/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070626.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 26, 2007, Vol. 11, No. 149 Headlines 17914 JOHN CONNOR: Voluntary Chapter 11 Case Summary ACA ABS: Fitch Puts Class C Notes' BB Rating Under Negative Watch ADELPHIA COMMS: Completes "True Up" Mechanism under Confirmed Plan AES CORPORATION: Posts $455 Million Loss in Quarter Ended March 31 ALLEGHENY ENERGY: PJM Okays 765-kV Transmission Project with AEP ALLIED DEFENSE: Inks Pact with Noteholders to Settle Default Row AMERICAN CAMPUS: Moody's Affirm Ba2 Rating with Stable Outlook AMERICAN CAMSHAFT: Wants to Sell Assets to Hilco for $5.5 Million AQUILA INC: Moody's Lifts Corporate Family Rating to Ba2 from B1 AVISTA CORP: Moody's Places All Ratings Under Review BCE INC: Telus Merger to Pass Through Critical Review BEAR STEARNS: Moody's Affirm Low-B Ratings on Six Certificates BILL PHILLPS: Case Summary & 15 Largest Unsecured Creditors BIOMET INC: Moody's Confirms Corporate Family Rating at P(B2) CALPINE CORP: Lloyd Will Joins as Structuring & Analytics VP CALPINE CORP: Discloses Liquidation Analysis Under Joint Plan CANWEST MEDIAWORKS: Moody's Lowers Corporate Family Rating to B1 CAPITAL RESERVE: Posts $188,745 Net Loss in Year Ended December 31 CATHOLIC CHURCH: Victims Join Panel vs. San Diego's Bar Date Plea CATHOLIC CHURCH: Panel Objects to San Diego's Lease Extension Plea CATHOLIC CHURCH: Davenport Can Sell Farm for $310,000 CITIGROUP MORTGAGE: Fitch Affirms B Ratings on Two Classes COMMERCIAL MORTGAGE: Moody's Affirm Low-B Ratings on Five Certs. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Two Classes CROSSWINDS AT MESQUITE: Voluntary Chapter 11 Case Summary CWALT 2006-43CB: Fitch Puts Low-B Ratings Under Negative Watch DAYTON SUPERIOR: Moody's Lifts Corporate Family Rating to B2 DEATH ROW: Marion Knight to Sell Malibu Mansion for $6.2 Million DELPHI CORP: Reaches Tentative Deal with UAW and General Motors DELTA FUNDING: S&P Downgrades Rating on Class M-2 Certs. to CCC DELUXE CORP: Appoints Baldwin, McGrath, and Metviner as Directors DEUTSCH ALT-A: Fitch Puts Ratings on Two Classes on Watch Negative DOBSON COMM: Mulls Sale of Firm, Hires Morgan Stanley DORAL FINANCIAL: FBOP Decides Not to Proceed with Investment Plan ENCORE ACQUISITION: Moody's Holds Corporate Family Rating at Ba3 FINLAY ENT: Inks Amended Pact with GE to Expand Credit Facility FORD MOTOR: Denies Plans to Build Slovak Plant; Eyes Romania FURNITURE BRANDS: Weak Performance Cues S&P to Cut Rating to BB- GENERAL MOTORS: Reaches Tentative Deal with UAW and Delphi Corp. GSAA HOME: Moody's Puts Ba1 Rating Under Review HARGRAY COMMS: Moody's Says Loan Changes Won't Affect Ratings HARLAN SPRAGUE: Moody's Affirms Corporate Family Rating at B2 HEALTH NET: Moody's Rates Shelf Registration at P(Ba2) INDYMAC MBS: Fitch Puts BB Rating on Class 2B-5 on Watch Negative INTEGRATED HEALTH: Claims Objection Deadline Moved to August 30 INTERFACE INC: Fabrics Division Sale Cues S&P's Positive Watch ION MEDIA: Board Appoints Todd Gjervold as Director IPSWICH STREET: Fitch Puts Class E Notes' Rating on Watch Negative JABIL CIRCUIT: Third Quarter 2007 Net Income Down to $6.2 Million JOAN FABRICS: U.S. Trustee and GE Balk at Proposed Asset Sale JOAN FABRICS: Judge Sontchi Approves Incentive Program JSC RESOURCES: Voluntary Chapter 11 Case Summary LB-UBS COMM: Fitch Affirms C Ratings on Class N and P Certs. LEAR CORP: Reschedules 2007 Annual Meeting to July 12 LEXINGTON RESOURCES: Posts $549,837 Net Loss in Qtr. Ended Mar. 31 LIMITED BRANDS: Debt Increase Cues Moody's Ratings Review LSF 5 WAGON: S&P Places Corporate Credit Rating at B MACKINAW POWER: S&P Rates $147MM Senior Secured Term Loan at BB- MARCAL PAPER: Files Chapter 11 Plan of Reorganization MASSACHUSETTS HEALTH: S&P Downgrades Bonds' Rating to BB+ MERRILL LYNCH: Moody's Affirm Low-B Ratings on Three Certificates MERRILL LYNCH: Moody's Junks Rating on Class B-3 Certificates MERITAGE MORTGAGE: Moody's Junks Rating on Class B-1 Certificates MITEL NETWORKS: ISS Urges Shareholders to Snub Inter-Tel Merger MORTGAGE ASSET: Fitch Affirms B Rating on Class B-5 Certificates MORTGAGE ASSET: Fitch Holds B Rating on 2003-8 Class B-5 Certs. MORTGAGE ASSET: Fitch Affirms BB Ratings on Two Cert. Classes NEWFIELD EXPLORATION: Inks New $1.25 Billion Credit Facility NUANCE COMMS: Inks Pact To Acquire Tegic for $265 Million in Cash ONEIDA INC: Moody's Places Corporate Family Rating at B2 PAETEC HOLDING: S&P Junks Rating on Proposed $300 Mil. Sr. Notes PLEASANT CARE: Wants to Sell All Assets on July 2 Auction PLEASANT CARE: Taps Paul Gulbrandson as Medicare Appeals Counsel PLEASANT CARE: Files Schedules of Assets & Liabilities PPM AMERICA: Fitch Downgrades Ratings on Three Note Classes PRICELINE.COM INC: Strong Performance Cues S&P's Upgrade to B+ PRIMERA HOMES: Case Summary & 20 Largest Unsecured Creditors PSEG ENERGY: S&P Affirms Corporate Credit Rating at BB- QUEENS SEAPORT: Trustee Wants Further Use of Cash Collateral RCN CORP: To Acquire NEON Communications for $260 Million in Cash RESIDENTIAL ACCREDIT: Fitch Downgrades Ratings on Three Classes SACO I: S&P Lowers Ratings on 13 Classes SALOMON BROTHERS: Fitch Affirms B- Rating on $5.9MM Class K Loans SCOTTISH RE: Annual Shareholders Meeting Scheduled on July 18 SEA CONTAINERS: Court Okays Deloitte & Touche as Auditors SEA CONTAINERS: Trustee & GE Capital Opposes $176MM DIP Financing SEQUOIA MORTGAGE: Fitch Affirms BB Rating on Class B-5 Certs. SIERRA PACIFIC: Affiliates Close Mortgage Securities Tender Offer SOVEREIGN COMMERCIAL: Fitch Puts Low-B Ratings on Three Certs. SPEAKING ROSES: March 31 Balance Sheet Upside-Down by $5.6 Million STA-BILT PRODUCTS: Case Summary & 20 Largest Unsecured Creditors STRATS: S&P Affirms BB+ Ratings on Classes A-1 and A-2 Certs. STRUCTURED ASSET: Fitch Downgrades Ratings on Two Cert. Classes TERWIN MORTGAGE: S&P Lowers Ratings on 51 Certificate Classes TRAINER WORTHAM: Fitch Puts BB Rating on Watch Negative TRANS ENERGY: Completes Financing Deal with CIT Energy TRINITY INDUSTRIES: S&P Lifts Corp. Credit Rating to BB+ from BB U.S. ENERGY: UK Financing Failure Could Prompt Bankruptcy Filing U.S. ENERGY: Board Suspends UK Unit CEO Grant Emms U.S. ENERGY: Weiser LLP Expresses Going Concern Doubt UNITED AMERICAN: March 31 Balance Sheet Upside-Down by $741,332 VENTURE CDO: S&P Withdraws BB Rating on $8 Million Class D Notes VONAGE HOLDINGS: Appeals Court Wants "Middle Ground" Considered W.R. GRACE: Wants Exclusive Plan-Filing Period Further Extended W.R. GRACE: Wants to Sell Washcoat Business for $21.9 Million WAVE WIRELESS: Court Confirms Amended Plan of Reorganization WHITING PETROLEUM: Commences 5 Million Common Stock Offering WHX CORP: March 31 Balance Sheet Upside-down by $73.3 Million WINN-DIXIE STORES: Hires Dan Portnoy as Senior Vice-President WINSTAR COMMS: Court Okays Wellspring Media Settlement Agreement WINSTAR COMMS: Lucent Brings $244MM Dispute to 3rd Circuit Court XENONICS HOLDINGS: Posts $177,000 Net Loss in Qtr. Ended March 31 XILLIX TECHNOLOGIES: Court Gives Interim Nod on Plan of Compromise * Dewey Ballantine Adds Three Partners to IP Litigation Group * Reed Smith Adds E. Estrada to Commercial Restructuring Practice * S&P Takes Various Rating Actions on 133 Classes from 23 Issuers * Large Companies with Insolvent Balance Sheets ********* 17914 JOHN CONNOR: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: 17914 John Connor, L.L.C. P.O. Box 576 Lincolnton, NC 28093-0576 Bankruptcy Case No.: 07-40355 Chapter 11 Petition Date: June 22, 2007 Court: Western District of North Carolina (Shelby) Judge: George R. Hodges Debtor's Counsel: Richard M. Mitchell, Esq. Mitchell & Culp, P.L.L.C. 1001 Morehead Square Drive, Suite 330 Charlotte, NC 28203 Tel: (704) 333-0630 Fax: (704) 333-4975 Estimated Assets: $1 Million to $100 Million Estimated Debts: $100,000 to $1 Million The Debtor does not have any creditors who are not insiders. ACA ABS: Fitch Puts Class C Notes' BB Rating Under Negative Watch ----------------------------------------------------------------- Fitch has placed the ratings on three classes of notes issued by ACA ABS 2003-2, Limited on Rating Watch Negative: -- $7,000,000 class B-F notes 'BBB'; -- $14,901,123 class B-V notes 'BBB'; -- $2,980,225 class C notes 'BB'. ACA ABS 2003-2 is a collateralized debt obligation that closed Nov. 6, 2003 and is managed by ACA Management, LLC. ACA ABS 2003-2 has a reinvestment period that ends in December 2007, and currently has a portfolio composed primarily of residential mortgage-backed securities, along with asset-backed securities, CDOs, commercial mortgage-backed securities and real estate investment trust debt. These rating actions are the result of a combination of credit deterioration within the portfolio and the high exposure ACA ABS 2003-2 has to under-performing 2006 vintage closed-end second lien RMBS assets. So far in 2007, approximately 9.2% of the portfolio has been downgraded and another 7.9% of the portfolio is currently on Rating Watch Negative. These negative rating actions have mostly affected subprime RMBS assets, and they have caused the portion of bonds rated 'BB+' or below in the portfolio to increase to 3.6% as of the May 31, 2007 trustee report from 0.2% at the end of 2006. The Fitch weighted average rating factor test has increased to 5 ('BBB/BBB-') from 4 ('BBB/BBB-') during this same time period, but was still passing its trigger of 5 as of the latest trustee report. However, there have been several additional downgrades since the last report, which will have a further negative effect on the WARF. Specifically, ACA ABS 2003-2 contains fifteen 2006 vintage CES RMBS bonds comprising approximately 8.7% of the portfolio. Of these fifteen bonds, four have been downgraded by at least a full rating category, accounting for 2.8% of the downgraded assets referred to above. These bonds remain on Rating Watch Negative, along with four additional CES RMBS bonds in the portfolio. Although ACA ABS 2003-2 is still in its reinvestment period until December 2007, the asset manager chose to use almost $100 million of accumulated principal proceeds to partially redeem the senior notes at the June 11, 2007 payment date. The acceleration of the redemption of the senior notes will benefit these notes through increased credit enhancement and a shorter expected life, but the failure to reinvest the principal proceeds leaves the notes lower in the capital structure highly exposed to the troubled assets in the existing portfolio. The ratings of the classes B-F, B-V and C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. ADELPHIA COMMS: Completes "True Up" Mechanism under Confirmed Plan ------------------------------------------------------------------ Adelphia Communications Corporation and its debtor-affiliates have completed the "True Up" Mechanism under their confirmed First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization. On Feb. 13, 2007, the effective date of the Plan, 23,158,360 shares of TWC Class A Common Stock were withheld from the Settlement Consideration and from distributions to holders of Claims against the Subsidiary Debtors and holders of Claims against the parent corporation Adelphia Communications and deposited in a True Up Holdback account as provided in the Plan. Under the True Up Mechanism, the recipient of the Settlement Consideration and holders of Allowed Claims against the Subsidiary Debtors received an initial distribution of shares of TWC Class A Common Stock, and had the potential of receiving additional shares of TWC Class A Common Stock from the True Up Holdback based on a recalculated Deemed Value. The Deemed Value is recalculated to be the volume weighted average price per share during market hours of the TWC Class A Common Stock during a 60-day test period as specified in the Plan. To the extent the shares in the True Up Holdback are not distributed to the recipient of the Settlement Consideration and creditors of the Subsidiary Debtors, the shares will be distributed to holders of Allowed Claims against the parent corporation or reserved on account of Disputed Claims against the parent Debtor. Additional information relating to the True Up Mechanism is contained in the Second Disclosure Statement Supplement, filed with the Bankruptcy Court on Oct. 16, 2006, Section 10.12 of the Plan, and Section 2.15 of the Plan Administrator Agreement, which is available at http://www.adelphiarestructuring.com/ On June 15, 2007, the Plan Administrator filed a notice and an explanation of the method of recalculation of the Deemed Value with the U.S. Bankruptcy Court for the Southern District of New York. The notice stated that the Deemed Value of the TWC Class A Common Stock at the conclusion of the Test Period was recalculated pursuant to the Plan Administrator Agreement to be $37.80. No objections to the recalculation were received by 4:00 p.m. on June 20, 2007, the objection deadline set in the notice. Accordingly, the new Deemed Value of the TWC Class A Common Stock for purposes of the Plan is $37.8038, and the company will commence distribution of all shares in the True Up Holdback in the manner set forth in the Plan to holders of record of Note Claims as of Feb. 13, 2007 and to holders of record of all other claims as of Jan. 10, 2007. A copy of the notice and the chart summarizing the distribution of shares of TWC Class A Common Stock to be made to certain classes of Claims from the True Up Holdback is also available in the important documents sections of the company's website at http://www.adelphiarestructuring.com/ About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Court confirmed the Debtors' First Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Feb. 13, 2007. AES CORPORATION: Posts $455 Million Loss in Quarter Ended March 31 ------------------------------------------------------------------ The AES Corporation reported that revenues increased 11% to $3.1 billion at March 31, 2007, compared to $2.8 billion for the first quarter of 2006, while net cash from operating activities increased 14% to $581 million compared to $509 million last year. The company had a net loss of $455 million for the quarter ended March 31, 2007, as compared with a net income of $348 million for the same quarter a year ago. First quarter income from continuing operations was $119 million, compare to 2006 first quarter income from continuing operations of $330 million. As anticipated and previously disclosed the company recognized an impairment charge of about $638 million, in connection with the sale of its equity stake in its Venezuelan subsidiary C.A. La Electricidad de Caracas. At March 31, 2007, the company had total assets of $31.9 billion, total liabilities of $29.4 billion, and total stockholders' equity of $2.5 billion. At March 31, 2007, the company had $4.9 billion of recourse debt and $12 billion of non-recourse debt outstanding. At March 31, 2007, cash and cash equivalents increased by $69 million from Dec. 31, 2006, to $1.4 billion. The change in cash was due to $581 million of cash provided by operating activities, $677 million of cash used by investing activities, $148 million of cash provided by financing activities and the positive effect of exchange rates on cash of $17 million. Discontinued Operations In May 2007, the company's wholly-owned subsidiary, Central Valley, reached an agreement to sell 100% of its indirect interest in two biomass fired power plants located in central California, the 50MW Delano facility and the 25MW Mendota facility, for $51 million. The AES Board of Directors approved the sale of the Central Valley Businesses in February 2007. In February 2007, the company entered into a definitive agreement to sell its shares of La Electricidad de Caracas subsidiary for $739 million net of withholding taxes. In addition, the agreement provided for the payment of a $120 million dividend in 2007 that was approved and declared by EDC shareholders on March 1, 2007. Partnership with GE Energy During the quarter, the company signed a memorandum of understanding and subsequently entered into a partnership with GE Energy Financial Services to develop greenhouse gas emission reduction projects in the United States. The company also acquired two new power plants with long-term power agreements in Tamuin, Mexico totaling 460 MW of capacity. A full-text copy of the company's first quarter 2007 report is available for free at http://ResearchArchives.com/t/s?2125 "The quarter reflected strong revenues, cash flow and underlying operating performance," said Paul Hanrahan, AES president and chief executive officer. "We continued to implement our growth strategy focusing on meeting increasing demand for energy in fast-growing markets while expanding our presence in renewables and the growing market for emission offsets." About AES Corporation AES Corporation -- http://www.aes.com/-- is a global power companies, with 2006 revenues of $12.3 billion. With a global workforce of 32,000 people and operations in 28 countries on five continents, AES's generation and distribution facilities have the capacity to serve 100 million people worldwide. Its 13 utilities amass annual sales of over 73,000 GWh and its 121 generation facilities have the capacity to generate about 40,000 megawatts. * * * To date, AES Corporation carries Moody's Ba3 senior secured debt rating, B1 long-term corporate family, senior unsecured debt and probability-of-default ratings, and Ba1 bank loan debt rating. The outlook remains stable. Also, the company continues to carry Standard & Poor's BB- long- term foreign and local issuer credit ratings. The outlook remains stable. The company also carries Fitch B+ long-term issuer default rating, BB+ senior secured debt and bank loan debt ratings, BB senior unsecured debt rating and B senior subordinated debt rating. The outlook remains stable. ALLEGHENY ENERGY: PJM Okays 765-kV Transmission Project with AEP ---------------------------------------------------------------- PJM Interconnection has approved American Electric Power's 765- kilovolt joint transmission line proposal with Allegheny Energy Inc. The PJM board included the Potomac-Appalachian Transmission Highline project in their five-year PJM Regional Transmission Expansion Plan designed to maintain the reliability of the transmission grid. The PJM plan approves the building of 250 miles of 765-kV extra-high voltage trans- mission from AEP's Amos substation near St. Albans, West Virginia, to Bedington substation, northeast of Martinsburg, West Virginia. Another 40 miles of transmission, consisting of twin-circuit 500-kV transmission, will be constructed from Bedington to a new substation to be built at Kemptown, located southeast of Frederick, Maryland. AEP and Allegheny announced plans April 18 to form a joint venture to build PATH. The total project is estimated to cost approximately $1.8 billion. AEP's estimated share of the costs will be approximately $600 million. The PJM RTEP calls for the PATH line to be put in service by June 2012 to meet the reliability needs of the region. "PJM approval allows us to move forward with construction of a significant portion of the I-765(TM) transmission superhighway that is urgently needed to help relieve transmission congestion and enhance reliability in PJM. PJM's analysis shows that the transmission system in this region will be overloaded as soon as 2012 unless upgrades are made. This project will expand the benefits of 765-kV extra-high voltage transmission in PJM to enhance reliability and address issues preventing efficient flow of electricity into this area," said Michael G. Morris, AEP chairman, president and chief executive officer. AEP and Allegheny expect to formalize their joint venture agreement for PATH within the coming weeks and file for incentive rate recovery from the Federal Energy Regulatory Commission. AEP and Allegheny also will begin work on a routing study and environmental assessment for the project. The companies will seek regulatory approvals from the utility commissions in both West Virginia and Maryland for the project following the completion of the routing study. AEP will have lead responsibility for engineering, designing and managing the construction of the 765-kV elements of the project. Allegheny will have similar responsibilities for the twin- circuited 500-kV line. Each company will provide services to the joint venture for siting, acquiring rights-of-way, securing regulatory approvals from the states the line crosses and maintenance of the project. The PATH project encompasses the first half of the AEP I-765(TM) Interstate Project, a 550-mile, $3 billion 765-kV transmission line proposed by AEP in January 2006. The remaining portion of AEP's proposed I-765(TM) Interstate Project from Kemptown Station into New Jersey remains under study by PJM and is not part of the joint venture. About American Electric Power Based in Columbus, Ohio, American Electric Power (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation's largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation's largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP's transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. About Allegheny Energy Based in Greensburg, Pennsylvania, Allegheny Energy, Inc., (NYSE:AYE) -- http://www.alleghenyenergy.com/-- is an investor- owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland and Virginia. * * * As reported in the Troubled Company Reporter on May 8, 2007, Standard & Poor's Ratings Services raised its corporate credit rating on diversified energy company Allegheny Energy Inc., its utility subsidiaries, Monongahela Power Co., West Penn Power Co., and Potomac Edison Co., and its unregulated generation company, Allegheny Energy Supply Co. LLC, to 'BBB-' from 'BB+'. The outlook is stable. The rating action affects nearly $3.3 billion of debt, excluding securitized debt. The upgrade reflects the company's successful operations and maintenance cost reductions and significant credit metric improvement. ALLIED DEFENSE: Inks Pact with Noteholders to Settle Default Row ---------------------------------------------------------------- The Allied Defense Group Inc. entered into definitive agreements with all investors of the company's $30 million convertible notes for recapitalization and resolution of all outstanding disputes of default between the company and its debt holders. Under the terms of the agreement, the convertible note investors have agreed to amend certain terms of the existing notes, provide up to $15 million in new funding, and release the company of all alleged defaults and penalties under the convertible note agreement. The transaction is subject to various closing conditions, including approval of the American Stock Exchange, and is expected to close within five business days. Under the terms of the agreement, the company will exchange the existing $30 million convertible debt issue for new approximately $27.1 million senior secured notes carrying an 8.95% coupon, payable quarterly and convertible into shares of The Allied Defense Group's common stock at a price of $9.35 per share, equal to the closing bid price of the common stock on the day of signing, and 1.288 million shares of common stock. The company will also receive an incremental $15 million cash of new funding, subject to similar interest and conversion provisions as the approximately $27.1 million notes. Of the $15 million in new funding, $5 million will be available immediately upon closing. The remaining $10 million will be available once a large anticipated ammunition contract award is received by the company's wholly-owned MECAR S.A. subsidiary. Allied's expectations with respect to the order have not changed and the company is currently working to establish a performance bond guarantee, which is a final requirement before the client can issue the contract award to MECAR. "The company has reached a consensual resolution with its convertible debt holders," Retired Major General John J. Marcello, president and chief executive officer of Allied Defense, said. "This restructuring will recapitalize the company and eliminate any uncertainties associated with the alleged defaults under the original notes. The management team and board of directors believes that this restructuring is in the best interests of all shareholders and one of several steps needed to refocus the company on a path of maximizing shareholder value. The company continues to work closely with its advisors to improve operational performance and evaluate all strategic options in an effort to maximize shareholder value." About Allied Defense Headquartered in Vienna, Virginia, The Allied Defense Group Inc. - - (AMEX: ADG) -- http://www.allieddefensegroup.com/-- is a diversified International defense and security firm which develops and produces conventional medium caliber ammunition marketed to defense departments worldwide; designs, produces and markets sophisticated electronic and microwave security systems principally for European and North American markets; manufactures battlefield effects simulators and other training devices for the military; and designs and produces state-of-the-art weather and navigation software, data, and systems for commercial and military customers. Going Concern Doubt As reported in the Troubled Company Reporter on May 18, 2007, BDO Seidman LLP, in Bethesda, Maryland, expressed substantial doubt about The Allied Defense Group Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's losses from operations in 2006 and 2005. The auditing firm also cited that the company has received default notices from certain convertible debt holders in 2007. The auditing firm further disclosed that if the company fails to register the underlying shares related to the company's $30 million convertible debt facility by March 29, 2007, the debt will be in default and the face value of the notes along with redemption premiums and all accrued interest will become due. AMERICAN CAMPUS: Moody's Affirm Ba2 Rating with Stable Outlook -------------------------------------------------------------- Moody's Investors Service affirmed the underlying rating of Ba2 on American Campus Properties University College Apartments, Phases IV-V, on Prairie View A&M campus. The rating outlook is changed to stable from negative. The bonds are also rated Aaa based on a municipal bond insurance policy provided by MBIA. The affirmation is based upon below average but improved occupancy and debt service coverage that is consistent with the Ba2 rating level. The stable outlook is based upon a stabilization of freshman enrollment at the University. Legal Security The bonds are limited obligations of American Campus Properties Student Housing Financing LTD, secured by trust estate assets. Credit Strengths The University's stated commitment to ensure the housing for students and the University's 50% share of the net revenues of the project giving it a stake in the project's financial success. Credit Challenges -- Occupancy and debt service coverage that are below levels projected at underwriting. -- Freshman enrollment at the University declined a substantial 25.9% in 2005/06, but increased 3.3% 2006/007. -- An absence of any long-term legal commitment to bondholders from the University, the University System, or the State of Texas. Recent Developments Enrollment at the University declined substantially after academic standards were implemented for the first time in 2005/06. The 2005/06 freshman class was 25.9% smaller than the freshman class in 2004/05. Freshman enrollment stabilized in 2006/07 when the entering class was 3.3% larger than the 2005/06 class. Audited financial statements for fiscal 2006 produce relatively thin debt service coverage of 1.09x. The weakening debt service was a direct result of low occupancy which was 80.5% in spring 2006. Interim financial statements through March 2007 indicate debt service coverage is likely to improve. The forecasted improvement is due to increased occupancy (89.4% fall 2006; 87.8% spring 2007) and a 3.5% increase in rents for the academic year. Moody's has incorporated the relatively thin debt service coverage and less than satisfactory occupancy into the Ba2 rating assignment. What could change the rating - UP Sustained improvements in occupancy and debt service coverage. What could change the rating - DOWN Continued declines in occupancy and debt service coverage. The University rescinding its stated commitment to ensuring the financial success of the project. The outlook on the bonds is stable based upon the stabilization of freshmen enrollment. AMERICAN CAMSHAFT: Wants to Sell Assets to Hilco for $5.5 Million ----------------------------------------------------------------- American Camshaft Specialties Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to grant accelerated approval of a sale of the Debtors' machinery and equipment for $5.5 million to Hilco Industrial LLC, Bill Rochelle of Bloomberg News reports. The Court is set to consider the request on June 29, 2007, the report said. Last month, the Court extended the Debtors' exclusive period to file a combined plan and disclosure statement until Aug. 7, 2007. In their request, published in the Troubled Company Reporter on May 14, 2007, the Debtors told the Court that they have encountered a variety of logistical and practical issues which have made it impracticable for them to have the ability to propose and file a plan, including: a) the attempt of the Debtors' senior management to satisfy all filing requirements for its Chapter 11 cases; and b) the search for a buyer of substantially all of the Debtors' assets either as a going concern or as an orderly liquidation. American Camshaft Specialties Inc. is located at the southwest corner of M-45 and U.S. 31, includes two plants -- ACS Grand Haven, which is solely owned by Asimco Technologies, and a joint venture between Nippon Piston Ring and ACS Inc. Asimco Technologies -- http://www.asimco.com/-- is headquartered in Beijing, China, and produces a wide range of power train, chassis and diesel fuel injection products for light duty and commercial vehicle applications. Asimco assembles semi-fully finished cast, steel and assembled camshafts. Aside from its U.S. operations, Asimco has 18 manufacturing facilities and 52 sales offices in China and one regional office in Europe and Japan. Asimco's major customers are automotive-based, such as DaimlerChrysler, Ford, GM, Cummins and CAT. American Camshaft and three other U.S. affiliates filed for chapter 11 protection on Dec. 9, 2006 (Bankr. E.D. Mich. Lead Case No. 06-58298). Christopher A. Grosman, Esq., and Robert A. Weisberg, Esq., at Carson Fischer, P.L.C., represent the Debtors. Lawyers at Schafer and Weiner PLLC represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors they listed estimated assets and debts between $10 million and $50 million. AQUILA INC: Moody's Lifts Corporate Family Rating to Ba2 from B1 ---------------------------------------------------------------- Moody's Investors Service upgraded Aquila Inc.'s corporate family rating to Ba2 from B1 and its probability-of-default rating to Ba3 from B2. At the same time Moody's upgraded Aquila's senior unsecured rating to Ba3 from B2. Moody's rating action is reflective of the improvement in Aquila's credit profile following several events including the recent outcome of its rate case in Missouri, related authorization to implement a fuel adjustment clause in its Missouri electric service area, and, importantly, lower leverage following the June 15, 2007 repayment of approximately $344 million of long-term debt. Moody's note that the rating action is based on the standalone credit profile of Aquila and that Aquila's ratings will remain on review for further possible upgrade based on its pending merger with Great Plains Energy Incorporated. That transaction, announced in February 2007, has been approved by Aquila's Board of Directors, but is subject to shareholder and regulatory approval. Aquila and Great Plains (Baa2 senior unsecured) have announced that they expect the merger to be completed during the first quarter of 2008. The corporate family rating upgrade to Ba2 acknowledges the continued progress Aquila is making to improve its credit profile. Utilizing existing cash on deposit and proceeds from the recent sale of its Kansas electric business to reduce leverage, Aquila's balance sheet debt has been reduced from $1.4 billion at year-end 2006 to approximately $1.0 billion. This action follows significant debt reduction achieved in 2006. With the lower debt burden and incremental cash flows expected from its recently allowed rate increase in Missouri (approximately $59 million annually), beginning in the second half of 2007, Moody's expects that Aquila should exhibit credit metrics more appropriate for the Ba rating category over the next twelve to eighteen months, including a funds from operations to adjusted debt metric at or near 10%. Moody's note as well that the Missouri Public Service Commission's approval to implement a fuel adjustment clause for up to 95% of energy costs not covered in existing rate authorization could provide some added protection against volatility in fuel costs in 2008. The corporate family rating also reflects the longer-term challenges that will need to be addressed before further upgrades would likely be considered including careful management of the sizeable capital program through 2010 and further improvement in credit metrics considering the additional debt to be incurred to finance the capital expenditures. Ratings upgraded include: -- Corporate family rating: to Ba2 from B1 -- Probability of default rating to Ba3 from B2 -- Senior secured delayed draw term loan: to Baa2 (LGD-1, 3%) from B1 (LGD-1, 2%) -- Senior unsecured: to Ba3 (LGD-3, 46%) from B2 (LGD-3, 43%) -- Subordinate: to B2 (LGD-5, 88%) from Caa1 (LGD-5, 88%) At this time Moody's will also withdraw the B2 rating assigned to Aquila's $2.0 million of convertible subordinated debentures as they are now substantially repaid. Headquartered in Kansas City, Missouri, Aquila, Inc, is an integrated electric and gas utility operating in Missouri, Kansas, Colorado, Nebraska and Iowa. Aquila reported revenues from continuing operations of $1.4 billion for the LTM period ended March 31, 2007. AVISTA CORP: Moody's Places All Ratings Under Review ---------------------------------------------------- Moody's Investors Service placed all of the ratings of Avista Corp. (Ba1 senior unsecured) under review for possible upgrade. The rating action reflects the faster than anticipated progress toward the sale of its unregulated Avista Energy, Inc. subsidiary and Moody's expectation that the sale proceeds will initially be used to reduce debt. In April, Avista Energy signed a definitive agreement to sell, subject to requisite regulatory approvals and other pre-closing conditions, substantially all of its contracts and ongoing operations to Coral Energy Holding, L.P. and certain of its subsidiaries (collectively Coral Energy), a subsidiary of Shell. With virtually all required regulatory approvals in hand and substantially all closing conditions met, we expect that Avista can close the sale of Avista Energy by June 30, 2007. As structured, the transaction calls for the sale of Avista Energy's trading portfolio at net book value, subject to various adjustments at closing. At the same time, Avista Corp. is expected to liquidate assets not subject to the sale or transfer to Coral Energy. These assets, which are largely comprised of receivables and restricted cash and deposits with counterparties, could generate proceeds near $175 million. If successful, the sale of Avista Energy contracts and operations would reduce the earnings volatility associated with the energy resource management and trading operations, lower Avista Corp.'s overall business risk profile, and leave it largely focused on the regulated electric and natural gas utility business operated through the Avista Utilities division. The lone remaining non- regulated business activity of any significance would then be the facility and information and cost management services business conducted by Advantage IQ (formerly known as Avista Advantage). In addition to taking into account the likely significant improvement in Avista's overall business risk profile, the review will also consider our view of Avista's ability to cope with the challenges of a somewhat higher capital spending program over the next couple of years. The capital program, which primarily relates to the Avista Utilities division, could constrain Avista's ability to further strengthen its financial metrics if the Washington and Idaho state regulators do not provide timely and adequate recovery of the capital investments. This is especially so when considering the lost cash flow contributions formerly derived from Avista Energy. Against this backdrop, the review will also entail increased weighting to our assessment of likely future outcomes in regulatory proceedings, especially those in Washington, which is Avista's largest jurisdiction by far. Avista ratings under review for possible upgrade include: -- senior secured debt, Baa3 -- senior unsecured debt and Issuer Rating, Ba1 -- preferred stock, Ba3 -- senior secured shelf, (P)Baa3 -- senior unsecured shelf, (P)Ba1 -- preferred stock shelf, (P)Ba3 -- AVA Trust III, trust preferred securities, Ba2 -- Avista Corp Capital II, trust preferred securities, Ba2 Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy- related businesses. It is headquartered in Spokane, Washington. BCE INC: Telus Merger to Pass Through Critical Review ----------------------------------------------------- Canadian Prime Minister Stephen Harper said that regulators will be critical in reviewing the issue on the possible merger of BCE Inc. and Telus Corp., a merger that will likely create a company that is 59% of the wireless industry, Theophilos Argitis and Alexandre Deslongchamps of Bloomberg News reports. Mr. Harper however said that he would not meddle in any decision of the competition bureau. "The government is going to be very loathe to substitute political judgment on a matter that we think should be settled at arm's length from the government," Mr. Harper told reporters in Ottawa. "There are regulatory processes under the law. The government will respect those." Several vital matters will be probed, especially on aspects of competition and foreign ownership. According to Bloomberg News, Canadian law states that no foreign company should own more than 46.7% of a domestic telephone company or should establish a network. As reported in yesterday's Troubled Company Reporter, the Strategic Oversight Committee of the Board of Directors of BCE Inc. disclosed that TELUS Corporation has entered into discussions to explore the possibility of a business combination with BCE. About TELUS TELUS Corp. (TSX: T, T.A; NYSE: TU) is a telecommunications company in Canada, which provides a range of communications products and services including data, Internet protocol, voice, entertainment and video. About BCE Inc. Headquartered in Montreal, Canada, Bell Canada International Inc. (TSX, NYSE: BCE) (NEX:BI.H) -- http://www.bci.ca/-- provides a suite of communication services to residential and business customers in Canada. Under the Bell brand, the company's services include local, long distance and wireless phone services, high- speed and wireless Internet access, IP-broadband services, information and communications technology services and direct-to- home satellite and VDSL television services. Other BCE businesses include Canada's premier media company, Bell Globemedia, and Telesat Canada, a pioneer and world leader in satellite operations and systems management. The company is operating under a Plan of Arrangement approved by the Ontario Superior Court of Justice, pursuant to which BCI intends to monetize its assets in an orderly fashion and resolve outstanding claims against it in an expeditious manner with the ultimate objective of distributing the net proceeds to its shareholders and dissolving the company. BEAR STEARNS: Moody's Affirm Low-B Ratings on Six Certificates --------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 22 classes of Bear Stearns Commercial Mortgage Securities Trust 2005, Series 2005-PWR8 Commercial Mortgage Pass-Through Certificates as: -- Class A-1, $72,576,960, affirmed at Aaa -- Class A-2, $46,500,000, affirmed at Aaa -- Class A-3, $63,000,000, affirmed at Aaa -- Class A-AB, $128,000,000, affirmed at Aaa -- Class A-4, $1,020,394,000, affirmed at Aaa -- Class A-4FL, $50,000,000, affirmed at Aaa -- Class A-J, $150,046,000, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $37,511,000, affirmed at Aa2 -- Class C, $17,653,000, affirmed at Aa3 -- Class D, $26,478,000, affirmed at A2 -- Class E, $17,653,000, affirmed at A3 -- Class F, $19,859,000, affirmed at Baa1 -- Class G, $15,446,000, affirmed at Baa2 -- Class H, $17,652,000, affirmed at Baa3 -- Class J, $8,826,000, affirmed at Ba1 -- Class K, $4,413,000, affirmed at Ba2 -- Class L, $6,620,000, affirmed at Ba3 -- Class M, $6,620,000, affirmed at B1 -- Class N, $2,206,000, affirmed at B2 -- Class P, $4,413,000, affirmed at B3 As of the June 11, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.8% to $1.7 billion from $1.8 billion at securitization. The Certificates are collateralized by 193 loans, ranging in size from less than 1.0% to 10.4% of the pool, with the top 10 loans representing 29.9% of the pool. The pool includes nine investment grade shadow rated loans, representing 18.4% of the pool. The pool has not realized any losses since securitization and currently there are no loans in special servicing. Eight loans, representing 4.3% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2005 and full- or partial-year 2006 operating results for 95.7% and 75.1%, respectively, of the pool. Moody's weighted average loan to value ratio for the conduit component is 91.9%, compared to 93.5% at securitization, resulting in an affirmation of all classes. The largest shadow rated loan is the One MetroTech Center Loan ($180.0 million -- 10.4%), which is secured by a 933,000 square foot Class A office building located in Brooklyn, New York. The property was 96.8% occupied as of January 2007, compared to 93.7% at securitization. Moody's current shadow rating is Baa2, the same as at securitization. The second largest shadow rated loan is the Lock Up Storage Centers Loan ($53.7 million -- 3.1%), which is secured by 14 self storage facilities located in Illinois (10 properties), Florida (2) and New Jersey (2). Moody's current shadow rating is A2, the same as at securitization. The remaining seven shadow rated loans comprise 4.9% of the pool. The current shadow ratings, which are the same as at securitization, are as follows: JL Holdings -- Burger King Portfolio A-Note ($14.5 million; 0.8%) -- A3; The Landings at Cypress Meadows ($14.4 million; 0.8%) - Baa3; Canyon Park Place ($14.3 million; 0.8%) -- Baa3; Glendale Plaza ($12.1 million; 0.7%) -- Baa3; Woodhaven Terrace Apartments ($11.7 million; 0.7%) -- Baa3; The Legends at Champions Gate ($10.0 million; 0.6%) -- A3 and Plaza at Riverlakes ($9.4 million; 0.5%) -- Baa3. The top three conduit loans represent 7.8% of the pool. The largest conduit loan is the Park Place Loan ($50.9 million -- 2.9%), which is secured by a four building office complex totaling 352,000 square feet. The complex, which is located in Florham Park, New Jersey, was 93.7% occupied as of January 2007, the same as at securitization. Moody's LTV is 79.5%, the same as at securitization. The second largest conduit loan is the Ballston Office Center Loan ($46.0 million -- 2.7%), which is secured by a 178,000 square foot Class A office building located in Arlington, Virginia. The property is 100.0% occupied, the same as at securitization. Moody's LTV is 109.8%, the same as at securitization. The third largest conduit loan is the Marriott Troy Loan ($38.6 million -- 2.2%), which is secured by a 350- room full service hotel located in Troy, Michigan. Moody's LTV is 84.4%, essentially the same as at securitization. BILL PHILLPS: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Bill Phillps Construction Company, L.L.C. 39641 Alabama Highway 69 Moundville, AL, AL 35474 Bankruptcy Case No.: 07-71061 Chapter 11 Petition Date: June 22, 2007 Court: Northern District of Alabama (Tuscaloosa) Debtor's Counsel: Harry P. Long, Esq. P.O. Box 1468 Anniston, AL 36202 Tel: (256) 237-3266 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ West Alabama Bank & Trust $260,000 7680 Highway 69 South Tuscaloosa, AL 35401 R.B.C. Centura $209,000 2330 University Boulevard Tuscaloosa, AL 35401 Moore's Asphalt & Paving $145,000 2731 Allison Bonnett Parkway Bessemer, AL 35023 R.S.C. Equipment Rental $57,000 Town & Country Leasing $55,000 Southern States Equipment $50,000 Sales, Inc. Northwest Supply $48,000 Powell Oil Company $26,000 Internal Revenue Service $25,000 Bama Concrete Products, Inc. $24,000 Hanson Pipe $23,500 Tuscaloosa Engineering $21,000 Isbell Insulation & Vinyl $13,000 Siding Johnston Floor Covering $12,000 Autery Land Surveying $9,000 BIOMET INC: Moody's Confirms Corporate Family Rating at P(B2) ------------------------------------------------------------- Moody's Investors Service confirmed the provisional ratings of Biomet Inc. ((P)B2 Corporate Family Rating.) The confirmation is based on Moody's expectation that the consortium of equity sponsors will finance the incremental purchase price ($500 million) with common stock. The rating action assumes that the company will not use incremental debt - including draws on its revolving credit facility - to fund a dividend in conjunction with this incremental purchase price. The rating outlook is negative. This concludes Moody's rating review that was initiated on June 7, 2007. The ratings are provisional, subject to the closing of the transaction and receipt and review of final documentation. Moody's anticipates that the closing will occur prior to the end of August 2007. Ratings confirmed with a negative outlook: Biomet, Inc. -- Corporate Family Rating at (P)B2 -- $350 Million Asset backed revolver at (P)Ba2, (LGD2, 14%) -- $400 Million Secured cash flow revolver at (P)B1, (LGD3, 36%) -- $3.6 Billion Secured term loan at (P)B1, (LGD3, 36%) -- $775 Million Unsecured senior notes at (P)B3, (LGD4, 63%) -- $775 Million Unsecured PIK option notes at (P)B3, (LGD4, 63%) -- $1.015 Billion Unsecured subordinated notes at (P)Caa1, (LGD6, 93%) -- PDR at B2 -- SGL-2 Moody's believes that Biomet's very high leverage and weak financial strength and financial policy ratios - some of which are positioned at the low-end of the "Caa" category - are a key credit risk. In particular, interest coverage is negligible and the ability to repay debt with cash flow is extremely limited. Further, the absence of financial covenants in the proposed bank agreements provides less protection to creditors. However, in our opinion, the presence of external liquidity sources as well as equity sponsors that have committed significant capital (of about $5.4 billion) provide greater assurance that a default is unlikely within the next twelve months. As a result, Moody's believes that the (P)B2 Corporate Family Rating is appropriate even though leverage (estimated at about 8.5 times pro forma Debt/ EBITDA based on twelve months ended February 28, 2007 financial statements) and coverage measures (estimated at 1.2 times pro forma EBITA/interest) are more consistent with lower ratings. The methodology implied rating under Moody's Global Methodology for the Medical Products & Device Industry based on pro-forma financial statements for the twelve months ended February 28, 2007 is a "B1". However, Moody's believes that this degree of leverage is not fully captured under the methodology. The company recently filed financial statements including a restated Form 10-K for the period ended May 31, 2006 as well as Form 10-Qs for the quarters ended August 31, 2006, November 30, 2006 and February 28, 2007. As anticipated, the auditors cited a material weakness related to the backdating of stock options. However, Moody's believes that these restated financial statements are not materially different from previous financial statements. The rating outlook remains negative, however, reflecting Biomet's weak position in the B2 category due primarily to Moody's concerns regarding extremely high debt levels. Moody's believes that the company will need to see operating improvements as well as grow at industry rates in order to meaningfully de-leverage over the next 12-24 months. Biomet's SGL-2 rating reflects our expectation that despite weak free cash flow, the company's liquidity should be solid, supported by external liquidity. Following the transaction, Biomet is expected to have about $750 million of capacity under two secured bank revolvers. Biomet, Inc, based in Warsaw, Indiana, is one of the leading manufacturers of orthopedic implants, specializing in reconstructive devices. CALPINE CORP: Lloyd Will Joins as Structuring & Analytics VP ------------------------------------------------------------ Calpine Corporation disclosed that Lloyd Will has joined Calpine as the Senior Vice President of Structuring and Analytics. In this role, Mr. Will oversees Calpine's fundamental and technical market analysis, commercial execution analytics, contract structuring and valuation, transmission support and analytics and gross margin forecasting and valuation. "Calpine continues to enhance our management team and is pleased to have attracted another talented individual with a proven track record of leading large organizations," said Thomas N. May, Calpine's Executive Vice President, Commercial Operations. "Lloyd's experience in project management and plant and commercial operations will help drive a more integrated operation for the company's commercial operations and its fleet of fuel-efficient natural gas and geothermal plants in key power markets," he continued. Prior to joining Calpine, Lloyd filled various leadership roles at NRG, Areva, UBS Bank, Enron and Manitoba Hydro. Mr. Will has more than 30 years of experience in energy including roles in control area and system operations, power system maintenance, energy trading, structuring and fundamental analysis. Mr. Will maintains a NERC security coordinator certification and is also a certified Six Sigma Black Belt project manager with extensive experience leading projects and enabling teams in the merchant, financial and utility environments. Based 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. (Calpine Bankruptcy News, Issue No. 52 Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). CALPINE CORP: Discloses Liquidation Analysis Under Joint Plan ------------------------------------------------------------- Calpine Corporation's executive vice president, general counsel and secretary, Gregory L. Doody, relates that the Debtors have prepared a liquidation analysis to create a reasonable good-faith estimate of the proceeds that might be generated if their estates were liquidated under Chapter 7 of the Bankruptcy Code. If no Chapter 11 Plan is confirmed, the Debtors' Chapter 11 cases would be converted to cases Chapter 7. In this event, a trustee will be appointed to liquidate the Debtors' assets. The Debtors' Liquidation Analysis assumes that conversion to Chapter 7 would be on Dec. 31, 2007. The Liquidation Analysis assumes a liquidation of all of the Debtors' assets, including the Debtors' interests in all non- debtor Affiliates after third-party claims against those Affiliates are satisfied. The Debtors have two major categories of assets: (1) About 72 power generating facilities primarily owned by Debtors Calpine Power Company and Calpine International Holdings, Inc.; and (2) A portfolio of trading assets, primarily consisting of energy and commodity trading contracts held by Debtor Calpine Energy Services, L.P. The remainder of Calpine Corporation's "first tier" subsidiaries are shell companies that hold no material saleable assets, and thus, no value is attributed to them in the Liquidation Analysis, Mr. Doody says. The Debtors' net operating losses are assumed to offset federal taxes expected to be incurred by the Trustee in a liquidation. Any NOLs remaining are ascribed no value in the Liquidation Analysis because the remaining NOLs do not retain value in a Chapter 7 liquidation. The Liquidation Analysis does not attribute any value to the Debtors' intangible assets like the Calpine trade name. Finally, other than certain Cash the U.S. Debtors will receive from the Canadian Debtors' arising out of their reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, the Liquidation Analysis does not attribute any value to the Canadian Debtors' assets. Mr. Doody asserts that the value of distributions, if any, in a Chapter 7 liquidation to holders of allowed unsecured claims and interests would be less than the value of distributions to the holders under the proposed Plan of Reorganization. A full-text copy of Calpine's liquidation analysis is available at no charge at: http://ResearchArchives.com/t/s?2129 Based 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. (Calpine Bankruptcy News, Issue No. 52 Bankruptcy Creditors' Service Inc. http://bankrupt.com/newsstand/or 215/945-7000). CANWEST MEDIAWORKS: Moody's Lowers Corporate Family Rating to B1 ---------------------------------------------------------------- Moody's Investors Service downgraded CanWest MediaWorks Inc.'s corporate family rating to B1 from Ba3, downgraded its senior subordinated rating to B3 from B2 and affirmed its SGL-2 liquidity rating. At the same time, Moody's assigned Ba1 senior secured and B2 senior subordinated ratings to CanWest MediaWorks Limited Partnership's planned debt issues. The long term ratings reflect a B1 probability of default and loss-given-default assessments as noted below. This action concludes the rating review for CanWest which commenced in January 2007. The outlook is stable. The downgrade to CanWest's corporate family rating primarily reflects the meaningful increase in consolidated adjusted pro- forma leverage towards 7x that will occur from CanWest's debt- financed privatization of LP, and its 29% equity investment in the Alliance Atlantis specialty channels. Moody's views the use of debt proceeds to facilitate these investments as a departure from the company's leverage reduction initiatives that it had undertaken through the past couple of years, which had supported the former Ba3 corporate family rating, despite weakening key credit metrics arising from the significant downturn of its Canadian and Australian broadcasting operations. While Moody's expects that a continuation of the very recent improving trends at these two operations, together with relative stability in the newspaper operations may provide CanWest with the ability to generate modest free cash flow and reduce leverage towards 5.5x by the end of fiscal 2008, key metrics will remain inconsistent with a Ba3 rating through much of the ratings horizon. Additionally, CanWest's recently announced plans to take control of Network TEN and its concurrent indications that it may seek to increase leverage at that entity may delay leverage reduction from the above estimates, in Moody's opinion. As well, Moody's believes the potential exists that CanWest may ultimately seek a controlling interest in the Alliance Atlantis specialty channels, which may pressure leverage over the longer term. The Ba1 rating assignment to LP's senior secured bank facility and B2 rating to its senior subordinated notes reflects the priority ranking of these instruments in Moody's loss-given-default methodology under the corporate family rating of CanWest. Ratings Lowered: CanWest MediaWorks Inc: -- corporate family rating to B1 from Ba3 -- probability of default rating to B1 from Ba3 -- $760 million senior subordinated notes, due 2012 to B3, LGD 5, 89% from B2, LGD 5, 87% Ratings Assigned: CanWest MediaWorks Limited Partnership: -- senior secured rating at Ba1, LGD 1, 7% -- $250 million senior secured revolver, due 2012 -- $250 million senior secured term loan A, due 2012 -- $450 million senior secured term loan B, due 2014 -- $700 million senior subordinated notes, due 2017 at B2, LGD 5, 73% CanWest MediaWorks Inc. is a communications company based in Winnipeg, Manitoba Canada, which owns, operates and/or holds substantial interests in TV, radio, publishing and out-of home advertising operations in Canada, Australia, New Zealand, the United Kingdom, the United States as well as other international locations. CAPITAL RESERVE: Posts $188,745 Net Loss in Year Ended December 31 ------------------------------------------------------------------ Capital Reserve Canada Limited reported a net loss of $188,745 on revenue of $1,714,925 for the year ended Dec. 31, 2006, compared with a net loss of $258,114 on revenue of $355,017 for the four (4) month period ended Dec. 31, 2005. The company reported a net loss of $643,469 on revenue of $933,441 for the year ended Aug. 31, 2005. Prior to the fiscal year ended Aug. 31, 2005, KCP Innovative Services Inc., the company's wholly owned operating subsidiary, changed its fiscal year end from Aug. 31 to Dec. 31. The financial information reported herein are for the transitional four month period ended Dec. 31, 2005, and for the fiscal years ended Aug. 31, 2005, and Dec. 31, 2006. Revenues for the fiscal year ended Dec. 31, 2006, were $1,714,925 and showed a substantial increase over revenues from the previous fiscal year ended Aug. 31, 2005, of $933,441. The increase in revenues for 2006 can be predominantly attributed to the availability of additional equipment for operations in KCP and increased marketing efforts of management. For the year ended Dec. 31, 2006, the company incurred operating losses of $188,745 as compared to operating losses of $862,266 for the fiscal year ended Aug. 31, 2005. Cost of sales for the year ended Dec. 31, 2006, increased to $846,090 from cost of sales of $605,370 for the fiscal year ended Aug. 31, 2005. This was mainly due to a corresponding increase in sales and from economies of scale of a larger business. Expenses for Dec. 31, 2006, fell to $1,057,580 from Aug. 31, 2005, expenses of $1,190,337. As at the four month period ended Dec. 31, 2005, the company reported revenues of $355,017. Costs of sales were $184,165. Expenses for the four month period were $570,682 and were comprised of $54,358 for salaries and benefits, $279,027 for general and administrative, $229,154 for amortization and interest costs of $8,143. There are no comparable periods for 2004. At Dec. 31, 2006, the company's consolidated balance sheet showed $7,128,645 in total assets, $1,310,377 in total liabilities, and $5,818,271 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?2121 Acquisition of KCP Innovative Pursuant to a share exchange agreement dated Aug. 12, 2005, the company indirectly, through its wholly owned subsidiary, Capital Reserve Projects Ltd., acquired a 78.2% interest in KCP Innovative Services Inc. Because the shareholders of KCP became the company's controlling shareholders, this transaction was accounted for as a reverse merger whereby KCP is deemed to be the parent company and Capital Reserve Projects Ltd. is deemed to be the subsidiary company for accounting purposes. The financial statements of the combined entity are issued under the name of the company, but are considered a continuation of the financial statements of KCP. Going Concern Doubt Child, Van Wagoner & Bradshaw CPAs, in Salt Lake City, expressed substantial doubt about Capital Reserve Canada Limited's ability to continue as a going concern after auditing the company's consolidated financial statements as of Dec. 31, 2006, and 2005, and Aug. 31, 2005. The auditing firm reported that the company currently has cash flow constraints and an accumulated deficit of $2,547,871 at Dec. 31, 2006. In addition, because of the operating losses of the past four periods, the company's continuance as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation. About Capital Reserve Based in Edmonton, Alberta, Capital Reserve Canada Ltd. (OTC BB: CRSVF.OB) -- http://capitalreservecanada.com/-- is an oil and gas services company. Through its wholly owned subsidiary, KCP Innovative Services Inc., the company provides testing and development services, measurement of existing wells' productivity, well abandonment services, and through its proprietary hardware and software technologies, determination of the profitability of coal bed methane deposits, which may be developed and sold as natural gas. The company has a second wholly owned subsidiary, Two Hills Environmental, to assist with problem waste from oil & gas companies, and provide underground storage. CATHOLIC CHURCH: Victims Join Panel vs. San Diego's Bar Date Plea ----------------------------------------------------------------- Certain state court plaintiffs, who are holding sexual abuse claims against The Roman Catholic Bishop of San Diego, tells the U.S. Bankruptcy Court for the Southern District of California that the establishment of a bar date with respect to childhood sexual abuse, or CSA, for whom the California limitations period has not expired, is entirely inappropriate and should be denied. Bar Date Plea As reported in the Troubled Company Reporter on May 22, 2007, the Diocese asked the Court to: (a) fix the deadline to file proofs of claim as 150 days after the Court approves the request; (b) set the Bar Date for claims resulting from the rejection of executory contracts or unexpired leases, as the earlier of 30 days from the rejection date, or 30 days from the confirmation of a plan of reorganization; (c) approve the proposed forms for the Tort Claim Form, Other Claims Form, Notice Forms and the Publication Notice; (d) approve the Publication program and schedule; (e) rule that individuals asserting Tort Claims by filing Tort Claim Forms will not be deemed to have waived their right to a jury trial; and (f) declare that Tort Claims Forms filed with Court will be confidential and under seal, unless the Tort Claimant specifically elects to make his or her identity public. Committee's Objection As further reported in the Troubled Company Reporter on May 22, 2007, the Official Committee of Unsecured Creditors asked the Court to deny the Debtor's request because it believes that the Diocese: (i) has sufficient assets to pay timely and in full all survivors of childhood sexual abuse, and (ii) is attempting to use a present bar date notice to limit the rights of future tort claimants, which raises avoidable constitutional and fairness issues. James I. Stang, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Los Angeles, California, said that if the Court determines to set a bar date, the Creditors Committee asks for (i) a longer Bar Date period, (ii) changes in the forms and manner of notice, and (iii) a "clear" order assuring that the California limitations period is not truncated or shortened. Joinder Christine E. Baur, Esq., at Baker & McKenzie LLP, in San Diego, California, contends that as the Creditors Committee correctly notes, the establishment of a Bar Date is not mandatory and the decision of whether or not to set one must depend on the specific facts and circumstances of each case. The Diocese is seeking to impose a bar date on future CSA claimants, thereby triggering constitutional and fairness-related issues that can, and should be avoided, Ms. Baur insists. The CSA survivors, who are currently unable to either understand their injury or come forward with respect to it, may be denied their right to participate in San Diego's bankruptcy case before having their claims discharged, Ms. Baur asserts. She points out that no future claims representative has been requested or appointed for future CSA claims. Diocese Talks Back The Diocese contends that the joinder of the 49 Plaintiffs should be struck as untimely because it was filed 28 days after the deadline for filing objections to the request expired. The Diocese also notes, among others, that the Joinder's additional grounds and authorities lack merit. Accordingly, the Diocese asks the Court to strike the Joinder. About the San Diego Diocese Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. The Diocese's exclusive period to file a chapter 11 plan of reorganization expires tomorrow, June 27, 2007. On March 27, 2007, the Debtor filed its plan and disclosure statement. (Catholic Church Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Panel Objects to San Diego's Lease Extension Plea ------------------------------------------------------------------ The Official Committee of Unsecured Creditors asks the United States Bankruptcy Court for the Southern District of California to deny the extension request filed by The Roman Catholic Bishop of San Diego because it did not contain any information regarding the Diocese's liability under the four unexpired nonresidential real property leases. Lease Decision Extension As reported in the Troubled Company Reporter on June 6, 2007, the Debtor asked the Court to extend its lease decision period to September 25, 2007. Susan G. Boswell, Esq., at Quarles & Brady LLP, in Tucson, Arizona, told the Court that since San Diego's Chapter 11 case has been pending for three months, the Diocese has not had sufficient time to evaluate and decide which Leases should be assumed or rejected. Committee's Contention James I. Stang, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Los Angeles, California, points out that copies of the Leases were not attached to the request, Mr. Stang relates that in its monthly operating report for March 2007, the Diocese listed four payments to Frank J. Patonai, Jr., aggregating $6,616 for a certain Pomerado Road property. The Property was not listed on Schedule G of the Diocese's Second Amended Schedule of Assets and Liabilities. Mr. Stang contends that the purpose of the Payments is not clear. He adds that it is not clear whether the Property should also be subject to the request. About the San Diego Diocese Roman Catholic Diocese of San Diego in California -- http://www.diocese-sdiego.org/-- employs approximately 3,000 people in various areas of work. The Diocese filed for Chapter 11 protection just before commencement of the first of court proceedings for 140 sexual abuse lawsuits filed against the Diocese. Authorities of the San Diego Diocese said they were not in favor of litigating their cases. The San Diego Diocese filed for chapter 11 protection on Feb. 27, 2007 (Bankr. S.D. Calif. Case No. 07-00939). Gerald P. Kennedy, Esq., at Procopio, Cory, Hargreaves and Savitch LLP, represents the Diocese. In its schedules of assets and liabilities, the Diocese listed total assets of $152,510,888 and total liabilities of $72,754,092. The Diocese's exclusive period to file a chapter 11 plan of reorganization expires tomorrow, June 27, 2007. On March 27, 2007, the Debtor filed its plan and disclosure statement. (Catholic Church Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Davenport Can Sell Farm for $310,000 ----------------------------------------------------- The Diocese of Davenport obtained authority from the United States Bankruptcy Court for the Southern District of Iowa to sell one of its surplus properties, free and clear of interest, including prepetition and postpetition claims, tax lien claims or any other claims. As reported in the Troubled Company Reporter on June 6, 2007, Richard A. Davidson, Esq., at Lane & Waterman LLP, in Davenport, Iowa, related that following Davenport's employment of three real estate agents, the Diocese entered into a real estate listing agreement with Ruhl Commercial, Inc. The Agent has also procured a real estate agreement from a prospective buyer, which is acceptable to the Diocese. Mr. Davidson disclosed that the farm at 3718 Telegraph Road, in Davenport, Iowa, will be sold to Charles Van Fossen for $310,000. Mr. Davidson informs the Court that the Diocese has determined that the purchase agreement with Mr. Van Fossen, which was negotiated at arm's-length and in good faith, represent the highest and best offer for the Property. The only known adverse interest in the Property is a judgment lien held by Michl D. Uhde by virtue of a judgment entered against the Diocese in September 2006, Mr. Davidson discloses. He adds that notice will be given pursuant to Rule 9014(b) of the Federal Rules of Bankruptcy Procedure. The Property is being sold AS-IS, WHERE-IS, with no representations or warranties, except for what is stated in the Purchase Agreement between the Diocese and the Purchaser. The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on October 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., of Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. Davenport's exclusive period to file a plan will expire on Aug. 15, 2007. Its exclusive period to solicit acceptances of its plan will expire on Oct. 14, 2007. (Catholic Church Bankruptcy News, Issue No. 95; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CITIGROUP MORTGAGE: Fitch Affirms B Ratings on Two Classes ---------------------------------------------------------- Fitch Ratings has taken rating actions on the following Citigroup Mortgage Loan Trust transactions: Series 2005-5 -- Class A affirmed at 'AAA'; -- Class 3B-1 affirmed at 'AA; -- Class 3B-2 affirmed at 'A'; -- Class 3B-3 affirmed at 'BBB'; -- Class 3B-4 affirmed at 'BB'; -- Class 3B-5 affirmed at 'B'. Series 2006-AR5 -- Class A affirmed at 'AAA'; -- Class 1B-1 affirmed at 'AA; -- Class 1B-2 affirmed at 'A'; -- Class 1B-3 affirmed at 'BBB'; -- Class 1B-4 affirmed at 'BB'; -- Class 1B-5 affirmed at 'B'; -- Class 2B-1 affirmed at 'AA'; -- Class 2B-2 affirmed at 'A'; -- Class 2B-3 affirmed at 'BBB'; -- Class 2B-4 affirmed at 'BB'; -- Class 2B-5 affirmed at 'B'. The mortgage loans consist of fixed- and adjustable- rate loans, extended to Alt-A borrowers and are secured by first liens, primarily on one- to four-family residential properties. As of the May 2007 distribution date, the transactions were seasoned 21 and 11 months respectively and the pool factors were 74.4% and 83.6% respectively. The loans are master serviced by CitiMortgage (rated 'RMS1' by Fitch). The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $1.62 billion of outstanding certificates. To date the 2006-AR5 transaction has not suffered any realized losses, and the 2005-5 transaction has suffered minimal losses. COMMERCIAL MORTGAGE: Moody's Affirm Low-B Ratings on Five Certs. ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 25 classes of COMM 2005-LP5, Commercial Mortgage Pass-Through Certificates, Series 2005-LP5 as: -- Class A-1, $1,861,274, affirmed at Aaa -- Class A-1A, $243,376,627, affirmed at Aaa -- Class A-2, $592,379,000, affirmed at Aaa -- Class A-3, $71,321,000, affirmed at Aaa -- Class A-4, $305,071,000, affirmed at Aaa -- Class A-J, $117,014,000, affirmed at Aaa -- Class A-SB, $86,687,000, affirmed at Aaa -- Class X-C, Notional, affirmed at Aaa -- Class X-P, Notional, affirmed at Aaa -- Class B, $46,806,000 affirmed at Aa2 -- Class C, $14,892,000, affirmed at Aa3 -- Class D, $27,658,000, affirmed at A2 -- Class E, $21,275,000, affirmed at A3 -- Class F, $23,403,000, affirmed at Baa1 -- Class G, $14,893,000, affirmed at Baa2 -- Class H, $17,020,000, affirmed at Baa3 -- Class J, $12,765,000, affirmed at Ba1 -- Class K, $6,383,000, affirmed at Ba2 -- Class L, $4,255,000, affirmed at Ba3 -- Class M, $4,255,000, affirmed at B1 -- Class O, $4,255,000, affirmed at B3 -- Class GMB-1, $27,500,000, affirmed at Baa1 -- Class GMB-2, $28,000,000, affirmed at Baa2 -- Class GMB-3, $16,200,000, affirmed at Baa3 -- Class GMB-4, $14,300,000, affirmed at Baa3 As of the June 11, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 3.6% to $1.7 billion from $1.8 billion at securitization. The Certificates are collateralized by 136 loans, ranging in size from less than 1.0% to 15.8% of the pool, with the top 10 loans representing 50.1% of the pool. The pool includes four investment grade shadow rated loans, representing 23.5% of the pool. The pool has not realized any losses since securitization and currently there are no loans in special servicing. Ten loans, representing 6.1% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2005 and full- or partial-year 2006 operating results for 97.6% and 92.2%, respectively, of the pool. Moody's weighted average loan to value ratio for the conduit component is 97.5%, compared to 97.8% at securitization, resulting in an affirmation of all classes. The largest shadow rated loan is the General Motors Building Loan ($260.0 million -- 15.8%), which represents a pari passu interest in a $800.0 first mortgage loan secured by a 1.9 million square foot Class A office building located in New York City. An $86.0 million junior non pool first mortgage loan component is also included in the trust and is the security for non pooled Classes GMB-1, GMB-2, GMB-3 and GMB-4. The property was 93.0% occupied as of April 2007, compared to 96.0% at securitization. Moody's current shadow ratings of the pooled and non pooled loan components are A3 and Baa3, respectively, the same as at securitization. The second largest shadow rated loan is the Lakeside Mall Loan ($93.6 million -- 5.7%), which represents a pari passu interest in a $194.0 million loan secured by the borrower's interest in a 1.5 million square foot regional mall located in Sterling Heights, Michigan. The mall is anchored by Sears, two Macy's stores, J.C. Penney and Lord & Taylor. Moody's current shadow rating is Baa3, the same as at securitization. The other two shadow rated loans comprise 2.0% of the pool. The Woodfield Commons Loan ($17.5 million -- 1.1%) is secured by a 208,000 square foot retail center located in Schaumburg, Illinois. Moody's current shadow rating is Baa3, the same as at securitization. The Chatham Ridge Shopping Center Loan ($15.0 million -- 0.9%) is secured by a 176,000 square foot retail center located in Chicago, Illinois. Moody's current shadow rating is A3, the same as at securitization. The top three conduit loans represent 15.2% of the pool. The largest conduit loan is the 63 Madison Avenue Loan ($105.0 million -- 6.4%), which represents a pari passu interest in a $165.0 million loan secured by a 798,000 square foot office building located in New York City. The property is 100.0% occupied, the same as at securitization. Moody's LTV is 118.4%, the same as at securitization. The second largest conduit loan is the Bank of America Tower at Las Olas City Centre Loan ($90.0 million -- 5.5%), which is secured by a 409,000 square foot Class A office building located in Fort Lauderdale, Florida. The property was 92.0% occupied as of year end 2006, compared to 80.0% at securitization. Moody's initial analysis assumed a stabilized occupancy level for this property which has now been achieved. Moody's LTV is 99.8%, the same as at securitization. The third largest conduit loan is the Continental Park Plaza Loan ($55.0 million -- 3.3%), which is secured by a 477,000 square foot Class A office building located in El Segundo, California. The property's occupancy declined to 80.0% as of November 2006 from 87.8% at securitization due to the early termination of Union Oil Company, which occupied 18.5% of the premises at securitization. The borrower has re-leased a significant portion of this space and has subdivided the remaining space for small space users. Moody's LTV is 84.9%, compared to 74.8% at securitization. CREDIT SUISSE: Fitch Affirms Low-B Ratings on Two Classes --------------------------------------------------------- Fitch affirms 14, downgrades two and Places one class on Rating Watch Negative from these Credit Suisse transactions: CSMC series 2006-7, Groups 1-5 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BBB'; -- Class B-5 affirmed at 'BBB-'; -- Class B-6 affirmed at 'BB'; -- Class B-7 affirmed at 'B'. CSMC series 2006-7, Groups 6-12 -- Class A affirmed at 'AAA'; -- Class DB-2 affirmed at 'AA-'; -- Class DB-3 affirmed at 'A+'; -- Class DB-4 affirmed at 'A'; -- Class DB-5 affirmed at 'BBB+'; -- Class DB-6 affirmed at 'BBB'; -- Class DB-7 rated 'BBB-', placed on Rating Watch Negative; -- Class DB-8 is downgraded to 'B+' from 'BB'; -- Class DB-9 is downgraded to 'C' from 'B' and assigned a distressed recovery rating of 'DR4'. The collateral of the above transaction consists of first lien fixed-rate alt-A mortgage loans. As of the May 2007 distribution date, the transaction is seasoned 10 months, and the pool factor is approximately 87%. All of the mortgage loans were purchased by an affiliate of the depositor from various sellers in secondary market transactions. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect approximately $1.0 billion of outstanding certificates. The downgrades, affecting approximately $6.1 million of outstanding certificates, are taken as a result of a deteriorating relationship between CE and expected loss. The class DB-7 bond was placed on Rating Watch Negative due to early negative trends in the relationship between serious delinquency and credit enhancement. For CSMC 2006-7 Groups 6-12, the amount of loans in Foreclosure and REO at ten months seasoning as a percentage of the current pool balance is 1.52%. The subordination of the DB-8 and DB-9 classes is 1.20% and 0.57%, respectively. The mortgage loans are being serviced by Wells Fargo Home Mortgage, Inc. ('RPS1' rated by Fitch), and Select Portfolio Servicing, Inc. ('RPS2'). The depositor is Credit Suisse First Boston Mortgage Securities Corp. CROSSWINDS AT MESQUITE: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Crosswinds at Mesquite Trails, L.L.C. 2929 North Power Road Suite 101 Mesa, AZ 85215 Bankruptcy Case No.: 07-bk-02939 Type of business: The Debtor owns a 640-acre residential subdivision. Chapter 11 Petition Date: June 22, 2007 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Bryan A. Albue, Esq. Fennemore Craig 3003 North Central Avenue, Suite 2600 Phoenix, AZ 85012-2913 Tel: (602) 916-5311 Fax: (602) 916-5511 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. CWALT 2006-43CB: Fitch Puts Low-B Ratings Under Negative Watch -------------------------------------------------------------- Fitch Ratings has taken these rating actions on CWALT 2006-43CB: Group 1 & 2 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. Group 3 -- Class A affirmed at 'AAA'; -- Class III-M affirmed at 'AA'; -- Class III-B-1 affirmed at 'A'; -- Class III-B-2 affirmed at 'BBB'; -- Class III-B-3 rated 'BB'; placed on Rating Watch Negative; -- Class III-B-4 rated 'B'; placed on Rating Watch Negative. The above transaction is collateralized primarily by conventional, fully amortizing, 15- to 30-year fixed-rate, mortgage loans either originated under Countrywide Home Loans, Inc.'s Standard Underwriting Guidelines extended to Prime borrowers or Expanded Underwriting Guidelines extended to Alt-A borrowers secured by first liens on one- to four-family residential properties. Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines. These affirmations, representing approximately $846 million of outstanding principal, reflect adequate relationships of credit enhancement to future loss expectations. The class III-B-3 and III-B-4 were placed on rating watch negative due to the relationship of serious delinquency to CE and reflect approximately $1.68 million in outstanding certificates. As of the May 2007 remittance period, Group 3 of the trust has a 60+ delinquency percentage of 5.60%. The CE of the class III-B-3 and III-B-4 is 1.28% and 0.61%, respectively. There have been no losses date. CWALT purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The loans are being serviced by Countrywide Home Loans Servicing LP, a direct wholly owned subsidiary of CHL. Countrywide Servicing is rated 'RPS1' for primary servicing and 'RMS2' for master servicing by Fitch. DAYTON SUPERIOR: Moody's Lifts Corporate Family Rating to B2 ------------------------------------------------------------ Moody's Investors Service upgraded Dayton Superior Corporation's CFR to B2 from B3. Moody's has also assigned a B2 to the company's proposed $195 million term loan B and a B3 to the company's proposed $85 million second lien loan. The proposed term loan B and second lien loan, together with a $130 million asset based revolver, will refinance the company's existing indebtedness, including the company's 10.75% and 13% notes. Dayton's ratings consider the company's improved debt burden post the December 2006 IPO, as well as anticipated continued improvement in the company's credit metrics due to operational improvement, anticipated ongoing strong demand for Dayton's products, and the benefits of the proposed refinancing including reduced interest burden. These ratings for Dayton have been upgraded: -- Corporate family rating, upgraded to B2 from B3; -- Probability of default rating, upgraded to B2 from B3. These ratings/assessments have been assigned: -- $195 million gtd. sr. secured term loan B, rated B2 (LGD4, 58%); -- $85 million gtd. sr. secured 2nd lien loan, rated B3 (LGD5, 73%). These ratings will be withdrawn at the close of the transaction: -- $165 million 10.75% senior secured second priority notes due 2008, B2 (LGD3, 42%); -- $155 million 13% senior subordinated notes due 2009, Caa2 (LGD5, 83%). The ratings outlook is stable. Dayton Superior's ratings and outlook reflect the company's improved financial performance as well as the expectation for continued improvement. Dayton is expected to continue benefiting from strong spending in the commercial and infrastructure end markets. The proposed refinancing will provide significant interest savings and give Dayton the flexibility to make additional debt prepayments. The ratings and/or outlook may improve if the company continues to deliver. The ratings would particularly benefit if the company were able to generate strong consistent annual positive free cash to total debt over 8% and if Dayton were able to reduce leverage to under 3.5 times. The rating and/or outlook could decline if the company's margins contract, if raw materials price increases were unable to be passed on to customers in a timely basis, and if the commercial construction business were to slow meaningfully. As 95% of Dayton's total revenue is generated from non-residential and infrastructure construction, a rebound in residential construction would have minimal influence in the company's performance. The ratings would also be negatively impacted if debt to EBITDA were to increase to 6 times on a projected basis. Headquartered in Dayton, Ohio, Dayton Superior Corporation is the largest North American manufacturer and distributor of metal accessories and forms used in concrete construction, and metal accessories used in masonry construction. Dayton provides these specialized products to the non-residential construction market for use in infrastructure, institutional, and commercial projects. Total revenues for 2006 were $479 million. DEATH ROW: Marion Knight to Sell Malibu Mansion for $6.2 Million ---------------------------------------------------------------- Rap mogul Marion "Suge" Knight, co-founder of recording company Death Row Records, is selling his Malibu mansion for $6.2 million, according to various reports. The sale of the seven-bedroom, 9-1/2 bath home is subject to the approval of the U.S. Bankruptcy Court for the Central District of California. Reports discloses that the Mediterranean-style house sits on a 6.79-acre hill above the Pacific Ocean, with pool and tennis courts. An addition of 2.11 acres of land is included in the real estate sale. Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as Chapter 11 Trustee for the Debtors' estate. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELPHI CORP: Reaches Tentative Deal with UAW and General Motors --------------------------------------------------------------- Delphi Corp. reached a tentative agreement and signed a Memorandum of Understanding with the UAW and General Motors Corp. covering site plans, workforce transition as well as other comprehensive transformational issues. The agreement is subject to union ratification and approval by the U.S. Bankruptcy Court. "If ratified, we believe this agreement will be a significant milestone in our transformation and a major step towards emergence," John Sheehan, Delphi's chief restructuring officer, said. "The Memorandum is a testament to the dedication and hard work of the UAW, Delphi and General Motors teams." UAW President Ron Gettelfinger and UAW Vice President Cal Rapson have issued a statement, "The UAW finalized an understanding with General Motors earlier [Fri]day that has resulted in a tentative agreement with their former parts operations. Details are being withheld based on explanation and ratification meetings by our local unions." The Detroit Free Press reports that Delphi is offering its offers workers buyouts, severance packages, early retirement incentives and other payments in exchange for ratifying the Tentative Agreement. The TA, the Free Press said, would significantly shrink the size of the Troy-based parts supplier in North America and reduce hourly wages to what the company considers competitive rates. The accord will also free up the UAW's negotiating staff to tackle summer contract talks with the Detroit automakers. The incentives, according to the Free Press, include: (1) A $105,000 buy-down -- paid in $35,000 installments over three years -- for about 4,000 workers who now receive the same wages and benefits as GM employees. In exchange, those workers would see their hourly wages cut from about $28 to so-called supplemental rates of $14.50 to $18.50, beginning Oct. 1. During the buy-down period, those workers also can try to return to GM. (2) A $140,000 buyout for workers with more than 10 years of service. (3) A $70,000 buyout for workers with less than 10 years of service. Workers who take either buyout will have to leave the company by Sept. 15. (4) A $35,000 payout to encourage workers with at least 30 years of service to retire. (5) Retirement benefits for workers who are at least 50 years old and have at least 10 years of service. (6) A so-called grow-in package for workers with 26 years of service as of Sept. 1. The package would allow those workers to stop working but be compensated as active workers -- at the new lower rates -- until they hit 30 years of service, and then retire. (7) Severance pay of $1,500 per month for every month worked - - up to $40,000 -- for all supplemental and temporary employees who choose to leave the company. (8) Skilled trade workers wouldn't see a change in hourly wages. (9) All workers compensated at GM rates also would have their health benefits changed to include the same higher deductibles and co-pays offered to employees hired since the two-tier wage and benefit structure took effect. (10) Skilled trade workers would receive a $10,000 payment to supplement the increase in health-care costs. The Wall Street Journal said that the TA shifts much of Delphi's labor burden to its former parent, GM. General Motors, according to the Free Press, expects to pay Delphi between $300,000,000 and $400,000,000 in annual labor-related charges on top of $7,000,000,000 in retirement and labor costs. But the Detroit automaker, according to the report, sees these costs to be offset by nearly $2,000,000,000 in annual savings once Delphi's costs are competitive. GM has also agreed to pay $450,000,000 into an existing Voluntary Employees' Beneficiary Association account, according to WSJ. The agreement outlines what products GM will buy from Delphi plants, some of which will be shut down or sold. According to WSJ, the agreement says Delphi will keep open only its sites in Kokomo, Indiana; Grand Rapids, Michigan; Lockport, New York; and Rochester, New York. Four other sites will be held for divestiture by 2009 and 10 sites will be "wound down." Three additional sites will be operated as "footprint sites," i.e., GM will operate the sites until a later date. The Free Press said that four plans to be sold are Saginaw steering; Adrian; Sandusky, Ohio; and Cottondale, Alabama. Plants due for closure are located in Coopersville; Columbus, Ohio; and Milwaukee. Delphi said in its June 22 news release that it "will not provide commentary on the details of the Memorandum at the current time." As widely reported, the union, the bankrupt auto-parts supplier and GM are trying to get the deal ratified before a two-week summer shutdown that begins July 1. When the parties return from the shutdown, the UAW will begin formal contract negotiations with GM, Ford Motor Co. and Chrysler Group. About the UAW The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America is one of the largest and most diverse unions in North America, with members in virtually every sector of the economy. UAW-represented workplaces range from multinational corporations, small manufacturers and state and local governments to colleges and universities, hospitals and private non-profit organizations. The UAW has approximately 640,000 active members and over 500,000 retired members in the United States, Canada and Puerto Rico. About General Motors Headquartered in Detroit, GM General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908, GM employs about 280,000 people around the world. With global manufactures its cars and trucks in 33 countries. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Mar. 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. (Delphi Corporation Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA FUNDING: S&P Downgrades Rating on Class M-2 Certs. to CCC --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-2 asset-backed certificates issued by Delta Funding Home Equity Loan Trust 2000-4 to 'CCC' from 'BB-' and removed it from CreditWatch with negative implications. In addition, S&P affirmed its 'AA' rating on class M-1 from the same series. The downgrade of class M-2 reflects the continued erosion of credit support as losses outpace excess interest. Loss projections indicate that the current performance trend may result in a principal write-down to the class M-2 certificates in the near future. As of the June 2007 distribution date, severe delinquencies (90-plus days, foreclosures, and REOs) were $3.353 million (37.79%) compared with 0.263 million in available credit support provided by class B. Cumulative realized losses to date are approximately 9.41% of the original pool balance. S&P removed the rating on class M-2 from CreditWatch negative because it was lowered to 'CCC'. According to Standard & Poor's surveillance practices, classes of certificates or notes from RMBS transactions with ratings lower than 'B-' are no longer eligible to be on CreditWatch negative. S&P affirmed the 'AA' rating on class M-1 because actual projected credit support is adequate to maintain the rating, despite the high level of severe delinquencies. The collateral consists of fixed- and adjustable-rate home equity first- and second-lien loans secured by one- to four-family residential properties. Rating Lowered and Removed from Creditwatch Negative Delta Funding Home Equity Loan Trust 2000-4 Rating ------ Class To From ----- -- ---- M-2 CCC BB-/Watch Neg Rating Affirmed Delta Funding Home Equity Loan Trust 2000-4 Class Rating ----- ------ M-1 AA DELUXE CORP: Appoints Baldwin, McGrath, and Metviner as Directors ----------------------------------------------------------------- Deluxe Corporation's board of directors named Ronald C. Baldwin, Don J. McGrath and Neil Metviner as company director effective July 1, 2007. This brings the total number of directors to 11, 10 of whom are independent of management. Mr. Baldwin, 60, is the retired vice chairman, regional banking of Huntington Bancshares Incorporated in Columbus, OH. Huntington is a $36 billion regional bank holding company which provides innovative retail and commercial financial products and services. Mr. Baldwin brings nearly 35 years of banking experience to Deluxe and holds a M.B.A. from the University of Michigan. Mr. McGrath, 59, is chief executive officer of BancWest Corp and Bank of the West, both of which are wholly owned subsidiaries of BNP Paribas. Bank of the West, the 4th largest bank headquartered in the west, offers customers a full range of personal and business products and services. Mr. McGrath has nearly 37 years experience in marketing and advertising coupled with product development. He has been with Bank of the West since 1975 and holds a M.B.A. from Boston University. Mr. Metviner, 49, is president of Pitney Bowes Direct in Stamford, CT, which is an operating unit of Pitney Bowes, Inc., a global provider of integrated mail, messaging and document management solutions. Mr. Metviner brings nearly 27 years of banking and small business experience to Deluxe. He has been with Pitney Bowes since 2000 and before that was with Cendant Corporation and National Westminster Bancorp. He holds a M.B.A. from Case Western Reserve University. "Earlier we had communicated to our shareholders we were actively recruiting additional board members. These individuals are proven executives and add almost a century of combined experience working with banks and small businesses to our board," said Stephen Nachtsheim, chairman of Deluxe. "We are thrilled to add their capabilities and expertise to complement our board and look forward to Ron, Don and Neil's many contributions." About Deluxe Corporation Headquartered in St. Paul, Minnesota, Deluxe Corporation (NYSE: DLX) -- http://www.deluxe.com/-- helps financial institutions and small businesses better manage, promote, and grow their businesses. The company uses direct marketing, distributors, and a North American sales force to provide a wide range of customized products and services: personalized printed items such as checks, forms, business cards, stationery, greeting cards, labels, and retail packaging supplies, promotional products and merchandising materials, fraud prevention services, and customer retention programs. The company also sells personalized checks and accessories directly to consumers. * * * As of June 25, 2007, the company continues to carry Moody's Ba2 ratings on its long term corporate family rating, senior unsecured debt, and probability of default rating. The outlook is stable. Also, the company still carries Standard & Poor's BB- ratings on its long term foreign and local issuer credits and B ratings on its short term foreign and local issuer credits. The outlook is negative. DEUTSCH ALT-A: Fitch Puts Ratings on Two Classes on Watch Negative ------------------------------------------------------------------ Fitch has affirmed four and downgraded two classes from Deutsch Alt-A Securities Inc. 2006-AR1 (Groups 2, 3, 4 & 5): -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 affirmed at 'A'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 (rated 'BB') placed on Rating Watch Negative; -- Class B-4 (rated 'B') placed on Rating Watch Negative. The affirmations reflect a stable relationship between credit enhancement and expected losses, and affect approximately $340.25 million in outstanding certificates. The negative rating actions reflect deterioration in the relationship between CE and expected losses, and affect approximately $4.25 million in outstanding certificates. Since the January 2007 distribution, the transaction has experienced rapidly growing delinquencies, notably in foreclosures and real estate owned. Since then, 60+ delinquencies (includes bankruptcy, FC, and REO) have more than doubled, from 0.92% to 2.14%. Approximately 80% of this 2.14% is concentrated in FC and REO. The 'B'-rated class currently has 0.41% in CE. The collateral in the pool consists of mixed adjustable rate mortgages on residential properties, extended to Alt-A borrowers. The loans are originated by various lenders, and are master serviced by Wells Fargo Bank, N.A (rated 'RMS1' by Fitch). DOBSON COMM: Mulls Sale of Firm, Hires Morgan Stanley ----------------------------------------------------- Dobson Communications Corp. is considering strategic options, including a sale of the company as deal activity among the telecom industry's smaller players quickens, The Wall Street Journal said on its Web site Monday, citing people familiar with the matter. The company, the WSJ's source said, has hired Morgan Stanley to explore its options. According to WSJ, the move comes as private-equity firms are increasingly striking high-profile telecom deals, leading to higher share prices for some smaller telecom companies in recent weeks. Based in Oklahoma City, Dobson Communications Corporation (Nasdaq: DCEL) - http://www.dobson/-- provides rural and suburban wireless voice and data services in portions of the United States. The company's operations are encompassed in its two wholly owned primary subsidiaries, Dobson Cellular Systems Inc. and American Cellular Corp. * * * As reported in the Troubled Company Reporter on Mar. 16, 2007, Fitch Ratings affirmed the 'B-' Issuer Default Rating for Dobson Communications Corporation with a stable outlook. DORAL FINANCIAL: FBOP Decides Not to Proceed with Investment Plan ----------------------------------------------------------------- Doral Financial Corporation said in a press statement that it has been notified by FBOP Corporation that after completion of its diligence process FBOP has decided that it will not proceed with its previously announced proposal to invest in Doral. FBOP, which is Doral's second largest shareholder, also informed Doral that it currently plans to vote in favor of the proposed $610 million investment transaction between Doral and Doral Holdings Delaware LLC. In a letter to Doral, FBOP thanked Doral's Board, management and employees for the assistance and cooperation given to FBOP throughout its diligence review. Previously, the proposed investment transaction between Doral Financial and Holdings provides for the issuance to Holdings of $610 million in shares of common stock and would result in Holdings' owning 90% of the company's outstanding shares. Holdings is a newly formed entity in which Bear Stearns Merchant Banking and other investors, including Marathon Asset Management, Perry Capital, the D. E. Shaw group, Tennenbaum Capital Partners, Eton Park Capital Management, Goldman Sachs & Co., Canyon Capital Advisors and GE Asset Management, will invest. Doral further said that it is soliciting proxies from shareholders of record as of June 11, 2007 for its annual meeting of shareholders to be held on July 17, 2007, at which shareholders will be asked to approve, among other matters, the Holdings investment. FBOP, which is not an investor in Holdings, currently owns approximately 4.6% of the company's outstanding common shares. Doral Board members Edgar Cullman, Jr. and John Ernst and certain members of their families, who collectively own approximately 10.7% of the company's outstanding common shares, have agreed to vote in favor of the Holdings transaction. Dennis Buchert, Chairman of the Board of Doral Financial, stated, "We are now focusing our attention on obtaining the necessary shareholder approval of the Holdings investment, which is a critical component of Doral's recapitalization process. The recapitalization of Doral will mean that the company is positioned to move forward with its efforts to build the potential of the franchise and, in turn, value for all shareholders and the communities Doral serves." Glen R. Wakeman, Chief Executive Officer of Doral, said, "Doral's new management team has worked diligently to put in place a business strategy designed to grow Doral's profitability over the long term. This involves transforming Doral into a community banking organization, providing our customers with state of the art products and services to meet their needs, and operating with strong controls and procedures. The anchor of our organization is Doral Bank, which is well capitalized from a regulatory perspective, and represents the engine with which we will build the Doral brand." About Doral Financial Corp. Based in New York City, Doral Financial Corporation (NYSE: DRL) -- http://www.doralfinancial.com/-- is a diversified financial services company engaged in mortgage banking, banking, investment banking activities, institutional securities and insurance agency operations. Its activities are principally conducted in Puerto Rico and in the New York City metropolitan area. Doral is the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on May 21, 2007, Fitch Ratings lowered Doral Financial Corporation's Long-term Issuer Default Rating to 'B' from 'B+'; Senior debt rating to 'B-' from 'B'; Preferred stock rating to 'CCC' from 'CCC+'; and Individual to 'E' from 'D/E'. At the same time, Moody's Investors Service said it is continuing its review of Doral Financial Corporation for possible downgrade. The ratings have been on review for possible downgrade since Jan. 5, 2007, when Doral was downgraded to B2 from B1 for senior debt. The review has centered on Doral's prospects for refinancing $625 million of debt maturing in July. ENCORE ACQUISITION: Moody's Holds Corporate Family Rating at Ba3 ---------------------------------------------------------------- Moody's Investors Service confirmed Encore Acquisition's Ba3 corporate family rating, Ba3 probability of default rating, and B1 senior subordinated note rating. Due to an increase proportion of current and expect first secured debt in EAC's capital structure, under Moody's Loss Given Default methodology the LGD rating for its senior subordinated notes has been moved down to LGD 5 (81%). However, a negative rating outlook is assigned pending EAC's execution of sustained debt reduction policies. These actions conclude Moody's review for downgrade. To retain its ratings, EAC would need to reduce leverage considerably in the next twelve months and conduct its subsequent acquisitions and its drop downs of properties into its pending master limited partnership in a fashion that reduces consolidated and parent company leverage relative to its consolidated and its parent proven developed reserves. Even pro-forma for its pending asset sales and MLP initial public offering, EAC's leverage on PD reserves exceeds levels suitable to its current ratings. EAC has stated that all pending asset sale proceeds and all proceeds of its pending initial public offering of its subsidiary MLP will reduce both parent and consolidated debt. In addition to that debt reduction, EAC will likely need to reduce debt further with discretionary cash flow or any further MLP unit offerings until leverage on PD reserves reaches the $5/Boe to $6/Boe range. Moody's initiated the review for downgrade in late 2006 due to EAC's intention to conduct two proportionately sizable and fully debt funded acquisitions, and due to EAC's intention to form a public MLP with attendant added uncertainty concerning its corporate and capital structures. The review also came on the heels of tough second half 2006 operating results. EAC faced rig delays and incurred downhole restraints that reduced air injection volumes and largely were responsible for missed production targets at its core Cedar Creek Anticline high-pressure air injection tertiary recovery program. EAC also incurred less robust results in East Texas and Oklahoma relative to capital expended. EAC's $400 million acquisition of Anadarko Petroleum's Big Horn Basin assets and $393 million acquisition of Anadarko's Williston Basin properties closed during first half 2007. Ratings support includes a management team historically committed to conservative leverage, the lower geologic risk of its mature properties, an expanded consolidated property base with an expected favorable impact on drillbit reserve replacement costs, a durable production base, and expected reasonably supportive prices. Ratings restraints include high leverage, the uncertainty surrounding the evolving apportionment of assets and debt amongst the parent and the MLP, and an approximately $355 million pro- forma net increase in debt after two acquisitions and debt reductions with MLP proceeds and the after tax proceeds of its $300 million Mid-Continent asset divestiture. Restraints also include somewhat negative operating trends prior to EAC's acquisitions, partly due to downhole restraints that reduced air injection volumes resulting in missed production targets at its Cedar Creek Anticline high-pressure air injection tertiary recovery program. EAC also incurred disappointing drilling results in East Texas and Oklahoma. As well, exacerbated by high natural gas prices and deep price discounts on most of its production, EAC's energy intensive air injection, water flooding, downhole pumping, water re-injection, and surface processing activities have driven production costs to high levels and restrained operating margins. The credit impact of the Encore Energy Partners MLP will be a function of: * the parent's pro-forma reserve and production scale, diversification, and property risk mix, * the amount of debt at the parent relative to the parent's PD reserves and production, * the health of the parent's reserve replacement effort as gauged by its unit full-cycle economics and leveraged recycle ratio, * cash margin outlook relative to sustaining capital spending, * commitment of the parent management to prioritize EAC shareholder interest with respect to the MLP, and * the MLP debt recourse covenants in relation to the parent. Moody's believes the MLP could eventually hold comparatively large proportions of EAC's lower risk properties. It will be important to reduce parent debt in tandem with the drop down of properties into the MLP. Moody's anticipates that the MLP may eventually, though not initially, have significant debt in its capital structure. Given the comparatively higher cash flow multiples at which an MLP's equity units trade, we expect the MLP to be used as basin consolidation acquisition vehicle. Per Moody's global ratings methodology for independent exploration and production firms, EAC maps to a B1 corporate family rating, one notch lower than its assigned Ba3 rating. The assigned rating reflects our expectation that leverage will be reduced significantly and that operating trends will stabilize. EAC exhibits high full-cycle costs in the high $30/boe range, relatively high three year average F&D costs of $15/boe, though in-line with the higher cost trends across the industry, and high debt to proven developed leverage at just under $7/boe, mapping to a B3 rating. The rating uplift to B1 from the indicated methodology also reflects a reserve and production base mapping to the Ba range and Ba range leverage on total reserves fully adjusted for future development spending. The relatively low future development capex is due to the nature of EAC's non-producing reserves, which primarily are brought to production with enhanced recovery stimulation. Enhanced recovery costs considerably less than a full blown exploitation program. Encore Acquisition Company is headquartered in Forth Worth, Texas. FINLAY ENT: Inks Amended Pact with GE to Expand Credit Facility --------------------------------------------------------------- Finlay Enterprises Inc. completed an amendment to its revolving credit facility provided by GE Corporate Lending. The amendment expands total availability from $225 million to $300 million. GE Capital Markets Inc. arranged the transaction. The new terms of the credit facility became effective June 20, 2007. "The company is pleased with the expansion of its credit facility and the continued confidence shown in Finlay Enterprises by its financial partners," Arthur E. Reiner, chairman and chief executive officer of Finlay Enterprises commented. "The expanded facility provides the company with additional financial flexibility and liquidity. The company continues to manage its balance sheet as it focuses on expanding its business." During the fourth quarter of fiscal 2006, the company terminated and retired the obligation under its gold consignment agreement and converted its gold lease inventory to asset which increased the company's collateral base. Subsequently, the company amended its credit agreement to give it the option to expand the size of the facility and extended the maturity date to January 2011. About GE Corporate Lending Headquartered in Norwalk, Connecticut, GE Commercial Finance Corporate Lending -- http://www.gelending.com/-- is one of North America's providers of asset-based, cash flow, structured finance and other capital solutions for mid-size and large companies. From over 30 offices throughout the U.S. and Canada, Corporate Lending specializes in serving the unique needs of borrowers seeking $20 million to $2 billion and more for working capital, growth, acquisitions, project finance and turnarounds. About Finlay Enterprises Inc. Headquartered in New York City, Finlay Enterprises Inc. (Nasdaq: FNLY) -- http://www.finlayenterprises.com/-- through its wholly-owned subsidiary, Finlay Fine Jewelry Corporation, retails fine jewelry and operates licensed fine jewelry departments in department stores throughout the United States. The company also operates luxury stand-alone jewelry stores primarily located in the southeastern United States. The number of locations at the end of the first quarter of fiscal 2007 totaled 749, including 33 Carlyle and five Congress specialty jewelry stores. * * * Standard & Poor's Rating Services assigned 'B' long term foreign and local issuer credit ratings to Finlay Enterprises Inc. FORD MOTOR: Denies Plans to Build Slovak Plant; Eyes Romania ------------------------------------------------------------ Ford Motor Company has dismissed a report by Slovak daily Hospodarske Noviny saying the U.S. carmaker was considering building a new assembly plant in an industrial park near the eastern Slovak town of Kechnec, where a Ford-Getrag joint venture already makes gearboxes, Reuters says. The Slovak paper also quoted the Kechnec mayor as saying he was in talks with a renowned producer to make higher-class cars in the east, Reuters notes. The investment should be worth tens of billions of crowns and create hundreds of jobs, the mayor said. Ford of Europe Spokesman told Reuters the report was "speculative" and they "cannot confirm anything like that (story)." The state investment agency SARIO has also denied any negotiations with Ford about a new plant in Slovakia, which has been a magnet for investment inflows in the auto sector. Mr. Nissen reiterated Ford's interest in an upcoming privatization of Romania's Automobile Craiova, Reuters states. "Eastern Europe is certainly the area where markets are growing and we have to consider how to increase our presence there. We are preparing a bid for the plant in Romania, which we are also referring to as eastern Europe," Mr. Nissen said. Mr. Nissen did not disclose details of the bid, but said that Ford was looking to expand the plant, Reuters says. The Romanian privatization agency AVAS had previously warned that the buyer would have to ensure a minimum yearly output of 300,000 cars. General Motors Corp. and Russian Machines, a unit of one of the largest privately held conglomerates in Russia, have also expressed interest in the Romanian plant, Reuters reveals. The deadline for binding bids is July 5, 2007. About Ford Motor Co. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. * * * As reported in the Troubled Company Reporter on Dec. 12, 2006, Standard & Poor's Ratings Services affirmed its 'B' bank loan and '2' recovery ratings on Ford Motor Co. As reported in the Troubled Company Reporter on Dec. 7, 2006, Fitch Ratings downgraded Ford Motor Company's senior unsecured ratings to 'B-/RR5' from 'B/RR4'. As reported in the Troubled Company Reporter on Dec. 6, 2006, Moody's Investors Service assigned a Caa1, LGD4, 62% rating to Ford Motor Company's $3-billion of senior convertible notes due 2036. FURNITURE BRANDS: Weak Performance Cues S&P to Cut Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Furniture Brands International Inc. to 'BB-' from 'BBB-'. The rating remains on CreditWatch with negative implications, where it was placed on Feb. 28, 2007, because of weakness in the company's business lines, and credit protection measures below S&P's expectations for the rating. "The downgrade reflects the company's weak operating performance in recent quarters, and credit measures that are well below our prior expectations," said Standard & Poor's credit analyst Rick Joy. "We believe that the company will continue to experience challenging market conditions given the weak retail environment for its brands and continued softness in the housing market." The company's profitability continues to be negatively affected by lower sales volume and discounting to reduce inventory levels. EBITDA margins of about 5.5% for the 12 months ended March 31, 2007, have continued to decline from about 10% in 2002, and remain very weak for a consumer products company. St. Louis, Missouri-based Furniture Brands is one of the largest residential furniture manufacturers in the U.S. The company sells a broad range of home furnishings under well-recognized brands, including Broyhill, Lane, Thomasville, Henredon, Drexel Heritage, and Maitland-Smith. GENERAL MOTORS: Reaches Tentative Deal with UAW and Delphi Corp. ---------------------------------------------------------------- Delphi Corp. reached a tentative agreement and signed a Memorandum of Understanding with the UAW and General Motors Corp. covering site plans, workforce transition as well as other comprehensive transformational issues. The agreement is subject to union ratification and approval by the U.S. Bankruptcy Court. "If ratified, we believe this agreement will be a significant milestone in our transformation and a major step towards emergence," John Sheehan, Delphi's chief restructuring officer, said. "The Memorandum is a testament to the dedication and hard work of the UAW, Delphi and General Motors teams." UAW President Ron Gettelfinger and UAW Vice President Cal Rapson have issued a statement, "The UAW finalized an understanding with General Motors earlier [Fri]day that has resulted in a tentative agreement with their former parts operations. Details are being withheld based on explanation and ratification meetings by our local unions." The Detroit Free Press reports that Delphi is offering its offers workers buyouts, severance packages, early retirement incentives and other payments in exchange for ratifying the Tentative Agreement. The TA, the Free Press said, would significantly shrink the size of the Troy-based parts supplier in North America and reduce hourly wages to what the company considers competitive rates. The accord will also free up the UAW's negotiating staff to tackle summer contract talks with the Detroit automakers. The incentives, according to the Free Press, include: (1) A $105,000 buy-down -- paid in $35,000 installments over three years -- for about 4,000 workers who now receive the same wages and benefits as GM employees. In exchange, those workers would see their hourly wages cut from about $28 to so-called supplemental rates of $14.50 to $18.50, beginning Oct. 1. During the buy-down period, those workers also can try to return to GM. (2) A $140,000 buyout for workers with more than 10 years of service. (3) A $70,000 buyout for workers with less than 10 years of service. Workers who take either buyout will have to leave the company by Sept. 15. (4) A $35,000 payout to encourage workers with at least 30 years of service to retire. (5) Retirement benefits for workers who are at least 50 years old and have at least 10 years of service. (6) A so-called grow-in package for workers with 26 years of service as of Sept. 1. The package would allow those workers to stop working but be compensated as active workers -- at the new lower rates -- until they hit 30 years of service, and then retire. (7) Severance pay of $1,500 per month for every month worked - - up to $40,000 -- for all supplemental and temporary employees who choose to leave the company. (8) Skilled trade workers wouldn't see a change in hourly wages. (9) All workers compensated at GM rates also would have their health benefits changed to include the same higher deductibles and co-pays offered to employees hired since the two-tier wage and benefit structure took effect. (10) Skilled trade workers would receive a $10,000 payment to supplement the increase in health-care costs. The Wall Street Journal said that the TA shifts much of Delphi's labor burden to its former parent, GM. General Motors, according to the Free Press, expects to pay Delphi between $300,000,000 and $400,000,000 in annual labor-related charges on top of $7,000,000,000 in retirement and labor costs. But the Detroit automaker, according to the report, sees these costs to be offset by nearly $2,000,000,000 in annual savings once Delphi's costs are competitive. GM has also agreed to pay $450,000,000 into an existing Voluntary Employees' Beneficiary Association account, according to WSJ. The agreement outlines what products GM will buy from Delphi plants, some of which will be shut down or sold. According to WSJ, the agreement says Delphi will keep open only its sites in Kokomo, Indiana; Grand Rapids, Michigan; Lockport, New York; and Rochester, New York. Four other sites will be held for divestiture by 2009 and 10 sites will be "wound down." Three additional sites will be operated as "footprint sites," i.e., GM will operate the sites until a later date. The Free Press said that four plans to be sold are Saginaw steering; Adrian; Sandusky, Ohio; and Cottondale, Alabama. Plants due for closure are located in Coopersville; Columbus, Ohio; and Milwaukee. Delphi said in its June 22 news release that it "will not provide commentary on the details of the Memorandum at the current time." As widely reported, the union, the bankrupt auto-parts supplier and GM are trying to get the deal ratified before a two-week summer shutdown that begins July 1. When the parties return from the shutdown, the UAW will begin formal contract negotiations with GM, Ford Motor Co. and Chrysler Group. About the UAW The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America is one of the largest and most diverse unions in North America, with members in virtually every sector of the economy. UAW-represented workplaces range from multinational corporations, small manufacturers and state and local governments to colleges and universities, hospitals and private non-profit organizations. The UAW has approximately 640,000 active members and over 500,000 retired members in the United States, Canada and Puerto Rico. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Mar. 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on July 31, 2007. About General Motors Headquartered in Detroit, GM General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908, GM employs about 280,000 people around the world. With global manufactures its cars and trucks in 33 countries. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on May 28, 2007, Standard & Poor's Ratings Services placed General Motors Corp.'s corporate credit rating at B/Negative/B-3. At the same time, Moody's Investors Service affirmed GM's B3 Corporate Family Rating and B3 Probability of Default Rating, and maintained its SGL-3 Speculative Grade Liquidity Rating. The rating outlook remains negative. GSAA HOME: Moody's Puts Ba1 Rating Under Review ----------------------------------------------- Moody's Investors Service placed on review three classes of certificates from a transaction issued by GSAA Home Equity Trust in 2006. The transaction is backed by closed-end second lien loans. The projected pipeline loss has increased over the past few months and may affect the credit support for these certificates. The certificates are being placed on review for possible downgrade based on the fact that the bonds' current credit enhancement levels, including excess spread, may be too low compared to the current projected loss numbers at the current rating level. Complete rating actions are: Issuer: GSAA Home Equity Trust Review for Possible Downgrade: -- Series 2006-S1, Class I-M-6, Current rating Baa2, under review for possible downgrade; -- Series 2006-S1, Class I-M-7, Current rating Baa3, under review for possible downgrade; -- Series 2006-S1, Class I-B-1, Current rating Ba1, under review for possible downgrade. HARGRAY COMMS: Moody's Says Loan Changes Won't Affect Ratings ------------------------------------------------------------- Hargray Communications Group, Inc. upsized its 1st lien secured term loan by $15 million, for a total 1st lien term loan amount of $210 million, and reduced the 2nd lien term loan by $5 million to $90 million. The senior secured revolving credit facility is unchanged at $25 million. While no ratings changed as a result of these changes, the LGD point estimates have been revised as: Issuer -- Hargray Communications Group, Inc. (DPC Acquisition LLC and HCP Acquisition LLC as co-borrowers) Senior Secured Revolving Credit Facility -- Changed to B1 (LGD3 -- 37%), from B1 (LGD3 -- 36%) 1st Lien Senior Secured Term Loan -- Changed to B1 (LGD3 -- 37%), from B1 (LGD3 -- 36%) 2nd Lien Senior Secured Term Loan -- Changed to Caa1 (LGD5 -- 88%), from Caa1 (LGD5 -- 87%) HARLAN SPRAGUE: Moody's Affirms Corporate Family Rating at B2 ------------------------------------------------------------- Moody's Investors Service affirmed Harlan Sprague Dawley, Inc.'s B2 Corporate Family Rating. Moody's also assigned ratings to the company's new senior credit facilities. Moody's expects that Harlan will finance its acquisition of a contract research organization with a newly proposed senior secured credit facility, including a $330 million first lien term loan and $30 million revolving credit facility. Moody's expects that a majority of these proceeds will be used to refinance Harlan's existing credit facility and subordinated notes. The transaction is expected to close in July 2007 at which time Moody's will withdraw its existing ratings. The ratings outlook is stable. Despite the increase in leverage to finance the acquisition, Moody's affirmation of Harlan's B2 Corporate Family Rating reflects the strategic benefits of improved geographic, product and consumer diversification, as well as the expected strengthening of its contract research business. Moody's also believes that the acquisition will be immediately accretive to earnings and cash flow. The strategic acquisition provides a comprehensive range of contract research services to clients on a global basis. The acquisition will allow Harlan to further penetrate pharmaceutical markets and diversify Harlan's service offerings and already broad client base. These ratings are being assigned to Harlan Sprague Dawley, Inc.: -- $15 Million First Lien U.S. Revolving Credit Facility, due 2013, rated Ba2, LGD-1, 3% -- $330 Million First Lien Term Loan, due 2014, rated B2, LGD-4, 53% This rating is being assigned to Harlan Netherlands B.V.: -- $15 Million First Lien EURO Revolving Credit Facility, due 2013, rated Ba2, LGD-1, 3% These ratings assigned to Harlan Sprague Dawley, Inc. are being affirmed: -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 These ratings will be withdrawn once the financing is completed: -- U.S. Dollar-Denominated Senior Secured Revolver, due 2010, rated B1, LGD3, 33% -- Euro-Denominated Senior Secured Revolver, due 2010, rated B1, LGD3, 33% -- First Lien Secured Term Loan, due 2011, rated B1, LGD3, 33% Harlan Sprague Dawley, Inc. (Harlan), founded in 1931, is a global provider of preclinical tools and services that allow for innovative and efficient research in the pharmaceutical, biotechnology, chemical and food industries. HEALTH NET: Moody's Rates Shelf Registration at P(Ba2) ------------------------------------------------------ Moody's Investors Service assigned provisional ratings (senior debt at (P)Ba2) to Health Net, Inc.'s recently filed shelf registration. Health Net maintains its shelf for general operational purposes, including capital expenditures and debt refinancing. The outlook on the shelf ratings is stable. On May 15, 2007, Moody's rated Health Net's $400 million takedown of senior unsecured notes Ba2 with a stable outlook. The company used the proceeds to refinance their term loan and outstanding amounts on the credit facility. Moody's has assigned these provisional ratings with a stable outlook: Health Net, Inc. - senior unsecured debt at (P)Ba2 - senior subordinated debt at (P)Ba3 - subordinated debt at (P)Ba3 Health Net, based in Woodland Hills, California, reported total revenues of $3.4 billion for the first three months of 2007. As of March 31, 2007, the company had total membership (excluding Medicare Part D) of approximately 6.3 million and reported shareholder's equity of $1.9 billion. INDYMAC MBS: Fitch Puts BB Rating on Class 2B-5 on Watch Negative ----------------------------------------------------------------- Fitch Ratings has taken the following rating actions on the IndyMac MBS, Inc., Residential Asset Securitization Trust issue listed below: Series 2004-A2 Group 1 -- Class 1A affirmed at 'AAA'. Series 2004-A2 Group 2 -- Class 2A affirmed at 'AAA'; -- Class 2B-1 affirmed at 'AA'; -- Class 2B-2 affirmed at 'A'; -- Class 2B-3 affirmed at 'BBB'; -- Class 2B-4 rated 'BB', placed on Rating Watch Negative; -- Class 2B-5 rated 'B', placed on Rating Watch Negative. The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $13 million in outstanding certificates. Classes 2B-4 and 2B-5 were placed on Rating Watch Negative due to the deterioration in the relationship of credit enhancement to future loss expectations, and affects approximately $147,000 of outstanding certificates. The amount of loans in Foreclosure and REO at 38 months seasoning as a percentage of the current pool balance is 2%. The subordination of the 2B-4 and 2B-5 classes is 1.12% and 0.64%, respectively. The collateral consists of conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity of 360 months. The loans were originated or purchased by IndyMac Bank, F.S.B., which it subsequently sold to IndyMac MBS, Inc. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The above transaction is seasoned 38 months and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) of Groups 1 and 2 are 42% and 21%, respectively. The mortgage loans are being serviced by Indymac Bank F.S.B. (rated 'RPS2+' for Alt-A products by Fitch). INTEGRATED HEALTH: Claims Objection Deadline Moved to August 30 --------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware approved IHS Liquidating LLC's request to further extend to Aug. 30, 2007, its deadline to object to certain proofs of claim without prejudice to IHS Liquidating's right to seek additional extensions. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, told the Court that since the Effective Date, IHS Liquidating LLC and its professionals have worked diligently to: a) file additional claims objections; b) review pending claims objections; c) perform required diligence to determine which of the pending objections should be prosecuted; d) prosecute or consensually resolve the pending claims objections; e) ensure that all disputed claims are made the subject of a proper objection deadline before the expiration of the Claims Objection Deadline. IHS Liquidating believes it is appropriate to extend the current deadline to avoid a circumstance where objectionable claims are inadvertently allowed. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 115; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) INTERFACE INC: Fabrics Division Sale Cues S&P's Positive Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Interface Inc., including the 'B' corporate credit rating, on CreditWatch with positive implications. "This action follows the company's announcement that it will sell its fabrics division in an all-cash transaction valued at approximately $70 million, to an affiliate of Sun Capital Partners, a private equity firm," said Standard & Poor's credit analyst Kenneth Shea. InterfaceFABRIC, which produces interior fabrics and upholstery products under the Guilford of Maine, Chatham, and Terratex brands, generated revenue of $161 million and an operating loss of $27.3 million during 2006 (this includes the European fabrics business which was sold in April 2006). "We expect management will use the proceeds to reduce debt to about 3x and strengthen credit measures in the near term," said Mr. Shea, adding that Standard & Poor's also expects that management will focus on the company's growing modular carpet and Bentley Price Street divisions. Standard & Poor's will meet with management shortly in order to assess the implications for the ratings. "Our analysis in resolving the CreditWatch will focus on the company's financial policies and operating strategies going forward," said Mr. Shea. ION MEDIA: Board Appoints Todd Gjervold as Director --------------------------------------------------- ION Media Networks Inc.'s board of directors appointed Todd E. Gjervold as a director of the company by June 22, 2007. Mr. Gjervold is not expected to be named to any committee of the board. Mr. Gjervold is an employee of Citadel Investment Group, L.L.C., which is an affiliate of CIG Media. He was appointed to the board in accordance with the terms of the master transaction agreement, dated as of May 3, 2007, among the company, NBC Universal Inc., NBC Palm Beach Investment I Inc., NBC Palm Beach Investment II Inc. and CIG Media LLC. Pursuant to the master transaction agreement, from and after the closing of CIG Media's tender offer for the company's outstanding shares of class a common stock, CIG Media has the right to designate up to two directors of the company. On May 4, 2007, CIG Media commenced a cash tender offer to purchase any and all shares of the company's class a common stock at a price of $1.46 per share. The initial tender offer period closed on June 1, 2007, and the subsequent offering period closed on June 15, 2007. CIG Media then exercised its right by designating Mr. Gjervold for appointment to the board. About ION Media ION Media Networks Inc. in West Palm Beach, Florida (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. 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. * * * As reported in the Troubled Company Reporter on May 9, 2007, Standard & Poor's Ratings Services placed its ratings on Ion Media Networks Inc., including the 'CCC+' corporate credit rating, on creditwatch with developing implications. The creditwatch placement follows Ion's announcement that it entered into an agreement with Citadel Investment Group LLC and NBC Universal Inc. for a comprehensive recapitalization of Ion. IPSWICH STREET: Fitch Puts Class E Notes' Rating on Watch Negative ------------------------------------------------------------------ Fitch has placed two classes of notes issued by Ipswich Street CDO, Ltd. and Ipswich Street CDO, LLC. on Rating Watch Negative: -- $9,948,789 class D notes 'BBB'; -- $7,859,543 class E notes 'BB+'. Ipswich Street is a high grade collateralized debt obligation that closed on June 27, 2006 and is managed by MFS Investment Management. The notes issued by Ipswich Street are supported by a portfolio composed of residential mortgage-backed securities (RMBS; 54%), collateralized debt obligations (27%), and commercial mortgage-backed securities (CMBS; 19%). Since the transaction closed, three subprime closed end second lien RMBS bonds comprising 1.04% of the underlying portfolio collateral has been downgraded while an additional 2.18% of the portfolio has been placed on rating watch negative. Two of the three downgraded assets were downgraded below investment grade to Fitch-derived ratings of 'B-' (.19%) and 'BB' (.43%) and remain on watch for future downgrade. Both from assets were originally rated 'A'. Additionally, both assets remain on Rating Watch Negative at this time. All of the assets affected by both rating actions have been comprised of 2006 vintage CES RMBS assets. As of the May 29, 2007 trustee report, the class D overcollateralization ratio increased to 100.74% from 100.73% as of the effective date versus a trigger of 100.37% and the weighted average rating factor was 1.17 versus a maximum threshold of 1.45. The recent rating actions on the three CES bonds will have a negative effect on the class D OC ratio as bonds rated below 'BBB-' are haircut for OC calculation purposes. JABIL CIRCUIT: Third Quarter 2007 Net Income Down to $6.2 Million ----------------------------------------------------------------- Jabil Circuit Inc. reported that for its third quarter ended May 31, 2007, net revenue was $3 billion, compared to $2.6 billion for the same period of fiscal 2006. Operating income for the third quarter of fiscal 2007 decreased to $33.6 million compared to $77.3 million for the same period of fiscal 2006. Net income for the third quarter of fiscal 2007 decreased to $6.2 million, compared to $64.2 million for the same period in fiscal 2006. Jabil's third quarter of fiscal 2007 core operating income decreased to $87.1 million or 2.9% of net revenue compared to $93.4 million or 3.6% of net revenue for the third quarter of fiscal 2006. Core earnings decreased to $47.4 million, compared to $78.5 million for the third quarter of fiscal 2006. As of May 31, 2007, the company's balance sheet showed total assets of $6.2 billion and total liabilities of $3.8 billion, resulting in a total stockholders' equity of $2.4 million. Third quarter 2007 operational and balance sheet sequential highlights include: -- Cash flow from operations for the quarter was about $192 million. -- Third quarter sales cycle improved from 29 days in the second quarter to 26 days. -- Annualized inventory turns improved from seven turns in the second quarter to eight turns. -- Core Return on Invested Capital increased to 10% from seven% in the second quarter. -- A $0.07 dividend was paid on June 1, 2007. "We are pleased with the improvements we have made both in operating efficiencies and progress on our balance sheet metrics," said president and chief executive officer, Timothy L. Main. Business Update Jabil said it expects revenue for its fourth fiscal quarter of 2007 to remain at the $3 billion level, with an estimated core operating margin range of 3% to 3.5%. "We will continue to focus on making step by step improvements in our operational efficiency and in our financial performance. We believe we are on the right path and intend to demonstrate this to our investors over the next several quarters," said Mr. Main. About Jabil Circuit Jabil Circuit Inc., headquartered in St. Petersburg, Florida -- http://www.jabil.com/-- provides electronics design, manufacturing and product management services to global electronics and technology companies. Jabil Circuit has more than 75,000 employees and facilities in 20 countries, including Brazil, Mexico, United Kingdom and Japan. Revenues for the 12 months ended Feb. 28, 2007 were $11.7 billion. * * * As reported in the Troubled Company Reporter on June 4, 2007, Moody's Investors Service confirmed Jabil Circuit Inc.'s Ba1 corporate family rating and revised the outlook to negative following the recent filing of its fiscal 2006 (August year-end) 10-K and fiscal 2007 first and second quarter tenth-quarters. Simultaneously, Moody's upgraded the rating on the existing $300 million senior unsecured notes to Ba1 from Ba2. JOAN FABRICS: U.S. Trustee and GE Balk at Proposed Asset Sale ------------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, opposes Joan Fabrics Corporation's motion to sell substantially all of its assets. The Trustee argues that the Debtor has not provided sufficient information to interested parties to allow them to evaluate the sales. Moreover, the Trustee said that despite the Debtor's agreement to do so, the Debtor has not addressed issues in the sale motion related to consumer privacy and consumer fraud. GE Commercial Finance Business Property Corporation fka General Electric Capital Business Asset Funding Corporation for its part argues that the Debtor has obligation to GE pursuant to a leased property. The Debtor, through its predecessor, Mastercraft Fabrics LLC, leases a property from Cramerton Associates LLC. The property is located at 345 Eastwood Drive, in Cramerton, North Carolina. Cramerton owes GE $3.7 million pursuant to a promissory note dated July 18, 2002. The note is secured by the leased property. GE contends that the lease property is not part of the estate under Section 541 of the Bankruptcy Code. It is undisputed, GE says, that the property is owned by Cramerton, a non-debtor entity and is leased to the Debtor. GE further argues that it was never contacted by the Debtor regarding the proposed asset sale. About two weeks ago, Bill Rochelle of Bloomberg News reported that the Debtor received a $13.5 million offer from Greystone Private Equity LLC for the purchase of its fabric-manufacturing assets. The assets, which have been approved for sale on May 21, 2007, will be auctioned today, June 26, the source said. If outbid, Greystone is entitled to a 2.5% breakup fee. The Court is set to consider approval of the results of the sale on June 28, 2007. Based in Tyngsboro, Massachusetts, Joan Fabrics Corporation manufactures automotive and furniture upholstery fabrics. The company has a manufacturing facility in North Carolina and an affiliate entity in Mexico. The Debtor and its affiliate, Madison Avenue Designs LLC, filed for Chapter 11 protection on April 10, 2007 (Bankr. D. Del. Case Nos. 07-10479 and 07-10480). Curtis A. Hehn, Esq., Laura Davis Jones, Esq., and Michael Seidl, Esq., at Pachulski Stang Ziehl Young Jones & Wein represent the Debtors in their restructuring efforts. Bradford J. Sandler, Esq., at Benesch Friedlander Coplan & Aronoff and David A. Matthews, Esq., at Shumaker, Loop & Kendrick, LLP represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $1 million to $100 million. The Debtors' exclusive period to file a plan expires on Aug. 8, 2007. JOAN FABRICS: Judge Sontchi Approves Incentive Program ------------------------------------------------------ The Honorable Christopher S. Sontchi United States Bankruptcy Court for the District of Delaware authorized Joan Fabrics Corporation and its debtor-affiliates to implement the incentive program to certain employees, specifically: -- John Lenox -- Margaret Coffin -- Bill Garner -- Mark Hefner -- Ghani Khanani -- Margaret Dunford -- Ed DiPetrillo -- Paul Buffum -- Garry Hicks -- Rise Ladebauche The Debtors tell the Court that these employees require additional incentives to close any anticipated sales, including, the marketing of their assets. The Debtors explained that the incentive program will motivate these employees to use their skills to maximize the sale price for the Debtors' assets. However, no incentive payments will be given if the Debtors failed to receive a gross sale price from the sale. Based in Tyngsboro, Massachusetts, Joan Fabrics Corporation manufactures automotive and furniture upholstery fabrics. The company has a manufacturing facility in North Carolina and an affiliate entity in Mexico. The Debtor and its affiliate, Madison Avenue Designs LLC, filed for Chapter 11 protection on April 10, 2007 (Bankr. D. Del. Case Nos. 07-10479 and 07-10480). Curtis A. Hehn, Esq., at Pachulski Stang Ziehl Young Jones & Wein, represents the Debtors. Bradford J. Sandler, Esq., at Benesch Friedlander Coplan, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $1 million to $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Aug. 8, 2007. JSC RESOURCES: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: JSC Resources International, Inc. P.O. Box 464 Louisville, GA 30434 Bankruptcy Case No.: 07-11104 Chapter 11 Petition Date: June 22, 2007 Court: Southern District of Georgia (Augusta) Debtor's Counsel: H. Lehman Franklin, Jr., Esq. H. Lehman Franklin, P.C. P. O. Box 964 Statesboro, GA 30459 Tel: (912) 764-9616 Fax: (912) 764-8789 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. LB-UBS COMM: Fitch Affirms C Ratings on Class N and P Certs. ------------------------------------------------------------ Fitch affirms LB-UBS Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2001-C2 as: -- $110.5 million class A-1 at 'AAA'; -- $789.3 million class A-2 at 'AAA'; -- Interest-Only class X at 'AAA'; -- $49.5 million class B at 'AAA'; -- $62.7 million class C at 'AAA'; -- $16.5 million Class D at 'AAA'; -- $13.2 million class E at 'AAA' ; -- $19.8 million class F at 'AA+' ; -- $16.5 million class G at 'AA-' ; -- $23.1 million class H at 'BBB+' -- $14.8 million class J at 'BB+'. -- $11.5 million Class K at 'BB-'; -- $9.9 million class L at 'B+'; -- $13.2 million class M at 'B-/DR1'. -- $6.6 million class N remains at 'C/DR5'; -- $3.3 million class P remains at 'C/DR6'. The $5.6 million class Q is not rated by Fitch. Fitch affirms all classes in spite of 11.6% pay down and 14.5% defeasance since the last rating action because there is a high percentage of loans of concern. As of the June 2007 distribution date, the pool's aggregate certificate balance has decreased by 11.6% to $1.2 billion from $1.32 billion at issuance. A total of 38 loans (37.2%) have defeased since issuance. Twenty-nine loans, 14.4% of the pool, are considered loans of concern. These include four specially serviced loans containing six assets (3.6%) along with other loans with performance issues. The first specially-serviced loan is comprised of two hotel properties (2.1%) located in Atlanta, both of which are real estate owned. The hotels were renovated and re-flagged and are being marketed for sale by the special servicer. The second specially-serviced loan (1.5%) is secured by a 543,572 square foot office building in Tulsa, OK that is 90+ days delinquent. The loan was transferred to special servicing in November 2005 after the borrower requested a loan modification due to declining occupancy and rents. The third specially-serviced loan (0.3%) is comprised of two hotel properties located in Houston, TX. One of the hotels has received an extended franchise agreement while the other hotel received a new franchise agreement. Both are being marketed for sale by the special servicer. The fourth specially-serviced loan (0.5%) is collateralized by a 3,300 square foot retail property located in Chicago, Illinois. The loan is current. Losses are expected on the specially serviced assets, which are anticipated to deplete the balance on Class Q and impact classes N and M. At issuance, Fitch considered six loans to have investment grade credit assessments, two of which are fully defeased: 10950 Tantau Avenue (2.2%) and Courtyard by Marriott (2.6%). Three of the remaining four credit loans maintain investment-grade credit assessments: Westfield Shoppingtown Meriden, New Park Mall and 400 Plaza Drive. The 529 Bryant Street loan no longer maintains an investment-grade credit assessment. Westfield Shoppingtown Meriden (6.3%) is located in Meriden, CT and is anchored by Macy's, JC Penney, Sears, Best Buy, and Dick's Sporting Goods. The collateral consists of 371,688 sf of in-line space within a 913,625 sf regional mall. As of February 20, 2007, in-line occupancy decreased to 88% compared to 95.7% at issuance, with total occupancy down to 94% from 98.2% at issuance. The A- note portion of the whole loan is held in the trust, while the B- note portion ($18.2 million) is held outside the trust. Fitch will monitor the leasing activity at this property. NewPark Mall (6.0%) is secured by 389,682 sf of a 1.2 million sf regional mall located in Newark, CA. As of March 2007, in-line occupancy was 96% compared to 88.9% at issuance. 400 Plaza Drive (1.7%), also known as Hartz Mountain Industries, is secured by a four-story multi-tenanted office building, located in Secaucus, NJ. The occupancy was 96.0% as of May 2007 compared to 100% at issuance. 529 Bryant Street (1.6%) is secured by a 45,161 sf office building located in Palo Alto, CA. The property is 100% occupied by a single tenant, whose lease expires May 2025. LEAR CORP: Reschedules 2007 Annual Meeting to July 12 ----------------------------------------------------- Lear Corporation has rescheduled its 2007 Annual Meeting to July 12, 2007 to allow stockholders sufficient time to evaluate the company's response to recent criticisms of the proposed merger with American Real Estate Partners, L.P., a diversified holding company and an affiliate of Carl C. Icahn. The company has also filed with the Securities and Exchange Commission a letter to all stockholders from an independent special committee of Lear's Board of Directors, reviewing the major reasons why the Board strongly recommends a vote in favor of the AREP proposal and addressing certain inaccurate statements by opponents of the transaction. In the letter to stockholders, the special committee emphasizes that: 1) Under objective valuation measures, the $36 per share offer price is fair to stockholders, and is more than double Lear's stock price of just over a year ago. 2) The company aggressively sought out higher bids by contacting 41 potential strategic and financial buyers, with no competing offers being received. 3) There is significant execution risk to Lear's long-term business plan: * Lear's results are highly dependent on SUV and light truck sales, which are trending lower; * A significant labor disruption or strike would materially impact Lear and its supply chain; * Recent improvements in the company's financial performance do not materially change the long-term outlook; * CEO Bob Rossiter's personal interests had no impact on the merger decision-making process or outcome. Ultimate authority for the merger rested with an active special committee and Lear's Board; and * Volatility and structural change within the automotive sector are likely to continue for the foreseeable future. Lear's Annual Meeting, originally scheduled for June 27, 2007, is now scheduled to be held on July 12, 2007 at 10:00 a.m., E.S.T., at Hotel du Pont, 11th and Market Streets in Wilmington, Delaware. Lear will continue to solicit proxies between now and the Annual Meeting. The record date for stockholders entitled to vote on the Merger Proposal and other such matters that may be considered at the Annual Meeting remains May 14, 2007. The company's Board of Directors, on the unanimous recommendation of a special committee of independent directors, has approved the merger agreement and recommends that Lear's stockholders vote "FOR" adoption of the Merger Proposal. As announced on Feb. 9, 2007, Lear entered into the merger agreement pursuant to which Lear's stockholders will be entitled to receive, subject to consummation of the merger, $36.00 in cash for each share they own, without interest and less any applicable withholding tax. About American Real Estate American Real Estate Partners, L.P. (NYSE: ACP) -- http://www.arep.com/-- is a diversified holding company engaged in a variety of businesses including hotel and casino operations, rental real estate, real estate development, hotel and resort operation, home fashion and investments in equity and debt securities. About Lear Corp. Based in Southfield, Michigan, Lear Corporation (NYSE: LEA) -- http://www.lear.com/-- supplies automotive interior systems and components. Lear provides complete seat systems, electronic products and electrical distribution systems and other interior products. Lear also operates in Latin American countries including Argentina, Mexico, and Venezuela. Its European operations are located in Czech Republic, United Kingdom, France, Germany, Honduras, Hungary, Poland, Portugal, Romania, Russia, Slovakia, Spain, Sweden, South Africa, Morocco, Netherlands, Tunisia and Turkey. Its Asian facilities are in China, India, Japan, Philippines, Singapore, South Korea, and Thailand. * * * As reported in the Troubled Company Reporter on May 16, 2007, Moody's Investors Service confirmed Lear Corp.'s existing ratings consisting of a B2 corporate family rating, B3 senior unsecured notes, and B2 secured bank term loan. LEXINGTON RESOURCES: Posts $549,837 Net Loss in Qtr. Ended Mar. 31 ------------------------------------------------------------------ Lexington Resources Inc. reported a net loss of $549,837 for the first quarter ended March 31, 2007, compared with a net loss of $3,809,589 for the same period ended March 31, 2006. During the three-month period ended March 31, 2007, the company generated $208,871 in gross revenue compared to $301,306 in gross revenue generated during the three-month period ended March 31, 2006, resulting from oil and gas revenue of $156,165 and $52,706 in well drilling and services revenue generated by the company's subsidiary, Oak Hills. During the three-month period ended March 31, 2007, the company incurred operating expenses in the aggregate amount of $595,178 compared to $2,489,820 incurred during the three-month period ended March 31, 2006, a decrease of $1,894,642. The company's net loss from operations during the three-month period ended March 31, 2007, includes $395,506 related to interest and finance fees, a loss of $110,219 related to a contingent liability from the adoption of EITF 00-19-2, and a gain of $342,195 related to the disposal of other equipment. The decrease in net loss during the three-month period ended March 31, 2007, is attributable primarily to the decrease in operating expenditures, a decrease in the scale and scope of well drilling operations and related capital expenditure, a decrease in overall general administration, and a decrease in investor relations and promotion relating to investor awareness programs. At March 31, 2007, the company's consolidated financial statements showed $15,292,348 in total assets, $9,426,770 in total liabilities, and $5,865,578 in total stockholders' equity. The company's consolidated balance sheet at March 31, 2007, also showed strained liquidity with $1,724,810 in total current assets available to pay $9,426,770 in total current liabilities. 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?2122 Going Concern Doubt As reported in the Troubled Company Reporter on May 25, 2007, Whitley Penn L.L.P., in Dallas, Texas, expressed substantial doubt about Lexington Resources Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations, net working capital deficiency and accumulated deficit. About Lexington Resources Lexington Resources Inc. -- (OTC BB: LXRS) (FSE: LXR) (BER: LXR) (WKN: AOBKLP) -- http://www.lexingtonresources.com/-- acquires and develops oil and natural gas properties in the United States. The company owns a 590 gross acre section of farm-out acreage in Pittsburg County, Oklahoma for the development and production of coal bed methane gas known as the Wagnon Property. The company is producing gas from four wells drilled on the Wagnon Property. Lexington has a 53.2% back-in working interest in each of the wells. Its current operational focus is gas development initiatives in the Arkoma Basin, Oklahoma, and the Fort Worth Basin, in Dallas, Texas. LIMITED BRANDS: Debt Increase Cues Moody's Ratings Review --------------------------------------------------------- Moody's Investors Service placed the Baa2 long term and Prime-2 short-term rating of Limited Brands, Inc. on review for possible downgrade following the company's announcement that it intends to raise an additional $1.25 billion of debt to finance a $500 million increase in its share repurchase program, the La Senza acquisition, and for general corporate purposes. The review for downgrade reflects the high likelihood that the increase in debt will cause the company to not be able to meet two out of the three credit metrics that were outlined as potentially prompting a downgrade in Moody's press release dated November 15, 2006. These ratings are placed under review for possible downgrade: -- Senior unsecured at Baa2; -- Senior unsecured shelf at (P) Baa2; -- Subordinated shelf at (P) Baa3; -- Preferred shelf at (P) Ba1; -- Commercial paper at Prime-2. Moody's review of Limited Brands ratings will focus on the impact on credit metrics of this sizable increase in debt, the components of the company's adjusted debt levels as a result of the increase in funded leverage, the planned divestiture of the apparel business, and its ongoing financial policies. Moody's review will also consider whether or not the company's weak first quarter operating performance will likely continue, the status of the integration of the La Senza acquisition, and the likelihood of the company achieving its announced cost savings. The review will also assess the likelihood that the company's remaining US businesses, Victoria's Secret and BBW, are approaching maturity in terms of store count and margin expansion. The review is expected to conclude prior to the company raising the proposed $1.25 billion of debt and any downgrade, if it were to occur, would be unlikely to lower the company's ratings below investment grade. Headquartered in Columbus, Ohio, Limitied Brands, Inc. operates 3,764 specialty stores under the Victoria's Secret, Bath & Body Works, C.O. Bigelow, Express, Limited Stores, La Senza, White Barn Candle Co., Henri Bendel and Diva London name plates. The companies products are also available online. Revenues for the fiscal year ended February 3, 2007 were nearly $10.7 billion. LSF 5 WAGON: S&P Places Corporate Credit Rating at B ---------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Dallas-based LSF 5 Wagon Investments LLC. The outlook is negative. At the same time, Standard & Poor's assigned its 'B' rating to the company's planned $110 million term loan B and $20 million revolving credit facility. The bank loan rating and the '3' recovery rating indicate the expectation for meaningful (50%-70%) recovery of principal in the event of default. The proceeds of the loan will predominately be used to repay existing debt and pay fees associated with the transaction. "The ratings on LSF 5 reflect," said Standard & Poor's credit analyst Charles Pinson-Rose, "among other factors, the company's small size in the highly competitive fine-dining steakhouse segment of the restaurant industry and the likelihood that the company will not generate positive free operating cash flows in the near future." He went on to explain that the negative outlook indicates that S&P could lower the rating if the company cannot meet its expected operating performance necessary to generate sufficient cash flows to fund capital expenditures for new restaurants. MACKINAW POWER: S&P Rates $147MM Senior Secured Term Loan at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' rating to Mackinaw Power LLC's $288.9 million senior secured bonds maturing 2023. At the same time, Standard & Poor's assigned its 'BB-' rating to Mackinaw Power Holdings LLC's $147 million senior secured term loan due 2015. The recovery rating on the term loan is '2', indicating the expectation for substantial (70%-90%) recovery of principal if a payment default occurs. The ratings had been preliminary. The outlook is stable. Mackinaw Power is a special-purpose, bankruptcy-remote operating company formed to own and operate power plants. Mackinaw Power is 100% indirectly owned by Holdings, which is 100% indirectly owned by ArcLight Energy Partners Fund III L.P., a $2.1 billion fund that is one of three private equity funds managed by ArcLight Capital Partners LLC. Proceeds from the issue will be used to purchase five contracted natural gas-fired electricity generation assets from Progress Ventures Inc. and Progress Genco Ventures LLC, subsidiaries of Progress Energy Inc. The portfolio consists of one combined-cycle unit (500 MW) and four peaking units (1,370 MW), aggregating 1,870 MW. During the contracted period, predictable cash flow from the projects supports a stable outlook for Mackinaw Power. The rating or outlook could be lowered if any asset significantly contributing to cash flow experiences a sustained operating issue that precludes execution under the tolls. There is little potential for an upgrade in the medium term given the contracted cash flow position. In the long term, under a low gas price scenario, Holdings will suffer without the benefit of contracted revenues and loan pay-down could lag expectations. On the other hand, the ratings could improve if market conditions get better, allowing Mackinaw Power to enter more longer term contracts, and continuing good operating performance allows the company to repay sufficient debt. MARCAL PAPER: Files Chapter 11 Plan of Reorganization ----------------------------------------------------- Marcal Paper Mills, Inc. has filed its Plan of Reorganization with the U.S. Bankruptcy Court for the District of New Jersey. The company also disclosed that it has secured a $60 million commitment from Apollo Capital Management, L.P. This investment is a key component of the company's restructuring efforts. "This is an important and positive step forward for the company, and we are pleased that all of the parties were able to work together to formalize this Plan of Reorganization. We appreciate the confidence that the parties have shown in the company, our management team, our employees and our business strategy," said Company Chairman and CEO Nicholas Marcalus. "I am particularly pleased that, under the Plan, the Marcalus family will partner with Apollo to allow Marcal to reach new heights." "The Plan underscores the unwavering commitment of our valued customers, suppliers and employees, who continue to bring tremendous passion and dedication to their work. We expect that the company will successfully emerge from Chapter 11 in September. In the interim, we remain focused on providing superior service to our customers, strengthening our core businesses, and solidifying our position in the marketplace," added Marcalus. Representatives of the company's Official Unsecured Creditors Committee support the economic terms of the proposed Plan. Under the Plan, these creditors are projected to receive 52 cents on the dollar on their unsecured claims. As part of the Plan, members of the Marcalus family and Apollo Capital Management will together invest more than $11.5 million, plus other forms of consideration, to acquire and hold 100 percent of the capital stock of a new holding company, which in turn will own 100 percent of the outstanding shares of a reorganized Marcal Paper Mills. "Apollo is pleased to enter into this partnership with the Marcalus family. We are highly supportive of management's strategic plan focused on further developing its reputation as a strong consumer brand and strengthening its commitment as a partner to its customers and vendors," said Mathew Constantino, a partner with Apollo. The company simultaneously filed a Disclosure Statement that explains the details of the proposed Plan. The company will request that a hearing on the adequacy of the Disclosure Statement and related procedures to solicit votes in favor of the Plan be scheduled by the Court for July 13, 2007. About Marcal Paper Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from-home use in hotels, restaurants, hospitals offices and factories. Marcal, founded in 1932, is a privately-held, fourth generation family business. It employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A. represent the Debtor. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. MASSACHUSETTS HEALTH: S&P Downgrades Bonds' Rating to BB+ --------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Massachusetts Health and Educational Facilities Authority's series 1992B, 1998D, and 2003E bonds, issued for Jordan Hospital, to 'BB+' from 'BBB-', reflecting Jordan's weak financial results for fiscal 2006, which reflected a greater loss than management originally expected, and the organization's extremely thin liquidity. The outlook is stable. "The results through the first eight months of fiscal 2007, ended May 31, 2007, reflect operational improvement; however, Jordan Hospital's overall financial picture is more in-line with a speculative-grade rating at this time," said Standard & Poor's credit analyst Jennifer Soule. "The stable outlook reflects our expectation that Jordan's fiscal 2007 will close in-line with management's projections or better and that it will continue to strengthen its weak liquidity position." Offsetting rating factors include strong volume growth through fiscal 2006 and through the interim period, as Jordan's new capacity from a major renovation and expansion project in 2006 is becoming well utilized; and a continued robust business position in the service area. The lowered rating affects about $87.7 million in rated debt. MERRILL LYNCH: Moody's Affirm Low-B Ratings on Three Certificates ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Merrill Lynch Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2005-CIP1 as: -- Class A-1, $60,013,340, affirmed at Aaa -- Class A-2, $533,800,000, affirmed at Aaa -- Class A-3A, $157,900,000, affirmed at Aaa -- Class A-3B, $50,000,000, affirmed at Aaa -- Class A-SB, $108,000,000, affirmed at Aaa -- Class A-4, $510,325,000, affirmed at Aaa -- Class A-M, $205,675,000, affirmed at Aaa -- Class A-J, 138,830,000, affirmed at Aaa -- Class XP, Notional, affirmed at Aaa -- Class XC, Notional, affirmed at Aaa -- Class B, $43,706,000, affirmed at Aa2 -- Class C, $17,997,000, affirmed at Aa3 -- Class D, $38,564,000, affirmed at A2 -- Class E, $25,709,000, affirmed at A3 -- Class F, $33,423,000, affirmed at Baa1 -- Class G, $20,567,000, affirmed at Baa2 -- Class H, $25,709,000, affirmed at Baa3 -- Class J, $10,284,000, affirmed at Ba1 -- Class K, $5,142,000, affirmed at Ba2 -- Class L, $7,713,000, affirmed at Ba3 As of the June 12, 2007 distribution date, the transaction's aggregate certificate balance has decreased by approximately 1.0% to $2.04 billion from $2.06 billion at securitization. The Certificates are collateralized by 135 mortgage loans. The loans range in size from less than 1.0% to 9.0% of the pool, with the top 10 loans representing 44.6% of the pool. The pool includes three shadow rated loans, representing 15.1% of the outstanding pool balance. There are no loans in special servicing. There have been no loans liquidated from the pool and no loans have defeased. Seventeen loans, representing 15.6% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2006 and partial-year 2006 operating results for 80.6% and 94.4%, of the pool. Moody's weighted average loan to value ratio for the conduit component is 100.6%, compared to 102.9% at securitization. The largest shadow rated loan is the Financial Center Loan ($130.0 million -- 6.3%), which is secured by a 1.03 million square foot, 36-story Class A office building located in the Financial District of New York City. The loan is interest only for its entire term. Moody's current shadow rating is Baa1, the same as at securitization. The second largest shadow rated loan is the Westchester Mall Loan ($100.0 million -- 4.8%), which is secured by the borrower's interest in a 832,000 square foot, regional mall (482,442 square feet of collateral) located in White Plains, New York. The loan represents a 20.0% pari-passu interest in a $500.0 million loan. The loan is interest only for its entire term. Moody's current shadow rating is A3, the same as at securitization. The third largest shadow rated loan is the E Walk on New 42nd Street Loan ($77.5 million -- 3.7%), which is secured by a leasehold interest in an 177,000 square foot theater anchored retail center located on 42nd Street in New York City. The property is subject to a ground lease that expires in July 2096. The loan is interest only for the entire term. Moody's current shadow rating is Baa2, the same as at securitization. The three largest conduit loans represent 25.5% of the pool. The largest conduit loan is the Glenbrook Mall Loan ($182.9 million -- 9.0%), which is secured by the borrower's interest in a 1.2 million square foot, regional mall (873,230 square feet of collateral) located in Fort Wayne, Indiana. Moody's LTV is 98.7% compared to in excess of 100.0% at securitization. The second largest conduit loan is the Highwoods Portfolio Loan ($160.0 million -- 7.9%), which is secured by an office building pool. The portfolio consists of 33 buildings containing in the aggregate 2.0 million square feet of space. The space is allocated between Tampa, Florida (64.0%) and Charlotte, North Carolina (36.0%). The loan is interest only for its entire term. Moody's LTV is in excess of 100.0%, the same as at securitization. The third largest conduit loan is the U-Haul Self-Storage Portfolio Loan ($84.0 million -- 4.1%), which is secured by a pool of 50 U-Haul Self Storage facilities located in various locations across 26 states. The largest state concentrations are New York (20.3%), Texas (11.1%) and Pennsylvania (7.9%). The facilities contain a total of 1.11 million square feet distributed among 14,725 Units. As of year-end 2006 the pool's occupancy was 88.0%, compared to 83.4% at securitization. The pool's performance has improved due to increased revenue and loan amortization. The loan amortizes on a 300-month schedule. Moody's LTV is 80.4%, compared to 89.4% at securitization. MERRILL LYNCH: Moody's Junks Rating on Class B-3 Certificates ------------------------------------------------------------- Moody's Investors Service has upgraded two classes of certificates and downgraded one class of certificates issued by a Merrill Lynch Mortgage Investors Trust in 2004. These actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to the expected loss. The transaction is failing its cumulative loss trigger and delinquency trigger, allowing the transaction to pay sequentially. The transaction is backed by sub-prime second-liens, and has seen recent losses that have exceeded the excess spread available thereby depleting the overcollateralization. Complete rating actions are: Issuer: Merrill Lynch Mortgage Investors Trust Upgrade: -- Series 2004-SL1, Class B-1, Upgraded to Aaa from Baa2; -- Series 2004-SL1, Class B-2, Upgraded to Aaa from Baa3. Downgrade: -- Series 2004-SL1, Class B-3, Downgraded to Caa2 from Ba2. MERITAGE MORTGAGE: Moody's Junks Rating on Class B-1 Certificates ----------------------------------------------------------------- Moody's Investors Service downgraded three certificates from a transaction issued in 2004 by Meritage Mortgage Loan Trust. The transactions are backed by primarily first lien, adjustable and fixed rate subprime mortgage loans. The actions are based on the analysis of the credit enhancement provided by subordination, overcollateralization and excess spread relative to expected losses. Complete rating actions are: DOWNGRADE: Issuer: Meritage Mortgage Loan Trust, 2004-1 -- Class M-7, downgraded to Ba3 from Baa2; -- Class M-8, downgraded to B3 from Baa3; -- Class B-1, downgraded to C from Ba1. MITEL NETWORKS: ISS Urges Shareholders to Snub Inter-Tel Merger --------------------------------------------------------------- Institutional Shareholder Services, providers of proxy voting and corporate governance solutions to the institutional marketplace, recommended that shareholders vote against Mitel Networks Corporation's merger with Inter-Tel (Delaware) Incorporated. "Based on ISS review of the terms of the transaction, the merger agreement does not warrant shareholder support due to low 7.6% 1-day offer premium; flawed sale process; lack of an imminent reason to sell the company without conducting a proper sale process; and valuation. "I am gratified ISS agrees with my position that shareholders should not vote in favor of the Mitel buyout at $25.60 per share. I believe the company is here due to a flawed process that resulted in an undervalued offer," Steven G. Mihaylo, founder and former chief executive officer of Inter-Tel (Delaware) Incorporated, stated. "Based on the assumptions underlying the recapitalization analysis, the company is worth more than the Mitel offer. Indeed, I believe a proper auction should be conducted to win the highest price for shareholders," he said. Furthermore, as ISS recognized, Mr. Mihaylo is not alone in his concerns regarding the process and valuation: Millenium Management LLC, which owns approximately 3.2% of the outstanding shares, sent a letter to Inter-Tel on June 13, 2007, stating that, in the company's view, the process was not a full and fair auction and the proposed purchase price fails to value the company adequately. "Absent a higher bid, I believe Inter-Tel has a better alternative through a leveraged recapitalization, which will provide greater value to all shareholders and will at the same time preserve the opportunity for future growth and upside potential, including a potential sale at a later date," Mr. Mihaylo added. "I urge all shareholders, especially current and former employees who care about the company as I do, to stand up, be heard and vote their shares against this buyout proposal." Mr. Mihaylo also disclosed, with regard to his proposed recapitalization plan, that the Royal Bank of Canada and RBC Capital Markets have committed a total of $255 million to finance Mr. Mihaylo's recapitalization plan subject to customary closing conditions similar to those contained in the Mitel financing commitments. The Senior Secured Financing Commitment Letter consists of: -- First-lien term loan facility in an aggregate principal amount of up to $125 million; -- $30 million revolving credit facility; and -- Second-lien term loan facility in an aggregate principal amount of up to $100 million. "With Royal Bank of Canada and RBC Capital Markets as my financing partners and their firm commitment to my recapitalization plan, I am confident Inter-Tel shareholders will agree that my proposal is superior to Mitel's buyout offer and will vote against the merger at the upcoming meeting of shareholders Friday, June 29, 2007," Mihaylo stated. "I believe the $255 million commitment should more than adequately address concerns raised by the board concerning the finance ability of the recapitalization proposal and should not require any asset disposition." "The board has had ample time to pursue its 'strategic options' but I believe the board never had a coherent plan as evidenced by its recent agreement to sell the company to Mitel, Mr. Mihaylo added. "Thus, if the shareholders vote against the merger, I believe it should be viewed as an unequivocal vote of no- confidence for the board and the company's leadership over the past 15 months." The preliminary proxy statement was filed on June 8, 2007, and along with other relevant documents, is available by contacting MacKenzie Partners Inc. by telephone at (800) 322-2885. About Inter-Tel (Delaware) Incorporated Headquartered in Tempe, Arizona Inter-Tel (Delaware) Incorporated (Nasdaq: INTL) -- http://www.inter-tel.com/-- has grown from providing simple business telephone systems, to offering value- driven communications products; applications utilizing networks and server-based communications software; and a wide range of managed services that include voice and data network design and traffic provisioning, custom application development and financial solutions. Founded in 1969 by Steven G. Mihaylo, Inter-Tel employs over 1,900 communications professionals, and services business customers through a network of 59 company-owned, direct sales offices and over 350 authorized providers in North America and 60 resellers in Europe. About Mitel Networks Corporation Headquartered in Herndon, Virginia, Mitel Networks Corporation -- http://www.mitel.com/-- delivers the full value of IP Communications through networked business solutions that help customers achieve success through business process integration, enhanced employee productivity, increased customer loyalty and helping to generate new revenue streams. * * * As reported in the Troubled Company Reporter on June 22, 2007, Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Ottawa-based Mitel Networks Corp. The outlook is stable. MORTGAGE ASSET: Fitch Affirms B Rating on Class B-5 Certificates ---------------------------------------------------------------- Fitch Ratings has affirmed the following Mortgage Asset Securitization Transactions Adjustable-Rate Mortgages Trust mortgage pass-through certificates: Series 2004-8 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB'; -- Class B-4 at 'BB'; -- Class B-5 at 'B'. Series 2006-2 -- Class A at 'AAA'; -- Class B-1 at 'AA'; -- Class B-2 at 'A'; -- Class B-3 at 'BBB+'; -- Class B-4 at 'BB'. The affirmations, affecting approximately $850 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. Both of the above transactions have experienced a growth in CE and have suffered only minimal or no loss to date. The collateral of the above transactions consists of conventional, fully amortizing, 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. The loans were acquired by UBS from various originators and are serviced by various servicers. Both of the above transactions are master serviced by Wells Fargo Bank N.A. (rated 'RMS1' by Fitch). MORTGAGE ASSET: Fitch Holds B Rating on 2003-8 Class B-5 Certs. --------------------------------------------------------------- Fitch Ratings has taken the following rating actions on the Mortgage Asset Securitization Transactions residential mortgage pass-through certificates listed below: Series 2003-1 Total Pool 2 -- Class A affirmed at 'AAA'; -- Class 30-B-1 affirmed at 'AAA'; -- Class 30-B-2 affirmed at 'AAA'; -- Class 30-B-4 upgraded to 'A+' from 'A'. Series 2003-1 Total Pools 1 & 3 -- Class A affirmed at 'AAA'; -- Class 15-B-1 affirmed at 'AAA'; -- Class 15-B-2 affirmed at 'AAA'; -- Class 15-B-5 affirmed at 'BB'. Series 2003-3 -- Class A affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'A+'; -- Class B-5 affirmed at 'BB+'. Series 2003-8 -- Class A affirmed at 'AAA'; -- Class B-5 affirmed at 'B'. The affirmations, affecting approximately $1.2 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. The upgrade, affecting approximately $1 million of the outstanding certificates, reflects an improvement in the relationship between CE and expected loss. In addition, all of the above transactions have experienced a growth in CE and have suffered minimal or no loss to date. The collateral of the above transactions primarily consists of conventional, fully amortizing, jumbo-prime, 10-year to 30-year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties. The loans were acquired by UBS from various originators and are serviced by various servicers. All of the above transactions are master serviced by Wells Fargo Bank N.A. (rated 'RMS1' by Fitch). MORTGAGE ASSET: Fitch Affirms BB Ratings on Two Cert. Classes ------------------------------------------------------------- Fitch Ratings has affirmed the following Mortgage Asset Securitization Transactions, Inc. Alternative Loan Trust mortgage pass-through certificates: Series 2003-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA+'; -- Class B-2 affirmed at 'AA-'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2003-6 -- Class A affirmed at 'AAA'. Series 2004-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA-'; -- Class B-2 affirmed at 'A-'; -- Class B-3 affirmed at 'BBB'. Series 2004-2 Total Pools 1-5 -- Class A affirmed at 'AAA'; -- Class B-I-1 affirmed at 'AA'; -- Class B-I-2 affirmed at 'A'; -- Class B-I-3 affirmed at 'BBB'; -- Class B-I-4 affirmed at 'BB'. Series 2004-2 Total Pools 6-8 -- Class A affirmed at 'AAA'. The affirmations, affecting approximately $605 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. In addition, all of the above transactions have experienced a growth in CE and suffered only minimal losses to date. The collateral of the above transactions primarily consists of 15- year and 30-year fixed-rate mortgage loans extended to Alt-A borrowers and secured by first liens on one- to four-family residential properties. The loans were acquired by UBS from various originators and are serviced by various servicers. All of the above transactions are master serviced by Wells Fargo Bank N.A., which is rated 'RMS1' by Fitch. NEWFIELD EXPLORATION: Inks New $1.25 Billion Credit Facility ------------------------------------------------------------ Newfield Exploration Company entered into a new $1.25 billion revolving credit facility to replace its previous $1 billion facility. The parties to the credit agreement, dated as of June 22, 2007, are the company, the lenders, and JPMorgan Chase Bank, N.A., as administrative agent and issuing bank. Loans under the credit agreement bear interest, at the company's option, based on: (a) a rate per annum equal to the higher of the prime rate announced from time to time by JPMorgan Chase Bank, N.A. or the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System during the last preceding business day Plus 50 basis points or (b) a base Eurodollar rate substantially equal to the London Interbank Offered Rate adjusted for statutory reserve requirements for Eurodollar liabilities, plus a margin that is based on a grid of our debt rating. All other terms and conditions of the credit agreement are substantially the same as those of the prior credit facility. About Newfield Exploration Headquartered in Houston, Texas, Newfield Exploration Co. (NYSE: NFX) -- http://www.newfld.com/-- is an independent oil and gas company that explores, develops and acquires crude oil and natural gas properties. * * * As of June 25, 2007, the company continues to carry Fitch's BB+ long term issuer default rating. Fitch rates the company's bank loan debt and senior unsecured debt at BB+ while its senior subordinate rating is at BB-. The outlook remains stable. At the same time, the company also bears Moody's Investor Services' Ba2 long term corporate family rating and probability of default rating, Ba1 senior unsecured debt, Ba3 senior subordinate rating, and B1 preferred stock rating. The outlook is stable. The company also continues to carry Standard & Poor's BB+ long term foreign and local issuer debt ratings. The outlook remains stable. NUANCE COMMS: Inks Pact To Acquire Tegic for $265 Million in Cash ----------------------------------------------------------------- Nuance Communications Inc. and AOL LLC signed a definitive agreement whereby Nuance will acquire Tegic Communications Inc. Under the terms of the agreement, total consideration is about $265 million in cash. The transaction is expected to close in Nuance's fiscal fourth quarter and is subject to customary closing conditions and regulatory approvals. The transaction expands Nuance's presence in the mobile industry and allows it to further accelerate the delivery of solutions that unlock the power of mobile devices and networks. Tegic brings industry-leading T9 predictive text input software, which has shipped on more than 2.5 billion devices, and next-generation integrated text and touch input solutions to Nuance's portfolio of voice-enabled applications for device control, mobile search, email and text messaging. Building on a partnership between Nuance and Tegic established in 2005, Nuance intends to deliver an all-in-one interface that integrates Nuance and Tegic solutions to support predictive text, speech and touch input. This multimodal interface will provide easier access for users of mobile devices and will be available to all manufacturers across their product lines. In its fiscal year 2008, Nuance expects Tegic to contribute between $65 million and $68 million in non-GAAP revenue; $45 million and $48 million in GAAP revenue; a GAAP loss between $0.12 and $0.13 per share; and non-GAAP earnings between $0.04 and $0.05 per diluted share. The combination is expected to generate about $8 million to $10 million in cost synergies in fiscal year 2008. The addition of Tegic brings resources and capabilities that are expected to expand Nuance's market presence and leadership in the rapidly expanding mobile industry: * Focus on Mobile Opportunities - The companies share core competencies in mobile infrastructure, work closely with a common OEM customer base and maintain similar relationships with leading carriers. Supporting more than 60 languages and 15 different character scripts, Tegic shares Nuance's commitment to broad language coverage based on custom dictionaries and grammars. * Strong Industry Relationships - Shipped on more than 2.5 billion mobile devices worldwide, including about two-thirds of mobile devices shipped last year, Tegic maintains longstanding relationships with the largest companies in the industry, including Nokia, Samsung, Sony Ericsson, LG and Motorola. This established customer base can be leveraged to generate new opportunities for Nuance's existing mobile product portfolio. In addition, Tegic's established distribution channel to all major Chinese handset manufacturers offers tremendous growth opportunities for the product lines of each organization in this fertile market. * Technological Leadership - Tegic embedded software solutions have set the bar for text input on mobile devices, making mobile experiences faster, easier and more compelling. In addition to its core T9 product, it has expanded its portfolio to support multimodal interfaces, broad languages and additional databases. More than 50 software engineers continue to advance Tegic's solutions and bring to Nuance more than 70 patents and 140 patents pending worldwide. * Talented, Experienced Team - Nuance benefits from the addition of Tegic's strong management, customer support, and engineering teams, with their proven competencies in creating, selling and supporting mobile embedded software. On this transaction, UBS and Citigroup are acting as financial advisors to Nuance and Time Warner, respectively. "The enhanced capabilities of mobile devices and networks have fueled significant innovation in features and services, but their potential has been tempered by the traditional interface on most mobile devices," said Paul Ricci, chairman and chief executive officer, at Nuance. "Tegic shares our vision of delivering an integrated, superior and flexible user experience for today's wireless subscribers. Together, we are poised to redefine the way people interact with their mobile devices, delivering a more convenient, simple way for consumers to control features and access information on their phones, and search and navigate the mobile Web." Time Warner Inc. chairman and chief executive Dick Parsons said: "AOL's sale of Tegic marks yet another step in our overall strategy of focusing on our core assets to drive profitable growth for our shareholders. As AOL continues to make impressive progress, it's more important than ever that AOL's resources are fully aligned behind growing its worldwide advertising businesses." AOL chairman and CEO Randy Falco said: "We believe that Nuance is a good match for Tegic, its employees and its business partners, and we value our relationships with both companies. This sale also lets us focus our mobile business on building strong consumer-based, ad-supported mobile experiences." About Tegic Communications Tegic Communications Inc. -- http://www.tegic.com/-- provides software for mobile data services, including market-leading T9 software. A wholly owned subsidiary of AOL LLC, Tegic was founded in 1995 to develop and market communication technologies for the telecommunications and computing industries. The company is headquartered in Seattle, Washington and has offices in London, Paris, Tokyo, Hong Kong, Seoul, Beijing, New Delhi, Singapore and Sao Paulo. About Nuance Communications Based in Burlington, Massachusetts, Nuance Communications Inc. (NASDAQ: NUAN), fka ScanSoft, Inc., -- http://www.nuance.com/-- provides speech and imaging solutions for businesses and consumers around the world. Its technologies, applications and services that help users interact with information, and create, share and use documents. * * * As reported in the Troubled Company Reporter on June 25, 2007, Standard & Poor's Ratings Services affirmed its B+/Positive/-- corporate credit and other ratings on Nuance Communications. ONEIDA INC: Moody's Places Corporate Family Rating at B2 -------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Oneida, Inc.'s new senior secured first lien bank facility and a B2 corporate family rating to the company. The rating outlook is stable. The ratings assigned are based on preliminary terms as outlined by the company, and are subject to receipt and final review of executed documents. These represent first time ratings for Oneida following its emergence from voluntary bankruptcy in September 2006. The company plans to use proceeds from the term loan and a portion of cash to refinance the existing term loan that was put in place following the emergence, pay a $30 million special dividend to preferred equity holders, and pay related fees, expenses and prepayment penalties. Ratings assigned are as follows: Oneida, Inc.: -- Corporate family rating at B2 -- Probability of default rating at B2 -- $120 million first-lien Term Loan due 2013 at B3 (LGD 4, 62%) Oneida's B2 corporate family rating reflects the company's lower debt obligations, stronger liquidity and improved credit metrics that came as a direct result of its emergence from bankruptcy in September 2006. As part of this process, the company was able to reduce debt by about $100 million and terminate $41 million of pension plan obligations. Pro forma for the current transaction, Moody's estimates debt to be about 5.0 times latest twelve months' EBITDA of about $40 million, which is comfortably in the "B" rating category. The rating also reflects the significant improvement in its cost structure as a result of completing the shift to a 100% outsourced business model in March 2005, which resulted in gross margin improvement to over 35% as of March 2007 from about 22% at the end of January 2005. These actions should provide sufficient cushion, enabling the company to invest in future growth. Further supporting the rating is the company's leading market positions in the tableware industry, its diversified customer base in both the consumer and foodservice segments, and its continued-strong brand name recognition. However, the rating is constrained by the significant revenue declines that have occurred over the last several years as a result of past service issues and failure to react to changing consumer tastes, which the company has corrected, and shifting industry trends and planned declines such as exiting unprofitable businesses. Oneida's revenue has declined from over $500 million in 2001 to about $350 million today. Although the company has identified and begun to implement several new growth initiatives, it could be met with challenges including the need to improve brand relevance, or fundamental industry issues such as increased penetration from private label goods, consolidation among department store customers and the shift toward dual sourcing or direct sourcing from foreign manufacturers by certain key customers. The stable outlook reflects Moody's expectation that Oneida's post-emergence cost structure and adequate liquidity will provide satisfactory flexibility to withstand near-term challenges as the company continues to implement its operational restructuring plan and growth initiatives. The outlook assumes that the company will steadily improve operating and financial performance in 2007, and 2008 through modest revenue growth and profit retention, will generate solid free cash flows and steadily reduce debt. Headquartered in Oneida, New York, Oneida, Inc. is a leading marketer and distributor of tableware products, including metalware, dinnerware, glassware and other tabletop accessories. The company's key operations are in North America, U.K. and Australia, and revenue is estimated to be about $350 million. PAETEC HOLDING: S&P Junks Rating on Proposed $300 Mil. Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Fairport, New York-based PAETEC Holding Corp. to positive from stable. At the same time, S&P assigned a 'CCC+' rating to PAETEC's proposed $300 million senior unsecured notes due 2015. All existing ratings are affirmed, including the 'B' corporate credit rating. "The outlook revision is based on our expectations for continued growth in the company's customer base and our belief that integration risks from the merger between subsidiary PAETEC Corp. and US LEC Corp. have been largely mitigated," said Standard & Poor's credit analyst Allyn Arden. "While the merger is still in the early stages, our discussions with management indicate that the company will be able to achieve its budgeted cost savings of $33 million this year." If PAETEC, a competitive local exchange carrier, is able to demonstrate further progress in operational integration over the next couple of quarters, we could raise the rating. Proceeds from the proposed note issue will be used to repay $300 million of the existing first-lien term loan. The notes are being offered under rule 144A with registration rights. PAETEC's debt will be about $875 million on an operating lease-adjusted basis after the repayment. The ratings on PAETEC reflect a vulnerable business risk profile stemming from significant competition from larger, better- capitalized regional Bell operating companies and other CLECs; the lack of any sustainable competitive advantages; low barriers to entry and low switching costs; and a highly leveraged financial profile. PAETEC mainly competes with Verizon Communications Inc. and AT&T Inc. for midsize and large business customers. These customers generate average monthly recurring revenue of about $2,000, considerably higher than most other rated CLECs. Tempering factors include reasonable prospects for solid discretionary cash flow generation, the potential for meaningful operating synergies as a result of the merger, long average contract durations and low churn, and market diversity. PAETEC is one of the largest CLECs in the U.S. with more than two million access lines and 45,000 midsize and large business customers in 52 tier one and tier two markets in the eastern and Midwest regions, as well as California. PLEASANT CARE: Wants to Sell All Assets on July 2 Auction --------------------------------------------------------- Pleasant Care Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Central District of California for authority to sell substantially all of their assets at a July 2, 2007 auction. To bid at the auction, buyers will need to provide the Debtors with a deposit equal to at least 20% of the amount of the minimum bid for the facilities they are interested in. As of June 11, 2007, the Debtors have entered into stalking horse bid agreements with two buyers for four of their 29 facilities. A&C Health Care Services Inc. offered to purchase the Debtors' facilities in Millbrae, Lodi, and Bakersfield, Calif. for $3.5 million. A&C has provided the Debtors with a $700,000 deposit, however, A&C wants to have until July 31, 2007, to close the sale. So that A&C is not being provided a longer time to close than other buyers, the Debtors request that all buyers be allowed to extend their required closing date until July 31, 2007, by increasing the amount of their non-refundable deposit by an additional 5%. GHC of Santa Ana Heights LLC also proposed to purchase the Debtors' facility in San Diego, Calif. for $3,550,000. GHC has not yet provided the Debtors with the required $250,000 deposit. The Debtors tell the Court that they considering the asset sale because they are losing a substantial amount of money from their business operations and their postpetition financing agreement with their senior secured lender, which enables them to fund those operating losses, is scheduled to expire on June 29, 2007. Last month, the Court issued a final order authorizing the Debtors to obtain up to $17,400,000 in postpetition from Bridge Healthcare Finance LLC and Bridge Opportunity Finance LLC -- the Debtors' primary secured creditor. As adequate protection, the Debtors grant the lenders security interests in all of their presently owned and after-acquired personal property and prepetition collateral. The Court is set to consider the results of the sale on July 5, 2007, 1:30 pm, at Courtroom 1639, No. 255, E. Temple St., in Los Angeles, Calif. Based in La Canada, California, Pleasant Care Corporation and its affiliates -- http://www.pleasantcare.com/-- provide nursing home care. The company and four of its affiliates filed for chapter 11 protection on March 22, 2007 (Bankr. C.D. Calif. Lead Case No. 07-12312). Ron Bender, Esq., Monica Y. Kim, Esq., and Jacqueline L. Rodriguez, Esq., at Levene, Neale, Bender, Rankin & Brill LLP, represent the Debtors. Samuel R. Maizel, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million and $100 million. PLEASANT CARE: Taps Paul Gulbrandson as Medicare Appeals Counsel ---------------------------------------------------------------- Pleasant Care Corporation and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Central District of California to employ Paul R. Gulbrandson, C.P.A. as their Medicare Appeals Consultant. The Debtors disclose that they are required to submit annual cost reports, which detail costs and perform cost allocation. The cost reports reconcile reimbursement to the Debtors at the end of the year. The cost reports and other data provided by the Debtors are subjected to audits performed by Medicare or their agents. Before the filing for bankruptcy, the Debtors challenged certain adjustments made by Mutual Omaha, who conducted the audits, with respect to Medicare reimbursements to which the Debtors believed they are entitled for the period of approximately 2001 to 2004. Mr. Gulbrandson will assist them in the challenge to the audits. The Debtors tell the Court that Mr. Gulbrandson will receive a fee equal to 25% of all funds recovered as a result of the trial before the board on the matter. Mr. Gulbrandson assures the Court that he is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About Pleasant Care Based in La Canada, California, Pleasant Care Corporation and its affiliates -- http://www.pleasantcare.com/-- provide nursing home care. The company and four of its affiliates filed for chapter 11 protection on March 22, 2007 (Bankr. C.D. Calif. Lead Case No. 07-12312). Ron Bender, Esq., Monica Y. Kim, Esq., and Jacqueline L. Rodriguez, Esq., at Levene, Neale, Bender, Rankin & Brill LLP, represent the Debtors. Samuel R. Maizel, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Official Committee of Unsecured Creditors. PLEASANT CARE: Files Schedules of Assets & Liabilities ------------------------------------------------------ Pleasant Care Corporation, delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Central District of California, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $3,000,000 B. Personal Property $14,202,730 C. Property Claimed as Exempt D. Creditors Holding $11,826,528 Secured Claims E. Creditors Holding $9,576,039 Unsecured Priority Claims F. Creditors Holding $11,208,243 Unsecured Nonpriority Claims ----------- ---------- Total $17,202,730 $32,610,810 About Pleasant Care Based in La Canada, California, Pleasant Care Corporation and its affiliates -- http://www.pleasantcare.com/-- provide nursing home care. The company and four of its affiliates filed for chapter 11 protection on March 22, 2007 (Bankr. C.D. Calif. Lead Case No. 07-12312). Ron Bender, Esq., Monica Y. Kim, Esq., and Jacqueline L. Rodriguez, Esq., at Levene, Neale, Bender, Rankin & Brill LLP, represent the Debtors. Samuel R. Maizel, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, represents the Official Committee of Unsecured Creditors. PPM AMERICA: Fitch Downgrades Ratings on Three Note Classes ----------------------------------------------------------- Fitch has affirmed four classes and downgraded three classes of notes issued by PPM America High Grade CBO I, Ltd. These actions are the result of Fitch's review process and are effective immediately: -- $49,011,935 class A-1 affirmed at 'AAA/F1+'; -- $183,487,366 class A-2A affirmed at 'AAA'; -- $384,744,034 class A-2B affirmed at 'AAA'; -- $24,528,903 class A3 affirmed at 'AAA'; -- $48,000,000 class B-1 downgraded to 'B+' from 'BB+'; -- $10,000,000 class B-2 downgraded to 'B+' from 'BB+'; -- $14,193,562 class C downgraded to 'C/DR6' from 'CCC+/DR2'. PPM High Grade I is a collateralized bond obligation that closed Dec. 19, 2000 and is managed by PPM America, Inc. PPM High Grade I has a portfolio with a large component of investment grade corporate bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The downgrades to the class B and C notes are the result of several factors, including negative credit migration of the portfolio, a reduction in weighted average coupon, and a declining class B interest coverage ratio. According to the portfolio dated June 15, 2007, the WAC of the assets decreased to 6.41%. The weighted average rating factor also deteriorated to 28.30 ('BBB- /BB+'), and the class B IC ratio decreased to 102.85%, relative to a trigger of 102.5%. Given the current state of the portfolio, Fitch has conducted cash flow model simulations that show that the deal may not be able to withstand a requisite level of defaults that are commensurate with the current ratings of the class B and C notes. The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class A-3 notes addresses the return of the accreted investment amount by the legal final maturity. The ratings of the class B-1 and class B-2 notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class C notes addresses the likelihood that investors will ultimately receive the stated balance of principal by the legal final maturity date. Since the close of the deal, the class C noteholders have received distributions totaling $3,656,438, bringing the rated balance to $14,193,562, or 79.5% of the original balance. PRICELINE.COM INC: Strong Performance Cues S&P's Upgrade to B+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Priceline.com Inc., including raising the corporate credit rating to 'B+' from 'B'. The ratings were removed from CreditWatch with positive implications, where they were placed on April 9, 2007. The outlook is positive. "The upgrade is based on strong operating performance and improving credit measures," said Standard & Poor's credit analyst Andy Liu. "We expect Priceline.com to continue its strong performance and market share gain, especially in the growing international markets, in the absence of an unexpected shock to the travel industry." Norwalk, Connecticut-based Priceline.com is a provider of retail and consumer bid-based travel services in airline tickets, hotel rooms, rental cars, vacation packages, and cruises. The ratings on Priceline.com reflect the highly competitive online travel agency market, some supplier concentrations in airlines and hotels, relatively low profit margins even with recent years' improvement, and decreased incentive fees from global distribution systems. These factors are partially offset by the company's good competitive position in the European online travel market, market- leading "name-your-own-price" bid-based business, and positive discretionary cash flow. This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer's management. Standard & Poor's has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used. PRIMERA HOMES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Primera Homes Corporation dba Maravilla Homes fka Primera Homes, Ltd. 12105 Bell Avenue Austin, TX 78727 Bankruptcy Case No.: 07-11125 Type of Business: The Debtor develops real estate property. Chapter 11 Petition Date: June 21, 2007 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Ray Fisher, Esq. Fisher Law Offices P.O. Box 684565 Austin, TX 78768-4565 Tel: (512) 478-9810 Fax: (877) 346-2241 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million Debtor's List of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Michael P. Kelly $1,973,684 12105 Bell Avenue Austin, TX 78727 Mark Baxter $762,037 Baxter Family Trust 1-5-28 Motoazabu Tokyo, Japan First State Bank Central Texas $397,150 c/o Opper & Gambrell, PLLC 8582 Katy Freeway, Suite 200 Houston, TX 77024 JW Contracting LLC $282,499 c/o Jeff Wyss 5114 Balcones Woods Drive, Suite 307-244 Austin, TX 78759 Mindy Bakker & Jason Brown $124,930 RAM Foundation $123,982 Your Plumber, Inc. $105,237 John Jones $102,365 Siena Landscaping $88,897 Chasco Contracting $83,632 Diego Roofing $80,724 Security State Bank $74,362 Aya E. Tsuchimochi $63,158 Jimmy Evans Company $57,745 Leonards Electric $50,644 Allison Kelly $46,249 Infinity Design $45,824 Jerald Broussard $45,000 ECamSecure, Inc. $42,836 Rumgay dba C&D Bobcat $41,450 PSEG ENERGY: S&P Affirms Corporate Credit Rating at BB- ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its long-term 'BBB' corporate credit rating on utility company Public Service Enterprise Group Inc. and on affiliates Public Service Electric & Gas Co. and PSEG Power LLC. In addition, Standard & Poor's revised the outlook on the rating to stable from negative. The outlook revision follows meaningful improvement in the group's consolidated financial profile and liquidity. At the same time, Standard & Poor's raised Enterprises' and PSE&G's short-term ratings to 'A-2' from 'A-3'. The outlook is stable. The corporate credit rating for affiliate PSEG Energy Holdings LLC is affirmed at 'BB-'. The outlook is negative. Newark, New Jersey-based Enterprise has about $8.2 billion in consolidated recourse debt, net of $822 million of nonrecourse project level bonds and the utility's $1.67 billion of stranded- cost securitization bonds. "Enterprise's rating reflects unregulated operations that are volatile, but are currently generating strong cash flow," said Standard & Poor's credit analyst Aneesh Prabhu. Strengths include supply subsidiary PSEG Power's well-positioned base-load generation assets that benefit from tightening reserve margins in the PJM region. S&P also expect PSEG Power's large base-load fleet to perform well as gas increasingly sets the marginal cost of power in the eastern Mid-Atlantic Area Council. These strengths are offset to an extent by full requirements contracting that expose PSEG Power's margins to market risks, including load-shaping, fuel, and volume risks. A significant decline in natural gas prices would negatively affect gross margins from coal and nuclear assets. Other risks include a slippage in PSEG Power's ability to improve and maintain availability of its nuclear units, and a fairly high environmental capital-spending program. The stable outlook on Enterprise, PSE&G, and PSEG Power reflect strong operating performance and an improving, albeit still weak, financial profile. S&P expect continuation of strong cash flow generation by PSEG Power over the short to medium term resulting in an improvement in the financial risk profile. Yet, an outlook revision to positive will depend more on the company's financial policy. Should the company deploy the higher anticipated cash from operations in a credit supportive manner, financial measures could support a higher business risk and ratings may even improve. If instead Enterprises' business risk increases due to increased merchant exposure or if its consolidated financial risk profile weakens from operational issues, the outlook could be revised to negative. QUEENS SEAPORT: Trustee Wants Further Use of Cash Collateral ------------------------------------------------------------ Howard M. Ehrendberg, Esq., the chapter 11 trustee appointed in Queen's Seaport Development Inc.'s bankruptcy case, asks the U.S. Bankruptcy Court for the Central District of California for permission to further use Bar-K Inc.'s cash collateral securing repayment of its obligations. As reported in the Troubled Company Reporter, Jan. 22, 2007, Bar-K Inc., a secured creditor, is the loan servicing agent for: R.E. Loans LLC, a California Limited Liability Company, and Bruce Horowitz Family Partnership, a California Limited Partnership, as successor to Gold Mountain Financial Institution Inc.; and RMS Foundation Inc. The Trustee also wants authority to deviate from the total expenses contained in that budget by nor more than 10% without the need for Bar-K's further agreement, provided that the total amount of the expenditures for the month will not exceed 110% of the aggregate amount of expenditures for the period. As adequate protection, the Trustee will make a $190,000 monthly payment to Bar-K, and RMS Foundation will make a $95,000 monthly payment to the Trustee as its share in the Trustee's advance payment of the adequate protection. RMS is the sub-lessee of the Debtor and the Debtor's co-obligor under various loan documents with Bar-K. In consideration for the making of the adequate protection payments, Bar-K agreed not to: a) file a plan of reorganization in the Debtor's case until Oct. 20, 2007; b) declare a default under the Bar-K Loan Documents. Headquartered in Long Beach, California, Queen's Seaport Development Inc. -- http://www.queenmary.com/-- operates the Queen Mary ocean liner, various attractions and a hotel. The company filed for chapter 11 protection on March 15, 2005 (Bankr. C.D. Calif. Case No. 05-15175). Joseph A. Eisenberg, Esq., at Jeffer Mangles Butler & Marmaro LLP represented the Debtor. Ira Benjamin Katz serves as counsel to unsecured creditors. On April 12, 2006, the Court appointed Howard M. Ehrenberg as the Debtor's chapter 11 trustee. Mr. Ehrenberg is represented by Larry D. Simons, Esq., at SulmeyerKupetz PC in Los Angeles, California. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. RCN CORP: To Acquire NEON Communications for $260 Million in Cash ----------------------------------------------------------------- RCN Corporation and NEON Communications Group, Inc. entered into a definitive agreement for RCN to acquire NEON for up to $5.25 per share of NGI common stock, in cash, for expected total consideration of up to approximately $260 million. The transaction has been approved by the Board of Directors of both companies, and is expected to close during the fourth quarter of 2007, subject to regulatory approvals and the approval of NEON's stockholders as well as certain other closing conditions described below. The transaction combines RCN, a leading competitive provider of video, data, and voice services to residential and business customers in the Northeast, mid-Atlantic, and Chicago metro markets, with NEON's pure play network transport services to carrier and enterprise customers in the twelve-state New England and mid-Atlantic regions. NEON offers RCN a complementary network and a customer base that fits very well into RCN Business Solutions' growth strategy. Pro forma for the quarter ended March 31, 2007 (assuming that the transaction had closed on Jan. 1, 2007), combined RCN Business Solutions' annualized Revenue and EBITDA would have been approximately $160 million and $40 million, respectively, nearly twice the actual results of RCN Business Solutions. These figures exclude an estimated $10 million of expected revenue and expense synergies to be achieved during the integration period following the closing of the transaction. In addition, this acquisition expands RCN's overall network footprint, including over 1,000 combined on-net commercial locations, and creating an opportunity to increase its addressable residential homes in markets both inside and adjacent to its existing core footprint. NEON brings to RCN: * A densely built fiber optic network with approximately 4,800 route miles, over 230,000 fiber miles, 22 colocation facilities, and more than 200 points of presence from Maine to Virginia; * A facilities-based wholesale communications provider that supplies high bandwidth fiber optic capacity and comprehensive end-to-end telecom services to approximately 120 carrier and enterprise customers; * Unique fiber routes along utility rights-of-way, expanding RCN's commitment to diversity from the legacy telecom Infrastructure; * Complementary network and similar sales approach, which will help facilitate integration and open up new markets for RCN products; and * Complementary customer base -- NEON's carrier focus and RCN's enterprise focus together offer enhanced growth and sales opportunities. "We are thrilled to be joining forces with NEON and look forward to welcoming its customers and team members to RCN," Peter Aquino, President and Chief Executive Officer of RCN added. "This is a significant strategic acquisition for RCN that scales our high- value commercial segment with another premier regional service provider in our own footprint. NEON brings an extensive fiber network in New England and the mid-Atlantic with diverse intercity fiber assets. This combination of NEON, ConEd Communications and RCN's existing metro and intercity rings will now reach into both Tier 1 and Tier 2 markets for enterprise and carrier customers who are looking for robust alternatives to incumbent providers. Additionally, NEON's dense capillarity improves our ability to deliver seamless, high quality services and creates significant growth potential. We are very excited about combining RCN Business Solutions, under RBS President Felipe Alvarez's leadership, with NEON, creating one of the best Regional CLECs on the East Coast and in Chicago." "We are pleased with this transaction and believe that it represents a good outcome for our stockholders, customers and employees," Kurt Van Wagenen, President and CEO of NEON Communications Group, said. "NEON and RCN have had a positive, long standing working relationship. Through this merger, our customers gain access to an enhanced set of services, additional on-net buildings and an expanded geography including a network in Chicago and deeper capillarity in New York City and Washington DC. The combined entity will have more than 14,000 route miles and more than 1,000 on-net buildings." RCN expects to fund the purchase price for the transaction with $250 million of debt financing, consisting of a combination of senior secured term loans as well as unsecured borrowings, with the remainder funded from its existing cash reserves. RCN has received commitment from affiliates of Deutsche Bank to provide the full $250 million of debt financing. Neither the acquisition nor the additional debt financing require the consent of RCN's existing lenders. The transaction is expected to close during the fourth quarter of 2007, subject to FCC and state regulatory approvals, NEON's stockholder approval, and NEON achieving minimum agreed-upon revenue and EBITDA milestones during the second half of 2007. In addition, assuming the required approvals are received and minimum financial milestones are met, the purchase price could be reduced by up to $0.10 per share if NEON does not meet supplementary revenue targets specified in the agreement during the second half of 2007. Deutsche Bank Securities, Inc. and Andrews Kurth LLP acted as financial and legal advisors to RCN, and The Bank Street Group LLC and Clifford Chance US LLP acted as financial and legal advisors to NEON. About NEON Communications NEON Communications Group, Inc., (AMEX: NGI) is a facilities-based wholesale communications provider, supplying high bandwidth fiber optic capacity and comprehensive end-to-end telecom services to communications companies and enterprise customers on an intercity, regional and metro network in the 12-state Northeast and mid- Atlantic region. With 4,800 route miles and over 230,000 fiber miles from Maine to Virginia, NEON is providing unparalleled capillarity and central office connectivity in the world's most demanding telecom market. About RCN Headquartered in Herndon, Virginia, RCN Corp. (Nasdaq: RCNI) -- http://www.rcn.com/-- is a communications company marketing video, voice and data services to residential and commercial customers located in high-density northeast and Midwest markets. Its video programming services include basic analog cable television, expanded basic cable TV, digital cable TV, channels, video on demand and subscription video on demand, high definition television, and digital video recorder services. * * * As reported in the Troubled Company Reporter on March 30, 2007, Moody's confirmed RCN Corporation's B1 corporate family rating and stable outlook, following the company's proposed $375 million special dividend to shareholders and refinancing of the company's existing first lien debt and likely re-financing of its second lien debt with a new $520 million senior secured term loan and approximately $80 million in cash. The company will also have a $75 million revolving credit facility, unused at inception. In addition, Moody's downgraded the company's first lien loan rating to B1, LGD3, 33% from Ba2 and the probability of default rating to B2 from B1 in line with Moody's Loss Given Default Methodology and due to the significant increase in the first lien debt relative to its overall capitalization and the transition to an all bank capital structure, respectively. RESIDENTIAL ACCREDIT: Fitch Downgrades Ratings on Three Classes --------------------------------------------------------------- Fitch Ratings has taken these rating actions on the Residential Accredit Loans, Inc. mortgage-pass through certificates listed below: Series 2003-QS23 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 downgraded to 'B' from 'BB'; placed on Rating Watch Negative; -- Class B-2 downgraded to 'CC/DR4' from 'B'. Series 2005-QS12 -- Class A affirmed at 'AAA' -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 rated 'BB', placed on Rating Watch Negative. -- Class B-2 downgraded to 'C/DR4' from 'B'. Series 2006-QS11 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'. -- Class B-2 rated 'B', placed on Rating Watch Negative. Series 2006-QS15 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'. -- Class B-1 rated 'BB', placed on Rating Watch Negative. -- Class B-2 rated 'B', placed on Rating Watch Negative. The affirmations, affecting approximately $1.7 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. The downgrades, affecting approximately $2.2 million, reflect a deteriorating relationship between CE and expected losses. Series 2003-QS23, classes B-1 and B-2 are downgraded because of high delinquencies. The 90+ DQ is 0.79% of the current collateral balance. To date, the transaction has experienced losses of approximately $116,000 or 0.07% of the original collateral balance. Losses have deteriorated the CE for the B-2 bond from 0.15% at issuance to 0.11% currently. The negative rating actions on the 2005 and 2006 vintage RALI transactions are due to current trends in the relationship between serious delinquency and credit enhancement. For series 2005-QS12, the 90+ DQ is 1.71% of the current collateral balance, while the CE of classes B-1 and B-2 is 0.90% and 0.44%, respectively. For series 2006-QS11, the 90+ DQ is 2.01% of the current collateral balance, while the CE of class B-2 is 0.40%. For series 2006- QS15, the 90+ DQ is 2.32% of the current collateral balance, while the CE of classes B-1 and B-2 is 0.95% and 0.44%, respectively. The collateral of the above transactions primarily consists of 30- year and 15-year fixed-rate mortgage loans extended to Alt-A borrowers. The loans are primarily secured by first liens on one- to four-family residential properties. All of the above transactions are master serviced by GMAC-RFC, (rated 'RMS1' by Fitch). As of the May 2007 distribution date, the pool factors (current principal balance as a percentage of original) of the above transactions range from 49% (series 2003-QS23) to 88% (series 2006-QS11 & 2006-QS15). The seasoning ranges from 7 months (series 2006-QS15) to 41 months (series 2003-QS23). SACO I: S&P Lowers Ratings on 13 Classes ---------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 13 classes from SACO I Trust's series 2005-GP1, 2006-5, 2006-6, 2006- 7, and 2006-8. S&P placed the ratings on two of the downgraded classes on CreditWatch with negative implications, left seven of the ratings on the downgraded classes on CreditWatch negative, and S&P removed the ratings on three of the downgraded classes from CreditWatch with negative implications. At the same time, S&P placed three ratings from SACO I Trust's 2005-GP1, 2005-5, and 2006-7 on CreditWatch with negative implications, and the ratings on five classes from series 2006-5 and 2006-6 remain on CreditWatch negative. Lastly, S&P affirmed its ratings on the remaining classes from these six SACO I Trust transactions. The downgrades and negative CreditWatch placements reflect the deteriorating collateral performance of the collateral pools backing these transactions. All of the deals contain primarily second-lien mortgage loans as collateral, which usually incur losses when the loans become 180-plus-days delinquent, and are subsequently charged off. Realized losses have been outpacing excess interest spread, which has reduced credit enhancement to levels that are not sufficient to support the previous ratings on the downgraded classes. As of the May 2007 remittance period, overcollateralization is below its target for each of the six mortgage loan pools. For the six pools with negative rating actions, cumulative losses ranged from 0.98% (series 2005-GP1) to 6.58% (2005-5, group 1) of the original pool balances. Severe delinquencies (90-plus days, foreclosures, and REOs) ranged from 2.58% (2006-8) to 8.88% (2006- 5, group 2) of the current pool balances. Total delinquencies ranged from 6.09% (2005-GP1) to 14.51% (2006-6) of the current pool balances. Standard & Poor's will continue to closely monitor the performance of the classes with ratings on CreditWatch. If the delinquent loans cure to a point at which monthly excess interest begins to outpace monthly net losses, thereby allowing O/C to build and provide sufficient credit enhancement, S&P will affirm the ratings and remove them from CreditWatch. Conversely, if delinquencies cause substantial realized losses in the coming months and continue to erode credit enhancement, S&P will take further negative rating actions on these classes. The ratings on classes II-B-4 from series 2006-5, B-4 from series 2006-6, and B-4 from series 2006-7 were removed from CreditWatch because they were lowered to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for these deals is derived from a combination of subordination, excess interest, and O/C. Series 2006-8 also benefits from a bond insurance policy from Ambac Assurance Corp. ('AAA'). These transactions were initially backed by either subprime/Alt-A closed-end second-lien mortgage loans or home equity lines of credit. The guidelines used in the origination process generally employed standards intended to assess the credit risk of borrowers with imperfect credit histories or relatively high ratios of monthly mortgage payments to income. Ratings Lowered And Placed On Creditwatch Negative SACO I Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-5 II-B-1 BB/Watch Neg BBB+ 2006-7 B-1 BB+/ Watch Neg BBB+ Ratings Lowered and Remaining on Creditwatch Negative SACO I Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-5 II-B-2 B/Watch Neg BB/Watch Neg 2006-5 II-B-3 B-/Watch Neg BB-/Watch Neg 2006-6 B-2 B/Watch Neg BB/Watch Neg 2006-6 B-3 B-/Watch Neg BB-/Watch Neg 2006-7 B-3 B-/Watch Neg BB-/Watch Neg 2006-7 B-2 BB/ Watch Neg BBB/Watch Neg 2006-8 B B/ Watch Neg BB/Watch Neg Ratings Lowered and Removed from Creditwatch Negative SACO I Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-5 II-B-4 CCC B/Watch Neg 2006-6 B-4 CCC B/Watch Neg 2006-7 B-4 CCC B/Watch Neg Rating Lowered SACO I Trust Rating ------ Series Class To From ------ ----- -- ----- 2005-GP1 B-4 CCC B+ Ratings Placed on Creditwatch Negative SACO I Trust Rating ------ Series Class To From ------ ----- -- ----- 2005-GP1 B-3 BB-/Watch Neg BB- 2005-5 I-B-4 BB/Watch Neg BB 2006-7 M-6 A-/Watch Neg A- Ratings Remaining on Creditwatch Negative SACO I Trust Series Class Rating ------ ----- ------ 2006-5 I-B-2 BBB/Watch Neg 2006-5 I-B-3 BB/Watch Neg 2006-5 I-B-4 B/Watch Neg 2006-6 B-1 BB+/Watch Neg 2006-6 M-6 A-/Watch Neg Ratings Affirmed SACO I Trust Series Class Rating ------ ----- ------ 2005-5 I-A AAA 2005-5 I-M-1 AA 2005-5 I-M-2 AA- 2005-5 I-M-3 A+ 2005-5 I-M-4 A 2005-5 I-M-5 A- 2005-5 I-B-1 BBB+ 2005-5 I-B-2 BBB 2005-5 I-B-3 BBB- 2005-GP1 A-1, A-2, M-1 AAA 2005-GP1 M-2 BBB- 2005-GP1 B-1 BB+ 2005-GP1 B-2 BB 2006-5 I-A AAA 2006-5 I-M-1 AA+ 2006-5 I-M-2 AA 2006-5 I-M-3 AA- 2006-5 I-M-4 A+ 2006-5 I-M-5 A 2006-5 I-M-6 A- 2006-5 I-B-1 BBB+ 2006-5 II-A-1, II-A-2, II-A-3 AAA 2006-5 II-M-1 AA+ 2006-5 II-M-2 AA 2006-5 II-M-3 AA- 2006-5 II-M-4 A+ 2006-5 II-M-5 A 2006-5 II-M-6 A- 2006-6 A AAA 2006-6 M-1 AA+ 2006-6 M-2 AA 2006-6 M-3 AA- 2006-6 M-4 A+ 2006-6 M-5 A 2006-7 A AAA 2006-7 M-1 AA+ 2006-7 M-2 AA 2006-7 M-3 AA- 2006-7 M-4 A+ 2006-7 M-5 A 2006-8 A, A-IO AAA SALOMON BROTHERS: Fitch Affirms B- Rating on $5.9MM Class K Loans ----------------------------------------------------------------- Fitch Ratings has affirmed Salomon Brothers Mortgage Securities VII, Inc., series 2000-C2 as: -- $437.6 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $33.2 million class B at 'AAA'; -- $33.2 million class C at 'AAA'; -- $7.8 million class D at 'AAA'; -- $11.7 million class E at 'AAA'; -- $13.7 million class F at 'AA-'; -- $9.8 million class G at 'A-'; -- $21.5 million class H at 'BBB-'; -- $13.7 million class J at 'BB-'; -- $5.9 million class K at 'B-/DR1'. Class L remains at 'C' and Fitch has downgraded the Distressed Recovery rating to 'DR6' from 'DR5' due to additional projected losses. Class M and Class N remain 'C/DR6'. Although the transaction benefits from additional defeasance and paydown, affirmations are warranted due to high Fitch Loans of Concern concentration and additional losses expected on the specially serviced assets. As of the May 2007 distribution date, the pool's aggregate certificate balance has been reduced 22.5% since issuance, to $606 million from $781.5 million. A total of forty loans (31.1%) have defeased since issuance. Three assets (4.6%) are currently in special servicing. The largest specially serviced asset (2.4%) is secured by a 251,365 square foot retail center located in Baltimore, MD. It has been real estate owned since February 2006. The special servicer is marketing the property for sale. Several tentative offers have been received for the purchase of the property. Based on recent appraisal valuations, significant losses are expected upon the liquidation of this asset. The second largest specially serviced asset (1.3%) is secured by 136,796 sf office property located in Houston, TX. It has been REO since November 2003 and the special servicer has been marketing the property for sale. Based on recent appraisal valuations, substantial losses are expected upon the sale of this asset. SCOTTISH RE: Annual Shareholders Meeting Scheduled on July 18 ------------------------------------------------------------- Scottish Re Group Limited will have its Annual General Meeting of Shareholders at 11:00 a.m. (Bermuda time) on July 18, 2007. The meeting will be held at Crown House, Second Floor, 4 Par-la-Ville Road, in Hamilton, Bermuda. At the meeting, shareholders will be asked to: * consider and vote upon the election of eleven directors, * approve the 2007 Stock Option Plan, and * ratify the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for 2007. A copy of the Proxy Statement may be viewed for free at: http://ResearchArchives.com/t/s?2126 About Scottish Re Scottish Re Group Ltd. -- http://www.scottishre.com/-- (NYSE:SCT) is a global life reinsurance company. Scottish Re has operating businesses in Bermuda, Grand Cayman, Guernsey, Ireland, Singapore, the United Kingdom and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re (U.S.) Inc. and Scottish Re Limited. * * * As reported in the Troubled Company Reporter on June 7, 2007, Fitch Ratings has upgraded Scottish Re's Issuer Default Rating to 'BB-' from 'B+' and the Insurer Financial Strength ratings of its primary operating subsidiaries to 'BBB-' from 'BB+'. The ratings have been removed from Rating Watch Positive; the Rating Outlook is Stable. SEA CONTAINERS: Court Okays Deloitte & Touche as Auditors --------------------------------------------------------- Sea Containers, Ltd. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Deloitte & Touche LLP as their auditors, nunc pro tunc to Jan. 1, 2007. Deloitte & Touche has served as the independent auditor for Sea Containers Ltd. since 2006, and for certain Non-Debtor subsidiaries since 1995. In the course of its retention, Deloitte & Touche has developed a great deal of institutional knowledge and intimate understanding of the Debtors' businesses, finances, operations, systems and capital structure. As the Debtors' auditors, Deloitte & Touche is expected to perform an integrated audit and report on the Debtors' financial statements. In addition, the firm is expected to express its opinion on the: (a) fairness of the presentation of the Debtors' financial statements, (b) management's assessment of the effectiveness of the Debtors' internal control over financial reporting, and (c) effectiveness of the Debtors' internal control over financial reporting. The Debtors will pay Deloitte & Touche in accordance with the firm's customary hourly billing rates: Professional Hourly Rates ------------ --------------- Partners GBP315 - GBP650 Managers/Directors GBP150 - GBP500 Staff GBP75 - GBP230 J. Gerard Murphy, member of Deloitte & Touche, relates that the firm received GBP183,365 within 90 days from the Petition Date. The firm, however, does not believe the payments were preferences under Section 547 of the Bankruptcy Code. Mr. Murphy assures the Court that the firm does not hold or represent any interest adverse to the Debtors, and is deemed a "disinterested person" as defined under Section 101(14) of the Bankruptcy Code. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers Ltd. disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) The Court extended the Debtors' exclusive period to file a Plan of Reorganization to Sept. 28, 2007. SEA CONTAINERS: Trustee & GE Capital Opposes $176MM DIP Financing ----------------------------------------------------------------- The U.S. Trustee for Region 3 and GE Capital Container SRL and its affiliates have raised objections to Sea Containers, Ltd. and its debtor-affiliates' move to borrow and obtain up to $176,500,000, pursuant to a DIP credit facility between the Debtors and Mariner LCD, Dune Capital LLC, Dune Capital LP, Wells Fargo Bank N.A. As reported in the Troubled Company Reporter on June 14, 2007, Mariner and Dune Capital, along with Trilogy Capital LLC and Caspian Capital Partners LP, had committed on May 3, 2007, to provide Sea Containers Ltd. with a $176,500,000 DIP facility. Under the New DIP Facility, Marine and Dune Capital will provide SCL with a term loan of up to $151,500,000, and a $25,000,000 revolving credit facility. Wells Fargo will serve as the administrative and collateral agent under the New DIP Facility. The Debtors intend to use the proceeds of the Term Loan to make a capital contribution to SPC Holdings Ltd., a non-debtor subsidiary of which SCL holds the entire economic interest. In turn, Holdings will make a capital contribution to Sea Containers SPC, a "bankruptcy remote" subsidiary. SPC will then use the proceeds of the capital contribution to repay an existing debt securitization facility. The repayment of the securitization facility will prevent foreclosure by SPC's lenders, which have alleged a default under that facility. In addition, the Term Loan will also be used to pay all costs and expenses of the DIP Lenders and the DIP Agent relating to the structuring of the proposed financing for SCL or SPC. On the other hand, the proceeds of the Revolving Credit Facility will be used for SCL's general corporate purposes in the ordinary course of business. A full-text copy of the of the Wells Fargo Draft DIP Agreement is available for free at: http://researcharchives.com/t/s?20e1 http://researcharchives.com/t/s?20e2 http://researcharchives.com/t/s?20e3 Objections (1) GE Capital Container, et al. GE Capital Container SRL, GE Capital Container Two SRL, and GE SeaCo SRL tells the U.S. Bankruptcy Court for the District of Delaware that the Term Loan is not necessary to preserve the Debtors' assets, and is not in the best interests of the Debtors' creditors. "The Debtors provide no detail to support their belief that incurring the Term Loan to repay SPC's debts will avoid additional claims against their estates," Andrew C. Kassner, Esq., at Drinker Biddle & Reath LLP, in Wilmington, Delaware, argues. Mr. Kassner also reveals that SPC's equity "is under water." SCL's equity in SPC will never have value unless there is some dramatic increase in the future sale price of containers. In addition, the Term Loan prevents the Debtors from preserving their estates' assets if they have future liquidity needs in excess of the amounts available under the Revolving Loan, or need to restructure the Revolving Loan. Mr. Kassner adds that there is a big probability that the Debtors will not be able to secure any future financing needs to protect the estate if they put up their available assets to repay SPC's creditors. In this case, the Term Loan should face rigid scrutiny because it favors SPC's creditors over the Debtors' creditors, Mr. Kassner points out. Accordingly, the Debtors must prove that: (a) absent the Term Loan, the Debtors' business operations will not survive, (b) the Debtors cannot obtain alternative financing on acceptable terms, and (c) the proposed postpetition lenders will not accede to less preferential terms. "Indeed, a postpetition financing that benefits one existing creditor group over another should only be approved as a last resort," Mr. Kassner asserts. Accordingly, GE Capital Container asks the Court to deny the Debtors' incurrence of the Term Loan. (2) U.S. Trustee To the extent that the proceeds of the Term Loan will be used exclusively to make the capital contributions, the use of cash is governed by Section 345 of the Bankruptcy Code, David L. Buchbinder, Esq., at the Office of the U.S. Trustee, in Wilmington, Delaware, argues. The Debtors are proposing to make an investment of cash into a twice removed "bankruptcy remote subsidiary," Mr. Buchbinder notes. "They may not do so unless they can comply with Section 345, and protect the funds for the creditor body," Mr. Buchbinder contends. The legislative intent behind Section 345 is to protect existing cash, and not permit speculation while the property is subject to the jurisdiction of the Court, Mr. Buchbinder explains. Accordingly, the Debtors must comply with Section 345 and post a bond to secure repayment of the funds should they desire to make the requested investment, Mr. Buchbinder asserts. Mr. Buchbinder also points out that the Debtors failed to cite factual support on the Debtors' interest in Holdings or SPC, and SPC's ability to repay the funds as the Guarantor. In addition, the U.S. Trustee contends that the proposed Loan Terms appears to prejudice the estate. The DIP Lenders are owed collectively $100,000,000 as unsecured creditors. The scheduled unsecured claims reach more than $1,000,000,000. "Given all these factors, numerous terms of the proposed DIP Credit Agreement appear to place the [DIP] Lenders in a position of control over the outcome of these cases," Mr. Buchbinder argues. Mr. Buchbinder also points out that the DIP Credit Agreement contains a clause that requires the Court to make a finding in the Final DIP Order with respect to the DIP Lenders that the transaction, standing alone, will cause their removal from the Official Committee of Unsecured Creditors. The U.S. Trustee says Clause is inappropriate. It is among the statutory duties of the U.S. Trustee to appoint or remove creditor committee members, Mr. Buchbinder argues. Accordingly, the U.S. Trustee asks the Court to deny the Motion. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers Ltd. disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) The Court extended the Debtors' exclusive period to file a Plan of Reorganization to Sept. 28, 2007. SEQUOIA MORTGAGE: Fitch Affirms BB Rating on Class B-5 Certs. ------------------------------------------------------------- Fitch Ratings has affirmed the following classes from Sequoia Mortgage Trust pass-through certificates, series 2003-3: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 affirmed at 'BBB'; -- Class B-5 affirmed at 'BB'. The underlying collateral for the Sequoia Mortgage transaction consists of 30-year adjustable-rate mortgages extended to prime borrowers. The Sequoia Mortgage Trust loans are acquired from various originators by a subsidiary of Redwood Trust Inc., a mortgage real estate investment trust that invests in residential real estate loans and securities. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $98.4 million outstanding certificates as detailed above. As of the May 2007 distribution date, the transaction is seasoned 47 months and has a pool factor of 17.64%. The master servicer for the deal is Wells Fargo Bank Minnesota, which is currently rated 'RMS1' by Fitch. SIERRA PACIFIC: Affiliates Close Mortgage Securities Tender Offer ------------------------------------------------------------------ Nevada Power Company and Sierra Pacific Power Company, two wholly- owned subsidiaries of Sierra Pacific Resources, each completed its tender offer, at 9 a.m., New York City time, June 22, 2007, for any and all of a certain series of its General and Refunding Mortgage securities. As of the expiration of Nevada Power's tender offer for its 9% General and Refunding Mortgage Notes, Series G, due 2013, a total of $210,256,000 aggregate principal amount of the Notes had been tendered for purchase, representing approximately 92% of the aggregate outstanding principal amount. Assuming a settlement date of June 28, 2007, Nevada Power will pay $1,079.75 plus accrued interest for each $1,000 principal amount of Notes purchased in the offer. As of the expiration of Sierra Pacific Power's tender offer for its 8% General and Refunding Mortgage Bonds, Series A, due 2008, a total of $220,757,000 aggregate principal amount of the Bonds had been tendered for purchase, representing approximately 69% of the aggregate outstanding principal amount. Assuming a settlement date of June 28, 2007, Sierra Pacific Power will pay $1,022.10 plus accrued interest for each $1,000 principal amount of Bonds purchased in the offer. Credit Suisse and Goldman, Sachs & Co. are the Dealer Managers for each of the tender offers. Morrow & Co., Inc. is the Information Agent. Requests for documents may be directed to Morrow & Co., Inc. by telephone at (800) 607-0088 (toll-free) or (203) 658-9400. Questions regarding the tender offers may be directed to Credit Suisse at (800) 820-1653 (toll-free) or (212) 325-4008 (collect), or to Goldman Sachs & Co. at (800) 828-3182 (toll-free) or (212) 902-9077 (collect). About Nevada Power Company Nevada Power Company is a regulated public utility engaged in the distribution, transmission, generation, purchase and sale of electric energy in the southern Nevada communities of Las Vegas, North Las Vegas, Henderson, Searchlight, Laughlin and their adjoining areas, including Nellis Air Force Base and the Department of Energy's Nevada Test Site in Nye County. Nevada Power provides electricity to approximately 807,000 residential and business customers. About Sierra Pacific Power Sierra Pacific Power Company is the principal utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power also distributes natural gas in the Reno-Sparks area of northern Nevada. Sierra Pacific Power provides electricity to approximately 361,000 residential and business customers and natural gas to approximately 140,000 residential and business customers. About Sierra Pacific Resources Headquartered in Las Vegas, Nevada, Sierra Pacific Resources (NYSE: SRP) -- http://www.sierrapacificresources.com/-- is a holding company whose principal subsidiaries, Nevada Power Company and Sierra Pacific Power Company, are electric and electric and gas utilities, respectively. Sierra Pacific Resources also holds relatively modest non-utility investments through other subsidiaries. * * * Moody's Investors Services rated Sierra Pacific Resources' long term corporate family rating at 'Ba2' and probability of default at 'Ba3'. Standard and Poor's assigned a 'BB-' rating on the company's long term foreign and local issuer credit. The outlook is stable. Fitch assigned 'BB-' rating on the company's long term issuer default. SOVEREIGN COMMERCIAL: Fitch Puts Low-B Ratings on Three Certs. -------------------------------------------------------------- Sovereign Commercial Mortgage Securities Trust 2007-C1 commercial mortgage pass-through certificates are rated by Fitch Ratings as: -- $1,014,026,928 class 'X' 'AAA' (notional amount); -- $50,000,000 class A-1 'AAA'; -- $529,727,000 class A-1A 'AAA'; -- $231,494,000 class A-2 'AAA'; -- $105,205,000 class A-J 'AAA'; -- $15,211,000 class B 'AA'; -- $17,745,000 class C 'A'; -- $20,281,000 Class D 'BBB+'; -- $10,140,000 Class E 'BBB'; -- $7,605,000 class F 'BBB-'; -- $2,535,000 class G 'BB+'; -- $2,535,000 class H 'BB'; -- $3,803,000 class J 'BB-'; -- $2,535,000 class K 'B+'; -- $3,803,000 class L 'B'; -- $2,535,000 class M 'B-'. Fitch does not rate the $8.9 million dollar class N. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 261 fixed loans having an aggregate principal balance of approximately $1,014,026,928, as of the cutoff date. SPEAKING ROSES: March 31 Balance Sheet Upside-Down by $5.6 Million ------------------------------------------------------------------ Speaking Roses International Inc. reported a net loss of $684,559 on net sales of $563,028 for the first quarter ended March 31, 2007, compared with a net loss of $1,484,308 on net sales of $460,908 for the same period ended March 31, 2006. At March 31, 2007, the company's consolidated financial statements for the quarter ended March 31, 2007, showed $1,265,426 in total assets and $6,936,910 in total liabilities, resulting in a $5,671,484 in total stockholders' deficit. The company's consolidated balance sheet at March 31, 2007, also showed strained liquidity with $478,551 in total current assets available to pay $2,049,375 in total current liabilities. 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?2128 Going Concern Doubt As reported in the Troubled Company Reporter on May 24, 2007, Tanner LC of Salt Lake City, Utah, expressed substantial doubt about Speaking Roses International Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditor pointed to the company's minimal cash, working capital deficit and accumulated deficit as of Dec. 31, 2006, significant losses and negative cash flows from operating activities since inception. About Speaking Roses Salt Lake City, Utah-based Speaking Roses International, Inc. (OTC BB: SRII) -- http://www.speakingroses.com/-- engages in marketing, distribution, retailing, and franchising floral and ancillary products, primarily roses. The company also sells embossed flowers and bouquets through its patented embossing technology. STA-BILT PRODUCTS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sta-Bilt Products, Inc. 902 West 13th Street P.O. Box 9 Blanco, TX 78606 Bankruptcy Case No.: 07-11121 Type of Business: The Debtor retails lumber, plywood, trusses, roofing, and other wooden building products. See http://www.stabilt.com/ Chapter 11 Petition Date: June 21, 2007 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Stephen W. Sather, Esq. Barron & Newburger, P.C. 1212 Guadalupe, Suite 104 Austin, TX 78701 Tel: (512) 476-9103 Ext. 220 Fax: (512) 476-9253 Total Assets: $1,921,911 Total Debts: $2,041,783 Debtor's List of its 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Handy Hardware Wholesale, Inc. Goods & Services $116,802 P.O. Box 203419 Houston, TX 77216 Bank of America, N.A. Promissory Note $95,139 CCS-Small Business/Premier TX1-609-06-01 P.O. Box 830632 Dallas, TX 75283-0632 Wells Fargo Business Card Business Line $94,055 P.O. Box 348750 Sacramento, CA 95834 Chase Bank Line of Credit $48,410 Bank of America Business Credit Line $47,226 Robert Bray Employee Loan $39,791 Jim Fender, Inc. Promissory Note $24,409 American Express Business Capital Line $19,418 American Express Business Credit Card $17,782 Truserv Corporation Service $14,684 Alpine Engineered Computer Supplies $12,564 Products, Inc. Texas State Comptroller Sales Taxes $9,119 Meter Loops & Power Poles, Inc. Services $7,730 Handy Hardware Wholesale, Inc. Trade Debt $7,114 Buttery Hardware Company Goods and Services $6,340 PPG Industries, Inc. Service $6,272 Cox Lumber Company Goods and Services $4,803 Headwaters Construction Services $4,640 Sheppard-Jones, Mildred Accountant $3,235 Key Equipment Finance Contract/Lease $3,004 STRATS: S&P Affirms BB+ Ratings on Classes A-1 and A-2 Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' ratings on classes A-1 and A-2 of the $12 million fixed-rate callable certificates issued by STRATS for United States Cellular Corp. Securities Series 2004-6. Concurrently, S&P removed these ratings from CreditWatch, where they were originally placed with negative implications on Nov. 17, 2006. The rating actions follow the June 21, 2007, affirmation of the corporate credit rating on United States Cellular Corp. (BB+/Developing/--) and its removal from CreditWatch negative. STRATS for United States Cellular Corp. Securities Series 2004-6 is a pass-through transaction, and its ratings are based solely on the rating assigned to United States Cellular Corp.'s 6.70% senior notes due Dec. 15, 2033. STRUCTURED ASSET: Fitch Downgrades Ratings on Two Cert. Classes --------------------------------------------------------------- Fitch has taken rating actions on these Structured Asset Securities Corp., mortgage pass-through certificates, as follows: Structured Adjustable Rate Mortgage (SARM), Series 2004-11 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA'; -- Class B3 affirmed at 'BBB'; -- Class B4 downgraded to 'CC' from 'B' and assigned Distressed Recovery rating 'DR3'; -- Class B5 downgraded to 'C/DR6' from 'C/DR5'. SARM, Series 2006-9 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA'; -- Class B2-I affirmed at 'A'; -- Class B3-I affirmed at 'BBB'; -- Class B4-I affirmed at 'BB'; -- Class B5-I affirmed at 'B'. SARM, Series 2006-9 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II affirmed at 'AA'; -- Class B3-II affirmed at 'A+'; -- Class B4-II affirmed at 'A'; -- Class B5-II affirmed at 'BBB+'; -- Class B6-II affirmed at 'BBB'; -- Class B7-II affirmed at 'BB'; -- Class B8-II affirmed at 'B'. SARM, Series 2006-12 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II affirmed at 'A'; -- Class B3-II affirmed at 'BBB'; -- Class B4-II (rated 'BB') placed on Rating Watch Negative; -- Class B5-II (rated 'B') placed on Rating Watch Negative; Structured Asset Securities Corp., Lehman Mortgage Trust (LMT), Series 2006-6 Group 1 -- Class A affirmed at 'AAA'; -- Class IB1 affirmed at 'AA'; -- Class IB2 affirmed at 'A'; -- Class IB3 affirmed at 'BBB'; -- Class IB4 affirmed at 'BB'; -- Class IB5 (rated 'B') placed on Rating Watch Negative. LMT, Series 2006-6 Group 2 -- Class A affirmed at 'AAA'; -- Class 2B1 affirmed at 'AA'; -- Class 2B2 affirmed at 'A'; -- Class 2B3 affirmed at 'BBB'; -- Class 2B4 affirmed at 'BB'; -- Class 2B5 affirmed at 'B'. The mortgage loans were originated by various banks and other mortgage lending institutions. The largest percentage of originations was made by Lehman Brothers Bank, FSB. The transactions consist of fixed and adjustable rate, conventional, fully amortizing mortgage loans, substantially all of which have original terms to stated maturity of 30 years. The mortgage loans are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. The affirmations reflect credit enhancement consistent with future loss expectations and affect $1.498 billion of outstanding certificates. The affirmed classes detailed above have experienced small to moderate growth in CE since closing. The downgraded classes and the classes placed on Rating Watch Negative reflect the deterioration in the relationship of CE to future loss expectations and affect approximately $999,590 and $3.534 million in outstanding certificates, respectively. The pools are seasoned from a range of 5 to 34 months. The pool factors (current principal balance as a percentage of original) range from 11% (series 2004-11) to 94% (series 2006-12 group 2). For 2004-11, the loans in 90+ delinquency (including foreclosure and real estate owned) at 34 months seasoning as a percentage of the current pool balance is 8.54%. The CE of the B-4 class is 1.50% and B-5 class is completely depleted. For 2006-12 Group 2, the loans in 90+ delinquency at 5 months seasoning as a percentage of the current pool balance is 1.28%. The CE of the B4-II and B5-II classes are 0.85% and 0.37%, respectively. For LMT 2006-6 Group 1, the loans in 90+ delinquency at 8 months seasoning as a percentage of the current pool balance is 1.46%. The CE of the IB5 class is 0.37%. TERWIN MORTGAGE: S&P Lowers Ratings on 51 Certificate Classes ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 51 classes of certificates from 21 Terwin Mortgage Trust transactions. The ratings on 26 of these classes remain on CreditWatch with negative implications, nine were placed on CreditWatch with negative implications, and eight were removed from CreditWatch with negative implications. Eight of the lowered ratings were defaults from 'CCC'. At the same time, S&P placed its ratings on 15 other classes on CreditWatch with negative implications. The 66 negative rating actions affected 21 Terwin Mortgage Trust deals. Of the 21 affected deals, which have between six and 36 months of seasoning, 14 are backed by closed-end second liens and seven are backed by subprime loans. The lowered ratings and negative CreditWatch placements reflect rapid deterioration of available credit support to the respective classes as of the May 2007 remittance period. Many of these pools, particularly those backed by second-lien collateral, have experienced greater-than-expected losses during recent months. While the majority of these deals are less than two years seasoned, losses have been front-loaded; excess interest has not been sufficient to cover these immense unexpected losses, leading to the early erosion of credit support. Twelve of the 14 second- lien deals currently have no credit enhancement from overcollateralization remaining, while O/C levels for the remaining two transactions are below their targets. All of the second-lien transactions (with the exception of series 2006-12SL, which was fully funded at issuance) were structured so that monthly excess interest would build O/C levels closer to their respective targets as the pools became more seasoned. However, collateral performance for these deals has not allowed O/C levels to reach their respective targets, and the O/C deficiencies continue to increase every period. O/C is also below its target for the seven affected subprime transactions. Cumulative losses on the second-lien pools range from 1.21% (series 2006-12SL) to 6.68% (series 2004-18SL, loan group 2) of the respective original principal balances, and delinquencies remain moderate. Cumulative losses on the subprime transactions range from 0.24% (loan group 1 from series 2004-21HE) to 1.38% (series 2004-3HE), and delinquencies remain moderate. Standard & Poor's will continue to closely monitor the 50 classes with ratings on CreditWatch negative. If losses decline to a point at which they no longer exhaust available credit enhancement, 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 take further negative rating actions on these classes, and possibly on the more senior tranches. The ratings on eight classes were removed from CreditWatch negative because they were lowered to 'CCC'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. Ratings Lowered and Placed on Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-3SL B-4 B/Watch Neg BB+ 2005-11 I-B-5 BB/Watch Neg BB+ 2005-11 I-B-6 B/Watch Neg BB+ 2005-16HE B-2 BB/Watch Neg BBB 2006-6 II-B-3 BB/Watch Neg BBB 2006-8 I-B-4 BB/Watch Neg BBB 2006-12SL B-3 BB+/Watch Neg BBB 2006-12SL B-4 BB/Watch Neg BBB 2006-12SL B-5 BB-/Watch Neg BBB- Ratings Lowered and Remaining on Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-9HE B-3 BB/Watch Neg BBB-/Watch Neg 2004-19HE B-3 BB/Watch Neg BBB-/Watch Neg 2004-18SL 1-B-4 B/Watch Neg BB/Watch Neg 2004-21HE 1-M-3 BB/Watch Neg BBB/Watch Neg 2005-2HE B-3 BB/Watch Neg BBB-/Watch Neg 2005-3SL B-5 B-/Watch Neg BB+/Watch Neg 2005-9HGS B-5 B+/Watch Neg BB+/Watch Neg 2005-11 II-B-3 BB-/Watch Neg BBB/Watch Neg 2005-11 II-B-4 B-/Watch Neg BB-/Watch Neg 2005-16HE B-3 B/Watch Neg BBB-/Watch Neg 2006-1 II-B-1 BBB-/Watch Neg A-/Watch Neg 2006-1 II-B-2 BB/Watch Neg BBB+/Watch Neg 2006-1 II-B-3 B/Watch Neg BB/Watch Neg 2006-1 II-B-4 B-/Watch Neg BB-/Watch Neg 2006-HF-1 B-4 BB-/Watch Neg BBB-/Watch Neg 2006-4SL B-4 BB-/Watch Neg BBB-/Watch Neg 2006-4SL B-5 B-/Watch Neg BB-/Watch Neg 2006-6 I-B-4 BB/Watch Neg BBB-/Watch Neg 2006-6 I-B-5 BB-/Watch Neg BBB-/Watch Neg 2006-6 I-B-6 B-/Watch Neg BB-/Watch Neg 2006-6 II-B-4 B-/Watch Neg BBB-/Watch Neg 2006-8 I-B-5 B-/Watch Neg BB-/Watch Neg 2006-8 II-B-4 BB-/Watch Neg BBB-/Watch Neg 2006-10SL B-5 BB-/Watch Neg BBB-/Watch Neg 2006-10SL B-6 B-/Watch Neg BB-/Watch Neg Terwin Mortgage Trust Series TMTS Rating ------ Series Class To From ------ ----- -- ----- 2004-3HE B-3 B/Watch Neg BB/Watch Neg Ratings Lowered and Removed from Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-10SL B-3 CCC B/Watch Neg 2006-4SL B-6 CCC B/Watch Neg 2006-6 I-B-7 CCC B-/Watch Neg 2006-6 II-B-5 D B-/Watch Neg 2006-8 I-B-6 CCC B/Watch Neg 2006-8 II-B-5 CCC B/Watch Neg 2006-10SL B-7 D B/Watch Neg Terwin Mortgage Trust Series TMTS Rating ------ Series Class To From ------ ----- -- ---- 2005-10HE B-7 CCC B/Watch Neg Ratings Lowered Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-16SL B-3 D CCC 2004-18SL 2-B-3 D CCC 2005-9HGS B-6 D CCC 2005-11 I-B-7 D CCC 2006-HF-1 B-6 D CCC 2006-2HGS B-6 D CCC 2006-8 II-B-6 D CCC 2006-10SL B-8 D CCC Ratings Placed on Creditwatch Negative Terwin Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-3SL B-3 BBB-/Watch Neg BBB- 2005-9HGS B-4 BBB-/Watch Neg BBB- 2005-11 II-B-2 BBB+/Watch Neg BBB+ 2005-16HE B-1 BBB+/Watch Neg BBB+ 2006-1 II-M-3 A/Watch Neg A 2006-HF-1 B-3 BBB/Watch Neg BBB 2006-4SL B-3 BBB/Watch Neg BBB 2006-6 I-B-3 BBB/Watch Neg BBB 2006-6 II-B-2 BBB+/Watch Neg BBB+ 2006-8 I-B-3 BBB+/Watch Neg BBB+ 2006-8 II-B-2 BBB+/Watch Neg BBB+ 2006-8 II-B-3 BBB/Watch Neg BBB 2006-10SL B-3 BBB+/Watch Neg BBB+ 2006-10SL B-4 BBB/Watch Neg BBB 2006-12SL B-2 BBB+/Watch Neg BBB+ TRAINER WORTHAM: Fitch Puts BB Rating on Watch Negative ------------------------------------------------------- Fitch has placed two classes of notes issued by Trainer Wortham First Republic CBO III Ltd, on Rating Watch Negative. -- $13,651,023 class D notes 'BBB'; -- $6,196,889 preference shares 'BB'. Trainer Wortham III is a collateralized bond obligation that closed on Feb. 19, 2003 and is managed by Trainer Wortham & Company, Inc. (rated 'CAM2' as a CDO asset manager by Fitch). The notes issued by Trainer Wortham III are supported by a portfolio composed of residential mortgage-backed securities, commercial mortgage-backed securities, asset-backed securities, corporate debt, and CDOs. Since the last review on April 9, 2007, approximately 8.8% of the underlying portfolio collateral has been downgraded, while an additional 3.75% of the portfolio has been placed on Rating Watch Negative. The majority of both rating actions have been comprised of 2005 and 2006 vintage closed end second lien RMBS assets with the remaining downgrades from subprime RMBS assets of various vintages. As of the May 30, 2007 trustee report, the class D overcollateralization ratio was 102.86% versus a trigger of 101.75% and the weighted average rating factor was 16.56 versus a maximum threshold of 14. Trainer Wortham III has a total of seven 2006 vintage CES bonds comprising approximately 6% of the portfolio. The ratings of the class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares addresses the likelihood that investors will ultimately receive the stated balance of principal by the legal final maturity date. TRANS ENERGY: Completes Financing Deal with CIT Energy ------------------------------------------------------ Trans Energy Inc. has closed a financing agreement with CIT Energy, a unit of CIT Group Inc. "The company been working to put the best possible financing structure for the company in place and believe it has done that with CIT," James K. Abcouwer, president and CEO of Trans Energy said. "The company was the operational team in place now to turn this new capital into producing oil and gas wells, exploiting the company's attractive leasehold position." "CIT Energy is pleased to provide Trans Energy with the financing it needs for its development drilling program," George McKean, director of CIT Energy, said. "The company's goal is to build long-term relationships through customized capital solutions that help its clients achieve their growth objectives. Reserve based lending is one of its core product offerings, and the company looks forward to working with Trans Energy on future developments." Trans Energy also has begun drilling the Lyons No. 7, the first of up to 35 wells the company plans to drill in its 2007 drilling program. Trans Energy has contracted with Union Drilling Company for an RD-20 top-drive drilling rig for the balance of the year with an option to extend through 2008. The program will develop properties with proven reserves in Wetzel, Marion and Tyler Counties in West Virginia. "The company will contract for a second, larger drilling rig from UDC to drill the deeper wells in our program, including Marcellus Shale wells as deep as 7,000 feet," Mr. Abcouwer concluded. "In addition, the company will do some up-hole completions in the Marcellus Shale in its older wells that formerly produced from deeper zones. The deployment of this new capital is targeted to boost our on-line production to over 3 million cubic feet of gas or oil equivalents by the end of the year. " The company's board of directors has approved to implement a policy to lock-in forward prices and use hedge programs to take advantage of the favorable forward market prices on approximately 70% to 80% of the planned production. About Trans Energy Inc. Headquartered in St Mary's West Virginia, Trans Energy Inc. (OTC BB: TENG.OB) -- http://www.transenergy.com/-- has been in the business of production, transportation, transmission, sales and marketing of oil and natural gas in the Appalachian and Powder River basins since 1993. With interests in West Virginia, Ohio, Pennsylvania, Virginia, Kentucky, New York, and Wyoming; Trans Energy and its subsidiaries own and operate oil and gas wells, gas transmission lines, transportation systems and well construction equipment and services. * * * As reported in the Troubled Company Reporter on April 23, 2007, Malone & Bailey PC, in Houston, expressed substantial doubt about Trans Energy Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's significant losses from operations, accumulated deficit of $33,026,735, and working capital deficit of $2,610,953 at Dec. 31, 2006. TRINITY INDUSTRIES: S&P Lifts Corp. Credit Rating to BB+ from BB ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Trinity Industries Inc., including its corporate credit rating to 'BB+' from 'BB'. The outlook is positive. "The upgrade reflects Trinity's continued improvement in operating performance and business risk profile, underpinned by the company's strong market position in railcar manufacturing and by its diversity of operations," said Standard & Poor's credit analyst James Siahaan. The ratings continue to reflect Trinity's aggressive financial risk profile, marked by the debt-financed growth of its leasing business; its participation in cyclical end-markets; and the company's exposure to steel and component costs. These factors are partially offset by the company's satisfactory business risk profile, marked by industry-leading positions in railcar, inland barge, and wind tower manufacturing, the stable earnings from its expanding leasing operations, as well as its competitive cost structure, derived in part from lower-cost foreign manufacturing operations. Demand for railcars is cyclical and can significantly vary. However, railcar deliveries and backlog have meaningfully increased over the past couple of years because companies are replenishing their aging fleets and North American railroad traffic has risen. Although the number of railcar deliveries in the first quarter of 2007 came in on the weak side at roughly 11,000 railcars, this is expected to be only a temporary setback; demand for tank cars and covered hoppers remains at high levels. The tank cars and covered hoppers are the main car types involved in ethanol production and are those in which Trinity is well- entrenched. Full-year orders may remain at relatively healthy levels over the next few years. Reported operating profit in Trinity's rail group rose to $270 million from $183 million, driving an increase in overall margins. Margin improvement has also come from better operating leverage and actions the company has taken to temper the impact of raw material cost fluctuations. Production and pricing in the industry depend on the availability and cost of steel and components. U.S. ENERGY: UK Financing Failure Could Prompt Bankruptcy Filing ---------------------------------------------------------------- U.S. Energy Systems, Inc., in a filing with the U.S. Securities and Exchange Commission yesterday reported on recent business developments relating to its UK natural gas exploration and production subsidiary, and provided an update on USEY's financial position. In addition, USEY reported that its board of directors has determined to seek to engage independent third party financial advisors for purposes of assisting the board in its evaluation of potential refinancing or restructuring transactions as well as other strategic alternatives available to the company. Description of UK Gas Assets The assets comprising USEY's UK business were acquired by USEY in August 2006 through a series of transactions and financings. They consist of: (i) gas licenses for 100,000 acres of onshore natural gas properties located in 6 fields (four of which are producing and two of which are to be developed) in North Yorkshire, England, (ii) an on-site 42MW gas-fired power plant, and (iii) a Power Purchase Agreement and a Gas Sales Agreement with Scottish Power Energy Management Ltd, under which Scottish Power has an obligation to take all of the electricity generated by the plant and all of the natural gas produced from the surrounding reserves up to 100 bcf, in each case at a small discount to market for the first 67 bcf and at a reduced discount for the remaining 33 bcf. Both agreements are for up to 12 years or a combined 100 bcf of gas sold, whichever occurs first. Expansion Costs The company previously reported that it has insufficient funds for the planned expansion of the UK Gas Assets. Based on forecasts provided to the company by independent third party engineers, the capital expenditure requirements for completion of the planned expansion of the UK Gas Assets are expected to significantly exceed the current capital expenditure budget of US$ 36,000,000 and may exceed that amount by more than 100%. The company will determine the actual extent of the capital requirement necessary for implementing the planned expansion through discussions with independent engineers over the upcoming four to six week period. However, absent a refinancing or the raising of additional capital by the company in an amount sufficient to meet the capital requirements for the expansion, the company will not have sufficient funds to complete the expansion of the UK Gas Assets. Failure to complete the expansion of the UK Gas Assets will result in the company's inability to generate sufficient revenue to service the debt under the UK financing agreements. The company is also evaluating measures which may reduce the capital requirements for the expansion, however there can be no assurance that the company will be successful in reducing the capital needs through the adoption of such measures. In addition, there can be no assurance that the company will be able to complete a refinancing or the raising of additional capital in a timely manner or on acceptable terms. Any raising of capital involving the issuance of equity is expected to result in a significant dilution to existing shareholders. Working Capital Deficiencies The company previously reported that there can be no assurance that the company will have sufficient cash flow from operations, financings or equity issuances to fund anticipated cash requirements for the next twelve months. The company believes that absent a refinancing, the raising of additional capital or other financial restructuring (including a restructuring involving the permitted sale of certain of the company's assets), the company will be unable to meet operating requirements and certain contractual obligations as they become due as early as August 2007. The company currently is projecting a shortfall in working capital in the UK for the year 2007 in an amount up to $3.2 million and is currently evaluating cost saving measures intended to reduce such shortfall. There can be no assurance that the company will be able to complete a refinancing or additional capital raise (which, in the case of an equity issuance, would result in the dilution of existing shareholders) on acceptable terms, or implement cost saving measures within the timeframe required to permit the Company to meet its working capital needs or comply with such contractual obligations. Compliance with Financing Arrangements The company previously reported that it has insufficient funds to make certain capital contributions required under the UK financing arrangements between September and December of 2007. Absent a refinancing or the raising of additional capital (which, in the case of an equity issuance, would result in the significant dilution of existing shareholders), the company will not be able to meet its capital contribution obligations starting in September 2007 and will be in default under the UK financing arrangements. The company is not currently in compliance with certain of its non-monetary obligations under the UK financing arrangements. The company has notified the financing parties under the UK financing arrangements of such current and anticipated failure and is in discussions with the UK financing parties. To date, no financing party has taken any action or notified the company that it intends to take action under the financing arrangements in response to such non-compliance. However, there can be no assurance that the financing parties will not take action in response to such non- compliance, including the declaration of a default under the financing arrangements and the acceleration of all outstanding indebtedness. If the UK financing parties were to declare the UK financing arrangements in default and exercise remedies, such action could involve foreclosure on substantially all of the company's assets and would have a material adverse effect on the company. In that circumstance, the company is unable to provide assurances that it would be able to avoid bankruptcy or insolvency proceedings. There has been no payment default under the UK financing agreements. Connection to UK's National Transmission System The company anticipated that it would be in a position to deliver gas to the NTS on a firm capacity (i.e., uninterrupted) basis upon completion of the expansion plans by August 2009. Based on information recently provided to the company by the operator of the NTS, the Company has determined that it would not be permitted to deliver gas from the UK Gas Assets to the NTS on a firm capacity basis before April 2011 at the earliest. Consequently, the company is revising its plans to enable it to deliver gas from the UK Gas Assets to the NTS on an interruptible basis by August 2009 until deliveries to the NTS on a firm capacity basis become possible. Until connection to the NTS is made on a firm capacity basis, interruptions of the Company's deliveries of gas to the NTS could reduce revenues generated from the sale of gas which may adversely affect the company's ability to service its debt or to comply with certain liquidity covenants under the UK financing agreements. Correction The company further reported that certain statements with respect to the company's working capital position attributed to USEY personnel in a June 18 Reuters article were inaccurate and should be interpreted in the context of the information presented its recent report filed with the SEC. In that June 18 reports, Reuters, citing a company spokesman, disclosed that the company was exploring strategic options over the next six months. The reported further cited the spokesman as saying that the company did not have any capital deficiency. About U.S. Energy Systems, Inc. U.S. Energy Systems, Inc. -- http://www.useyinc.com/-- (Nasdaq: USEY) owns of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company has a 100% interest in U.S. Energy Biogas Corp., which owns and operates 23 landfill gas to energy projects in the United States, 20 of which produce electricity and three of which sell landfill gas as an alternative to natural gas. The company also has a 100% interest in Plymouth Envirosystems, Inc., which owns a 50% interest in Plymouth Cogeneration Limited Partnership. Plymouth Cogeneration Limited Partnership owns and operates a combined heat and power plant in Massachusetts that produces 1.2MWs of electricity and 7 MWs of heat. The company further has a 79% interest in GBGH, LLC, which owns energy assets and mineral rights in the United Kingdom including a 42MW gas-fired power plant and gas licenses for approximately 100,000 acres of onshore natural gas properties and mineral rights in North Yorkshire, England. GBGH is the parent company of UK Energy Systems, LTD. U.S. ENERGY: Board Suspends UK Unit CEO Grant Emms -------------------------------------------------- U.S. Energy Systems, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission that on June 24, 2007, its board of directors suspended Mr. Grant Emms, the Chief Executive Officer and a director of its subsidiary, UK Energy Systems Ltd. Mr. Emms, the company further discloses is suspended with pay and other contractual benefits pending investigation by the audit committee. Mr. Joseph Reynolds, UK Energy's Program Director, will serve as the interim CEO. About U.S. Energy Systems, Inc. U.S. Energy Systems, Inc. -- http://www.useyinc.com/-- (Nasdaq: USEY) owns of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company has a 100% interest in U.S. Energy Biogas Corp., which owns and operates 23 landfill gas to energy projects in the United States, 20 of which produce electricity and three of which sell landfill gas as an alternative to natural gas. The company also has a 100% interest in Plymouth Envirosystems, Inc., which owns a 50% interest in Plymouth Cogeneration Limited Partnership. Plymouth Cogeneration Limited Partnership owns and operates a combined heat and power plant in Massachusetts that produces 1.2MWs of electricity and 7 MWs of heat. The company further has a 79% interest in GBGH, LLC, which owns energy assets and mineral rights in the United Kingdom including a 42MW gas-fired power plant and gas licenses for approximately 100,000 acres of onshore natural gas properties and mineral rights in North Yorkshire, England. GBGH is the parent company of UK Energy Systems, LTD. U.S. ENERGY: Weiser LLP Expresses Going Concern Doubt ----------------------------------------------------- Weiser LLP in New York expressed substantial doubt on U.S. Energy Systems, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2006. In the company's Form 10-K filed with the U.S. Securities and Exchange Commission on June 8, 2007, the auditing firm pointed to the company's working capital deficiency and continuing operating losses. Financial Results Net loss for the year ended Dec. 31, 2006 was $27,835,000, up $17,543,000 from a net loss of $10,292,000 for the year ended Dec. 31, 2005. Net loss for 2006 included: * $996,000 of legal costs and other expenses related to the Countryside settlement, * $1,688,000 of expense related to the valuing of previously granted employee equity grants as required by SFAS 123R, * a $3,595,000 reserve against the outstanding balance related to a note receivable for the sale of U.S. Energy Biogas' ownership interest in certain gasco entities, and * $872,000 of expenses related to the settlement of the Zahren lawsuit. The balance of the change is primarily due to $9,137,000 of net operating losses from the UK operations which commenced operations on Aug. 7, 2006. Liquidity and Capital Resources As of Dec. 31, 2006, the company had a working capital deficit of $1,085,000. Included in current liabilities is $5,250,000 representing the amount of the Illinois Subsidy Liability due by May 31, 2007 per USEB's settlement with the Illinois Commerce Commission. This amount was paid on May 31, 2007 from proceeds from USEB's financing which closed on that day. At Dec. 31, 2006, the company's balance sheet showed total assets of $346,930,000, total liabilities of $297,445,000, and a stockholders' equity of $31,480,000. Equity at Dec. 31, 2005, was $16,173,000. The company also disclosed that accumulated deficit at Dec. 31, 2006, was $73,275,000, up from accumulated deficit of $46,528,000 at Dec. 31, 2005. USEB's Bankruptcy Proceeding As reported in the Troubled Company Reporter on June 4, 2007, the company's U.S.-based renewable energy business, U.S. Energy Biogas Corp., completed its reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York. U.S. Energy Biogas' confirmed plan provided full payment with interest to creditors. U.S. Energy Biogas filed a voluntary chapter 11 petition on Nov. 29, 2006. A full-text copy of the company's financial statements for the year ended Dec. 31, 2006, is available for free at: http://ResearchArchives.com/t/s?20cc About U.S. Energy Systems, Inc. U.S. Energy Systems, Inc. -- http://www.useyinc.com/-- (Nasdaq: USEY) owns of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The company has a 100% interest in U.S. Energy Biogas Corp., which owns and operates 23 landfill gas to energy projects in the United States, 20 of which produce electricity and three of which sell landfill gas as an alternative to natural gas. The company also has a 100% interest in Plymouth Envirosystems, Inc., which owns a 50% interest in Plymouth Cogeneration Limited Partnership. Plymouth Cogeneration Limited Partnership owns and operates a combined heat and power plant in Massachusetts that produces 1.2MWs of electricity and 7 MWs of heat. The company further has a 79% interest in GBGH, LLC, which owns energy assets and mineral rights in the United Kingdom including a 42MW gas-fired power plant and gas licenses for approximately 100,000 acres of onshore natural gas properties and mineral rights in North Yorkshire, England. GBGH is the parent company of UK Energy Systems, LTD. UNITED AMERICAN: March 31 Balance Sheet Upside-Down by $741,332 --------------------------------------------------------------- United American Corp. reported net income of $30,672 on sales of $5,483,752, compared with a net loss of $286,481 on sales of $2,463,170 for the same period in 2006. The increase in revenue is primarily attributable to increases in sales of VoIP termination services in both the brokered international telecom routes as well as the direct routes. The company reported a gross profit of $928,517 and $137,639 for the three months ended March 31, 2007, and 2006 respectively. The increase in gross profit is a result of increase sales of brokered routes. The company incurred operating expenses in the amount of $854,473 for the three months ended March 31, 2007, compared to $447,682 for the three months ended March 31, 2006. The increase is primarily attributable to increases in commissions paid on the increased revenues as well as increases in management fees. At March 31, 2007, the company's consolidated financial statements showed $1,927,704 in total assets and $2,669,036 in total liabilities, resulting in a total stockholders' deficit of $741,332. The company's consolidated balance sheet at March 31, 2007, also showed strained liquidity with $1,504,741 in total current assets available to pay $2,669,036 in total current liabilities. 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?2124 Going Concern Doubt Michael Pollack CPA, in Cherry Hill, New Jersey, expressed substantial doubt about United American Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. Mr. Pollack pointed to the company's operating losses and capital deficits. About United American Headquartered in Las Vegas, Nevada, United American Corp. (OTC BB: UAMA.OB) -- http://www.unitedamericancorp.com/ -- is a next- generation, facilities-based, marketing and sales-oriented telecommunications holding company. The company utilizes the Internet to provide economical local and international telecommunications services. VENTURE CDO: S&P Withdraws BB Rating on $8 Million Class D Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on all of the notes issued by Venture CDO 2002 Ltd., a cash flow arbitrage high-yield CLO transaction, following their complete redemption. The rating withdrawals follow the paydown of all the notes on the June 15, 2007, payment date. Ratings Withdrawn Venture CDO 2002 Ltd. Rating Balance ------ ------- Class To From Original Current ----- -- ---- -------- ------- A NR AAA $237,000,000 0.00 B NR A- $20,000,000 0.00 C-1 NR BBB $8,250,000 0.00 C-2 NR BBB $5,000,000 0.00 D NR BB $8,000,000 0.00 NR - Not rated. VONAGE HOLDINGS: Appeals Court Wants "Middle Ground" Considered --------------------------------------------------------------- An appeals court judge in Vonage Holdings Corp.'s patent dispute with Verizon Communications Inc. questioned whether it would be possible to reach a "middle ground" which would not result in Vonage going out of business, Corey Boles of The Wall Street Journal reports. Vonage previously said in a regulatory filing that its ongoing patent litigation with Verizon, if determined against the company, could, among others, lead to the bankruptcy or liquidation of the company. According to WSJ, Judge Timothy Dyke, one of a three-judge panel hearing the case, asked whether the ultimate punishment meted out to Vonage for infringing three of Verizon's patents could not be a middle ground. WSJ says Verizon's lawyer, Richard Tarranto, Esq., told Judge Dyke that in the abstract, a middle ground could be possible if Vonage had asked for time to come up with a "work-around" solution and had demonstrated it was close to finding one, something it had none done. Verizon Litigation On June 12, 2006, Verizon filed a suit against Vonage and its subsidiary Vonage America Inc., with the U.S. District Court for the Eastern District of Virginia. Verizon alleged that the company infringed seven patents in connection with providing VoIP services and sought injunctive relief, compensatory and treble damages and attorneys' fees. Verizon dismissed its claims with respect to two of its patents prior to trial, which commenced on Feb. 21, 2007. After trial on the merits, a jury returned a verdict finding that the company infringed three of the patents-in-suit. The jury rejected Verizon's claim for willful infringement, treble damages, and attorneys' fees, and awarded compensatory damages in the amount of $58 million. The trial court subsequently indicated that it would award Verizon $1.6 million in prejudgment interest on the $58 million jury award. The trial court issued a permanent injunction with respect to the three patents the jury found to be infringed effective April 12, 2007. The trial court then permitted the company to continue to service existing customers pending appeal, subject to deposit into escrow of a 5.5% royalty on a quarterly basis. The trial court also ordered that the company may not use its technology that was found to be infringing to provide services to new customers. In addition, Vonage posted a $66 million bond to stay execution of the monetary judgment pending appeal. On April 6, 2007, the company brought the trial court's ruling to the Federal Circuit Court, which Court allowed Vonage to continue to sign up new customers while Vonage appeals the jury's decision and set June 25, 2007, as the commencement of the oral arguments on the matter. About Vonage Vonage Holdings Corp. (NYSE:VG) -- http://www.vonage.com/-- is a provider of broadband telephone services with over 1.4 million subscriber lines as of February 8, 2006. Utilizing its voice over Internet protocol technology platform, the company offers feature- rich, low-cost communications services with a call quality comparable to traditional telephone services. While customers in the United States represent over 95% of its subscriber lines, Vonage continues to expand internationally, having launched its service in Canada in November 2004, and in the United Kingdom in May 2005. W.R. GRACE: Wants Exclusive Plan-Filing Period Further Extended --------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates ask the Hon. Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware to further extend their exclusive period to: (i) file a plan of reorganization until 90 days after the Court issues a final order on the personal injury claims estimation trial; and (ii) solicit acceptances of that plan until 60 days after a reorganization plan is filed. The trial dates for the estimation of the Debtors' personal injury liabilities will begin January 2008, Timothy P Cairns, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, LLP, in Wilmington, Delaware, relates. Mr. Cairns asserts that the PI Estimation Trial remains the key event in the Debtors' Chapter 11 cases and is required for the confirmation of any reorganization plan. It is through the PI Estimation Trial and other asbestos claims litigation that the issue of insolvency will be resolved, Mr. Cairns contends. Competing plans of reorganization will only distract the parties and the Court, and create yet more litigation, Mr. Cairns asserts. The Debtors suspect that various other constituents including the Official Committee of Asbestos Personal Injury Claimants and the Future Claims Representative want to file a competing plan that presumes the Debtors' insolvency to send a message to the market that the Debtors appear substantially insolvent thereby eroding the Debtors' stock price and, in turn, possibly weakening the equity holders' ability to negotiate effectively. "Lifting exclusivity will not advance formulation of a confirmable reorganization plan and a quicker exit from Chapter 11," Mr. Cairns says. "The other constituents in the Debtors' cases could not confirm a plan without incorporating the results from the PI Estimation Trial." Accordingly, the Debtors insist that exclusivity should be extended to allow the results from the PI Estimation Trial to be incorporated into a plan of reorganization Mr. Cairns points out that the Debtors have made significant progress in their bankruptcy cases. Among other things, the pool of property damage claims have been reduced from 4,042 in March 2003 to 483 PD Claims as of June 11, 2007. From 2003 to June 2007, the Debtors have also settled several of the PD Claims. Other PD Claims have been withdrawn or disallowed by the Court. Of the remaining 483 PD Claims, about 268 are subject to settlements and 215 are not. Mr. Cairns adds that as of June 1, 2007, the Debtors have resolved approximately 2,900 non-asbestos claims, leaving only approximately 348 open and unresolved non-asbestos claims. More than 14,000 non-asbestos claims were filed against the Debtors in March 2003. By application of Delaware Local Rule 9006-2, the Debtors' exclusive period is automatically extended until July 23, 2007, when the Court will convene a hearing on the extension request. About W.R. Grace Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Anderson Kill & Olick, P.C., represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expires on July 23, 2007. At Dec. 31, 2006, the W.R. Grace's balance sheet showed total assets of $3,620,400,000 and total debts of $4,189,100,000. (W.R. Grace Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). W.R. GRACE: Wants to Sell Washcoat Business for $21.9 Million ------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates operate a business line -- the Washcoat Business -- that designs, manufactures, and markets alumina and mixed-oxide materials used in catalytic converters to remove pollutants produced by automotive and other engines. The Washcoat Business also sells into the automobile supply chain end in which the Debtors have no other presence and have limited leverage, Timothy P. Cairns, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, LLP, in Wilmington, Delaware, tells the United States Bankruptcy Court for the District of Delaware. In 2006, the Washcoat Business had sales of approximately $25,800,000, which is less than 1% of the Debtors' consolidated revenue for that year, according to Mr. Cairns. In the third quarter of 2006, the Debtors made known that they were considering strategic alternatives for the Washcoat Business. The Debtors determined that the Washcoat Business is not complementary to their other business lines, had low sales and yet required frequent management attention. Thus, the Debtors and their financial advisor began marketing and soliciting potential buyers for the Washcoat Business and have since contacted numerous strategic and financial buyers. The marketing efforts culminated in the entry of a sale agreement with Rhodia, Inc., who agreed to purchase the Business for approximately $21,900,000 subject to certain post-closing adjustments through a private sale process. Under the Sale Agreement, all of the Debtors' right, title and interest in assets used exclusively in the Washcoat Business, including real property, leases, machinery, equipment, inventory, accounts receivable, books and record, software, and claims under insurance policies will be transferred to Rhodia. Rhodia, however, will not assume certain of the Debtors' assets, including: -- all of the Debtors' assets not used for the Business; -- the Washcoat intellectual property, which is being provided to Rhodia under a license agreement; and -- the assets of the Debtors' silica manufacturing operations that have shared facilities with the Washcoat Business in Cincinnati, Ohio. Rhodia will also assume all liabilities and obligations arising out of the operation or ownership of the Transferred Assets post- closing, including (i) post-closing employment liabilities and (ii) all removal, repair or abatement-related liabilities related to the presence of lead or asbestos in any of the buildings, structures, improvements and fixtures in the Washcoat real property. Rhodia will not assume all pre-closing liabilities arising from exposure to hazardous substance related to the Debtors' businesses other than the Washcoat Business and all liabilities arising out of the Transferred Assets arising on or before the Closing Date. The Debtors will make an offer concerning certain conditions of employment to non-bargaining unit employees and no more than 27 bargaining unit employees, provided that the terms of the compensation is comparable to the existing compensation to the employees. The Debtors will also use reasonable commercial efforts to offer a voluntary severance plan to their bargaining unit employees located at the Cincinnati facility. Rhodia will not assume any employee benefit plans. The Debtors will assume and assign several executory contracts and unexpired leases of the Washcoat Business to Rhodia. Payments of the Cure Amounts will be shared equally between the Debtors and Rhodia. As of June 18, 2007, the Debtors estimate that the cure amounts for the Assumed Contracts is $0. The Sale Agreement provides that the Debtors will indemnify Rhodia for certain intellectual property-related indemnities for up to five years after the Closing Date provided that the indemnification will not exceed 15% of the Purchase Price. Accordingly, the Debtors seek the Court's permission to sell the Washcoat Business to Rhodia, free and clear of all liens and claims through a private sale process. The Debtors assert that if they are to proceed with a public auction, their estates will incur significant market risk with low probability of identifying a higher and better offer. The Debtors believe that further delays in completing the sale could lead to deteriorating financial performance of the Washcoat Business. In any event, the Debtors seek the Court for permission to pay Rhodia $547,500 as Break-Up Fee in the event they complete a sale of the Washcoat Business to another bidder other than Rhodia. About W.R. Grace Headquartered in Columbia, Md., W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Anderson Kill & Olick, P.C., represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 13, 2004. On Jan. 13, 2005, they filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Debtors' Disclosure Statement began on Jan. 21, 2005. The Debtors' exclusive period to file a chapter 11 plan expires on July 23, 2007. At Dec. 31, 2006, the W.R. Grace's balance sheet showed total assets of $3,620,400,000 and total debts of $4,189,100,000. (W.R. Grace Bankruptcy News, Issue No. 132; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WAVE WIRELESS: Court Confirms Amended Plan of Reorganization ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware confirmed the Amended Joint Plan of Reorganization proposed by Wave Wireless Corporation and its Official Committee of Unsecured Creditors. The purpose of the plan is to restructure the Debtor's outstanding indebtedness and resolve its liquidity concerns, thereby enhancing the recovery the Debtor's creditors and enabling it to continue as a going concern, with operations that are far more limited in breath and scope than prior to the petition date. Under the Plan, SDS Capital Group SPC, LTD. will become the owner of not less than 70% of the issued and outstanding shares of Common Stock, depending on participation in the equity financing, described below. All existing equity interests in the Debtor will be cancelled. The Debtor estimates that SDS has waived $600,000 or more of its secured claim against the Debtor in exchange for the grant of new Common Stock, and the releases set forth in the Plan. All priority unsecured claims and administrative claims will be paid in full, through either: (i) payment on the effective date of the Plan; (ii) payment through an escrow account established with the Plan Administration Trust; or (iii) payment from the reorganized Debtor following the allowance of a claim. To facilitate a distribution to the Debtor's general unsecured creditors, the Plan calls for the formation of a Plan Administration Trust. The initial funding for the Plan Administration Trust will be $250,000 less certain professional fees and other charges set forth in the plan. This initial funding will be provided from funds that were otherwise distributable to SDS. The Plan Administration Trust will be responsible for, among other things, objecting to general unsecured claims and making distributions, as appropriate, to holders of general unsecured claims. The plan also permits general unsecured claimants and preferred shareholders to participate in an equity financing, pursuant to which each party is permitted to purchase a portion of 30,000 shares of new Common Stock at $1 per share, based upon the terms and conditions set forth in the Plan. Pursuant to the terms of the plan and the Debtor's proposed Amended Certificate of Incorporation, the Registrant will have authorized 250,000 shares of Common Stock. Under the Plan, the Debtor will issue 100,000 shares of Common Stock, 70,000 shares of which will be issued to SDS, and the remaining 30,000 will be issued to participants in the Equity Financing. As of May 31, 2007, the total assets of the Debtor were approximately $3.2 million, and the total liabilities were approximately $4.5 million. Based in San Jose, California, Wave Wireless Corporation fka PCom Inc. is a wireless broadband developer. The company filed a chapter 11 petition on Oct. 31, 2006 (Bankr. Del. Case No. 06-11267) Anthony M. Saccullo, Esq. and Neal J. Levitsky, Esq., at Fox Rothschild LLP represent the Debtor. When the Debtor sought protection from its creditors, it listed $1,000,000 in total assets and $5,000,000 in total debts. WHITING PETROLEUM: Commences 5 Million Common Stock Offering ------------------------------------------------------------ Whiting Petroleum Corporation commenced a public offering of its 5 million shares of common stock. Whiting will grant the underwriters for the offering an option to purchase up to an additional 750,000 shares to cover over-allotments. Whiting will use the net proceeds from the proposed offering: a) to repay a portion of the debt currently outstanding under its credit agreement; and b) to use the increased credit availability to pay for capital expenditures related to accelerated drilling and completion of wells and construction of processing facilities primarily at its Boies Ranch and Jimmy Gulch prospect areas in the Piceance Basin and Robinson Lake prospect area in the Williston Basin. Merrill Lynch & Co. and J.P. Morgan Securities Inc. will act as joint book-running managers for the offering. The offering was made by means of a prospectus and related prospectus supplement, copies of which may be obtained from: Merrill Lynch & Co. 4 World Financial Center New York, New York 10080 and J.P. Morgan Securities Inc. 4 Chase Metrotech Center, CS Level Brooklyn, New York 11245 About Whiting Petroleum Corporation Headquartered in Denver, Colorado, Whiting Petroleum Corporation, (NYSE: WLL) -- http://www.whiting.com/-- is an independent oil and gas company that acquires, exploits, develops and explores for crude oil, natural gas and natural gas liquids primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast and Michigan regions of the United States. * * * Moody's Investor Services assigned a 'Ba3' on Whiting Petroleum Corp.'s long term corporate family rating and probability of default. The outlook is stable. The company's long term foreign and local issuer credit carry Standard and Poor's 'BB-' ratings. The outlook is stable. WHX CORP: March 31 Balance Sheet Upside-down by $73.3 Million ------------------------------------------------------------- WHX Corp.'s consolidated balance sheet at March 31, 2007, showed $296,235,000 in total assets, $369,602,000 in total liabilities, resulting in a $73,367,000 total stockholders' deficit. The company's consolidated balance sheet at March 31, 2007, also showed strained liquidity with $135,832,000 in total current assets available to pay $151,521,000 in total current liabilities. WHX Corp. reported a net loss of $8,533,000 for the first quarter ended March 31, 2007, compared with a net loss of $7,066,000 for the same period ended March 31, 2006. Net sales for the first quarter of 2007 increased to $117.8 million, compared to $112.8 million in the first quarter of 2006, mainly due the $5.1 million increase in sales at the Engineered Materials Segment. Gross profit decreased to $19,482,000 from $21,409,000 in 2006, as the 2006 quarter included a positive impact of $700,000 from the liquidation of precious metal inventories valued at LIFO, while the 2007 quarter was negatively affected by a $400,000 loss on the sale of HHEM inventory (related to the sale of the Handy & Harman Electronic Materials Corporation subsidiary, located in East Providence, Rhode Island, as well as certain of its assets and inventory located in Malaysia for net proceeds of approximately $3.8 million). Selling, general and administrative expenses increased $3.8 million to $18.8 million in the first quarter of 2007 from $15.0 million in the comparable 2006 period. A significant factor that increased SG&A expenses in the first quarter of 2007 was the acquisition of OMG Midwest, a roofing fastener business acquired by the company in late 2006. In addition, costs also rose in the 2007 period due to additional audit, legal, and professional fees, partially offset by reduced costs resulting from the closure of the HHEM and Norristown facilities. There were no environmental remediation costs in the first quarter of 2007; however, environmental remediation expenses of $2.9 million were recorded in the first quarter of 2006. These expenses include $1.5 million related to the company's estimated exposure at the Shpack landfill site, and $800,000 in connection with the company's former Norristown facility. Operating income for the first quarter of 2007 was $577,000 compared to $3.5 million for the first quarter of 2006. The decrease in operating income can be attributed to the reduced gross margin percentage, as well as higher SG&A expenses, partly offset by environmental remediation expenses of $2.9 million in 2006. Interest expense for the first quarter of 2007 increased $3.0 million to $7.6 million from $4.6 million in the first quarter of 2006. Approximately half of the increase was due to additional borrowings after the first quarter of 2006. Proceeds from the additional borrowings were used principally to fund the acquisition of OMG Midwest in December 2006, and to pay substantial environmental remediation costs and pension-related payments in excess of the company's operating cash flow. The balance of the increase was attributable to higher interest rates and amortization of deferred financing costs in 2007 compared to the same period of 2006. Realized and unrealized losses on derivatives were $691,000 in the first quarter of 2007, compared to $5.5 million in the first quarter of 2006. The derivative financial instruments utilized by the company are precious metal forward contracts, which are used to economically hedge the company's precious metal inventory against price fluctuations. While precious metal market prices increased in the first quarter of both 2007 and 2006, the rate of increase was lower during the first quarter of 2007 compared to the first quarter of 2006. In addition, there was a significantly lower quantity of precious metal ounces under contract in the first quarter of 2007. Net cash used by operating activities for the three months ended March 31, 2007, totaled $10.4 million, compared with net cash used in operating activities of $13.8 million for the same period in 2006. Investing activities provided $1.9 million in the first quarter of 2007, driven by $3.6 million received principally from the sale of the HHEM and certain Norristown assets. Investing activities used $5.1 million in the same period of 2006. Cash used for investing activities in the first quarter of 2006 was higher than in 2007 because of net cash paid out for precious metal derivative contracts in 2006 of $4.4 million, compared to $700,000 in 2007. In addition, capital spending in 2006 was $2.2 million, as compared to $1.0 million spent on capital improvements in the same quarter of 2007. 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?2123 About WHX Corp. Headquartered in New York, WHX Corporation (Pink Sheets: WXCP.PK) -- http://www.whxcorp.com/-- is a holding company that invests in and manages a group of businesses. WHX's primary business currently is Handy & Harman, a diversified manufacturing company whose strategic business units encompass three reportable segments: precious metals, tubing, and engineered materials. The company filed for chapter 11 protection on March 7, 2005 (Bankr. S.D.N.Y. Case No. 05-11444). WHX Corp. emerged from bankruptcy on July 29, 2005. WINN-DIXIE STORES: Hires Dan Portnoy as Senior Vice-President ------------------------------------------------------------- Winn-Dixie Stores, Inc. has hired Dan Portnoy as its senior vice president and chief merchandising and marketing officer, in connection with its realignment of its merchandising and marketing departments. Mr. Portnoy, who is set to join the company in mid-July, will be responsible for leading the merchandising and marketing efforts of the 521-store chain which emerged from Chapter 11 bankruptcy protection late last year. Mr. Portnoy most recently served as president and chief executive officer of Kings Super Markets in Parsipanny, New Jersey. Prior to that, he was senior vice president of Cott Corporation, the world's largest retailer branded manufacturer. He has also held numerous executive level positions with companies such as Daymon Worldwide, American Stores, The Food Emporium and Great Atlantic & Pacific Tea Company. "Dan brings with him more than 30 years of experience in the food industry on both the retail and manufacturing sides," said Peter Lynch, president, CEO and chairman of the board for Winn-Dixie. "Aligning our merchandising and marketing departments under his leadership will allow us to strengthen both of those functions and provide the framework to build a stronger and more competitive company." A native of Boston, Portnoy received his M.B.A. in Marketing and Consumer Research from Bernard M. Baruch College, City University of New York, and holds a B.S. in finance from Babson College in Wellesley, Massachusetts. Tom Robbins, who has served as Winn-Dixie's senior vice president of merchandising since 2005, will be retiring. "As a member of our senior management team, Tom has helped to guide our Company through very difficult times and to lay the groundwork for returning Winn-Dixie to profitability," said Lynch. "The support that he provided to me personally during this time was invaluable and he will continue his support to Dan and all of us for the next couple of months as we transition his role." Dave Henry will continue to serve as the senior vice president of marketing reporting directly to Mr. Portnoy. About Winn-Dixie Based in Jacksonville, Florida, Winn-Dixie Stores Inc. (Nasdaq: WINN) -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. The Honorable Jerry A. Funk confirmed Winn-Dixie's Joint Plan of Reorganization on Nov. 9, 2006. Winn-Dixie emerged from bankruptcy on Nov. 21, 2006. WINSTAR COMMS: Court Okays Wellspring Media Settlement Agreement ---------------------------------------------------------------- Christine C. Shubert, the Chapter 7 Trustee overseeing the liquidation of the estates of Winstar Communications, Inc. and its debtor-affiliates, obtained approval from the U.S. Bankruptcy Court for the District of Delaware Court of a settlement agreement she entered into with Wellspring Media, Inc., formerly known as Regulus International Capital Co., Inc. The agreement resolves a pending adversary proceeding the Chapter 7 Trustee commenced against Wellspring Media. The dispute arose from a unit purchase in which Wellspring paid $2,000,000 in cash and executed a $3,000,000 promissory note to Winstar. The Note was rendered payable in two installments over a two-year period. Following the Court order converting the Debtors' Chapter 11 cases to Chapter 7, Wellspring refused to honor the Note. After a lengthy dispute involving terminologies and provisions in the original purchase agreement between the parties, the Chapter 7 Trustee and Wellspring agreed that: (a) Wellspring will pay $563,700 to the Chapter 7 Trustee; (b) the Trustee will dismiss the Adversary Action with prejudice, as well as all other liabilities relating to Wellspring; and (c) Wellspring will release all liabilities relating to the Trustee. Sheldon K. Rennie, Esq., at Fox Rothschild LLP in Wilmington, Delaware, tells the Court that the Trustee is obligated to maximize the value of the estate and decide in the best interests of all of the creditors of the estate. The Trustee believes the Agreement will benefit the creditors, especially in light of the cost, uncertainty and delay of litigation, Mr. Rennie states. About Winstar Communications Based in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) The Debtor's bankruptcy case has been converted to a Chapter 7 liquidation proceeding. WINSTAR COMMS: Lucent Brings $244MM Dispute to 3rd Circuit Court ---------------------------------------------------------------- Lucent Technologies, Inc., has taken an appeal from a district court ruling on its dispute with Winstar Communications, Inc. The Honorable Joseph J. Farnan of the U.S. District Court for the District of Delaware in April 2007 affirmed in all respects the Bankruptcy Court's December 2005 judgment: -- awarding $243,930,742, plus interest to Winstar on account of preferential and other claims; and -- subordinating Lucent Technologies' claim against Winstar to the claims of all creditors and certain equity holders, and transferring to the estate any lien or claim held by Lucent on Winstar's assets. Lucent has asked the U.S. Court of Appeals for the Third Circuit to review the District Court's decision. Lucent posted a $306,000,000 letter of credit to secure the judgment. In a 16-page decision, Judge Farnan said the Bankruptcy Court correctly concluded that Lucent was a Winstar insider and that the parties' relationship was more than a mere debtor-creditor relationship conducted at arm's-length. According to Judge Farnan, Lucent is a "person in control of the debtor." Lucent controlled Winstar's purchasing decisions to inflate its own revenue, even when Winstar neither needed Lucent equipment or services, Judge Farnan said. With respect to the Siemens loan funds, the Bankruptcy Court correctly found that Lucent demanded that Winstar agree to transfer the funds to Lucent or it would terminate negotiations for a necessary transition agreement and would further refuse financing under the parties' credit agreement, Judge Farnan held. More than 90 days but less than a year before Winstar's bankruptcy filing, Winstar transferred to Lucent $188,200,000 from a loan made to Winstar by Siemens on the same day. The Bankruptcy Court correctly held that the Siemens loan funds were not earmarked for Lucent, Judge Farnan said. Judge Farnan also pointed out that the Bankruptcy Court correctly concluded that Winstar and its creditors were substantially harmed by, and Lucent substantially benefitted, from Lucent's inequitable conduct. Judge Farnan also noted that Lucent was obligated to make payments under a subcontract with Winstar Wireless. Lucent breached that subcontract when it refused to pay for services performed by Wireless. Enforcement of the Judgment will be stayed until issuance of a mandate following the Third Circuit Appeal. JPMorgan Chase Bank, N.A., issued the letter of credit in favor of Christine C. Shubert, the Chapter 7 Trustee overseeing the liquidation of Winstar's estates. In a stipulation approved by the Bankruptcy Court, Lucent and the Winstar Trustee have agreed that Lucent will amend the Letter of Credit to increase the amount to $318,904,554, if the Appeal has not been resolved by April 30, 2008. Afterwards, the Letter of Credit will be increased by $12,162,515 annually until the Appeal has been resolved. Lucent is represented in the Appeal by Craig T. Goldblatt, Esq., at Wilmer Cutler Pickering Hale and Dorr, LLP, in Washington, D.C., and Daniel J. DeFranceschi, Esq., and Jason M. Madron, Esq., at Richards Layton & Finger, Pennsylvania, in Wilmington, Delaware. About Winstar Communications Based in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) The Debtor's bankruptcy case has been converted to a Chapter 7 liquidation proceeding. XENONICS HOLDINGS: Posts $177,000 Net Loss in Qtr. Ended March 31 ----------------------------------------------------------------- Xenonics Holdings Inc. reported a net loss of $177,000 for the second quarter ended March 31, 2007, compared with a net loss of $682,000 for the same period ended March 31, 2006. Revenue for the three months ended March 31, 2007, from the sale of the company's NightHunter high-intensity illumination devices increased to $1,646,000 compared to $718,000 for the second quarter of fiscal 2006. Gross profit for this year's second quarter was $1,307,000, which included $640,000 related to the sale of excess inventory of the NightHunter II product during the period. This compares to gross profit of $310,000 for the second quarter last year. Selling, general and administrative expenses for the three months ended March 31, 2007, increased to $1,352,000 compared to $915,000 a year earlier, primarily reflecting increased head count and advertising expenses associated with the launch of SuperVision. "We are ramping production of SuperVision to meet demand for this exciting new product that is exceeding our expectations. Following modest initial shipments in March and April, we expect to ship more than 1,000 units in May. We expect to increase the pace to at least 2,000 units in June as we improve our manufacturing process. We expect SuperVision sales to have a substantial positive impact on our financial performance beginning in the current quarter," said chairman Alan Magerman. "Also noteworthy is that we generated nearly $400,000 in cash from operations for this year's first six months, compared to absorbing more than $620,000 in cash for the same period last year, even as we invested in future growth. With working capital at the end of the second quarter of more than $5 million and no debt, we believe we have the resources we need to achieve our aggressive goals for Xenonics' long-term growth," Magerman added. At March 31, 2007, the company's consolidated balance sheet showed $6,363,000 in total assets, $1,024,000 in total liabilities, and $5,339,000 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?2127 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 8, 2007, Eisner LLP, in New York, raised substantial doubt about Xenonics Holdings Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2006. The auditor pointed to the company's recurring losses and accumulated deficit. About Xenonics Holdings Xenonics Holdings Inc. (AMEX: XNN) -- http://www.xenonics.com/-- develops and produces advanced, lightweight and compact ultra-high intensity illumination and low-light vision products for military, law enforcement, public safety, and commercial and private sector applications. Xenonics' NightHunter line of illumination products are used by every branch of the U.S. Armed Forces as well as law enforcement and security agencies. Its SuperVision night vision device is designed for commercial and military applications. XILLIX TECHNOLOGIES: Court Gives Interim Nod on Plan of Compromise ------------------------------------------------------------------ Xillix Technologies Corp. (TSX: XLX) disclosed last week that the Supreme Court of British Columbia granted an interim order approving a consolidated plan of compromise and arrangement under the Companies Creditors Arrangement Act and the British Columbia Business Corporations Act. The arrangement provided for in the Plan would recapitalize and reorganize the company, resulting in funding of $4.4 million. The Plan provides for: (i) an investment in the company by Cavalon Capital Partners Ltd., a Calgary based private investment company, in the amount of $4,400,000, structured as a non-interest bearing loan; (ii) the settlement and release of all of the company's secured and unsecured creditors' claims in exchange for the payment of a total of $3,600,000, of which not less than $600,000 will be paid to the unsecured creditors (on a pro rata basis), leaving the company with a cash balance of $800,000; (iii) the conversion of approximately 94.5% of the Convertible Loan into common shares and a new class of non-voting shares of the company, such that immediately following such conversion Cavalon would hold 45% of the (voting) common shares and 100% of the non-voting shares then outstanding, providing it with the ownership of 45% of the voting and 80% of the equity interests in the company; (iv) the cancellation of all outstanding options, warrants, exchange rights and conversion rights; and (v) the change of the company's name to "Zillion Technologies Corp." or such other name as its directors may approve. The remaining sum of $240,000 would then be owing by the company to Cavalon under the Convertible Loan. The completion of the Arrangement will be subject to a number of conditions, including the entering into of a definitive agreement by the company and Cavalon providing for the Convertible Loan, the approval of the Plan by the company's secured and unsecured creditors, the granting of a final Court order approving the Plan, and the receipt of all required regulatory approvals, including the approval of the Toronto Stock Exchange. The company expects to hold a creditors meeting to consider and approve the Plan on July 9, 2007. If the Plan is approved by the creditors, it is anticipated that the company will apply to Court for a final order approving the Plan on or about July 25, 2007 and that the Arrangement will be completed by the end of July. On May 3, 2007, the company sold substantially all of its assets, including its intellectual property, certain capital assets and inventory to Novadaq Technologies Inc., of Toronto, Ontario. The completion of the Arrangement would enable the company to seek additional capital and pursue potential acquisitions. * Dewey Ballantine Adds Three Partners to IP Litigation Group ------------------------------------------------------------- Dewey Ballantine LLP employed Dirk D. Thomas, Robert A. Auchter and Kenneth A. Freeling, as partners in the Intellectual Property Litigation Group, Washington, D.C. office on June 25, 2007. Mr. Thomas will serve as co-chair of the firm-wide IP Litigation Group alongside Aldo A. Badini. Messrs. Thomas, Auchter and Freeling all join Dewey Ballantine from the Washington, D.C. office of Robins, Kaplan, Miller & Ciresi LLP. "I am pleased to welcome Dirk, Bob, Ken and their entire team to the Washington, D.C. office," Alan Wm. Wolff, a member of Dewey Ballantine's Management Committee and managing partner of the firm's Washington, D.C. office, said. "They are IP lawyers of the highest quality and their arrival will have an immediate positive impact on the firm and its clients. Their arrivals come at a time when many of the company's clients are looking for ways to protect, preserve and promote their intellectual property assets in a complex and competitive marketplace." Mr. Thomas has more than 20 years of experience focusing on intellectual property litigation. He has represented clients in a range of technology industries, including telephone systems, medical devices, computer hardware and software, power generation, and refining equipment/systems. He has first-chaired patent infringement jury trials and arbitration hearings related to patent license disputes, and has served as lead trial counsel on many patent infringement litigations, coordinating simultaneous patent infringement litigations in the U.S. and Europe. Clients Mr. Thomas has represented include Medtronic, Tulip Computers, Nikon, Taro Pharmaceuticals, Eli Lilly, Foster Wheeler, Unisys, Prism Technologies, Rexnord, Dr. Gary Michelson, American Catherization Systems, Cordis and Regeneration Technologies Inc. He has argued numerous appeals before the Court of Appeals for the Federal Circuit that has resulted in precedential opinions from that appeals court. Mr. Thomas is a registered patent attorney and has experience in all ex parte and inter partes matters before the United States Patent and Trademark Office and the European Patent Office. He graduated from the University of Maryland in 1982 where he received his Bachelor of Science in Mechanical Engineering and went on to George Washington University National Law Center where he received his J.D. Mr. Freeling has more than 20 years of experience litigating and trying antitrust and patent cases with a particular concentration in the pharmaceutical, biological, and medical device industries, representing clients including Pfizer, CIBA Vision, Bayer, NYU and MIT. Recently Mr. Freeling first-chaired two significant antitrust/patent jury trials back-to- back for major insurers. He also has broad trial experience with complex commercial cases involving financial institutions and other major industries for clients such as AIG, Morgan Stanley, Merrill Lynch and Citibank before federal and state courts as well as arbitration panels. Mr. Freeling graduated from Georgetown University, A.B., magna cum laude in 1979. He received his J.D. from Georgetown University Law Center in 1982. Mr. Auchter has more than 10 years of intellectual property litigation experience representing clients in District and Appellate Courts, the Court of Federal Claims and the International Trade Commission in patent litigation relating to electronic, biomedical and consumer products and processes. He represented ExxonMobil Chemical Company on patents involving unique polymers and assisted the company in reaching resolution with a licensee, well as internet-based clients, such as the largest provider of computer technology test preparation materials, with copyright litigation. He has also represented clients in commercial litigation involving significant commercial real estate dispositions. Mr. Auchter graduated cum laude from George Washington University School of Engineering and Applied Sciences, B.S.E.E., and was a member of Tau Beta Pi and Eta Kappa Nu engineering honor societies. He received his J.D. with high honors from the George Washington University Law School in 1993. "Dirk, Bob and Ken join the firm at a time of explosive growth," Jeffrey L. Kessler, co-chair of the firm's Litigation Department and a member of its executive and management committees said. "They complement and will be tremendous assets to, the company's strong IP and antitrust litigation capabilities in New York, Austin, Los Angeles, Silicon Valley and Washington, D.C. Under Dirk and Aldo's leadership, I look forward to even greater growth of the IP litigation practice going forward." About Dewey Ballantine Dewey Ballantine LLP, an international law firm with approximately 550 lawyers located in New York, Washington, D.C., Los Angeles, East Palo Alto, Austin, London, Warsaw, Frankfurt, Milan, Rome, Beijing and Charlotte, was founded in 1909. Through its network of offices, the firm handles some of the largest, most complex corporate transactions, litigation and tax matters in areas such as M&A, private equity, project finance, corporate finance, corporate reorganization and bankruptcy, antitrust, intellectual property, sports law, structured finance and international trade. Industry specializations include energy and utilities, health care, insurance, financial services, media, consumer and industrial goods, consumer electronics, technology, telecommunications and transportation. * Reed Smith Adds E. Estrada to Commercial Restructuring Practice ----------------------------------------------------------------- Edward J. Estrada, Esq. has joined Reed Smith LLP as partner in the firm's Commercial Restructuring and Bankruptcy Group. He will be resident in the firm's New York City office, effective June 21, 2007, bringing the total number of lawyers in the firm's restructuring practice to more than 45 worldwide. "Reed Smith is noted for strong client relationships and its support of partners interested in generating business independently," said Mr. Estrada. "These are important to me at this stage of my career. I believe this is a firm in which my opportunities for success are very promising." Mr. Estrada joins Reed Smith from the New York office of LeBoeuf, Lamb, Greene & MacRae LLP, which he joined in 2002, where he was an associate. He was previously with Nixon Peabody LLP and Jackson & Campbell, P.C. "Members of our Commercial Restructuring and Bankruptcy practice have collaborated with Ed for more than a year on a major industrial bankruptcy matter," said Peter S. Clark, head of Reed Smith's CRB Group. "We have seen Ed in action and know he brings us the right combination of experience with complex indenture analysis, strong hedge fund and indenture trustee contacts, and a fundamental drive to assist and participate with other Reed Smith partners in developing our commercial restructuring and bankruptcy practice in New York." Reed Smith's Corporate Restructuring & Bankruptcy Group was recently ranked by The Deal as one of the top five most active practices in the US, with more than 200 active cases. Mr. Estrada's practice at LeBoeuf included representation of trustees, debtors, secured and unsecured creditors in bankruptcy proceedings, as well as subordinated and distressed debtholders in cases aimed at maximizing recoveries. His efforts have included arguing before the Second Circuit Court of Appeals on issues of first impression, representation of a foreign pilots' union in a domestic bankruptcy, representation of foreign representatives in a Chapter 15 (section 304) ancillary proceeding, and the protection of a utility company's secured, unsecured and setoff claims. In addition, Mr. Estrada has represented debtors and creditors in bankruptcy adversary proceedings, including preference and fraudulent transfer actions, and parties in non-bankruptcy state and federal court litigations. Mr. Estrada earned his J.D. from George Washington University in 1997 and his B.A. from Cornell University in 1994. "Not only does he bolster our presence in New York and fit in well with the national scope of our bankruptcy practice, he also adds to our sophisticated indenture trustee and bondholder talent pool, which will help us expand our impact now and during the next credit cycle downturn locally and nationwide," said Robert Nicholas, Managing Partner of Reed Smith's New York office. Mr. Estrada is the second partner and third lawyer who has joined Reed Smith's global commercial restructuring and bankruptcy practice this month. On June 1, 2007, Jeff Drew, who previously headed the financial restructuring group at Akin Gump's London Office, joined the group in the firm's London office. Mr. Drew's Associate Nuala Barratt joined him in the move, bringing the total number of lawyers in the firm's global practice to over 45. About Reed Smith Reed Smith -- http://www.reedsmith.com/-- is one of the 15 largest law firms in the world, with more than 1,500 lawyers in 21 offices throughout the United States, Europe and the Middle East. Founded in 1877, the firm represents leading international businesses from Fortune 100 corporations to mid-market and emerging enterprises. Its attorneys provide litigation services in multi-jurisdictional matters and other high stake disputes, deliver regulatory counsel, and execute the full range of strategic domestic and cross-border transactions. Reed Smith is a preeminent advisor to industries including financial services, life sciences, health care, advertising and media, shipping, international trade and commodities, real estate, manufacturing and education. * S&P Takes Various Rating Actions on 133 Classes from 23 Issuers ----------------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions on 133 subordinate classes from 62 different transactions from 23 different issuers. We downgraded 45 classes backed by closed-end second-lien collateral. S&P placed 27 of those classes on CreditWatch with negative implications, left 12 on CreditWatch negative, and removed six from CreditWatch negative. In addition, we placed the ratings on 46 other classes backed by closed-end second-lien collateral on CreditWatch negative. S&P rating actions affected a total of 34 closed-end second-lien deals from 12 different issuers. S&P rating actions also affected 42 classes backed by subprime collateral from 30 different transactions from 15 different issuers. S&P placed 31 classes on CreditWatch negative and downgraded 11 classes: five were placed on CreditWatch negative, four remain on CreditWatch negative, and two were removed from CreditWatch negative. The downgrades and CreditWatch placements reflect early signs of poor performance of the collateral backing these transactions. For the closed-end second-lien transactions, the percentage of severely delinquent (90-plus days, foreclosure, and REO) loans in these pools ranges from 3.30% (Structured Asset Securities Corp. Mortgage Loan Trust 2006-S2) to 18.20% (New Century Home Equity Loan Trust 2006-S1) of the current pool balances. Cumulative losses range from 0.00% (Home Equity Mortgage Trust 2006-2) to 5.15% (Ace Securities Corp. Home Equity Loan Trust 2006-SL1) of the original pool balances. For the subprime transactions, the percentage of severely delinquent loans in these pools ranges from 5.27% (American Home Mortgage Investment Trust 2006-2) to 17.06% (Argent Securities Trust 2006-W5) of the current pool balances. Cumulative losses range from 0.00% (American Home Mortgage Investment Trust 2006-2, loan groups two and three) to 1.45% (Soundview Home Equity Loan Trust 2005-1) of the original pool balances. S&P removed eight ratings from CreditWatch negative because they were lowered below 'B-'. According to Standard & Poor's surveillance practices, ratings lower than 'B-' on classes of certificates or notes from RMBS transactions are not eligible to be on CreditWatch negative. Most of the transactions with classes placed on CreditWatch have not experienced significant losses. The placement of S&P's ratings on CreditWatch when a transaction has not experienced significant losses represents a new methodology derived from their normal surveillance practice. S&P began using this methodology with the 2006 and 2005 vintages because transactions from earlier vintages did not see the same combination of early high delinquencies and minimal losses. Since the deals have not incurred substantial cumulative realized losses, S&P measured deal performance against the stressed time to disposition of the loans, assuming a reinstatement rate of zero for all severely delinquent loans. Many of the 2005 and 2006-vintage transactions may be showing weakness because of origination issues: aggressive residential mortgage loan underwriting, first-time homebuyer programs, piggyback second-lien mortgages, hybrid ARMs entering their reset periods, and the concentration of affordability loans. Credit support for each series is derived from either subordination or a combination of subordination, excess interest, and overcollateralization. Generally, O/C levels are below their targets because early losses are outpacing available excess interest and prohibiting growth toward the targeted amounts. Standard & Poor's will continue to closely monitor the performance of these transactions. Over the next three months, S&P will monitor any losses incurred from the liquidation of REO assets. If these losses are material, and delinquencies continue at their present pace, S&P will likely lower our ratings up to three notches, depending on individual performance. Conversely, if the delinquency rates decline and the transactions do not realize substantial cumulative losses, S&P will affirm the ratings and remove them from CreditWatch negative. These transactions are collateralized by closed-end second-lien or subprime mortgage loans. The transactions were initially backed by pools of fixed- and adjustable-rate mortgage loans secured by first, second, or third liens on one- to four-family residential properties. Second-Lien Ratings Lowered and Placed on Creditwatch Negative ACE Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-SL1 M-9 BB-/Watch Neg BBB- Bear Stearns Mortgage Funding Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SL1 B-2 BB/Watch Neg BBB 2006-SL1 B-3 BB-/Watch Neg BBB- CWABS Asset-Backed Certificates Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SPS2 B B/Watch Neg BB+ Home Equity Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-3 M-9 BB-/Watch Neg BBB- 2006-4 M-7 BB/Watch Neg BBB+ 2006-4 M-8 BB-/Watch Neg BBB Morgan Stanley Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-4SL B-4 B/Watch Neg BB+ 2006-4SL B-5 B-/Watch Neg BB 2006-10SL B-4 B/Watch Neg BB+ 2006-10SL B-5 B-/Watch Neg BB New Century Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-2 BBB-/Watch Neg A 2006-S1 M-3 BB+/Watch Neg A- 2006-S1 M-4 BB/Watch Neg BBB+ 2006-S1 M-5 BB-/Watch Neg BBB 2006-S1 M-6 B+/Watch Neg BBB- Nomura Asset Acceptance Corp. Alternative Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-S1 B-3 B/Watch Neg BB 2006-S1 B-4 B/Watch Neg BB+ 2006-S1 B-5 B-/Watch Neg BB 2006-S3 B-3 BB-/Watch Neg BBB- 2006-S3 B-4 B+/Watch Neg BB+ Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M7 BB/Watch Neg BBB 2006-S2 B1 BB-/Watch Neg BBB- 2006-S2 B2 B+/Watch Neg BB+ 2006-S2 B3 B/Watch Neg BB+ 2006-S3 M7 BB/Watch Neg BBB+ 2006-S3 M8 BB-/Watch Neg BBB Second-Lien Ratings Lowered and Remaining on Creditwatch Negative ACE Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-SL1 B-1 B/Watch Neg BB+/Watch Neg Bear Stearns Mortgage Funding Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SL1 B-4 B/Watch Neg BB+/Watch Neg Home Equity Mortgage Loan Asset-Backed Trust INDS Rating ------ Series Class To From ------ ----- -- ---- 2006-A M-10 B+/Watch Neg BB+/Watch Neg 2006-A B-2 B/Watch Neg BB+/Watch Neg 2006-A B-3 B-/Watch Neg BB/Watch Neg Home Equity Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-3 B-1 B/Watch Neg BB+/Watch Neg 2006-4 B-1 B-/Watch Neg B/Watch Neg New Century Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M7 B/Watch Neg BB+/Watch Neg Nomura Asset Acceptance Corp. Alternative Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S3 B-5 B/Watch Neg BB/Watch Neg Structured Asset Securities Corp. Mortgage Loan Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M8 B/Watch Neg BBB-/Watch Neg 2006-S3 M9 B+/Watch Neg BBB-/Watch Neg 2006-S3 B1 B/Watch Neg BB+/Watch Neg Second-Lien Ratings Lowered and Removed from Creditwatch Negative Home Equity Mortgage Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-3 B-2 CCC BB/Watch Neg 2006-4 B-2 CCC B-/Watch Neg New Century Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-8 CCC BB+/Watch Neg Structured Asset Securities Corp. Mortgage Loan Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 B1 CCC B/Watch Neg 2006-S2 B4 CCC BB/Watch Neg 2006-S3 B2 CCC BB/Watch Neg Second-Lien Ratings Placed on Creditwatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SL1 M-7 BBB+/Watch Neg BBB+ 2006-SL1 M-8 BBB/Watch Neg BBB 2006-SL3 M-9 BBB-/Watch Neg BBB- 2006-SL3 B-1 BB+/Watch Neg BB+ American Home Mortgage Investment Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-2 IV-M-6 BBB-/Watch Neg BBB- 2006-2 IV-M-7 BB+/Watch Neg BB+ Bear Stearns Mortgage Funding Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-SL1 B-1 BBB+/Watch Neg BBB+ 2006-SL2 B-3 BBB-/Watch Neg BBB- 2006-SL2 B-4 BB+/Watch Neg BB+ 2006-SL3 B-3 BBB-/Watch Neg BBB- 2006-SL3 B-4 BB+/Watch Neg BB+ 2006-SL4 B-3 BBB-/Watch Neg BBB- 2006-SL4 B-4 BB+/Watch Neg BB+ CWABS Asset-Backed Certificates Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SPS2 M-9 BBB-/Watch Neg BBB- First Franklin Mortgage Loan Trust Rating ------ Series Class To From ------ ------ -- ---- 2006-FFA B2 BB/Watch Neg BB 2006-FFB B2 BB/Watch Neg BB Home Equity Mortgage Loan Asset-Backed Trust INDS Rating ------ Series Class To From ------ ----- -- ---- 2006-1 B-2 BB+/Watch Neg BB+ 2006-1 B-3 BB/Watch Neg BB 2006-A M-9 BBB-/Watch Neg BBB- Home Equity Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-1 B-2 BB/Watch Neg BB 2005-3 B-2 BB/Watch Neg BB 2005-4 B-2 BB+/Watch Neg BB+ 2006-2 1B-1 BB+/Watch Neg BB+ 2006-2 1B-2 BB/Watch Neg BB 2006-3 M-8 BBB/Watch Neg BBB 2006-5 B-1 BB+/Watch Neg BB+ Merrill Lynch Mortgage Investors Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-SL1 B-5 BB+/Watch Neg BB+ 2006-SL2 B-1 BB+/Watch Neg BB+ 2006-SL2 B-2 BB/Watch Neg BB New Century Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-S1 M-1 AA/Watch Neg AA Nomura Asset Acceptance Corp. Alternative Loan Trust Rating ------ Series Class To From ------ ------ -- ---- 2005-S1 B2 BBB-/Watch Neg BBB- 2005-S3 B-4-IO BB/Watch Neg BB 2005-S3 B-4-PO BB/Watch Neg BB 2005-S4 B-4 BB+/Watch Neg BB+ 2005-S4 B-5 BB/Watch Neg BB 2006-S1 B-2 BBB/Watch Neg BBB 2006-S1 B-3 BBB-/Watch Neg BBB- 2006-S3 B-2 BBB/Watch Neg BBB 2006-S4 B-3 BBB-/Watch Neg BBB- 2006-S4 B-4 BB+/Watch Neg BB+ 2006-S5 M-7 BBB+/Watch Neg BBB+ 2006-S5 M-8 BBB/Watch Neg BBB 2006-S5 M-9 BBB-/Watch Neg BBB- 2006-S5 M-10 BB+/Watch Neg BB+ Structured Asset Securities Corp. Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-S2 M9 BBB-/Watch Neg BBB- 2006-S3 M6 A-/Watch Neg A- Subprime Ratings Lowered and Placed on Creditwatch Negative Soundview Home Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-1 B-3 B/Watch Neg BB- Structured Asset Investment Loan Trust Rating - ----- Series Class To From ------ ----- -- ---- 2006-2 M8 BB/Watch Neg BBB- 2006-BNC1 M7 BB/Watch Neg BBB 2006-BNC1 M8 BB-/Watch Neg BBB- 2006-BNC2 M8 BB-/Watch Neg BBB- Subprime Ratings Lowered and Remaining on Creditwatch Negative MASTR Asset Backed Securities Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-WMC2 M-10 B/Watch Neg BB+/Watch Neg Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-2 B1 B/Watch Neg BB+/Watch Neg 2006-BNC2 B1 B+/Watch Neg BB+/Watch Neg 2006-BNC2 B2 B/Watch Neg BB/Watch Neg Subprime Ratings Lowered and Removed from Creditwatch Negative Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-2 B2 CCC B/Watch Neg 2006-BNC1 B1 CCC B/Watch Neg Subprime Ratings Placed on Creditwatch Negative Ace Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ----- 2005-HE6 B-2 BB/Watch Neg BB 2006-FM1 M-11 BB/Watch Neg BB Ameriquest Mortgage Securities Inc. Rating ------ Series Class To From ------ ----- -- ---- 2005-R4 M11 BB/Watch Neg BB American Home Mortgage Investment Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-2 II-M-5 BBB/Watch Neg BBB 2006-2 III-M-6 BBB-/Watch Neg BBB- Argent Securities Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-M2 M-11 BB/Watch Neg BB 2006-W5 M-10 BBB/Watch Neg BBB Asset Backed Securities Corp. Home Equity loan Trust Rating ------ Series Class To From ------ ----- -- ---- NC2006-HE4 M10 BB/Watch Neg BB Citigroup Mortgage Loan Trust Inc. Rating ------ Series Class To From ------ ----- -- ---- 2005-HE4 M-13 BB/Watch Neg BB CWABS Asset-Backed Certificates Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AB2 B BBB+/Watch Neg BBB+ 2006-ABC1 M-8 A-/Watch Neg A- HSI Asset Securitization Corporation Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-NC1 M-14 BB/Watch Neg BB Lehman XS Trust Rating ------ Series Class To From ------ ----- -- ---- 2006-7 M10 BBB-/Watch Neg BBB- MASTR Asset Backed Securities Trust Rating ------ Series Class To From ------- ----- -- ---- 2006-AM2 M-12 BBB-/Watch Neg BBB- 2006-WMC2 M-9 BBB-/Watch Neg BBB- NovaStar Mortgage Funding Trust Rating ------ Series Class To From ------ ----- -- ----- 2006-3 M-11 BB+/Watch Neg BB+ 2006-4 M-12 BB+/Watch Neg BB+ 2006-5 M-12 BB/Watch Neg BB Option One Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-2 M-9 BBB-/Watch Neg BBB- Soundview Home Loan Trust Rating ------ Series Class To From ------ ----- -- ----- 2005-DO1 B-2 BB/Watch Neg BB 2005-3 B-3 BB/Watch Neg BB 2005-OPT1 M-10 BBB-/Watch Neg BBB- 2005-OPT2 M-9 BBB-/Watch Neg BBB- Structured Asset Investment Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-2 B BB/Watch Neg BB 2005-3 B BB/Watch Neg BB 2005-6 M10-A BBB-/Watch Neg BBB- 2005-6 M10-F BBB-/Watch Neg BBB- 2006-2 M-7 BBB/Watch Neg BBB 2006-BNC1 M6 BBB+/Watch Neg BBB+ 2006-BNC2 M7 BBB/Watch Neg BBB Structured Asset Securities Corp. Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-AR1 M9 BBB-/Watch Neg BBB- * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (22) 118 (4) AFC Enterprises AFCE (25) 162 4 Alaska Comm Sys ALSK (29) 551 19 Alliance Imaging AIQ (4) 678 50 Bare Escentuals BARE (189) 184 91 Blount International BLT (98) 448 135 CableVision System CVC (5,349) 9,654 (638) Calpine Corp CPNLQ (7,348) 18,594 (3,055) Carrols Restaurant TAST (24) 453 (28) Cell Therapeutic CTIC (101) 94 24 Centennial Comm CYCL (1,090) 1,393 92 Charter Comm CHTR (6,345) 15,177 (1,015) Cheniere Energy CQP (168) 2,104 108 Choice Hotels CHH (70) 305 (55) Cincinnati Bell CBB (773) 1,951 27 Claymont Stell PLTE (50) 150 67 Compass Minerals CMP (46) 691 157 Corel Corp. CRE (21) 271 (42) Crown Holdings CCK (225) 6,582 310 Crown Media HL CRWN (519) 759 64 CV Therapeutics CVTX (90) 356 263 Cyberonics CYBX (16) 137 (28) Dayton Superior DSUP (106) 312 60 Deluxe Corp DLX (40) 1,223 (402) Denny's Corporation DENN (221) 444 (67) Depomed Inc. DEPO (37) 37 16 Domino's Pizza DPZ (561) 421 39 Dun & Bradstreet DNB (458) 1,392 (238) Echostar Comm DISH (30) 9,066 1,150 Eisntein Noah Re BAGL (131) 135 (9) Embarq Corp EQ (331) 8,983 (409) Emeritus Corp. ESC (112) 953 (55) Empire Resorts I NYNY (10) 71 12 Encysive Pharmaceutical ENCY (122) 87 52 Enzon Pharmaceutical ENZN (55) 369 180 Epix Pharmaceutical EPIX (51) 112 39 Extendicare Real EXE-U (20) 1,316 29 Foamex Intl FMXI (272) 579 150 Ford Motor Co F (3,447) 281,491 (8,138) Gencorp Inc. GY (65) 1,037 31 General Motors GM (3,202) 185,198 (5,059) Graftech International GTI (86) 772 241 Healthsouth Corp. HLS (1,602) 3,238 (398) I2 Technologies ITWO (15) 185 32 ICOS Corp ICOS (18) 285 112 IDEARC Inc IAR (8,755) 1,508 171 IMAX Corp IMX (33) 243 84 Incyte Corp. INCY (104) 325 261 Indevus Pharma IDEV (144) 76 36 Intermune Inc ITMN (55) 249 195 Isolagen Inc ILE (48) 49 21 Ista Pharmaceuticals ISTA (15) 48 18 Jazz Pharmaceuticals JAZZ (195) 201 47 Koppers Holdings KOP (70) 671 177 Life Sciences LSR (1) 237 25 Lodgenet Entertainment LNET (54) 274 8 McMoran Exploration MMR (47) 446 (31) Mediacom Comm MCCC (110) 3,620 (269) National Cinemed NCMI (585) 401 43 Neurochem Inc NRM (34) 61 20 New River Pharma NRPH (110) 152 (19) Nexstar Broadcasting NXST (80) 709 23 NPS Pharm Inc. NPSP (213) 180 (219) ON Semiconductor ONNN (138) 1,441 309 Protection One PONN (85) 441 (1) Qwest Communication Q (1,534) 20,701 (1,440) Radnet Inc. RDNT (48) 396 31 Ram Energy Resources RAME (2) 184 (6) Regal Entertainment RGC (130) 3,085 (131) Riviera Holdings RIV (28) 221 13 RSC Holdings Inc RRR (408) 3,281 (3,410) Rural Cellular RCCC (587) 1,362 183 Rural/Metro Corp. RURL (93) 298 38 Savvis Inc. SVVS (14) 640 145 Sealy Corp. ZZ (154) 1,021 61 Senorx Inc SENO (4) 16 2 Sipex Corp SIPX (12) 53 7 St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (178) 3,694 (46) Stelco Inc STE (83) 2,788 656 Sun-Times Media SVN (369) 929 (265) Suncom Wire-CL SCWH (433) 1,639 209 TechTarget TTGT (66) 94 31 Town Sports Int. CLUB (20) 436 (52) Unisys Corp. UIS (5) 3,913 317 Weight Watchers WTW (1,053) 1,019 (82) Western Union WU (172) 5,354 972 Westmoreland Coal WLB (108) 759 (55) Worldspace Inc. WRSP (1,641) 527 85 WR Grace & Co. GRA (467) 3,628 912 XM Satellite XMSR (445) 1943 (76) Xoma Ltd. XOMA (6) 70 28 ********* 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, Sheena Jusay, 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 ***