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/raid1/www/Hosts/bankrupt/TCR_Public/070507.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 7, 2007, Vol. 11, No. 107 Headlines ADVANSTAR COMMUNICATIONS: Gets Requisite Consents for Senior Notes ALL AMERICAN: Court Approves First Day Motions and DIP Financing ALLIED HOLDINGS: $315MM Exit Financing from Goldman Sachs Okayed ALLIED HOLDINGS: Equity Holders Withdraw Oil Rig Financing Appeal AMERICAN AIRLINES: Pilots Union Seeks 30.5% Compensation Increase AMERICAN AIRLINES: March 31 Stockholders' Deficit Down to $819MM AMERICAN INT'L: Case Summary & 18 Largest Unsecured Creditors ARKANSAS ENVIRONMENTAL: Case Summary & 12 Largest Unsec. Creditors ARTISTDIRECT INC: Gumbiner Savett Raises Going Concern Doubt ASARCO LLC: Court Issues Protocol for Estimation Proceedings ASARCO: BP America, et al. Want to Join in Estimation Proceedings ASSOCIATED ESTATES: Earns $450,000 in First Quarter Ended March 31 BOWATER INC: Weak Earnings Cue S&P's Negative Outlook BURCAW DEVELOPMENT: Case Summary & 16 Largest Unsecured Creditors CALPINE CORP: Unit Completes $377 Million Power Plant Financing CBRL GROUP: Completes Zero Coupon Convertible Notes Exchange Offer CERVANTES ORCHARDS: Judge Rossmeissl Confirms Reorganization Plan CHEMED CORPORATION: Inks New $275 Million Bank Credit Facility CHIQUITA BRANDS: Posts $3.4 Million Net Loss in Qtr Ended March 31 CITY CAPITAL: Buys Granite Real for $1.3MM Including Assumed Debts COMMUNICATIONS CORP: Disclosure Statement Hearing Moved to May 21 COOPER TIRE: Moody's Holds Ratings and Says Outlook is Stable COPELANDS' ENTERPRISES: Delaware Court Confirms Liquidation Plan DAVID IHMUD: Case Summary & 15 Largest Unsecured Creditors DELUXE ENTERTAINMENT: Increased Loan Cues S&P to Affirm Ratings DENNY'S CORP: March 31 Balance Sheet Upside-Down by $221 Million DUNE ENERGY: Prices Private Offering of Sr. Notes & Pref. Stock EASTMAN KODAK: 2007 First Quarter Sales Decrease 8% to $2.12 Bil. EDS CORP: Earns $164 Million in First Quarter Ended March 31 ENERGY PARTNERS: Earns $3.7 Mil. in First Quarter Ended March 31 EPICOR SOFTWARE: Prices $200MM Convertible Senior Notes Offering FINAL ANALYSIS: Wants Until August 28 to File Chapter 11 Plan FINAL ANALYSIS: Court Okays Sheppard as Special Litigation Counsel FLINKOTE CO: Wants Exclusive Plan Filing Period Moved to Aug. 31 FREEHAND HJ: Organizational Meeting Scheduled for May 18 GEARS LTD: Low Cumulative Net Loss Prompts S&P to Upgrade Ratings HEALTHSOUTH CORP: Completes Rehab Division Sale to Select Medical HOST HOTELS: Possible Credit Improvement Cues S&P's Pos. Outlook INSIGHT HEALTH: Defers $194.5MM Exchange Offer Deadline to May 16 INSIGHT HEALTH: Failure to Pay Interest Cues S&P to Cut Ratings INTERTAPE POLYMER: Inks Agreement Selling Stake to Littlejohn Fund ION MEDIA: Board Gets Restructuring Proposal from Stockholders ION MEDIA: Inks Privatization Pact with Citadel & NBC's Affiliates ISLE OF CAPRI: Financial Restatements Delay 10-Q Filing with SEC J. CREW: Board Names Heather Reisman as Director J. CREW: Unit Makes $25 Million Prepayment Under Credit Pact JAMES RIVER: Posts $26.2 Million Net Loss in Year Ended Dec. 31 JP MORGAN: S&P Cuts Ratings on Four Classes of 2001-CIBC1 Certs. L&M VIDEO: Case Summary & 20 Largest Unsecured Creditors LONGVIEW FIBRE: Moody's Withdraws B1 Corporate Family Rating LOUIS PEARLMAN: Case Summary & List of Creditors MEDIA GENERAL: Shelf De-Registration Cues S&P to Withdraw Ratings MICHAEL NELSON: Case Summary & 18 Largest Unsecured Creditors NEFF CORP: S&P Rates Proposed $250 Million Senior Notes at B- NEFF CORPORATION: Moody's Puts Corporate Family Rating at B3 NORTHWEST AIRLINES: Pilots Union Condemns CEO's $26.6 Mil. Bonus NRG ENERGY: Fitch Says Common Dividend Plan Won't Affect Ratings NRG HOLDINGS: Moody's Holds Corporate Family Rating at Ba3 NRG ENERGY: S&P Lifts Rating on $4.7 Billion Unsecured Bonds to B NUTRO PRODUCTS: Moody's May Upgrade Ratings on Mars Deal OAKWOOD HOMES: S&P Downgrades Ratings on Nine Classes PEMBROKE PINES: S&P Rates Proposed $1.65 Billion Facilities at B PERKINS & MARIE: Default Prompts S&P to Junk Corp. Credit Rating PLAUDO LLC: Voluntary Chapter 11 Case Summary PRIMUS TELECOMMS: March 31 Balance Sheet Upside-Down by $472.3MM QWEST CORPORATION: Completes Offering of $500 Million Notes QWEST CORP: Launches $400 Million Offering of Debt Securities RAG SHOP: Organizational Meeting Scheduled this Friday RITE AID: Earns $26.8 Million in Fiscal Year Ended March 3 ROCK-TENN COMPANY: Earns $21.7 Million in Quarter Ended March 31 SHAW GROUP: To Redeem Remaining $15.2 Mil. of 10-3/4% Senior Notes SINCLAIR BROADCAST: Prices $300MM Convertible Sr. Notes Offering SOLUTIA INC: Judge Beatty Approves Settlement Pact with FMC Corp. SOLUTIA INC: Wants Deal with GE Capital on Contested Leases OK'd SPECTRUM SIGNAL: Sells Stake to Vecima Networks for $18.3 Million TERWIN MORTGAGE: S&P Puts Class I-B-6 Certs.' Rating on Neg. Watch TRIAD HOSPITALS: Earns $222.3 Million in Year Ended December 31 TRIBUNE CO: Fitch Downgrades Issuer Default Rating to B+ WACHOVIA BANK: S&P Rates $21.9MM S. 2007-C31 Class N Certs. at BB- VWR INTERNATIONAL: Company Sale Cues S&P's Negative Watch WEDA SHAH: Voluntary Chapter 11 Case Summary WESTMORELAND COAL: Intends to Launch $85 Million Rights Offering WHITE BIRCH: S&P Rates Proposed $425 Million 1st-Lien Loan at B+ XERIUM TECHNOLOGIES: Secures Amendment to Senior Credit Facility * White and Williams Builds Partnership with China's Xue Law Firm * Xue Law Formally Unites with Pennsylvania-based White & Williams * BOND PRICING: For the week of April 30 - May 4, 2007 ********* ADVANSTAR COMMUNICATIONS: Gets Requisite Consents for Senior Notes ------------------------------------------------------------------ Advanstar Communications Inc. received last week consents from holders of approximately 100% of its outstanding 10-3/4% Second Priority Senior Secured Notes due 2010 (CUSIP Nos. 00758RAM6 and 00758RAH7) and 93.41% of its 12% Senior Subordinated Notes due 2011 (CUSIP No. 00758RAF1) and that Advanstar, Inc., has received 97.96% of its 15% Senior Discount Debentures due 2011 (CUSIP No. 00759JAE1). The consents are sufficient to effect all of the proposed amendments to the indentures governing each of the Notes as set forth in the Issuers' Offer to Purchase and Consent Solicitation Statement dated April 19, 2007 and the related Consent and Letter of Transmittal, pursuant to which the tender offers and the consent solicitations are being made. The proposed amendments eliminate substantially all of the restrictive covenants and eliminate or modify certain default provisions in the indentures. The proposed amendments to the indenture governing the Senior Secured Notes also release the security interest in the collateral under that indenture and related security documents. As reported in the Troubled Company Reporter on April 26, 2007, the tender offers and consent solicitations will expire at 5:00 p.m., New York City time, on May 18, 2007, unless extended. The Issuers intend to extend the Expiration Date until closing of the acquisition of the Issuers, which is expected to occur on or about May 31, 2007. The purchase price, assuming a settlement date of May 31, 2007, for each $1,000 principal amount outstanding of Senior Secured Notes is $1,057.53, the price calculated from the yield to maturity on the applicable reference United States Treasury, as of 10:00 a.m., New York City time, May 2, 2007, plus a fixed spread of 0.50% less the consent payment. The purchase price for each $1,000 principal amount outstanding of Senior Subordinated Notes is $1,013.50, and the purchase price for each $1,000 principal amount outstanding of Debentures is $1,012.50. Holders who tendered their Notes and delivered their consents on or prior to the Consent Date will, in addition to the purchase price, receive a consent payment of $30 per $1,000 outstanding principal amount of Notes tendered and accepted in the tender offers. Holders whose Notes are accepted for purchase in the tender offers will also receive accrued and unpaid interest to, but not including, the settlement date for the tender offers. The Issuers will proceed to execute supplemental indentures effecting the proposed amendments to the indentures governing each series of Notes. The supplemental indentures will become operative only if the Issuers accept the Notes for payment pursuant to the terms of the tender offers. When the supplemental indentures become operative, they will be binding on the holders of Notes not purchased in the tender offers. Credit Suisse Securities (USA) LLC is the exclusive Dealer Manager and Solicitation Agent for the tender offers and consent solicitations. Questions regarding the tender offers and consent solicitations may be directed to Credit Suisse Securities (USA) LLC's Liability Management Group, at (800) 820-1653 (toll free) or (212) 538-0652 (collect). Requests for the Statement, Consent and Letter of Transmittal or other documents related to the tender offers and solicitations may be directed to the Information Agent, D.F. King & Co., Inc., at (888) 628-8208 (toll free). About Advanstar Communications Inc. Headquartered in New York City, Advanstar Communications Inc. -- http://www.advanstar.com/-- a wholly owned subsidiary of Advanstar Inc., provides integrated marketing solutions for the Fashion, Life Sciences and Powersports industries. Advanstar serves business professionals and consumers in these industries with its portfolio of 91 events, 66 publications and directories, 150 electronic publications and Web sites, well as educational and direct marketing products and services. Advanstar has roughly 1,000 employees and currently operates from multiple offices in North America and Europe. * * * As reported in the Troubled Company Reporter on April 3, 2007, Moody's Investors Service placed the ratings of Advanstar Communications Inc., under review for possible downgrade. The ratings placed under review were the company's First lien senior secured revolving credit facility, Ba3; Senior secured first lien term loan, Ba3; 10.75% senior secured second priority notes, B1; 12% senior subordinated global notes, Caa1; Corporate Family rating, B3; and Probability of Default rating, B3. The ratings review follows the report that Advanstar has entered into a definitive agreement to be acquired by an investor group led by Veronis Suhler Stevenson in a transaction valued at around $1.1 billion. ALL AMERICAN: Court Approves First Day Motions and DIP Financing ---------------------------------------------------------------- All American Semiconductor Inc. disclosed the approval of its first day motions by the U.S. Bankruptcy Court for the Southern District of Florida, Miami Division. The company received approval of first day motions seeking relief to enable the company to continue operations during the Chapter 11 process, including debtor-in-possession financing from its existing bank group, and the payment of prepetition, employee-related and certain customer obligations. In addition, All American received Bankruptcy Court approval of bidding procedures for an auction sale of its businesses as a going concern to be completed no later than June 8, 2007. The Court approved interim DIP financing of up to $13 million, which is expected to provide the company with sufficient liquidity to continue operations during the Chapter 11 case and is based on a budget agreed upon with the bank group. The final hearing on DIP financing is scheduled on May 17. "The company is pleased with this outcome," Bruce Goldberg, president and ceo of All American, said. "The Court's approval of the company's motions allows All American to continue as a going concern as the company works towards an auction sale of the business." The approved sale process provides for interested purchasers to complete due diligence and submit binding bids by May 28, 2007, with the auction scheduled for May 31 at the Miami offices of the company's counsel, Squire, Sanders & Dempsey, LLP. The hearing to approve a sale to the highest bidder at the auction is scheduled for June 5, 2007, with the sale closing no later than June 8. Prior to the company's bankruptcy filing, it signed a nonbinding letter of intent with a potential purchaser of substantially all of the company's and its subsidiaries' assets. The company advised the Bankruptcy Court that it is actively negotiating a binding purchase agreement with this party to become the stalking horse for the sale. In the event such an agreement is reached, specific stalking horse protections, including a breakup fee, will be subject to the approval of the DIP lenders and the Bankruptcy Court. In addition, a sale to the highest bidder at the auction will also require the approval of the Bankruptcy Court. On April 25, 2007, All American and its 33 subsidiaries in the United States, Canada, Mexico, Europe and Asia filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. All American determined to file for relief under Chapter 11 after extensively exploring and carefully evaluating all of its options. All American believes that the Chapter 11 process provides the best alternative for maximizing the value of the company for the benefit of its stakeholders including suppliers, customers and employees. About All American All American Semiconductor Inc. -- http://www.allamerican.com/-- (Nasdaq: SEMI) (Pink Sheets: SEMI.PK) is a Delaware corporation with its principle place of business in Miami, Florida. It also maintains corporate offices for West Coast operations in San Jose, California. All American is a distributor of electronic components manufactured by others. The company distributes a full range of semiconductors including transistors, diodes, memory devices, microprocessors, microcontrollers, other integrated circuits, active matrix displays and various board-level products. All American also distributes passive components such as capacitors, resistors and inductors; and electromechanical products such as power supplies, cable, switches, connectors, filters and sockets. All American also offers complete solutions for flat panel display products. In total, the company offers approximately 40,000 products produced by approximately 60 manufacturers. These products are sold primarily to original equipment manufacturers in a diverse range of industries such as manufacturers of computers and computer-related products, networking, satellite, wireless and other communications products; Internet infrastructure equipment and appliances; automobiles and automotive subsystems; consumer goods; voting and gaming machines; defense and aerospace equipment; and medical instrumentation. The company also sells products to contract electronics manufacturers who manufacture products for companies in all electronics industry segments. The company has 36 strategic locations throughout North America, well as operations in both Asia and Europe. The company and its Debtor-affiliates filed for Chapter 11 protection on April 25, 2007, (Bankr. Case No.: 07-12963 through 07-13002 S.D. Fla.) Tina M. Talarchyk, Esq. of the Squire Sanders & Dempsey LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $117,634,000 and total debts of $106,024,000. ALLIED HOLDINGS: $315MM Exit Financing from Goldman Sachs Okayed ---------------------------------------------------------------- The Honorable Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia gave Allied Holdings Inc. and its debtor-affiliates authority, on a final basis, to enter into an exit financing option agreement with Goldman Sachs Credit Partners L.P. Judge Mullins allowed the Debtors to borrow up to $315,000,000 from Goldman Sachs. Each of the Debtors will guaranty the obligations of the other Debtors in connection with the financing. Prior Objections Sopris Capital Advisors, LLC, and Aspen Advisors LLC, the Debtors' equity security holders, had asked the Court to deny the Debtors' request to enter into a $315,000,000 senior secured bank financing with Goldman Sachs, because: (1) there is no record proof that the Debtors investigated the availability of alternative financing for the replacement DIP and exit financing; (2) there are a number of terms in the proposed financing which are either unworkable, improper or contrary to market. Even if allowable, the terms threaten the Debtors' ability to consummate the financings and render the DIP Motion flawed; and (3) the proposed DIP is not the best available financing, for reasons that include the fact that Sopris has offered better terms. The only record proof in the Debtors' request as to any alternative financing is the conclusory statement, "after appropriate investigation and analysis, the Debtors reasonably concluded that the proposed Replacement Facilities were the best alternative available to them," Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal LLP, in New York, noted. The statement tells nothing, he added. The Debtors' request must be denied unless there is record proof of multiple potential sources being solicited and the specifics of those sources' bids, Mr. Wolfson argued. Under Section 364 of the Bankruptcy Code, the Court is not free to rely simply on the Debtor's judgment. There must be evidence of the alternative financing, and of the Debtors' efforts to obtain the same. Mr. Wolfson pointed out that the Goldman's financial proposal has a number of terms and conditions that are problematic in the context of the Debtors' Chapter 11 cases because: (a) the Goldman exit financing is improperly conditioned on the Debtors' Joint Plan of Reorganization; (b) the fees for the replacement facilities are excessive; (c) the short maturity of the proposed financing narrows the reorganization's options and threatens additional expenses; and (d) certain conditions for the conversion to an exit facility are not feasible; Mr. Wolfson informed the Court that Sopris is prepared to finance the Exit Facilities on better terms. To demonstrate its continued willingness to provide an exit facility to the Debtors, Sopris has prepared a revised version of its first financing proposal, which the Debtors have previously rejected. The Revised Sopris Proposal, Mr. Wolfson explained, has lower interest rates than the Goldman proposal. Thus, it provides for, among other things, lower fees, better rates and a significantly longer maturity than the Goldman proposal. Sopris has not offered its DIP proposals in some nefarious effort to derail the Goldman deal, Mr. Wolfson contended, but rather in an effort to make sure that the Debtors have an opportunity to obtain a comprehensive debtor-in-possession facility that addresses their financing needs and reflects fair, market-based fees and terms. As a substantial equity holder of the Debtors, Sopris has a vested interest in seeing that all aspects of their business, including its financing costs, are as efficient as they can reasonably be, Mr. Wolfson said. Mr. Wolfson argued that the fact the Debtors have thus far refused to meaningfully engage Sopris on its DIP financing proposals is further evidence of their utter failure to demonstrate that the proposed Goldman financing is an appropriate exercise of their business judgment. In connection with the order, Judge Mullins overruled all objections to the final approval of the Debtors' motion, to the extent, not resolved. Judge Mullins has determined that: * the Debtor's motion is necessary to avoid harm to their estates; * good, adequate and sufficient cause has been shown to justify the Debtors' motion; and * the Debtors are unable to obtain financing on more favorable terms from sources other than Goldman Sachs, and adequate unsecured credit allowable under Section 503(b)(1) as an administrative expense. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other OTC: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) Plan Update On March 2, 2007, the Debtors, Yucaipa and Teamsters filed a Co- Sponsored Plan and Disclosure Statement explaining that plan. On April 2, 2007, they filed an Amended Plan and on April 6 filed a Second Amended Plan. The Court approved the adequacy of the disclosure statement explaining the 2nd Amended Plan on April 6, 2007. The Court is set to consider confirmation of the Co-Sponsored Plan on Wednesday, May 9, 2007. ALLIED HOLDINGS: Equity Holders Withdraw Oil Rig Financing Appeal ----------------------------------------------------------------- Sopris Capital Advisors LLC and Aspen Advisors LLC have withdrawn their notice of appeal relating to Allied Holdings Inc. and its debtor-affiliates' oil rig financing deal. The Debtors' equity security holders withdrew their appeal after the Honorable Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia denied their request for a stay of the interim order pending their appeal of that order to the U.S. District Court for the Northern District of Georgia, for reasons stated in open court. In their appeal, Sopris and Aspen wanted the Bankruptcy Court to rule on these issues: (a) Whether the Bankruptcy Court erred, as a matter of law, in approving the requested financing on an interim basis without making the specific finding, as required by Rule 4001(c)(2) of the Federal Rules of Bankruptcy Procedure, that the Debtors would suffer "immediate and irreparable harm" if the interim approval was not granted; (b) Whether the Bankruptcy Court erred in concluding that the decision to enter into the postpetition financing was a proper exercise of the Debtors' business judgment, where the postpetition financing contained provisions that would permit the lender to convert its debt into equity of the reorganized Debtors at an implied enterprise valuation that was more than $100,000,000 below the enterprise valuation that was simultaneously proffered by the Debtors' own financial advisors; and (c) In the event the Bankruptcy Court committed reversible error, whether the District Court should direct the Bankruptcy Court to: * order the return of any rigs purchased under the terms of the postpetition financing to Yucaipa Transportation, LLC; or * allow the Debtors to retain any acquired rigs as long as the Debtors can obtain replacement financing to repay any related debt due to Yucaipa. About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other OTC: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) Plan Update On March 2, 2007, the Debtors, Yucaipa and Teamsters filed a Co- Sponsored Plan and Disclosure Statement explaining that plan. On April 2, 2007, they filed an Amended Plan and on April 6 filed a Second Amended Plan. The Court approved the adequacy of the disclosure statement explaining the 2nd Amended Plan on April 6, 2007. The Court is set to consider confirmation of the Co- Sponsored Plan on Wednesday, May 9, 2007. AMERICAN AIRLINES: Pilots Union Seeks 30.5% Compensation Increase ----------------------------------------------------------------- A Dallas Business Journal writer reported Thursday that the Allied Pilots Association has presented a compensation plan to American Airlines Inc. that would give pilots the 30.5% raise on May 1, 2008, plus 5% increases each year for the next three years. In addition, the source says that the pilots want signing bonuses that equal 15% of each pilot's total pay over the length of contract negotiations, which began July 21, 2006, and May 1, 2008, when the new contract should take effect. "Other American Airlines stakeholders have already recovered their investment in our airline's turnaround," Dallas Business cited the union's president, Capt. Ralph Hunter, as saying. "It is time for our pilots to begin doing the same." Melanie Trottman of The Wall Street Journal relates that the pay raise proposal was disclosed by the union in hopes of accelerating stagnant contract negotiations that began last September. According to WSJ, the union took $1.6 billion in annual pay and benefit cuts in 2003 to help prevent American Airlines' slide into bankruptcy. American Airlines agreed to bring the pilots' demands to the table for full discussion. Credit Ratings In March 2007, Moody's Investors Service raised the debt ratings of AMR Corporation and its subsidiaries, including the corporate family rating, to B2. Moody's also raised the ratings of most tranches of AMR's Enhanced Equipment Trust Certificates, affirmed the SGL-2 rating, and increased the Loss Given Default rate to 30- LGD3 on the secured debt and to 83-LGD5 on the senior unsecured debt. The outlook is stable. "The rating upgrades follow meaningful improvement to the debt protection metrics of AMR Corp. and American Airlines Inc. after a sustained period of free cash flow generation, including American's first full year of net profits since 2000", said George Godlin of Moody's Investors Service. Also in the same month, Standard & Poor's Ratings Services assigned its 'CCC+' rating to American Airlines Inc.'s $357 million Alliance Airport Authority special facility revenue refunding bonds, series 2007, due Dec. 1, 2029. The bonds are guaranteed by American's parent, AMR Corp., and are secured by payments made by American to the airport authority. Proceeds are being used to refund the outstanding revenue bonds, series 1990, whose rating is withdrawn. About American Airlines Inc. Based in Fort Worth, Texas, American operates the largest scheduled passenger airline in the world with service throughout North America, the Caribbean, Latin America, Europe and Asia. AMERICAN AIRLINES: March 31 Stockholders' Deficit Down to $819MM ---------------------------------------------------------------- American Airlines Inc., AMR Corporation's wholly owned subsidiary, recorded net earnings of $51 million in the first quarter of 2007 compared to a net loss of $106 million in the same period last year due to an improvement in unit revenues and by fuel prices that remain high by historical standards. The company's revenues increased approximately $75 million, or 1.4%, to $5.4 billion in the first quarter of 2007 from revenues of $5.3 billion for the same period last year. American Airlines' balance sheet as of March 31, 2007, showed total assets of $26.6 billion and total liabilities of $27.4 billion resulting in a stockholder's deficit of $819 million. The company's stockholder's deficit as of Dec. 31, 2006, stood at $1 billion. The company's March 31 balance sheet also showed strained liquidity with total current assets of $7.6 billion and total current liabilities of $10 billion. The company had accumulated deficit of $3.2 billion as of March 31, 2007, compared to accumulated deficit of $3.3 billion at Dec. 31, 2006. Cash Flow Activity At March 31, 2007, the company had $5.3 billion in unrestricted cash and short-term investments, an increase of $660 million from Dec. 31, 2006, and $285 million available under a revolving facility. Net cash provided by operating activities in the three- month period ended March 31, 2007, was $814 million, an increase of $82 million over the same period in 2006 primarily due to an improved revenue environment and the impact of certain company initiatives to improve revenue. The company also contributed $62 million to its defined benefit pension plans in the first quarter of 2007 compared to $36 million during the first quarter of 2006. A full-text copy of the company's quarterly report is available for free at: http://researcharchives.com/t/s?1de9 1st Qtr Plans & Achievements On March 28, 2007, American said it will pull forward an order with The Boeing Company to take delivery of three 737-800 aircraft in 2009 that American had previously committed to acquire in 2016. American also said it intends to continue pulling forward other aircraft from their 2013 to 2016 delivery schedules to the 2009 to 2012 timeframe. As of March 31, 2007, the company had commitments to acquire three Boeing 737-800s in 2009 and an aggregate of 44 Boeing 737-800s and seven Boeing 777-200ERs in 2013 through 2016. Future payments for all aircraft, including the estimated amounts for price escalation, are currently estimated to be approximately $2.8 billion, with the majority occurring in 2011 through 2016. However, if the company commits to accelerating the delivery dates of a significant number of aircraft in the future, a significant portion of the $2.8 billion commitment will be accelerated into earlier periods, including 2008 and 2009. Accumulated depreciation of owned equipment and property at March 31, 2007, and Dec. 31, 2006, was $10.1 billion and $10.0 billion, respectively. Accumulated amortization of equipment and property under capital leases was $1.1 billion at both March 31, 2007, and Dec. 31, 2006. On March 30, 2007, American paid in full the $285 million principal balance of its senior secured revolving credit facility. As of March 31, 2007, the $444 million term loan facility under the same bank credit facility was still outstanding and the $285 million balance of the revolving credit facility remains available to American through maturity. The revolving credit facility amortizes at a rate of $10 million quarterly through Dec. 17, 2007. American's obligations under the credit facility are guaranteed by AMR. As of March 31, 2007, American had issued guarantees covering approximately $1.1 billion of AMR's unsecured debt. In addition, as of March 31, 2007, AMR and American had issued guarantees covering approximately $368 million of AMR Eagle's secured debt. On Jan. 26, 2007, AMR completed a public offering of 13 million shares of its common stock. The company realized $497 million from the sale of equity. The proceeds from the transaction were transferred to American. Changes in Employee Benefits The company expects to contribute approximately $364 million to its defined benefit pension plans in 2007. The company's estimates of its defined benefit pension plan contributions reflect the provisions of the Pension Funding Equity Act of 2004 and the Pension Protection Act of 2006. Of the $364 million the company expects to contribute to its defined benefit pension plans in 2007, the company contributed $62 million during the three months ended March 31, 2007, and contributed $118 million on April 13, 2007. In addition, American has announced a pay plan, funded at 1.5% of base salaries, for all American employees on U.S. payroll, effective May 1, 2007. On April 18, 2007, the Board approved 1.5% increases in the base salaries for officers (including the executive officers of AMR and American), effective May 1, 2007. About American Airlines Inc. Based in Fort Worth, Texas, American operates the largest scheduled passenger airline in the world with service throughout North America, the Caribbean, Latin America, Europe and Asia. AMERICAN INT'L: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: American International Security Doors, Inc. 134-16 Atlantic Avenue Richmond Hill, NY 11419 Bankruptcy Case No.: 07-42268 Type of Business: The Debtor installs and repairs storm windows and doors. Chapter 11 Petition Date: May 2, 2007 Court: Eastern District of New York (Brooklyn) Judge: Dennis E. Milton Debtor's Counsel: Errol A. Burkhart, Esq. Burkhart Wexler & Hirschberg, L.L.C. 585 Stewart Avenue Suite 750 Garden City, NY 11530 Tel: (516) 222-2230 Estimated Assets: $4,026,000 Estimated Debts: $1,144,034 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Alice Yaxin Company, Ltd. trade debt $190,000 22 Redan Drive Hauppage, NY 11788 Harold J. Korcaz trade debt $170,000 1258 East 73rd Street Brooklyn, NY 11234 Internal Revenue Service trade debt $110,000 Andover, MA 05510-0010 Burkhart, Wexler & trade debt $80,000 Hirschberg, L.L.P. E.M.R.D. trade debt $70,000 Jorro Realty Corp. trade debt $64,827 Metco Realty trade debt $53,136 Atlantic Associates trade debt $43,562 Utica Insurance trade debt $33,858 NYS Department of Labor trade debt $30,000 Various Employees-unpaid wages wage claim $26,206 NYS Department of Taxation & trade debt $25,000 Finance, Bankrupcy Section Old Castle Glass Co. trade debt $24,948 King Architectural, Inc. trade debt $18,800 Rasok, Inc. trade debt $15,896 Bushwick Steel trade debt $11,536 Aramark Uniform trade debt $9,132 Alexander Pamero trade debt $2,132 ARKANSAS ENVIRONMENTAL: Case Summary & 12 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Arkansas Environmental Waste Recycling Corp. 310 Mid Continent Building, Suite 175 West Memphis, AR 72364 Bankruptcy Case No.: 07-12309 Type of Business: The Debtor is a landfill operator. Chapter 11 Petition Date: May 3, 2007 Court: Eastern District of Arkansas (Jonesboro) Debtor's Counsel: Frederick S. Wetzel, Esq. 200 North State Street, Suite 200 Little Rock, AR 72201 Tel: (501) 663-0535 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kay Raby $1,000,000 c/o James Hale, III, Esq. 66 Mound City Road Marion, AR 72364 C.A.T. Financial $370,000 P.O. Box 730681 Dallas, TX 75373 Wells Fargo $108,000 P.O. Box 1450 Minneapolis, MN 55485 Fidelity National Bank $55,800 Trustmark $50,000 Internal Revenue Service $23,000 Looney Imp. Co. $16,000 American International Risk $11,140 Reducers, L.L.C. E. Ritter Oil $7,000 Hart Tire $2,000 Exxon $1,400 G.M.A.C. $1,206 ARTISTDIRECT INC: Gumbiner Savett Raises Going Concern Doubt ------------------------------------------------------------ Gumbiner Savett Inc. in Santa Monica, Calif., expressed substantial doubt about Artistdirect Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's default under its senior and subordinated debt agreements and suggested that the default could cause a request for accelerated payment or redemption of the debt. ARTISTdirect Inc. reported a net loss of $4.9 million on total net revenue of $24.1 million for the year ended Dec. 31, 2006, compared with a net loss of $12.1 million on total net revenue of $14 million for the year ended Dec. 31, 2005. Results for the year ended Dec. 31, 2006, included stock-based compensation costs of $2.3 million. The increase in total net revenue is primarily a result of the acquisition of MediaDefender on July 28, 2005. Accordingly, MediaDefender's revenues were consolidated for twelve months in 2006, as compared to five months in 2005. For the year ended Dec. 31, 2006, loss from operations was $399,000, as compared to income from operations of $1.4 million for the year ended Dec. 31, 2005. Results for the years ended Dec. 31, 2006, and 2005, include a non-cash gain of $1.1 million and a non-cash charge to income of $10.7 million, respectively, to reflect a decrease and an increase in warrant liability, related to the fair value of warrants issued in connection with the financing of the MediaDefender acquisition in July 2005. Results for the years ended Dec. 31, 2006, and 2005, also include a non-cash income of $7.8 million and a non-cash charge to income of $20 million, respectively, to reflect a decrease and an increase in the embedded derivative liability contained in the $30,000,000 convertible subordinated debt notes issued by the company in connection with the acquisition of MediaDefender. As a result of the disposition of ADI's interest in ARTISTdirect Records effective Feb. 28, 2005, the company recognized a gain of $21.1 million in its consolidated statement of operations for the year ended Dec. 31, 2005, primarily as a result of the elimination of the liabilities of ARTISTdirect Records. At Dec. 31, 2006, the company's balance sheet showed $55 million in total assets, $64.7 million in total liabilities, resulting in a $9.7 million total stockholders' deficit. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $13.4 million in total current assets available to pay $64.2 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1e86 Default Under Senior and Subordinated Debt Agreements As a result of the U.S. Securities and Exchange Commission's requirement to restate previously issued financial statements, in particular regarding the application of accounting rules and interpretations related to embedded derivatives associated with the company's subordinated convertible notes payable issued in July 2005, the company was not in compliance with certain of its financial covenants under both the senior financing and the sub- debt financing at Dec. 31, 2006. Pursuant to an agreement dated April 17, 2007, the investors in the senior financing agreed to forbear from the exercise of their rights and remedies under the senior financing documents through May 31, 2007, in exchange for a cash payment of $250,000. The company has the right to extend the agreement through June 30, 2007, by an additional cash payment of $125,000 on or before May 31, 2007. The company says it is exploring various alternatives to resolve the defaults under its senior and secured debt obligations. To the extent that it is unable to restructure its senior and subordinated debt obligations in a satisfactory manner, the company explains that the ongoing penalties and default interest will have a significant and material negative impact on its cash flows and earnings, such that the company may not have sufficient cash resources to maintain operations in the future. About ARTISTdirect Inc. Headquartered in Santa Monica, Calif., ARTISTdirect Inc. (OTC BB: ARTDE.OB) -- http://www.artistdirect.com/-- is a digital media entertainment company that is home to an online music network and, through its acquisition of MediaDefender, is a leader in anti-piracy solutions in the Internet piracy protection industry. The ARTISTdirect Network is a network of web-sites offering multi-media content, music news and information, communities organized around shared music interests, music-related specialty commerce and digital music services. ASARCO LLC: Court Issues Protocol for Estimation Proceedings ------------------------------------------------------------ After responses from the U.S. Government and various creditors of ASARCO LLC and its debtor-affiliates, the Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas issued out a case management order for the Debtors to follow in estimating their environmental liabilities. To promote the efficient administration of the environmental liabilities estimation proceedings and prevent delays in the estimation schedule, Judge Schmidt rules that: (a) ASARCO LLC will be responsible for prosecuting any objections to and requests for estimation of environmental claims; (b) No discovery may be propounded to the Environmental Claimants by any party other than ASARCO or its Official Committee of Unsecured Creditors without prior leave of the Court, provided that no party may propound formal discovery to the United States or a state regulatory agency without prior leave of Court; (c) A party can seek direction from the Court or at the next scheduled status conference if it believes it has not received discoverable material, although all parties are directed to reasonably cooperate with one another in both formal and informal discovery; and (d) No party other than the Debtors, the Environmental Claimants and the Creditors Committee may submit expert reports, witnesses, testimony, or may cross-examine in the estimation proceedings without prior leave of the Court. The Debtors' first omnibus objection to claims will be consolidated with the environmental estimation proceedings and adjudicated as part of the proceedings, Judge Schmidt orders. Asarco Incorporated may submit expert reports but may not submit witnesses, testimony, or conduct cross-examination without prior leave of the Court. Asarco Inc. may not introduce its reports at an estimation hearing without prior leave of the Court. Parties to the estimation proceeding need not respond to Asarco Inc.'s reports unless the Court grants Asarco Inc. leave to introduce its report at the estimation hearing. Except for the Debtors, the Environmental Claimants and the Creditors Committee, participation in the estimation proceedings of all other parties-in-interest will be limited to their presence at the estimation hearings, depositions, and mediations, and filing briefs. Estimation of environmental claims for the un-owned portions of sites will be for purposes of allowance, voting and distribution. Any estimation of the un-owned sites will be without prejudice to any right to assert or object to secured, administrative or other priority status as to the amount determined through the estimation. If an Environmental Claimant intends to assert secured, administrative or other priority status for prepetition claims as to the un-owned portions of the sites, it must do so by identifying the site and the basis for the priority claim before June 1, 2007. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors' exclusive period to file a plan expires on Aug. 9, 2007. (ASARCO Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASARCO: BP America, et al. Want to Join in Estimation Proceedings ----------------------------------------------------------------- Atlantic Richfield Company, ARCO Environmental Remediation LLC and BP America Inc. ask the Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas to amend its case management order to identify them as parties entitled to participate in, and receive materials related to, the estimation of ASARCO LLC and its debtor-affiliates' environmental liabilities at Sweetwater/Ozark Mine. The Court had issued its Case Management Order with the intention of promoting the efficient administration of the environmental liabilities estimation proceedings and prevent delays in the Debtors' estimation schedule. Atlantic, ARCO, and BP America point out that the Debtors' Environmental Estimation Motion identified them as environmental claimants for future response costs and natural resource damages at the Viburnum Trend Hauls Road site but did not identify them as claimants for the Sweetwater Mine, formerly known as Ozark Mine. James S. Carr, Esq., at Kelley Drye & Warren, LLP, in New York, relates that the BP Claimants filed, among other proofs of claim, Claim No. 10880 against ASARCO LLC and Claim No. 10881 against Debtor American Smelting and Refining Company. The Claims were based on an indemnification agreement entered between the BP Claimants' predecessors and the Debtors' predecessors related to the sale of certain assets of the Ozark Mine. The BP Claimants also seek leave to: -- amend their Claims to describe with greater particularity the Debtors' liability for contamination at the Sweetwater/Ozark Mine; or -- leave to file late proofs of claim for the Debtors' liability to them at the Sweetwater/Ozark Mine. Debtors Object to Band 2 Sites Pursuant to the CMO, the Debtors dispute certain environmental claims, asserting past, future and joint-liability costs related to the Band 2 Sites: Claimant Claim No. Site -------- --------- ---- Port of Everett 10849 Everett Smelter Strider 8007 Everett Smelter EPA, Army Corps 8375 Coeur d'Alene Hecla Mining Company 9585 Coeur d'Alene Union Pacific Railroad 10855 Coeur d'Alene Idaho 11053 Coeur d'Alene Everett Housing Authority 10424 Everett Smelter Pacific Murray 10742 B&L Woodwaste Louisiana Pacific 9586 B&L Woodwaste Wasser & Winters 9889 B&L Woodwaste City of East Helena 10907 East Helena Smelter State of Montana 10843 East Helena Smelter Doe Run Resources Corporation 10539 Barker Hughesville Jesus Christ of 3300 Tacoma Smelter Latter-day Saints 3301 Tacoma Smelter Montana Resources, Inc. 10872 Silver Bow Creek 10876 Silver Bow Creek 11570 Silver Bow Creek 11571 Silver Bow Creek BNSF Railway 9741 Everett and East Helena smelters State of Montana 10524 East Helena Smelter, Silver Bow Creek, Barker Hughesville and Iron Mountain State of Washington 10728 Azurite Mine, Everett Smelter, B&L Woodwaste and Tacoma Smelter Plume U.S. Department of Agriculture 8375 Azurite Mine, Coeur d'Alene and Iron Mountain U.S. Department of Agriculture/ 10746 Azurite Mine, East Environmental Protection Helena Smelter, Agency Coeur d'Alene, and Iron Mountain For claims asserting past environmental costs, the Debtors contend that the alleged harms are divisible and should be estimated on an allocable share basis. The Debtors add that some or all of the past costs have been incurred in a manner inconsistent with the National Contingency Plan or otherwise are not recoverable under Comprehensive Environmental Response, Compensation, and Liability Act of 1980. For claims asserting future environmental costs, the Debtors contend that the claims reflect the selection of an alternative that is inconsistent with the NCP for reasons of implementation, cost-effectiveness and protectiveness of human health and the environment. The Debtors object to Claim No. 10728 as it asserts natural resource damages that occurred before December 11, 1980. The Debtors inform the Court that the state of Montana and Montana Resources, Inc., will seek to deal with any reclamation costs outside the context of the estimation hearing. The Debtors agree with the proposed approach. A full-text copy of the Debtors' specific objections to the Band 2 Sites Claims is available for free at: http://researcharchives.com/t/s?1e7f Debtors Also Object to Band 3 Sites The Debtors dispute certain claims related to the Band 3 Sites: Claimant Claim No. -------- --------- State of California 10529 C.S. Land 10425 CA State Lands Commission 10831 U.S. Department of Agriculture 8375 Atlantic Richfield Company 10883 U.S. Department of Agriculture 10746 State of Montana 10524 State of Montana 10843 Texas Commission on Environmental Quality 10458 Encycle/Texas, Inc. 11234 Federal Iron & Metal 8000 Meany-Walsh Properties No.1, Ltd. 9789 Meany-Walsh Properties No.1, Ltd. 9790 Texas Natural Resources Trustee 9815 Blue Tee Corporation 11055 Gold Fields Limited 11054 State of Kansas 11086 NL Industries, Inc. 11002 Department of the Interior 10745 State of Missouri 11134 State of Missouri 11116 Doe Run Resources Corporation 10539 The Band 3 Sites include: -- the Cherokee, Jasper, Newton and Tar Creek Sites, otherwise known as the Tri-State Sites; -- the Madison County/Catherine Mine, Big River/Federal Mine Tailings Sites, Westfork Mine, Sweetwater Mine, the Glove Smelter, also known as the Southeast Missouri Sites; -- Selby Smelter, California; -- Mike Horse/Upper Blackfoot, Montana; -- Nueces Bay/Corpus Christi, Texas; -- the Encycle Texas Site; and -- other sites identified by the U.S. Section of the International Boundary and Water Commission. For portions of the Claims asserting future environmental clean- up costs, the Debtors contend that they are not subject to any liability incurred to conduct any potential response activities to address contamination whose source is off-site and unrelated to the former operations of any of the Band 3 Sites. The Debtors also object to the extent the Claims overstate future response costs. Moreover, the Debtors assert that the Claims should be treated as general unsecured claims and duplicative claims should be subject to disallowance under Section 502(e)(1)(B) of the Bankruptcy Code. A full-text copy of the Debtors' specific objections to claims related to the Selby Smelter, Upper Blackfoot, Encycle, Nueces Bay, Corpus Christi, and USIBWC Sites is available for free at: http://researcharchives.com/t/s?1e80 A full-text copy of the Debtors' specific objections to claims related to the Tri-State Sites is available for free at: http://researcharchives.com/t/s?1e81 A full-text copy of the Debtors' specific objections to claims related to the Southeast Missouri Sites is available for free at: http://researcharchives.com/t/s?1e82 Stipulation to Supplement CMO At the April 17, 2007 status conference for the environmental liabilities estimation, ASARCO and the U.S. Government asked the Court to supplement the CMO. Accordingly, parties that submit expert reports in accordance with the CMO will not be required to produce, or be deposed concerning, prior drafts of the expert reports, unless otherwise directed for good cause shown, the Court rules. The Debtors informed the Court at the status conference that they have entered into a stipulation with the city of El Paso and an agreement with Union Pacific and the city of Omaha. The El Paso Stipulation provides that to the extent certain claims filed by El Paso relate to properties other than the residential homes in the El Paso County Metals Survey Site, those Claims will not be subject to or governed by the CMO, the Band I Objection, and the environmental claims estimation proceedings: * The "Particulate Matter Reduction Project Claim," * The "Toxic Tort Environmental Claims," * The "Remediation of El Paso Smelter" claim, and * The "Statutory Cost Recovery and Contribution Claim." The Stipulation also provides that these El Paso Claims will be subject to and governed by the CMO, the Band I Objections, and the estimation proceedings: * The "Remediation of the Metals Site" claim, and * The "Statutory Cost Recovery and Contribution" claims. The Court schedules the next status conference on the Debtors' environmental liabilities on May 22, 2007. Parties are required to file briefs by May 7 and responses to those briefs must be filed by May 17. Briefs should not be more than 25 pages and responses not more than 10 pages. The Court sets May 4, 2007, as the deadline for government agencies to submit past cost issues. The Court will convene the estimation hearing of environmental claims related to the Government Gulch Sites on June 21, 2007. The hearing will be continued the next day, if needed. The estimation hearing of environmental claims related to the Band 3 Site will take place on Oct. 29 to 31, 2007. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). The Debtors' exclusive period to file a plan expires on Aug. 9, 2007. (ASARCO Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ASSOCIATED ESTATES: Earns $450,000 in First Quarter Ended March 31 ------------------------------------------------------------------ Associated Estates Realty Corporation reported a net income of $450,000 on total revenue of $37.2 million for the first quarter of 2007, as compared with a net loss of $7.6 million on total revenue of $35.7 million for the first quarter of 2006. Net loss applicable to common shares of $812,000 for the first quarter ended March 31, 2007, as compared with a net loss applicable to common shares of $8.9 million for the first quarter ended March 31, 2006. Revenue for the first quarter 2007 consisted of $33.9 million in property revenue, $2.7 million in fees, reimbursements and other revenues, and $616,000 in painting services. Commenting on the company's results, John Shannon, senior vice president of operations, said, "Our favorable performance in the quarter is reflective of the fact that we have the right people in place to take advantage of the improving market fundamentals in the Midwest and the continued strength in our Atlanta, Metro DC and Florida sub-markets." As of March 31, 2007, the company's balance sheet reflected total assets of $617.7 million, total liabilities of $507.3 million, and minor interest of $1.8 million, resulting in a total stockholders' equity of $108.6 million. Cash, cash equivalents and restricted cash totaled $12.3 million as of March 31, 2007, down from $37.3 million as of Dec. 31, 2006. The company recorded $177.7 million in accumulated distributions in excess of accumulated net income as of March 31, 2007, as compared with $174 million as of Dec. 31, 2006. Dispositions During the quarter, the company sold a 120-unit property, located in Mayfield Heights, Ohio, which completed its exit from the congregate care business. The company said it still expects to sell between $50 million and $75 million of assets during 2007. Revolving Credit Facility In April 2007, the company obtained a revolving credit facility in the amount of $100 million to be used for the refinancing of existing debt, general corporate purposes, and/or the acquisition of properties. This revolver accrues interest at a variable rate and matures in April 2010. In connection with obtaining the revolver, the company terminated its $17 million and $14 million lines of credit. Additionally, at the time of the closing, the revolver was used to prepay two mortgage loans totaling $15.7 million. Legal Proceedings In April 2007, the company settled a pending lawsuit, which is expected to result in a $1.5 million of additional revenue in the second quarter of 2007. Full-text copies of the company's first quarter 2007 report are available for free at http://ResearchArchives.com/t/s?1e7a About Associated Estates Headquartered in Richmond Heights, Ohio, Associated Estates Realty Corporation (NYSE: AEC) -- http://www.aecrealty.com/-- is a real estate investment trust. The REIT directly or indirectly owns, manages or is a joint venture partner in 103 multifamily communities containing a total of 20,650 units located in nine states. * * * Associated Estates Realty Corporation carries Moody's Investors Service B1 senior unsecured debt shelf rating and B3 preferred stock shelf rating. The rating outlook is stable. BOWATER INC: Weak Earnings Cue S&P's Negative Outlook ----------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Greenville, South Carolina-based Bowater Inc. to negative from stable. All ratings, including the company's 'B+' corporate credit rating, were affirmed. "The outlook revision reflects weaker-than-expected earnings and cash flow stemming from difficult newsprint market conditions, softer pricing for coated and specialty papers, ongoing operating losses for lumber, and elevated costs," said Standard & Poor's credit analyst Pamela Rice. Standard & Poor's had expected Bowater's credit measures to improve modestly in 2007 as the company used asset-sale proceeds to reduce debt and reduced costs to offset lower prices. However, industry supply discipline in North America has not kept pace with demand declines, so prices remain under pressure. As a result, Bowater's debt, including debt-like obligations, remains very high at $2.7 billion, and debt leverage for the 12 months ended March 31, 2007, rose to 7.4x from 6.7x at year-end 2006. Although S&P stated in January 2007 that the proposed merger between Bowater and Abitibi-Consolidated Inc. (B+/Negative/--) could result in a 'B+' corporate credit rating and a stable outlook for the new company, S&P also expressed some caution that weaker newsprint market conditions during the protracted merger closing period would expose the ratings and outlook to further pressure. "The ratings on Bowater reflect the company's high debt burden; cyclical, mature, and oversupplied markets; and enduring input cost pressures," Ms. Rice said. "Still, the company maintains leading market positions in newsprint and coated groundwood paper, has undertaken vigorous cost reduction efforts, and has valuable timberland holdings." The outlook is negative. Although market conditions should improve seasonally in the near term, S&P remain concerned about Bowater's profitability and inability to reduce its heavy debt burden. S&P could lower the ratings if the company is unable to strengthen its earnings and cash flow with cost improvement efforts, or if market conditions worsen. S&P could revise the outlook to stable if Bowater is able to reduce debt beyond expectations or if it merges with Abitibi, and S&P believe the combined entity's credit risk profile will support the current ratings over the intermediate term. BURCAW DEVELOPMENT: Case Summary & 16 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Burcaw Development Group, Inc. 17511 North Dale Mabry Lutz, FL 33548 Bankruptcy Case No.: 07-03643 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- South Creek Company, L.L.C. 07-03644 Type of Business: The Debtor was formed by owners Laurie and Amy Burcaw in 2003 for acquiring new land for residential clients. Chapter 11 Petition Date: May 3, 2007 Court: Middle District of Florida (Tampa) Debtor's Counsel: David W. Steen 602 South Boulevard Tampa, FL 33606-2630 Tel: (813) 251-3000 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Burcaw Development Group's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Amy Smith hillside; value $600,000 1915 Rebecca Drive of senior lien: Lutz, FL 33548 $800,000 B.B.&T. Shady, L.L.C.- $170,000 360 Central Avenue Singletary Saint Petersburg, FL 33701 Shady, L.L.C.- $755,000 Fulcher Byrd Corporation $700,000 100 South Carillon Parkway, Suite 100 Saint Petersburg, FL 33716 Donna J. Feldman, Esq. attorneys fees $300,000 Donna J. Feldman, P.A. 19321-C U.S. Highway 19, Nor. Clearwater, FL 33764 Florida Capital line of credit $380,000 c/o Saxon/Gilmore 201 East Kennedy Boulevard, Suite 600 Tampa, FL 33602 Lake Patience; $650,000 value of senior lien: $140,000 Hillside $800,000 K.B. Homes $400,000 3450 Buschwood Park Tampa, FL 33618 Keene Brothers, Inc. lawsuit $1,000,000 c/o Darin J. Quam, Esq. Stearns Weaver P.O. Box 3299 Tampa, FL 33601-3299 Laurie S. Burcaw $15,030,000 17511 North Dale Mabry Lutz, FL 33548 M&I Marshall and Ilsley Bank Kings Landing $1,552,342 c/o Richard S. McIver, Esq. Kass Shuler P.O. Box 800 Tampa, FL 33601-0800 Regions Bank Sherwood, L.L.C.- $3,580,000 Dept. 2521 South P.O. Box 2153 Birmingham, AL 35287 Sherwood, L.L.C.- $2,280,000 North SunAmerica Investments $4,050,000 P.O. Box 7001 Wesley Chapel, FL 33543 and Third Mortgage $1,997,000 for Sherwood, L.L.C.-North; value of senior lien: $2,280,000 and Third Mortgage $1,702,000 for Sherwood, L.L.C.-South; value of senior lien: $3,580,000 Kings Landing; $645,000 value of senior lien: $1,552,342 Wachovia Shady, L.L.C.- $685,000 P.O. Box 96074 Pitts Charlotte, NC 28296 Shady, L.L.C.- $487,000 Benitez B. South Creek Company, LLC's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ M.&I. Marshall & Ilsley Bank $2,168,606 c/o Richard S. McIver, Esq. Kass Shuler P.O. Box 800 Tampa, FL 33601-0800 SunAmerica Investments $575,000 P.O. Box 7001 Wesley Chapel, FL 33543 Donna J. Feldman, Esq. $50,000 Donna J. Feldman, P.A. 19321-C U.S. Highway 19, Nor. Clearwater, FL 33764 Doug Beldon Tax Collector $50,000 P.O. Box 172930 Tampa, FL 33672-2930 CALPINE CORP: Unit Completes $377 Million Power Plant Financing --------------------------------------------------------------- Calpine Corporation disclosed that its subsidiary, Otay Mesa Energy Center LLC, obtained a $377 million credit facility to finance the construction of its 596-megawatt Otay Mesa Energy Center near San Diego, California. The project finance facility for this indirect, stand-alone subsidiary is comprised of a construction loan that will convert to a term loan at commercial operations, expected in May 2009. The term loan will mature in April 2019. The loan facilities, jointly arranged by ING Capital LLC and BayernLB, are non-recourse to Calpine, and therefore neither Calpine nor any of its affiliates is responsible for the debt or any obligations of OMEC. Concurrent with this financing, OMEC has executed a ten-year tolling agreement with San Diego Gas & Electric for the full output of the Otay Mesa Energy Center. Under the terms of the agreement, SDG&E will have the ability to dispatch power from the Otay Mesa plant to serve its energy customers, and the utility will supply natural gas to fuel the power plant. The agreement also provides SDG&E the option to purchase the plant at the end of the contract term in 2019. If SDG&E does not exercise its option, under certain circumstances, OMEC has the right to require SDG&E to purchase the plant. "As one of California's largest, most environmentally responsible power producers, Calpine is dedicated to developing clean, reliable and cost-effective energy solutions for its customers," Calpine Chief Executive Officer Robert P. May stated. "This financing will allow Calpine to complete construction for SDG&E of a needed, low-carbon energy resource -- demonstrating that Calpine's customers, California and the environment can benefit from the continued development of new power generation facilities like the Otay Mesa Energy Center. We appreciate SDG&E's commitment to the development of clean, reliable power generation. Calpine also is very pleased with the continued support of two of its key relationship banks and looks forward to working with them on future transactions." Calpine Construction Management Company, Inc. will be responsible for overseeing all aspects of construction for the plant, including management of the project's general contractor, a joint venture between ARB, Inc. and Barton Malow Company, named Otay Mesa Power Partners. Calpine plans to re-commence construction of the plant this month, and will complete start-up, testing and commissioning by May 2009. The company will operate and maintain the plant through its subsidiary, Calpine Operating Services Company, Inc. Comparable to the majority of Calpine's energy centers, the Otay Mesa Energy Center will use a combined-cycle design that will enable it to generate electricity up to 40 percent more efficiently than traditional natural gas-fueled facilities. The project also will incorporate best available emissions control technology significantly reducing emissions. Calpine in California Calpine has made an unprecedented investment in California's energy infrastructure through the construction and operation of the state's newest, cleanest and most fuel-efficient fleet of power plants and is the state's single largest renewable power producer. Since July 2001, Calpine has added more than 4,000 megawatts of clean, fuel-efficient capacity in California -- an accomplishment unmatched by any other company in the energy industry. The company's fleet of natural gas-fueled, combined- cycle power plants is among the cleanest and most fuel-efficient of its kind, and, unlike traditional renewable resources such as wind and solar, Calpine's renewable geothermal power plants are capable of generating electricity twenty four hours a day, seven days a week. Today, Calpine currently operates 41 power plants in the state, which combined are capable of generating more than 5,250 megawatts of electricity. This is equivalent to almost 10- percent of peak California power demand and is enough electricity to power more than five million Californian households. 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. CBRL GROUP: Completes Zero Coupon Convertible Notes Exchange Offer ------------------------------------------------------------------ CBRL Group Inc. has completed its offer to exchange a new issue of Zero Coupon Senior Convertible Notes due 2032 (CUSIP No. 12489VAC0) plus an exchange fee for the company's Liquid Yield Option(TM) Notes due 2032 (CUSIP Nos. 12489VAB2 and 12489VAA4). The exchange offer expired at 5:00 p.m., Eastern Standard Time, on April 30, 2007. As of the expiration of the exchange offer, $375,931,000 aggregate principal amount at maturity of Old Notes, representing approximately 89% of the amount of Old Notes outstanding, had been tendered in exchange for an equal principal amount of New Notes. All Old Notes that were properly tendered were accepted for exchange. The exchange of New Notes for Old Notes is expected to take place on May 3, 2007. After the consummation of the exchange offer, there are outstanding $46,099,000 aggregate principal amount at maturity of Old Notes and $375,931,000 aggregate principal amount at maturity of New Notes. The purpose of the exchange offer was to issue, in exchange for Old Notes, New Notes with a "net share settlement" feature. Both the Old Notes and the New Notes is convertible into 10.8584 shares of the company's common stock per $1,000 in principal amount at maturity. The net share settlement feature will allow the company, upon conversion of a New Note, to satisfy a portion of its obligation due upon conversion in cash rather than with the issuance of shares of its common stock. This will reduce the share dilution associated with the conversion of the New Notes. The Old Notes and the New Notes would be redeemed on June 4, 2007, the Redemption Date. The redemption price of both the Old Notes and the New Notes is $477.41 per $1,000 in principal amount at maturity, which is the accreted principal amount of both the Old Notes and New Notes on the Redemption Date. The aggregate redemption price of the Old Notes and the New Notes, collectively, will be approximately $201 million, assuming that no holders of either Old Notes or New Notes convert their notes into common stock. At any time up to two business days prior to the Redemption Date, holders of Old Notes and New Notes can convert either Old Notes or New Notes, as the case may be. The conversion rate applicable to both the Old Notes and the New Notes is 10.8584 shares of common stock per $1,000 in principal amount at maturity; however, in the case of the New Notes, the company will settle its conversion obligations with a combination of cash and shares of common stock, if any, in lieu of only shares. Common stock will be issued upon conversion of the New Notes only to the extent that the conversion value exceeds the accreted principal amount of the New Notes. The conversion value generally will exceed the accreted principal amount of the notes if the company's common stock trades at a price in excess of $43.97 per share. The company indicated that it intends to repurchase, through open market purchases, any shares of common stock that are issued in connection with the conversion of either the Old Notes or new Notes. The company will pay the redemption price of the Old Notes and New Notes well as the purchase price for any shares of common stock that are issued in connection with a conversion of any Old Notes or New Notes through a draw on its existing delayed-draw term loan facility and cash on hand. Information concerning the exchange offer and copies of the Exchange Circular and related documents may be obtained from the information agent: -- Global Bondholder Services Corporation Attn: Corporate Actions Suite 704 No. 65 Broadway New York, NY 10006 Tel: (212) 430-3774 (Banks and Brokers) (866) 470-4300 About CBRL Group Inc. Headquartered in Lebanon, Tennessee, CBRL Group Inc. (Nasdaq: CBRL)-- http://www.cbrlgroup.com/-- presently operates 557 Cracker Barrel Old Country Store(R) restaurants and gift shops located in 41 states. * * * CBRL Group Inc.'s Zero-Coupon Senior Liquid Yield Option Notes due 2032 carry Moody's Investors Service's 'Ba2' rating and Standard & Poor's 'B+' rating. CERVANTES ORCHARDS: Judge Rossmeissl Confirms Reorganization Plan ----------------------------------------------------------------- The Honorable John A. Rossmeissl of the U. S. Bankruptcy Court for the Eastern District of Washington has confirmed Cervantes Orchards & Vineyards LLC's Amended Chapter 11 Plan of Reorganization. Under the Plan, holders of Allowed Class 1 Administrative Expenses Claims and Allowed Class 2 Priority Claims will be paid in full on the distribution date. Holders of Allowed Class 3 Priority Tax Claims will receive $1,000 or the amount of the claim whichever is lesser. The balance of the allowed claim will be paid in 10 equal quarterly installments commencing on the distribution date or the third anniversary of the assessment of the tax, whichever is later. Class 4 Deere Credit Inc. Claims will receive interest on the principal amount of its loans at the rate of 7-1/2% payable quarterly commencing on Sept. 30, 2006, together with minimum quarterly payments of $12,500 in reduction of principal. The principal and the accrued interest must be fully paid on Dec. 31, 2009. Class 5 U.S. Bank Trust NA Claims will receive interest on the principal amount of its loans at the rate of 8.11% per annum payable semi-annually commencing on Jan. 1, 2007, as part of payments in the amount of $87,434. All principal and accrued interest must be fully paid on July 1, 2014. Because the Debtor expects to obtain a recovery against Columbia Trust Bank in excess of the Bank's claim, Class 6 Columbia Trust Bank Claims will be treated in its full amount. Payments, however, will be paid to Columbia in an amount equal to 2% of the principal amount of the Bank's claims each quarter with first payment due 90 days after the effective date. Class 7-1 Elbert B. Schinmann Claims will receive $19,373 annual payments. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. Class 7-2 Douglas F. Bridgeman Claims will receive $25,463 annual payments until the claims are paid. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. The Class 7-3 Claim of Robert Lambrecht will receive $22,720 annual payments until the claims are paid. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. The Class 7-4 Claim of American West Bank will receive $11,804 semi-annual payments until the claims are paid. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. The Class 7-5 Claim of Ronald L. Curfman will receive $12,025 annual payments until the claims are paid. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. Gary Simmons, Kay Moore and Sherran Whatley Claims will receive $19,514 annual payments on account of thier claims. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. Everett L. Wiggins' claim is entitled to a $7,600 annual payment. Interest will accrue on the principal of the claim from the Debtor's bankruptcy filing. Donna Freeburn's Class 7-8 Claim will be paid in full on the distribution date. Holders of Class 8 Unsecured Claims will receive a cash payment equal to 20% of their allowed claims on the distribution date. The holders will also receive an 80% promissory note for the balance of their allowed claims. The note will bear a 6% interest per annum and payable on or before March 15, 2007. In the event all prior classes are fully paid under the Plan, Class 9 Related Entity Claims will receive any remaining funds available for distribution. Holders of Class 10 Interest Claims will retain all units under the Plan. Full-text copies of the Debtor's Amended Disclosure Statement are available for a fee at: http://www.researcharchives.com/bin/download?id=070503213619 Headquartered in Sunnyside, Washington, Cervantes Orchards and Vineyards LLC filed for chapter 11 protection on Aug. 19, 2005 (Bankr. E.D. Wash. Case No. 05-06600). R. Bruce Johnston, Esq., at Law Offices of R. Bruce Johnston represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. CHEMED CORPORATION: Inks New $275 Million Bank Credit Facility -------------------------------------------------------------- Chemed Corporation entered into a new bank credit facility agreement, consisting of a $100 million five-year term loan and a $175 million revolving credit agreement. The interest rate on the Facility Agreement has a floating rate that is currently LIBOR plus 87.5 basis points. The term loan requires 10% amortization per year and allows for early termination without any prepayment penalty. An accordion feature is included in this Facility Agreement that provides Chemed the opportunity to expand its revolver and term loan an aggregate of $100 million. Proceeds from this Facility Agreement will be used to fund the redemption of Chemed's $150 million of 8-3/4% Senior Notes due 2011 on May 4, 2007. The redemption is being made pursuant to the terms of the indenture dated Feb. 24, 2004 at a redemption price of 104.375% of the principal amount of the Notes together with accrued but unpaid interest. JPMorgan Chase Bank acted as the administrative agent and arranger for this transaction. Citibank and LaSalle were the syndication agents and National City Bank was the documentation agent. Headquartered in Cincinnati, Ohio, Chemed Corp. (NYSE: CHE) -- http://www.chemed.com/-- fka Roto-Rooter, Inc., operates two wholly owned subsidiaries: VITAS Healthcare and Roto-Rooter. VITAS provides end-of-life hospice care and Roto-Rooter provides plumbing and drain cleaning services. * * * As reported in the Troubled Company Reporter on March 29, 2007, Standard & Poor's Rating Services revised its outlook on the hospice and plumbing/drain-cleaning services provider Chemed Corp. to positive, from stable, and affirmed its existing ratings on Chemed, including the 'BB-' corporate credit rating. CHIQUITA BRANDS: Posts $3.4 Million Net Loss in Qtr Ended March 31 ------------------------------------------------------------------ Chiquita Brands International Inc. reported a net loss of $3.4 million, including a charge of $5 million related to a decision to exit certain unprofitable farm leases in Chile. This compares to net income of $19.5 million in the year-ago period. First quarter net sales increased by 3 percent year-over- year to $1.19 billion, from net sales of $1.15 billion in the prior year quarter. "During the first quarter, we continued to make good progress in both our banana and salad operations," said Fernando Aguirre, chairman and chief executive officer. "In Europe, we grew volume while maintaining our premium market position and profitability, despite last year's onerous regulatory changes. In our North American banana business, we also grew volume, recovered cost increases, and are successfully introducing higher-margin, innovative products to differentiate the Chiquita brand. "At Fresh Express, we have strengthened our No. 1 position in retail value-added salads and reinforced our food safety leadership in the face of soft consumer demand for packaged salads. While these primary segments are improving, we have also taken decisive actions to improve profits in our other produce operations, including exiting certain farm operations in Chile. Aguirre concluded, "Overall, while we have faced several obstacles in recent quarters, I am confident that Chiquita is on the right path, and we saw tangible signs of progress in the first quarter. We remain committed to deliver sustainable, profitable growth, and we expect 2007 to be a positive step in reaching those goals." Quarterly sales rose primarily due to increased banana volume in Europe and North America and favorable foreign exchange rates, partly offset by lower local banana pricing in Europe. Operating income decreased to $18 million in the first quarter of 2007, compared to operating income of $39.3 million in the first quarter of 2006, due to higher purchased fruit and other industry costs, lower local banana pricing in the European market, higher costs due to a record January freeze in Arizona, which affected lettuce sourcing, and the charge related to a decision to exit certain farm leases in Chile. These were partially offset by favorable year-over-year European exchange rates and the absence of residual costs from Tropical Storm Gamma that affected the year-ago period. Total debt increased to $1.06 billion at the end of the first quarter of 2007, compared to total debt of $1.02 billion at March 31, 2006. The increase in total debt was due to $36 million of borrowings on the company's revolving credit facility in the first quarter 2007, which brought total borrowings under the facility to $80 million at March 31, 2007, compared to $27 million at March 31, 2006. Strategic Shipping Transaction Chiquita recently announced it has signed definitive agreements to sell its 12 refrigerated cargo vessels for $227 million. The ships will be chartered back from an alliance formed by Eastwind Maritime Inc. and NYKLauritzenCool AB. The parties also entered a long-term strategic agreement in which the alliance will serve as Chiquita's preferred supplier in ocean shipping to and from Europe and North America. About Chiquita Brands Cincinnati, Ohio-based Chiquita Brands International, Inc. (NYSE: CQB) -- http://www.chiquita.com/-- is an international marketer and distributor of high-quality fresh and value-added food products - from bananas and other fruits to nutritious blends of convenient green salads. The company markets its products under the Chiquita(R) and Fresh Express(R) premium brands and other related trademarks. Chiquita employs approximately 25,000 people operating in more than 70 countries worldwide. * * * In November 2006, Moody's Investors Service downgraded its ratings for Chiquita Brands LLC, as well as for its parent Chiquita Brands International Inc. Moody's said the outlook on all ratings is stable. Standard & Poor's Ratings Services also lowered its ratings on Chiquita Brands International Inc., including its corporate credit rating, from 'B+' to 'B'. S&P said the ratings remain on CreditWatch with negative implications where they were placed on Sept. 26. CITY CAPITAL: Buys Granite Real for $1.3MM Including Assumed Debts ------------------------------------------------------------------ City Capital Corporation acquired Granite Real Estate Investment Company LLC for a total amount of $1.38 million. The company paid $150,000 and assumed $690,000 of outstanding debts, along with accounts payable of $350,000 and equipment leases totaling $185,000. The Granite Companies booked $39,805,000 in total revenues in 2006. All three divisions are included in this acquisition: Granite Real Estate Acquisition Company LLC; Granite Custom Builders, a high end, full service Design and Build, Construction Management and Custom Renovation Firm; and Granite Real Estate Investment Company LLC, a full service Real Estate Company representing both buyers and sellers of residential real estate. "The company has been researching companies in the Northeast quadrant of the country for several months now, City Capital CEO Ephren W. Taylor II stated. "The company recognises the need for affordable housing for working-class families in the densely populated Northeast corridor. Granite has a strong presence in the Greater Philadelphia Metro area, and the company anticipates using this acquisition as a base for expanding its operations into several East coast markets that the company has been in discussions with." "The company is excited about being acquired by a public company with the strong reputation City Capital commands among city governments and community organizations around the country," Gary Freedman, Managing Partner of Granite, added. "The company is looking forward to working with Mr. Taylor and his entire executive management team, to grow Granite to the next level. The two groups have strong synergies that should make this marriage a huge success. The company has experience in the greater Philadelphia market, and is looking forward to expanding the company's operations into the rest of the Eastern Seaboard." About Granite Real Estate Based in Chadds Ford, Pennsylvania, Granite Real Estate Investment Company LLC -- http://www.graniterei.com/-- has acquired or built and sold over 424 homes since 2004, and has booked 53 homesales so far in 2007 alone. The company currently has 28 homes under contract, valued in excess of $6 million. About City Capital Headquartered in Franklin, Tennessee, City Capital Corp. (OTCBB: CCCN) -- 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. 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. . 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. COMMUNICATIONS CORP: Disclosure Statement Hearing Moved to May 21 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Louisiana has deferred, to May 21, 2007, at 09:00 a.m., the hearing to consider the adequacy of Communications Corporation of America and its debtor-affiliates and White Knight Holdings Inc. and its debtor-affiliates' disclosure statement explaining their Chapter 11 Plan of Reorganization. Overview of the Plan As reported in the Troubled Company Reporter on March 19, 2007, the primary purposes of the Plan are to provide for: (a) the continued operation and renewed growth of the Debtors' businesses; (b) the restructure and rationalization of the Debtors' capital structure; (c) the recapitalization of the Debtors for additional liquidity; and (d) payments to creditors in accordance with terms of the Plan. The Debtors will fund the Plan through a combination of: (1) the sale of assets for $75 million, (2) a capital infusion of $10 million from the present owners of Communications Corporation of America Inc. and White Knight Holdings Inc., and (c) revenues derived from continued operations. The net sale proceeds will be paid to GE Lenders Secured Claims. The estimated allowed amount of the GE Lenders Secured Claim is $206 million. The claim is subject to valuation by the Court. Allowed Administrative Claims, Priority Tax Claims, Priority Claims, Other Secured Claims, Convenience Claims, and Unsecured Trade Claims will be paid in full. The total estimate of outstanding unpaid Administrative Expense Claims is in the range of $5.8 million to $6.3 million; Priority Tax Claims, $0; Priority Claims, $0; Other Secured Claims, $16,000; Convenience Class Claims, $95,000; and Unsecured Trade Claims, $900,000 to $1.1 million. Holders of General Unsecured Claims will recover 3%. The estimated amount of Allowed General Unsecured Claims is $170,000,000. The holders of equity interests in the Debtor Subsidiaries will retain their equity interests. Preferred Interests in Communications Corporation of America Inc. will receive a cash distribution equal to the holder's pro rata share of $50,000. Holders of common equity interests in the Parent companies won't receive anything under the Plan. A full-text copy of the Debtors' Disclosure Statement is available for free at http://ResearchArchives.com/t/s?1b86 About White Knight Headquartered in Lafayette, Louisiana, White Knight Holdings, Inc., is a media, television and broadcasting company. White Knight entered into commercial inventory agreements, joint sales agreements, and shared services agreements with Communications Corporation of America. However, both entities are independent companies and are not affiliates of each other. Along with Communications Corp., White Knight operates around 23 TV stations. White Knight and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. White Knight and its debtor-affiliates' chapter 11 cases are jointly administered under Communication Corporation of America's chapter 11 case. When the Debtors filed for protection from their creditor, they estimated less than $50,000 in assets and estimated debts between $100,000 and $500,000. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. Taylor, Porter, Brooks & Phillips LLP serves as counsel to the Official Committee of Unsecured Creditors. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. COOPER TIRE: Moody's Holds Ratings and Says Outlook is Stable ------------------------------------------------------------- Moody's Investors Service affirmed Cooper Tire & Rubber Company's corporate family rating of B2 but revised the outlook to stable from negative. At the same time, the rating agency affirmed the B2 rating on Cooper's unsecured notes and raised the Speculative Grade Liquidity rating to SGL-2 from SGL-3. The stable outlook reflects Moody's expectations that the combination of resumption of growth in U.S. replacement tire demand, management actions to restore profitability and operating efficiencies, the impact of pricing actions, and less volatile commodity and energy costs will contribute to a gradual strengthening in the company's performance over the intermediate term. The long-term ratings consider the ongoing material leverage in the company's capital structure as well as recent stress on its operating margins, cash flow, and debt coverage ratios in its largest operating segment, North American Tire. The B2 Corporate Family rating incorporates the company's elevated leverage, regional concentration, and modest scale compared to global competitors. It further recognizes weak financial ratios that have unfolded over the past two years. The rating is supported by stronger scores for its participation in the relatively stable replacement tire segment, established brands and distribution channels, as well as granularity across its customer base. Nonetheless, current margins, leverage and interest coverage metrics pull the rating into the B2 category. While reinvestment plans and restructuring expenditures are expected to constrain free cash flow, implementation of cost reduction and efficiency initiatives should begin to reverse deteriorating trends of 2005 and 2006. Despite recent investments in Asian ventures, its core operations remain in North America and have faced challenging conditions from a combination of raw material costs, slack unit demand, and competition from tires sourced in lower cost countries. The stable outlook is based upon expectations that the combination of resumption of growth in U.S. replacement tire demand, management initiatives, along with pricing actions to recover raw material costs will contribute to healthier results. Cooper's current liquidity profile further supports the stable outlook. However, delivering improved performance and remaining on course to generate material free cash flow in its North American segment as well as the terms and timing of any extension of its revolving credit facility could affect ratings. The SGL-2 rating represents good liquidity over the coming year. The rating flows from break-even to marginal free cash flow generation in North America, existing levels of cash and short- term investments as well as significant external funding commitments. Cooper continues with modest headroom under financial covenants in its revolving credit facility and has some ability to develop incremental alternate liquidity given the unsecured nature of its liabilities and available lien baskets. Ratings affirmed: Cooper Tire & Rubber Company * Corporate Family Rating, B2 * Senior Unsecured Notes, B2 * Shelf filings, (P)B2 and (P)Caa1 for senior unsecured and preferred respectively Ratings revised: * Outlook to stable from negative * Speculative Grade Liquidity rating to SGL-2 from SGL-3 Loss Given Default Assessments revised: * Senior unsecured notes to LGD-4, 56 % from LGD-4, 57% * Shelf filing for unsecured notes to LGD-4, 56% from LGD-4, 57% The last rating action was on December 4, 2006 at which time the liquidity rating of SGL-3 was renewed. Cooper's $175 million revolving credit facility is not rated. The B2 (LGD-4, 56%) rating on the senior unsecured notes is level with the Corporate Family Rating and stems from their significance in the company's debt structure and their pari passu standing with bank facilities. Neither the notes nor the bank credit facility benefit from up-streamed subsidiary guarantees, and both obligations are on an unsecured basis. Cooper Tire & Rubber Company, headquartered in Findlay, Ohio, is the fourth largest tire manufacturer in North America and is focused on replacement markets for passenger cars and light & medium duty trucks. Revenues in 2006 were approximately $2.7 billion. The company operates 10 manufacturing facilities and had 13,361 employees at the end of 2006. COPELANDS' ENTERPRISES: Delaware Court Confirms Liquidation Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware confirmed the Chapter 11 Plan of Liquidation co-proposed by Copelands' Enterprises Inc. and its Official Committee of Unsecured Creditors. The Plan, as published in the Troubled Company Reporter on Feb. 16, 2007, proposes to pay Class 1 Other Priority Claims and Class 3 Other Secured Claims in full. Holders of Class 2 Subordinated Note Claims will receive 21% of their allowed claim while holders of Class 4 General Unsecured Claims will get 0.2% to 1.9%. Holders of Equity Interests in the Debtor will not receive any distributions under the Plan. Distributions under the Plan will be sourced from the proceeds of the store closing sales at eleven of the Debtor's store locations. The winning bidder, a joint venture composed of TSA Stores, Inc., Hilco Merchant Resources LLC and Hilco Real Estate LLC, purchased the subject properties for $21.7 million, predicated on an aggregare cost value of the Debtor's inventory of $23 million. Great American Group was the liquidator agent for the sale which concluded early December 2006. The Debtors' postpetition business operation was backed by a $25,000,000 debtor-in-possession financing provided by Wells Fargo Retail Finance LLC and a $5,000,000 mezzanine loan from Thomas and James Copeland. Both loans have been paid in full on Nov. 20, 2006. Based in San Luis Obispo, California, Copelands' Enterprises Inc. dba Copelands' Sports -- http://www.copelandsports.com/-- operates specialty sporting goods stores. The company filed for chapter 11 protection on Aug. 14, 2006 (Bankr. D. Del. Case No. 06-10853). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub LLP, in Los Angeles, California, represent the Debtor. Adam G. Landis, Esq., at Landis Rath & Cobb LLP represents the Official Committee of Unsecured Creditors. Clear Thinking Group serves as the Debtor's financial advisor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. DAVID IHMUD: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: David F. Ihmud aka Abedelsalam F. Ihmud dba Planet DVD fdba Star Video Nina Ihmud aka Nina Saryan aka Nina Saryan-Ihmud 9545 Mango Avenue Fontana, CA 92335 Bankruptcy Case No.: 07-12364 Type of Business: Chapter 11 Petition Date: May 1, 2007 Court: Central District Of California (Riverside) Judge: Meredith A. Jury Debtor's Counsel: Joseph L. Borrie, Esq. 4333 Orange Street, Suite 21 Riverside, CA 92501 Tel: (951) 686-6432 Fax: (951) 686-6490 Total Assets: $482,774 Total Debts: $1,095,437 Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo credit line $92,825 Business Line P.O. Box 54349 Los Angeles, CA 90054 Washington Mutual credit line $49,196 P.O. Box 54349 Phoenix, AZ 85062 Capital One credit line $47,307 P.O. Box 105131 Atlanta, GA 30348 Bank of America credit line $51,753 American Express credit line $35,105 Capital One, F.S.B. credit card $18,312 M.B.N.A. credit line $17,261 credit card $25,889 American Express credit card $44,627 Discover Card credit card $14,972 Chase credit card $14,371 First Equity Card Corp. credit card $12,863 Chase Sony Card credit card $11,831 Advanta Bank Corp. credit card $11,129 Citi Cards credit card $10,696 Dell Business Credit trade debt; $14,763 value of collateral: $4,200 DELUXE ENTERTAINMENT: Increased Loan Cues S&P to Affirm Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its loan and recovery ratings on the senior secured first-lien bank facility of Deluxe Entertainment Services Group Inc. (B/Stable/--), following the announcement that the company will increase its first-lien term loan to $610 million (from $585 million) to help fund a special dividend. The secured loan rating is 'B', at the same level as the 'B' corporate credit rating, and the recovery rating is '3', indicating expectation of meaningful (50%-80%) recovery of principal in the event of a payment default. Pro forma for the add-on, the first-lien facility will consist of a $125 million unfunded revolving credit facility due 2011, a $25 million prefunded revolving credit facility due 2013, a $560 million U.S. term loan due 2013, and a US$50 million Canadian term loan due 2013. Ratings List Deluxe Entertainment Services Group Inc. Corporate Credit Rating B/Stable/-- Rating Affirmed Deluxe Entertainment Services Group Inc. Senior Secured B Recovery Rating 3 DENNY'S CORP: March 31 Balance Sheet Upside-Down by $221 Million ---------------------------------------------------------------- Denny's Corporation reported $221.2 million in total stockholder's deficit, $443.7 million in total assets and $664.9 million in total liabilities as of March 31, 2007. The company's March 31 balance sheet also showed strained liquidity with total current assets of $71.6 million available to pay total current liabilities of $138.7 million. During the first quarter, Denny's sold six restaurant operations to franchisees and divested three real estate properties for aggregate net proceeds of $5.7 million. These proceeds along with cash flow from operations were used to reduce outstanding debt by $6 million while increasing the company's cash balance by $8.9 million. Subsequent to quarter-end, Denny's made an $8.8 million semiannual interest payment on its 10% Senior Notes. In addition, the company has initiated a $10 million voluntary prepayment on its Credit Facility Term Loan, which will be effective in the first week of May 2007. First Quarter Results Net income for the first quarter was $1.2 million, an increase of $451,000, as compared with prior year net income of $712,000. Adjusted income before taxes decreased $2.1 million from the prior year period to a loss of $100,000 in the first quarter. For the first quarter of 2007, Denny's reported total operating revenue of $236.8 million, a decrease of $11.2 million from the prior year quarter. Company restaurant sales decreased $9.2 million to $215.8 million as a result of 17 fewer equivalent units and a 1.8% decrease in company same-store sales. Franchise revenue decreased $2 million to $21 million as a result of lower franchise rental income, eleven fewer equivalent units and a 0.7% decrease in franchise same-store sales. Franchise rental income, a component of franchise revenue, decreased $2.2 million due primarily to the 2006 sale of real estate previously leased to franchisees. General and administrative expenses for the first quarter decreased $1.3 million from the same period last year due primarily to a $1.2 million reduction in share-based incentive compensation. Depreciation and amortization expense for the first quarter decreased by $1.2 million compared with the prior year period due primarily to the sale of real estate assets in 2006. Operating income for the first quarter decreased $2.3 million to $12.7 million due primarily to a lower company restaurant operating margin and reduced franchise rental income. Interest expense for the first quarter decreased $3.3 million to $11.3 million due primarily to lower debt balances and improved borrowing costs. Full-text copies of the company's first quarter report for 2007 are available for free at http://ResearchArchives.com/t/s?1e77 Nelson Marchioli, president and chief executive officer, stated, "Our first quarter results were impacted by soft sales combined with rising labor costs. In response to the persistent sales weakness affecting much of our industry, we recently launched several new promotions aimed at increasing guest traffic. By pairing Denny's strong value proposition with a lineup of exciting new product offerings we will provide consumers a compelling reason to choose Denny's." "We are committed to delivering on our long-term strategic initiatives including increasing cash generation and reducing debt. We are implementing franchise development programs targeted at both existing and potential franchisees. We are investing in product and process innovation to shape the future of Denny's. As we execute on these objectives, we are confident in our plans to expand the Denny's brand, improve our financial performance and enhance shareholder value," Mr. Marchioli concluded. About Denny's Corp. Headquartered in Spartanburg, South Carolina, Denny's Corporation (Nasdaq: DENN) -- http://www.dennys.com/-- is a full-service family restaurant chain in the U.S., with 521 company-owned units and 1,024 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. DUNE ENERGY: Prices Private Offering of Sr. Notes & Pref. Stock --------------------------------------------------------------- Dune Energy Inc. has priced its private offering of senior secured notes due 2012 and senior redeemable convertible preferred stock. Prior to pricing, Dune increased the amount of the Senior Secured Notes offered in the private offering from $285 million to $300 million and the amount of Preferred Stock from $140 million to $180 million. A majority of the proceeds from the private offering will be used to acquire all of the outstanding capital stock of Goldking Energy Corporation. The Senior Secured Notes will bear interest at the rate of 10.5% per annum and will be unconditionally guaranteed on a senior secured basis by each of the company's existing and future domestic subsidiaries. The Senior Secured Notes will be secured by a lien on substantially all of the company's assets. The Preferred Stock, which will have a liquidation preference of $1,000 per share, will pay a dividend at a rate of 10% per annum, payable quarterly, at the option of the company, in additional shares of Preferred Stock, shares of the company's common stock or cash. The Preferred Stock will be initially convertible into 60 million shares of the company's common stock, based on an initial conversion price of $3 per share of the company's common stock and reflecting a 20% conversion premium to the $2.50 per share closing price of Dune's common stock on the American Stock Exchange on May 1, 2007. The company has granted the initial purchaser a 30-day option to acquire an additional 36,000 shares of Preferred Stock. There will be a one-time test for adjustment of the conversion price and the dividend rate, effective as of May 1, 2008, based upon a specified average trading price of the company's common stock for the 30 trading days up to and including April 30, 2008. If the company meets or exceeds this target, there will be no adjustment. In addition, the conversion price of the Preferred Stock will be subject to adjustment pursuant to customary anti-dilution provisions and may also be adjusted upon the occurrence of a fundamental change. The Preferred Stock is redeemable at the option of the holder on Dec. 1, 2012 or upon a change of control. In the event the company fails to redeem shares of Preferred Stock "put" to the company by a holder, then the conversion price shall be lowered and the dividend rate increased. After Dec. 1, 2012, the company may redeem shares of Preferred Stock. Holders converting Preferred Stock prior to June 1, 2010 will be entitled to receive a certain make whole premium. In connection with these offerings, the company will file with the Securities and Exchange Commission upon the closing and the acquisition of Goldking. The Senior Secured Notes are being offered to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, to non-U.S. persons outside the United States under Regulation S of the Act, and to a limited number of institutional accredited investors. Shares of Preferred Stock are being offered only to qualified institutional buyers pursuant to Rule 144A of the Act. Neither the Senior Secured Notes nor the Preferred Stock have been registered under the Act or any state securities laws, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements. Dune expects that the offerings related to the Senior Secured Notes and the Preferred Stock will close concurrently in mid-May 2007, although there can be no assurances in that regard. About Dune Energy Headquartered in Houston, Texas, Dune Energy Inc. (Amex: DNE) -- http://www.duneenergy.com/-- is an independent exploration and development company, with operations focused along the Louisiana/Texas Gulf Coast and the North Texas Fort Worth Basin Barnett Shale. Dune will continue to exploit its existing asset base, seek accretive acquisitions, and enter into additional joint venture drilling programs. * * * As reported in the Troubled Company Reporter on May 2, 2007, Moody's Investors Service assigned first-time ratings to Dune Energy Inc., including a Caa2 Corporate Family Rating, Caa2 Probability of Default Rating, and a Caa2 rating (LGD 4, 50%) on its proposed $285 million of senior secured notes due 2012. In addition, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to oil and gas exploration and production company Dune Energy Inc. S&P also assigned a 'B-' rating and '3' recovery rating, indicating S&P's expectation of meaningful (50%-80%) recovery of principal in the event of a payment default, to the company's proposed $285 million senior secured notes due 2012. EASTMAN KODAK: 2007 First Quarter Sales Decrease 8% to $2.12 Bil. ----------------------------------------------------------------- Eastman Kodak Company reported a loss from continuing operations of $174 million for the first quarter ended March 31, 2007, compared with a loss from continuing operations of $346 million in the same period a year ago. This is a $172 million year-over-year improvement in results from continuing operations on lower year- over-year revenue, reflecting significant cost reduction efforts and lower restructuring charges. For the first quarter of 2007, sales totaled $2.12 billion, a decrease of 8% from $2.29 billion in the first quarter of 2006. Digital revenue totaled $1.21 billion, a 3% decrease from $1.25 billion. Traditional revenue totaled $896 million, a 13% decline from $1.03 billion in the year-ago quarter. New Technologies revenue was $13 million in the first quarter, compared with $16 million in the year-ago period. The company's first-quarter loss from continuing operations before interest, other income (charges), net, and income taxes was $188 million, compared with a loss of $324 million in the year-ago quarter. Kodak held $1.026 billion in cash and cash equivalents as of March 31, 2007, consistent with the company's goal of maintaining at least $1 billion in cash on its balance sheet. As of March 31, 2007, the company's debt level was $2.75 billion. Selling, General and Administrative expenses decreased $112 million from the year-ago quarter, reflecting the company's cost reduction activities. SG&A as a percentage of revenue was 19%, down from 22% in the year-ago quarter. Gross Profit was 20.2%, down from 20.5%, primarily attributable to approximately $30 million of adverse silver and aluminum costs, partially offset by the favorable impact of foreign exchange. "I'm very pleased with our first-quarter performance, in which we made significant progress on our two key objectives for 2007 - new product success and cost reduction. Thus far the year is proceeding on plan," said Antonio M. Perez, chairman and chief executive officer, Eastman Kodak Company. "Both our Consumer Digital and Film Products groups were well ahead of plan. On the product side, we successfully launched a revolutionary line of inkjet products, and at the recent AIIM/On Demand Conference our Graphic Communications Group introduced several award-winning products that broadened our portfolio of solutions. We also significantly reduced our SG&A expenses, improved our receivables performance, and ended the quarter with more than $1 billion in cash on our balance sheet. When we conclude the recently announced sale of our manufacturing facility in Xiamen, China, we will have completed the last, significant step in our manufacturing restructuring." Health Group Sale Closed On April 30, 2007, the company completed the sale of its Health Group to an affiliate of Onex Corporation for up to $2.55 billion. At closing Kodak received $2.35 billion in cash with the potential to receive up to $200 million in additional future payments if Onex achieves certain returns with respect to its investment. About Eastman Kodak Co. Headquartered in Rochester, New York, Eastman Kodak Co. (NYSE: EK) -- http://www.kodak.com/-- develops, manufactures, and markets digital and traditional imaging products, services, and solutions to consumers, businesses, the graphic communications market, the entertainment industry, professionals, healthcare providers, and other customers. * * * In February 2007, Moody's Investors Service said it is continuing its review on Eastman Kodak's ratings for possible downgrade including Corporate Family Rating at B1, Senior Unsecured Rating at B2, and Senior Secured Credit Facilities at Ba3. EDS CORP: Earns $164 Million in First Quarter Ended March 31 ------------------------------------------------------------ Electronic Data System Corp. reported a net income of $164 million first quarter ended March 31, 2007, versus a net income of $24 million for the first quarter ended March 31, 2006. First quarter revenues increased to $5.2 billion from $5.1 billion in the year-ago quarter. First quarter revenue decreased on an organic basis, which excludes the impact of currency fluctuations, acquisitions and divestitures. "EDS recorded another successful quarter as we continued to improve our operational performance and further strengthen our financial position," said Mike Jordan, EDS chairman and chief executive officer. "As EDS continues to broaden its base and capabilities -- as well as reposition the business and develop attractive segments -- our ability to provide effective business solutions to our clients continues to expand." "EDS' continued improvement in earnings reflects traction in our key initiatives," said president and chief operating officer Ron Rittenmeyer. "Despite what appear to be softer market conditions, EDS' signings were solid. The quarter reflected specific expansion activities in our Best Shore delivery network; marked increases in quality assurance metrics; and, most significantly, momentum and strength in our applications business where we continue to grow." EDS signed $3.4 billion in contracts in the first quarter of 2007 versus $10 billion in the year-ago quarter, which included $3.6 billion with General Motors and $3.9 billion with the U.S. Department of the Navy. EDS signed seven deals in the first quarter of 2007 with contract values greater than $100 million with clients in the communications, consumer goods and retail, financial services, and manufacturing industries. Free cash flow was $8 million outflow in the first quarter versus $38 million outflow for the year-ago period. As of March 31, 2007, the company listed total assets valued at $17.8 billion, total liabilities of $9.6 billion, and minority interest of $385 million, resulting in a total stockholders' equity of $7.9 billion. Cash, cash equivalents and marketable securities as of March 31, 2007, were $2.8 billion and $45 million, respectively. First Quarter Results by Segment * Americas First quarter revenue was $2.62 billion, up compared to the prior- year period. Operating profit was $405 million, up from $337 million in the prior-year period. * EMEA First quarter revenue was $1.45 billion, down from the prior-year period, and down on an organic basis. Operating profit was $179 million, up from $178 million in the prior-year period. * Asia-Pacific First quarter revenue was $409 million, up from the prior-year period, primarily due to MphasiS revenues. Operating profit was $38 million, up from $24 million in the prior-year period. * U.S. Government First quarter revenue was $623 million, down from the prior-year period. Operating profit was $122 million, up from $43 million in the prior-year period. 2007 Updated Guidance The company reaffirms prior revenue guidance of $22 billion to $22.5 billion, free cash flow guidance of $1 billion to $1.1 billion, and total contract value guidance of $23 billion- plus. For the second quarter of 2007, EDS currently expects revenue of $5.3 billion to $5.5 billion. About EDS Corp. Based in Plano, Texas, Electronic Data System Corp. (NYSE: EDS) -- http://www.eds.com/-- is a global technology services company delivering business solutions to its clients. EDS founded the information technology outsourcing industry more than 40 years ago. EDS delivers a broad portfolio of information technology and business process outsourcing services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, and consumer and retail industries and to governments around the world. * * * EDS Corp.'s 7-1/8% Notes due 2009 carry Moody's Investors Service's Ba1 rating. ENERGY PARTNERS: Earns $3.7 Mil. in First Quarter Ended March 31 ---------------------------------------------------------------- Energy Partners Ltd. reported financial and operational results for the first quarter ended March 31, 2007, with a net income of $3.7 million, as compared with $14.8 million for the first quarter ended March 31, 2006. Revenue for the first quarter of 2007 was $108.5 million, essentially flat with first quarter 2006 revenues of $109.2 million. Discretionary cash flow, which is cash flow from operating activities before changes in working capital and exploration expenses, was $71.2 million versus $92.9 million in the first quarter last year. Cash flow from operating activities in the first quarter of 2007 was $113.8 million, as compared with $63.9 million in the same quarter a year ago. The first quarter of 2007 benefited from a 13% increase in production volumes versus the first quarter of 2006. Benefits were also realized in the quarter from the settlement of insurance claims related to Hurricanes Katrina and Rita. Insurance collections in the first quarter of 2007 were $92.9 million, as compared with $58.3 million of insurance receivables recorded at the end of year 2006. As of March 31, 2007, the company's balance sheet listed total assets of $997.1 million and total liabilities of $619.6 million, resulting in a total stockholders' equity of $377.5 million. However, the company's balance sheet as of March 31, 2007, showed strained liquidity with total current assets of $111.7 million available to pay total current liabilities of $170.4 million. The company had retained earnings of $68.7 million in the first quarter 2007, slightly up from retained earnings of $65 million in the fourth quarter of 2006. Cash and cash equivalents as of March 31, 2007, were $33.9 million, up from $3.2 million held as of Dec. 31, 2006. Full-text copies of the company's first quarter 2007 report are available for free at http://ResearchArchives.com/t/s?1e76 Tenders and Financing On March 12, 2007, the company disclosed the conclusion of its strategic alternatives process and privately placed $450 million of Senior Unsecured Notes at par and secured a new revolving credit facility in April 2007. Proceeds were used to fund the purchase of 8,700,000 shares at $23 per share in its equity self- tender offer, the repurchase of about 96% of its senior notes due 2010, and the repayment of its then existing revolving credit facility. The company stated it is actively marketing selected non-strategic properties for divestiture to reduce its post tender offer debt, with an expected close in the third quarter of 2007. Additionally, based on its increased financial leverage, the company has initiated a comprehensive hedging program designed to mitigate commodity price risk. Richard A. Bachmann, EPL's chairman and chief executive officer, commented, "We are very excited to have the corporate actions initiated in mid-March behind us, with only the asset divesture remaining to be wrapped up sometime in the third quarter of this year. I'm pleased to report that through all of the turmoil of the last two years, we have maintained the staff that brought us our previous successes. We can now turn our full attention to our core business, with renewed focus and determination to create value for our shareholders." Recent Shelf Discovery The company reported a recent discovery on the Gulf of Mexico Shelf, the West Cameron 252 #1 well. The moderate risk, moderate potential well, drilled to a total depth of 8,299 feet, encountered high quality natural gas pay in a single interval. The well is currently anticipated to initiate production in 2008, with an option to accelerate first production currently under evaluation. EPL, the operator, holds a 75% working interest in the well and Mariner Energy Inc. holds the remaining 25%. About Energy Partners Based in New Orleans, Louisiana, 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 March 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. EPICOR SOFTWARE: Prices $200MM Convertible Senior Notes Offering ---------------------------------------------------------------- Epicor Software Corporation has priced its offering of $200 million aggregate principal amount of 2.375% convertible senior notes due 2027. As part of the offering, the company has granted the underwriters a 30-day option to purchase up to an additional $30 million aggregate principal amount of the notes solely to cover overallotments, if any. Assuming the repayment of its outstanding term loan, Epicor expects the offering to be accretive to its fiscal 2007 earnings per diluted share. The notes will pay interest semiannually at a rate of 2.375% per annum until May 15, 2027. The notes will be convertible, under certain circumstances, into cash or, at the company's option, cash and shares of the company's common stock, at an initial conversion rate of 55.2608 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $18.10 per share. The initial conversion price represents a 30% premium over the last reported sale price of the Company's common stock on May 2, 2007, which was $13.92 per share. The notes were priced on May 2, 2007. Epicor estimates that the net proceeds from this offering will be approximately $193.2 million after deducting the underwriters' discounts and commissions and estimated offering expenses. The offering is expected to close on May 8, 2007, subject to customary closing conditions. Epicor intends to use the net proceeds from the offering to repay in full the company's term loan outstanding under its credit facility. The balance of the net proceeds will be used for working capital, capital expenditures and other general corporate purposes, which may include funding acquisitions of businesses, technologies or product lines, although Epicor currently has no commitments or agreements for any such specific acquisition. Epicor may also use a portion of the remaining net proceeds to repurchase outstanding shares of its common stock. UBS Investment Bank and Lehman Brothers acted as joint book- running managers for the offering. Cowen and Company, Needham & Company, and Piper Jaffray served as co-managers for the offering. The issuer has filed a registration statement and preliminary prospectus supplement with the Securities and Exchange Commission for the offering to which this communication relates. Copies of the prospectus and preliminary prospectus supplement relating to the offering may also be obtained from: -- UBS Securities LLC Attention: Prospectus Department No. 299 Park Avenue New York, New York, 10171 Tel: (212) 821 3000; or -- Lehman Brothers c/o Broadridge No. 1155 Long Island Avenue Edgewood, NY 11717 Fax: (631) 254-7268 About Epicor Software Corporation Headquartered in Irvine, California, Epicor Software Corporation (Nasdaq: EPIC) -- http://www.epicor.com/-- is dedicated to providing integrated enterprise resource planning, customer relationship management and supply chain management software solutions to midmarket companies around the world. Founded in 1984, the company serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. The company leverages innovative technologies like Web services in developing end-to-end, industry-specific solutions for manufacturing, distribution, enterprise service automation, retail and hospitality that enable companies to immediately drive efficiency throughout business operations and build competitive advantage. With the scalability and flexibility to support long- term growth, Epicor's solutions are complemented by a full range of services, providing a single point of accountability to promote rapid return on investment and low total cost of ownership. Epicor is a registered trademark of Epicor Software Corporation. Other trademarks referenced are the property of their respective owners. * * * As reported in the Troubled Company Reporter on April 23, 2007, Standard & Poor's Rating Services raised its corporate credit rating on Irvine, California-based Epicor Software Corp., to 'BB-' from 'B+'. The outlook is stable. FINAL ANALYSIS: Wants Until August 28 to File Chapter 11 Plan ------------------------------------------------------------- Final Analysis Communication Services Inc. asks the United States Bankruptcy Court for the District of Maryland to extend its exclusive periods to: a. file a Chapter 11 plan of reorganization until Aug. 28, 2007; and b. solicit acceptances of that plan until Oct. 27, 2007. The Debtor tells the Court that the extension will prevent other parties from filing a rival Chapter 11 plan of reorganization to attempt to regain control of its assets. J. Daniel Vorsteg, Esq., at Whiteford, Taylor & Preston LLP, said that the extension will provide sufficient time for the Debtor to obtain the required documents from its former management to formulate a plan. New York Satellite Industries LLC holds a majority interest in Final Analysis Communication Services Inc. Nader Modanlo, who filed for Chapter 11 protection on July 22, 2005, owns NYSI. Lanham, Md.-based Final Analysis Communication Services Inc. filed a voluntary Chapter 11 petition on Dec. 29, 2006 (Bankr. D. Md. Case No. 06-18520). J. Daniel Vorsteg, Esq., Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, represent the Debtor. No official committee of unsecured creditors has been appointed in the case at this time. When it filed for bankruptcy, the Debtor estimated its assets at more than $100 million and debts at $1 million to $100 million. FINAL ANALYSIS: Court Okays Sheppard as Special Litigation Counsel ------------------------------------------------------------------ The United States Bankruptcy Court for the District of Maryland gave Final Analysis Communication Services Inc. permission to employ Sheppard Mullin Richter & Hampton LLP as its special litigation counsel. As reported in the Troubled Company Reporter on Feb. 1, 2007, the Debtor informed the Court that on Jan. 30, 2003, it filed suit against General Dynamics in the United States District Court for the District of Maryland asserting claims for, among other things, breach of contract, anticipatory breach of contract, fraud, defamation and tortuous interference with respect to General Dynamics' termination of its strategic business partnership with the Debtor. The Debtor wanted Sheppard Mullin to assist it with the pending litigation against General Dynamics General Dynamics Corporation and General Dynamics Information Services Inc. For their services, the firm's professionals will be paid: * 10% of any recovery made after the firm have taken any action on behalf of the company; * 12.5% of any recovery made after plaintiff's opening statement at trial; * 15% of any recovery made after commencement testimony on plaintiff's case-in-thief and prior to jury's verdict; and * 20% of any recovery made after a jury's verdict. Michael Ahrens, Esq., a Sheppard Mullin partner, assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. New York Satellite Industries LLC holds a majority interest in Final Analysis Communication Services Inc. Nader Modanlo, who filed for Chapter 11 protection on July 22, 2005, owns NYSI. Lanham, Md.-based Final Analysis Communication Services Inc. filed a voluntary Chapter 11 petition on Dec. 29, 2006 (Bankr. D. Md. Case No. 06-18520). J. Daniel Vorsteg, Esq., Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, represent the Debtor. No official committee of unsecured creditors has been appointed in the case at this time. When it filed for bankruptcy, the Debtor estimated its assets at more than $100 million and debts at $1 million to $100 million. FLINKOTE CO: Wants Exclusive Plan Filing Period Moved to Aug. 31 ---------------------------------------------------------------- The Flinkote Company and its debtor-affiliate Flinkote Mines Limited ask the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive periods to: a. file a Chapter 11 plan of reorganization until Aug. 31, 2007; and b. solicit acceptances of that plan through and including Oct. 30, 2007. The Debtors' exclusive period to file a Chapter 11 plan expired on April 27, 2007. This is the Debtors' ninth motion to extend the exclusive periods. The Debtors tell the Court that they need sufficient time to finalize the terms of a reorganization plan co-proposed by the Asbestos Claimants Committee and the Future Claimants. The Honorable Judith K. Fitzgerald will convene a hearing on June 25, 2007, at 11:30 a.m. to consider the Debtors' request. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The company and its affiliate, Flintkote Mines Limited, filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11300). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. The Bankruptcy Court appointed James J. McMonagle as the Legal Representative for Future Asbestos Personal Injury Claimants for Flintkote and Mines on Aug. 26, 2004, and Sept. 9, 2004, respectively. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. FREEHAND HJ: Organizational Meeting Scheduled for May 18 -------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, will hold an organizational meeting to appoint an official committee of unsecured creditors in Freehand H.J., Inc.'s chapter 11 case at 11:00 a.m., on May 18, 2007, at the Office of the U.S. Trustee, Suite 501, 833 Chestnut Street, in Philadelphia, Pennsylvania. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtor's cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtor will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in West Chester, Pennsylvania, Freehand H.J., Inc. filed for Chapter 11 protection on April 15, 2007 (Bankr. E.D. Pa. Case No. 07-12172). Albert A. Ciardi, III, Esq., at Ciardi & Ciardi, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. GEARS LTD: Low Cumulative Net Loss Prompts S&P to Upgrade Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of securities from the GEARS Ltd. 2004-A transaction. At the same time, the ratings on the class A notes were affirmed. The upgrades reflect the low cumulative net loss levels experienced by the underlying collateral and the ample credit support within the deal structure. An underlying collateral pool of prime automobile loan contracts supports the securities. Cumulative net losses for the collateral are 1.11% of initial pool balance, which compares favorably with the original expected losses. In addition, delinquencies of more than 60 days have remained negligible. Furthermore, the structure benefits from a sizable reserve account, which has reached its floor. Standard & Poor's expects the remaining credit support will be sufficient to support the notes at the raised and affirmed levels. Ratings Raised GEARS Ltd. 2004-A Rating ------ Class To From ----- -- ---- B-1 AAA AA B-2 AAA AA C AAA A D AAA BBB E AA BB Ratings Affirmed GEARS Ltd. 2004-A Class Rating ----- ------ A-P AAA A-3 AAA A-4 AAA HEALTHSOUTH CORP: Completes Rehab Division Sale to Select Medical ----------------------------------------------------------------- HealthSouth Corporation closed its reported transaction with Select Medical Corporation to sell HealthSouth's Outpatient Rehabilitation Division. HealthSouth's Outpatient Rehabilitation Division is a network of approximately 600 facilities in 35 states and the District of Columbia that provides high quality rehabilitative care for general orthopedic and sports injuries and conditions, as well as work-related injuries. "This is an important step in HealthSouth's strategic plan to deleverage its balance sheet and reposition itself as a 'pure- play,' post-acute care provider. By reducing our long-term debt, we will be able to focus our resources on enhancing our preeminent position as the nation's leader in inpatient rehabilitative care," said HealthSouth President and CEO Jay Grinney. "We appreciate the dedication and professionalism displayed by the Outpatient Rehabilitation Division employees. They have worked hard to create an outstanding business model with a terrific reputation. We wish them continued success with Select Medical." This divestiture is the part of HealthSouth's plan, announced in August 2006, to reposition the company as a "pure play" post-acute care provider with a focus on its Inpatient Rehabilitation Division. The company has also announced the sale of its Surgery Division to TPG and its Diagnostic Divisions to The Gores Group. Both of these transactions are expected to close in the third quarter. Goldman, Sachs & Co. served as HealthSouth's financial advisor on this transaction. About HealthSouth HealthSouth Corporation (NYSE:HLS) -- http://www.healthsouth.com/ -- provides outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. * * * The company's Dec. 31, 2006 balance sheet showed $3.4 billion in total assets, $4.9 billion in total liabilities, $271.1 million in minority interest, and $387.4 million in convertible perpetual preferred stock, resulting in a $2.2 billion total stockholders' deficit. HOST HOTELS: Possible Credit Improvement Cues S&P's Pos. Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Host Hotels & Resorts Inc. to positive from stable. All ratings on the company, including the 'BB' corporate credit rating, were affirmed. "The outlook revision reflects our expectation that average credit measures could improve over time to levels consistent with a higher rating given continued strength in the lodging operating environment," said Standard & Poor's credit analyst Emile Courtney. "However, a key factor that will influence prospects for a rating upgrade will be the extent of Host's use of leverage to make potential future acquisitions and dividend payments. If the company adopts a financial policy that pursues future acquisitions without adding meaningful amounts of leverage, and if Host limits the growth in its dividend near the growth rate of profitability, this could potentially be consistent with a higher rating." The 'BB' rating reflects Host's aggressive financial profile and, as a real estate investment trust, its reliance on external sources of capital for growth. These factors are tempered by the company's high-quality and geographically diversified hotel portfolio, high barriers to entry for new competitors because of its hotels' locations (primarily in urban and resort markets or in close proximity to airports), its strong brand relationships, and its experienced management team. Pro forma for acquisitions, divestitures, and debt refinancing activity up to March 19, 2007, total lease-adjusted debt to EBITDA was 4.5x, EBITDA interest coverage was 3.3x, funds from operations to total lease adjusted debt was 15%, and debt to total capital was in the mid-50% area. While these measures are better that those described as appropriate for the current rating, Host's credit measures can move within a wide range over time given the cyclical nature of lodging. A higher rating would also incorporate S&P's expectation that future joint venture transactions would not meaningfully raise the company's risk profile. INSIGHT HEALTH: Defers $194.5MM Exchange Offer Deadline to May 16 ----------------------------------------------------------------- InSight Health Services Holdings Corp. disclosed that the offer to exchange shares of InSight's common stock for up to $194.5 million aggregate principal amount of 9-7/8% Senior Subordinated Notes due 2011 of InSight's wholly owned subsidiary, InSight Health Services Corp., has been extended and will now expire at 11:59 p.m., New York City time, on May 16, 2007, unless further extended. As reported in the Troubled Company Reporter on May 1, 2007, Insight extended the offer to exchange shares of common stock for the Notes of InSight Health Services Corp., to 5:00 p.m., New York City time, on May 3, 2007, unless further extended. A full-text copy of the modified terms of the exchange offer is available for free at http://ResearchArchives.com/t/s?1e85 InSight commenced the exchange offer on March 21, 2007. As of May 1, 2007, approximately $109.1 million of Notes had been tendered to the exchange agent. Based in Lake Forest, California, InSight Health Services Holdings Corp. -- http://www.insighthealth.com/-- is a nationwide provider of diagnostic imaging services. It serves managed care entities, hospitals and other contractual customers in over 30 states, including the following targeted regional markets: California, Arizona, New England, the Carolinas, Florida and the Mid-Atlantic states. InSight's network consisted of 109 fixed-site centers and 108 mobile facilities as of Dec. 31, 2006. InSight Health's balance sheet at Dec. 31, 2006, showed total assets of $354,548,000 and total debts of $503,827,000, resulting in a $198,038,000 stockholders' deficit. INSIGHT HEALTH: Failure to Pay Interest Cues S&P to Cut Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on InSight Health Services Corp. to 'SD' from 'CCC'. At the same time, Standard & Poor's lowered its rating on InSight's subordinated debt to 'D' from 'CC' and its rating on InSight's senior secured debt to 'CC' from 'CCC'. The senior secured debt rating remains on CreditWatch with developing implications, where it was placed on Feb. 20, 2007. "These actions reflect InSight's failure to make the semi-annual interest payment (of about $9.6 million) on its outstanding $195.4 million of 9.875% senior subordinated notes due 2011, which was due May 1, 2007," explained credit analyst Cheryl Richer. InSight announced that it is again extending its offer to exchange shares of its common stock for $194.5 million of 9.875% senior subordinated notes due 2011; the offer now expires at 11:59 p.m. May 16, 2007. The company indicated in its Dec. 31, 2006 form 10Q filing that it may pursue a prepackaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for all or a portion of its indebtedness if negotiated settlements with lenders are unsuccessful. The company has a 30-day grace period during which payment can be made before (1) an event of default under the indenture governing the notes and (2) a cross-default and acceleration of debt provision under the terms of its senior secured debt facilities are triggered. All ratings will be lowered to 'D' if a cross default to the senior secured debt occurs or the company files for Chapter 11 protection. Alternatively, if the notes are exchanged for common stock the corporate credit rating and senior secured debt rating could be raised as a result of improved prospects of repayment given the lower overall debt burden. INTERTAPE POLYMER: Inks Agreement Selling Stake to Littlejohn Fund ------------------------------------------------------------------ Intertape Polymer Group Inc. disclosed that Littlejohn & Co. LLC's indirect wholly owned subsidiary, Littlejohn Fund III L.P., will acquire all of the company's outstanding common shares at a price of $4.76 per share in cash pursuant to a definitive agreement entered into by Intertape and the subsidiary. Including net debt outstanding, the total transaction value is approximately $500 million. The non-management members of the board of directors of the company, after considering a number of factors, have unanimously approved the Arrangement and agreed to recommend that the company's shareholders approve the proposed Arrangement. TD Securities Inc., as financial advisor to the company's board, has concluded that as at May 1, 2007, the consideration to be received under the Arrangement is fair, from a financial point of view, to the holders of the company's common shares. "The signing of the Arrangement Agreement is the result of the review of strategic alternatives that was initiated by the Board in October 2006 with the objective of enhancing value for all of the company's shareholders," Michael L. Richards, chairman of the board of directors of the company, said. "During the course of this review, the board, with the assistance of TD Securities, evaluated a comprehensive range of value maximization alternatives for the company in the context of its existing capital structure and current operating environment. These alternatives included the sale of the company, raising additional equity, and the sale of one or more of the company's businesses to provide greater financial flexibility. This value maximization process included numerous strategic and financial parties." "Intertape represents an opportunity for Littlejohn to invest in a market leader and work closely with their management team to generate operating performance improvements and drive growth." Edmund J. Feeley, Partner of Littlejohn, said. "Based on Littlejohn's successful track record of investing in companies like Intertape, Littlejohn is confident that it can add value." Pursuant to the Arrangement, holders of the outstanding common shares of the company would receive $4.76 cash per share, which represents a 5.5% premium over the volume weighted average trading price on the NYSE over the 30 trading days prior to today's disclosure. "The board has carefully weighed the Arrangement against alternatives available to the company, and has determined that the Arrangement provides the best value available to the company's shareholders," Michael L. Richards further stated. "Each member of the board intends to vote his shares in favor of the Arrangement," he added. "This transaction is also positive for the company's employees, customers and suppliers as Littlejohn is dedicated to continue to build on the strong market position of Intertape going forward, H. Dale McSween, interim chief executive officer of the company," said. The transaction will be implemented by way of a court-approved plan of arrangement under Canadian law and accordingly, subject to the approval of two-thirds of the votes cast by the company's shareholders at a special meeting of shareholders anticipated to take place in late June 2007. In addition, the Arrangement will require approval by the Superior Court of Quebec in the District of Montreal. The transaction will be subject to certain other customary conditions described in the Arrangement Agreement, including receipt of a limited number of regulatory approvals and no material adverse change in the company's business. The transaction is not subject to any financing condition. Littlejohn has received a commitment for the required debt financing and Littlejohn Fund III L.P. intends to fund the equity required to complete the transaction. It is anticipated that the Arrangement, if approved by the company's shareholders, will be completed early in the third quarter of 2007. The Arrangement Agreement also provides a non-solicitation covenant on the part of the company, a right in favor of Littlejohn to match any superior proposal and the payment of a termination fee to Littlejohn in the amount of $5.9 million under certain circumstances. About Littlejohn & Co. LLC Based in Greenwich, Connecticut, Littlejohn & Co. LLC -- http://www.littlejohnllc.com/-- is a private equity firm that makes control equity investments in mid-sized companies that are underperforming their potential and can benefit from its operational and strategic approach. The company acts as a change agent and works closely with management to establish viable operating strategies, reinvigorate marketing and product initiatives, maximize the utilization of operating assets and establish a framework in which all corporate constituents- customers, employees, suppliers, management and equity interests- are aligned towards a common goal of success. The firm manages three investment funds with committed capital of $200 million (Fund I), $530 million (Fund II), and $650 million (Fund III). About Intertape Polymer Headquartered in Quebec, Canada, Intertape Polymer Group (TSX: ITP) (NYSE: ITP) -- http://www.intertapepolymer.com/-- develops and manufactures specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the company employs about 2450 employees with operations in 18 locations, including 13 manufacturing facilities in North America, one in Europe and in Mexico. * * * Intertape Polymer Group, Inc. carries Standard & Poor's Ratings' 'B-' corporate credit and senior secured ratings. In addition, the company also carries Standard & Poor's 'CCC' senior subordinated rating. ION MEDIA: Board Gets Restructuring Proposal from Stockholders -------------------------------------------------------------- ION Media Networks Inc. disclosed that a group of holders of its 9-3/4% Series A Convertible Preferred Stock has delivered to the company's board of directors a restructuring proposal that includes a take-out offer for the company's class A common stock, at the currently proposed price; infusion of liquidity; and a non- coercive exchange offer for the two senior series of preferred stock. Unlike the proposal disclosed by Citadel Limited Partnership and NBC Universal, the holders believe that this proposal does not pose regulatory risk, can be implemented more quickly and is fair to all constituencies. The holders noted that, the company has received an offer from a large media company to purchase the company for cash. The holders believe it is important for the board of directors to carefully consider all alternatives and not to make a rush judgment that would be disadvantageous to the company and all of its shareholders. The holders urge the company promptly and fairly to disclose all proposals that it receives. In the holders' proposal letter, the Committee is proposing a capital restructuring for Ion Media with these principal objectives: * A near term opportunity for existing common equity holders to cash out at a premium to current market, on the same terms as the Citadel/NBCU proposal. * A near term injection of new liquidity into the company by a well capitalized and committed investment group, with flexibility for additional but prudent leverage as needed to accommodate the company's operating goals. * Modification to the existing capital structure that -- a) upon expiration of the NBCU call option, will not require the consent of NBCU; and b) respects the respective rankings of the various series of referred stock. * A balance sheet without financial stress that will allow the company to pursue, over the course of the next several years, an operating plan that will bring value to all constituencies. * Preservation of the existing rights of the various series of preferred stock, but with meaningful remedies, commensurate with ranking, where they are lacking. * Allotment of voting rights in accordance with the financial stake and expectancy of the various classes and series of equity, consistent with applicable law. * A fair and proportionate opportunity for existing stockholders to participate in a rights offering to raise capital necessary for the repurchase of the class A common stock and the infusion of additional liquidity for general corporate purposes. * Absence of coercion. The holders added that the proposal does not constitute a binding offer, is presented with the expectation of an opportunity for diligence and good faith discussions with the company and representatives of other affected constituencies, will require the negotiation and execution of definitive documentation to embody enforceable agreements among the parties and is subject to compliance with applicable law, including in particular the rules and regulations of the FCC. The Recapitalization Term Sheet submitted by the Holders include: a) Structure - the recapitalization will be accomplished through non-coercive offers of tender or exchange, to the extent that securities are proposed to be substituted or replaced. b) Treatment of Securities Generally b.1 Term Loans and Senior Secured Floating Rate Notes - To remain outstanding with no change, with change-of- control provisions to be addressed either consensually or through refinancing. b.2 14 1/4% Preferred Stock - An offer to exchange for each $10,000 in accreted value of the 14 1/4% Preferred Stock one share of 12 1/4% Senior Preferred Stock. - If all holders of 14 1/4% Preferred Stockparticipate in the exchange, the holders will receive an estimated total of $664 million in value of 12 1/4% Senior Preferred Stock, assuming a closing at June 30, 2007. b.3 9-3/4% Preferred Stock - An offer to exchange for each $10,000 in accreted value of 9 3/4% Preferred Stock: * 0.78 of a share of 12 1/4% Senior Preferred Stock, and * 0.22 of a share of12 1/4% Junior Preferred Stock. - If all holders of 9 3/4% Preferred Stock participate in the exchange, the holders will receive an estimated total of $140 million in value of 12 1/4% Senior Preferred Stock, and $39 million in value of 12 1/4% Junior Preferred Stock, assuming a closing at June 30, 2007. b.4 11% Preferred Stock - To remain outstanding with no change. b.5 Class A Common Stock - An offer to purchase for cash Class A common stock, at an offer price equal to higher of (i) $1.45 and (ii) the price provided under the Amended and Restated stockholder Agreement among the company, the Paxson interests and NBCU. c) Rights Offering - Holders of the 14 1/4% Preferred Stock and the 9 3/4% Preferred Stock will have the pro rata right to subscribe for an aggregate of an additional (i) $100 million in value of 12 1/4% Senior Preferred Stock, and (ii) $75 million principal amount of 12-1/4% Senior Subordinated Notes. The rights offering will be back-stopped by certain holders of the 14 1/4% Preferred Stock and 9 3/4% Preferred Stock. d) Conditions - The recapitalization will be conditioned upon: d.1 receipt of all necessary regulatory approvals; d.2 satisfactory arrangements with respect to the change-of- control provisions of the term loans and senior secured floating rate notes. d.3 requisite waivers under the term loans and senior secured floating rate notes for issuance of the 12 1/4% Senior Subordinated Notes. d.4 expiration without exercise of the option under the Call Agreement between the Paxson interests and NBCU. d.5 the retirement of all Class B common stock; d.6 exit consents from a majority of the holders of each of the 9 3/4% Preferred Stock and the 14 1/4% Preferred Stock approving the issuance of the 12 1/4% Senior Preferred Stock; d.7 if desired, exit consents from a majority of the holders of each of the 14 1/4% Preferred Stock, the 9 3/4% Preferred Stock and the Class A Common Stock approving the necessary amendments to the 14 1/4% Preferred Stock and 9 3/4% Preferred Stock, limiting each such series to two directors for all defaults in existence immediately following the recapitalization. e) Management Participation - To be discussed. f) Public Company Registration - To be discussed, depending on the response to the Class A common stock tender offer. g) Board of Directors - To be reconstituted upon closing of the offers, subject to the right of any series of preferred stock to class representation on the board. h) Fees and Expenses - Customary reimbursement. About ION Media ION Media Networks Inc. (AMEX: ION) -- http://www.ionmedia.tv/-- owns and operates a broadcast television station group and ION Television, reaching over 90 million U.S. television households via its nationwide broadcast television, cable and satellite distribution systems. ION Television currently features popular television series and movies from the award-winning libraries of Warner Bros., Sony Pictures Television, CBS Television and NBC Universal. In addition, the network has partnered with RHI Entertainment, which owns over 4,000 hours of acclaimed television content, to provide high-quality primetime programming beginning July 2007. Utilizing its digital multicasting capability, ION Media Networks has launched several new digital TV brands, including qubo, a television and multimedia network for children formed in partnership with Scholastic, Corus Entertainment, Classic Media and NBC Universal, as well as ION Life, a television and multimedia network dedicated to health and wellness for consumers and families. * * * ION Media Network Inc.'s preferred stocks carry Moody's Investors Service's 'Caa2' rating. Standard and Poor's assigned a 'CCC+' rating on its long-term foreign and local issuer credit. The outlook is negative. ION MEDIA: Inks Privatization Pact with Citadel & NBC's Affiliates ------------------------------------------------------------------ ION Media Networks Inc. entered into an agreement for a comprehensive recapitalization with affiliates of Citadel Investment Group LLC and NBC Universal Inc. ION will become a privately held entity after the transaction. NBC Universal is transferring to Citadel the call right on Bud Paxson's controlling shares it acquired in November 2005 when NBC Universal restructured its investment in ION. According to the terms of the agreement, Citadel will exercise the call right, commence a cash tender offer for ION's outstanding Class A common stock at a price of $1.46 a share, and invest $100 million to fund ION's future growth and digital investment plans. In addition, ION will launch an exchange offer and consent solicitation to holders of its other preferred stock for newly issued subordinated debt and preferred stock. NBC Universal will continue to hold non-voting securities after the restructuring is complete. In its agreement with Citadel, NBC Universal has acquired certain options with an initial term of five years to acquire voting control of ION. Currently, NBC Universal is prohibited from exercising control over the company because of federal regulations regarding TV station ownership. ION's board of directors approved the transaction on the recommendation of a special committee of independent directors. The transaction is subject to various regulatory approvals. About Citadel Investment Group Headquartered in Chicago, Illinois, Citadel Investment Group -- http://www.citadelgroup.com/-- is an institution in the alternative investment management, services and capital markets arenas. Since its founding in 1990, Citadel has expanded to deploy investment capital across a highly diversified set of proprietary investment strategies around the world and to deliver a range of capital markets, alternative investment management and alternative investment services. The Citadel group of companies employ over 1,000 professionals at and across offices around the world, including New York, San Francisco, London, Hong Kong and Tokyo. About NBC Universal Headquartered in Universal City, California, NBC Universal -- http://www.nbcuni.com/-- is one of the global media and entertainment companies in the development, production, and marketing of entertainment, news, and information to a global audience. Formed in May 2004 through the combining of NBC and Vivendi Universal Entertainment, NBC Universal owns and operates a valuable portfolio of news and entertainment networks, a premier motion picture company, significant television production operations, a leading television stations group, and world- renowned theme parks. NBC Universal is 80% owned by General Electric and 20% owned by Vivendi. About ION Media Networks ION Media Networks Inc. (AMEX: ION) -- http://www.ionmedia.tv/-- owns and operates a broadcast television station group and ION Television, reaching over 90 million U.S. television households via its nationwide broadcast television, cable and satellite distribution systems. ION Television currently features popular television series and movies from the award-winning libraries of Warner Bros., Sony Pictures Television, CBS Television and NBC Universal. In addition, the network has partnered with RHI Entertainment, which owns over 4,000 hours of acclaimed television content, to provide high-quality primetime programming beginning July 2007. Utilizing its digital multicasting capability, ION Media Networks has launched several new digital TV brands, including qubo, a television and multimedia network for children formed in partnership with Scholastic, Corus Entertainment, Classic Media and NBC Universal, as well as ION Life, a television and multimedia network dedicated to health and wellness for consumers and families. * * * ION Media Network Inc.'s preferred stocks carry Moody's Investors Service's 'Caa2' rating. Standard and Poor's assigned a 'CCC+' rating on its long-term foreign and local issuer credit. The outlook is negative. ISLE OF CAPRI: Financial Restatements Delay 10-Q Filing with SEC ---------------------------------------------------------------- Isle of Capri Casinos Inc. stated in the NASDAQ Listing Qualifications Panel hearing held on April 26, 2007, that the company's failure to file its Form 10-Q for the third fiscal quarter ended Jan. 28, 2007, by the March 9 due date resulted from the company's restatement of its financial statements for the fiscal years ended April 25, 2004; April 24, 2005 and April 30, 2006, and the quarterly results for fiscal 2005 and 2006 included therein, and for the first two quarters of fiscal 2007. The company's failure to make a timely quarterly filing meant that Isle of Capri Casinos is not in compliance with the filing requirements for continued listing of its common stock on the NASDAQ Global Select Market as set forth in Marketplace Rule 4310(c)(14). On April 25, 2007, NASDAQ notified the company that the Quarterly Report of Form 10-Q that the company filed on April 18, 2007 did not cure the company's deficiency under Marketplace Rule 4310(c)(14) because the company's independent auditors had not reviewed it. The company expects to receive the decision of the NASDAQ Listing Qualifications Panel within a few weeks, regarding its request for an exception giving it time for its auditors to complete their review and for the company to amend the Quarterly Report on Form 10-Q to meet the requirements of Marketplace Rule 4310(c)(14). In the meantime, the company's common stock will remain listed on the NASDAQ Global Select Market. About Isle of Capri Based in Biloxi, Missippi and founded in 1992, Isle of Capri Casinos Inc. (Nasdaq: ISLE) -- http://www.islecorp.com/-- owns and operates casinos in Biloxi, Lula and Natchez, Mississippi; Lake Charles, Louisiana; Bettendorf, Davenport and Marquette, Iowa; Kansas City and Boonville, Missouri and a casino and harness track in Pompano Beach, Florida. The company also operates and has a 57 percent ownership interest in two casinos in Black Hawk, Colorado. Isle of Capri Casinos' international gaming interests include a casino that it operates in Freeport, Grand Bahama and a two-thirds ownership interest in casinos in Dudley and Wolverhampton, England. * * * Moody's Investors Service affirmed its Ba3 Corporate Family Rating on Isle of Capri Casinos in connection with its implementation of the new Probability-of-Default and Loss-Given-Default rating methodology for the Gaming, Lodging & Leisure sector. Moody's assigned LGD ratings to four of the company's debts including a LGD5 rating on its 9% Sr. Sub. Notes, suggesting debt holders will experience a 76% loss in the event of a default. As reported in the Troubled Company Reporter on Nov. 8, 2006, Standard & Poor's Ratings Services affirmed ratings on Isle of Capri Casinos Inc., including its 'BB-' corporate credit rating. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they were placed on Oct. 4, 2006, with negative implications. The outlook is stable. J. CREW: Board Names Heather Reisman as Director ------------------------------------------------ J. Crew Group Inc.'s Board of Directors has unanimously voted to appoint Heather Reisman as a director, effective on May 15, 2007. The company has not yet determined the committee or committees on which Ms. Reisman will serve. In exchange for her services as a Director in 2007, Ms. Reisman will be entitled to receive these compensation pro-rated based upon the effective date of her appointment: 1) an annual cash retainer of $35,000; 2) an additional cash payment of $2,000 for each Board meeting attended in person; and 3) non-qualified stock options to purchase 5,500 shares of the company's common stock to be granted on June 12, 2007. The stock options will have an exercise price equal to fair market value on the grant date, will vest, subject to continued services as a Director, in three equal annual installments beginning on the first anniversary of the grant date and will have a seven year term. In addition, as a new Director, Ms. Reisman will also be entitled to receive additional non-qualified stock options to purchase 5,000 shares of the company's common stock to be granted as soon as reasonably practicable after joining the company's Board of Directors. She will also be required to purchase a minimum of 2,500 shares of the company's common stock in the open market within a reasonable amount of time after joining the Board of Directors. Following the appointment of Ms. Reisman, Richard Boyce tendered his resignation as a member of the Board of Directors, effective May 15, 2007. At the time of his resignation, Mr. Boyce did not serve on any committee of the Board of Directors. J. Crew Group states that Mr. Boyce's departure was not caused by any disagreement with the company on any matter related to the company's operations, policies or practices. About J. Crew Group New York City-based J. Crew Group Inc. (NYSE: JCG) -- http://www.jcrew.com/-- is a nationally recognized multi-channel retailer of women's and men's apparel, shoes and accessories. As of March 13, 2007, the company operates 178 retail stores, the J. Crew catalog business, jcrew.com, and 51 factory outlet stores. * * * As reported in the Troubled Company Reporter on March 27, 2007, Standard & Poor's Ratings Services revised its outlook on specialty apparel retailer J. Crew Group Inc. to positive from stable. The 'B+' corporate credit rating was affirmed. J. CREW: Unit Makes $25 Million Prepayment Under Credit Pact ------------------------------------------------------------ J. Crew Group Inc. disclosed in a regulatory filing with the Securities and Exchange Commission that on April 30, 2007, its affiliate, J. Crew Operating Corp., made a $25 million voluntary prepayment under a credit and guaranty agreement. The Credit Agreement has been entered into by and among J. Crew Operating Corp., J. Crew Group Inc., and certain of J. Crew Operating Corp.'s direct and indirect subsidiaries, together with Goldman Sachs Credit Partners L.P. and Bear, Stearns & Co. Inc. as joint lead arrangers and joint bookrunners, Goldman Sachs Credit Partners L.P. as administrative agent and collateral agent, Bear Stearns Corporate Lending Inc. as syndication agent and Wachovia Bank, National Association as documentation agent. New York City-based J. Crew Group Inc. (NYSE: JCG) -- http://www.jcrew.com/-- is a nationally recognized multi-channel retailer of women's and men's apparel, shoes and accessories. As of March 13, 2007, the company operates 178 retail stores, the J. Crew catalog business, jcrew.com, and 51 factory outlet stores. * * * As reported in the Troubled Company Reporter on March 27, 2007, Standard & Poor's Ratings Services revised its outlook on specialty apparel retailer J. Crew Group Inc. to positive from stable. The 'B+' corporate credit rating was affirmed. JAMES RIVER: Posts $26.2 Million Net Loss in Year Ended Dec. 31 --------------------------------------------------------------- James River Coal Company reported a net loss of $26.2 million on revenues of $564.8 million for the year ended Dec. 31, 2006, compared with a net loss of $12.3 million on revenues of $454 million for the year ended Dec. 31, 2005. In 2006, James River Coal shipped 13.1 million tons of coal compared to 11.1 million tons for the same period in 2005. The increase was primarily due to a full year of production at Triad Mining, which added 1.3 million tons in 2006. Coal sales revenue increased from $445.7 million in 2005 to $560.2 million in 2006. The increase was due to the increase in shipments and an increase in the average sales price per ton for sales under long-term contracts, offset by a decrease in the average Central Appalachian spot sales price per ton. The cost of coal sold, excluding depreciation, depletion and amortization increased from $389.2 million in 2005 to $496.8 million in 2006. Depreciation, depletion and amortization, increased from $51.8 million in 2005 to $74.6 million in 2006. Selling, general and administrative expenses increased from $25.5 million for 2005 to $30.9 million for 2006. The increase was primarily due to a $1.7 million expense for the resolution of a contingent obligation dealing with the company's previous bankruptcy, an increase in bank charges of $1 million, $900,000 increase in salary and benefits primarily attributed to an increase in headcount and a $700,000 increase in stock compensation. Net cash provided by operating activities was $31.7 million for the year ended Dec. 31, 2006, and net cash provided by operating activities was $490 million for the year ended Dec. 31, 2005. Net cash used by investing activities decreased $80.6 million to $54.7 million for the year ended Dec. 31, 2006, as compared to the year ended Dec. 31, 2005. Net cash provided by financing activities was $15.9 million for the year ended Dec. 31, 2006, and net cash provided by financing activities was $91.4 million for the year ended Dec. 31, 2005. Total long-term debt at Dec. 31, 2006, totaled $167.5 million, compared to total long-term debt at Dec. 31, 2005, of $150 million. At Dec. 31, 2006, the company's balance sheet showed $451.3 million in total assets, $364.9 million in total liabilities, and $86.4 million in total shareholders' equity. The company's balance sheet at Dec. 31, 2006, also showed strained liquidity with $71.1 million in total current assets available to pay $73.7 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1e83 About James River Headquartered in Richmond, Va., James River Coal Company (NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines, processes and sells bituminous steam and industrial-grade coal primarily to electric utility companies and industrial customers. The company's mining operations are managed through six operating subsidiaries located throughout eastern Kentucky and in southern Indiana. * * * As reported in the Troubled Company Reporter on April 10, 2007, Moody's Investors Service lowered James River Coal Company's corporate family rating to Caa3 from Caa2 and its senior unsecured rating to Ca from Caa3 (LGD5, 75%). At the same time, Moody's assigned a negative outlook and affirmed the SGL-4 speculative grade liquidity rating, indicating weak liquidity. JP MORGAN: S&P Cuts Ratings on Four Classes of 2001-CIBC1 Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2001- CIBC1. Concurrently, ratings were raised on three classes and affirmed on seven other classes from the same series. The lowered ratings on classes L and M reflect principal losses due to the liquidation of assets that were formerly with the special servicer. The downgrades of classes J and K reflect anticipated credit support erosion upon the eventual resolution of the assets currently with the special servicer, as well as liquidity concerns stemming from two appraisal reduction amounts, which are in effect on the assets with the special servicer. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The upgrades of several senior certificates reflect the defeasance of $283.9 million (36%) in collateral since issuance. As of the April 16, 2007, remittance report, the collateral pool consisted of 142 loans with an aggregate trust balance of $796.9 million, down from 165 loans totaling $1.015 billion at issuance. The master servicer, Capmark Finance Inc., reported primarily full-year 2006 financial information for 98% of the pool, excluding the loans secured by defeased collateral. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.40x, up from 1.34x at issuance. To date, the trust has experienced 13 losses totaling $26.1 million. The only delinquent loans in the pool are related to two REO assets (cumulative exposure of $6.9 million), both of which are with the special servicer, CW Capital Asset Management LLC. ARAs totaling $2.8 million are in effect against the REO assets. Details on the specially serviced assets are: -- The Ramada Inn - LaPorte is a 141-unit REO asset in LaPorte, Indiana, with a total exposure of $3.9 million. The loan was transferred to the special servicer in June 2004. An ARA of $1.9 million is outstanding based on a September 2006 appraisal. Standard & Poor's expects the liquidation of the asset to result in a substantial loss. -- Hunter's Ridge Apartments is a 141-unit REO multifamily asset in Memphis, Tennessee, with a total exposure of $3.0 million. An ARA of $866,954 is outstanding based on a September 2006 appraisal, and the property is under contract to be sold. The top 10 exposures secured by real estate have an aggregate outstanding balance of $154.3 million (19%) and a weighted average DSC of 1.41x, up from 1.34x at issuance. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. Two properties were characterized as "fair," while the remaining collateral was characterized as "good." Capmark reported a watchlist of 33 loans ($149.2 million, 19%). The second-largest exposure in the pool, the Dunning Farm Shopping Center, has a trust balance of $22.2 million (3%). The loan is secured by a fee interest in a 359,131-sq.-ft. retail property in Middleton, New York. The loan appears on the watchlist because the property reported a 2006 year-end DSC of 0.66x. The third- largest exposure in the pool, the Trace Fork Shopping Center, has a trust balance of $21.4 million and is secured by a fee interest in a 300,858-sq.-ft. retail property in South Charleston, West Virginia Occupancy was 99% as of Feb. 15, 2007. Capmark has confirmed that the loan will be removed from the watchlist on the May remittance report. The remaining loans on the watchlist appear there primarily because of DSC or occupancy issues. 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 various rating actions. Ratings Lowered J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CIBC1 Rating ------ Class To From Credit enhancement ----- -- ---- ----------------- J B+ BB- 2.18% K CCC B- 0.59% L D CCC+ 0.00% M D CCC- 0.00% Ratings Raised J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CIBC1 Rating ------ Class To From Credit enhancement ----- -- ---- --------------- C AAA AA+ 14.60% D AA+ AA 13.01% E A A- 9.82% Ratings Affirmed J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-CIBC1 Class Rating Credit enhancement ----- ------ ------------------ A-3 AAA 25.10% B AAA 19.69% F BBB+ 8.07% G BB+ 4.41% H BB 3.14% X-1 AAA N/A X-2 AAA N/A * N/A- Not applicable. L&M VIDEO: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: L&M Video Productions, Inc. dba WNGT TV P.O. Box 151 Maumee, OH 43537 Bankruptcy Case No.: 07-31798 Type of Business: The Debtor operates TV stations. Chapter 11 Petition Date: May 3, 2007 Court: Northern District of Ohio (Toledo) Judge: Mary Ann Whipple Debtor's Counsel: Grady L. Pettigrew, Jr. 115 West Main Suite 400 Columbus, OH 43215-5099 Tel: (614) 224-1113 Fax: (614) 228-0701 Total Assets: $1,917,850 Total Debts: $1,185,975 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Alice V. Farley Trust business loan $140,000 c/o David Rohrbacker 405 Madison Avenue, 8th Floor Toledo, OH 43604 American Tower trade debt $12,600 B.&J. Video, Inc. trade debt $5,310 Eastman & Smith professional $43,000 services Gary & Karen Stewart commercial $200,000 24 East Woodruff Avenue lease Toledo, OH 43604 James Winston professional $3,000 services John Gray & Co. s/h tax consultant $13,500 John Lepre business loan $7,700 Keith Mitchell professional $4,000 services Kevin Kenney & Associates professional $15,000 services Melvin E. Harbaugh business loan $41,365 Mildred Clark business loan $113,000 11 South Centennial Road Holland, OH 43528 Palace Sports & programming $26,000 Entertainment, Inc. rights Poggermeyer Engineering professional $2,300 services Robert Culp $3,500 Robert Webb $2,500 Steve Coran professional $2,500 services The Toledo Journal business loan $30,000 Warner Brothers Television programming $5,200 rights WNWO-TV24 trade debt $5,500 LONGVIEW FIBRE: Moody's Withdraws B1 Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service withdrew Longview Fibre's corporate family rating of B1, following the acquisition of Longview by Brookfield Asset Management (Baa2/Stable). Moody's expects Longview's operations to form part of Brookfield's platform; however, Longview will no longer be a stand-alone public company. The following rating was withdrawn: * Longview Fibre Company -- corporate family rating at B1. Longview Fibre Company was an integrated timberlands, paper and packaging company, headquartered in Longview, Washington, USA. At December 31, 2006, it had assets of $1.1 billion and equity of $300 million. LOUIS PEARLMAN: Case Summary & List of Creditors ------------------------------------------------ Debtor: Louis J. Pearlman Enterprises, Inc. c/o Gerard A. McHale, Jr. as Receiver 1601 Jackson Street, Suite 200 Fort Myers, FL 33901 Bankruptcy Case No.: 07-01505 Debtor-affiliate that filed a separate voluntary Chapter 11 petition on May 3, 2007: Entity Case No. ------ -------- Louis J. Pearlman Enterprises, LLC 07-01779 Debtor-affiliates that were filed involuntary Chapter 11 petitions on March 1, 2007: Entity Case No. ------ -------- Trans Continental Airlines, Inc. 07-00762 Louis J. Pearlman 07-00761 Type of Business: The Debtors are owned by Louis J. Pearlman, an alleged con man from Flushing, Queens, New York, USA, last residing in Orlando, Florida. His current whereabouts are unknown. Mr. Pearlman is best known for managing boy bands the Backstreet Boys and 'N Sync. Chapter 11 Petition Date: April 18, 2007 Court: Middle District of Florida (Orlando) Judge: Arthur B. Briskman Counsel for LJP Enterprises: Michael C. Markham, Esq. Johnson Pope Bokor Ruppel & Burns, LLP P.O. Box 1368 Clearwater, FL 33757 Tel: (727) 461-1818 Fax: (727) 443-6548 Debtor-affiliates' Petitioners' Counsel: Derek F. Meek, Esq. Burr & Forman LLP 3100 SouthTrust Tower 420 North 20th Street Birmingham, AL 35203 Tel: (205) 458-5471 Fax: (205) 244-5679 -- and -- Raymond V. Miller, Esq. Gunster Yoakley & Stewart, P.A. 2 South Biscayne Boulevard, Suite 3400 Miami, FL 33131 Tel: (305) 376-6048 Fax: (305) 376-6010 -- and -- Lawrence E. Rifken, Esq. McGuire Woods LLP 1750 Tysons Boulevard, Suite 1800 McLean, VA 22102 Tel: (703) 712-5337 -- and -- William P. Wassweiler, Esq. Rider Bennett LLP 33 South Sixth Street, Suite 4900 Minneapolis, MN 55402 Tel: (612) 340-8900 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million A. Trans Continental Airlines, Inc.'s petitioning creditors: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ American Bank of St. Paul Multiple Advance $27,137,550 1578 University Avenue West Term Loan Agreement Saint Paul, MN 55104-3908 and Promissory Note dated March 27, 2006 First National Bank and June 29, 2005 $14,243,592 Trust Co. of Williston Promissory Note 22 East 4th Street Williston, ND 58802 Tatonka Capital Corporation Judgment $6,203,906 1441 18th Street, Suite 400 Denver, CO 80202 Integra Bank Aug. 23, 2006 & $895,478 21 Southeast Third Street Sept. 29, 2006 Evansville, IN 47708 Promissory Notes B. Louis J. Pearlman's petitioning creditors: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ American Bank of St. Paul Guaranty by $27,137,550 1578 University Avenue West corporation dated Saint Paul, MN 55104-3908 March 27, 2006 Integra Bank Credit Agreement $16,852,749 21 Southeast Third Street & Promissory Notes Evansville, IN 47708 dated Sept. 18, 2004 First National Bank and June 29, 2005 $14,243,592 Trust Co. of Williston Promissory Note 22 East 4th Street Williston, ND 58802 Tatonka Capital Corporation Judgment $6,203,906 1441 18th Street, Suite 400 Denver, CO 80202 MEDIA GENERAL: Shelf De-Registration Cues S&P to Withdraw Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Media General Inc., including the 'BBB-' corporate credit rating, at the company's request. The ratings withdrawal follows the de- registration of Media General's shelf, which became effective on May 2, 2007. Ratings List Media General Inc. Ratings Withdrawn To From -- ---- Corporate Credit Rating NR BBB-/Watch Neg/- Shelf Debt (prelim) Senior Unsecured NR BBB-/Watch Neg Preferred Stock NR BB/Watch Neg MICHAEL NELSON: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Michael B. Nelson aka Mike Nelson dba Nelson Contracting Angela Beth Nelson aka Beth Nelson dba Nelson Duncan Salon Nelson Contracting 18741 U.S. Highway 31 Cullman, Al 35058 Tel: (256) 739-2171 Bankruptcy Case No.: 07-81090 Type of Business: The Debtor owns Mike Nelson and Associates, Inc. and is engaged in the resident, commercial and industrial building businesses. See http://mikenelsongc.com/ Chapter 11 Petition Date: April 30, 2007 Court: Northern District of Alabama (Decatur) Judge: Jack Caddell Debtor's Counsel: S. Mitchell Howie, Esq. 107 North Side Square Huntsville, AL 35801 Tel: (256) 533-2400 Total Assets: $829,604 Total Debts: $1,762,008 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First American Bank bank loan $248,373 P.O. Box 37 Birmingham, AL 35201-0037 Merchants Bank bank loan $203,015 900 2nd Avenue Southwest value of Cullman, AL 35055-4225 collateral: $50,900 value of security: $253,915 $55,753 Jeanice Galin $126,000 2530 County Road 1246 Vinemont, AL 35179-8362 Buettner Brothers Lumber $120,000 Company, Inc. P.O. Box 1090 Cullman, AL 35056-1090 Gobble-Fite Lumber Co., Inc. $44,444 Chase Cardmember Service $25,500 Amsouth Bank $22,437 Boral Bricks $18,982 Cell Pak, Inc. $13,243 Marvins Building Materials $12,849 Naylor Plumbing Co. $9,078 Marvins, Inc. $7,863 U.S.A. D.C.A. Ready Mix $7,685 Kirkpatrick Concrete, Inc. $5,744 Bama Air Systems, Inc. $5,288 Southern Linc $4,133 A.K. Rentals $3,221 D.&S. Hardware & Lumber, Inc. $3,051 NEFF CORP: S&P Rates Proposed $250 Million Senior Notes at B- ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Miami- based equipment rental company Neff Corp. and its operating subsidiaries, including its 'B+' corporate credit rating. At the same time, the ratings were removed from CreditWatch where they were placed with negative implications on April 3, 2007, following news on the sale of the company. "The affirmation reflects the company's continued solid operating performance amid strong industry fundamentals despite the higher debt load following the proposed transaction," said Standard & Poor's credit analyst John R. Sico. The CreditWatch listing had reflected the concern regarding the possible negative impact that an increase in debt may have had on credit quality. At the same time, S&P assigned its loan and recovery ratings to Neff's proposed $270 million second-lien term loan due 2014. The loan was rated 'B-' with a recovery rating of '5', indicating S&P's expectation of negligible (0%-25%, albeit at the higher end of the range) recovery of principal in the event of a payment default after first-priority lenders recover up to $350 million in unrated, first-lien senior secured credit facilities due 2013. S&P also assigned 'B-' rating to the proposed $250 million senior unsecured notes due 2015. This rating reflects the preponderance of secured debt in the proposed capital structure. Ratings on the existing secured notes, which were not placed on CreditWatch, will be withdrawn when the transaction closes in May 2007. The outlook is stable. Neff is currently demonstrating improved operating performance, as should be expected during the current cyclical upswing in the industry. Upside to the ratings is limited, as the company is not expected to generate enough free cash flow in the intermediate term to materially reduce high debt levels as a consequence of the transaction. Additionally, if the company pursued a more aggressive financial policy, specifically acquisitions or dividends, it would risk a downgrade or outlook revision to negative. NEFF CORPORATION: Moody's Puts Corporate Family Rating at B3 ------------------------------------------------------------ Moody's Investors Service assigned ratings to Neff Corp.: * corporate family rating - B3; * probability of default - B3; * second lien term loan -- B3 (LGD4, 56%); * senior unsecured notes -- Caa2 (LGD5, 87%); and * speculative grade liquidity rating -- SGL-3. The outlook is stable. The purpose of the term loan and unsecured notes is to fund the acquisition of Neff Rental, LLC by a group led by Lightyear Capital LLC. In a related action, Moody's confirmed the ratings of Neff Rental, LLC: * corporate family rating -- B3; * probability of default -- B3; and * second priority senior secured notes -- Caa1 (LGD4, 64%). The speculative grade liquidity rating remains SGL-3. The outlook for Neff Rental, LLC is stable. It is anticipated that upon closing of the acquisition, all existing debt of Neff Rental, LLC will be repaid, and that all ratings assigned to Neff Rental, LLC will be withdrawn. Moody's has maintained a B3 corporate family rating for Neff Rental LLC. Over the past year the company's financial metrics have improved to levels that could be supportive of a higher corporate family rating. The continued strength of the equipment rental market has enabled the company to improve its cash flow. Despite this favorable operating trend, the proposed acquisition will increase overall debt by $234 million on a pro form basis and offset the improvement that has occurred in the company's financial metrics. Moody's views the pro forma financial metrics of Neff Corp. following the acquisition as being consistent with the maintenance of a B3 corporate family rating. Moody's said that Neff's B3 corporate family rating reflects the reduction in credit metrics that will result from the leveraged buyout of the company. Adjusted debt will increase by about $234 million at closing. In addition, Neff will continue to face important operational and financial challenges. These challenges include: 1) the ongoing cyclicality of the equipment rental sector; 2) the continued need to fund its rental fleet; and 3) weakened credit metrics. Key credit metrics on a pro forma basis for 2007 will likely erode in the following manner when compared to the company's 2006 results: debt/EBITDA to 4.6x from 3.4x; EBITA/avg. assets to 13% from 19%; and EBITDA/interest expense to 2.5x from 2.8x (as adjusted per Moody's FM Methodology). The company's higher leverage makes it vulnerable to potential adverse financial risks and could hinder Neff's financial flexibility in a downturn. These credit metrics position Neff as one of the more leveraged companies in the universe of rated equipment rental companies. Borrowings under the revolving credit facility beyond the initial draw down for the acquisition could further stress the company's credit metrics. Despite these operational and financial challenges, Moody's believes that Neff has some significant strengths including: 1) continued participation by the company in the strong non- residential construction market; and 2) Neff's multi-regional branch network and broad customer base. These strengths in addition to improved internal efficiencies, and a commitment to maintain ample liquidity should enable the company to strengthen debt protection measures through the intermediate term. The stable outlook reflects Moody's belief that Neff's debt protection measures should improve over the intermediate term and better position the company within the B rating category. Neff should be able to weather future cyclical downturns much better than in the past due to its improved internal efficiencies, multi- regional branch network, and a commitment to maintain ample liquidity. The B3 rating assigned to the $270 million second lien term loan (rated the same as the corporate family rating) reflects an LGD 4 (56%) loss given default assessment. The term loan is junior to the obligations under the $350 million first lien asset based revolving credit facility. The term loan also benefits from the issuance of the $270 million senior unsecured notes. The Caa2 rating assigned to Neff's $250 million senior unsecured notes (rated two notches below corporate family rating) reflects an LGD 5 (87%) loss given default assessment. These notes are the most junior debt in Neff's capital structure and will be behind the company's other obligations in a recovery scenario. The SGL-3 Speculative Grade Liquidity Rating reflects Moody's belief that the company will maintain an adequate liquidity profile over the next 12-month period. The rating anticipates that availability under the company's revolving credit facility, which will be approximately $140 million at closing in consideration of the initial draw down and letter of credit commitments, should be sufficient to fund the company's required operational needs over the next 12 months. The SGL rating is constrained, however, by the level of negative free cash flow during the seasonal build of the company's equipment purchases and by the fact that substantially all of the company's assets are encumbered to secure its bank borrowings. Neff Corp. headquartered in Miami, Florida, is a regional equipment rental company in the Mid-Atlantic, Southeast and gulf coast regions of the Unites States. NORTHWEST AIRLINES: Pilots Union Condemns CEO's $26.6 Mil. Bonus ---------------------------------------------------------------- Leaders of the Northwest Airlines Corp. unit of the Air Line Pilots Association condemned NWA CEO Doug Steenland's decision to reward himself with a $26.6 million bonus during a time when employees have taken 40% pay cuts for the next five years in an effort to help the company emerge from bankruptcy. "Mr. Steenland grossly overreached and missed another opportunity to share the gain with the employees whose excessive concessions funded the airline's turn around," Capt. Dave Stevens, chairman of the Northwest Airlines unit of the Air Line Pilots Association, said. "His compensation will be increased to $26.6 million while pilot payroll was slashed by more than 50% in bankruptcy causing morale to plummet. Employees expect a fair return, not 20 cents on the dollar while executives receive millions in pay and equity." Mr. Steenland's ability to profit from Northwest's bankruptcy comes soon after Northwest pilots agreed to give $358 million annually (included a 23.9% pay cut) during the next five years to help the company avoid liquidation. This sacrifice was in addition to the $265 million (including a 15% pay cut) annual concession Northwest pilots gave in December 2004. Northwest pilots' total concession of $623 million a year totals over $4 billion through 2011. "It is incredible that the CEO profits from Northwest's bankruptcy at the expense of pilots, other employees and stakeholders," Bob Elflein, secretary treasurer of the Northwest Airlines unit of the Air Line Pilots Association, said. "Northwest management's mantra seems to be 'we will reap the gain while labor bears the pain.'" In January 2006, Northwest management and its "experts" testified in Bankruptcy Court that severe labor cost reductions were necessary in order to save the company from liquidation. ALPA vehemently argued management's projections stating that management was overreaching in its demands. Today, Northwest Airlines is profitable once again and is far exceeding the grim business plan that management portrayed in Bankruptcy Court. "Management must recognize and reward the employees with an equitable share in the company's success. To disregard our legitimate concerns is a recipe for continued labor unrest," Capt. Ray Miller, vice chairman of the Northwest Airlines unit of ALPA, said. "Pennies on the dollar from profit and success sharing programs are grossly inadequate compensation for our draconian 40% pay cuts and onerous work rules. Continued pilot concessions based on the Chapter 11 business plan that has already been far exceeded is absolutely unacceptable." Founded in 1931, the Air Line Pilots Association or ALPA -- http://www.alpa.org/and http://www.nwaalpa.org/-- is the world's largest pilot union, representing 60,000 pilots at 40 airlines in the United States and Canada. ALPA represents approximately 5,300 active and furloughed NWA pilots. About Northwest Airlines Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. Plan Update On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. The hearing to consider confirmation of the Debtors' Plan is set for May 16, 2007. NRG ENERGY: Fitch Says Common Dividend Plan Won't Affect Ratings ---------------------------------------------------------------- According to Fitch Ratings, NRG Energy Inc.'s (NRG; Issuer Default Rating [IDR] 'B', with a Stable Rating Outlook) announcement Wednesday that it plans to pay a common dividend beginning 2008 through the creation of a holding company structure does not immediately affect the company's ratings or rating Outlook. As proposed, NRG would create a parent holding company that would issue up to $1 billion in debt, the proceeds from which would be used to pay down the existing Term Loan B at the operating company level. On a consolidated basis, NRG's total debt outstanding is expected to remain unchanged at approximately $8.8 billion. The new holding company debt would be structurally subordinated to the existing operating company debt. By reducing debt at the operating company level, NRG believes it will have sufficient room under the restricted payments basket to pay a common dividend of approximately $150 million annually. Fitch is in the process of reviewing NRG's ratings, including an updated recovery analysis based on recent forward commodity prices, which may result in more robust valuations for NRG's merchant generation portfolio. In Fitch's view, the reduction of the Term Loan B could improve the ratings of the unsecured bonds. The current ratings of NRG are supported by its hedged base-load capacity and relatively diverse generation portfolio. As described in Fitch's 'U.S. Power and Gas 2007 Outlook', the outlook for competitive generation has improved, and this should benefit NRG. NRG HOLDINGS: Moody's Holds Corporate Family Rating at Ba3 ---------------------------------------------------------- Moody's Investors Service affirmed the ratings of NRG Energy, Inc., including its Corporate Family Rating at Ba3, the Probability of Default Rating at Ba3, the senior unsecured debt at B1, and its Speculative Grade Liquidity Rating of SGL-2, following the company's announcement to return more capital to shareholders in the form of existing and future share repurchases and to begin paying a common dividend during the first quarter of 2008. Moody's also affirmed NRG's Ba1 bank loan rating for the company's secured revolving credit and term loan facility, which is being amended and re-priced. The rating outlook for NRG remains negative. Additionally, Moody's has assigned a (P)B2 rating to a planned $1 billion delayed draw secured term loan at NRG Holdings, Inc., a new holding company being formed, which will own the common stock of NRG. "While the rating affirmation incorporates our expectation that the company will be able to generate meaningful free cash for the next few years, the company's announcement concerning capital allocation indicates a continuing shift towards shareholder rewards, at a time when future capital requirements for the sector and the company have increased and are expected to remain so for the foreseeable future, " said A.J. Sabatelle, Vice President -- Senior Credit Officer of Moody's. The rating affirmation reflects relatively stable cash flows expected at NRG given the company's competitive position in several key markets and the degree of forward hedges in place for the next five years. NRG's cash flow (CFO pre-W/C) to total adjusted debt was 13.7% during 2006 which should improve further during 2007 given a full year benefit of higher cash flows from the hedge reset program executed by the company in November 2006. NRG's expects to generate nearly $900 million of free cash flow during 2007. Given the degree of forward hedges entered into by the company and the prospects for continuing relatively high natural gas prices, Moody's expects that under most reasonable scenarios, the company's cash flow (CFO pre-W/C) to total adjusted debt is expected to achieve at least a 13% level over the next several years, which remains consistent with the existing Ba3 Corporate Family Rating. The rating affirmation also considers several initiatives announced by the company designed to return more capital to shareholders. These initiatives include the commencement of an annual common dividend of $0.50 per share, paid quarterly beginning in the first quarter 2008, and the continuation of share repurchase programs after the current authorized share buyback program is completed. To help facilitate these shareholder friendly objectives, NRG's intends to amend and restate its existing revolving credit and term loan facility and to form NRG Holdings, which together with a delayed draw $1 billion term loan will substantially increase capacity under the restricted payments basket in the company's existing indentures. Under the planned refinancing, NRG will become a wholly-owned operating subsidiary of NRG Holdings. NRG Holdings will borrow up to $1 billion under a term loan and will downstream the net proceeds to NRG as an equity contribution. NRG will use the net proceeds for the prepayment of a portion of its existing Term B loan. Upon completion, the restricted payments capacity under NRG's bond indentures will increase by an amount equal to the equity contribution from NRG Holdings to NRG, thereby allowing NRG to return more capital to shareholders in the future. Upon the formation of NRG Holdings, existing NRG common and preferred shares will be exchanged for identical NRG Holdings level securities. The NRG Holdings term loan is being syndicating as a new $1 billion delayed draw term loan to NRG's existing secured revolver and term loan lenders as part of the amendment and re- pricing request. Current NRG lenders will be asked to simultaneously commit to a strip of new NRG Holdings term loans, which will be funded once the holding company is formed. Since certain regulatory approvals are required in order for NRG Holdings to be formed, NRG does not expect the formation to occur until the fourth quarter 2007. The (P) B2 rating assigned to NRG Holdings' secured term loan incorporates Moody's current understanding of the proposed refinancing, and reflects the structural subordination of this creditor class to senior unsecured and senior secured creditors at NRG. NRG's negative rating outlook reflects, in Moody's opinion, a trend by management to steadily implement shareholder friendly initiatives within the past year. Since August 2006, NRG has amended financing documents and has executed financings to return more capital to the shareholders either by increasing the restricted payments basket or by structuring financings that allow capital to flow to shareholders outside of the restricted payments basket. Additionally, the negative outlook incorporates the higher permanent debt levels at NRG incurred in November 2006 as part of the hedge reset. While cash margins, generation values, and hedging opportunities for independent power companies have all increased within the recent past, the capital needs of companies in the sector, including NRG, have also continued to move in an upward direction, particularly for future environmental related capital expenditures. With a higher permanent level of debt embedded in the capital structure, an increasing shareholder focus by management, and the cost of future capital investment programs increasing, NRG's credit quality could weaken, particularly if the company's future margins compress due to lower natural gas prices, lower market heat rates, or successful efforts key stakeholders to re-regulate segments of the sector. In light of the negative rating outlook as well as the company's capital investment program, share repurchase plan and other related initiatives, limited near-term prospects exist for the rating to be upgraded; however, the rating outlook could stabilize if the company makes meaningful progress towards using free cash flow to permanently reduce debt over the next several years, and/or if the company finances its anticipated large capital investment program in a relatively conservative manner resulting in a adjusted cash flow (CFO pre-W/C) to total adjusted debt rising to the mid-teens level on a sustainable basis. Moody's understands that the company's secured credit facilities will continue to require lenders to accept for prepayment 50% of any excess cash flow offered by NRG, which should help to facilitate debt repayment. The rating could be downgraded if the degree of shareholder initiatives further accelerates over the next twelve to eighteen months without meaningful progress towards reducing consolidated debt or if the company chooses to finance its capital investment program with higher than anticipated levels of debt. Additionally, should margins compress across NRG's existing generation fleet or should additional leverage be incurred to finance shareholder rewards causing adjusted cash flow (CFO pre- W/C) to total adjusted debt to fall below 10% for an extended period, the rating could be downgraded. Ratings affirmed: NRG Energy, Inc. * Corporate family rating at Ba3; * Probability of default rating at Ba3; * Speculative Grade Liquidity Rating of SGL-2; Ratings affirmed/LGD assessments revised; NRG Energy, Inc. * Senior unsecured notes at B1 (LGD 5, 78% from LGD5, 77%); * Shelf registration for senior unsecured debt at (P) B1 (LGD 5, 78% from LGD5, 77%); Ratings and assessments affirmed: NRG Energy, Inc. * Senior secured revolving credit and term loan facility at Ba1 (LGD2, 22%) * Preferred stock at B2, LGD 6, 98%; * Shelf registration for senior secured debt at (P) Ba1 (LGD 2, 22%) * Shelf registration for subordinated debt at (P)B2, LGD 6, 97%; * Shelf registration for preferred stock at (P)B2, LGD 6, 98%; Rating assignment: NRG Holdings, Inc. * Senior secured term loan at (P)B2 Headquartered in Princeton, New Jersey, NRG Energy, Inc. owns and operates power generating facilities, primarily in Texas and the northeast, south central and western regions of the United States. NRG also owns generating facilities in Australia, Brazil, and Germany. NRG ENERGY: S&P Lifts Rating on $4.7 Billion Unsecured Bonds to B ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on NRG Energy Inc.'s $4.7 billion unsecured bonds to 'B' from 'B-' and assigned its 'B-' rating to the proposed $1 billion delayed-draw term loan B at NRG Holdings Inc., a newly created holding company that would own 100% of NRG's equity. In addition, Standard & Poor's affirmed the 'B+' corporate credit rating on NRG and affirmed the 'BB-' rating on NRG's $3.148 billion term loan B; the 'CCC+' rating on the company's preferred stock, and the 'B-2' short-term rating. The outlook on all ratings is stable. The proceeds of the term loan B can only be used to pay down the existing term loan B debt at NRG, creating room for the planned dividends under the restricted payments basket of the unsecured bond indenture. "The raised rating on NRG's senior unsecured bonds is a result of our asset coverage test," said Standard & Poor's credit analyst Swami Venkataraman. "The term loan B at NHI is rated 'B-', reflecting its subordination to more than $8.6 billion of debt at NRG." These rating actions follow NRG's announcement that it will create a new holding company to facilitate the payment of a common dividend of $100 million-$150 million per year starting in the first quarter of 2008. NHI will borrow up to $1 billion from the term B market and pay the net proceeds to NRG as an equity contribution. NRG will use the net proceeds to prepay portion of its existing term B loan, resulting in no change to the company's consolidated debt levels. On completion, the restricted payments capacity under NRG's unsecured bond indentures will increase by an amount equal to the equity contribution from the holding company to NRG. The recovery rating of '5' on NHI's debt reflects its negligible recovery prospects since lenders are secured only by the equity interest in NRG and are effectively subordinated to all debt at NRG, including the $4.7 billion unsecured bonds. If the funding occurs, Standard & Poor's expect to raise the rating on the remaining $2.148 billion NRG term loan B to 'BB' from 'BB-', reflecting the greater overcollateralization of the term loan by NRG's assets and related stronger recovery in the event of a default. NRG is primarily engaged in the ownership, development, construction and operation of power generation facilities, the trading of energy, fuel, capacity and related products in the United States and internationally. As of Dec. 31, 2006, NRG owned 24,175 MW of generating capacity and had about $8.7 billion in debt. NUTRO PRODUCTS: Moody's May Upgrade Ratings on Mars Deal -------------------------------------------------------- Moody's Investors Service changed its review for possible downgrade of the ratings of Nutro Products, Inc., including the corporate family rating of B2, to a review for possible upgrade. The change in direction of the review follows the announcement that Mars, Incorporated will acquire the global pet food operations of Nutro, subject to regulatory approvals. Terms of the acquisition by Mars have not been disclosed. LGD assessments are also subject to change. Ratings under review for possible upgrade: * Corporate family rating at B2 * Probability of default rating at B2 * Senior secured bank term loan at Ba3 * Senior secured bank revolving credit agreement at Ba3 * Senior unsecured notes at B3 * Senior subordinated notes at Caa1 The prior review for possible downgrade, begun on April 11, 2007, was based on Moody's concern that the widening recall of wet pet foods produced by Nutro's third party manufacturer Menu Foods and Nutro's concurrent recall of all Nutro wet pet foods made with wheat gluten. Moody's was concerned that this recall would negatively impact sales and profitability of highly leveraged Nutro, delaying Moody's previously anticipated reduction in leverage beyond the end of fiscal 2007. Moody's review will focus on both the successful execution of the acquisition, the post transaction credit profile of the company and the ultimate disposition of the company's debt. Should most of Nutro's debt be repaid, its ratings will be withdrawn. Nutro Products, Inc., headquartered in City of Industry California, is a manufacturer of premium pet food. OAKWOOD HOMES: S&P Downgrades Ratings on Nine Classes ----------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on nine classes of Oakwood Homes Corp.-related manufactured housing transactions. The lowered ratings reflect the continued adverse performance trends exhibited by the underlying pools of manufactured housing installment sales contracts and mortgage loans and the resulting deterioration of credit enhancement. The projected lifetime cumulative net losses for the transactions have significantly exceeded original expectations, and the current rating actions reflect the declining levels of credit enhancement available to cover future expected losses. The higher losses exhibited by these transactions continue to be driven by higher- than-expected defaults and loss severities, as most of the underlying collateral pools have deteriorated over the past few years. In April 2004, Clayton Homes Inc., a subsidiary of Berkshire Hathaway Inc., completed its acquisition of Oakwood Mortgage Corp. While collateral performance has stabilized since Vanderbilt Mortgage and Finance Inc. assumed the servicing responsibilities for the Oakwood portfolio, the performance has not improved enough to offset the rapid decline in credit support. Most of the transactions have experienced principal write-downs on their subordinate classes and, in many cases, on the mezzanine classes as well. Ratings Lowered Oakwood Mortgage Investors Inc. Series 1995-A Rating ------ Class To From ----- -- ---- B-1 BB- BBB+ Oakwood Mortgage Investors Inc. Series 1995-B Rating ------ Class To From ----- -- ---- B-1 B- BB Oakwood Mortgage Investors Inc. Series 1998-A Rating ------ Class To From ----- -- ---- M-1 B- B+ Oakwood Mortgage Investors Inc. Series 1998-B Rating ------ Class To From ----- -- ---- M-1 CCC B OMI Trust 2000-A Rating ------ Class To From ----- -- ---- A-2 CCC- CCC A-3 CCC- CCC A-4 CCC- CCC A-5 CCC- CCC OMI Trust 2002-C Rating ------ Class To From ----- -- ---- M-1 CCC- CCC PEMBROKE PINES: S&P Rates Proposed $1.65 Billion Facilities at B ---------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'B' corporate credit rating to Pembroke Pines, Florida-based Claire's Stores Inc., a specialty retailer of value-priced jewelry and fashion accessories for pre-teens, teenagers, and young adults. The outlook is negative. At the same time, S&P assigned its bank loan and recovery rating to the company's proposed $1.65 billion senior secured credit facilities, consisting of a $200 million revolving credit facility maturing 2013 and a $1.45 billion term loan maturing 2014. The facilities are rated 'B', the same as the corporate credit ratings on Claire's and have been assigned a recovery rating of '3', reflecting the expectation for meaningful (50%-80%) recovery of principal in the event of payment default. The negative outlook reflects the current softness in the international division and potential difficulties involved in implementing operational improvements identified by the company. "We expect sales growth to be below historical rates and some continued decline in operating margins over the next 12 months," said Standard & Poor's credit analyst David Kuntz. PERKINS & MARIE: Default Prompts S&P to Junk Corp. Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on Memphis, Tennesse-based Perkins & Marie Callender's Inc. to 'CCC+' from 'B-'. At the same time, S&P revised the CreditWatch implications to developing from negative, where they were placed on March 30, 2007. The downgrade follows Perkins failure to both file its 10-K in time to meet its bank facility reporting covenants and then rectify the situation within the 30 days allowed, constituting an event of default. While Perkins received a waiver for its bank loan facility, the company's $190 million outstanding notes due 2013 can be accelerated if noteholders do not waive compliance with the filing requirement. "If noteholders accelerate," said Standard & Poor's credit analyst Jackie E. Oberoi, "we could lower ratings further, but if nothing more develops in this direction and Perkins files its 10-K, Standard & Poor's could raise the rating once the risks dissipate." PLAUDO LLC: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Plaudo, L.L.C. 600 Worcester Road Framingham, MA 01702 Bankruptcy Case No.: 07-12758 Chapter 11 Petition Date: May 3, 2007 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Daniel I. Cotton, Esq. Wolfson, Keenan, Cotton & Meagher 390 Main Street Suite 1000 Worcester, MA 01608 Tel: (508) 791-8181 Fax: (508)792-0832 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not submit a list of its largest unsecured creditors. PRIMUS TELECOMMS: March 31 Balance Sheet Upside-Down by $472.3MM ---------------------------------------------------------------- PRIMUS Telecommunications Group, Incorporated reported total assets of $432.6 million and total liabilities of $904.8 million, resulting in a total stockholders' deficit of $472.3 million as of March 31, 2007. The principal amount of PRIMUS's long-term debt obligations as of March 31, 2007 was $688 million, up from $640 million at Dec. 31, 2006. For the first quarter ended March 31, 2007, its net revenue was $228 million, down from $241 million in the prior quarter and $269 million in the first quarter 2006. The company reported a net loss for the quarter of $3 million, as compared with a net loss of $2 million in the prior quarter and a net loss of $16 million in the first quarter 2006. "We are pleased to have met our expectations for Adjusted EBITDA in the first quarter, despite expected revenue declines driven largely by seasonality and the loss of low-margin/low-growth businesses," stated K. Paul Singh, chairman and chief executive Officer. "Significantly, our improving financial performance over the past year positioned us to execute successfully a number of important liquidity-enhancing initiatives during the quarter. Collectively, these initiatives have enabled PRIMUS to: (1) raise over $75 million in cash to fund fully our business plan for 2007 and beyond; and (2) refinance obligations that extend the nearest material debt maturity to mid-year 2009. As a result of these accomplishments, PRIMUS now has the financial flexibility to make additional investments in our higher margin and most successful growth businesses as well as to consider potentially attractive acquisitions. Any combination of these actions would be undertaken with an initial goal of increasing the rate of revenue growth and contribution from broadband, VOIP, local, data and hosting services." "Our focus will continue to be on growing the high-margin broadband, VOIP, local, data and hosting service initiatives that are performing well with an annualized revenue run-rate of approximately $200 million. That growth has been accomplished with sales and marketing investment levels constrained by available cash. With our newly expanded resources, we now have the opportunity to consider accelerated growth strategies in these high-margin products. "As previously stated, we expect overall revenue to decline in 2007 as compared to 2006, particularly as we continue to prune or to divest low-margin, or non-core revenue streams. Our objective, however, is to generate contribution from growth products such as broadband, VOIP, local, data and hosting in excess of the contribution loss from the decline in legacy voice and dial-up ISP products." Sale of Australian Domain The company sold its Australian domain name business in the first quarter 2007. From an accounting perspective, the sale has been treated as a "discontinued operation." In 2006, the revenue and net income from these operations was $4 million and $1 million, respectively. Liquidity and Capital Resources PRIMUS ended the first quarter 2007 with a cash balance of $111 million, including $9 million of restricted funds, as compared to $73 million, including $8 million of restricted funds, as of Dec. 31, 2006. During the first quarter, a net $7 million in cash was used by operating activities. Free Cash Flow for the first quarter 2007 was negative $14 million, as compared with negative $5 million in the prior quarter and Free Cash Flow neutral in the first quarter 2006. To improve liquidity, the company had a private sale in February 2007 of $24 million principal amount of new 14.25% Second Lien Notes for cash, the accompanying private exchange of an additional $33 million principal amount of 14.25% Second Lien Notes for $41 million principal amount of existing 12.75% Senior Notes; the private sale of $51 million principal amount of 14.25% Second Lien Notes for cash in March 2007; the refinancing of a US$28 million Canadian credit facility scheduled to mature in April 2008 with a new $35 million facility with a March 2012 maturity; the refinancing of an $8 million Australian fiber purchase agreement with an original maturity of March 2007 to amortize over a two- year period; and the sale of a domain registration business unit in Australia for about $6 million in net cash proceeds. About PRIMUS Telecommunications Based in McLean, Virginia, PRIMUS Telecommunications Group Inc. (NASDAQ: PRTL) -- http://www.primustel.com/-- offers international and domestic voice, voice-over-Internet protocol, Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the U.S., Canada, Australia, the U.K. and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including about 350 points-of- presence throughout the world, ownership interests in undersea fiber optic cable systems, 16 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. QWEST CORPORATION: Completes Offering of $500 Million Notes ----------------------------------------------------------- Qwest Corporation, a subsidiary of Qwest Communications International Inc., has concluded an offering of $500 million aggregate principal amount of debt securities due June 1, 2017, which was upsized from the amount of $400 million. The notes bear an interest rate of 6.5% per annum, payable semi-annually on June 1 and Dec. 1, commencing on Dec. 1, 2007. "We're pleased with the strong demand and success of this offer," John Richardson, Qwest executive vice president and CFO, said. "We believe this is an opportunistic and value creating transaction." The ten-year notes were priced at par. The net proceeds of the offering will be used for general corporate purposes, including repayment of QC's indebtedness, and funding and refinancing investments in the company's telecommunications assets. The sale of the notes is expected to close on May 16, 2007. JPMorgan, Bank of America Securities LLC and Merrill Lynch & Co. were joint book-runners for the offering, which was made in a private placement transaction pursuant to Rule 144A under the Securities Act of 1933, as amended. Citigroup, Deutsche Bank Securities and Lehman Brothers were co-managers. About Qwest Corp. Headquartered in Denver, Colorado Qwest Corporation -- http://www.qwest.com/-- a subsidiary of Qwest Communications International Inc. (NYSE:Q), offers a unique and powerful combination of managed voice and data solutions for businesses, government agencies and consumers -- locally and throughout the United States. * * * As reported in the Troubled Company Reporter on May 4, 2007, Moody's Investors Service assigned a Ba1 rating to Qwest Corporation's planned offering of $400 million senior notes due 2017. Standard & Poor's Ratings Services assigned its 'BB+' rating to Qwest Corp.'s proposed $400 million notes due 2017, to be issued under Rule 144A with registration rights. S&P also affirmed the existing ratings on Qwest Corp., an incumbent local exchange carrier, and parent Qwest Communications International Inc., including the 'BB' corporate credit ratings. Fitch Ratings has a 'BB' Issuer Default Rating for both Qwest Corporation. The Rating Outlook for Qwest and its subsidiaries is Stable. QWEST CORP: Launches $400 Million Offering of Debt Securities ------------------------------------------------------------- Qwest Corporation, a subsidiary of Qwest Communications International Inc., is offering $400 million aggregate principal amount of debt securities in a private placement to be conducted pursuant to Rule 144A under the Securities Act of 1933, as amended. The net proceeds of the offering will be used for general corporate purposes, including repayment of indebtedness, and funding and refinancing investments in the company's telecommunications assets. Headquartered in Denver, Colorado Qwest Corporation -- http://www.qwest.com/-- a subsidiary of Qwest Communications International Inc. (NYSE:Q), offers a unique and powerful combination of managed voice and data solutions for businesses, government agencies and consumers -- locally and throughout the United States. * * * As reported in the Troubled Company Reporter on May 4, 2007, Moody's Investors Service assigned a Ba1 rating to Qwest Corporation's planned offering of $400 million senior notes due 2017. Standard & Poor's Ratings Services assigned its 'BB+' rating to Qwest Corp.'s proposed $400 million notes due 2017, to be issued under Rule 144A with registration rights. S&P also affirmed the existing ratings on Qwest Corp., an incumbent local exchange carrier, and parent Qwest Communications International Inc., including the 'BB' corporate credit ratings. Fitch Ratings has a 'BB' Issuer Default Rating for both Qwest Corporation. The Rating Outlook for Qwest and its subsidiaries is Stable. RAG SHOP: Organizational Meeting Scheduled this Friday ------------------------------------------------------ Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, will hold an organizational meeting to appoint an official committee of unsecured creditors in Rag Shops, Inc. and its debtor-affiliates' chapter 11 cases at 1:00 p.m., on Friday, May 11, 2007, at the U.S. Trustee Meeting Room, 4th Floor, 80 Broad Street, in New York City. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtor will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Based in Hawthorne, New Jersey, Rag Shops, Inc. and its affiliates (NASDAQ: RAGS) -- http://www.ragshop.com/-- operate retail chain stories that offer a wide selection of value-priced crafts, fabrics, floral, framing, and related merchandise. The company was founded in 1963 and currently has over 60 retail locations in five states. The company and 63 of its affiliates filed for Chapter 11 protection on May 2, 2007 (Bankr. E.D. N.Y. Case Nos. 07-42272 through 07-42338). Christopher K. Kiplok, Esq. and James W. Giddens, Esq., at Hughes Hubbard & Reed LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $35,301,000 and total liabilities of $52,532,000. RITE AID: Earns $26.8 Million in Fiscal Year Ended March 3 ---------------------------------------------------------- Rite Aid Corporation reported net income of $26.8 million for the year ended March 3, 2007, compared with net income of $1.27 billion for the year ended March 4, 2006, which includes a $1.23 billion income tax benefit primarily comprised of a federal and state tax benefit for the release of valuation allowances for net deferred tax assets that have an expected future utilization. For the 52-week fiscal year ended March 3, 2007, Rite Aid had revenues of $17.5 billion as compared to revenues of $17.3 billion for the 53-week prior year, which included an additional approximate $345 million in revenues because of the extra week. Revenues year-over-year increased 1.4%. The 1.4% growth in revenues for fiscal 2007 was driven by front- end sales growth of 0.1% and pharmacy sales growth of 2.2%. Adjusted EBITDA was $696.9 million or 4.0 percent of revenues for the 52-week year compared to $675.6 million or 3.9 percent of revenues for the 53-week previous year, with the extra week accounting for approximately $15 million in adjusted EBITDA. The $21.3 million increase in year-over-year adjusted EBITDA is primarily due to the increase in revenues and a reduction in expenses in relation to revenues. For the year, the company opened 40 new stores, relocated 66 stores, acquired two stores, closed 32 stores and remodeled 19 stores. Stores in operation at the end of the year totaled 3,333. The company ended the year with cash and cash equivalents of $106.1 million, compared to $76.1 million at March 4, 2006. Cash flow provided by operating activities was $309.1 million in fiscal 2007, compared with net cash provided by operating activities of $417.2 million in fiscal 2006. At March 3, 2007, the company's balance sheet showed $7.1 billion in total assets, $5.4 billion in total liabilities, and $1.7 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended March 3, 2007, are available for free at http://researcharchives.com/t/s?1e72 Pending Acquisition On Aug. 23, 2006, the company entered into a stock purchase agreement with Jean Coutu Group. Under the terms of the Agreement, the company will acquire from Jean Coutu Group all of the membership interests of The Jean Coutu Group (PJC) USA Inc. (Jean Coutu USA), a wholly owned subsidiary of Jean Coutu Group, which is engaged in the business of owning and operating retail pharmacy stores conducting business under the Eckerd and Brooks banners. As consideration for the acquisition, the company will issue 250 million shares of Rite Aid common stock and will pay $2.3 billion in cash, subject to a working capital adjustment. The company intends to finance the acquisition through the issuance of new debt. Consummation of the acquisition is subject to customary conditions. The company expects to complete the acquisition by the end of May 2007. About Rite Aid Headquartered in Harrisburg, Pa., Rite Aid Corporation (NYSE, PCX: RAD) -- http://www.riteaid.com/-- is one of the nation's leading drugstore chains with annual revenues of approximately $17.5 billion and more than 3,330 stores in 27 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Feb. 14, 2007, Moody's Investors Service rated the proposed secured notes of Rite Aid Corporation at B3 and the proposed senior notes at Caa2. As reported in the Troubled Company Reporter on Feb. 13, 2007, Fitch has assigned ratings to Rite Aid Corporation's $300 million senior secured notes due 2017 'BB-/RR1'; and $500 million senior unsecured notes due 2015 'CCC+/RR5'. ROCK-TENN COMPANY: Earns $21.7 Million in Quarter Ended March 31 ---------------------------------------------------------------- Rock-Tenn Company reported net income of $21.7 million on net sales of $585.7 million for the second quarter ended March 31, 2007, compared with net income of $5.2 million on net sales of $529.7 million for the same period last year. Income for the second quarter of fiscal 2007 included pre-tax restructuring and other costs of $1.2 million primarily related to the decision to close the Stone Mountain, Georgia folding carton plant. Net income for the prior year quarter included pre-tax restructuring and other costs of $3.5 million and operating losses at folding carton facilities that were closed or in the process of closing of $900,000. Total segment income of $54.6 million increased $21.2 million from the prior year quarter. Paperboard segment income increased $11.1 million and Merchandising Displays segment income increased $9 million. Corrugated segment income also increased by $1.4 million. These increases were offset by decreases in Packaging Products segment income of approximately $300,000. Rock-Tenn Company chairman and chief executive officer James A. Rubright stated, "The record sales and strong income gains reflect the continued improvements we have achieved in our businesses. Our paperboard mills experienced sharply higher costs of fiber, which peaked in March 2007 at historically high levels. We still recorded the second highest quarterly Paperboard segment income and the highest net income in our company's history. We believe we are well positioned to continue to recover currently high fiber and energy costs due to the tight mill supply demand conditions, particularly in our coated recycled paperboard mills." Net cash provided by operating activities in the second quarter of fiscal 2007 was $36.9 million compared to net cash provided by operating activities of $47.9 million in the prior year quarter. Net cash provided by operating activities in this year's quarter was reduced by the funding of $16.2 million in operating assets and liabilities, including an increase of $23.6 million in receivables resulting from the $51.8 million in sales growth over the December quarter. During the quarter Rock-Tenn Company acquired the remaining 40% minority interest in its GSD packaging joint venture for $32 million, and contributed $4.6 million to its pension plans. During the second quarter of fiscal 2007, net cash provided by financing activities was $22.3 million and included $13.7 million from the issuance of common stock primarily due to the exercise of stock options for 1.1 million shares and the related excess tax benefits from share based compensation of $9 million. At March 31, 2007, the company's balance sheet showed $1.8 billion in total assets, $1.2 billion in total liabilities, $11 million in minority interest, and $579 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?1e75 About Rock-Tenn Company Rock-Tenn Company (NYSE: RKT) -- http://www.rocktenn.com/-- provides a wide range of marketing and packaging solutions to consumer products companies, with operating locations in the United States, Canada, Mexico, Argentina and Chile. The company is one of North America's leading manufacturers of packaging products, merchandising displays and bleached and recycled paperboard. * * * As reported in the Troubled Company Reporter on Dec. 13, 2006, Standard & Poor's Ratings Services revised its outlook on Rock- Tenn Company to stable from negative. At the same time, S&P affirmed all its ratings including its BB corporate credit rating on the company. SHAW GROUP: To Redeem Remaining $15.2 Mil. of 10-3/4% Senior Notes ------------------------------------------------------------------ The Shaw Group Inc. will redeem all remaining outstanding 10-3/4% Senior Notes due 2010. As of April 30, 2007, the aggregate principal amount of the remaining outstanding Senior Notes was $15,173,000. Pursuant to the terms of the 10-3/4% Senior Notes Indenture, the Senior Notes will be redeemed by Shaw on May 31, 2007 at a redemption price equal to 105.375% of the outstanding principal amount of the outstanding Senior Notes ($1,053.75 per $1,000 in principal amount of the Senior Notes) plus accrued interest of $22.67 per $1,000 in principal amount of the Senior Notes. Shaw will fund the redemption of the Senior Notes with cash on hand. The company expects to record a pre-tax charge of approximately $1.1 million, $0.7 million after taxes in the third quarter of fiscal 2007 as a result of the early retirement of remaining outstanding 10-3/4% Senior Notes. Shaw issued the $253 million face amount, 10-3/4% Senior Notes due 2010 in a private offering on March 17, 2003. In May 2005, Shaw redeemed $237,856,000 aggregate principal amount of Senior Notes, 94% of original issuance, pursuant to a tender offer. The company paid approximately $266.8 million to redeem the Senior Notes, plus accrued interest, and made consent payments totaling approximately $5.9 million. 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. SINCLAIR BROADCAST: Prices $300MM Convertible Sr. Notes Offering ---------------------------------------------------------------- Sinclair Broadcast Group Inc. has priced its offering of $300 million aggregate principal amount of convertible senior notes due 2027. In addition, Sinclair has granted the underwriters an option, solely to cover over-allotments, to purchase up to an additional aggregate $45 million principal amount of the notes. The notes will bear interest at a rate of 3% per annum from May 10, 2007, payable semi-annually on May 15 and November 15, commencing on Nov. 15, 2007. Under certain circumstances, the notes will also bear contingent cash interest of 0.375% per annum. The notes mature in 2027 and, upon certain conditions, will be convertible into cash and, in certain circumstances, shares of Class A common stock of Sinclair Broadcast Group Inc. prior to maturity at an initial conversion price of $20.43 per share, subject to adjustment, which is equal to an initial conversion rate of approximately 48.9476 shares of Sinclair class A common stock per $1,000 principal amount of notes. The notes may not be redeemed prior to May 20, 2010 and may thereafter be redeemed by Sinclair at par. The offering was made pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission and is expected to close, subject to the satisfaction of customary closing conditions on May 10, 2007. Sinclair intends to use the net proceeds from the offering, together with available cash on hand and/or bank debt, to finance the partial redemption of Sinclair Television Group, Inc.'s, its wholly-owned subsidiary, existing 8% Senior Subordinated Notes due 2012. A copy of the prospectus and prospectus supplement meeting the requirements of Section 10 of the Securities Act of 1933 may be obtained from: -- Deutsche Bank Securities Attn: Prospectus Department No. 100 Plaza One Jersey City, NJ 07311 Tel: (800) 503-4611 About Sinclair Broadcast Group Headquartered in Baltimore, Maryland, Sinclair Broadcast Group Inc. (Nasdaq: SBGI)-- http://www.sbgi.net/-- is one of the diversified television broadcasting companies, that owns and operates, programs or provides sales services to 61 television stations in 38 markets. Sinclair's television group includes FOX, WB, ABC, CBS, NBC, and UPN affiliates and reaches approximately 23.0% of all U.S. television households. * * * As reported in the Troubled Company Reporter on Dec. 18, 2006, Moody's Investors Service affirmed Sinclair Broadcast Group's Ba3 corporate family rating and assigned a Baa3 rating to its subsidiary, Sinclair Television Group Inc.'s new $225 million Term Loan A-1 Facility. SOLUTIA INC: Judge Beatty Approves Settlement Pact with FMC Corp. ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved a settlement agreement dated as of April 10, 2007, between Solutia Inc. and FMC Corp. The settlement agreement resolves litigation between the parties in the United States District Court for the Southern District of New York arising from the Astaris LLC joint venture. Solutia and FMC entered into a joint venture agreement in April 1999. The parties hoped Astaris could produce purified phosphoric acid using a wet-process technology developed by FMC. The technology was supposed to allow Astaris to produce PPA through a process that was less expensive and more efficient than the methods previously used by Solutia. Unfortunately, the technology did not perform as expected and the Astaris PPA plant in Idaho was closed in October 2003. Solutia filed an adversary proceeding against FMC in February 2004 alleging that FMC knew that shortcomings in the technology undermined the joint venture, but failed to disclose them. On FMC's request, the District Court assumed jurisdiction over the FMC Litigation on July 27, 2004. Solutia asserted seven claims against FMC in the FMC Litigation, of which three were dismissed. Following extensive discovery, the District Court granted FMC's request for summary judgment in part, limiting Solutia's claims for breach of fiduciary duty, fraud and negligent misrepresentation to one particular theory. Additionally, the District Court struck Solutia's jury demand. Shortly after the FMC Litigation was filed, Solutia and FMC began settlement discussions that continued in 2005 in connection with the decision by FMC and Solutia to explore a possible sale of Astaris. On September 1, 2005, Astaris, Solutia and FMC entered into an asset purchase agreement with Israel Chemicals Limited and one of its subsidiaries, pursuant to which Astaris agreed to sell substantially all of its assets to ICL for $225,000,000 in cash and the assumption by ICL of certain related liabilities. FMC and Solutia agreed that the FMC Litigation would not be affected by the sale of Astraris. On Oct. 14, 2005, both parties appeared before United States Magistrate for court-ordered mediation, but could not resolve the issues. Settlement talks occurred sporadically throughout 2006. Solutia and FMC again engaged in arm's-length negotiations to settle the FMC Litigation during the weeks leading to the April 2, 2007 trial date. The parties reached a settlement with the salient terms: -- FMC will pay Solutia $22,500,000 in cash; -- the settlement payment will be made within five business days after the period for appealing the Bankruptcy Court's order approving the Proposed Settlement expires; -- Solutia will dismiss the FMC Litigation with prejudice within 20 days after FMC makes the settlement payment; -- Solutia, with the cooperation of FMC, will secure the Bankruptcy Court's approval of the Proposed Settlement; -- they will exchange mutual releases of all claims relating to the dispute; -- Solutia and FMC will recommend to the District Court that the trial be stayed during the Bankruptcy Court approval process and that the District Court retain jurisdiction over the case until resolution of the Bankruptcy Court approval process; and -- the fees and costs of the FMC Litigation will be borne by each party. Solutia relates that the proposed settlement enables its estate to avoid the costs of prosecuting the FMC Litigation through a trial and an almost certain appeal. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SOLUTIA INC: Wants Deal with GE Capital on Contested Leases OK'd ---------------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Solutia Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement agreement among Solutia, CPFilms Inc. and General Electric Capital Corporation. David A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP, in St. Louis, Missouri, relates that before the Debtors' bankruptcy filing, the Debtors and GE Capital entered into numerous lease agreements whereby the Debtors agreed to lease certain personal property from GE Capital or its predecessors in interest. On Dec. 16, 2004, GE Capital filed a request for, among others, payment of postpetition lease obligations, and compelling immediate assumption or rejection of leases. In their response to GE's request, the Debtors argued that five of the leases were not true leases and should be recharacterized as security interests: -- Master Lease Agreement entered into between Mellon US Leasing and Solutia dated July 23, 1999; -- Master Lease Agreement entered into between Lease Plan U.S.A., Inc., and Solutia dated Oct. 24, 2001; -- Master Lease Agreement entered into between GE Capital and CPFilms dated Oct. 15, 2001; -- Equipment Lease Agreement entered into by GE Capital and Solutia dated Jan. 1, 2001; and -- Master Lease Agreement entered into by Emerson Financial Services and Solutia dated June 19, 2001. GE Capital contended that the Contested Leases are true leases. The Debtors thoroughly investigated the Contested Leases. The Debtors obtained appraisals of the equipment, which was the subject of the Contested Leases from SB Capital. The Debtors also retained NERA as a potential expert witness in connection with the hearing on GE Capital's request and reviewed the preliminary expert report. The Debtors and GE Capital also exchanged written discovery. GE Capital and the Debtors scheduled a settlement meeting for March 12, 2007 where the parties were able to agree upon the terms of a Settlement Agreement, which resolves all outstanding issues posed by the GE Capital Motion and the Contested Leases. The salient terms of the Settlement Agreement are: (1) Solutia will assume the Maryville Lease and restructure the payments due thereunder so that Solutia will pay GE Capital $37,000 per month for 72 months; (2) CPFilms will assume the CPFilms Lease and restructure the payments due thereunder so that CPFilms will pay GE Capital $5,000 per month for 72 months; (3) Solutia and CPFilms will each retain the right to purchase the equipment that is the subject of the Maryville Lease and CPFilms Lease at the end of the respective lease terms by paying to GE Capital the then fair market value of the equipment; (4) The Indian Orchard, Atlanta, and Pensacola Leases will each be terminated and GE Capital will convey all its interests in the affected equipment to Solutia; (5) GE Capital will be allowed a secured claim of $100,000 against Solutia, which will be paid upon the effective date of any plan of reorganization proposed by the Debtors, as well as a general unsecured claim of $540,000 against Solutia; (6) GE Capital will withdraw all other proofs of claim that it filed in connection with the Contested Leases. (7) The Debtors and GE Capital will exchange mutual releases with respect to all claims that may exist with respect to the Contested Leases. The Debtors and GE Capital identified a number of leases where there are no existing disputes. The parties will continue to perform their respective obligations and duties with respect to the Uncontested Leases. About Solutia Inc. Headquartered in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Allen E. Grimes, III, Esq., at Dinsmore & Shohl, LLP and Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SPECTRUM SIGNAL: Sells Stake to Vecima Networks for $18.3 Million ----------------------------------------------------------------- Spectrum Signal Processing Inc. disclosed that Vecima Networks Inc. has completed the acquisition of all of Spectrum's issued and outstanding common shares for a total purchase price of approximately $18.3 million, made up of 820,000 Vecima shares and approximately $10.1 million in cash. The statutory plan of arrangement disclosed on Feb. 16, 2007, involving Spectrum, its shareholders and Vecima, was approved by the Supreme Court of British Columbia on April 27, 2007 and by the Committee on Foreign Investments in the United States on April 26, 2007. More than 92% of Spectrum shareholders represented at its special meeting held on April 20, 2007 voted to approve the Arrangement. "Spectrum's shareholder vote clearly demonstrated strong support in favor of this Arrangement that fuses two powerful technological portfolios to enhance Vecima's position and opportunities in the emerging WiMAX market," Dr. Surinder Kumar, president and chief executive of Vecima, stated. "The strategic fit of Spectrum's compelling product portfolio focused at the commercial and defense broadband wireless markets advantageously positions Vecima to deliver the power and security of software-defined radio technologies to the commercial broadband wireless market. In addition, the Arrangement allows the company to bring Vecima's portfolio of last-mile wireless solutions to Spectrum's current market." Both Spectrum's and Vecima's product portfolios are powered at their core by field programmable gate array chips, digital signal processing chips, and general purpose processors running software tailored to broadband wireless communications. In addition to the defense market, Vecima intends to target high growth commercial markets such as the public safety, homeland security, satellite communications, and broadband wireless markets which demand a configurable software radio solution to enable the various agencies to communicate in an interoperable manner. "Vecima has a solid strategic plan to bring Spectrum's financial results into alignment with our historical profit model in the near term by taking advantage of a single exchange listing and streamlining administrative expenses through economies of scale," Dr. Kumar said. "The company is pleased to see so many Spectrum shareholders elect to receive Vecima shares and look forward to building upon Vecima's track record of 19 consecutive years of profitability." Vecima reiterates its expectation that the acquisition will be immediately accretive to revenues. About Vecima Networks Inc. Vecima Networks Inc. (TSX: VCM) -- http://www.vecimanetworks.com/ -- designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. The company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fiber to the home and IP video. About Spectrum Signal Based in Columbia, Maryland, Spectrum Signal Processing Inc. (TSX: SSY)(NASDAQ: SSPI) -- http://www.spectrumsignal.com/-- is a supplier of software-defined platforms for defense electronics applications. The company provides applications engineering services and modified commercial-off-the-shelf platforms to the US Government, its allies and its prime contractors. The company's products and services are optimized for military communications, signals intelligence, surveillance, electronic warfare and satellite communications applications. As of Dec. 31, 2006, the company had cash and cash equivalents of $1.7 million and net working capital of $3.5 million. The company has an undrawn line of credit facility of up to CDN$2.9 million. TERWIN MORTGAGE: S&P Puts Class I-B-6 Certs.' Rating on Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on five certificates issued by Terwin Mortgage Trust 2006-6. Of the five lowered ratings, two defaulted, one was placed on CreditWatch with negative implications, and two remain on CreditWatch negative. At the same time, the ratings on three other classes were placed on CreditWatch with negative implications. The lowered ratings and CreditWatch placements affecting certificates from loan group 1 are primarily due to a significant loss totaling $12.56 million, which occurred during the April 2007 remittance period. Prior to this sizeable loss, the average monthly losses for the most recent six months totaled approximately $1.09 million. The deal is nine months seasoned and is generating a reasonable amount of monthly excess interest; however, $10.23 million of the class I-B-8's principal balance was written down, causing the class to default. Total and serious (90-plus-days, foreclosure, and REO) delinquencies for this loan group are 7.57% and 4.22%, respectively. The lowered ratings and CreditWatch placements affecting the certificates from loan group 2 reflect the early deterioration of available credit support to these classes due to the poor performing collateral. This loan group also incurred a significant loss of $1.68 million during the April 2007 distribution period, which caused class II-B-6 to default. Prior to this distribution, average monthly losses for the most recent six months totaled approximately $185,938. Total and serious delinquencies for this loan group are 12.62% and 6.63%, respectively. Credit support for both loan groups was initially provided by excess interest, subordination, and building overcollateralization. The early losses incurred by these pools never allowed overcollateralization amounts for loan group 1 and loan group 2 to build to their respective targets of $21.6 million and $5.2 million, respectively. Standard & Poor's will continue to closely monitor the six classes with ratings on CreditWatch negative. If losses decline to a point at which they no longer exceed monthly excess interest, and the level of credit enhancement is not further eroded, S&P will affirm the ratings on these classes and remove them from CreditWatch. Conversely, if delinquencies continue to translate into substantial realized losses in the coming months and continue to erode available credit enhancement, S&P will lower the ratings on these classes, and further negative ration actions can be expected on the more senior tranches. The collateral for this deal initially consisted of closed-end second-lien mortgage loans. Rating Lowered and Placed on Creditwatch Negative Terwin Mortgage Trust 2006-6 Rating ------ Class To From ----- -- ---- I-B-6 BB-/Watch Neg BB+ Ratings Lowered and Remaining on Creditwatch Negative Terwin Mortgage Trust 2006-6 Rating ------ Class To From ----- -- ---- I-B-7 B-/Watch Neg BB-/Watch Neg II-B-5 B-/Watch Neg B/Watch Neg Ratings Lowered Terwin Mortgage Trust 2006-6 Rating ------ Class To From ----- -- ---- I-B-8 D CCC II-B-6 D CCC Ratings Placed on Creditwatch Negative Terwin Mortgage Trust 2006-6 Rating ------ Class To From ----- -- ---- I-B-4 BBB-/Watch Neg BBB- I-B-5 BBB-/Watch Neg BBB- II-B-4 BBB-/Watch Neg BBB- TRIAD HOSPITALS: Earns $222.3 Million in Year Ended December 31 --------------------------------------------------------------- Triad Hospitals Inc. reported net income of $222.3 million on revenues of $5.5 billion for the year ended Dec. 31, 2006, compared with net income of $226 million on revenues of $4.7 billion for the year ended Dec. 31, 2005. New hospital facilities, two in the second and fourth quarter of 2005 and three in the first and fourth quarter of 2006, increased revenues by $369.7 million in the year ended Dec. 31, 2006, compared to the year ended Dec. 31, 2005. Same facility revenues increased 9.2% in 2006 compared to 2005. Income from continuing operations decreased to $207.9 million in 2006 from $229.4 million in 2005. In 2006 management revised its estimate of uncollectible accounts which increased the allowance to approximately 72.2% of discounted billed uninsured receivables from 62.1% in 2005. This revision resulted in a reduction to income from continuing operations of approximately $28 million. Results for 2006 also included $27.7 million of share-based compensation expense from the adoption of SFAS 123R, while the results for 2005 included $8.4 million in refinancing transaction costs relating to the write-off of unamortized debt issue costs from the refinancing of the company's bank credit facility. Interest expense, net, decreased to $95.3 million in 2006 compared to $101.6 million in 2005, due primarily to the increase in interest income. The decrease was partially offset by an increase in interest rates on the company's floating rate debt. At Dec. 31, 2006, the company's balance sheet showed $6.2 billion in total assets, $2.7 billion in total liabilities, $340.8 million in minority interests, and $3.2 billion in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the year ended Dec. 31, 2006, are available for free at http://researcharchives.com/t/s?1e79 About Triad Hospitals Triad Hospitals Inc. (NYSE TRI) -- http://www.triadhospitals.com/ -- through its affiliates, owns and manages hospitals and ambulatory surgery centers in small cities and selected larger urban markets. The company currently operates 54 hospitals (including one under construction) and 13 ambulatory surgery centers in 17 states and Ireland with approximately 9,855 licensed beds. In addition, through its QHR subsidiary, the company provides management and consulting services to independent general acute care hospitals located throughout the United States. * * * As reported in the Troubled Company Reporter on March 22, 2007, Standard & Poor's reported that its B+ corporate credit rating on Triad Hospitals Inc. remains on CreditWatch with negative implications, where it was originally placed on Feb. 5, 2007. TRIBUNE CO: Fitch Downgrades Issuer Default Rating to B+ -------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Tribune Co.'s new senior secured credit facility. Fitch has also downgraded the company's Issuer Default Rating to 'B+' from 'BB-'. The ratings remain on Rating Watch Negative. -- Issuer Default Rating downgraded to 'B+' from 'BB-'; -- Senior unsecured notes downgraded to 'B-/RR6' from 'BB-'; -- Subordinated exchangeable debentures due 2029 downgraded to 'CCC+/RR6' from 'B+'. -- CP rating of 'B' withdrawn. Fitch rates the following: -- Senior secured credit facility 'BB/RR2'. The existing senior unsecured revolving credit facility rating of 'BB-' is expected to be withdrawn following completion of step one of the financing. The rating actions reflect the financing involved in the first step of the company's two-step transaction. The first step involves: -- Establishment of an ESOP which purchases a $250 million stake in Tribune; -- $4.3 billion cash tender for 126 million shares at $34 per share; -- The issuance of a new term loan B for $7.015 billion establishment of a $750 million revolving credit facility and $263 million delayed-draw term loan and the refinancing of existing credit facilities; -- An initial investment by EGI-TRB, L.L.C. (the Zell Entity) of $250 million; -- Payment of transaction fees. Funded debt, pro forma for successful completion of step one, is approximately $9.5 billion, and pro forma step one leverage (debt to EBITDA) is approximately 7 times (x) and is expected to be completed in the second quarter of 2007. The Recovery Ratings and notching reflect Fitch recovery expectations under a distressed scenario. Tribune's RRs for both steps reflect Fitch's expectation that the enterprise value of the company, and hence, recovery rates for its creditors, will be maximized in a restructuring scenario (as a going concern), rather than a liquidation. Following a successful completion of step one, the 'RR2' recovery rating for the company's new credit facilities reflects Fitch belief that 71%-90% recovery is reasonable given its priority position. The recovery rating of 'RR6' for the $1.5 billion of senior unsecured notes and for the $1.3 billion of subordinated exchangeable debentures (PHONES) due 2029 reflects Fitch's estimate that negligible recovery would be achievable due to their position in the capital structure. In step two: -- A subsidiary of the ESOP merges with Tribune with Tribune surviving as a wholly-owned subsidiary of the ESOP; -- Zell Entity invests an incremental $65 million; -- The company establishes a $2.105 billion incremental term loan B facility and a $2.1 billion bridge facility (or issues $2.1 billion of senior unsecured notes); -- The company purchases the remaining outstanding shares for $4.3 billion; -- Necessary regulatory approvals are expected to be obtained. Exclusive of asset disposition proceeds, pro forma debt after step two would be approximately $13 billion and pro forma leverage would be approximately 9x-9.5x. Separately the company has announced plans to sell the Cubs and its stake in Comcast Sports Net following the 2007 season. Step two is expected to be completed in the fourth quarter of 2007. If the transaction is not consummated as proposed, Fitch believes it is not likely that another course of action would result in an IDR higher than 'B+'. The rating actions below are based on the assumptions that step two is completed as proposed and the business risk profile remains steady. Fitch would expect to remove the ratings from Rating Watch and assign a Stable Outlook. Given the timeframe and uncertainties between steps one and two, Fitch notes that the ultimate ratings may differ from the guidance below. -- Issuer Default Rating (IDR) to 'B-' from 'B+'; -- Senior secured revolving credit facility to 'B/RR3' from 'BB/RR2'; -- Senior unsecured notes to 'CCC/RR6' from 'B-/RR6'; -- Subordinated exchangeable debentures due 2029 to 'CCC-/RR6' from 'CCC+/RR6'. Assuming a successful completion of step two, Fitch expects to lower the recovery rating for the company's first priority credit facilities (which would include the incremental $2.105 term loan B) to 'RR3' from 'RR2' reflecting Fitch's belief that 51%-70% recovery is reasonable. While recognizing they have different levels of priority, Fitch would expect to assign an 'RR6' to the proposed $2.1 billion of new unsecured notes and maintain the 'RR6' on existing senior unsecured and subordinated exchangeable debentures (PHONES). The 'RR6' ratings reflect Fitch's estimate that negligible recovery would be achievable due to their subordination in the capital structure. Fitch's ratings reflect the priority and security of the different debt instruments. The step-one bank facilities and step-two incremental facility will be secured by a pledge of stock from two newly formed holding companies: Tribune Broadcasting Holdco LLC and Tribune Finance LLC. These facilities will also receive a senior guarantee from the same operating subsidiaries. The step- two bridge facility will have a subordinated guarantee from certain operating subsidiaries. The existing notes will be secured equally and ratably by the pledge of stock in the new holdcos (in accordance with the negative pledge in their indentures) but will not receive a guarantee from operating subsidiaries and will thus be subordinated to the secured bank debt and potential new senior unsecured bonds. Fitch's rating actions also reflect the significant debt burden the announced transaction places on the company's balance sheet while its revenue and cash flow have been declining. Fitch believes that newspapers and broadcast affiliates (particularly in large markets where there is more competition for advertising dollars) face meaningful secular headwinds that could lead to more cash flow volatility in the future. With fixed charge coverage estimated to be below 1.3x there is very little room to absorb declines in EBITDA. The company derives a material portion of its cash flow from volatile classified categories (Auto, Help Wanted, and Real Estate) of its publishing division. This category is presently facing both secular and cyclical challenges with revenues down approximately 15% in the first quarter of 2007. Also, with the limited track record and uncertain future performance of the nascent CW network, the company's cash flows from the bulk of its broadcast stations could fluctuate even more than the historical odd/even-year political and Olympic swings that are inherent in the business. Fitch believes these factors could impair the company's ability to service its debt, particularly if coupled with a cyclical downturn. Fitch's expectation to assign a Stable Outlook after step two of the transaction is predicated upon on the view that Tribune's portfolio of assets affords it the flexibility to postpone and potentially avoid financial distress even if its core businesses under-perform to a degree. The company's portfolio is separable in that parts of its holdings could be liquidated to generate cash without significant organizational burden. (Fitch expects final credit documents would require that 100% of proceeds from non- ordinary course asset sales would be used to pay down the secured facility subject to certain exceptions). Notable separable assets include the Food Network (31%) and CareerBuilder (43%) stakes in addition to its 11 newspapers and 23 broadcast stations. Fitch recognizes there has been demonstrated interest in the Food Network stake and in a number of the company's newspapers and stations from a mix of financial and strategic buyers. While there may be tax considerations with certain assets and the CareerBuilder stake could be difficult to monetize without the consent of its partners, Fitch believes the composition of the company's portfolio enhances management's options and flexibility if faced with potential financial distress in the core business. Resolution of the Rating Watch will include Fitch's evaluation of the company's strategic direction, ultimate transaction structure, review of credit documents, pro forma credit metrics and overall financial policies. The resolution will incorporate Fitch's view of the risks of accelerated deterioration in the company's major business lines and markets. WACHOVIA BANK: S&P Rates $21.9MM S. 2007-C31 Class N Certs. at BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Wachovia Bank Commercial Mortgage Trust's $5.845 billion commercial mortgage pass-through certificates series 2007-C31. The preliminary ratings are based on information as of May 3, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Class A-1, A-2, A-3, A- PB, A-4, A-5, A-1A, A-M, A-J, B, C, D, E, and F are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool, excluding the Peter Cooper Village and Stuyvesant Town loan, has a debt service coverage of 1.15x, a beginning LTV of 126.9%, and an ending LTV of 123.5%. Unless otherwise indicated, all weighted average LTV, DSC, coupon, and capitalization rate calculations in this presale report do not include the Peter Cooper Village and Stuyvesant Town Pool loan (4.2% of the pool balance). Preliminary Ratings Assigned Wachovia Bank Commercial Mortgage Trust Recommended Class Rating Amount Credit support ----- ------ ------ ------------ A-1 AAA $50,915,000 30.000% A-2 AAA $63,472,000 30.000% A-3 AAA $188,934,000 30.000% A-PB AAA $85,404,000 30.000% A-4 AAA $1,025,472,000 30.000% A-5 AAA $750,000,000 30.000% A-1A AAA $1,327,630,000 30.000% A-M AAA $584,547,000 20.000% A-J AAA $460,331,000 12.125% B AA+ $ 36,534,000 11.500% C AA $73,068,000 10.250% D AA- $73,069,000 9.000% E A+ $29,227,000 8.500% F A $51,148,000 7.625% A-5FL* AAA TBD 30.000% A-MFL* AAA TBD 20.000% A-JFL* AAA TBD 12.125% G A- $58,454,000 6.625% H BBB+ $80,376,000 5.250% J BBB $51,147,000 4.375% K BBB- $65,762,000 3.250% L BB+ $29,227,000 2.750% M BB $14,614,000 2.500% N BB- $21,921,000 2.125% O NR $14,614,000 1.875% P NR $14,613,000 1.625% Q NR $14,614,000 1.375% S NR $80,375,231 0.000% X-P** AAA TBD N/A X-C** AAA TBD N/A X-W** AAA TBD N/A * Floating-rate class. ** Interest-only class with a notional amount. NR -- Not rated. TBD -- To be determined. N/A -- Not applicable. VWR INTERNATIONAL: Company Sale Cues S&P's Negative Watch --------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating on VWR International Inc. on CreditWatch with negative implications in light of its sale by current owner Clayton, Dubilier & Rice Inc. to another private equity firm, Madison Dearborn Partners LLC. "Although the terms of the transaction have not been disclosed, it could cause an increase in the company's leverage," explained Standard & Poor's credit analyst David Lugg. "The company's debt to EBITDA for 2006 was 7.6x." S&P expect that VWR's current rated debt will be repaid in this transaction. Accordingly, the ratings on the senior secured, senior unsecured, and subordinated debt of VWR and its parent, CDRV Investors Inc., are not on CreditWatch and will likely be withdrawn when the transaction closes, now expected to be in the third quarter of 2007. S&P will resolve the CreditWatch when the transaction's financing is determined. WEDA SHAH: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Weda Shah fdba World Mutual Financial Mortgage 8120 West Depot Master Court Tracy, CA 95304 Bankruptcy Case No.: 07-23198 Chapter 11 Petition Date: May 2, 2007 Court: Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: David C. Johnston, Esq. Gianelli & Associates P.O. Box 3212 Modesto, CA 95353 Tel: (209) 521-6260 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not submit a list of its largest unsecured creditors. WESTMORELAND COAL: Intends to Launch $85 Million Rights Offering ---------------------------------------------------------------- Westmoreland Coal Company plans to conduct a rights offering, with a minimum size of $85 million, of common stock to its shareholders. The subscription price for the rights offering will be $18.00 per share. Tontine Capital Standby Purchase Agreement In connection with the proposed rights offering, the company has entered into a standby purchase agreement with Tontine Capital Partners, L.P., which together with its affiliates currently owns 17.1% of the company's outstanding shares. Pursuant to this agreement, Tontine has agreed to provide the company with a "backstop" commitment to exercise any rights remaining unexercised at the close of the rights offering, provided that its ownership does not exceed 30% of the fully diluted shares after the rights offering. In the event that Tontine's ownership after the rights offering is less than 25% of the fully diluted shares, Tontine will have the option to purchase additional shares at the subscription price that could raise its ownership in the company to 25% of the fully diluted shares. Proceeds from the rights offering will be used to fund capital expenditures that are expected to lower the company's coal mining production costs, fund future growth initiatives and provide working capital, as well as for general corporate purposes. Proposed Preferred Stock Retirement As part of the transaction, the company intends to retire its outstanding Series A Convertible Exchangeable Preferred Stock, each share of which is represented by four depositary shares, and the company is evaluating options to achieve this objective. The company intends to use a portion of the proceeds from the rights offering to redeem the depositary shares that are outstanding at the conclusion of the rights offering. Pursuant to the agreement between the company and Tontine, Tontine has the right to appoint two individuals to the company's Board of Directors, and the company has agreed to limit the number of directors to seven. "The Board of Directors views the rights offering as a landmark event in the company's long history," Robert E. Killen, the Company's Vice-Chairman, said. "If the rights offering is completed, the cash infusion will eliminate the company's near- term liquidity concerns, provide for cost improvement opportunities, expand mine capacity and create flexibility in the development of new business projects. Of additional significance will be the retirement of the outstanding preferred stock, which the company views as an important step towards simplifying the company's capital structure." The agreement is subject to several closing conditions, including approval of the company's shareholders. Because the company must register the rights offering with the Securities and Exchange Commission, no record date for the offering has been set yet. CEO To Resign The Board of Directors disclosed that Christopher K. Seglem, Chairman, President and Chief Executive Officer, would be leaving the company to pursue other interests. "Chris has been with the Company for 27 years and was responsible for transforming the Company from an operator of underground mines, based in the East, to its present position as one of the largest operators of surface mines in the country and owner of electrical power generating plants," Mr. Killen said. "The Board recognizes Chris' dedication to Westmoreland's survival and the Company's extraordinary achievements under his leadership." In connection with Mr. Seglem's departure, Mr. Killen has been appointed as the non-executive Chairman of the Board of Directors, and the company has appointed Keith E. Alessi as the interim Chief Executive Officer of the company. Mr. Alessi is an accomplished manager with over 25 years of senior executive experience in the turnaround of a number of public and private companies. He has served in various capacities including CEO, COO and CFO in such situations. Mr. Alessi is a Director and Chairman of the audit committee of both Town Sports International of New York City and H&E Equipment Services of Baton Rouge, Louisiana. He is also a director of MWI Veterinary Services of Boise, Idaho. Since 1999, Mr. Alessi has been an adjunct professor of law at The Washington and Lee University School of Law in Lexington, Virginia and since 2001 has been an adjunct lecturer of business at the Ross School of Business at the University of Michigan. About Westmoreland Based in Colorado Springs, Colorado, Westmoreland Coal Company (AMEX:WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States and a developer of highly clean and efficient independent power projects. The company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its current power operations include ownership and operation of the two-unit ROVA coal-fired power plant in North Carolina, an interest in a natural gas-fired power plant in Colorado, and the operation of four power plants in Virginia. At Dec. 31, 2006, the company's balance sheet showed a stockholders' deficit of $126,185,000, compared to a deficit of $10,192,000 at Dec. 31, 2005. WHITE BIRCH: S&P Rates Proposed $425 Million 1st-Lien Loan at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to the amended and restated term loan facilities of Nova Scotia-based White Birch Paper Co. based on preliminary terms and conditions. The proposed financing consists of a $425 million first-lien term loan and a $125 million second-lien term loan. The first-lien facility is rated 'B+', one notch higher than the corporate credit rating on the company, with a recovery rating of '1', indicating the expectation for full (100%) recovery of principal in the event of a payment default. The second-lien facility is rated 'B', with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. Proceeds will be used to repay the $358 million outstanding under the existing first-lien term loan and the $166 million outstanding under the existing second-lien term loan. The 'B+' bank loan and '1' recovery ratings on the company's $90 million senior secured revolving credit facility were affirmed at the same time. Standard & Poor's will immediately withdraw the ratings on the proposed $550 million first-lien senior secured term loan facility that were assigned on April 12, 2007. Ratings List White Birch Paper Co. Corporate credit rating B/Stable/-- Ratings Assigned $425 million first-lien term loan B+ (Recovery rtg: 1) $125 million second-lien term loan B (Recovery rtg: 2) Ratings Affirmed $90 million senior secured revolving credit facility B+ (Recovery rtg: 1) XERIUM TECHNOLOGIES: Secures Amendment to Senior Credit Facility ---------------------------------------------------------------- In steps designed to facilitate future growth, Xerium Technologies Inc. secured an amendment to its existing senior credit facility, amended its agreement with certain shareholders with respect to the company's dividend reinvestment plan, changed its dividend policy and reaffirmed elements of its investment plan. The company's Board of Directors also declared a cash dividend under the new dividend policy. "These steps together provide improved financial flexibility to the company that we believe will enable us to capitalize more aggressively on the long-term growth opportunities while accelerating reduction of our debt and improving our overall capital structure," Thomas Gutierrez, Xerium's Chief Executive Officer, said. "Given the additional flexibility provided in part by the reduction in dividend, we expect to pursue our previously- announced plans to build a clothing manufacturing operation in Vietnam, fund additional investments in our roll cover business, expand our presence in South America and implement further actions aimed at reducing our overall cost structure." "We are also exploring expansion opportunities in Eastern Europe consistent with our efforts to continue to improve our competitive position in the marketplace and better serve the needs of our customers," Mr. Gutierrez added. "We have identified a significant array of investment opportunities that we believe would improve Xerium's growth profile and profitability over time. As such, we expect to continue to review our capital structure and strategic alternatives to insure that we are taking the best advantage of these opportunities." The amendment to the credit facility includes, among other changes, these changes: * reduction of the minimum interest coverage ratio covenant for the period from the second quarter of 2007 through 2012 and of the minimum fixed charge ratio covenant for the period from the second quarter of 2007 through 2012. * changes to previously existing covenant limiting dividends to make it more restrictive and the insertion of a covenant limiting the quarterly dividend payable on common stock of the company to not more than $0.1125 per share in addition to the other restrictions on dividends. * reduction of mandatory excess cash flow prepayment percentages in the event there is Excess Cash (as defined in the Credit Agreement) to 40% in fiscal year 2007, 27.5% in fiscal year 2008, and 50% in each fiscal year thereafter. * changes to the definition of Adjusted EBITDA to add back Consolidated Restructuring and Growth Program Costs, subject to certain limitations. * other changes that provide enhanced flexibility to invest in capital expenditures, joint ventures and acquisitions, subject to various restrictions. In connection with the amendment, the company paid an amendment fee of approximately $1.5 million, as well as other fees and expenses. Dividend Reinvestment Plan Participation In connection with the changes to the credit agreement, certain investment entities managed directly or indirectly by Apax Europe IV GP Co Ltd have extended their commitment to participate in the company's dividend reinvestment plan through Dec. 31, 2008 pursuant to terms in place under the December 2006 agreement between these Apax entities and the company. As of April 1, 2007, the Apax entities collectively held 23,532,351.8 shares of common stock of the company or approximately 53% of the outstanding common stock of the company. New Dividend Policy In addition, Xerium's Board of Directors has re-evaluated the company's existing dividend policy adopted in May 2005, and the rate at which Xerium has paid quarterly dividends. The Board determined to adopt a new dividend policy under which quarterly dividends will be paid at an amount to be determined by the Board on a quarterly basis taking into account those factors deemed relevant by the Board. These factors may include such matters as the company's financial performance, the sufficiency of cash flow from operations to fund dividends, credit facility limitations, growth opportunities and debt repayments considerations. Under the new dividend policy, on May 2, 2007, the company's Board of Directors declared a cash dividend of $0.1125 per share of common stock payable on June 15, 2007, to shareholders of record as of the close of business on June 5, 2007. This reflects a reduction from the quarterly dividend paid in the preceding six quarters of $0.225 per common share. About Xerium Xerium Technologies Inc. (NYSE: XRM) -- http://xerium.com/-- manufactures and supplies two types of products used primarily in the production of paper: clothing and roll covers. The company, which operates around the world under a variety of brand names, owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 35 manufacturing facilities in 15 countries around the world, Xerium Technologies has approximately 3,800 employees. * * * As reported in the Troubled Company Reporter on Feb. 13, 2007, Moody's Investors Service downgraded Xerium Technologies': Corporate Family Rating, to B2 from B1; Senior Secured Term Loan, to B2 from B1; Senior Secured Revolving Credit Facility, to B2 from B1; and Probability of Default Rating, to B2 from B1. * White and Williams Builds Partnership with China's Xue Law Firm ----------------------------------------------------------------- White and Williams LLP have formalized a strategic alliance with the Xue Law Firm, a ten-attorney commercial practice firm based in Shanghai, China. Since the summer of 2006, White and Williams has been working on a cooperative basis with the Xue Law Firm. White and Williams Associate Chunsheng Lu, born in Shanghai and holding law degrees from both China and U.S. based Universities, spent 10 weeks in July and August of 2006 working out of the Xue Law Firm's Shanghai office. Lu is a member of both the Pennsylvania Bar and the China National Bar. After China's Cultural Revolution in the 1970's, managing partner of the Xue Law Firm, Weiyong Xue, became one of the first legal practitioners in China. Xue was a member of Shanghai First Law Firm, the first law firm established in China, until he founded the Xue Law Firm in 2001. Xue's practice includes civil litigation and complex business transactions. He represented the Shanghai government in its first joint venture negotiation with a German automobile company. White and Williams established its China Practice Group in 2003 and the Shanghai alliance is a necessary step in the expansion of the Firm's China-related services. "The firm has been assisting its U.S. clients in pursuing business opportunities in China for some time," Gary P. Biehn, chair of both the Business Department and the China Practice Group at White and Williams, commented. "The firm's alliance with the Xue Law Firm is a natural progression for White and Williams -- the firm need to have attorneys in China on a continual basis." The Shanghai alliance provides White and Williams' clients with a law firm in the Chinese marketplace. Not only will this alliance allow the Firm to better serve U.S. companies going to China, but it will provide a venue for serving China-based companies seeking to make investments in the United States. "The firm has been assisting White and Williams U.S.-based clients with their China operations and the Shanghai alliance will provide us with a vehicle to serve Chinese companies looking to the U.S," George J. Hartnett, chair of the firm's executive committee, said. "The firm believes the Shanghai alliance will make the Chinese market a two-way street for White and Williams -- the firm and the Xue Law Firm can help companies coming and going." About White and Williams LLP Headquartered in Philadelphia, Pennsylvania and founded in 1899, White and Williams LLP -- http://www.whiteandwilliams.com/-- has over 230 attorneys that represents clients in transactional matters and all aspects of civil litigation and appellate practice in state and federal courts. The firm's business practice includes such matters as the formation, governance and operation of corporate organizations, mergers and acquisitions, regulatory compliance and bankruptcy related matters. The firm's litigation practice encompasses such areas as business and employment issues, products liability, medical malpractice, toxic and mass torts, and insurance coverage and reinsurance matters. * Xue Law Formally Unites with Pennsylvania-based White & Williams ------------------------------------------------------------------ Xue Law Firm disclosed that it has formalized strategic alliance with the Philadelphia, Pennsylvania-based law firm, White and Williams LLP. Since the summer of 2006, Xue Law Firm has been working on a cooperative basis with the White and Williams. Chunsheng Lu, a White and Williams Associate, born in Shanghai and holding law degrees from both China and U.S. based Universities, spent 10 weeks in July and August of 2006 working out of the Xue Law Firm's Shanghai office. Lu is a member of both the Pennsylvania Bar and the China National Bar. After China's Cultural Revolution in the 1970's, Weiyong Xue, managing partner of the Xue Law Firm, became one of the first legal practitioners in China. Xue was a member of Shanghai First Law Firm, the first law firm established in China, until he founded the Xue Law Firm in 2001. Xue's practice includes civil litigation and complex business transactions. He represented the Shanghai government in its first joint venture negotiation with a German automobile company. According to Gary P. Biehn, chair of both the Business Department and the China Practice Group at White and Williams, the Shanghai alliance is necessary for the expansion of White and Williams' China-related services. Mr. Biehn also stated that the alliance is a natural progression for White and Williams, as the firm needs to have attorneys in China on a continual basis." The Xue Law Firm, through the Shanghai alliance will be able to provide White and Williams' clients with a law firm in the Chinese marketplace. The alliance will also allow Xue serve the U.S. companies going to China. Additionally, the alliance will provide the clients with a venue for serving China-based companies seeking to make investments in the United States. About White and Williams LLP Headquartered in Philadelphia, Pennsylvania and founded in 1899, White and Williams LLP -- http://www.whiteandwilliams.com/-- has over 230 attorneys that represents clients in transactional matters and all aspects of civil litigation and appellate practice in state and federal courts. The firm's business practice includes such matters as the formation, governance and operation of corporate organizations, mergers and acquisitions, regulatory compliance and bankruptcy related matters. The firm's litigation practice encompasses such areas as business and employment issues, products liability, medical malpractice, toxic and mass torts, and insurance coverage and reinsurance matters. The firm's China Practice Group was established in 2003. Xue Law Firm Based in Shanghai, China, Xue Law Firm is a ten-attorney commercial practice firm that has been assisting White and Williams U.S.-based clients with their China operations. * BOND PRICING: For the week of April 30 - May 4, 2007 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- AHI-DLTO7/05 8.625% 10/01/07 75 Allegiance Tel 11.750% 02/15/08 50 Allegiance Tel 12.875% 05/15/08 50 Amer & Forgn Pwr 5.000% 03/01/30 69 Antigenics 5.250% 02/01/25 74 Atherogenics Inc 1.500% 02/01/12 51 Atlantic Coast 6.000% 02/15/34 6 Bank New England 8.750% 04/01/99 9 Bank New England 9.500% 02/15/96 14 Bank New England 9.875% 09/15/99 8 Better Minerals 13.000% 09/15/09 70 Budget Group Inc 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 57 Calpine Corp 4.000% 12/26/06 70 Calpine Gener Co 11.500% 04/01/11 35 Cell Therapeutic 5.750% 06/15/08 74 CHS Electronics 9.875% 04/15/05 1 Collins & Aikman 10.750% 12/31/11 4 Complete Mgmt 8.000% 12/15/03 0 Dairy Mart Store 10.250% 03/15/04 0 Decode Genetics 3.500% 04/15/11 72 Delco Remy Intl 9.375% 04/15/12 38 Delco Remy Intl 11.000% 05/01/09 39 Delta Air Lines 2.875% 02/18/24 58 Delta Air Lines 7.700% 12/15/05 56 Delta Air Lines 7.900% 12/15/09 53 Delta Air Lines 8.000% 06/03/23 57 Delta Air Lines 8.300% 12/15/29 48 Delta Air Lines 9.000% 05/15/16 53 Delta Air Lines 9.250% 03/15/22 55 Delta Air Lines 9.750% 05/15/21 54 Delta Air Lines 10.000% 08/15/08 54 Delta Air Lines 10.000% 12/05/14 58 Delta Air Lines 10.125% 05/15/10 55 Delta Air Lines 10.375% 02/01/11 45 Delta Air Lines 10.375% 12/15/22 58 Delta Mills Inc 9.625% 09/01/07 14 Deutsche Bank NY 8.500% 11/15/16 73 Diamond Triumph 9.250% 04/01/08 55 Diva Systems 12.625% 03/01/08 0 Dura Operating 8.625% 04/15/12 36 Dura Operating 9.000% 05/01/09 8 Empire Gas Corp 9.000% 12/31/07 1 Encysive Pharmacy 2.500% 03/15/12 70 Exodus Comm Inc 4.750% 07/15/08 0 Fedders North AM 9.875% 03/01/14 48 Finova Group 7.500% 11/15/09 27 Florsheim Group 12.750% 09/01/02 0 Ford Motor Co 6.625% 02/15/28 73 Ford Motor Co 7.400% 11/01/46 75 Ford Motor Co 7.700% 05/15/97 75 Global Health Sc 11.000% 05/01/08 8 Golden Books Pub 10.750% 12/31/04 0 Gulf States Stl 13.500% 04/15/03 0 Hills Stores Co 12.500% 07/01/03 0 Home Prod Intl 9.625% 05/15/08 26 Insight Health 9.875% 11/01/11 29 Iridium LLC/CAP 10.875% 07/15/05 23 Iridium LLC/CAP 11.250% 07/15/05 22 Iridium LLC/CAP 13.000% 07/15/05 23 Iridium LLC/CAP 14.000% 07/15/05 22 JTS Corp 5.250% 04/29/02 0 Kaiser Aluminum 9.875% 02/15/02 21 Kaiser Aluminum 12.750% 02/01/03 0 Kellstrom Inds 5.750% 10/15/02 0 Keystone Cons 9.625 08/01/07 42 Kmart Corp 8.990% 07/05/10 10 Kmart Corp 9.350% 01/02/20 12 Kmart Corp 9.780% 01/05/20 10 Liberty Media 3.750% 02/15/30 63 Liberty Media 4.000% 11/15/29 67 LTV Corp 8.200% 09/15/07 0 MacSaver Financl 7.400% 02/15/02 0 MacSaver Financl 7.875 08/01/03 2 Motorola Inc 5.220% 10/01/97 74 New Orl Grt N RR 5.000% 07/01/32 71 Nexprise Inc 6.000% 04/01/07 0 Northern Pacific RY 3.000% 01/01/47 56 Northern Pacific RY 3.000% 01/01/47 56 Northwest Airlines 7.875% 03/15/08 71 Northwest Airlines 8.7005 03/15/07 72 Northwest Airlines 8.875% 06/01/06 71 Northwest Airlines 10.000% 02/01/09 72 Northwst Stl&Wir 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 75 Nutritional Src 10.125% 08/01/09 66 Oakwood Homes 7.875% 03/01/04 11 Oakwood Homes 8.125% 03/01/09 11 Outboard Marine 9.125% 04/15/17 1 Pac-West Telecom 13.500% 02/01/09 10 Pac-West Telecom 13.500% 02/01/09 20 Pegasus Satellite 9.750% 12/01/06 8 Pegasus Satellite 12.375% 08/01/08 0 Pegasus Satellite 12.500% 08/01/07 0 Phar-Mor Inc 11.720 12/31/49 3 Piedmont Aviat 10.350% 03/28/11 2 Polaroid Corp 6.750% 01/15/02 0 Polaroid Corp 7.250% 01/15/07 0 Primus Telecom 3.750% 09/15/10 63 Primus Telecom 8.000% 01/15/14 70 PSINET Inc 11.500% 11/01/08 0 Radnor Holdings 11.000% 03/15/10 0 Railworks Corp 11.500% 04/15/09 0 RJ Tower Corp. 12.000% 06/01/13 7 SLM Corp 5.000% 12/15/28 73 Spacehab Inc 5.500% 10/15/10 65 Tech Olympic 7.500% 03/15/11 74 Tech Olympic 7.500% 01/15/15 71 Tom's Food Inc 10.500% 11/01/04 2 United Air Lines 8.390 01/21/11 0 United Air Lines 10.110% 02/31/49 0 US Air Inc. 10.680% 06/27/08 0 USAutos Trust 2.212% 03/03/11 7 Vesta Insurance Group 8.750% 07/15/25 5 Werner Holdings 10.000% 11/15/07 5 Wheeling-Pitt St 5.000% 08/01/11 74 Wheeling-Pitt St 6.000% 08/01/10 74 ********* 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, John Paul C. Canonigo, 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 ***