T R O U B L E D C O M P A N Y R E P O R T E R Thursday, November 15, 2007, Vol. 11, No. 271 Headlines ACTUANT CORP: R. Alan Hunter Joins Board of Directors AFM 805 INC: Case Summary & 30 Largest Unsecured Creditors AFV SOLUTIONS: Posts $498,995 Net Loss in 1st Qtr. Ended Sept. 30 AGILENT TECHNOLOGIES: Inks Merger Agreement with Velocity11 AINSWORTH LUMBER: Moody's Junks Corporate Family Rating ALAN BURNS: Case Summary & 19 Largest Unsecured Creditors ALLIANCE BANCORP: Sells Brisbane Property to TA Associates AMERICAN HOME: Can Access $35 Mil. of AHM Acquisition Financing AMERICAN HOME: Asks Court to Move Lease Decision Period to Mar. 3 AMERICAN HOME: Wants Senior Managers Incentive Program Approved AMERICAN REPROGRAPHICS: S&P Holds 'BB' Corporate Credit Rating AMERISOURCEBERGEN CORP: Earns $87.5 Mil. in Qtr. Ended Sept. 30 AMMC VIII: Moody's Rates $20 Million Class E Notes at Ba2 AMR CORP: Fitch Holds Junk Rating on Senior Unsecured Debt ANN-LEE CONSTRUCTION: Case Conversion Hearing Moved to December 12 ANSLEY PARK: Moody's Junks Ratings on Four Note Classes ARCHSTONE-SMITH: S&P Retains 'BB-' Issuer Credit Rating ARES XII: Moody's Assigns Ba2 Rating on $35 Mil. Class E Notes ARVINMERITOR INC: Declares $0.10 Quarterly Dividend ARVINMERITOR INC: Posts $62 Million Net Loss in Fourth Quarter ATARI INC: Streamlines Operations, Establishes Business Plan BABBY-HENKEL: Case Summary & Two Largest Unsecured Creditors BAKER & TAYLOR: Moody's Changes Outlook to Negative from Stable BANC OF AMERICA: Fitch Holds BB+ Rating on Class M-MC Certs. BEAR STEARNS: Fitch Holds BB+ Rating on Class L Certificates CARIBE MEDIA: S&P Puts 'B' Ratings Under Positive CreditWatch CELL THERAPEUTICS: Sept. 30 Balance Sheet Upside-Down by 119.3MM CITIGROUP: Moody's Holds Low-B Ratings on Three Cert. Classes CLECO EVANGELINE: Moody's Lifts Rating on Senior Notes to Ba1 COLUMBUSNOVA CLO: Moody's Rates $11.25MM Class E Notes at Ba2 COREL CORP: S&P Holds 'B' Rating and Revises Outlook to Stable CREDIT SUISSE: Low Credit Levels Cue Moody's to Lower Ratings CREDIT SUISSE: Moody's Cuts Ratings on Two Cert. Classes to Low-B CSFB TRUST: Credit Support Erosion Cues S&P's Rating Downgrades CYRUS REINSURANCE: S&P Assigns Low-B Ratings on $105 Million Loan DELPHI CORP: To Receive Labor Payments from GM Through 2015 DUANE STREET: Moody's Rates $15 Million Class B Notes at Ba2 DURA AUTOMOTIVE: Asks Firm to Detail Purchase of Clients' Bonds DRYDEN XVIII: Moody's Assigns Ba2 Rating on $14MM Class B Notes E.DIGITAL CORP: Sept. 30 Balance Sheet Upside-Down by $2.04 Mil. E*TRADE: Moody's Lowers Outlook to Stable from Positive E*TRADE FINANCIAL: Possible Write-Downs Cue S&P to Cut Ratings EDITH MOSER: Voluntary Chapter 11 Case Summary ENCYSIVE PHARMA: Sept. 30 Balance Sheet Upside-Down by $136.6 Mil. FEDERAL MOGUL: District Court Affirms Chapter 11 Plan FIRST UNION: Fitch Junks Rating on $11.8 Mil. Class M Certs. FREESCALE SEMICONDUCTOR: Fitch Puts Issuer Default Rating at B+ GENERAL MOTORS: To Make Labor Payments to Delphi Through 2015 GENERAL MOTORS: Signs 2007 UAW-GM National Labor Contract GOLDMAN SACHS: Moody's Lowers and Reviews Ratings on 18 Deals GOLF TRUST: Terminates Plan of Liquidation and Dissolution GREENWOOD LLC: Case Summary & Four Largest Unsecured Creditors GSC CAPITAL: Moody's Junks Ratings on Four Certificate Classes HAZEL POINTE LP: Involuntary Chapter 11 Case Summary HM RIVERGROUP: S&P Holds 'B-' Rating and Removes Positive Watch HOME EQUITY: Poor Credit Support Cues S&P to Lower Ratings HOMEBANC CORP: Judge Carey Appoints Stuart Maue as Fee Auditor INFINITY ENERGY: Earns $3.2 Million in 3rd Quarter Ended Sept. 30 JEFFREY BRUNO: Case Summary & 20 Largest Unsecured Creditors JOHN CONNERS: Voluntary Chapter 11 Case Summary KKR FINANCIAL: Moody's Assigns Low-B Ratings on $62 Million Notes LAWRENCE SALANDER: Needs $200,000 DIP Fund to Pay Attorneys LAWRENCE SALANDER: Creditor Balks at DIP Pact with First Republic LAWRENCE SALANDER: Wants Until December 17 to File Schedules LEVITT AND SONS: Wants to Hire Berger Singerman as Bankr. Counsel LEVITT AND SONS: Selects AP Services as Crisis Managers LEVITT AND SONS: Wants Court's OK to Use Lenders' Cash Collateral LEVITZ FURNITURE: Gets Interim Okay to Use GECC's Cash Collateral MACY'S INC: Earns $33 Million in Third Quarter Ended Nov. 3 MAJESTIC STAR: Moody's Cuts Corporate Family Rating to B2 MAMC WINDWARD: Voluntary Chapter 11 Case Summary MATRITECH INC: Sept. 30 Balance Sheet Upside-Down by $9.9 Million MISSION BAY: Case Summary & 20 Largest Unsecured Creditors MONDY PROPERTIES: Voluntary Chapter 11 Case Summary MORGAN STANLEY: Moody's Affirms Low-B Ratings on Six Cert. Classes NASH FINCH: Earns $15.4 Million in Quarter Ended October 6 NASH FINCH: Board Approves One Million Share Repurchase Program NATURADE INC: Obtains $1.2 Mil. Exit Financing from Redux Holdings NEPTUNE CDO: Moody's Junks Ratings on Six Note Classes NEW YORK RACING: U.S. Trustee and PBGC Balk at Chapter 11 Plan NOMURA ALT-A: Moody's Lowers and Reviews Ratings on 10 Deals NOVASTAR FINANCIAL: Has $80.7 Million Equity Deficit at Sept. 30 NOVASTAR FINANCIAL: Inks Waiver Agreement with Wachovia Bank NOVASTAR FIN'L: Mulls Bankruptcy Filing Due to Bank Loan Default NUVEEN INVESTMENTS: Moody's Cuts Rating on Senior Notes to B3 PEABODY ENERGY: Fitch Affirms BB+ Issuer Default Rating PETROLEUM GEO: Arrow Seismic Deal Cues S&P to Hold 'BB-' Rating PILGRIM'S PRIDE: Earns $33.2 Million in Quarter Ended Sept. 29 PLAINS EXPLORATION: Provides Final Results of Pogo Elections PLAINS EXPLORATION: Earns $32.9 Mil. in Quarter Ended Sept. 30 POLAR REFRIGERANT TECHNOLOGY: Involuntary Chapter 11 Case Summary PROGRESSIVE GAMING: Posts $39.7 Million Loss in Third Quarter PROVIDENCE SERVICE: Moody's Puts Corporate Family Rating at B2 QUEBECOR WORLD: Moody's Junks Rating on New $400 Mil. Senior Notes QUEBECOR WORLD: S&P Rates Proposed $400 Million Senior Notes at B RAMPART CLO: Moody's Rates $16.35 Million Class E Notes at Ba2 REAL ESTATE: Moody's Holds Low-B Ratings on 6 Certificate Classes RELIANCE INTERMEDIATE: Moody's Rates $293MM Senior Notes at Ba2 RELIANCE INTERMEDIATE: S&P Rates $293 Million Secured Notes at BB- REMY WORLDWIDE: Files Supplement to Prepackaged Chapter 11 Plan REMY WORLDWIDE: Plan Confirmation Hearing Set for November 20 RIVERDEEP INTERACTIVE: Harcourt Deal Cues Moody's Rating Action ROGER ENGEN: Case Summary & Eight Largest Unsecured Creditors ROUTE 66: Case Summary & Seven Largest Unsecured Creditors SALANDER-O'REILLY: Wants to Use First Republic's $1.5MM DIP Fund SCOTTISH RE: Moody's Holds (P)Ba3 Rating on Senior Unsecured Shelf SMK SPEEDY: Need to Cut Overhead Costs Cues CCAA Bankruptcy Filing SPATIALIGHT INC: Sept. 30 Balance Sheet Upside-Down by $13.5 Mil. SPATIALIZER AUDIO: Earns $472,342 in Third Quarter Ended Sept. 30 STATION CASINO: Moody's Cuts Rating on Senior Notes to B2 TAXI TECHNOLOGY: Voluntary Chapter 11 Case Summary TRENT VON'LEE: Case Summary & 13 Largest Unsecured Creditors VICTORY OUTREACH: Case Summary & Eight Largest Unsecured Creditors VIEWPOINT CORP: Posts $256,000 Net Loss in 3rd Qtr. Ended Sept. 30 WACHOVIA BANK: Moody's Holds Low-B Ratings on Six Cert. Classes WATERFORD WEDGWOOD: Posts EUR85 Mil. Equity Deficit at Sept. 30 WAVE SYSTEMS: Posts $4.8 Million Net Loss in Qtr. Ended Sept. 30 WELLS FARGO: Fitch Holds Low-B Ratings on 10 Cert. Classes WENDY'S INT'L: Gets Lower Purchase Proposal from Triarc Cos. WINDSTREAM REGATTA: Moody's Puts Corporate Family Rating at B1 WINDSTREAM REGATTA: S&P Assigns 'B+' Corporate Credit Rating X-RITE INC: Posts $2.8 Million Net Loss in Quarter Ended Sept. 29 *Chapter 11 Cases with Assets & Liabilities Below $1,000,00 ********* ACTUANT CORP: R. Alan Hunter Joins Board of Directors ----------------------------------------------------- Actuant Corporation has appointed R. Alan Hunter to the company's Board of Directors, effective immediately. Mr. Hunter is a retired executive from The Stanley Works where he had served as President and Chief Operating Officer from 1993-1997 as well as Vice President Finance and Chief Financial Officer from 1986-1993. He joined Stanley in 1974 and prior to that time was an Officer in the United States Navy. Mr. Hunter has been involved in several business and community organizations since retiring from Stanley in 1997. Commenting on the announcement, Bob Arzbaecher, Actuant's Chairman and CEO, said, "We are pleased to announce the addition of Alan to Actuant's Board of Directors. His broad experience in operations and finance, as well as his industrial tool and home center market background, nicely complements the Actuant portfolio of businesses. The rest of the Board and I look forward to his contributions and counsel on the various opportunities awaiting Actuant." Actuant also disclosed that Kathleen Hempel will be retiring from the Board at the company's Annual Meeting of Shareholders in January 2008. Arzbaecher commented, "Kathy has been a member of our Board since 2001. Since that time, Actuant has grown significantly, both in terms of internal growth and acquisitions. I am grateful for her dedication, integrity and leadership during this period of growth for Actuant and, speaking on behalf of the entire Board, we will miss her insight and passion for the business." About Actuant Corp. Headquartered in Glendale, Wisconsin, Actuant Corp. (NYSE:ATU) -- http://www.actuant.com/-- is a diversified industrial company with operations in more than 30 countries, including Australia, Brazil, China, Hong Kong, Italy, Japan, Taiwan, United Kingdom and South Korea. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools and supplies. The company employs a workforce of approximately 6,000 worldwide. * * * As reported in the Troubled Company Reporter on June 6, 2007, Standard & Poor's Ratings Services assigned its 'BB-' rating to Actuant Corp.'s proposed $250 million senior unsecured notes due 2017. AFM 805 INC: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: A.F.M. 805, Inc. dba Ameristop Express 805 985 Burlington Park Burlington, KY 41005 Bankruptcy Case No.: 07-15511 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- A.F.M. 806, Inc. 07-15512 A.F.M. 807, Inc. 07-15513 A.F.M. 810, Inc. 07-15514 A.F.M. 812, Inc. 07-15515 A.F.M. 814, Inc. 07-15516 A.F.M. 815, Inc. 07-15517 A.F.M. 816, Inc. 07-15518 Type of Business: The Debtors own and operate convenience stores and gas stations. They belong to the AmeriStop Express banner of AmeriStop. See http://www.ameristop.com Chapter 11 Petition Date: November 12, 2007 Court: Southern District of Ohio (Cincinnati) Judge: Burton Perlman Debtors' Counsel: Ronald E. Gold, Esq. Frost Brown Todd, L.L.C. 2200 P.N.C. Center 201 East Fifth Street Cincinnati, OH 45202 Tel: (513) 651-6800 Fax: (513) 651-6981 Estimated Assets Estimated Debts ---------------- --------------- A.F.M. 805, Inc. $1 Million to $1 Million to $100 Million $100 Million A.F.M. 806, Inc. $1 Million to $1 Million to $100 Million $100 Million A.F.M. 807, Inc. $1 Million to $1 Million to $100 Million $100 Million A.F.M. 810, Inc. $1 Million to $1 Million to $100 Million $100 Million A.F.M. 812, Inc. $1 Million to $1 Million to $100 Million $100 Million A.F.M. 814, Inc. $100,000 to $1 Million to $1 Million $100 Million A.F.M. 815, Inc. $100,000 to $1 Million to $1 Million $100 Million A.F.M. 816, Inc. $1 Million to $1 Million to $100 Million $100 Million Debtors' Consolidated List of their 30 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Dayton Oil Co. $970,647 Contact: President or Chief Executive Officer 4232 Colonel Glenn Highway Beavercreek, OH 45431 CORE-MARK INTERNATIONAL $865,190 Attention: Bankruptcy 1055 Salt River Road Leitchfield, KY 42754 KENTUCKY LOTTERY CORP. $159,619 Attention: Bankruptcy Contact: President 6040 Dutchman's Lane Louisville, KY 40205-3271 DINSMORE & SHOL $137,961 JOSEPH DECOSIMO & CO. $153,027 PEPSI-COLA BOTTLING- $79,586 CINCINNATI COCA COLA BOTTLING CO. $46,008 C.N.A. INSURANCE $35,542 TRAUTH DAIRY $27,532 R.G.I.S. $24,771 RADIO STATION 94.9 $19,363 HOME CITY ICE CO. $17,900 I.C.E.E.-U.S.A. CORP. $15,842 FLANAGAN, LIEBERMAN, HOFFMAN $10,304 & SWAINE THE MERTEN GROUP $12,240 W.U.B.E.-F.M. $10,166 CHARLES DEGLOW $9,619 TRI-STATE JUICE $9,349 NARENDRA PATEL $7,524 RJM MANAGEMENT $7,429 COX AUTO TRADER $7,240 ZEP MANUFACTURING CO. $7,217 Duke Energy $7,085 TRI-STATE SERVICE STATION $7,024 MOVIE GALLERY U.S. INC. $6,838 C/O HOLLYWOOD M.W. DAVIS $6,382 FRITO-LAY, INC. $6,168 STAPLES $6,087 MOVIES U BUY/S.Q.S. $6,144 MARGE SCHOTT $5,881 AFV SOLUTIONS: Posts $498,995 Net Loss in 1st Qtr. Ended Sept. 30 ----------------------------------------------------------------- AFV Solutions Inc. reported a net loss of $498,995 on revenue of $20,277 for the first quarter ended Sept. 30, 2007, compared with a net loss of $1.2 million on revenue of $36,442 in the same period in 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $1.2 million in total assets, $550,537 in total liabilities, and $680.7 million in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?254b Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 22, 2007, Kansas City, Mo.-based Weaver & Martin LLC raised substantial doubt about AFV Solutions Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended June 30, 2007. The auditing firm pointed to the company's losses from inception. About AFV Solutions Headquartered in Irvine, California, AFV Solutions Inc. (OTC BB: AFVS.OB) -- http://www.afvsolutions.com/-- brokers hybrid electric, CNG and LPG buses manufactured in China. AGILENT TECHNOLOGIES: Inks Merger Agreement with Velocity11 ----------------------------------------------------------- Agilent Technologies Inc. and Velocity11 have signed a definitive agreement for Agilent to acquire Velocity11. Velocity11, privately held, is a leader in automated liquid handling and laboratory robotics for the life science market. Financial details were not disclosed. The acquisition is expected to be final in 30 to 60 days, subject to certain closing conditions. The acquisition will enable Agilent to offer a more comprehensive suite of workflow solutions to its life science customers in the pharmaceutical, biotech and academic research markets. Velocity11 designs, manufactures and markets robotic solutions that range from standalone instrumentation to bench- top automation solutions to large, multi-armed robotic systems. The company also develops world-class software to control the robotics. Velocity11's technology will strengthen Agilent's offering of automated sample-preparation solutions across a broad range of applications. "Velocity11 is a market leader in lab automation with a solid reputation for innovative technology, quality products and superb customer service,"said Nick Roelofs, vice president of Agilent's Life Science Systems and Solutions Unit. "Together, we can offer customers a comprehensive set of workflow solutions with increased levels of automation, which can help speed drug discovery and genetic research. When the acquisition is final, customers will continue to experience the same personalized customer service they've come to expect from Velocity11, with the addition of Agilent's strong network of global service and support." "We are very excited to be joining Agilent and to have found a company with such a complementary culture, product line, commitment to customer satisfaction and vision for providing complete automated workflow solutions,"said Rob Nail, Velocity11's CEO. "The ability to leverage Agilent's global infrastructure and deep applications focus will allow us to continue to improve the services we provide our customers, innovate in new directions, and rapidly expand our reach worldwide." Agilent is offering jobs to substantially all of Velocity11's approximately 150 employees worldwide. Headquartered in Menlo Park, California, Velocity11 has a second office in Melbourn, Hertfordshire, U.K., with field sales and support offered throughout the U.S. and western Europe. The company was established in 1999. Velocity11 has been recognized as one of the fastest growing companies in Silicon Valley and in North America. In 2006, Velocity11 was named to Deloitte's "Fastest Growing U.S. Tech Company" list. About Velocity11 Velocity11 -- http://www.velocity11.com/-- is a privately held company based in Menlo Park, Calif., and is focused on pioneering automation technology solutions for life science laboratories. The company's customers comprise most of the major pharmaceutical and biotechnology companies as well as leading genome centers and academic institutions. Combining innovative engineering with high standards of quality and customer service, Velocity11 designs and manufactures flexible high-performance automation solutions for processes that are transforming the industry. Velocity11 is committed to providing its customers with The Ultimate Automation Experience(tm). Based in Santa Clara, California, Agilent Technologies Inc. (NYSE: A) -- http://www.agilent.com/-- is a measurement company serving communications, electronics, life sciences and chemical analysis industries. The company's 19,000 employees serve customers in more than 110 countries. The company has operations in India, Argentina, Puerto Rico, Bolivia, Paraguay, Venezuela, and Luxembourg, among others. * * * As reported in the Troubled Company Reporter on Oct. 26, 2007, Moody's Investors Service assigned a Ba1 rating to Agilent Technologies, Inc.'s proposed offering of $500 million senior notes due 2017 and affirmed its existing ratings and stable outlook. AINSWORTH LUMBER: Moody's Junks Corporate Family Rating ------------------------------------------------------- Moody's Investors Service downgraded Ainsworth Lumber Co. Ltd.'s corporate family rating to Caa1 from B2. At the same time, the ratings on the senior unsecured notes were downgraded to Caa1 from B2 and the rating on the secured term loan was downgraded to B2 from Ba3. The downgrade reflects the company's deteriorating liquidity position as poor market conditions for the company's principal product, oriented strandboard, continue to hamper cash flow generation. The rating outlook remains negative. OSB markets have been depressed for most of 2007 with year-to-date North American OSB demand down 9%, as US housing starts are in the midst of one of its most precipitous declines. During the current US housing market downturn, OSB pricing have, on occasion, dropped to below cash costs. Near term improvements in the OSB market are not expected as three new OSB plants are scheduled to come on-line in the coming months and tighter home mortgage standards are further depressing housing starts. Ainsworth's cash flow generation is further challenged by the strong Canadian dollar. The company has significantly reduced capital expenditures and has taken other measures to preserve cash, however, given the ongoing cash drain, and in the absence of asset sales or additional funding, there is the possibility of Ainsworth's liquidity being depleted within twelve months. The outlook remains negative as we expect pressure on liquidity and debt measurements to continue over the near and intermediate term as the company pursues additional sources of capital. Downgrades: Issuer: Ainsworth Lumber Co. Ltd. -- Probability of Default Rating, Downgraded to Caa1 from B2 -- Corporate Family Rating, Downgraded to Caa1 from B2 -- Senior Secured Bank Credit Facility, Downgraded to a range of 24 - LGD2 to B2 from a range of 23 - LGD2 to Ba3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to a range of 56 - LGD4 to Caa1 from a range of 55 - LGD4 to B2 Ainsworth's ratings are influenced primarily by the extremely volatile pricing of its core product - OSB, coupled with the company's high debt level, constrained liquidity position, the company's relatively modest size and its product line and geographic concentration. The rating also reflects the company's aggressive financial policies and growth aspirations with little history of paying down debt. The company's good cash flow in strong OSB pricing environments, coupled with the company's competitive assets and good fiber access somewhat offset these challenges. Ainsworth Lumber Co., Ltd., headquartered in Vancouver, British Columbia, Canada, is a publicly traded integrated producer of OSB and specialty overlaid plywood. ALAN BURNS: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------- Debtors: Alan J. Burns Linda Burns 511 Woodland Drive Danville, KY 40422-1772 Bankruptcy Case No.: 07-52208 Chapter 11 Petition Date: November 12, 2007 Court: Eastern District of Kentucky (Lexington) Debtors' Counsel: Laura Day DelCotto, Esq. Wise DelCotto PLLC 200 North Upper Street Lexington, KY 40507 Tel: (859) 231-5800 Fax: (859) 281-1179 Total Assets: $1,675,867 Total Debts: $8,005,910 Debtors' list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ HNW, Inc. Personal Guaranty of $1,357,795 4840 Waterside Drive AJB Debt Lexington, KY 40513 Community Trust Bank Inc. Personal Guaranty of $1,200,000 P.O. Box 2947 AJB Debt Pikeville, KY 41502 Jeffrey and Christy Baird Personal Guaranty of $801,659 P.O. Box 832 AJB Debt Danville, KY 40423 National City Bank Personal Guaranty of $550,000 101 South Fifth Street AJB debt; co-maker Louisville, KY 40202 of AJB debt Central Kentucky Federal Co-maker and personal $480,000 Savings Bank guaranty of AJB debt 340 West Main Street Danville, KY 40422 US Bank, NA (fka Firstar Personal Guaranty of $231,442 Bank NA) AJB Debt Kentucky Department AJB 2005/06 unpaid $82,300 of Revenue Legal Branch - withholding taxes - Bankruptcy Section responsible officer liability National City Leasing Corp Personal Guaranty of $48,000 Fulcrum Corp. and Personal Guaranty of $43,000 Robert Hassur AJB Debt Fifth Third Bank 2007 Hyundai (NADA Blue $33,499 Book Value) ($22,255 secured) GMAC 2007 Escalade (NADA Blue $54,427 Book Value) (48,400 secured) AFC Enterprises Inc Personal Guaranty of Unknown AJB indebtedness ARW, LLC Co-guarantor of AJB Unknown debt with Community Trust Bank - Contribution Claims Boyle County Public Schools Boyle Co. Taxes Unknown Boyle County Sheriff Boyle County Property Tax Unknown Central Kentucky Federal Personal guaranty of JAR Unknown Savings Bank debt City of Danville Boyle Co. Taxes Unknown Department of Taxes Farmers National Bank Personal guaranty of Danarb Unknown Danville and JAR debts Residence at 511 Woodland $700,000 Place Danville, KY 40422 (270,000 Co-debtor - Crossroads secured) MidPop, LLC Personal guaranty of AJB Unknown debt ($35,500 secured) ALLIANCE BANCORP: Sells Brisbane Property to TA Associates ---------------------------------------------------------- Alliance Bancorp sold off its property in Brisbane, California to TA Associates Realty, Andrew C. Burr writes for CoStar News. According to the news, the property is a 1983-year old, six-storey office building with an area of 99,150-square-foot. The purchase price was not disclosed, however Alliance bought the property for $15 million in 2005, CoStar relates, citing an information source. Headquartered in Brisbane, California, Alliance Bancorp -- http://www.alliancebancorp.net/-- is a residential mortgage lender. Alliance Bancorp fka United Financial Mortgage Corp., on July 13, 2007, filed a voluntary chapter 7 petition with the U.S. Bankruptcy Court for the District of Delaware. Its parent company, Alliance Mortgage Investments Inc., and another affiliates, Alliance Bancorp Inc. of Oakbrook, Illinois, also filed voluntary chapter 7 petitions. The company ceased operations as of July 13, 2007. AMERICAN HOME: Can Access $35 Mil. of AHM Acquisition Financing --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave American Home Mortgage Investment Corp. and its debtor-affiliates authority, on an interim basis, to borrow $35,000,000 from the $50,000,000 loan provided by AH Mortgage Acquisition Co. Inc., the purchaser of its loan servicing business, to fund its servicing operations, pending the final closing of the sale. The key provisions of the credit facility are: -- The Facility is a senior secured limited recourse debtor- in-possession credit facility, comprised of a $50,000,000 revolving credit facility, with an interim availability of $35,000,000; -- The maturity date is the earliest of: (i) the Final Closing Date; and (ii) the earlier date on which either: * all Loans will become due and payable; or * all Loans and all other Obligations for the payment of money will be paid in full and the Commitments and this Loan Agreement are terminated; -- Loans will bear interest at the Eurodollar Rate plus the applicable margin. The Eurodollar Rate will be a periodic fixed rate equal to LIBOR plus the Applicable Margin of 3%; -- Upon the occurrence and during the continuance of any event of default, the Applicable Margin will increase by 2% per annum; -- Events of Default include: (i) failure to pay principal or interest; (ii) a default under other loan documents that remains unremedied for five days; (iii) false or misleading representations, warranties, or certifications; (iv) termination of any Loan Document; (v) any of the Debtors' Chapter 11 cases are converted to Chapter 7; and (vi) any of the Cases are dismissed and the dismissal order does not provide for termination of the commitments and full payment of the obligations of the Debtor Borrowers. Pursuant to a Court-approved stipulation, the Debtors will no longer be able to use their lenders' cash collateral in the event of the initial closing of the sale of the Debtors' servicing business. The Court has previously authorized the Debtors, on a final basis, to obtain $50,000,000 of postpetition financing from WLR Recovery Fund III, L.P., the financing arm of WL Ross & Co. LLC. The availability of funds under the DIP Facility, however, is not permitted to fund the operations of the Servicing Business, which was recently approved to be sold to AHM Acquisition, an entity sponsored by WL Ross & Co. Pursuant to the asset purchase agreement between the Debtors and AHM Acquisition, the sale will be closed in two steps -- (i) an initial or economic closing expected to occur mid-November 2007, and (b) a final closing anticipated to occur by September 30, 2008. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that the APA provides that from and after the initial closing, AHM Acquisition will fund the obligations associated with the Servicing Business. Hence, the Sellers agreed to (i) grant AHM Acquisition, as of the initial closing, a collateral of first priority lien on, and security interest in, all of the purchased assets and the Sellers' cash and cash equivalents and other proceeds received in connection with the Servicing Business after the initial closing, and (ii) promptly seek approval of the grant of that lien and security interest pursuant to Section 364(c) of the Bankruptcy Code. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 15, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Asks Court to Move Lease Decision Period to Mar. 3 ----------------------------------------------------------------- American Home Mortgage and Investment Corp. and its debtor- affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the time for them to assume or reject any of the leases, subleases or other agreements, to which any of the Debtors are a party that may be considered an unexpired lease of nonresidential real property through and including March 3, 2008. Since their bankruptcy filing, the Debtors have focused primarily on maximizing the value of the Debtors' bankruptcy estates for their stakeholders through the orderly liquidation of their assets. As a result of the expedited and lengthy sale process of the Debtors' loan servicing business and other matters the Debtors faced during the initial stage of their bankruptcy cases, they have not had ample opportunity to evaluate all of their remaining real property leases, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says. As of November 8, 2007, the Debtors have assumed and assigned approximately 40 unexpired leases of non-residential real property related to the Debtors' loan origination business, Mr. Patton discloses. In addition, the Court has approved the Debtors' request to extend the deadline for lease disposition for unexpired leases related to the Servicing Business until March 3, 2008. Mr. Patton contends that sought extension will not damage the lessors beyond the compensation that is available to them under the Bankruptcy Code because the Debtors had and will perform their undisputed obligations in a timely fashion, including the payment of postpetition rent. He also notes that the Debtors should not be forced at this relatively early stage of the Chapter 11 cases to prematurely assume the Leases and incur potentially significant and unnecessary administrative claims, or to reject the Leases and lose the opportunity to obtain value for those leases. The Debtors submit that ample "cause" exists for the Court to extend the assumption or rejection period. They add that the sought extension is without prejudice to the rights of the Debtors to seek further extensions with the consent of the counterparties to the Leases as contemplated by Section 365(d)(4)(B)(ii) of the Bankruptcy Code. Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 15, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants Senior Managers Incentive Program Approved --------------------------------------------------------------- American Home Mortgage and Investment Corp. and its debtor- affiliates seek the U.S. Bankruptcy Court for the District of Delaware's authority to pay incentive to certain members of senior management, pursuant to Sections 105(a), 363(b)(1) and 503(c)(3) of the Bankruptcy Code. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that in August 2007, the Debtors were forced to drastically reduce their workforce from approximately 7,500 employees to 1,000 employees, who were determined to be essential to wind-down the Debtors' business, maintain the valuable loan servicing business and manage the remaining businesses. Since their bankruptcy filing, the Debtors' workforce has been further depleted, resulting to members of the Debtors' senior management, composed of 27 executives, senior vice presidents, and vice presidents, having to maintain and motivate a workforce, which has forced to perform additional duties, like the duties previously performed by former colleagues and additional tasks associated with the Chapter 11 cases, Mr. Patton says. He adds that the Senior Management is being asked to conduct structured sales of substantially all of the Debtors' assets within an expedited time frame, including the sale of the sale of the servicing business, the American Home Bank, mortgage loans, financial assets, real estate holdings, interests in reinsurance companies, furniture, fixtures & equipment and the Rabbi trust. To incentivize the Senior Management, the Debtors have developed an executive incentive plan (EIP), which aligns the interests of Senior Management with the interests of the Debtors' stakeholders, Mr. Patton tells the Court. He relates that the EIP is the result of significant discussions and negotiations with the Official Committee of Unsecured Creditors during the past several months. The amounts payable to the plan participants, pursuant to the EIP, are contingent upon the Debtors' successful and timely completion of certain asset sales and the efficient management of an expedited wind-down of the Debtors' business following the sales. The Executive Incentive Plan Mr. Patton explains that the EIP provides for contributions to a plan pool, which will not be less than $3,650,000 nor more than $9,000,000, based upon the achievement of objective measures of the value obtained through: * asset sales; * management of the asset sales process; * minimization of wind-down costs; and * rapid confirmation of a plan of liquidation. The contribution, if any, upon the consummation of an asset sales, will be calculated based upon the extent to which the proceeds remaining from the Asset Sales after payment of secured debt and costs exceed certain threshold amounts: Net Proceeds Asset Sales Contribution ------------ ------------------------ less than $230,000,000 None $230,000,000 to $300,000,000 1.5% of the Net Proceeds $300,000,000 to $400,000,000 $1,050,000 + 2.25% of the Net Proceeds more than $400,000,000 $3,300,000 + 3% of the Net Proceeds Regardless of the actual Net Proceeds, the Asset Sales Contribution will not exceed $5,000,000. The Debtors desire to incentivize Senior Management to efficiently and expeditiously close certain Asset Sales, hence, cutting off the administrative drain while maximizing the value of the Assets. The Debtors will contribute into the Plan Pool based upon the time it takes to consummate the sales of the Servicing Business and the American Home Bank: Assets Target Date Contribution ------ ----------- ------------ Servicing Business October 31, 2007 $700,000 American Home Bank January 31, 2008 300,000 American Home Bank February 28, 2008 150,000 American Home Bank March 1 or later None The sale order of the Servicing Business, which was signed by the Court on October 30, 2007, has satisfied the requirement of the asset sales milestone. The Debtors propose to make additional contribution to the Plan Pool if the costs in winding down their business is minimized. The Wind-Down Costs consist of the Debtors' expenses during the liquidation process, excluding (i) operating expenses of the servicing operations, (ii) fees and expenses associated with the Debtors' Chapter 11 cases, like professional fees, and (iii) health insurance costs of the Debtors' employees. Wind-Down Costs Contribution ------------ ------------ exceeds $45,000,000 None less than $45,000,000 10% of the amount by which the Wind-Down Costs are less than $45,000,000 less than $40,000,000 $500,000 + 20% of the amount by which the Wind-Down Costs are less than $40,000,000 Regardless of the actual Wind-Down Costs, the Wind-Down Costs Contributions will not exceed $2,000,000. The Debtors will endeavor to conclude these cases as quickly as possible to expedite distributions to creditors. Hence, the Debtors will also contribute to the Plan Pool if their cases will be resolve within one year from their bankruptcy filing. The contribution associated with the expeditious completion of the cases will be based upon the time it takes the Debtors to obtain confirmation of a plan of liquidation. Target Date Contribution ----------- ------------ on or before June 6, 2008 $1,000,000 after June 5, 2008, but prior 500,000 to August 6, 2008 later than August 6, 2008 None The Debtors submit that the EIP, which has a maximum aggregate payout of $9,000,000, provides significant value at relatively small cost to the bankruptcy estates. In light of the value, size, and complexity of the Debtors' business, and the issues that have already arisen and will continue to arise in these cases, the Debtors submit that the incentive amounts for the Senior Management are reasonable and responsibly targeted, and that the EIP's approval serves the best interests of the estates. Additional EIP Terms Mr. Patton says that Plan Participants are not eligible for incentive payments if they resign voluntarily, or are terminated for "cause." As a condition precedent to receiving payments under the EIP, Plan Participants are required to fully execute and return to the Debtors a general release and waiver of claims. Payments from the Minimum Plan Pool will be made according to certain percentages, while payments in excess of the Minimum Plan Pool will be made based upon subjective criteria determined by Michael Strauss, the Debtors' chief executive officer, Steve Cooper, the chief restructuring officer, and the compensation committee of the Debtors' board of directors. The Minimum Plan Pool payments will be made to Plan Participants on January 31, 2008. Every three months thereafter, each Plan Participant will be paid his or her pro rata share of 50% of the remaining estimated Plan Pool. The final payments will be made upon the completion of the claims reconciliation process. The Debtors will implement an updated EIP for the period from February 1, 2008, to July 31, 2008, for the benefit of those Plan Participants to be employed by the Debtors for that period. EIP's Confidential Information Pursuant to Section 107(b) of the Bankruptcy Code and Rule 9018 of the Federal Rules of Bankruptcy Procedure, the Debtors further seek the Court's permission to file under seal two of EIP's exhibits, which contain the identity of the Plan Participants and the proposed percentages of the Minimum Plan Pool payments. They also ask the Court to direct that the EIP Confidential Exhibits remain under seal, confidential and not be made available to anyone, except for the Court, the office of the U.S. Trustee, counsel to the Creditors Committee, counsel to Bank of America, N.A., and counsel to the DIP Lender, or others at the Debtors' or Court's discretion. Mr. Patton contends that good cause exists for the Court to grant the relief requested because the Exhibits contain non-public information, which is highly confidential. He notes that disclosure of the confidential information of the Exhibits may create a competitive and unhealthy work environment. Moreover, Mr. Patton points out that the critical employees are necessary (i) for the closing of the Assets Sales, and (ii) to assist the Debtors' professionals in resolving the issues in the bankruptcy cases. He argues that if the highly confidential information is exposed, those in the Debtors' industry may use those information to lure away highly-important employees at a critical juncture in these cases by offering enhanced compensation and bonuses. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors has selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on Dec. 4, 2007. (American Home Bankruptcy News, Issue No. 15, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN REPROGRAPHICS: S&P Holds 'BB' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' rating and '1' recovery rating to Glendale, California-based American Reprographics Co. LLC's proposed $350 million senior secured credit facilities. The issue rating is two notches above the 'BB' corporate credit rating, which was affirmed with a stable outlook. The recovery rating of '1' indicates an expectation for very high (90% to 100%) recovery in the event of a payment default. The facilities consist of a $75 million revolving credit facility and a $275 million term loan. The credit facilities will be used to repay existing debts and for general corporate purposes. "The ratings on ARC reflect its exposure to the cyclical commercial construction industry and its acquisitive track record," said Standard & Poor's credit analyst Ariel Silverberg. These factors are tempered by its leadership position in architecture, engineering, and construction reprographics, and its intermediate financial risk profile. ARC is the largest provider in the U.S. of outsourced reprographics and related business services. Operating in a highly fragmented industry, the company has pursued an expansion strategy that supports organic growth with acquisitions of much smaller competitors. In the first nine months of 2007, ARC acquired eight companies for a total of about $92.9 million. Standard & Poor's expects the company to maintain an aggressive strategy on acquisition and to fund such transactions in a manner consistent with the current rating. The company serves more than 140,000 customers through 294 digitally-connected branches in more than 210 cities in the U.S., six locations in Canada and one in Mexico. Through its acquisitions, ARC has established a national footprint that gives it one of the leading positions in the potentially volatile AEC reprographics industry. AMERISOURCEBERGEN CORP: Earns $87.5 Mil. in Qtr. Ended Sept. 30 --------------------------------------------------------------- AmerisourceBergen Corporation reported its fiscal fourth quarter ended Sept. 30, 2007. The company reported a net income of $87.5 million over $16.3 billion total revenues in the three months ended Sept. 30, 2007, compared with a net income of $121.9 million over $15.6 billion total revenues in same quarter last year. The PharMerica Long-Term Care business, which the company spun-off on July 31, 2007, is included in the fourth quarter and fiscal year 2007 results from continuing operations. Fiscal Fourth Quarter Highlights -- Operating revenue of $15.3 billion, up 4.5%; -- Cash flow from operations of $128 million; and -- $546 million of share repurchases. Fiscal Year 2007 Highlights -- Record operating revenue of $61.7 billion, up 9%; -- Diluted earnings per share from continuing operations of $2.63, up 16%; -- Pharmaceutical Distribution Segment operating income increase of 14%; operating margin of 1.20%, up 5 basis points; -- Cash flow from operations of $1.2 billion, above expectations; -- $1.4 billion of share repurchases, above expectations; and -- Merchandise inventories were down 7% with a 9% operating revenue increase. "We delivered outstanding performance for the 2007 fiscal year, exceeding the diluted earnings per share expectations we originally announced for the fiscal year last November, despite the impact from the write-down of tetanus-diphtheria vaccine inventory within the specialty business in the fourth fiscal quarter," R. David Yost, AmerisourceBergen's President and Chief Executive Officer, said. "In the fourth quarter and the fiscal year, performance of our traditional drug distribution business was outstanding, driven by our ability to leverage our contracts with branded manufacturers, drive generic sales, and lower our expense ratios through our newly completed distribution network." Consolidated Results Consolidated operating income in the fiscal 2007 fourth quarter decreased 7% to $181.0 million, due to a $28 million write-down to market value of tetanus-diphtheria vaccine inventory in the Pharmaceutical Distribution Segment, poor performance in the Other Segment, and higher than normal bad debt expense. These negative impacts were partially offset by the net positive impact of $7.6 million from "facility consolidations, employee severance and other," which included a gain of $10.4 million from a favorable decision by an appeals court in an employment-related dispute with a former Bergen Brunswig chief executive officer whose employment was terminated long before the creation of AmerisourceBergen and charges of $2.8 million primarily associated with the spin-off of the company's PharMerica Long-Term Care business. In the prior year's fiscal fourth quarter, consolidated operating income was negatively impacted by $7.8 million of "facility consolidations, employee severance and other," offset by an $8.9 million gain from the settlement of pharmaceutical manufacturer antitrust litigation cases. Consolidated operating income for fiscal year 2007 was $820.3 million, up 10% over the previous fiscal year. The effective tax rate for the fourth quarter of fiscal 2007 was 35.6%, down from 37.6% in the previous fiscal year's fourth quarter primarily due to the favorable resolution of certain tax matters. The effective tax rate for fiscal year 2007 was 37.1%. Going forward, the Company expects the effective tax rate to be between 37% and 38%. A $24.6 million loss, net of tax, from discontinued operations in the fourth quarter of fiscal 2007 resulted from an adverse decision in litigation related to the contingent earn-out provisions within the acquisition agreement for our former Bridge Medical business, which the Company sold in fiscal 2005. Balance Sheet As of Sept. 30, 2007, the company's balance sheet showed total assets of $12.3 billion and total liabilities of $9.2 billion, resulting in $3.0 billion stockholders' equity. About AmerisourceBergen Headquartered in Valley Forge, Pennsylvania, AmerisourceBergen Corporation (NYSE:ABC) -- http://www.amerisourcebergen.com/-- is one of the pharmaceutical services companies serving the United States, Canada and selected global markets. AmerisourceBergen's service solutions range from pharmacy automation and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living facilities, reimbursement and pharmaceutical consulting services, and physician education. AmerisourceBergen employs more than 14,000 people. * * * AmerisourceBergen continues to carry Moody's Investor Services' Ba1 long term corporate family and Ba1 probability of default ratings. The outlook is positive. AMMC VIII: Moody's Rates $20 Million Class E Notes at Ba2 --------------------------------------------------------- Moody's Investors Service assigned these ratings to Notes issued by AMMC VIII Limited: -- Aaa to the $337,500,000 Class A-1 Floating Rate Notes, Due 2022; -- Aa1 to the $37,500,000 Class A-2 Floating Rate Notes, Due 2022; -- Aa2 to the $25,000,000 Class B Floating Rate Notes, Due 2022; -- A2 to the $20,000,000 Class C Deferrable Floating Rate Notes, Due 2022; -- Baa2 to the $20,000,000 Class D Deferrable Floating Rate Notes, Due 2022; and -- Ba2 to the $20,000,000 Class E Deferrable Floating Rate Notes, Due 2022. The Moody's ratings of the notes address the ultimate cash receipt of all required interest and principal payments, as provided by the notes' governing documents, and are based on the expected loss posed to noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of Senior Secured Loans due to defaults, the transaction's legal structure and the characteristics of the underlying assets. American Money Management Corporation will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. AMR CORP: Fitch Holds Junk Rating on Senior Unsecured Debt ---------------------------------------------------------- Fitch Ratings affirmed the debt ratings of AMR Corp. and its principal operating subsidiary American Airlines Inc., as: AMR -- Issuer Default Rating at 'B-'; -- Senior unsecured debt at 'CCC'/RR6'; American Airlines -- Issuer Default Rating at 'B-'; -- Secured bank credit facility at 'BB-/RR1'. The Rating Outlook for both AMR and American has been revised to Positive from Stable. The affirmation and Outlook revision reflect progress made by AMR in directing free cash flow toward debt reduction throughout 2007, as well as Fitch's expectation that the airline can de-lever its balance sheet further-even in the face of record-high jet fuel costs and a challenging U.S. economic outlook moving into 2008. Ratings capture the airline's highly leveraged balance sheet and heavy fixed cash obligations, balanced against the substantial reduction in debt and improvements in liquidity achieved over the last two years. AMR's intention to pre-pay about $545 million of aircraft-backed debt in the fourth quarter appears to validate management's commitment to focus on debt reduction as the first and best use of free cash flow at a time when considerable uncertainty still exists over AMR's cost profile and its capacity to grow profitably in a very difficult airline industry operating environment. Sustained improvements in passenger unit revenue over the last several quarters, tied to solid air travel demand patterns and constraints on industry capacity growth, have supported a surge in AMR's free cash flow generation power. This in turn has made substantial debt reduction possible. Since year-end 2005, AMR's consolidated debt balance has declined from $14.7 billion to $12 billion at Sept. 30, 2007, while lease- adjusted leverage (capitalizing both aircraft and facilities rents at 8x LTM expenses) has fallen from 9.8x at year-end 2005 to 5.7x at Sept. 30. With its heavy emphasis on strengthened liquidity and $5.4 billion of unrestricted cash and investments, total net balance sheet debt stood at $6.6 billion at the end of the third quarter. Besides spiking energy costs and mounting concerns over the durability of healthy air travel demand and pricing patterns, AMR faces significant cost pressures that could intensify over the next several quarters if a new round of contracts with the Allied Pilots Association and other unions pushes unit labor costs significantly higher. The pilot union's call for substantial wage increases raises the risk that rising pay and benefit levels could keep AMR's unit costs at the high end of the legacy carrier group for an extended period. With longer-term deals in place at Northwest and Delta following their bankruptcies, AMR could face a protracted cost competitiveness challenge that may keep available seat mile capacity and fleet growth in check for a number of years. With crude oil prices surging to over $98 per barrel in early November, AMR and the other U.S. airlines have been forced to look for opportunities to recover higher fuel costs via fare hikes at a time when marginal demand patterns may already be softening. To date, rising fares and strong revenue per available seat mile gains have offset fuel cost pressure. Still, looking into 2008, Fitch expects all U.S. carriers to experience some additional margin pressure that could limit free cash flow generation and constrain further debt reduction. AMR has about 40% of fourth quarter jet fuel consumption hedged with effective caps of approximately $69 per barrel of crude oil. This will offset some fuel cost pressure, but AMR management has made it clear that additional fare hikes will be necessary to pass on higher fuel costs to customers. To date, the industry appears to be adopting a disciplined capacity approach in response to fuel cost pressure, and additional capacity reduction (especially in domestic markets) may well follow over the next few weeks. For AMR, the absence of new aircraft deliveries until 2009 will keep capital spending low and allow continued debt reduction as well as cash pension funding of $300 million -$400 million next year. Since unrestricted cash and investments now represent about 25% of LTM revenues (a healthy liquidity position even in the face of material industry event risk), most if not all free cash flow can be directed to the funding of debt maturities and pension contributions in 2008. Recent discussion of possible non-core asset spin-offs at AMR and the other legacy carriers raises questions over the long-term direction of core airline credit quality if cash-generating units such as the AAdvantage loyalty program, American Eagle regional airline unit, or the aircraft maintenance unit are ultimately separated from American Airlines Inc.-where the bulk of AMR's consolidated debt and fixed obligations reside. Any asset separation would presumably result in some margin erosion at the core airline, making the direction of cash proceeds from any asset sale toward debt reduction a credit-enhancing priority. While the Positive Rating Outlook reflects Fitch's view that further de-leveraging could drive an upgrade of AMR's IDR to 'B' in the near term, further spikes in jet fuel costs and/or a significant slowdown in the airline's RASM growth during 2008 could drive free cash flow lower and limit the potential for further improvements in credit quality. ANN-LEE CONSTRUCTION: Case Conversion Hearing Moved to December 12 ------------------------------------------------------------------ The Honorable Jeffery A. Deller of the United Sates Bankruptcy Court for the Western District of Pennsylvania continued the hearing on Dec. 12, 2007, at 10:00 a.m., to consider approval of Ann-Lee Construction and Supply Company Inc.'s request to convert its Chapter 11 bankruptcy case into a Chapter 7 liquidation proceeding. The hearing will be held at U.S. Steel Tower, 54th Floor, p02 Courtroom B in Pittsburgh. As reported in the Troubled Company Reporter on Oct. 4, 2007, the Debtor said they have incurred additional losses from Jan. 11, 2007, to Aug. 17, 2007, and as a result, it is unable to meet its debts as they come due. The Debtor further said that it was unable to file a viable Chapter 11 plan and disclosure statement within the required time set by the Court. The Debtor's exclusive plan filing period expired on Sept. 19, 2007. Based in Saltsburg, Pennsylvania, Ann-Lee Construction and Supply Company, Inc. offers construction consulting & management services. The company filed for Chapter 11 protection on Jan. 11, 2007 (Bankr. W.D. Pa. Case No. 07-20226). Michael J. Henny, Esq. and Joseph V. Luvara, Esq. represent the Debtor in its restructuring efforts. Kirk B. Burkley, Esq., at Bernstein Law Firm PC, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. ANSLEY PARK: Moody's Junks Ratings on Four Note Classes ------------------------------------------------------- Moody's Investors Service downgraded five classes of notes issued by Ansley Park ABS CDO Ltd., with three classes left on review for further possible downgrade. One additional class has been placed on review for possible downgrade. The notes affected by the rating action are: -- $11,150,000 Class X Senior Secured Notes Due 2046 Prior Rating: Aaa Current Rating: Aaa, on review for possible downgrade -- $450,000,000 Class A-1 Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Baa1, on review for possible downgrade -- $98,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aaa Current Rating: Caa1, on review for possible downgrade -- $27,500,000 Class B Senior Secured Floating Rate Notes Due 2046 Prior Rating: Aa2 Current Rating: Caa2, on review for possible downgrade -- $9,000,000 Class C Secured Floating Rate Deferrable Notes Due 2046 Prior Rating: A2, on review for possible downgrade Current Rating: Ca -- $8,000,000 Class D Secured Floating Rate Deferrable Notes Due 2046 Prior Rating: Baa2, on review for possible downgrade Current Rating: Ca The rating actions reflect severe deterioration in the credit quality of the underlying portfolio, as well as the occurrence on Nov. 2, 2007 of an event of default caused by a failure of the ratio, calculated by dividing the Net Outstanding Portfolio Collateral Balance by the Aggregate Outstanding Amount of the Class A Notes, to equal or exceed 100%, pursuant to Section 5.01(i) of the Indenture dated December 20, 2006. Ansley Park ABS CDO Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. Recent ratings downgrades on the underlying portfolio caused ratings-based haircuts to effect the calculation of overcollateralization. Thus, the ratio of Net Outstanding Portfolio Collateral Balance divided by the Aggregate Outstanding Amount of the Class A Notes, failed to meet the required level. Upon an event of default in this transaction, a majority of the controlling class is entitled to exercise certain remedies under the indenture. Liquidation of the underlying portfolio is one possible remedy; however, it is not clear at this time whether the controlling class will choose to exercise this option. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The expected losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued by the controlling class. Because of this uncertainty, the Class X, Class A-1, Class A-2, and Class B Notes remain on review for possible downgrade pending the receipt of definitive information. ARCHSTONE-SMITH: S&P Retains 'BB-' Issuer Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BBB+' rating on the unsecured debt issued by Archstone-Smith Operating Trust. S&P's 'BB-' issuer credit and secured credit ratings on Archstone are unchanged. The withdrawal of the debt rating follows Archstone's redemption of more than 90% of its $575 million 4% exchangeable notes. Remaining noteholders have the option to put the notes back to the company through Nov. 30, 2007. Before their redemption, the exchangeable notes represented Archstone's remaining unsecured public debt obligations following the company's recent go-private transaction. S&P's current 'BB-' rating on roughly $5.1 billion of secured bank debt is unchanged, and S&P's outlook on the company remains stable. These weaknesses, however, are partly offset by the good quality and above-average historical operating performance of Archstone's portfolio. Rating Withdrawn Archstone-Smith Operating Trust Rating ------ To From -- ---- Exchangeable senior notes NR BBB+/Watch Neg Other Ratings Outstanding Archstone-Smith Operating Trust Rating ------ Corporate credit BB-/Stable/-- Secured credit facility BB- (Recovery rating 4) ARES XII: Moody's Assigns Ba2 Rating on $35 Mil. Class E Notes -------------------------------------------------------------- Moody's Investors Service assigned these ratings to Notes issued by Ares XII CLO Ltd.: -- Aaa to the $479,500,000 Class A Floating Rate Notes Due 2020; -- Aa2 to the $52,500,000 Class B Floating Rate Notes Due 2020; -- A2 to the $42,000,000 Class C Floating Rate Deferrable Notes Due 2020; -- Baa2 to the $35,000,000 Class D Floating Rate Deferrable Notes Due 2020; and -- Ba2 to the $35,000,000 Class E Floating Rate Deferrable Notes Due 2020 The Moody's ratings of the notes address the ultimate cash receipt of all required interest and principal payments, as provided by the notes' governing documents, and are based on the expected loss posed to noteholders, relative to the promise of receiving the present value of such payments. The ratings reflect the risks due to the diminishment of cash flow from the underlying portfolio consisting of Loans, High Yield Bonds, Structured Finance Securities, Senior Secured Floating Rate Notes and Synthetic Securities due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Ares CLO Management XII L.P. will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. ARVINMERITOR INC: Declares $0.10 Quarterly Dividend --------------------------------------------------- The ArvinMeritor Inc. Board of Directors, at a meeting held on Nov. 13, 2007, at its corporate headquarters in Troy, Mich., declared a quarterly dividend of $0.10 per share on the common stock of ArvinMeritor, payable Dec. 10, 2007, to holders of record at the close of business on Nov. 26, 2007. The company also disclosed Wednesday that its annual shareowners' meeting will be held on Jan. 25, 2008, at 9 a.m. EST, at its Troy, Mich. headquarters. Shareowners of record at the close of business on Nov. 23, 3007, will be entitled to notice of, and to vote, at the annual meeting. About Arvinmeritor Headquartered in Troy, Michigan, ArvinMeritor Inc. (NYSE: ARM) -- http://www.arvinmeritor.com/-- supplies integrated systems, modules and components to the motor vehicle industry. The company serves commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, and light vehicle manufacturers. * * * As reported in the Troubled Company Reporter on Oct. 9, 2007, Fitch Ratings downgraded its ratings on ArvinMeritor Inc. including Issuer Default Rating to 'BB-' from 'BB'; Senior secured revolver to 'BB' from 'BB+'; and Senior unsecured notes to 'B+' from 'BB-'. The rating outlook is negative. Standard & Poor's Ratings Services lowered its corporate credit rating and related ratings on ArvinMeritor Inc. to 'B+' from 'BB-'. The outlook is negative. Moody's Investors Service downgraded ArvinMeritor's Corporate Family Rating to B1 from Ba3 and maintained the outlook at stable. Moody's also lowered its ratings on the company's secured bank obligations (to Ba1, LGD-1, 8% from Baa3, LGD-2, 13%) and unsecured notes (to B2, LGD-4, 63% from B1, LGD-4, 63%). The Probability of Default is changed to B1 from Ba3, while the company's Speculative Grade Liquidity rating remains SGL-2. The outlook is stable. ARVINMERITOR INC: Posts $62 Million Net Loss in Fourth Quarter -------------------------------------------------------------- ArvinMeritor Inc. reported Wednesday financial results for its full fiscal year and fourth quarter ended Sept. 30, 2007. The company reported a net loss of $62 million for the fourth quarter ended Sept. 30, 2007, compared with a net loss of $274 million for the same period in fiscal year 2006. For the fourth quarter of fiscal year 2007, ArvinMeritor posted sales of $1.6 billion, flat over the same period last year. Sales reflect the continued downturn in Class 8 North American truck sales offset by stronger volumes in other regions. Operating income in the fourth quarter of 2007, before special items, was $8 million, compared to operating income, before special items, of $56 million in the prior year's fourth quarter. Loss from continuing operations during the fourth quarter of fiscal year 2007, before special items, was $4 million, compared to income from continuing operations, before special items, of $29 million a year ago. Fourth-quarter results reflect reduced North American volumes and significant premium costs associated with record European volumes. Special items included costs associated with supplier reorganizations, restructuring expenses and certain non-recurring tax charges. For the fourth quarter of 2007, ArvinMeritor reported positive free cash flow of $178 million. "Despite the solid progress we are making in implementing our strategic initiatives, our results this quarter were negatively impacted by weaker than anticipated North American truck production and the continuing capacity challenges in our European truck operations," said chairman, chief executive officer and president Chip McClure. "Going forward, we believe European capacity issues will be less severe due to actions we are taking to implement lean manufacturing improvements and bring new suppliers into the pipeline. "Following this period of extended softness in the North American truck market, we expect to see a rebound as the industry gradually returns in 2008. In Europe, we look forward to continued strong sales volumes, and in Asia and South America, we expect volumes to grow significantly." Sales from continuing operations for fiscal year 2007 were $6.4 billion, up $34 million, compared to fiscal year 2006. On a GAAP basis, net loss was $219 million, compared to a net loss of $175 million in fiscal tear 2006. Loss from continuing operations was $30 million, compared to income from continuing operations of $112 million in fiscal year 2006. Net debt was reduced by $146 million during the fiscal year despite negative free cash flow of $113 million. At Sept. 30, 2007, the company's consolidated balance sheet showed $4.789 billion in total assets, $4.181 billion in total liabilities, $65 million in minority interests, and $543 million in shareowners' equity. About Arvinmeritor Headquartered in Troy, Michigan, ArvinMeritor Inc. (NYSE: ARM) -- http://www.arvinmeritor.com/-- supplies integrated systems, modules and components to the motor vehicle industry. The company serves commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets, and light vehicle manufacturers. * * * As reported in the Troubled Company Reporter on Oct. 9, 2007, Fitch Ratings downgraded its ratings on ArvinMeritor Inc. including Issuer Default Rating to 'BB-' from 'BB'; Senior secured revolver to 'BB' from 'BB+'; and Senior unsecured notes to 'B+' from 'BB-'. The rating outlook is negative. Standard & Poor's Ratings Services lowered its corporate credit rating and related ratings on ArvinMeritor Inc. to 'B+' from 'BB-'. The outlook is negative. Moody's Investors Service downgraded ArvinMeritor's Corporate Family Rating to B1 from Ba3 and maintained the outlook at stable. Moody's also lowered its ratings on the company's secured bank obligations (to Ba1, LGD-1, 8% from Baa3, LGD-2, 13%) and unsecured notes (to B2, LGD-4, 63% from B1, LGD-4, 63%). The Probability of Default is changed to B1 from Ba3, while the company's Speculative Grade Liquidity rating remains SGL-2. The outlook is stable. ATARI INC: Streamlines Operations, Establishes Business Plan ------------------------------------------------------------ Atari Inc. will re-focus its operations on publishing and distribution in North America, completing its withdrawal from the production business. Atari has licensed its Test Drive franchise to Infogrames Entertainment, S.A. under an agreement which includes a $5 million advance royalty. Restructuring Initiative Atari has determined to focus its resources on the publishing and distribution segments of the rapidly growing video game business. The company's operations will involve title acquisition, sales and marketing, and physical distribution of products from IESA, its 51% shareholder, and other selected partners. In line with that goal, Atari has agreed in principle with IESA to terminate its Production Services Agreement in the near future. As a result, Atari will no longer provide production and quality assurances services to IESA. Rather, Atari plans to transfer certain employees and contract other staff on a project basis for a limited period of time. As part of the company restructuring, Atari, Inc. will reduce its current workforce in order to re-align the company's cost structure with its on-going business base. Test Drive Licensing Agreement Test Drive Unlimited, an award-winning product in 2006, together with the entire Test Drive franchise has been licensed to IESA under a 6-year agreement that provides for a $5 million advance royalty. Test Drive Unlimited, an award-winning product in 2006, together with the entire Test Drive franchise has been licensed to IESA under a 6-year agreement that provides for a $5 million advance royalty. The agreement allows IESA, whose Eden Studios originally developed Test Drive Unlimited for Atari, to develop and market at least two new releases of the franchise during the life of the license. It is anticipated that the deal, signed on Nov. 8, 2007, will assure the continued vitality of the franchise and will strengthen the relationship between Atari and its parent company while providing an important element in the on-going financial restructuring of Atari. "Atari continues to take important steps to streamline operations and establish a winning business plan," Curtis G. Solsvig III, Atari's Chief Restructuring Officer, commented. "We expect that the actions we are undertaking today will position us for the future as a preferred business and distribution partner." BlueBay Credit Facility As reported in the Troubled Company Reporter on Oct. 26, 2007, Atari recently signed a deal with BlueBay High Yield Investments (Luxembourg) S.A.R.L for financial support in the form of a $10 million credit facility as part of its overall financial restructuring. Blue Bay owns in excess of 20% of IESA's stock. About Atari Inc. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) - http://www.atari.com/ -- develops interactive games for all platforms and is a third-party publisher of interactive entertainment software in the U.S. Atari Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA, an interactive games publisher in Europe. Atari Inc.'s consolidated balance sheet at June 30, 2007, showed $35.0 million in total assets and $43.6 million in total liabilities, resulting in an $8.6 million in total shareholders' deficit. Going Concern Doubt New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. BABBY-HENKEL: Case Summary & Two Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Babby-Henkel Building Specialties, Inc. P.O. BoX 40997 Tucson, AZ 85717 Bankruptcy Case No.: 07-02261 Type of Business: The Debtor is drywall/insulating contractor. Chapter 11 Petition Date: November 11, 2007 Court: District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Eric Slocum Sparks, Esq. Eric Slocum Sparks P.C. 110 South Church Avenue Suite 2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's list of its Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ BHM Investment Company Lease $3,060 $3,060 c/o Margaret Babby Monthly P.O. Box 12970 Tucson, AZ 85732 Southwest Carpenters Trusts Benefits Unknown 533 South Fremont Avenue Contributions Los Angeles, CA 90071 BAKER & TAYLOR: Moody's Changes Outlook to Negative from Stable --------------------------------------------------------------- Moody's Investors Service changed the rating outlook of Baker & Taylor Acquisitions Corp. to negative from stable. In addition, Moody's affirmed the company's existing ratings except its probability of default rating which was changed to B2 from B1. The change in the rating outlook to negative reflects the company's weaker than expected operating profits for the fiscal year ended June 30, 2007 which resulted in deterioration in credit metrics, particularly EBIT/Interest Expense which fell to 0.7x. The negative outlook also reflects Moody's expectation that interest coverage will remain weak over the next twelve months until the full effect of the company's shift in focus toward margin improvements is fully evidenced. The company's operating profits during fiscal 2007 were constrained by the company's focus on driving top line sales at the expense of margins as well as by the acquisition of Advance Marketing Services (which generated negative profitability). While the company's first quarter ended Sept. 30, 2007 results showed signs of improvement in profitability, credit metrics still remained weak and continued to be below Moody's original expectations, notably EBIT/IE was 1.0x for the LTM period ended Sept. 30, 2007. These ratings are affirmed: -- Corporate family rating of B2, -- $165 million senior secured second lien notes of B2 (LGD3; 45%). This rating is changed: -- Probability of default rating to B2 from B1. The B2 corporate family rating is primarily driven by the company's weak credit metrics, aggressive financial policies, including a history of leverage buy outs and debt financed acquisitions, and its sizable customer concentration. The rating is also constrained by the company's weak operating profit as a result of its recent focus at growing market share and top line sales at the expense of profitability. These factors constrain the rating category despite the company's numerous strong qualitative factors and its adequate liquidity. Baker & Taylor's sizable market share and efficient distribution network are more indicative of an investment grade company. Also lending support to the rating category is the company's moderate scale, geographic and segmental diversification, and it high level of organic revenue growth. The rating outlook is negative. The negative outlook reflects the modest downward rating pressure that the company's fiscal year-end 2007 soft performance has placed on the rating category. It also reflects that the company's current level of EBIT/Interest Expense at 1x is weak for the B2 rating level. The change in the probability of default rating to B2 is as a result of modifying the approach taken in Baker & Taylor's estimated expected family recovery rate to the mean level family- level LGD from an enterprise valuation approach. Baker & Taylor Acquisitions Corp. is a holding company whose sole asset is Baker & Taylor Corporation. Baker & Taylor Corporation, headquartered in Charlotte, North Carolina, is a leading domestic and international distributor of books and entertainment products to libraries and retailers. It is wholly owned by Castle Harlan and management. BANC OF AMERICA: Fitch Holds BB+ Rating on Class M-MC Certs. ------------------------------------------------------------ Fitch Ratings upgraded class C of Banc of America Large Loan Inc., series 2006-BIX1, as: -- $43.2 million class C to 'AAA' from 'AA+'. In addition, Fitch affirmed these: -- $68.3 million class A-1 at 'AAA'; -- $223.5 million class A-2 at 'AAA'; -- Interest-only class X-1A at 'AAA'; -- Interest-only class X-1B at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- Interest-only class X-3 at 'AAA'; -- Interest-only class X-4 at 'AAA'; -- Interest-only class X-5 at 'AAA'; -- $15 million class B at 'AAA'; -- $42.4 million class D at 'AA'; -- $28.3 million class E at 'AA-'; -- $28.3 million class F at 'A+'; -- $28.3 million class G at 'A'; -- $28.3 million class H at 'A-'; -- $11.3 million class J at 'BBB+'; -- $11.8 million class K at 'BBB'; -- $18.9 million class L at 'BBB-'; -- $4.3 million class J-CP at 'BBB+'; -- $6.4 million class K-CP at 'BBB'; -- $12.5 million class L-CP at 'BBB-'; -- $1.4 million class J-CA at 'BBB+'; -- $0.9 million class K-CA at 'BBB'; -- $1.1 million class L-CA at 'BBB-; -- $2 million class M-MC at 'BB+'; Class L-SC has been paid in full. The rating upgrade is the result of increased credit enhancement levels due to payoff of three loans, partial prepayments and scheduled amortization. As of the October 2007 distribution date, the pool's aggregate certificate balance has decreased 52.4% to 547.5 million from $1,149.6 million at issuance. To date, four loans have paid off: the Lee's Summit loan, the Wyvernwood loan, the Sterling Court loan, and the Quality Hotel Times Square loan. 43 office properties were sold in the CarrAmerica Pool 3 and CarrAmerica Pool 2 loans and two in JER Denver Office Portfolio, reducing the balance of the loans. There are fourteen loans remaining in the pool. All pooled senior participations included in the trust have investment-grade shadow ratings. The non-pooled senior participation interests of three loans in the trust, CarrAmerica Pool 3, CarrAmerica Pool 2, and Midtown Center, are structured as stand-alone raked classes. The Greece Ridge Center loan matured in November 2007 and the borrower has exercised his first one-year extension option. The Holiday Hilton Head loan matures in December 2007 and is also expected to extend. All the remaining loans in the pool are scheduled to mature in 2008. BEAR STEARNS: Fitch Holds BB+ Rating on Class L Certificates ------------------------------------------------------------ Fitch Ratings upgrades these class of Bear Stearns commercial mortgage pass-through certificate, series 2004-BBA3: -- $7.5 million class H to 'AAA' from 'A'. Fitch downgrades and removes from Rating Watch Negative this class: -- $15.5 million class K to 'BBB-' from 'BBB'. Additionally, these classes are affirmed: -- Interest-only class X-1B at 'AAA'; -- $12.5 million class J at 'BBB+'; -- $18.7 million class L at 'BB+'. Classes A-1A, A-1B, A-2, X-2, X-3, X-4, X-5, B, X-1A, C, D, E, F, G, E-ST, F-ST, G-ST, H-ST, J-ST, K-ST, L-ST and M-ST have paid in full. The upgrade is due to 27.4% paydown since the last rating action. The transaction has paid down by 96.4% since issuance. The downgrade and removal from Rating Watch Negative are due to continued deterioration in performance of both of the remaining loans: Riverside Center (52.1%), Sheffield Office Park (47.9%). The $28.2 million Riverside Center loan is secured by a 633,503 square foot retail shopping center located in Utica, NY that is anchored by Wal-Mart, Lowe's, and BJ's Wholesale Club. The mall was 80.1% occupied in August 2007 compared to 91.4% at issuance. As of June 30, 2007, Fitch's annualized stressed debt service coverage ratio on net cash flow for the senior note was 1.21x compared to 1.57x at issuance. While there are prospects for the mall's vacant space, no new leases have been signed since the last rating action. The $26 million Sheffield Office Park loan is secured by a 514,438 sf, three-building office property located in Troy, Michigan. The largest tenant plans to exercise its option to vacate a portion of its space before the end of 2007, four years before the lease expires in October 2011 (the tenant will pay a lease cancellation fee). Fitch stressed the leasing costs at issuance, and the master servicer has instituted a cash trap which funds a leasing reserve. As of Sept. 30, 2007, Fitch's annualized stressed DSCR on NCF for the senior note has declined to 1.46x from 1.61x at issuance. Occupancy has been stable. As of Sept. 30, 2007, the buildings were 77.8% occupied compared to 79.7% at issuance. Fitch is concerned about softening in the Troy office market and uncertainty regarding leasing prospects at the property. The debt service coverage ratios for the loans are calculated based on a Fitch adjusted net cash flow and a stressed debt service based on the current loan balances and a hypothetical mortgage constant. CARIBE MEDIA: S&P Puts 'B' Ratings Under Positive CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and 'B' senior secured debt rating on Caribe Media, Inc. on CreditWatch with positive implications. "At the same time, we withdrew our ratings, including the corporate credit ratings, on ACS Media, LLC, and CBD Media Holdings, LLC, as well as our subordinated debt rating on CBD Media LLC, following the repayment of rated corporate debt," said Standard & Poor's credit analyst Ariel Silverberg. The CreditWatch listing reflects a reassessment of Caribe's business profile. In resolving the CreditWatch listing, S&P will consider management's intermediate term operational and financial strategies. If an upgrade to the corporate credit rating is the outcome of S&P's review, S&P expect that it would be limited to one notch. CELL THERAPEUTICS: Sept. 30 Balance Sheet Upside-Down by 119.3MM ---------------------------------------------------------------- Cell Therapeutics Inc. reported last week financial results for the quarter and nine months ended Sept. 30, 2007. Cell Therapeutics Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $84.9 million in total assets, $180.8 million in total liabilities, and 149,000 in minority interest in subsidiary, resulting in a $119.3 million total shareholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $48.4 million in total current assets available to pay $82.3 million in total current liabilities. The company reported a net loss of $48.5 on revenues of $20,000 for the third quarter ended Sept. 30, 2007, compared with a net loss of $27.8 million on revenues of $20,000 in the same period in 2006. As a result of the acquisition of Systems Medicine Inc. during the quarter, the net loss for the quarter and the nine months ended Sept. 30, 2007, included a non-cash acquired in-process research and development charge of $21.3 million allocated to the purchase of SM. Excluding this in-process research and development charge, oper