/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/070918.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, September 18, 2007, Vol. 11, No. 221 Headlines 1031 TAX GROUP: Disclosure Statement Hearing Slated for Sept. 24 AAMES MORTGAGE: S&P Junks Rating on 2001-4 Class B Certificates ABN AMRO: Stable Credit Support Cues S&P to Affirm Ratings AEGIS MORTGAGE: Inks $500,000 Loan Business Sale with Selene AEGIS MORTGAGE: U.S. Trustee Amends Committee Appointment ANVUI LLC: Case Summary & 20 Largest Unsecured Creditors APOLLO ANTENNA: Voluntary Chapter 11 Case Summary ARCADIA RESOURCES: Completes Sale of Florida & Colorado Assets ASPEN EXECUTIVE: Case Summary & 25 Largest Unsecured Creditors BALLANTYNE RE: Market Losses Cues S&P to Cut BBB+ Rating to B- BALLY TOTAL: Bankruptcy Court Confirms Plan of Reorganization BAUSCH & LOMB: Sets Special Shareholders' Meeting for Sept. 21 BOISE CASCADE: Moody's Affirms Corporate Family Rating at Ba3 CABLEVISION SYSTEMS: Sets Shareholders' Meeting for Oct. 24 CALEDONIA MINING: Earns CDN$238,000 in Quarter Ended June 30 CALLIDUS DEBT: S&P Puts Preliminary BB Rating on $13 Mil. Notes CALPINE CORP: Disclosure Statement is Misleading, Rosetta Says CAPITALSOURCE INC: Fitch Rates $250 Million Debentures at BB+ CARBIZ INC: Closes $1 Million Trafalgar Capital Financing CDC MORTGAGE: Poor Collateral Prompts S&P to Lower Ratings CENVEO CORP: S&P Lifts Bank Loan Rating to BB from BB- CHARTER COMMS: Amends Unit's Exchange 5.88% Senior Notes Offer CHESTER DORSEY: Case Summary & Five Largest Unsecured Creditors COUNTRYWIDE FINANCIAL: Provides August 2007 Operations Results E*TRADE FINANCIAL: Restructuring Businesses, to Focus on Retail EQUINIX INC: S&P Junks Rating on $550 Million Subordinated Notes EUROFRESH INC: Low Profit Margin Cues Moody's to Junk Ratings FEDDERS CORP: Committee Balks at $79 Mil. DIP Loan from Goldman FIRST DATA: Extends Tender Offer Expiration to September 24 FREEDOM COMMUNICATIONS: S&P Places BB Rating Under Negative Watch GENERAL MOTORS: Talks with UAW Show Progress, WSJ Says GRAY TELEVISION: S&P Revises Outlook to Negative from Stable GSAMP TRUST: S&P Lowers Ratings on Four Certificate Classes HARTCOURT COMPANIES: Kabani & Company Raises Going Concern Doubt INSIGHT COMMS: Low Sale Price Spurs Owner to Defer Sale INTEGRA BANK NA: Moody's Revises Outlook to Negative from Stable MACQUARIE BANK: Moody's Affirms Financial Strength Rating at C+ MAGNA ENTERTAINMENT: Adopts Initiatives to Improve Earnings MAJESCO ENT: July 31 Balance Sheet Upside-Down by $678,000 MEDIANEWS GROUP: S&P Puts BB- Rating Under Negative CreditWatch MYERS INDUSTRIES: Postponed Deal Cues S&P to Withdraw All Ratings MKP CBO: Moody's Places B2 Class D Notes' Rating Under Review NATIONAL ENERGY: July 31 Balance Sheet Upside-Down by $1.3 Million NORTHWEST AIRLINES: To Own 47% of Midwest Airlines OCTANS II: Moody's Reviews $45 Mil. Class X-I Notes' Ba1 Rating OCTANS III: Moody's Reviews Two Low-B Rated Cert. Class' Ratings OFFICEMAX INC: Names Sam Martin as Exec. Vice President and COO PALM SPRINGS: To Cease Operations This Month, Desert Sun Says POPE & TALBOT: Nods to Extend Forbearance Agreement with Lenders RAPID LINK: Inks Letter of Intent to Purchase Two Networks RAPID LINK: July 31 Balance Sheet Upside-Down by $4.4 Million RESIDENTIAL ASSET: Fitch Lowers Ratings on $71.1MM Certificates RITCHIE (IRELAND): Court OKs $2.7MM DIP Financing From Affiliate SACO I: Poor Performance Cues S&P to Cut Ratings on 10 Classes SCO GROUP: Case Summary & 20 Largest Unsecured Creditors SEMINOLE TRIBE: Moody's Rates Proposed $240 Million Bonds at Ba1 SERENA SOFTWARE: S&P Holds B Rating and Revises Outlook to Pos. SUB SURFACE: June 30 Balance Sheet Upside-Down by $901,703 SWIFT CORP: S&P Puts 'B' Ratings Under Negative Watch TORBAY HOLDINGS: Posts $597,820 Net Loss in Quarter Ended June 30 TOYS 'R' US: CEO Testifies at Senate Hearing on Toy Safety TPF II: S&P Rates $180 Million Senior Secured Term Loan at BB- TRUESTAR BARNETT: Court Sets Oct. 3 Hearing to Decide on Venue US REDUCTION: Case Summary & 18 Largest Unsecured Creditors VALCOM INC: Sues POW! and S. Lee for Breach of Disney Venture Pact VERIFONE INC: Good Operating Trends Cue S&P's Positive Outlook VERTIS COMM: Commences Exchange Offer for American Color Notes VESTA INSURANCE: Former CEO David Lacefield Seeks Summary Judgment VESTA INSURANCE: Florida Select Wants Nod on Schmidt Agreement VOTORANTIM CEMENT: Moody's Lifts Rating on $559 Mil. Bank Facility WERNER LADDER: Court OK's Panel's 2nd Amended Disclosure Statement WERNER LADDER: Confirmation Hearing Scheduled on October 25 WHOLE FOODS: Moody's Downgrades Corporate Family Rating to Ba1 ZUFFA LLC: S&P Affirms All Ratings and Revises Outlook to Negative * Large Companies with Insolvent Balance Sheets ********* 1031 TAX GROUP: Disclosure Statement Hearing Slated for Sept. 24 ---------------------------------------------------------------- The Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Sept. 24, 2007, to consider approval of the disclosure statement explaining 1031 Tax Group LLC and its debtor- affiliates' Plan of Reorganization, Bill Rochelle of Bloomberg News reports. According to the report, the Debtor is expected to revise the Plan after the Court and the U.S. Trustee found it difficult to understand. The Plan, as published in the TCR on Aug. 6, 2007, provides, among others, that holders of general unsecured claims, totaling $162,200,000, will receive: a. one or more distributions in cash or other consideration on account of each of their pro rata share; and b. pro rata share of the beneficial interest in the liquidating trust and distributable proceeds from the liquidating trust assets. Last month, the Court denied the U.S. Trustee's request for an appointment of a Chapter 11 Trustee or, in the alternative, for the conversion of the Debtors' cases into cases under Chapter 7 of the Bankruptcy Code. In his Aug. 13 memorandum opinion, Judge Glenn concluded that establishing fraud by a member of the Debtors' governing body that appoints new management is by itself insufficient to require the appointment of a trustee. Headquartered in Richmond, Virginia, The 1031 Tax Group LLC -- http://www.ixg1031.com/-- is a privately held consolidated group of qualified intermediaries created to service real property exchanges under Section 1031 of the Internal Revenue Code. The company and 15 of its affiliates filed for Chapter 11 protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through 07-11462). Norman N. Kinel, Esq., and Steven E. Fox, Esq., at Dreier, LLP, represents the Debtors in their restructuring efforts. David Y. Wolnerman, Esq., at Greenberg Traurig, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of over $100 million. AAMES MORTGAGE: S&P Junks Rating on 2001-4 Class B Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-2 and B mortgage pass-through certificates from Aames Mortgage Trust 2001-4. Concurrently, S&P removed its rating on class B from CreditWatch, where it was placed with negative implications on May 25, 2007. Additionally, S&P affirmed its ratings on the remaining classes from the same transaction. The lowered ratings reflect the deteriorating performance of the collateral pool. Realized losses have consistently outpaced excess interest over the past year, to the extent that credit support for these two classes is no longer sufficient to support the prior ratings. As of the August 2007 remittance period, series 2001-4 had experienced cumulative losses totaling $9.40 million, or 4% of its original pool balance. Total delinquencies and severe delinquencies (90-plus days, foreclosures, and REOs) constituted 26.43% and 13.33% of the current pool balance, respectively. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for this transaction is derived from a combination of subordination, excess interest, and overcollateralization. S&P removed the rating on class B from CreditWatch because it was 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 collateral backing the certificates originally consisted of subprime fixed- and adjustable-rate, first-lien mortgage loans with terms of maturity of no more than 30 years. Rating Lowered Aames Mortgage Trust 2001-4 Rating ------ Class To From ----- -- ---- M-2 BB A+ Rating Lowered and Removed from Creditwatch Negative Aames Mortgage Trust 2001-4 Rating ------ Class To From ----- -- ---- B CCC BB/Watch Neg Ratings Affirmed Aames Mortgage Trust 2001-4 Class Rating ----- ------ A4 AAA M1 AA+ ABN AMRO: Stable Credit Support Cues S&P to Affirm Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the class B-2 certificates from ABN AMRO Mortgage Corp.'s series 2002-9. Simultaneously, S&P affirmed its ratings on the remaining 136 classes from nine ABN AMRO Mortgage Corp. transactions. The upgrade of the B-2 class from series 2002-9 reflects a significant increase in credit support to the subordinate class due to the paydown of the senior classes, combined with the shifting interest feature of the transaction and very low losses. The affirmations on the remaining classes reflect stable credit support percentages, very low losses, and rapid prepayments. Subordination provides credit support for the ABN AMRO transactions. As of the Aug. 25, 2007, distribution date, total delinquencies ranged from 0% (various series) to 1% (series 2003-8), and serious delinquencies ranged from 0% (various series) to 0.48% (series 2003-5) of the current pool balances. Cumulative losses ranged from 0% (various series) to 0.02% (series 2002-10) of the original pool balances. The transactions are backed by 15- and 30-year fixed- and variable-rate mortgage loans secured by first liens on owner- occupied, one- to four-family residential properties. Rating Raised ABN AMRO Mortgage Corp. Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2002-9 B-2 AA A+ Ratings Affirmed ABN AMRO Mortgage Corp. Mortgage pass-through certificates Series Class Rating ------ ----- ------ 2002-9 A-3, A-4, A-25, A-30, A-P, A-X, M AAA 2002-9 B-1 AA+ 2002-10 IA-1, IA-2, IA-3, IA-4, IA-6, IA-8 AAA 2002-10 IA-25, IA-26, IA-X, IIA-1, IIA-2 AAA 2002-10 IIA-3, IIA-X, A-P, M AAA 2002-10 B-1 AA+ 2002-10 B-2 A- 2003-1 A-1, A-2, A-3, A-4, A-P, A-X, M AAA 2003-1 B-1 AA 2003-1 B-2 BBB+ 2003-1 B-3 BBB 2003-1 B-4 BB+ 2003-2 IA-1, IA-2, IA-3, IA-4, IIA-1, IIA-2, A-P AAA 2003-2 A-X AAA 2003-2 M AA+ 2003-2 B-1 AA 2003-2 B-2 A- 2003-2 B-3 BBB+ 2003-2 B-4 BB- 2003-5 A-2, A-3, A-4, A-11, A-29, A-31 AAA 2003-5 A-X, A-P, IIA-1, IIA-2, IIA-3, IIA-4 AAA 2003-5 IIA-5, IIA-X, IIA-P AAA 2003-5 M AA+ 2003-5 B-1 A+ 2003-5 B-2 BBB 2003-5 B-3 BB 2003-5 B-4 B 2003-7 A-1, A-2, A-3, A-4, A-5, A-6, A-P, A-X AAA 2003-7 M AA 2003-7 B-1 A 2003-7 B-2 BBB 2003-7 B-3 BB 2003-7 B-4 B 2003-8 A-1, A-2, A-3, A-4, A-8, A-12, A-13, A-18 AAA 2003-8 A-19, A-20, A-21, A-22, A-23, A-24, A-25 AAA 2003-8 A-26, A-29, A-30, A-P, A-X AAA 2003-8 M AA 2003-8 B-1 A- 2003-8 B-2 BBB- 2003-9 A-1, A-2, A-3, A-4, A-5, A-6, A-P, A-X AAA 2003-9 M AA 2003-9 B-1 A 2003-9 B-2 BBB 2003-9 B-3 BB 2003-9 B-4 B 2003-11 A-1, A-2, A-3, A-4, A-5, A-7, A-8 AAA 2003-11 A-9, A-11, A-12, A-13, A-14, A-P AAA 2003-11 M AA 2003-11 B-1 A+ 2003-11 B-2 BBB+ 2003-11 B-3 BB 2003-11 B-4 B AEGIS MORTGAGE: Inks $500,000 Loan Business Sale with Selene ------------------------------------------------------------ Aegis Mortgage Corporation and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware an asset purchase agreement dated Sept. 7, 2007, between Aegis Mortgage Corporation and Selene Ventures LLC. Pursuant to the APA, in exchange for a $500,000 consideration, the Debtors will sell assets used in their loan servicing operations to Selene, subject to higher and better offers in auction. The Debtors set Sept. 17, 2007, as auction date. The Debtors may also seek the Court's approval of the sale of their loan servicing assets to Selene tomorrow, September 19, should no other parties submit definitive bids. The Purchased Assets will include the assets owned by the Debtors, used primarily in connection with the servicing of loans from their facilities located at 3250 Briarpark, Suite 400 and 9990 Richmond, both in Houston, Texas. The Purchased Assets will include: -- the assets owned by Aegis and used primarily in connection with servicing loans; -- all of the issue and outstanding stock of Aegis Loan Servicing, LP; -- all of the issued and outstanding stock of AMC Insurance, including, to the extent transferable and assignable under applicable law solely by virtue of the transfer of the stock, all of the subsidiary's licenses to underwrite and sell insurance policies; and -- all documentation and files relating to the Mortgage and Insurance Licenses, and bonds for entities that are part of the transaction as expeditiously as possible. Selene will offer employment, effective on the closing, to not less than 25 employees currently employed in the Debtors' loan servicing business for at least six months. Pursuant to the APA, the Debtors will assume and assign these contracts to Selene: * IVR (I3) Telephone and dialer Contract; * Document Imaging (File NET) Contract; and * Ocwen Technology Xchange, Inc. (OXT) Contract for an application service on a residential service platform. The Debtors and Selene agree to a closing date of not later than September 26, 2007. A full-text copy of the APA is available for free at: http://researcharchives.com/t/s?2371 Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, Young, Jones and Weintraub, L.L.P., serve as counsel to the Debtors. When the Debtors filed for bankruptcy, they listed assets and debts of more than $100 million. The Debtors' exclusive period to file a plan expires on Dec. 11, 2007. Aegis Bankruptcy News, Issue No. 5, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). AEGIS MORTGAGE: U.S. Trustee Amends Committee Appointment --------------------------------------------------------- Kelly Beaudin Stapleton, United States Trustee for Region 3, amended the membership of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Aegis Mortgage Corporation and its debtor-affiliates, to include First Advantage Credco: a) First Advantage Credco. Attn: Carol White 12395 First American Way Poway, California 92126 Tel: (619) 938-7341 Fax: (800) 998-4747 b) Credit Suisse First Boston Mortgage Capital LLC Attn: Didier Siffer Eleven Madison Avenue New York, New York 10010-3629 Tel: (212) 325-7418 Fax: (212) 325-0304 c) UBS Real Estate Securities Inc. Attn: Peter Chudy 1251 Avenue of the Americas New York, New York 10020 Tel: (212) 713-8501 Fax: (212) 713-1153 Andrew R. Vara, assistant U.S. Trustee, informed the U.S. Bankruptcy Court for the District of Delaware that Aurora Loan Services, LLC, resigned from the Creditors Committee. Mr. Vara did not disclose the reasons for Aurora's resignation. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, Young, Jones and Weintraub, L.L.P., serve as counsel to the Debtors. When the Debtors filed for bankruptcy, they listed assets and debts of more than $100 million. The Debtors' exclusive period to file a plan expires on Dec. 11, 2007. Aegis Bankruptcy News, Issue No. 5, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ANVUI LLC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Anvui, L.L.C. fdba Hannah's Restaurant dba Hannah's Neighborhood Bistro 1050 South Rampart Boulevard Las Vegas, NV 89145 Bankruptcy Case No.: 07-15836 Chapter 11 Petition Date: September 14, 2007 Court: District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Terry V. Leavitt, Esq. 601 South 6th Street Las Vegas, NV 89101 Tel: (702) 385-7444 Fax: (702) 385-1178 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ G.L. Dragon Lawsuit $1,300,000 Robert Eng 2877 Paradise Road, Suite 2401 Las Vegas, NV 89109 Nevada Department of Sales and Use Tax $220,000 Taxation 1550 College Parkway, Suite 115 Carson City, NV 89706-7937 Business Financial Services Business Loan $210,000 3111 North University Drive, Suite 800 Pompano Beach, FL 33065 Snell & Wilmer Services $108,000 Rewards Network Services $87,818 Venture Bank/Advance Services $24,000 Restaurant Finance Melissa's Services $18,897 Classic Parking of Nevada, Services $17,389 Inc. Southern Wine Services $13,840 Premier Meat Company Services $12,516 Showa Marine Services $9,217 Health Plan of Nevada/ Insurance $8,000 Sierra Health U.S. Foods Services $7,095 944 Magazine Advertising $7,004 Brand, Ltd. Services $7,000 Preferred Public Relations Services $6,576 and Marketing Triad Leasing and Financial, Services $5,100 Inc. Las Vegas Parking Services $4,800 Nevada Linen Services $4,132 Sysco Services $4,000 APOLLO ANTENNA: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Apollo Antenna Sales, Inc. dba Apollo Spas dba Apollo Plastics North 720 Fancher Spokane, WA 99212 Bankruptcy Case No.: 07-02991 Chapter 11 Petition Date: September 12, 2007 Court: Eastern District of Washington (Spokane/Yakima) Judge: Patricia C. Williams Debtor's Counsel: Kevin ORourke, Esq. Southwell & O'Rourke 421 West Riverside Avenue, Suite 960 Spokane, WA 99201 Tel: (509) 624-0159 Fax: (509) 624-9231 Estimated Assets: $100,000 to $1 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. ARCADIA RESOURCES: Completes Sale of Florida & Colorado Assets -------------------------------------------------------------- Arcadia Resource, Inc. disclosed on Thursday that it completed the sale of its Durable Medical Equipment locations in Florida and Colorado to Aerocare Holdings Inc. in two separate transactions for total cash proceeds of $7.7 million. In connection with the transactions, Arcadia will retain the accounts receivable relating to services provided at these sites prior to Aug. 16, 2007, totaling approximately $7.0 million. After using part of the proceeds to reduce debt and other obligations by approximately $4.3 million, Arcadia will have approximately $10.0 million (including the balance of the purchase price and the expected collection of the remaining accounts receivable) to support its on-going operations and further develop its DailyMed(TM) product offering. Aerocare held back $750,000 for 12 months to secure Arcadia's obligations. As part of the transaction, Arcadia and Aerocare Holdings have also agreed to negotiate a DailyMed(TM) co-marketing agreement for all of Aerocare's locations nationwide within the next 90 days. "This transaction is a significant step towards meeting our goal of reducing debt, increasing our cash position, investing in our DailyMed(TM) initiatives and generating positive EBITDA and operating cash flow beginning in October 2007, our fiscal 2008 third quarter," said Arcadia's chief executive officer Marvin Richardson. "Even after paying down certain liabilities and a portion of our debt, the combination of the cash proceeds from the sale and the expected collection of the accounts receivable we retained, should provide us with approximately $10.0 million to be used to support on-going operations and growth initiatives," continued Richardson. The agreement for the sale of the Florida operations includes certain obligations by Arcadia to compensate the buyer if the federal government enacts legislation that would reduce the Medicare rental oxygen reimbursement time period to less than 36 months in calendar years 2008 or 2009. The amount due the buyer would depend on the number of months that the new legislation would provide for reimbursement, and the maximum amount would be $1.0 million if the number of months is reduced to 18 months or lower. With the completion of these transactions, Arcadia's remaining DME operations will consist of 22 DME locations in states other than Florida and Colorado, which generate approximately $24.0 million in gross revenues and contribute positively to Arcadia's EBITDA. Arcadia Negotiates an Expanded Co-marketing Relationship In conjunction with the sale of the Florida DME subsidiary, Aerocare has agreed to negotiate a co-marketing relationship for Arcadia's core product offering of DailyMed(TM). The agreement is to be negotiated within 90 days of the closing of the sale on mutually agreeable terms. Arcadia expects to leverage the previously owned locations along with current Aerocare locations to increase market penetration of DailyMed(TM), Arcadia's compliance packaging pharmacy offering, which will improve medication administration and safety for Aerocare's customers. About Arcadia Resources Headquartered in Southfield, Mich. Arcadia Resources, Inc. (AMEX: KAD) -- http://www.arcadiaresourcesinc.com/-- is a national provider of alternate site healthcare services and products, including respiratory and durable medical equipment; non-medical and medical staffing, including travel nursing. Through industry partnerships, the company is also establishing walk-in routine (non-emergency) medical clinics inside of retail stores. Going Concern Doubt As reported in the Troubled Company Reporter on July 4, 2007, BDO Seidman LLP, in Troy, Michigan, expressed substantial doubt about Arcadia Resources Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations. ASPEN EXECUTIVE: Case Summary & 25 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Aspen Executive Air, L.L.C. aka AEXJet 361 Southside Drive Basalt, CO 81621 Bankruptcy Case No.: 07-11341 Type of business: The Debtor is a private jet travel company. See http://www.aexjet.com/ Chapter 11 Petition Date: September 14, 2007 Court: District of Delaware (Delaware) Debtor's Counsel: Laura Davis Jones, Esq. Pachulski, Stang, Ziehl & Jones, L.L.P. 919 North Market Street, 17th Floor Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 25 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ J.L.T. Aicraft Holding Judgment Creditor- $19,834,442 Company, L.L.C. aircraft lease 10 River Park Plaza, obligations Suite 800 St. Paul, MN 55107 Tel: (651) 641-1111 Fax: (651) 641-1244 Walker Aicraft, L.L.C. Judgment Creditor- $11,206,764 10 River Park Plaza, aircraft lease Suite 800 obligations St. Paul, MN 55107 Tel: (651) 641-1111 Fax: (651) 641-1244 Flight Safety International, trade & services $300,847 Inc. P.O. Box 75691 Charlotte, NC 18175 Pratt & Whitney Canada Corp. trade & services $167,554 P.O. Box 730011 Dallas, TX 75373-730011 Desert Champions, L.L.C. trade & services $125,000 Mendel Blumenfeld, P.C. trade & services $117,825 Honeywell trade & services $101,275 Gulfstream/GENDYN trade & services $82,585 Jet Support Services, Inc. trade & services $50,428 C.A.E. Simuflite, Inc. trade & services $44,210 Universal Weather & trade & services $38,976 Aviation, Inc. Wodd Fuel Services, Inc. trade & services $38,329 Trajen F.B.O. Network trade & services $34,141 Premium Assignment Corp. trade & services $30,871 First Flight trade & services $28,310 B.C.O.M. Air, L.L.C. trade & services $27,472 Landmark Aviation/Garrett trade & services $25,110 Aviation, Inc. Aspen Art Museum trade & services $25,000 Wachovia Financial trade & services $21,144 Beverage Bistro trade & services $20,709 Phoenix Fuel, L.L.C. trade & services $27,560 Aspen Magazine trade & services $14,119 International Jet Aviation trade & services $26,871 Milion Air Dallas trade & services $25,734 Colt International trade & services $17,341 BALLANTYNE RE: Market Losses Cues S&P to Cut BBB+ Rating to B- -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its subordinated debt ratings on Ballantyne Re plc's Class B-1 and B-2 notes to 'B-' from 'BBB+'. At the same time, the ratings have been placed on CreditWatch with negative implications. "This action was taken in response to the mark-to-market losses experienced in the collateral accounts relating to the recent spread widening on fixed-income assets," said Standard & Poor's credit analyst Gary Martucci. Securities in the surplus account are the source of funds to make payments on the Class-B notes as well as payments under the reinsurance agreement. The transaction provides reinsurance to Scottish Re (U.S.) Inc., the ceding insurer. "Despite the devaluation, we believe the securities in the collateral account currently generate sufficient cash flow under stressed scenarios to make principal and interest payments on the Class-B notes," Mr. Martucci added. The fair-market value triggers in the indenture prohibit the payment of principal and interest on the Class-B notes. As a result of this deficiency, the Class-B notes did not make the scheduled September payment. Most of the decline in the market value of the assets in the excess, additional funding, and surplus accounts can be attributed to RMBS and ABS securities securitized with subprime and Alt-A mortgages and Home Equity Lines of Credit. The value of these securities has declined in the past several months due to spread widening, though none of the assets in the collateral account has failed to make a scheduled payment to date. Standard & Poor's views this as a technical default, and, over time, we believe the potential exists for the Class-B noteholders to receive all deferred payments and eventually, all payments due them under the terms of the indenture. The notes were placed on CreditWatch negative because additional market declines will put additional stress on the structure and delay the repayment of the deferred amounts. Standard & Poor's will monitor the developments in the assets values in the accounts and determine if any future ratings actions are warranted on any notes issued by Ballantyne Re. BALLY TOTAL: Bankruptcy Court Confirms Plan of Reorganization ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has entered an order confirming Bally Total Fitness Holding Corporation's Amended Prepackaged Chapter 11 Plan of Reorganization. With this action, Bally expects to emerge from Chapter 11 by the end of September 2007 and move forward with the restructuring arrangements funded by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund L.P. At the hearing, the Court ruled that Bally had met all of the statutory requirements to confirm its Plan. The Plan will become effective, and the company will emerge from Chapter 11 as a private company, once all conditions to funding of the Harbinger proposal are satisfied. "The Court's confirmation of our Plan paves the way for our emergence from Chapter 11 and we look forward to a rejuvenated Bally Total Fitness under Harbinger's leadership," Don R. Kornstein, Interim Chairman and Chief Restructuring Officer of Bally Total Fitness, said. "We will exit bankruptcy as a stronger company, with a capital structure that will enable us to increase our level of investments in our clubs and pursue other initiatives to add value for our members." Under its proposal Harbinger would invest approximately $233.6 million in exchange for 100% of the common equity of reorganized Bally. Under the Harbinger proposal: * The Senior Noteholders will receive new Senior Second Lien Notes bearing at 13% as well as a consent fee equal to 2% of the face value of their Notes. * Subordinated Noteholders will receive an immediate cash payment of $123.5 million in the aggregate, with the remaining balance of the Subordinated Notes to be satisfied through the issuance of approximately $200 million in new subordinated notes of reorganized Bally. The annual interest rate payable under the new subordinated notes will be 15-5/8% as the payment-in-kind interest rate and 14% as the cash pay interest rate. * Existing Bally shareholders and holders of certain equity- related claims will receive an aggregate distribution of $16.5 million as soon as practicable after the company can determine the maximum amount of the equity-related claims. That determination cannot be made until after the Oct. 31, 2007, deadline for submission of proofs of claim for equity-related claims, and may require court approval. In the event the transaction with Harbinger is not consummated, the company can consummate the restructuring in the original plan sponsored by Tennenbaum Capital Partners, LLC, Goldman, Sachs & Co. and Anschutz Investment Company upon the satisfaction of certain conditions. A redlined copy of the company's Modified First Amended Plan is available for free at: http://ResearchArchives.com/t/s?2370 About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre-packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P. represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had $408,546,205 in total assets and $1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. On Aug. 13, 2007, they filed an Amended Joint Prepackaged Plan and on Aug. 17 filed a Modified Amended Prepackaged Plan. BAUSCH & LOMB: Sets Special Shareholders' Meeting for Sept. 21 -------------------------------------------------------------- Bausch & Lomb Inc. will convene a special meeting of shareholders at 10 a.m. on Sept. 21, 2007, at the Bausch Ballroom of Clarion Hotel Riverside at 120 East Main Street in Rochester, New York. Bausch & Lomb shareholders of record as of the close of business on Aug. 10, 2007, will be entitled to vote at the special meeting. Foreign Regulatory Approvals On Aug. 31, 2007, the proposed merger of B&L and WP Prism Merger Sub Inc., an affiliate of Warburg Pincus LLC, satisfied the requirements under Chinese competition laws. On Aug. 21, 2007, the company received an unconditional approval decision from the Turkish Competition Board relating to the merger. As reported in the Troubled Company Reporter on May 17, 2007, Bausch & Lomb Inc. entered into a definitive merger agreement with affiliates of Warburg Pincus, the global private equity firm, in a transaction valued at approximately $4.5 billion, including approximately $830 million of debt. Under the terms of the agreement, affiliates of Warburg Pincus will acquire all of the outstanding shares of Bausch & Lomb common stock for $65 per share in cash. Headquartered in Rochester, New York, Bausch & Lomb Inc. (NYSE: BOL) -- http://www.bausch.com/-- develops, manufactures, and markets eye health products, including contact lenses, contact lens care solutions, and ophthalmic surgical and pharmaceutical products. The company is organized into three geographic segments: the Americas; Europe, Middle East, and Africa; and Asia (including operations in India, Australia, China, Hong Kong, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand). In Latin America, the company has operations in Brazil and Mexico. "In Europe, the company maintains operations in Austria, Germany, the Netherlands, Spain, and the United Kingdom. * * * As reported in the Troubled Company Reporter on July 12, 2007, Standard & Poor's Ratings Services said its 'BB+' corporate credit and senior secured ratings on Bausch & Lomb Inc. remain on CreditWatch with negative implications in light of the July 5, 2007 acquisition bid by Advanced Medical Optics Inc. As reported in the Troubled Company Reporter on May 18, 2007, Moody's Investors Service stated that it will continue its review of Bausch & Lomb Incorporated's ratings for possible downgrade following the announcement that the company has entered into a definitive merger agreement with affiliates of Warburg Pincus. Ratings subject to review for possible downgrade include the company's Ba1 Corporate Family rating and Ba1 Probability of Default rating. In addition, the Warburg Pincus deal prompted Fitch to maintain its Negative Rating Watch on the company. Fitch also warned that the transaction would significantly increase leverage and likely result in a multiple-notch downgrade, including an Issuer Default Rating of no higher than 'BB-'. BOISE CASCADE: Moody's Affirms Corporate Family Rating at Ba3 ------------------------------------------------------------- Moody's affirmed the ratings (CFR Ba3) of Boise Cascade, LLC after its recent announcement that the company entered into a purchase and sale agreement with Aldabra 2 Acquisition Corporation for the sale of Boise Cascade's paper, packaging, and newsprint segments for $1.63 billion. The transaction is subject to customary closing conditions as well as the approval of Aldabra's stockholders and the receipt of debt financing on terms and conditions to be approved by Aldabra's and Boise Cascade's respective board of directors. The outlook is stable. The affirmation reflects the anticipated improvements to the company's credit metrics though offset by the reduced business diversification. Boise Cascade will still maintain a strong size with annual sales of about $3.4 billion; however, Moody's now views the company as operating in only one segment, wood-based building products. The company's size and lack of product and geographic diversification is consistent with a B rated paper and forest products company. The timing of the transaction and amount of potential debt reduction is unclear at this time; however, Moody's believes credit metrics could improve following the transaction close. At the same time, the potential for significant debt reduction is mitigated by the continuing weak housing environment in North America. The company is now more exposed to the volatile wood products business, which will pressure the company's credit profile over the near term. Mitigating this risk will be the counter-cyclical nature of working capital within the distribution business and the ability of the company to generate cash flow in a downturn. Moody's believes the operating performance of the distribution business will generate low single-digit EBITDA margins, but those margins will remain relatively stable over the long-term. Moody's believes Boise Cascade will generate debt protection measures consistent with its Ba3 rating through the business cycle and have a solid liquidity profile. Moody's expects that the company will enter into a new revolving credit facility upon closing of the transaction. However, the ratings are tempered by significant competitive pressures, private equity ownership (the potential for capital outlays and/or distributions), and event risk within the paper and forest products industry. Ratings Affirmed: -- Corporate family rating; Ba3 -- Probability of default rating; Ba3 -- Senior secured term loan; Ba2 (LGD3, 39%) -- Delayed Draw term loan; Ba2 (LGD3, 39%) -- Revolving credit facility; Ba2 (LGD2, 39%) -- Senior unsecured notes; B1 (LGD5, 75%) -- Senior subordinated notes; B2 (LGD6, 91%) -- Speculative grade liquidity rating; SGL-2 Boise Cascade, LLC, headquartered in Boise, Idaho, is a private company that distributes building materials and manufactures paper and wood products. The company operates a national wholesale distributor business with 30 distribution facilities and produces uncoated free sheet paper, packaging and newsprint, and engineered wood products. The majority of Boise is owned and controlled by Madison Dearborn Partners, LLC with minority positions owned by OfficeMax and management. CABLEVISION SYSTEMS: Sets Shareholders' Meeting for Oct. 24 ----------------------------------------------------------- Cablevision Systems Corp. will convene a special meeting of stockholders to be held on Oct. 24, 2007 at 11:00 a.m., New York time, at its corporate headquarters building at 1111 Stewart Avenue in Bethpage, New York. At the special meeting, shareholders must consider and vote upon a proposal to adopt and approve the Agreement and Plan of Merger, dated as of May 2, 2007, by and among Cablevision Systems Corporation, Central Park Holding Company, LLC (an entity organized by certain members and affiliates of the Dolan family) and Central Park Merger Sub, Inc. (a wholly-owned subsidiary of Central Park Holding Company, LLC formed to effect the merger and related transactions). As reported in the Troubled Company Reporter on May 3, 2007, Cablevision Systems Corporation has agreed to be taken private by an entity created by members of the Dolan Family Group, pursuant to which all outstanding shares of Cablevision that the Dolan Family Group does not already own will be converted into $36.26 per share in cash. The transaction values Cablevision at a total enterprise value of approximately $22 billion. The merger agreement, the company says, includes a "majority of the minority" provision, which requires a majority of the outstanding Class A shares not held by the Dolan Family Group or Cablevision's directors and executive officers to approve the transaction. About Cablevision Systems Headquartered in Bethpage, New York, Cablevision Systems Corporation (NYSE:CVC) -- http://www.cablevision.com/-- is an entertainment and telecommunications company. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include: Interactive Optimum digital television, Optimum Online high-speed Internet, Optimum Voice digital voice-over-cable, and its Optimum Lightpath integrated business communications services. At June 30, 2007, Cablevision Systems Corporation's balance sheet showed a stockholders' deficit of $5 billion, compared to a stockholders' deficit of $5.3 billion at Dec. 31, 2006. CALEDONIA MINING: Earns CDN$238,000 in Quarter Ended June 30 ------------------------------------------------------------ Caledonia Mining Corp. reported net income of CDN$238,000 in the three months ended June 30, 2007, a reversal of the CDN$2.9 million net loss reported in the same period last year, mainly due to a foreign exchange gain of approximately CDN$2.0 million. This foreign exchange gain was mainly due to the revision in the rate of exchange announced by the Reserve Bank of Zimbabwe on April 26, 2007. Results for the quarter ended June 30, 2007, includes a loss from discontinued operations of CDN$126,000 representing the holding costs of Barbrook and Eersteling. Barbrook Mine and Eersteling Gold Mine have been put up for sale and are thus presented as assets for sale in the consolidated financial statements. For the quarter ended June 30, 2007, Caledonia reported revenue of CDN$1.5 million from the Blanket gold mine, on sales of 2,922 ounces of gold. The company reported CDN$0 revenue in 2006. Gold production for the quarter was 2,672 ounces. Production was affected by the planned shut down of No.4 shaft for refurbishment, which is part of the planned expansion, and the lower than anticipated grades from underground. Commenting on the results, Stefan Hayden, president and chief executive officer, said "I am pleased to report that the Blanket mine continued operations throughout the quarter, despite the tough operating conditions in Zimbabwe, the cashflow issues faced by other gold producers and the planned expansion. "Production of 2,672 ounces of gold was below the plan due to the lower than anticipated grades from underground, however the metallurgical plant and the Sands plant performed well. Underground production has since resumed and we are targeting a return to 600 tonnes a day, depending on the reliability of power supply. "Operating conditions continue to remain challenging in Zimbabwe, however if the situation does not deteriorate further, we anticipate completing the shaft expansion by the end of the fourth quarter and making-up a portion of the reduced second quarter production during the second half of the year. "The drilling program at Nama continues, with drill cores currently being assayed. These results will be evaluated during the third quarter and we anticipate announcing further NI43-101 results by the fourth quarter. Metallurgical testwork on product specification for a cobalt hydroxide is nearly complete and we hope to announce these results before year-end as well. "Unfortunately we do not have any concrete updates on the sale negotiations of the Barbrook and Eersteling mines, however we do continue to negotiate with a number of interested parties. Clearly this sale process is taking a long time and we are aiming to conclude a transaction by the end of the third quarter." As of June 30, 2007, the company had a working capital surplus of CDN$2.3 million. As at the end of the 2nd quarter, $413,000 was owed by the Reserve Bank of Zimbabwe for gold sold, $280,000 was received 3 days after the quarter closed and as at Aug. 7, 2007, $244,000 was overdue for payment. At June 30, 2007, the company's consolidated balance sheet showed CDN$28.2 million in total assets, CDN$3.4 million in total liabilities, and CDN$24.8 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2356 Going Concern Doubt BDO Dunwoody LLP's audit report of Caledonia Mining Corp.'s consolidated financial statements for the years ended Dec. 31, 2006, and 2005, is expressed in accordance with Canadian reporting standards which do not require a reference in the auditor's report to events and conditions which cast doubt on the company's ability to continue as a going concern in the auditors' report when these are adequately disclosed in the financial statements. The company's ability to continue as a going concern is dependent upon attaining profitable operations, realizing proceeds from the disposal of mineral properties and obtaining sufficient financing to meet its liabilities, its obligations with respect to operating expenditures and expenditures required on its mineral properties. Since inception from February 1992, Caledonia has recorded a loss in every year except 1994 and 2000. As at June 30, 2007, the consolidated accumulated deficit was CDN$171.2 million. About Caledonia Mining Caledonia Mining Corporation (TSX: CAL) (OTC BB: CALVF) (AIM: CMCL) -- www.caledoniaminin.com -- is a Canadian registered mining, exploration and development corporation that owns a diversified portfolio of carefully selected, high quality mines and exploration properties in Southern Africa and Canada. In June 2006 Caledonia acquired the Blanket Mine in Zimbabwe from Kinross Gold Corporation of Toronto. Caledonia's two South African gold mines, Barbrook Mine and Eersteling Gold Mine, are both currently on care-and-maintenance and were put up for sale in December 2006. CALLIDUS DEBT: S&P Puts Preliminary BB Rating on $13 Mil. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Callidus Debt Partners CLO Fund VI Ltd./Callidus Debt Partners CLO Fund VI Inc.'s $378 million floating-rate notes due October 2021. The preliminary ratings are based on information as of Sept. 14, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes, and by the equity and overcollateralization; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; and -- The transaction's legal structure, including the issuer's bankruptcy remoteness. Preliminary Ratings Assigned Callidus Debt Partners CLO Fund VI Ltd./Callidus Debt Partners CLO Fund VI Inc. Class Rating Amount ----- ------ ------ A-1T AAA $279,000,000 A-1D AAA $25,000,000 A-2 AA $23,000,000 B A $17,500,000 C BBB $20,500,000 D BB $13,000,000 Income notes NR $25,500,000 NR — Not rated. CALPINE CORP: Disclosure Statement is Misleading, Rosetta Says -------------------------------------------------------------- Rosetta Resources Inc. filed an objection with the bankruptcy court on Sept. 14, 2007, opposing Calpine Corp.'s proposed First Amended Disclosure Statement for its pending Joint Plan of Reorganization. In its objection, Rosetta asserts that Calpine's proposed disclosure statement should not be approved by the court because, among other reasons, it contains misleading and factually inaccurate descriptions of the July 2005 transaction by which Calpine split off its remaining oil and gas business to Rosetta, a Calpine-created entity, and of the claims Calpine has filed against Rosetta purportedly arising from this transaction. Rosetta states that Calpine's "disclosure" with respect to the Rosetta transaction amounts to little more than self-serving conclusory allegations that are improperly portrayed as facts rather than unsupported contentions that are disputed by Rosetta. Rosetta's objection also asserts that the proposed disclosure statement fails to disclose the nature and extent of any investigation Calpine may have conducted before proposing to release any and all claims the Calpine bankruptcy estate may hold against Calpine's board of directors, officers and professional advisers arising from their respective involvement in the conception, structuring and implementation of the Rosetta transaction. Rosetta argues that Calpine's own statements regarding the misconduct of these persons as set forth in the proposed disclosure statement and in Calpine's complaint against Rosetta cannot be reconciled with the broad releases Calpine proposes to provide for its officers, directors and professionals. Rosetta asserts that, at a minimum, Calpine should provide additional disclosure of the nature and extent of the investigation it conducted regarding the actions of these persons and the analysis underlying Calpine's conclusion that the broad releases of these persons from any and all claims are appropriate, notwithstanding its own allegations of breaches of fiduciary duty and mismanagement by these persons in connection with the Rosetta transaction. In addition, Rosetta's objection asserts that: * Calpine's disclosure statement is inadequate because it fails to inform creditors that the full payment of their claims under Calpine's proposed plan is not in any way dependant on its obtaining any recovery from Rosetta and, in fact, the full satisfaction of creditor claims will preclude further assertion of this claim as a matter of law. * The disclosure statement fails to warn Calpine's prepetition shareholders that they are not entitled to any benefit from Calpine's purported fraudulent transfer claims against Rosetta, since fraudulent transfer is a remedy that is available only to protect the interests of creditors, but that as a result of the contemplated full payment to creditors under Calpine's proposed plan, its prepetition shareholders will bear all of the substantial costs associated with Calpine's decision to pursue these claims, despite its full payment plan and the fact the prepetition shareholders may not share in any recovery. * Calpine's disclosure statement mischaracterizes the Rosetta transaction as an "insider transaction" when, in fact, Rosetta was controlled by Calpine prior to the Rosetta transaction and, at all relevant times after the Rosetta transaction, by unrelated third-party investors. The Rosetta transaction was structured and approved by Calpine's board of directors and management, based on the advice of a variety of internationally recognized financial and legal investment advisers. Additionally, Calpine touted the experience and expertise of its Calpine Natural Gas management team as an intangible value in attracting the unrelated investors and lenders that provided the debt and equity to Rosetta that led to the $1.05 billion cash purchase price and other consideration demanded by Calpine to complete the Rosetta transaction. * While Rosetta strongly disputes Calpine's statements regarding the propriety of the Rosetta transaction and the actions of Calpine's officers, directors and professionals, Calpine's statements, if true, state a claim for breach of fiduciary duty and mismanagement by Calpine's directors and officers in having approved and consummated the Rosetta transaction, which claim it improperly released under Calpine's proposed plan. * Similarly, if Calpine's allegations in its fraudulent conveyance action are true, which Rosetta disputes, the Calpine directors and officers who entirely controlled and made all decisions related to the Rosetta transaction, without CNG management having any control or decision making authority for and on behalf of Calpine in this regard, misled Rosetta and its shareholders and induced them to participate in the Rosetta transaction by representing that Calpine was and would remain solvent. Rosetta and its shareholders may, as a result, hold separate and distinct claims under federal securities laws, that they could assert against Calpine and its directors and officers. * Calpine's disclosure statement fails to address Rosetta's position that the Purchase Agreement is comprised of a number of interrelated agreements and, therefore that Calpine may not assume or reject the remaining unperformed portions of the Purchase Agreement without also assuming or rejecting the remainder of the other agreements entered into by the parties as part of the Purchase Agreement. In addition, the disclosure statement fails to disclose that if Calpine elects to reject the remainder of the agreements, Rosetta has the right under section 365(i) of the Bankruptcy Code to elect to force Calpine to nonetheless convey the remaining properties in exchange for the payment by Rosetta of the balance of the purchase price. "We object to approval of Calpine's Proposed Disclosure Statement because it contains false and misleading descriptions of the Rosetta transaction and the purported claims Calpine holds against Rosetta," Charles Chambers, President and CEO of Rosetta Resources, said. Mr. Chambers emphasized that Rosetta believes Calpine's claims against it are entirely devoid of merit and further points out that Calpine's apparent effort to use its bankruptcy protection to effectively attempt to renegotiate the terms of Rosetta's acquisition of Calpine's oil and gas business and to thereby obtain a monetary windfall for its shareholders is a misuse of the legal process under circumstances where creditor claims will be fully satisfied. "We will continue to vigorously defend ourselves from these baseless allegations," Mr. Chambers concluded. About Calpine Corporation 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. On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Disclosure Statement has been reset to Sept. 25. CAPITALSOURCE INC: Fitch Rates $250 Million Debentures at BB+ ------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to CapitalSource, Inc.'s $250 million senior subordinated debentures issued on July 30, 2007. The 7.25% notes are unsecured and will mature July 15, 2037. Prior to maturity, the notes can be converted, under certain terms and conditions, into CapitalSource common stock. The notes rank equally with $499 million of subordinated debentures due in 2034, which are also rated 'BB+' by Fitch. Based in Chevy Chase, Maryland, CapitalSource operates as a real estate investment trust and, via its commercial loan and investment and residential mortgage investment businesses, provides senior and subordinated commercial loans, engages in asset management and servicing activities, invests in real estate and residential mortgage assets. CARBIZ INC: Closes $1 Million Trafalgar Capital Financing --------------------------------------------------------- CarBiz Inc. has closed on an additional $1 million convertible debenture financing with Trafalgar Capital Specialized Investment Fund, Luxemburg that will assist in funding the expansion strategy of its business. The debenture bears an annual interest rate of: a. 12% compounded monthly from the date of issuance until CarBiz files a registration statement with the SEC registering certain of the shares of company common stock into which the debenture is convertible; b. 10% compounded monthly from the date the registration statement is filed until it is declared effective by the staff of the SEC; and c. 8% per annum thereafter until the debenture is repaid in full. Subject to certain limitations, the debenture is convertible at Trafalgar's option into common shares of CarBiz at a price per share equal to the lesser of: -- an amount equal to $0.22, or -- an amount equal to 85% of the lowest daily closing bid price of the CarBiz's common shares, as quoted by Bloomberg LP, both for the five trading days immediately preceding the date of conversion. The debenture contains certain liquidated damage provisions for the failure to meet certain criteria regarding the registration of the shares of company common stock into which the debenture is convertible as set forth in the financing documents. The debenture is also secured by all of the assets of CarBiz, with Trafalgar having the ability to seize such assets in the case of an event of default in accordance with the terms of the financing documents. In addition to the debenture, CarBiz issued to Trafalgar warrants to purchase up to 2 million common shares of CarBiz at any time until Aug. 31, 2010, with 1,000,000 shares subject to purchase at $0.15 per share, and 1,000,000 shares subject to purchase at $0.22 per share, subject to adjustment under certain circumstances. About CarBiz Inc. Headquartered in Toronto, Ontario, Canada, CarBiz Inc. (OTCBB: CBZFF) -- http://www.carbiz.com/-- provides software and services for car dealers. CarBiz's software applications cover finance and insurance, special financing, leasing, buy here-pay here, traffic management, and accounting. Related services include software training and consulting, software applications hosting, and website design. CarBiz also offers service contracts and extended warranties through Heritage Warranty and car loans. Carbiz serves more than 3,000 dealers. At April 30, 2007, the company's balance sheet showed total assets of $1,922,316, total liabilities of $5,611,745, and minority interest of $212,264, resulting in a total stockholders' deficit of $3,901,693. CDC MORTGAGE: Poor Collateral Prompts S&P to Lower Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 12 classes from four CDC Mortgage Capital Trust transactions - series 2002-HE3, 2003-HE1, 2003-HE2, and 2003-HE4. Of the 12 lowered ratings, S&P removed six from CreditWatch with negative implications. Lastly, S&P affirmed its ratings on the remaining nine classes from the same transactions. The lowered ratings reflect the continuing deterioration of collateral performance. Credit support for these transactions is derived from a combination of subordination, excess interest, and overcollateralization. Realized losses have consistently outpaced excess spread and have eroded (or depleted) O/C to the extent that credit support for these classes is no longer sufficient to support the prior ratings. As of the August 2007 remittance period, O/C for the pool backing series 2002-HE3 had been depleted. S&P lowered the rating on class B-1 to 'D' due to principal write-downs in the previous two months. Cumulative realized losses reached $18.47 million, or 2.80% of the original pool balance. Total delinquencies and severe delinquencies (90-plus days, foreclosure, and REOs) constitute 33.06% and 19% of the current pool balance, respectively. As of the August 2007 remittance period, cumulative realized losses for the pool backing series 2003-HE1 had reached $13.27 million, or 2.01% of the original pool balance. Total and severe delinquencies constitute 24.73% and 11.43% of the current pool balance, respectively. As of the August 2007 remittance period, the O/C for the pool backing series 2003-HE2 had been reduced to $1.31 million, or 0.19% of the original pool balance. Cumulative realized losses reached $10.36 million, or 1.51% of the original pool balance. Total and severe delinquencies constitute 34.88% and 24.93% of the current pool balance, respectively. As of the August 2007 remittance period, the O/C for the pool backing series 2003-HE4 had been reduced to $1.25 million, or 0.16% of the original pool balance. Cumulative realized losses reached $11.89 million, or 1.56% of the original pool balance. Total and severe delinquencies constitute 28.25% and 19.92% of the current pool balance, respectively. S&P removed the rating on class B-1 from series 2003-HE1, class B- 3 from series 2003-HE2, and class B-3 from series 2003-HE4 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. The collateral backing these transactions consists of pools of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered CDC Mortgage Capital Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-HE3 B-1 D CCC 2003-HE1 M-2 BBB A 2003-HE2 M-3 BBB A- 2003-HE2 B-1 BB BBB+ 2003-HE2 B-2 B BBB 2003-HE4 B-1 BB BBB+ Ratings Lowered and Removed from Creditwatch negative CDC Mortgage Capital Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-HE3 M-2 BB A/Watch Neg 2003-HE1 M-3 BB A-/Watch Neg 2003-HE1 B-1 CCC B/Watch Neg 2003-HE2 B-3 CCC BB/Watch Neg 2003-HE4 B-2 B BBB/Watch Neg 2003-HE4 B-3 CCC B/Watch Neg Ratings Affirmed CDC Mortgage Capital Trust Series Class Rating ------ ----- ------ 2002-HE3 M-1 AA+ 2003-HE1 M-1 AA+ 2003-HE2 M-1 AA+ 2003-HE2 M-2 A 2003-HE4 A-1, A-3 AAA 2003-HE4 M-1 AA 2003-HE4 M-2 A 2003-HE4 M-3 A- CENVEO CORP: S&P Lifts Bank Loan Rating to BB from BB- ------------------------------------------------------ Standard & Poor's Ratings Services raised its bank loan rating on Cenveo Corp.'s senior secured credit facilities to 'BB', from 'BB-'. The recovery rating was revised to '1' from '2'. The '1' recovery rating indicates that lenders can expect very high (90%- 100%) recovery in the event of a payment default. At the same time, Standard & Poor's affirmed its 'BB' bank loan rating and '1' recovery rating due to the company's $100 million senior secured term loan C add-on, issued in July to help fund the acquisition of Madison/Graham ColorGraphics Inc. S&P also affirmed the 'B+' corporate credit rating on Stamford, Connecticut-based Cenveo Inc. The outlook is positive. "The ratings on Cenveo reflect its high leverage pro forma for recent acquisitions, the likelihood of more debt-financed acquisitions in the intermediate term, and its participation in highly competitive and fragmented markets," said Standard & Poor's credit analyst Emile Courtney. "These factors are somewhat offset by operating improvements in 2006 and the expectation of continued growth in profitability and cash flow generation." CHARTER COMMS: Amends Unit's Exchange 5.88% Senior Notes Offer -------------------------------------------------------------- Charter Communications Inc. has amended and extended Charter Communications Holding Company LLC, its subsidiary's exchange offer for the company's outstanding 5.875% Convertible Senior Notes due 2009. Amendments include: -- adjustments to the coupon from 7% to 6.5% and to the initial conversion premium from 40% to 30% for the New Convertible Notes; -- Charter Holdco will now accept for exchange any and all of the $413 million aggregate principal amount outstanding of Existing Convertible Notes; and -- the Expiration Date and the period for the calculation of the 10-day VWAP have each been extended by one day. As amended, Charter Holdco is offering up to $793 million principal amount of the company's new 6.5% Convertible Senior Notes due 2027, with an initial conversion premium of 30% to the 10-day VWAP in exchange for any and all of its $413 million aggregate principal amount of Existing Convertible Notes. The Exchange Offer is valid for Existing Convertible Notes tendered for exchange and not validly withdrawn on or prior to 11:59 pm on Sept. 27, 2007. The Exchange Offer was to expire at 11:59 pm on Sept. 26, 2007. The exchange consideration for the Existing Convertible Notes will be determined based on the average of the volume-weighted daily price of Charter's Class A common stock for the ten consecutive trading days ending Sept. 25, 2007, and will be in the form of New Convertible Notes. The amount of New Convertible Notes to be issued per Existing Convertible Notes will vary based on the 10-day VWAP and will range from approximately $1,111 to $1,924 per $1,000 principal amount of Existing Convertible Notes. If the 10-day VWAP is between two stock prices on the table, the amount of New Convertible Notes to be issued per $1,000 principal amount of Existing Convertible Notes will be determined by straight-line interpolation between the amounts set forth for the higher and lower stock prices. a) 10-day VWAP of Charter's Class A Common Stock: $2 Principal Amount of New Convertible Notes to be Issued per $1,000, Principal Amount of Existing Convertible Notes Tendered: $1,110.62 Conversion Price: $2.60 Conversion Rate: 384.6154 b) 10-day VWAP of Charter's Class A Common Stock: $2.20 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,173.25 Conversion Price: $2.86 Conversion Rate: 349.6503 c) 10-day VWAP of Charter's Class A Common Stock: $2.40 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,239.65 Conversion Price: $3.12 Conversion Rate: 320.5128 d) 10-day VWAP of Charter's Class A Common Stock: $2.60 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,309.13 Conversion Price: $3.38 Conversion Rate: 295.8580 e) 10-day VWAP of Charter's Class A Common Stock: $2.80 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,381.10 Conversion Price: $3.64 Conversion Rate: 274.7253 f) 10-day VWAP of Charter's Class A Common Stock: $3 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,451.68 Conversion Price: $3.90 Conversion Rate: 256.4103 g) 10-day VWAP of Charter's Class A Common Stock: $3.20 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,521.73 Conversion Price: $4.16 Conversion Rate: 240.3846 h) 10-day VWAP of Charter's Class A Common Stock: $3.40 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,592.26 Conversion Price: $4.42 Conversion Rate: 226.2443 i) 10-day VWAP of Charter's Class A Common Stock: $3.60 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,662.60 Conversion Price: $4.68 Conversion Rate: 213.6752 j) 10-day VWAP of Charter's Class A Common Stock: $3.80 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,733.33 Conversion Price: $4.94 Conversion Rate: 202.4291 k) 10-day VWAP of Charter's Class A Common Stock: $4 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,802.82 Conversion Price: $5.20 Conversion Rate: 192.3077 l) 10-day VWAP of Charter's Class A Common Stock: $4.20 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,872.80 Conversion Price: $5.46 Conversion Rate: 183.1502 m) 10-day VWAP of Charter's Class A Common Stock: $4.35 Principal Amount of New Convertible Notes to be Issued per $1,000 and Principal Amount of Existing Convertible Notes Tendered: $1,923.50 Conversion Price: $5.66 Conversion Rate: 176.8347 New Convertible Notes will be issued only in minimum denominations of $1,000 and integral multiples of $1,000. In addition to the exchange consideration, Charter Holdco will pay accrued interest on the Existing Convertible Notes from and including May 16, 2007, the last interest payment date, up to the settlement date of the Exchange Offer. The New Convertible Notes will have a 2027 maturity, subject to earlier redemption at the option of the company or repurchase at the option of the holders. The New Convertible Notes provide the holders with the right to require Charter to repurchase some or all of the New Convertible Notes for cash on Oct. 1, 2012, 2017, and 2022, at a repurchase price equal to the principal amount plus accrued interest. The Exchange Offer is conditional upon the 10-day VWAP being between $2 and $4.35. The Exchange Offer is also conditioned on a minimum of $75 million of Existing Convertible Notes being tendered. Subject to applicable securities laws and the terms set forth in the Exchange Offer, Charter Holdco reserves the right to amend the Exchange Offer in any respect. The Exchange Offer will expire at 11:59 PM Eastern Daylight Time on Sept. 27, 2007, unless extended or earlier terminated. The New Convertible Notes may not be issued, nor may the Exchange Offer be accepted, prior to the time the registration statement becomes effective. Except for these modifications, all other terms and conditions of the offer remain materially unchanged. As of 5:00 p.m. Eastern Daylight Time on Sept. 13, 2007, no Existing Convertible Notes had been tendered in the Exchange Offer. The offer documents will be made available to all holders of the Existing Convertible Notes. Copies of the prospectus and related letter of transmittal may be obtained from Global Bondholder Services Corporation, the information agent for the Exchange Offer, at (866) 470-3700 (U.S. Toll-free) or (212) 430-3774. The Dealer Managers for the Exchange Offer are Citigroup Global Markets Inc. and Morgan Stanley. For additional information, you may contact the Citigroup Special Equity Transactions Group at (877) 531-8365 (U.S. Toll-free) or (212) 723-7406 or the Morgan Stanley Liability Management Group at (800) 624-1808 (U.S. Toll- free) or (212) 761-5384. About Charter Communications Headquartered in St. Louis, Missouri, Charter Communications Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and a publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. Charter Communications Inc.'s consolidated balance sheet at $15.05 billion in total assets, $21.70 billion in total liabilities, $195 million in minority interest, and $4 million in redeemable preferred stock resulting in a $6.8 billion total stockholders' deficit. CHESTER DORSEY: Case Summary & Five Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Chester C. Dorsey, Jr. 5370 South Kenyon Seattle, WA 98118 Bankruptcy Case No.: 07-14329 Chapter 11 Petition Date: September 13, 2007 Court: Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Cynthia A Kuno, Esq. Crocker, Kuno, Ostrovsky, L.L.C. 720 Olive Way, Suite 1000 Seattle, WA 98101 Tel: (206) 624-9894 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ KEY/CITI credit card $25,273 P.O. Box 6003 purchases Hagerstown, MD 21747 D.S.H.S. arrearages $9,000 1115 Washington Street, Southeast Olympia, WA 98504 Seattle Public Utilities utilities $228 P.O. Box 34016 Seattle, WA 98124 M.C.I. telephone $165 Puget Sound Energy utilities $155 COUNTRYWIDE FINANCIAL: Provides August 2007 Operations Results -------------------------------------------------------------- Countrywide Financial Corporation released operational data for the month ended Aug. 31, 2007. Key operational results included: * Mortgage loan fundings for the month of August 2007 totaled $34 billion, a decrease of 17% from August 2006. * Average daily mortgage loan application activity for August 2007 was $2.3 billion, a decline of 12% from August 2006. The mortgage loan pipeline was $52 billion at Aug. 31, 2007, as compared to $64 billion for the same period last year. * The mortgage loan servicing portfolio continued to grow, reaching $1.5 trillion at Aug. 31, 2007. This is an increase of $226 billion, or 18 percent, from Aug. 31, 2006. * Commercial real estate funding volume for the month of August 2007 was $757 million, which compares to $273 million in August 2006. * Banking Operations' assets were $94 billion at Aug. 31, 2007, which compares to $87 billion at August 31, 2006. * Securities trading volume in the Capital Markets segment of $414 billion for August 2007 was 17% higher when compared to the same month last year. * Net earned premiums from the Insurance segment were $135 million in August 2007, up 22% from August 2006. "Residential mortgage loan activity for the month of August reflected current mortgage market conditions," said David Sambol, President and Chief Operating Officer. "Average daily application volume was down 12 percent as compared to both July 2007 and August 2006 as a result of the continued slowdown in housing and credit tightening in the mortgage market. As a result, the pipeline of applications-in-process ended the month at $52 billion, which was down 17% from July 2007 and down 19% from August 2006. "Adjusting to the turbulent conditions in the mortgage and credit markets, the Company has taken decisive steps since early August, which included: * Addressing liquidity and funding needs by accelerating our plans to migrate the funding of our mortgage originations to Countrywide Bank, and our borrowing of $11.5 billion under our lines of credit. Additionally, the Company recently arranged for $12 billion in additional secured borrowing capacity through new or existing credit facilities; * Materially tightening product and underwriting guidelines such that all loans the Company now originates are eligible for Fannie Mae, Freddie Mac or Ginnie Mae securitization programs, or otherwise meet Countrywide Bank's investment criteria; * Taking advantage of reduced primary market competition to adjust pricing, which is expected to have a favorable impact on mortgage banking gain-on-sale margins and result in greater returns on the high- quality loans originated for our Bank's investment portfolio; and * Announcing plans to reduce expenses in response to lower expectations for mortgage origination market volume. These plans include workforce reductions of up to 20%. "Looking forward, the Company expects that it will be a long-term beneficiary of the current conditions and corrections in the mortgage industry, and we are confident that the actions which we have taken in response to the current environment will position us for profitable future growth and success," Mr. Sambol concluded. About Countrywide Founded in 1969, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services prime and nonprime loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. At July 31, 2007, Countrywide employed 61,586 workers, 34,326 of which originate loans. Bankruptcy Speculation As reported in the Troubled Company Reporter on Aug. 17, 2007, Kenneth Bruce, a Merrill Lynch & Co. analyst in San Francisco, raised the possibility that Countrywide might need to seek protection from creditors under chapter 11 in a research report entitled "Liquidity is the Achilles heel" distributed to Merrill Lynch clients Wednesday. "If liquidations occur in a weak market, then it is possible for CFC to go bankrupt," Mr. Bruce wrote. With $216 billion in assets and $202 billion in liabilities, Countrywide would be the largest chapter 11 filing in U.S. history by those measures. The company however gave banking customers reassurance that their money was safe. That company cited that it has assets of more than $100 billion; has investment-grade ratings from three major credit rating agencies; and credit woes currently hurting its lending business won't affect federally insured deposits. Countrywide also disclosed that it received a $2 billion strategic equity investment from Bank of America which was completed and funded Aug. 22, 2007. E*TRADE FINANCIAL: Restructuring Businesses, to Focus on Retail --------------------------------------------------------------- E*TRADE FINANCIAL Corporation said it plans to realign its balance sheet and streamline business operations to focus on its retail growth opportunity. The company is exiting or restructuring non-core businesses that lack a direct and strategic connection with its retail customers. The company is also accelerating plans to shift the composition of its balance sheet toward retail assets and liabilities and to synchronize balance sheet growth with customer engagement. In addition, the company is increasing the provision for loan losses due to charge-offs expected as a result of the disturbance in the credit markets. As a result of those actions, E*TRADE FINANCIAL is revising 2007 earnings guidance to account for higher provision for loan losses, potential securities impairments, reduced balance sheet growth and restructuring charges. The company also confirmed that its balance sheet funding sources remain sound and the company remains well capitalized based on regulatory standards. "[The] announcement addresses the recent shifts in the global financial markets and allows us to focus on accelerating plans to further align both our balance sheet and business operations with our core asset - the retail customer," said Mitchell H. Caplan, Chief Executive Officer, E*TRADE FINANCIAL Corporation. "Growth in our target segment continues at record levels. The actions we have taken better position the franchise for future growth and high quality earnings." The specific details of the plan, and expected financial implications (all figures are pre-tax, with the exception of EPS and net income), include: * Balance sheet growth and composition strategy -- For the foreseeable future, balance sheet growth, if any, will be driven by the continued growth in cash and deposit balances from retail investing and trading customers. Through at least 2008, interest-earning assets will remain relatively flat with third quarter levels, with growth in customer cash and deposits used to replace wholesale fundings. The company plans to reduce balances in home equity, consumer loans and securities, replacing these assets as they pay down or mature with margin debt and prime first lien mortgages from retail customers. The planned run-off in home equity loans, consumer loans and securities will reduce both the overall level of risk within the portfolio and expected future loss levels. Through this initiative, the composition of the balance sheet will shift significantly toward retail assets and liabilities, reducing wholesale contributions to revenue and net income. The company anticipates making this transition in an orderly fashion over the next 18-24 months. Given the expectations for limited balance sheet growth going forward, the capital needs of the overall business will be reduced - creating opportunities in higher return investments such as accelerated share and debt repurchase activity or other initiatives to strengthen the business. * Increased allowance for loan losses. -- Given the significant deterioration in the mortgage market in August and particularly the pace of change in the performance of home equity loans in August, the company expects charge-offs of $95 million dollars and total provision expense of $245 million in the second half of 2007. The majority of this provision is expected to be recorded in the third quarter. With this additional reserve, allowance for loan losses as a percentage of non-performing loans is expected to increase to 75 percent based on assumptions for the second half of the year, up from 45 percent on June 30, 2007. Within home equity loans, where the company and the marketplace have seen the most significant stress, the coverage will be approximately 100 percent, up from 51 percent as of June 30, 2007. * Potential for securities impairments. -- Embedded in the company's modified guidance is an assumed securities impairment of up to $100 million in the second half of 2007. The expected impairments in the guidance are predominantly related to deterioration in the performance of asset-backed securities comprised of second lien loans and CDOs (collateralized debt obligations). * Exiting and restructuring non-core businesses. -- The company will exit its wholesale mortgage operations and will streamline its direct mortgage lending business to focus on its retail franchise. In addition, the company will restructure its institutional sales trading business in a manner to better align it with retail activity. Total severance, restructuring and other exit charges are estimated to be approximately $32 million, the majority of which will occur in the fourth quarter. As a result of those actions, the company is revising its earnings outlook for 2007 to account for: 1) higher provision for loan losses; 2) potential securities impairments; 3) slower balance sheet growth and composition expectations; and 4) exit and other restructuring charges. For the full year 2007, E*TRADE FINANCIAL expects GAAP net income of between $450 million and $500 million, and earnings per share of between $1.05 and $1.15 per share. This is down from its previous range of $1.53 to $1.67. About E*TRADE FINANCIAL Headquartered in New York City, E*TRADE FINANCIAL Corp. -- https://us.etrade.com/ -- provides financial services including trading, investing, banking and lending for retail and institutional customers. Securities products and services are offered by E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * E*TRADE FINANCIAL Corp. carries to date Moody's "Ba2" Issuer and Senior Unsecured Debt ratings, which were placed on June 6, 2006, with a positive outlook. In addition, the company carries Standard & Poor's "BB-" long-term local and foreign issuer credit ratings, which were placed on Oct. 23, 2006, with a stable outlook. EQUINIX INC: S&P Junks Rating on $550 Million Subordinated Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Foster City, California-based data center operator Equinix Inc. S&P also assigned a 'CCC+' rating to the company's $250 million of convertible subordinated notes due 2012 and proposed $300 million of convertible subordinated notes due 2014. The outlook is positive. Proceeds from the proposed $300 million note issue and an expected concurrent $300 million common stock offering will be used to fund the estimated $550 million acquisition of IXEurope. As of June 30, 2007, Equinix had $543 million of total debt outstanding. Pro forma for the acquisition of IXEurope and several financing transactions that occurred subsequent to June 30, 2007, total debt will be about $930 million. The notes are rated two notches below the corporate credit rating due to the substantial concentration of priority obligations in the capital structure, including borrowings under the $75 million revolving credit facility and the $110 million financing for the Chicago 3 IBX facility. "The ratings reflect the significant risks of this capital- intensive, highly competitive industry niche, coupled with aggressive leverage," said Standard & Poor's credit analyst Catherine Cosentino. Equinix offers space, power, utilities, and cross-connects in buildings for various network operators, content companies, and enterprises to interconnect and exchange traffic. These data centers' primary cost components are rent, engineering and security, power and electricity. Since most of these costs are fixed, this business has very favorable operating leverage characteristics as new customers are added, and gross profit margins can exceed 65%. The acquisition of IXEurope provides a presence in the European data center market, expanding Equinix's ability to globally serve its customers. IXEurope operates 14 data centers in four countries--Germany, the U.K., Switzerland, and France--and generated $65 million of revenue in 2006. While many competitors have exited the business in the past several years years, it remains an area in which numerous companies have invested, and could prove to have many of the same longer-term adverse pricing trends as long distance communications, especially if Web-enabled Internet protocol applications do not result in material growth in Internet traffic levels over the next several years. This would be particularly problematic for Equinix, given its planned expansion of existing data centers sites, including the Silicon Valley, Chicago, Singapore, and Japan. EUROFRESH INC: Low Profit Margin Cues Moody's to Junk Ratings ------------------------------------------------------------- Moody's Investors Service downgraded Eurofresh Inc.'s senior unsecured notes and its corporate family rating to Caa2 from Caa1. Moody's affirmed the company's probability of default rating at Caa3, and the Ca rating on its senior subordinated notes discount notes. The rating outlook remains negative. The downgrade reflects the erosion in reported operating profit margin in the recent second fiscal quarter, Moody's concerns about Eurofresh's liquidity and ability to meet covenants in its bank agreement, and the increased possibility that the company could have difficulty meeting its debt service requirements as scheduled. While production volumes and sales improved during the first six months of fiscal 2007, profitability has been negatively impacted by continued high energy costs, legal fees, high employee turnover, and the lower productivity of a relatively high number of inexperienced workers. These factors are also likely to hurt the third fiscal quarter, as could recent modest outbreaks of plant disease. Eurofresh Inc.'s Caa2 corporate family rating reflects the company's very weak financial metrics, tight liquidity, and limited financial flexibility, and the increased possibility that the company may be unable to meet its scheduled debt service requirements. It also reflects the company's small size and very narrow product focus relative to larger and more diversified competitors in the fresh fruit and vegetable industry. The company's ratings also incorporate the very strong market position it has created, resulting in a solid enterprise value and likely good recovery values for secured debt in the event of default, although there could be material losses for unsecured senior and subordinated creditors in the event of default. The negative rating outlook reflects the possibility that the company's liquidity and financial flexibility could tighten further creating additional downward rating pressure. This could occur if operating performance does not improve sufficiently to build ample cushion in its financial covenants, or if availability under its $40 million bank revolving credit facility is further reduced. Ratings downgraded: -- Corporate family rating to Caa2 from Caa1 -- $170 million senior unsecured notes due 2013 to Caa2 (LGD2, 29%) from Caa1 (LGD2, 29%) Rating affirmed: -- Probability of default rating at Caa3 Rating affirmed, but LGD rate and percentage adjusted: -- $44.17 million senior subordinated discount notes due 2014 at Ca (LGD5,71%), from (LGD4, 69%) Based in Willcox, Arizona, Eurofresh Inc, is a leading producer of greenhouse-grown tomatoes. Sales for the twelve months ended June 30, 2007 were about $167 million. FEDDERS CORP: Committee Balks at $79 Mil. DIP Loan from Goldman --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Fedders Corp.'s bankruptcy case oppose the $79 million in postpetition financing provided to Fedders by a group including Goldman Sachs Credit Partners LP and Bank of America NA, Bill Rochelle of Bloomberg News reports. According to the report, the Committee called the loan "outrageously expensive" arguing that it costs 14 percent over the London interbank offered rate for the term loan and LIBOR plus 5 percent for the revolving credit. The Committee also argued that the terms of the loan permit calling a default any time, give the lenders "absolute discretion" to direct the reorganization, and turn the Chapter 11 case into a "sham," the source relates. Last month, Fedders obtained interim Court approval to borrow under the financing agreement. The matter is set for final approval at a September 20 hearing. Headquartered in Liberty Corner, New Jersey and founded in 1896, Fedders Corporation (OTC: FJCC) -- http://www.fedders.com/-- manufactures air treatment products, including air conditioners, furnaces, air cleaners and humidifiers for residential, commercial and industrial markets. The company filed for Chapter 11 protection on Aug. 22, 2007, (Bankr. D. Del. Case No.: 07-11182). Its Debtor-affiliates filed for separate Chapter 11 cases. Norman L. Pernick, Esq. of Saul, Ewing, Remick & Saul LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed total assets of $186,300,000 and total debts of $322,000,000. FIRST DATA: Extends Tender Offer Expiration to September 24 ----------------------------------------------------------- First Data Corporation has further extended the offer expiration date and price determination date for its tender offers in respect of its outstanding: -- 6-3/8% Notes due 2007 (CUSIP No. 32006YAG7); -- 3.375% Notes due 2008 (CUSIP No. 319963AG9); -- 5.8% Medium-Term Notes due 2008 (CUSIP No. 32006YAH5); -- 3.9% Notes due 2009 (CUSIP No. 319963AJ3); -- 4.5% Notes due 2010 (CUSIP No. 319963AL8); -- 5.625% Senior Notes due 2011 (CUSIP No. 319963AF1); -- 4.7% Notes due 2013 (CUSIP No. 319963AH7); -- 4.85% Notes due 2014 (CUSIP No. 319963AK0); and -- 4.95% Notes due 2015 (CUSIP No. 319963AM6). The offer expiration date will now be 8:00 a.m., New York City time, on Sept. 24, 2007, unless extended or earlier terminated. As indicated in the Offer to Purchase, it is expected that the offer expiration date will be extended as necessary to coincide with the date that the Merger becomes effective. In addition, the company disclosed that the price determination date will now be 2:00 p.m., New York City time, on Sept. 19, 2007, unless extended or earlier terminated. As of 5:00 p.m., New York City time, on Sept. 13, 2007, the company had received tenders in respect of the principal amounts of Notes: -- 6-3/8% Notes due 2007: $59 million; -- 3.375% Notes due 2008: $430.1 million; -- 5.8% Medium-Term Notes due 2008: $26.7 million; -- 3.9% Notes due 2009: $87 million; -- 4.5% Notes due 2010: $135.2 million; -- 5.625% Senior Notes due 2011: $110.9 million; -- 4.7% Notes due 2013: $426.5 million; -- 4.85% Notes due 2014: $336.8 million; and -- 4.95% Notes due 2015: $359.2 million. The tender offers and the related consent solicitations relating to the Notes are made upon the terms and conditions set forth in the company's Offer to Purchase and Consent Solicitation Statement dated Aug. 3, 2007, and the related Consent and Letter of Transmittal, as amended. The terms and conditions of the tender offers are unchanged. The tender offers and consent solicitations are subject to the satisfaction of certain conditions, including the merger of First Data with an affiliate of Kohlberg Kravis Roberts & Co. pursuant to the merger agreement having occurred, or the Merger occurring substantially concurrent with the Offer Expiration Date. First Data has retained Citigroup Global Markets Inc. to act as the lead dealer manager for the tender offers and lead solicitation agent for the consent solicitations, and they can be contacted at 800-558-3745 (toll-free) or 212-723-6106 (collect). First Data has also retained Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and Lehman Brothers Inc. to act as co-dealer managers for the tender offers and co-solicitation agents for the consent solicitations. Deutsche Bank Luxembourg SA was appointed Luxembourg Tender Agent for the Offers and may be contacted at: Deutsche Bank Luxembourg SA Trust & Securities Services 2 BLD Konrad Adenauer L-1115 Luxembourg Tel (352) 421-22-460 Fax (352) 421-22-426 Requests for documentation may be directed to Global Bondholder Services Corporation, the Information Agent, which can be contacted at 212-430-3774 (for banks and brokers only) or 866-924- 2200 (for all others toll-free). About First Data Headquartered in Greenwood Village, Colorado, First Data Corp. (NYSE: FDC) -- http://www.firstdata.com/-- provides electronic commerce and payment solutions for businesses worldwide. The company's portfolio of services and solutions includes merchant transaction processing services; credit, debit, private-label, gift, payroll and other prepaid card offerings; fraud protection and authentication solutions; receivables management solutions; electronic check acceptance services through TeleCheck; well as Internet commerce and mobile payment solutions. The company's STAR Network offers PIN-secured debit acceptance at 2 million ATM and retail locations. * * * First Data Corp.'s long-term foreign and local issuer credits carry Standard & Poor's Ratings Services' 'BB+' rating, which were placed on April 2, 2007, with a negative outlook. FREEDOM COMMUNICATIONS: S&P Places BB Rating Under Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Freedom Communications Inc., including the 'BB' corporate credit rating, on CreditWatch with negative implications. Freedom is an Irvine, California-headquartered media company that is engaged in the publishing of newspapers, including the Orange County Register and more than 65 daily and weekly community newspapers, as well as the owner of several television broadcasting stations and interactive media operations. "The CreditWatch listing reflects Freedom's weak operating performance for the three months ended June 30, 2007, and the prospects for a continued weak revenue climate," said Standard & Poor's credit analyst Emile Courtney. Standard & Poor's will review its rating on Freedom after evaluating the company's future operating and financial strategies. GENERAL MOTORS: Talks with UAW Show Progress, WSJ Says ------------------------------------------------------ General Motors Corp.'s labor talks with the United Auto Workers is moving forward, The Wall Street Journal reports, citing people familiar with the negotiations. Last week, the UAW picked GM as lead negotiator on a new four-year contract along with Ford Motor Co. and Chrysler LLC, and threatened a strike should GM fail to close a deal. According to WSJ, the automaker and the UAW are bargaining over a wide range of issues to replace the contract, including a proposal to unload from GM's balance sheet more than $50 billion in debts owed to UAW retiree health care and place them in a union-controlled trust. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. 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, according to Moody's. GRAY TELEVISION: S&P Revises Outlook to Negative from Stable ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Gray Television Inc. to negative from stable. "The rating action is based on our concern about Gray's narrow margin of financial covenant compliance under its current capital structure and its discretionary cash flow deficits in the first half of 2007," explained Standard & Poor's credit analyst Deborah Kinzer. S&P affirmed the long-term ratings, including the 'B' corporate credit rating. The Atlanta, Georgia-based TV broadcasting company had total debt of about $928.5 million outstanding as of June 30, 2007. Under Gray's covenants, net debt to trailing eight quarters' average EBITDA was 7.97x against a covenant level of 8.25x as of June 30, 2007. The covenant tightens to 7.75x as of June 30, 2008. Even considering the benefit of political ad revenues for the 2008 elections, which could begin to flow in from the fourth quarter of 2007, S&P are concerned about the company's ability to maintain sufficient headroom under its leverage covenant, given a recent slowdown in ad spending in a number of industries. The rating on Gray reflects its high debt leverage, the mature and somewhat cyclical nature of TV advertising, and the potential for additional cash acquisitions, share repurchases, or dividends that may limit improvement in the company's credit metrics. These risks are only partially offset by the strong market position of Gray's major-network-affiliated TV stations, the good margin and discretionary cash flow potential of TV broadcasting, and resilient station asset values. GSAMP TRUST: S&P Lowers Ratings on Four Certificate Classes ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes of mortgage pass-through certificates from GSAMP Trust 2004-SEA2. Concurrently, S&P removed its ratings on classes M-3, M-4, and M-5 from CreditWatch with negative implications. Additionally, S&P affirmed its ratings on four other classes from the same series . The downgrades reflect continuing deterioration in the performance of the collateral pool. Excessive realized losses have depleted overcollateralization and incurred significant write-downs to the class B-2 certificate. For the past six months, monthly realized losses have outpaced excess interest by approximately $1.08 million, which has in turn reduced credit enhancement to levels that are not sufficient to support the prior ratings on the downgraded classes. As of the August 2007 distribution date, cumulative losses had reached $39.98 million, or 6.44% of the original pool balance. Total delinquencies and severe delinquencies (90-plus days, foreclosures, and REOs) constitute 28.94% and 18.16% of the current pool balance, respectively. Credit support for this transaction is provided through a combination of excess spread, overcollateralization, and subordination. The underlying collateral consists of subprime, conventional, fixed-rate mortgage loans secured by first and second liens on one- to four-family residential properties. Rating Lowered GSAMP Trust 2004-SEA2 Rating ------ Class To From ----- -- ---- M-2 A AA+ Ratings Lowered and Removed from Creditwatch Negative GSAMP Trust 2004-SEA2 Rating ------ Class To From ------ -- ----- M-3 B A/Watch Neg M-4 B- BB/Watch Neg M-5 CCC B/Watch Neg Ratings Affirmed GSAMP Trust 2004-SEA2 Class Rating ----- ------ A-1, A-2A, A-2B, M-1 AAA HARTCOURT COMPANIES: Kabani & Company Raises Going Concern Doubt ---------------------------------------------------------------- Kabani & Company, Inc., expressed substantial doubt about Hartcourt Companies, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company incurred net losses and experienced negative cash flows from operations in the last six years. As of May 31, 2007, the company accumulated deficit of approximately $69 million. The auditing firm added that losses will likely increase in the near future as the company moves out of IT business and into the education business. The company posted a $3,786,441 net loss on zero revenue for the year ended May 31, 2007, compared with a $2,834,960 net loss on zero revenue in the prior year. At May 31, 2007, the company's balance sheet showed $1,415,634 in total assets, $1,611,821 in total liabilities, resulting in a $196,187 stockholders' deficit. The company also reported strained liquidity in its May 31, 2007, balance sheet with $62,160 in total current assets and $ 1,219,447 in total current liabilities, resulting in a $1,157,287 working capital deficit. A full-text copy of the company's 2007 annual report is available for free at http://ResearchArchives.com/t/s?2366 About The Hartcourt Companies Headquartered in Shanghai, China, The Hartcourt Companies, Inc. -- http://www.hartcourt.com-- was incorporated in Utah. The company specializes in the Chinese information technology market. In August 2006, the company decided to enter the post- secondary education market in China. Kabani & Company, Inc., in Los Angeles, Calif., raised substantial doubt about The Hartcourt Companies, Inc.'s ability to continue as a going concern after auditing their consolidated financial statements for the year ended May 31, 2006. The auditor pointed to the company's negative cash flow from operations and accumulated deficiencies. INSIGHT COMMS: Low Sale Price Spurs Owner to Defer Sale ------------------------------------------------------- Credit market woes has affected the sale price of cable company Insight Communications Co. Inc., instigating private equity firm The Carlyle Group plc to hold off the auction, various sources report. Adding to problems of the sale, sources say that bidder Time Warner Cable Inc. had difficulty securing adequate bank funding due to the industry's turmoil. According to the papers, Carlyle is hoping to sell Insight for a higher price when the credit market stabilizes. Insight Communications (NASDAQ: ICCI) operates cable operator in the U.S., serving about 1.3 million customers in the four contiguous states of Illinois, Indiana, Ohio, and Kentucky. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering analog and digital video, high-speed Internet, and voice telephony in selected markets to its customers. * * * As reported in the Troubled Company Reporter on April 9, 2007, Fitch Ratings placed Insight Communications Company Inc.'s and Insight Midwest LP's 'B+' Issuer Default Rating on Rating Watch Negative. As reported in the Troubled Company Reporter on April 4, 2007, Dominion Bond Rating Service placed the ratings of Insight Communication Company Inc., Insight Midwest, LP, and Insight Midwest Holdings LLC Under Review with Negative Implications. Among these ratings under review is Insight Communication Company's Unsecured Notes, currently rated B (low). INTEGRA BANK NA: Moody's Revises Outlook to Negative from Stable ---------------------------------------------------------------- Moody's Investors Service changed the outlook on Integra Bank N.A. to negative from stable. The bank is rated A3 for long-term deposits, Prime-2 for short-term deposits and C for bank financial strength. The bank is a subsidiary of Evansville, Indiana-based Integra Bank Corporation, which is unrated. The outlook change follows Integra's announcement that it has entered into a definitive agreement to acquire Peoples Community Bancorp Inc. of Cincinnati, Ohio. The transaction is valued at about $86 million in a cash and stock deal, and is expected to close in the first quarter of 2008. Moody's said the outlook change reflects its view that the transaction will weaken Integra's credit profile. According to Moody's, Peoples' financial fundamentals are weaker than Integra's and the institution is relatively large in relation to Integra's size. Furthermore, the acquisition follows closely on Integra's April 2007 acquisition of Chicago-based Prairie Financial Corporation, which significantly increased Integra's existing commercial real estate concentration risk. Moody's noted that largely as a result of the Prairie acquisition, Integra's true CRE exposure (excluding owner-occupied loans) rose significantly to 3.7 times consolidated Tier 1 capital and represented about 40% of total gross loans. In addition, construction and land account for 60% of the CRE portfolio, which Moody's views as inherently more risky. Moody's observed that Peoples represents about 30% of Integra's total assets and therefore creates heightened integration risk for Integra. Shortcomings on this front could lead to client attrition and negative trends on revenues and profitability, even with planned cost savings. Nevertheless, Moody's recognized that this acquisition is consistent with Integra's plan to increase its presence in metropolitan areas with higher growth rates than its current footprint. Integra's presence in the Cincinnati metropolitan area would be enhanced, the rating agency added. Moody's said that the successful integration of Peoples, as represented by improved financial fundamentals at the enlarged institution, and a reduction in Integra's CRE concentration, are the principal factors that would return the outlook to stable. On the other hand, integration problems and/or deterioration in asset quality beyond expectations would likely increase negative rating pressure. Integra Bank Corporation, based in Evansville, Indiana, reported total assets of about $3.2 billion at June 30, 2007. Outlook Actions: Issuer: Integra Bank National Association -- Outlook, Changed To Negative From Stable MACQUARIE BANK: Moody's Affirms Financial Strength Rating at C+ --------------------------------------------------------------- Moody's Investors Service affirmed the A1/Prime-1 deposit and senior debt ratings, as well as the C+ bank financial strength rating of Macquarie Bank Limited. The rating outlook also remains Stable. The affirmation follows MBL's announcement that it intends to form a non-operating holding company structure, and to transfer certain of its investment banking activities to a new Non-Bank Group which will be created underneath the Group NOHC. Under the restructuring MBL would provide a transitional bridge facility to the Group NOHC, which would in turn downstream funds to a Non-Bank Holding Company. Hence MBL will retain a substantial indirect exposure to the Non-Bank Group while the bridge facility is in place. While the initial rating benefits to MBL of this restructuring are limited, Moody's believes that MBL's risk profile could improve over time, to the extent that the Group NOHC is able to successfully refinance a significant portion of the bridge facility. "The proposed restructuring would remove from MBL's balance sheet some exposure concentrations in large assets that have less consistent liquidity characteristics", said Patrick Winsbury, a Senior Vice President with Moody's Sydney office. "By transferring many of the Group's investment banking activities to the new Non-Bank Group, MBL would also trim exposure to some cyclical business lines, without substantially reducing its overall diversity of income," Mr. Winsbury added. Moody's also noted that the proposed regulatory framework for NOHC's would establish strict limits on inter-company transactions between bank and non-bank affiliates, limiting MBL's future exposure to the Group NOHC or Non-Bank Group, once the bridge facility has been refinanced. To reflect these potential benefits, Moody's anticipates that following completion of the proposed restructuring in mid November, the ratings outlook for MBL would be changed to Positive, provided no deterioration in MBL's risk profile or credit metrics has occurred However, any upward movement in MBL's ratings would first require the successful refinancing of a significant portion of the bridge facility. In addition, Moody's expects that the new Group NOHC and the new Non-Bank Holding Company would both be assigned issuer ratings of A2/Prime-1 upon completion of the restructuring -- subject to any changes to the final structure, and as long as there has been no deterioration in the risk profile and credit metrics of MBL prior to that time. The A2/P-1 issuer ratings of the Non-Bank Holding Company would reflect its franchise strength, as it will hold some of the Macquarie group's key business lines. The ratings will also incorporate its strong earnings potential and its proposed liability profile: it is anticipated that predominantly long-term debt will be raised at the Group NOHC to fund the Non-Bank Group's activities. The ratings also include the synergistic benefits of inclusion within the broader Macquarie group structure. The Macquarie group's success in extracting value from commercial opportunities across multiple lines of business is an important credit strength. The A2 / P-1 issuer ratings that would be assigned to the Group NOHC recognize the strength of both its main business lines, but also the structural subordination of its obligations relative to those of MBL and the Non-Bank group entities. Moody's anticipates that while the outlook for MBL would be changed to Positive upon completion of the restructure, the outlooks for the Group NOHC and the Non-Bank Holding Company would be Stable. The Stable rating outlook reflects Moody's expectation that the Group NOHC will operate with a conservative liquidity profile, fund predominantly with long-term borrowings and will limit double-leverage to a moderate level. It also reflects Moody's view that whereas MBL would continue to benefit from a high level of systemic support, under the NOHC structure the other Macquarie group entities would be unlikely to benefit from any systemic support. At the same time, Moody's also affirmed the A2/Prime-1 issuer and debt ratings of Macquarie International Finance Limited with a Stable outlook -- and said that subject to any changes to the final structure, and as long as there has been no deterioration in the risk profile and credit metrics of MBL prior to that time, these ratings and outlook would likely be maintained post- restructure. Moody's issuer ratings are assigned to denote the credit risk of a firm's senior obligations. In the case of the post-restructure Macquarie group, it is envisaged that the main debt-issuing entities will be the Group NOHC and MBL. Macquarie Bank Limited is headquartered in Sydney, New South Wales, Australia. It reported assets of AUD136 billion at financial year-end 2007 (about $110 billion). MAGNA ENTERTAINMENT: Adopts Initiatives to Improve Earnings ----------------------------------------------------------- As a result of the completion of Magna Entertainment Corp.'s strategic review of assets and operations, a number of important initiatives have been adopted, including: * adopting a plan designed to eliminate the company's net debt by Dec. 31, 2008 by generating aggregate proceeds of approximately $600-$700 million from the sale of assets, entering into strategic transactions involving MEC's racing, gaming and technology operations, and a possible future equity issuance, likely in 2008, as well as improving future earnings; * arranging $100 million of funding to address immediate liquidity concerns and provide sufficient time to implement the plan, comprised of: (i) a $20 million private placement of MEC Class A Subordinate Voting Stock to Fair Enterprise Limited, a company that forms part of an estate planning vehicle for the family of Mr. Frank Stronach, the Chairman and Interim Chief Executive Officer of MEC; and (ii) an $80 million short-term bridge loan from a subsidiary of MI Developments Inc., MEC's controlling shareholder; and * appointing Tony Campbell of Knott Partners Management, LLC as a new independent director. "From the outset, the development of this plan to eliminate MEC's net debt and improve its earnings has been actively supported by the company's Founder, Chairman and Interim CEO, Frank Stronach," Jerry Campbell, MEC's Lead Director, stated. "This plan, unanimously approved by MEC's Board of Directors, has now firmly and publicly set us on a course to eliminate debt and improve operations," Mr. Frank Stronach said. "Almost eight weeks ago, I sought out Tom Hodgson (a former MEC CEO) to help MEC accelerate the pace of asset sales with a view to quickly and dramatically reducing MEC's debt. The Board endorsed my decision and retained Tom's firm, Greenbrook Capital Partners Inc., for that purpose. Tom's first assignment was to conduct an independent review of MEC's assets and operations with a view to determining the best way to achieve our goal of eliminating debt. That phase of his work is now complete. We have identified the assets to be sold outright as well as the strategic transactions involving other racing, gaming and technology operations that need to be completed to achieve our goal of being debt-free by the end of 2008. The next step is execution and I am pleased that we will continue to have Tom's support through this phase. "I am also pleased that Tony Campbell has agreed to join our Board of Directors and am confident that he will provide important input as we move forward. As evidenced by the initiatives, I continue to believe in MEC's vision and strategy and my belief in MEC's place within the thoroughbred racing and entertainment industries remains strong. I am determined that our debt elimination plan will be successfully and fully implemented on a timely basis." Debt Elimination The plan is designed to eliminate MEC's net debt by December 31, 2008 by generating aggregate proceeds of approximately $600-$700 million from: (i) the sale of certain real estate, racetracks and other assets; (ii) the sale of, or entering into strategic transactions involving, MEC's other racing, gaming and technology operations; and (iii) a possible future equity issuance, likely in 2008. The initiatives outlined in MEC's second quarter release remain key components of the plan. MEC has relinquished its racing license for the Romulus, Michigan location, and abandoned its application in Dixon, California. MEC intends to sell real estate properties including those situated in the following locations: Dixon, California; Ocala, Florida; Aventura and Hallandale, Florida, both adjacent to Gulfstream Park; Porter, New York; Maryland, adjacent to the Laurel Park racetrack; and Ebreichsdorf, Austria, adjacent to the Magna Racino. MEC also intends to explore selling its membership interests in the mixed-use developments at Gulfstream Park racetrack in Florida and Santa Anita Park racetrack in California that it is pursuing under joint venture arrangements with Forest City Enterprises and Caruso Affiliated, respectively. As reported in the Troubled Company Reporter on Sept. 7, 2007, the racetracks that MEC intends to sell include: Great Lakes Downs in Michigan; Thistledown in Ohio; and its interest in Portland Meadows in Oregon. In addition, MEC will cease horse racing for its own account at the Magna Racino in Austria after the close of the 2007 meet and is exploring a contractual arrangement for a third party to utilize the racing facilities. MEC also intends to explore strategic transactions involving other racing, gaming and technology operations, including: partnerships or joint ventures in respect of the existing gaming facility at Gulfstream Park and potential alternative gaming operations at other MEC racetracks; the possible sale of Remington Park in Oklahoma City; partnerships or joint ventures relating to other racetracks, such as Santa Anita Park; and transactions involving MEC's technology operations, which may include one or more of the assets that comprise MEC's PariMax business. MEC intends to engage an investment banking firm to assist the company in identifying potential purchasers for certain of these assets as well as evaluating partnership, joint venture and/or strategic investment opportunities contemplated by the plan. In addition, MEC has signed a consulting agreement with MID pursuant to which MID will provide senior management assistance to the MEC management team and Board to help implement the plan. "MEC is at a crossroads," Mr. Hodgson remarked. "The elimination of MEC's net debt by Dec. 31, 2008 requires the Company to raise approximately $600-$700 million from a combination of asset sales, partnerships and joint ventures, and a possible future equity financing. It is a tall order, but I believe that MEC's strong asset base makes this feasible and it is a target that all members of the Company's senior management and Board, including the Chairman, are firmly committed to." $100 Million Funding Arrangement In order to allow the company to fund operations, mandatory principal and interest payments, necessary capital expenditures and implement its plan in an orderly manner, MEC has arranged $100 million of funding, comprised of a $20 million private placement of Class A Stock to Fair Enterprise and a Bridge Loan of up to $80 million from the MID Lender. Private Placement to Fair Enterprise MEC has entered into a definitive agreement pursuant to which Fair Enterprise will invest $20 million in MEC by way of a private placement of Class A Stock. The subscription price per share will be the greater of: (i) 90% of the volume weighted average price per share of Class A Stock on NASDAQ for the five trading days commencing on Sept. 13, 2007; and (ii) $1.91, being 100% of the volume weighted average price per share of Class A Stock on NASDAQ for the five trading days immediately preceding Sept. 13, 2007. MEC expects the private placement, which is subject to regulatory approval, to close before the end of October 2007, with the proceeds to be used to fund MEC's operations. Bridge Loan The bridge loan matures on May 31, 2008 and is non-revolving. An arrangement fee of $2.4 million is payable to the MID Lender on closing, and there is a monthly commitment fee equal to 1% per annum (payable in arrears) on the undrawn portion of the $80 million maximum loan commitment. The loan will bear interest at LIBOR plus 10.0%, with an increase of 1% coming into effect on Dec. 31, 2007 if MEC has not completed asset sales (or executed asset sale agreements acceptable to the MID Lender) or completed equity financings (other than the private placement to Fair Enterprise) with aggregate net proceeds of $50 million. If, by Feb. 29, 2008, MEC has not entered into agreements acceptable to the MID Lender for asset sales that would yield aggregate net proceeds sufficient to repay the entire outstanding loan amount, the interest rate increases by another 1%. The bridge loan is required to be repaid by way of the payment of the net proceeds of any asset sale, any equity offering (other than the private placement to Fair Enterprise) or any debt offering, subject to specified amounts required to be paid to reduce other prior-ranking indebtedness. It is a condition of funding under the bridge loan that MEC's senior secured revolving credit facility with a Canadian chartered bank in the amount of $40 million be amended so that the facility expires no earlier than Jan. 31, 2008. This extension has been negotiated and is anticipated to be executed shortly. The bridge loan will be secured by essentially all of the assets of MEC and by guarantees provided by certain subsidiaries of MEC. The guarantees will be secured by charges over the lands owned by Golden Gate Fields, Santa Anita Park and Thistledown, and charges over lands in Dixon, California and Ocala, Florida, as well as by pledges of the shares of certain MEC subsidiaries. The bridge loan will also be cross-defaulted to all other obligations of MEC and its subsidiaries to the MID Lender and to other significant indebtedness of MEC and certain of its subsidiaries. Certain amendments are also being made to the outstanding Gulfstream Park and Remington Park project financings, made available by the MID Lender to MEC's subsidiaries that own and operate Gulfstream Park and Remington Park to finance reconstruction and casino facility construction work. Those amendments require, among other things, that $100 million of indebtedness under Gulfstream Park project financing be repaid by May 31, 2008, in return for the MID Lender agreeing to waive any applicable make-whole payments for repayments made under either of the project financings prior to May 31, 2008. "Although this new bridge loan facility involves incurring more debt in the short term, the plan contemplates the need for the bridge facility to address MEC's projected cash needs up until May 2008, pending completion of intended asset sales and other strategic transactions," Mr. Hodgson said. Special Committee Process Consideration of the private placement, the bridge loan, the amendments to the project financing facilities and the consulting agreement with MID was supervised by the Special Committee of MEC's board of directors consisting of Jerry D. Campbell (Chairman) and William J. Menear. The approval of MEC's board followed a favorable recommendation of the Special Committee. The Special Committee retained independent legal and financial advisors to assist it in its deliberations in respect of these transactions. MEC will file a material change report as soon as practicable after Sept. 13, 2007. The material change report will be filed less than 21 days prior to the closings of the bridge loan and the amendment of the Gulfstream and Remington project facilities and possibly less than 21 days prior to the closing of the private placement. The timing of the material change report is, in MEC's view, both necessary and reasonable because the terms of these transactions were settled and approved by MEC's board of directors on Sept. 12, 2007 and MEC requires immediate funding to address its short-term liquidity needs. Appointment of New Independent Director MEC also disclosed that Anthony Campbell has been appointed to the Board, effective Sept. 13, 2007. Mr. Campbell is a partner of Knott Partners Management, LLC, which has been a long-term investor in MEC and is one of MEC's largest institutional shareholders . Knott Partners currently holds approximately 3.4 million shares of Class A Stock. About MEC Based in Aurora, Ontario, Magna Entertainment Corp. (NASDAQ: MECA; TSX: MEC.A) -- http://www.magnaentertainment.com/-- acquires, develops, owns and operates horse racetracks and related pari- mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV, a 24-hour horse racing television network and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Going Concern Doubt As reported in the Troubled Company Reporter on March 23, 2007, Chartered accountants, Ernst & Young LLP, expressed substantial doubt about Magna Entertainment's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. MAJESCO ENT: July 31 Balance Sheet Upside-Down by $678,000 ---------------------------------------------------------- Majesco Entertainment Company's consolidated balance sheet at July 31, 2007, showed $9.3 million in total assets and $10.0 million in total assets, resulting in a $678,000 total stockholders' deficit. The company's consolidated balance sheet at July 31, 2007, also showed strained liquidity with $8.6 million in total assets available to pay $10.0 million in total current liabilities. During the nine months ended July 31, 2007, the company recorded a $2.5 million charge in connection with the expected settlement of its class action litigation. In addition, during the nine month period ended July 31, 2006, the company recorded gains of $4.5 million relating to vendor settlements. The company incurred a net loss of $1.5 million in the third quarter ended July 31, 2007, compared to third quarter 2006 net loss of $724,000. Non-GAAP net loss was $1.6 million, compared to a non-GAAP net loss of $2.1 million. The GAAP operating loss was $1.3 million, compared to third quarter 2006 operating loss of $332,000. Non-GAAP 2007 operating loss was $1.4 million, compared to a non-GAAP operating loss of $1.7 million in 2006. Net revenue was $10.0 million, compared to $12.4 million. The decrease is related to a light release schedule in the third quarter of 2007, compared to the release of JAWS(TM) Unleashed in the third quarter of 2006. At July 31, 2007, the company had cash of $3.8 million. Net revenue was $39.1 million in the nine months ended July 31, 2007, compared to net revenue $45.2 million in the nine months ended July 31, 2006. The decrease in net revenues was primarily attributable to the company's shift away from publishing higher priced games in 2006 and a light release schedule in the third quarter of 2007. Including the aforementioned litigation charges, the GAAP operating loss in the nine months ended July 31, 2007, was $2.3 million. This compares to 2006 GAAP operating loss of $1.1 million. Non-GAAP 2007 operating loss was $147,000, compared to a non-GAAP operating loss of $5.6 million in 2006. GAAP net loss in the nine months ended July 31, 2007, was $3.8 million, compared to a GAAP net loss of $2.5 million in 2006. Non-GAAP net loss was $1.6 million, compared to a non-GAAP net loss of $7.0 million. Jesse Sutton, Majesco's interim chief executive officer, said, "During the third quarter, we accomplished important operational milestones, positioning us for future growth. We continued to reduce expenses, prepared our line-up for the holiday season, and shipped six titles internationally. While our nine-month GAAP operating loss was $2.3 million, our nine-month non-GAAP operating results were almost breakeven and improved more than $5.0 million compared to last year. As announced in August, we have exceeded sales of 500,000 units of Cooking Mama for the DS(TM) since the game's launch almost a year ago. This franchise has proven to be attractive to our target market, and its success reinforces our content and platform strategy. To further leverage the success of the Cooking Mama brand, we secured the rights to Cooking Mama 2 for the Nintendo DS and Wii(TM) platforms. We are very excited about these games, and expect them to be a cornerstone of our 2008 product portfolio." "The installed bases of Nintendo's Wii and DS continue to grow, supporting our strategy to produce fun, easy to play games for these mass market platforms. During the quarter, we announced Fish Tycoon(R) and Zoo Hospital(TM) for the DS and Furu Furu Park for the Wii," said Sutton. Sutton concluded, "With our recent financing of $6.0 million, we have the working capital to expand our product line. The additional funds also provide valuable flexibility, stability and agility to reduce financing costs, fund growth, and expand our intellectual property partnerships for 2008 and beyond. In addition, we expect to produce more games simultaneously, thereby creating a stronger, deeper, product line-up from which to build a larger more stable revenue base." Full-text copies of the company's consolidated financial statements for the quarter ended July 31, 2007, are available for free at http://researcharchives.com/t/s?2367 Going Concern Doubt Goldstein Golub Kessler LLP, in New York, expressed substantial doubt about Majesco Entertainment Co.'s ability to continue as a going concern after auditing the company's financial statements as of the years ended Oct. 31, 2006, and 2005. The auditing firm pointed to the company's net losses. About Majesco Entertainment Headquartered in Edison, N.J., Majesco Entertainment Co. (NasdaqCM: COOL) -- http://www.majescoentertainment.com/-- provides video games and digital entertainment products for the mass market, with a focus on publishing video games for leading portable systems and the Wii(TM) console. Product highlights include Nancy Drew(TM), Cooking Mama and Zoo Hospital(TM) for the Nintendo DS(TM) and Cooking Mama: Cook Off for the Wii(TM) console. MEDIANEWS GROUP: S&P Puts BB- Rating Under Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Denver, Colorado-based MediaNews Group Inc., including the 'BB-' corporate credit rating, on CreditWatch with negative implications, reflecting deteriorating operating fundamentals in the company's portfolio of newspaper properties and investments. In the 12 months ended March 2007 (MediaNews has not yet filed its 10-K for fiscal 2007 ended June), leverage as measured by total adjusted debt to EBITDA increased to the mid-6x area from the high-5x area in the prior year's period. Leverage is adjusted for operating leases, debt-like unfunded pension and other post-retirement obligations, and half of the debt of the company's unconsolidated Denver joint operating agency agreement. The decline in EBITDA is the result of lower advertising revenue in most of the company's newspaper markets. MediaNews is also pursuing amendments to financial covenants for the current period in its secured credit facility that S&P expect the company to achieve over the near term. "The CreditWatch listing is not specifically related to the company seeking an amendment to its covenants, rather, it is primarily driven by weak operating performance," said Standard & Poor's credit analyst Emile Courtney. Although MediaNews has been pursuing cost efficiency measures for some time, and expects to achieve additional cost savings in future periods, revenue declines have outpaced cost cuts during the past few quarters. S&P will review expectations for the company's operating performance, as well as upcoming external investments by Hearst Corp., when resolving the CreditWatch listing. MYERS INDUSTRIES: Postponed Deal Cues S&P to Withdraw All Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew all ratings on Myers Industries Inc. The withdrawal follows the announcement that private equity sponsor Goldman Sachs Capital Partners would postpone the closing of its acquisition of Myers until the fourth quarter. As reported in the Troubled Company Reporter on June 29, 2007, the company carries S&P's B corporate credit rating. The company's $535 million first-lien term loan and $150 million first-lien revolving credit facility carries S&P's B+ bank loan rating. Its $265 million Rule 144A for life senior subordinated notes maturing in 2017 is rated CCC+ by S&P. MKP CBO: Moody's Places B2 Class D Notes' Rating Under Review ------------------------------------------------------------- Moody's Investors Service downgraded these notes issued by MKP CBO VI Ltd.: Class Description: Class C Mezzanine Secured Deferrable Floating Rate Notes due 2051 Prior Rating: A2, on review for possible downgrade Current Rating: Ba2, on review for possible downgrade Class Description: Class D Mezzanine Secured Deferrable Floating Rate Notes due 2051 Prior Rating: Baa2, on review for possible downgrade Current Rating: B2, on review for possible downgrade Moody's Investors Service also reported that these notes issued by MKP CBO VI, Ltd. will remain on review for possible downgrade: Class Description: Class A-2 Second Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aaa, on review for possible downgrade Current Rating: Aaa, on review for possible downgrade Class Description: Class B Third Priority Senior Secured Floating Rate Notes due 2051 Prior Rating: Aa2, on review for possible downgrade Current Rating: Aa2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. NATIONAL ENERGY: July 31 Balance Sheet Upside-Down by $1.3 Million ------------------------------------------------------------------ National Energy Services Company Inc.'s consolidated balance sheet at July 31, 2007, showed $1.1 million in total assets and $2.4 million in total liabilities, resulting in a $1.3 million total stockholders' deficit. The company's consolidated balance sheet at July 31, 2007, also showed strained liquidity with $977,153 in total current assets available to pay $1.9 million in total current liabilities. The company reported a net loss of $14,741 in the three months ended July 31, 2007, a decrease from the $226,620 net loss reported in the same period last year, mainly due to higher reported operating revenues. Total operating revenues rose to $589,207 from $37,169. Full text copies of the company's consolidated financial statements for the quarter ended July 31, 2007, are available for free at http://researcharchives.com/t/s?2368 Going Concern Doubt Bagell Josephs, Levine & Company LLC, in Gibbsboro, N.J., expressed substantial doubt about National Energy Services Company Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Oct. 31, 2006, and 2005. The auditing firm pointed to the company's substantial net losses for the years ended Oct. 31, 2006, and 2005, that has resulted in substantial accumulated deficits. About National Energy Headquartered in Egg Harbor Township, New Jersey, National Energy Services Company Inc. (NEGS.OB) -- http://www.nescorporation.com/ -- is engaged in the business of providing comprehensive and cost- driven energy products and management aimed at lowering energy consumption and helping its customers buy the energy they use more efficiently. NORTHWEST AIRLINES: To Own 47% of Midwest Airlines -------------------------------------------------- Northwest Airlines Corp., the minority passive investor in the buyout of Midwest Airlines, would own 47% of the Milwaukee-based carrier, according to a preliminary proxy statement filed by Midwest with the U.S. Securities and Exchange Commission on September 13, 2007. Pursuant to Midwest Air Group Inc.'s merger agreement dated August 16, 2007, with Midwest Air Partners, LLC -- a limited liability company formed by an affiliate of TPG Capital, L.P. and Northwest Airlines -- both TPG Capital and Northwest have delivered equity commitment letters aggregating: EquityProvider Commitment Amount -------------- ----------------- TPG Partners V, L.P. $238,111,703 Northwest Airlines, Inc. 213,250,000 ----------------- Total $451,361,703 Under the terms of the agreement, each outstanding share of Midwest's common stock will be converted into a right to receive $17 per share in cash. Northwest, as minority passive investor, will not participate in the management or control of Midwest. The transaction is expected to be completed in the fourth quarter of 2007, the statement said. All financing for the transaction is in the form of equity. No debt financing is required. The transaction is subject to approval by Midwest's shareholders, as well as other customary conditions, including anti-trust approvals. The date on which Midwest's shareholders would vote on the transaction was not set in the preliminary proxy. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. OCTANS II: Moody's Reviews $45 Mil. Class X-I Notes' Ba1 Rating --------------------------------------------------------------- Moody's Investors Service placed these notes issued by Octans II CDO Ltd. on review for possible downgrade: Class Description: $108,000,000 Class B Senior Secured Floating Rate Notes due 2051 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade Class Description: $78,000,000 Class C-1 Deferrable Secured Floating Rate Notes due 2051 Prior Rating: A2 Current Rating: A2, on review for possible downgrade Class Description: $31,500,000 Class C-2 Deferrable Secured Floating Rate Notes due 2051 Prior Rating: A3 Current Rating: A3, on review for possible downgrade Moody's also downgraded these notes issued by Octans II CDO, Ltd: Class Description: $51,000,000 Class D Deferrable Secured Floating Rate Notes due 2051 Prior Rating: Baa2, on review for possible downgrade Current Rating: Baa3, on review for possible downgrade Class Description: $45,000,000 Class X-I Deferrable Secured Fixed Rate Notes due 2051 Prior Rating: Baa3, on review for possible downgrade Current Rating: Ba1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of RMBS securities. OCTANS III: Moody's Reviews Two Low-B Rated Cert. Class' Ratings ---------------------------------------------------------------- Moody's Investors Service placed these notes issued by Octans III CDO, Ltd. on review for possible downgrade: Class Description: $50,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2047 Prior Rating: Aa2 Current Rating: Aa2, on review for possible downgrade Class Description: $55,000,000 Class B Floating Rate Deferrable Interest Secured Notes Due 2047 Prior Rating: A2 Current Rating: A2, on review for possible downgrade Moody's also downgraded these notes issued by Octans III CDO, Ltd: Class Description: $40,000,000 Class C Floating Rate Deferrable Interest Secured Notes Due 2047 Prior Rating: Baa2, on review for possible downgrade Current Rating: Baa3, on review for possible downgrade Class Description: $15,000,000 Class D Floating Rate Deferrable Interest Secured Notes Due 2047 Prior Rating: Ba1, on review for possible downgrade Current Rating: Ba2, on review for possible downgrade Class Description: $20,000,000 Class E Floating Rate Deferrable Interest Secured Notes Due 2047 Prior Rating: Ba2, on review for possible downgrade Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying reference obligations, which consist primarily of cashflow CDOs, RMBS, CMBS, and ABS securities. OFFICEMAX INC: Names Sam Martin as Exec. Vice President and COO --------------------------------------------------------------- Sam Martin has assumed the role of OfficeMax Incorporated's executive vice president and chief operating officer, effective Sept. 17, 2007. Mr. Martin will have responsibility for all areas of Retail, Contract and Supply Chain. Mr. Martin, 51, served as senior vice president of operations of Wild Oats Markets Inc. Prior to joining Wild Oats, from 2005 to 2006, Mr. Martin served as senior vice president of supply chain for ShopKo Stores Inc. Mr. Martin joined ShopKo in 2003 as vice president of Distribution and Transportation. From 1998 until 2003, Mr. Martin was regional vice president, Western Region, and general manager for Toys R Us. Prior to that, Mr. Martin served in a variety of operational roles in his 24-year tenure with Fred Meyer Stores. "I am extremely excited to have Sam join our executive leadership team," Sam Duncan, chairman and chief executive officer of OfficeMax, said. "Sam has an exemplary track record in delivering strong operating performance. We welcome his wealth of knowledge as we pursue our near- and long-term goals." About OfficeMax(R) Incorporated Headquartered in Naperville, Illinois, OfficeMax Incorporated fka Boise Cascade Corporation (NYSE:OMX) -- http://www.officemaxsolutions.com/-- provides office supplies and paper, print and document services, technology products and solutions and furniture to large, medium and small businesses and consumers. Its customers are served by more than 36,000 associates through direct sales, catalogs, the Internet and retail stores. Its segments include OfficeMax, Contract; OfficeMax, Retail, and Corporate and Other. It distributes a line of items for the office, including office supplies and paper, technology products and solutions and office furniture through the OfficeMax, Contract segment. OfficeMax, Retail is a retail distributor of office supplies and paper, print and document services, technology products and solutions, and office furniture. Boise Building Solutions is a producer of plywood, lumber and particleboard. Boise Paper Solutions manufactures and sells uncoated free sheet papers, containerboard, corrugated containers, newsprint and market. * * * As reported in the Troubled Company Reporter on Aug. 22, 2007, Standard & Poor's Ratings Services revised the outlook for OfficeMax Inc. to positive from stable. At the same time, S&P affirmed the ratings on the company, including the 'B+' corporate credit rating. PALM SPRINGS: To Cease Operations This Month, Desert Sun Says ------------------------------------------------------------- Three entities that operate The Palm Springs Pavilion Theatre -- a 1000-seat theatre in downtown Palm Springs, California -- will declare bankruptcy soon, Bruce Fessier writes for The Desert Sun. Dick Taylor, who created the theater through his Dick Taylor Productions with a $300,000 city loan and $2.45 million personal money, disclosed the facility's closure last week. According to the report, the $300,000 city loan is due May 2008, and Mr. Taylor had only repaid $1,182 of that loan. "The key proviso of this loan was it was fully secured and not with collateral on the Pavilion, but with a personal cash annuity," Palm Springs City Manager David Ready was cited by The Desert Sun as saying. But, because Mr. Taylor has announced the theater's closure, Mr. Ready said the annuity funds will be released in about 10 days, the source relates. POPE & TALBOT: Nods to Extend Forbearance Agreement with Lenders ---------------------------------------------------------------- Pope & Talbot Inc. agreed to an extension of its forbearance agreement with its senior secured lenders. The agreement will extend the company's access to liquidity provided by the revolving credit facility for an additional four weeks. The company will use this additional time to continue to explore options for improving its balance sheet, including but not limited to, the sale of certain or all of the company's assets. Going Concern Doubt As reported in the Troubled Company Reporter on April 12, 2007, KPMG LLP expressed substantial doubt on Pope & Talbot 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 significant borrowings and the uncertainty over the company's ability to comply with the financial covenants in future periods. About Pope & Talbot Pope & Talbot Inc. (NYSE: POP) -- http://www.poptal.com/-- is a pulp and wood products company. The company is based in Portland, Oregon. The company was founded in 1849 and produces market pulp and softwood lumber at mills in the U.S. and Canada. Markets for the company's products include the U.S., Europe, Canada, South America, and the Pacific Rim. RAPID LINK: Inks Letter of Intent to Purchase Two Networks ---------------------------------------------------------- Rapid Link, Inc. disclosed last week that it has signed a Letter of Intent to purchase the business and assets of Web Breeze Networks LLC and Communications Advantage LLC, each a wireless broadband service provider. Web Breeze Networks and Communications Advantage are located in rural Amador County, Calif. The assets include a 350 square mile wireless broadband network in Amador, Calif., a worldwide web- hosting service, full service web based Email services, nationwide dial-up Internet access, national IP voice messaging and fax messaging service and over 800 long-distance customers using One Plus dialing, Nationwide 800, and Travel Card services. "The signing of the Letter of Intent to acquire Web Breeze Networks LLC and Communications Advantage LLC marks a major milestone in our endeavor to provide a complete communications service package to our customers. We focus on niche markets, such as those served by Web Breeze Networks and Communications Advantage, and we are committed to own and manage the 'last mile' of communications connectivity. This acquisition would augment our ability to provide our customers a full array of communication services from broadband to basic phone services all under one platform. We would be able to offer the same type of services currently offered by larger carriers such as Verizon, Qwest, Sprint and Time Warner," stated John Jenkins, chief executive officer of Rapid Link. Chris Canfield, Rapid Link's president and chief financial officer, added, "This acquisition will complete the first step in allowing us to provide many different communication services under one package to our customers. This not only could increase our net margin per customer, but could make our customers less likely to move their services to another network, potentially increasing our customer retention levels significantly." Eric Shippam, managing director of Web Breeze and Communications Advantage, commented, "I am thrilled at the prospect of becoming part of the Rapid Link team. I have worked closely with the principals of Rapid Link and the entire Rapid Link support team for years. I have extreme confidence in our combined abilities and look forward to growing the broadband wireless divisions of Rapid Link, and taking the company to another level of service offerings." About Rapid Link Headquartered in Los Angeles, California, Rapid Link Inc. (OTC BB: RPID.OB) -- http://www.rapidlink.com/ -- is a communications company providing various forms of voice and data transport services to wholesale and retail customers around the world. Rapid Link companies provide licensed traditional long distance services in the contiguous United States, as well as other next generation communication services worldwide, including voice over internet protocol and information service products tailored for each target market. RAPID LINK: July 31 Balance Sheet Upside-Down by $4.4 Million ------------------------------------------------------------- Rapid Link Inc.'s consolidated balance sheet at July 31, 2007, showed $7.3 million in total assets and $11.7 million in total liabilities, resulting in a $4.4 million total shareholders' deficit. The company's consolidated balance sheet at July 31, 2007, also showed strained liquidity with $1.5 million in total current assets available to pay $11.7 million in total current liabilities. The company incurred a net loss of $505,407 in the three months ended July 31, 2007, flat compared to the $510,494 net loss reported in the same period last year. Revenues fell to $4.2 million from $4.8 million. This decline was offset by a decrease in interest expense. Interest expense, cash and noncash, for the third quarter of fiscal 2007 decreased by $256,000 or 51.0% compared to the same period of fiscal 2006. The company also recognized $71,000 of deferred costs associated with the issuance of 4,000,000 warrants to Westside Capital, which vested during the third quarter of fiscal 2007. Full-text copies of the company's consolidated financial statements for the quarter ended July 31, 2007, are available for free at http://researcharchives.com/t/s?2369 Going Concern Doubt KBA GROUP LLP, in Dallas, expressed substantial doubt about Rapid Link Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Oct. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from continuing operations during each of the last two fiscal years. Additionally, the auditing firm reported that at Oct. 31, 2006, the company's current liabilities, which includes significant amounts of past due payables, exceeded its current assets by $4.7 million and the company has a shareholders' deficit totaling $2.6 million. The company has an accumulated deficit of approximately $52.0 million as of July 31, 2007, as well as a working capital deficit of approximately $10.3 million. In addition, a significant amount of the company's trade accounts payable and accrued liabilities are past due. About Rapid Link Headquartered in Los Angeles, California, Rapid Link Inc. (OTC BB: RPID.OB) -- http://www.rapidlink.com/ -- is a communications company providing various forms of voice and data transport services to wholesale and retail customers around the world. Rapid Link companies provide licensed traditional long distance services in the contiguous United States, as well as other next generation communication services worldwide, including voice over internet protocol and information service products tailored for each target market. RESIDENTIAL ASSET: Fitch Lowers Ratings on $71.1MM Certificates --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Residential Asset Mortgage Product, Inc. mortgage pass-through certificates. Affirmations total $1 billion and downgrades total $71.1 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: RAMP 2006-RS3 -- $470.3 million class A affirmed at 'AAA' (BL: 21.52, LCR: 2.13); -- $15.3 million class M-1 rated 'AA+', placed on Rating Watch Negative (BL: 18.73, LCR: 1.86); -- $13.8 million class M-2 rated 'AA+', placed on Rating Watch Negative (BL: 16.19, LCR: 1.61); -- $8.2 million class M-3 rated 'AA', placed on Rating Watch Negative (BL: 14.65, LCR: 1.45); -- $7.5 million class M-4 rated 'AA-', placed on Rating Watch Negative (BL: 13.21, LCR: 1.31); -- $7.1 million class M-5 downgraded to 'BBB-' from 'A+' (BL: 11.80, LCR: 1.17); -- $5.2 million class M-6 downgraded to 'BB+' from 'A' (BL: 10.73, LCR: 1.06); -- $3.7 million class M-7 downgraded to 'BB' from 'A-' (BL: 9.93, LCR: 0.98); -- $3.7 million class M-8 downgraded to 'BB-' from 'BBB+' (BL: 9.16, LCR: 0.91); -- $7.5 million class M-9 downgraded to 'B' from 'BBB+' (BL: 7.85, LCR: 0.78). Deal Summary -- Originators: 100% GMAC RFC; -- 60+ day Delinquency: 12.69%; -- Realized Losses to date (% of Original Balance): 0.23%; -- Expected Remaining Losses (% of Current Balance): 10.09%; -- Cumulative Expected Losses (% of Original Balance): 7.64%. RAMP 2005-RS1 Group 1 -- $113.2 million class A affirmed at 'AAA' (BL: 27.93, LCR: 9.31); -- $9.3 million class M-I-1 affirmed at 'AA' (BL: 22.46, LCR: 7.49); -- $6.2 million class M-I-2 affirmed at 'A' (BL: 19.48, LCR: 6.5); -- $3.1 million class M-I-3 affirmed at 'BBB+' (BL: 18.00, LCR: 6.00); -- $2.5 million class M-I-4 affirmed at 'BBB' (BL: 16.82, LCR: 5.61). Deal Summary -- Originators: 100% GMAC RFC; -- 60+ day Delinquency: 4.38%; -- Realized Losses to date (% of Original Balance): 0.77%; -- Expected Remaining Losses (% of Current Balance): 3.00%; -- Cumulative Expected Losses (% of Original Balance): 2.46%. RAMP 2005-RS1 Group 2 -- $34.9 million class A affirmed at 'AAA' (BL: 83.86, LCR: 6.53); -- $68.8 million class M-II-1 affirmed at 'AA' (BL: 28.81, LCR: 2.24); -- $39.8 million class M-II-2 affirmed at 'A' (BL: 19.87, LCR: 1.55); -- $10.8 million class M-II-3 downgraded to 'BBB+' from 'A-' (BL: 17.69, LCR: 1.38); -- $10.8 million class M-II-4 downgraded to 'BBB' from 'BBB+' (BL: 15.80, LCR: 1.23); -- $8.5 million class M-II-5 (Turbo) affirmed at 'BBB' (BL: 18.17, LCR: 1.41). Deal Summary -- Originators: 100% GMAC RFC; -- 60+ day Delinquency: 25.04%; -- Realized Losses to date (% of Original Balance): 2.12%; -- Expected Remaining Losses (% of Current Balance): 12.84%; -- Cumulative Expected Losses (% of Original Balance): 5.93%. RAMP 2005-RS4 -- $133.8 million class A affirmed at 'AAA' (BL: 48.69, LCR: 4.51); -- $14.1 million class M-1 affirmed at 'AA+' (BL: 42.71, LCR: 3.96); -- $19.1 million class M-2 affirmed at 'AA' (BL: 34.39, LCR: 3.19); -- $10.5 million class M-3 affirmed at 'AA-' (BL: 29.78, LCR: 2.76); -- $7.8 million class M-4 affirmed at 'A+' (BL: 26.29, LCR: 2.44); -- $7.8 million class M-5 affirmed at 'A' (BL: 22.79, LCR: 2.11); -- $6.0 million class M-6 affirmed at 'A-' (BL: 20.04, LCR: 1.86); -- $6.0 million class M-7 affirmed at 'BBB+' (BL: 17.19, LCR: 1.59); -- $5.5 million class M-8 downgraded to 'BBB-' from 'BBB+' (BL: 11.92, LCR: 1.10); -- $4.2 million class M-9 downgraded to 'BB' from 'BBB' (BL: 10.43, LCR: 0.97); -- $3.1 million class B-1 downgraded to 'B+' from 'BB+' (BL: 9.35, LCR: 0.87); -- $5.2 million class B-2 downgraded to 'B' from 'BB' (BL: 8.42, LCR: 0.78); -- $3.9 million class B-3 downgraded to 'B' from 'B+' (BL: 8.33, LCR: 0.77). Deal Summary -- Originators: 100% GMAC RFC; -- 60+ day Delinquency: 15.98%; -- Realized Losses to date (% of Original Balance): 1.43%; -- Expected Remaining Losses (% of Current Balance): 10.79%; -- Cumulative Expected Losses (% of Original Balance): 6.16%. RITCHIE (IRELAND): Court OKs $2.7MM DIP Financing From Affiliate ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Ritchie Risk-Linked Strategies Trading (Ireland) II Ltd. to obtain a $2,700,000 postpetition financing from its affiliate, Ritchie Risk-Linked Strategies Trading Ltd. In his order, the Hon. Burton R. Lifland modified the terms of the financing eliminating the $54,000 fee that was to be paid to the lender on the closing date. The loan will be repaid in full at a rate of 8% per annum and will terminate at the earliest of: -- Dec. 15, 2007; -- the date on which the commitment is terminated because of the existence and continuance of an event of default; -- the effective date of a plan of reorganization in the chapter 11 case; or -- the closing date of sale of all or substantially all of Ritchie II's assets. Upon the occurrence of a default or event of default, interest on the loan will be payable at a rate of 10% per annum. Based in Dublin, Ireland, Ritchie Risk-Linked Strategies Trading (Ireland) Ltd. and Ritchie Risk-Linked Strategies Trading (Ireland) II Ltd. -- http://www.ritchiecapital.com/-- are Dublin- based funds of hedge fund group Ritchie Capital Management. The Debtors were formed as special purpose vehicles to invest in life insurance policies in the life settlement market. The Debtors filed for Chapter 11 protection on June 20, 2007 (Bankr. S.D.N.Y. Case Nos. 07-11906 and 07-11907). Allison H. Weiss, Esq., David D. Cleary, Esq., and Lewis S. Rosenbloom, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed to date. When the Debtors filed for bankruptcy, they listed estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a Chapter 11 plan expires on Oct. 18, 2007. SACO I: Poor Performance Cues S&P to Cut Ratings on 10 Classes -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 10 classes from SACO I Trust's series 2005-5 and 2005-7. Concurrently, S&P removed its rating on class I-B-4 from series 2005-5 from CreditWatch with negative implications, where it was placed June 22, 2007. At the same time, S&P affirmed its ratings on the remaining classes from these two SACO I Trust series. The downgrades reflect continuing deterioration in the performance of the collateral backing these transactions. Credit support for these deals is derived from a combination of subordination, excess interest, and overcollateralization. Closed-end second-lien mortgage pools back both transactions. Severely delinquent second-lien loans are likely to be charged off when they become 180 days delinquent. For the past six months, realized losses have consistently outpaced excess interest spread, to the extent that credit enhancement has been reduced to levels that are not sufficient to support the previous ratings on the downgraded classes. As of the August 2007 remittance period, the O/C for the loans backing series 2005-5's group I certificates had been reduced to $16.06 million, or 2.84% of the original pool balance. Cumulative realized losses for this loan group reached $46.35 million, or 8.19% of the original pool balance. Total delinquencies and severe delinquencies (90-plus-days, foreclosures, and REOs) for loan group I constitute 15.54% and 6.70% of the current pool balance, respectively. For the same time period, O/C for the pool backing series 2005-7 had been depleted. S&P lowered the rating on class B-4 to 'D' due to a principal write-down in the August remittance period. Cumulative realized losses reached $25.90 million, or 6.42% of the original pool balance. Total delinquencies and severe delinquencies constitute 13.02% and 5.72% of the current pool balance, respectively. S&P removed its rating on class I-B-4 from series 2005-5 from CreditWatch because it was 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. These transactions were initially backed by either subprime or Alt-A closed-end second-lien mortgage loans, or by 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 SACO I Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-5 I-M-5 BBB A- 2005-5 I-B-1 BB BBB+ 2005-5 I-B-2 B+ BBB 2005-5 I-B-3 B BBB- 2005-7 M-5 BBB A- 2005-7 B-1 B+ BBB+ 2005-7 B-2 B BB+ 2005-7 B-3 CCC B 2005-7 B-4 D CCC Rating Lowered and Removed from Creditwatch Negative SACO I Trust Rating ------ Series Class To From ------ ----- -- ---- 2005-5 I-B-4 CCC BB/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 2005-7 A AAA 2005-7 M-1 AA 2005-7 M-2 AA- 2005-7 M-3 A+ 2005-7 M-4 A SCO GROUP: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: The S.C.O. Group, Inc. aka F.K.A. Caldera International, Inc. 355 South 520 West Lindon, UT 84042 Bankruptcy Case No.: 07-11337 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- S.C.O. Operations, Inc. 07-11338 Type of business: The Debtor provides software technology for distributed, embedded, network-based and mobile systems. It offers S.C.O. OpenServer for small to medium business, UnixWare and S.C.O. Mobile Server for enterprise applications and digital network services. See http://www.sco.com Chapter 11 Petition Date: September 14, 2007 Court: District of Delaware (Delaware) Judge: Kevin Gross Debtors' Counsel: James E. O'Neill, Esq. Laura Davis Jones, Esq. Pachulski, Stang, Ziehl & Jones, L.L.P. 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 Debtor's Financial Condition as of Sept. 10, 2007: Total Assets: $14,800,000 Total Debts: $7,500,000 Debtors' Consolidated List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Amici, L.L.C. Trade Debt $500,651 80 State Street, Suite 600 Albany, NY 12720 Boies Schiller & Flexner, Trade Debt $287,256 L.L.P. 401 East Las Olas Boulevard, Suite 1200 Fort Lauderdale, FL 33301 The Canopy Group Trade Debt $139,895 c/o Cushman & Wakefield P.O. Box 45257 San Francisco, CA 94145 Gre Mountain Trade Debt $132,502 Heights Property Microsoft Licensing, Inc. Trade Debt $125,575 Sun Microsystems, Inc. Trade Debt $50,000 Veritas Software Trade Debt $37,881 Intel Corp. Trade Debt $25,302 Fujitsu Services Trade Debt $25,302 H.P.-Nonstop Royalty Trade Debt $25,302 Accounting Unisys Corporation Trade Debt $25,302 K.S.J. Consulting Trade Debt $21,781 4Front Technologies Trade Debt $10,417 Silverman Heller Trade Debt $10,352 Associates Madson & Austin Trade Debt $8,478 Radd Strategic Solutions, Trade Debt $7,027 L.L.C. Sage Forensic Accounting Trade Debt $6,221 Profile Consulting, Inc. Trade Debt $5,450 Sun Microsystems, Inc. Trade Debt $5,414 Software Royalty Accounting Group AMLAW Discovery Trade Debt $5,400 SEMINOLE TRIBE: Moody's Rates Proposed $240 Million Bonds at Ba1 ---------------------------------------------------------------- Moody's Investors Service raised the Seminole Tribe of Florida's existing series A & B gaming division bonds and term loan one- notch to Baa3. This completes the rating review that was initiated on Sep. 7, 2007 when Moody's placed the Tribe's ratings on review for possible upgrade. A stable rating outlook was assigned. The Tribe's Corporate Family Rating, Probability of Default Rating and Loss Given Default Assessments were withdrawn. Moody's also assigned a Ba1 rating to the Tribe's proposed $240 million series 2007A tax-exempt special obligation bonds due 2027 and $219 million series 2007 B taxable special obligation bonds due 2020. Proceeds from the new bonds will be used for non- gaming related infrastructure and other governmental activities of the Tribe. The investment grade rating considers that issues regarding the Tribe's use of gaming revenue have been satisfactorily reviewed by the National Indian Gaming Commission, and that while the NIGC made a number of recommendations regarding financial reporting and governance related issues related to the Tribe directly, the results of the NIGC audit do not put the Tribe's gaming operations at any risk. The mitigation of this risk, along with continued domination of the Florida gaming market, a very good liquidity profile, and a financial profile that has exhibited low investment grade characteristics since the Tribe's bonds were initially rated in Sep. 2005 (debt/EBITDA has historically been less than 2.5 times), are key factors supporting the upgrade. Credit concerns include the Tribes' sole gaming concentration in one state, increased competition in Florida, and continued expectation that most or all of surplus cash generated each year will be distributed. Also considered is that although substantial progress has been made with respect to corporate governance issues, the Tribe is subject to follow-up reviews by the NIGC. The Baa3 rating on the Tribe's gaming division term loan and existing series A & B taxable gaming division bonds take into account that their respective indentures prohibit the issuance of debt senior to these obligations. The Ba1 rating on the Tribe's proposed $459 million series 2007 special obligation bonds considers that the bonds will be subordinate to all debt incurred pursuant to the gaming division bonds The one-notch difference between the gaming division debt and series 2007 bonds reflects the Tribe's strong ability and incentive to make debt service payments on the bonds to have access to the cash flow for governmental and per capita uses. The stable rating outlook reflects the favorable long-term outlook for Florida gaming market and anticipates leverage and coverage metrics as well as the Tribe's financial policy will remain consistent with an investment grade credit profile over the long- term. The stable outlook acknowledges the increased amount of competition in Florida but expects that the state will easily absorb it the increased supply and that Tribe's gaming revenue will continue to exhibit growth, even though a slower growth rate is possible. The Seminole Tribe of Florida is a federally recognized Indian tribe with enrolled membership of about 3,200 members, most of who reside on Tribal lands in Florida. The Tribe owns and operates seven Class II gaming facilities located on Tribal lands throughout southern and central Florida. SERENA SOFTWARE: S&P Holds B Rating and Revises Outlook to Pos. --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on San Mateo, California-based Serena Software Inc. to positive from stable. "This follows continued positive operating trends and improved leverage levels," said Standard & Poor's credit analyst David Tsui. Ratings on the company, including the 'B' corporate credit rating, were affirmed. The ratings on Serena Software reflect the company's narrow business profile, competitive marketplace, and high leverage. These factors are partly offset by a leading position in a growing niche software market, strong EBITDA margins, and a significant base of recurring business. Serena provides enterprise software applications and related services aimed at managing change in the IT environment. The company's software products provide services that automate processes and control changes for teams within enterprises that are managing development, Web content, and IT infrastructure. Mainframe and Distributed, the two main platforms, add up to a $1 billion market. Serena's product portfolio is cross-platform, spanning both of these key markets. SUB SURFACE: June 30 Balance Sheet Upside-Down by $901,703 ---------------------------------------------------------- Sub Surface Waste Management of Delaware Inc.'s consolidated balance sheet at June 30, 2007, showed $1.4 million in total assets and $2.3 million in total liabilities, resulting in a $901,703 total stockholders' deficit. The company's consolidated balance sheet at June 30, 2007, moreover showed strained liquidity with $1.3 million in total current assets available to pay $2.3 million in total current liabilities. The company incurred a net loss of $781,346 in the third quarter ended June 30, 2007, an increase from the $423,361 net loss reported in the same period last year, mainly due to lower revenues and higher selling, general and administrative expenses. Revenue fell 28% to $55,379 from $76,662. Revenues consisted primarily of engineering services, construction, and bio- remediation of hydro-carbons in contaminated soil for projects in Mexico. Full-text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2352 About Sub Surface Waste Headquartered in Carlsbad, Calif. Sub Surface Waste Management of Delaware Inc. -- http://www.subsurfacewastemanagement.com/-- is a majority owned subsidiary of U.S. Microbics Inc. The company provides comprehensive civil and environmental engineering project management services including specialists to design, permit, build and operate environmental waste clean-up treatment systems using conventional, biological and filtration technologies. SWIFT CORP: S&P Puts 'B' Ratings Under Negative Watch ----------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the long-term 'B' corporate credit rating, on Swift Corp. on CreditWatch with negative implications. The CreditWatch placement reflects Swift's somewhat worse-than-expected operating performance in recent months and concerns over its near-term operating performance given the slowing U.S. economy and the pressures currently being experienced by the trucking sector. Swift Corp. is the holding company for Swift Transportation Co. Inc., a Phoenix, Ariz.-based truckload carrier. At the same time, Standard & Poor's placed the 'B' rating on Swift Transportation Co. Inc.'s $835 million second-lien notes on CreditWatch with negative implications. In addition, S&P placed the 'BB-' rating on Swift Transportation Co. Inc.'s first-lien credit facility, consisting of a $450 million revolving credit facility and $1.72 billion term loan B, on CreditWatch with negative implications. "Conditions in the trucking sector have deteriorated in recent months and will likely not improve materially over the near term given the slowing U.S. economy," said Standard & Poor's credit analyst Anita Ogbara. "As a result, we expect Swift's operating performance and financial profile to remain weaker than previously expected." Swift is the largest for-hire truckload carrier in the U.S., as measured by the number of trucks, operating a fleet of 18,000 tractors, 49,000 trailers, and 31 major terminals in the U.S. and Mexico. Although it is one of the larger players in a very fragmented industry, it is subject to significant competitive pressures. These pressures are likely to intensify over the near to intermediate term given the current U.S. economic outlook. Swift operates an older fleet than many of its competitors, which could exacerbate competitive pressures during this period of weak demand. Swift has adequate liquidity based on $171 million of cash on hand and $253 million of availability under the revolving credit agreement as of June 30, 2007. However, the company has more limited flexibility for dealing with an extended period of industry weakness given its highly leveraged capital structure. S&P will meet with management to discuss Swift's operating prospects and liquidity outlook. S&P are likely to lower ratings if it appears that the financial profile of the company will remain below previous expectations. TORBAY HOLDINGS: Posts $597,820 Net Loss in Quarter Ended June 30 ----------------------------------------------------------------- Torbay Holdings Inc. incurred a net loss of $597,820 in the second quarter ended June 30, 2007, an increase from the $174,814 net loss reported in the same period last year, mainly due to a $345,948 loss on change in fair value of derivative liability and an increase in interest expense and financing cost. With the transfer of the Designer Appliances business on June 29, 2007, the company had no revenue from continuing operations to report. At June 30, 2007, the company's consolidated balance sheet showed $1.1 million in total assets, $719,594 in total liabilities, and $377,612 in total stockholders' equity. Full text copies of the company's consolidated financial statements for the quarter ended June 30, 2007, are available for free at http://researcharchives.com/t/s?2365 Going Concern Doubt Holtz Rubenstein Reminick LLP, in New York, expressed substantial doubt about Torbay Holdings Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's losses, negative cash flows, working capital deficiency and stockholders' deficiency. About Torbay Holdings Headquartered in Irvine, Calif., Torbay Holdings Inc. (OTC BB: TRBY), was, prior to June 29, 2007, engaged through its subsidiary, Designer Appliances Inc., in the development, sale and marketing of computer mouse and software products in the United States. On June 29, 2007, the company transferred to Mr. Thomas Large, a former officer who remains a director of the company, 100% of the capital stock of Designer Appliances Inc. and all other assets and liabilities of the company relating to its computer mouse and software business, including intellectual property and physical materials, including hardware and software and all rights pertaining thereto, in consideration of the payment to the company in perpetuity of a 1.0% royalty on sales by Designer Appliances Inc., the return by Mr. Large to the company of 1,000,000 shares of its common stock, and the grant to the company of a 5.0% interest in the disposal value of Designer Appliances Inc. TOYS 'R' US: CEO Testifies at Senate Hearing on Toy Safety ---------------------------------------------------------- Jerry Storch, Chairman and Chief Executive Officer of Toys "R" Us, Inc. has testified on the issue of toy safety at a special hearing of the Senate Appropriations Subcommittee on Financial Services and General Government last week. In his testimony, Mr. Storch reaffirmed the company's support of proposed federal legislation to build a more effective Consumer Product Safety Commission, strengthen third-party testing requirements for products, and introduce production code stamping. In addition, the company disclosed new steps it is taking to ensure customers receive even more rapid and detailed information regarding toy safety issues. "We recognize that the issue of toy safety goes well beyond business and directly to the well-being of the families we serve," Mr. Storch commented. "We have reiterated that simple, single fact to our employees, suppliers and business partners. We will not tolerate products that do not meet our rigorous safety standards." Mr. Storch commented on product recalls from the perspective of a retailer, and discussed the company's strict procedures for handling these recalls. On the issue of how to improve the recall process, Mr. Storch said, "We believe the recall process itself could be improved in two ways: First, we support legislation shortening the timeframes during the period between identification of a problem and the eventual recall of that product. Second, we also believe that production code stamping of products and packaging would significantly help in tracing potential safety issues." In addition, Mr. Storch shared with the Subcommittee some of the company's requirements of its manufacturers to help reduce and prevent future recalls. In his testimony, he stated, "There are three prongs to effective prevention of problems: setting standards, comprehensive testing to ensure compliance with those standards, and deterrence through real consequences if the standards are violated. We have long held our vendors accountable for meeting strict safety standards. There is no room for compromise. And if a vendor does not meet our standards, we take immediate action. To strengthen deterrence even more, we support increasing penalties for noncompliance." "We are also moving to require that our vendors submit to us certification of testing for each batch coming to Toys "R" Us," he continued. "To reinforce this direction, we strongly support strengthening third-party testing requirements. Specifically, we advocate for legislation requiring accredited certification of testing facilities." "Recent events have catalyzed increased scrutiny in manufacturing, tighter controls and substantially more and more product testing," Mr. Storch concluded. "This is good news for us and our customers. Against this backdrop, and with the combination of these efforts by retailers, regulators, and manufacturers, we believe that together we will make this the safest of holiday seasons for American consumers." As part of its ongoing commitment to safety, Toys "R" Us, Inc. also reported new enhancements to ensure its customers have the most specific and up-to-date information on toy safety issues. Mr. Storch shared these new initiatives with the Subcommittee, which include: * Launching a dedicated toy safety microsite, http://www.Toysrus.com/Safety/that has information about the company's safety assurance standards and procedures, as well as specific recall information; * Introducing an email notification system for recalls; * Adding bilingual recall notices to its communication protocols; and * Introducing new Safety Boards in stores, which will contain important product safety information, including recall notices. These improvements are part of the company's ongoing efforts to raise the bar continually when it comes to the safety of children. These new measures were developed to deliver rapid and decisive communications to customers about safety issues. About Toys 'R' Us Headquartered in Wayne, New Jersey, Toys "R" Us -- http://www.Toysrus.com/-- is a specialty toy retailer, which sells merchandise through more than 1,500 stores, including 586 stores in the U.S. and 699 international stores, which include licensed and franchised stores, and through its Internet site. Babies "R" Us -- http://www.Babiesrus.com/-- is a baby product specialty store chain, which sells merchandise through 256 stores in the U.S. as well as on the Internet. * * * As reported in the Troubled Company Reporter on Aug. 28, 2007, Moody's Investors Service confirmed the B2 corporate family rating and the B2 probability of default rating of Toys 'R' Us Inc. Moody's also confirmed the Caa1 rating of the company's senior unsecured notes due 2011-2018. The outlook is stable. As reported in the Troubled Company Reporter on July 3, 2007, Standard & Poor's Ratings Services raised its corporate credit rating on Toys 'R' Us Inc. to 'B' from 'B-'. At the same time, the senior unsecured rating was raised to 'CCC+' from 'CCC'. The outlook is stable. TPF II: S&P Rates $180 Million Senior Secured Term Loan at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BB-' ratings to TPF II LC LLC's $180 million senior secured term loan B and $40 million revolver, both of which mature in 2014. At the same time, Standard & Poor's assigned recovery ratings of '2' to the facilities, indicating the expectation of substantial recovery (70%-90%) in event of default. The outlook is stable. The proposed issues will be used to finance the acquisition of two simple-cycle natural gas peaking power plants, Lincoln Generation Facility and Crete Generation Facility, with nominal capacity of 656 MW and 328 MW, respectively. The plants will be purchased from ArcLight, DTE Energy Services, and Tyr Energy. TPF II L.P., a newly formed private equity fund, will indirectly own 100% of TPF II LC LLC. The preliminary ratings assume that all project documents are finalized on comparable terms as presented to Standard & Poor's, and that the project meets S&P's criteria for special purpose entities, including the provision of an independent director and a non-consolidation opinion. The final rating will depend on meeting these criteria and a review of all finalized project documents. The project is expected to generate revenue from tolling agreements already in place, followed by merchant energy and capacity payments in the RTO region of PJM's reliability pricing model capacity market when the agreements expire. The 'BB-' rating reflects these risks: -- Commodity risk for fuel, energy, and capacity prices through the majority of the debt's term; -- Refinancing risk in 2014 under the Standard & Poor's base case; -- Dependence on cash from operations to fund major maintenance expenditures; -- Ability to incur additional debt at TPF II L.P.; and -- Historical heat rates above pro forma projections, based on limited data. The above risks are offset by these strengths at the 'BB-' level: -- A 100% sweep of excess cash that steps down to 75% at a leverage ratio (debt to CFADS) of 3x or lower; -- Contracted revenues from tolling agreements and transparent capacity pricing over the next three years; -- Robust coverage ratios under several stress scenarios, including low dispatch and depressed capacity prices; -- Revenue streams from both energy and capacity at two locations, providing mild diversification; and -- A six-month debt service reserve account. TRUESTAR BARNETT: Court Sets Oct. 3 Hearing to Decide on Venue -------------------------------------------------------------- Honorable Stacey G. Jernigan, the bankruptcy judge in Truestar Barnett's Dallas bankruptcy case, has set a hearing for Oct. 3, 2007, to determine if the Truestar Barnett bankruptcy case will go forward in Dallas or Denver. This is the opportunity for all creditors to weigh in on this very important issue. On Aug. 31, 2007, Optima Services International LTD. and five other creditors have filed an involuntary chapter 11 bankruptcy petition against Truestar Barnett LLC in the United States Bankruptcy Court, Northern District of Texas, Dallas Division. Optima anticipates that other creditors will also join in the near future. Also on Aug. 31, 2007, but after the Dallas involuntary bankruptcy filing, Truestar Barnett filed a voluntary chapter 11 bankruptcy petition in the United States bankruptcy Court located in Denver, Colorado. On Aug. 31, 2007, an involuntary chapter 11 bankruptcy petition was also filed against Truestar Petroleum Corporation in the Dallas Bankruptcy Court. Truestar Petroleum Corporation has not filed a voluntary bankruptcy as of Sept. 14. "We believe the right venue for both bankruptcy matters should be Texas," Robert Kubbernus president of Optima, stated. "The assets of Truestar are in Texas, most of the creditors including employee claims against the company are in Texas, the senior lender Macquarie Bank is in Texas, all partners in the Barnett Shale assets are in Texas and the operator of the assets Eagle Oil and Gas are also located in Texas." "We also believe that if an orderly sale of all the assets of Truestar were to take place, our highest and best opportunity for full recovery for all creditors will come from within Texas," Mr. Kubbernus concluded. "We also believe that by conducting a bankruptcy of both the parent company Truestar Petroleum and its subsidiary Truestar Barnett, no creditors will be forgotten in the process." In both the Truestar Barnett and Truestar Petroleum Corporation bankruptcy matters, Optima is represented by Walter Cicack at the law firm of Seyfarth Shaw. About TrueStar Barnett LLC Headquartered in Denver, Colorado, TrueStar Barnett LLC fdba Trinity Barnett LLC -- http://www.truestar-petroleum.com/-- TrueStar Petroleum Corporation (CVE:TPC) is the sole managing member of the Debtor, formed to facilitate the acquisition and operation of the oil and gas assets in the Newark East Gas Field in Texas from Eagle Oil & Gas Co. The company filed for Chapter 11 protection on Aug. 31, 2007, (Bankr. D. Colo. Case No. 07-19746). Duncan E. Barber, Esq. and Steven T, Mulligan, Esq. of Bieging Shapiro & Burrus LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of $1 million to $100 million. US REDUCTION: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: U.S. Reduction, Inc. 641 Lexington Avenue, 26th Floor New York, NY 10022 Bankruptcy Case No.: 07-12897 Chapter 11 Petition Date: September 14, 2007 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Gabriel Del Virginia, Esq. 641 Lexington Avenue, 21st Floor New York, NY 10022 Tel: (212) 371-5478 Fax: (212) 371-0460 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Translux Limited (Dubai) Unsecured Term loan $906,459 due on January 1, 2013, with interest at 5-percent prepayable on demand from surplus; value of principal: $841,212 Unsecured Term $408,793 loan due April 24, 2016, with interest at 5-percent; value of principal: $384,998 Unsecured Demand Loan $273,941 with interest at 5- percent; value of principal: $257,995 The John Leopolda Fiorilla Convertible $814,291 Revocable Trust Notes 2003-2007 555 Park Avenue New York, NY 10021 John S. Samuels, III Advances; value of $496,300 641 Lexington Avenue, principal: $451,182; 26th Floor New York, NY 10022 Jonathan M. Sacks Promissory $451,688 761 Galloping Hill Road Notes 2004-2005 Franklin Lakes, NJ 07417 Translux Group, Inc. Advances $290,622 641 Lexington Ave, 26th Floor New York, NY 10022 Delta Capital Corporation Business commission $257,995 620 Fifth Avenue, 3rd Floor 2006 New York, NY 10020 First Lexington Corporation Rent June through $103,156 September Carbomin, Inc. Advances $33,205 Vertical Ventures, L.L.C. Sublease Security $8,870 Deposit Harvey Bernstein, C.P.A. Professional $3,780 Services 2007 Olympus Securities, L.L.C. Sublease Rent Arrears $3,449 through September 2007 Capital One Bank Credit Card $2,567 J.P. Morgan Chase Bank, N.A. Service Charges $2,183 Rutgers/E. Broadway Rent in September 2007 $2,047 Association, L.L.C. Emiroil, Inc. Advances $831 A.T.T. Mobility, L.L.C. telephone $361 Key Equipment Finance Photocopier $361 Lease Verizon Communications Telephone $354 VALCOM INC: Sues POW! and S. Lee for Breach of Disney Venture Pact ------------------------------------------------------------------ ValCom Inc. filed suit against POW! Entertainment and Stan Lee for breach of contract of a joint venture agreement involving the Disney Company. Under the terms of the Agreement, ValCom would own a 51% position while POW! Entertainment would own 49% of the venture. In addition, all new projects entered into by ValCom and POW! Entertainment would be undertaken exclusively through the venture, including a proposed deal between POW! Entertainment and the Disney Company. ValCom paid to POW! Entertainment $276,000 and to date has not received any payments and has not been updated as to the status of any of the joint ventures. Both Stan Lee and POW! entertainment have been served. About ValCom Based in Los Angeles, California, ValCom, Inc. (PNK: VLCO) -- http://www.valcom.com/-- is a diversified and vertically integrated, independent entertainment company. ValCom, through its operating divisions and subsidiaries, creates and operates full service facilities that accommodate film, television and commercial productions with its four divisions comprised of: studio, film and television, live theater production, and broadcast television. ValCom's clientele list consists of all of the majors such as MGM, Paramount Pictures, ABC, CBS, Sony, NBC, BET, MTV. The Debtor has filed voluntary petitions for reorganization under Chapter 11 on July 16, 2007 (Bankr. C.D. Calif. Case No. 07- 15984). Joseph L. Pittera, Esq. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed assets and debts between $1 million to $100 million. VERIFONE INC: Good Operating Trends Cue S&P's Positive Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on San Jose, California-based VeriFone Inc. to positive from stable, following continued positive operating trends. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. "The ratings reflect the company's moderate debt leverage and acquisitive growth strategies," said Standard & Poor's credit analyst David Tsui. "These factors are partially offset by VeriFone's leading position in the niche market for electronic payment solutions and its diversified customer and market base." VeriFone designs, markets, and services system solutions that enable secure electronic payments. Organic revenue growth has accelerated over the past two years, benefiting from management's focus on increasing penetration of electronic payments in international markets, the replacement of existing solutions to accommodate newer payment applications, and an overall market shift from paper-based transactions to electronic transactions at the point of sale. Revenues for the quarter ended July 2007 were $232 million, up from $148 million last year, primarily due to the company's acquisition of Lipman Electronic Engineering in November 2006. Profitability improved after the Lipman acquisition, with EBITDA margins rising to the mid-20% area from 20% in the fiscal year ended October 2006. The acquisition of Lipman appears to have been integrated smoothly and to have solidified VeriFone's leading market position, particularly in international markets. VERTIS COMM: Commences Exchange Offer for American Color Notes -------------------------------------------------------------- Vertis Communications and American Color Graphics have entered into an agreement with certain holders of: -- the 10% Senior Second Secured Notes due 2010 of American Color and of the 9.75% Senior Secured Second Lien Notes due 2009; and -- 10.875% Senior Notes due 2009 and 13.5% Senior Subordinated Notes due 2009 of Vertis Inc. Pursuant to the agreement, certain holders of the ACG Notes and the Vertis Notes have agreed to participate in exchange offers for the ACG Notes and the Vertis Notes. The exchange offers would extend the maturities of the ACG Notes and the Vertis Notes and convert the ACG Notes into a new series of senior subordinated indebtedness of Vertis. By tendering their existing notes, holders will also be consenting to certain amendments to the indentures governing the existing ACG Notes and the existing Vertis Notes to eliminate substantially all of the covenants including, in the case of the ACG Notes, the requirement that ACG offer to redeem the ACG Notes upon the occurrence of a change of control, and events of default that may be removed by majority consent of the holders consistent with the applicable indentures and the requirements of the Trust Indenture Act of 1939, as amended. In addition, the holders of the ACG Notes and the 9.75% Senior Secured Second Lien Notes will be asked to consent to the release of all collateral from the liens securing such notes. The exchange offers will also provide for a second lien to the holders of notes exchanged for the 9.75% Senior Secured Second Lien Notes due 2009, a third lien to holders of the notes exchanged for the 10.875% Senior Notes due 2009, and a fourth lien to the holders of the notes exchanged for the ACG Notes and the 13.5% Senior Subordinated Notes due 2009. Rights to receive principal and interest on the existing notes not tendered will not be impaired. The exchange offers will be subject to certain conditions, including, without limitation, the consummation of the acquisition by Vertis of ACG Holdings Inc., the parent company of ACG. A definitive merger agreement between Vertis and ACG has not yet been executed and Vertis and ACG can provide no assurance that it will be or, if a merger agreement is executed and the transaction closes, that the combined company will be able to realize the anticipated benefits of the merger. The exchange offers will only be made, and copies of the offering documents will only be made available to, holders that have certified certain matters to Vertis, including their status as a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933. The securities to be issued in the exchange offers have not been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. Milbank, Tweed, Hadley & McCloy LLP is representing certain holders of ACG Notes in connection with the exchange offers. For any questions, holders of ACG Notes should contact ACGNotes@milbank.com. Akin Gump Strauss Hauer & Feld LLP is representing certain holders of Vertis Notes in connection with the exchange offers. Holders of Vertis Notes should contact Akin Gump at VERTAG@akingump.com with any questions. About American Color Graphics Headquartered in Brentwood, Tennessee, American Color Graphics Inc. -- http://www.americancolor.com/-- is engaged in printing of advertising inserts and newspaper products in the United States. The company is a wholly owned subsidiary of ACG Holdings Inc. The company operates in two segments: print and premedia services. Customers for its print services include about 230 national and regional retailers and approximately 155 newspapers. The premedia services segment provides its customers with a solution for the preparation and management of materials for printing, including the design, creation and capture; manipulation; storage; transmission, and distribution of images. About Vertis Communications Vertis Communications, fka Vertis Inc., a wholly owned subsidiary of Vertis Holdings -- http://www.vertisinc.com/-- is a marketing partner to a number of clients, including several Fortune 500 companies. The company offers consulting, creative, research, direct mail, media, technology and production services. It also provides print advertising, direct marketing solutions, and similar services to America's retail and consumer services companies. Vertis Inc. posted total stockholders' deficit as of Dec. 31, 2006, amounting to $550.1 million, resulting from total assets of $844.7 million and total liabilities of $1.4 million. * * * As reported in the Troubled Company Reporter on July 27, 2007, Moody's Investors Service placed the ratings of Vertis Inc. under review for possible downgrade after reports of the company to merge with American Color Graphics Inc. Ratings placed under review for possible downgrade: $350 million 10.875% senior notes due 2009 - Caa1; $293 million 13 1/2% senior subordinated notes due 2009 - Caa3; $350 million 9 3/4% senior secured second lien notes due 2009 - B1; corporate family rating - Caa1; and probability of default rating - Caa1. VESTA INSURANCE: Former CEO David Lacefield Seeks Summary Judgment ------------------------------------------------------------------ Former Vesta Insurance Group President and CEO David W. Lacefield denies the existence of an actual controversy between him and XL Specialty Insurance Company so as to support XL Specialty's Complaint. XL Specialty issued for Vesta Insurance Group's benefit an insurance policy, whose policy period was extended to December 2007. Tom E. Ellis, Esq., at Ellis & Boom LLC, in Birmingham, Alabama, asserts that there are no material facts supporting XL's allegation that Mr. Lacefield has requested CL "keep the extension in place," or that XL has received "conflicting directives" or "competing demands." Moreover, Mr. Ellis contends, there are no material issues of fact to: -- suggest that Mr. Lacefield has ever requested, directed or demanded any action by XL in regard to the cancellation or continuance of the Policy; -- support that Mr. Lacefield authorized or acquiesced Lloyd T. Whitaker, as trustee for Vesta Group's Third Amended Plan of Liquidation, to act on his behalf with regard to the policy; or -- establish that he has ever been "compelled" by any entity to cancel any extension of the Policy. Instead, Mr. Lacefield has repeatedly asserted to the Court that XL has no contractual right to cancel the Policy, Mr. Ellis maintains. Mr. Ellis also contends that the policy does not contain terms permitting a "cancellation" of the policy by any person or entity, and that XL Specialty has no authority to in any manner terminate the coverage due and owing to him upon the request of any person or entity. Mr. Lacefield instead denies any option of XL Specialty to do anything but keep the policy in effect until Dec. 31, 2007, as the contract of insurance provides. Thus, Mr. Lacefield asks the U.S. Bankruptcy Court for the Northern District of Alabama to enter summary judgment in his favor and against XL by declaring that XL may not "cancel" any party of the Policy or in any manner encumber the available coverage of the policy for a period shorter than that through and including Dec. 31, 2007. Mr. Ellis also asserts that the Court lacks jurisdiction to otherwise adversely affect the contractual rights of a non- debtor. "The rights of [Mr.] Lacefield to continuation of whatever coverages to which he is entitled under the Policy through December 31, 2007 does not effect the estate of the debtor and therefore the Court lacks jurisdiction to so impair [Mr.] Lacefield's contractual rights," Mr. Ellis says. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered an order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. On Oct. 11, 2006, both Vesta and Gaines filed separate Plans of Liquidation and Disclosure Statements. They filed an amended Plan on Nov. 7, 2006, and a Second Amended Plan on Nov. 10, 2006. The Court approved the Disclosure Statements of Vesta and Gaines on Nov. 10, 2006. On Dec. 22, 2006, the Court confirmed the Third Amended Plans of Vesta and Gaines. Florida Select Insurance Agency Inc., an affiliate, filed for chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No. 07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer & Dobbs LLP, represents Florida Select. (Vesta Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VESTA INSURANCE: Florida Select Wants Nod on Schmidt Agreement -------------------------------------------------------------- Florida Select Insurance Agency, Inc., asks the Hon. Thomas B. Bennett of the U.S. Bankruptcy Court Northern District of Alabama to approve a claims settlement agreement it entered into with J.P. Schmidt, in his capacity as Insurance Commissioner of the State of Hawaii and as the Court-appointed liquidator for The Hawaiian Insurance & Guaranty Company, Limited. Florida Select, as managing general agent, entered into a Managing General Agency Agreement dated February 2003 with HIG. In 2006, Vesta Group, Inc., and certain of its subsidiaries, including HIG, suffered significant deterioration, resulting in increased scrutiny from various state insurance regulators and ultimately to agreed rehabilitation proceedings to be held in Florida, Texas, and Hawaii. In June and August 2006, the First Circuit for the State of Hawaii entered Receivership and Liquidation Orders with respect to HIG, and appointed Mr. Schmidt as rehabilitator and liquidator of HIG. The Liquidation Order triggered the process of canceling policies relating to HIG. Some of the policies were issued in California and were the subject of the MGA Agreement with Florida Select. In April 2007, Mr. Schmidt filed an action in the Hawaii Court, seeking declaratory and injunctive relief with respect to premiums, aggregating $865,000, allegedly owed by Florida Select to HIG based on the Californian policies. Florida Select never made an appearance in the Hawaii Civil Action or the Hawaii Receivership Action, and disputed the allegations of the Hawaii Civil Action. In July 2007, HIG filed Claim No. 22 for $865,459. HIG also filed a Lift Stay Motion with respect to the alleged premiums. To resolve their dispute, Florida Select and Mr. Schmidt entered into a settlement agreement, which provides that: (a) Florida Select will transfer to Mr. Schmidt $488,000 out of certain accounts maintained at First Commercial Bank and Bank of America; (b) Mr. Schmidt will file the Hawaii Action Dismissal; (c) Mr. Schmidt will withdraw its Lift Stay Motion; (d) The HIG claim will be disallowed and withdrawn; (e) The MGA Agreement will be deemed rejected by Florida Select and terminated effective as of the Petition Date with no rejection damages available for HIG or Mr. Schmidt; and (f) The parties will release each other from all other claims. Rufus T. Dorsey, Esq., at Parker, Hudson, Rainer & Dobbs LLP, in Atlanta, Georgia, asserts that the Settlement is in the best interest of Florida Select because it: -- resolves pending litigation in Hawaii; -- takes into account the recoupment claims of Florida Select; and -- reaches a resolution that will fully separate the interests of Florida Select and the Hawaii receivership estate. In the absence of a settlement, litigation between Florida Select and Mr. Schmidt could be lengthy and expensive, Mr. Dorsey relates. The settlement, reaches a resolution that removes any uncertainty and delay of a potential litigation, Florida Select maintains. About Vesta Insurance Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc. (Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding company for a group of insurance companies that primarily offer property insurance in targeted states. Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership III, L.P., filed an involuntary chapter 7 petition against the company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517). The case was converted to a voluntary chapter 11 case on Aug. 8, 2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor. R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, represents the petitioning creditors. In its schedules of assets and liabilities, Vesta listed $14,919,938 in total assets and $214,278,847 in total liabilities. J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that manages the company's numerous insurance subsidiaries and employs the headquarters workers. The company filed for chapter 11 protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808). Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP, represent the Debtor in its restructuring efforts. In its schedules of assets and liabilities, Gaines listed $19,818,094 in total assets and $16,046,237 in total liabilities. On Aug. 1, 2006, the District Court of Travis County, Texas entered an order appointing the Texas Commissioner of Insurance as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries: Vesta Fire Insurance Corporation; The Shelby Insurance Company; Shelby Casualty Insurance Corporation; Texas Select Lloyds Insurance Company; and Select Insurance Services, Inc. On Oct. 11, 2006, both Vesta and Gaines filed separate Plans of Liquidation and Disclosure Statements. They filed an amended Plan on Nov. 7, 2006, and a Second Amended Plan on Nov. 10, 2006. The Court approved the Disclosure Statements of Vesta and Gaines on Nov. 10, 2006. On Dec. 22, 2006, the Court confirmed the Third Amended Plans of Vesta and Gaines. Florida Select Insurance Agency Inc., an affiliate, filed for chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No. 07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer & Dobbs LLP, represents Florida Select. (Vesta Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VOTORANTIM CEMENT: Moody's Lifts Rating on $559 Mil. Bank Facility ------------------------------------------------------------------ Moody's Investors Service upgraded Votorantim Cement North America Inc.'s $559 million Senior Secured Bank Facility ratings to Ba1 from Ba2. The facility is comprised of a $150 million five-year revolving credit facility and a $409 million five-year term loan. The facility is secured by a first priority lien on all of VCNA's present and future assets. Moody's also assigned a Ba1 corporate family rating to VCNA. The rating outlook is positive. In an earlier corporate action, VCNA acquired 100% of St. Marys Cement Inc, the entity to which Moody's had previously affixed the Corporate Family Rating and Senior Secured rating. The ratings at St. Marys Cement Inc. are being withdrawn concurrently with the assignment of ratings for VCNA. The upgrade and positive outlook for VCNA primarily reflect the Aug. 24, 2007 upgrade of VCNA's parent, Votorantim Participacoes S.A. to Baa3 with a positive outlook, the importance of VCNA to VPar, and its inclusion as a material subsidiary in VPar's notes documentation, which contains cross default and cross acceleration language to its wholly-owned subsidiary liabilities of more than $25 million, however, there are no formal guarantees or support. VPar has directly provided support to VCNA in the past. Other key factors influencing VCNA's ratings include its reasonable financial leverage given the company's size and earnings capacity, a market position supported by its status as the largest supplier of cement in the Great Lakes region and its assets in ready-mix concrete and construction aggregates. VCNA's ratings are also reflective of the company's reduction in free cash flow due to increased capital spending over the near term, largely driven by expansion of the company's Florida assets, and vulnerability to raw material cost inflation, including natural gas and electricity, as well as vulnerability to economic weakening in the Great Lakes region, given its focus on that region. These ratings were upgraded: Issuer: Votorantim Cement North America Inc. (previously assigned to St. Marys Cement Inc.): -- $150 million Gtd Sr Sec Revolving Credit Facility due 2011 - upgraded to Ba1 (LGD3, 46%) from Ba2 -- $409 million Gtd Sr Sec Term Loan Facility due 2011 - upgraded to Ba1 (LGD3, 46%) from Ba2 These ratings were assigned: Issuer: Votorantim Cement North America Inc. (previously assigned to St. Marys Cement Inc.): -- Corporate family rating - Ba1 -- Probability of Default -- Ba1 Toronto-based Votorantim Cement North America is the North American holding company for Votorantim Cimentos' operations in the United States and Canada, operating primarily in the Great Lakes and Florida regions. For 2006, VCNA generated more than $725 million in net sales and was responsible for the sale of more than 5.5 million tons of cement, 2.4 million cubic meters of ready-mix and about 6.6 million tons of aggregates. VCNA and VC are ultimately owned by the Votorantim group. Votorantim Participacões S.A. is the non-operating holding company of the family-owned Votorantim group, one of Brazil's largest conglomerates with a diverse business portfolio that includes banking, metals and mining, pulp and paper, cement, agribusiness, and chemicals. Votorantim reported consolidated net revenues of BRL29 billion ($13.3 billion) in 2006. WERNER LADDER: Court OK's Panel's 2nd Amended Disclosure Statement ------------------------------------------------------------------ The United States Bankruptcy Court for the District of Delaware approved on Sept. 14, 2007, the Second Amended Disclosure Statement with respect to the Second Amended Liquidating Plan filed by the Official Committee of Unsecured Creditors in the Chapter 11 cases of Werner Holding Co. (DE), Inc., and its affiliates. Bankruptcy Judge Kevin J. Carey ruled that the Disclosure Statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Committee delivered final, revised copies of its Second Amended Plan and Disclosure Statement during the September 14 hearing. A full-text copy of the Committee's Revised Plan is available at no charge at http://ResearchArchives.com/t/s?236c A full-text copy of the Committee's Revised Disclosure Statement is available at no charge at http://ResearchArchives.com/t/s?236d Judge Carey also approved the procedures for solicitation and tabulation of votes to accept or reject the Second Amended Liquidating Plan, as well as procedures for filing Plan confirmation objections. Specifically, Judge Carey directed the Committee to mail, no later than September 19, a solicitation package containing: -- a written notice of the Disclosure Statement Order, the deadline for voting on the Plan, the Pan confirmation hearing date and the deadline and procedures for filing Plan confirmation objections; -- the Plan and Disclosure Statement in pdf format on a CD- ROM; -- the appropriate form of Ballots or Master Ballot and a ballot return envelope; and -- other information as the Court may direct or approve. Solicitation Packages will be sent to the relevant broker, bank, transfer agent, registrar, servicing agent, or other intermediary holding claims for acting on behalf of holders of 10% senior Subordinated Notes due November 15, 2007. The Intermediaries will forward the Package to the appropriate Subordinated Noteholders prior to the voting deadline, as set by the Court on October 15 at 4:00 p.m. Pursuant to Rule 3017 of the Federal Rules of Bankruptcy Procedure, Judge Carey did not require the Committee to transmit a Solicitation Package to Non-Voting Parties. The Committee will mail to each Non-Voting Party within September 29. The Court established September 12 as the record date to determine creditors and interest holders entitled to receive the Solicitation Package or the Non-Voting Creditor Notice and to vote on the Plan. Kurtzman Carson Consultants LLC will tabulate the ballots and certify to the Court the balloting results. The Committee may object to any claim solely for Plan voting purposes by filing a determination motion no later than 20 days before the Voting Deadline. The Court ruling on the Determination Motion will be considered a ruling with respect to the allowance of claims under Rule 3018. Creditors seeking to have a claim temporarily allowed for purposes of voting to accept or reject the Plan pursuant to Rule 3018 must file a motion no later than October 1. About Werner Ladder Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. On June 19, 2007, the Creditors Committee submitted their own chapter 11 plan and disclosure statement explaining that plan. On Sept. 10, 2007, the Committee filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Disclosure Statement started on August 23 and was continued to September 12. The Debtors' exclusive period to file a chapter 11 plan expired on June 30, 2007. (Werner Ladder Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or (215/945-7000). WERNER LADDER: Confirmation Hearing Scheduled on October 25 ----------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware set a hearing at 10:00 a.m., on Oct. 25, 2007, to consider confirmation of the Second Amended Liquidating Plan filed by the Official Committee of Unsecured Creditors in the Chapter 11 cases of Werner Holding Co. (DE), Inc., and its affiliates. Any objection, comment or response to Plan confirmation must be filed with the Court by October 15 at 4:00 p.m. The Confirmation Hearing may be adjourned from time to time without further notice to creditors and other parties-in- interest. About Werner Ladder Based in Greenville, Pennsylvania, Werner Holding Co. (DE) Inc. aka Werner Ladder Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). The Debtors are represented by the firm of Willkie Farr & Gallagher LLP as lead counsel and the firm of Young, Conaway, Stargatt & Taylor LLP as co-counsel. Rothschild Inc. is the Debtors' financial advisor. The Official Committee of Unsecured Creditors is represented by the firm of Winston & Strawn LLP as lead counsel and the firm of Greenberg Traurig LLP as co-counsel. Jefferies & Company serves as the Creditor Committee's financial advisor. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. On June 19, 2007, the Creditors Committee submitted their own chapter 11 plan and disclosure statement explaining that plan. On Sept. 10, 2007, the Committee filed an Amended Plan and Disclosure Statement. The hearing to consider the adequacy of the Disclosure Statement started on August 23 and was continued to September 12. The Debtors' exclusive period to file a chapter 11 plan expired on June 30, 2007. (Werner Ladder Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or (215/945-7000). WHOLE FOODS: Moody's Downgrades Corporate Family Rating to Ba1 -------------------------------------------------------------- Moody's Investors Service downgraded Whole Foods Market Inc.'s corporate family rating to Ba1 from Baa3 reflecting the deterioration in the company's debt protection measures following the debt-financed acquisition of Wild Oats Markets Inc. The rating outlook is stable. This rating action resolves the review for possible downgrade initiated on Feb. 22, 2007. Ratings downgraded: -- Corporate family rating to Ba1 from Baa3 -- Issuer rating to Ba2 from Ba1 (will be withdrawn) Rating assigned: -- Probability of default rating at Ba1 On Aug. 28, 2007, Whole Foods acquired Wild Oats for total consideration of $708 million, including assumed debt and fees; the transaction was funded in full with a new senior term loan (which is unrated). Moody's notes that the acquisition solidifies Whole Foods' competitive position in its existing markets and extends its footprint to new trade markets. However, it also significantly increases leverage, with pro forma Debt/EBITDA rising to 5.2 times from 4 times for fiscal 2006, while placing further stain on the company's already negative free cash flow. Additionally, management faces the challenge of integrating a sizable organization with a distinct culture of its own at the same time as it continues its aggressive rollout of new stores. Whole Foods Ba1 rating balances non investment grade credit metrics against the company's compelling business model, industry leading comparable store sales growth and profit margins, and productive store base. Whole Foods is the market leader in high quality perishables and organic food offerings. Furthermore, the company generates solid cash flow, which has been generally used to fund internal operating expense and the company's aggressive capital expenditures. The ratings also reflect Moody's concern that Whole Foods service-oriented culture and management may potentially be strained as the company continues its rapid expansion and as the competition in natural and organic sections intensifies. The ratings are constrained by high leverage metrics, scale of companies in terms of revenues, and possible integration risks over the next two years. Whole Foods Market Inc. is the largest retailer of natural and organic foods and products in the US. The company operates about 191 stores in 32 states and the District of Columbia, three stores in Canada and six in the United Kingdom. Sales for the last twelve months ended July 1, 2007 exceeded $6 billion. Wild Oats Markets Inc, acquired by Whole Foods, operates a nationwide chain of natural and organic foods markets in the U.S. and Canada. With about $1.2 billion in annual sales, the company currently operates 109 natural foods stores in 24 states and British Columbia, Canada. The company's markets include: Wild Oats Marketplace, Henry's Farmers Market, Sun Harvest and Capers Community Markets. ZUFFA LLC: S&P Affirms All Ratings and Revises Outlook to Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Las Vegas-based Zuffa LLC, d/b/a Ultimate Fighting Championship, to negative from stable, while affirming all ratings, including the 'BB' corporate credit rating, on the company. "The outlook revision reflects Zuffa's weak operating results over the six months ended June 30, 2007, which were meaningfully below our prior expectations," said Standard & Poor's credit analyst Guido DeAscanis III. In particular, the company incurred significantly higher operating costs, primarily related to its initiative to extend the Ultimate Fighting Championship brand into the U.K. Zuffa is the world's largest promoter and producer of Mixed Martial Arts sporting events through its UFC, World Extreme Cagefighting, and Pride Fighting Championship. UFC is the company's flagship brand and the primary contributor to consolidated revenues and cash flow. Total debt outstanding as of June 30, 2007 was $325 million. The ratings reflect the company's relatively short operating history, potential revenue and cash flow volatility given its primarily event-driven business model, and vulnerability to changing consumer tastes. These risks partly are offset by the company's historical success in growing its UFC brand, healthy free cash flow conversion, and modest expected debt leverage. Zuffa produces live and taped MMA content which is distributed primarily through pay-per-view and cable television. Roughly 75% of revenues are event based and depend largely on the number of pay-per-view buys and, to a lesser extent, tickets sold at the gate for the company's MMA contests. The other 25% of revenues are committed through contractual arrangements with Viacom Inc.'s Spike TV channel, which extends through 2008, and various sponsors. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Softwre ABT (1) 63 22 AFC Enterprises AFCE (31) 158 3 Alaska Comm Sys ALSK (23) 562 19 Apex Silver Mine SIL (131) 1,385 146 Authentic Inc AUTH (4) 22 0 Bare Escentuals BARE (162) 196 68 Bearingpoint Inc BE (338) 1,836 133 Blount International BLT (89) 471 141 CableVision System CVC (5,064) 10,072 17 Carrols Restaurant TAST (18) 459 (36) Cell Therapeutic CTIC (85) 90 21 Centennial Comm CYCL (1,078) 1,322 20 Cheniere Energy CQP (181) 1,935 145 Choice Hotels CHH (72) 332 (33) Cincinnati Bell CBB (744) 1,953 (2) Claymont Stell PLTE (41) 152 72 Compass Minerals CMP (49) 674 139 Corel Corp. CRE (16) 261 (31) Crown Holdings CCK (90) 6,793 428 Crown Media HL CRWN (588) 749 63 CV Therapeutics CVTX (129) 308 226 Cyberonics CYBX (17) 135 (28) Deluxe Corp DLX 0 1,410 (164) Demantec Inc DMAN (10) 60 (7) Denny's Corporation DENN (207) 439 (54) Domino's Pizza DPZ (1,434) 474 87 Dun & Bradstreet DNB (425) 1,418 (268) Einstein Noah Re BAGL (46) 136 (3) Emeritus Corp. ESC (111) 950 (62) Enzon Pharmaceutical ENZN (57) 355 166 Extendicare Real EXE-U (16) 1,331 146 Foamex Intl FMXI (257) 566 146 Ford Motor Co F (1,422) 287,939 (4,704) Gencorp Inc. GY (50) 1,033 52 General Motors GM (2,290) 186,527 (4,638) Graftech International GTI (4) 788 260 Healthsouth Corp. HLS (1,292) 2,402 (463) I2 Technologies ITWO (6) 195 39 ICO Global C-New ICOG (116) 628 146 IDEARC Inc IAR (8,575) 1,576 326 IMAX Corp IMX (64) 220 12 IMAX Corp IMAX (64) 220 12 Incyte Corp. INCY (120) 309 250 Indevus Pharma IDEV (75) 156 14 Intermune Inc ITMN (68) 241 181 ITC Deltacom Inc ITCD (49) 409 9 Koppers Holdings KOP (44) 699 196 Linear Tech Corp LLTC (708) 1,219 681 McMoran Exploration MMR (50) 446 (1) Mediacom Comm MCCC (120) 3,624 (278) National Cinemed NCMI (559) 446 40 New River Pharma NRPH (110) 152 (19) Nexstar Broadcasting NXST (81) 704 (20) NPS Pharm Inc NPSP (226) 150 (107) ON Semiconductor ONNN (118) 1,428 322 Primedia Inc PRM (426) 1,233 770 Protection One PONN (4) 678 (302) Qwest Communication Q (1,556) 20,389 (1,263) Radnet Inc. RDNT (49) 393 38 Ram Energy Resources RAME (1) 203 (8) Regal Entertainment RGC (96) 2677 (89) Resverlogix Corp RVX (2) 17 11 Riviera Holdings RIV (24) 443 28 RSC Holdings Inc RRR (129) 3,430 (202) Rural Cellular RCCC (602) 1,260 14 Sealy Corp. ZZ (145) 1,017 49 Sipex Corp SIPX (18) 44 2 Sirius Satellite SIRI (539) 1,688 (176) St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (167) 3,745 (62) Stelco Inc STE (108) 2,734 726 Town Sports Int. CLUB (12) 459 (52) Unisys Corp. UIS (2) 3,832 40 VMWare Inc-CL A VMW (183) 1,244 3 Voyager Learning VLCY (53) 917 (637) Weight Watchers WTW (991) 1,046 (85) Western Union WU (86) 5,328 945 Westmoreland Coal WLB (115) 764 (51) Worldspace Inc. WRSP (1,683) 424 (20) WR Grace & Co. GRA (390) 3,706 922 XM Satellite XMSR (597) 1,813 (153) Xoma Ltd XOMA (14) 68 23 This table lists 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. This list is taken from the Troubled Company Reporter's Tuesday edition. ********* 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 R. 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 ***