mendoza, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
J. Cobo & Associates, Inc. $44,013
15712 Southwest 41 Street, Suite 800
Fort Lauderdale, FL 33331
Fogel Caribbean Corp. $43,639
170 Pedro Albizu Campos
Aguadilla, PR 0603
Refricentro, Inc. $17,586
H-15 Calle Amapola
Condado Viejo
Caguas, PR 00726
Carrier PR, Inc. $14,959
P.O. Box 71519
San Juan, PR 00936
Follet Corporation $11,806
P.O. Box D
801 Church Lane
Easton, PA 18044
Collazo Electric $8,000
Cumba Refrigeration $7,472
York International $7,150
Asoc. Industrials Del Pan Coliseo $5,980
Wilberto Rivera Feliciano $2,352
Mitel Distributing Inc. $1,887
Padilla Refrigeration $1,876
Vanya Air $1,406
Simcox Refrigeration Suppliers $1,143
Tourism Events Unlimited $975
Thunderbird Food Machine, Inc. $955
Trane De PR, Inc. $939
Joe Caceres $700
Brothers Bakery Machinery $557
IMI Cornelius, Inc. $548
C. Inversiones Mendoza, Inc., and Inmobiliaria Mendoza Del Norte,
Inc., do not have any creditors who are not insiders.
FREMONT GENERAL: Mulls Sale of $4 Bil. Sub-Prime Residential Loans
------------------------------------------------------------------
Fremont General Corporation's wholly owned industrial bank,
Fremont Investment & Loan, has entered into whole loan sale
agreements to sell approximately $4 billion of its sub-prime
residential real estate loans.
Fremont General has received approximately $950 million in cash
from the first sale installment under the agreements with the
remaining sales under the agreements expected to be completed over
the next several weeks.
Fremont General will sell the loans at a discount, reflecting
current conditions in the sub-prime mortgage market. Fremont
General estimates that the sale of the approximately $4 billion of
its sub-prime residential loans will result in a pre-tax loss of
approximately $140 million.
Fremont General continues to operate its profitable commercial
real estate lending and residential loan servicing operations, as
well as its retail banking division. Fremont General's retail
banking operation continues with its 70-year history of offering
highly competitive rates for Certificates of Deposit and Savings
Accounts across its network of California branch offices.
Customer deposits remain fully insured by the FDIC up to at least
$100,000, and retirement accounts remain insured separately up to
an additional $250,000.
Significant events have taken place prior to Fremont General's
plan to sell loans.
Lay-Offs
Reuters reported early this week that Fremont General notified
around 2,400 employees in its subprime mortgage unit that they
will lose their jobs on May 18.
Line of Credit
One of Fremont General's lenders, Credit Suisse, has increased its
committed line of credit to Fremont Investment & Loan to
$1 billion, and has received various proposals for additional
credit facilities if needed to supplement the company's current
liquidity position of $1.3 billion in cash and short-term
investments.
10-K Filing Delay
Fremont General disclosed in a regulatory filing with the
Securities and Exchange Commission that it will not file its
Annual Report on Form 10-K for the fiscal year ended
Dec. 31, 2006 before the extended deadline of March 16, 2007.
The company said it is still working with its independent
registered public accounting firm to complete the audit of the
Dec. 31, 2006 financial statements.
Noting the company's delayed financial report as well as its
increased line of credit, Dominion Bond Rating Service stated that
all the ratings of Fremont General and its subsidiaries, including
Fremont's Issuer & Senior Debt rating at B (low), remain Under
Review with Negative Implications.
Early this month, Fremont General disclosed in a regulatory filing
that it will exit its sub-prime residential real estate lending
operations.
The move comes as a result of the company's receipt on Feb. 27,
2007, of a Proposed Cease and Desist Order from the Federal
Deposit Insurance Corporation.
The FDIC's action prompted Moody's Investors Service to downgrade
the servicer quality rating of Fremont Investment & Loan as a
primary servicer of subprime loans to SQ4+ from SQ3+. Moody's
also placed the rating on review for possible further downgrade.
Another rating agency, Standard & Poor's Ratings Services, also
lowered its counterparty credit rating on Fremont General to 'B-'
from 'B+'. Standard & Poor's said that the rating remains on
CreditWatch with negative implications, where it was placed on
March 1, 2007.
Furthermore, Fitch Ratings downgraded Fremont General's Long-Term
Issuer Default Rating to 'CCC' from 'B+'; Short-Term Issuer to 'C'
from 'B'; Long-Term senior debt to 'CC' from 'B'; and Individual
to 'E' from 'D'.
About Fremont General
Headquartered in Santa Monica, Calif., Fremont General Corporation
(NYSE:FMT) -- http://www.fremontgeneral.com/-- is a nationwide
real estate lender doing business primarily through its wholly
owned industrial bank, Fremont Investment & Loan.
GATEHOUSE MEDIA: Incurs $1.57 Million Net Loss in Full Year 2006
----------------------------------------------------------------
GateHouse Media, Inc. reported results for the year ended Dec. 31,
2006, with a net loss of $1.57 million on total revenues of
$314.93 million.
Total revenues in 2006 were derived from advertising of
$238.72 million, circulation of $52.65 million, and commercial
printing and other revenues of $23.55 million. For the year 2006,
the company paid interest expense related to its debt totaling
$35.99 million.
The company's balance sheet as of Dec. 31, 2006, showed total
assets of $1.16 billion and total liabilities of $694.64 million,
resulting to total stockholders' equity of $473.08 million.
Retained deficit as of Dec. 31, 2006, was $10.6 million.
Cash and cash equivalents held in 2006 were $90.3 million, as
compared with $3.06 million in 2005.
For the period June 6, 2005, to Dec. 31, 2005, GateHouse Media as
the successor company after its merger with FIF III Liberty,
posted a net income of $9.56 million on total revenues of
$119.51 million.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1bcb
Merger with FIF III Liberty
On June 6, 2005, FIF III Liberty Holdings LLC, a wholly owned
subsidiary of Fortress, merged with the company, with GateHouse
Media surviving the merger and Fortress becoming the company's
principal and controlling stockholder. As of Dec. 31, 2006,
Fortress beneficially owned about 56.3 percent of the company's
outstanding common stock. Prior to the Merger, affiliates of
Leonard Green & Partners LP controlled the company.
Recent Developments
On March 8, 2007, the company's Board of Directors declared a
first quarter 2007 dividend of $0.37 per share on the company's
common stock, for the period from Jan. 1, 2007, to March 31, 2007,
which will be payable on April 16, 2007, to stockholders of record
as of March 30, 2007.
On Feb. 28, 2007, the company purchased all the issued and
outstanding capital stock of SureWest Directories from SureWest
Communications for $110 million. SureWest Directories publishes
yellow page and white page directories in and around the
Sacramento, California area and provides Internet yellow pages
through the sacramento.com website. The company will become the
publisher of the official directory of SureWest Telephone.
On Feb. 27, 2007, the company amended and restated credit
agreement with a syndicate of financial institutions with Wachovia
Bank, National Association as administrative agent. The restated
credit agreement provides for a $670 million term loan facility
which matures in August, 2014, a delayed draw term loan of up to
$250 million available until August 2007 which matures in August
2014, and a revolving credit agreement with a $40 million
aggregate loan commitment available.
On Feb. 9, 2007, the company acquired seven publications from the
Journal Register Co. for a net purchase price of about $70 million
plus about $2 million of working capital. The acquisition
includes two daily and three weekly newspapers as well as two
shopper publications serving Southeastern Massachusetts with an
aggregate circulation of about 122,000.
During the period from Jan. 1, 2007, to Feb. 1, 2007, the company
acquired an additional 25 publications for an aggregate purchase
price of about $23.6 million. The acquisitions include one daily,
thirteen weeklies, ten shopper and one niche publication with an
aggregate circulation of about 292,000.
2007 Credit Facility
GateHouse Media Operating, Inc., an indirectly wholly owned
subsidiary of the company, GateHouse Media Holdco, Inc., a wholly
owned subsidiary of the company, and certain of their subsidiaries
are party to a first lien credit agreement, dated June 6, 2006, as
amended on June 21, 2006, and Oct. 11, 2006, with a syndicate of
financial institutions with Wachovia Bank, National Association as
administrative agent. The first lien credit facility was amended
and restated on Feb. 27, 2007, by entering into the 2007 Credit
Facility. As of Dec. 31, 2006, $558 million was outstanding under
the first lien credit facility.
The 2007 Credit Facility provides for a:
(i) $670 million term loan facility due Aug. 28, 2014;
(ii) a delayed draw term loan of up to $250 million
available until Aug. 28, 2007, that matures on
Aug. 28, 2014; and
(iii) a revolving loan facility with a $40 million aggregate
loan commitment amount available.
As of Feb. 28, 2007, $670 million was outstanding under the term
loan facility; zero borrowings were outstanding under the delayed
draw facility and under the revolving credit facility.
About GateHouse Media
Headquartered in Fairport, New York, GateHouse Media, Inc. (NYSE:
GHS), is a publisher of locally based print and online media in
the U.S. It currently owns over 445 community publications,
including 7 white and yellow page directory publications located
in 18 states across the country, and more than 235 related
websites reaching about 9 million people on a weekly basis.
* * *
As reported in the Troubled Company Reporter on March 20, 2007,
Moody's placed ratings of GateHouse Media Operating, Inc. under
review for possible downgrade, following the company's
announcement that it has signed a definitive stock and asset
purchase agreement to acquire 9 publications from The Copley
Press, Inc. for a net purchase price, including working capital
adjustments, of $380 million. The ratings placed under review
include the company's $40 million senior secured first lien
revolving credit facility, due 2014 -- B1; $670 million senior
secured term loan B, due 2014 -- B1; $250 million senior secured
delayed draw term loan, due 2014 -- B1; Corporate Family rating --
B1; and Probability of Default rating -- B2.
GLOBAL HOME: Hires Johnson Associates as Compensation Advisor
-------------------------------------------------------------
Global Home Products LLC and its debtor-affiliates obtained
permission from the U.S. Bankruptcy Court for the District of
Delaware to employ Johnson Associates Inc. as their compensation
advisor nunc pro tunc Jan. 9, 2007.
Johnson Associates is expected to:
a) perform an analysis of the Debtors' proposed management
incentive plan and sales bonus plan;
b) provide expert testimony, at one or more depositions or
hearings related to their chapter 11 cases, regarding their
proposed plans, or any modifications to that plans; and
c) provide other advisory services as necessary by the Debtors.
Jeff Visithpanich, Esq., at Johnson Associates, will bill the
Debtors $300 per hour for his work. Mr. Visithpanich discloses
that the firm's other professionals bill:
Professional Hourly Rate
------------ -----------
Alan Johnson $575
Staff and Associates $155 - $300
Mr. Visithpanich assured the Court that Johnson Associates is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Westerville, Ohio, Global Home Products, LLC
-- http://www.anchorhocking.com/and http://www.burnesgroup.com/
-- sells houseware and home products and manufactures high
quality glass products for consumers and the food services
industry. The company also designs and markets photo frames,
photo albums and related home decor products. The company and
16 of its affiliates, including Burnes Puerto Rico, Inc., and
Mirro Puerto Rico, Inc., filed for Chapter 11 protection on
April 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis
Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and
Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub LLP, represent the Debtors. Bruce Buechler,
Esq., at Lowenstein Sandler, P.C., and David M. Fournier, Esq., at
Pepper Hamilton LLP represent the Official Committee of Unsecured
Creditors. Huron Consulting Group LLC gives financial advice to
the Committee. When the company filed for protection from their
creditors, they estimated assets between $50 million and
$100 million and estimated debts of more than $100 million.
GLOBAL HOME: Ct. Extends Time to Remove Civil Suits Until July 15
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware further
extended until July 15, 2007, the period within which Global Home
Products LLC and its debtor-affiliates can remove state court
civil actions.
As reported in the Troubled Company Reporter on Jan. 29, 2007,
since filing for bankruptcy, Debtors' efforts were directed to:
a) obtain Court approval for the sale of the Burnes Group
assets and WearEver assets;
b) address issues attendant to that sales;
c) consider going forward alternatives for the Anchor Hocking
business;
d) extend and modify their dip financing; and
e) work with key constituencies on issues relating to their
cases.
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub LLP, told the Court that the Debtors did not have the
opportunity to thoroughly review actions that may be need to be
removed from other jurisdictions.
The extension, Ms. Laura said, will allow the Debtors to make
fully informed decisions in removing each action and will assure
that the Debtors won't forfeit valuable rights under Section 1452
of the Bankruptcy Code.
Headquartered in Westerville, Ohio, Global Home Products, LLC
-- http://www.anchorhocking.com/and http://www.burnesgroup.com/
-- sells houseware and home products and manufactures high
quality glass products for consumers and the food services
industry. The company also designs and markets photo frames,
photo albums and related home decor products. The company and
16 of its affiliates, including Burnes Puerto Rico, Inc., and
Mirro Puerto Rico, Inc., filed for Chapter 11 protection on
April 10, 2006 (Bankr. D. Del. Case No. 06-10340). Laura Davis
Jones, Esq., Bruce Grohsgal, Esq., James E. O'Neill, Esq., and
Sandra G.M. Selzer, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub LLP, represent the Debtors. Bruce Buechler,
Esq., at Lowenstein Sandler, P.C., and David M. Fournier, Esq., at
Pepper Hamilton LLP represent the Official Committee of Unsecured
Creditors. Huron Consulting Group LLC gives financial advice to
the Committee. When the company filed for protection from their
creditors, they estimated assets between $50 million and
$100 million and estimated debts of more than $100 million.
GOODYEAR TIRE: Inks Pact w/ Union on Scheduling, Hiring & Vacation
------------------------------------------------------------------
Goodyear Tire & Rubber Co. has reached a tentative agreement on
local issues with the United Steelworkers of America after five
weeks of negotiations, Melissa Willett of The Fayetteville
Observer reports.
The report says the agreement, which mainly addressed scheduling,
hiring and vacation time, provides, among others, that:
a) all workers except maintenance -- craftsmen, electricians
and machinists -- will be given multiple shift options; and
b) maintenance workers will be split into two shifts -- one
working eight hours and the other working 12 hours.
Amended Pension Plans
Early this month, the company made a series of changes to its
U.S.-based retail and salaried employee pension and retiree
benefit plans aimed at increasing its global competitiveness while
significantly reducing its cost structure.
The changes will be phased in over a two-year period, with most
benefit plan changes effective in 2008 and the most significant
pension plan changes in 2009. As a result, Goodyear expects
after-tax savings of $80 million to $90 million in 2007,
$100 million to $110 million in 2008, and $80 million to
$90 million in 2009 and beyond.
The actions are expected to reduce the company's pension
obligation by approximately $100 million and its obligation for
other post retirement benefits by about $525 million assuming
interest rates used to value the obligations remain similar to
those used at Dec. 31, 2006.
Goodyear plans to record a one-time after-tax charge of
approximately $65 million related to these actions in the first
quarter of 2007.
Benefit plan changes effective Jan. 1, 2008, include:
* Increasing the amounts that current and future salaried
retirees contribute toward the cost of their medical
benefits;
* Redesigning retiree medical benefit plans to minimize cost
impact on premiums;
* Closing the company's Medicare supplement plan to new
entrants; and
* Discontinuing company-paid life insurance for salaried
retirees.
The pension changes include:
* Freezing the current salaried defined benefit pension plans
as of Dec. 31, 2008;
* Replacing the defined benefit pension plans with enhanced
401(k) savings accounts with varying levels of company
contributions for current associates beginning Jan. 1, 2009;
and
* Introducing company-matching contributions for the salaried
401(k) savings plan at 50 percent of the first 4 percent of
annual pay beginning Jan. 1, 2009.
Low-B Ratings Affirmed
Last week, Fitch Ratings affirmed its ratings for The Goodyear
Tire & Rubber Company, including the 'B' rating on the company's
$300 million third lien term loan, and 'CCC+' rating on its senior
unsecured debt. The rating agency revised the rating outlook to
stable from negative.
Fitch noted that at Dec. 31, 2006, the company had approximately
$7.2 billion of debt outstanding, prior to a paydown of bank debt
in January.
The revision to a Stable Outlook, Fitch said, reflects its
expectation for further improvement in the company's operating
profile as it recovers from the labor strike and continues to
implement its cost-savings plan.
In addition, Fitch noted that the company faces significant cash
requirements that could contribute to negative cash flow in 2007.
The requirements, the rating agency said, include pension
contributions, capital expenditures, an increase in working
capital requirements as the company rebuilds inventory, and debt
and interest payments.
Fitch's 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.
On Jan. 12, 2007, Moody's Investors Service affirmed Goodyear Tire
& Rubber Company's Corporate Family Rating of B1. Ratings on
Goodyear's existing secured and unsecured obligations were also
affirmed as was the company's Speculative Grade Liquidity rating
of SGL-2. The outlook was reverted to stable from negative.
On Jan. 8, 2007, Standard & Poor's Ratings Services affirmed its
'B-' ratings on the class A-1 and A-2 certificates from the
$46 million Corporate Backed Trust Certificates Goodyear Tire &
Rubber Note-Backed Series 2001-34 Trust. The ratings were removed
from CreditWatch, where they were placed with negative
implications on Oct. 24, 2006.
About The Goodyear Tire & Rubber Company
Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company
(NYSE: GT) -- http://www.goodyear.com/-- is the world's largest
tire company. The company manufactures tires, engineered rubber
products and chemicals in more than 90 facilities in 28 countries.
Goodyear Tire has marketing operations in almost every country
around the world including Chile, Colombia, Guatemala and Peru in
Latin America. Goodyear employs more than 80,000 people
worldwide.
GRAHAM PACKAGING: Moody's Assigns B1 Rating to Amended Facility
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the amended
credit facility of Graham Packaging Company, L.P. Moody's expects
the $300 million in anticipated proceeds to be used to pay down
the existing $250 million second-lien term loan and $50 million in
revolving debt.
Moody's took these ratings:
-- Assigned $1,870 million (originally $1,570 million) senior
secured first lien term loan due Oct. 7, 2011, B1, LGD3,
37%
-- Affirmed Corporate family rating, B2
-- Affirmed Probability of Default Rating, B2
-- Affirmed $250 million senior secured first lien revolver due
Oct. 7, 2010, B1, LGD3, 37%
-- Affirmed $250 million second lien term loan C due
April 7, 2012, B3 which will be withdrawn upon completion of
the transaction
-- Affirmed $250 million 8.5% senior unsecured notes due
Oct. 15, 2012, Caa1, LGD5, 83%
-- Affirmed $375 million senior subordinated notes due
Oct. 15, 2014, Caa1, LGD6, 93%
The ratings outlook is negative.
The ratings and outlook are subject to receipt of the final
documentation.
Based in York, Pennsylvania, Graham Packaging Company, L.P. is a
leading global designer and manufacturer of customized blow-molded
plastic containers for branded food and beverages, household and
personal care products, and automotive lubricants. Blackstone
Capital Partners of New York is the majority owner. Revenue for
the last twelve months ended Sept. 30, 2006 was approximately
$2.5 billion.
HANCOCK FABRICS: Files for Bankruptcy to Reduce Secured Debt
------------------------------------------------------------
Hancock Fabrics Inc. has filed a voluntary petition for Chapter 11
relief in the United States Bankruptcy Court for the District of
Delaware. Its subsidiaries are also filing for the same relief.
Hancock took this action so that it can use the reorganization
process to:
* improve the company's operating performance,
* reduce its secured debt over time,
* close underperforming locations, and
* exit Chapter 11.
Hancock said that it has negotiated a consensual $105 million DIP
financing arrangement with Wachovia Bank, N.A., in which Hancock
will gain additional borrowing capacity necessary to operate
successfully under Chapter 11. The company is also in the final
stages of negotiating an additional loan of up to $17.5 million
with another lender.
The company further said that it had completed a review of each of
its store locations and had decided to close 104 stores, in
addition to the 30 store closings announced in a press release
dated February 8, 2007.
Jane Aggers, President and CEO, stated, "The process of
reorganizing Hancock Fabrics under Chapter 11 is a necessary step
to reposition the Company for the future. It allows us to focus
our attention and resources entirely on further improving our
better-performing stores and right-sizing our back-office
operations and distribution center. We intend to complete the
reorganization as quickly as possible, while taking the actions
necessary to preserve value for our creditors, customers,
employees and other stakeholders."
Hancock has filed a number of "First Day Motions" in the
bankruptcy court to support its employees, customers, vendors and
other stakeholders. Among other things, the court filings include
requests to continue to pay Hancock's employees and to fulfill the
needs of the Company's customers as they relate to gift cards,
merchandise returns, classes and other services.
Hancock Fabrics, Inc. - America's Fabric Store - (NYSE: HKF)
-- http://www.hancockfabrics.com/-- is committed to serving
creative enthusiasts with a complete selection of fashion and home
decorating textiles, sewing accessories, needlecraft supplies and
sewing machines, through retail stores and an Internet store.
HANCOCK FABRICS: Case Summary & 31 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Hancock Fabrics, Inc.
One Fashion Way
Baldwyn, MS 38824
Bankruptcy Case No.: 07-10353
Debtor-affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Hancock Fabrics of MI, Inc. 07-10354
HF Resources, Inc. 07-10356
Hancockfabrics.com, Inc. 07-10357
HF Merchandising, Inc. 07-10358
HF Enterprises, Inc. 07-10359
Hancock Fabrics, LLC 07-10360
Type of Business: The Debtors are specialty retailers of fashion
and home decorating textiles, sewing
accessories, needlecraft supplies and sewing
machines. See http://www.hancockfabrics.com/
Chapter 11 Petition Date: March 21, 2007
Court: District of Delaware (Delaware)
Judge: Brendan Linehan Shannon
Debtors' Counsel: Robert J. Dehney, Esq.
Morris, Nichols, Arsht & Tunnell
1105 N. Market Street P.O. Box 1347
Wilmington, DE 19899-1347
Tel: (302) 658-9200
Fax: (302) 658-3989
Debtors' financial condition as of March 2, 2007:
Total Assets: $241,873,900
Total Debts: $161,412,000
Debtors' Consolidated List of their 31 Largest Unsecured
Creditors:
Entity Claim Amount
------ ------------
Wright Ltd. $750,804
Legal Department 51601
P.O. Box 201516
Dallas, TX 75320-1516
Fax: (413) 436-9785
Textile Creations, Inc. $592,769
Legal Department
IBIS Plaza Suite 201
3535 Quaker Bridge Road
Hamilton, NJ 08619
Tel: (609) 631-4433
Fax: (609) 631-4434
Fabric Editions, Ltd. $569,983
Division of Fendrich Industries
c/o Debbie Scott
P.O. Box 601670
Charlotte, NC 28260-1670
Tel: (864) 288-2211
Fax: (864) 288-5350
Fairfield Processing $569,879
Legal Department
P.O. Box 1157
Dunbury, CT 06813-1157
Tel: (203) 744-2090
Fax: (203) 792-9710
PricewaterhouseCoopers, LLP $566,020
c/o Legal Department
P.O. Box 65640
Charlotte, NC 28265-0640
Tel: (704) 344-7500
Fax: (704) 344-4100
P/K Lifestyles $452,383
Division of P/Kaufmann, Inc.
P.O. Box 36090
Newark, NJ 07188-6090
Fabri-Quilt $439,254
901 East 14th Avenue
North Kansas City, MO 64116
Carat U.S.A. $425,940
c/o Wachovia
P.O. Box 18063
Newark, NJ 07191-8063
Springs Industries, Inc. $383,471
P.O. Box 101029
Atlanta, GA 30392-1029
Springs Industries, Inc. $383,471
P.O. Box 101029
Atlanta, GA 30392-1029
World Dynasty International $356,887
Trading Co.
450 7th Avenue, Suite 1004
New York, NY 10123
Blumenthal-Lansing $347,800
P.O. Box 32672
Charlotte, NC 28232-2672
Fabric Traditions $346,249
1350 Broadway
New York, NY 10018
Baum Textile Mills, Inc. $336,972
812 Jersey Avenue
Jersey City, NJ 07310
Three Hands Corporation $331,933
13259 Ralston Avenue
Sylmar, CA 91342
Universal Sewing Supply $329,760
1011 East Park Industrial Drive
St. Louis, MO 63130
Prym Dritz $321,673
P.O. Box 75715
Charlotte, NC 28275
Hirschberg-Schutz $309,818
P.O. Box 676543
Dallas, TX 75267-6543
Silkcrafts, Inc. $309,199
134 West 37th Street
New York, NY 10018
Simplicity Pattern Co. $290,920
Dept. 51602
P.O. Box 201516
Dallas, TX 75320-1516
Confortaire, Inc. $288,066
2133 South Veterans Boulevard
Tupelo, MS 38804
Consumer Products Enterprise $270,278
P.O. Box 60401
Charlotte, NC 28260-0401
Richloom Fabrics Group, Inc. $261,349
261 Fifth Avenue
New York, NY 10016-7794
David Textiles $259,708
1920 South Tubeway Avenue
City of Commerce, CA 90040
Janome America, Inc. $257,396
10 Industrial Avenue
Mahwah, NJ 07430
Blank Textiles $257,213
65 West 36th Street
New York, NY 10018
Robert Kaufman Fine Fabrics $253,019
P.O. Box 59266 Greenmead Station
Los Angeles, CA 90059-0266
Lucerne Textiles, Inc. $248,098
519 8th Avenue
New York, NY 10018
Lion Brand Yarn $246,532
135 Kero Road
Carlstadt, NJ 07072
Jaftex Corp. $227,650
49 West 37th Street, 14th Floor
New York, NY 10018
Offray & Sons Inc. $225,073
P.O. Box 8500-1886
Philadelphia, PA 19178-1886
HAROLD'S STORES: Posts $3.1 Million Net Loss in Qtr. Ended Feb. 3
-----------------------------------------------------------------
Harold's Stores Inc. reported a net loss of $3.1 million for the
fourth quarter ended Feb. 3, 2007, compared to a net loss of
$4 million for the fourth quarter ended Jan. 28, 2006. For the
year ended Feb. 3, 2007, the company reported a net loss of
$11.2 million, compared to a net loss of $6 million for the year
ended Jan. 28, 2006.
For the quarter, which consisted of 14 weeks in fiscal 2006 versus
13 weeks in fiscal 2005, the company's total net sales increased
9.4%, from $20.6 million last year to $22.6 million. Comparable
store sales, which have been calculated on a 13-week basis,
decreased 0.3% in the full-line retail stores, declined 9.2% in
the outlet stores, and increased 69.2% to $1.3 million in the
direct channel (internet and catalog).
For the fiscal year, which consisted of 53 weeks in 2006 versus 52
weeks in 2005, the company's total net sales decreased 2.2%, to
$86.3 million from $88.2 million. Comparable store sales, which
have been calculated on a 52-week basis, decreased 8% in full-line
retail stores, declined 8.6% in outlet stores, and increased 49.7%
to $4.8 million in the direct channel.
"During fourth quarter of 2006, we incurred smaller losses than
during fourth quarter 2005. Our sales improved as customers
responded more favorably to our merchandise assortments, which
enhanced gross margins over the prior period. We continue to see
improving customer response to our most recent spring merchandise
offerings," said Ron Staffieri, chief executive officer.
Mr. Staffieri continued, "The year 2006 was disappointing for the
company, as customers did not respond favorably to our 2006 spring
and summer apparel offerings. Sales improved during the fall and
holiday season, but were still below our expectations. We took
the appropriate steps to move through excess inventory levels as a
result of sales coming in below plan, which resulted in lower
gross margins and greater losses for the full year."
"During the latter half of 2006, we focused our efforts on
ensuring that our 2007 merchandise is consistently brand
appropriate. We have also created improved planning and
allocation methods to ensure that we purchase the correct amount
of merchandise and time our deliveries to improve our sell-
throughs. We have edited our assortments beginning with our
current deliveries in order to provide our customers a better
shopping experience, as well as reduce our markdowns," continued
Mr. Staffieri.
About Harold's Stores
Based in Dallas, Texas, Harold's Stores Inc. (OTC BB: HLDI) --
http://www.harolds.com/-- operates 43 upscale ladies'
and men's specialty stores in 20 states. The company's Houston
locations are known as "Harold Powell."
* * *
At Oct. 28, 2006, the company's balance sheet showed a
stockholders' deficit of $25,426,000, compared to a deficit of
$17,083,000 at Jan. 28, 2006.
HARVEST OPERATIONS: Moody's Cuts Corp. Family Rating to B3 from B2
------------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
for Harvest Operations Corp. to B3 from B2, downgraded the ratings
for the $250 million 7.875% senior unsecured notes due 2011 to
Caa1, LGD4, 65% from B3, LGD5, 76%, and downgraded the probability
of default rating to B3 from B2.
Simultaneously, Moody's also affirmed the SGL-3 rating for
Harvest. The outlook is stable. This concludes Moody's ratings
review. Harvest Operations is an operating subsidiary of Harvest
Energy Trust, a publicly traded Canadian Unit Trust.
The B3 CFR reflects the amount of debt the company has undertaken
to fund the company altering purchase of the North Atlantic
Refinery from the Vitol Group. The ratings were initially put
under review for possible downgrade until there was clarity around
the final capital structure and the capital spending plans for
both the refinery and the upstream segment.
After two rounds of capital raising efforts, the CDN$1.6 billion
acquisition was ultimately 75% debt financed with CDN$610 million
of convertible debt at the parent and CDN$403 million of units.
The majority of the debt raised for the purchase was structurally
subordinate to the senior unsecured notes. However, on a stand
alone basis, this purchase was completed at the highest multiple
for a refinery to date and the very high proportion of debt makes
it by far the most leveraged refinery rated by Moody's based on
debt/complexity barrel of approximately $1,500.
Furthermore, the high distribution unit trust model combined with
the refinery expansion projects and the capital intensity of the
E&P segment is expected to result in very limited debt reduction
over the medium term, thus keeping leverage at what Moody's feels
are very high levels not only on a consolidated basis but also
when looking at each of the E&P and refining segments separately.
The B3 CFR also accommodates senior management's lack of a
refining operating track record and execution of potential
de-bottlenecking/expansion projects. While the large scale
refinery offers diversification from the asset depleting E&P
business, and serves the high demand northeast markets of Boston
and New York, the unit has had an uneven operating performance in
terms of feedstock throughput relative to capacity over the past
ten years as it underwent various turnarounds and maintenance.
The B3 rating also factors in an E&P business of scale that will
continue to drive the majority of Harvest's consolidated cashflows
from which the company was built. Harvest has demonstrated an
ability to continue to grow reserves and production at a
manageable cost structure and leverage, though costs have trended
towards the higher end of the B2 rated peer group and has pushed
the company's leveraged full cycle ratio to approximately 1.0x,
which is considered very weak in the current commodity price
environment.
However, Moody's notes that organic reserve growth has been weak
with the reported growth being largely acquisition driven and will
likely remain as such due to the unit trust model which relies on
near-term cashflows and is not compatible with longer lead time
and very capital intensive exploration or development projects.
This feature is expected to prevent any significant debt reduction
and keep leverage on the proven developed reserve base at or above
$8.00/boe.
The stable outlook assumes that commodity prices and refining
margins remain supportive and that the company reduces leverage
before market conditions soften. The inability to reduce debt and
leverage on the refinery towards $1,000 b/sd over the next twelve
months or increasing debt on the PD reserves to over $8.50/boe
would put negative pressure on the outlook and/or ratings. The
stable outlook also assumes that Harvest continues to show
production and reserve growth in the upstream segment and that
full cycle costs have improved and provides additional capital for
reinvestment.
The SGL-3 rating reflects the still supportive commodity price
outlook and continued upstream production gains that should
provide sufficient adequate cash flow coverage of full-cycle
costs, financial obligations, capital spending needs, and
significant distributions of free cash flow to unit holders.
While liquidity is cushioned by Harvest's option during cash flow
weakness to reduce substantial cash distributions to unit holders,
reducing cash distributions to unit holders may significantly
weaken the company's equity valuation.
Harvest also exhibits:
* adequate undrawn external liquidity,
* good covenant coverage, but
* weak alternative liquidity considering substantially all of
the company's assets are already pledged to its banks.
Harvest Operations Corp. is a wholly-owned subsidiary of Harvest
Energy Trust which is headquartered in Calgary, Alberta, Canada.
HEALTH-CHEM: Demetrius Raises Going Concern Doubt in 2005 Report
----------------------------------------------------------------
Demetrius & Company, LLC raised substantial doubt about Health-
Chem Corp.'s ability to continue as a going concern after the it
audited the company's financial statements for years ended 2005
and 2004 and the company's related consolidated financial
statements.
The auditing firm pointed to the company's default of payments to
its bondholders and licensors, as well as working capital
deficiencies.
For the year ended Dec. 31, 2005, the company incurred a net loss
of $2.48 million on net sales of $7.58 million versus a net income
of $9,000 on net sales of $9.19 million for 2004.
As of Dec. 31, 2005, the company's balance sheet showed total
assets of $6.96 million, total liabilities of $21.89 million, and
minority interests of $3,000, resulting to total stockholders'
deficit of $14.93 million.
The company's balance sheet as of Dec. 31, 2005, also showed
strained liquidity with total current assets of $5.04 million
available to pay total current liabilities of $19.7 million.
The company's total current liabilities includes:
(i) $10.8 million of principal and interest due under
certain convertible subordinated debentures due April
15, 1999, under which it is in default;
(ii) $6.1 million of royalties due under a license with Key
Pharmaceuticals, Inc., under which it is in breach; and
(iii) $2.8 million of million of trade payables and other
miscellaneous liabilities.
Debentures
On April 15, 1981, Health Chem sold and issued 10.375% Convertible
Subordinated Debentures due April 15, 1999, in the principal
amount of $20 million under the terms of an Indenture between the
company and Bankers Trust Company, now known as Deutsche Bank
Trust Company Americas, as trustee. Interest on the Debentures
was payable semi-annually on April 15 and October 15 in each year.
In April 1999, the company defaulted on its obligations to repay
the $8 million in principal then outstanding as well as the
accrued interest of $400,000 due on the Debentures at maturity.
The company has remained in sporadic contact with the Trustee for
the Debentures since it defaulted but has not had the funds to
make any payments or principal or interest since August 1999.
The company says that it as of Dec. 31, 2006, it owed
$11.46 million in principal and interests.
Bankruptcy Warning
The company also disclosed in its 2005 annual report that if it is
not able to negotiate favorable payment terms of the amounts due
to the holders of the Debentures and the Key royalties, it may
have to wind-up its operations and possibly seek protection under
bankruptcy laws.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1b9b
About Health-Chem
Health-Chem Corp. develops, manufactures, and markets transdermal
drug delivery systems. This product is used for relief of
vascular and cardiovascular symptoms related to angina pectoris.
The company sells patch to distributors and wholesalers for
distribution in the U.S.
HESS CORPORATION: Moody's Lifts Debt's Rating to Baa3 from Ba1
--------------------------------------------------------------
Moody's upgraded Hess Corporation's unsecured long-term debt
rating to Baa3 from Ba1 on March 20, 2007. The rating outlook is
stable.
The upgrade reflects the company's progress in advancing its
portfolio of upstream development projects, which are intended to
diversify and strengthen the durability of its reserves and
production profile, as well as improvements in achieving a more
competitive cost structure and a gradually declining financial
leverage position.
Hess has been focused on execution of development programs and
production growth in areas such as Equatorial Guinea, the
Malaysia-Thai JDA, the North Sea, and the deepwater Gulf of
Mexico. Work in all of these areas is proceeding on plan and
supporting a gradually rising production profile.
The company's 2006 results indicate that reserve replacement from
all sources increased to 232%, including 185 million BOEs of
organic additions and 126 million BOEs primarily from its re-entry
into Libya. Its reserve life also is somewhat longer at 9.3 years
proved and 5.5 year proved developed.
In addition, finding and development and full cycle costs, at
about $12 and $26 per BOE, respectively, show that the company's
cost structure has come more in line with those of its peers,
although on an increasing trend and subject to industry-wide
inflationary pressures. Invested cash returns also increased in
2006, as indicated by a full cycle ratio exceeding 2.7x,
reflecting a stronger cash margin supported by higher oil and
natural gas prices and the roll-off of most of its earlier
disadvantageous oil hedges.
Moody's notes that Hess's financial leverage, while still somewhat
elevated, has declined as measured by debt of $5.23 per proved
developed BOE in 2006 as well as by continuing stronger equity
accretion through improving earnings. The company will have a
continued high level of required capital spending to diversify and
develop its upstream reserves portfolio and thus is likely to have
relatively little free cash flow available for debt reduction. It
has, however, retained cash on the balance sheet for financial
flexibility and liquidity purposes. Management's focus on growth
capital, rather than debt reduction, is likely to continue in the
medium-term.
Moody's views Hess's rating outlook as stable, factoring in the
expectation that its development programs will continue to
progress and the company will be able to increase its production
in its targeted range of 3%-5% p.a.
Hess Corporation, an integrated petroleum company, is
headquartered in New York.
HOST HOTELS: S&P Rates Proposed $550 Million Senior Notes at BB
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Host Hotels & Resorts L.P.'s proposed $550 million exchangeable
senior notes due 2027. These notes are offered to qualified
institutional buyers in a private placement, and proceeds will be
used to refinance mortgage debt and for general corporate
purposes. An additional $50 million in notes may be offered if
purchasers exercise their right to acquire additional notes.
At the same time, Standard & Poor's affirmed its 'BB' corporate
credit rating on the company and its parent and sole general
partner, Host Hotels & Resorts Inc. The outlook is stable.
"The ratings reflect Host's aggressive financial profile and, as a
real estate investment trust, its reliance on external sources of
capital for growth," said Standard & Poor's credit analyst Emile
Courtney.
These factors are tempered by Host's high-quality and
geographically diversified hotel portfolio; the high barriers to
entry for new competitors because of its hotels' locations
primarily in urban and resort markets or in close proximity
to airports; the company's strong brand relationships; and its
experienced management team.
Standard & Poor's expects operating improvements in Host's hotel
portfolio, largely because of continued strength in the lodging
operating environment, which we expect to extend through 2007.
In February 2007, Host issued comparable-hotel 2007 revenue per
available room growth guidance of 6.5% to 8.5% and
operating-margin growth guidance of 100-125 basis points. This
guidance would represent a decrease from comparable hotel RevPAR
growth in 2006 of 8.5% and operating margin growth of 210 basis
points. This is partially because of a downward trend in still-
strong occupancy levels driven partly by lower transient demand in
2006 and to some extent renovation disruption at a limited number
of hotels. Still, these overall growth expectations continue to
be strong compared with previous lodging cycles.
Standard & Poor's expects that Host will prioritize investments in
its existing portfolio over acquisitions in 2007, however, the
rating agency expects future acquisitions will be funded in a
manner consistent with current ratings.
IMPERIAL PETROLEUM: Jan. 31 Balance Sheet Upside-Down by $5.8 Mil.
------------------------------------------------------------------
Imperial Petroleum, Inc. reported results for the three months and
six months ended Jan. 31, 2007. The company had a net loss of
$729,945 on total operating income of $216,166 for the quarter
period ended Jan. 31, 2007, versus a net loss of $587,349 on total
operating income of $615,410 for the quarter period ended Jan. 31,
2006.
For the six months ended Jan. 31, 2007, the company had a net loss
of $498,677 on total operating income of $575,746, versus a net
loss of $1,367,513 on total operating income of $2,025,168 for the
six months ended Jan. 31, 2006.
The company's balance sheet showed total assets of $4,762,063 and
total liabilities of $10,619,001, resulting to total stockholders'
deficit of $5,856,938 as of Jan. 31, 2007.
The company's January 31 balance sheet also showed strained
liquidity with total current assets of $620,313 available to pay
total current liabilities of $9,830,290. Its cash and cash
equivalents as of Jan. 31, 2007, were $44,922.
Full-text copies of the company's quarter financials are available
for free at http://ResearchArchives.com/t/s?1bd7
About Imperial Petroleum
Headquartered in Evansville, Indiana, Imperial Petroleum, Inc.,
(OTCBB:IPMN) -- http://www.iptm.net/-- is an oil and natural gas
exploration and production company.
IMPLANT SCIENCES: Fiscal 2nd Quarter Net Loss Lowers to $441,000
----------------------------------------------------------------
Implant Sciences Corporation reported a $441,000 net loss on
$7,118,000 of total revenues for the fiscal second quarter ended
Dec. 31, 2006.
For the three months ended Dec. 31, 2005, the company reported a
$1,320,000 net loss on $7,540,000 of total revenues.
The company said the decrease in net loss is primarily due to the
overall improvement in gross margins.
Revenues in the medical and semiconductor business segments
increased by $888,000 or 21% over the comparable prior year
period.
The majority of this increase comes from the continued strong
performance of its California subsidiaries combined with increased
revenue recognized from an increase in the volume of our
brachytherapy seeds.
The company said, however, that management expects that medical
revenues will materially decrease in the third quarter and beyond
as its primary orthopedic coating customer has changed its product
line and has phased out the company's coating services in the
second quarter.
The gains in the medical and semiconductor segments were offset by
a $1,310,000 or 41% decrease in its Security Products business
segment. This decrease is the result of the completion and
shipment of a significant order of the company's explosives
detection equipment to a customer in China in the comparable prior
year period.
While the company continues to show steady unit sales of its
handheld explosives detection equipment, it has not realized an
order of the same magnitude as it had in the three-month period
ended Dec. 31, 2005.
The lack of sizeable unit orders has been partially offset by the
award and performance of a new government contract in the
explosives detection arena.
The company continues to make a significant investment in the
development and manufacturability of the next generation of
explosives detection products.
At Dec. 31, 2006, the company's balance sheet showed $30,513,000
in total assets, $9,309,000 in total liabilities, $2,602,000 in
cumulative redeemable convertible preferred stock, and $18,602,000
in total stockholders' equity.
Full-text copies of the company's fiscal second quarter financials
are available for free at http://ResearchArchives.com/t/s?1bc6
About Implant Sciences
Based in Wakefield, Massachusetts, Implant Sciences Corporation
(AMEX: IMX) -- http://www.implantsciences.com/-- develops,
manufactures, and markets products for the medical device and
explosives detection industry. Its core technology involves ion
implantation and thin film coatings of radioactive and
nonradioactive materials. The company manufactures and sells I-
Plant Iodine-125 radioactive seed for the treatment of prostate
cancer, and Ytterbium-192 for breast cancer therapy. It also
provides surface engineering technology to manufacturers of
orthopedic hip and knee total joint replacements. The company has
a strategic alliance with Rapiscan Systems, Inc. for the
manufacture and sale of explosives detection equipment on a
private label basis.
Going Concern Doubt
UHY LLP expressed substantial doubt about Implant Sciences
Corporation's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended June 30, 2006. The auditing firm pointed to the Company's
recurring losses from operations.
INFRASOURCE SERVICES: Earns $26.14 Mil. in Year Ended December 31
-----------------------------------------------------------------
InfraSource Services, Inc. reported a net income of $26.14 million
on revenues of $992.3 million for the year ended Dec. 31, 2006, as
compared with a net income of $13.72 million on revenues of
$853.07 million for the year ended Dec. 31, 2005.
The company's balance sheet as of Dec. 31, 2006, showed total
assets of $581.23 million and total liabilities of
$242.04 million, resulting to total shareholders' equity of
$339.19 million.
As of Dec. 31, 2006, the company had cash and cash equivalents of
$26.2 million and working capital of $107.4 million. As of the
same date, the company had $50 million drawn under its senior
credit facility, $33.6 million in letters of credit outstanding,
and $1.1 million drawn under its short-term credit facility,
leaving $141.9 million available for additional borrowings.
The company anticipates that cash and cash equivalents as of
Dec. 31, 2006, its senior credit facility, and future cash flow
from operations will provide sufficient cash to meet operating
needs for the next 12 months.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1ba2
Acquisition of RUE
On Dec. 15, 2006, the company acquired all of the voting interests
of RUE, a company that provides substation and transmission line
engineering services for electric utilities, for total purchase
price consideration of $9.3 million in cash, including transaction
costs.
The company held back $1.3 million of purchase price
consideration, of which $400,000 is scheduled to be paid upon
filing of the final 2006 seller-period tax returns and $900,000 is
scheduled to be paid 18 months after the date of acquisition.
Those holdback amounts are reflected as liabilities on the balance
sheet as their payment is not contingent on future performance or
the achievement of future milestones by RUE.
Final purchase price allocation remains subject to a working
capital adjustment expected to occur during the first quarter of
2007 and valuation of intangible assets. The purchase agreement
contains a provision allowing the sellers to realize additional
purchase price consideration, payable as 93,186 shares of
InfraSource Services, Inc. unregistered common stock, contingent
upon achieving certain earnings-based targets in fiscal years
2007, 2008 and 2009.
The results of RUE were included in the company's consolidated
results beginning Dec. 15, 2006. As RUE is part of the company's
ICS segment, the resulting goodwill of $7.8 million is included in
the ICS segment and is not tax deductible.
Sale of Mechanical Specialties
In the third quarter of 2006, the company committed to a plan to
sell certain assets of Mechanical Specialties, Inc. In the third
and fourth quarters of 2006, the company sold certain assets of
MSI for a cash purchase price of about $2.6 million, resulting in
a gain, net of taxes, of $300,000, which is included in gain on
disposal of discontinued operations in the company's consolidated
statement of operations. MSI was part of the company's ICS
segment.
About InfraSource
Headquartered Media, Pennsylvania, InfraSource Services, Inc.
(NYSE: IFS) -- http://www.infrasourceinc.com/-- is a specialty
contractor servicing electric, natural gas and telecommunications
infrastructure in the United States. InfraSource designs, builds,
and maintains transmission and distribution networks for
utilities, power producers, and industrial customers.
* * *
Standard & Poor's assigned its BB- long-term foreign and local
issuer credit ratings to the company.
INTEGRATED HEALTH: Wants July 2 Deadline to Remove Civil Actions
----------------------------------------------------------------
IHS Liquidating LLC asks the U.S. Bankruptcy Court for the
District of Delaware to further extend the period within which it
may file notices of removal with respect to civil actions pending
on Feb. 2, 2000, through and including July 2, 2007.
The Bankruptcy Court will hold a hearing on May 4, 2007, at
2:00 p.m., to consider the Debtor's request. By application of
Del.Bankr.L.R. 9006-2, IHS Liquidating's Removal Deadline is
automatically extended until the Court rules on the request.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, relates that under its Plan of
Reorganization, IHS Liquidating is responsible for litigating,
settling or resolving disputed claims against the Debtors, some
of which are the subject of actions currently pending in courts
of various states and federal districts.
Mr. Brady states that IHS Liquidating is still in the process of
determining which Prepetition Actions will be litigated or
removed pursuant to Rule 9027(a) of the Federal Rules of
Bankruptcy Procedure.
Substantially all of the Prepetition Actions have been resolved
through the claims reconciliation process, Mr. Brady notes.
Nonetheless, removal may be appropriate with respect to those
unresolved Prepetition Actions, he says.
IHS Liquidating believes it is prudent to preserve the estate's
right to seek removal until the analysis of the Prepetition
Actions is complete.
Mr. Brady asserts that the requested extension will:
-- afford IHS Liquidating an opportunity to make more fully
informed decisions concerning the removal of each
Prepetition Action; and
-- assure that IHS Liquidating does not forfeit the valuable
rights afforded to it under 28 U.S.C. Section 1452.
Moreover, Mr. Brady contends that the rights of IHS Liquidating's
adversaries will not be prejudiced by an extension of the
Removal Deadline, as any party to a Prepetition Action that is
removed may seek to have it remanded to the state court pursuant
to Section 1452(b).
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 113; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
JP MORGAN: Fitch Holds Rating on $4MM Class H Certificates at BB-
-----------------------------------------------------------------
Fitch Ratings affirms J.P. Morgan Commercial Mortgage Finance
Corp.'s mortgage pass-through certificates, series 1999-C7:
-- $280.7 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $40.1 million class B at 'AAA';
-- $40.1 million class C at 'AAA'.
-- $52.1 million class D at 'AAA';
-- $12 million class E at 'AAA';
-- $38.1 million class F at 'A';
-- $26 million class G at 'BB'; and
-- $4 million class H at 'BB-'.
The $23.4 million class NR certificates are not rated by Fitch.
Class A-1 has paid in full.
The rating affirmations reflect stable transaction performance and
paydown since issuance. In total, three loans (11.3%) including
the largest loan in the pool have defeased. As of the February
2007 distribution date, the pool's aggregate principal balance has
been reduced 35.6% to $516.4 million from $801.4 million at
issuance.
There are currently 14 Fitch loans of concern (12%), including the
fourth largest loan (2.7%) and one specially serviced asset
(1.4%). The largest Fitch loan of concern is a multifamily
development with 258 units in Greenville, South Carolina, and 274
units in Charlotte, North Carolina. The servicer-provided
third-quarter 2006 combined occupancy is 86% and the debt service
coverage ratio is 0.64x. The properties have had issues in their
respective markets and concessions are being offered.
The specially serviced asset is real estate-owned and secured by
two office buildings in Jackson, Mississippi. The February 2007
servicer-provided combined occupancy is 40% and the property is
currently listed for sale.
KAR HOLDINGS: Moody's Rates Proposed $1.7 Billion Sr. Debts at Ba3
------------------------------------------------------------------
Moody's Investors Service assigned Ba3 ratings to the proposed
senior secured credit facilities of KAR Holdings, Inc., which
consist of a 6-year $300 million senior secured revolver and a
6.5-year $1.490 billion senior secured Term Loan B.
The financing is in conjunction with the acquisition of ADESA,
Inc. by a group of private equity funds consisting of Kelso &
Company, GS Capital Partners, ValueAct Capital and Parthenon
Capital. Insurance Auto Auctions, Inc. will be combined with ADESA
upon closing. The proceeds, along with $1.1 billion of junior
debt and $790 million of new cash equity will be used to finance
the acquisition of ADESA's equity, repay existing debt at ADESA
and IAAI and pay fees and expenses associated with the
transaction.
Concurrently, Moody's assigned B2 Corporate Family and Probability
of Default ratings to KAR Holdings. The outlook for the ratings
is stable.
KAR Holdings'B2 Corporate Family Rating primarily reflects very
high financial leverage upon completion of the transaction and
slightly negative pro forma free cash flow in 2006 for the
combined entity. The ratings are also constrained by weak EBIT to
interest coverage. Notwithstanding Moody's expectation that
leverage and other financial metrics are likely to take more than
two years to be within the range normally associated with a B2
Corporate Family Rating, the ratings are supported by high
barriers to entry, the size and national scale of the combined
ADESA/IAAI organization, recession resistant revenue streams which
comprise whole car auctions, salvage auctions and dealer floorplan
financing, favorable growth prospects across all business lines,
and low inventory risk as the company does not take title to the
vehicles it sells.
The ratings remain constrained by a high level of integration
risk, very limited financial flexibility post-transaction and the
competitive nature of the industry which leaves lenders vulnerable
to fluctuations in the volume of cars coming to auction and
reductions in conversion volumes on the whole car side.
Given the high level of leverage, weak free cash flow generation
and expectations of continuing selective acquisitions and
greenfield investments which could lead to revolver usage, an
upgrade is unlikely in the near to medium term.
Moody's assigned these ratings to KAR Holdings:
* Ba3, LGD2, 26% rating to the proposed $300 million senior
secured revolving credit facility due 2013;
* Ba3, LGD2, 26% rating to the proposed $1.490 billion senior
secured term loan due 2013;
* B2 Corporate Family Rating;
* B2 Probability of Default Rating;
The ratings outlook is stable.
Moody's anticipates that the existing debt of ADESA and IAAI will
be repaid upon completion of the transaction and the ratings will
be withdrawn at that time.
Meanwhile, Moody's confirmed these existing ratings:
* ADESA, Inc.
-- The Ba2 Corporate Family Rating;
-- The Ba2 Probability of Default Rating;
-- The Ba1, LGD3, 33% rated $350 million senior secured
revolver due 2010;
-- The Ba1, LGD3, 33% rated $120 million senior secured term
loan due 2010;
-- The B1, LGD5, 87% rated $125 million 7.625% senior
subordinated notes due 2012;
-- The Speculative Grade Liquidity Rating of ADESA is SGL-1.
* Insurance Auto Auctions, Inc.
-- The B2 Corporate Family Rating;
-- The B2 Probability of Default Rating;
-- The Ba3, LGD2, 23% rated $50 million senior secured
revolver due 2011;
-- The Ba3, LGD2, 23% $205 million senior secured term loan
'B' due 2012;
-- The Caa1, LGD5, 79% rated $150 million, 11.0% senior
unsecured notes due 2013;
The Speculative Grade Liquidity Rating of IAAI is SGL-2.
The outlook for the ratings of the two companies is stable.
KAR Holdings, Inc. will be the holding company for ADESA, Inc. and
Insurance Auto Auctions, Inc. Headquartered in Carmel, Indiana,
Adesa is a leading provider of wholesale vehicle auctions and used
vehicle dealer floorplan financing through its AFC subsidiary.
IAAI is a leader in automotive total loss and specialty salvage
services in the U.S., providing insurance companies, the major
suppliers of its vehicles, with cost-effective, turnkey solutions
to process and sell total-loss and recovered-theft vehicles. The
combined entity will span North America with 54 ADESA used vehicle
auction sites, 137 salvage vehicle auction sites and 85 AFC loan
production offices. The combined entity had revenues of about
$1.47 billion in fiscal 2006, pro forma for the effect of recent
acquisitions.
KARA HOMES: Mulls Selling Remainder of Hidden Lakes Development
---------------------------------------------------------------
Kara Homes Inc. asks the U.S. Bankruptcy Court for the District of
New Jersey in Trenton for authority to sell nine homes in its
Hidden Lakes development, Bill Rochelle of Bloomberg News reports.
According to the source, the remainder of the project includes
five homes under contract, two unsold units, and two empty lots.
Bloomberg says Kara plans to sell the properties, with more than
$1.5 million in mortgages and construction liens, at an auction in
which its bank, Bank of America Corp. would be allowed to bid.
Kara, Bloomberg relates, said it doesn't have the financing to
complete work on the Hidden Lakes development.
Single Asset Entity
In a previous report, published in the Troubled Company Reporter
on Mar. 19, 2007, Mr. Rochelle said Kara received a setback when
the Court ruled the company and its 32 affiliates are all "single
asset real entities."
In that report, Mr. Rochelle said the Hon. Michael B. Kaplan ruled
in favor of Kara's lenders, allowing them to foreclose if Kara
does not begin paying interest or file a chapter 11 plan within 30
days.
Early last week, Kara and its debtor-affiliates sought Court
authority to file one master disclosure statement and one master
plan to avoid substantial duplication and to spare them from
significant financial expense.
In that motion, the Debtors told the Court that notwithstanding
the filing of one master plan and master disclosure statement, the
treatment of claims will be handled on a case-by-case basis
and there will be separate ballots filed earmarked for filing
in the individual case to which the claim pertains.
About Kara Homes Inc.
Headquartered in East Brunswick, New Jersey, Kara Homes Inc. aka
Kara Homes Development LLC, builds single-family homes,
condominiums, town homes, and active-adult communities. The
company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D.
N.J. Case No. 06-19626). On Oct. 9, 2006, nine affiliates filed
separate chapter 11 petitions in the same Bankruptcy Court. On
Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions.
David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al.,
represents the Debtors. Michael D. Sirota, Esq., at Cole, Schotz,
Meisel, Forman & Leonard represents the Official Committee of
Unsecured Creditors. Traxi LLC serves as the Debtors' crisis
manager. The Debtors engaged Perry M. Mandarino as chief
restructuring officer, and Anthony Pacchia as chief financial
officer. When Kara Homes filed for protection from its creditors,
it listed total assets of $350,179,841 and total debts of
$296,840,591.
KEVIN WASKO: Case Summary & Nine Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Kevin Patrick Wasko
Cassondra Raeann Dehay
P.O. Box 2427
Toluca Lake, CA 91610
Bankruptcy Case No.: 07-10845
Chapter 11 Petition Date: March 19, 2007
Court: Central District Of California (San Fernando Valley)
Judge: Maureen Tighe
Debtor's Counsel: J. Bennett Friedman, Esq.
Hamburg, Karic, Edwards & Martin, L.L.P.
1900 Avenue of the Stars, Suite 1800
Los Angeles, CA 90067-4409
Tel: (310) 552-9292
Total Assets: $1,197,771
Total Debts: $1,821,950
Debtor's Nine Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Stuart H. Kaplan claim for money $750,000
c/o William F. Gutierrez, Esq.
332 Pine Street, Suite 800
San Francisco, CA 94104
Chase credit card $23,252
Cardmember Service
P.O. Box 94014
Palatine, IL 60094-4014
Chase credit card $12,105
P.O. Box 15298
Wilmington, DE 19850-5298
credit card $7,353
credit card $6,641
AT&T Universal Card credit card $11,271
Direct Merchants Bank credit card $8,572
CitiBusiness Card credit card $4,074
Discover Platinum Card credit card $3,920
G.M. Flex Card credit card $2,397
Bank of America credit card $90
credit card $40
LENOX GROUP: Lesa Chittenden Resigns as Lenox Brands President
--------------------------------------------------------------
Lenox Group Inc. reported that Lesa Chittenden Lim will leave her
position as President of Lenox Brands for Gorham and Dansk brands
in the wholesale channel of distribution, effective March 30,
2007.
Ms. Chittenden Lim will receive 9 months of severance pay totaling
$288,750, less withholding and related tax obligations, and
partial payment by the company of her COBRA premiums during the
severance period, if COBRA is elected.
In Addition, the Compensation Committee of the Board of Directors
of the Company had approved, on March 13, 2007, that Stewart M.
Kasen receive an annual retainer of $60,000 for his service in
the newly created position of Non-Executive Chairman of the Board,
retroactive to Jan. 3, 2007, the date of his election to that
position.
At the same time, the Board eliminated its position of Lead
Director formerly held by Mr. Kasen, and related annual retainer
for that position of $10,000. Mr. Kasen will continue to serve as
Chairman of the Compensation Committee.
About Lenox Group
Based in Eden Prarie, Minnesota, Lenox Group Inc (NYSE: LNX)
was formed on Sept. 1, 2005, when Department 56 Inc., a designer,
wholesaler and retailer of collectibles and giftware products
purchased Lenox Inc., a designer, manufacturer and marketer of
fine china, dinnerware, silverware, crystal, and giftware
products. The company sells its products through wholesale
customers who operate gift, specialty and department store
locations in the United States and Canada, company-operated retail
stores, and direct-to-the-consumer through catalogs, direct mail,
and the Internet.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 20, 2007,
Deloitte & Touche, LLP, in Minneapolis, Minnesota, raised
substantial doubt about Lenox Group Inc.'s ability to continue
as a going concern after auditing the Company's consolidated
financial statements for the year ended Dec. 31, 2006. The
auditor pointed to the company's difficulties in meeting its
loan agreement covenants and financing needs.
LIQUIDMETAL TECH: Choi Kim & Park Raises Going Concern Doubt
------------------------------------------------------------
Choi, Kim & Park LLP, in Los Angeles, California, expressed
substantial doubt about Liquidmetal Technologies Inc.'s ability to
continue as a going concern after auditing the company's financial
statements for the years ended Dec. 31, 2006, and 2005. The
auditing firm pointed to the company's significant operating
losses and working capital deficit.
Liquidmetal Technologies Inc. reported a $14.5 million net loss on
$27.7 million of revenues for the year ended Dec. 31, 2006,
compared with a $7.1 million net loss on $16.4 million of revenues
for the year ended Dec. 31, 2005.
The increase in revenues included a $7.3 million increase in sales
and prototyping of parts manufactured from bulk Liquidmetal alloys
to consumer electronics customers as a result of increased demand
in electronic casings applications, and increase of $3.5 million
in sale of coatings products as a result of increased demand in
oil drilling applications, and an increase of $500,000 in research
and development services as a result of increased research and
development services primarily from defense applications.
Cost of sales increased to $22.4 million, or 81% of revenue,
during the twelve months ended Dec. 31, 2006, from $15.1 million,
or 92% of revenue, in the twelve months ended Dec. 31, 2005. The
increase was a result of increases in bulk Liquidmetal alloy
business and coatings business.
At Dec. 31, 2006, the company's balance sheet showed $22.2 million
in total assets and $32.6 million in total liabilities, resulting
in a $10.4 million total stockholders' deficit.
The company's balance sheet at Dec. 31, 2006, also showed strained
liquidity with $8.7 million in total current assets available to
pay $31.8 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?1bc0
About Liquidmetal
Liquidmetal Technologies Inc. (OTC BB: LQMT.OB) --
http://www.liquidmetal.com/-- is a materials technology company
that develops and commercializes products made from amorphous
alloys. The company's Liquidmetal(R) family of alloys consists of
a variety of proprietary coatings, powders, bulk alloys, and
composites that utilize the advantages offered by amorphous alloy
technology.
MICHAEL ZANONE: Case Summary & Seven Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Michael T. Zanone
2643 North Lockesley Cove
Germantown, TN 38139
Bankruptcy Case No.: 07-22570
Chapter 11 Petition Date: March 21, 2007
Court: Western District of Tennessee (Memphis)
Judge: Jennie D. Latta
Debtor's Counsel: James E. Bailey, III, Esq.
Farris Mathews Branan Bobango
Hellen & Dunlap, PLC
40 South Main, Suite 2000
Memphis, TN 38103
Tel: (901) 259-7100
Fax: (901) 259-7150
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
Debtor's Seven Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Income Tax $190,623
P.O. Box 21126
Philadelphia, PA 19114
SunTrust Bank $168,879
P.O. Box 305053
Nashville, TN 37230-5265
MBNA America Bank, N.A. $147,586
co Frank W. Ziegler
1300 Sun Trust Bank Building
201 Fourth Avenue North
Nashville, TN 37219
Capital One Bank $48,858
Chase Bank USA, N.A. $26,030
U.S. Bank $23,543
Ritz Carlton Grand Cayman $11,620
MOHEGAN TRIBAL: Moody's Holds Corporate Family Rating at Ba1
------------------------------------------------------------
Moody's Investors Service lowered Mohegan Tribal Gaming
Authority's $250 million 6.125% senior unsecured notes due 2013 to
Baa3, LGD3, 33% from Baa2, LGD2, 15%.
The Baa1 LGD-2 rating on the company's existing $450 million
secured bank facility was withdrawn. At the same time, Moody's
revised the LGD assessments of MTGA's senior subordinated notes to
LGD5, 82% from LGD4, 69% and affirmed the Ba2 issue rating. These
rating actions reflect the application of Moody's Loss Given
Default methodology following the replacement of MTGA's existing
$450 million secured bank facility with a new $1 billion secured
bank facility.
MTGA's Ba1 corporate family rating, Ba1 probability of default
rating and stable ratings outlook were not affected by the
inclusion of the larger bank facility in MTGA's capital structure
and were affirmed.
MTGA's ratings and stable outlook consider that while leverage is
expected to increase as a result of the company's new $740 million
hotel tower, the expansion project has a good risk reward profile
and will further enhance the long-term competitive position and
overall asset quality of Mohegan Sun. Moody's also notes that
MTGA's competitive profile is strong enough to materially offset
the increased leverage relative to its current rating.
Additionally, the recent opening of Pocono Downs racino
development in Pennsylvania is expected to have a positive impact
on MTGA's cash flow.
Moody's previous rating action on MTGA occurred on Nov. 20, 2006,
when its senior secured bank loan rating and senior unsecured note
rating were placed on review for possible downgrade
The Mohegan Tribal Gaming Authority is an instrumentality
established by the Mohegan Tribe of Indians of Connecticut, with
the exclusive power to operate the Mohegan Sun casino in
Uncasville, Connecticut. MTGA also owns and operates the Mohegan
Sun at Pocono Downs racino in Plains Township, Pennsylvania.
Consolidated net revenue for the 12-month period ended
Dec 30, 2006 was $1.458 billion. Total outstanding debt reported
was $1.311 billion.
MORTGAGE LENDERS: Wells Fargo Wants Servicing Rights Terminated
---------------------------------------------------------------
Wells Fargo Bank, National Association, asks the U.S. Bankruptcy
Court for the District of Delaware for relief from the automatic
stay of Section 362 of the Bankruptcy Code to:
(1) terminate the servicing rights of Mortgage Lenders Network
USA, Inc., to the extent that they were not terminated
prepetition, as to certain mortgage loans, and
(2) to take actions necessary to replace Debtor as servicer
on the mortgage loans.
Wells Fargo acts as Indenture Trustee for the pools of mortgage
loans owned by two trusts: (a) Mortgage Lenders Network Home
Equity Loan Trust 1999-2; and (b) Mortgage Lenders Network Home
Equity Loan Trust, Series 2000-1.
The Debtor acted as the servicing agent for the mortgage loans
owned by the Trusts pursuant to (i) the Servicing Agreement in
Nov. 1, 1999, among the 1999-2 Trust, the Debtor, as Servicer,
and Wells Fargo, as Indenture Trustee, and (ii) the Pooling and
Servicing Agreement dated as of April 1, 2000, as amended, among
Prudential Securities Secured Financing Corp., as Depositor, the
Debtor, as seller and Servicer, and Wells Fargo, as Trustee.
Financial Security Assurance Inc., as Note Insurer, notified
Debtor by letter dated Feb. 1, 2007, that it terminated the
Debtor as Servicer on the 1999-2 Trust because of the various
events of default under the 1999-2 Servicing Agreement. The
letter further notified the Debtor that Wells Fargo as Indenture
Trustee had advised FSA that it wished to appoint Wells Fargo
Home Mortgage as the successor Servicer beginning Feb. 28, 2007.
FSA, as Certificate Insurer, further notified Debtor by letter
dated Feb. 1, 2007, that it terminated Debtor as Servicer on the
2000-1 Trust on account of various servicer defaults under the
2000-1 Pooling Agreement.
Noel Burnham, Esq., at the Montgomery, McCracken, Walker & Rhoads
LLP, in Wilmington, Delaware, asserts that because the Debtor's
servicing rights under the Servicing Agreements were terminated
before the Petition Date, the servicing rights are not property
of the Debtor's bankruptcy estate.
Mr. Burnham further states that even assuming the servicing
rights are bankruptcy estate property, the servicing fee set
forth in the Servicing Agreements, given the current status of
the polls of loan and the subprime mortgage market, is below-
market servicing fee. As a result, he asserts, third-party
servicers are unlikely to be willing to service the Trust Loans
at the servicing fee set forth in the Servicing Agreements.
Mr. Burnham states that the Debtor has repeatedly indicated to
the Court and to Wells Fargo that it is in the process of winding
down its servicing business and will not be able to meet its
duties under the Servicing Agreements, and that it will not
oppose if Wells Fargo will transfer the servicing of the mortgage
loans.
As of Jan. 31, 2007, the outstanding balance of the Trust Loans
owned by the 1999-2 Trust was $17,337,557 and $20,181,534 for the
2000-1 Trust.
Mr. Burnham states that if the Debtor does not have sufficient
resources, Wells Fargo, FSA, and individual borrowers on the
Trust Loans will be adversely affected by the Debtor's inability
to service the Trust Loans.
If the Trust Loans are not transferred as soon as possible, the
funds received from the Trust Loans would be adversely affected
and the payments due form FSA would increase, Mr. Burnham argues.
About Mortgage Lenders
Middletown, Conn.-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering
a full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No.
07-10146). Pachulski Stang Ziehl Young Jones & Weintraub LLP
represents the Debtor. Blank Rome LLP represents the Official
Committee of Unsecured Creditors. In the Debtor's schedules of
assets and liabilities filed with the Court, it disclosed total
assets of $464,847,213 and total debts of $556,459,464. The
Debtor's exclusive period to file a chapter 11 plan expires on
June 5, 2007.
(Mortgage Lenders Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
MORTGAGE LENDERS: Panel Hopes to Resolve Issues with Wells Fargo
----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Mortgage Lenders
Network USA Inc. wants the U.S. Bankruptcy Court for the District
of Delaware to condition any stay relief upon the payment of:
(a) servicing fees and expenses owing the Debtor and its
estate, and
(b) the repayment, reimbursement and refund to the Debtor of
all amounts it advanced for servicing, T&I, P&I and
corporate purposes pursuant to the Agreements.
Wells Fargo Bank, National Association, asked for relief from the
automatic stay of Section 362 of the Bankruptcy Code to:
(1) terminate the servicing rights of Mortgage Lenders Network
USA, Inc., to the extent that they were not terminated
prepetition, as to certain mortgage loans, and
(2) to take actions necessary to replace Debtor as servicer
on the mortgage loans.
David W. Carickhoff, Esq., at the Blank Rome LLP in Wilmington,
Delaware, says the Committee reserves any rights and claims the
estate has against the Wells Fargo, the Trusts, and other
relevant parties and in respect of the Agreements.
Mr. Carickhoff adds that the Committee is optimistic that it will
reach a consensual resolution of its issues with Wells Fargo.
According to Carickhoff, the Committee is presently conducting
due diligence as to (i) servicing and other fees, expenses and
charges due and owing the Debtor in respect of the Servicing
Agreements; (ii) amounts due and owing the Debtor in respect of
each Agreement for servicing, corporate and other advances; and
(iii) the value of servicing that is proposed to be transitioned
and the existence of other claims.
About Mortgage Lenders
Middletown, Conn.-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- is a privately held company offering
a full range of Alt-A/Non-Conforming and Conforming loan products
through its retail and wholesale channels. The company filed for
chapter 11 protection on Feb. 5, 2007 (Bankr. D. Del. Case No.
07-10146). Pachulski Stang Ziehl Young Jones & Weintraub LLP
represents the Debtor. Blank Rome LLP represents the Official
Committee of Unsecured Creditors. In the Debtor's schedules of
assets and liabilities filed with the Court, it disclosed total
assets of $464,847,213 and total debts of $556,459,464. The
Debtor's exclusive period to file a chapter 11 plan expires on
June 5, 2007.
(Mortgage Lenders Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
MSC 2007-SRR3: Fitch Rates $1.49 Million Class R Notes at B-
------------------------------------------------------------
Fitch assigns ratings to SPGS SPC's variable floating-rate notes
maturing on December 2049, acting for the account of MSC 2007-SRR3
Segregated Portfolio:
-- $28,110,000 class A 'AAA'
-- $14,055,000 class B 'AA+';
-- $14,055,000 class C 'AA';
-- $14,055,000 class D 'AA-';
-- $14,055,000 class E 'A+';
-- $14,055,000 class F 'A';
-- $10,541,250 class G 'A-';
-- $10,541,250 class H 'BBB+';
-- $10,541,250 class J 'BBB';
-- $10,541,250 class K 'BBB-';
-- $15,854,040 class L 'BBB-';
-- $9,491,810 class M 'BB+';
-- $4,000,990 class N 'BB';
-- $3,007,770 class O 'BB-';
-- $3,495,010 class P 'B+';
-- $2,501,790 class Q 'B'; and
-- $1,499,200 class R 'B-'.
SPGS SPC, acting for the account of MSC 2007-SRR3 Segregated
Portfolio incorporated under the laws of the Cayman Islands, is a
static synthetic collateralized debt obligation transaction that
references a $937 million portfolio. The portfolio consists of 62
separately rated commercial mortgage-backed security bonds. The
transaction is designed to provide credit protection for realized
losses on a reference portfolio through a credit default swap
between MSC and the swap counterparty, Morgan Stanley Capital
Services Inc. The legal maturity date of the CDS is 2049. The
securities are rated to the timely payment of interest and the
ultimate repayment of principal on the maturity date.
Proceeds from the issuance of the securities are invested in a
pool of eligible investments, which are protected through the
total return swap agreement between MSC and MSCS, the TRS
counterparty. The payment obligations of the TRS counterparty are
guaranteed by Morgan Stanley, the swap counterparty guarantor.
Under the TRS agreement, MSCS will make periodic interest payments
to MSC and pay any depreciation in market value with respect to
eligible collateral upon its disposition to MSC. MSC will then
pay MSCS all the interest and similar amounts payable with respect
to the eligible collateral. In addition, MSC will pay to MSCS any
appreciation in market value of the eligible collateral upon its
disposition.
The ratings are based on the credit quality of the reference
portfolio, the credit enhancement provided by subordination for
each tranche, the strength of the counterparties, and the
transaction's sound financial and legal structures.
NE ENVIRONMENTAL: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Lead Debtor: NE Environmental Services, Inc.
c/o Tillinghast Licht LLP
10 Weybosset Street, Suite 1000
Providence, RI 02903
Tel: (401) 456-1200
Bankruptcy Case No.: 07-10476
Debtor-affiliate filing separate chapter 11 petition:
Entity Case No.
------ --------
P&T Enterprises LLC 07-10477
Type of Business: The Debtors recycle used oil. Todd Smith
is the vice-president of the Debtors.
Chapter 11 Petition Date: March 21, 2007
Court: District of Rhode Island (Providence)
Debtor's Counsel: William J. Delaney, Esq.
Tillinghast Licht LLP
10 Weybosset Street
Providence, RI 02903
Tel: (401) 456-1200
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
The Debtors did not file a list of their 20 largest unsecured
creditors.
NORTHWEST AIRLINES: Ad Hoc Panel's Plea to Seal Report Denied
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
denies the request filed by the Ad Hoc Committee of Equity
Security Holders of Northwest Airlines Corp. and its debtor-
affiliates to file its amended statement pursuant to Rule 2019(a)
of the Federal Rules of Bankruptcy Procedure under seal.
Judge Gropper holds that the Court's duty is to enforce Rule 2019
in a manner consistent with protecting the legitimate rights of
the parties and the public interest.
"Granting the motion to seal would scuttle the Rule," Judge
Gropper says.
In his 9-page memorandum of opinion and order, Judge Gropper
points out that Rule 2019 is a disclosure rule which requires
unofficial committees that play a significant public role in
reorganization proceedings and enjoy a level of credibility and
influence consonant with group status to file a statement
containing certain information.
"Much has changed in reorganization practice since the 1930's,
but the disclosure required by what is now Bankruptcy Rule 2019
is substantially the same," Judge Gropper says.
Judge Gropper notes that by acting as a group, the members of the
Ad Hoc Committee subordinated to the requirements of Rule 2019
their interest in keeping private the prices at which they
individually purchased or sold the Debtors' securities.
"This is not unfair because their negotiating decisions as a
Committee should be based on the interests of the entire
shareholders' group, not their individual financial advantage,"
Judge Gropper explains. Moreover, the possibility that members
of an ad hoc committee will sell and leave a group without a
representative is exactly why there are disclosures required
under Rule 2019, he adds.
Court Won't Reconsider Ruling
Judge Gropper denied a request for reconsideration of his
decision saying, it is "totally frivolous" and the request
"offers no new arguments on an issue that the law is clear
about."
The Reconsideration Motion filed by Anchorage Capital Group, LLC,
Latigo Partners, LP, and Seneca Capital, -- holders of Northwest
common stock -- asked Judge Gropper to reconsider the linguistic
and historical meaning of the term "committee" to determine that
Rule 2019(a) must be limited to impose duties on committees in
substance only, not in empty nomenclature.
Anchorage, Latigo, and Seneca argued that the Ad Hoc Committee
was not a "committee" for purposes of Rule 2019(a), and the
Rule's heightened disclosure requirements do not apply.
Loan Syndications and Trading Association and Securities Industry
and Financial Markets Association supported the request for
reconsideration.
Ruling May Affect Trading Strategies
Christopher Scinta of Bloomberg News says Judge Gropper's
decision compelling the Ad Hoc Committee to disclose the size of
its members' stakes in Northwest; the date the securities were
acquired; and how much they paid, would likely to quell the
enthusiasm of hedge funds for banding together to influence
bankruptcy cases in the future.
At a conference on hedge funds and restructuring held on March 5,
2007, Jonathan Henes, Esq., at Kirkland & Ellis, said Judge
Gropper's decision could alter how hedge funds trade in various
types of assets of bankrupt companies, and "change the course of
today's investments in restructurings," Bloomberg News reports.
David Pauker, managing director of restructuring firm Goldin
Associates LLC, said Judge Gropper's decision "raises questions
about how other courts will define a group."
"Will courts decide that if three creditors file three briefs
that look a lot alike, that they are acting together and have
disclosure obligations? Will simply sharing an attorney and
conferring trigger these obligations?" Bloomberg News quotes Mr.
Pauker as saying.
However, Marty Zohn, a partner at Proskauer Rose LLP, in Los
Angeles, California, who has represented both debtor companies
and hedge funds in bankruptcy cases, said Judge Gropper made the
proper decision based on the law because the right of a party to
seal certain documents shouldn't trump the right of the creditors
to know, Bloomberg News says.
Court Stays Ruling
Judge Gropper gave the Ad Hoc Committee a 10-day reprieve from
his Rule 2019 Ruling saying, "The committee deserves some time to
get to appellate court without creating a huge emergency,"
according to Bloomberg.
The Ad Hoc Committee took an appeal of Judge Gropper's Rule 2019
Ruling to the U.S. District Court in the Southern District of New
York on March 14, 2006.
NORTHWEST AIRLINES: Ad Hoc Panel to Appeal Judge Gropper's Ruling
-----------------------------------------------------------------
The members of the Ad Hoc Committee of Equity Security Holders of
Northwest Airlines Corp. and its debtor-affiliates notifies the
Bankruptcy Court that it will take an appeal to the U.S. District
Court for the Southern District of New York from Judge Gropper's
Memorandum of Opinion and Order dated March 9, 2007, compelling
the Ad Hoc Committee to disclose:
* the amounts of claims or interests owned by members of the
Committee;
* the times the securities were acquired; and
* the amounts paid.
Daniel P. Goldberg, Esq., at Kasowitz, Benson, Torres & Friedman
LLP, in New York, says the Ad Hoc Committee wants the District
Court to determine whether the Bankruptcy Court erred by denying
the Ad Hoc Committee's request to file under seal certain
information in the Rule 2019 Statement, where the Bankruptcy
Court based its decision on the incorrect conclusions that:
(1) the Ad Hoc Committee members have what amounts to
fiduciary duties to represent all stockholders;
(2) Rule 2019 supersedes Section 107(b) of the Bankruptcy
Code; and
(3) the information at issue is not confidential commercial
information.
Mr. Goldberg asserts that Judge Gropper's Rule 2019 Ruling is a
final order within the meaning of Section 158(a)(1) of the
Bankruptcy Code, and satisfies the "collateral order doctrine,"
making the decision appealable.
Mr. Goldberg says the Collateral Order Doctrine requires that the
order on appeal (i) conclusively determine a disputed question,
(ii) resolve an important issue completely separate from the
merits of the action, and (iii) effectively would be unreviewable
if the appeal were to wait until the conclusion of the case.
In the Ad Hoc Committee's case, each element is satisfied easily,
Mr. Goldberg maintains. Specifically, Mr. Goldberg says, the
contested matter was all about whether the Ad Hoc Committee could
file portions of its Rule 2019 statement under seal, and the
Court's March 9, 2007, decision resolved that matter entirely.
Likewise, whether the Ad Hoc Committee's trading data is
protected from public dissemination is important, but it is
completely separate from the merits of the underlying bankruptcy
case, Mr. Goldberg explains.
If there is no appeal and the Ad Hoc Committee is forced to
immediately disclose the requested information, the issue will be
rendered moot because the harm it seeks to avoid by the appeal --
that is public disclosure -- will already have occurred, Mr.
Goldberg asserts.
Thus, the appeal should be heard now, even if only on a purely
discretionary basis under Section 1292(b) of the Bankruptcy Code,
Mr. Goldberg says.
About Northwest Airlines
Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/
-- is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and
approximately 1,400 daily departures. Northwest is a member of
SkyTeam, an airline alliance that offers customers one of the
world's most extensive global networks. Northwest and its travel
partners serve more than 900 cities in excess of 160 countries on
six continents. The Company and 12 affiliates filed for chapter
11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No.
05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq.,
at Cadwalader, Wickersham & Taft LLP in New York, and Mark C.
Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in
Washington represent the Debtors in their restructuring efforts.
The Official Committee of Unsecured Creditors has retained Akin
Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the
Debtors' chapter 11 cases. When the Debtors filed for protection
from their creditors, they listed $14.4 billion in total assets
and $17.9 billion in total debts. On Feb. 15, 2007, the Debtors
filed an Amended Plan & Disclosure Statement. The hearing to
consider the adequacy of the Disclosure Statement has been
scheduled for March 26, 2007. (Northwest Airlines Bankruptcy
News, Issue No. 61; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
NOVASTAR FINANCIAL: Reduces Workforce by 17%
--------------------------------------------
NovaStar Financial, Inc., said that it would implement a reduction
in workforce to align its organization with changing conditions in
the mortgage market. The workforce reductions affect about 350
persons, approximately 17% percent of the company's workforce.
The actions focus on the company's wholesale loan origination
group and related functions, including employees at the company's
headquarters in Kansas City and at operation centers in California
and Ohio. Subject to completion of the necessary legal notices
and requirements, implementation of the reductions will begin
immediately and conclude during the second quarter of 2007.
NovaStar's loan servicing organization is not affected by the
reduction.
The company says that as the economic landscape changes for the
mortgage industry, NovaStar will continue to focus on three
disciplines:
* solid lending guidelines appropriate for current conditions;
* coupon rates on loans that provide acceptable risk-adjusted
returns; and
* lower overhead and support costs for loan origination.
NovaStar has previously disclosed steps to tighten its
underwriting guidelines and exception policies, as well as raising
coupon rates to improve margins. The company estimates that the
total pre-tax charge to earnings associated with this plan of
termination will range between $2.7 million and $3.1 million and
is expected to be incurred in the first quarter of 2007.
Audit Committee Action
In a regulatory filing, the company says that its Audit Committee
has committed to the workforce reduction pursuant to a plan of
termination described in paragraph 8 of Financial Accounting
Standards Board Statement of Financial Accounting Standards No.
146 Accounting for Costs Associated with Exit or Disposal
Activities, under which material charges will be incurred under
generally accepted accounting principles applicable to the
company.
Executive Bonus Plan
The company had previously on Feb. 12, 2007, that the Compensation
Committee of its Board of Directors reviewed and approved the
payment of annual cash incentives for 2006 performance for the
named executive officers. Each named executive officer's annual
cash incentive opportunity for 2006 was set so that the named
executive officer's target bonus was equal to 100% of his base
salary if certain individual and Company performance objectives
previously approved by the Committee were met, with an opportunity
to earn up to 200% of his base salary.
The Committee determined that the achievement of the performance
objectives under the Bonus Plan resulted in a payout percentage
as:
* Scott F. Hartman, Chairman of the Board and Chief Executive
Officer - 74% of 2006 base salary;
* Gregory S. Metz, Senior Vice President and Chief Financial
Officer - 66% of 2006 base salary;
* W. Lance Anderson, President and Chief Operating Officer -
74% of 2006 base salary;
* Michael L. Bamburg, Senior Vice President and Chief
Investment Officer - 76% of 2006 base salary; and
* David A. Pazgan, President and Chief Executive Officer of
NovaStar Mortgage, Inc., a subsidiary of the Company, - 76%
of 2006 base salary.
As a result, these cash payments were made to the named executive
officers:
* Mr. Hartman, $474,534;
* Mr. Metz, $167,888;
* Mr. Anderson, $474,534;
* Mr. Bamburg, $300,000; and
* Mr. Pazgan, $300,000.
The Compensation Committee also granted the named executive
officers stock options and restricted stock pursuant to the
NovaStar Financial, Inc. Long Term Incentive Plan and the NovaStar
Financial 2004 Incentive Stock Plan.
CEO Forecasts Earnings in 2007
Last month, NovaStar responded to misstatements in the media
regarding the company's expectations for taxable income in the
future. Some reports, the company said, erroneously stated
that the company does not expect to be profitable in the period of
2007 to 2011.
Scott Hartman, the company's chief executive officer, commented:
"Some news stories mistakenly assert that NovaStar does not expect
to report profits the next several years. In our earnings release
and conference call, we stated that we expect to recognize little,
if any, taxable income during the period 2007 through 2011.
Taxable income involves a calculation for tax returns filed under
the IRS requirements for Real Estate Investment Trusts. This
figure differs significantly from net income under General
Accepted Accounting Principles, known as GAAP earnings."
"Our belief is that NovaStar generally will be profitable on a
GAAP basis over the next several years, as it was in 2006. Over
time, GAAP tends to reflect the economics of our business.
Because of the REIT structure and accounting rules for
securitizations, taxable income exceeded GAAP earnings in recent
years, and we expect taxable income to be less than GAAP earnings
over the next several years. Our comments about 2007 to 2011
related to taxable income, as part of our discussion of a
potential change in NovaStar's REIT status," Mr. Hartman said.
2006 Fourth Quarter & Year-End Results
For the quarter ended Dec. 31, 2006, NovaStar reported a net loss
available to common shareholders of $14.4 million. In the fourth
quarter of 2005, net income available to common shareholders was
$26.4 million.
Full-year 2006 net income available to common shareholders was
$66.3 million. That full-year result compares with 2005 net
income available to common shareholders of $132.5 million.
Two Retained Cert. Classes Get Low-B Ratings
Following NovaStar Financial subsidiary, NovaStar Mortgage Inc.'s
move to securitize $1.9 billion of non-conforming mortgage assets,
Standard & Poor's and Moody's Investors Service placed these
ratings for the certificates retained by NovaStar:
Class S&P / Moody's
----- -------------
M-6 A- / A3
M-7 BBB+ / Baa1
M-8 BBB / Baa2
M-9 BBB- / Baa3
M-10 BB+ / Ba1
M-11 BB / Ba2
NovaStar will initially retain the M-6 through M-11 certificates,
which represent $106.7 million in principal. The M-10 and M-11
certificates were not covered by the prospectus.
Lead managers Deutsche Bank Securities, RBS Greenwich Capital and
Wachovia Securities underwrote NovaStar Mortgage Funding Trust,
Series 2007-1, which closed Feb. 28, 2007. The transaction was
structured into 17 rated classes of certificates with a face value
of $1,845,384,000.
About NovaStar Financial
Based in Kansas City, Mo., NovaStar Financial Inc. (NYSE: NFI)
-- http://www.novastarmortgage.com/-- is a specialty finance
company that originates, purchases, invests in and services
residential nonprime loans. The company specializes in single-
family mortgages, involving borrowers whose loan size, credit
details or other circumstances fall outside conventional mortgage
agency guidelines. A Real Estate Investment Trust founded in
1996, NovaStar has lending operations nationwide.
OCCULOGIX INC: Ernst & Young Expresses Going Concern Doubt
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Ernst & Young LLP, in Toronto, Canada raised substantial doubt on
OccuLogix, Inc.'s ability to continue as a going concern after
auditing the company's financial statements for the year ended
Dec. 31, 2006. The auditing firm pointed to the company's
recurring losses.
For the year ended Dec. 31, 2006, the company reported a net loss
of $82,171,548 on total revenues of $205,884, versus a net loss of
$162,971,986 on total revenues of $1,840,289 for the previous
year.
As of Dec. 31, 2006, the company's balance sheet showed total
assets of $90,403,695, total liabilities of $27,998,761, and
minority interests of $1,184,844, resulting to total stockholders'
equity of $61,220,090.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1bba
Acquisitions
On Sept. 1, 2006, the company acquired Solx, Inc. for a total
purchase price of $29,068,443, which includes acquisition-related
transaction costs of $851,279.
SOLX is a Boston University Photonics Center-incubated company
that developed a system for the treatment of glaucoma called the
SOLX Glaucoma System. The results of SOLX's operations have been
included in the company's consolidated financial statements since
Sept. 1, 2006.
On Nov. 30, 2006, the company acquired 50.1% of the capital stock
of OcuSense, Inc. for a total purchase price of $4,171,098, which
includes acquisition-related transaction costs of $171,098. The
company will make additional payments totaling $4,000,000 upon the
attainment of two pre-defined milestones by OcuSense prior to
May 1, 2009.
Shares and Warrants
On Feb. 1, 2007, the company entered into a Securities Purchase
Agreement with certain institutional investors, pursuant to which
the company agreed to issue to the investors an aggregate of
6,677,333 shares of its common stock and five-year warrants
exercisable into an aggregate of 2,670,933 shares of the company's
common stock.
The per share purchase price of the Shares is $1.50, and the per
share exercise price of the Warrants is $2.20, subject to
adjustment. The Warrants will become exercisable on Aug. 6, 2007.
Pursuant to the Securities Purchase Agreement, on Feb. 6, 2007,
the company issued the Shares and the Warrants. The gross
proceeds of sale of the Shares totaled $10,016,000, less
transaction costs of about $750,000.
On Feb. 6, 2007, the company also issued to Cowen and Company LLC
a warrant exercisable into an aggregate of 93,483 shares of
company common stock in part payment of the placement fee payable
to Cowen for its services.
Vamvakas' Standby Commitment
On Nov. 30, 2006, the company disclosed that Elias Vamvakas, its
chairman and chief executive officer, agreed to provide the
company with a standby commitment to purchase convertible
debentures of the company in an aggregate maximum amount of
$8,000,000.
On Feb. 6, 2007, the company raised gross proceeds in the amount
of $10,016,000 in a private placement of shares of its common
stock and warrants. The Total Commitment Amount was therefore
reduced to zero, thus effectively terminating Mr. Vamvakas'
standby commitment. No portion of the standby commitment was ever
drawn down by the company, and the company paid Mr. Vamvakas a
total of $29,808 in commitment fees in February 2007.
About OccuLogix
OccuLogix, Inc. (NasdaqGM: OCCX) -- http://www.occulogix.com/--
is an ophthalmic therapeutic company that commercializes
treatments for age-related eye diseases, including age-related
macular degeneration, or AMD. AMD is a cause of late onset visual
impairment and legal blindness in people over the age of 50 in the
U.S. and other Western industrialized societies.
PACIFIC GAS: SC Allows Travelers to Seek Repayment of Legal Fees
----------------------------------------------------------------
In a unanimous opinion written by Justice Samuel Alito, the United
States Supreme Court authorized Travelers Casualty & Surety Co. of
America to seek repayment of its legal fees from Pacific Gas &
Electric Co.
Bill Rochelle of Bloomberg News relates that Travelers had a
contract calling for the payment of attorneys' fees when it was a
creditor in Pacific Gas' reorganization case.
According to Mr. Rochelle, the U.S. Ninth Circuit Court of Appeals
in San Francisco ruled that Pacific Gas did not have to pay the
fees because the dispute involved bankruptcy law.
The Supreme Court disagreed, stating that Federal bankruptcy law
does not disallow contract-based claims for attorney's fees based
solely on the fact that the fees were incurred litigating
bankruptcy law issues.
The Court Supreme however said it expresses no opinion as to
Pacific Gas' arguments that unsecured claims for contractual
attorney's fees, such as Travelers', are categorically disallowed
by Sec. 506(b) of the Bankruptcy Code.
The proceeding is identified as Case No. 05-1429 on the U.S.
Supreme Court's docket.
G. Eric Brunstad, Jr., Esq. at Bingham McCutchen LLP represented
Travelers in this matter. Pacific Gas was represented by Gary M.
Kaplan, Esq. at Howard Rice Nemerowski Canady Falk & Rabkin.
Headquartered in San Francisco, California, Pacific Gas and
Electric Company -- http://www.pge.com/ -- a wholly owned
subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest
combination natural gas and electric utilities in the United
States. The Company filed for Chapter 11 protection on April 6,
2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes,
Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at
Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the
Debtors in their restructuring efforts. On June 30, 2001, the
Company listed $23,216,000,000 in assets and $22,152,000,000 in
debts. Pacific Gas and Electric emerged from chapter 11
protection on April 12, 2004, paying all creditors 100 cents-on-
the-dollar plus post-petition interest.
PENHALL INT'L: Debt Financing Cues Moody's to Cut Rating to B3
--------------------------------------------------------------
Moody's Investors Service downgraded Penhall International,
Corp.'s corporate family rating to B3 from B2 and its probability
of default to B3 from B2.
The rating action reflects the company's recent report that YDD
Holdings, Inc., Penhall's parent company, is seeking $60 million
of debt financing for the purpose of paying a dividend to its
equity investors, Code Hennessey, & Simmons and management. The
rating of Penhall's second priority, senior secured notes remained
at B3, but its loss given default assessment is changed to LGD3,
48% from LGD4, 64%.
Moody's assigned a Caa2, LGD6, 90% rating to YDD's proposed
$60 million senior unsecured loan. As a result of YDD's debt
being rated, the B3 corporate family rating for Penhall will now
be assigned to YDD, the senior-most entity with rated debt in the
capital structure.
The rating outlook for both YDD and Penhall is stable.
Moody's said that the downgrade of the corporate family rating to
B3 recognizes an aggressive financial strategy that is reflected
in the willingness of Penhall's owners to seek a $60 million
distribution less than a year after completing the buyout of
Penhall. The debt issued by YDD to fund the dividend will not be
guaranteed by Penhall, but since Penhall is the principal
operating subsidiary of YDD, debt service will be highly reliant
on Penhall's performance. As a result of the dividend to CHS, the
overall group's adjusted debt/EBITDA on a consolidated basis could
exceed 5.0x for fiscal year ending June 30, 2007. The corporate
family rating is further constrained by the potential for Penhall
to pursue more acquisitions which could require incremental
capital investments and may further increase operating and
financial risks.
Despite the increased leverage resulting from the special
dividend, Moody's believes that Penhall maintains a leading
position in concrete cutting and associated services for
infrastructure construction. Moody's believes that the company
should benefit from the higher levels of infrastructure upgrades
throughout the United States, which are the key to its financial
performance over the near to medium term.
The stable outlook reflects Moody's belief that Penhall's
operating performance should enable it to service the greater debt
burden stemming from the dividend, as spending for infrastructure
and construction projects remain strong. The key risk that
Penhall will continue to face is the cyclicality in the
construction end markets. Nevertheless, the company should be
able to weather future cyclical downturns much better than in the
past due to its expanding continental footprint.
The B3 rating assigned to the $175 million second priority, senior
secured notes reflects an LGD3, 48% loss given default assessment.
These notes are junior to the obligations relative under the
$70 million first lien senior secured, asset based revolving
credit facility. The second priority notes also benefit from the
new issuance of $60 million of junior debt.
The Caa2 rating assigned to YDD's $60 million senior unsecured
loan reflects an LGD6, 60% loss given default assessment. These
notes are the most junior debt and will be behind Penhall's debt
in a recovery scenario. Moody's notes that CHS has the discretion
to either service YDD's notes with cash interest payments or PIK
interest payments. At this time, Penhall's revolving credit
facility prohibits any upstream dividend payments. Penhall does
not provide a guarantee for YDD's loan, which will mature five
years from closing.
Penhall International Corp., headquartered in Anaheim, California,
is the largest provider of concrete cutting, breaking and highway
grinding services in North America.
PRUDENTIAL MORTGAGE: Fitch Lifts Rating on Class L Certs. to BB+
----------------------------------------------------------------
Fitch upgrades Prudential Mortgage Capital Funding's ROCK
commercial mortgage pass-through certificates, series 2001-C1:
-- $13.6 million class G to 'AAA from 'AA';
-- $13.6 million class H to 'AA' from 'A';
-- $22.7 million class J to 'BBB+' from 'BBB';
-- $6.8 million class K to 'BBB-' from 'BB+'; and
-- $4.5 million class L to 'BB+' from 'BB'.
In addition, Fitch affirms these classes:
-- $80.3 million class A-1 at 'AAA';
-- $536.1 million class A-2 at 'AAA';
-- Interest-only class X-1 at 'AAA';
-- Interest-only class X-2 at 'AAA';
-- $27.2 million class B at 'AAA';
-- $38.6 million class C at 'AAA';
-- $9.1 million class D at 'AAA';
-- $11.4 million class E at 'AAA';
-- $15.9 million class F at 'AAA';
-- $9.1 million class M at 'B'; and
-- $4.5 million class N at 'B-'.
Fitch does not rate the $7.6 million class O.
The upgrades reflect the increased credit enhancement levels due
to scheduled amortization, prepayment of four loans, as well as
defeasance of an additional eight loans (11%) since Fitch's last
rating action. As of the March 2007 distribution date, the
transaction's aggregate principal balance has decreased 11.8%, to
$801.1 million from $908.2 million at closing.
The largest Fitch Loans of Concern, Gables Stonebridge Apartments
(2.63%), is secured by a 500-unit multifamily property located in
Cordova, Tennessee. As of September 2006, the occupancy of the
property was high at 97.8%, compared to 93.8% at issuance.
However, net cash flow debt service coverage ratio decreased to
0.97x from 1.27x at issuance due to high rent concessions offered
at the property.
One loan, the RREEF America II Portfolio, representing
approximately 11.4% of the pool, maintains an investment grade
credit assessment due to stable performance. The $155.4 million
loan is split into an A and B note. The $91 million A note is
included in the transaction and the $64.4 million B note is held
outside the trust. The loan is secured by a diverse portfolio of
industrial, retail, office and multifamily properties located in
Delaware, Texas, California, Florida, Georgia, and Arizona. There
is approximately 3.7 million square feet of commercial space and
176 multifamily units. The weighted average portfolio occupancy
rate as of September 2006 was 91.6%.
PTS: High Debt Leverage Prompts S&P's B+ Corporate Credit Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Somerset, New Jersey-based PTS. The rating
outlook is stable.
At the same time, Standard & Poor's assigned its loan and recovery
ratings to the company's senior secured financing, consisting of a
$1.76 billion senior secured credit facility, a $350 million
revolver due 2013, and a $1.41 billion term loan B due 2014. The
debt is rated 'B+' with a recovery rating of '2', indicating the
expectation for substantial recovery of principal in the event of
a payment default.
In addition, Standard & Poor's assigned its 'B-' rating to PTS's
$565 million senior unsecured increasing-rate payment-in-kind
toggle notes due 2014 and $300 million senior subordinated notes
due 2017.
"Proceeds of the various debt issuances will be used to partially
finance the $3.3 billion purchase of PTS by Blackstone Group from
Cardinal Health Inc.," explained Standard & Poor's credit analyst
Arthur Wong.
The ratings on PTS, an advanced technologies and outsourcing
services provider to the pharmaceutical and biotechnology
industries, overwhelmingly reflect the company's high debt
leverage and minimal free cash flows expected over the near term.
These negatives are partially offset by the company's investment
grade-like business profile, which is highlighted by the company's
various leading market positions and the relative stability of its
diverse revenue streams.
REFCO INC: Plan Administrators Want Protocol on 140 Related Claims
------------------------------------------------------------------
RJM, LLC, the duly appointed administrator of Refco, Inc.'s
Chapter 11 case, and Marc S. Kirschner, the duly appointed
administrator and Chapter 11 Trustee of Refco Capital Markets,
Ltd.'s estate, ask the U.S. Bankruptcy Court for the Southern
District of New York to treat approximately 140 claims as Related
Claims in accordance with the Plan.
The Plan Administrators assumed the rights, powers, and duties of
the Reorganized Debtors and RCM upon the Plan Effective Date.
Under the Reorganized Debtors' chapter 11 Plan, a creditor is
entitled to recover on its claim from its primary debtor obligor.
Other claims arising from the same facts, transactions or
occurrences giving rise to the creditor's claim are deemed
"Related Claims" and are subordinated under the Plan. The
claimholders are not entitled to a distribution on account of
those claims unless and until all Allowed General Unsecured Claims
against the applicable Reorganized Debtor or RCM, have been paid
in full.
After reviewing the Reorganized Debtors' books and records, the
Plan Administrators have identified approximately 140 Related
Claims, with underlying claims asserted against each claimant's
primary obligor.
The Related Claims include:
Primary Related
Claimant Case No. Claim No. Case No. Claim No.
-------- -------- --------- -------- ---------
Alternative Investments 018 9198 262 9172
Fund, Ltd.
Banesco Holding CA 018 10125 023 10546
Fimex International 018 5750 029 9288
Limited
IDS Managed Fund LLC 018 9352 261 14417
Lebo Capital 018 12289 262 12261
Management LLC
NBK Investment, Ltd. 018 10221 262 10194
Nikko Futures Fund 018 10015 020 10017
Reserve Invest 018 11392 006 11391
(Cyprus) Limited
Rietumu Banka 018 11383 027 11380
RPM Risk & Portfolio 018 9568 007 9561
Management AB
TAU 28 Fund Ltd. 018 9420 023 9404
A complete list of the Related Claims is available at no charge
at http://ResearchArchives.com/t/s?1bc1
Mark W. Deveno, Esq., at Bingham McCutchen LLP, in New York,
asserts that proper treatment of the Related Claims is necessary
to ensure that distributions are properly calculated within the
terms of the Plan.
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. 59; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/
or 215/945-7000).
REVLON CONSUMER: Dec. 31 Balance Sheet Upside-Down by $1.22 Bil.
----------------------------------------------------------------
Revlon Consumer Products Corp. increased its net loss for the year
ended Dec. 31, 2006, to $244.5 million, from $77.8 million for the
year ended Dec. 31, 2005. Net sales in 2006 and 2005 were
somewhat flat at $1.33 billion, sales in 2005 were higher by
$900,000.
The company had an operating loss of $43.6 million in 2006, as
compared with an operating income of $72.5 million a year earlier.
The operating loss was partly due to the increased selling,
general, and administrative expenses of $802.1 million in 2006, as
compared with $750.2 million in 2005.
The company's balance sheet as of Dec. 31, 2006, showed a
stockholders' deficiency of $1.22 billion, resulting from total
assets of $944 million and total liabilities of $2.16 billion. It
stockholders' deficiency in 2005 was $1.09 billion.
As of Dec. 31, 2006, the company's cash and cash equivalents
totaled $35.4 million, slightly up from $32.4 million in 2005.
A full-text copy of the company's annual report is available for
free at http://ResearchArchives.com/t/s?1bbf
Year 2006 Highlights
In September 2006, the company elected David Kennedy as a Director
and as president and chief executive officer to replace Mr. Stahl.
Mr. Kennedy was also elected as a director. Mr. Kennedy
previously served as Revlon, Inc.'s executive vice president,
chief financial officer and treasurer, and prior to that as the
company's executive vice president and president of Revlon, Inc.'s
international operations.
Revlon, Inc. also announced in September 2006 the discontinuance
of its Vital Radiance brand, which did not maintain an
economically feasible retail platform for future growth.
During 2006 the company incurred charges of $9.4 million in
connection with the Mr. Stahl's departure and $60.4 million in
connection with the discontinuance of the Vital Radiance brand.
Credit Agreements
On Dec. 20, 2006, the company replaced the $800 million 2004 Term
Loan Facility under its 2004 Credit Agreement with a new 5-year,
$840 million 2006 Term Loan Facility pursuant to the 2006 Term
Loan Agreement, as of Dec. 20, 2006, among the company, as
borrower, the lenders party thereto, Citicorp USA, Inc., as
administrative agent and collateral agent, Citigroup Global
Markets Inc., as sole lead arranger and sole bookrunner, and
JPMorgan Chase Bank, N.A., as syndication agent.
As part of the bank refinancing, the company also amended and
restated the 2004 Multi-Currency Facility by entering into the
$160 million 2006 Revolving Credit Agreement that amended and
restated the 2004 Credit Agreement.
The company was in compliance with all applicable covenants under
the 2006 Credit Agreements as of Dec. 31, 2006.
At Feb. 28, 2007, the 2006 Term Loan Facility was fully drawn and
availability under the $160 million 2006 Revolving Credit
Facility, based upon the calculated borrowing base less about
$15.1 million of outstanding letters of credit and nil then drawn
on the 2006 Revolving Credit Facility, was about $134.4 million.
About Revlon Consumer
Revlon Consumer Products Corp., headquartered in New York, is a
cosmetics, skin care, fragrance, and personal care products
company. The company is a wholly owned subsidiary of Revlon,
Inc., which in turn is majority-owned by MacAndrews and Forbes,
which is wholly owned by Ronald O. Perelman.
* * *
As reported in the Troubled Company Reporter on Dec. 11, 2006,
Moody's Investors Service assigned a B1 rating to Revlon Consumer
Products Corp.'s $160 million senior secured asset based revolving
credit facility and a B3 rating to the company's new $840 million
senior secured term loan. At the same time, Moody's affirmed the
company's long-term ratings, including the corporate family rating
of Caa1. The outlook remains negative.
ROTECH HEALTHCARE: Posts $534.1 Mil. Net Loss in Yr. Ended Dec. 31
------------------------------------------------------------------
Rotech Healthcare Inc. reported a net loss of $534.1 million on
net revenues of $498.8 million for the year ended Dec. 31, 2006,
compared with net income of $5.5 million on net revenues of
$533.2 million for the year ended Dec. 31, 2005.
The net decrease in revenues for the year ended Dec. 31, 2006, was
primarily attributable to:
-- reduced Medicare reimbursement rates for compounded
budesonide which reduced net revenues by approximately
$30.4 million,
-- additional provisions for accounts receivable contractual
allowances recorded as a result of a deterioration in the
aging of accounts receivable -- including $17.5 million
recorded during the quarter ended June 30, 2006, and
$4 million recorded during the quarter ended Dec. 31, 2006,
as a result of an increased monthly provision rate for
accounts receivable contractual allowances;
-- reduction in the 2006 dispensing fee for nebulizer
medications which reduced net revenues by approximately
$9.8 million; and
-- volume reductions under the contract with Gentiva Health
Services ("Gentiva") which reduced net revenue by
approximately $19.3 million as a result of an amendment to
their contract with CIGNA Healthcare ("CIGNA"), whereby
Gentiva would no longer coordinate specific respiratory
therapy and DME services on behalf of CIGNA effective
Jan. 31, 2006.
These decreases were partially offset by an increase of
$13.5 million in net revenue for the year ended Dec. 31, 2006,
from locations acquired during 2005 and 2006 and $33.6 million in
net revenue for the year ended Dec. 31, 2006, from a 6.6% increase
in oxygen and drug patient counts (excluding acquisitions) and a
9.2% increase in other DME respiratory product counts (excluding
acquisitions).
Net loss for the year ended Dec. 31, 2006 was $534.1 million
compared to net earnings of $5.5 million for the year ended
Dec. 31, 2005. $529 million of the current year net loss is
attributable to non-cash goodwill impairment charges,
40.2 million to Medicare reimbursement cuts and $21.5 million to
additional provisions for accounts receivable contractual
allowances.
Due to an overall decline in profitability which resulted
primarily from decreases in Medicare reimbursement rates,
including reductions for compounded budesonide, and the resulting
decline in its market capitalization, the company recorded non-
cash goodwill impairment charges of $529 million during the year
ended Dec. 31, 2006.
At Dec. 31, 2006, the company's balance sheet showed
$497.1 million in total assets, $456.1 million in total
liabilities, $5.3 million in series A convertible, redeemable
preferred stock, and $35.7 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?1bc3
Cash Flows
Net cash provided by operating activities was $15.5 million and
$60.7 million for the years ended Dec. 31, 2006 and 2005,
respectively.
Net cash used in investing activities was $61.7 million and
$109.5 million for the years ended Dec. 31, 2006, and 2005,
respectively. The decrease in net cash used in investing
activities during 2006 is attributed to: (i) increased utilization
of existing equipment, which decreased capital expenditures from
$78.8 million to $59.9 million for the years ended Dec. 31, 2005,
and 2006, respectively; and (ii) discontinuance of business
acquisitions, which decreased cash outlays for businesses acquired
from $30.8 million to $1.8 million for the years ended
Dec. 31, 2005, and 2006, respectively.
As of Dec. 31, 2006, the company had the following credit
facilities and outstanding debt:
-- Two-year $25 million senior secured revolving line of credit
for general corporate purposes including working capital,
capital expenditures and permitted acquisitions. As of
Dec. 31, 2006, the company did not have any amounts
outstanding under this revolving credit facility; however,
the company had $14.1 million committed under standby letters
of credit.
-- Two-year $95 million senior secured term loan, the proceeds
of which were used to repay the outstanding balance under the
company's former term loan and revolving credit facility
and for other general corporate purposes. As of
Dec. 31, 2006, the company had a balance of $95 million
outstanding under the current term loan.
-- $300 million aggregate principal amount of 9 1/2% senior
subordinated notes, the proceeds of which were used to repay
certain pre-petition claims owed to the creditors of the
predecessor company as part of its plan of reorganization.
The notes mature on April 1, 2012. As of both Dec. 31, 2006,
and 2005, the company had a balance of $287 million
outstanding.
About Rotech Healthcare
Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ:ROHI)
-- http://www.rotech.com/-- provides home respiratory care and
durable medical equipment and services to patients with breathing
disorders such as chronic obstructive pulmonary diseases. The
company provides its equipment and services in 48 states through
approximately 485 operating centers, located principally in non-
urban markets. The company's local operating centers ensure that
patients receive individualized care, while its nationwide
coverage allows the company to benefit from significant operating
efficiencies.
* * *
As reported in the Troubled Company Reporter on Nov. 9, 2006,
Moody's Investors Service affirmed Rotech Healthcare Inc.'s Caa2
Corporate Family Rating in connection with the rating agency's
implementation of its new Probability-of-Default and Loss-Given-
Default rating methodology.
RURAL/METRO CORP: Lenders Waive Default Due to 10-Q Filing Delay
----------------------------------------------------------------
Rural/Metro Corporation disclosed that Rural/Metro Operating
Company LLC, its subsidiary, entered into Waiver No. 1, dated as
of March 13, 2006, under that certain Credit Agreement, dated as
of March 4, 2005, with the Lenders; Citibank, N.A., as LC facility
issuing bank; Citicorp North America, Inc., as administrative
agent for the lenders; JPMorgan Chase Bank, N.A., as syndication
agent; and Citigroup Global Markets Inc. and J.P. Morgan
Securities Inc., as joint lead arrangers and joint lead
bookrunners.
Under the Waiver, the Lenders waive the defaults arising out
of the company's failure to timely file its Form 10-Q, for the
quarter ended Dec. 31, 2006. The company has been delayed due to
the reported inventory restatement relating to certain durable
medical equipment within inventory.
In addition, the company has disclosed that it had changed
its method of accounting for revenue and uncompensated care,
previously referred to as the provision for doubtful accounts, in
order to align with the preferred industry standard.
The inventory restatement requires the company to amend its Form
10-Q for the quarters ended March 31, 2006, and Sept. 30, 2006,
and its Form 10-K for the fiscal year ended June 30, 2006.
However, if any default occurs under the Credit Agreement on April
30, 2007, the default shall constitute an "Event of Default" on
April 30, 2007. The foregoing description of the Waiver is
qualified in its entirety by reference to the Waiver.
The company expects to file its Form 10-Q for the quarter ended
Dec. 31, 2006 prior to the expiration of the 60-day cure period
relating to its notes.
About Rural/Metro Corp.
Headquartered in Scottsdale, Arizona, Rural/Metro Corporation
-- http://www.ruralmetro.com/-- provides emergency and non-
emergency medical transportation, fire protection, and other
safety services in 23 states and approximately 400 communities
throughout the United States.
* * *
As reported in the Troubled Company Reporter on March 8, 2007,
Moody's Investors Service placed a Caa1 rating to Rural/Metro
Corp.'s $93.5 million, 12.75% senior discount notes, due 2016,
and assigned a B2 Corporate Family Rating.
S-TRAN HOLDINGS: Plan-Filing Extension Objections Due Today
-----------------------------------------------------------
S-Tran Holdings Inc. and its debtor affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to further extend
their exclusive periods to:
a) file a plan of reorganization until June 4, 2007; and
b) solicit acceptances on that plan until Aug. 5, 2007.
The Debtors tell the Court that they are actively analyzing
information relevant to potential asset recoveries. The Debtors
are resolving issues relating to the numerous freight claims filed
against them and addressing insurance collateral issues.
At present, the Debtors have reached approximately 60 settlement
of preference claims, which recovered $400,000.
The Debtors tell the Court that the extension will not harm their
creditors or other parties-in-interest.
Objections, if any, must be submitted by 4:00 p.m. today. The
Court will convene a hearing at 1:30 p.m. on April 3, 2007, to
consider the Debtors' request.
Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc.,
provides common carrier services and specialized in less-than-
truckload shipments and also supplies overnight and second day
service to shippers in 11 states in the Southeast and Midwestern
United States. The Company and its debtor-affiliates filed for
chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No.
05-11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub P.C. represents the Debtors in their
restructuring efforts. Donald A. Workman, Esq., at Foley &
Lardner LLP represents the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed total assets of $22,508,000 and total
debts of $30,891,000.
S-TRAN HOLDINGS: Has Until March 31 to Use ACFC's Cash Collateral
-----------------------------------------------------------------
The U.S. Bankruptcy for the District of Delaware approved a
stipulation in which S-Tran Holdings Inc. and its debtor-
affiliates can continue using, until March 31, 2007, cash
collateral of American Capital Financial Services Inc., as agent
for American Capital Strategies Ltd. and ACS Funding Trust I.
The Debtors' loans previously consisted of borrowings from LaSalle
Business Credit LLC for $11.8 million under a prepetition senior
secured credit facility securing all of their assets.
As approved by the Court on Sept. 27, 2006, LaSalle agreed to let
the Debtors use its cash collateral through Oct. 31, 2006.
Thereafter, the Debtors ceased using LaSalle's cash collateral
because their obligations to LaSalle have been substantially paid.
As of Jan. 1, 2007, the Debtors had collected $16.4 million
through auction and other asset sales and collections of accounts
receivable and insurance collateral. The Debtors say they have
applied much of their collections to pay off their outstanding
debt to LaSalle.
Currently, the Debtors owe ACFS $7.5 million securing
substantially all of the Debtors' assets.
ACFS asserts an interest in the Debtors' cash collateral. The
Debtors say that any diminution in value of ACFS's interest is
adequately protected.
The Debtors told the Court that using cash collateral will allow
them to have an orderly liquidation and recoveries for all
creditors.
A copy of the Cash Collateral Budget is available for free at
http://ResearchArchives.com/t/s?1b7a
Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc.,
provides common carrier services and specialized in less-than-
truckload shipments and also supplies overnight and second day
service to shippers in 11 states in the Southeast and Midwestern
United States. The Company and its debtor-affiliates filed for
chapter 11 protection on May 13, 2005 (Bankr. D. Del. Case No.
05-11391). Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub P.C. represents the Debtors in their
restructuring efforts. Donald A. Workman, Esq., at Foley &
Lardner LLP represents the Official Committee of Unsecured
Creditors. When the Debtors filed for protection from their
creditors, they listed total assets of $22,508,000 and total
debts of $30,891,000.
SABRE HOLDINGS: Moody's May Junk Rating on $800 Million Notes
-------------------------------------------------------------
Moody's Investors Service commented that conclusion of its review
for possible downgrade for senior unsecured notes issued by Sabre
Holdings Corporation remains subject to the receipt of stockholder
approvals and other closing conditions related to the company's
proposed acquisition by Silver Lake Partners and Texas Pacific
Group. The proposed acquisition is valued at approximately
$5.4 billion, including the assumption of approximately
$700 million in net debt.
Based on the company's estimated capital structure pro forma for
the transaction, Moody's would likely downgrade the existing
$800 million notes of Sabre Holdings to Caa1 from Baa3 and assign
a B1 rating to proposed first lien credit facilities. Moody's
would also likely assign a B2 corporate family rating and a stable
rating outlook.
"This transaction, once approved, would result in a significant
increase in financial leverage and result in a multiple notch
rating downgrade. At the same time, Moody's believes that Sabre's
strong management team and 2006 contract negotiations with travel
suppliers, including the major U.S. airlines, will continue to
support Sabre's leading industry position within the travel
service markets," said Moody's analyst John Moore,
Moody's estimates that once the transaction is consummated, debt
to EBITDA and debt to EBITDA less capital expenditures ratios
would increase from current levels to 5.9x and 7.2x, respectively,
factoring in anticipated cost savings. Without cost savings, debt
to EBITDA and debt to EBITDA less capital expenditures would
increase from current levels to 7.8x and 10.1x, respectively.
The proposed new credit facilities are anticipated to be issued by
Sabre Inc. and guaranteed by all U.S. operating subsidiaries,
which hold predominantly all of the company's intellectual
property. Participants in the credit facilities would also
receive a 65% pledge of stock in foreign subsidiaries.
The lower notching for the $800 million existing notes is based on
information included in the company's recent proxy filing whereby
a pledge of any tangible U.S. property in excess of 1% of
consolidated net assets is excluded from the security package of
the proposed new credit facilities and, as a result, the equal and
ratable security requirement of the existing $800 million notes
does not get triggered.
Ratings of Sabre Holdings Corporation on review for possible
downgrade:
* $400 million senior unsecured notes due August 2011
* $400 million senior unsecured notes due March 2016
Proposed new credit facilities to be issued by Sabre Inc.:
* $500 million first lien revolving credit facility which is
anticipated to be undrawn at closing)
* $3 billion first lien term loan
Headquartered in Southlake, Texas, Sabre Holdings is a leading
travel services provider worldwide.
SABRE INC: S&P Holds B+ Rating on Proposed $3.5 Billion Facility
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' rating on
Sabre Inc.'s proposed $3.515 billion secured credit facility and
revised the recovery rating on the revised facility to '3' from
'2'.
Sabre Inc. is the major operating subsidiary of Sabre Holdings
Corp. a travel distribution company based in Southlake, Texas.
Standard & Poor's expects to lower the corporate credit rating on
Sabre Holdings to 'B+', remove it from CreditWatch, and assign a
stable outlook upon completion of this transaction. Ratings were
initially placed on CreditWatch with negative implications on Dec.
12, 2006, and subsequently lowered on Dec. 21, 2006.
"This rating action follows the issuer's decision to transfer the
$300 million second-lien facility to the $2.715 billion first-lien
term loan, increasing that facility to $3.015 billion," said
Standard & Poor's credit analyst Betsy Snyder.
Standard & Poor's has assigned a recovery rating of '3',
indicating an expectation of a meaningful recovery of principal in
the event of a payment default, to the revised $3.015 billion
first-lien facility. Standard & Poor's has withdrawn the '5'
recovery rating on the $300 million second-lien term loan. All
previous terms of the first-lien term loan continue to apply.
Ratings List:
* Sabre Holdings Corp.
-- Corporate Credit Rating, BB/Watch Negative
-- Senior Unsecured Debt, B+/Watch Neg
* Sabre Inc.
-- $3.515 Bil. 1st-Lien Sr. Sec. Credit Facility revised to
B+, Recovery Rating: 3 to B+, Recovery Rating: 2
-- $300 Mil. 2nd-Lien Term Loan, Recovery Rating: revised to
NR (not rated) from 5
SALOMON BROTHERS: Fitch Holds B- Rating on $7 Mil. Class L Certs.
-----------------------------------------------------------------
Fitch Ratings assigns a Distressed Recovery rating to Salomon
Brothers Mortgage Securities VII, Inc.'s commercial mortgage
pass-through certificates, series 1999-C1:
-- $7.3 million class L to 'B-/DR1' from 'B-'.
In addition, Fitch affirms these classes:
-- $276.3 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $38.6 million class B at 'AAA';
-- $38.6 million class C at 'AAA';
-- $11 million class D at 'AAA';
-- $27.6 million class E at 'AAA';
-- $11 million class F at 'AAA';
-- $14.7 million class G at 'AA+';
-- $20.2 million class H at 'A-';
-- $9.2 million class J at 'BBB-'; and
-- $16.5 million class K at 'B'.
Fitch does not rate the $5.6 million class M certificates. Class
A-1 has paid in full. The assignment of the DR rating to class L
is the result of expected losses on the specially serviced loans.
The rating affirmations reflect the pool's stable performance from
loan payoffs and amortization, as well as the defeasance of four
additional loans (3.3%) since Fitch's last rating action.
In total, 15 loans (16.4%) have defeased, including the largest
loan (4%) in the transaction. As of the February 2007
distribution date, the pool's collateral balance has been reduced
35% to $478.7 million from $734.9 million at issuance
Currently, six assets (4%) are in special servicing and losses are
expected on four. The largest specially serviced asset is secured
by a multifamily property in Beaumont, Texas, which suffered
damage due to Hurricane Rita. The property has been renovated and
current occupancy is 94%. The loan is 90+ days delinquent and the
borrower and special servicer have agreed to a workout plan.
SANITARY AND IMPROVEMENT: Files Disclosure Statement & Plan
-----------------------------------------------------------
Sanitary and Improvement District #425 of Douglas County, Nebraska
delivered to the United States Bankruptcy Court for the District
of Nebraska a Disclosure Statement accompanying its Plan of
Adjustment.
The Debtor, a municipal corporation, is responsible for the
construction of public improvements, like roads and utilities,
within its geographic boundaries.
The Debtor informs the Court it is not currently solvent, but it
believes the tax base of the District will increase as it
continues to develop and as new construction proceeds.
The general goal of the Plan is three-fold:
(1) the Plan allows the District to continue operating;
(2) the Plan maintains the quality of life of the residents of
the District, in turn fostering new construction and
creating additional income for the District; and
(3) the continued operation of the District, together with the
increased income of the District, should be used in any
way possible to repay each and every creditor of the
District.
The District has four distinct classes of creditors:
(a) all holders of administrative claims will be paid in full,
either from available funds or in the form of general fund
warrants;
(b) general fund warrant holders will be paid in accordance
with the terms of the warrants issued;
(c) general obligation bonds will be paid in full, with
principal and interest; and
(d) outstanding construction fund warrants will be cancelled
and construction fund warrant holders will be provided
with Class B bonds, which may continue to receive payments
for as long as 30 years. The Class B bonds allow the
opportunity for current construction fund warrant holders
to be paid most or all of their debt, including past and
future interest.
Construction fund warrant holders are the only creditors required
to exchange the securities they currently hold under the Plan.
They are the only class of creditors required to approve the Plan.
Construction fund warrant holders will be provided a ballot to
select their approval or disapproval of the Plan. The Plan, if
approved by one-half in number and two-thirds in value of those
construction fund warrant holders voting, will likely be confirmed
by the Bankruptcy Court.
Headquartered in Omaha, Nebraska, Sanitary and Improvement
District #425 of Douglas County, Nebraska filed for chapter 9
protection on Oct. 26, 2005 (Bankr. D. Nebr. Case No. 05-85871).
Mark James LaPuzza, Esq., at Pansing Hogan Ernst & Bachman, LLP,
represents the Debtor in its restructuring efforts. William L.
Biggs, Jr., Esq., at Gross & Welch, represents the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it estimated assets between
$500,000 to $1 million and estimated debts between $10 million to
$50 million.
SANTA FE: Creditors Have Until April 16 to File Claims
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set
4:00 p.m., Eastern Time, on April 16, 2007, as the last day for
persons owed money by Santa Fe Minerals Inc. and its sole
shareholder, 15375 Memorial Corporation, to file their proofs of
claim against the Debtors. The bar date applies only to claims
that arose prior to Aug. 16, 2006.
Proofs of claim must be filed on or before the Bar Date with:
The Clerk of the Bankruptcy Court
5th Floor
824 Market St.
Wilmington, DE 19801
With a copy sent to:
Stevens & Lee, P.C.
Attn: Memorial-Santa Fe Cases
7th Floor
1105 N. Market St.
Wilmington, DE 19801
About Santa Fe Minerals
Headquartered in Houston, Texas, 15375 Memorial Corporation is the
sole shareholder of Santa Fe Mineral, Inc. Santa Fe Minerals is a
Wyoming based corporation dissolved in 2000. Under Wyoming law,
creditors of a dissolved corporation can recover their debts from
the dissolved corporation's shareholders, up to the value of the
assets that each shareholder received at the dissolution.
15375 Memorial and Santa Fe Minerals filed for chapter 11
protection on Aug. 16, 2006 (Bankr. D. Del. Case Nos. 06-10859 &
06-10860). John D. Demmy, Esq., at Stevens & Lee, P.C.,
represents the Debtors. No Official Committee of Unsecured
Creditors have been appointed in the Debtors' cases. When the
Debtors filed for protection from their creditors, they estimated
their assets between $100,000 to $500,000 and liabilities of more
than $100 million.
SASCO NIM: DBRS Rates $3.9 Million Class C Certificates. at BB
--------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to the Series
2007-BC2 Notes issued by SASCO NIM Company 2007-BC2.
Ratings assigned:
* $16.8 million Class A rated at A (low)
* $5.0 million Class B rated at BBB (low)
* $3.9 million Class C rated at BB
The NIM Notes are backed by a 100% interest in the Class X and
Class P Certificates issued by Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2007-BC2.
The Class X Certificates will be entitled to all excess interest
in the Underlying Trust, and the Class P Certificates will be
entitled to all prepayment premiums or charges received in respect
of the mortgage loans. The NIM Notes will also be entitled to the
benefits of an underlying Swap Agreement with Lehman Brothers
Special Financing Inc.
Payments on the NIM Notes will be made on the 27th of each month
commencing in March 2007. The interest payment amount will be
distributed to the Class A and Class B Noteholders, followed by
the principal payment amount to the Class A, Class B and Class C
Noteholders until the principal balance of the NIM Notes are
reduced to zero. Any remaining amounts will be distributed to
the Preference Shareholders.
The mortgage loans in the Underlying Trust were originated by
EquiFirst Corporation, Lehman Brothers Bank, FSB, Fieldstone
Mortgage Company and First Street Financial, Inc.
SBE INC: Posts $1.1 Million Net Loss in Quarter Ended January 31
----------------------------------------------------------------
SBE Inc. reported a net loss of $1.1 million on net sales of
$1.2 million for the first quarter ended Jan. 31, 2007, compared
with a net loss of $2.7 million on net sales of $1.4 million for
the same period a year ago.
Net sales for the first quarter of fiscal 2007 was $1.2 million, a
14% decrease from $1.4 million in the first quarter of fiscal
2006. This decrease was primarily attributable to a decrease in
shipments of the company's Highwire products.
Total operating expenses decreased $1.8 million to $2.3 million in
the first quarter ended Jan. 31, 2007, when compared to total
operating expenses of $4.1 million in the same period 12 months
ago.
Operating loss decreased to $1.1 million in the first quarter
ended Jan. 31, 2007, compared to an operating loss of $2.7 million
in the same period ended Jan. 31, 2006.
Interest and other income decreased to $1,000 in the current
quarter compared to $18,000 in the first quarter ended
Jan. 31, 2006.
At Dec. 31, 2006, the company's balance sheet showed $4 million in
total assets, $1.5 million in total liabilities, and $2.5 million
in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended Jan. 31, 2007, are available for
free at http://researcharchives.com/t/s?1bd3
About SBE Inc.
SBE Inc. (NASDAQ: SBEI) -- http://www.sbei.com/-- designs and
provides IP-based storage networking solutions for an extensive
range of business critical applications, including back-up and
disaster recovery. SBE delivers a portfolio of scalable,
standards-based hardware and software products designed to enable
optimal performance and rapid deployment across a wide range of
next-generation storage systems.
Going Concern Doubt
BDO Seidman LLP, in San Francisco, California, expressed
substantial doubt about SBE Inc.'s ability to continue as a going
concern after auditing the company's financial statements for the
years ended Oct. 31, 2006, and 2005. The auditing firm pointed to
the company's recurring losses and negative cash flows from
operations.
SENTEX SENSING: Hausse Taylor Raises Going Concern Doubt
--------------------------------------------------------
Hausser + Taylor LLC, in Cleveland, Ohio, expressed substantial
doubt about Sentex Sensing Technology Inc.'s ability to continue
as a going concern after auditing the company's financial
statements for the year ended Nov. 30, 2006. The auditing firm
pointed to the company's substantial net and operating losses.
Sentex Sensing Technology Inc. reported a net loss of $578,609 on
total revenues of $21,245 for the year ended Nov. 30, 2006,
compared with a net loss of $376,636 on total revenues of $159,175
for the year ended Nov. 30, 2005.
At Nov. 30, 2006, the company's balance sheet showed $1.9 million
in total assets and $8.3 million in total liabilities, resulting
in a $6.4 million total stockholders' deficit.
The company's balance sheet at Nov. 30, 2006, also showed zero
current assets available to pay $8.3 million in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the year ended Nov. 30, 2006, are available for
free at http://researcharchives.com/t/s?1bcf
About Sentex
Sentex Sensing Technology Inc. (OTC BB: SNTX.OB) is a corporation
duly organized in 1980 in the state of New Jersey. On
July 2, 2001, the company purchased Regency Technologies LLC from
Regency Steel LLC and other selling members.
On Nov. 20, 2005, the company entered into a Contribution and
Investment Agreement with JJJ-RT LLC, Regency Technologies Inc.
(Regency), a wholly owned subsidiary of the company, and Regency
Acquisition LLC, a wholly owned subsidiary of Regency. Under the
Investment Agreement, Regency contributed all of its operating
assets to Regency Acquisition LLC and Regency Acquisition LLC
assumed all of the obligations of Regency except for amounts due
Robert Kendall, chief executive of the company, of about $200,000
and certain inter-company accounts payable between Regency and the
company in the amount of $47,000, and JJJ-RT obtained the right to
invest up to $800,000 in Regency Acquisition LLC on an as-needed
basis.
As a result of these arrangements and with the understanding that
it is the intention of JJJ-RT to obtain a majority position prior
to the end of the next fiscal year, the company, together in
consultation with its outside auditors, has concluded that JJJ-RT
should be the consolidating entity. Accordingly, the company has
not reflected the assets, liabilities, revenue or expenses of the
Regency Acquisition LLC in its financial statements.
SHILOH INDUSTRIES: Discloses Results of Litigation
--------------------------------------------------
Shiloh Industries, Inc. disclosed that on March 16, 2007, a jury
verdict was entered against the company in the United States
District Court in Akron, Ohio following a jury trial in a claim by
the bankruptcy estate of Valley City Steel, LLC relating to the
company's sale of certain assets in 2001.
Valley City Steel, LLC claimed that the company's sale of certain
assets to Valley City Steel, LLC, in connection with the creation
of the joint venture in which the company was a minority
shareholder, amounted to a constructive fraudulent conveyance
under Ohio law. The plaintiff also alleged that certain amounts
were due and owing on account to Valley City Steel, LLC. The jury
verdict against the company was approximately $4.9 million,
$4.6 million of which related to the constructive fraudulent
conveyance claim.
The company believes that the verdict relating to the constructive
fraudulent conveyance claim is contrary to the facts and the law
and the company intends to file post-trial motions including a
motion for a new trial and other relief.
The company will vigorously appeal any final constructive
fraudulent conveyance judgment if the court denies the post-trial
motions. The company believes that there are valid grounds to
reverse, or reduce the damages applicable to, the portion of any
final judgment relating to the constructive fraudulent conveyance
claim on appeal. There can be no assurance that the company's
appeal will be successful.
About Valley City
Headquartered in Valley City, Ohio, Valley City Steel, LLC, is a
subsidiary of Viking Steel LLC. The Company filed for chapter 11
protection on November 27, 2002 (Bankr. N.D. Ohio Case No.
02-55516). Howard E. Mentzer, Esq., at Mentzer, Vuillemin and
Mygrant Ltd., represents the Debtor. When it filed for
bankruptcy, the Company reported assets and debts between
$10 million and $50 million.
About Shiloh
Headquartered in Valley City, Ohio, Shiloh Industries, Inc.
(NASDAQ:SHLO) -- http://www.shiloh.com/-- manufactures first
operation blanks, engineered welded blanks, complex stampings and
modular assemblies for the automotive and heavy truck industries.
The Company has 15 wholly owned subsidiaries at locations in Ohio,
Georgia, Michigan, Tennessee and Mexico, and employs approximately
1,890.
* * *
As reported in the Troubled Company Reporter on Feb. 26, 2007,
Moody's Investors Service affirmed the ratings for Shiloh
Industries, Inc's Corporate Family at Ba3; and Probability of
Default at B1. Moody's also affirmed the ratings of the company's
guaranteed first lien senior secured credit facility, Ba2, LGD2,
24%. The outlook remains stable.
SOUTH BEACH: Secured Lender Sobe Mezz Selling Collateral on Monday
------------------------------------------------------------------
Sobe Mezz Lender LLC, a secured party under membership pledge and
security agreements dated Aug. 5, 2005, with SBHI 2 LLC and SBBR 2
LLC, will be selling at public sale its collateral interests in
SBHI 2 and SBBR 2 on March 26, 2007, at 10:30 a.m.
The auction will be held at the offices of Genovese, Joblove &
Batista P.A., 44th Floor, Bank of America Tower at International
Place, 100 Southeast Second Street, in Miami, Florida.
Sobe Mezz's collateral consist of 100% of the membership
interests in SBHI 1 LLC and 100% of the membership
interests in SBBR 1 LLC.
SBH1 owns 100% of the membership interests in South Beach Hotel
Investors LLC, and SBBR1 owns 100% of the membership interests in
South Beach Breakwater Restaurant LLC.
South Beach Hotel and South Beach Breakwater are the owners of
title to certain real property located at 940-960 Ocean Drive, in
Miami Beach, Florida.
SBHI 2 and SBBR 2 pledged the collateral as security for a
certain indebtedness owed to Sobe Mezz, which indebtedness
includes, among other things, the debt evidenced by a promissory
note dated Aug. 5, 2005, in the original principal amount of
$20,350,000 in favor of Sobe Mezz. SBHI 2 and SBBR 2 are in
default under the Note.
All of the collateral will be sold as a block. To participate in
the auction, all prospective bidders must provide a good faith
deposit of $250,000.
For more information regarding the sale, contact:
Robin D. Fineman, Esq.
Akin Gump Strauss Hauer & Feld LLp
42nd Floor
590 Madison Avenue
New York 10022
Tel: (212) 872-1066
SPANSION INC: Fitch Holds BB- Rating on $175 Mil. Senior Facility
-----------------------------------------------------------------
Fitch has affirmed Spansion Inc.'s Issuer Default Rating of 'B-'
and $175 million senior secured revolving credit facility due 2010
at 'BB-/RR1'.
These ratings have been downgraded due to lower recovery prospects
as a result of Spansion's issuance of additional secured debt:
-- $225 million of 11.25% senior unsecured notes due 2016 to
'CCC+/RR5' from 'B-/RR4'; and
-- $207 million of 2.25% convertible senior subordinated
debentures due 2016 to 'CCC/RR6' from 'CCC+/RR5';
Fitch also has established a rating of 'BB-/RR1' on Spansion's
$500 million senior secured term loan due 2012. The Rating
Outlook remains Negative.
Approximately $1.1 billion of total debt is affected by Fitch's
actions.
The Negative Rating Outlook reflects Fitch's expectations that:
-- Spansion's currently limited financial flexibility will be
pressured by significant capital expenditures planned for
2007, which Fitch estimates will result in approximately
negative $500 million of free cash flow for the year;
-- debt levels will likely increase to finance these
investments, which in the absence of stronger than
anticipated operating metrics could result in the company
breaching its current leverage covenant for the $500 million
senior secured term loan facility; and
-- pricing pressures across Spansion's end markets will
continue through 2007, constraining meaningful gross margin
expansion and, therefore, the company's ability to achieve
operating profitability.
While recognizing that Spansion's capital spending is being
accelerated to support solid unit growth prospects and needed to
meet its longer-term cost reduction objectives, Fitch's concerns
center on the potential for even moderate gross margin erosion to
stress Spansion's liquidity position.
Additionally, the affirmation of the IDR continues to reflect
substantial capital expenditures and research and development
investments beyond the near-term and Spansion's lack of
diversification and size relative to key competitors. Fitch
believes these larger and more diversified providers can more
easily absorb operating losses and setbacks in technology roadmaps
and process technology migrations.
The ratings are supported by:
-- Fitch's expectations that Spansion's revenue growth will
meet or exceed that of the NOR flash memory market
(approximately 9%) over the next few years, due to continued
penetration of the company's MirrorBit and ORNAND
architectures, strong demand for higher-density products,
and solid unit growth in handsets, which represents the
largest component of the wireless market for NOR flash
memory;
-- expectations the company's gross margins will be somewhat
less susceptible to significant erosion in 2007, given
strong anticipated unit growth, high utilization rates
exiting 2006, lower cost structure from upgrading its
back-end test equipment, and more flexible capacity due to
its foundry relationships, including its foundry
relationship with Fujitsu upon closing the sale of its JV1
and JV2 facilities during the second quarter of fiscal year
2007;
-- established relationships with a diverse customer base,
including leading wireless handset makers and consumer and
automotive electronics original equipment manufacturers; and
-- leading share positions in the NOR flash memory market,
which Fitch believes is more defensible due to the higher
barriers to entry resulting from significant investment
requirements.
The current recovery ratings and notching reflect Fitch's recovery
expectations for its creditors under a distressed scenario, which
Fitch believes will be maximized under a reorganization rather
than liquidation scenario.
The recovery ratings incorporate:
-- Spansion's higher debt levels and greater proportion of
secured debt within the capital structure;
-- Fitch's reduction of the assumed reorganization multiple to
4x from 5x, reflecting Spansion's current market
capitalization;
-- the company's 80% operating EBITDA growth from 2005 to 2006;
and
-- Fitch's less severe discount to operating EBITDA to 55% from
80%, supported by tightened financial covenants and
expectations for a less irrational but still pressured
pricing and operating environment over the next few years.
Fitch believes Spansion's $675 million of secured facilities,
including the $500 million senior secured term loan and assumption
of a fully drawn $175 million revolving credit facility, would
recover 100% in a reorganization scenario, resulting in a rating
of 'RR1'. The waterfall analysis provides 11%-30% recovery for
the approximately $225 million of rated senior unsecured debt,
resulting in a recovery rating of 'RR5', and 0%-10% recovery for
the approximately $207 million of senior subordinated notes,
resulting in a recovery rating of 'RR6'.
As of Dec. 31, 2006, Fitch believes Spansion's liquidity was
sufficient to meet near-term financial obligations and supported
by:
-- approximately $886 million of cash and cash equivalents and
-- approximately $236 million of available borrowings under the
company's various existing credit facilities, including
Spansion's undrawn $175 million senior secured U.S.
revolving credit facility expiring 2010.
Fitch's expectations for cash burn of approximately $500 million
in 2007 should be partially offset by approximately $150 million
of gross proceeds from Spansion's sale of its JV1 and JV2
manufacturing facilities to Fujitsu in the second fiscal quarter
of 2007. Nonetheless, Fitch expects the company may seek
additional external funding, given expectations for significant
capital expenditures in 2008.
Total debt at Dec. 31, 2006 was approximately $1.1 billion and
consisted of:
-- $500 million senior secured term loan facility expiring
2012;
-- $225 million of 11.25% senior notes due 2016;
-- $207 million of 2.25% convertible senior subordinated
debentures due 2016;
-- obligations under capital leases; and
-- borrowings under various foreign credit facilities.
Fitch's Recovery Ratings are a relative indicator of creditor
recovery prospects on a given obligation within an issuers'
capital structure in the event of a default.
SPGS SPC: Fitch Rates $1.4 Million Class R Notes at B-
------------------------------------------------------
Fitch assigns ratings to SPGS SPC's variable floating-rate notes
maturing on December 2049, acting for the account of MSC 2007-SRR3
Segregated Portfolio:
-- $28,110,000 class A 'AAA'
-- $14,055,000 class B 'AA+';
-- $14,055,000 class C 'AA';
-- $14,055,000 class D 'AA-';
-- $14,055,000 class E 'A+';
-- $14,055,000 class F 'A';
-- $10,541,250 class G 'A-';
-- $10,541,250 class H 'BBB+';
-- $10,541,250 class J 'BBB';
-- $10,541,250 class K 'BBB-';
-- $15,854,040 class L 'BBB-';
-- $9,491,810 class M 'BB+';
-- $4,000,990 class N 'BB';
-- $3,007,770 class O 'BB-';
-- $3,495,010 class P 'B+';
-- $2,501,790 class Q 'B'; and
-- $1,499,200 class R 'B-'.
SPGS SPC, acting for the account of MSC 2007-SRR3 Segregated
Portfolio incorporated under the laws of the Cayman Islands, is a
static synthetic collateralized debt obligation transaction that
references a $937 million portfolio. The portfolio consists of 62
separately rated commercial mortgage-backed security bonds. The
transaction is designed to provide credit protection for realized
losses on a reference portfolio through a credit default swap
between MSC and the swap counterparty, Morgan Stanley Capital
Services Inc. The legal maturity date of the CDS is 2049. The
securities are rated to the timely payment of interest and the
ultimate repayment of principal on the maturity date.
Proceeds from the issuance of the securities are invested in a
pool of eligible investments, which are protected through the
total return swap agreement between MSC and MSCS, the TRS
counterparty. The payment obligations of the TRS counterparty are
guaranteed by Morgan Stanley, the swap counterparty guarantor.
Under the TRS agreement, MSCS will make periodic interest payments
to MSC and pay any depreciation in market value with respect to
eligible collateral upon its disposition to MSC. MSC will then
pay MSCS all the interest and similar amounts payable with respect
to the eligible collateral. In addition, MSC will pay to MSCS any
appreciation in market value of the eligible collateral upon its
disposition.
The ratings are based on the credit quality of the reference
portfolio, the credit enhancement provided by subordination for
each tranche, the strength of the counterparties, and the
transaction's sound financial and legal structures.
STRATOS GLOBAL: CIP Canada Deal Cues Moody's to Review Ratings
--------------------------------------------------------------
Moody's Investors Service placed the B1 corporate family and
probability of default ratings of Stratos Global Corporation under
review for possible downgrade, placed the company's Ba2 senior
secured rating under review direction uncertain and placed its B3
senior unsecured rating under review for possible upgrade.
At the same time, Moody's affirmed Stratos' SGL-3 Speculative
Grade Liquidity rating.
The rating action follows the company's disclosure that it has
agreed to be acquired by the investment company, CIP Canada
Investment Inc., which will receive approximately $250 million in
debt funding from a subsidiary of Inmarsat PLC to finance the
acquisition. Following the close of the transaction, CIP Canada
will beneficially own Stratos through an independent Canadian
trust until at least April 2009, at which time Inmarsat will have
the ability to exercise a call option to acquire Stratos from CIP
Canada. The transaction is subject to customary regulatory
rulings and requisite shareholder votes.
Moody's acknowledges that Stratos' credit profile may ultimately
benefit should it eventually be acquired by Inmarsat. However,
the ratings review for possible downgrade reflects Moody's belief
that Stratos does not have any additional debt capacity within its
existing rating coupled with Moody's concern over the significant
intermediate time period during which Stratos will be beneficially
owned by a private equity investor, which has potentially financed
the acquisition of Stratos entirely with debt.
The review will focus on:
* the potential for the transaction to be completed and the
probability of the Inmarsat call option being exercised,
* the characteristics of the debt instrument CIP Canada has
obtained from Inmarsat,
* the potential for Stratos to deflect any of its future cash
flows away from the reduction of its existing debt
obligations, and
* Stratos' operating prospects over the next couple of years
in light of the company's weak position within the B1 rating
category.
The review directions of the instrument ratings reflect the
potential for Moody's to consider the existing obligations to rank
ahead of CIP Canada's junior ranking debt within the loss given
default waterfall. This in turn may raise existing instrument
ratings even if the corporate family rating is lowered.
Moody's noted that it expects to be able to complete its review
ahead of the close of the transaction.
Ratings placed under review for possible downgrade:
* Corporate Family Rating B1
* Probability of Default Rating B1
Ratings placed under review direction uncertain:
* Senior Secured Ba2, LGD 2, 23%
Ratings placed under review for possible upgrade:
* Senior Unsecured B3, LGD 5, 77%
Ratings affirmed:
* Speculative Grade Liquidity Rating SGL-3
Headquartered in St John's, Newfoundland, Stratos Global
Corporation is a global provider of mobile and fixed satellite-
based communications services, primarily under a resale agreement
with Inmarsat.
SWEETSKINZ INC: Court Sets April 30 as General Claims Bar Date
--------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
set 5:00 p.m., Eastern Time, on April 30, 2007, as the last day
for persons owed money by SweetskinZ Holdings Inc. and SweetskinZ
Inc. to file their proofs of claim against the Debtors. The bar
date applies only to claims that arose prior to March 5, 2007.
Entities asserting a claim by reason of rejection of an executory
contract or unexpired lease can file their respective claims
either on:
a) the later of March 5, 2007; or
b) the first business day that is at least 30 calendar days
after the mailing of the notice of entry of any order
approving the rejection of the executory contract or
unexpired lease.
Governmental units have until Sept. 4, 2007, to file their proofs
of claim.
Proofs of claim must be filed with:
The Clerk of Court
United States Bankruptcy Court
District of Delaware
Attn: SweetskinZ Holdings Inc. Claims Processing
3rd Floor
824 N. Market St.
Wilmington, DE 29801
SweetskinZ Inc. -- http://www.sweetskinz.com/-- has developed
the only manufacturing methodology which imbues pneumatic tires
with any type of durable color graphic, design or logo, adding new
and original dimensions of style to the traditional black or white
walled tire. In addition, SweetskinZ is able to produce tires
with greatly enhanced reflectivity and tires that virtually glow
in the dark during dusk.
SweetskinZ Holdings and SweetskinZ Inc. filed for chapter 11
protection on March 5, 2007 (Bankr. D. Del. Case Nos. 07-10288 and
07-10289). Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at
Landis Rath & Cobb LLP, represent the Debtors. When the Debtors
sought protection from their creditors, they listed estimated
assets between $100,000 and $1 million and estimated debts between
$1 million and $100 million.
TENET HEALTHCARE: Fitch Holds Senior Unsecured Notes' Rating at B-
------------------------------------------------------------------
Fitch Ratings has affirmed these ratings on Tenet Healthcare
Corp.:
-- Issuer Default Rating 'B-';
-- Secured bank facility 'BB-/RR1'; and
-- Senior unsecured notes 'B-/RR4'.
Total rated debt at Dec. 31, 2006, was approximately $4.8 billion.
The Outlook has been revised to Stable from Negative.
The Stable Outlook reflects the increased stability in the
business as a result of the resolution of its legal liabilities
and increased liquidity in 2006. Despite these improvements,
however, Tenet continues to experience operating challenges such
as declining volumes and weak margins. Fitch believes that 2007
represents a critical year for Tenet to demonstrate sustainable
improvements in its core operations.
2006 included several milestones for the company on its road to
recovery. First, Tenet enhanced its liquidity by obtaining a
five-year, $800 million revolving credit facility. This replaced
its prior cash-backed letter of credit facility, freeing
approximately $263 million in restricted cash.
Also in 2006, Tenet entered into a global civil settlement with
the federal government which, along with the previously announced
Alvarado and shareholder suit settlements, resolved virtually all
of the company's historic legal issues. In addition, Tenet
demonstrated improved pricing metrics in 2006, averaging
approximately 4.6% growth in inpatient revenue per admission,
although the pricing gains moderated somewhat in the second half
of the year.
Although Tenet has made several significant achievements in 2006,
the company still faces operational challenges. The fourth
quarter of 2006 was the 12th straight quarter of declining
admissions, with a decline in inpatient admissions and outpatient
visits of 0.9% and 3.1%, respectively. Fitch notes that the
company has projected 0.5%-1.5% inpatient admissions growth and
2%-3% outpatient visits growth in 2007. Fitch believes these
expectations will be difficult to achieve given current
performances. However, Fitch expects volumes and revenues should
improve from 2006 and yield flat-to-low growth in 2007.
In addition to declining admissions, Tenet continues to
underperform the industry in terms of profitability and credit
metrics. Although EBITDA margins were improved in 2006 at
approximately 8.5%, they still lag the industry average by nearly
500 basis points. Margin pressure has stemmed in part from
Tenet's industry-leading levels of uncompensated care, which has
increased steadily over the past few years and now represents
roughly 20% of revenues. Tenet is also affected by reverse
operating leverage as declining revenues lead to pressure on
margins as not all expense lines are purely variable in nature.
Fitch expects margins to improve in the near future, as a result
of service-line rationalization through its Targeted Growth
Initiative and operating leverage with increased revenues in the
longer-term.
In addition to weak margins, Tenet also has among the highest
levels of leverage in the industry; leverage at Dec. 31, 2006, was
6.5x. Furthermore, the company's financial flexibility is
affected by negative free cash flow, which Fitch projects will
continue to remain negative in the near future.
Fitch notes that Tenet made a change to its reserving methodology
for self-pay accounts based on an 18-month look-back analysis of
its collection rate. Going forward, the company will be reserving
88% (versus its prior level of 92%) of self-pay accounts.
This change is in contrast to the industry trend of instituting
increasing reserves and more conservative bad debt accounting; an
assumption of 12% collections on self-pay accounts is also much
higher than that assumed by many of its peers in the industry.
However, Fitch notes that the fact that the reserve assumption is
based on actual collection rates supports the change in
methodology. In addition, the reserves are applied to revenues
after the impact of the uninsured discounts and charity care.
As the amount of discounts and charity care have increased since
the implementation of Tenet's Compact with the Uninsured program,
it is logical that the collection of the remaining receivables
would be higher, since the revenues from patients least likely to
pay are never recorded. However, the magnitude of the change in
reserve rates is somewhat unusual and Fitch will closely monitor
measures such as days sales outstanding for any indication that
the change was too aggressive.
Tenet has implemented several strategies designed to return the
company to growth. The Targeted Growth Initiative is a strategic
initiative in which Tenet is shifting its service mix to those
that are the most profitable and have the highest expected future
demand. This program was responsible for some disruption in
volumes in California, which was the first state in which it was
launched in 2005, although volumes began to rebound in late 2006.
After California, Tenet launched TGI in Florida and Texas, and
Fitch will monitor the situation to see if volume disruptions
occur in these markets in 2007.
Fitch believes that this program should ultimately lead to
increased profitability. In addition to TGI, Tenet has launched
the Physician Sales and Service Program, which is effectively an
internal sales and development program focused on increasing
volume from Tenet's 'splitter physicians,' or doctors who admit to
both Tenet and competing facilities. Although Tenet has recorded
some preliminary positive results - for example, in the fourth
quarter Tenet reported a 3.7% increase in admissions from the
4,900 physicians it contacted in the program - it has not been
able to reverse the trend of declining admissions. PSSP in
combination with an increased recognition for quality, as
evidenced by the company's growing numbers of Centers of
Excellence designation from leading managed care providers such as
Cigna and United, are designed to repair Tenet's reputation and
build volumes. 2007 will be a key test to see if these programs
can gain enough momentum to bring Tenet back to growth.
Liquidity is provided by the company's $800 million revolver and
cash on hand. At Dec. 31, 2006, Tenet had approximately
$823 million in cash and securities on the balance sheet and
$596 million in availability on the revolver, net of $190 million
in outstanding letters of credit. There were no borrowings
against the revolver. There are no meaningful maturities until
2011, when approximately $1 billion is due; however, Tenet is
obligated to make legal payments of $275 million, payable in
quarterly installments at 4.125% interest until August 2010,
related to its civil settlement with the federal government.
Although Tenet currently has no plans to divest facilities other
than those previously reported, Fitch notes that Tenet, like most
hospital operators, has a substantial portfolio of assets that may
be divested, if necessary, to generate cash.
The covenants on the new revolver are more conservative than the
covenants on the existing notes. Key covenants on the credit
facility include change of control provisions, limitation on
liens, and restricted payments. Under the change of control
provision, a change of 35% or more of the voting interest of the
company, or the borrower ceasing to control at least 60% of
economic and voting interest in guarantor subsidiaries, is
considered an event of default. Liens are prohibited, with the
exception of certain permitted liens related to permitted
acquisitions, existing liens, and other exceptions.
In addition, there is a $200 million carve-out for liens, provided
that they are secured by property other than the collateral
accounts receivable. Cash dividends and share repurchases are
restricted to $10 million. There are also several covenants that
are in effect when availability reaches a certain threshold,
including limitations on capital expenditures, a fixed charge
coverage ratio, and limitations on investments. Pricing is set at
LIBOR+175 basis points for the first six months, but can decrease
to LIBOR+150 if leverage is less than 4.75:1 at any time
thereafter. In addition, leverage is defined as the ratio of
total debt less cash and equivalents over $100 million to EBITDA.
In contrast, Tenet's outstanding senior notes have few restrictive
covenants. There is no meaningful change of control provision as
such events are allowed if the surviving entity is a domestic
corporation, assumes the obligation, and there is no event of
default. In addition, liens are permitted as defined in the
corresponding supplementary note indenture. There are also no
leverage, coverage or similar financial covenants.
TRIAD HOSPITALS: Merger Deal Cues S&P to Hold Negative CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services reported that its B+ corporate
credit rating on Plano, Texas-based hospital owner and operator
Triad Hospitals remains on CreditWatch with negative implications,
where it was originally placed on Feb. 5, 2007.
This follows the report that the company has entered into a
definitive agreement to be acquired by Community Health Systems
Inc. for $54 per share, or about $6.8 billion. The total value
of this deal exceeds the $6.4 billion offer made by CCMP Capital
Advisors and GS Capital Partners in February 2007.
"If Triad is acquired by Community, Triad's existing bank debt
will be repaid and terminated, and all its senior unsecured and
subordinated debt will be repaid," explained Standard & Poor's
credit analyst David Peknay.
"Triad's change of control provision is triggered when there is a
change of ownership in 30% or more of the voting stock."
All ratings on Triad will be withdrawn at that time. Triad owns
and operates 53 hospitals in 17 states.
TRIBUNE CO: Sam Zell Bargains Revised Proposal, WSJ Says
--------------------------------------------------------
Real-estate magnate Sam Zell is negotiating a revised offer for
Tribune Co. in an effort to boost his prospects with the company,
Sarah Ellison of The Wall Street Journal reports, citing people
familiar with the matter.
According to the report, details of Mr. Zell's revised offer are
not clear, although it was already known that his bid involved use
of an employee stock-ownership plan taking on debt to buy some of
the newspaper and TV company.
In a statement cited by Reuters, published in the Troubled Company
Reporter on Mar. 12, 2007, Tribune Co. said it has no intention of
selling its remaining newspapers, after having completed a plan to
dispose of $500 million worth of non-core assets.
Tribune Publishing, a division of Tribune Co., said in a March 6,
2007 press statement that it will sell its Southern Connecticut
Newspapers, The Advocate (Stamford) and Greenwich Time, to Gannett
Co. Inc., for $73 million. The sale does not include real estate
in Stamford and Greenwich, which Tribune will sell separately
after a transitional lease to Gannett.
2006 Results
For the year ended Dec. 31, 2006, Tribune reported $594 million of
net income on $5.517 billion of total operating revenues compared
with $534.7 million of net income on $5.511 billion of total
operating revenues for the year ended Dec. 31, 2005.
Consolidated operating revenues were essentially flat at
$5.5 billion in 2006 as a decrease in publishing revenues was
offset by an increase in broadcasting and entertainment revenues.
Consolidated operating profit decreased 4%, or $42 million, to
$1.085 billion in 2006, from $1.127 billion in 2005.
Publishing operating profit decreased 1%, or $11 million, in 2006,
while Broadcasting and entertainment operating profit decreased
6%, or $25 million, primarily due to higher programming and
compensation expenses, partially offset by higher revenues.
Corporate expenses increased 13%, or $7 million, in 2006 primarily
due to $11 million of stock-based compensation expense, partially
offset by a $7 million gain related to the sale of the corporate
airplane in 2006.
At Dec. 31, 2006, the company's balance sheet showed $13.4 billion
in total assets, $9.081 billion in total liabilities, and
$4.319 billion in total stockholders' equity.
The company's balance sheet at Dec. 31, 2006, also showed strained
liquidity with $1.377 billion in total current assets available to
pay $2.546 billion in total current liabilities.
About Tribune Co.
Chicago, Ill.-based Tribune Company (NYSE: TRB) --
http://www.tribune.com/-- is a media company, operating
businesses in publishing and broadcasting. In publishing, Tribune
operates 11 daily newspapers including the Los Angeles Times,
Chicago Tribune and Newsday, plus a wide range of targeted
publications. The company's broadcasting group operates 26
television stations, Superstation WGN on national cable, Chicago's
WGN-AM and the Chicago Cubs baseball team.
* * *
On Oct. 5, 2006, Standard & Poor's Ratings Services lowered its
ratings on the class A and B units from the $75.795 million
Structured Asset Trust Unit Repackaging Tribune Co. Debenture
Backed Series 2006-1 to 'BB+' from 'BBB-'. Concurrently, the
ratings were placed on CreditWatch with negative implications.
In September 2006, Fitch Ratings downgraded its ratings for
Tribune Co.'s $3.1 billion of outstanding senior unsecured and
subordinated debt as of June 25, 2006, and subsequently placed
them on Rating Watch Negative. Affected ratings include the
company's Issuer Default Rating lowered to 'BB+' from 'BBB-', and
Senior unsecured revolving credit facility lowered to 'BB+'from
'BBB-'.
UNIGENE LABORATORIES: Grant Thornton Raises Going Concern Doubt
---------------------------------------------------------------
Grant Thornton LLP, in Edison, New Jersey, expressed substantial
doubt about Unigene Laboratories Inc.'s ability to continue as a
going after auditing the company's financial statements for the
years ended Dec. 31, 2006, and 2005. The auditing firm pointed to
the company's recurring losses from operations and working capital
deficiency. The auditing firm also stated that the company has
stockholders demand loans in default at Dec. 31, 2006.
Unigene Laboratories Inc. reported a net loss of $11.8 million on
revenues of $6.1 million for the year ended Dec. 31, 2006,
compared with a net loss of $495,593 on revenues of $14.3 million
for the year ended Dec. 31, 2005.
The decrease in revenues was due to reduced Fortical revenue from
2005, including a $4,000,000 milestone payment received in 2005.
Revenue for the year ended Dec. 31, 2006, primarily consisted of
Fortical revenue, including $2,822,000 in sales and $2,451,000 in
royalties.
Net loss for 2006 increased 2,276% to $11.8 million from $495,593
in 2005. The company expects net losses to continue unless the
company achieves, milestones in its GSK and Novartis agreements,
sign new revenue generating research, licensing or distribution
agreements or generate sufficient sales and royalties from
Fortical. Net loss for 2006 increased primarily due to a decrease
in revenue of $8.2 million, principally from the Fortical launch
in 2005. In addition, operating expenses increased $3.4 million.
At Dec. 31, 2006, the company's balance sheet showed $14 million
in total assets and $28.2 million in total liabilities, resulting
in a $14.2 million total stockholders' deficit.
The company's balance sheet at Dec. 31, 2006, also showed strained
liquidity with $10.2 million in total current assets available to
pay $19.7 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?1bca
Stockholder Demand Loans
To satisfy short-term liquidity needs, Jay Levy, the company's
chairman of the Board and an officer, Warren Levy and Ronald Levy,
each a director and executive officer of Unigene, and another Levy
family member, from time to time made loans to the company. The
company has not made principal and interest payments on certain of
these loans when due. However, the Levys waived all default
provisions including additional interest penalties due under these
loans through Dec. 31, 2000.
As of Dec. 31, 2006, total accrued interest on all Levy loans was
approximately $8,081,000 and the outstanding loans by these
individuals to the company, classified as short-term debt, totaled
$8,105,000. These loans are secured by security interests in
company equipment, real property and/or certain of the company's
patents.
About Unigene Laboratories Inc.
Fairfield, New Jersey-based Unigene Laboratories Inc. (OTCBB:
UGNE) -- http://www.unigene.com/or http://www.fortical.com/--
is a biopharmaceutical company focusing on the oral and nasal
delivery of large-market peptide drugs. Due to the size of the
worldwide osteoporosis market, Unigene is targeting its initial
efforts on developing calcitonin and PTH-based therapies.
Fortical(R), Unigene's nasal calcitonin product for the treatment
of postmenopausal osteoporosis, received FDA approval and was
launched in August 2005. Unigene has licensed the U.S. rights for
Fortical to Upsher-Smith Laboratories, worldwide rights for its
oral PTH technology to GlaxoSmithKline and worldwide rights for
its calcitonin manufacturing technology to Novartis.
VALLEY CITY STEEL: Gets Verdict Against Shiloh Industries
---------------------------------------------------------
Shiloh Industries, Inc. disclosed that on March 16, 2007, a jury
verdict was entered against the company in the United States
District Court in Akron, Ohio following a jury trial in a claim by
the bankruptcy estate of Valley City Steel, LLC relating to the
company's sale of certain assets in 2001.
Valley City Steel, LLC claimed that the Shiloh's sale of certain
assets to Valley City Steel, LLC, in connection with the creation
of the joint venture in which Shiloh was a minority shareholder,
amounted to a constructive fraudulent conveyance under Ohio law.
The plaintiff also alleged that certain amounts were due and owing
on account to Valley City Steel, LLC. The jury verdict against
Shiloh was approximately $4.9 million, $4.6 million of which
related to the constructive fraudulent conveyance claim.
Shiloh believes that the verdict relating to the constructive
fraudulent conveyance claim is contrary to the facts and the law
and the company intends to file post-trial motions including a
motion for a new trial and other relief.
Shiloh says it will vigorously appeal any final constructive
fraudulent conveyance judgment if the court denies the post-trial
motions. Shiloh believes that there are valid grounds to reverse,
or reduce the damages applicable to, the portion of any final
judgment relating to the constructive fraudulent conveyance claim
on appeal. There can be no assurance that the Shiloh's appeal
will be successful.
About Valley City
Headquartered in Valley City, Ohio, Valley City Steel, LLC, is a
subsidiary of Viking Steel LLC. The Company filed for chapter 11
protection on November 27, 2002 (Bankr. N.D. Ohio Case No.
02-55516). Howard E. Mentzer, Esq., at Mentzer, Vuillemin and
Mygrant Ltd., represents the Debtor. When it filed for
bankruptcy, the Company reported assets and debts between
$10 million and $50 million.
About Shiloh
Headquartered in Valley City, Ohio, Shiloh Industries, Inc.
(NASDAQ:SHLO) -- http://www.shiloh.com/-- manufactures first
operation blanks, engineered welded blanks, complex stampings and
modular assemblies for the automotive and heavy truck industries.
The Company has 15 wholly owned subsidiaries at locations in Ohio,
Georgia, Michigan, Tennessee and Mexico, and employs approximately
1,890.
* * *
As reported in the Troubled Company Reporter on Feb. 26, 2007,
Moody's Investors Service affirmed the ratings for Shiloh
Industries, Inc's Corporate Family at Ba3; and Probability of
Default at B1. Moody's also affirmed the ratings of the company's
guaranteed first lien senior secured credit facility, Ba2, LGD2,
24%. The outlook remains stable.
VICTORIA INDUSTRIES: Files Restated 2005 Annual Report
------------------------------------------------------
Victoria Industries filed with the U.S. Securities and Exchange
Commission an amended report on Form 10-KSBA for the year ended
Dec. 31, 2005.
The company's restated report showed net income of $162,079 on
revenues of $5,353,013 for the year ended Dec. 31, 2005. This
compares to a $92,321 net loss on revenues of $2,164,534 for 2004.
At Dec. 31, 2005, the company's balance sheet showed $2,716,189 in
total assets and $1,702,021 in total liabilities, resulting to
$1,014,168 in total stockholders' equity.
Going Concern Doubt
John A. Braden & Company, PC, in Houston Texas, expressed
substantial doubt on the companies ability to continue as a going
concern. The auditing firm pointed to the company's limited
revenue history, dependence on narrow customer base and limited
funding.
The auditing firm also said that the company has suffered losses
from operations, has limited operating history and intentions for
future capital investment. The auditing firm further said that
there is no assurance that the lumber business that the company is
involved in will generate sufficient funds that will be available
for operations.
A full-text copy of the company's amended annual report for 2005
is available for free at http://ResearchArchives.com/t/s?1b91
About Victoria Industries
New York-based Victoria Industries, Inc. (OTC BB: VIIN), --
http://www.victoriaind.com/-- that markets and distributes forest
products, primary plywood, sawlog, and lumber. Its subsidiaries
are Victoria Resources, Inc., Victoria Lumber, LLC, Victoria
Siberian Wood, and Coptent Trading. The Group's principal
customers are based in Eastern Siberia and Far East regions of
Russia, and North provinces of China - Inner Mongolia and
Heyluntszyan.
VIEW SYSTEMS: Amended 2005 and 2004 Reports Show Higher Net Losses
------------------------------------------------------------------
View Systems, Inc. filed with the U.S. Securities and Exchange
Commission it restated its annual reports for the years ended
Dec. 31, 2005 and 2004.
The company says that it restated its 2005 annual report due to an
error in reporting a payment of a loan from an officer, resulting
in a loan receivable to the officer. The 2004 financial
statements were changed to reflect amortization of the licenses
over a defined life.
Amended 2005 Results
The company's amended 2005 annual report showed:
-- higher net loss of $2,473,934, from the previously
reported net loss of $2,368,976;
-- restated total operating expense increased to $3,005,094,
from $2,900,136;
-- higher retained deficit of $18,375,345, as compared with
the previously reported retained deficit of $18,060,472;
-- lower total stockholders' equity of $1,080,952, from
$1,395,825, as previously reported;
-- lower total assets of $1,793,610, from the previously
reported $2,108,484.
A full-text copy of the company's amended 2005 annual report is
available for free at http://ResearchArchives.com/t/s?1bab
Its previously filed 2005 annual report is available for free at
http://ResearchArchives.com/t/s?1bad
Amended 2004 Results
The company's amended 2004 annual report reflected:
-- higher net loss of $1,291,436, from the previously
reported net loss of $1,186,478;
-- higher total operating expense of $1,474,432, from the
previously reported total operating expense of $1,220,546;
-- lower total current liabilities of $580,823, from the
previously reported $647,324;
-- retained deficit increased to $15,901,411, from
$15,691,496;
-- total stockholders' equity decreased to $1,294,719,
from $1,504,634;
-- restated total assets were $1,875,542, down from the
previously reported total assets of $2,151,958.
The company's annual report for 2004 also reflected amendments to
its income statements for the year ended Dec. 31, 2003. It
reported a net loss of $2,651,292 for 2003, as restated, as
compared with a previously reported net loss of $2,546,334.
A full-text copy of the company's amended annual report for 2004
is available for free at http://ResearchArchives.com/t/s?1ba7
Its previously filed 2004 annual report is available for free at
http://ResearchArchives.com/t/s?1bac
Going Concern Doubt
Chisholm, Bierwolf & Nilson, LLC, in Bountiful, Utah, expressed
substantial doubt on the company's ability to continue as a going
concern citing incurred ongoing operating losses and default on
its debt obligations.
Default
The company disclosed that as of Dec. 31, 2004, it was in default
on a $110,000 note payable due in 1999. The company says that it
renegotiated to repay the loan as cash flows permit and the debt
remains outstanding. The company however doubt on the intention,
will or ability of the note holder to attempt collection of this
debt. The company says that at this time, the entity is no longer
in existence and it has been unable to locate the principals of
that company.
About View Systems
View Systems, Inc. -- http://www.viewsystems.com/-- develops and
markets computer software for security surveillance applications.
Its product line also includes a concealed weapons detection
systems and a hazardous material first response wireless video
transmitting system. The company acquired exclusive licenses to
manufacture, use, sub-license and distribute technology and
processes for the concealed weapons detection technology and the
first response wireless video transmitting system from Bechtel
BWXT Idaho, LLC.
VIEWPOINT CORP: PricewaterhouseCoopers Raises Going Concern Doubt
-----------------------------------------------------------------
PricewaterhouseCoopers LLP, in New York, expressed substantial
doubt about Viewpoint Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years ended Dec. 31, 2006, 2005, and 2004. The
auditing firm pointed to the company's negative cash flow from
operations, net losses since inception, and limited capital to
fund future operations.
Viewpoint Inc. reported a net loss of $19.7 million on total
revenues of $17.2 million for the year ended Dec. 31, 2006,
compared with a net loss of $10.6 million on $25.3 million of
total revenues for the year ended Dec. 31, 2005.
Advertising systems revenues were $7.3 million in 2006 compared to
$5.4 million in 2005. The increase in revenues was due to the
increased investment in the sales and marketing and research and
development of the advertising system products, as well as the
industry trend of transferring more advertising spend from
traditional media to the internet.
Search revenues were $6.3 million in 2006 compared to $9.4 million
for 2005. Search revenues are generated when users of the
Viewpoint Toolbar are provided search results from advertisers
that they click to view. These advertisers then pay a fee to
Yahoo, who remits a percentage of the fee to Viewpoint. The
company experienced a decrease in installations as well as a
decrease in the cost per click of the installed toolbars in 2006.
Service revenues of $3.5 million decreased $1.8 million or 34%
compared to $5.3 million in 2005. The company experienced a
decline in revenue from the automotive sector and slower growth in
revenue from the development of creative products and activities.
The decrease in service revenues in 2006 triggered goodwill
impairment in this segment.
The company did not recognize related party service revenues in
2006 compared to $1.1 million for 2005. The decrease is the
result of the change in related party status of America Online
Inc. (AOL) who had a representative on the company's Board of
Directors until Dec. 31, 2003. Agreements for services executed
prior to that date have been accounted for as related party
revenue.
License revenues were minimal in 2006 resulting from the company
discontinuing the practice of charging customers a license fee for
using the Viewpoint Media Player. The company discontinued the
practice of charging customers a license fee in June 2005.
Currently, the company only charges for special purpose licenses
that require customization.
The company did not recognize related party license revenue in
2006 as the related party license revenues from 2005 and 2004 were
attributable to a 27 month agreement with AOL that was executed in
October 2003 and expired in December 2005.
Gross profit for the year ended Dec. 31, 2006 was $10.5 million,
compared to gross profit of $17.7 million for the twelve months
ended Dec. 31, 2005. The decrease in gross profit in 2006
compared to 2005 was due to the expiration of a 2003 license
agreement with America Online Inc. (AOL) in 2005. In addition the
company experienced a $3.1 million decrease in search revenue, a
98% margin business. This was partially offset by strong growth
from the ad systems product portfolio.
Operating loss for the year ended Dec. 31, 2006, was $19.6 million
compared to $10.8 for the years ended Dec. 31, 2005. The
increased operating loss in 2006 was attributable primarily to the
$7.2 million decrease in gross margin and a goodwill impairment
increase of $2.9 million associated with the services unit
resulting from further decreased performance of that unit in the
third quarter of 2006.
At Dec. 31, 2006, the company's balance sheet showed $27.7 million
in total assets, $8 million in total liabilities, and
$19.7 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?1bda
Viewpoint's cash, cash equivalents, and marketable securities as
of Dec. 31, 2006, were $4.3 million. This can be compared to
cash, cash equivalents, and marketable securities, of $9.1 million
as of Dec. 31, 2005.
About Viewpoint Corp.
Viewpoint Corp. (NasdaqGM: VWPT) -- http://www.viewpoint.com/--
is a leading Internet marketing technology company, offering
Internet marketing and online advertising solutions through the
powerful combination of its proprietary visualization technology
and a full range of campaign management services including
TheStudio, Viewpoint's creative services group, Unicast,
Viewpoint's online advertising group, and KeySearch, Viewpoint's
search engine marketing consulting practice.
WALL STREET UNDERGROUND: Court Sets April 11 as Claims Bar Date
---------------------------------------------------------------
The U.S. District Court for the District of Kansas set 5:00 p.m.,
Eastern Time, on April 11, 2007, as the last day for entities and
persons owed money by Wall Street Underground Inc. to file their
proofs of claim against the Debtor.
Proofs of claim must be mailed or delivered by hand or courier on
or before the April 11 Bar Date to:
Stinson Morrison Hecker LLP
Attn: Stephen Froelich
1201 Walnut Street, Suite 2900
Kansas City, MO 64106
On April 22, 2003, the Commodity Futures Trading Commission filed
an action against Wall Street Underground Inc. alleging that from
1999 until April 22, 2003, the company fraudulently promoted, and
sold to the public, several systems to be used for trading
commodity futures and commodity options; fraudulently overstated
the profit of the trading systems; and failed to adequately warn
of the risks inherent to commodity trading.
On March 18, 2004, District Judge Carlos Murguia appointed Robb
Evans and Associates LLC as receiver for the company.
In its report of activities, the Receiver determined that WSU
maintained an account at Euro Bank Corporation in the Cayman
Islands and the Receiver sought to safeguard those assets during
the liquidation of Euro Bank.
Euro Bank was closed on May 11, 1999, by order of the Governor-in-
Council upon the recommendation of the Cayman Monetary Authority.
On June 16, 1999, Euro Bank was placed into voluntary liquidation.
Mr. Ian Wright and Mr. Michael Pilling of Deloitte and Touche were
appointed as Liquidators.
The Receiver collected $1,200,707 from the Liquidators of Euro
Bank.
WAYNE READ: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Wayne H. Read
8304 Howe Road
Wonder Lake, IL 60097
Bankruptcy Case No.: 07-70601
Chapter 11 Petition Date: March 19, 2007
Court: Northern District of Illinois (Rockford)
Judge: Manuel Barbosa
Debtor's Counsel: James E. Stevens, Esq.
Barrick, Switzer, Long, Balsley
& Van Evera, L.L.P.
6833 Stalter Drive
Rockford, IL 61108
Tel: (815) 962-6611
Fax: (815) 962-1758
Estimated Assets: $1 Million to $100 Million
Estimated Debts: $1 Million to $100 Million
Debtor's 10 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Junior Young $380,000
c/o Herrick & Russell, P.C.
415 E. Golf Road #111
Arlington Heights, IL 60005
C.V.B. 360 $217,000
1900 Carrolwood #9
La Place, LA 70068
I.R.S. $50,000
Centralized Insolvency Operations
P.O. Box 21126
Philadelphia, PA 19114
M.B.N.A./Bank of America $25,000
State of New Jersey $7,811
Spiegel/W.F.N.N.B. $4,594
Citicards $4,011
Don Lubansky $3,073
McGanns Furniture $3,000
Zukowski Rodgers Flood, et al. $1,865
WERNER LADDER: Black Diamond Named as Stalking Horse Bidder
-----------------------------------------------------------
Werner Holding Co. (DE) Inc., aka Werner Ladder Company, and its
debtor-affiliates disclosed Wednesday that the U.S. Bankruptcy
Court for the District of Delaware has approved the Debtors motion
to select Black Diamond Capital Management and Brencourt Advisors
LLC as the lead or "stalking horse" bidder to purchase
substantially all of Werner's assets, allowing the Debtors
operations to emerge from Chapter 11 in May of this year.
Black Diamond Capital Management, L.L.C. is an alternative asset
management firm with offices in Lake Forest, IL and Greenwich, CT,
and Brencourt Advisors, LLC is a registered investment advisor to
various alternative investment funds with offices in both New
York, NY and London, U.K.
Under the terms of the accepted bid, Werner will be purchased for
approximately $265 million including the forgiveness of debt and
the assumption of liabilities. This arrangement provides Werner
with a certain exit from Chapter 11 at a significant value. The
arrangement with Black Diamond and Brencourt does not include
contingencies for financing or due diligence. In addition, it
provides certainty regarding the continued operation of Werner's
ladder manufacturing operations in the US, Mexico and Asia. The
company will continue to operate with the financing provided for
under the previously announced Debtor-In-Possession agreement, as
the first amendment to the second forbearance agreement for the
DIP financing agreement was also approved by the Court.
The Court also approved a timeline for the completion of the sale
process.
Third party bidders will be able to submit offers for Werner that
will be considered by the Company to the extent that they exceed
Black Diamond and Brencourt's offer by at least $1 million.
If additional qualified bids are submitted by April 20, 2007 they
will be analyzed and considered with a hearing to approve the
winning bidder scheduled for April 25, 2007.
James J. Loughlin, Jr., Werner's Interim Chief Executive Officer,
said, "We are pleased the Court has approved the designation of a
stalking horse bidder and paved the way for the sale to be
completed in the very near future. The sale will enable Werner to
de-leverage its balance sheet and position the business for long-
term success. In conjunction with the recently completed
operational restructuring, Werner is well positioned for improved
profitability. We appreciate the continued support we have
received from our customers, suppliers, and employees. We remain
committed to improving our performance in all areas and our
emergence from bankruptcy will help us accomplish this objective."
About Brencourt Advisors
Brencourt Advisors, LLC was formed in 2001 as a registered
investment advisor to various alternative investment funds.
Brencourt currently manages approximately $2 billion in assets and
has offices in both New York, NY and London, U.K.
About Black Diamond
Founded in 1995, Black Diamond Capital Management, L.L.C. is an
alternative asset management firm with approximately $10 billion
under management in a combination of distressed-debt/private
equity funds, hedge funds and structured vehicles. Black Diamond
has offices in Greenwich, CT, Lake Forest, IL and London, U.K.
About Werner Holding Co.
Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc.
aka Werner Ladder Co. -- http://www.wernerladder.com/--
manufactures and distributes ladders, climbing equipment and
ladder accessories. The company and three of its affiliates filed
for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case
No. 06-10578).
The Debtors are represented by the firm of Willkie Farr &
Gallagher LLP as lead counsel and the firm of Young, Conaway,
Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the
Debtors' financial advisor. The Official Committee of Unsecured
Creditors is represented by the firm of Winston & Strawn LLP as
lead counsel and the firm of Greenberg Traurig LLP as co-counsel.
Jefferies & Company serves as the Creditor Committee's financial
advisor. At March 31, 2006, the Debtors reported total assets of
$201,042,000 and total debts of $473,447,000.
WRAP ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Wrap Enterprises, Inc.
dba Camille's Sidewalk Cafe
9785 W. Higgins
Des Plaines, IL 60018
Bankruptcy Case No.: 07-04825
Type of Business: The Debtor owns and operates a restaurant.
Chapter 11 Petition Date: March 19, 2007
Court: Northern District of Illinois (Chicago)
Judge: Carol A. Doyle
Debtor's Counsel: James L. Hardemon, Esq.
Legal Remedies Chartered
8527 South Stony Island
Chicago, IL 60617
Tel: (312) 419-1001
Fax: (312) 419-1711
Total Assets: $1,206,804
Total Debts: $517,175
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Strategic Equipment-Palm consumer debt $55,579
1031 Madeira Avenue
Minneapolis, MN 55405
Lincoln Property Company rent $28,000
9801 West Higgins Road
Suite 120
Des Plaines, IL 60018
Creative Ideas consumer debt $25,000
Two Prudential Plaza
Suite 5300
Chicago, IL 60601
McMahan & Sigunick consumer debt $11,294
Illinois Department of taxes $8,300
Revenue
U.S. Foodservice consumer debt $5,000
Camillie's Clothes consumer debt $3,865
Village of Rosement village taxes $3,000
Journal & Topics consumer debt $2,447
Journal Topics consumer debt $2,000
ComEd utility bill $1,602
Edward Don & Company consumer debt $1,583
Ronald A. Weiss consumer debt $1,505
Annabelle M. Lubr wages $981
Sara Lee Coffe & Tea consumer debt $637
AT&T consumer debt $616
Maura Venegas wages $587
Curtis Restaurant Supply consumer debt $482
Steven Unren consumer debt $446
Anna M. Lawson wages $421
YDD HOLDINGS: Moody's Junks Rating on Proposed $60. Mil. Sr. Loan
-----------------------------------------------------------------
Moody's Investors Service downgraded Penhall International,
Corp.'s corporate family rating to B3 from B2 and its probability
of default to B3 from B2.
The rating action reflects the company's recent report that YDD
Holdings, Inc., Penhall's parent company, is seeking $60 million
of debt financing for the purpose of paying a dividend to its
equity investors, Code Hennessey, & Simmons and management. The
rating of Penhall's second priority, senior secured notes remained
at B3, but its loss given default assessment is changed to LGD3,
48% from LGD4, 64%.
Moody's assigned a Caa2, LGD6, 90% rating to YDD's proposed
$60 million senior unsecured loan. As a result of YDD's debt
being rated, the B3 corporate family rating for Penhall will now
be assigned to YDD, the senior-most entity with rated debt in the
capital structure.
The rating outlook for both YDD and Penhall is stable.
Moody's said that the downgrade of the corporate family rating to
B3 recognizes an aggressive financial strategy that is reflected
in the willingness of Penhall's owners to seek a $60 million
distribution less than a year after completing the buyout of
Penhall. The debt issued by YDD to fund the dividend will not be
guaranteed by Penhall, but since Penhall is the principal
operating subsidiary of YDD, debt service will be highly reliant
on Penhall's performance. As a result of the dividend to CHS, the
overall group's adjusted debt/EBITDA on a consolidated basis could
exceed 5.0x for fiscal year ending June 30, 2007. The corporate
family rating is further constrained by the potential for Penhall
to pursue more acquisitions which could require incremental
capital investments and may further increase operating and
financial risks.
Despite the increased leverage resulting from the special
dividend, Moody's believes that Penhall maintains a leading
position in concrete cutting and associated services for
infrastructure construction. Moody's believes that the company
should benefit from the higher levels of infrastructure upgrades
throughout the United States, which are the key to its financial
performance over the near to medium term.
The stable outlook reflects Moody's belief that Penhall's
operating performance should enable it to service the greater debt
burden stemming from the dividend, as spending for infrastructure
and construction projects remain strong. The key risk that
Penhall will continue to face is the cyclicality in the
construction end markets. Nevertheless, the company should be
able to weather future cyclical downturns much better than in the
past due to its expanding continental footprint.
The B3 rating assigned to the $175 million second priority, senior
secured notes reflects an LGD3, 48% loss given default assessment.
These notes are junior to the obligations relative under the
$70 million first lien senior secured, asset based revolving
credit facility. The second priority notes also benefit from the
new issuance of $60 million of junior debt.
The Caa2 rating assigned to YDD's $60 million senior unsecured
loan reflects an LGD6, 60% loss given default assessment. These
notes are the most junior debt and will be behind Penhall's debt
in a recovery scenario. Moody's notes that CHS has the discretion
to either service YDD's notes with cash interest payments or PIK
interest payments. At this time, Penhall's revolving credit
facility prohibits any upstream dividend payments. Penhall does
not provide a guarantee for YDD's loan, which will mature five
years from closing.
Penhall International Corp., headquartered in Anaheim, California,
is the largest provider of concrete cutting, breaking and highway
grinding services in North America.
YUKOS OIL: Three More Auctions Set in April to Sell 35 Assets
-------------------------------------------------------------
Eduard Rebgun, in his capacity as bankruptcy receiver for OAO
Yukos Oil Co., disclosed three more auctions to sell 35 Yukos
assets worth about RUR3.6 billion, RosBusinessConsulting reports.
The bidding for the assets started March 19, 2007. Bidding
details show:
Bidding Auction Starting Bid Increment
Assets Deadline Date Price (RUR) (RUR)
------ -------- ------- -------------- --------------
Lot 4 Apr. 13 Apr. 17 2.64 billion 26.39 million
Lot 5 Apr. 16 Apr. 18 992.31 million 9.92 million
Lot 6 Apr. 18 Apr. 20 3.12 million 31,000
An unidentified source tells Interfax that assets under Lot 4,
which will feature Yukos's stakes in various energy companies,
include:
-- ZAO Energy Service Co. (100%),
-- ESKOM- EnergoTrade (100%),
-- Belgorodenergo (25.73%),
-- Tambovenergo (25.15%),
-- Tambov Energy Sales Company (25.15%),
-- Tambov Trunk Grid Company (25.15%),
-- Belgorod Trunk Grid Company (25%),
-- Belgorod Sales Company (25%),
-- Corporate Service Systems (25%), and
-- Territorial Generation Company No. 4 (3.18%).
RBC says the fifth lot will be comprised of nine assets while the
sixth would include eight non-core assets of the bankrupt oil
firm.
As widely reported, Yukos is scheduled to sell its 9.44% stake in
state-owned Rosneft Oil, which includes promissory notes issued by
Yuganskneftegaz, Yukos' former main production unit, for RUR195.5
billion ($7.47 billion) on March 27.
Meanwhile, its 20% stake in Gazprom Neft, along with Yukos'
ArcticGaz unit and 20 other assets in one lot, will carry
a RUR145-billion starting price during the April 4, 2007, auction.
Mr. Rebgun has estimated Yukos' assets between $25.6 billion
and $26.8 billion, minus a possible liquidation discount of
not more than 30%. As of Jan. 31, 2007, claims against Yukos
filed by 68 creditors reached RUR709 billion ($26.8 billion).
Rosneft Oil and Gazprom are seen as the most likely bidders for
the bulk of the nearly 200 Yukos assets, which Mr. Rebgun aims to
sell by August 2007.
Aside from being a potential buyer, Rosneft also holds a
RUR264.6 billion ($10 billion) claim against Yukos, which
entitled Rosneft a seat in the firm's creditors' committee.
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. A few days
later, the Russian Government sold its main production unit
Yugansk to a little-known firm Baikalfinansgroup for
$9.35 billion, as payment for $27.5 billion in tax arrears for
2000-2003. Yugansk eventually was bought by state-owned Rosneft,
which is now claiming more than $12 billion from Yukos.
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.
YUKOS OIL: Rosneft Borrows $22 Billion to Fund Asset Purchase
-------------------------------------------------------------
OAO Rosneft Oil Co. will borrow around $22 billion to finance its
possible acquisition of some of OAO Yukos Oil Co.'s assets,
various reports say.
Rosneft will directly borrow $13 billion from a group of bank
comprised of ABN AMRO, Barclays, BNP Paribas, Calyon, Citibank,
Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley. Rosneft
will also guarantee a $9-billion loan for its RN-Razvitiye, which
was purposely created to acquire Yukos' 9.44% stake in Rosneft.
The unit has already filed a request with the Federal Antimonopoly
Service for the transaction.
"We have successfully attracted $22 billion, thus, finishing an
important phase of preparation for auctions," said Rosneft
President Sergey Bogdanchikov. "We are ready for competition. In
the process of preparing and taking part in auctions we will base
our decisions on the principles of economic expedience, the
creation of maximum value for shareholders and steady and long-
term development."
Reports say the loan will carry an interest rate of LIBOR +0.25%-
0.5% and will mature in 12 months to 18 months.
Mr. Bogdanchikov implied that Rosneft would bid for Yukos' oil
refining assets to break the "considerable imbalance between the
amount of oil Rosneft is extracting and the capacity of oil
refineries."
Rosneft already owns Yukos' former core production unit,
Yuganskneftegaz.
The first phase of the auction will commence on March 27, 2007.
Eduard Rebgun, Yukos' bankruptcy receiver, is putting up 193 Yukos
subsidiaries for sale over several months.
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. A few days later,
the Russian Government sold its main production unit Yugansk to a
little-known firm Baikalfinansgroup for $9.35 billion, as payment
for US$27.5 billion in tax arrears for 2000-2003. Yugansk
eventually was bought by state-owned Rosneft, which is now
claiming more than $12 billion from Yukos.
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.
ZOOMERS HOLDING: Chapter 11 Case Dismissal Hearing Set on June 20
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida will
convene a hearing at 1:30 p.m., on June 20, 2007, at Courtroom E
Room 4-117 at 2110 First Street in Fort Myers, Fla., to consider
Florida Community Bank's request to dismiss the chapter 11 case of
Zoomers Holding Company, LLC.
As reported in the Troubled Company Reporter on May 23, 2006,
Florida Community, a secured creditor of the Debtor, contended
that the Debtor's chapter 11 case was filed in bad faith citing:
a. the Debtor's real property located in Lee County, Fla.,
is encumbered by liens, which exceeds the fair market value
of the real property;
b. the Debtor has no other employees aside from its
principals;
c. the Debtor's financial problems involve a dispute between
the Debtor and Florida Community, along with junior lien
creditors, which can be resolved in the pending state court
foreclosure action;
d. the Debtor has no cash flow and no available sources of
income to sustain a plan of reorganization or make adequate
protection payments;
e. there are no non-insider unsecured creditors whose claims
are relatively small in light of the total obligation owed
by the Debtor; and
f. there is no realistic possibility of an effective
reorganization.
Headquartered in Osprey, Florida, Zoomers Holding Company, LLC,
filed for chapter 11 protection on Apr. 28, 2006 (Bankr. M.D. Fla.
Case No. 06-02008). Richard Johnston, Jr., Esq., at Kiesel Hughes
& Johnston, represents the Debtor. When the Debtor filed for
protection from its creditors, it estimated assets and debts
between $10 million and $50 million.
* 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 AVC Enterprises, Inc.
Bankr. D. V.I. Case No. 07-30002
Chapter 11 Petition filed March 14, 2007
See http://bankrupt.com/misc/vib07-30002.pdf
In re Breakfast, Inc.
Bankr. N.D. Ill. Case No. 07-04532
Chapter 11 Petition filed March 14, 2007
See http://bankrupt.com/misc/ilnb07-04532.pdf
In re Greater Mount Zion Church
Bankr. E.D. N.C. Case No. 07-00952
Chapter 11 Petition filed March 14, 2007
See http://bankrupt.com/misc/nceb07-00952.pdf
In re Natty Realty Corp.
Bankr. E.D. N.Y. Case No. 07-41241
Chapter 11 Petition filed March 14, 2007
See http://bankrupt.com/misc/nyeb07-41241.pdf
In re Warren C. McDowell
Bankr. S.D. Fla. Case No. 07-11728
Chapter 11 Petition filed March 14, 2007
See http://bankrupt.com/misc/flsb07-11728.pdf
In re 3 H's Inc.
Bankr. E.D. N.C. Case No. 07-00978
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/nceb07-00978.pdf
In re All Dimensions, Inc.
Bankr. W.D. Pa. Case No. 07-21616
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/pawb07-21616.pdf
In re Forrest Shane Wagoner
Bankr. D. Ariz. Case No. 07-01108
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/azb07-01108.pdf
In re LRP Holdings, LLC
Bankr. D. Conn. Case No. 07-30575
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/ctb07-30575.pdf
In re Total Telecom Logistics, Inc.
Bankr. D. N.J. Case No. 07-13575
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/njb07-13575.pdf
In re U.S. Gerslyn, LLC
Bankr. E.D. N.Y. Case No. 07-70882
Chapter 11 Petition filed March 15, 2007
See http://bankrupt.com/misc/nyeb07-70882.pdf
In re Bartol, Inc.
Bankr. D. Md. Case No. 07-12463
Chapter 11 Petition filed March 16, 2007
See http://bankrupt.com/misc/mdb07-12463.pdf
In re Northeast Mechanical Services, Inc.
Bankr. E.D. Mich. Case No. 07-45214
Chapter 11 Petition filed March 16, 2007
See http://bankrupt.com/misc/mieb07-45214.pdf
In re Samuel Garcia Rodriguez
Bankr. D. P.R. Case No. 07-01415
Chapter 11 Petition filed March 19, 2007
See http://bankrupt.com/misc/prb07-01415.pdf
In re Jeanne Marie Donia
Bankr. D. Ariz. Case No. 07-00422
Chapter 11 Petition filed March 20, 2007
See http://bankrupt.com/misc/azb07-00422.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,
Ludivino Q. Climaco, Jr., 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
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
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*** End of Transmission ***