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/raid1/www/Hosts/bankrupt/TCR_Public/070424.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 24, 2007, Vol. 11, No. 96 Headlines ACE SECURITIES: Moody's Downgrades Ratings on Four Certificates ADVANCED MICRO: Posts $611 Million Net Loss in Qtr Ended March 31 ADVANTA CAPITAL: Improved Profitability Cues Moody's to Up Ratings AFFILIATED COMPUTER: Darwin Deason Increases Bid to $62 per Share AFINSA BIENES: Hearing on Chapter 15 Petition Scheduled Tomorrow AGRICORE UNITED: Revised Offer Cues S&P to Retain Developing Watch ATLANTIC EXPRESS: Proposes $165 Million Senior Sec. Notes Offering BANC OF AMERICA: S&P Holds Low-B Ratings on Two Class Certificates BANKUNITED FINANCIAL: Fitch Rates $160 Million Senior Notes at BB+ BEST BRANDS: Waiver Request Cues S&P's Negative CreditWatch CALPINE CORP: Resolves Acadia Power Plant Issue with Cleco Corp. CAPROCK HOLDINGS: S&P Rates Proposed $190 Million Facilities at B CARITOR INC: Moody's Rates $690 Million Credit Facilities at B1 CARITOR INC: S&P Rates Proposed $690 Million Senior Loan at BB- CATHOLIC CHURCH: Court OKs AlixPartners as Davenport Claims Agent CATHOLIC CHURCH: Court Confirms Portland's 3rd Amended Plan CATHOLIC CHURCH: San Diego Gets Interim Nod on $14MM DIP Financing CATHOLIC CHURCH: Spokane Delivers Voting Results on Joint Plan CHINA RECYCLING: Losses Prompt Zhong Yi's Going Concern Doubt CIENA CORP: Continued Growth Prompts S&P's Positive Outlook CITICORP MORTGAGE: Fitch Holds B Rating on Class B5 Certificates CITIGROUP MORTGAGE: Fitch Holds Low-B Ratings on Two Certificates CITY CAPITAL: De Joya Griffith Raises Going Concern Doubt CLEAR CHANNEL: Declares Quarterly Cash Dividend on Common Stock CLECO CORP: Resolves Acadia Power Plant Issue with Calpine Corp. CONTINENTAL AIRLINES: Earns $22 Million in Quarter Ended March 31 COUNTRYWIDE ASSET: Fitch Cuts Rating on Four Class Certificates COUNTRYWIDE ASSET: Fitch Takes Various Rating Actions on 13 Issues CRESTED CORP: Moss Adams Expresses Going Concern Doubt CSFB HOME: S&P Junks Ratings on Six Certificate Classes CUZZ-ACRES-ORANGE: Case Summary & 10 Largest Unsecured Creditors CWALT INC: Fitch Puts Ratings on 16 Classes Under Watch Negative D&E LIMITED: Voluntary Chapter 11 Case Summary DAIMLERCHRYSLER AG: Employees Propose 70% Ownership of Chrysler DAIMLERCHRYSLER AG: UAW Talks with Tracinda but Prefers Magna DELTA AIR: Judge Hardin Approves $2.5 Billion Exit Financing DELTA AIR: Files Joint Plan of Reorganization Supplements DELTA AIR: Various Parties Object to Plan Confirmation DELUXE ENTERTAINMENT: Moody's Rates $585MM First-Lien Loan at B1 DIVERSIFIED ASSET: Fitch Junks Rating on $22.2MM Class B-1L Notes DURA AUTOMOTIVE: Inks Technical Alliance with India's Aditya Auto ENERGY PARTNERS: Prices Terms of 8-3/4% Senior Notes Tender Offer FIRST FRANKLIN: Moody's Downgrades Ratings on Five Certificates FOOT LOCKER: Offers to Buy Genesco for $1.2 Billion in Cash FOOT LOCKER: Proposed Acquisition of Genesco's Shares Gets Snubbed FOOT LOCKER: Genesco Bid Prompts Moody's to Put Ratings on Review FOOT LOCKER: Genesco Bid Cues S&P's to Retain on Negative Watch FORUM GROUP: Case Summary & 12 Largest Unsecured Creditors FREMONT HOME: Moody's Junks Rating on 2006-B Class SL-B1 Certs. GATEHOUSE MEDIA: Moody's Rates Proposed $275 Mil. Term Loan at B1 GENERAL MOTORS: Wagoner Sees Hope Despite Delay in Delphi's Exit GENESCO INC: Gets $1.2 Billion Cash Offer from Foot Locker GENESCO INC: Board Snubs Foot Locker's Shares Acquisition Proposal GENESCO INC: Foot Locker Offer Prompts Moody's to Review Ratings GENESCO INC: Foot Locker Offer Cues S&P's Developing CreditWatch GIGABEAM CORPORATION: BDO Seidman Raises Going Concern Doubt GOODYEAR TIRE: Amends $2.7 Bil. and EUR505 Mil. Credit Facilities GOODYEAR TIRE: Says 4% Senior Notes are Convertible Until June 29 GSAMP TRUST: Moody's Lowers Ratings on 15 Certificate Classes HEALTH-CHEM CORP: Demetrius & Company Raises Going Concern Doubt HEREUARE INC: Kabani & Company Raises Going Concern Doubt INDYMAC BANCORP: Fitch Affirms Individual Rating at 'B/C' INEX PHARMA: Withdraws Bankr. Petition for Protiva Biotherapeutics INTERNAL INTELLIGENCE: Gets Another 120-Day Extension to File Plan JHADWARN INC: Voluntary Chapter 11 Case Summary KODIAK CDO: Fitch Holds BB+ Rating on $27 Million Class H Notes LONG BEACH: Fitch Takes Various Rating Actions on 21 RMBS Issues LONG BEACH: Moody's Lowers Ratings on Three Certificate Classes LYONDEL CHEMICAL: Launches 10.5% Sr. Secured Notes Cash Offering MASTR SECOND: Moody's Junks Rating on Class M-8 Loans MECHANICAL ELECTRICAL: Case Summary & 5 Largest Unsec. Creditors MEGA BRANDS: S&P Places BB- Ratings on Negative CreditWatch MERISANT CO: S&P Junks Rating on Amended $246 Mil. Facilities MERRILL LYNCH: Fitch Holds Low-B Ratings on 7 Class Certificates MGM MIRAGE: CityCenter Gross Construction Costs $7.4 Billion MORTGAGE LENDERS: Gets Final Approval on Use of Cash Collateral MORTGAGE LENDERS: Can Destroy Old Internal and Customer Records MORTGAGEBROKERS.COM: SF Partnership Raises Going Concern Doubt MOTOR COACH: S&P Puts CCC Rating on Positive CreditWatch MTS OF WISCONSIN: Case Summary & 11 Largest Unsecured Creditors MWAM CBO: Moody's Removes Watch on $21.8 Million Notes' Ba2 Rating NATIONAL HEALTH: CEO Adams' Offer Cues S&P's Negative CreditWatch NEW CENTURY: Wants to Sell Access Lending Business to AHC NEW CENTURY: Moves 2007 Shareholders' Meeting to October NEW CENTURY: Moody's Junks Rating on 2006-S1 Class M8 Certificate NOBLE GINTHER: Voluntary Chapter 11 Case Summary NOVELL INC: Patrick Jones Joins Board of Directors OSI RESTAURANT: Moody's Junks Rating on $700MM Notes Offering OXBOW CARBON: S&P Rates $960 Million Senior First-Lien Loan at B+ PEOPLE'S CHOICE: Wants Pachulski Stang as Bankruptcy Counsel PEOPLE'S CHOICE: Committee Wants Winston & Strawn as Counsel PRODUCTOS DE CEMENTO: Voluntary Chapter 11 Case Summary RECYCLED PAPER: Limited Liquidity Cues S&P to Junk Ratings REDDY ICE: Posts $4.9 Million Net Loss in Fourth Qtr. Ended Dec.31 REFCO INC: Marc Kirschner Discharges Duties as RCM Trustee REFCO INC: Plan Administrators Object to Grant Thornton's Claims RELIABILITY INC: Fitts Roberts Reports Going Concern Doubt RHODE ISLAND HEALTH: S&P Revises Outlook on Bonds Ratings to Pos. RIVER EDGE: Case Summary & Seven Largest Unsecured Creditors SAINT CORP: S&P Rates Proposed $2.1 Billion Facilities at B+ SAINT VINCENTS: Wants to Sell Forest Avenue Property for $635,000 SAINT VINCENTS: Wants to Sell Vanderbilt Property for $1.2 Mil. SHANGDONG ZHOUYUAN: Kempisty & Company Raises Going Concern Doubt SHAW GROUP: Gary Graphia Named as Corporate Development EVP SMART ENERGY: Chisholm Bierwolf Raises Going Concern Doubt STRIKEFORCE TECHNOLOGIES: Li & Company Raises Going Concern Doubt STRUCTURED ADJUSTABLE: S&P Cuts Rating on Class M7 Loan to BB TD BANKNORTH: Fitch Holds Individual Rating at B TERRA ENERGY: Rosen Seymour Raises Going Concern Doubt TRANSDERM LABS: Demetrius & Company Raises Going Concern Doubt TRIBUNE COMPANY: Posts $15.6 Million Net Loss in Qtr Ended April 1 VERINT SYSTEMS: S&P Rates Proposed $675 Million Facility at B VITALTRUST BUSINESS: Rotenberg Meril Raises Going Concern Doubt WELD WHEEL: Plan Confirmation Hearing Scheduled on May 8 WELLS FARGO: Fitch Rates $3.9 Million Class B-2 Certificates at BB WESTERLY HOSPITAL: Poor Performance Cues Moody's to Cut Ratings WESTON NURSERIES: Files Joint Amended Plan & Disclosure Statement WILLIAMS SCOTSMAN: Strong Performance Cues Moody's to Lift Ratings WOODWIND & BRASSWIND: Wants Excl. Plan Filing Date Moved to June 1 WOODWIND & BRASSWIND: Wants Gardis Regas as Litigation Counsels XEROX CORP: Earns $233 Million in 2007 First Quarter YUKOS OIL: Distributes Nearly RUR2 Million to Creditors YUKOS OIL: Report Links Mysterious Buyer to Deutsche Bank ********* ACE SECURITIES: Moody's Downgrades Ratings on Four Certificates --------------------------------------------------------------- Moody's Investors Service has downgraded and maintained on review for possible further downgrade four certificates and placed on review for possible downgrade ten certificates from a transaction, issued by Ace Securities Corp. Home Equity Loan Trust. The transaction is backed by sub-prime second lien loans. The projected pipeline loss has increased over the past few months and is likely to affect the credit support for these certificates. The certificates are being downgraded and placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: Ace Securities Corp. Home Equity Loan Trust Downgrade and Review for Possible Downgrade: * Series 2006-SL2, Class M-8 downgraded from Baa2 to B1 and on review for possible further downgrade * Series 2006-SL2, Class M-9A, downgraded from Baa3 to B3 and on review for possible further downgrade * Series 2006-SL2, Class M-9B, downgraded from Baa3 to B3 and on review for possible further downgrade * Series 2006-SL2, Class B1, downgraded from Ba1 to Ca and on review for possible further downgrade Review for Possible Downgrade: * Series 2006-SL2, Class A current rating Aaa, under review for possible downgrade * Series 2006-SL2, Class M-1, current rating Aa1, under review for possible downgrade * Series 2006-SL2, Class M-2A, current rating Aa2, under review for possible downgrade * Series 2006-SL2, Class M-2B, current rating Aa2, under review for possible downgrade * Series 2006-SL2, Class M-3, current rating Aa3, under review for possible downgrade * Series 2006-SL2, Class M-4, current rating A1, under review for possible downgrade * Series 2006-SL2, Class M-5, current rating A2, under review for possible downgrade * Series 2006-SL2, Class M-6A, current rating A3, under review for possible downgrade * Series 2006-SL2, Class M-6B, current rating A3, under review for possible downgrade * Series 2006-SL2, Class M-7, current rating Baa1, under review for possible downgrade ADVANCED MICRO: Posts $611 Million Net Loss in Qtr Ended March 31 ----------------------------------------------------------------- Advanced Micro Devices Inc. reported a net loss of $611 million on net revenue of $1.2 billion for the first quarter ended March 31, 2007, compared with net income of $185 million on net revenue of $1.3 billion for the same period ended March 26, 2006. The results for the first quarter of 2007 include ATI acquisition- related and integration charges of $113 million and employee stock-based compensation expense of $28 million. The decline in revenue was primarily due to a $568 million decline in net revenue from the Computing Solutions segment, which includes what the company previously called the Computation Products and Embedded Products segments as well as the chipset business acquired with ATI. Year-over-year server and desktop processor unit shipments and revenues declined significantly, while mobile processor unit shipments and revenue increased significantly. First quarter Graphics segment revenue of $197 million increased 19 percent from the fourth quarter of 2006, primarily due to a full quarter of operations. Graphics segment had no revenues for the first quarter of 2006. Consumer Electronics segment revenue, including a full quarter of operations, was down sequentially to $118 million, from $120 million in the fourth quarter of 2006. On a full quarter comparative basis, video processor unit shipments into the digital TV market increased in the seasonally down quarter while handheld processor unit shipments and game console revenue decreased. First quarter 2007 gross margin was 31 percent, excluding stock- based compensation expense and acquisition-related charges, compared to 59 percent in the first quarter of 2006. The decrease from the prior quarter was largely due to significantly lower microprocessor unit shipments, lower microprocessor average selling prices, and the inclusion of the former ATI operations, which generally have lower-margin products, for the entire quarter. AMD reported an operating loss of $504 million for the first quarter ended March 31, 2007, compared with operating income of $259 million for the same period ended March 26, 2006, primarily due to a decrease in gross margin, and an increase in research and development expenses, marketing, general and administrative expenses, and amortization of acquired intangible assets and integration charges. "After more than three years of successfully executing our customer expansion strategy and significantly growing our unit and revenue base, our first quarter performance is disappointing and unacceptable," said Robert J. Rivet, AMD's chief financial officer. "We are aggressively addressing the issues that led to our significant revenue decline. We are aligning our business model, capital expenditures and cost structure with the goal of accelerating our return to profitability. Lastly, our customer relationships remain solid, reflecting their confidence in our strategic direction, current and new products, and technology roadmaps." At March 31, 2007, the company's balance sheet showed $12.7 billion in total assets, $7.2 billion in total liabilities, $303 million in minority interest in consolidated subsidiaries, and $5.2 billion in total stockholders' equity. About Advanced Micro Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative processing solutions in the computing, graphics and consumer electronics markets. AMD is dedicated to driving open innovation, choice and industry growth by delivering superior customer-centric solutions that empower consumers and businesses worldwide to differ materially from current expectations. * * * As reported in the Troubled Company Reporter on Mar. 14, 2007, Moody's Investors Service lowered AMD's corporate family rating to B1 from Ba3. The outlook is stable. ADVANTA CAPITAL: Improved Profitability Cues Moody's to Up Ratings ------------------------------------------------------------------ Moody's Investors Service upgraded Advanta Corporation's long-term ratings, including its senior unsecured rating to Ba3 from B1, reflecting the company's continued strong financial performance and core focus on business credit cards. The rating outlook is stable. Moody's said Advanta's improved profitability since the last rating action in December 2005 was a key driver for the rating upgrade. During this time, the company's net income in its core business card segment increased approximately 53% in 2006 from 2005, while return on average managed assets (adjusted for a large one-time gain in 2005) increased to 1.51% from approximately 1.1%. This was due to an increase in overall receivables, continued strong credit quality, and continued discipline in operating expenses. Moody's recognizes the strong credit environment over this time period, in particular 2006, which benefited from an acceleration of chargeoffs in 2005 in anticipation of new bankruptcy legislation which became effective on Oct. 17, 2005. However, Advanta has improved its credit scoring technology and has focused on primarily underwriting to a higher credit quality demographic. This shift up the credit scale has been successful to date; however, this will continue to be monitored due to the greater competition found in the "prime" sector. This has been evidenced by the company's net interest margin decline in 2006, due primarily to the aforementioned higher credit quality clientele, the competitive environment, promotional offers on new accounts, and higher funding costs due to higher market interest rates. A substantial decline in margin or a shift to greater focus on sub- prime account growth could pressure the current rating. Advanta has historically been involved in various litigation and ventures into other businesses distinct from business credit cards (e.g. mortgage and consumer lending, venture capital). During the past two years, the company has resolved all material litigation and has focused on its primary business in which it has developed a core competency. The company's continued operation free of significant litigation while maintaining its primary investment in business cards is key for the rating. Advanta's ratings remain constrained by the firm's monoline nature and relatively modest competitive position versus others that compete in its space. As mentioned previously, while the firm has developed a solid niche in business credit cards, it has limited scale advantages compared to the largest U.S. credit card issuers. The business card segment will likely remain highly competitive, due to its favorable growth characteristics and the greater interchange fees available to the providers of business credit cards. In Moody's opinion, these relatively higher interchange fees are critical to the company's business model. Therefore, a sizeable decline in interchange fees would materially affect the firm's profitability and franchise, and would negatively affect its credit standing. Moody's notes also that Advanta's leverage metrics have elevated over the past year as the result of share repurchase activity, and can be expected to elevate further -- potentially to historic highs - in the immediate future as the result of the recently announced additional share repurchase program. Given the company's monoline nature and competitive position, Moody's considers maintenance of a solid capital position to be an important rating factor. Accordingly Moody's will continue to monitor closely the development of Advanta's capital and leverage. Finally, Advanta relies on securitization and to a lesser extent bank deposits as its primary sources of funding. The company's limited funding sources create additional risk during a stress scenario. While the company mitigates this to some extent through its de-linked securitization structure and asset-liability management policy including contingency funding plan policies and procedures, increased sources and access to funding would further support the rating. What Could Change the Rating - UP While the ratings are well-positioned, continued improvements in core profitability and efficiency coupled with lower leverage, especially if combined with evidence of sustained success in competing against larger competitors without impairing asset quality, could put upward pressure on the ratings. Demonstrated access to additional sources of funding for credit card receivables beyond securitization and bank deposits could also be positive for the rating. What Could Change the Rating - DOWN Ratings could go down if asset quality, profitability, or capital and leverage deteriorate materially, or if liquidity or funding flexibility is significantly reduced. Ratings upgraded included: Advanta Corporation -- - Senior unsecured debt to Ba3 from B1 - Senior unsecured shelf to (P)Ba3 from (P)B1 - Subordinated debt to B2 from B3 - Subordinated shelf to (P)B2 from (P)B3 - Preferred Stock shelf to (P)B3 from (P)Caa1 Advanta Corporation, headquartered in Spring House, Pennsylvania, reported approximately $6.3 billion in managed assets as of December 31, 2006. AFFILIATED COMPUTER: Darwin Deason Increases Bid to $62 per Share ----------------------------------------------------------------- Affiliated Computer Services Inc. has received a revised proposal from Darwin Deason, chairman of the board of ACS, and Cerberus Capital Management LP, to acquire, for a cash purchase price of $62 per share, all of the outstanding shares of the company's common stock, other than certain shares and options held by Mr. Deason and members of the company's management team that would be rolled into equity securities of the acquiring entity in connection with the proposed transaction. Mr. Deason's original offer was $59.25 per share. A special committee of independent directors formed by the board of directors to evaluate the company's strategic alternatives, including the proposal from Mr. Deason and Cerberus, expects to make a recommendation to the board after its consideration of all strategic alternatives, including the proposal and all others received, in due course. The special committee continues to have concerns about the Deason/Cerberus proposal and the sale process that it outlines, particularly with regard to the unchanged exclusivity arrangement that the independent directors asked to be voided on March 21, 2007. The special committee has written a letter to Mr. Deason seeking clarification with respect to several issues of concern. About Cerberus Capital Management Headquartered in New York City, and established in 1992, Cerberus Capital Management LP is one of the world's leading private investment firms with approximately $25 billion of capital under management in funds and accounts. Through its team of investment and operations professionals, Cerberus specializes in providing both financial resources and operational expertise to help transform its portfolio companies into industry leaders for long- term success and value creation. Cerberus has offices in Los Angeles, Chicago and Atlanta, well as advisory offices in London, Baan, Frankfurt, Tokyo, Osaka and Taipei. About Affiliated Computer Services Headquartered in Dallas, Texas, Affiliated Computer Services Inc. (NYSE: ACS) -- http://www.acs-inc.com/-- is a FORTUNE 500 company. It provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company has more than 58,000 employees supporting client operations in nearly 100 countries. * * * As reported in the Troubled Company Reporter on March 29, 2007, Fitch Ratings 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 were (i) Issuer Default Rating 'BB'; (ii) Senior secured revolving credit facility at 'BB'; (iii) Senior secured term loan at 'BB'; and (iv) Senior notes at 'BB-'. AFINSA BIENES: Hearing on Chapter 15 Petition Scheduled Tomorrow ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has set a hearing on April 25, 2007, to consider the petition and the request of the Foreign Representatives for an order granting recognition of Afinsa Bienes Tangibles SA's proceeding pending in Madrid, Spain, as a foreign main proceeding. The hearing will be held at Room 601 of the U.S. Bankruptcy Court for the Southern District of New York, One Bowling Green in New York. Headquartered in Madrid, Spain, Afinsa Bienes Tangibles SA -- http://www.afinsa.es/eng/-- is a wholesaler and retailer of stamps, coins, art works and other collectables. The Debtor has a pending proceeding in the Mercantile Court No. 6 in Madrid, Spain. On March 13, 2007, Javier Diaz Galvez, Benito Aguera Marin, and Ana Fernandez Daza, as the Debtor's Foreign Representatives, filed a chapter 15 petition (Bankr. S.D.N.Y. Case No. 07-10675). The Foreign Representatives are represented by Thomas L. Kent, Esq., Anthony Princi, Esq., and Jennifer A. Mo, Esq., at Paul, Hastings, Janofsky & Walker LLP. When the petitioners filed the chapter 15 petition, they estimated the Debtor's assets and debts to be more than $100 million. AGRICORE UNITED: Revised Offer Cues S&P to Retain Developing Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services maintained the CreditWatch listings on Agricore United (AU; BB/Watch Dev/--) and Saskatchewan Wheat Pool (SWP; B+/Watch Pos/--), following James Richardson International Ltd.'s new CDN$1.8 billion offer for AU. The revised offer is an all-cash offer that has been deemed to at least match SWP's April 13, 2007, offer and, as such, has been accepted by AU's board of directors. "If JRI's revised bid succeeds, the new company will become private and the ratings on AU could be affirmed, raised, lowered, or withdrawn," said Standard & Poor's credit analyst Don Povilaitis. Plans for AU's publicly rated bank debt have yet to be determined. "Conversely, should any party counter with a new bid for AU, such a bid would once again have to be deemed equal or superior by AU's board to be recommended to shareholders," Mr. Povilaitis added. The JRI offer is still subject to the tendering of at least 75% of AU's common shares outstanding, as well as the clearing of regulatory hurdles with the Canadian Competition Bureau, which is expected shortly. Still, as other bids could emerge, including a revised bid from SWP, the ratings on both AU and SWP will remain on CreditWatch until the ultimate buyer is determined. ATLANTIC EXPRESS: Proposes $165 Million Senior Sec. Notes Offering ------------------------------------------------------------------ Atlantic Express Transportation Corp. has proposed offering of $165 million in aggregate principal amount of Senior Secured Floating Rate Notes due 2012. The company said that the notes will be unconditionally guaranteed on a senior secured basis by each of the company's existing and future domestic subsidiaries that are not unrestricted domestic subsidiaries, other than certain immaterial subsidiaries. The company states that the net proceeds from the offering will be used to refinance existing indebtedness, including to fund the redemption of the company's outstanding 12% Senior Secured Notes due 2008 and Senior Secured Floating Rate Notes due 2008. The exact terms and timing of the offering will depend upon market conditions and other factors. About Atlantic Express Atlantic Express provides transportation in the United States. The company also provides paratransit services for disabled passerngers. The Company has contracts with approximately 120 school districts in New York, Missouri, Massachusetts, California, Pennsylvania, New Jersey, and Illinois, and as of Dec. 31, 2006, had a fleet of approximately 5,800 operating vehicles. * * * Standard & Poor's Ratings Services placed its ratings, including its 'CCC+' corporate credit rating, on Atlantic Express Transportation Corp. on CreditWatch with positive implications. The CreditWatch listing follows the company's announcement that it plans to refinance its existing debt with a new $165 million senior secured debt offering. The Staten Island, New York-based school bus transportation company has about $220 million of lease- adjusted debt outstanding. BANC OF AMERICA: S&P Holds Low-B Ratings on Two Class Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on nine classes of commercial mortgage pass-through certificates from Banc of America Commercial Mortgage Inc.'s series 2001-PB1. Concurrently, the ratings on the remaining classes from the same series were affirmed. The raised and affirmed ratings reflect the stable performance of the pool and increased credit enhancement levels that provide adequate support through various stress scenarios. The upgrades of several senior certificates reflect the defeasance of $270.1 million (35% of the pool) of collateral since issuance. The aforementioned figure includes the defeasance of Keystone Office Buildings, which occurred subsequent to the April 11, 2007, remittance. As of the April 11, 2007, remittance report, the collateral pool consisted of 116 loans with an aggregate trust balance of $781.4 million, down from 134 loans with a balance of $938.3 million at issuance. The master servicer, Prudential Asset Resources, reported interim and full-year 2006 financial information for 100% of the pool, which excludes the defeased collateral. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.30x, down from 1.41x at issuance. All of the loans in the pool are current, and there are no loans with the special servicer. To date, the trust has experienced four losses totaling $6.4 million. The top 10 loans secured by real estate have an aggregate outstanding balance of $189.7 million (24%) and a weighted average DSC of 1.22x, down from 1.34x at issuance. The current weighted average DSC includes several interim 2005 and 2006 figures. Three of the top 10 loans, which are discussed below, are on the watchlist because of various occupancy issues and associated declines in DSC. According to inspection reports received from Prudential, three properties were characterized as "excellent," one was characterized as "fair," and the remaining collateral was characterized as "good." Prudential reported a watchlist of 17 loans with an aggregate outstanding balance of $121.6 million (16%). The largest exposure, Milwaukee Center Office Tower ($31 million, 4%), is secured by a 373,625-sq.-ft. class A office building in Milwaukee, Wisconsin. The loan was placed on the watchlist due to a decline in DSC attributable to decreased occupancy. As of Sept. 31, 2006, occupancy was 75% and DSC was 0.35x. At issuance, underwritten occupancy was 98%, while DSC was 1.52x. The eighth-largest loan, 25, 40 & 45 Hartwell Avenue ($15 million, 2%), is secured by three research and development office properties totaling 113,159 sq. ft. in Lexington, Massachusetts. The loan is on the watchlist because the properties reported a year-end 2006 combined DSC of 1.04x. One of the collateral properties, 25 Harwell Avenue, was vacant. A 10-year lease was executed recently for 100% of the space, and the performance at the property is expected to improve. The combined occupancy, including the new lease, is 100%. Keystone Office Buildings ($14.0 million, 1.8%) was on the watchlist. However, the loan defeased after the watchlist was prepared. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Banc of America Commercial Mortgage Inc. Commercial mortgage pass-through certificates series 2001-PB1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ E AAA AA+ 15.69% F AAA AA 14.19% G AA+ A+ 12.39% H AA A- 10.59% J AA- BBB+ 9.09% K A- BBB 6.68% L BBB BB+ 4.88% M BB+ BB- 3.98% N BB- B+ 2.48% Ratings Affirmed Banc of America Commercial Mortgage Inc. Commercial mortgage pass-through certificates series 2001-PB1 Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 25.60% A-2F AAA 25.60% B AAA 20.79% C AAA 19.59% D AAA 18.09% O B 1.88% P B- 1.28% X-P AAA N/A X-C AAA N/A *N/A-Not applicable. BANKUNITED FINANCIAL: Fitch Rates $160 Million Senior Notes at BB+ ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB+' rating to BankUnited Financial Corp.'s $160 million senior notes, offered with a forward purchase contract as 'equity units' to synthetically create a mandatory convertible security. The notes will mature 2012. The Rating Outlook for BKUNA is Stable. The forward purchase contract, which commits the investor to purchase a variable number of common shares for cash, must be exercised in May 2010. The senior notes will be pledged as collateral to support the investors' obligation under the purchase contract. BKUNA does not have the option to defer the interest payments on the senior notes. While they are outstanding, the senior notes will rank equally with other unsecured and unsubordinated obligations and senior to any future subordinated obligations. Fitch will assign 50% equity credit to the notes in combination with the forward purchase contract, resulting in a mandatory convertible structure. Although eventually converting to common equity, the equity credit allowed under Fitch criteria is constrained by the senior ranking of the instruments and the inability to defer interest payments. BKUNA expects to utilize the note proceeds for general corporate purposes including the redemption of other debt and repurchase of class A common stock. Fitch assigns this rating: BankUnited Financial Corporation: -- $160 million senior debt 'BB+'. BEST BRANDS: Waiver Request Cues S&P's Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B' corporate credit rating, on Minnetonka, Minnesota-based Best Brands Corp. on CreditWatch with negative implications. This action means that the ratings could be lowered or affirmed following the completion of the CreditWatch review. Total debt outstanding at the company was about $252 million as of Dec. 31, 2006. "The CreditWatch placement reflects our concerns about the company's operating performance and liquidity following its request for a waiver and amendment to its credit agreement," said Standard & Poor's credit analyst Alison Sullivan. Best Brands is seeking a waiver due to late delivery of financial statements, and an amendment to adjust EBITDA calculations for covenant purposes. "Financial results are weaker than expected, and we are concerned about limited covenant cushion," said Ms. Sullivan. Standard & Poor's will review Best Brands' operating and financial plans with management and monitor the status of the credit agreement amendment before resolving the CreditWatch listing. CALPINE CORP: Resolves Acadia Power Plant Issue with Cleco Corp. ---------------------------------------------------------------- A settlement has been reached between Calpine Corp. and Cleco Corp., subject to bankruptcy court approval, resolving issues related to their co-owned Acadia power plant. The plant is owned by Acadia Power Partners LLC, an entity owned equally by Cleco's Acadia Power Holdings LLC and Calpine Acadia Holdings LLC. Under the proposed settlement APH will receive allowed unsecured claims against Calpine Energy Services, L.P., and Calpine of $85 million in connection with two long-term tolling agreements CES held for the output of the 1,160-megawatt plant located near Eunice and Calpine's guaranty of those agreements. Additionally, APH has agreed to purchase Calpine's 50% ownership interest in Acadia Power Partners for $60 million, subject to any higher or better offers Calpine may receive in a bankruptcy court- sponsored auction. APH's $60 million offer, in effect, values a 50% interest in the Acadia power plant at $145 million, taking into account the agreed value of certain priority distributions and payments due APH. APH's offer will serve as a "Stalking Horse" bid in the auction of Calpine's interest in Acadia Power Partners. The auction process is anticipated to begin in May, with the bankruptcy auction expected in July. The terms of the auction, including a breakup fee and other protections in favor of APH, will be considered at a May 9 bankruptcy court hearing. If APH is not the successful bidder, APH will retain its 50% ownership in Acadia Power Partners and receive payment from the successful bidder in the amount of $85 million. The $85 million payment is the agreed value of certain priority distributions and payments due APH under agreements with Calpine affiliates. In either outcome, a Cleco subsidiary will assume operations and project management functions at the plant. "We are extremely pleased to have reached an agreement with Calpine and look forward to assuming the daily activities of the plant," Cleco President and CEO Michael Madison said. About Cleco Corp. Headquartered in Pineville, Louisiana, Cleco Corp. (NYSE:CNL) -- http://www.cleco.com/-- is a regional energy services holding company that conducts substantially all of its business operations through its two principal operating business segments, Cleco Power LLC and Cleco Midstream Resources LLC. Cleco Power is an integrated electric utility services subsidiary which also engages in energy management activities. Cleco Midstream is a merchant energy subsidiary that owns and operates a merchant generation station, invests in a joint venture that owns and operates a merchant generation station, and owns and operates transmission interconnection facilities. About Calpine Corporation Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. The Debtors' exclusive period to file chapter 11 plan of reorganization expires on June 20, 2007. Calpine Corp. has until June 20, 2007, to file a plan, and until Aug. 20, 2007, to solicit acceptances of that plan. CAPROCK HOLDINGS: S&P Rates Proposed $190 Million Facilities at B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Houston, Texas-based satellite communications provider CapRock Holdings Inc. to 'B' from 'B+'. The outlook is stable. At the same time, S&P assigned a 'B' bank loan rating, at the same level as the corporate credit rating on the parent company, and '4' recovery rating, to subsidiary CapRock Communications Inc.'s proposed $190 million senior secured first-lien credit facilities, indicating our expectation of marginal (25%-50%) recovery of principal in the event of a payment default. S&P also assigned a 'CCC+' bank loan rating, two notches below the corporate credit rating on the parent company, and '5' recovery rating, to the company's proposed $65 million senior secured second lien term loan, indicating our expectation of negligible (0%-25%) recovery of principal in the event of a payment default. "We based the downgrade on greater uncertainty in the company's indirect government revenue stream as it faces a likely reduction in its largest customer's government contract and associated business," said Standard & Poor's credit analyst Susan Madison. "Also, the company may depend more on new markets to generate discretionary cash flow, and its leverage will increase after a refinancing and the acquisition of another communications company." CapRock will use proceeds from the proposed term loans to acquire Arrowhead Global Solutions Inc., a supplier of integrated communications solutions to the U.S. federal government and military, for $31.8 million, and to refinance nearly all of CapRock's existing $168 million debt. Pro forma for this transaction, CapRock will have $216 million in outstanding debt. CapRock has historically focused on energy customers, providing communications services to offshore rigs in the Gulf of Mexico and the North Sea. However, since 2002, the company's indirect government services business has grown rapidly, primarily in providing communications for a contractor to the U.S. military in Iraq. The customer's U.S. military contract has been reopened for bidding. Given the current political environment in Washington, it is unlikely that the new contract will be sole-sourced, which could cause CapRock's indirect government business to reduce. The ratings on CapRock reflect the highly uncertain prospects of its indirect government services business, its highly leveraged capital structure, its limited size and scale, its significant dependence on a single customer, expectations that the company will need to access its revolving credit facility to fund operations for the next few years, increased risks associated with entering new market segments, and the highly competitive and fragmented nature of the satellite industry. Tempering factors include some competitive protection because of the company's focus on a high-end niche market, significant customer-switching costs, and progress in diversifying into new markets. CARITOR INC: Moody's Rates $690 Million Credit Facilities at B1 --------------------------------------------------------------- Moody's Investors Service assigned Caritor Inc. a first time B1 corporate family rating and a stable rating outlook. Moody's also assigned a first time B1 rating to the company's first lien credit facilities ($600 million term loan, $50 million revolving credit facility, and $40 million synthetic letter of credit facility). All three facilities expire in 2013. On February 7, 2007, a definitive agreement was reached for Caritor to acquire Keane for an all cash purchase price of approximately $854 million. Under the terms of the merger agreement, holders of Keane's common stock will receive $14.30 per share in cash. The transaction will be financed through a combination of equity ($350 million) to be contributed to Caritor by Citigroup Venture Capital International and debt financing. Members of the Keane family and affiliated entities (representing approximately 20% of the current shares outstanding) have committed to vote their Keane shares owned by them in favor of the merger. The deal is expected to close by May 2007. Subsequent its acquisition of Keane, Inc., Caritor will have $1.1 billion combined revenues for the twelve months ended December 2006. Pro forma for the acquisition, Caritor Inc.'s B1 corporate family rating reflects its size and profitability, as measured by its pretax income and asset returns, its financial strength, as measured by its financial leverage and interest coverage, and its business profile, as measured by its client concentration. The combined company's pro forma size and profitability and financial strength are similar to B1 rated business services peers. However, its business profile is similar to business services peers rated B2. The stable outlook reflects Moody's belief that Caritor will benefit from its offshore infrastructure and achieve its targeted cost savings, such that in the twelve months subsequent to the merger's closing,the company will generate free cash flow sufficient to begin to pay down debt. What Could Change the Rating - Up The ratings could be upgraded if the company achieves its projected cost savings and maintains organic revenue and profit growth such that debt to EBITDA adjusted for operating leases remains less than 4.0 times on a sustainable basis. What Could Change the Rating - Down The ratings could be downgraded if the company were unable to achieve projected synergies/cost savings in the twelve months subsequent to the closing of the merger, or organic revenues or profitability were to decline on a trailing twelve month basis, or debt to EBITDA adjusted for operating leases were to exceed 5.1 times, or Moody's come to believe that the options investigations or shareholder litigation would likely result in substantial additional costs. Ratings assigned: * Corporate Family Rating - B1 * $600 million first lien term loan (due 2013) - B1, LGD 3, 48% * $50 million revolving credit facility (due 2013) - B1, LGD 3, 48% * $40 million synthetic letter of credit facility (due 2013) - B1, LGD 3, 48% Headquartered in San Ramon, California, Caritor, Inc. is an I/T services firm specializing in applications management and business process outsourcing. CARITOR INC: S&P Rates Proposed $690 Million Senior Loan at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to San Ramon, California-based Caritor Inc. At the same time, Standard & Poor's assigned its 'BB-' senior secured ratings, with a recovery rating of '3', to Caritor Inc.'s proposed $690 million senior secured bank facilities, which will consist of a $50 million revolving credit facility (due 2013), a $600 million term loan B (due 2013), and $40 million synthetic letter of credit. "The bank loan rating, which is the same as the corporate credit rating, along with the recovery rating, reflect our expectation of meaningful [50%-80%] recovery of principal by creditors in the event of a payment default or bankruptcy," said Standard & Poor's credit analyst Philip Schrank. The proceeds from this facility will be used to finance the acquisition of Keane Inc. by Caritor Inc. The merged company will operate under the Keane Inc. name. The outlook is negative. The ratings reflect Caritor's second-tier presence in a highly competitive and consolidating industry, the risks associated with integrating acquired operations, and high debt leverage. These are only partially offset by a solid presence within its midmarket niche, and above average industry operating margins. CATHOLIC CHURCH: Court OKs AlixPartners as Davenport Claims Agent ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Diocese of Davenport's Chapter 11 case obtained authority from the U.S. Bankruptcy Court for the Southern District of Iowa to retain AlixPartners LLC as: (a) claims agent for the Diocese; and (b) Internet Web site administrator for the Committee, to assist the Committee in fulfilling its obligation to provide information to creditors. As reported in the Troubled Company Reporter on March 26, 2007, Committee counsel Hamid R. Rafatjoo, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Los Angeles, told the Court that AlixPartners, as a Chapter 11 administrator, has substantial experience in noticing, ballot tabulation, claims processing and reconciliation, AlixPartners' efficient and cost-effective methods will benefit the Diocese's estate and the creditors, Mr. Rafatjoo said. He added that creditors will also benefit from having AlixPartners administer the Creditors Committee's Web site. As Claims Agent and Internet Web site Administrator, AlixPartners will: (a) receive and process all proofs of claim and maintain the claims register; (b) set up and administer a call center, if requested; (c) track all claims transfers and update ownership of claims in the claims register; (d) assist Davenport and the Creditors Committee with the claims resolution process and tracking of claims status; (e) provide Davenport and the Creditors Committee and their counsel access to the claims database system; (f) file a monthly claims register with the Court; (g) create and maintain the Creditors Committee's Web site at http://www.davenportcommittee.com/ (h) provide monthly billings for services rendered; and (i) assist with other matters as requested that fall within its expertise. The Creditors Committee also asked the Court to release all filed claims directly to the firm. Davenport will pay AlixPartners based on the firm's discounted hourly rates: Position Hourly Rate -------- ----------- Managing Directors $600 Directors $495 Vice Presidents $350 Associates $315 Analysts $230 Paraprofessionals $175 Davenport will also reimburse the firm for its actual and necessary expenses and charges incurred. According to Mr. Rafatjoo, there are no amounts owed to AlixPartners as of the Petition Date. The firm would be paid a $10,000 retainer from the Diocese for services rendered, and to be rendered, in connection with the Chapter 11 case. The Diocese's funds would be the source of the Retainer. Charles A. Cipione, Esq., managing director at AlixPartners, informed the Court that AlixPartners does not: (i) represent interest adverse to the Diocese or its estate; (ii) have connection with the Diocese, creditors, U.S. Trustee, other parties-in-interest and their attorneys and accountants; or (iii) employ any person related to a Court judge or the U.S. Trustee. The firm is also a "disinterested person" under applicable sections of the Bankruptcy Code, Mr. Cipione says. About the Diocese of Davenport 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. Davenport's exclusive period to file a plan will expire on Aug. 15, 2007. Its exclusive period to solicit acceptances of its plan will expire on Oct. 14, 2007. (Catholic Church Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Court Confirms Portland's 3rd Amended Plan ----------------------------------------------------------- The Hon. Elizabeth Perris of the U.S. Bankruptcy Court for the District of Oregon issued a written order dated April 17, 2007, confirming the Third Amended and Restated Joint Plan of Reorganization delivered by the Archdiocese of Portland in Oregon; the Tort Claimants Committee appointed to represent the interests of Known Tort Claimants; David A. Foraker, as Future Claimants Representative; and the Parish and Parishioners Committee. Judge Perris ruled that all objections to the Joint Plan's confirmation that have not been withdrawn, waived, or settled are overruled on the merits. She added that the amendments to the Joint Plan are confirmed in all respects pursuant to Section 1129 of the Bankruptcy Court. Claim No. 476 At the Court's directive, the Joint Plan was amended to provide that "[f]or avoidance of doubt, Claim No. 476 is a General Unsecured Claim." The Claim is transferred to Class 5 from the settled claims after Judge Perris received a letter from the Claimant, Ritchard D. Coultas, asserting that he did not settle with Portland. Discharge The Plan Proponents also amended the Joint Plan to provide that, pursuant to Section 1141(d), on the Plan Effective Date, the Archdiocese, its parishes and schools, and the Reorganized Debtor will be discharged from all liability on all claims and debts, known or unknown, that arose from any action, conduct or obligation of the Parties or their representatives before the Joint Plan's Confirmation Date. Notwithstanding the Discharge provisions of the Plan, Portland's discharge will not impair or release the obligations of any Non- Settling Insurance Company with respect to the Claims. Moreover, obligations arising under any settlement agreement between Portland and any Settling Insurance Company approved by the Bankruptcy Court will not be discharged. Exculpation Based on the Court's instruction, the Joint Plan was amended to include the provision that nothing in the exculpation clause affects the liability of the Archdiocese for conduct related to its disclosure or lack of disclosure of information under the Court's "order expanding parties to whom Debtor may disclose confidential proofs of claim and protective order" filed on November 16, 2005. Plan Documents The Court also approved each of the Plan Documents, including: (a) Known Tort Claims Trust Agreement; (b) Future Claims Plan Documents: -- Future Claims Trust Agreement; -- Future Claims Note; and -- Irrevocable Standby Letter of Credit (Securing Future Claims Note); and (c) Allied Irish Banks Credit Facility Documents: -- Credit Agreement; -- Promissory Note; -- Security Agreement; -- Account Control Agreement; -- Line of Credit Instrument (Trust Deed); -- Environmental Indemnity Agreement; and -- Irrevocable Standby Letter of Credit. Judge Perris approved all pending settlements between Portland and any Claimant. Property Transfers and Taxes The Court ruled that except as otherwise provided in the Joint Plan, all transfers of property of the bankruptcy estate or of the Archdiocese, the Parishes or the Schools that are made in connection with the Joint Plan, including the contemplated restructuring transactions, will be free and clear of all claims, liens, encumbrances and other interests of creditors and claimants. Pursuant to Section 1146(c), the issuance, transfer or exchange of security, or the delivery or filing of instrument of transfer, in connection with the Joint Plan will not be taxed under any law imposing a recording, stamp, transfer and other similar taxes. Judge Perris directs all filing or recording officers to accept and to file all instruments of transfer without payment of any tax imposed by federal, state, or local law. Settling Insurance Companies Judge Perris maintained that all injunctions or stays provided for in the Confirmation Order and the Joint Plan, the injunctive provisions of Sections 524 and 1141, and all injunctions or stays protecting a Settling Insurance Company and its predecessors, successors, and assigns are permanent and will remain in full force and effect after the Effective Date. The Settling Insurance Companies are: (a) ACE Property and Casualty Insurance Company, formerly known as CIGNA Property and Casualty Insurance Company and Aetna Insurance Company; (b) Centennial Insurance Company; (c) Employers Surplus Lines Insurance Company; (d) Interstate Fire & Casualty Company; (e) Underwriters and syndicates at Lloyd's, London, and all companies doing business in the London Insurance Market, including: -- Excess Ins. Co., Ltd.; -- Terra Nova Ins. Co., Ltd.; -- Tenecom, Ltd.; -- Sphere Drake Ins. Co., PLC; -- London & Edinburgh Per Tower; -- Union America; -- Stronghold Ins. Co., Ltd.; -- Dominion Ins. Co., Ltd.; -- CNA Reinsurance Co. of London, Ltd. -- St. Katherine Insurance Co. PLC; (f) Oregon Insurance Guaranty Association; (g) General Insurance Company of America, Safeco Insurance Company of America, and Safeco Corporation; (h) St. Paul Mercury Indemnity Company and St. Paul Fire and Marine Insurance Company; and (i) National Union Fire Insurance Company of Pittsburgh, Pennsylvania. Contracts and Leases All of the Archdiocese's executory contracts and unexpired leases, including, employee and retiree benefit plans and collective bargaining agreements, that were assumed pursuant to the Joint Plan will remain in full force and effect for the benefit of the Reorganized Debtor. A full-text copy of the order confirming Portland's Third Amended and Restated Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?1dae The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. (Catholic Church Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: San Diego Gets Interim Nod on $14MM DIP Financing ------------------------------------------------------------------ The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California granted The Roman Catholic Bishop of San Diego's request, on an interim basis, to incur up to $14,000,000 in postpetition secured financing from the ALSAM Foundation to fund the construction of Mater Dei High School. Judge Adler deferred ruling on whether the $36,000,000 ALSAM advanced before the Debtor's bankruptcy filing to pay contractors was originally a gift or loan, The San Diego Union-Tribune reported. Judge Adler explained she could not find that ALSAM and San Diego acted in bad faith, Union-Tribune Staff Writers Mark Sauer and Sandi Dolbee relate. Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. The Diocese's exclusive period to file a chapter 11 plan of reorganization expires on June 27, 2007. On March 27, 2007, the Debtor filed its plan and disclosure statement. (Catholic Church Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Spokane Delivers Voting Results on Joint Plan -------------------------------------------------------------- The Diocese of Spokane delivered to the U.S. Bankruptcy Court for the Eastern District of Washington an amended summary of the voting results of a Second Amended Joint Plan of Reorganization proposed by the Diocese, the Official Committee of Tort Claimants, the Future Claims Representative, and the Executive Committee of the Association of Parishes. Members % of Members % of Class Accepting Accepting Rejecting Rejecting ----- --------- --------- --------- --------- Class 5 125 100.00 0 0.00 Class 6 24 100.00 0 0.00 Class 7 162 100.00 0 0.00 Amount % of Amt Amount % of Amt Class Accepting Accepting Rejecting Rejecting ----- --------- --------- --------- --------- Class 5 $145,697,054 100.00 0 0.00 Class 6 39,359 100.00 0 0.00 Class 7 160 100.00 0 0.00 The Tort Claimants unanimously voted for the Joint Plan. The Associated Press reported that many victims believed that the Diocese should have done more. One of the tort claimants, Mike Shea, expressed his dissatisfaction. Mr. Shea complained that the claimants were not able to hold the bishop accountable for the abuses, and that the public has not been informed of his involvement of those misconduct, AP said. "I think the victims have accepted the reality of finite resources and understand that there's some benefit to putting an end to this, and to doing it sooner, rather than later," said Michael Pfau, Esq., who represents about half of Spokane's claimants, according to AP. AP further reported that Mike Ross, an official of the Spokane chapter of Survivors Network of Those Abused by Priests, had asked Bishop Skylstad to go farther than what the Joint Plan provides and open the Diocese's archives for public inspection. One of Spokane's lawyers, Greg Arpin, Esq., told AP that the overwhelming voting result is a major step toward confirmation of the Joint Plan. "We're optimistic it will be confirmed," he said. The SpokesmanReview.com relates that four parishioners have asked Bishop Skylstad to step down and called the Diocese's settlement deal with certain sex abuse claimants a "complete disaster." Donald Herak, Thomas Tilford, James Workland, and Ronald Caferro told Bishop Skylstad in a letter, "we will not contribute one dime to this unfortunate, costly and mistaken mediated settlement," John Stucke at SpokesmanReview.com said. Bishop Skylstad dismissed the parishioners' demand. In his reply letter, Bishop Skylstad said "[t]o put this settlement to the wind is a gamble no prudent man of business would consider," Mr. Stucke reported. Mr. Herak is a former chairman of Gonzaga University's board of trustees. He owns Acme Concrete Co. Mr. Tilford, an attorney and businessman, heads the Hogan Entrepreneurial Leadership Program at Gonzaga. He serves on the University's board of trustees. Mr. Workland is an attorney at Workland Witherspoon PLLC and serves on the Gonzaga University President's Council. Mr. Caferro owns Ecolite Manufacturing Company Inc. Shaun Cross, Esq., the diocese's counsel, was surprised with the resignation demand, Mr. Stucke relates. "I'm not Catholic, but it's my understanding that only the pope can remove a bishop. It's also my understanding that Mr. Herak is not the pope," Mr. Cross said, as cited by Mr. Stucke. The confirmation hearing of Spokane's Joint Plan is set to start today, April 24, 2007. 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. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CHINA RECYCLING: Losses Prompt Zhong Yi's Going Concern Doubt ------------------------------------------------------------- Zhong Yi (Hong Kong) C.P.A. Company Limited raised substantial doubt about China Recycling Energy Corporation's ability to continue as a going concern citing China Recycling's substantial losses after auditing the company's financial statements as of Dec. 31, 2006. The company, formerly China Digital Wireless Inc., posted a net loss of $3,463,371 for the year 2006, versus an earlier year-net income of $1,811,107. Total revenues for the year 2006 were $2,889,436, versus total revenues for the year 2005 of $20,419,022. As of Dec. 31, 2006, the company posted $4,464,612 in total assets, $1,117,975 in total current liabilities, and $3,346,637 in total stockholders' equity. Accumulated deficit in 2006 was $2,512,696, as compared with retained earnings in 2005 of $8,084,922. The company's cash balance decreased from $3,578,367 as of Dec. 31, 2005, to $252,000 as of Dec. 31, 2006. This decrease in cash and cash equivalents was primarily due to the decrease in the collection of accounts receivable. At Dec. 31, 2006, and 2005, the company's net working capital was $9,877,040 and $3,346,637, respectively. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1db4 About China Recycling China Recycling Energy Corporation (OTC BB: CREG) currently provides information services, cellular phone distribution and advertising services through its Chinese operating subsidiaries. In 2006 and in the first quarter of 2007, the company also began to engage in recycling energy business, providing energy saving and recycling products and services. On March 8, 2007, China Digital Wireless Inc. changed its name to China Recycling Energy Corporation. Its subsidiaries are Sifang Holdings Co., Ltd., Sifang Holdings Co., and Shanghai TCH Data Technology Co., Ltd. CIENA CORP: Continued Growth Prompts S&P's Positive Outlook ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Linthicum, Maryland-based Ciena Corp., and revised the outlook to positive from stable. The action reflects the company's continued growth and improving operating profitability. "The ratings continue to reflect the company's substantial leverage and the risks of continuing technology evolution, as well as its good liquidity," said Standard & Poor's credit analyst Bruce Hyman. Ciena supplies optical telecommunications systems and related products to telecom operators, cable MSOs, government agencies, and enterprise users. The company had $938 million in debt and capitalized operating leases outstanding as of Jan. 31, 2007. Although market conditions remain aggressive, Ciena has increased its revenues sequentially for several years. Ciena reported revenues for the quarter ended Jan. 31, 2007, of $165 million, up modestly from October and 38% year over year, while the company expects internally generated revenue growth of 5%-10% sequentially in the April quarter, and 27%-30% in the fiscal year ending October 2007. Sales remain somewhat concentrated, with three customers representing 50% of sales in the January quarter, in addition to other large customers such as BT; revenues could fluctuate depending on the timing of those customers' buildout of optical networks. EBITDA has been positive since the April 2006 quarter, and was $18 million, or 11% of sales, in the January 2007 quarter. Margins can fluctuate depending on the mix of products and services sold in each quarter. Still, reflecting both growth and an anticipated improvement in services profitability, EBITDA margins could reach mid-teens percentage by year-end. CITICORP MORTGAGE: Fitch Holds B Rating on Class B5 Certificates ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings from these Citicorp Mortgage Alternative Loan Trust Issue: Series 2006-A3 -- Class A at 'AAA'; -- Class B1 at 'AA'; -- Class B2 at 'A'; -- Class B3 at 'BBB'. -- Class B4 at 'BB'; -- Class B5 at 'B'. The affirmations, affecting approximately $300.03 million in outstanding certificates, reflect adequate levels of credit enhancement relative to expected losses and low seasoning. The pool is seasoned 7 months and has a pool factor (current collateral balance as a percentage of the initial balance) of approximately 92%. To date, the trust has experienced no realized losses. The pool consists of 10- to 30-year, fixed rate mortgages extended to Alt-A borrowers, secured by first-liens on one- to four- family residential properties. The loans are serviced by CitiMortgage (rated 'RPS1' by Fitch) as primary servicer. At closing, the three largest geographic concentrations of loans were in California, New York, and Florida. CITIGROUP MORTGAGE: Fitch Holds Low-B Ratings on Two Certificates ----------------------------------------------------------------- Fitch Ratings has affirmed these Citigroup Mortgage Loan Trust Issue: Series 2005-7 -- Class 1-A at 'AAA'; -- Class 1-B1 at 'AA'; -- Class 1-B2 at 'A'; -- Class 1-B3 at 'BBB'. -- Class 1-B4 at 'BB'; -- Class 1-B5 at 'B'; -- Class 2-A at 'AAA'; -- Class 2-B1 at 'AA'; -- Class 2-B2 at 'A'; -- Class 2-B3 at 'BBB'. -- Class 2-B4 at 'BB'; -- Class 2-B5 at 'B'. The affirmations, affecting approximately $950.6 million in outstanding certificates, reflect adequate levels of credit enhancement relative to expected losses and low seasoning. The pool is seasoned 18 months and has a pool factor (current collateral balance as a percentage of the initial balance) of approximately 81.5%. To date, the trust has experienced no realized losses. The pool consists of conventional, fully amortizing fixed- and adjustable- rate mortgages extended to Alt-A borrowers, secured by first-liens on single family residential properties. The loans are master serviced by CitiMortgage (rated 'RMS1' by Fitch). At closing, the three largest geographic concentrations of loans were in California,Virginia, and Maryland. CITY CAPITAL: De Joya Griffith Raises Going Concern Doubt --------------------------------------------------------- De Joya, Griffith & Company LLC, in Henderson, Nev., expressed substantial doubt about City Capital Corporation'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 negative cash flows. City Capital Corporation reported a net investment loss of $896,975 for the year ended Dec. 31, 2006, compared with a net investment income of $420,955 for the year ended Dec. 31, 2005. . For the years ended Dec. 31, 2006, and 2005, the company reported zero operating revenues. As the company operates as a Business Development Corporation as designated under Section 54(a) of the Investment Act of 194 during 2006 and 2005, no revenue was incurred during those periods. The company's balance sheet at Dec. 31, 2006, showed $1,373,869 in total assets and $1,855,747 in total liabilities, resulting in a total net deficit of $481,878. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $56,314 in total current assets available to pay $1,855,747 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?1da5 About City Capital City Capital Corp. (OTC BB: CCCN.OB) -- http://citycapcorp.com/-- prior to its election to be a Business Development Corporation, specialized in the sale and distribution of artificial turf. Those business activities were conducted in the company's subsidiary, Perfect Turf Inc. Perfect Turf was sold on March 29, 2007. Currently, the company's business is the acquisition of undervalued real assets for redevelopment and oil and gas leases for improvement in production. CLEAR CHANNEL: Declares Quarterly Cash Dividend on Common Stock --------------------------------------------------------------- The board of directors of Clear Channel Communications Inc. declared a quarterly cash dividend of $0.1875 per share on its common stock. The dividend is payable on July 15, 2007 to shareholders of record at the close of business on June 30, 2007. Based in San Antonio, Texas, Clear Channel Communications Inc. (NYSE:CCU) -- http://www.clearchannel.com/-- is a global media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. Outside U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. * * * As reported in yesterday's Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Clear Channel Communications Inc. to 'B+' from 'BB+'. The ratings remain on CreditWatch with negative implications, where they were placed on Oct. 26, 2006, following the company's announcement that it was exploring strategic alternatives to enhance shareholder value. CLECO CORP: Resolves Acadia Power Plant Issue with Calpine Corp. ---------------------------------------------------------------- A settlement has been reached between Cleco Corp. and Calpine Corp., subject to bankruptcy court approval, resolving issues related to their co-owned Acadia power plant. The plant is owned by Acadia Power Partners LLC, an entity owned equally by Cleco's Acadia Power Holdings LLC and Calpine Acadia Holdings LLC. Under the proposed settlement APH will receive allowed unsecured claims against Calpine Energy Services, L.P., and Calpine of $85 million in connection with two long-term tolling agreements CES held for the output of the 1,160-megawatt plant located near Eunice and Calpine's guaranty of those agreements. Additionally, APH has agreed to purchase Calpine's 50% ownership interest in Acadia Power Partners for $60 million, subject to any higher or better offers Calpine may receive in a bankruptcy court- sponsored auction. APH's $60 million offer, in effect, values a 50% interest in the Acadia power plant at $145 million, taking into account the agreed value of certain priority distributions and payments due APH. APH's offer will serve as a "Stalking Horse" bid in the auction of Calpine's interest in Acadia Power Partners. The auction process is anticipated to begin in May, with the bankruptcy auction expected in July. The terms of the auction, including a breakup fee and other protections in favor of APH, will be considered at a May 9 bankruptcy court hearing. If APH is not the successful bidder, APH will retain its 50% ownership in Acadia Power Partners and receive payment from the successful bidder in the amount of $85 million. The $85 million payment is the agreed value of certain priority distributions and payments due APH under agreements with Calpine affiliates. In either outcome, a Cleco subsidiary will assume operations and project management functions at the plant. "We are extremely pleased to have reached an agreement with Calpine and look forward to assuming the daily activities of the plant," Cleco President and CEO Michael Madison said. About Calpine Corporation Headquartered in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. The Debtors' exclusive period to file chapter 11 plan of reorganization expires on June 20, 2007. Calpine Corp. has until June 20, 2007, to file a plan, and until Aug. 20, 2007, to solicit acceptances of that plan. About Cleco Corp. Headquartered in Pineville, Louisiana, Cleco Corp. (NYSE:CNL) -- http://www.cleco.com/-- is a regional energy services holding company that conducts substantially all of its business operations through its two principal operating business segments, Cleco Power LLC and Cleco Midstream Resources LLC. Cleco Power is an integrated electric utility services subsidiary which also engages in energy management activities. Cleco Midstream is a merchant energy subsidiary that owns and operates a merchant generation station, invests in a joint venture that owns and operates a merchant generation station, and owns and operates transmission interconnection facilities. * * * In March 2003, Moody's Investors Service assigned a Ba2 rating to Cleco Corp.'s Preferred Stock. CONTINENTAL AIRLINES: Earns $22 Million in Quarter Ended March 31 ----------------------------------------------------------------- Continental Airlines reported net income of $22 million on operating revenue of $3.2 billion for the first quarter ended March 31, 2007, compared with a net loss of $40 million on operating revenue of $2.9 billion for the same period ended March 31, 2006. First quarter net income includes a $7 million gain on the sale of substantially all of the company's remaining investment in ExpressJet Holdings and a net charge from other special items of $11 million. Excluding special items, Continental recorded net income of $26 million, an improvement of $72 million compared to the same period last year. Strong revenue growth, continued cost discipline and a slight decrease in fuel prices contributed to the quarterly profit, the first time since 2001 that the company has posted a first quarter profit in what is a seasonally weak period. Continental's operating income of $64 million increased $53 million over the same period last year, despite severe winter storms that negatively impacted revenue by over $10 million. "Thanks to the hard work of my co-workers, we were able to achieve a first quarter profit for the first time in six years," said Larry Kellner, Continental's chairman and chief executive officer. "We are competitively well-positioned because we combine solid day-to-day execution with thoughtful long-term planning." Passenger revenue of $2.9 billion increased $212 million, or 7.9 percent, compared to the first quarter 2006, led by strong international revenue growth. Continental's growth and high load factors, both domestic and international, and improved yield produced higher revenue for the company. "We are pleased with the first quarter revenue results, as we continued to grow our revenue at almost twice the rate that we grew our capacity," said Jeff Smisek, Continental's president. "While the domestic system suffers from yield pressure, the international system is performing superbly, and rewards us for our decade-long focus on international expansion." "Good execution and attention to detail by our entire team brought our costs in better than expected, despite the negative impact of winter weather," said Jeff Misner, Continental's executive vice president and chief financial officer. "The team's continuous effort, coupled with a variety of initiatives we are working on, should continue to hold our costs in check." Continental ended the first quarter with $2.64 billion in unrestricted cash and short-term investments. Continental completed the sale of $1.15 billion of Pass Through Certificates in April. The certificates were issued in three different series with an average interest rate of 6.27%. Proceeds from the sale of the certificates will be used to finance the company's purchase of 18 737-900ER and 12 737-800 Boeing aircraft scheduled for delivery beginning in January 2008. Continental now has committed financing for all of its new aircraft deliveries through the end of 2008. At March 31, 2007, the company's balance sheet showed $11.8 billion in total assets, $11.2 billion in total liabilities, and $583 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2007 are available for free at http://researcharchives.com/t/s?1db9 About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 3,100 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 138 international destinations. More than 400 additional points are served via SkyTeam alliance airlines. With more than 44,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 67 million passengers per year. * * * As reported in the Troubled Company Reporter on March 29, 2007, Standard & Poor's Ratings Services assigned its preliminary 'A' rating to Continental Airlines Inc.'s series 2007-1 Class A pass-through certificates, its preliminary 'BBB-' rating to the Class B certificates, and its preliminary 'B+' rating to the Class C certificates. COUNTRYWIDE ASSET: Fitch Cuts Rating on Four Class Certificates ---------------------------------------------------------------- Fitch Ratings has affirmed 14 classes, placed 8 classes on Rating Watch Negative, 4 of which were also downgraded, from these Countrywide Asset-Back Securitizations trusts: Series 2006-SPS1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA+'; -- Class M-4 affirmed at 'AA'; -- Class M-5 affirmed at 'AA-'; -- Class M-6 rated 'A', placed on Rating Watch Negative; -- Class M-7 rated 'A-', placed on Rating Watch Negative; -- Class M-8 downgraded to 'BB+' from 'BBB+', placed on Rating Watch Negative; -- Class M-9 downgraded to 'BB' from 'BBB', placed on Rating Watch Negative; -- Class B downgraded to 'BB-' from 'BBB-', placed on Rating Watch Negative. Series 2006-SPS2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA'; -- Class M-5 affirmed at 'AA-'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 rated 'BBB+', placed on Rating Watch Negative; -- Class M-9 rated 'BBB', placed on Rating Watch Negative; -- Class B downgraded to 'BB-' from 'BBB-', placed on Rating Watch Negative. The above trusts consist entirely of second liens extended to sub- prime borrowers on one- to four-family residential properties and certain other property and assets. CWABS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The affirmations affect approximately $549.4 million in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The classes with negative actions reflect the deterioration in the relationship of CE to future loss expectations and affect $55.38 million in outstanding certificates. Series 2006-SPS1, seasoned 9 months, has experienced losses in the sum of approximately $11.33 million in the past three months which has depleted the OC amount. The credit support provided by the OC to the most subordinate class has decreased 267 bps in 3 months. This has put negative pressure on the subordinate bonds affecting classes B up to M-6. If the high rate of losses continue, further rating action may be necessary. Slightly less seasoned at 7 months, Series 2006-SPS2 experienced a loss of approximately $6 million in the March distribution period. The loss decreased the OC percentage 69 bps in one month. Fitch believes that this trust will have similar trends in losses as Series 2006-SPS1 and Fitch will monitor the loss trends over the next few months to determine the need for rating action. Countrywide Home Loans Servicing, LP, rated 'RMS1-' by Fitch, will act as Master Servicer for the above transactions. COUNTRYWIDE ASSET: Fitch Takes Various Rating Actions on 13 Issues ------------------------------------------------------------------ Fitch Ratings has affirmed 99 classes, placed 1 class on Rating Watch Negative, and upgraded 12 classes from the following Countrywide Asset-Back Securitizations (CWABS) trusts: Series 2003-5 Group 1 -- Class A affirmed at 'AAA'; -- Class MF-1 upgraded to 'AAA' from 'AA+'; -- Class MF-2 upgraded to 'AA-' from 'A+'; -- Class MF-3 upgraded to 'A+' from 'A'; -- Class MF-4 upgraded to 'A+' from 'A'; -- Class MF-5 upgraded to 'A' from 'A-'; -- Class BF upgraded to 'A-' from 'BBB+'. Series 2003-5 Group 2 -- Class MV-1 upgraded to 'AA+' from 'AA'; -- Class MV-2 upgraded to 'A+' from 'A'; -- Class MV-3 upgraded to 'A' from 'A-'; -- Class MV-4 upgraded to 'A-' from 'BBB+'; -- Class MV-5 upgraded to 'BBB+' from 'BBB'; -- Class BV upgraded to 'BBB' from 'BBB-'. Series 2003-BC3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB+'; -- Class M-6 affirmed at 'BBB'. Series 2003-BC4 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A'; -- Class M-5 affirmed at 'A-'; -- Class M-6 affirmed at 'BBB+'; -- Class B affirmed at 'BBB'. Series 2003-BC5 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'AA-'; -- Class M-3 affirmed at 'A+'; -- Class M-4 affirmed at 'A'; -- Class M-5 affirmed at 'A-'; -- Class M-6 affirmed at 'BBB+'; -- Class B affirmed at 'BBB'. Series 2003-BC6 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB'; -- Class B rated 'BBB-', placed on Rating Watch Negative. Series 2004-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class B affirmed at 'BB+'. Series 2004-5 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class B affirmed at 'BBB-'. Series 2004-8 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class B affirmed at 'BBB-'. Series 2004-11 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class B affirmed at 'BBB-'. Series 2004-BC4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class B affirmed at 'BBB-'. Series 2005-9 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; Series 2005-AB1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class B affirmed at 'BBB'. Series 2005-BC3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class B affirmed at 'BBB-'. The above trusts consist primarily of fixed- and adjustable-rate first and second liens extended to sub-prime borrowers on one- to four-family residential properties and certain other property and assets. Series 2003-BC4 and 2003-BC5 contain primary mortgage insurance policies that insure against default a fraction of the applicable loan balances, bringing down the effective loan to value ratio on these loans to 60%. Approximately 65%-70% of mortgage loans in each trust are insured under these policies. CWABS purchased the mortgage loans from Countrywide Home Loans, Inc. and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The affirmations affect approximately $4.84 billion in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $370.81 million in outstanding certificates. The class placed on Rating Watch Negative reflects the deterioration in the relationship of CE to future loss expectations and affects $1.07 million in outstanding certificates. The losses to date and current delinquency of Group 1 of series 2003-5 have been substantially below industry averages for the 2003 vintage. With only 0.35% in cumulative losses to the Group and approximately 7% of delinquent loans as of the March 2007 distribution period, the trust has been able to maintain the target overcollateralization amount since origination. While Group 2 has experienced a few months of OC deterioration in the past year, it benefits from a cross-collateralization feature of the remaining monthly net excess spread of Group 1. Since losses have been minimal for Group 1, Group 2 has been able to utilize this feature to maintain the OC amount. Since the step-down date of October 2006, series 2003-BC6 has been below the target amount of $2,005,000. For the past three months, the OC percentage has decreased approximately 37 basis points adding pressure to the most subordinate bond. Fitch will continue to monitor this bond. Countrywide Home Loans Servicing, LP, rated 'RMS1-' by Fitch, will act as Master Servicer for the above transactions. CRESTED CORP: Moss Adams Expresses Going Concern Doubt ------------------------------------------------------ Moss Adams LLP cited several factors that raise substantial doubt about the ability of Crested Corp. to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006. The factors were the company's significant losses from operations and working capital deficit of $3,730,800 as of Dec. 31, 2006. Moss Adams also stated that a substantial portion of Crested's obligation is [owed] to an affiliated entity. Net income for the year ended Dec. 31, 2006, was $3,850,900, versus net income for the year ended Dec. 31, 2005, of $4,541,400. The company did not obtain any revenue for the years 2006, 2005 and 2004. The company's balance sheet as of Dec. 31, 2006, showed total assets of $15,123,000; total current liabilities of $14,482,100; commitment to fund equity investees of $215,600; assets retirement obligation of $51,000; and forfeitable common stock of $10,100, resulting in a $364,200 shareholders' equity. The company recorded an accumulated deficit of $11,497,400 in 2006, as compared with an accumulated deficit of $15,348,300 in 2005. Although the company received these cash proceeds during the year ended Dec. 31, 2006, it continued to have a working capital deficit of $3,730,800. The principal component of the working capital deficit is a debt payable to U.S. Energy Corp. in the amount of $13,277,200. The debt to USE increased $2,455,400 during the year ended Dec. 31, 2006, as a result of USE paying the company's portion of working capital and investment capital needs in various entities in which they jointly participate. During the year ended Dec. 31, 2006, the company consumed $15,600 in operations and $3,313,900 in financing activities while investing activities generated $6,471,000. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1db0 About Crested Corp. Crested Corp. (OTC BB: CBAG) develops and leases mineral properties. The company primarily focuses on hard rock minerals, including lead, zinc, silver, molybdenum, gold, uranium, and oil and gas properties. It also engages in the production of petroleum properties and marketing of minerals through equity investees. CSFB HOME: S&P Junks Ratings on Six Certificate Classes ------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 11 classes from eight series of home equity pass-through certificates issued by CSFB Home Equity Asset Trust and Home Equity Asset Trust. The ratings remain on CreditWatch with negative implications. The ratings on another two classes from two series were lowered and placed on CreditWatch with negative implications. In addition, the ratings on six classes from five series were lowered to 'CCC' and removed from CreditWatch negative. Furthermore, the ratings on four classes from four series were placed on CreditWatch with negative implications, while three classes from three series remain on CreditWatch with negative implications. Lastly, the ratings on 41 classes from the 12 series were affirmed. The downgrades and negative CreditWatch placements reflect the deteriorating performance of the collateral pools as monthly net losses continue to significantly outpace monthly excess interest, resulting in steady erosion of the classes' credit support, specifically overcollateralization. Each of these transactions, except series 2004-1, is below its respective O/C target (0.50% of the original pool principal balance). Series 2004-1 is at its O/C target of 0.50%; however, cash flow projections indicate that the O/C will be written down, as losses outpace excess spread. The current O/C for the other 11 transactions ranges from 0.08% for series 2003-2 and 2003-5 to 0.31% for series 2002-5. Total delinquencies range from 31.80% of the current pool balance for series 2003-1 to 40.58% for series 2002-2, with severe delinquencies (90-plus days, foreclosure, and REO) ranging from 14.40% for series 2003-1 to 24.39% for series 2003-6. Cumulative realized losses range from 1.14% of the original pool balance for series 2003-4 to 2.48% for series 2003-2. The ratings on six classes were removed from CreditWatch because they were lowered to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. Standard & Poor's will continue to closely monitor the performance of these transactions. If losses decline to a point at which they no longer exceed excess interest, and the level of O/C has not been further eroded, S&P will affirm the ratings and remove them from CreditWatch. Conversely, if losses continue to exceed excess interest and further erode O/C, S&P will take additional negative rating actions. The affirmed ratings reflect adequate actual and projected credit support percentages and the shifting interest structure of the transactions. Credit support for these transactions is provided by subordination, O/C, and excess interest cash flow. The collateral consists of 30-year fixed- and adjustable-rate, first- and second- lien subprime mortgage loans secured by one- to four-family residential properties. Ratings Placed on Creditwatch Negative CSFB Home Equity Asset Trust Home equity pass-through certificates Rating ------ Series Class To From ------ ----- -- ----- 2002-3 M-2 A/Watch Neg A 2002-5 M-2 A/Watch Neg A 2003-4 B-2 BBB/Watch Neg BBB Home Equity Asset Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-1 B-3 BBB/Watch Neg BBB Ratings Lowered and Remaining on Creditwatch Negative CSFB Home Equity Asset Trust Home equity pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 M-2 BBB/Watch Neg A+/Watch Neg 2002-4 B-1 BB/Watch Neg BBB+/Watch Neg 2003-1 B-2 B/Watch Neg BB/Watch Neg 2003-2 M-3 BB/Watch Neg BBB/Watch Neg 2003-2 B-1 B/Watch Neg BB/Watch Neg 2003-3 B-1 B/Watch Neg BB/Watch Neg 2003-4 B-3 BB/Watch Neg BBB-/Watch Neg Home Equity Asset Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-5 B-1 B/Watch Neg BB+/Watch Neg 2003-5 B-2 B-/Watch Neg BB/Watch Neg 2003-6 B-2 BB/Watch Neg BBB/Watch Neg 2003-6 B-3 B-/Watch Neg BB-/Watch Neg Ratings Lowered and Placed on Creditwatch Negative CSFB Home Equity Asset Trust Home equity pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-2 M-2 BBB/Watch Neg A+ Home Equity Asset Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-5 M-3 BBB/Watch Neg A- Ratings Lowered and Removed from Creditwatch Negative CSFB Home Equity Asset Trust Home equity pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-1 B-1 CCC B/Watch Neg 2002-2 B-1 CCC B/Watch Neg 2002-3 B-1 CCC B/Watch Neg 2003-3 B-2 CCC B/Watch Neg 2003-3 B-3 CCC B-/Watch Neg Home Equity Asset Trust Rating ------ Series Class To From ------ ----- -- ---- 2003-5 B-3 CCC B/Watch Neg Ratings Remaining on Creditwatch Negative CSFB Home Equity Asset Trust Home equity pass-through certificates Series Class Rating ------ ----- ------ 2002-5 B-1 B/Watch Neg 2003-1 B-1 BB+/Watch Neg 2003-3 M-3 A-/Watch Neg Ratings Affirmed CSFB Home Equity Asset Trust Home equity pass-through certificates Series Class Rating ------ ----- ------ 2002-1 A-2, A-3, A-4 AAA 2002-1 M-1 AA+ 2002-2 A-2, A-3, A-4 AAA 2002-2 M-1 AA+ 2002-3 A-2, A-4, A-5 AAA 2002-3 M-1 AA+ 2002-4 M-1 AA+ 2002-4 M-2 A 2002-5 M-1 AA 2003-1 M-1 AA 2003-1 M-2 A+ 2003-1 M-3 A 2003-1 B-3 CCC 2003-2 M-1 AA 2003-2 M-2 A+ 2003-2 B-2 CCC 2003-3 M-1 AA 2003-3 M-2 A 2003-4 M-1 AA 2003-4 M-2 A 2003-4 M-3 A- 2003-4 B-1 BBB+ Home Equity Asset Trust Series Class Rating ------ ----- ------ 2003-5 A-1, A-2 AAA 2003-5 M-1 AA 2003-5 M-2 A 2003-6 M-1 AA 2003-6 M-2 A 2003-6 M-3 A- 2003-6 B-1 BBB+ 2004-1 M-1 AA 2004-1 M-2 A+ 2004-1 M-3 A 2004-1 B-1 A- 2004-1 B-2 BBB+ CUZZ-ACRES-ORANGE: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cuzz-Acres-Orange, L.P., a Corporation 205 Indian River Road Orange, CT 06477 Bankruptcy Case No.: 07-30882 Chapter 11 Petition Date: April 20, 2007 Court: District of Connecticut (New Haven) Judge: Albert S. Dabrowski Debtor's Counsel: James M. Nugent, Esq. Harlow, Adams, and Friedman, P.C. 300 Bic Drive Milford, CT 06460 Tel: (203) 878-0661 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ginsberg & Ginsberg, L.L.C. mortgage $4,205,000 377 Main Street West Haven, CT 06516 First Pioneer Farm Credit mortgage $300,000 174 South Road Enfield, CT 06082-9868 Leo P. Carroll mortgage $150,000 26 Cherry Street Milford, CT 06460 Town of Orange taxes $107,000 Christopher B. Carveth mortgage $100,000 Seward and Monde accounting services $23,175 City of West Haven taxes $7,000 Mary E. Guadagno judgment $3,245 Regional Water Authority utility bills $1,384 United Illuminating Company utility bills $392 CWALT INC: Fitch Puts Ratings on 16 Classes Under Watch Negative ---------------------------------------------------------------- Fitch Ratings has affirmed 465 and placed 16 classes on Rating Watch Negative from these CWALT, Inc.'s alternative loan trusts mortgage pass-through certificates: Series 2005-6CB -- Class A affirmed at 'AAA'. Series 2005-19CB -- Class A affirmed at 'AAA'. Series 2005-J2 -- Class A affirmed at 'AAA'. Series 2005-22T1 -- Class A affirmed at 'AAA'. Series 2005-25T1 -- Class A affirmed at 'AAA'. Series 2005-32T1 -- Class A affirmed at 'AAA'. Series 2005-35CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2005-43 -- Class A affirmed at 'AAA'; -- Class B-2 affirmed at 'BBB'. Series 2005-46CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. Series 2005-48T1 -- Class A affirmed at 'AAA'. Series 2005-49CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. Series 2005-52CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2005-55CB Group 1 -- Class A affirmed at 'AAA'; -- Class 1-M affirmed at 'AA'; -- Class 1-B-1 affirmed at 'A'; -- Class 1-B-2 affirmed at 'BBB'; -- Class 1-B-3 affirmed at 'BB'; -- Class 1-B-4 affirmed at 'B'. Series 2005-55CB Group 2 -- Class A affirmed at 'AAA'; -- Class 2-M affirmed at 'AA'; -- Class 2-B-1 affirmed at 'A'; -- Class 2-B-2 affirmed at 'BBB'; -- Class 2-B-3 affirmed at 'BB'; -- Class 2-B-4 affirmed at 'B'. Series 2005-57CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. Series 2005-67CB -- Class A affirmed at 'AAA'; Series 2005-74T1 -- Class A affirmed at 'AAA'; Series 2005-77T1 Group 1 -- Class A affirmed at 'AAA'. Series 2005-77T1 Group 2 -- Class A affirmed at 'AAA'. Series 2005-83CB -- Class A affirmed at 'AAA'. Series 2006-2CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-8T1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 rated 'BB', placed on Rating Watch Negative; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-9T1 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 rated 'BB', placed on Rating Watch Negative; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-11CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-12CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-13T1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 rated 'BB', placed on Rating Watch Negative; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-15CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-17T1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'A+'; -- Class M-4 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BBB-'; -- Class B-3 rated 'BB', placed on Rating Watch Negative; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-20CB -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. Series 2006-29T1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'A+'; -- Class M-4 affirmed at 'A'; -- Class M-5 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BBB-'; -- Class B-3 affirmed at 'BB'; -- Class B-4 rated 'B', placed on Rating Watch Negative. The above certificates are collateralized primarily by conventional, fully amortizing, 15- to 30-year fixed-rate, mortgage loans either originated under Countrywide Home Loans, Inc.'s Standard Underwriting Guidelines extended to prime borrowers or Expanded Underwriting Guidelines extended to Alt-A borrowers secured by first liens on one- to four-family residential properties. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. These affirmations, representing approximately $13 billion of outstanding principal, reflect adequate relationships of credit enhancement to future loss expectations. The classes placed on Rating Watch Negative were placed there due to early trends in the relationship between serious delinquency and CE, and reflect approximately $37 million in outstanding certificates. The trusts currently have 60+ days delinquency (inclusive of foreclosure and real estate owned) percentages ranging from 1.23% to 4.26%. The CEs of the most subordinate classes on these trusts range from 0.29% to 0.46%. There have been minimal to no losses on these trusts to date, as loans have not yet begun to liquidate. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The loans are being serviced by Countrywide Home Loans Servicing LP, a direct wholly owned subsidiary of CHL. Countrywide Servicing is rated 'RPS1' for primary servicing and 'RMS1-' for master servicing by Fitch. D&E LIMITED: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: D&E Limited Partnership #6 3539 Rolston Drive Fort Wayne, IN 46805 Bankruptcy Case No.: 07-11049 Chapter 11 Petition Date: April 20, 2007 Court: Northern District of Indiana (Fort Wayne Division) Judge: Robert E. Grant Debtor's Counsel: R. John Wray 5644 Coventry Lane Fort Wayne, IN 46804 Tel: (260) 423-3331 Total Assets: $2,345,000 Total Debts: $0 The Debtor does not have any creditors that are not insiders. DAIMLERCHRYSLER AG: Employees Propose 70% Ownership of Chrysler --------------------------------------------------------------- Workers at a Chrysler plant in Toledo, Ohio, have written to DaimlerChrysler AG Chief Executive Dieter Zetsche, suggesting employees could buy 70% of Chrysler, possibly in exchange for cost concessions, Gina Chon, Jeffrey McCracken and John D. Stoll report for the Wall Street Journal. Concurrently, billionaire Kirk Kerkorian's investment company, which has offered to buy Chrysler for $4.5 billion in cash, is studying employee ownership as part of its bid and is interested in discussing the idea with the union, WSJ relates. Meanwhile, United Auto Workers union President Ron Gettelfinger, who serves as an employee representative on DaimlerChrysler AG's supervisory board, plans to ask the company's directors to keep Chrysler, English Business News reports. "I personally think that there's a lot of value in keeping it there right now because of the synergies, even though you don't hear a lot about that," Gettelfinger said. "There's been some times when the Chrysler Group has buoyed up the DaimlerChrysler in and of itself and then we're in a little downturn right now." According to the report, Mr. Gettelfinger is opposing the sale of Chrysler to private equity investors because he is concerned that they would "strip and flip" the company by selling it off in parts. English Business News notes that Gettelfinger said Chrysler's losses and problems are small compared to past losses at Ford Motor Co. and General Motors Corp. "It's like hardly anything," he said. "It appears to me we're moving forward and we just don't need the aggravation of going through whatever happens here. It seems to me like both the Chrysler Group and DaimlerChrysler as a whole would be better served if we focused on moving forward with the plan that's in place and building a quality product and worrying about the future." Labor will play a key role in determining the future of Chrysler, largely because the company is grappling with how to address enormous health-care costs and more than $15 billion in unfunded pension and health-care liabilities, Ms. Chon of WSJ observes. That is why bidders for Chrysler have been trying to woo the unions for their support. DaimlerChrysler revealed a restructuring plan that included offering buyout and early retirement packages to 13,000 workers on Feb. 14, the same day that the company's Chairman of the Board of Management Dr. Dieter Zetsche disclosed that all options are open for the struggling unit, English Business News relates. The TCR-Europe reported on April 16 that DaimlerChrysler AG executive Ruediger Grube, a management-board member and head of strategy, is presently negotiating with all Chrysler bidders, with the exception of billionaire Kirk Kerkorian's Tracinda Corp. The company had scheduled meetings with Cerberus Capital Management LP; joint bidders Blackstone Group and Centerbridge Capital Partners LP; and the tandem of Magna International Inc. and Onex Corp., but left Tracinda Corp. in the lurch. Chrysler Group Chief Executive Tom LaSorda recently said that the company is continuing discussions with interested bidders, Reuters states. Mr. LaSorda added that all options are still on the table and the union will have to be involved. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/ -- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam, and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DAIMLERCHRYSLER AG: UAW Talks with Tracinda but Prefers Magna ------------------------------------------------------------- United Auto Workers members, who have proposed an employee-stock- ownership plan for DaimlerChrysler AG's Chrysler Group, met with representatives of billionaire investor Kirk Kerkorian's Tracinda Corp., which has submitted a $4.5 billion bid for the U.S. unit, Gina Chon and John D. Stoll report for The Wall Street Journal. Concurrently, the DaimlerChrysler Employee Buyout Committee, a group of members from UAW local 12 in Toledo, Ohio, has expressed preference for Magna International Inc. as Chrysler's buyer. Both the UAW and the Canadian Auto Workers union have expressed opposition to private equity ownership of the company because of fears that such owners would eliminate long-standing labor agreements, close plants and then flip the company once it returned to profitability, Greg Keenan writes for the Globe and Mail. Union Proposal The TCR-Europe reported on April 23 that workers at a Chrysler plant in Toledo, Ohio, have written to DaimlerChrysler AG Chief Executive Dieter Zetsche, suggesting employees could buy 70% of Chrysler, possibly in exchange for cost concessions. UAW President Ron Gettelfinger, who serves as an employee representative on the company's supervisory board, plans to ask the company's directors to keep Chrysler. DaimlerChrysler's top leaders, including Chief Executive Dieter Zetsche, will meet with labor groups, who plan to ask about the company's strategic review of Chrysler and the status of talks with three other groups, WSJ reveals. Mr. Zetsche faces pressure from shareholders who are concerned that Chrysler, with its $18- billion unfunded health-care liabilities and recent operating losses, is pulling down the company's profitable Mercedes-Benz luxury-car business. Tracinda, in its proposal to DaimlerChrysler, said it would consider giving the UAW a stake as part of a new capital structure, WSJ relates. The proposal would give the union equity in return for giving up some future benefits. This idea, swapping the retirement health-care debts owed to UAW workers for equity in their employers, is getting increasing attention among Detroit union leaders. The company is presently negotiating with all Chrysler bidders, including Cerberus Capital Management LP; joint bidders Blackstone Group and Centerbridge Capital Partners LP; and the tandem of Magna International Inc. and Onex Corp., but has ignored Tracinda Corp. About DaimlerChrysler Based in Stuttgart, Germany, DaimlerChrysler AG (NYSE:DCX) (FRA: DCX) -- http://www.daimlerchrysler.com/-- develops, manufactures, distributes, and sells various automotive products, primarily passenger cars, light trucks, and commercial vehicles worldwide. It primarily operates in four segments: Mercedes Car Group, Chrysler Group, Commercial Vehicles, and Financial Services. The company's worldwide operations are located in: Canada, Mexico, United States, Argentina, Brazil, Venezuela, China, India, Indonesia, Japan, Thailand, Vietnam, and Australia. The Chrysler Group segment offers cars and minivans, pick-up trucks, sport utility vehicles, and vans under the Chrysler, Jeep, and Dodge brand names. It also sells parts and accessories under the MOPAR brand. The Chrysler Group is facing a difficult market environment in the United States with excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles. At the same time, key competitors have further increased margin and volume pressures -- particularly on light trucks -- by making significant price concessions. In addition, increased interest rates caused higher sales & marketing expenses. In order to improve the earnings situation of the Chrysler Group as quickly and comprehensively, measures to increase sales and cut costs in the short term are being examined at all stages of the value chain, in addition to structural changes being reviewed as well. DELTA AIR: Judge Hardin Approves $2.5 Billion Exit Financing ------------------------------------------------------------ The Hon. Adlai S. Hardin of the U.S. Bankruptcy Court for the Southern District of New York authorized Delta Air Lines Inc. and its debtor-affiliates to enter into a commitment letter and related fee letters, with certain financing parties. The Court stated that all amounts due and owing to any of the Financing Parties under the Commitment Letter and the Fee Letters, including the fees and expense reimbursements provided and any indemnity claims arising thereunder, will be entitled to priority as administrative expense claims under Sections 503(b) and 507(a)(2), whether or not the Senior Credit Facilities are consummated. New Credit Facility The Debtors' Joint Plan of Reorganization provides that the Debtors, as reorganized, will enter into a $2.5 billion credit facility, and pay certain fees to the arrangers or bookrunners and the first-lien administrative agent under that new credit facility. As a condition to effectiveness, the Plan requires that: (a) the New Credit Facility has been executed and delivered by all of the parties; (b) all conditions precedent to the consummation of the New Credit Facility have been waived or satisfied in accordance with the terms; and (c) funding pursuant to the New Credit Facility has occurred. The Debtors relate that they have negotiated the term sheet describing the New Credit Facility with certain financing parties. The Official Committee of Unsecured Creditors has approved the Term Sheet. The Term Sheet will be attached as an appendix to the disclosure statement describing the Debtors' Plan. Along with the Term Sheet, the Debtors also negotiated: (a) a commitment letter with the Financing Parties: * J.P. Morgan Securities Inc., * JPMorgan Chase Bank, N.A., * Lehman Brothers Inc., * Lehman Commercial Paper Inc., * UBS Securities LLC, * UBS Loan Finance LLC, * Goldman Sachs Credit Partners L.P., * Merrill Lynch Commercial Finance Corp., * Barclays Capital, the investment banking division of Barclays Bank PLC, and * Barclays Bank PLC; (b) an arrangers fee letter between Delta and the Financing Parties; and (c) an administrative agent fee letter with JPMCB. Overview of the Credit Facility Pursuant to the Commitment Letter, the Financing Parties have committed to provide to the Debtors senior credit facilities in an aggregate amount of $2.5 billion comprising: (i) first-lien revolving credit facility of $1 billion; (ii) first-lien synthetic revolving credit and letter of credit facility of $500 million; and (iii) a second-lien term loan facility of $1 billion. Subject to certain conditions, each of JPMCB, LCPI, UBS Finance, GSCP, Merrill Lynch and Barclays Bank have committed to provide one-sixth of the entire amount of the $2.5 billion Senior Credit Facilities. The proceeds of the Senior Credit Facilities will be used to: (a) repay outstanding loans and advances under: * the Amended and Restated Secured Super-Priority Debtor in Possession Credit Agreement dated as of March 27, 2006; and * the Second Amended and Restated Advance Payment Supplements to Delta's Co-Branded Credit Card Program Agreement and Membership Rewards Agreement dated as of March 27, 2006; (b) pay certain accrued administrative expenses; and (c) finance working capital and for other general corporate purposes. Terms of the Credit Facilities The salient terms of the Senior Secured Credit Facilities are: Borrowers: Delta Air Lines, Inc. Guarantors: Delta's domestic subsidiaries. Co-Lead Arrangers: (a) For the First-Lien Facilities, JPMorgan Securities and Lehman Brothers; and (b) For the Tranche B Term Facility, Goldman Sachs and Merrill Lynch. Joint Bookrunners: (a) For the First-Lien Facilities, JPMorgan Securities, Lehman Brothers and UBS Securities; and (b) For the Tranche B Term Facility, Goldman Sachs, Merrill Lynch and Barclays Capital. Syndication Agents: UBS Securities for First-Lien Facilities and Barclays Capital for Tranche B Term Facility. Administrative Agents and Collateral Agents: JPMCB for the First-Lien Facilities and Goldman Sachs for the Tranche B Term Facility. Lenders: A syndicate of banks, financial institutions and other entities, including JPMCB and Goldman Sachs, arranged by the applicable Co-Lead Arrangers and reasonable acceptable to Delta. Terms of Revolving Facility: Revolving Loans will be repaid in full, and the commitments will terminate five years after the Closing Date. Amortization and Maturity of Tranche A Term Facility: The Tranche A Term Facility will be repaid in an amount equal to 1% of the original principal amount of the Tranche A Term Loans annually, with the balance of the Loans due and payable on the fifth anniversary of the Closing Date. Amortization and Maturity of Tranche A Term Facility: The Tranche B Term Facility will be repaid in an amount equal to 1% of the original principal amount of the Tranche B Term Loans annually, with the balance of the Loans due and payable on the fifth anniversary of the Closing Date. Collateral: Delta and the guarantors will pledge, and grant security interest on or mortgages with respect to all of the property securing the General Electric Capital Corp.-arranged DIP financing on a first priority basis to the Collateral Agents to secure all of their obligations. The First-Lien Facilities, as well as designated hedging obligations, will be secured by a first priority security interest in the Collateral. Commitment Fee: 0.50% per annum on the average unused amount of the Revolving Facility, payable quarterly in arrears during the period commencing on the Closing Date and through the Revolving Facility Maturity Date. If Delta receives a corporate family rating of B1 or higher from Moody's and a corporate credit rating of B+ or higher from Standard & Poor's Ratings Services, in each case with stable outlook, then the commitment fee percentage will decrease to 0.375%. Interest Rate Options: Delta may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to: (a) the ABR plus the Applicable Margin; or (b) LIBOR plus the Applicable Margin. ABR is the higher of: * the rate of interest publicly announced by the Administrative Agents as its prime rate in effect at its principal office in New York City; and * the federal funds effective rate plus 0.5%. LIBOR means the London interbank offered rate for deposits in U.S. dollars. Applicable Margin, with respect to the Revolving Loans and the Tranche A Term Loans: * 1.25% in the case of ABR Loans, and * 2.25% in the case of LIBOR Loans. With respect to the Tranche B Loans, Applicable Margin is: * 2.50% in the case f ABR Loans, and * 3.50% in the case of LIBOR Loans. If Delta receives a corporate family rating of B1 or higher from Moody's and a corporate credit rating of B+ or higher from S&P, with stable outlook in each case, then the Applicable Margins will each decrease by 0.25% Default Interest: Overdue principal payments will bear interest on demand at 2% above the rate otherwise applicable thereto. Overdue interest, fees and other amounts will bear interest at 2% above the rate applicable for ABR Loans. Minimum Revolver Borrowings: $1,000,000 for direct borrowing of ABR Loans, and $5,000,000 for direct borrowing of LIBOR Loans, with no more than 20 borrowings of LIBOR Loans under the Revolving Facility outstanding at any one time. Optional Prepayments and Commitment Reductions: Delta may prepay the Loans and reduce the commitments in minimum amounts to be agreed without premium or penalty. Optional prepayments of the Term Loans will be applied as directed by Delta. Optional prepayments of the Term Loans may not be reborrowed. Mandatory Prepayments and Commitment Reductions: Net proceeds of any sale or other disposition of any assets constituting Collateral will be applied to prepay Term Loans and reduce the commitments under the Revolving Facility, in each case solely to the extent required to maintain Collateral Coverage Ratios. The amounts obtained from the asset sale or disposition will be applied in this order: (a) to prepay the Tranche A Tern Loans, (b) to prepay the Tranche B Term Loans, and (c) to permanently reduce the commitments under the Revolving Facility. Mandatory prepayments of the Term Loans will be applied to the respective installments thereof ratably in accordance with the then outstanding amounts thereof. Mandatory prepayments of the Term Loans may not be reborrowed. The Revolving Loans will be prepaid to the extent the extensions of credit exceed the amount of the commitments under the Revolving Facility, after giving effect to any permanent reduction of the commitments required in connection with any sale or disposition. Financial covenants will be limited to: (a) Minimum Fixed Charge Coverage Ratio. Delta will not permit its consolidated Fixed Charge Coverage Ratio in each case for the 12-month period ending as of the last day of each fiscal quarter ending in the months below to be less than the corresponding ratio: March 2007 1.00:1.00 June 2007 1.00:1.00 September 2007 1.00:1.00 December 2007 1.00:1.00 March 2008 and 1.20:1.00 thereafter for each fiscal quarter ending through the Tranche B Term Facility Maturity Date (b) Minimum Unrestricted Cash Reserves. Delta will not permit its and its subsidiaries' reserve of unrestricted cash, unrestricted cash equivalents and unencumbered short-term investments that are in accounts subject to shifting account control agreements to be less than $750,000,000 at any time; (c) Minimum Collateral Coverage Ratios. Delta will not permit the ratio of aggregate current market value of the Eligible Collateral plus the Cure Collateral to: * the sum of the aggregate outstanding exposure under the First-Lien Facilities and any designated hedge obligations to be less than 1.75:1.00; or * the sum of the aggregate outstanding amount of the Tranche B Term Loans plus the First-Lien Obligations at any time to be less than 1.25:1.00. However, if upon the delivery of an appraisal, it is determined that Delta will not be in compliance with either minimum collateral coverage covenant, Delta will: * deliver Cure Collateral to the Collateral Agents; or * prepay the Loans, in each case in an amount sufficient to enable Delta to comply with the minimum collateral coverage covenants. Delta may obtain a release of the lien on an asset constituting Collateral, provided that: (i) no Event of Default have occurred and be continuing, (ii) either: (a) after giving effect to the release, the remaining Eligible Collateral will continue to satisfy the minimum collateral coverage covenants; (b) Delta will prepay the Loans in an amount required to comply with the minimum collateral coverage covenants; or (c) Delta will deliver Cure Collateral to the Collateral Agents in an amount required to comply with the minimum collateral coverage covenants; and (iii) Delta will deliver an officer's certificate demonstrating compliance with the minimum collateral coverage covenants after the release. The Debtors have also agreed to pay certain related fees as set forth in the Fee Letters. The Arrangers Fee Letter requires the payment of certain upfront fees on the closing date of the Senior Credit Facilities. In addition, the Administrative Agent Fee Letter provides for the payment of certain administrative agency fees that are payable at certain, specified time intervals, with the first payment date being the Closing Date. The Fee Letters do not require the payment of any fees in advance of the Closing Date. Simpson Thacher & Bartlett LLP represents the Co-Lead Arrangers, the Administrative Agents and the Collateral Agents. A full-text copy of the Commitment Letter and the Credit Facilities Term Sheet is available for free at: http://ResearchArchives.com/t/s?1da7 About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC:DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. The hearing to consider confirmation the Debtors' plan is scheduled tomorrow, April 25, 2007. DELTA AIR: Files Joint Plan of Reorganization Supplements ---------------------------------------------------------- Delta Air Lines, Inc., and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York supplements to their Joint Plan of Reorganization. The Plan Supplements are: (i) a schedule of "Old Aircraft Securities" to be cancelled, with certain exceptions, on the Effective Date pursuant to Section 6.6 of the Plan. A full-text copy of the Old Aircraft Securities schedule is available for free at: http://ResearchArchives.com/t/s?1da8 (ii) a list of executory contracts and unexpired leases that the Debtors intend to assume on the Effective Date, a full-text copy of which is available for free at: http://ResearchArchives.com/t/s?1da9 (iii) a list of executory contracts and unexpired leases that the Debtors intend to reject on the Effective Date, a full-text copy of which is available for free at: http://ResearchArchives.com/t/s?1daa (iv) a list, with supplemental lists, of deferred executory contracts and unexpired leases relating to the Debtors' aircraft equipment. A full-text copy of the list is available for free at: http://ResearchArchives.com/t/s?1dab (v) a list of the Debtors' Postpetition Aircraft Agreements, a full-text copy of which is available for free at: http://ResearchArchives.com/t/s?1dac (vi) a list of indicative particular Causes of Action that the Debtors retain. A full-text copy of Retained Causes of Action List is available for free at: http://ResearchArchives.com/t/s?1dad The Plan Supplements also include a disclosure that, as of March 30, 2007, there are no avoidance actions that the Debtors will retain on the Effective Date. However, the Debtors specify that they remain free, subject to the terms of the Plan, to supplement and amend the list of the Retained Avoidance Actions or Causes of Actions. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC:DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. The hearing to consider confirmation the Debtors' plan is scheduled tomorrow, April 25, 2007. DELTA AIR: Various Parties Object to Plan Confirmation ------------------------------------------------------ Various tax authorities, aircraft creditors, and other parties- in-interest delivered to the United States Bankruptcy Court for the Southern District of New York their objections to the confirmation of Delta Air Lines Inc. and its debtor-affiliates' Joint Plan of Reorganization. Among the objectors are: (a) the Ad Hoc Committee of Kenton County Bondholders, holders of the $419,000,000 Kenton County Airport Board, Special Facilities Revenue Bonds, 1992 Series A, and the $19,000,000 Kenton County Airport Board, Special Facilities Revenue Bonds, 1992 Series B issued pursuant to a trust indenture dated Feb. 1, 1992, between Kenton County Airport Board, as issuer, Star Bank, N.A., as trustee, and guaranteed by Delta Air Lines, Inc.; (b) a group of aircraft creditors, including, Airline Credit Opportunities, L.P.; Bank of America, N.A.; Bayerische Landesbank Girozentrale; and Bear Stearns Investment Properties, Inc.; (c) Multnomah County, Oregon, holder of a secured tax claim; (d) Georgia Department of Revenue, which has claims against the Debtors for unpaid Georgia withholding taxes, sales and use taxes, corporate net worth taxes, corporate income taxes, interest and penalties in the total amount of $62,938,048; (e) Local Texas Tax Authorities Bexar County, Dallas County, El Paso, Harris County, Irving ISD, Nueces County and Tarrant County, and the City of Memphis; (f) Wachovia Financial Services, Inc., formerly known as First Union Commercial Corporation; (g) U.S. Bank National Association and U.S. Bank Trust National Association, as indenture trustee and pass through trustee; (h) Ohio Department of Taxation; (i) Wilmington Trust Company; and (j) The Arizona Department of Revenue. The Kenton County Bondholders Committee asserts that the Plan cannot be confirmed pursuant to Section 1129 of the Bankruptcy Code: * The Plan fails to specify the treatment that the claims held by the Bondholders in Class 4 (Unsecured Claims) will receive under the Plan, which violates Section 1123(a)(3), and renders the Plan unconfirmable under Section 1129(a)(1); * The Debtors solicited votes on the Plan without disclosing the terms of the proposed settlement agreement dated March 8, 2007, with Kenton County Airport Board, and UMB Bank, N.A., as indenture trustee to the two facilities revenue bonds. The Proposed Settlement materially alters recoveries to the Bondholders under the Plan; thus, the Debtors violated Sections 1127(c) and 1129(a)(2); * The Bondholders have not agreed to receive less favorable treatment than the treatment afforded to holders of other claims in Class 4 (Unsecured Claims), violating Sections 1123(a)(4) and 1129(a)(1); * The Debtors did not propose the Plan in good faith, given the circumstances surrounding the execution of the Settlement Agreement and the timing of the Debtors' pending Rule 9019 motion to approve it; thus, the Plan violates Section 1129(a)(3); * The proposed Plan releases and discharges non-debtor parties in violation of Sections 524(e) and 1129(a)(1) and applicable Second Circuit precedent; and * The Plan does not meet the requirements for confirmation under section 1129(b) because it unfairly discriminates against the Bondholders and is not fair and equitable. Representing Multnomah County, Susan S. Ford, Esq., at Sussman Shank, LLP, in Portland, Oregon, argues that the Plan fails to separately classify claims that may be secured by different property, or, if secured by the same property, with different rank in priority. The defect is substantial because there may be multiple liens on aircraft or other transitory property of the Debtor, some consensual, and some involuntary. Andrew I. Silfen, Esq., at Arent Fox LLP, in New York, Wilmington Trust's counsel, asserts that the proposed distribution scheme violates Section 1123(a)(4) by giving distributions of materially different character and values to holders of claims within the same class. He notes that failure to comply with Section 11234(a)(4) results to a violation of Section 1129(a)(1), one of the 13 statutory requirements for confirmation of the Plan. Among other things, Multnomah County objects to the Plan provisions categorically disallowing all postpetition interest or post-effective date interest, because there is no legal basis for those provisions. Other tax authorities, including Bexar County, Dallas County, El Paso, Harris County, Irving ISD, Nueces County and Tarrant County, and the City of Memphis, assert that the Plan fails to properly provide for the payment of interest on their claims as required by Sections 506(b) and 1129(b). The Georgia Revenue Department and Ohio Department of Taxation object to the Plan because they cannot determine when payments on their claims will commence and how frequently the payments will be made. Section 1129(a)(9)(C) requires that priority tax claims be paid in "deferred cash payments, over a period not exceeding six years after the date of assessment of such claim, of a value, as of the effective date of the plan, equal to the allowed amount of such claim." The Arizona Department of Revenue asserts that the Plan's failure to provide for payment of its postpetition tax claim on the Plan's effective date violates Section 1129(a)(9)(A). It also contends that Plan's failure to establish the payment terms of its priority claim violates Section 1129(a)(9)(C). As proposed, the Plan, the Department notes, fails to identify if its priority claim is going to be paid in a single cash distribution and on what date, if the Department's claim is to be paid on the fifth and the sixth anniversary of the date of assessment or other recovery as may be determined by the Court. The Aircraft Creditors maintain that the Plan is unconfirmable because it does not specify the manner in which the Debtors will maintain their distribution reserves for holders of disputed claims as of the Initial Distribution Date. The Aircraft Creditors note that the Plan leaves doubt as to whether disputed claimholders will receive equal treatment to holders of allowed claims. The Plan cannot be confirmed because Sections 1123(a)(4) and 1129(a)(1) prohibit disparate treatment of like claimholders. Objections to the Debtors' Schedule of Deferred Contracts Certain parties to the leveraged lease agreements objects to the Plan's language stating that they may be required to wait for up to 180 days after the Effective Date for the Debtors' decision to either reject or assume the executory contracts and unexpired leases. The Aircraft Creditors relate that many of them are parties, or holders of beneficial interests, to numerous executory agreements and unexpired leases currently listed in the Deferral Schedule Representing the Aircraft Creditors, Michael J. Edelman, Esq., at Vedder, Price, Kaufman & Kannholz, P.C., in New York, argues that the Bankruptcy Code explicitly prohibits the attempted "deferral" of a debtor-in-possession's decision as to whether it desires to assume or reject a prepetition executory agreement or unexpired lease after the confirmation of a chapter 11 plan. The Bank of New York, as indenture trustee under certain trust indentures and security agreements, supports the Aircraft Creditors' objections. U.S. Bank notes that the Debtors' schedule of deferred executory contracts and unexpired leases includes certain agreements in which no Debtor is a party. Ira H. Goldman, Esq., at Shipman & Goodwin LLP, in Hartford, Connecticut, U.S. Bank's counsel, argues that the Debtors have no authority under the Bankruptcy Code to reject agreements to which they are not parties. Thus, the Debtors have to revise the Schedule. "Old Aircraft Securities" Schedule Pursuant to prepetition leveraged lease transactions, Wachovia Financial is an owner participant and sole equity owner of six Bombardier regional jet aircraft subleased to Comair, Inc. The Plan includes a schedule of "Old Aircraft Securities" that the Debtors will cancel, with certain exceptions, on the Effective Date pursuant to Section 6.6 of the Plan. Wachovia Financial states that it is not clear what effect, if any, the language of Section 6.6 of the Plan has on its interest as Owner Participant in the Leases. J. Michael Booe, Esq., at Kennedy Covington Lobdell & Hickman, L.L.P., Charlotte, North Carolina, maintains that Section 1123(b) of the Bankruptcy Code provides that, subject to Section 365, a plan of reorganization may provide for a the assumption, rejection or assignment of any executory contract. However, the Plan, if confirmed, defers that decision for Comair for up to 180 days following its Effective Date. Wachovia objects to that language and its effect to the extent that Section 6.6 does have any effect its rights under the Leases. Objections to Debtors' Proposed Assumption of Executory Contracts and Unexpired Leases Various parties-in-interest have objected to the Debtors' schedule, as supplements to the Plan, enumerating the various executory contracts and unexpired leases that the Debtors intend to assume or reject on the Effective Date because, among other reasons: (a) the Debtors fail to propose sufficient cure amounts in connection with the affected contracts or leases; (b) the Debtors fail to recognize certain agreements as executory contracts; (c) the Debtors fail to describe the contracts with sufficient detail to permit the non-Debtor party to identify the contracts at issue; or (d) the non-Debtor party has not consented to the Debtors' proposed assumption of certain contracts. Among the objectors to the Debtors' proposed assumption of certain agreements are: * Puerto Rico Ports Authority complains that the Schedules failed to provide the proposed treatment for curing of arrears that Delta Air Lines, Inc., owed to them on account of a lease governing Delta's use of Luis Munoz Marin International Airport in Carolina, Puerto Rico. * The New Orleans Aviation Board, operator of the Louis Armstrong New Orleans International Airport, objects to the classification treatment of its lease with the Debtors and claims under the Plan because it fails to acknowledge the Lease as an executory contract. The Plan also fails to provide for cure amounts, which it asserts to be equal to the amounts due under the claims; and * Cisco Systems, Inc., maintains that the approval of the Debtors' proposed assumption of Cisco-related contracts without first identifying the contracts at issue violates its due process. It denies Cisco an opportunity to analyze whether the Debtors have a right to assume any contracts without its express consent. About Delta Air Headquartered in Atlanta, Georgia, Delta Air Lines (OTC:DALRQ) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) Plan Update The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. The hearing to consider confirmation the Debtors' plan is scheduled tomorrow, April 25, 2007. DELUXE ENTERTAINMENT: Moody's Rates $585MM First-Lien Loan at B1 ---------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating for Deluxe Entertainment Service Group Inc. to B1 from B2 and assigned a B1 rating to its proposed first lien bank facility and a B3 rating to the proposed second lien facility. The proposed facilities consist of a $585 million first lien term loan and a $110 million second lien term loan, with proceeds intended to refinance existing debt and to fund a $132 million dividend to MacAndrews & Forbes Holdings Inc. The upgrade reflects Deluxe's longer track record of stable performance compared to the original rating assignment, including filing of US GAAP audited financial statements. Additionally, notwithstanding the increase in debt, leverage pro forma for the proposed transaction is comparable to the level when Moody's assigned the rating, due to both debt reduction and EBITDA growth. Deluxe's capacity to generate strong free cash flow, its conservative capital structure, and favorable terms of the credit agreement (which obligate rapid reduction in lender exposure) support its B1 corporate family rating. The company's long term relationship with its studio customers and expectations for it to maintain its leading market share throughout its offerings also support the rating. Nevertheless, the B1 corporate family rating also reflects its inherent business risk, including customer concentration; execution risk as Deluxe seeks growth in its Creative Services segment to offset a potential decline in its core film processing business with the advent of digital technology; and some volatility of cash flows related to cash advance contract payments required to secure business. Furthermore, the proposed transaction increases debt but creates no incremental value for lenders, and the $132 million dividend represents a return of almost the entire $155 million of cash equity that M&F invested in Deluxe in January 2006. Moody's remains concerned over the potential for incremental cash to escape from Deluxe. The outlook remains stable, and a summary of today's actions follows. Deluxe Entertainment Services Group Inc. - Upgraded Corporate Family Rating to B1 from B2 - Upgraded Probability of Default Rating to B1 from B2 - Assigned B1 Senior Secured First Lien Bank Credit Facility, LGD3, 43% - Assigned B3 Senior Secured Second Lien Bank Credit Facility, LGD6, 91% Deluxe Entertainment Services Group Inc. supplies worldwide film processing, distribution and creative services to the major producers and distributors of motion pictures and television programs. It maintains headquarters in Los Angeles, California, and the company's annual revenue is approximately $900 million. DIVERSIFIED ASSET: Fitch Junks Rating on $22.2MM Class B-1L Notes ----------------------------------------------------------------- Fitch downgrades two and affirms two classes of notes issued by Diversified Asset Securitization Holdings III, L.P. These rating actions are the result of Fitch's review process and are effective immediately: -- $96,772,652 class A-1L notes affirmed at 'AA'; -- $31,507,375 class A-2 notes affirmed at 'AA'; -- $30,000,000 class A-3L notes downgraded to 'B/DR1' from 'BB'; -- $22,217,521 class B-1L notes downgraded to 'C/DR6' from 'CC/DR3'. Diversified Asset Securitization Holdings III, L.P is a cash collateralized debt obligation that was originated and managed by Asset Allocation & Management, LLC (AAMCO) in June 2001. TCW Asset Management Co. became the substitute asset manager for AAMCO in October 2002. The portfolio is composed of residential mortgage backed securities, asset-backed securities, commercial mortgage-backed securities, and real estate investment trusts. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and conducted cash flow modeling for various default timing, interest rate scenarios, and prepayment assumptions to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since the last rating action in March 2006, there have been further write-downs on some of the previously defaulted bonds. According to Fitch's analysis, the rated liabilities are roughly $19M undercollateralized. As of the most recent Trustee report (dated March 28, 2007), the class A OC ratio was at 99.4% versus 101.8% as of January 28, 2006, below its trigger level of 105%. The class B OC ratio was at 87.3% and 93.6% respectively, below its trigger level of 101.5%. The class A IC ratio declined to 111.7% from 138.2% below the trigger 122%. A substantial portion of the collateral represents fixed coupon assets and, with a scheduled decline in the interest rate swap notional over the life of the deal, the deal has been exposed to the risk of a rising 3- month LIBOR. The transaction is in the amortization period and while senior notes are de-leveraging, subordinate notes continue to be cut off from interest. The class B-1L notes have a cumulative deferred interest of approximately $3.7M. The ratings of the classes A-1L, A-2, and A-3L notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B-1L notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. DURA AUTOMOTIVE: Inks Technical Alliance with India's Aditya Auto ----------------------------------------------------------------- DURA Automotive Systems, Inc. entered into a technical alliance with Aditya Auto Products and Engineering Pvt. Ltd., based in Bangalore, India, to bring new automotive technologies to the growing domestic Indian and Asian markets. DURA will supply technology to Aditya for the manufacture of products such as pedals, parking brakes, shifters and spare tire carriers. Aditya will produce the parts and provide local support to automotive OEMs in the region. DURA and Aditya anticipate that the alliance will commence manufacturing of DURA components in India by the first quarter of 2008. "Establishing a manufacturing presence in India is a key component of our global growth strategy, which is designed to leverage DURA technology investments and provide local support to customers anywhere in the world," Larry Denton, DURA Automotive's chief executive officer said. "The DURA and Aditya partnership opens significant opportunities for us in fast-growing automotive markets." By 2012, India is projected to be the seventh largest automobile producer in the world. The establishment of the alliance in Bangalore, a major Indian market, also provides access to neighboring Asian markets. "Our alliance brings together Aditya's expertise in designing and manufacturing systems with DURA's world-class technology to meet the requirements of leading automakers in this region," C. Jayaraman, Aditya's managing director and chief executive officer, said. "Combining our strengths will better position us to participate in India's growing domestic automotive market and beyond." DURA will contribute designs, intellectual property and technical resources. Under the terms of the agreement, the alliance is planned to become a joint venture in three years and when certain milestones are achieved. Once initiated, the joint venture will operate under the name Aditya DURA Pvt. Ltd. DURA currently has a presence in 16 countries with 69 locations, including its manufacturing facilities, technology and customer service centers, and joint venture companies. About Aditya Auto Headquartered in Bangalore, India, Aditya Auto Products & Engineering India Private Limited -- http://www.adityaauto.com/-- is a privately owned and professionally managed organization, engaged in the business of design & manufacture of systems & sub systems to meet the requirements of the growing automobile industry. Beginning as Autarky Auto in April 1989 and established as Aditya Auto Products in February 1999, the company works closely with leading Automotive OEMs & Global tier 1 industries, both in India and the rest of the world. About DURA Automotive Systems Inc. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors' exclusive plan-filing period expires on May 23, 2007. ENERGY PARTNERS: Prices Terms of 8-3/4% Senior Notes Tender Offer ----------------------------------------------------------------- Energy Partners, Ltd. disclosed the pricing terms for the cash tender offer to purchase any and all of its outstanding 8-3/4% Senior Notes due 2010 (CUSIP No. 29270UAC9) and related consent solicitation to amend the indenture pursuant to which the Notes were issued. The total consideration for each $1,000 principal amount of Notes validly tendered and not withdrawn on or prior to the Consent Payment Deadline of 5:00 p.m., New York City time, on April 9, 2007 is $1,051.56 which includes the tender offer consideration and the consent payment of $30 per $1,000 principal amount of Notes. The total consideration was determined by reference to a fixed spread of 50 basis points over the yield of the 3-7/8% U.S. Treasury Note due July 31, 2007, which was calculated at 2:00 p.m., New York City time, on April 20, 2007. The reference yield and tender offer yield are 4.989% and 5.489%, respectively. Holders whose Notes were validly tendered and not withdrawn on or before the Consent Payment Deadline and are accepted for purchase by the company will receive accrued and unpaid interest on the Notes up to, but not including, the initial payment date for the Offer, was yesterday, April 23, 2007. Holders whose Notes are validly tendered after the Consent Payment Deadline, but on or prior to 5:00 p.m., New York City time, on May 3, 2007 and accepted for purchase by the company will receive the tender offer consideration of $1,021.56 per $1,000 principal amount of Notes tendered, but will not receive the consent payment, and will receive accrued and unpaid interest on the Notes up to, but not including, the final payment date for the Offer, which is expected to be on or about May 4, 2007. The complete terms and conditions of the Offer are described in the Offer to Purchase, copies of which may be obtained from Mackenzie Partners, Inc. the information agent and depositary for the Offer, at (800) 322-2885 (US toll-free) and (212) 929-5500 (collect). The company has engaged Banc of America Securities LLC to act as the exclusive dealer manager in connection with the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, High Yield Special Products, at (888) 292-0070 (US toll-free) and (704) 388-9217 (collect). About Energy Partners Headquartered in New Orleans, La., Energy Partners Ltd. (NYSE: EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company. Founded in 1998, the company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. * * * As reported in the Troubled Company Reporter on Mar. 14, 2007, Moody's Investors Service downgraded Energy Partners, Ltd.'s Corporate Family Rating to B3 from B2 and its Probability of Default Rating to B3 from B2 following the conclusion of the company's strategic alternative process. FIRST FRANKLIN: Moody's Downgrades Ratings on Five Certificates --------------------------------------------------------------- Moody's Investors Service has downgraded five certificates from three deals issued by First Franklin Mortgage Loan Trust. These certificates are being downgraded based on the low credit enhancement levels compared to the current loss projections. Realized losses have caused the overcollateralization amount to decline below the required level. In addition losses are not all covered by the mortgage insurance and the subordinate tranches have therefore less credit protection than expected. Complete rating actions are: Downgrade: Issuer: First Franklin Mortgage Loan Trust * 2003-FFB, Class B-1, Downgraded from Baa2 to B3 * 2003-FFB, Class B-2, Downgraded from Baa3 to B3 * 2003-FFC, Class M-3, Downgraded from Baa1 to Ba1 * 2003-FFC, Class M-4, Downgraded from Baa2 to Ba1. Issuer: FFML Net Interest Margin Trust 2003-FFB * Notes, Downgraded from Baa2 to B3. FOOT LOCKER: Offers to Buy Genesco for $1.2 Billion in Cash ----------------------------------------------------------- Foot Locker Inc. disclosed that it had made an acquisition proposal to purchase all of the outstanding shares of Genesco Inc. for $46 per share in cash, subject to certain terms and conditions. The proposal came in a letter that Matthew D. Serra, Foot Locker, Inc.'s Chairman and CEO, sent on April 4, 2007 to Hal N. Pennington, Chairman, President and Chief Executive Officer of Genesco Inc. On April 19, 2007, Mr. Serra sent a follow-up letter to Mr. Pennington to reiterate Foot Locker, Inc.'s interest in acquiring Genesco, Inc. and his belief that the proposal represents significant value to Genesco shareholders. The proposed purchase price of $46 per share in cash represents a total consideration of approximately $1.2 billion for all of the equity of Genesco. This proposal provides to Genesco Inc.'s shareholders a 26% premium to the average share price during the one year period preceding the April 4, 2007 letter. About Genesco Inc. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE:GCO) -- http://www.genesco.com/-- retails branded footwear, licensed and branded headwear, and wholesaler of branded footwear. Its business segments include Journeys, Underground Station Group, Hat World, Johnston & Murphy, and Licensed Brands. The Journeys segment consists of the Journeys and Journeys Kidz retail footwear chains. The Underground Station Group segment includes the Underground Station and Jarman retail footwear chains. The Hat World segment includes the Hat World, Lids, Hat Zone, Cap Connection and Head Quarters retail headwear chains. The Johnston & Murphy segment includes Johnston & Murphy retail operations, and wholesale distribution. The Licensed Brands segment is engaged in the wholesale distribution of footwear manufactured under the Dockers and Perry Ellis brands, under licenses from Levi Strauss & Company and PEI, Inc. As of June 9, 2006, it operated a total of 1,773 stores: 1,755 stores throughout the United States and Puerto Rico, and 18 stores in Canada. About Foot Locker Headquartered in New York, Foot Locker, Inc. (NYSE: FL) --- http://www.footlocker-inc.com/-- is a global retailer of athletic footwear and apparel, operated 3,942 primarily mall-based stores in the United States, Canada, Europe, Australia, and New Zealand as of Feb. 3, 2007. The Company, through its subsidiaries, operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment is an athletic footwear and apparel retailer, whose formats include Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and Footaction. The Direct-to-Customers segment reflects Footlocker.com, Inc., which sells, through its affiliates, including Eastbay, Inc., to customers through catalogs and Internet Websites. The Foot Locker brand is the Company's principal brand. In March of 2006, Foot Locker, Inc. entered into a 10-year area development agreement with the Alshaya Trading Co. W.L.L., in which the Company agreed to enter into separate license agreements for the operation of a minimum of 75-foot Locker stores. FOOT LOCKER: Proposed Acquisition of Genesco's Shares Gets Snubbed ------------------------------------------------------------------ Foot Locker Inc.'s proposal to acquire all of the outstanding shares for $46 per share in cash was rejected by Genesco Inc.'s board of directors. Hal N. Pennington, Genesco's chairman, president and chief executive officer, said in his letter to Matthew D. Serra, chairman and ceo of Foot Locker Inc. that after careful consideration, the board, in consultation with its financial advisor, Goldman Sachs & Co., and with the assistance of its legal advisor, Bass Berry & Sims PLC, unanimously determined that the $46 per share cash proposal is not in the best interests of Genesco's shareholders. "Genesco's board unanimously rejected the proposal and concluded that it did not reflect the long-term value of Genesco, including its strong market position and future growth prospects," Mr. Pennington said. On April 20, 2006, Foot Locker, though Mr. Serra's letter, has made an acquisition proposal to purchase all of the company's outstanding shares for $46 per share in cash or $1.2 billion, subject to certain terms and conditions. Mr. Serra stated in his proposal letter that together with the company's executive management teams, board of directors, and advisors, he concluded that a merger of with Genesco would enable both companies to benefit from mutual best practices, enhance the companies' ability to serve its customers, and provide Foot Locker employees and management teams with increased opportunities. About Genesco Inc. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- is a specialty retailer of footwear, headwear and accessories in more than 1,900 retail stores in the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection, and on Internet websites http://www.journeys.com, http://www.journeyskidz.com/,http://www.undergroundstation.com/, http://www.johnstonmurphy.com/,http://www.lids.com/, http://www.hatworld.com/and http://www.lidscyo.com/. The company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers. About Foot Locker Inc. Headquartered in New York City, Foot Locker Inc. (NYSE: FL) -- http://www.footlocker-inc.com/-- retails athletic footwear and apparel. The company operates approximately 3,900 athletic retail stores in 17 countries in North America, Europe and Australia under the brand names Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, and Champs Sports. FOOT LOCKER: Genesco Bid Prompts Moody's to Put Ratings on Review ----------------------------------------------------------------- Moody's Investors Service placed the ratings of Foot Locker, Inc. on review for possible downgrade following the company's announcement that it had made an unsolicited proposal to purchase all of the outstanding shares of Genesco Inc. for $46 per share cash representing a total consideration of approximately $1.2 billion. These ratings are placed on review for possible downgrade: * Corporate family rating of Ba1; * Probability of default rating of Ba1; * Senior unsecured notes rating of Ba1. The senior unsecured notes current LGD assessment of LGD4-60% is subject to change as a result of the review for possible downgrade. The review is prompted by the high likelihood that the acquisition, if successful, will be predominantly financed with debt and will result in a sizable increase in the pro forma company's leverage and a corresponding weakening in credit metrics. In addition the review is prompted by the apparent change that this action signals to the company's financial policy which had historically viewed as relatively conservative and stable by Moody's and had supported the current Ba1 corporate family rating. The review will focus on the pro forma company's capital structure and debt protection measures post transaction; its financial policies, including its risk appetite for acquisitions and liquidity; and the pro forma company's ability to manage its expected higher debt burden. If the bid is unsuccessful, the review for possible downgrade will assess Foot Locker's appetite for leverage and future debt financed growth strategies. Foot Locker, Inc., headquartered in New York, New York operates 4,000 stores in 20 countries in North America, Europe, and Australia under the nameplates; Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports and Footquarters. Revenues for the fiscal year ended February 3, 2007 were approximately $5.8 billion. Genesco Inc., headquartered in Nashville, Tennessee, operates 2,009 footwear and headwear stores throughout the United States and in Puerto Rico and Canada. In addition, Genesco also is a wholesaler of branded footwear. Revenues for the fiscal year ended February 3, 2007 were approximately $1.5 billion. Pro forma revenues of the combined companies would be approximately $7.2 billion. FOOT LOCKER: Genesco Bid Cues S&P's to Retain on Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings, including the 'BB+' corporate credit rating, on specialty footwear retailer Foot Locker Inc. remain on CreditWatch with negative implications following the New York City-based company's announcement that it has launched a bid to acquire Genesco Inc. "Because Standard & Poor's expects that a significant portion of the $1.2 billion acquisition price could be funded with debt," said Standard & Poor's credit analyst David Kuntz, "this would result in a deterioration of Foot Locker's credit metrics and a likely downgrade." At the same time, we placed the ratings (including the 'BB-' corporate credit rating) for Genesco on CreditWatch with developing implications. We will continue to monitor the ratings as details of the transaction become available. FORUM GROUP: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Forum Group, Ltd. 9030 West Sahara Avenue Las Vegas, NV 89117 Bankruptcy Case No.: 07-12185 Type of Business: The Debtor is an international resort community developer based out of Las Vegas Nevada. Chapter 11 Petition Date: April 20, 2007 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Roger P. Croteau, Esq. 720 South 4th Street, Suite 202 Las Vegas, NV 89101 Tel: (702) 254-7775 Fax: (702) 228-7719 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Washington Mutual loan $1,000,000 P.O. Box 78065 Phoenix, AZ 85062-8065 Hiroko ITO loan $600,000 3-3-115 Koyodai Kawanishi Hyogo, Japan Yue Mei Jian Wang loan $350,000 5th Floor, Suite 28, Lane 128, Jing HWA Street, Tapeitaiwan ROC John & Ann Miletich loan $200,000 Wells Fargo Bank loan $182,000 Bank of America loan $53,500 Buillivant Houser, Esq. service $48,000 M.B.N.A. credit card $21,000 RedRock Engineering service $13,500 Citi Bank credit card $11,000 L.D.O. Limited services $1,800 Fed Ex services $700 FREMONT HOME: Moody's Junks Rating on 2006-B Class SL-B1 Certs. --------------------------------------------------------------- Moody's Investors Service has downgraded one certificate, downgraded and maintained on review for possible further downgrade three certificates, and has placed on review for possible downgrade seven certificates from a transaction, issued by Fremont Home Loan Trust. The transaction is backed by sub-prime second lien loans. The projected pipeline loss has increased over the past few months and may affect the credit support for these certificates. These certificates are being downgraded and placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: Fremont Home Loan Trust Downgrade: * Series 2006-B Class SL-B1, Downgraded from Ba1 to C Downgrade and Review for Possible Downgrade: * Series 2006-B Class SL-M7, Downgraded from Baa1 to B3 and on review for possible further downgrade * Series 2006-B Class SL-M8, Downgraded from Baa2 to Caa2 and on review for possible further downgrade * Series 2006-B Class SL-M9, Downgraded from Baa3 to Ca and on review for possible further downgrade Review for Possible Downgrade: * Series 2006-B Class SL-A, current rating Aaa, under review for possible downgrade * Series 2006-B Class SL-M1, current rating Aa1, under review for possible downgrade * Series 2006-B Class SL-M2, current rating Aa2, under review for possible downgrade * Series 2006-B Class SL-M3, current rating Aa3, under review for possible downgrade * Series 2006-B Class SL-M4, current rating A1, under review for possible downgrade * Series 2006-B Class SL-M5, current rating A2, under review for possible downgrade * Series 2006-B Class SL-M6, current rating A3, under review for possible downgrade GATEHOUSE MEDIA: Moody's Rates Proposed $275 Mil. Term Loan at B1 ----------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to GateHouse Media Operating, Inc.'s proposed $275 million term loan C, which the company plans to issue in connection with the acquisition of four daily newspapers from Gannett Co., Inc. Details of the rating action are: Rating assigned and placed under review for possible downgrade: * Proposed $275 million incremental term loan C -- B1, LGD3, 35% Ratings remaining under review for possible downgrade: * $40 million senior secured first lien revolving credit facility * $690 million senior secured term loan B * $230 million senior secured delayed draw term loan * Corporate Family rating * Probability of Default rating The continuation of the review for possible downgrade, initiated on March 16, 2007 following the announcement of the Copley acquisition, reflects Moody's view that GateHouse's financial metrics will likely deteriorate as a result of the incremental debt incurring with its acquisition of the Copley publications and the recently announced Gannett publications. On April 11, 2007, GateHouse announced that it had completed the acquisition of nine publications from The Copley Press, Inc. in a transaction valued at approximately $380 million. GateHouse funded this acquisition, in part by drawing $157 million under a $300 million unrated holdco bridge credit facility and $230 million under its delayed draw term loan. On April 12, 2007, GateHouse announced that it has signed a definitive asset purchase agreement to acquire four daily newspapers from Gannett Co., Inc. for a purchase price of $410 million, in a transaction which is expected to close in the second quarter of 2007. GateHouse intends to finance the acquisition with a combination of common equity and debt. The continuing review for possible downgrade will consider a number of factors, including: (1) a review of the company's capital structure following the completion of the acquisition of both the Copley and Gannett publications, (2) the anticipated impact that the acquisitions will have on GateHouse's financial and operating profile over time, (3) the strategic merits and the likely cost synergies presented by the acquisitions, and (4) the likelihood that GateHouse will continue to engage in additional acquisition activity. The proposed $275 million term loan C will be ratably secured with the existing senior secured revolver and term loan B, by a pledge of stock and substantially all of the assets of the borrower and its subsidiaries and will be guaranteed on a senior secured basis by borrower' subsidiaries and by its direct parent (GateHouse Media Holdco Inc.) Although the revolver and term loans are rated at parity, term loan lenders are unable to independently declare a payment default, a covenant breach, or a cross default, if any revolver debt is outstanding. Headquartered in Fairport, New York, GateHouse Media Operating, Inc. is a leading US publisher of local newspapers and related publications. Pro forma for acquisitions, the company recorded sales of approximately $750 million in the fiscal year ended December 2006. GENERAL MOTORS: Wagoner Sees Hope Despite Delay in Delphi's Exit ---------------------------------------------------------------- General Motors Corp.'s chief executive officer Rick Wagoner remains positive that Delphi Corp. can emerge from bankruptcy despite the delay caused by a prospective investor's likely rejection of a deal to invest $3.4 billion in the bankrupt auto parts supplier. "We're optimistic," Mr. Wagoner was quoted as saying by Jeff Green of Bloomberg News in an interview in Shanghai Friday last week. GM Chief Financial Officer Fritz Henderson was also cited by Mr. Green as saying that "GM is . . . committed to being part of trying to find a solution to Delphi's exit." GM, Bloomberg says, spun Delphi off in 1999 and still uses the company as a source for air bags, anti-lock brakes, steering components, air conditioners and other parts. The automaker agreed as part of the spinoff to cover retirement costs for former GM union workers if Delphi could not afford the expenses, the source adds. Free press business writer Katie Merx relates that Delphi's key investor, Cerberus Capital Management LP, is expected to withdraw its plan to invest in Delphi after the two sides disagreed on how much the auto supplier would be worth when it emerges from Chapter 11 protection. In a press statement dated April 19, 2007, Delphi confirmed that it anticipates negotiating changes to an equity purchase and commitment agreement it entered into in December 2006 with its plan investors -- affiliates of Appaloosa Management LP, Cerberus, and Harbinger Capital Partners Master Fund I Ltd., as well as Merrill Lynch & Co. and UBS Securities LLC. Delphi said it also anticipates negotiating an amendment to a related plan framework support agreement it also entered into in December 2006, with the plan investors and GM, which outlined the expected treatment of the company's stakeholders in its anticipated plan of reorganization. According to Delphi, any changes would be primarily as a result of addressing differences in views regarding the company's reorganization enterprise value among the Plan Investors, GM, the company's statutory creditors' and equity committees and the Company. Delphi said it expects that under amended framework agreements, Appaloosa, Harbinger, Merrill Lynch and UBS will continue to participate as Plan Investors (together with possible additional investors that may include members of the Statutory Committees), and that Cerberus may participate in the company's exit financing, as part of a competitive process, but not as a plan investor. Delphi is also hopeful that GM will support amended framework agreements and will be a party to any revised Plan Framework Support Agreement. About Delphi Corp. Headquartered in Troy, Mich., Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. Delphi's exclusive plan-filing period expires on July 31, 2007. About General Motors Corp. General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- is the world's largest automaker and has been the global industry sales leader for 76 years. GM currently employs about 280,000 people around the world. GM manufactures its cars and trucks in 33 countries. In 2006, nearly 9.1 million GM cars and trucks were sold globally under these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. * * * As reported in the Troubled Company Reporter on Dec. 15, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with negative implications, where they were placed March 29, 2006. S&P said the outlook is negative. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. As reported in the Troubled Company Reporter on Nov. 14, 2006, Moody's Investors Service assigned a Ba3, LGD1, 9% rating to the $1.5 billion secured term loan of General Motors Corp. GENESCO INC: Gets $1.2 Billion Cash Offer from Foot Locker ---------------------------------------------------------- Genesco Inc. disclosed that Foot Locker Inc. has made an acquisition proposal to purchase all of the company's outstanding shares for $46 per share in cash or $1.2 billion, subject to certain terms and conditions. The proposal came in a letter that Matthew D. Serra, Foot Locker Inc.'s chairman and ceo, sent on April 4, 2007 to Hal N. Pennington, Genesco Inc.'s chairman, president and chief executive officer. Mr. Serra stated in his proposal letter that the executive management teams, board of directors, and advisors have devoted significant time and effort to analyzing the potential strategic benefits of combining two companies. Mr. Serra said that Foot Locker concluded that a merger of with Genesco would enable both companies to benefit from mutual best practices, enhance the companies' ability to serve its customers, and provide Foot Locker employees and management teams with increased opportunities. According to Mr. Serra, Foot Locker proposed to acquire all the outstanding stock of Genesco for a consideration of $46 per share in cash. Foot Locker believes this proposal provides compelling value for Genesco's shareholders in that it represents: -- a significant premium above Genesco's all-time high stock price; -- a premium of 26% to Genesco's average trading pricing during the past year; -- an implied multiple of enterprise value to LTM EBITDA of 7.7x, which compares favorably to the current trading multiples of comparable specialty footwear and apparel retailers. Mr. Serra added that Foot Locker has engaged Lehman Brothers as strategic advisor and Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel. On April 19, 2007, Mr. Serra sent a follow-up letter to Mr. Pennington to reiterate Foot Locker's interest in acquiring Genesco and his belief that the proposal represents significant value to Genesco shareholders. About Foot Locker Headquartered in New York, Foot Locker, Inc. (NYSE: FL) --- http://www.footlocker-inc.com/-- is a global retailer of athletic footwear and apparel, operated 3,942 primarily mall-based stores in the United States, Canada, Europe, Australia, and New Zealand as of Feb. 3, 2007. The Company, through its subsidiaries, operates in two segments: Athletic Stores and Direct-to-Customers. The Athletic Stores segment is an athletic footwear and apparel retailer, whose formats include Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports and Footaction. The Direct-to-Customers segment reflects Footlocker.com, Inc., which sells, through its affiliates, including Eastbay, Inc., to customers through catalogs and Internet Websites. The Foot Locker brand is the Company's principal brand. In March of 2006, Foot Locker, Inc. entered into a 10-year area development agreement with the Alshaya Trading Co. W.L.L., in which the Company agreed to enter into separate license agreements for the operation of a minimum of 75-foot Locker stores. About Genesco Inc. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE:GCO) -- http://www.genesco.com/-- retails branded footwear, licensed and branded headwear, and wholesaler of branded footwear. Its business segments include Journeys, Underground Station Group, Hat World, Johnston & Murphy, and Licensed Brands. The Journeys segment consists of the Journeys and Journeys Kidz retail footwear chains. The Underground Station Group segment includes the Underground Station and Jarman retail footwear chains. The Hat World segment includes the Hat World, Lids, Hat Zone, Cap Connection and Head Quarters retail headwear chains. The Johnston & Murphy segment includes Johnston & Murphy retail operations, and wholesale distribution. The Licensed Brands segment is engaged in the wholesale distribution of footwear manufactured under the Dockers and Perry Ellis brands, under licenses from Levi Strauss & Company and PEI, Inc. As of June 9, 2006, it operated a total of 1,773 stores: 1,755 stores throughout the United States and Puerto Rico, and 18 stores in Canada. GENESCO INC: Board Snubs Foot Locker's Shares Acquisition Proposal ------------------------------------------------------------------ Genesco Inc.'s board of directors rejected Foot Locker Inc.'s unsolicited proposal to acquire all of the outstanding shares of the company for $46 per share in cash. After careful consideration, the board, in consultation with its financial advisor, Goldman Sachs & Co., and with the assistance of its legal advisor, Bass Berry & Sims PLC, unanimously determined that the $46 per share cash proposal is not in the best interests of the company's shareholders. "The company's board unanimously rejected the proposal and concluded that it did not reflect the long-term value of Genesco, including its strong market position and future growth prospects," Hal N. Pennington, chairman and chief executive officer of Genesco Inc., said. On April 20, 2006, Foot Locker has made an acquisition proposal to purchase all of the company's outstanding shares for $46 per share in cash or $1.2 billion, subject to certain terms and conditions. Matthew D. Serra, Foot Locker Inc.'s chairman and ceo, stated in his proposal letter that together with the company's executive management teams, board of directors, and advisors, he concluded that a merger of with Genesco would enable both companies to benefit from mutual best practices, enhance the companies' ability to serve its customers, and provide Foot Locker employees and management teams with increased opportunities. About Foot Locker Inc. Headquartered in New York City, Foot Locker Inc. (NYSE: FL) -- http://www.footlocker-inc.com/-- retails athletic footwear and apparel. The company operates approximately 3,900 athletic retail stores in 17 countries in North America, Europe and Australia under the brand names Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, and Champs Sports. About Genesco Inc. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- is a specialty retailer of footwear, headwear and accessories in more than 1,900 retail stores in the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection, and on Internet websites http://www.journeys.com, http://www.journeyskidz.com/,http://www.undergroundstation.com/, http://www.johnstonmurphy.com/,http://www.lids.com/, http://www.hatworld.com/and http://www.lidscyo.com/. The company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers. GENESCO INC: Foot Locker Offer Prompts Moody's to Review Ratings ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Genesco Inc. on review for possible downgrade following the announcement by Foot Locker that it had made an unsolicited proposal to purchase all of the outstanding shares of Genesco for $46 per share cash representing a total consideration of approximately $1.2 billion. These ratings are placed on review for possible downgrade: * Corporate family rating of Ba3; * Probability of default rating of Ba3; * Convertible senior subordinated debentures of B1. The convertible senior subordinated notes current LGD assessment of LGD4-68% is subject to change as a result of the review for possible downgrade. The review is prompted by the high likelihood that the acquisition, if successful, will be predominantly financed with debt and will result in a sizable increase in the combined company's leverage and a corresponding weakening in credit metrics. In addition the review is prompted by the possibility that this action by Foot Locker will result in competing bids increasing the likelihood of a possible leverage sale of Genesco. The review will focus on: the combined company's capital structure and debt protection measures post transaction; its financial policies, liquidity; and the pro forma company's ability to manage its expected higher debt burden. If this bid should prove to be unsuccessful the review will focus on the likelihood that competing bids arise and the potential impact of those bids on Genesco's financial profile and debt protection measures. Genesco Inc., headquartered in Nashville, Tennessee, operates 2,009 footwear and headwear stores throughout the United States and in Puerto Rico and Canada. In addition, Genesco also is a wholesaler of branded footwear. Revenues for the fiscal year ended February 3, 2007 were approximately $1.5 billion. Foot Locker, Inc., headquartered in New York, New York operates 4,000 stores in 20 countries in North America, Europe, and Australia under the nameplates; Foot Locker, Footaction, Lady Foot Locker, Kids Foot Locker, Champs Sports, and Footquarters. Revenues for the fiscal year ended February 3, 2007 were approximately $5.8 billion. Pro forma revenues of the combined companies would be approximately $7.2 billion. GENESCO INC: Foot Locker Offer Cues S&P's Developing CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB-' corporate credit rating, on specialty footwear and headwear retailer Genesco Inc. on CreditWatch with developing implications. This rating action follows the announcement that Foot Locker Inc. (BB+/Watch Neg/--) has launched a bid to acquire Nashville, Tennesse-based Genesco for $1.2 billion. "If any downgrade to Foot Locker is limited to two notches," said Standard & Poor's credit analyst David Kuntz, "we would raise the rating on Genesco to the Foot Locker level if the transaction is completed." Genesco has responded that it intends to consider the proposal with the assistance of its financial advisor, Goldman, Sachs & Co., and expects to respond in due course. If Genesco opposes the acquisition and embarks upon material shareholder-friendly initiatives, Standard & Poor's could lower its rating. S&P will continue to monitor the ratings as details of the transaction become available. GIGABEAM CORPORATION: BDO Seidman Raises Going Concern Doubt ------------------------------------------------------------ BDO Seidman LLP in Bethesda, Md., expressed substantial doubt about GigaBeam Corporation'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 losses from operations and dependence on outside sources of capital for continuance of their operations. GigaBeam Corporation reported a net loss of $20,234,560 on net sales of $4,823,914 for the year ended Dec. 31, 2006, compared with a net loss of $15,306,358 on net sales of $1,196,512 for the year ended Dec. 31, 2005. The increase in net loss is primarily a result of the company not being able to generate sufficient revenues to cover operating expenses. General and administrative expenses increased $2,467,477 primarily due to increased legal and professional fees, including investment banking fees, higher insurance premiums due to increased coverage, costs associated with compliance with the requirements of the Sarbanes Oxley Act, costs of implementation of the company's integrated managerial accounting system, expenses related to employee share-based compensation of $550,993, and ongoing expenses of operating as a publicly traded company. Selling and marketing expenses increased $2,111,854, while service, install and link operations expenses increased by $1,956,251. At Dec. 31, 2006, the company's balance sheet showed $12,265,860 in total assets, $4,429,113 in total liabilities, and $7,836,747 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?1da2 About GigaBeam Corporation Headquartered in Herndon, Va., GigaBeam Corp. (NasdaqCM: GGBM) -- http://www.gigabeam.com-- is a provider of high-performance wireless point-to-point communications transport and access solutions that operate in the licensed 71-76 GHz and 81-86 GHz radio spectrum bands. GOODYEAR TIRE: Amends $2.7 Bil. and EUR505 Mil. Credit Facilities ----------------------------------------------------------------- The Goodyear Tire & Rubber Company has closed on an amendment and restatement of three of its credit facilities. Significant changes to the amended and restated agreements include: * With respect to the company's $1.5 billion asset-based revolving credit facility, an extension of its maturity until 2013, a reduction of the applicable interest rate by between 50 and 75 basis points (depending on availability of undrawn amounts) and a more flexible covenant package. * With respect to the company's $1.2 billion second lien term loan, an extension of its maturity until 2014, a reduction of the applicable interest rate by 100 basis points (to be further reduced by 25 basis points if Goodyear's credit ratings are BB- and Ba3 or higher) and a more flexible covenant package. * With respect to the company's EUR505 million European credit facility, the conversion of the EUR155 million term loan portion of the existing facility to a revolving facility, an extension of its maturity until 2012, a reduction of the applicable interest rate by 75 basis points (as compared to the existing European revolving facility) and 37.5 basis points (as compared to the existing European term loan) and a more flexible covenant package. "This refinancing action reduces our interest expense, creates additional operational flexibility, extends maturities and helps address our efforts to improve Goodyear's balance sheet," Richard J. Kramer, president, North American Tire and chief financial officer, said. "We anticipate annualized interest expense savings of $15 million to $20 million." Headquartered in Akron, Ohio, Goodyear Tire and Rubber Company (NYSE:GT) -- http://www.goodyear.com/-- manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries around the world. Goodyear employs more than 75,000 people worldwide. * * * As reported in the Troubled Company Reporter on April 10, 2007, Fitch Ratings has affirmed ratings for The Goodyear Tire & Rubber Company, including 'B' Issuer Default Rating; 'BB/RR1' rating of its $1.5 billion first-lien credit facility; 'BB/RR1' rating of its $1.2 billion second-lien term loan; 'B/RR4' rating of its $300 million third-lien term loan; 'B/RR4' rating of its $650 million third-lien senior secured notes; and 'CCC+/RR6' Senior unsecured debt rating. GOODYEAR TIRE: Says 4% Senior Notes are Convertible Until June 29 ----------------------------------------------------------------- The Goodyear Tire & Rubber Company said that its 4% Convertible Senior Notes due June 15, 2034, are now convertible at the option of the holders and will remain convertible through June 29, 2007, the last business day of the current fiscal quarter. The notes became convertible because the last reported sale price of the company's common stock for at least 20 trading days during the 30 consecutive trading-day period ending on April 17, 2007 (the 11th trading day of the current fiscal quarter) was greater than 120% of the conversion price in effect on such day. The notes have been convertible in previous fiscal quarters. The company will deliver shares of its common stock or pay cash upon conversion of any notes surrendered prior to June 29, 2007. If shares are delivered, cash will be paid in lieu of fractional shares only. Issued in June 2004, the notes are currently convertible at a rate of 83.0703 shares of common stock per $1,000 principal amount of notes, which is equal to a conversion price of $12.04 per share. There is approximately $350 million in aggregate principal amount of notes outstanding. If all outstanding notes are surrendered for conversion, the aggregate number of shares of common stock issued would be approximately 29 million. The notes could be convertible after June 30, 2007, if the sale price condition described above is met in any future fiscal quarter or if any of the other conditions to conversion set forth in the indenture governing the notes are met. Headquartered in Akron, Ohio, Goodyear Tire and Rubber Company (NYSE:GT) -- http://www.goodyear.com/-- manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries around the world. Goodyear employs more than 75,000 people worldwide. * * * As reported in the Troubled Company Reporter on April 10, 2007, Fitch Ratings has affirmed ratings for The Goodyear Tire & Rubber Company, including 'B' Issuer Default Rating; 'BB/RR1' rating of its $1.5 billion first-lien credit facility; 'BB/RR1' rating of its $1.2 billion second-lien term loan; 'B/RR4' rating of its $300 million third-lien term loan; 'B/RR4' rating of its $650 million third-lien senior secured notes; and 'CCC+/RR6' Senior unsecured debt rating. GSAMP TRUST: Moody's Lowers Ratings on 15 Certificate Classes ------------------------------------------------------------- Moody's Investors Service has downgraded and placed under review for possible downgrade, certain certificates from three GSAMP Trust deals, issued in 2006. The transaction consists of subprime second-lien fixed-rate loans. The primary originators on the three transactions are Fremont Investment & Loans, Long Beach Mortgage Company, and New Century Mortgage Company. The twenty-three certificates from the three transactions have been downgraded and placed on review for possible downgrade because existing credit enhancement levels are low given the current projected losses on the underlying pool. The pools of mortgages have seen a spike in losses in recent months with high loss severity. In the GSAMP 2006-S2 transaction future loss could cause a more significant erosion of the overcollateralization (OC) and a loss for the subordinated classes as reflected in the ratings. The GSAMP 2006-S3 and 2006-S5 transaction the B-2 certificates are completely written-down and the B-1 certificates have begun to take write-downs. Complete rating actions are: Issuer: GSAMP Trust Downgrades: * Series 2006-S2; Class M-5, downgraded to Ba1 from Baa1; * Series 2006-S2; Class M-6, downgraded to Ba3 from Baa2; * Series 2006-S2; Class M-7, downgraded to B3 from Baa3; * Series 2006-S2; Class B-1, downgraded to Caa3 from Ba1; * Series 2006-S2; Class B-2, downgraded to C from Caa2; * Series 2006-S3; Class M-4, downgraded to Ba3 from Baa3; * Series 2006-S3; Class M-5, downgraded to Caa1 from Ba1; * Series 2006-S3; Class M-6, downgraded to Ca from Ba3; * Series 2006-S3; Class M-7, downgraded to C from B2; * Series 2006-S3; Class B-1, downgraded to C from Caa2; * Series 2006-S5; Class M-4, downgraded to Ba1 from A3; * Series 2006-S5; Class M-5, downgraded to B3 from Baa1; * Series 2006-S5; Class M-6, downgraded to Ca from Ba3; * Series 2006-S5; Class M-7, downgraded to C from B2; * Series 2006-S5; Class B-1, downgraded to C from Ca. Review for Possible Downgrade: * Series 2006-S3; Class M-1, current rating Aa2, under review for possible downgrade; * Series 2006-S3; Class M-2, current rating Aa3, under review for possible downgrade; * Series 2006-S3; Class M-3, current rating A2, under review for possible downgrade; * Series 2006-S5; Class A-1, current rating Aaa, under review for possible downgrade; * Series 2006-S5; Class A-2, current rating Aaa, under review for possible downgrade; * Series 2006-S5; Class M-1, current rating Aa2, under review for possible downgrade; * Series 2006-S5; Class M-2, current rating Aa3, under review for possible downgrade; * Series 2006-S5, Class M-3, current rating A2, under review for possible downgrade. HEALTH-CHEM CORP: Demetrius & Company Raises Going Concern Doubt ---------------------------------------------------------------- Demetrius & Company LLC in Wayne, N.J., expressed substantial doubt about Health-Chem Corporation'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 defaulting on payments to its bondholders and licensors, and working capital deficiencies. Health-Chem Corp. reported a net loss of $1,656,000 on net sales of $5,940,000 for the year ended Dec. 31, 2006, compared with a net loss of $2,480,000 on net sales of $7,586,000 for the year ended Dec. 31, 2005. Net sales decreased by 22% during the 2006 period. The decrease is due primarily to a 53% decline in sales of transdermal nitroglycerin patches to one of the company's largest customers in 2006 as compared to 2005. Total operating expenses decreased $752,000, primarily due to a decrease in selling, general and administrative expenses, a decrease in net interest expense, partly offset by an increase in research and development expense. Product development income increased $160,000 due primarily to additional development work income associated with a new project that commenced in 2006. Other income of $492,000 in 2006 consisted primarily of $487,000 representing a reimbursement for premiums the company had previously paid on a life insurance policy on a former officer of the company which policy was paid out to the insured's beneficiary during the year. The company reported no other income for the same period in 2005. At Dec. 31, 2006, the company's balance sheet showed $5,793,000 in total assets and $22,379,000 in total liabilities, resulting in a $16,586,000 total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $4,063,000 in total current assets available to pay $20,228,000 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?1da4 Default on Payments to Bondholders and Licensors Included in the company's total liabilities as of Dec. 31, 2006, are $11,463,000 in outstanding debentures which became due in 1999 and under which the company is currently in default. Also included in these debts and liabilities is $7,321,000 of unpaid royalties due under a license agreement with Key Pharmaceuticals Inc. The company does not have cash on hand to repay the amount due under the debentures or the royalty payment owed under the license agreement. The company's financial condition has prevented it from securing financing or obtaining loans from which it could repay all or a portion of the amounts due. About Health-Chem Corp. Headquartered in Emigsville, Pa., Health-Chem Corp. (Other OTC: HCLC.PK) -- http://www.healthchem.com/-- develops, manufactures and markets transdermal drug delivery systems and undertakes research and development activities for third parties on a contract basis. Currently, the company's sole product is a prescription transdermal patch which delivers nitroglycerin for use in the relief of the vascular and cardiovascular symptoms related to angina pectoris (chest pain). HEREUARE INC: Kabani & Company Raises Going Concern Doubt --------------------------------------------------------- Kabani & Company, Inc. raised substantial doubt about the ability of hereUare Inc., formerly PeopleNet International Corporation, to continue as a going concern after auditing the company's financial statements as of Dec. 31, 2006, and 2005. The auditing firm pointed to the company's accumulated deficit of $65,009,435 including net losses of $13,484,750 and $1,034,957 for the years ended Dec. 31, 2006, and 2005, respectively. For the year ended Dec. 31, 2006, the company generated revenues of $38,118, as compared with a net loss of $9,069 for the year ended Dec. 31, 2005. As of Dec. 31, 2006, the company had total assets of $1,902,802 and total liabilities of $459,406, resulting in a $1,443,396 total stockholders' equity. The company's December 31 balance sheet also showed strained liquidity with total current assets of $434,630 and total current liabilities of $459,406. Net cash flows for the 12 months ended Dec. 31, 2006, was negative at $1,158,743. There was a net inflow of $1,057,770 from financing activities. Cash used for operating activities was $2,299,601 on a consolidated basis while net cash gained from investing activities was $83,084. Throughout the year ended Dec. 31, 2006, the company was primarily developing products and was not generating revenues. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1daf About hereUare Inc. hereUare Inc. and its wholly owned operating subsidiary, hereUare Communications Inc. -- http://info.hereuare.com/index.html--, provide individuals and small to medium enterprises with a personalized and centralized Internet platform that aggregates user needs on any Internet device. Its products focus on delivering simple, flexible and patent pending technologies uniquely tailored to different Internet needs or styles. On Sept. 22, 2006, PeopleNet International Corporation acquired hereUare Communications, Inc., a Delaware corporation, by reverse merger. On March 26, 2007, hereUare changed its name from PeopleNet International Corporation to hereUare Inc. The securities of hereUare are not currently traded on any market. INDYMAC BANCORP: Fitch Affirms Individual Rating at 'B/C' --------------------------------------------------------- Fitch Ratings has affirmed the long-term Issuer Default Rating of IndyMac Bancorp at 'BBB-'. The Rating Outlook has been revised to Stable from Positive. The affirmation reflects NDE's relatively good performance amid an extremely challenging mortgage environment. Fitch believes that the company's seasoned management team and a much improved risk management function will help NDE endure profitability pressures and deteriorating asset quality. The rating is also supported by stable funding and liquidity sources. In addition to deposits and access to FHLB funding, NDE has approximately $2.8 billion of unencumbered liquid assets. More recently, the company has relied less on short-term, secured funding. The Rating Outlook revision reflects the likelihood that 2007 will be a transitional year for both NDE and the industry. Although the company's production volume has been strong, NDE's Mortgage Banking Revenue margin has dropped recently and consistently narrowed over the last five years. Fitch believes that a prolonged mortgage market weakness will make it difficult for NDE to grow production and replicate earnings performance enjoyed over the last three years. NDE does not possess the same risk profile or focus shared by companies participating in the lower end of the credit spectrum that have struggled or folded. Although subprime production was less than 3% in 2006, NDE is not immune to subprime contagion and secondary market risk aversion. Future rating actions will be based on NDE's execution of its strategic plan that will emphasize retail mortgage banking. In considering positive rating actions, Fitch will evaluate the company's ability to improve while maintaining current risk- adjusted capital levels. Negative rating actions would be considered if credit costs are higher than expected or external events beyond management's control materialize. Such events include, for example, mortgage industry regulatory reform or a marked declined in California real estate prices. Fitch would also consider negative rating actions if NDE manages capital more aggressively. Fitch has affirmed these ratings with a Stable Outlook: IndyMac Bancorp -- Long-term Issuer Default Rating at 'BBB-'; -- Long-term senior debt rating at 'BBB-'; -- Short-Term Issuer at 'F2'; -- Individual at 'B/C'; -- Support at '5'. IndyMac Bank, FSB -- Long-term deposit rating at 'BBB'; -- Long-term Issuer Default Rating (IDR) at 'BBB-'; -- Short-Term Issuer at 'F2'; -- Short-term deposits at 'F2'; -- Individual at 'B/C'; -- Support at '5'. IndyMac Capital Trust -- Preferred securities at 'BB+'. INEX PHARMA: Withdraws Bankr. Petition for Protiva Biotherapeutics ------------------------------------------------------------------ Inex Pharmaceuticals Corporation has withdrawn, with the leave of the Supreme Court of British Columbia, its bankruptcy petition, which sought to have Protiva Biotherapeutics Inc. declared bankrupt. The bankruptcy petition was filed by Inex on Feb. 26, 2007, on the basis that Protiva had not paid Inex $71,882.89 for certain patent costs incurred by Inex between July 2006 and December 2006. As Inex was informed at the time of its submission, the reason Protiva did not reimburse Inex for its costs was because the patents in question are at issue in the ongoing litigation between the companies, and not because Protiva lacked the available funds to do so. To ensure the petition was withdrawn expeditiously and to eliminate the legal costs of fighting it, Protiva has reimbursed Inex for the total amount owed. "We are pleased that this petition, which in our view was frivolous to begin with, has been withdrawn," Protiva's President and CEO, Dr. Mark Murray said. "We fully expect Inex will continue its campaign against Protiva. For our part, we will focus on our business and continue to pursue our claims against Inex in court, where we expect to prevail. In the US, Sirna and Merck underestimated the validity of our claims, and have now found themselves enjoined by the California Superior Court from using our intellectual property. We expect to have the same kind of success against Inex. In both cases, we will be seeking to protect our intellectual property as well as substantial monetary damages." About Protiva Headquartered in Vancouver, B.C., Protiva Biotherapeutics Inc. -- http://www.protivabio.com/-- develops nucleic acid based pharmaceutical products to fight serious human diseases, such as cancer, influenza, Ebola, inflammatory diseases and other chronic viral infections. Founded in 2001, Protiva has offices in Seattle, Washington. About INEX Based in Vancouver, Canada, Inex Pharmaceuticals Corporation (NASDAQ: HNAB) (TSX: IEX) -- http://www.inexpharma.com/-- is a biopharmaceutical company developing and commercializing proprietary drugs and drug delivery systems to improve the treatment of cancer. At Sept. 30, 2006, Inex Pharmaceuaticals disclosed total assets of $8,915,832 and total liabilities of $8,982,462, resulting in a $66,630 deficit. Shareholders' deficit was $3,878,468 at June 30, 2006. At Dec. 31, 2006, the company's balance sheet showed a positive equity of $181,283. This concludes the Troubled Company Reporter's coverage of Inex Pharmaceuticals Corporation until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. INTERNAL INTELLIGENCE: Gets Another 120-Day Extension to File Plan ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey extended Internal Intelligence Services Inc.'s exclusive periods to file a Chapter 11 plan and solicit acceptances of that plan for an additional 120 days. The Debtor's exclusive period to file a plan expired on April 19, 2007. According to the Debtor, the extension is warranted because: 1. its case is in the early stage; 2. the Debtor is current with its postpetition obligations; 3. the Debtor is making a good faith effort to move the case forward; and 4. the Debtor is in the process of stabilizing the case. Newark, New Jersey-based Internal Intelligence Service Inc. provides security and investigative services. The Debtor filed for Chapter 11 protection on Dec. 20, 2006 (Bankr. D. N.J. Case No. 06-22824) Jonathan I. Rabinowitz, Esq., at Rabinowitz, Lubetkin, & Tully LLC, represents the Debtor. No Committee of Unsecured Creditors has been appointed in the Debtor's case. In its schedules of assets and liabilities, the Debtor listed total assets of $3,889,890 and total liabilities of $11,436,947. JHADWARN INC: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Jhadwarn, Inc. dba Message on Hold 5503 56th Commerce Park Tampa, FL 33610 Bankruptcy Case No.: 07-03203 Type of Business: The Debtor provides mailing and messenger services. Chapter 11 Petition Date: April 20, 2007 Court: Middle District of Florida (Tampa) Debtor's Counsel: Alberto F. Gomez, Jr., Esq. Morse & Gomez, P.A. 119 South Dakota Avenue Tampa, FL 33606 Tel: (813) 301-1000 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. KODIAK CDO: Fitch Holds BB+ Rating on $27 Million Class H Notes --------------------------------------------------------------- Fitch affirms 12 classes of notes issued by Kodiak CDO I, Ltd./Inc. These rating actions are effective immediately: -- $323,500,000 class A-1 first priority senior secured floating rate notes at 'AAA'; -- $103,500,000 class A-2 second priority senior secured floating rate notes at 'AAA'; -- $83,000,000 class B third priority senior secured floating rate notes at 'AA'; -- $30,000,000 class C fourth priority secured deferrable floating rate notes at 'AA'; -- $13,000,000 class D-1 fifth priority secured deferrable fixed/floating rate notes at 'AA-'; -- $5,000,000 class D-2 fifth priority secured deferrable fixed/floating rate notes at 'AA-'; -- $29,000,000 class D-3 fifth priority secured deferrable floating rate notes at 'AA-'; -- $5,000,000 class E-1 sixth priority secured deferrable floating rate notes at 'A'; -- $29,000,000 class E-2 sixth priority secured deferrable floating rate notes at 'A'; -- $7,000,000 class F seventh priority secured deferrable floating rate notes at 'BBB+'; -- $50,000,000 class G eighth priority secured deferrable floating rate notes at 'BBB'; -- $27,000,000 class H ninth priority secured deferrable floating rate notes at 'BB+'. Kodiak I is managed by Kodiak Capital Management Company and has recently completed its ramp-up period. Fitch's affirmations are based on the transaction's satisfaction of required performance covenants. During its ramp-up period, Kodiak I experienced temporary overcollateralization test failures due to certain shadow rating downgrades, by Fitch, of trust preferred securities issued by subprime mortgage lenders in the portfolio. The assets in question were downgraded to such a level that excluded them from the performing pool, causing the OC test failures. Kodiak Capital Management proposed, and subsequently executed a plan to sell one of the distressed assets out of the CDO in order to avoid an effective date ratings confirmation failure and early wind down. The combination of this sale and Fitch's upgrade of the shadow ratings of other distressed assets has resulted in Kodiak I passing its OC covenants as of the effective date. The ratings of the class A-1, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the stated maturity date. The ratings for the class C, D, E-1, E-2, E-3, F-1, F-2, G and H notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the stated maturity date. The portfolio is fully ramped with a total performing collateral balance of $706.9 million. The notes have a stated maturity of August 2037 and periodic payments on the notes will be paid on a quarterly basis. The notes are supported by the cash flows of a static portfolio consisting of trust preferred securities and subordinated debt issued by subsidiaries of real estate investment trusts, real estate operating companies and homebuilders, as well as senior REIT debt securities and commercial mortgage-backed securities. Of the total portfolio, approximately 67% are trust preferred securities and subordinated debt, approximately 28% are senior REIT debt securities and 5% are CMBS. The collateral was selected and is monitored by Kodiak CDO Management LLC, which is managed solely by Kodiak Capital Management LLC. Kodiak Capital Management LLC is a joint venture between The Bear Companies and Harbor Asset Management. This is the first CDO managed by Kodiak CDO Management. As part of the rating process for this transaction, Fitch stressed the underlying asset portfolio with a variety of default rates, timing scenarios, and interest-rate scenarios, designed to simulate varying economic conditions. This included modeling the cash flows under middle-, front-, and back-loaded default stress scenarios. The majority of the trust preferred securities included in the KODIAK I portfolio are unrated. Fitch used a hybrid approach to analyze the portfolio. This analysis included a combination of trust preferred criteria used by Fitch's Financial Institutions and Insurance groups and Fitch's VECTOR model analytics. Fitch will continue to monitor and review this transaction for future rating adjustments. LONG BEACH: Fitch Takes Various Rating Actions on 21 RMBS Issues ---------------------------------------------------------------- Fitch Ratings has taken rating actions on these Long Beach Mortgage Loan Trust RMBS issues: Long Beach Mortgage Loan Trust, Series 2000-1 -- Class A affirmed at 'AAA'; -- Class M-1 downgraded to 'BBB' from 'A'; -- Class M-2 affirmed at 'CCC/DR2' Distressed Recovery; -- Class M-3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2001-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'A-'; -- Class M-2 affirmed at 'B+'; -- Class M-3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2001-2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'A'; -- Class M-2 affirmed at 'BB'; -- Class M-3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2001-3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'A+'; -- Class M-2 downgraded to 'B' from 'BB-'; -- Class M-3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2001-4 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 downgraded to 'C' from 'CCC' and remains at 'DR2'; -- Class I-M3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2001-4 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-M1 affirmed at 'A-'; -- Class II-M2 downgraded to 'C' from 'CCC' and remains at 'DR2'; -- Class II-M3 remains at 'C/DR6'. Long Beach Mortgage Loan Trust, Series 2002-1 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 downgraded to 'B' from 'BB'; -- Class I-M3 remains at 'C/DR4'. Long Beach Mortgage Loan Trust, Series 2002-1 Group 2 -- Class II-M1 affirmed at 'BBB+'; -- Class II-M2 downgraded to 'B' from 'BB'; -- Class II-M3 remains at 'C/DR4'. Long Beach Mortgage Loan Trust, Series 2002-2 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 downgraded to 'BB' from 'BBB'; -- Class I-M3 downgraded to 'C' from 'B' and assigned 'DR3'; -- Class I-M-4A downgraded to 'C/DR6' from 'CCC/DR3'; -- Class I-M-4B downgraded to 'C/DR6' from 'CCC/DR3'. Long Beach Mortgage Loan Trust, Series 2002-2 Group 2 -- Class II-M2 downgraded to 'BB' from 'BBB'; -- Class II-M3 downgraded to 'C' from 'B' and assigned 'DR3'; -- Class II-M-4A downgraded to 'C/DR6' from 'CC/DR4'; -- Class II-M-4B downgraded to 'C/DR6' from 'CC/DR4'. Long Beach Mortgage Loan Trust, Series 2002-5 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A-'; -- Class M-3 downgraded to 'C' from 'B+' and assigned 'DR2; -- Class M-4A remains at 'C' and downgraded to 'DR6' from 'DR5'; -- Class M-4B remains at 'C' and downgraded to 'DR6' from 'DR5'. Long Beach Mortgage Loan Trust, Series 2003-1 -- Class A-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BB-' from 'BB+'; -- Class M-4 downgraded to 'C' from 'B' and assigned 'DR5'. Long Beach Mortgage Loan Trust, Series 2003-2 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BBB+' from 'A-'; -- Class M-4 downgraded to 'BBB-' from 'BBB'; -- Class M-5 downgraded to 'BB+' from 'BBB-'. Long Beach Mortgage Loan Trust, Series 2003-3 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BB' from 'BBB-'; -- Class M-4 downgraded to 'B' from 'BB-'. Long Beach Mortgage Loan Trust, Series 2003-4 -- Class AV-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class M-4A affirmed at 'BBB+'; -- Class M-4F affirmed at 'BBB+'; -- Class M-5A affirmed at 'BBB'; -- Class M-5F affirmed at 'BBB'; -- Class M-6 downgraded to 'BB-' from 'BBB-'. Long Beach Mortgage Loan Trust, Series 2004-1 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA+'; -- Class M-2 upgraded to 'AA+' from 'AA'; -- Class M-3 upgraded to 'AA' from 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'; -- Class B affirmed at 'BB+'. Long Beach Mortgage Loan Trust, Series 2004-2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB+'; -- Class M-6 affirmed at 'BBB'; -- Class M-7 affirmed at 'BBB-'; -- Class B affirmed at 'BB'. Long Beach Mortgage Loan Trust, Series 2004-3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA'; -- Class M-3 affirmed at 'AA-'; -- Class M-4 affirmed at 'A+'; -- Class M-5 affirmed at 'A'; -- Class M-6 affirmed at 'A-'; -- Class M-7 affirmed at 'BBB+'; -- Class M-8 affirmed at 'BBB'; -- Class M-9 affirmed at 'BBB-'. Long Beach Mortgage Loan Trust, Series 2004-4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class M-4 affirmed at 'AA-'; -- Class M-5 affirmed at 'A+'; -- Class M-6 affirmed at 'A'; -- Class M-7 affirmed at 'A-'; -- Class M-8 affirmed at 'BBB+'; -- Class M-9 affirmed at 'BBB'; -- Class M-10 affirmed at 'BBB-'. Long Beach Mortgage Loan Trust, Series 2004-5 -- Class A affirmed at 'AAA'; -- Class A-5 affirmed at 'AA+'; -- Class A-6 affirmed at 'AA'; -- Class M-1 affirmed at 'AA-'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB+'; -- Class M-6 affirmed at 'BBB'; -- Class M-7 affirmed at 'BBB-'. Long Beach Mortgage Loan Trust, Series 2004-6 -- Class A affirmed at 'AAA'; All of the mortgage loans in the aforementioned transactions were either originated or acquired by Long Beach Mortgage Company. The mortgage loans consist of fixed- and adjustable-rate subprime mortgage loans and are secured by first- and second-lien mortgages or deeds of trust on residential properties. As of the March 2007 distribution date, the transactions are seasoned from a range of 28 to 74 months, and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from approximately 5% (series 2000-1) to 27% (series 2004-6). Long Beach Mortgage Company is the master servicer for all of the transactions detailed above, and Washington Mutual Bank, FA, rated 'RPS2' for subprime products by Fitch, is the subservicer for all of the mortgage loans. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $3.733 billion of outstanding certificates. Specifically, the affirmation on class A-1V in series 2001-2 reflects a guaranty provided by the Federal Home Loan Mortgage Corporation, whose financial strength is rated 'AAA' by Fitch. The affirmations on the A classes in series 2001-3, 2001-4, 2002-1 and 2003-1 reflect a guaranty provided by the Federal National Mortgage Association, whose financial strength is rated 'AAA' by Fitch. The affirmation on class A in series 2004-4 reflects a guaranty provided by Financial Security Assurance Inc., whose financial strength is rated 'AAA' by Fitch. The upgrades reflect an improvement in the relationship between CE and future expected losses, and affect approximately $303.7 million in outstanding certificates. The downgrades, which affect approximately $213.7 million of outstanding certificates, reflect continued deterioration in the relationship between CE and future loss expectations. All of the transactions affected by the downgrades are generally experiencing monthly losses that exceed the available excess spread, resulting in substantial deterioration of OC and preventing the OC from maintaining its target amount. In the most severe examples (2001 vintage transactions), OC has been depleted and the most subordinate certificates have suffered principal write-downs. In regard to series 2001-4 and 2002-1 transactions, classes M-2 and M-3 represent interests in 2 loan groups and, solely for purposes of determining distributions of principal and interest and the allocation of losses realized on mortgage loans, each class consists of two components: I-M2 and II-M2; I-M3 and II-M3. The CE for a component class may differ between the loan groups. However, a default of a component class would result in a default of the entire class and therefore Fitch's ratings reflect the credit risk to the weaker of the two components. Of particular note, the performance of the transactions issued prior to 2004 has also been adversely affected by a growing concentration of loans secured with manufactured homes. While the percentage of MH loans in the initial pool balance was relatively modest, the MH loans have made up a disproportionately large percentage of the liquidated loans and, due to relatively slow voluntary prepayments, have become a significant percentage of the remaining pool balance. As of March 2007, the MH concentration (as a percentage of current pool balance) for transactions issued in 2000 is approximately 26% (originally from 6% to 7%); for transactions issued in 2001 from 23% to 25% (originally from 5% to 7%); for transactions issued in 2002 from 11% to 19% (originally from 3% to 4%); and for transactions issued in 2003 from 10% to 12% (originally from 2% to 3%). It is Fitch's expectation that the MH concentration for those transactions to continue to grow. LONG BEACH: Moody's Lowers Ratings on Three Certificate Classes --------------------------------------------------------------- Moody's Investors Service has downgraded and maintained on review for possible further downgrade three certificates and placed on review for possible downgrade nine certificates from a transaction issued by Long Beach Mortgage Loan Trust. The transaction is backed by sub-prime second lien loans. The projected pipeline loss has increased over the past a few months and may affect the credit support for the three certificates. The certificates are being downgraded and placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers for the current rating levels. Complete rating actions are: Issuer: Long Beach Mortgage Loan Trust Downgrade and Review for Possible Further Downgrade: * Series 2006-A Class M-7, downgraded from Baa3 to B1, and on review for possible further downgrade * Series 2006-A Class B-1, downgraded from Ba1 to B3, and on review for possible further downgrade * Series 2006-A Class B-2, downgraded from Ba2 to Ca, and on review for possible further downgrade Review for Possible Downgrade: * Series 2006-A Class A-1, current rating Aaa, under review for possible downgrade * Series 2006-A Class A-2, current rating Aaa, under review for possible downgrade * Series 2006-A Class A-3, current rating Aaa, under review for possible downgrade * Series 2006-A Class M-1, current rating Aa2, under review for possible downgrade * Series 2006-A Class M-2, current rating Aa3, under review for possible downgrade * Series 2006-A Class M-3, current rating A2, under review for possible downgrade * Series 2006-A Class M-4, current rating A3, under review for possible downgrade * Series 2006-A Class M-5, current rating Baa1, under review for possible downgrade * Series 2006-A Class M-6, current rating Baa2, under review for possible downgrade LYONDEL CHEMICAL: Launches 10.5% Sr. Secured Notes Cash Offering ---------------------------------------------------------------- Lyondell Chemical Company disclosed last week that it is soliciting consents to a proposed amendment of a restrictive provision of the indenture related to its 10.5% Senior Secured Notes due 2013, which currently require Lyondell to refinance indebtedness that is subordinated in right of payment to the 2013 Notes by issuing new subordinated indebtedness. Separately, the company has commenced a cash tender offer for all of its outstanding $278,000,000 aggregate principal amount of its 11.125 percent Senior Secured Notes due 2012. In conjunction with the 2012 Tender Offer, the company is soliciting consents from holders of the 2012 Notes to effect certain proposed amendments o the indenture governing the 2012 Notes, including elimination of substantially all the restrictive covenants. The company intends to fund the 2012 Tender Offer with cash on hand and borrowings under its revolving credit facility. 2013 Consent Solicitation The 2013 Consent Solicitation will expire at 5 p.m. EDT on Tuesday, May 1, 2007, unless extended or earlier terminated. Holders of record of the 2013 Notes as of April 17, 2007, are entitled to consent to the proposed amendment. Adoption of the proposed amendment and payment of the consent payment are conditioned upon, among other things, the receipt of the consent of holders of not less than a majority in aggregate principal amount of the 2013 Notes. The company will pay a consent payment of $2.50 for each $1,000 principal amount of the 2013 Notes with respect to which a consent to the proposed amendment is received and not revoked prior to the 2013 Consent Deadline. Consents to the amendments should be sent directly to D. F. King & Co., Inc., the Tabulation Agent for the 2013 Consent Solicitation, 48 Wall Street, 22nd Floor, New York, New York 10005, Attention: John Dunican at (212) 269-5694 (telephone) and (212) 809-8839 2012 Tender Offer and the 2012 Consent Solicitation The 2012 Tender Offer will expire at midnight EDT on Tuesday, May 15, 2007, unless extended or earlier terminated by Lyondell. The 2012 Consent Solicitation will expire at 5 p.m. EDT on Tuesday, May 1, 2007, unless extended or earlier terminated. Holders that validly tender the 2012 Notes pursuant to the 2012 Tender Offer will be deemed to have validly delivered consents related to such 2012 Notes. Tendered 2012 Notes may not be withdrawn, and consents may not be revoked, after 5 p.m. EDT on Tuesday, May 1, 2007. The total consideration per $1,000 principal amount of 2012 Notes validly tendered and not validly withdrawn at or prior to the 2012 Consent Deadline will consist of: a) the present value on the Initial Payment Date (as defined below) of: -- the repayment price of $1,055.63 at the first call date of July 15, 2007, plus -- the amount of interest that would accrue from the last date on which interest has been paid to the Call Date minus b) accrued and unpaid interest from the last date on which interest has been paid up to, but not including, the Initial Payment Date. The discount rate for calculating the present value is based on a fixed spread of 50 basis points over the yield on the Price Determination Date of the 3.625% U.S. Treasury Note due June 30, 2007. The total consideration includes a consent payment of $30 per $1,000 principal amount of 2012 Notes to holders who validly tender 2012 Notes, and thereby validly deliver consents related to such 2012 Notes, at or prior to the 2012 Consent Deadline. In addition, accrued and unpaid interest from the last interest payment date to, but not including, the applicable payment date will be paid on all validly tendered and accepted 2012 Notes. The total consideration will be calculated at 2 p.m. EDT on Tuesday, May 1, 2007, unless the 2012 Tender Offer is extended. Holders whose 2012 Notes are validly tendered by the 2012 Consent Deadline and accepted for purchase will receive payments on or about Wednesday, May 2, 2007. Holders whose 2012 Notes are validly tendered after the 2012 Consent Deadline and accepted for purchase will receive payments promptly after the Expiration Date. Lyondell's obligation to accept for purchase, and to pay for, 2012 Notes validly tendered and not withdrawn pursuant to the 2012 Tender Offer and the 2012 Consent Solicitation is subject to the satisfaction or waiver of certain conditions, including the receipt of consents with respect to a majority in aggregate principal amount of outstanding 2012 Notes. The complete terms and conditions of the 2012 Tender Offer and the 2012 Consent Solicitation are set forth in the Offer to Purchase and Consent Solicitation Statement dated April 18, 2007, which is being sent to holders of the 2012 Notes. Citi is the exclusive dealer manager for the 2012 Tender Offer and solicitation agent for the 2012 Consent Solicitation. Questions regarding the 2012 Tender Offer and 2012 Consent Solicitation may be directed to Citi at (800) 558-3745 (toll free) and (212) 723- 6106 (collect). Copies of the Offer and Consent Statement and related materials may be obtained from the Information Agent, D.F. King & Co., Inc. at (800) 735-3107 (U.S. toll free) and (212) 269- 5550. About Lyondell Chemical Headquartered in Houston, Texas, Lyondell Chemical Company manufactures chemicals and plastics, a refiner of heavy, high- sulfur crude oil. The company also produces fuel products like ethylene, polyethylene, styrene, propylene, propylene oxide, titanium dioxide, gasoline, ultra low-sulfur diesel, MTBE and ETBE. * * * Fitch Ratings affirmed Lyondell Chemical Company's Issuer Default Rating at 'BB-'. In addition, Fitch affirmed the company's Senior secured credit facility and term loan at 'BB+' and Senior secured notes at 'BB+. At the same time, Fitch lowered the rating of Lyondell's $100 million, 10.25% debentures due 2010 and $225 million, 9.8% debentures due 2020 to 'BB-' from 'BB+'. MASTR SECOND: Moody's Junks Rating on Class M-8 Loans ----------------------------------------------------- Moody's Investors Service has downgraded two tranches and has placed under review for possible downgrade three tranches from MASTR Second Lien Trust 2005-1. The underlying collateral for this deal consists of second-lien, fixed-rate residential mortgage loans. The loans are serviced by Irwin Union Bank and Trust Company. The certificates have been downgraded and placed on review for possible downgrade based upon the weaker than anticipated performance of the mortgage collateral and the resulting erosion of credit support. The overcollateralization in the deal has been fully exhausted, the unrated M-10 tranche has been fully written down, and the unrated M-9 tranche is currently realizing losses. Furthermore, existing credit enhancement levels may be low given the current projected losses on the underlying pool. Complete rating actions are: Issuer: MASTR Second Lien Trust Downgrade: * Series 2005-1, Class M-7, downgraded from Ba1 to B2 * Series 2005-1, Class M-8, downgraded from B1 to C Review for Possible Downgrade: * Series 2005-1, Class M-4, current rating Baa1, under review for possible downgrade * Series 2005-1, Class M-5, current rating Baa2, under review for possible downgrade * Series 2005-1, Class M-6, current rating Baa3, under review for possible downgrade MECHANICAL ELECTRICAL: Case Summary & 5 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Mechanical Electrical & Refrigeration Contractors, Inc. P.O. Box 24642 GMF, GU 96921 Bankruptcy Case No.: 07-00046 Type of Business: The Debtor is a mechanical, electrical and refrigeration services contractor. Chapter 11 Petition Date: April 20, 2007 Court: District Court of Guam (Hagatna) Judge: Frances M. Tydingco-Gatewood Debtor's Counsel: Mark E. Williams 201 K and F Building, 213 East Buena Vista Avenue Dededo, GU 96929 Tel: (671) 637-9620 Fax: (671) 637-9660 Total Assets: $1,165,824 Total Debts: $2,081,498 Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Department of Revenue & $1,276,809 Taxation P.O. Box 23607 GMF, GU 96921 Internal Revenue Service $791,690 Department of the Treasury 300 North Los Angeles St. Stop 5501 Los Angeles, CA 92677 American Plumbing Supply $8,454 American International Supply, Inc. 165 Skyline Drive, Suite 1000 Tamuning, GU 96913 Perez Bros., Inc. $3,071 Trade Publishing Company, Ltd. $1,474 MEGA BRANDS: S&P Places BB- Ratings on Negative CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' long-term corporate credit and bank loan ratings on Montreal, Quebec-based MEGA Brands Inc. on CreditWatch with negative implications. The bank loan's '2' recovery rating was also placed on CreditWatch. "The CreditWatch placement and the possibility of a subsequent downgrade reflect concerns that revenues, earnings, and credit protection measures at MEGA Brands did not meet Standard & Poor's forecast for 2006 and could remain weaker than expected in 2007 due to challenges the company faces," said Standard & Poor's credit analyst Lori Harris. MEGA Brands has faced litigation relating to its Magnetix product, which resulted in product recalls, product replacement, and product liability settlement expenses. Although MEGA Brands could be reimbursed for certain expenses, the magnitude of the charges related to the litigation in the fourth quarter of 2006, and the resulting negative impact on the company's debt levels and credit ratios were not expected by Standard & Poor's. MEGA Brands had chosen to be self-insured for Magnetix products manufactured before May 1, 2006, and for incidents occurring after Dec. 1, 2006, because the cost of insurance was viewed as prohibitive. Management's decision to be self-insured raises uncertainty surrounding the company's potential exposure to liability claims and MEGA Brands ability to financially support these claims without excessively jeopardizing the financial strength of the business. In addition, the company is involved in litigation with the former shareholders of Rose Art Industries Inc., which concerns contingent payments related to MEGA Brands' acquisition of the business in 2005. An additional $51 million in accrued consideration has yet to be paid because MEGA Brands is disputing the claim. To resolve the CreditWatch listing, Standard & Poor's will meet with management and review MEGA Brands' operating and financial strategies, including the company's plans to deal with the litigation risk that it faces. MERISANT CO: S&P Junks Rating on Amended $246 Mil. Facilities ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' bank loan rating to Chicago, Illinois-based low-calorie sweetener processor, packager, and marketer Merisant Co.'s $246 million amended and restated first-lien senior secured credit facilities, and assigned a recovery rating of '1', indicating investors could expect full (100%) recovery of principal in the event of a payment default or bankruptcy. The ratings are based on preliminary terms and conditions and are subject to review upon final documentation. At the same time, Standard & Poor's affirmed the 'CCC' corporate credit ratings and 'CC' senior subordinated note ratings on Merisant Co. and its holding company, Merisant Worldwide Inc. The outlook is negative. In April 2007, Merisant announced that it was amending and restating its senior secured credit facility. As part of the proposed transaction, the company plans to add-on $85 million in first-lien senior secured term loan debt, proceeds of which would be used to refinance its $85 million second-lien facility. The aggregated $246 million first-lien credit facility consists of a $35 million revolving facility due 2009, a $191 million term loan B due 2010, and a $20 million Euro-denominated term loan A due 2009. Pro forma for the transaction, no material debt will be added to the company's balance sheet. At the fiscal year ended Dec. 31, 2006, Merisant had about $546 million in total consolidated debt outstanding. "The ratings on Merisant reflect the company's highly leveraged financial profile, limited financial flexibility, narrow product focus, and intensely competitive industry conditions," said Standard & Poor's credit analyst Mark Salierno. MERRILL LYNCH: Fitch Holds Low-B Ratings on 7 Class Certificates ---------------------------------------------------------------- Fitch has taken rating actions on these Merrill Lynch Mortgage Investors mortgage pass-through certificates: Series 2002-A3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class M-3 affirmed at 'AAA'; -- Class B-1 upgraded from 'AA+' to 'AAA'; -- Class B-2 upgraded from 'A+' to 'AA'. Series 2003-A -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3A affirmed at 'A+'; -- Class B-3B affirmed at 'A'; -- Class B-4 affirmed at 'BBB+'; -- Class B-5 affirmed at 'BB'. Series 2003-A1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'A+'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 upgraded from 'B' to 'B+'. Series 2003-A3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA+'; -- Class M-3 affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB-'. Series 2003-B -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'AA'; -- Class B-4 affirmed at 'AA-'; -- Class B-5 affirmed at 'BBB'. Series 2003-G -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'AA-'; -- Class B-4 affirmed at 'BBB+'; -- Class B-5 affirmed at 'BB+'. Series 2003-H -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'AA-'; -- Class B-3 affirmed at 'A-'; -- Class B-4 affirmed at 'BBB-'; -- Class B-5 affirmed at 'BB'. Series 2005-A4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; -- Class B-2 affirmed at 'B'. Series 2005-B -- Class A affirmed at 'AAA'; -- Class B-1 upgraded from 'AA' to 'AA+'; -- Class B-2 upgraded from 'A' to 'A+'; -- Class B-3 upgraded from 'BBB+' to 'A-'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The collateral in the aforementioned transactions consists primarily of adjustable rate, conventional, fully amortizing loans secured by first liens on residential properties. The collateral was originated by multiple lenders including PHH Mortgage Corporation, Countrywide Home Loans, Inc., National City Mortgage Co., Quicken Loans, Inc., Washington Mutual Bank, and others. Wells Fargo Bank, N.A. is the servicer for all transactions, and has a rating of 'RPS1' provided by Fitch. The affirmations reflect a stable relationship between credit enhancement and future expected losses, and affect approximately $1.63 billion in outstanding certificates. The upgrades reflect an improvement in the relationship between CE and future expected losses, and affect approximately $11.25 million in outstanding certificates. The CE levels for the upgraded classes increased by at least more than two-times the original CE, and have relatively low delinquency pipelines. MGM MIRAGE: CityCenter Gross Construction Costs $7.4 Billion ------------------------------------------------------------ MGM MIRAGE provided updated information on its CityCenter cost estimates and the progress of the residential sales efforts. According to the company, construction of all components of CityCenter is well underway. The components of CityCenter remain unchanged while the gross construction square footage has increased by 670,000 square feet. The company has updated CityCenter's gross construction costs to a total of approximately $7.4 billion, excluding land costs and preopening expenses. The company also has updated its estimate of expected gross proceeds from the sale of residential units, from $2.5 billion to $2.7 billion, resulting in a new estimated net cost of CityCenter of $4.7 billion versus the previous estimate of $4.3 billion. In each case, these net costs exclude approximately $200 million in preopening expenses. "In a project of the magnitude and complexity of CityCenter, variances are to be expected," said Terry Lanni, Chairman and Chief Executive Officer of MGM MIRAGE. "Our revised estimate of costs and revenues represents the increase to the overall development size as well as the tremendous public response to the residential offerings. Unit sales have been robust, and CityCenter continues to track to an on-schedule opening in November 2009." Residential Sales Progress Sales of residential units commenced in January 2007 and have been exceptionally strong. Through April 19, 2007, contracts for the sale of residential units have been executed representing over $800 million in sales proceeds at average sales per square foot above original projections. These contracts are accompanied by non-refundable deposits equal to 10% of the purchase price at signing, with a second 10% deposit due in six months from contract signing. The company is currently converting reservations to sales contracts for Vdara, the 1,543-unit condominium-hotel tower. During its initial release, the Company has received over 700 reservations and anticipates converting approximately 60% of such units to sales contracts. To date, over 300 of these reservations have been converted to sales contracts. The company has also begun taking reservations for the two 335-unit Veer towers, and has received over 630 reservation deposits. The company has only recently begun converting reservations to contract. The residential program at the Mandarin Oriental has been tremendously successful with approximately 90% of the 227 units sold out at higher average price per square foot than originally anticipated. The Company expects to release approximately 200 residences at The Harmon later this year. About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- owns and operates 23 wholly owned casino resorts in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM Mirage has also announced plans to develop Project CityCenter, a multi-billion dollar mixed-use urban development project in the heart of Las Vegas, and has a 50% interest in MGM Grand Macau, a hotel-casino resort currently under construction in Macau S.A.R. * * * As reported in Troubled Company Reporter on Dec. 22, 2006, Fitch assigned a rating of 'BB' to the 7.625% $750 million in senior unsecured notes due 2017 offered by MGM Mirage. Fitch also affirmed the company's 'BB' Senior Credit Facility and Senior Notes' Rating. MORTGAGE LENDERS: Gets Final Approval on Use of Cash Collateral --------------------------------------------------------------- The Hon. Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized Mortgage Lenders Network USA Inc., on a final basis, to use Residential Funding Company LLC's cash collateral until the earliest of: -- the close of business on April 28, 2007; or -- the date on which the Debtor fails to comply with the terms of the Final Cash Collateral Order; -- the effective date of any confirmed Chapter 11 plan of reorganization or liquidation in the Debtor's case; -- the entry of an order (a) converting the case to a case under Chapter 7 of the Bankruptcy Code; (b) dismissing the case; (c) appointing a trustee under Chapter 7 or Chapter 11, or an examiner with expanded powers; (d) reversing, vacating or modifying the Final Cash Collateral Order, or (e) lifting the automatic stay as to any creditor holding or asserting a lien or reclamation claim on a material portion -- more than $250,000 in the aggregate -- of the assets of the Debtor necessary to the servicing and sale of mortgage loans, or where the deprivation of the Debtor of the assets would reasonably be expected to have a material adverse effect on the Debtor; -- the commencement of any proceeding seeking to invalidate, subordinate or otherwise challenge the superpriority claim or liens granted to RFC; -- the entry of an order approving the use of Cash collateral or any financing or loans secured by liens which are senior, pari passu or junior to RFC's liens on the collateral, without RFC's approval; -- the closing of a sale of all or substantially all of the Debtor's assets; -- the Debtor's failure to pursue or complete the sale of mortgage loans constituting Prepetition Collateral in a manner consistent with the provisions of the Final Cash Collateral Order, its prepetition credit agreement with RFC, and the Loan Sale Order; or -- any date that Dan Scouler ceases to be the Debtor's chief restructuring officer or ceases to have the authority to operate the Debtor's business. On the occurrence of a Termination Date, RFC will extend to the Debtor, in the event the Debtor has insufficient cash to make payments, cash collateral in an amount sufficient to permit the Debtor to pay: (i) all accrued and unpaid wages of the Debtor's employees arising on or after the Petition Date through the Termination Date, not exceeding the amount set forth in the budget; (ii) all accrued and unpaid postpetition obligations to ordinary course professionals; (iii) all other accrued and unpaid expenses set forth in the budget, not exceeding $150,000 in the aggregate; and (iv) any prepetition claims or expenses, except as set forth in the budget. RFC is granted Adequate Protection Liens with respect to any diminution in the value of its interest in the Cash Collateral. RFC agrees that (a) any Diminution Claim will be limited to $5,000,000 (b) as of March 20, 2007, there is no Diminution Claim; and (c) notice of any Diminution Claim will be delivered to the Debtor, with a copy to the Official Committee of Unsecured Creditors, by April 28, 2007. The Adequate Protection Liens are subject to a carve-out for statutory U.S. trustee and court fees and retained professionals' fees, not to exceed $1,000,000. Judge Walsh directs the Debtor to set aside $1,000,000 in an escrow account for the benefit of the retained professionals. The Debtor delivered a revised budget for the 12-week period ending April 28, 2007. The Debtor expects cash receipts to total roughly $10,300,000 during the period. The Debtor also expects to make cash disbursements aggregating roughly $7,000,000. The Debtor projects a net cash flow of roughly $3,150,000 and a net ending cash balance of $2,300,000. A full-text copy of the 12-week budget is available at no charge at http://ResearchArchives.com/t/s?1db2 A full-text copy of the Final Cash Collateral Order is available at no charge at http://ResearchArchives.com/t/s?1db3 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. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MORTGAGE LENDERS: Can Destroy Old Internal and Customer Records --------------------------------------------------------------- The Hon. Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized Mortgage Lenders Network USA Inc. to destroy all Internal Records and Customer Records that are more than seven years old or dated April 1, 2000, and earlier. The Debtor may also destroy around 50 bankers' boxes of documents containing duplicate copies of loan files that otherwise exist in hard copies or electronic copies. The Debtor will retain the hard copies or electronic copies. With respect to documents in 100 bags that have been designated for shredding, the Debtor will: -- do a sampling of the shred bags to confirm that the documents (i) are of the type that were historically and traditionally shredded in the ordinary course of the Debtor's business and (ii) are not pertinent to existing loan files or other business records; and -- report the findings of the sampling to the Official Committee of Unsecured Creditors and the state of Connecticut. The Debtor may then destroy the records contained in the Shred Bag upon receipt of written confirmation from the Committee and Connecticut that they do not object to the destruction of the records. With respect to the Debtor's remaining records (i) less than seven years old, (ii) not consisting of documents contained in the Duplicate Records or the Shred Bags, and (iii) not required to be retained pursuant to other applicable non-bankruptcy law, the Debtor is authorized to destroy the documents on a case by case basis in the future without further Court approval, provided that the Committee and Connecticut (a) have the opportunity to review a list of the Remaining Records proposed for destruction, and (b) provide written approval to the Debtor of any proposal to destroy the Remaining Records. The Debtor is authorized to make postpetition payments for the postpetition preservation and destruction, as the case may be, of its Internal Records and Customer Records. No Internal Records or Customer Records presently stored at Iron Mountain will be abandoned at Iron Mountain. Request to Dispose Inconsequential Files The Debtors had asked the Court for authority to dispose of or abandon books, records, and files that are of inconsequential value to its estate and are not necessary for the investigation of any potential causes of action. In connection with the winding down its business and the rejection of many of its leases, the Debtor has closed or is in the process of closing all of its regional offices, with the exception of the two remaining locations. The Debtor anticipates closing and vacating in the immediate future the remaining locations that it occupies. Laura Davis Jones, Esq., at the Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, stated that the Debtor has determined, in the good-faith exercise of its business judgment, it should destroy or dispose of certain books, records, and files consisting of Internal Records and Customer Records. The Internal Records include but are not limited to company records like invoices, litigation files, payroll records from Dec. 1, 1996, and older, certain accounting and financial records from Oct. 1, 1996, and older, contract files, personnel files, accounts receivable and payable postings, and other corporate documents. Customer Records include but are not limited to consumers' names, social security numbers, and financial statements and other personal information obtained during the course of the Debtor's lending business. Ms. Jones clarified that the Debtor does not seek in any way to destroy, abandon, or dispose of Internal Records or Customer Records that the Debtor is required to retain in relation to applicable federal and state law and banking regulations or in connection with certain cease and desist litigation commenced against the Debtor. Approximately 6,900 to 7,200 cartons fall within the Internal Records category and approximately 4,100 of which are at the Remaining Locations that the Debtor is scheduled to vacate between Feb. to June 2007. Approximately 2,500 cartons are located at the Iron Mountain and approximately 500 of which are stored at Eagle Storage. The remaining records constitute the Retained Records that the Debtor will continue to retain in compliance with applicable state and federal law necessary in the Bankruptcy proceedings. The Debtor intends to destroy, in most instances by shredding, any Internal Records and Customer Records that it can identify as containing sensitive employee or customer information. Ms. Jones asserted that the cost of retaining the Internal Records and Customer Records that are to be destroyed is an unnecessary and burdensome cost to the Debtor's estates. She notes that it will benefit the creditors of the estate by saving estate resources if the inconsequential records are disposed of. Connecticut's Objection The state of Connecticut had asked the Court to bar the Debtor from destroying any documents or records that are less than seven years old for a period of 120 days. Connecticut Attorney General Richard Blumenthal, Esq., is investigating alleged wage violations by Mitchell Heffernan, the Debtor's former president and chief executive officer. The Connecticut State's Attorneys Office received in March 2007 an application for the arrest of Mr. Heffernan for failure to pay wages in accordance with Conn. Gen. Stat. Sections 31-71b and 31- 71g. In the arrest warrant application, a Wage Enforcement Agent for the Connecticut Department of Labor claimed that Mr. Heffernan failed to pay the prepetition wages of about 61 Mortgage Lenders Network employees. Based solely on the description set forth in the Debtor's request, the state is unable to determine whether or which categories of the documents and records the Debtor seeks permission to destroy could be relevant to the ongoing criminal investigation of Mr. Heffernan, Assistant Attorney General Joan E. Pilver, Esq., in Hartford, Connecticut, explains. Iron Mountain's Objection Iron Mountain Information Management, Inc., stores thousands of boxes of Mortgage Lenders Network records at various Iron Mountain locations. To avoid ambiguity, Iron Mountain wants any order approving the Debtor's request to provide that no records at Iron Mountain will be abandoned, and that the Debtor will pay Iron Mountain the amount necessary to store any Retained Records, and to destroy or dispose of Internal Records and Customer Records presently in Iron Mountain's custody. 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. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MORTGAGEBROKERS.COM: SF Partnership Raises Going Concern Doubt -------------------------------------------------------------- SF Partnership LLP, in Toronto, expressed substantial doubt about MortgageBrokers.com Holdings 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 and negative working capital from operations. MortgageBrokers.com Holdings Inc. reported a net loss of $2,008,677 on revenue of $4,023,281 for the year ended Dec. 31, 2006, compared with a net loss of $1,143,581 on revenue of $229,603 for the same period ended Dec. 31, 2005. At Dec. 31, 2006, the company's balance sheet showed $1,450,891 in total assets and $2,115,418 in total liabilities, resulting in a $664,527 total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $1,347,122 in total current assets available to pay $2,002,369 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?1da0 About MortgageBrokers.com MortgageBrokers.com Holidings Inc. (OTC BB: MBKR.OB) -- http://www.mortgagebrokers.com/-- is a mortgage brokerage and technology corporation dedicated to re-branding the over 40,000 small and medium mortgage broker firms in North America and offering these entities scalability through a centralized shared services platform. MOTOR COACH: S&P Puts CCC Rating on Positive CreditWatch -------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC' corporate credit rating on Motor Coach Industries International Inc. on CreditWatch with positive implications. "The CreditWatch listing results from improvements in the company's operating performance, driven by a rebound in several end markets. In addition, the listing reflects the increased likelihood that the company will be able to successfully refinance its existing debt, including credit facilities that mature in December 2008 and senior subordinated notes that mature in May 2009," said Standard & Poor's credit analyst Clarence Smith. S&P's review could result in a positive rating action if Motor Coach continues to build on recent improvements in operating performance and if the company begins taking satisfactory steps to refinance its debt. MTS OF WISCONSIN: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: MTS of Wisconsin, Ltd. P.O. Box 70 Wilson, WI 54027 Bankruptcy Case No.: 07-11523 Chapter 11 Petition Date: April 21, 2007 Court: Western District of Wisconsin (Eau Claire) Debtor's Counsel: Daniel R. Freund, Esq. 920 South Farwell Street, Suite 1800 P.O. Box 222 Eau Claire, WI 54702-0222 Tel: (715) 832-5151 Fax: (715) 832-5491 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Audrey Thomas Equipment Rental & $531,733 302 - 325th Street Loans Knapp, WI 54749 Shareholder Loan $180,000 Internal Revenue Service has levied on $680,000 Insolvency Division numerous Accounts Secured: P.O. Box 21126 Receivables $385,174 Philadelphia, PA 19114 Commercial Credit Group Guarantor for $237,552 P.O. Box 60121 Audrey Thomas Debt Charlotte, NC 28260-01221 Troy Thomas Shareholder Loan $94,000 Mobile Transport Services, Inc. Loans $91,700 David Thomas Shareholder Loan $47,000 County Line Producers, Inc. Rent $41,170 Ebenezer Oaks, Inc. Past Due Rent $17,850 Allstate Sales & Leasing Rolling Stock $5,000 Secured: $2,000 All Wheels Rolling Stock $5,000 Secured: $4,000 BJ Transport Judgment $1,510 MWAM CBO: Moody's Removes Watch on $21.8 Million Notes' Ba2 Rating ------------------------------------------------------------------ Moody's Investors Service has removed from watch for possible downgrade the rating of a class of notes issued by MWAM CBO 2001- 1, a collateralized debt obligation issuer: The $21,875,000 Class B Floating Rate Notes Due January 30, 2031 Prior Rating: Ba2 (on watch for possible downgrade) Current Rating: Ba2 NATIONAL HEALTH: CEO Adams' Offer Cues S&P's Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services stated that its ratings on National Health Investors Inc. remain on CreditWatch, where they were placed with negative implications on Oct. 19, 2006. The CreditWatch placements, which affect roughly $100 million of public senior notes, was originally prompted by an Oct. 11, 2006, announcement by the company's board of directors that the company has formed a special committee and retained a financial advisor to help evaluate strategic alternatives for enhancing shareholder value. The CreditWatch actions also followed an offer by Andrew Adams, NHI's chief executive officer and significant shareholder, to purchase the company, which was subsequently rejected. After making the initial offer, Mr. Adams made several amended offers, which were also rejected. There is the possibility that Mr. Adams will make another amended offer, and the company recently announced that it is engaged in preliminary discussions regarding a possible combination with an undisclosed entity. In addition, NHI's $100 million of rated senior notes mature this July, and it is uncertain how they will be repaid. NHI does maintain a substantial cash and equivalents balance ($178 million at year-end 2006), which would be more than ample to cover the principal balance of the maturing notes. However, it is uncertain how this cash will be used if a transaction does take place (Mr. Adams' proposals indicate that some of the available cash would be used to partly fund the transaction he has proposed). S&P would likely lower the ratings if a significant amount of debt is placed on NHI's balance sheet to effect a recapitalization. It is also possible, but perhaps less likely, that S&P will affirm the ratings and remove them from CreditWatch if the company maintains a status quo, or if the ultimate acquirer maintains a moderate balance sheet. It is more likely, however, that a potential buyer will leverage the surviving entity more highly. S&P will continue to monitor developments as they unfold. Ratings Remain on Creditwatch Negative National Health Investors Inc. Rating ------ Corporate credit BB/Watch Neg/-- Senior unsecured debt BB/Watch Neg NEW CENTURY: Wants to Sell Access Lending Business to AHC --------------------------------------------------------- New Century Financial Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to authorize New Century TRS Holdings Inc. to cause its unit, New Century Warehouse Corp., unit to enter into an asset purchase agreement with Access Holdings Corporation. In December 2005, New Century Warehouse Corp., a non-debtor shell company wholly owned by New Century TRS Holdings, Inc., acquired substantially all of the assets of Access Lending Corporation. Access Lending finances residential mortgage loans originated by a network of mortgage originators and other smaller financial institutions. Access Lending provided financing to the loan originators that was, in turn, used to fund the loans provided to individual borrowers who were customers of the loan originators. Access Lending obtained its financing from three warehouse lenders who entered into various receivables purchase agreements, credit agreements and repurchase agreements. New Century Warehouse completed the acquisition of Access Lending's assets in February 2006. Since the acquisition, New Century Warehouse has continued the business conducted previously by Access Lending. New Century Warehouse acquired the Access Lending trade name and generally does business as "Access Lending," and either entered into new Warehouse Loan Facilities with its warehouse lenders or assumed Access Lending's obligations under an existing Warehouse Loan Facility. New Century Financial Corp. guaranteed Access Lending's obligations under the Warehouse Loan Facilities. New Century Warehouse also entered into an employment agreement with David Fleig, the principal of Access Lending, and an earn out agreement with Access Lending and Access Investments I, L.L.C., a wholly owned subsidiary of Access Lending at the time that New Century Warehouse completed the acquisition. New Century Warehouse did not acquire the membership interests in Access Investments I, L.L.C., and that entity is not affiliated in any way with New Century Warehouse or the Debtors. Since the acquisition, New Century Warehouse has operated largely independently of the Debtors. However, the Debtors' financial difficulties triggered cross-defaults under New Century Warehouse's Warehouse Loan Agreements. Goldman Sachs Mortgage Company, one of the Warehouse Lenders, declared an event of default under a Master Repurchase Agreement dated Feb. 15, 2006, as amended. New Century Warehouse entered into forbearance agreements with Galleon Capital, LLC, State Street Global Markets, LLC, and State Street Bank and Trust Company, and Guaranty Bank, allowing New Century Warehouse to continue to operate. The forbearance agreements expire April 23, 2007. If the State Street Entities and Guaranty Bank exercise their remedies, it is likely that there will be no value for any other creditors or shareholders in New Century Warehouse, Marcos A. Ramos, Esq., at Richards, Layton & Finger, P.A., Wilmington, Delaware, tells the Court. Moreover, New Century Warehouse's employees would be likely to quit, and New Century Warehouse would cease functioning as an operating business, according to Mr. Ramos. Fortunately, Mr. Ramos says, New Century Warehouse has reached an agreement to sell substantially all of its assets as a going concern to Access Holdings Corporation. It has also reached an accommodation with State Street and Guaranty Bank. Mr. Fleig created Access Holdings to avoid a melt down of New Century Warehouse. Mr. Ramos clarifies that the transaction is between two non- debtors. "However, the parties to the transaction have conditioned the closing on approval by th[e] Court, which the Debtors assert is appropriate given that a Debtor, New Century TRS, owns all of the stock of New Century Warehouse," Mr. Ramos says. The bankruptcy estates will receive direct benefits by way of releases of the claims State Street and Guaranty Bank each have on account of New Century Financial's guarantees of their Warehouse Loans, and by virtue of substantially increasing the prospects that the estates may realize value from New Century TRS' stock in New Century Warehouse, Mr. Ramos tells Judge Carey. The transaction is designed to maintain the Access Lending business as a going concern, to eliminate all liabilities under New Century Financial's guarantees, and to allow for a process to maximize recoveries on the Loans that are subject to the State Street and Guaranty Bank Warehouse Loan Facilities, Mr. Ramos relates. The financing provided by the Warehouse Lenders covered approximately 96% of the amount paid by New Century Warehouse, while the balance, commonly referred to in the industry as the "haircut," was financed from New Century Warehouse's working capital. If State Street and Guaranty Bank were to foreclose on the Loans, New Century Warehouse's equity in the Loans would either be lost entirely or would be minimal, Mr. Ramos explains. New Century Financial does not have the resources or the employees to liquidate the Loans at New Century Warehouse and the Buyer is the only entity appropriately situated to do so, Mr. Ramos says. Under the sale agreement, Access Holdings will pay New Century Warehouse $76,058 in cash and 60% of the Net Proceeds realized on the sale of the Loans. Access Holdings will also make employment offers to New Century Warehouse employees, and assume the warehouse loan financing arrangements with State Street and Guaranty Bank. Access Holdings will have incentives to maximize the recoveries on the Loans since it will realize 40% of the Net Proceeds plus a $100,000 fee, Mr. Ramos says. New Century Warehouse believes that the 60% it will receive should equal around $6,000,000, compared to a likely recovery of nothing, or close to it, if the transaction does not close. As part of the deal, Mr. Fleig will release New Century Warehouse from: (i) their employment agreement which provides for base compensation of $317,500 per year, bonus compensation of no less than $100,000, long-term incentive compensation typically equal to base pay and certain other perquisites; and (ii) an earn out agreement that would entitle Access Lending to 22% of New Century Warehouse's pre-tax net income for 2006 and 20% for 2007. Access Holdings will also free New Century Warehouse of its obligations on a real estate lease. New Century Warehouse will receive back its lease security deposit and the Buyer will free New Century Warehouse of obligations to its employees. State Street and Guaranty Bank will release their guaranty claims against New Century Financial. Sale Does Not Affect Goldman Sachs Dispute On March 12, 2007, Goldman Sachs purported to credit the market value of the mortgage loans that were subject to the Goldman- Access Lending Warehouse Loan Agreement. Goldman Sachs notified New Century Warehouse that the credit equaled $74,949,770 as applied to $73,204,427, the total amount owed to Goldman Sachs. Notwithstanding that the credited amount exceeded the amount owed on the Goldman-Access Lending Warehouse Loan Agreement, Goldman Sachs asserted that it did not owe the surplus to New Century Warehouse. Goldman Sachs asserted that it was able to apply the surplus to amounts allegedly owed to it by Debtor NC Capital Corporation under some unrelated loan sales completed under a Purchase Price and Terms Agreement dated Sept. 14, 2006. Mr. Ramos clarifies that the proposed sale does not seek to affect any claims or rights between New Century Warehouse or the Debtors, on the one hand, and Goldman Sachs, on the other hand. There are a number of open issues involving the parties, and Deutsche Bank National Trust Company, as custodian for Goldman Sachs. "All rights of the parties with respect to these matters are fully reserved and are not affected by the relief sought," Mr. Ramos says. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a chapter 11 plan expires on July 31, 2007. (New Century Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEW CENTURY: Moves 2007 Shareholders' Meeting to October -------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, New Century Financial Corporation disclosed that its board of directors approved an amendment and restatement of the company's bylaws on April 11, 2007. The amendment provides that New Century Financial's 2007 annual meeting of stockholders will be held at a date and time during the month of October as will be determined by a majority of the members of the company's Board, rather than a date and time during the month of May. The Fifth Amended and Restated Bylaws, which were effective immediately, will not affect the dates for the annual meetings to be held in years subsequent to 2007. A full-text copy of the Fifth Amended and Restated Bylaws is available at no charge at http://researcharchives.com/t/s?1dba New Century also disclosed that Marilyn A. Alexander, one of its Class II directors with a term expiring in 2008, resigned from the Board effective as of April 10, 2007. In a separate development, the Commonwealth of Massachusetts Office of the Attorney General issued a Civil Investigation Demand to New Century, which requests certain documents relating to the company's loan origination business practices in connection with an investigation conducted pursuant to the Attorney General's authority to enforce consumer protection statutes. New Century said it is cooperating with the investigation. About New Century Founded in 1995 and headquartered in Irvine, California, New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/ -- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a chapter 11 plan expires on July 31, 2007. (New Century Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEW CENTURY: Moody's Junks Rating on 2006-S1 Class M8 Certificate ----------------------------------------------------------------- Moody's Investors Service has downgraded one certificate, downgraded and maintained on review for possible further downgrade four certificates, and has placed on review for possible downgrade six certificates from a transaction issued by New Century Home Equity Loan Trust. The transaction is backed by sub-prime second lien loans. The projected pipeline loss has increased over the past few months and may affect the credit support for these certificates. The certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: New Century Home Equity Loan Trust Downgrade: * Series 2006-S1 Class M8, downgraded from Ba2 to C. Downgrade and Review for Possible Downgrade * Series 2006-S1 Class M4, downgraded from Baa1 to Ba3 and on review for possible further downgrade, * Series 2006-S1 Class M5, downgraded from Baa2 to B1 and on review for possible further downgrade, * Series 2006-S1 Class M6, downgraded from Baa3 to B3 and on review for possible further downgrade, * Series 2006-S1 Class M7, downgraded from Ba1 to Ca and on review for possible further downgrade, Review for Downgrade: * Series 2006-S1 Class A-1, current rating Aaa, under review for possible downgrade * Series 2006-S1 Class A-2a, current rating Aaa, under review for possible downgrade * Series 2006-S1 Class A-2b, current rating Aaa, under review for possible downgrade * Series 2006-S1 Class M-1, current rating Aa2, under review for possible downgrade * Series 2006-S1 Class M-2, current rating A2, under review for possible downgrade * Series 2006-S1 Class M-3, current rating A3, under review for possible downgrade NOBLE GINTHER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Noble C. Ginther 6750 West Loop South, Suite 720 Bellaire, TX 77401-4112 Bankruptcy Case No.: 07-80200 Chapter 11 Petition Date: April 23, 2007 Court: Southern District of Texas (Galveston) Debtor's Counsel: Stuart Douglas Ferrell, Esq. 6750 West Loop South, Suite 720 Bellaire, TX 77401 Tel: (713) 664-9020 Total Assets: Unknown Total Debts: $1,290,669 The Debtor did not file a list of its 20 largest unsecured creditors. NOVELL INC: Patrick Jones Joins Board of Directors -------------------------------------------------- Patrick Jones became a member of the board of directors of Novell Inc., effective April 11, 2007. Mr. Jones, who has held a range of senior financial management and board positions at leading technology firms, including vice president and corporate controller at Intel, brings strong financial and technology experience to the board and will provide important direction to Novell as the company continues to expand its solutions for enterprise-wide Linux and enterprise management services. "Having served in both the boardrooms and on the executive teams of leading companies in the technology sector, Pat Jones understands the challenges and opportunities Novell faces today," said Thomas Plaskett, chairman of the company's board. "His financial and management insights will be welcomed additions to the board, and will serve Novell well as it continues to focus on its growth businesses around Linux and enterprise management." Mr. Jones, 62, brings a wealth of experience in steering strategy for both public and private companies, and he has deep global expertise, having worked in Europe, Asia and Latin America. He is chairman of the board for Lattice Semiconductor and an active board member for Genesys SA, Smarttrust AB, and Epocrates. He was chairman of the audit committee for mobile messaging leader Mobile 365, recently acquired by Sybase. Previously, Mr. Jones served as senior vice president and chief financial officer for Gemplus International SA, a $1 billion revenue company, which he assisted in taking public in December 2000. Prior to Gemplus, he was vice president and corporate controller at Intel Corp. While at Intel, he was responsible for all worldwide accounting financial systems, internal and external reporting, and international finance organizations as the company grew from $8 billion to more than $25 billion in revenue. Mr. Jones also served as chief financial officer at LSI Logic, and he began his career at IBM. He holds a BA from the University of Illinois, with a concentration in economics, and an MBA from St. Louis University, with a concentration in finance. "From my perspective, adding Pat's background and knowledge to the board will be a great benefit for Novell," said Ron Hovsepian, president and CEO of Novell. "As a company, we're aggressively transitioning our business into dynamic new markets, and the board's guidance is important to the management team as we make this move. Pat really understands the economics of the technology sector from battling in the trenches, and I look forward to working with him." Headquartered in Waltham, Mass., Novell, Inc. (Nasdaq: NOVL) -- http://www.novell.com/-- delivers Software for the Open Enterprise. With more than 50,000 customers in 43 countries, Novell helps customers manage, simplify, secure and integrate their technology environments by leveraging best-of-breed, open standards-based software. Novell has sales offices in Argentina, Brazil and Colombia. * * * Novell, Inc.'s Subordinated Debt carries Moody's Investors Service's 'B1' rating. OSI RESTAURANT: Moody's Junks Rating on $700MM Notes Offering ------------------------------------------------------------- Moody's Investors Service assigned a first-time B2 corporate family rating to OSI Restaurant Partners, Inc. along with Ba3 ratings on the proposed senior secured credit facilities ($150 million working capital revolving line of credit, $100 million pre-funded revolving line of credit for capital expenditures and a $1.08 billion term loan B). In addition, Moody's assigned a Caa1 rating to OSI's $700 million guaranteed senior unsecured note offering. At the same time, an SGL-2 Speculative Grade Liquidity rating was assigned. The rating outlook is stable. Proceeds from the newly rated debt together with a commercial mortgage backed transaction and contributed equity will fund the acquisition of OSI by two private equity sponsors, Bain Capital Partners and Catterton Partners, along with other sponsors that include OSI's founders and members of the current management team. These assigned ratings are subject to review of final documentation. OSI operates eight restaurant concepts, most notably Outback Steakhouse, Carrabba's Italian Grill and Bonefish Grill. The B2 corporate family rating reflects OSI's high financial leverage, modest coverage, and marginal free cash flow generation, as well as the highly competitive environment within the casual dining segment of the restaurant industry which will likely persist over the intermediate term. Moody's believes the operating environment in the casual dining space will remain challenging as consumers continue to focus on greater value in regards to food prepared away from home. However, the ratings also incorporate OSI's significant scale and scope, the benefits of a diversified revenue stream stemming from the various concepts and good liquidity. The stable outlook anticipates that while the operating environment will remain challenging, OSI's strategic initiatives and targeted cost savings should help to improve debt protection metrics and overall financial flexibility over time. The stable outlook also indicates good liquidity and reflects Moody's expectation that OSI's internally generated cash flow and cash balances will be sufficient in funding capital expenditures, mandatory term loan B amortization, working capital fluctuations and other internal investments over the next twelve months. Ratings assigned: - B2 corporate family rating, - B2 probability of default rating, - Ba3 (LGD3, 28%) for the $150 million working capital revolver maturing in 2013, - Ba3 (LGD3, 28%) for the $100 million pre-funded revolver maturing in 2013, - Ba3 (LGD3, 28%) for the $1.08 billion term loan B maturing in 2014, - Caa1 (LGD5, 82%) for the $700 million senior unsecured notes maturing in 2015, - SGL-2 Speculative Grade Liquidity rating The outlook is stable Moody's has applied its new Probability-of-Default and Loss-Given- Default rating methodology to OSI and its subsidiaries. Moody's current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology disaggregates these two key assessments in long-term ratings. T he LGD rating methodology also enhances the consistency in Moody's notching practices across industries and improves the transparency and accuracy of our ratings as our research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss on an individual security is expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% - 9%) to LGD6 (loss anticipated to be 90% - 100%). The assignment of ratings to OSI's new capital structure reflects Moody's new methodology for assigning ratings to individual securities rather than a change in the characteristics of any debt security in the company's fundamental credit profile. OSI Restaurant Partners, Inc., headquartered in Tampa, Florida, is one of the largest casual dining restaurant companies in the world with eight concepts located throughout all 50 states and in 21 countries internationally. Revenues for fiscal 2006 totaled $3.9 billion. OXBOW CARBON: S&P Rates $960 Million Senior First-Lien Loan at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Oxbow Carbon and Minerals Holdings LLC, West Palm Beach, Florida- based distributor of solid fuel and other carbon-related products. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and '3' recovery rating to OCHM's $960 million senior secured first-lien Term Loan B based on preliminary terms and conditions. Proceeds from the term loan and approximately $250 million of new equity will be used to acquire Great Lakes Carbon Income Fund for about $527 million plus assumption of debt and other anticipated acquisitions and to make a distribution to OCMH shareholders. "We expect OCHM's favorable market position to benefit from a larger and more diversified supply and customer base after the acquisitions. Moreover, we predict favorable market conditions in many of the company's businesses over the intermediate term," said Standard & Poor's credit analyst Anna Alemani. "However, we expect the company's profitability levels to remain thin and its financial leverage to remain aggressive in the intermediate term." OCMH has a leading position in the fuel-grade and calcined petroleum coke market. It is a subsidiary of unrated Oxbow Carbon & Minerals Holdings Inc., which is part of the larger Oxbow Group. Oxbow Group is composed of more than two dozen companies with yearly aggregate sales of more than $1.3 billion and more than 800 employees worldwide. GLC is the world's largest producer and distributor of anode and industrial-grade calcined petroleum coke. About 80% of its revenue is derived from the cyclical and volatile aluminum markets, with future pricing subject to additional capacity in the Middle East over the next couple of years. Ms. Alemani said, "We could revise the outlook to negative if the company assumes a more aggressive financial position, costs rise significantly, coal prices decline materially, or operating margins substantially erode. We could revise the outlook to positive if the company reduces and sustains lower debt levels." PEOPLE'S CHOICE: Wants Pachulski Stang as Bankruptcy Counsel ------------------------------------------------------------ People's Choice Financial Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Central District of California for authority to employ Pachulski Stang Zhiel Young Jones & Weintraub LLP as their general bankruptcy counsel as of March 20, 2007. Brad Plantiko, the Debtors' executive vice president of finance and strategic planning, relates that the Debtors desire to employ Pachulski because of the firm's expertise in the areas of insolvency, business reorganization, and other debtor-and-creditor matters. The firm has served as general bankruptcy counsel in a number of Chapter 11 cases to a wide range of debtors in various industries, including OwnIt Mortgage Solutions, Inc., and Mortgage Lenders Network USA, Inc. Pachulski also has extensive experience in representing individual creditors, special interest committees, asset purchasers, and investors in both in and out of court restructurings, Mr. Plantiko states. Pachulski's services are necessary to enable the Debtors to execute duties as debtors-in-possession, including maximizing value to creditors, Mr. Plantiko says. These are, among others: -- advise the Debtors on the requirements of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the Local Bankruptcy Rules, and the requirements of the United States Trustee pertaining to the administration of the Debtors' estates; -- prepare motions, applications, answers, orders, memoranda, reports, papers, etc., in connection with the administration of the estates; -- protect and preserve the estates by prosecuting and defending actions commenced by or against the Debtors and analyzing, and preparing necessary objections to, proofs of claim filed against the estates; -- investigate and prosecute preference, fraudulent transfer, and other actions arising under the Debtors' avoiding powers; and -- render other advise and services as the Debtors may require in connection with their Chapter 11 cases. Mr. Plantiko tells the Court that Pachulski received $450,000 within one year before the Petition Date for services rendered or to be rendered in contemplation of, or in connection with, the Chapter 11 cases. The firm deducted $117,800 for prepetition services, leaving a balance of $332,200 as a retainer, which has been placed in a segregated trust account. The retainer is not a fixed price for Pachulski's services, Mr. Plantiko notes. The firm reserves the right to seek additional compensation beyond the amounts covered by the Retainer. The Debtors will pay Pachulski according to its customary hourly rates in effect from time to time and reimburse the firm according to its customary reimbursement policies. The professionals expected to serve in the Debtors' cases are: Jeremy V. Richards, Esq. $695 Jeffrey W. Dulberg, Esq. $450 Scotta E. McFarland, Esq. $495 Robert M. Saunders, Esq. $475 J. Rudy Freeman, Esq. $375 O.C. Nelson, paralegal $185 Mr. Dulberg, a partner at Pachulski, assures the Court that neither the firm nor any of its professionals have any connection with the Debtors, creditors, parties-in-interest, or the Office of the U.S. Trustee; or has any interest adverse to the Debtors' estates or of any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the Debtors or for any other reason. Mr. Dulberg attests that Pachulski and its partners, counsel and associates are disinterested persons, as defined in Sections 101(14) and 327 of the Bankruptcy Code. About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Lead Case No. 07-10765). J. Rudy Freeman, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Debtors. At March 31, 2006, the Debtors' financial conditions showed total assets of $4,711,747,000 and total debts of $4,368,966,000. The Debtors' exclusive period to file a chapter 11 plan expires on July 18, 2007. (People's Choice Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). PEOPLE'S CHOICE: Committee Wants Winston & Strawn as Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in People's Choice Financial Corp. and its debtor-affiliates' Debtors' Chapter 11 cases seeks the U.S. Bankruptcy Court for the Central District of California's authority to retain Winston & Strawn LLP as counsel, effective as of March 28, 2007. William McCreary, Jr., president of Fidelity National Information Services (LSI Tax Services), chairperson of the Committee, says the members of the Committee selected Winston & Strawn because of its extensive restructuring and insolvency practice in representing debtors, creditors, committees, and other parties- in-interest in cases under the Bankruptcy Code and in out-of- court debt restructuring and workouts. Winston & Strawn's services are necessary to enable the Committee to execute faithfully its duties on behalf of the creditors. The firm has agreed to: (a) provide legal advice to the Committee with respect to its duties and powers in the Chapter 11 cases; (b) consult with the Committee and the Debtors concerning the administration of the cases; (c) assist the Committee in its investigation of the acts, conduct, assets, liabilities, postpetition financing, and financial condition of the Debtors, operation of the Debtors' businesses, the desirability of continuing or selling the businesses or assets, and any other matters relevant to the cases or to the formulation of a plan; (d) assist the Committee in the evaluation of claims against the Debtors' estates, including analysis of and possible objections to the validity, priority, amount, subordination, or avoidance of claims or transfers of property in consideration of the claims; (e) assist the Committee in participating in the formulation of a plan, including the Committee's communications with unsecured creditors concerning the plan and the collecting and filing with the Court of acceptances or rejections to a plan; (f) assist the Committee with any effort to request the appointment of a trustee or examiner; (g) advise and represent the Committee in connection with administrative and substantive matters arising in these cases, including the obtaining of credit, the sale of assets, and the rejection or assumption of executory contracts and unexpired leases; (h) appear before the Court, any other federal court, state court or appellate courts; and (i) perform other legal services as may be required and which are in the interests of the unsecured creditors. Winston & Strawn will charge the Debtors' estates for its professional services on its current hourly rates. The firm charges -- for partners, from $405 to $845; for associates, from $200 to $590; and for legal assistants, from $135 to $285. Winston & Strawn will also seek reimbursement for its ordinary and necessary expenses incurred in its representation of the Committee. The professionals who will primarily be engaged in the firm's representation of the Committee, and their hourly rates, are: Professional Position Hourly Rate ------------ -------- ----------- Eric E. Sagerman, Esq. Partner $650 Keith A. McDaniels, Esq. Partner $480 Justin E. Rawlins, Esq. Associate $455 David L. Wilson, Esq. Associate $260 Winston & Strawn did not provide the Committee or any informal group of creditors of the Debtors with legal services prior to March 28, 2007. Winston & Strawn has not received any payment for services rendered to the Committee. Eric E. Sagerman, a partner at Winston & Strawn, assures the Court that his firm does not hold or represent an interest adverse to the Debtors or bankruptcy estates. The firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Winston & Strawn maintains an office for the practice of law at 333 South Grand Avenue, in Los Angeles, California. About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Lead Case No. 07-10765). J. Rudy Freeman, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Debtors. At March 31, 2006, the Debtors' financial conditions showed total assets of $4,711,747,000 and total debts of $4,368,966,000. The Debtors' exclusive period to file a chapter 11 plan expires on July 18, 2007. (People's Choice Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). PRODUCTOS DE CEMENTO: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Productos De Cemento Inc. P.O. Box 360385 San Juan, PR 00936 Tel: (787) 720-5161 Bankruptcy Case No.: 07-02104 Chapter 11 Petition Date: April 20, 2007 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: William Santiago Sastre, Esq. P.O. Box 19328 Santurce, PR 00910 Tel: (787) 622-3939 Fax: (787) 622-3941 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. RECYCLED PAPER: Limited Liquidity Cues S&P to Junk Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Chicago, Illinois-based Recycled Paper Greetings Inc. to 'CCC' from 'B'. The rating on the senior secured debt was also lowered to 'CCC' from 'B', and the recovery rating was affirmed at '2', indicating expectation for a substantial (80%-100%) recovery of principal in the event of a payment default. The rating on the second-lien debt was lowered to 'CC' from 'CCC+', and the recovery rating was affirmed at '5', indicating expectation for negligible (0%-25%) recovery of principal in the event of a payment default. All the ratings remain on CreditWatch with negative implications, where they were placed on April 5, 2007, following the company's violation of its financial covenants for the third quarter ended Jan. 26, 2007. About $197.3 million of total debt was outstanding as of Jan. 26, 2007. "The downgrade reflects the company's very limited liquidity following loss of access to its $20 million revolving credit facility, and our uncertainty about its ability to obtain an amendment on its bank loan facility," said Standard & Poor's credit analyst Bea Chiem. Standard & Poor's is also concerned about the company's ability to meet its $5.5 million interest payment due April 30, 2007, if it is unable to secure a waiver and amend its credit agreements. The company violated total leverage, first-lien leverage, interest coverage, and fixed charge covenants on its bank credit agreements for the third quarter ended Jan. 26, 2007. The company experienced weaker-than-expected sales growth during the last 12 months ended Jan. 26, 2007, due to weak holiday sales (particularly Valentines Day) during the third quarter, and the inability to acquire key new customers and grow revenues as previously expected. "We believe that the company will have a difficult time generating sufficient operating cash flow to service interest and principal payments on its outstanding debt," said Ms. Chiem. Standard & Poor's will monitor RPG's progress in securing an amendment to its credit facility, and its ability to meet its April interest payment, before resolving the CreditWatch listing. REDDY ICE: Posts $4.9 Million Net Loss in Fourth Qtr. Ended Dec.31 ------------------------------------------------------------------ Reddy Ice Holdings Inc. reported financial results for the fourth quarter and year ended Dec. 31, 2006. The company's net loss was $4.9 million in the fourth quarter of 2006, compared to a net loss of $4.2 million in the fourth quarter of 2005. Revenues for the fourth quarter of 2006 were $61.6 million, compared to $60.8 million in the same quarter of 2005. "The company's results in the fourth quarter of 2006 were slightly below last year's performance as a result of challenges in the company's non-ice businesses, the bottled water operations in particular, and higher professional services expenses related to the implementation of Sarbanes Oxley during the quarter," William P. Brick, chairman and chief executive officer, commented. "However, the results of the company's ice operations exceeded last year's fourth quarter as various operating initiatives continued to provide benefits that the company is optimistic will continue into 2007. Overall, the company is pleased with its 2006 results in comparison to the expectations the company initially set at this time last year." The company's net income was $14.7 million in 2006, compared to a net loss of $12.1 million in 2005. Revenues in the full year 2006 were $346.0 million, compared to $319.8 million in 2005. Results for 2006 and 2005 include non-cash goodwill impairment charges of $3.3 million for 2006 and $5.7 million for 2005 related to the company's non-ice business segment. Non-cash impairment charges totaling $0.4 million related to property, plant and equipment were also recognized in 2006. The results for 2005 include $6.2 million of expenses associated with the company's initial public offering and related transactions and a $28.1 million loss on extinguishment of debt related to the redemption of the company's 8-7/8% senior subordinated notes and the refinancing of its senior credit facility. In 2006, expenses of $0.6 million were incurred in connection with a secondary offering of the company's common stock. The company completed one acquisition during the fourth quarter of 2006, bringing the total for the year to ten. These ten acquisitions had an aggregate acquisition cost of $12.9 million. At Dec. 31, 2006, the company's balance sheet showed total assets of $610.27 million, total debts of $442.62 million and total stockholders' equity $167,648. About Reddy Ice Headquartered in Dallas, Texas, Reddy Ice Holdings Inc. (NYSE: FRZ), and its subsidiaries manufacture and distribute packaged ice in the United States serving approximately 82,000 customer locations in 31 states and the District of Columbia under the Reddy Ice brand name. The company is the largest of its kind in the United States. Typical end markets include supermarkets, mass merchants, and convenience stores. * * * Moody's Investors Service's assigned 'B1' on Reddy Ice Holdings Inc.'s long term corporate family rating and 'B1' on its probability of default rating. Standard and Poor's gave a 'B+' on the company's long term foreign issuer credit rating. REFCO INC: Marc Kirschner Discharges Duties as RCM Trustee ---------------------------------------------------------- Marc S. Kirschner, as Chapter 11 trustee and duly appointed Plan Administrator of Refco Capital Markets Ltd.'s estate, obtained the Court's authority to assign any and all of his remaining rights, powers and duties to the RCM Plan Administrator, leaving him as the sole party acting on behalf of and administering the RCM estate. The Court also authorized Mr. Kirschner to: (i) discharge his duties as RCM Trustee; (ii) release and terminate the duty to obtain and maintain the RCM Trustee's surety bonds by Hartford; Fidelity & Deposit/Zurich; Federal (Chubb), and Safeco; and (iii) release and terminate the restrictions on the Restricted Accounts. Timothy B. DeSieno, Esq., at Bingham McCutchen LLP, in New York, relates that by notice dated April 10, 2006, the U.S. Trustee appointed Mr. Kirschner as RCM Trustee, subject to a bond under Section 322. The Court subsequently approved the appointment of the RCM Trustee, requiring him to post a $1,000,000,000 bond. The Bond was later reduced to $156,500,000, subject to segregation of a substantial portion of RCM's cash into restricted accounts. The RCM Trustee then (a) obtained the Bond for $156,500,000, and (b) created the Restricted Accounts with $800,500,000 in cash invested as required by Section 345. The annual premium for the Bond was $762,938 and was fully earned. The Bond expires on April 19, 2007. Post-Effective Date Management of RCM Given the assignment of the RCM Trustee's role and duties to the RCM Administrator, the RCM Trustee's work for the RCM estate has concluded, Mr. DeSieno tells Judge Drain. Mr. DeSieno states that the Plan Confirmation Order left the RCM Trustee in charge of the RCM estate, although it required him to enter into a December 2006 RCM Administration Agreement with the RCM Administrator. Specifically, Mr. DeSieno says, the RCM Administration Agreement enumerates the RCM Administrator's powers and responsibilities, which include liquidating RCM's assets, paying RCM's expenses, investing RCM's cash, calculating and paying distributions to creditors of RCM, and dissolving and winding up RCM. Mr. DeSieno states that the Plan, the Confirmation Order, and the RCM Administration Agreement do not require continued maintenance of the Bond or the Restricted Accounts by the RCM Trustee or the RCM Plan Administrator. However, he says, in accordance with the RCM Administration Agreement, the RCM Administrator has obtained professional liability insurance for $5,000,000. Distributions from RCM Estate Mr. DeSieno states that the assets of the RCM estate have been significantly reduced as a consequence of making distributions and other court-approved and ordinary course payments. During the RCM Trustee's appointment, Mr. DeSieno relates, the RCM estate had $2,054,000,000 in assets. At the time of the Plan Confirmation, the RCM estate held approximately $2,500,000,000 in assets, of which $1,800,000,000 was cash or cash equivalents, and the remainder in securities. As of March 1, 2007, the RCM estate held about $920,000,000 in liquid and illiquid assets, of which $13,900,000 is in the RCM Wind-Down Reserves pursuant to the Plan. Since his appointment, Mr. DeSieno notes, the RCM Trustee has distributed from the RCM estate: (a) $56,400,000 in fees and expenses of estate professionals, of which $1,000,000 was paid to the RCM Trustee; (b) $84,400,000 to JPMorgan Chase Bank, N.A., pursuant to a Court-approved settlement agreement; and (c) $1,475,767,317 to RCM creditors between Dec. 27 and 28, 2006. Furthermore, the Court authorized a second interim distribution to RCM creditors, aggregating $428,000,000. Mr. DeSieno says various estate professionals have also filed final applications for payment of fees and reimbursement of expenses, which will result in additional disbursements from the RCM estate. To date, the RCM estate has contributed approximately $16,000,000 into an administrative expense reserve to fund the administration of the Plan, including compensation of administrative professionals. Assuming the payments are made under the Second Distribution and final fee applications, the RCM estate will have remaining assets exceeding $450,000,000, Mr. DeSieno says. The remaining RCM assets will now be administered by the RCM Administrator following the approval of the Motion, Mr. DeSieno states. About Refco Inc. Based in 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. On June 5, 2006, three more affiliates filed for chapter 11 protection namely: Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC. Refco Commodity Management, Inc., another affiliate, filed for bankruptcy on Oct. 16, 2006. 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, 2006. (Refco Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). REFCO INC: Plan Administrators Object to Grant Thornton's Claims ---------------------------------------------------------------- David S. Rosner, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, states that in July 2006, Grant Thornton LLP filed 27 proofs of claim -- Claim Nos. 11393 through 11395 and Claim Nos. 11527 through 11550 -- against various Debtor entities, asserting: (i) $242,804 in fees and costs for prepetition services rendered as the independent auditor for Refco Inc. and its subsidiaries, including Refco Capital Markets, Ltd.; and (ii) $2,800,000 in attorneys fees and costs incurred in connection with its defense of securities litigation actions, including, In re Refco, Inc. Securities Litigation, No. 05 Civ. 8626 (GEL) (S.D.N.Y.), and In re Refco Capital Markets, Ltd. Brokerage Customer Securities Litigation, No. 06-CV-643 (GEL) (S.D.N.Y.). Grant Thornton also asserted that it holds contingent unliquidated claims as a result of the Securities Actions. Grant Thornton further argued that its claims were based on the terms of its relationship that was memorialized in various engagement letters or contracts with (i) Refco group Ltd., LLC, and its subsidiaries, including RCM, and (ii) New Refco Group Ltd., LLC. Pursuant to their Chapter 11 Plan, and as of the Effective Date, the Reorganized Debtors and Marc S. Kirschner, as the then- Chapter 11 Trustee for Refco Capital Markets, Ltd.'s estate, established a litigation trust for the pursuit of any and all Contributed Claims, including litigation claims of the Debtors, RCM, or their estates. The Litigation Claims include any and all claims, rights of action, suits or proceedings that any Debtor or RCM may hold. Mr. Rosner states that the Litigation Trust is currently investigating Grant Thornton in connection with its conduct with respect to the Debtors and RCM and its relationship and role with respect to the Debtors' collapse. The investigation may lead to the assertion of affirmative claims by the Litigation Trust against Grant Thornton, he notes. On March 16, 2007, Grant Thornton filed amended claims -- Claim Nos. 14458 through 14484 -- to increase the amount of liquidated damages asserted in each Original Claim to $4,356,371. On March 23, RJM, LLC, as Plan Administrator for the Chapter 11 Debtors' cases, and Mr. Kirschner, as the duly appointed Plan Administrator for the RCM estate, objected to the Original Claims, seeking entry of an order: (i) expressly reserving any and all rights, claims and defenses of the estates and their successors to assert any and all claims against Grant Thornton; to object to and defend against the Claims; and to obtain a full and fair litigation of all claims, objections and matters relating to Grant Thornton in an appropriate forum; (ii) disallowing the Claims for reimbursement of costs and expenses to the extent that Grant Thornton seeks indemnification for claims, damages, losses, liabilities, costs and expenses, incurred in connection with the Securities Actions or any other actions; and (iii) disallowing the Claims to the extent that they assert the same liability against multiple Debtor entities, including RCM. After reviewing the Original Claims, the Plan Administrators have determined that each of those claims have been amended and superseded by the Amended Claims. Accordingly, the Plan Administrators ask Judge Drain to disallow and expunge the Original Claims. The Plan Administrators believe that Grant Thornton will not be prejudiced by having their Original Claims disallowed and expunged, because their Amended Claims will remain on the claims registry. Moreover, the Plan Administrators object to and seek entry of an order with respect to the Amended Claims on the same grounds and for the same reasons set forth in their First Objection to the Original Claims. About Refco Inc. Based in 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. On June 5, 2006, three more affiliates filed for chapter 11 protection namely: Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC. Refco Commodity Management, Inc., another affiliate, filed for bankruptcy on Oct. 16, 2006. 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, 2006. (Refco Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). RELIABILITY INC: Fitts Roberts Reports Going Concern Doubt ---------------------------------------------------------- Fitts, Roberts & Co., P.C. reported substantial doubt about Reliability Incorporated'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 cited the company's negative trends, including recurring losses from operations and negative cash flows from operating activities. The company incurred net loss of $178,000 and $3,484,000 for the years ended Dec. 31, 2006, and 2005, respectively. Revenues for 2006 and 2005 were $237,000 and $748,000, respectively. As of Dec. 31, 2006, the company listed total assets of $2,505,000 and total liabilities of $278,000, resulting in a $2,227,000 total stockholders' equity. Accumulated deficit as of Dec. 31, 2006, totaled $6,446,000. The company held $1,258,000 in cash and cash equivalents as of Dec. 31, 2006. The company has sustained significant negative financial results, including substantial decreases in revenues, net income, backlog, and cash flows from operating activities. The deterioration in the company's financial condition and liquidity are generally attributable to operating losses sustained in each of the last six years. Reliability-Medallion Merger On April 1, 2007, the company consummated the merger of its wholly owned subsidiary, Reliability-Medallion Inc., a Florida corporation, into Medallion Electric Acquisition Corporation, a Florida corporation, and the indirect acquisition, through MEAC, of Medallion Electric Inc., a Florida corporation. All of the funds used for the down payment to Medallion Electric were paid out of the company's cash on hand. Additional payments will come from the company's working capital, funds generated by the private placements, and funds generated by Medallion Electric's operations. However, there can be no assurances that the company will be able to successfully raise enough funds or maintain sufficient liquidity over a period of time that will allow it to continue to service the acquisition commitments. A full-text copy of the company's annual report is available for free at http://ResearchArchives.com/t/s?1db1 About Reliability Inc. Reliability Incorporated (PNK: REAL.PK) -- http://www.relinc.com/ -- is principally designs, manufactures, markets, and supports high performance equipment used to test and condition integrated circuits. The company has been providing capital equipment to integrated circuit manufacturers and users to burn-in integrated circuits since 1975 and to functionally test ICs during burn-in since 1980. RHODE ISLAND HEALTH: S&P Revises Outlook on Bonds Ratings to Pos. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Rhode Island Health and Educational Building Corp.'s $16.7 million series 1998 bonds, issued for Roger Williams Hospital (formerly Roger Williams General Hospital), to positive from negative, reflecting Roger Williams' ability to improve its financial position, and more recently increase its utilization, despite a period of negative press that resulted from its former CEO's indictment in early 2006. At the same time, Standard & Poor's affirmed its 'BB' rating on the bonds. "If the organization is able to continue with its trend of financial improvement, with ratios more in line with an investment-grade credit, upward rating potential may be warranted," said Standard & Poor's credit analyst Jennifer Soule. Roger Williams' audited results for fiscal 2006 reflected an operating loss of $1.6 million, or a negative 1%, and excess loss of $1.7 million, or a 1% margin, generating maximum annual debt service coverage of 2.4x, which is strong for the current rating. This outcome was an improvement over fiscal 2005, with an operating loss of $3.4 million, or a negative 2.2% margin, and an excess loss of $2.5 million, or a negative 1.6% margin. It is important to note that in both years the system realized significant onetime investigation costs associated with the indictment of its former CEO. Management attributes the financial improvement to tight expense controls, revenue enhancement initiatives and to a renewed relationship with its physicians that has allowed for a recent rebound in utilization. The strength of management, with the system's interim CEO hired as a permanent replacement in October 2006, is also a significant contributing factor. Utilization realized in the last two quarters of fiscal 2006 reflected significant improvement over the first two quarters, with inpatient admissions growing by 9% and inpatient surgical growth of 16%. Improvement is evidenced through the first five months of fiscal 2007 as well, with annualized admissions growing by approximately 7% and emergency visits growing by approximately 6%. A higher rating is precluded by Roger Williams' lack of a profitability trend that would reflect margins more comparable with an investment grade credit; and a moderate cash position, with 50 days' cash on hand through fiscal 2006. Roger Williams Hospital operates a 220 licensed-bed acute care hospital in Providence (A), Rhode Island (AA) but does not provide obstetric or pediatric services. The hospital is affiliated with Roger Williams Medical Center, which has subsidiaries such as a nursing home and a real estate holding corporation. RIVER EDGE: Case Summary & Seven Largest Unsecured Creditors ------------------------------------------------------------ Debtor: River Edge Development Corporation P.O. Box 129 Yabucoa, PR 00767 Bankruptcy Case No.: 07-02108 Chapter 11 Petition Date: April 20, 2007 Court: District of Puerto Rico (Old San Juan) Judge: Enrique S. Lamoutte Inclan Debtor's Counsel: Wigberto Lugo Mender, Esq. Lugo Mender & Co. Centro Internacional de Mercadeo Road 165, Torre 1, Suite 501 Guaynabo, PR 00968 Tel: (787) 707-0404 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Seven Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Las Cuevas Development $822,000 c/o Amaris d. Coya, Esq. and Rolando Emmanuelli, Esq. Rovira Office, Park 623 Avenue Al Ceiba, Suite 401 Ponce, PR 00717-1902 Rivera & Placeres $384,181 HC 01 P.O. Box 4876 Naguabo, PR 00718-9727 Guarionex PR Construction Inc. $325,000 P.O. Box 136 Wester Auto Plaza 220, Suite 101 Trujillo Alto, PR 00976 Tower M. Realty $204,750 Del Valle Construction $108,854 Amey Construction $25,000 RE Advertising $4,522 SAINT CORP: S&P Rates Proposed $2.1 Billion Facilities at B+ ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Saint Corp., which is in the process of buying Swift Transportation Co. Inc., a leading truckload trucking company, for approximately $2.7 billion. Following the closing of the transaction, Saint Corp. will be renamed Swift Corp. The outlook is stable. In addition, Standard & Poor's assigned its 'B+' bank loan rating and '1' recovery rating to Swift Transportation Co. Inc.'s proposed $2.1 billion first-lien credit facilities. The bank facility consists of a $450 million, five-year revolving facility and a $1.7 billion, 7-year, term loan B. Standard & Poor's also assigned its 'B-' rating and '3' recovery rating to the $835 million proposed second-lien notes, which consists of two tranches: a fixed rate (maturing in 2017) and floating rate (maturing in 2015); exact sizes have yet to be determined. The ratings are based on preliminary terms and are subject to review of final documentation. The borrower under the credit facilities will be Saint Acquisition Co., a wholly owned subsidiary of Saint Corp., which will use the proceeds to purchase the outstanding shares of Swift Transportation Co. Inc. Newco will then merge with Swift, which will be the continuing borrower. "The ratings on Swift, Saint Corp.'s major subsidiary, reflect the highly fragmented and cyclical truckload market and the company's high capital intensity, customer concentration, and highly leveraged capital structure," said Standard & Poor's credit analyst Eric Ballantine. Offsetting this somewhat is the company's satisfactory business position as the largest TL carriers in the U.S. and growing positions within the intermodal and dedicated trucking business. In the near term, S&P expects the company to focus on improving its operations and repaying debt, which should help strengthen credit metrics slightly. An outlook change to positive is unlikely in the near term, given the company's heavy debt load and industry challenges. Should industry challenges escalate, causing credit measures to deteriorate, the outlook would likely be revised to negative. SAINT VINCENTS: Wants to Sell Forest Avenue Property for $635,000 ----------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to sell real property at Block 132, Lot 1, at 427 Forest Avenue, in Staten Island, New York, to Michael Behar for $635,000, subject to higher and better offers. Pursuant to a lease agreement, the Debtors currently lease the 427 Forest Property to Richmond University Medical Center, as tenant, which operates the Silberstein Alcohol Program on-site. The Debtors have ascertained that it is in their best interest to dispose of the Property and the proceeds-debt reduction that a sale of the Property will produce will be vital to their reorganization. Accordingly, the Debtors engaged Massey Knakal Realty Services to assist them in locating potential buyers for the Property. As a result of Massey Knakal' efforts, the Property fetched offers from 20 potential purchasers. Mr. Behar's offer is the highest "as is" offer for the Property. After engaging in arm's-length negotiations, the Debtors entered into a purchase agreement with Mr. Behar, which provides that: (a) The Debtors will sell the Property to Mr. Behar, free and clear of all liens, claims and encumbrances; (b) Mr. Behar will pay the Debtors $635,000 for the Property. About $63,500 will be paid after signing the Contract of Sale, and $571,500 will be paid at the closing of the Transaction; (c) The RUMC Lease will be assumed and assigned to the Successful Bidder of the sale of the Property; and (d) If the proposed sale is consummated with a qualified bidder other than Mr. Behar, he will be entitled to: -- a $25,400 Break-Up Fee, which is about 4% of the total purchase price; and -- reimbursement of costs of title examination and of preparing or updating a survey. According to the Debtors, they have received or expect to receive consent from Lienholders General Electric Capital Corporation and Staten Island Savings Bank to sell the Property free and clear of the Lienholder's interests in the Debtors' assets. The sale of the Property should be exempt from all stamp taxes or similar taxes pursuant to Section 1146(c) of the Bankruptcy Code, the Debtors contend. Interested parties have until April 30, 2007, to submit their bids. If more than one Qualified Bid is received, the Debtors intend to hold an auction on May 8, 2007. The 427 Forest Property Sale will be considered at a May 16, 2007 hearing in the Debtors' cases. Objections to the Sale must be filed by May 10. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. The Debtors filed their Chapter 11 Plan of Reorganization accompanying a disclosure statement explaining that Plan on Feb. 9, 2007. The Court is set to consider the adequacy of the Debtors' Disclosure Statement on May 3, 2007. (Saint Vincent Bankruptcy News, Issue No. 51 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAINT VINCENTS: Wants to Sell Vanderbilt Property for $1.2 Mil. --------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to sell a parcel of real property located at Block 534, Lot61, at 155 Vanderbilt Avenue, in Staten Island, New York to Michael Behar for $1,260,000, subject to higher and better offers. The Property is currently leased to St. Elizabeth Ann's Health Care & Rehabilitation Center, also known as Sisters of Charity Health Care System Nursing Home, Inc., pursuant to an unexpired net lease agreement between SVCMC as landlord and SEA as tenant. St. Elizabeth Ann, a non-debtor affiliate of SVCMC, operates a home to an AIDS Adult Day Health Care Program at the Property. The Debtors have determined that the Property is not necessary for their contemplated post-reorganization activities. According to Andrew M. Troop, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, Massey Knakal Realty Services assisted the Debtors in locating potential buyers for the Property as well as other parcels of real property. Massey Knakal contacted over 1000 potential purchasers, and fielded offers from 13 potential purchasers. The Debtors determine that Mr. Behar's $1,260,000 bid is currently the highest offer for the Property. Accordingly, the Debtors entered into a purchase agreement with Mr. Behar for the sale of the Property, subject to higher and better bids. The salient terms of the Purchase Agreement are: (a) Mr. Behar will purchase the Property, free and clear of all liens and encumbrances, subject to the SEA Lease and to certain Permitted Exceptions. (b) Mr. Behar will pay $1,260,000 the Debtors for the Property: -- $50,000 after signing the Contract of Sale; -- $76,000 upon Mr. Behar's receipt of the Approval Notice; and -- $1,134,000 at the Closing. (c) The SEA Lease will be assumed and assigned to the Successful Bidder. (d) If the transaction is consummated with a Qualified Bidder other than Mr. Behar, he will be entitled to: -- a $39,750 Break-Up Fee, which is about 3% of the total purchase price; and -- reimbursement of the cost of title examination and of preparing or updating a survey. (4) The Purchase Agreement will be effective upon the approval of the Court and the Debtors' Board of Directors. The Debtors have received or expect to receive consent from two lienholders to sell the Property free and clear of these interests: 1. A lien held by General Electric Capital Corporation, the Debtors' postpetition lenders, which attaches to substantially all of the Debtors' property, pursuant to GECC Replacement Financing Order. 2. A lien held by Staten Island Saving Bank, pursuant to a mortgage granted on March 27, 1996. The Debtors also ask the Court to find that the sale of the Property is exempt from all stamp taxes or similar taxes pursuant to Section 1146(c) of the Bankruptcy Code. Interested and qualified parties can submit their bids before April 30, 2007. If more than one Qualified Bid is received, the Debtors intend to hold an auction on May 8, 2007, at the offices of Cadwalader, Wickersham & Taft LLP, in New York. The Court will consider the 155 Vanderbilt Property Sale on May 16, 2007. Objections must be filed by May 10. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. The Debtors filed their Chapter 11 Plan of Reorganization accompanying a disclosure statement explaining that Plan on Feb. 9, 2007. The Court is set to consider the adequacy of the Debtors' Disclosure Statement on May 3, 2007. (Saint Vincent Bankruptcy News, Issue No. 51 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SHANGDONG ZHOUYUAN: Kempisty & Company Raises Going Concern Doubt ----------------------------------------------------------------- Kempisty & Company, in New York, expressed substantial doubt about Shangdong Zhouyuan Seed and Nursery Co. Ltd.'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 net losses for the years ended Dec. 31, 2006, and 2005, accumulated deficit of $1,792,706 at Dec. 31, 2006, and default on bank loans and interest payments totaling $1,501,979 as of Dec. 31, 2006. Shangdong Zhouyuan Seed and Nursery Co. Ltd., formerly Pingchuan Pharmaceuticals Inc., reported a net loss of $347,706 on total revenue of $424,709 for the year ended Dec. 31, 2006, compared with a net loss of $256,354 on total revenue of $644,145 for the year ended Dec. 31, 2005. At Dec. 31, 2006, the company's balance sheet showed $3,635,854 in total assets, $2,571,682 in total liabilities, $430,013 in minority interest, and $634,159 in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $473,449 in total current assets available to pay $2,571,682 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?1d9b Default on Bank Loans and Interest Payments The company is currently in default with respect to principal and interest payments due on $1.3 million in obligations to the Agricultural Bank of China. The company's current financial situation does not permit it to satisfy the debt as written. The company has been in negotiations with the Bank regarding a restructuring of the debt. About Shandong Zhouyuan Shandong Zhouyuan Seed & Nursery Co. Ltd., formerly Pingchuan Pharmaceuticals Inc., is primarily engaged in the sale of medical equipment and the provision of consultation services in the pharmaceutical business. SHAW GROUP: Gary Graphia Named as Corporate Development EVP ----------------------------------------------------------- The Shaw Group Inc. reported that Gary P. Graphia, recently named Executive Vice President by Shaw Group's Board of Directors, would assume a newly established senior executive position of Executive Vice President - Corporate Development and Strategy. In this new role, Mr. Graphia will assume responsibility over the following areas: Mergers and Acquisitions, Shaw Capital, Strategic Markets, Risk Management, Safety, QA/QC, Corporate Communications, and Sales and Marketing. He will also oversee and serve on the company's Project Risk, Claims, and Sarbanes-Oxley Committees. Mr. Graphia joined Shaw Group in August 1999 as Corporate Secretary and General Counsel and in January 2007, he was named Executive Vice President, Chief Legal Officer and Corporate Secretary. Since joining Shaw Group, Mr. Graphia has presided over the legal and corporate affairs of the company, working closely with management and the board. He has overseen the growth of the Legal Department from 3 attorneys to 42 professionals, including 24 attorneys. Over the years, the company has completed three major acquisitions -- including Stone & Webster in 2000; IT Group in 2002; and most recently, a 20% equity interest in Westinghouse in October 2006; as well as, numerous smaller transactions, including acquisitions, divestitures, and joint ventures. In addition, the company has completed seven public capital markets transactions totaling over $2.7 billion dollars, and three increases to its bank credit facilities, the most recent being to increase the facility to $850 million. Shaw Group also disclosed that Cliff S. Rankin would join Shaw Group as General Counsel and Corporate Secretary beginning May 7, 2007. Mr. Rankin joins Shaw Group from the Houston law firm of Vinson & Elkins LLP, where he was employed for 15 years and has been a partner since 2001. At Vinson & Elkins, Mr. Rankin specialized in representing corporate clients and financial institutions in a variety of complex transactional matters including construction, acquisitions, project finance and development, and structured and commercial finance. Shaw Group further disclosed that Richard F. Gill, Executive Vice President and Chairman of Shaw's Executive Committee, who had been serving as acting President of the Power Group, has officially been named to that position. Mr. Gill will be relocating to Shaw Group's Charlotte, North Carolina office. Charlotte is headquarters for the senior management within the Fossil and Nuclear Divisions of the Power Group. Mr. Gill's move will facilitate increased opportunities for collaboration within the Power Group, and allow for more rapid decision- making. Shaw Group believes that Mr. Gill's relocation will allow it to further strengthen its leadership position within the power industry. Within the Power Group, David L. Brannen will join Shaw Group on April 16, 2007 as Executive Vice President, working directly with Mr. Gill. Mr. Brannen's focus will be engineering execution and project management processes. Over the past five years, Mr. Brannen has been a consultant to engineering and testing services companies, primarily providing services to telecommunications and power utilities markets. As an independent consultant, he participated in the cost and schedule analysis of the Hanford Waste Treatment project, a major nuclear waste management project sponsored by the U.S. Department of Energy. The Hanford team was made up of industry experts from throughout the nuclear industry. Previously, Mr. Brannen served in numerous executive, managerial, and project capacities with Bechtel International over an extensive and successful 35-year career. Based in Baton Rouge, Louisiana, The Shaw Group Inc. (NYSE: SGR) -- http://www.shawgrp.com/-- provides services to the environmental, infrastructure and homeland security markets, including consulting, engineering, construction, remediation and facilities management services to governmental and commercial customers. It is also a vertically integrated provider of engineering, procurement, pipe fabrication, construction and maintenance services to the power and process industries. The company segregates its business activities into four operating segments: Environmental & Infrastructure; Energy & Chemicals; Maintenance, and Fabrication, Manufacturing & Distribution. In January 2005, the company sold substantially all of the assets of its Shaw Power Technologies, Inc. and Shaw Power Technologies International, Ltd. units to Siemens Power Transmission and Distribution Inc., a unit of Siemens AG. The company has operations in Chile, China, Malaysia, the United Kingdom and, Venezuela, among others. * * * Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on The Shaw Group Inc. and removed it from CreditWatch, where it was placed with negative implications in October 2006. S&P said the outlook is stable. In addition, 'BB' senior secured debt rating was affirmed after the $100 million increase to the company's revolving credit facility. SMART ENERGY: Chisholm Bierwolf Raises Going Concern Doubt ---------------------------------------------------------- Chisholm Bierwolf & Nilson LLC, in Bountiful, Utah, expressed substantial doubt about Smart Energy Solutions 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 auditing firm pointed to the company's substantial losses from operations and limited sales of its product. Smart Energy Solutions Inc. reported a net loss of $5,328,496 on revenues of $1,818,973 for the year ended Dec. 31, 2006, compared with a net loss of $2,519,577 on revenues of $151,257 for the year ended Dec. 31, 2005. At Dec. 31, 2006, the company's balance sheet showed $2,765,924 in total assets, $1,317,449 in total liabilities, and $1,448,475 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?1d9a About Smart Energy Headquartered in Pompton Plains, N.J., Smart Energy Solutions Inc. (OTC B: SMGY) -- http://www.smgy.net/-- is the sole owner of the Battery Brain line of vehicle accessory products. Battery Brain is an automotive accessory product that easily installs onto the battery of a regular or custom car, truck, SUV, van, or RV. It uses unique electronic technology to ensure the battery always maintains enough power to start the engine. STRIKEFORCE TECHNOLOGIES: Li & Company Raises Going Concern Doubt ----------------------------------------------------------------- Li & Company PC, in Skillman, N.J., expressed substantial doubt about StrikeForce 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 accumulated deficit of $12,378,048 and working capital deficiency of $2,590,315 at Dec. 31, 2006, net loss and cash used in operations of $3,154,234 and $1,432,370 in 2006, respectively. StrikeForce Technologies reported a net loss of $3,154,234 on revenues of $338,445 for the year ended Dec. 31, 2006, compared with a net loss of $5,174,926 on revenues of $30,532 for the year ended Dec. 31, 2005. At Dec. 31, 2006, the company's balance sheet showed $2,122,241 in total assets and $5,413,552 in total liabilities, resulting in a $3,291,311 total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $351,958 in total current assets available to pay $2,942,273 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?1da3 About StrikeForce Technologies Headquartered in Edison, N.J., StrikeForce Technologies Inc. (OTC BB: SKFT) -- http://www.strikeforcetech.com/-- provides solutions that help prevent identity theft. Its total protection solution strengthens companies' defenses against the biggest points of fraud - when the internet is accessed, when accounts are opened, when they're accessed, when they're changed, and each time there's a new transaction. STRUCTURED ADJUSTABLE: S&P Cuts Rating on Class M7 Loan to BB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M7 from Structured Adjustable Rate Mortgage Loan Trust 2005-10 to 'BB' from 'BBB-' and placed it on CreditWatch with negative implications. Concurrently, the ratings on four classes from four other Structured Adjustable Rate Mortgage Loan Trust deals were placed on CreditWatch negative. At the same time, the ratings on 907 classes of pass-through certificates from 44 transactions from the same issuer were affirmed. The lowered rating and negative CreditWatch placement on class M7 from series 2005-10 reflects increased losses incurred by the pool and a significant amount of loans in the delinquency pipeline. This transaction incurred an average monthly loss of approximately $192,158 over the past six months, which is more than 3.8x the excess interest being generated. Consequently, the overcollateralization is at 0.18%, well below its target of 0.35%. Furthermore, severe delinquencies (90-plus days, foreclosure, and REO) for this transaction are approximately 5.34% of the current pool balance, and cumulative realized losses are approximately 0.14% of the original pool balance. The four other negative CreditWatch placements reflect weaker- than-expected pool performance. The delinquency pipelines for these transactions (series 2004-15, 2005-6XS, 2005-8XS, and 2006- 4) are significant and have caused projected credit support to fall significantly. Standard & Poor's will continue to closely monitor the performance of the transactions with ratings on CreditWatch negative. If delinquencies are reduced and the level of credit support has not been further eroded, S&P will affirm the ratings and remove them from CreditWatch. Conversely, if the transactions start incurring greater losses, S&P will take further negative rating actions on these classes. The affirmations are based on actual and projected credit support percentages that are sufficient to maintain the current ratings. Severe delinquencies for these transactions range from 6.29% (series 2004-7) to 0.45% (series 2004-6) of the current pool balances. Cumulative realized losses range from 0.00% (multiple transactions) to 0.19% (series 2005-3XS) of the original pool balances. The underlying collateral for these transactions consists of conventional, fully amortizing, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Rating Lowered and Placed on Creditwatch Negative Structured Adjustable Rate Mortgage Loan Trust Residential mortgage-backed securities Rating ------ Series Class To From ------ ----- -- ---- 2005-10 M7 BB/WatchNeg BBB- Ratings Placed On Creditwatch Negative Structured Adjustable Rate Mortgage Loan Trust Residential mortgage-backed securities Rating ------ Series Class To From ------ ----- -- ----- 2004-15 B5 B/Watch Neg B 2005-6XS M3 BBB/Watch Neg BBB 2005-8XS M4 BBB/Watch Neg BBB 2006-4 B6-I B/Watch Neg B Ratings Affirmed Structured Adjustable Rate Mortgage Loan Trust Residential mortgage-backed securities Series Class Rating ------ ----- ------ 2004-1 1-A, 2-A, 2-AX, 3-A1, 3-A2, 3-A3, 4-A1 AAA 2004-1 4-A2, 4-A3, 4-A4, 4-A5, 4-AX, 4-PAX, 5-A AAA 2004-1 5-AX, 6-A, 6-AX AAA 2004-1 B1-I, B1X-I, B1-II, B1X-II AA 2004-1 B2-I, B2X-I, B2-II A 2004-1 B3 BBB 2004-1 B4 BB 2004-1 B5 B 2004-2 1-A1, 1-A2, 1-AX, 2-A, 3-A, 3-AX, 4-A1 AAA 2004-2 4-A2, 4-A3, 4-AX, 4-PAX, 5-A, 5-AX AAA 2004-2 B1-I, B1X-I, B1-II AA 2004-2 B2-I, B2X-I, B2-II A 2004-2 B3 BBB 2004-2 B4 BB 2004-2 B5 B 2004-4 1-A1, 1-A2, 1-A3, 1-AX, 2-A, 3-A1, 3-A2 AAA 2004-4 3-A3, 3-A4, 3-A5, 3-A6, 3-AX, 3-PAX, 4-A AAA 2004-4 4-AX, 5-A AAA 2004-4 B1 AA 2004-4 B2 A 2004-4 B3 BBB 2004-4 B4 BB 2004-4 B5 B 2004-5 1-A, 2-A, 3-A1, 3-A2, 3-A3, 3-A4, 3-A5 AAA 2004-5 3-A6, 3-AX, 3-PAX, 4-A, 4-AX, 5-A, 5-AX AAA 2004-5 B1 AA 2004-5 B2 A 2004-5 B3 BBB 2004-5 B4 BB 2004-5 B5 B 2004-6 1-A, 2-A, 3-A1, 3-A2, 3-A3, 4-A1, 4-A2 AAA 2004-6 5-A1, 5-A2, 5-A3, 5-A4, 5-A5, 5-A6, 6-A AAA 2004-6 B1, B1-X AA 2004-6 B2, B2-X A 2004-6 B3 BBB 2004-6 B4 BB 2004-6 B5 B 2004-7 A1, A2-A, A2-B, A3, A4 AAA 2004-7 M1 AA 2004-7 M2 A 2004-8 1-A1, 1-A2, 1-A3, 2-A1, 2-A2, 3-A, 4-A AAA 2004-8 5-A1, 5-A2, 5-A3, 5-A4, 5-A4B, 5-A5, 5-A5B AAA 2004-8 5-A6, 5-A6B AAA 2004-8 B1, B1-X AA 2004-8 B2, B2-X A 2004-8 B3 BBB 2004-8 B4 BB 2004-8 B5 B 2004-10 1-A1, 1-A2, 1-A3, 2-A, 3-A1, 3-A2, 3-A3 AAA 2004-10 4-A, 4-AX AAA 2004-10 B1, B1-X AA 2004-10 B2, B2-X A 2004-10 B3 BBB 2004-10 B4 BB 2004-10 B5 B 2004-12 1-A1, 1-A2, 1-A3, 2-A, 3-A1, 3-A2, 3-A3 AAA 2004-12 3-AX, 4-A, 5-A, 6-A, 7-A1, 7-A2, 7-A3 AAA 2004-12 7-AX, 8-A, 9-A AAA 2004-12 B1, B1-X AA+ 2004-12 B2, B2-X AA 2004-12 B3, B3-X AA- 2004-12 B4, B4-X A 2004-12 B5 A- 2004-12 B6 BBB 2004-12 B7 BB 2004-12 B8 B 2004-14 1-A, 2-A, 3-A1, 3-A2, 3 AX, 3-PAX, 4-A AAA 2004-14 5-A1, 5-A2, 5-AX, 5-PAX, 6-A, 7-A, M, MX AAA 2004-14 B1, B1-X AA+ 2004-14 B2, B2-X AA 2004-14 B3, B3-X AA- 2004-14 B-4 A 2004-14 B-5 A- 2004-14 B6 BBB 2004-14 B7 BB 2004-14 B8 B 2004-15 A AAA 2004-15 B1 AA 2004-15 B2 A 2004-15 B3, BX BBB 2004-15 B4 BB 2004-16 1-A1, 1-A2, 1-A3, 2-A, 3-A-1, 3-A2, 3-AX AAA 2004-16 3-PAX, 4-A, 4-AX, 4-PAX, 5-A1, 5-A2, 5-A3 AAA 2004-16 5-AX, 5-AIO, 5-C, 6-A, M, MX AAA 2004-16 B1, B1X AA+ 2004-16 B2, B2X AA 2004-16 B3, B3X AA- 2004-16 B4 A 2004-16 B5 A- 2004-16 B6 BBB 2004-16 B7 BB 2004-16 B8 B 2004-18 1-A1, 1-A2, 1-A3, 2-A, 3-A1, 3-A2, 4-A1 AAA 2004-18 4-A2, 4-AX, 4-PAX, 5-A, 5-AX AAA 2004-18 M, MX, B1, B1X AA+ 2004-18 B2, B2X AA 2004-18 B3, B3X AA- 2004-18 B4 A 2004-18 B5, B5X A- 2004-18 B6, B6X, B7, B7X BBB 2004-18 B8, B8X BB 2004-18 B9 B 2004-19 1-A1, 1-A2, 1-A2X, 2-A1, 2-A2 AAA 2004-19 B1, B2 AA 2004-19 B3 A+ 2004-19 B4 A 2004-19 B5 BBB+ 2004-19 B6, BX BBB- 2004-19 B7-I, B7-II BB 2004-19 B8-I, B8-II B 2004-20 1-A1, 1-A2, 1-A3, 2-A1, 2-A2, 3-A1 3-A2 AAA 2004-20 4-A, 5-A AAA 2004-20 B1, B1X, B2, B2X AA+ 2004-20 B3, B3X, B4, B4X AA 2004-20 B5, B5X AA- 2004-20 B6 A 2004-20 B7, B7X A- 2004-20 B8, B8X, B9 BBB 2004-20 B10 BB 2004-20 B11 B 2004-3AC A1, A2, A3, PAX, AX AAA 2004-3AC B1 AA 2004-3AC B2 A 2004-3AC B3 BBB 2004-3AC B4 BB 2004-3AC B5 B 2005-1 1-A1, 1-A2, 2-A, 3-A, 3-AX, 4-A1, 4-A2 AAA 2005-1 5-A1, 5-A2, 6-A AAA 2005-1 B1, B1X, B2, B2X, B3, B3X AA+ 2005-1 B4, B4X AA 2005-1 B5, B5X A+ 2005-1 B6 A 2005-1 B7, B7X A- 2005-1 B8 BBB+ 2005-1 B9 BBB 2005-1 B10, B10X BBB- 2005-1 B11, B11X BB 2005-1 B12 B 2005-2 A1, A2, A2X1, A2X2 AAA 2005-2 B1, B2 AA 2005-2 B3 A+ 2005-2 B4 A 2005-2 B5 BBB+ 2005-2 B6, BX BBB 2005-2 B7 BBB- 2005-2 B8 BB 2005-2 B9 B 2005-3XS A1, A2, A3 AAA 2005-3XS M1 AA 2005-3XS M2 A 2005-3XS M3 BBB+ 2005-4 1-A1, 1-A2, 2-A, 3-A1, 3-A2, 3-AX, 3-PAX AAA 2005-4 4-A, 5-A, 6-A1, 6-A2, 6-A3, 6-AX1, 6-AX2 AAA 2005-4 B1-II AA+ 2005-4 B2-II AA 2005-4 B1-I AA- 2005-4 B3-II A+ 2005-4 B2-I, B4-II, BX-II A- 2005-4 B3-I, B5-II BBB 2005-4 B4-I BBB- 2005-4 B5-I, B6-II BB 2005-4 B6-I, B7-II B 2005-6XS A1, A2, A3 AAA 2005-6XS M1 AA 2005-6XS M2 A 2005-7 1-A1, 1-A2, 1-A3, 1-A4, 2-A1, 2-A2, 3-A1 AAA 2005-7 3-A2, 4-A, 5-A1, 5-A2, 6-A1, 6-A2 AAA 2005-7 B1-I AA 2005-7 B2-I AA- 2005-7 B3-I A 2005-7 B4-I A- 2005-7 B5-I BBB 2005-7 B6-I, B7-I BBB- 2005-7 B8-I BB 2005-7 B9-I B 2005-7 7-A AAA 2005-7 B1-II AA 2005-7 B2-II A 2005-7 B3-II A- 2005-7 B4-II BBB 2005-7 B6-II BB 2005-7 B7-II B 2005-8XS A1, A2, A3 AAA 2005-8XS M1 AA 2005-8XS M2 A 2005-8XS M3 BBB+ 2005-9 1-A, 2-A1, 2-A2A, 2-A2B AAA 2005-9 B1 AA+ 2005-9 B2 AA 2005-9 B3 AA- 2005-9 B4 A 2005-9 B5 A- 2005-9 B6 BBB 2005-9 B7 BBB- 2005-9 B9 BB 2005-9 B10 B 2005-10 A1, A2, A-IO AAA 2005-10 M1, M2 AA 2005-10 M3, M4 A 2005-10 M5, M6 BBB 2005-11 1-A1, 1-A2, 2-A1, 2-A2, 3-A, 4-A AAA 2005-11 B1 AA 2005-11 B2 A 2005-11 B3 BBB+ 2005-11 B4 BBB 2005-11 B5 BBB- 2005-11 B6 BB 2005-11 B7 B 2005-12 1-A1, 1-A2, 2-A1, 2-A2, 3-A1 AAA 2005-12 3-A2, 4-A1, 4-A2, 5-A, 5-AX AAA 2005-12 B-1 AA+ 2005-12 B-2 AA 2005-12 B-3 AA- 2005-12 B-4 A 2005-12 B-5 A- 2005-12 B-6 BBB 2005-12 B-7 BBB- 2005-12 B-8 BB 2005-12 B-9 B 2005-14 A1, A2, A3, 1-AX, 2-AX AAA 2005-14 B1, B2 AA+ 2005-14 B3, B4 AA 2005-14 B5 A+ 2005-14 B6 A 2005-14 B7 BBB+ 2005-14 B8 BBB 2005-14 B9 BBB- 2005-14 B10 BB 2005-14 B11 B 2005-15 1-A1, 1-A2, 1-AX, 1-PAX, 2-A1 AAA 2005-15 2-A2, 3-A1, 3-A2, 4-A1, 4-A2 AAA 2005-15 R AAA 2005-15 B-1 AA+ 2005-15 B-2 AA 2005-15 B-3 AA- 2005-15 B-4 A 2005-15 B-5 A- 2005-15 B-6 BBB 2005-15 B-7 BBB- 2005-15 B-8 BB 2005-15 B-9 B 2005-17 1-A1, 1-A2, 2-A1, 2-A2, 3-A1 AAA 2005-17 3-A2, R AAA 2005-17 B1-I AA+ 2005-17 B2-I AA 2005-17 B3-I A 2005-17 B4-I BBB 2005-17 B5-I BBB- 2005-17 B6-I BB 2005-17 B7-I B 2005-17 4-A1, 4-A2, 4-A3, 4-A4, 4-A5 AAA 2005-17 4-AX, 5-A1, 5-A2, 5-A3, 5-AX AAA 2005-17 B1-II AA+ 2005-17 B2-II AA 2005-17 B3-II A 2005-17 B4-II BBB 2005-17 B5-II BBB- 2005-17 B6-II BB 2005-17 B7-II B 2005-18 1-A1, 1-A2, 2-A, 3-A1, 3-A2 AAA 2005-18 4-A1, 4-A2, 4-A3, 5-A1, 5-A2 AAA 2005-18 6-A1, 6-A2, R AAA 2005-18 B1-I AA+ 2005-18 B2-I AA 2005-18 B3-I A 2005-18 B4-I BBB 2005-18 B5-I BBB- 2005-18 B6-I BB 2005-18 B7-I B 2005-18 7-A1, 7-A2, 7-A3, 7-AX, 8-A1 AAA 2005-18 8-A2, 9-A1, 9-A2, 9-A3, 9-A4 AAA 2005-18 9-AX AAA 2005-18 B1-II AA+ 2005-18 B2-II AA 2005-18 B3-II A 2005-18 B4-II BBB 2005-18 B5-II BBB- 2005-18 B6-II BB 2005-18 B7-II B 2005-19XS 1-A1, 1-AA, 1-AB, 1-A-3 AAA 2005-19XS M1-I AA 2005-19XS M2-I A 2005-19XS M3-I BBB 2005-19XS 2-A-1, 2-A2, 2-A3 AAA 2005-20 1-A1, 1-A2, 2-A1, 2-A2, 3-A1 AAA 2005-20 3-A2, 3-A3, 3-AX, 4-A1, 4-A2 AAA 2005-20 B1-I AA+ 2005-20 B2-I AA 2005-20 B3-I A 2005-20 B4-I BBB 2005-20 B5-1 BBB- 2005-20 B6-1 BB 2005-20 B7-1 B 2005-20 B1-II AA+ 2005-20 B2-II AA 2005-20 B3-II A 2005-20 B4-II BBB 2005-20 B5-II BBB- 2005-20 B6-II BB 2005-20 B7-II B 2005-20 R AAA 2005-21 1-A, 2-A, 3-A1, 3-A2, 4-A-1 AAA 2005-21 4-A-2, R, 5-A1, 5-A2, 6-A1 AAA 2005-21 6-A2, 6-A3, 6-A4, 6-AX, 7-A1 AAA 2005-21 7-A2 AAA 2005-21 B1-II AA+ 2005-21 B1-I, B2-I, B2-II AA 2005-21 B3-I A+ 2005-21 B4-1, B3-II A 2005-21 B5-I BBB+ 2005-21 B4-II, B6-I BBB 2005-21 B7-I, B5-II BBB- 2005-21 B8-I, B6-II BB 2005-21 B9-I, B7-II B 2005-22 1-A1, 2-A2, 1-A3, 1-A4, 1-A5, 1-AX AAA 2005-22 1-PAX, 2-A1, 2-A2, 3-A1, 3-A2, R AAA 2005-22 4-A2, 4-A2, 5-A1, 5-A2 AAA 2005-22 B1-I, B1-II AA 2005-22 B2-1, B2-II A 2005-22 B3-1 A- 2005-22 B4-I, B3-II BBB 2005-22 B5-I, B4-II BBB- 2005-22 B6-I, B5-II BB 2005-22 B7-I, B6-II B 2005-23 1-A1, 1-A2, 1-A3, 1-AZ, 1-A4 AAA 2005-23 1-AX, 1-A2X, 2-A1, 2-A2, R AAA 2005-23 3-A1, 3-A2, 4-A1, 4-A2 AAA 2005-23 B1-I, B1-II AA 2005-23 B2-I, B2-II A 2005-23 B3-I, B3-II BBB 2005-23 B4-I, B4-II BBB- 2005-23 B5-I, B5-II BB 2005-23 B6-I, B6-II B 2006-1 1-A1, 1-A2, 2-A1, 2-A2, 2-A3 AAA 2006-1 2-AX, 3-A1, 3-A2, 4-A, 5-A1 AAA 2006-1 5-A2, 5-A3, 5-AX, 6-A1, 6-A2 AAA 2006-1 6-AX, R, 7-A1, 7-A2, 7-A3 AAA 2006-1 7-A4, 7-A5, 7-AX, 8-A1, 8-A2 AAA 2006-1 8-AX AAA 2006-1 B1-I, B1-II AA 2006-1 B2-I AA- 2006-1 B3-I, B2-II A 2006-1 B4-I A- 2006-1 B5-I, B3-II BBB 2006-1 B6-I, B4-II BBB- 2006-1 B7-I, B5-II BB 2006-1 B8-I, B6-II B 2006-2 1-A1, 1-A2, 2-A1, 2-A2, AX AAA 2006-2 PAX, 3-A1, 3-A2, R, 4-A1, 4-A2 AAA 2006-2 4-AX, 5-A1, 5-A2, 5-AX AAA 2006-2 B1-II AA 2006-2 B2-II A 2006-2 B6-II B 2006-3 1-A1, 1-A2, 2-A1, 2-A2, 3-A1 AAA 2006-3 3-A2, 3-A3, 3-AX, R, 4-A, 4-AX AAA 2006-3 B1-II AA 2006-3 B2-II A 2006-3 B3-II BBB 2006-3 B4-II BBB- 2006-3 B5-II BB 2006-3 B6-II B 2006-4 1-A1, 1-A2, 2-A1, 2-A2, 3-A1, 3-A2, R AAA 2006-4 4-A1, 4-A2, 5-A1, 5-A2, 6-A, 7-A1, 7-A2 AAA 2006-4 7-A3, 7-A4 AAA 2006-4 B1-II AA+ 2006-4 B2-II AA 2006-4 B3-II AA- 2006-4 B4-II A 2006-4 B5-II BBB 2006-4 B6-II BBB- 2006-4 B7-II BB 2006-4 B8-II B 2006-5 1-A1, 1-A2, 2-A1, 2-A2, 2-A3, 2-AX, R AAA 2006-5 3-A, 4-A1, 4-A2, 5-A1, 5-A2, 5-A3, 5-A4 AAA 2006-5 B1-II AA+ 2006-5 B2-II AA 2006-5 B3-II AA- 2006-5 B8-II B 2006-6 1-A1, 1-A2, 1-A3, 1-AX, R AAA 2006-6 B5-I B 2006-6 2-A1, 2-A2, 2-A3, 2-A4, 3-A1, 3-A2 AAA 2006-6 B1-II AA+ 2006-6 B2-II AA 2006-6 B4-II A 2006-6 B8-II B 2006-7 1-A1, 1-A2, 2-A1, 2-A2, R AAA 2006-7 B5-I B 2006-7 3-A1, 3-AF, 3-A2, 3-AS, 4-A1, 4-A2, 4-AX AAA 2006-7 B5-II B 2006-8 1-A1, 1-A2, 1-A2X, 1-A3, 1-AX, R AAA 2006-8 B6-I B 2006-8 2-A1, 2-AF, 2-A2, 2-A3, 2-AS, 2-A4 AAA 2006-8 3-A1, 3-A2, 3-A3, 3-A4, 3-A5, 3-A5X AAA 2006-8 3-AF, 3-AS, 3-A6 AAA 2006-8 4-A1, 4-A2, 4-A3, 4-A3X, 4-A4, 4-A5, 4-AX AAA 2006-8 B1-II AA 2006-8 B2-II AA- 2006-8 B7-II B TD BANKNORTH: Fitch Holds Individual Rating at B ------------------------------------------------ Fitch Ratings has upgraded TD Banknorth Inc. and its principal subsidiaries' long-term and short-term ratings, including the Issuer Default Rating to 'AA-' from 'A'. With these upgrades, the ratings for BNK and its subsidiaries are removed from Rating Watch Positive and the Outlook is now Stable. Fitch's rating actions follow the buyout of BNK minority shareholders by majority shareholder Toronto-Dominion Bank (TD, rated 'AA-/F1+' by Fitch). Fitch placed BNK's ratings on Rating Watch Positive when the proposed buyout was announced in November 2006. BNK is now a wholly-owned subsidiary of TD, one of the largest banks in Canada, and Fitch has aligned its ratings with those of TD. Fitch considers integration risk in this transaction to be minimal as BNK has become increasingly more integrated with TD since TD purchased a controlling interest in BNK in March 2005. TD's current ratings reflect its strong Canadian retail franchise, good revenue diversification, solid asset quality, satisfactory funding profile, adequate capitalization and strong risk management practices. Revenue diversification has been enhanced by BNK and a minority ownership position in discount broker TD Ameritrade. Fitch has upgraded these ratings for TD Banknorth Inc. and related entities: TD Banknorth Inc. -- Long-term Issuer Default Rating to 'AA-' from 'A'; -- Senior debt to 'AA-' from 'A'; -- Short-term to 'F1+' from 'F1'. TD Banknorth, NA -- Long-term deposits to 'AA' from 'A+'; -- Long-term Issuer Default Rating to 'AA-' from 'A'; -- Senior debt to 'AA-' from 'A'; -- Short-term Issuer to 'F1+' from 'F1'; -- Short-term deposits to 'F1+' from 'F1'. Banknorth Capital Trust I and II HUBCO Capital Trust I and II Peoples Heritage Capital Trust I -- Preferred stock to 'A+' from 'A-'. Hudson United Bank -- Long-term deposits to 'AA' from 'A+'; -- Subordinated debt to 'A+' from 'A-'. First Massachusetts Bank, NA -- Subordinated debt to 'A+' from 'A-'. Fitch affirms these ratings for TD Banknorth Inc. and related entities: TD Banknorth Inc. -- Individual at 'B'; -- Support at '1'. TD Banknorth, NA -- Individual at 'B'; -- Support at '1'. TERRA ENERGY: Rosen Seymour Raises Going Concern Doubt ------------------------------------------------------ Rosen Seymour Shapss Martin & Company LLP, in New York, expressed substantial doubt about Terra Energy & Resource 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 recurring losses from operations and net capital deficiency. Terra Energy & Resource Technologies Inc. reported a net loss of $10,914,179 on revenues of $2,800,000 for the year ended Dec. 31, 2006, compared with a net loss of $2,306,290 on revenues of $732,150 for the year ended Dec. 31, 2005. The company's balance sheet at Dec. 31, 2006, showed $2,377,268 in total assets and $2,566,491 in total liabilities, resulting in a $189,223 total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $1,102,869 in total current assets available to pay $2,566,491 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?1d98 Headquartered in New York, Terra Energy & Resource Technologies Inc. (OTC BB TEGR.OB) -- http://www.terrainsight.com/-- through its wholly owned subsidiary, Terra Insight Corporation, provides mapping and analysis services for exploration companies related to natural resources to be found beneath the surface of the earth utilizing unique technologies and scientific analysis techniques. TRANSDERM LABS: Demetrius & Company Raises Going Concern Doubt -------------------------------------------------------------- Demetrius & Company LLC, in Wayne, N.J., expressed substantial doubt about Transderm Laboratories Corporation'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 having defaulted on payments to its bondholders and licensors, and working capital deficiencies. Transderm Laboratories Corporation reported a net loss of $2,222,200 on net sales of $5,940,000 for the year ended Dec. 31, 2006, compared with a net loss of $1,887,000 on net sales of $7,586,000 for the year ended Dec. 31, 2005. During the year ended Dec. 31, 2006, net sales decreased 22%. The decrease in net sales during 2006 is primarily due to a decline in orders from one of the company's largest customers. The decrease in net sales reduced gross profit from $1,139,000 to $583,000. At Dec. 31, 2006, the company's balance sheet showed $5,716,000 in total assets and $41,320,000 in total liabilities, resulting in a $35,604,000 total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $3,987,000 in total current assets available to pay $29,938,000 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?1da6 Default on Royalty Payments At Dec. 31, 2006, the company had total liabilities of $41.3 million, which included approximately $7.3 million due under the terms of a license acquired from Key Pharmaceuticals Inc. to utilize certain technology in its current generation transdermal patch, which represents royalty payments owed over the last seven years and $30.5 million owed to Health Chem, including $14.1 million related to redeemable preferred stock under which Transderm is currently in default, $7.2 million related to a subordinated promissory note under which Transderm is currently in default, and $9.2 million related to a long-term payable. About Transderm Laboratories Transderm Laboratories Corporation manufactures controlled release products to deliver drugs topically or transdermally. The company conducts the majority of its business through its 98.5%-owned subsidiary, Hercon Laboratories Corporation. Health-Chem owns 90% of the company's outstanding common stock. TRIBUNE COMPANY: Posts $15.6 Million Net Loss in Qtr Ended April 1 ------------------------------------------------------------------ Tribune Company reported a net loss of $15.6 million on operating revenues of $1.2 billion for the first quarter ended April 1, 2007, compared with net income of $102.8 million on operating revenues of $1.3 billion for the first quarter ended March 26, 2006. First quarter 2007 results from continuing operations included the a pretax non-operating loss of $76 million, of which $70 million related to marking-to-market the derivative component of the company's PHONES and the related Time Warner investment. First quarter 2006 results from continuing operations included a pretax non-operating loss of $14 million primarily from marking- to-market the derivative component of the company's PHONES and the related Time Warner investment. "The print advertising environment was challenging in the first quarter due to softness in classified categories," said Dennis FitzSimons, Tribune chairman, president and chief executive officer. "Our interactive division continues to generate significant growth and our newspapers continue to innovate - the Los Angeles Times launched new travel and fashion sections and RedEye will add a weekend edition in May. In broadcasting, revenue improvements in primetime helped offset weaker market conditions due in part to the absence of political spending versus last year." Consolidated cash operating expenses were down 2 percent, or $22 million. In the first quarter of 2006, cash operating expenses included a charge of $19 million associated with the new union contracts at Newsday. Operating cash flow was down 12 percent to $238 million from $271 million, while operating profit declined 16 percent to $181 million from $217 million. Publishing Publishing's first quarter operating revenues were $931 million, down 5 percent, or $54 million. Publishing cash operating expenses decreased $26 million, or 3 percent, to $748 million, in part due to the previously discussed $19 million charge related to the Newsday union contracts in 2006. Publishing operating cash flow was $184 million, a 13 percent decline from $212 million in 2006. Publishing operating profit decreased 18 percent to $140 million, from $170 million in 2006. Cash operating expenses decreased due in part to $19 million charge, partially offset by a $2 million gain on real property sales in 2006. All other cash expenses were down $9 million as decreases in newsprint, compensation and promotion expenses were partially offset by increases in mailed preprint advertising postage and outside services expense. Broadcasting and Entertainment Broadcasting and entertainment's first quarter operating revenues decreased slightly to $283 million, from $284 million in 2006. Group cash operating expenses increased 2 percent, or $4 million, to $209 million. Operating cash flow was $74 million, down 7 percent from $80 million, and operating profit decreased 9 percent to $61 million from $67 million in 2006. Television's cash operating expenses were up 2 percent, or $4 million, primarily due to higher compensation expense, partially offset by a decrease in broadcast rights. Equity Results Net equity income was $13 million in the first quarter of 2007, compared with $7 million in the first quarter of 2006. The increase reflects improvements at TV Food Network and CareerBuilder. Additional Financial Details Corporate expenses for the 2007 first quarter were $20 million, down 4% from the first quarter of 2006. Interest expense for the 2007 first quarter increased to $83 million, up 71 percent from $49 million in the first quarter of 2006. The increase in interest expense was due to higher debt levels and interest rates. Debt, excluding the PHONES, was $4.3 billion at the end of the 2007 first quarter and $2.8 billion at the end of the 2006 first quarter. The increase was primarily due to financing the stock repurchases in 2006. Capital expenditures were $21 million in the first quarter of 2007. Discontinued Operations On Feb. 12, 2007, the company announced an agreement to sell the New York edition of Hoy, the company's Spanish-language daily newspaper. On March 6, 2007, the company announced an agreement to sell its Southern Connecticut Newspapers - The Advocate (Stamford) and Greenwich Time for $73 million. The sales of these business units are expected to close in the second quarter of 2007. The assets and liabilities of these business units are now classified as held for sale and their results of operations are reported as discontinued operations. In the first quarter of 2007, the company recorded an after-tax loss of $33 million to write down the SCNI net assets to estimated fair value, less costs to sell. The company expects to record a pretax gain on the sale of the New York edition of Hoy when the sale closes. In June 2006, the company announced the sales of its Atlanta and Albany television stations. The sale of the Atlanta station closed in August 2006. In September 2006, the company announced an agreement to sell its Boston station. The sales of the Albany and Boston stations closed in December 2006. The results of operations for these stations in 2006 are reported as discontinued operations. About Tribune Company Headquartered in Chicago, Tribune Company (NYSE: TRB) -- http://www.tribune.com/-- is one of the country's top media companies, operating businesses in publishing, interactive and broadcasting. It reaches more than 80 percent of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, Newsday (Long Island, NY), The Sun (Baltimore), South Florida Sun-Sentinel, Orlando Sentinel and Hartford Courant. The company's broadcasting group operates 23 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. * * * As reported in the Troubled Company Reporter on April 9, 2007, Standard & Poor's Ratings Services lowered its ratings on the class A and B units from the $79.795 million Structured Asset Trust Unit Repackaging Tribune Co. Debenture Backed Series 2006-1 to 'BB-' from 'BB+'. The ratings remain on CreditWatch, where they were placed with negative implications on Oct. 3, 2006. VERINT SYSTEMS: S&P Rates Proposed $675 Million Facility at B ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Melville, New York-based Verint Systems Inc., a provider of analytic software-based solutions for security and business intelligence. The outlook is developing, meaning the ratings could be revised upward or downward because the company is not current on its SEC filings as a result of an investigation at Comverse Technology Inc., its majority shareholder, for backdating stock-option grants and certain accounting matters and related internal investigation at Verint. "At the same time, we assigned our 'B' bank loan rating, and '3' recovery rating to the company's proposed $675 million first-lien credit facility, indicating that lenders can expect meaningful (50%-80%) recovery of principal in the event of payment default," said Standard & Poor's credit analyst David Tsui. The facility consists of a $25 million revolver and a $650 million term loan B. All ratings are based on preliminary offering statements and are subject to review upon final documentation. Proceeds from the $650 million first lien term loan and proceeds from issuance of convertible perpetual preferred stock to Comverse, along with $175 million cash on hand, will be used to fund the purchase of Witness Systems Inc., a provider of workforce optimization software and services and transaction-related expenses. The ratings on Verint reflect the company's acquisitive growth strategy, integration risk related to the Witness acquisition, high leverage and non-compliance with SEC filing regulations. These factors are partly offset by favorable market growth, predictable and growing revenue base stemming from high renewal rates, and more balanced product and service offerings following the transaction. Verint operates in a fragmented and competitive security and business intelligence industry, with vendors ranging from large diversified companies to small private point solution vendors. The company's rapid growth over the years has been the result of organic growth and acquisitions, having completed 8 acquisitions since 2002. The acquisition of Witness is expected to provide Verint with the necessary scale efficiencies to improve its margins as well as its market position, with approximately 36% pro forma market share in the workforce optimization software and services segment. VITALTRUST BUSINESS: Rotenberg Meril Raises Going Concern Doubt --------------------------------------------------------------- Rotenberg Meril Solomon Bertiger & Guttilla PC, in Saddle Brook, N.J., expressed substantial doubt about VitalTrust Business Development Corporation'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, negative cash flows from operations, and the uncertainty related to outstanding litigation. VitalTrust Business Development Corporation reported a net loss of $4,277,558 on revenues of $40,000 for the year ended Dec. 31, 2006, compared with a net loss of $3,790,058 on zero revenues for the year ended Dec. 31, 2005. The company's balance sheet at Dec. 31, 2006, showed $1,187,686 in total assets, $762,527 in total liabilities, and $425,159 in total stockholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $19,876 in total current assets available to pay $762,527 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?1d9d Roder Litigation On March 22, 2005, the company filed a civil suit in Orange County Circuit Court, Orlando, Fla. against its former chief executive officer, Walter H. Roder II. Counterclaims were filed by Mr. Roder and related entities alleging non-payment of purported obligations. On March 5-6, 2007, the Orange County Circuit Court entered a separate final judgment against the company in the aggregate amount of $1,307,685. The company appealed to the Fifth District Court of Appeal in Daytona Beach, Fla. on March 7, 2007, and the appellate court entered a March 22, 2007, Order of Referral to Mediation. About VitalTrust Business VitalTrust Business Development Corporation (OTC BB: VTBD), a registered Business Development Company under the Investment Company Act of 1940, provides management and finance primarily to private companies that desire to become publicly traded during the course of their business cycle. The company invests and manages enterprises in the healthcare, energy, internet and services sectors. WELD WHEEL: Plan Confirmation Hearing Scheduled on May 8 -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri set a hearing at 2:00 p.m., on May 8, 2007, to consider final approval of Weld Wheel Industries Inc. and its debtor-affiliates' Amended Disclosure Statement and confirmation of the Debtors' Joint Plan of Liquidation. Objections, if any, must be filed by April 30, 2007. Ballots are due on April 30, 2007. Plan Implementation The Debtors say that on the effective date of the Plan, the Estates will be substantively consolidated and all claims by one estate against another will be extinguished. The Debtors will be dissolved as soon as practicable after the Effective Date. All of Debtors' property will be vested exclusively with the Plan Trust, to be administered by the Plan Trustee. The Plan Trustee will be authorized to sell or otherwise dispose of all remaining property of the Estates, bring actions to avoid prepetition transactions, recover property under Chapter 5 of the Bankruptcy Code, to object to Claims and to exercise all the rights, powers and duties of a Chapter 11 Trustee. The Plan Trustee will make the distributions anticipated by the Plan and the Plan Trust Agreement. Treatment of Claims Under the Plan, Administrative Claims and Priority Claims will be paid in full and in cash. Other Priority Claims will also be paid in full. PNC Bank's Secured Claim will be paid from excess escrow amount. Remaining Equipment Lender Claims will be paid from escrowed sale proceeds. General Unsecured Creditors, in full satisfaction of their claims, will receive a pro rata share of the cash available after payment in full of or reserve for Administrative Expense Claims, Priority Tax Claims, Other Priority Claims, and all Plan Trust expenses. General Unsecured Creditors will also receive a pro rata share of 1/2 of the excess escrow amount up to $2 million and all of the remaining excess escrow amount in excess. Holders of Intercompany Claims and Equity Interests will not receive any distributions under the Plan. A full-text copy of the Debtors' Amended Disclosure Statement explaining their Joint Liquidating Plan is available for free at: http://ResearchArchives.com/t/s?1dbf About Weld Wheel Kansas City, Missouri- based Weld Wheel Industries, Inc., nka XWW Inc. -- http://www.weldracing.com/-- manufactures forged alloy wheels to enhance the performance and appearance of racecars, off- road trucks, luxury pickups, SUV's, premium motorcars, customs, hot rods, and motorcycles. Weld Wheel and its two debtor- affiliates filed for Chapter 11 protection on Aug. 17, 2006 (Bankr W.D. Mo. Case No. 06-42105). Cynthia Dillard Parres, Esq., and Laurence M. Frazen, Esq., at Bryan Cave LLP, represent the Debtors. Lisa A. Epps, Esq., at Spencer Fane Britt & Browne LLP and Kim Martin Lewis, Esq., at Dinsmore & Shohl LLP represent the Official Committee of Unsecured Creditors. Mesirow Financial Consulting LLC gives financial advice to the Committee. When the Debtors sought protection from their creditors, they estimated assets and debts at $10 million to $50 million. WELLS FARGO: Fitch Rates $3.9 Million Class B-2 Certificates at BB ------------------------------------------------------------------ Fitch rates the Wells Fargo Home Equity Asset-Backed Securities 2007-2 Trust as: -- $370,510,000 classes A-1 through A-4 'AAA'; -- $24,840,000 class M-1 'AA+'; -- $13,697,000 class M-2 'AA'; -- $7,893,000 class M-3 'AA-'; -- $7,429,000 class M-4 'A+'; -- $7,197,000 class M-5 'A'; -- $4,875,000 class M-6 'A-'; -- $4,179,000 class M-7 'BBB+'; -- $4,179,000 class M-8 'BBB'; -- $3,482,000 class M-9 'BBB-'; -- $3,482,000 class B-1 'BB+'; -- $3,947,000 class B-2 'BB'. The 'AAA' rating on the senior certificates reflects the 20.20% total credit enhancement provided by the 5.35% class M-1, 2.95% class M-2, 1.70% class M-3, 1.60% class M-4, 1.55% class M-5, 1.05% class M-6, 0.90% class M-7, 0.90% class M-8, 0.75% class M- 9, 0.75% class B-1, 0.85% class B-2, and 1.85% initial overcollateralization. All certificates have the benefit of monthly excess cashflow to absorb losses. In addition, the ratings reflect the quality of the loans and the integrity of the transaction's legal structure as well as the capabilities of Wells Fargo Bank, N.A., as servicer (rated 'RPS1' by Fitch). HSBC Bank USA, National Association is the trustee. The certificates are supported by 2,998 subprime, fixed and adjustable interest rate, monthly pay, one- to four-family, residential first and second lien mortgage loans as collateral. The mortgage balance for the total pool as of the cut-off date (April 1, 2006) was $464,299,545. The weighted average loan rate is approximately 8.791%. The weighted average remaining term to maturity is 355 months. The average unpaid principal balance of the loans is approximately $154,870. The weighted average original loan-to-value ratio is 82.39%. Approximately 3.61% of the loans are covered by a lender paid mortgage insurance policy. The properties are primarily located in California (12.21%), Florida (9.49%), and Illinois (5.12%). All other states represent less than 5% of the outstanding balance of the pool. All of the mortgage loans were purchased by Wells Fargo Asset Securities Corporation, acting as the depositor, from Wells Fargo Bank, N.A. The trust fund will make elections to treat some of its assets as one or more real estate mortgage investment conduits for federal income tax purposes. WESTERLY HOSPITAL: Poor Performance Cues Moody's to Cut Ratings --------------------------------------------------------------- Moody's Investors Service has downgraded Westerly Hospital's long- term rating to Ba3 from Ba2 on approximately $11.2 million of outstanding Series 1994 Bonds. The outlook remains negative at the lower rating level. The rating downgrade and negative outlook reflect the continued poor operating performance and recent decline in liquidity in fiscal year 2006. LEGAL SECURITY: The Series 1994 Bonds are secured by a lien on the hospital's gross receipts. There is no mortgage lien. Debt service reserve fund maintained. Interest Rate Derivatives: None Strengths * Leading market share with over 70% market share in a favorable service area * Renegotiated payor contracts and reclassification to a more favorable Medicare wage index that should translate into $3.6 million of incremental revenues in FY 2007 * Community support as demonstrated by $1.5 million in fundraising in FY 2006 with expectations that fundraising should continue Challenges * Significant operating deficits and the inability to meet budgets that have consistently resulted in operating cash flow margins of 2.0% or less in each of the past three fiscal years * Underfunded pension liability that continues to pressure Westerly's operating results and cash position * Bank lines of $9.5 million that are required to be collateralized by a minimum of $10.4 million from unrestricted investments. The $10.4 million represents 55% of Westerly's total unrestricted cash Recent Developments/Results FY 2006 marked the fourth consecutive year of sizable operating deficits for Westerly Hospital. Management budgeted a $2.5 million operating deficit FY 2006 but results were unfavorable with an operating deficit of $4.9 million, in line with weak performance in the three preceding fiscal years. As a result, operating cash flow from operations was weak: $782 thousand (1.1% operating cash flow margin) when compared to national medians. Management attributed the poor performance in FY 2006 to a light flu season and expense growth due to increased overtime pay and bad debt. To address the expense issues, management indicated that open FTE positions are currently being filled with permanent staff to reduce overtime usage. To reduce bad debt expense, management has changed pre-collection companies to improve their ability to collect late bills. Of equal concern is Westerly's liquidity position. Unlike FY 2005, where unrestricted cash balances were maintained despite the poor operating performance, Westerly's unrestricted cash balance declined $4.3 million to $18.7 million (94.5 days cash on hand) in FY 2006 from a healthier $23 million (125.1 days). The decline in the cash balance was attributed to: 1) poor operating performance, 2) $4.7 million contribution towards the defined benefit plan, which will not be offered to employees hired after January 30, 2007, and 3) an increase in accounts receivable days (to 47 days from 39 days). Westerly utilizes bank borrowings for working capital needs to help preserve the cash position. These bank lines are collateralized at 110% or approximately $10.4 million. Adjusting for the collateralized amount, unrestricted cash and investments decreases to an unfavorable $8.6 million (44.1 days cash on hand). With renovations in the past few years and capital and operating leases, management reports that it has been spending enough on capital to at a minimum maintain the plant. Recent capital expenditures include a new MRI and nuclear medicine camera. Notwithstanding, the average age of plant, 13.9 years, is higher than national averages. For FY 2007, Westerly is budgeting an operating deficit $2.5 million and improved cash flow of $3.2 million. Management expects the improvement in performance due to: 1) improved rates improve commercial payors and a reclassification of their Medicare wage index which in total is expected to increase revenue by $3.6 million, and 2) increased revenue from radiology, maternity, pain management, and medication management services, which is expected to increase revenue by $560 thousand. Despite the improved rate increases from commercial payors and additional revenue from the above mentioned service lines, Moody's believes Westerly will face another challenging year in its goal to reach budget. Through five months FY 2007, Westerly is operating at a deficit of approximately $2 million dollars and has generated $424 thousand of cash flow from operations (1.4% operating cash flow margin). Management reports that other Rhode Island hospitals are experiencing financial situations similar to Westerly and the State is beginning to recognize and make efforts to address the issues. Outlook The negative outlook reflects ongoing concern that Westerly will not produce adequate cash flow levels in FY 2007 and cash may be further impaired. What could change the rating--UP A consistent trend of improving operating profits and operating cash flow; increased inpatient and outpatient volume What could change the rating--DOWN Further decline in cash reserves; continued operating deficits that are in line with results from the last three fiscal years; increase in debt without commensurate improvement in cash flow and liquidity Key Indicators Assumptions & Adjustments: - Based on financial statements for The Westerly Hospital and Subsidiary - First number reflects audit year ended September 30, 2005 - Second number reflects audit year ended September 30, 2006 - Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 4,484; 4,405 * Total operating revenues: $66.6 million; $71.6 million * Moody's-adjusted net revenue available for debt service: $2.8 million; $3.1 million * Total debt outstanding: $23.5 million; $24.1 million * Maximum annual debt service: $2.25 million; $2.25 million * MADS Coverage with reported investment income: 1.49 times; 1.84 times * Moody's-adjusted MADS Coverage with normalized investment income: 1.25 times; 1.39 times * Debt-to-cash flow: 17.0 times; 15.0 times * Days cash on hand: 125.1 days; 94.5 days * Cash-to-debt: 97.9%; 77.5% * Operating margin: -7.1%; -6.9% * Operating cash flow margin: 1.3%; 1.1% Rated Debt (debt outstanding as of 9/30/2006) - Series 1994 rated Ba3 WESTON NURSERIES: Files Joint Amended Plan & Disclosure Statement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts has scheduled a hearing on May 2, 2007, 9:00 p.m., at A.M. Worcester Courtroom 3, to consider the adequacy of Weston Nurseries Inc. and Mezitt Agricultural Corporation's Amended Joint Disclosure Statement explaining their Amended Joint Chapter 11 Plan of Reorganization. Overview of the Plan The Plan will be funded primarily with a portion of the sale proceeds of all issued and outstanding shares of Mezitt's stock, along with the sale of certain property owned by Weston, Mezitt and certain of the Mezitt Family Members. The Plan provides for the reorganization of Weston as a going concern, and for the payment of all valid claims through the use of: i. a portion of the Weston sale proceeds; ii. to the extent necessary, a portion of the funds that Weston will borrow on a secured basis from Boulder Business Alliance Capital Company and other lender; iii. the revenue generated by the operation of Weston's business after the Plan is confirmed; and iv. only to the extent necessary, the proceeds of recoveries realized from the prosecution of any causes of action. The Plan contemplates that on the closing of the sale of Mezitt Stock, or alternatively its real property, the sale proceeds will be paid to satisfy all valid claims against Mezitt. On Feb. 21, 2007, the Court entered a sale order to sell approximately 742 acres of real property to Boulder, under the purchase and sale agreement. Treatment of Claims Under the Joint Plan, First Pioneer Farm Credit, ACA's allowed secured claim, holding debts secured by mortgage liens of the Debtors' real property, will be satisfied in full from the sale proceeds. Business Alliance holding allowed secured claim will also be paid in full. Weston's allowed claims of its administrative and priority creditors will receive full payment. MezAg's allowed claims of its administrative and priority and general unsecured creditors will receive full payment. General unsecured claims of insiders against Mezitt and Weston will be paid according to the terms of a settlement agreement. As of Weston's chapter 11 filing, Roger N. Mezitt and his wife, and R. Wayne Mezitt and his wife, each own 13% of the issued Weston stock. Pursuant to the Plan, Roger's outstanding shares of Weston stock will be transferred to Wayne, and the EVM Trust, which owns the remaining 74% of that stock. Roger's shares will be transferred to Wayne in connection with the settlement agreement. Mezitt's Equity Interest will retain their interests. All of its non-real estate assets will be distributed to Wayne and Roger in accordance with the terms of the Settlement Agreement. About Weston Nurseries Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc., -- http://www.westonnurseries.com/-- is central New England's premier resource in designing, creating, and enjoying outdoor living areas. Weston Nurseries grows and sells plants, trees, shrubs, and perennials. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884). Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP, represents the Debtor in its restructuring efforts. Michael J. Fencer, Esq., and Steven C. Reingold, Esq., at Jager Smith, PC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. WILLIAMS SCOTSMAN: Strong Performance Cues Moody's to Lift Ratings ------------------------------------------------------------------ Moody's Investors Service upgraded the Corporate Family Rating of Williams Scotsman, Inc. to B1 from B2, the rating on the senior secured credit facility to B1 from B2, and the senior unsecured rating to B2 from B3. This rating action results from the company's strong operating performance and resulting leverage improvement, and it concludes Moody's ratings review which began on November 30, 2006. The outlook for the ratings is stable. Moody's said Williams Scotsman's improved profitability since the IPO in September 2005 was a key driver for the CFR upgrade. The company has seen a substantial increase in its North American average monthly rental rate ($289 in 2006 versus $263 in 2005) reflecting strong demand for its core products while maintaining stable utilization. Moody's upgrade also recognizes the company's commitment to a more conservative leverage profile since the IPO. While Williams Scotsman has made recent acquisitions utilizing its revolving credit facility, overall debt usage has been disciplined as evidenced by a secondary equity offering in 2006 which was used, in-part to reduce outstandings on the facility. In addition, the B1 CFR is supported by the improvement in the company's fleet diversification and industry exposure. For example, the company's increased focus on classrooms provides an asset class that is characterized by longer lease durations due to their more permanent lease status at schools. These leases are more countercyclical and provide support in the event the more volatile construction fleet experiences a slowdown. The company is also increasing its investment in providing modular space to the health care sector, which if successful, will further provide diversification from the non-residential construction sector. Moody's recognizes the company is benefiting from a currently strong economy and positive broader secular issues (e.g. Canadian oil exploration). However, the company's extended lease durations build visibility into future earnings. This is due to the improved turn rate the company receives by repricing old leases coming off lower average rates at the new higher average lease rates. While a protracted economic downturn could negate this to some extent as lease rates fall and utilization decreases, this does provide an additional buffer in the event of a temporary economic decline that leads to lower demand and pricing. In addition, the company's ability to decrease expansionary capital expenditures during an industry downturn is also positive for the rating. As a part of the review, Moody's analyzed the company's leasing versus sales mix of total revenue. While the company continues to focus on its core business of leasing (as evidenced by the 18% year over year growth in leasing revenue), unit sales remain a significant portion of overall revenue. Whereas unit sales have increased company profitability in the current environment, this has the potential to be problematic in an economic downturn, as unit sales tend to be more opportunistic in nature. Moody's will continue to monitor the sales/leasing revenue mix, particularly if leasing revenue exhibits a decline as a percentage of total revenue. Moody's also examined the company's business strategy, particularly as it relates to expansion. Williams Scotsman has recently increased its investment in Spain, by purchasing the remaining outside interest in Wiron Constructionnes Modulares, S.A. In addition, the company has increased its investment in Mexico. It will be key for the company to be prudent with leverage regarding its acquisition strategy while it grows both domestically and internationally. It will also be critical for the company to maintain appropriate controls, which can become more difficult with international expansion. Williams Scotsman's ratings are constrained by the heavy competition in the modular space market, strong (albeit declining) earnings correlation to the macro economy, and considerable leverage that could increase as the company takes on more debt for growth. What Could Change the Rating - UP While the rating is well-positioned, the rating could go up if the company achieves and sustains its targets of lower leverage and improved interest coverage. Continued improvements in earnings driven by stable utilization and the ability to sufficiently maintain the current lease rates even during a turn in the current economic cycle could also increase the rating. Further diversification into non cyclical asset classes is also positive for the rating. What Could Change the Rating - DOWN Ratings could go down if there is a material change in the capital structure resulting in increased leverage or if the company experiences significant erosion in utilization and average lease rates. These ratings were upgraded: Williams Scotsman, Inc. - Corporate Family to B1 from B2 - Senior Secured Credit Facility to B1 from B2 - Senior Unsecured Notes to B2 from B3 Williams Scotsman International, Inc. is headquartered in Baltimore, Maryland, and is a provider of modular space solutions in North America and Spain. WOODWIND & BRASSWIND: Wants Excl. Plan Filing Date Moved to June 1 ------------------------------------------------------------------ Dennis Bamber Inc. dba The Woodwind and the Brasswind asks the U.S. Bankruptcy Court for the Northern District of Indiana to further extend its exclusive periods to: a. file a Chapter 11 plan of reorganization through and including June 1, 2007; and b. solicit acceptances of that plan until Sept. 1, 2007. The Debtor's exclusive period to file a plan expired on March 24, 2007. Howard L. Adelman, Esq., at Adelman & Gettleman Ltd., said the Debtor has not yet had a fair opportunity to formulate a plan, and requires an extension of the exclusivity period which it may continue the process of resolving the putative security and reclamation interests. The Debtor, Mr. Adelman said, has the ability to facilitate the resolution of those interests, which will ultimately lead to the distribution of funds to the Debtor's creditors. Headquartered in South Bend, Indiana, The Woodwind & the Brasswind -- http://www.wwbw.com/-- sells musical instruments and accessories. The Company filed for chapter 11 protection on Nov. 24, 2006 (Bankr. N.D. Ind. Case No. 06-31800). Chad H. Gettleman, Esq., Henry B. Merens, Howard L. Adelman, Esq., and Nathan Q. Rugg, Esq., at Adelman, Gettleman, Ltd., represent the Debtor in its restructuring efforts. Carl A. Greci, Esq., and James M. Carr, Esq., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, they estimated assets and debts between $1 million and $100 million. WOODWIND & BRASSWIND: Wants Gardis Regas as Litigation Counsels --------------------------------------------------------------- Dennis Bamber Inc. dba The Woodwind and the Brasswind asks the U.S. Bankruptcy Court for the Northern District of Indiana for permission to employ Kroger Gardis & Regas as its litigation counsel. The firm will prosecute and defend all claims between the Debtor and Steinway Muscial Instruments Inc. The disputed claims relate to Steinway's offer to purchase substantially all of the Debtor's assets for $3.4 million. Subsequently, Steinway filed an adversary proceeding seeking the recovery of the deposit in connection with its offer. The firm's professionals billing rates are: Professional Designation Hourly Rate ------------ ----------- ----------- James A. Knauer, Esq. Attorney $345 William Bock, Esq. Attorney $345 Steven Runyon, Esq. Attorney $175 Kurtis Marshall, Esq. Attorney $185 Wendy Wools Paralegal $110 James A. Knauer assures the Court the firm does not hold any interest adverse to the Debtor and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Knauer can be reached at: James A. Knauer, Esq. Kroger Gardis & Regas 111 Monument Circle, Suite 900 Indianapolis, IN 46204-5125 Tel: (317) 692-9000 Fax: (317) 264-6832 http://www.kgrlaw.com/ Headquartered in South Bend, Indiana, The Woodwind & the Brasswind -- http://www.wwbw.com/-- sells musical instruments and accessories. The Company filed for chapter 11 protection on Nov. 24, 2006 (Bankr. N.D. Ind. Case No. 06-31800). Chad H. Gettleman, Esq., Henry B. Merens, Howard L. Adelman, Esq., and Nathan Q. Rugg, Esq., at Adelman, Gettleman, Ltd., represent the Debtor in its restructuring efforts. Carl A. Greci, Esq., and James M. Carr, Esq., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, they estimated assets and debts between $1 million and $100 million. XEROX CORP: Earns $233 Million in 2007 First Quarter ---------------------------------------------------- Xerox Corporation earned $233 million of net income on $3.8 billion of total revenues for the three months ended March 31, 2007, compared to a net income of $200 million on total revenues of $3.7 billion in the same quarter of 2006. The company's earnings include a $23 million charge to reflect its share of a restructuring charge recorded by Fuji Xerox Co. Ltd. Total revenue of $3.8 billion grew 4 percent in the first quarter. Post-sale and financing revenue -- Xerox's annuity streams that represent more than 70 percent of total revenue -- increased 6 percent. The growth was largely driven by a 7 percent increase in post-sale revenue from digital systems. Both total revenue and post-sale revenue included a currency benefit of 3 percentage points. The company's March 31 balance sheet showed total assets of $21.4 billion, total liabilities of $14.3 billion, and a stockholders' equity of $7.1 billion at March 31, 2007, compared to total assets of $21.7 billion, total liabilities of $14.6 billion, and a $7 billion stockholders' equity at Dec. 31, 2006. New Products Boost Sales "Xerox's growth strategy focuses on increasing our install base of digital technology through new products and broader distribution, strengthening our leadership in color, and expanding our services business. Success in these areas builds a healthy annuity stream that serves our company well for the long term," said Anne M. Mulcahy, Xerox chairman and chief executive officer. "Our results in the first quarter show that the strategy is working. We delivered solid activity gains, grew color revenue, and signed big deals for Xerox's document management services - all of which contribute to steady annuity growth. "Along with progress on the top line, excellent operational performance and improved margins led to a 17 percent increase in net income and earnings that exceeded our expectations," added Mulcahy. A fundamental measure of Xerox's business is increasing the number of Xerox systems installed in customers' workplaces. This installation activity generates sales of supplies and services that are expected to drive gains in post-sale revenue. As Xerox accelerated activity in key markets during the first quarter, the continued impact of pricing declines put pressure on equipment sales, which were down 2 percent including a 2-point benefit from currency. Since the beginning of the year, Xerox has introduced 19 new products, half of which are color products, surpassing the 14 total product launches in 2006. The company plans to more than double its number of product launches this year. More than two- thirds of Xerox's equipment sales come from products launched in the past two years. Xerox is growing color revenue through the industry's broadest portfolio of color presses, printers and multifunction devices, and new marketing campaigns that promote quality and affordability. Revenue from color grew 17 percent in the first quarter and now represents 37 percent of Xerox's total revenue, up 4 points from the first quarter of 2006. Xerox color presses produce the highest volume of pages in the industry and last year more than 30 billion color pages were printed on Xerox technology. In the first quarter, color pages contributed to a 21 percent increase in post-sale revenue from color. Xerox services help businesses simplify work processes, manage office technology and in-house print shops, digitize paper files, create digital archives and much more. Through multiyear, multimillion dollar contracts, the company's document management services generated nearly $800 million in annuity revenue in the first quarter, a 10 percent increase in post-sale revenue from services. Xerox's production business provides commercial printers and document-intensive industries with high-speed digital printing and services that enable on-demand, personalized printing. Total production revenue increased 5 percent in the first quarter including a 4 point currency benefit. Installs of production black-and-white systems declined 7 percent with growth in light production and continuous feed only partially offsetting declines in higher-end production printing. Production color installs grew 4 percent reflecting strong activity for the Xerox iGen3(R) Digital Production Press and continued demand for the DocuColor(R) 5000. Xerox's office business provides document technology and services for businesses of any size. Total office revenue was up 2 percent in the first quarter including a 2-point currency benefit. Installs of office black-and-white systems were down 5 percent due to activity declines for desktop devices, which were only partially offset by 11 percent growth in the company's mid-range line of multifunction devices. Strong demand for Xerox's color WorkCentre(R) families led to a 71 percent increase in install activity for color multifunction systems. In addition to new product and service offerings, Xerox is making aggressive moves to expand its presence in the fast growing small and mid-size business market. Earlier this month, Xerox agreed to acquire Global Imaging Systems for $1.5 billion, which, upon closing, will give Xerox access to about 200,000 new customers and increase its U.S. distribution to SMB customers by more than 50 percent. Expected to close in mid-May, the acquisition of Global Imaging builds on Xerox's announcement in February to increase its investments in sales channels by providing more offerings to value-added resellers and independent agents. "We're playing offense in the marketplace and we're playing to win," said Mulcahy. About Xerox Corp. Based in Stamford, Connecticut, Xerox Corporation (NYSE: XRX) -- http://www.xerox.com/-- develops, manufactures and markets document processing systems and related supplies and provides consulting and outsourcing document management services. * * * As reported in the Troubled Company Reporter on Jan. 31, 2007, Standard & Poor's Ratings Services revised its rating outlook on Stamford, Connecticut-based Xerox Corp. to positive from stable. Ratings on the company, including the 'BB+' long-term and 'B-1' short-term corporate credit ratings, were affirmed. As reported in the Troubled Company Reporter on Apr. 4, 2007, Xerox and Global Imaging Systems Inc. entered into a definitive agreement for Xerox to acquire Global Imaging for $29 per share in cash. The total purchase price is expected to be about $1.5 billion. The move prompted Standard & Poor's Ratings Services to place its ratings on Xerox Corp., including the 'BB+' corporate credit rating, on CreditWatch with positive implications. According to S&P credit analyst Molly Toll Reed, the CreditWatch placement reflects S&P's expectation that Xerox has the ability to fund the acquisition with a combination of existing cash and short-term debt, with negligible impact on Xerox's financial profile by the end of fiscal 2007. Following completion of the acquisition, which is expected to occur in the second quarter of fiscal 2007, the corporate credit rating would be raised to 'BBB-' with a stable outlook, the rating agency said. YUKOS OIL: Distributes Nearly RUR2 Million to Creditors ------------------------------------------------------- OAO Yukos Oil Co. distributed nearly RUR2 million to its second- tier creditors on April 17, Interfax reports citing Nikolai Lashkevich, press secretary to the company's receiver, as saying. The distribution fully pays wage and severance claims held by private creditors, Interfax relates. According to the report, the company has no first-tier creditors as these are private individuals who suffered losses during the company's operations. Meanwhile, Mr. Lashkevich said Yukos is yet to start paying about RUR709 billion to unsecured creditors, but did not specify when this would be. In a report carried by Interfax last week, Yukos bankruptcy receiver Eduard Rebgun said creditor distribution would start as soon as payments are received from the first or second auctions and before all the auctions are completed. On April 13, RN-Razvitiye, an indirect subsidiary of OAO Rosneft Oil, paid the 9.44% Rosneft stake it bought from Yukos at a March 27 auction. The company offered RUR197.8 billion for the stake, which is sold together with 12 promissory notes worth RUR3.56 billion in Yuganskneftegaz, Yukos' former main production unit, in one lot. On April 4, EniNeftegaz, a joint venture of Italian energy firms Eni S.p.A. (60%) and Enel S.p.A. (40%), won the bid to acquire Yukos's 20% stake in OAO Gazprom Neft for RUR151.5 billion. The second lot, which carried a starting price of RUR144.78 billion, also included: -- a 100% stake in OAO Arcticgaz; -- a 100% stake in ZAO Urengoil; and -- 19 other Yukos assets. EniNeftegaz paid the assets in full immediately after the auction. Mr. Rebgun has estimated the firm's assets between $25.6 billion and $26.8 billion, minus a possible liquidation discount of not more than 30 percent. As of Jan. 31, claims against Yukos filed by 68 creditors reached RUR709 billion ($26.8 billion). As of Jan. 31, the company's largest creditors include: Claim Amount Creditor (RUR) ($) -------- ------------- ------------ Federal Tax Service 429.3 billion 16.3 billion Rosneft 264.6 billion 10 billion Tomskneft 12.2 billion 465 million Samaraneftegaz 1.9 billion 70 million Siberian Service Co. 228.4 million 8.7 million 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 US$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 US$1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, 2006, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06-0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, 2006, Yukos signed a $1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, 2006, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. YUKOS OIL: Report Links Mysterious Buyer to Deutsche Bank --------------------------------------------------------- Monte-Valle, which snatched up OAO Yukos Oil Co.'s stakes in various energy companies at an April 17 auction, is connected to Deutsche Bank, Deutsche Presse-Agenture reports citing Interfax as its source. An unnamed source told Interfax that the money advanced by Monte- Valle was moved from a Deutsche Bank account by UFGIS Trading Limited, a subsidiary of Deutsche Bank's 100-percent-owned Russian office, Deutsche UFG, DPA relates. DPA says Interfax noted analysts that the bank could offer the assets to Russian or other companies, including Russia's Unified Energy Systems or Germany's E.ON. As reported in the Troubled Company Reporter-Europe on April 19, Monte-Valle offered RUR3.5 billion or $138 million for the energy assets, which included Yukos' stakes in: -- 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%). The assets, which were grouped in one lot, were sold in the fourth round of Yukos auctions after a third one was called off due to a lack of bids. Other bidders who joined in the auction were Financial Agency, Versar and Rosneft-linked Neft-Aktiv. The lot carried a RUR2.6 billion starting price, with a RUR26.3 million minimal bid increment. The Prime-Tass news agency previously reported that Monte-Valle was registered in Moscow and opened in August 2003 by U.S. citizen Steven Patrick Lynch. Rosneft Oil and Gazprom are seen as the most likely bidders for the bulk of the nearly 200 Yukos assets up for liquidation, which Mr. Rebgun aims to sell by August 2007. Mr. Rebgun has estimated the firm's assets between $25.6 billion and $26.8 billion, minus a possible liquidation discount of not more than 30 percent. As of Jan. 31, claims against Yukos filed by 68 creditors reached RUR709 billion ($26.8 billion). 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. ********* 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, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2007. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***