T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 3, 2007, Vol. 11, No. 286 Headlines 12021 ASSOCIATES: Voluntary Chapter 11 Case Summary ACA CAPITAL: Posts $883 Million Equity Deficit in Third Qtr. 2007 ACTIVISION INC: Inks $18.9 Billion Merger Deal with Vivendi AMERICAN HOME: Gets Nod to Pay up to $9MM to Senior Managers AMERIQUEST MORTGAGE: Fitch Retains Junk Rating on Class M-3 AMR CORP: Low Stock Price Cues FL Group to Cut Stake by 8% ARANTES ALIMENTOS: Fitch Assigns 'B' Foreign Currency IDR ARTUS LOAN: Moody's Assigns Ba2 Rating on $28MM Class B-2L Notes ASSET BACKED: Fitch Retains Junk Rating on Class B Certificates AVADO BRANDS: Court Okays Lane Berry as Financial Advisors BANC OF AMERICA: Fitch Puts 'BB' Rating on $1.777 Million Certs. BBJ ENVIRONMENTAL: Case Summary & 20 Largest Unsecured Creditors BLACKHAWK AUTOMOTIVE: Files Schedules of Assets and Liabilities BLACKHAWK AUTOMOTIVE: Can Hire Benesch Friedlander as Counsel BLACKHAWK AUTOMOTIVE: U.S. Trustee Forms Seven-Member Committee BOMBARDIER INC: Planned Debt Repurchase Cues Fitch's Pos. Watch BURGER KING: Moody's Affirms Ba2 Rating with Stable Outlook CALUMET LUBRICANTS: S&P Rates $510 Mil. Credit Facilities at BB- CARBIZ INC: Illinois Unit Begins Sales and Collections Operations CD 2007-CD5: Fitch Assigns 'B-' Rating on $2.617 Million Certs. CDC MORTGAGE: Moody's Cuts Certificate Ratings on Eight Deals CDW CORPORATION: $7.55 Bil. Refinancing Cues Moody's B3 Rating CENTRAL GARDEN: Weak Performance Cues Moody's Ratings Downgrades CHESAPEAKE SHORES: U.S. Trustee Wants Case Converted to Chapter 7 CHEYENNE ENERGY: Inks Forbearance Agreement with its Lender CHRYSLER LLC: Likely to Lose $1 Billion in 2007, Sales Exec Says CITIGROUP MORTGAGE: Fitch Holds 'B' Ratings on Nine Classes CLASSICSTAR LLC: Wants Henry Watz to Provide Litigation Services CMF TRUSS: Case Summary & 20 Largest Unsecured Creditors CONSECO INC: Implements LTCG's Systems and Operational Solution CONSTELLATION BRANDS: Fitch Rates $500 Million Senior Note at BB- CREDIT SUISSE: S&P Cuts Rating on $5 Mil. Certs. to BB from BBB DAVID OWEN: Case Summary & 10 Largest Unsecured Creditors DLJ COMMERCIAL: S&P Junks Rating on Class B-8 Certitificates DUKE FUNDING: Fitch Junks Ratings on Ten Note Classes E*TRADE FINANCIAL: Appoints R. Jarrett Lilien as Acting CEO E*TRADE FINANCIAL: Secures $2.5 Billion Financing from Citadel E*TRADE FINANCIAL: S&P Retains 'B' Rating Under Negative Watch E3 BIOFUELS: Mead Plant Losses Prompt Bankruptcy Filing EMANON PARTNERS: Case Summary & Nine Largest Unsecured Creditors GENERAL MOTORS: Still Open to Future Tie-Up with Proton Holdings GLIMCHER REALTY: S&P Affirms 'BB' Corporate Credit Rating GOLDEN STATE: Files Schedules of Assets and Liabilities GREEN TREE: S&P Assigns Default Rating on Class B-1 Sr. Certs. GULFMARK OFFSHORE: S&P Lifts Corp. Credit Rating to BB- from B+ HEARTLAND INC: Earns $70,452 in Third Quarter Ended Sept. 30, 2007 HOLOGIC INC: Earns $95.6 Million in Fiscal Year Ended Sept. 29 INDYMAC BANCORP: Moody's Cuts Issuer Rating to Ba2 from Ba1 INDYMAC BANK: Moody's Lowers Deposit Rating to Ba1 from Baa3 J.CREW GROUP: Earns $26.8 Million in Third Quarter Ended Nov. 3 JP MORGAN: Fitch Assigns 'B' Rating on $1.6MM Class B-5 Certs. KEY ENERGY: Completes $425 Mil. Offering of 8.375% Senior Notes KL TRANSPORT: Case Summary & 20 Largest Unsecured Creditors L TERSIGNI: Hearing on Unfiled Documents Set for December 11 L TERSIGNI: Submits Schedules of Assets and Liabilities L TERSIGNI: Delaware Court OKs Examiner Appointment to Probe Case LAKE MARTIN: Stoneview Balks at Dow Husky as Special Counsel LAKE MARTIN: Court Approves McDaniel & Associates as Accountant LB-UBS COMMERCIAL: Fitch Affirms Junk Rating on $3.6MM Certs. LEVITZ FURNITURE: Committee Wants Case Converted to Chapter 7 LEVITZ FURNITURE: AICCO Wants Stay Lifted to Cancel Policies LJA DANBURY: Case Summary & Seven Largest Unsecured Creditors MEDIANEWS GROUP: High Leverage Cues Moody's to Cut Rating to B1 MORGAN STANLEY: Fitch Assigns Low-B Ratings on Three Cert. Classes MOTORSPORT AFTERMARKET: Moody's Holds B2 Corporate Family Rating NATIONAL EASTERN: Wants to Employ T.M. Byxbee as Accountants NATIONAL RV: Files for Chapter 11 Protection in California NEW ORLEANS SEWERAGE: Fitch Holds 'B' Rating on $180.3MM Bonds NY RACING: Judge Peck Approves Third Amended Disclosure Statement NY RACING: Plan Confirmation Hearing Scheduled on December 27 OBLAST OF NIZHNIY: Moody's Assigns Ba2 Issuer Rating PATMAN DRILLING: U.S. Trustee Appoints Creditors Committee PAUL MORREL: Case Summary & 4 Largest Unsecured Creditors PHARMED GROUP: Seeks Court OK for FTI Consulting to Provide CRO POPE & TALBOT: Wants to File Schedules & Statements Until Jan. 18 POPE & TALBOT: Wants to Employ Rothschild as Financial Advisor POPE & TALBOT: B.C. Court Accepts Transfer of CCAA Proceedings POPE & TALBOT: British Columbia Court Extends Stay to Jan. 16 REGENT BROADCASTING: Weak Performance Cues Moody's to Cut Rating RYERSON INC: To Restructure Chicago Operations in Phased Moves SEARS HOLDINGS: Net Income Drops to $2 Mil. in 2007 Third Quarter SECURUS TECHNOLOGIES: Liquidity Concerns Cue S&P to Cut Rating SMITHFIELD FOODS: Earns $17.4 Million in 2nd Quarter Ended Oct. 28 SOLUTIA INC: Moody's Rates $400 Mil. Sr. Credit Facilities at Ba1 SONA MOBILE: Completes $3 Million Offering of Notes & Warrants SPARE BACKUP: Posts $4,674,055 Net Loss in Third Quarter SUNCHASE CAPITAL: Taps Gatewood Co. as Real Estate Consultant STALLION OILFIELD: Increased Leverage Cues Moody's to Cut Rating TERWIN MORTGAGE: Moody's Cuts Rating on Class M-2 Certs. to B3 THORPE INSULATION: Wants to Hire Snyder Miller as Special Counsel THORPE INSULATION: Committee Taps Caplin & Drysdale as Counsel THORPE INSULATION: Committee Wants Heller Ehrman as Co-Counsel TIDELANDS OIL: Posts $877,775 Net Loss in Third Quarter TRANS ENERGY: Board Authorizes Common Share Buy-Back Program TRIAXX FUNDING: Fitch Cuts Rating on $80MM Notes to BB from AA TRIBUNE CO: FCC OKs Transfer of Licenses and Waivers Extension TRIBUNE CO: Projected Low Revenue Cues Moody's to Cut Ratings TYCO INTERNATIONAL: Incurs $1.7 Billion Net Loss in Year 2007 UNITY WIRELESS: Sept. 30 Balance Sheet Upside-Down by $618,134 USG CORP: Court Wants Ex-Financial Advisor's Conduct Investigated VERASUN ENERGY: Executes Merger Agreement with US BioEnergy WALTER INDUSTRIES: Moody's Cuts CFR to B1 with Negative Outlook WARNER MUSIC: Sept. 30 Balance Sheet Upside-Down by $36 Million WATERFORD EQUITIES: Can Access Capital Source's Cash Collateral WATERFORD EQUITIES: Taps Kurztman Carson as Claims Agent WELLS FARGO: Fitch Rates $653,000 Class B-5 Certificates at B WELLS FARGO: Fitch Rates $2.796MM Class B-4 Certificates at BB WHITLATCH & CO: Court Okays Kohrman Jackson as Bankruptcy Counsel WM BOLTHOUSE: Higher Sales Cue Moody's to Hold B2 Family Rating * Moody's Says US Apparel Industry Continues To Be Negative * Moody's Issues Four Special Reports on Infrastracture Issues * Moody's Says Rise in Home Equity Sector Delinquency Continued * Moody's Says Performance of Jumbo Mortgage Loans Weakened * S&P Lowers Ratings on 106 Tranches From 22 US Hybrid CDO * S&P Lowers Ratings on 48 Classes of US Synthetic CDO * Fitch Says Strong Pricing Puts Pressure on For-Profit Hospitals * Fitch Plans to Release Nonrated Report on $88 Million IFA Bonds * BOND PRICING: For the Week of November 26 - November 30, 200 ********* 12021 ASSOCIATES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: 12021 Associates, L.L.C. 14724 Ventura Boulevard, 6th Floor Sherman Oaks, CA 91403 Bankruptcy Case No.: 07-14682 Chapter 11 Petition Date: November 29, 2007 Court: Central District Of California (San Fernando Valley) Debtor's Counsel: Georgeann H. Nicol, Esq. 9454 Wilshire Boulevard, 6th Floor Beverly Hills, CA 90212-2929 Tel: (310) 271-6223 Fax: (310) 271-9805 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor does not have any creditors who are not insiders. ACA CAPITAL: Posts $883 Million Equity Deficit in Third Qtr. 2007 ----------------------------------------------------------------- ACA Capital Holdings Inc. incurred $1 billion net loss in the third quarter ended Sept. 30, 2007, as compared with a a net income of $16.0 million for the same quarter a year ago. For the third quarter 2007, the company's total revenues were a negative at $1.5 billion, due to $1.7 billion in net insured credit swap revenue losses. Net insured credit swap revenue includes insured credit swap premiums received for credit protection the company has sold under its insured credit swaps as well as realized and unrealized gains and losses related to those transactions. Realized losses arise upon the occurrence of credit events requiring payment by the Company under the related credit swap and, additionally, realized gains or losses could occur if a transaction is terminated in advance of its scheduled termination date. The estimated aggregate present value of future installments under all insured credit swap transactions totaled $468.8 million at September 30, 2007. The company is currently currently investigating the possibility of restructuring our insured credit swap transactions to eliminate the collateral posting requirement. As of Sept. 30, 2007, the company's balance sheet showed total assets of $4.9 billion, total liabilities of $5.8 billion, and minority interest of $9.5 million, resulting in total stockholders' deficit of $883.3 million. A full-text copy of the company's third quarter 2007 report is available for free at: http://ResearchArchives.com/t/s?25db William Ackman Sees Likely Bankruptcy William Ackman of Pershing Square Capital said Wednesday that ACA Capital will possibly go bankrupt over a slump in the subprime mortage sector hitting about $68 billion collateralized debt obligations insured by the company, Reuters relates. Standard & Poor's Rating Action On Nov. 9, 2007 Standard & Poor's Rating Services placed its financial strength rating of ACA Financial Guaranty Corporation, a wholly owned subsidiary of the company, on CreditWatch with negative implications. Should S&P ultimately downgrade ACA FG's financial strength rating below 'A-', under the existing terms of the company's insured credit swap transactions, the company would be required to post collateral based on the fair value of the insured credit swaps as of the date of posting. The failure to post collateral would be an event of default, resulting in a termination payment in an amount approximately equal to the collateral call. This termination payment would give rise to a claim under the related ACA FG insurance policy. Based on current fair values, neither the company nor ACA Financial Guaranty would have the ability to post such collateral or make termination payments. About Perishing Square Capital Pershing Square Capital Management is a $300 million activist hedge fund managed by Bill Ackman that has had about 40% returns over the past two years. About ACA Capital ACA Capital Holdings Inc. (NYSE: ACA) -- http://www.aca.com/-- is a holding company that provides financial guaranty insurance products to participants in the global credit derivatives markets, structured finance capital markets and municipal finance capital markets. It also provides asset management services to specific segments of the structured finance capital markets. The company participates in its target markets both as a provider of credit protection through the sale of financial guaranty insurance products, for risk-based revenues, and as an asset manager, for fee-based revenues. ACA operates its businesses through three business lines, which consist of its two financial guaranty insurance lines of business: Structured Credit and Public Finance, and its CDO Asset Management business. The company serves as an asset manager of collateralized debt obligations (CDOs) for the benefit of the third-party investors in these CDOs. ACTIVISION INC: Inks $18.9 Billion Merger Deal with Vivendi ----------------------------------------------------------- Activision Inc. and Vivendi said Sunday that they have signed a definitive agreement to combine Vivendi Games, Vivendi's interactive entertainment business -- which includes Blizzard Entertainment's World of Warcraft(R), the world's #1 multi-player online role-playing game franchise -- with Activision, creating the world's largest pure-play online and console game publisher. The new company, Activision Blizzard, is expected to have approximately $3.8 billion in pro forma combined calendar 2007 revenues and the highest operating margins of any major third- party video game publisher. On closing of the transaction, Activision will be renamed Activision Blizzard and will continue to operate as a public company traded on NASDAQ under the ticker ATVI. Blizzard Entertainment, a division of Vivendi Games, has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit. Blizzard owns the #1 multi-player online role-playing game franchise, World of Warcraft, which currently has over 9.3 million subscribers worldwide. Blizzard's World of Warcraft, Warcraft(R), StarCraft(R) and Diablo(R) games account for four of the top-five best-selling PC game titles of all time. Vivendi Games also owns popular franchises, including Crash Bandicoot(TM) and Spyro(TM). Pro forma for calendar 2007, Activision Blizzard expects to generate approximately 70% of its revenues from owned franchises. As a result of the business combination, Activision Blizzard expects to have the most diversified and broadest portfolio of interactive entertainment assets in its industry, positioning the combined company to capitalize on the continued worldwide growth in interactive entertainment. Jean-Bernard Levy, Chairman of the Management Board and Chief Executive Officer of Vivendi stated: "This alliance is a major strategic step for Vivendi and is another illustration of our drive to extend our presence in the entertainment sector. By combining Vivendi's games business with Activision, we are creating a worldwide leader in a high-growth industry. We are excited about the opportunities for Activision Blizzard as a broader entertainment software platform. We believe this transaction will create significant value for Activision Blizzard and Vivendi stockholders. In Activision, we have found a partner with a highly complementary business and strong operating team. Bobby Kotick and Brian Kelly are industry pioneers, well known for creating shareholder value. The combined strength of the existing management teams at both companies will set the stage for further profitable growth of Activision Blizzard. We look forward to being an active and supportive majority stockholder in a company that is poised to lead the worldwide interactive entertainment industry in the years ahead." Rene Penisson, Member of the Management Board of Vivendi and current Chairman of Vivendi Games, added: "We are very confident that by combining forces, Activision Blizzard will set the highest standards in quality, reputation and profitability, and will bring together the best creative teams in the industry. The combination of this unique product portfolio with highly professional employees gives us great confidence in the growth prospects for Activision Blizzard." Said Robert Kotick, Activision's Chairman and Chief Executive Officer: "This is an outstanding transaction for Activision and our stockholders, as well as a pivotal event in the continuing transformation of the interactive entertainment industry. By combining leaders in mass-market entertainment and subscription- based online games, Activision Blizzard will be the only publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry and reach the broadest possible audiences. By joining forces with Vivendi Games, we will become the immediate leader in the highly profitable online games business and gain a large footprint in the rapidly growing Asian markets, including China and Korea, while maintaining our leading operating performance across North America and Europe. Activision stockholders will benefit from significantly increased earnings power and the recurring nature and predictability of subscription-based revenues, while also having the opportunity, if they choose, to receive $27.50 per share for a portion of their shares in the post-closing tender offer." Mr. Kotick continued: "Vivendi Games provides Activision with unique strategic and financial benefits and will allow us to leverage our franchises into emerging online opportunities as Blizzard has done so successfully. Activision has been very focused on margin expansion, and this transaction will meaningfully increase our overall operating margins as we expand our franchises online and in new geographies. Diversifying our revenue base among subscription-based online, console and PC formats, as well as wireless and casual emerging opportunities, gives us the broadest platform to capitalize on industry growth. With Blizzard's successful franchises, such as World of Warcraft, StarCraft and an exciting pipeline of yet-to-be announced titles, Vivendi Games' and Blizzard's management team will join with Activision's strong and experienced leaders to become an even more powerful force for innovation in online and offline interactive entertainment across a wide range of platforms. This transaction also provides a unique relationship with Universal Music Group -- the world's largest music company -- which will benefit Guitar Hero and further extend our sizable leadership position in music-based games." Mike Morhaime, President and Chief Executive Officer of Blizzard, added: "Blizzard's industry-leading PC games business, with a track record of nine consecutive bestsellers and a global subscriber base of more than 9.3 million World of Warcraft players, is an exceptional fit for Activision's highly profitable console games business. From our interactions with the Activision team, it is clear we have much in common in terms of our approaches to game development and publishing. Above all, we are looking forward to continue creating great games for Blizzard gamers around the world, and we believe this new partnership will help us to do that even better than before." Structure & Terms of Transaction Under the terms of the agreement, Vivendi Games will be merged with a wholly owned subsidiary of Activision. In the merger, shares of Vivendi Games will be converted into 295.3 million new shares of Activision common stock. Based on the transaction price of $27.50 per share of Activision common stock, this implies a value of approximately $8.1 billion for Vivendi Games. Concurrently with the merger, Vivendi will purchase 62.9 million newly issued shares of Activision common stock at a price of $27.50 per share -- a premium of 31% to Activision's average closing price over the past 20 trading days -- for a total of $1.7 billion in cash. As a result of these transactions, Vivendi will own an approximate 52% ownership stake in Activision Blizzard on a fully diluted basis. Within five business days after closing the transaction, Activision Blizzard will launch a $4 billion all-cash tender offer to purchase up to 146.5 million Activision Blizzard common shares at $27.50 per share. The tender offer will be funded by Activision Blizzard's cash on hand at closing, including the $1.7 billion in cash received from the Vivendi share purchase. In addition, Vivendi has agreed to acquire from Activision Blizzard additional newly issued shares for up to an additional $700 million of Activision common stock at $27.50 per share, the proceeds of which would also be used to fund the tender offer. Any remaining funds required to complete the tender offer will be borrowed by Activision Blizzard from Vivendi or third-party lenders. If the tender offer is fully subscribed, Vivendi will own an approximate 68% ownership stake in Activision Blizzard on a fully diluted basis. The transaction is expected to be immediately accretive in its first year post-closing for Activision's stockholders and slightly accretive for Vivendi's stockholders. Activision Blizzard is targeting pro forma operating income of $1.1 billion and pro forma earnings per share (EPS) in excess of $1.20 in calendar year 2009. The transaction is expected to be at least $0.20 accretive to Activision stockholders in calendar year 2009. Governance Activision Blizzard's board of directors will be comprised of eleven members: six directors designated by Vivendi, two Activision management directors and three independent directors who currently serve on Activision's board of directors. Rene Penisson, currently a member of the Management Board of Vivendi and Chairman of Vivendi Games, will serve as Chairman of Activision Blizzard. Brian Kelly, currently Co-Chairman of Activision, will serve as Co-Chairman of Activision Blizzard. The three independent directors will be Richard Sarnoff, Robert J. Corti and Robert Morgado. Other Activision Blizzard directors will be Robert Kotick (President and Chief Executive Officer of Activision Blizzard), Bruce Hack (Vice-Chairman and Chief Corporate Officer of Activision Blizzard), Jean-Bernard Levy (Chairman of the Management Board and Chief Executive Officer of Vivendi), Doug Morris (Chairman and Chief Executive Officer of the Universal Music Group), Philippe Capron (Member of the Management Board and Chief Financial Officer of Vivendi), and Frederic Crepin (Senior Vice President, Head of Legal, Vivendi). Management Following the completion of the transaction, Robert Kotick will be President and Chief Executive Officer of Activision Blizzard. Bruce Hack, current Chief Executive Officer of Vivendi Games, will serve as Vice-Chairman and Chief Corporate Officer of Activision Blizzard, accountable for leading the merger integration and the finance, human resources and legal functions. Mike Griffith will serve as President and Chief Executive Officer of Activision Publishing, which after closing will include the Sierra Entertainment, Sierra Online and Vivendi Games Mobile divisions in addition to the Activision business. Mike Morhaime will continue to serve as President and Chief Executive Officer of Blizzard Entertainment. Thomas Tippl, currently Chief Financial Officer of Activision, will be appointed Chief Financial Officer of Activision Blizzard and Jean-Francois Grollemund, currently Chief Financial Officer of Vivendi Games, will be appointed Chief Accounting Officer of Activision Blizzard. Conditions to Closing The transaction has been approved by the boards of directors of Vivendi, Vivendi Games and Activision. The transaction is subject to the approval of Activision's stockholders and the satisfaction of customary closing conditions and regulatory approvals, including expiration of applicable waiting periods and receipt of applicable approvals under the Hart-Scott-Rodino Antitrust Improvements Act and European Union merger control regulations. Pending regulatory and stockholder approval, the companies expect the transaction to be completed in the first half of calendar year 2008. Financial and Legal Advisors Activision's financial advisor on the transaction is Allen & Company LLC and its legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP. Vivendi's financial advisor is Goldman, Sachs & Co. and Gibson, Dunn & Crutcher LLP is acting as legal counsel to Vivendi. About Activision Broadcast Media Center Activision Broadcast Media Center broadcast video and web- streaming video in PAL and NTSC formats on its Web site -- http://activision.pondserver.com/ Pathfire users can download video to their Digital Media Gateway by choosing the Pathfire Enabled file. All video is free of charge and its use is unrestricted. About Vivendi Vivendi (Euronext Paris: VIV) -- http://www.vivendi.com/-- is a global provider of digital entertainment like music, TV, cinema, mobile, internet, and games through its ownership of Universal Music Group, Canal+ Group, SFR, Maroc Telecom and Vivendi Games. In 2006, Vivendi had revenues of over EUR20 billion and a global headcount of 39,000. Listed on the Paris Stock market, Vivendi is a member of the CAC 40. About Vivendi Games Vivendi Games globally develops, publishes and distributes multiplatform interactive entertainment. The company is the leader in the subscription-based massively multi-player online role-playing games (MMORPG) category and is building on its position in the PC, console and handheld games markets. Vivendi Games has a global presence, a history of franchise success, development teams around the world and a catalog of its own original and licensed material. Vivendi Games has approximately 4,000 employees and is driven by four creative divisions: Blizzard Entertainment, Sierra Entertainment, Sierra Online and Vivendi Games Mobile. Irvine, California-based Blizzard, creator of the Warcraft, StarCraft and Diablo games series, is by far the largest of the four entities with approximately 2,300 employees. About Blizzard Entertainment Blizzard Entertainment Inc. -- http://www.blizzard.com/-- a division of Vivendi Games, is a premier developer and publisher of entertainment software renowned for creating some of the industry's most critically acclaimed games. Blizzard Entertainment's track record includes ten #1-selling games and multiple Game of the Year awards. It is best known for blockbuster hits including World of Warcraft and the Warcraft, StarCraft, and Diablo series. The company's online-gaming service, Battle.net(R), is one of the largest in the world, with millions of active users. About Activision Inc. Headquartered in Santa Monica, California, Activision Inc. (Nasdaq: ATVI) -- http://www.activision.com/-- is a worldwide developer, publisher and distributor of interactive entertainment and leisure products. Founded in 1979, Activision posted net revenues of $1.5 billion for the fiscal year ended March 31, 2007. Activision has more than 2,000 employees worldwide. Activision is best known for its top-selling franchises, including Guitar Hero(R), Call of Duty(R) and the Tony Hawk series, as well as Spider-Man(TM), X-Men(TM), Shrek(R), James Bond(TM) and TRANSFORMERS(TM). Activision maintains operations in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Scandinavia, Spain, the Netherlands, Australia, Japan and South Korea. * * * As reported in the Troubled Company Reporter on Aug. 24, 2007, Standard & Poor's Ratings Services revised its outlook on video game publisher Activision Inc. to stable from negative. At the same time, S&P affirmed its 'BB-' corporate credit rating on the company. Activision had no debt outstanding as of June 30, 2007. AMERICAN HOME: Gets Nod to Pay up to $9MM to Senior Managers ------------------------------------------------------------ American Home Mortgage and Investment Corp. and its debtor- affiliates obtained approval from the U.S. Bankruptcy Court of the District of Delaware to pay up to $9,000,000 in incentives to members of senior management. Under an executive incentive plan, the Debtors will give bonuses to 27 executives, senior vice presidents, and vice presidents if certain thresholds are met. The Debtors will contribute to a plan pool in the event at least one of these objectives are achieved: -- net proceeds from asset sales exceed $230,000,000; -- a plan of liquidation of the Debtors is confirmed on or before August 6, 2008; -- a sale of American Home Bank is consummated on or before February 28, 2007; and -- wind-down costs are less than $45,00,000. The Debtors will contribute $700,000 to the plan pool in light of the initial closing of the sale of their loan servicing business on October 31, 2007. The Debtors were expected to receive up to $500,000,000 from the purchaser, AHM Acquisition Co., Inc. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, said the EIP is necessary to incentivize and reward senior management for their work in the wind-down operations and liquidation of the Debtors. The EIP has been negotiated with the Official Committee of Unsecured Creditors appointed in the Chapter 11 cases. Bankruptcy Judge Christopher S. Sontchi denied American Home's request to withhold the names of senior managers and the bonuses they are entitled to. According to The Associated Press, Chief Financial Officer Stephen Hozie will receive at least $462,000 in incentives, while "secondary markets executive" Robert Johnson will get at least $247,100. AP adds that Michael Strauss, American Home's founder and chief executive, bypassed the bonus pool. 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. 18, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERIQUEST MORTGAGE: Fitch Retains Junk Rating on Class M-3 ----------------------------------------------------------- Fitch Ratings has taken rating actions on these classes of Ameriquest Mortgage Securities Inc. home equity issues: QUEST 2003-X4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'A'; -- Class M-2 rated 'BBB,' placed on Rating Watch Negative; -- Class M-3 remains at 'CC/DR3'. The affirmations, affecting approximately $12.8 million of the outstanding balances, are taken due to a satisfactory relationship of credit enhancement to expected losses. The $7.9 million class-2 is placed on Rating Watch Negative due to the deterioration in the relationship between CE and expected losses. Monthly losses have exceeded the available excess spread in recent months, which has caused deterioration in the overcollateralization amount. Monthly losses have exceeded excess spread by an average of approximately $249,000 over the last six months. As of the October distribution date, QUEST 2003-X4 is seasoned 47 months. The pool factor is 18% and approximately 25.2% of the pool is more than 60 days delinquent. The loans were either originated or acquired by Ameriquest Mortgage Company. Citi Residential Lending Inc., rated 'RSS3+' by Fitch, is the servicer. AMR CORP: Low Stock Price Cues FL Group to Cut Stake by 8% ---------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, FL Group hf. disclosed that as of the close of business on Nov. 29, 2007, it beneficially owned 2,658,000 shares of common stock of AMR Corporation. FL Group's stake constitutes approximately 1.1% of outstanding shares of common stock of AMR (based on 249,121,904 shares outstanding on Oct. 12, 2007, as reported in AMR's Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2007). FL Group previously owned a total of 22,658,000 shares of AMR common stock, which represented approximately 9.1% of the outstanding shares of AMR common stock. The shares included 20,458,000 shares held by FL Group's wholly owned subsidiary, FL Group Holding Netherlands B.V. On Nov. 28, 2007, FL Group's wholly owned subsidiary sold 17,800,000 of the 20,458,000 shares it held. The wholly owned subsidiary holds the remaining 2,658,000 Shares. Swap Transactions On Dec. 4, 2006, FL Group entered into an ISDA Master Agreement with Morgan Stanley & Co. International plc, relating to shares of common stock of AMR. FL Group entered into a series of swap transactions executed in September 2007 under the MSC Master Agreement, relating to a total of 2,200,000 shares of AMR common stock. Under the MSC Master Agreement and confirmation letters relating to the specific transactions effected under the MSC Master Agreement, FL Group had the right to elect to settle the swap transactions by taking delivery of the 2,200,000 shares of common stock. Accordingly, FL Group was deemed to beneficially own the 2,200,000 shares of common stock. The September Swap Transactions were scheduled to expire on Nov. 16, 2007, and were subsequently extended on the same terms. On Nov. 28, 2007, FL Group divested its interest in the 2,200,000 shares which were the subject of the November 2007 swap extensions. FL Group ceased to be the beneficial owner of more than 5% of AMR common stock on Nov. 28, 2007. Reason for Cutting Stake According to The Wall Street Journal, FL Group cited lack of progress by AMR in boosting shareholder value as the main reason for cutting its stake in the airline company. In September, WSJ said, FL Group urged AMR to consider strategic alternatives, such as divesting itself of assets such as the frequent-flier program or, secondarily, its American Eagle regional airline business. Divesting American Eagle As reported in the Troubled Company Reporter on Nov. 29, 2007, AMR said it plan to divest American Eagle to: -- provide the company with the structure, incentives and opportunities to win new business and provide new opportunities for American Eagle's employees; and -- focus on the company's mainline business, while ensuring continued access to cost-competitive regional feed. American Eagle, which provides regional airline services, operates approximately 300 aircraft, with approximately 1,700 daily flights to more than 150 cities throughout the United States, Canada, the Bahamas, the Caribbean and Mexico. In 2007, American Eagle expects to generate annual revenues of approximately $2.3 billion. The planned divestiture would include both American Eagle Airlines Inc., which feeds American Airlines hubs throughout North America, and its affiliate, Executive Airlines Inc., which carries the American Eagle name throughout the Bahamas and the Caribbean from bases in Miami and San Juan, Puerto Rico. FL Group Comments WSJ relates that FL Group agrees with AMR's plan, however, it said more was needed to boost the airline company's stock price. "With AMR's focus now on divesting American Eagle, we don't expect them to move on any other strategic initiatives to create shareholder value over the mid-term. As such, we believe there are more interesting investment opportunities for our portfolio at the current time," spokesman Halldor Kristmannsson told WSJ. About AMR Corporation Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. * * * As reported in the Troubled Company Reporter on Nov. 30, 2007, following the announcement by AMR Corp. that it intends to divest its American Eagle Holding Corp. subsidiary in 2008, Fitch expects no near-term impact on the debt ratings of AMR and its principal operating subsidiary, American Airlines Inc. Fitch affirmed both entities' Issuer Default Ratings at 'B-' on Nov. 13, 2007, while revising the Rating Outlook for AMR to Positive. ARANTES ALIMENTOS: Fitch Assigns 'B' Foreign Currency IDR --------------------------------------------------------- Fitch Ratings has assigned foreign and local currency Issuer Default Ratings of 'B' to Brazil's Arantes Alimentos Ltda. In addition, Fitch has also assigned Arantes a national debt rating at 'BBB(bra)'. The Rating Outlook is Stable. The ratings reflect Arantes low cost structure and diversified export revenue base. Arantes' beef processing business is exposed to volatile beef and cattle markets, which has an impact on its raw material cost structure and end-product prices (domestically and internationally). Volatility is primary driven by supply and demand imbalances which are a result of factors such as sanitary disease, adverse weather conditions, unfavorable global economic conditions, changes in beef consumption habits, government-imposed sanitary and trade restrictions, and competitive pressures from other Brazilian or international beef producers and exporters. Some of these risks are partially mitigated by Arantes' geographically diversified operational plants, global distribution and customer diversification, and a balanced export revenue base. The company has aggressively grown since returning to the beef processing business in 2005, through acquisitions of new plants and modernization of existing plants. The company's strategy is focused on achieving steady and sustained growth while maintaining the efficiency of its operations and building on its competitive strengths in order to increase its profitability and its market share in the Brazilian and international markets. Near-term growth is based on already acquired capacity while long-term strategy is expected to be achieved through a combination of organic growth, acquisitions, and by purchasing or leasing additional facilities. During the first nine months of 2007, revenues grew by 66%, while EBITDA grew at a slower rate. EBITDA margin declined to 8.2% from 9.5% during the prior comparable period. Margin decline was a result of higher raw material cost, higher domestic volumes coupled with lower domestic prices which were partially offset by higher international prices, and lower SG&A expenses as a percentage of revenues. The ratings incorporate Arantes' highly leveraged capital structure and financing needs in order to fund working capital, and continued near-term large projected capital expenditures in order to add capacity. Credit protection measures worsened during the first nine months of 2007 as EBITDA growth was more than offset by increase in debt related to higher capex and working capital requirements. At Sept. 30, 2007, the company had a ratio of net debt to EBITDA of 4.5 times, not including leased properties as, except for one, all leased property titles are being transferred from the Arantes family to Arantes Alimentos Ltda. EBITDA coverage of interest expense of 7x EBITDA is expected to grow by 70% in 2007 to R$57.2 million from R$33.7 million in 2006. Pro-forma net debt to EBITDA at the end of 2007 is expected to be 4.3x with pro-forma total debt of about R$350.6 million, a significant increase from R$252.8 million at the end of September 2007. Consequently, despite very large expected revenue and EBITDA growth in the next few years, credit-protection measures will likely remain under pressure in the very near term before reaching more comfortable levels. Arantes was positioned as the seventh largest Brazilian beef exporter during the first nine months of 2007. The company has an aggregate daily slaughtering capacity of approximately 4,330 head of cattle at the five slaughterhouses it operates in the Brazilian States of Mato Grosso, Goias and Maranhao. Arantes exports its products to more than 140 customers located in over 35 countries. The foreign market corresponds to about 45% of Arantes' sales. The company maintains long-term relationships with leading international beef distributors. ARTUS LOAN: Moody's Assigns Ba2 Rating on $28MM Class B-2L Notes ---------------------------------------------------------------- Moody's Investors Service assigned these ratings to Notes issued by Artus Loan Fund 2007-I, Ltd.: (1) Aaa to the U.S. $780,000,000 Class A-1L Floating Rate Notes Due 2018; (2) Aa2 to the U.S. $42,000,000 Class A-2L Floating Rate Notes Due 2018; (3) A2 to the U.S. $52,000,000 Class A-3L Floating Rate Notes Due 2018; (4) Baa2 to the U.S. $35,000,000 Class B-1L Floating Rate Notes Due 2018; and (5) Ba2 to the U.S. $28,000,000 Class B-2L Floating Rate Notes Due 2018. 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 leveraged loans due to defaults, the transaction's legal structure and the characteristics of the underlying assets. Babson Capital Management LLC will manage the selection, acquisition and disposition of collateral on behalf of the Issuer. ASSET BACKED: Fitch Retains Junk Rating on Class B Certificates --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Asset Backed Funding Corp. mortgage pass-through certificates: Series 2002-SB1 -- Class A-II-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB' from 'A' and placed on Rating Watch Negative; -- Class M-3 downgraded to 'B-/DR1' from 'BB' and removed from Rating Watch Negative; -- Class B remains at 'C/DR4'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $27 million of outstanding certificates, as of the October 2007 distribution date. The downgrades total approximately $6 million of outstanding certificates and reflect the deterioration of CE relative to future expected losses. The downgrades total also includes the $3.2 million M-2 class that has been placed on Rating Watch Negative. This transaction is 65 months seasoned and the pool factor is 11%. The cumulative loss, as a percentage of the pools' initial balance, is 5.89%. The underlying collateral consists of fixed-rate and adjustable- rate mortgage loans secured by first and second liens on residential mortgage properties extended to subprime borrowers. The servicer for the loans in this transaction is Litton Loan Servicing, LP which is rated 'RPS1', Rating Watch Negative, by Fitch. As of the October 2007 distribution date, the overcollateralization was zero, with a target of $1,578,734. The 60+ delinquencies are 23.78% of current collateral balance. This includes foreclosures and real estate owned (REO) of 3.16% and 4.17%, respectively. AVADO BRANDS: Court Okays Lane Berry as Financial Advisors ---------------------------------------------------------- Avado Brands Inc. and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Lane, Berry & Co. International LLC as their financial advisors. The Debtors selected Lane Berry to assist them in effectuating a sale of substantially all of their operating assets. Specifically, Lane Berry will: a) analyze and evaluate the business, operations, and financial position of the Debtors; b) prepare an offering memorandum for distribution and presentation to potential parties to a sale transaction; c) prepare and implement a plan to market the Debtor's business; d) identify and screening interested prospective parties to a sale transaction; e) evaluate various potential sale transactions and the value of each to the Debtors' estates; f) coordinate due diligence related to the sale process; g) evaluate proposals from potential purchasers; h) assist in the structuring and negotiating of potential sale transactions; i) meeting with the Debtor's board of directors to discuss the financial implications of a particular sale transaction; j) providing affidavits and testimony with respect to the services performed by Lane Berry; and k) perform other financial advisory services for the Debtors that may be necessary. Robert M. Berry, the president and founding member of Lane Berry, tells the Court that the Debtor have agreed to pay Lane Berry a transaction fee, based upon a percentage of the total fair market value, of all consideration paid or payable to the Debtors in connection with the sale transaction: -- if the aggregate consideration for the sale transaction is less than or equal to $50 million, Lane Berry is entitled to a $1 million transaction fee; -- if the aggregate consideration for the sale transaction is between $50-60 million, Lane Berry is entitled to an additional fee of 1.5% of the consideration; and -- if the aggregate consideration for the sale transaction is greater than $60 million, Lane Berry is entitled to an additional fee of 3% of the consideration. Mr. Berry assures the Court that the firm is disinterested, pursuant to Section 101(14) of the U.S. Bankruptcy Code. About Avado Brands Madison, Georgia-based Avado Brands Inc., aka Applesouth, -- http://www.avado.com/-- operates about 120 casual dining restaurants under the banners Don Pablo's Mexican Kitchen and Hops Grillhouse & Brewery. The restaurants are located in 22 states in the U.S. As of Sept. 5, 2007, the Debtors employed about 9,970 people. For the year ended July 31, 2007, the Debtors generated about $227.8 million in revenues and a negative EBITDA of $7.8 million. The Debtor filed for chapter 11 protection on Feb. 4, 2004 (Bankr. N.D. Tex. Case No. 04-1555). On April 26, 2005, Judge Steven Felsenthal confirmed Avado's Modified Plan of Reorganization and that Plan became effective on May 19, 2005. On Sept. 5, 2007, Avado filed a voluntary chapter 22 petition (Bankr. D. Del. Case No. 07-11276) to complete an orderly sale of its assets, via Section 363 of the Bankruptcy Code. About 10 of Avado's affiliates also filed for bankruptcy protection on the same date (Bankr. D. Del. Case Nos. 07-11277 through 07-11286). Michael Tuchin, Esq., and Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Debtors. Donald J. Detweiler, Esq., at Greenberg Traurig, LLP, is the Debtors' local counsel. Kurtzman Carson Consultants LLC acts as the Debtors claims and noticing agent. In their second filing, the Debtors disclosed estimated assets and debts between $1 million to $100 million. Scott L Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and David B. Stratton, Esq., at Pepper Hamilton LLP, represent the Official Committee of Unsecured Creditors. BANC OF AMERICA: Fitch Puts 'BB' Rating on $1.777 Million Certs. ---------------------------------------------------------------- Fitch rated Banc of America Mortgage Securities Inc.'s mortgage pass-through certificates, series 2007-3, as: -- $428,714,699 classes 1-A-1 - 1-A-46, 1-A-R, 1-IO, 1-PO and 2-A-1 - 2-A-4 senior certificates 'AAA'; -- $8,664,000 class B-1 'AA'; -- $2,665,000 class B-2 'A'; -- $1,111,000 class B-3 'BBB'; -- $1,777,000 class B-4 'BB'; -- $444,000 class B-5 'B'. Classes 2-A-1, 2-A-2 and 2-A-4 are privately offered certificates. The 'AAA' ratings on the senior certificates reflects the 3.50% subordination provided by the 1.95% class B-1, 0.60% class B-2, 0.25% class B-3, 0.40% privately offered class B-4, 0.10% privately offered class B-5, and 0.20% privately offered class B- 6. The ratings for classes B-1, B-2, B-3, B-4, and B-5 are based on their respective subordination. Class B-6 is not rated by Fitch. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, N.A. (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. This transaction contains certain classes designated as exchangeable certificates and others as regular certificates. Classes I-A-3 through 1-A-16, 2-A-1 and 2-A-2 are exchangeable REMIC certificates. Classes I-A-1, 1-A-2, 1-A-17 through I-A-46, and 2-A-4 are exchangeable certificates. The remaining classes are regular certificates. The transaction is secured by two pools of mortgage loans. Loan groups 1 and 2 are cross-collateralized and supported by the B-1 through B-6 subordinate certificates. The mortgage pool consists of 634 fully amortizing, fixed interest rate, one- to four-family, residential first mortgage loans, substantially all of which have original terms to stated maturity of approximately 180 to 360 months. The aggregate outstanding balance of the pool as of Dec. 1, 2007 is $444,265,109 with an average balance of $700,733 and a weighted average coupon of 6.853%. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 71.59%. The weighted average FICO credit score is 752. Second homes and investor- occupied properties comprise 6.45% and 0.23% of the loans in the group, respectively. Rate/Term and cash-out refinances account for 18.82% and 14.14% of the loans in the group, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (51.83%) and Florida (6.67%) All other states represent less than 5% of the aggregate pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as multiple real estate mortgage investment conduits. Wells Fargo Bank, N.A. will act as trustee. BBJ ENVIRONMENTAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: B.B.J. Environmental Solutions, Inc. 5910 Breckenridge Parkway, Suite A Tampa, FL 33610 Bankruptcy Case No.: 07-11630 Type of Business: The Debtor develops solutions to biologically related indoor air quality problems, such as mold, mildew, fungi and bacteria. See http://www.bbjenviro.com Chapter 11 Petition Date: November 29, 2007 Court: Middle District of Florida (Tampa) Judge: Catherine Peek McEwen Debtor's Counsel: Harley E Riedel, Esq. Scott A. Stichter, Esq. Stichter, Riedel, Blain & Prosser 110 East Madison Street, Suite 200 Tampa, FL 33602 Tel: (813) 229-0144 Fax: (813) 229-1811 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ KayeScholer, L.L.P. $23,756 425 Park Avenue New York, NY 10022 Quality Systems & $14,222 Technology 6502 28th Avenue, East Palmetto, FL 34221 Bryan Bilchik $13,311 1216 Tar Flower Drive Tampa, FL 33626 Joseph Pivinski $11,300 Platinum Plus for Business $10,311 Jackson Lewis, L.L.P. $9,671 Bob Disinski $6,345 Incorporated Service State $5,809 of Nevada Hillsborough County Tax $5,664 Collector Wheeler, Herman, Hopkins & $5,596 Lag B.&G. Equipment Co. $5,454 Berlin Packaging $4,099 Prudential $3,750 LoBell Sales $3,504 William C. Shadel $2,029 Whitaker Solvents & Chemicals $1,803 R.&L. Carriers $1,303 RoDan Fire Sprinklers $1,270 Indoor Environment $1,200 Communications Capital One, F.S.B. $1,151 BLACKHAWK AUTOMOTIVE: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and Tier e Automotive Group Inc. submitted to the U.S. Bankruptcy Court for the Northern District of Ohio their schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $2,500,000 B. Personal Property 56,165,229 C. Property Claimed as - Exempt D. Creditors Holding $36,435,479 Secured Claims E. Creditors Holding 286,425 Unsecured Priority Claims F. Creditors Holding 14,522,688 Unsecured Non Priority Claims ----------- ----------- TOTAL $58,665,229 $51,244,592 About Blackhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. Donlin Recano & Company Inc. will provide claims, noticing, balloting and distribution services for the Debtors. As of the bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BLACKHAWK AUTOMOTIVE: Can Hire Benesch Friedlander as Counsel ------------------------------------------------------------- Blackhawk Automotive Plastics Inc. and Tier e Automotive Group Inc. obtained permission from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Benesch, Friedlander, Coplan & Aronoff LLP as their general counsel. Benesch Friedlander will: a. advise the Debtors of their rights, powers, and duties as Debtors-in-possession that are continuing to operate and manage their businesses and property; b. attend meetings and negotiate with representatives of creditors and other parties-in-interest; c. prepare on behalf of the Debtors all necesary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents, and review all financial and other reports to be filed with the Court in the cases; d. advise the Debtors concerning, and prepare responses to, applications, motions, pleadings, notices, and other papers that may be filed and served in the cases; e. advise the Debtors concerning, and assist in the negotiation and documentation of, the refinancing or sale of their assets, debt and lease restructuring, executory contract and unexpired lease assumptions, assignments or rejections, and related transactions; f. review the nature and validity of liens asserted against the Debtors' property and advise the Debtors concerning the enforceability of the liens; g. advise the Debtors concerning the actions that they might take to collect and recover property for the benefit of their estates; h. counsel the Debtors in connection with the formulation, negotiation, and confirmation of a plan or plans of reorganization and related documents; and i. perform other legal services for the Debtors as may be necessary in the administration of their chapter 11 cases and businesses, including advising and assisting the Debtors with respect to debt restructuring, corporate governance issues related to restructuring, stock or asset dispositions and general business and litigation matters. The Debtors will pay the firm according to these hourly rates: Professional Designation Rate ------------ ----------- ---- William I. Kohn, Esq. Partner $645 William E. Schonberg, Esq. Partner $425 David M. Neumann, Esq. Associate $320 Jennifer R. Hoover, Esq. Associate $300 Stuart A. Laven, Jr., Esq. Associate $275 Scott B. Lepene, Esq. Associate $240 Lisa M. Behra Paralegal $160 During the 90 days prior to bankruptcy, the Debtors have paid the firm $185,310 for current legal services rendered. The Debtors also paid the firm a $100,357 retainer on Oct. 18, 2007. The Debtors and William I. Kohn, Esq., assure the Court that the firm is a "disinterested person" as that term is defined under section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code. The firm can be reached at: William I. Kohn, Esq. David M. Neumann, Esq. Stuart A. Laven, Jr., Esq. Benesch, Friedlander, Coplan & Aronoff LLP 2300 BP Tower, 200 Public Square Cleveland, OH 44114-2378 Tel: (216) 363-4182/4584/4493 Fax: (216) 363-4588 http://www.bfca.com/ About Blackhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. Donlin Recano & Company Inc. will provide claims, noticing, balloting and distribution services for the Debtors. As of the bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BLACKHAWK AUTOMOTIVE: U.S. Trustee Forms Seven-Member Committee --------------------------------------------------------------- Habbo G. Fokkena, the United States Trustee for Region 9, appointed seven members to serve in an official committee of unsecured creditors in Blackhawk Automotive Plastics Inc. and Tier e Automotive Group Inc.'s bankruptcy cases. The seven members are: 1. Sabic Innovative Plastics c/o Valerie Venable 9930 Kinsey Avenue Hunstville, NC 28078 Tel: (704) 992-5075 Fax: (866) 585-2386 2. JIT Packaging c/o Erin Hogan Jones 1550 Kingsview Drive P.O. Box 358 Lebanon, OH 45036 Tel: (513) 933-0250 Fax: (513) 934-3239 3. Avery Dennison Corporation c/o William M. Goldsmith 650 West 67th Avenue Schererville, IN 46375 Tel: (219) 322-9826 Fax: (219) 322-9825 4. Createc Corporation c/o Elizabeth E. Dreyer 8888 Keystone Crossing, Suite 1600 Indianapolis, IN 46240 Tel: (317) 705-2917 Fax: (317) 566-9910 5. Kurz Transfer Products LP c/o David Seymour 3200 Woodpark Blvd. Charlotte, NC 28206 Tel: (704) 927-3750 Fax: (704) 927-3703 6. Pioneer Plastics c/o Ralph Danesi P.O. Box 26392 Akron, OH 44319 Tel: (330) 896-2356 Fax: (330) 896-3609 7. CNI Enterprises Inc. c/o Jorge J. Morales 1451 E. Lincoln Madison Heights, MI 48071 Tel: (248) 586-3324 Fax: (248) 586-9611 Kurz Transfer replaced PPG Industries Inc. as member of the committee. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Blackhawk Automotive Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. Donlin Recano & Company Inc. will provide claims, noticing, balloting and distribution services for the Debtors. As of the bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BOMBARDIER INC: Planned Debt Repurchase Cues Fitch's Pos. Watch --------------------------------------------------------------- Fitch Ratings has placed these ratings of Bombardier Inc. and Bombardier Capital Inc. on Rating Watch Positive: Bombardier Inc. -- Issuer Default Rating 'BB-'; -- Senior unsecured debt 'BB-'; -- Preferred stock 'B'. Bombardier Capital Inc. -- IDR 'BB-'; -- Senior unsecured debt 'BB-'. The action reflects BBD's announcement that it intends to repurchase approximately $1.1 billion of debt by Jan. 31, 2008. The ratings cover outstanding debt and preferred stock totaling approximately $5.7 billion as of Oct. 31, 2007. Due to the existence of a support agreement and demonstrated support by the parent, BC's ratings are linked to those of BBD. The Positive Rating Watch primarily reflects the reduction in leverage that would result from BBD's intended repurchase of debt. Fitch expects to resolve the Rating Watch within the next two to three months. Should the ratings be upgraded in that time period, Fitch expects the IDR's and unsecured debt ratings to remain in the 'BB' category. The Positive Rating Watch and longer-term rating trends are also supported by expectations for continued margin improvement, sales growth, and solid cash generation. Strong orders in all of BBD's businesses and a large backlog support projections for continued improvement. These factors could potentially lead to further long term improvement in BBD's credit profile. As indicated by BBD in a press release, the debt targeted to be repurchased includes approximately $408 million of Euro- denominated 5.75% notes due in February 2008, $623 million of BC's Sterling-denominated 6.75% notes due in May 2009, and $26 million of other long term debt. This debt amounts to approximately 20% of BBD's consolidated debt. All of BC's remaining debt would be retired. Factors supporting the ratings include BBD's diversification, leading market positions, the health of the business jet and turboprop markets, cash balances, debt maturity schedule, BT's successful restructuring, and large backlog. Rating concerns include the elevated but improving consolidated gross debt levels compared to EBITDA; relatively low operating margins; business jet market cyclicality; the pension plan deficit; the impact of exchange rate volatility on margins, financial results, and planning; and several RJ concerns, including uncertainty regarding development of new aircraft models and contingent obligations related to past aircraft sales, although these contingent obligations are spread out over time and are not a near-term concern. BBD's eventual decision about its potential entry into the mainline aircraft market could have an impact on its financial and operating profile. Fitch believes the recent performance issues with one operator's Q400 aircraft are not a significant credit concern at this time. At Oct. 31, 2007 the company had $3.6 billion of unrestricted cash balances, not including $1.3 billion of restricted cash related to its letter of credit facility. Restricted cash balances are not available for liquidity purposes or for the benefit of unsecured bond holders. Bombardier's unrestricted cash balances are the company's sole source of liquidity because the LOC facility is not available on a revolving credit basis. Free cash flow has been solid, supporting the increase of roughly $400 million in BBD's net cash balances during the fiscal third quarter. Upon completion of the expected debt reduction, cash balances would be nearly $2.6 billion on a pro forma basis which Fitch considers to be sufficient to support BBD's liquidity requirements. BURGER KING: Moody's Affirms Ba2 Rating with Stable Outlook ----------------------------------------------------------- Moody's Investors Service affirmed the Ba2 corporate family rating of Burger King Corporation. Moody's also affirmed the company's Ba2 rating assigned to Burger Kings's $250 million senior secured term loan A, $1.1 billion senior secured term loan B, and $150 million senior secured revolving credit facility. In addition, Moody's changed the outlook for Burger King to stable from negative. The Ba2 corporate family rating reflects Burger King's strong brand recognition, the meaningful scale and geographic diversity of system-wide restaurants, as well as improved operating performance and good liquidity. However, the rating also incorporates Burger Kings relatively weak credit metrics for the current rating category and somewhat aggressive growth plans that are driven largely by franchisees. The ratings also incorporate the intense competitive environment within the U.S. restaurant industry, increasing margin pressures related to historically high commodity costs and wages, and a more financially challenged consumer. The stable outlook reflects Moody's expectation that a continued improvement in operating performance, driven by positive traffic and average check, should further strengthen debt protection metrics and liquidity. The outlook also expects that management will exercise a prudent treasury policy with shareholder based initiatives supported by excess free cash flow and not by non- operating cash flows, asset sale proceeds, or additional debt. Burger King Corporation, with headquarters in Miami, Florida, operates 1,298 and franchises 10,001 Burger King hamburger quick service restaurants in 69 countries and U.S. territories. For the twelve months ended September 30, 2007, Burger King reported revenues and operating income of about $2.3 billion and $305 million respectively. CALUMET LUBRICANTS: S&P Rates $510 Mil. Credit Facilities at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its bank loan and recovery ratings to the $510 million credit facilities of Calumet Lubricants Co. L.P. (no corporate credit rating), a subsidiary of Calumet Specialty Products Partners L.P. (B/Positive/--), based on preliminary terms and conditions. The 'BB-' senior secured rating and recovery rating of '1' indicate expectation of very high (90%- 100%) recovery of principal in the event of a payment default. The facilities consist of a $385 million term loan, a $75 million delayed-draw term loan, and a $50 million prefunded LOC facility. The company's planned $375 million asset-based revolving credit facility has not been rated. Calumet Specialty Products will use the proposed loans to finance its pending $267 million acquisition of Penreco and to repay outstanding debt on Calumet Lubricants' existing credit facility. The Penreco acquisition is expected to close during the fourth quarter of 2007. The corporate credit rating on Calumet Specialty Products is 'B', reflecting the Indianapolis, Indiana-based company's position as a small, independent petroleum refiner structured as a master limited partnership, hedges on about 60% of fuel production through 2010, more-stable specialty product margins, moderate debt leverage for the current rating, and modest asset diversity provided by its three refineries and the pending acquisition of Penreco. Ratings List Calumet Specialty Products Partners L.P. Corporate Credit Rating B/Positive/-- New Rating Calumet Lubricants Co. L.P. Senior Secured BB- Recovery Rating 1 CARBIZ INC: Illinois Unit Begins Sales and Collections Operations ------------------------------------------------------------------ CarBiz Inc. disclosed that its Illinois locations have begun full operation of sales and collections. CarBiz will operate six car stores across Illinois in East Peoria, Moline, Loves Park, Rockford, Pekin and Dekalb. The five remaining states are Iowa, Illinois, Indiana, Nebraska and Oklahoma. This marks the third state to receive their dealer license in three weeks after the company made similar statements in Ohio and Kentucky. CarBiz CEO Carl Ritter expects the remaining facilities to be operational very soon. "We are excited about the opportunity as our plan is starting to take shape," he said. Headquartered in Sarasota, Florida, CarBiz Inc. (OTC BB: CBZFF.OB) -- http://www.carbiz.com/-- provides software, training and consulting solutions to the United States automotive industry. CarBiz's suite of business solutions includes dealer software products focused on the "buy-here pay-here", sub-prime finance and automotive accounting markets. CarBiz also operates "buy-here pay-here" dealerships in Florida through its CarBiz Auto Credit division that are wholly owned or joint venture companies. Going Concern Doubt Christopher, Smith, Leonard, Bristow & Stanell P.A., in Sarasota, Florida, expressed substantial doubt about Carbiz Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Jan. 31, 2007, and 2006. The auditing firm pointed to the company's recurring losses from operations and net capital deficiency. At July 31, 2007, the company's balance sheet showed total assets of $1.8 million and total liabilities of $8.2 million, resulting to a total shareholders' deficit of $6.4 million. CD 2007-CD5: Fitch Assigns 'B-' Rating on $2.617 Million Certs. --------------------------------------------------------------- Fitch has rated CD 2007-CD5, commercial mortgage pass-through certificates as: -- $42,300,000 class A-1 'AAA'; -- $88,500,000 Class A-2 'AAA'; -- $39,400,000 Class A-3 'AAA'; -- $52,000,000 Class A-AB 'AAA'; -- $958,880,000 Class A-4 'AAA'; -- $284,848,000 Class A-1A 'AAA'; -- $2,039,879,000 Class XP (notional amount and interest only)'AAA'; -- $168,726,000 Class AM 'AAA'; -- $40,693,000 Class A-MA 'AAA'; -- $111,780,000 Class AJ 'AAA'; -- $26,959,000 Class A-JA 'AAA'; -- $2,094,183,816 Class XS (notional amount and interest only)'AAA'; -- $20,942,000 Class B 'AA+'; -- $20,942,000 Class C 'AA'; -- $20,942,000 Class D 'AA-'; -- $18,324,000 Class E 'A+'; -- $18,324,000 Class F 'A'; -- $20,942,000 Class G 'A-'; -- $23,559,000 Class H 'BBB+'; -- $23,560,000 Class J 'BBB'; -- $20,942,000 Class K 'BBB-'; -- $26,177,000 Class L 'BB+'; -- $7,853,000 Class M 'BB'; -- $5,236,000 Class N 'BB-'; -- $5,235,000 Class O 'B+'; -- $5,236,000 Class P 'B'; -- $2,617,000 Class Q 'B-'. The $39,266,816 class S is not rated by Fitch Classes A-1, A-2, A-3, A-AB, A-4, A-1A, XP, AM, A-MA, AJ, A-JA, B and C are offered publicly, while classes XS, D, E, F, G, H, J, K, L, M, N, O, P, Q and S are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 161 fixed rate loans having an aggregate principal balance of approximately $2,094,183,817, as of the cutoff date. CDC MORTGAGE: Moody's Cuts Certificate Ratings on Eight Deals ------------------------------------------------------------- Moody's Investors Service has downgraded certain certificates from eight deals issued by CDC Mortgage Capital Trust in 2001, 2002 and 2003. The actions are based on the analysis of credit enhancement provided by subordination, overcollateralization and excess spread relative to expected losses. All eight transactions are backed by first and second-lien fixed and adjustable subprime mortgage loans and have pool factors lower than 13%. The release of subordination due to stepdown and continuous losses have left all deals with thin credit enhancement level and made them more vulnerable to pool deterioration in the tail ends of the deals' lives. Moody's expects that all transactions will continue to see deteriorating performance due to the high pipelines. As of October 2007, severely delinquent loans (defined as loans over 60 days delinquent, in bankruptcy, foreclosure and REO) were 49.91%, 31.88%, 40.43%, 27.93%, 20.26%, 29.99%, 28.83%, and 23.07% respectively of CDC Mortgage Capital Trust series 2001-HE1, 2002- HE1, 2002-HE2, 2002-HE3, 2003-HE1, 2003-HE2, 2003-HE3, and 2003- HE4. The complete rating actions are: Issuer: CDC Mortgage Capital Trust Downgrade: -- Series 2001-HE1, Class M-2, downgraded to Ba2 from A2; -- Series 2001-HE1, Class B, downgraded to C from Caa2; -- Series 2002-HE1, Class M, downgraded to Baa3 from A2; -- Series 2002-HE1, Class B, downgraded to C from Caa1; -- Series 2002-HE2, Class M-1, downgraded to A3 from Aa2; -- Series 2002-HE2, Class M-2, downgraded to Ba3 from A2; -- Series 2002-HE2, Class B-1, downgraded to Ca from B2; -- Series 2002-HE3, Class M-1, downgraded to A1 from Aa2; -- Series 2002-HE3, Class M-2, downgraded to Ba3 from Baa2; -- Series 2002-HE3, Class B-1, downgraded to C from Ca; -- Series 2003-HE1, Class M-1, downgraded to A1 from Aa2; -- Series 2003-HE1, Class M-2, downgraded to Baa2 from A2; -- Series 2003-HE1, Class M-3, downgraded to Ba2 from A3; -- Series 2003-HE1, Class B-1, downgraded to C from Caa1; -- Series 2003-HE2, Class M-1, downgraded to A3 from Aa2; -- Series 2003-HE2, Class M-2, downgraded to Ba3 from A2; -- Series 2003-HE2, Class M-3, downgraded to B2 from A3; -- Series 2003-HE2, Class B-1, downgraded to Caa1 from Baa1 -- Series 2003-HE2, Class B-2, downgraded to Ca from Ba1; -- Series 2003-HE2, Class B-3, downgraded to C from B1; -- Series 2003-HE3, Class M-1, downgraded to A3 from Aa2; -- Series 2003-HE3, Class M-2, downgraded to Ba3 from A2; -- Series 2003-HE3, Class M-3, downgraded to B1 from A3; -- Series 2003-HE3, Class B-1, downgraded to B2 from Baa3; -- Series 2003-HE3, Class B-2, downgraded to Caa1 from B1; -- Series 2003-HE3, Class B-3, downgraded to C from Ca; -- Series 2003-HE4, Class M-1, downgraded to A1 from Aa2; -- Series 2003-HE4, Class M-2, downgraded to Baa2 from A2; -- Series 2003-HE4, Class M-3, downgraded to Ba1 from A3; -- Series 2003-HE4, Class B-1, downgraded to B3 from Baa1; -- Series 2003-HE4, Class B-2, downgraded to Caa1 from Ba2; -- Series 2003-HE4, Class B-3, downgraded to C from B1. CDW CORPORATION: $7.55 Bil. Refinancing Cues Moody's B3 Rating -------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to CDW Corporation (corporate family rating of B3 and speculative grade liquidity rating of SGL-2) with a stable outlook. The ratings reflect the approximate $7.55 billion refinancing of CDW's buyout by private equity sponsors, Madison Dearborn Partners, LLC and Providence Equity Partners Inc., in a highly leveraged transaction that closed on Oct. 12, 2007. CDW is a direct marketer and value- added provider of information technology and related services. Net proceeds from a $2.2 billion senior secured term loan and $800 million senior secured ABL revolver ($500 million drawn at refinancing) together with $1.19 billion senior notes ($890 million cash pay plus $300 million PIK toggle) and $750 million senior subordinated notes will be used to refinance the transaction, as well as a $2.3 billion cash equity investment from the equity sponsors. The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as advised to Moody's. These first time ratings/assessments were assigned: -- Corporate Family Rating -- B3 -- Probability of Default Rating -- B3 -- $2,200 Million Senior Secured Term Loan due 2014 -- B2 (LGD-3, 38%) -- $ 890 Million Senior Unsecured Notes due 2015 -- Caa1 (LGD-4, 63%) -- $300 Million Senior Unsecured PIK Toggle Notes due 2015 -- Caa1 (LGD-4, 63%) -- $750 Million Senior Subordinated Notes due 2017 -- Caa2 (LGD-6, 93%) -- Speculative Grade Liquidity Rating -- SGL-2 CDW's B3 corporate family rating reflects the company's aggressive use of debt to finance the LBO at a purchase price multiple of 12.4x EBITDA (twelve months ended Sept. 30, 2007) at a time when the current business cycle is entering its late stage. CDW's high financial leverage of 8.4x debt to EBITDA (Moody's adjusted), weak credit protection measures (pro forma EBITDA interest coverage of 1.3x) as well as liberal financial covenants following the recapitalization are negative factors weighing heavily on the rating. These concerns are further magnified by modest operating margins near 6% (though higher than CDW's distributor peers), which have contracted in recent years, despite gross margin improvement, because of increased expense associated with the build-out of CDW's sales force and investment in other highly trained specialists to support an ongoing focus on solutions, which Moody's expects will continue. As a result of the variable nature of the company's sales compensation structure, Moody's believes operating margin expansion is constrained, which limits improvement in interest coverage and constrains the rating at the B3 level. Additional factors captured in the CFR include CDW's: (i) significant vendor concentration, with HP accounting for 26% of 2006 net sales, and 30% of 2006 purchases sourced from Tech Data and Ingram Micro, its two largest distributors; (ii) exposure to commercial end markets, which could experience a pullback if the U.S. economy exhibits further weakness; (iii) single-digit organic corporate sector growth; (iv) CDW's lack of exposure to large international markets experiencing high growth rates; (v) potential further acquisition spending that could pause de- leveraging; and (vi) exposure to the cyclical IT hardware, software and services market. At the same time, the B3 rating also considers CDW's position as a leading direct marketer of IT solutions with a history of market share gains; the company's visible revenue base given its success in accurately analyzing customer buying patterns and responding to changing client needs; and its diversified customer base across market verticals with strong double-digit public sector sales growth. The rating also reflects prospects for continued market share gains given the company's scale, broad product offering relative to smaller VARs and potential migration of business to CDW as vendors consolidate channel partners and CDW improves penetration into customer accounts following the corporate sales force realignment. In addition, the rating recognizes the potential for continued gross margin expansion through up-sell opportunities of value-added customized configurations and complex technology solutions into the existing client base; a track record of consistent operating profitability; and historic earnings stability and positive free cash flow generation even during industry downturns and recessionary episodes. With $4.6 billion gross debt, CDW is expected to be moderately free cash flow positive over the near term. As such, Moody's does not expect the company to substantially repay debt over the next 12 months. The stable rating outlook reflects the potential for modest improvement in financial leverage and interest coverage metrics; and expectations for the continuation of stable vendor/customer relationships and operating margin stability. The SGL-2 speculative grade liquidity rating recognizes the company's good liquidity provided by its partially drawn secured revolving credit facility, modest free cash flow generation, cash balance under $100 million and lack of near-term debt maturities following the LBO recapitalization. CDW Corporation, headquartered in Vernon Hills, Illinois, is one of the largest providers of multi-branded information technology products and value-added services in the U.S. and Canada. Revenues and EBITDA for the twelve months ended September 30, 2007 were $7.8 billion and $559 million (Moody's adjusted), respectively. CENTRAL GARDEN: Weak Performance Cues Moody's Ratings Downgrades ---------------------------------------------------------------- Moody's Investors Service lowered Central Garden & Pet Company's corporate family and probability of default ratings to B2 from B1. Moody's also lowered the rating on the company's senior subordinated notes to Caa1 from B3 and the rating on its secured credit facilities to B1 from Ba3. The downgrade reflects the company's weak operating performance for the quarter and fiscal year-ended Sept. 29, 2007 that has resulted in elevated borrowing levels and deteriorated credit metrics. Debt/EBITDA increased to 4.8 times for fiscal 2007 (including Moody's standard analytical adjustments) from 3.8 times the same period last year. The downgrade also considers significant ongoing business challenges that will pressure fiscal 2008 operating performance, including continued volatility in grain prices, elevated garden inventory levels, and soft demand in the aquatics category. The company has indicated that the quarter ended December 2007 will be much weaker than the same period last year. As such, Moody's has concerns over the company's ability to comply with the financial covenants governing its credit facilities (the company already amended its financial covenants twice in fiscal 2007). Central's weakened operating performance also heightens Moody's concern over the company's reduction in financial cushion to absorb further commodity volatility or adverse weather conditions which impact its markets. The rating outlook was revised to negative from stable. These ratings were lowered: -- Corporate family rating to B2 from B1; -- Probability of default rating to B2 from B1; -- $150 million senior subordinated notes due 2013 to Caa1 (LGD5, 88%) from B3 (LGD5, 88%); -- $350 million senior secured revolving credit facility due 2011 to B1 (LGD3, 39%) from Ba3 (LGD3, 39%); -- $300 million senior secured term loan due 2012 to B1 (LGD3, 39%) from Ba3 (LGD3, 39%). Central's B2 corporate family rating recognizes the company's weakened financial profile, its moderately high leverage, the susceptibility of its earnings and cash flow to regional weather conditions, exposure to volatile grain costs, the highly seasonal nature of the business, and continued acquisition risk as it seeks to expand its portfolio of proprietary brands. The rating also incorporates the challenges posed by the company's powerful retail customers and the significant competition inherent in the highly fragmented lawn & garden and pet supplies industries. The rating is supported by Central's diversified portfolio of branded products with leading positions in niche markets, the relative attractiveness of its end-markets, and its favorable competitive position as a player of scale in highly fragmented industries. The rating also recognizes Central's long-standing relationships with key retailers, only moderate customer concentration, the good performance of the pet segment, and its historical success at organically growing branded product sales. The negative outlook reflects Moody's concern over continued covenant compliance and uncertainty over the timing and strength of a potential recovery in Central's earnings and cash flows given ongoing business challenges. Central Garden & Pet Company, located in Walnut Creek, California, manufactures an array of branded lawn and garden and pet supply products, and operates as a distributor for other manufacturers' products in both of these segments. Sales were $1.7 billion for the twelve months ended September 29, 2007. CHESAPEAKE SHORES: U.S. Trustee Wants Case Converted to Chapter 7 ----------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, asks the U.S. Bankruptcy Court for the District of Delaware to convert the Chapter 11 case of Chesapeake Shores Development Inc. into a Chapter 7 liquidation proceeding, or in the alternative, dismiss the Debtor's bankruptcy case. The U.S. Trustee presents to the Court three reasons for converting or dismissing the Debtor's single-asset real estate case: 1) The Debtor is unable to pay administrative expenses as it has no cash or source of income. It intends to sell its only asset and thus does not intend to "rehabilitate" its business, thus constituting a continuing loss to the estate. 2) The Debtor has failed to maintain property liability insurance coverage, which subjects the estate to potential liability for any injuries that occur on the property, and constitutes cause for conversion or dismissal under Section 1112(b) of the U.S. Bankruptcy Code. 3) The Trustee alleges that the main purpose of the Debtor's filing was to stay the trial of a state court action, remove it to federal court and seek to transfer venue to this Court. The U.S. Trustee elaborates that Robert and Geraldine Guyon sought to liquidate their claim arising out of a lawsuit against the Debtor in June 2005. The state court action, which seeks a $2.1 million judgment for causes of action for fraud and misrepresentation of the Debtor's president, was scheduled to go to trial on Sept. 26, 2007, but was stayed by the Debtor's filing for bankruptcy. The U.S. Trustee contends that the action by a party taking advantage of the automatic stay and the ability to remove and transfer litigation to federal court suggest that the Debtor's bankruptcy filing was not in good faith. The U.S. Trustee adds that administrative expenses including real estate taxes and attorney's fees have not been paid and there is no cash or operating income from which they can be paid. About Chesapeake Shores Washington-based Chesapeake Shores Development, Inc. filed for Chapter 11 bankruptcy protection on Sept. 19, 2007 (Bankr. D. Del. Case No. 07-11354). Brett D. Fallon, Esq., at Morris James, L.L.P., represents the Debtor in its restructuring efforts. The Debtor chose Todd E. Duffy, Esq., at Duffy & Atkins LLP, as its co-counsel. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for bankruptcy, it listed assets and liabilities between $1 million and $100 million. CHEYENNE ENERGY: Inks Forbearance Agreement with its Lender ----------------------------------------------------------- Cheyenne Energy Inc. has entered into a forbearance agreement with its lender. The lender has agreed to forbear from exercising certain or all of its rights and remedies available while a new forbearance agreement is put in place. This new agreement is expected to expire on Jan. 31, 2008, and will still be finalized. In the past, the company had breached its requirement to maintain a working capital of 1:1 ratio. At that time, it had received a waiver from the Lender with respect to this breach. This waiver has not been granted since March 31, 2007, quarter end. The forbearance agreement had originally expired on Oct. 31, 2007. Under the terms of the Forbearance Agreement, the company acknowledged that: -- it had defaulted on its working capital ratio; -- it had failed to reduce its operating loan availability on a monthly basis; -- the amount of the company's advances exceed the amount of the company's lending base as determined by the Lender; and -- there has been a material adverse change in the financial condition of the company due to some registration of liens on its well at location 14-14-097-20W5. The Forbearance Agreement provides that the company will fully cooperate with the lender in connection with any efforts to sell or market the current assets. This Forbearance Agreement will allow the company to continue its operations while both the company and its lender explore strategic alternatives. The company has also cancelled the flow-through share private placement, disclosed on Aug. 20, 2007, and amended on Oct. 9, 2007, due to unfavorable market conditions and internal restructuring efforts. Further statements on financings will be made when the company has determined its next steps. Restructuring Specialist At this time, a restructuring specialist along with CB Securities Inc. have been hired to assist in determining alternative strategies to deal with the company's lender and creditors. Until these issues have been resolved, there will be no further activity in the Hawk area of northern Alberta. About Cheyenne Energy Inc. Headquartered in Calgary, Alberta, Cheyenne Energy Inc. (CVE:CHY) -- http://www.cheyenneenergy.com/-- is a public energy company engaged in the exploration for and development and production of crude oil and natural gas in western Canada. CHRYSLER LLC: Likely to Lose $1 Billion in 2007, Sales Exec Says ---------------------------------------------------------------- Steve Landry, Chrysler LLC's executive vice president of North American sales, revealed that the company expects to lose $1 billion this year in costs, according to Andrea MacDonald of The Daily News. Mr. Landry, the paper reports, told marketing and business students of Saint Mary's University in Halifax, Nova Scotia, that Chrysler's 2007 revenue is expected at $64 billion and costs at around $65 billion. The Daily News relates that Mr. Landry recounted Chrysler's business aim to recover costs next year and to yield a huge profit in 2009 and 2010, slashing about 8 models from its lineup. Mr. Landry adds that Chrysler has plans to launch a Chrysler Aspen- Dodge Durango hybrid to entice environment-concerned customers. The top sales executive came to the Halifax university to donate $100,000 for two yearly scholarships from Chrysler Canada, according to The Daily News. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on Nov. 12, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Chrysler LLC and DaimlerChrysler Financial Services Americas LLC and removed it from CreditWatch with positive implications, where it was placed Sept. 26, 2007. The outlook is negative. CITIGROUP MORTGAGE: Fitch Holds 'B' Ratings on Nine Classes ----------------------------------------------------------- Fitch Ratings has taken rating actions on these Citigroup Mortgage Loan Trust Issue: Series 2003-1 Pool S -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AA'; -- Class B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-1 Pool W -- Class W-A affirmed at 'AAA'; -- Class W-B1 affirmed at 'AA'; -- Class W-B2 affirmed at 'A'; -- Class W-B3 affirmed at 'BBB'; -- Class W-B4 affirmed at 'BB'; -- Class W-B5 affirmed at 'B'. Series 2003-UST1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-1 -- Class A affirmed at 'AAA'. Series 2004-2 -- Class A affirmed at 'AAA'. Series 2004-HYB1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-HYB4 Pool H -- Class H-A affirmed at 'AAA'. Series 2004-HYB4 Pool W -- Class W-A affirmed at 'AAA'; -- Class 3-B1 affirmed at 'AA'; -- Class 3-B2 affirmed at 'A'; -- Class 3-B3 affirmed at 'BBB'; -- Class 3-B4 affirmed at 'BB'; -- Class 3-B5 affirmed at 'B'. Series 2004-NCM1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2004-UST1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. Series 2005-10 Group 2 -- Class II-A affirmed at 'AAA'; -- Class II-B1 affirmed at 'AA'; -- Class II-B2 affirmed at 'A'; -- Class II-B3 affirmed at 'BBB'; -- Class II-B4 affirmed at 'BB'; -- Class II-B5 affirmed at 'B'. Series 2005-11 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA+'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The mortgage loans consist of fixed rate- and adjustable-rate fixed-rate mortgages extended to prime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties. As of the October distribution date, the transactions are 20 to 47 months seasoned and the pool factors range from 16% (2003-1 Pool W) to 81% (2005-11). The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $2.455 billion of outstanding certificates. CLASSICSTAR LLC: Wants Henry Watz to Provide Litigation Services ---------------------------------------------------------------- ClassicStar LLC seeks authority from the U.S. Bankruptcy Court for the Eastern District of Kentucky to expand the scope of Henry Watz Gardner Sellars & Gardner PLLC's engagement to include litigation services. James W. Gardner, Esq., an attorney at Henry Watz, relates that in mid-2006, a dozen lawsuits were filed against the Debtor that arose from the Debtor's mare lease breeding program. In October 2007, the U.S. District Court for the Eastern District of Kentucky advised the Debtor that six or more actions pending against it will be heard under In Re ClassicStar Mare Lease Litigation, Civil Action No. 5:04-cv-353. Mr. Gardner explains that Henry Watz's scope of representation did not specifically include litigation or arbitration. Mr. Gardner says that it is in the best interest of the Debtor to have Henry Watz represent the Debtor in this litigation proceeding. As reported in the Troubled Company Reporter on Oct. 8, 2007, the firm's professionals charge these rates for their services: Professionals Designation Hourly Rates ------------- ----------- ------------ James W. Garner, Esq. Member $295 Kara Read Marino, Esq. Associate $225 Genia Denisio Paraprofessional $100 Brenda Bowen Paraprofessional $100 Desgination Hourly Rates ----------- ------------ Member $250-$295 Associates $125-$225 Paraprofessionals $80-$120 James W. Gardner, Esq., a member of the firm, assured the Court that the firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person"�as that term is defined in Section 101(14) of the