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/raid1/www/Hosts/bankrupt/TCR_Public/071211.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 11, 2007, Vol. 11, No. 293 Headlines A21 INC: Sept. 30 Balance Sheet Upside-Down by $258,000 ACCREDITED MORTGAGE: Moody's Cuts Rating on Cl. M-9 Loan to Ba3 ADVANCED MARKETING: Third Amended Plan Effective December 4 AES CORP: Somerset Town Seeks Judge's Disqualification in Lawsuit AMERICAN HOME: Asks Feb. 1 Extension for Filing Adversary Action AMERICAN HOME: Can Pay Up to $9 Mil. in Incentives to Sr. Managers AMERICAN HOME: FGIC Wants Stay Lifted to Transfer Servicing Rights AMERICAN RACING: Posts $1,036,525 Net Loss in Third Quarter ANTARES MEZZ: Weaver Hill to Sell Antares Mezz Affiliate on Jan. 3 ASSOCIATES MANUFACTURED: Fitch Retains Junk Rating on Class B-2 ATLANTIC WINE: Posts $92,797 Net Loss in Second Quarter BANCO DEL CARIBE: S&P Cuts Issuer Default Rating to B from B+ BEARINGPOINT: Moody's Confirms B2 Corporate Family Rating BIG A: Taps Lewis R. Landau as Co-General Bankruptcy Counsel BIG A: Selects Steven R. Fox Law Offices as Co-Counsel BREK ENERGY: Posts $265,773 Net Loss in Third Quarter BROOKLYN STRUCTURED: S&P Puts 'BB' Rating Under Negative Watch BROTMAN MEDICAL: Court Gives Final OK to Access $19.8MM Financing C-BASS MORTGAGE: Moody's Downgrades Ratings on 53 Tranches CAM COMMERCIAL: S&P Affirms 'B-' Rating on Class N Certificates CANYON CAPITAL: Case Summary & Two Largest Unsecured Creditors CASTLETON GROUP: Hearing on Appeal vs. N.C. Insurance Set Today CDC MORTGAGE: S&P Assigns Default Rating on Class B Certificates CENTRAL MEMPHIS REGIONAL: Sale of GECC Collateral Set for Dec. 18 CHASE MORTGAGE: Moody's Assigns B2 Rating on Class B-4 Certs. CHASE MORTGAGE: Moody's Assigns Ba2 Rating on Cl. B-3 Certs. CHINA DIGITAL: Posts $72,361 Net Loss in Third Quarter CHRYSLER LLC: Top Spokesman Quits Spurring Corporate Realignment CITIGROUP MORTGAGE: Moody's Lowers Ratings on 52 Tranches CJ KELLEY: Case Summary & 20 Largest Unsecured Creditors CLAYTON HOLDINGS: Poor Performance Cues Moody's to Cut Ratings COILPLUS JACKSON: To Be Put Into Liquidation by Mitsubishi COMPUSA: Acquired by Gordon Brothers; Winds Down Retail Operations CROSS READY: Case Summary & 22 Largest Unsecured Creditors CYGNAL TECH: Canadian Court Extends Stay Period Until January 31 DB KEY: Settlement Plan Sets Philrich as Stalking Horse Bidder DEL LABORATORIES: Coty and Bella Merger Deal Cues Moody's Review DELPHI CORP: Sr. Noteholders Balk at Revised Disclosure Statement DELPHI CORP: Disclosure Statement is Inadequate, Wilmington Says DELPHI CORP: Revised Plan Disregards ERISA Plaintiffs' Concerns EL PASO: Board OKs 25% Shareholders to Call Special Meetings ENERSYS INC: To Sell 5,000,000 Common Shares to Jefferies ENTERCOM COMMS: Rising Debt Leverage Cues S&P to Revise Outlook ENVIROKARE TECH: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil. FAYETTE MRI: To Pay GECC Debt Through December 18 Asset Sale GE COMMERCIAL: S&P Holds Low-B Ratings on Six Cert. Classes GENERAL MOTORS: Canadian Arm to Idle Oshawa Truck Plant in January GENERAL MOTORS: November 2007 Sales in Canada Down 10.2% GENESCO INC: Faces Class Action Suit in Tennessee Dist. Court GOODYEAR TIRE: Forms New Strategic Business Unit GWENDOLYN CHAMBLISS: Case Summary & 12 Largest Unsecured Creditors HELIX ENERGY: S&P Rates $500MM Proposed Fixed-Rate Notes at B+ HEREFORD & HOPS: Voluntary Chapter 11 Case Summary HIGHRIDGE ABS: S&P Puts 'BB' Rating Under Negative Watch HJ HEINZ: Moody's Revises Outlook to Stable from Negative HSI ASSET: Moody's Lowers Ratings on 29 Tranches HURLEY MEDICAL: Moody's Holds Ba1 Rating and Revises Outlook IMAX CORP: Inks Deal with AMC to Install 100 IMAX(R) Systems INGLESIDE GO DEBT: Good Performance Cues S&P's Positive Outlook INGLESIDE WATERWORKS: S&P Revises Outlook to Pos. from Stable INPHOHIC INC: Court Approves DLA Piper as Bankruptcy Counsel INPHOHIC INC: Taps Bayard Firm as Bankruptcy Co-Counsel INPHONIC INC: U.S. Trustee Appoints Five Member Creditors Panel INTERPLAY ENT: Sept. 30 Balance Sheet Upside-Down by $1,810,000 INTREPID TECH: Posts $695,694 Net Loss in 1st Qtr. Ended Sept. 30 J&T TRANSPORTATION: Case Summary & 18 Largest Unsecured Creditors JDJ WILTON: Case Summary & 16 Largest Unsecured Creditors JOHN FRUHMORGEN: Case Summary & Eight Largest Unsecured Creditors JP MORGAN: S&P Assigns Low-B Ratings on Six Certificate Classes KMART FUNDING: Fitch Retains Junk Ratings on $26.5MM Bonds KRISPY KREME: Posts $798,000 Net Loss in Quarter Ended October 28 LEHMAN MORTGAGE: Fitch Downgrades Ratings on $26.7MM Certs. LPATH INC: Posts $4.6 Million Net Loss in Third Quarter MARK IV: S&P Retains 'B' Rating Under Negative CreditWatch MARINER ENERGY: Solid Performance Cues S&P to Lift Rating to B+ MDWERKS INC: Sept. 30 Balance Sheet Upside-Down by $962,602 MECHANICAL PRODUCTS: Lender Selling Assets at December 21 Auction MGM MIRAGE: Board Authorizes 20 Million Common Stock Repurchase MORGAN STANLEY: S&P Cuts Rating on Class A-6 Notes to B- from B+ MORGAN STANLEY: S&P Lowers Rating on Class A-10 Notes to B- from B MORGAN STANLEY: S&P Places Ratings Under Negative CreditWatch MSB OF DESTIN: Section 341(a) Meeting Slated for December 20 MTI GLOBAL: Inks Forbearance Deal with its Principal Lender MUSICLAND HOLDING: Extends Plan Effective Date Until January 31 NABI BIOPHARMA: Completes Sale of Unit to Biotest AG for $185 Mil. NABI BIOPHARMA: Board Approves $65 Mil. Share Repurchase Program NABI BIOPHARMA: $185MM Biotest Sale Cues S&P's Stable Outlook NEMASKET PARTNERS: Case Summary & Six Largest Unsecured Creditors NEPHROS INC: Sept. 30 Balance Sheet Upside-Down by $5.6 Million NEUTRON ENTERPRISES: Posts $2,256,162 Net Loss in Third Quarter NEW ORLEANS REGIONAL: Auctions Asset on Dec. 17 to Pay GECC Debt NEWPAGE CORP: Earns $16 Million in Third Quarter Ended Sept. 30 NEWPAGE CORP: Moody's Rates $1.6 Billion Secured Term Loan at Ba2 NEWPAGE CORP: S&P Rates Proposed $1.6 Billion Term Loan at BB- NEWSTAR TRUST: Fitch Affirms 'BB' Rating on $24.372MM Notes NORTH PARK VILLAGE: Voluntary Chapter 11 Case Summary NORTHWEST AIR: Won't Complete Midwest Acquisition by January 31 OCTANS III: S&P Places Ratings Under Negative CreditWatch PASQUAL CASINO: Greater Revenue Cues S&P to Lift Rating to BB- PATRIOT TAX: Stays Neutral on Peachtree Partners' Tender Offer PETSMART INC: Moody's Withdraws All Ratings for Business Reasons PHARMANET DEVELOPMENT: S&P Holds 'B+' Rating and Revises Outlook PHILIP GIBA: Case Summary & Ten Largest Unsecured Creditors PLAINS EXPORATION: Change of Control Offers for Pogo's Notes End PREMIER PRODUCTS: Case Summary & 19 Largest Unsecured Creditors PYRAMIDS CHILD: Files for Chapter 11 Protection in New York QUALITY DISTRIBUTION: To Offer $50 Mil. of Senior Floating Notes QUALITY DISTRIBUTION: Boasso Funding Cues Moody's to Hold Ratings REAL ESTATE: Submits Schedules of Assets and Liabilities ROADHOUSE GRILL: Wants Unexpired Non-Residential Lease Rejected SAGITTARIUS CDO: Terminated Facility Cues Moody's to Cut Ratings SALANDER-O'REILLY: Sotheby's Withdraws Offer to Auction Art Pieces SALLY HOLDINGS: Moody's Affirms B2 Rating and Changes Outlook SARM: Fitch Lowers Ratings on $149.6 Million Certificates SASCO MORTGAGE: S&P Junks Rating on Class B Certificates SCOTIABANK SUD: Moody's Withdraws All Ratings at Issuer's Request SEAN EUGENE O'CARROLL: Voluntary Chapter 11 Case Summary SEARS ROEBUCK: S&P Cuts Rating on $60.19MM Certs. to BB from BB+ SMART ENERGY: Posts $1,705,949 Net Loss in Third Quarter SOUTHAVEN POWER: Court Extends Plan Filing Period to January 15 SPX CORP: Considers Offering $500 Mil. of Senior Unsecured Notes SPX CORP: Fitch Rates Planned $500MM Sr. Unsecured Notes at BB+ SPX CORP: S&P Rates $500 Million Sr. Unsecured Notes at BB STEWART & STEVENSON: S&P Removes CreditWatch on 'CCC+' Rating STRIKEFORCE TECH: Sept. 30 Balance Sheet Upside-Down by $4,124,507 STRUCTURAL INVESTMENT: Involuntary Chapter 11 Case Summary STRUCTURED ASSET: S&P Junks Rating on Class B-4 Certificates SVI MEDIA INC: Voluntary Chapter 11 Case Summary TECO ENERGY: Completes $405 Million Sale of TECO Transport TECO ENERGY: Extends Expiration Date of Exchange Offers THORPE INSULATION: Seeks Injunctive Relief from Coverage Suit THORPE INSULATION: Three Insurers Wants Ch. 11 Trustee Appointed TITUS RANCH EAST: Case Summary & 12 Largest Unsecured Creditors UAL CORP: Board Approves $250 Million Distribution to Shareholders UAL CORP: Unions Furious Over Payouts UNISYS CORP: Prices Offering of $210 Mil. of 12.5% Senior Notes UNITED AIRLINES: Planned Pay Out Does Not Affect Fitch's Rating US STEEL: Prices $500 Million Offering of 7% Senior Notes UVUMOBILE INC: Sept. 30 Balance Sheet Upside-Down by $2,553,043 VALLEY ADVANCED: To Auction GECC Collateral on December 17 WATERFORD EQUITIES: Ombudsman Taps Schottenstein Zox as Counsel WATERFORD EQUITIES: Taps Houlihan Lokey as Financial Advisor WATERFORD EQUITIES: U.S. Trustee Appoints 9-Member Creditors Panel WILD WEST: Judge Nugent Directs Series of Auction to Begin Today WILLIAMS COMPANIES: S&P Lifts Credit Rating to BBB- from BB+ XM SATELLITE: Still Awaits FCC and DOJ Approval on Sirius Merger * Gordon Brothers Acquires CompUSA & Winds Down Retail Operations * Fitch Expects 2008 Will Be An Anxious Year for Paper Industry * S&P Lowers Ratings on 101 Tranches from 24 US Hybrid CDO * S&P Takes Rating Actions on Various Note Classes * S&P Took Various Rating Actions on Insurance Companies * Large Companies with Insolvent Balance Sheets ********* A21 INC: Sept. 30 Balance Sheet Upside-Down by $258,000 ------------------------------------------------------- a21 Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $30.6 million in total assets, $29.8 million in total liabilities, and $1.1 million in minority interest, resulting in a $258,000 total stockholders' deficit. The company reported a net loss of $1.4 million on total revenue of $5.4 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.0 million on total revenue of $5.9 million in the same period in 2006. Total cost of sales for the third quarter of 2007 were $2.2 million, or 40.4% of revenues, compared to 38.4% of revenues for the same prior year period. Third quarter 2007 selling, general, and administrative expenses were reduced by $163,000 compared to the same prior year period through a continued focus on expense reduction. In the third quarter of 2007, the company recognized a $315,000 extraordinary charge for organizational consolidation and restructuring expenses. The third quarter 2007 operating loss was $1.0 million including restructuring expense of $315,000, compared to a loss of $614,000 for the same prior year period. Net loss for the quarter reflects lower revenues and margins along with the extraordinary restructuring charge. At Sept. 30, 2007, the company's cash position was $2.8 million and working capital $2.6 million with no short-term debt obligations. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2632 About a21 Inc. Based in Jacksonville, Fla., a21 Inc.(OTC BB: ATWO) -- http://www.a21group.com/-- is a leading online digital content company. Through SuperStock and ArtSelect, a21 delivers high quality images, art framing, and exceptional customer service. ACCREDITED MORTGAGE: Moody's Cuts Rating on Cl. M-9 Loan to Ba3 --------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 3 tranches from Accredited Mortgage Loan Trust 2007-1. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: Accredited Mortgage Loan Trust 2007-1 -- Cl. M-7, Downgraded to Baa2, previously Baa1, -- Cl. M-8, Downgraded to Ba1, previously Baa2, -- Cl. M-9, Downgraded to Ba3, previously Baa3. ADVANCED MARKETING: Third Amended Plan Effective December 4 ----------------------------------------------------------- Advanced Marketing Services Inc., Publishers Group Incorporated and Publishers Group West Incorporated formally emerged from Chapter 11 upon declaration of the U.S. Bankruptcy Court for the District of Delaware the effectiveness of their Third Amended Joint Plan of Liquidation on Dec. 4, 2007. The Liquidating Plan, which was co-filed by the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases, was confirmed by the Court on November 15, finding that it satisfies all the requirements under Section 1129(a) of the Bankruptcy Code and complies with other applicable provisions. Curtis R. Smith, the newly appointed Plan Administrator pursuant to the Confirmation Order, states that creditors holding claims against the Debtors' estates will be entitled to receive distributions in accordance with the terms of the Plan, to the extent that the claims are allowed. Any request for allowance of Administrative Claims will be filed no later than January 3, 2008, with objections to be filed on or before February 4. In addition, all professional fee requests must be filed and served on the Debtors' counsel for final allowance and reimbursement on or before January 18. Furthermore, any entity asserting a claim against the Debtors' estates arising from the rejection of the entity's executory contract or unexpired lease with the Debtors must file a proof of claim by January 3, to be sent to Epiq Bankruptcy Solutions, LLC, 757 Third Avenue, 3rd Floor, in New York. Unless otherwise ordered by the Court, all Claims arising from the rejection of executory contracts or unexpired leases will be treated as Unsecured Claims against the Reorganized Debtors, as the case may be under the Plan. On the Effective Date, the Creditors Committee will dissolve automatically, and its members will be deemed relieved of all of their prospective duties and obligations in connection with the Reorganized Debtors' cases or the Plan and its implementation. In addition, the Creditors Committee will be reconstituted as the Post-Confirmation Committee, with these members: * Random House, Inc., * Hachette Book Group USA, Inc., * Harper Collins Publishers, * Penguin Group, and * Workman Publishing Co. The bylaws and and the fiduciary duties adopted by the Creditors Committee before the Effective Date will apply to the Post- Confirmation Committee. Also, the new committee will have the right to terminate the Plan Administrator with or without cause and to then appoint a successor Plan Administrator. About Advanced Marketing Based in San Diego, Calif., Advanced Marketing Services, Inc. -- http://www.advmkt.com/-- provides customized merchandising, wholesaling, distribution and publishing services, currently primarily to the book industry. The company has operations in the U.S., Mexico, the United Kingdom and Australia and employs approximately 1,200 people Worldwide. The company and its two affiliates, Publishers Group Incorporated and Publishers Group West Incorporated filed for chapter 11 protection on Dec. 29, 2006 (Bankr. D. Del. Case Nos. 06-11480 through 06-11482). Suzzanne S. Uhland, Esq., Austin K. Barron, Esq., Alexandra B. Feldman, Esq., O'Melveny & Myers, LLP, represent the Debtors as Lead Counsel. Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors as Local Counsel. Lowenstein Sandler PC represents the Official Committee of Unsecured Creditors. In schedules filed with the Court, Advanced Marketing disclosed total assets of $213,384,791 and total debts of $216,608,357. Publishers Group West disclosed total assets of $39,699,451 and total debts of $83,272,493. Publishers Group Inc. disclosed zero assets but $41,514,348 in liabilities. On Aug. 24, 2007, the Debtors' exclusive period to file a chapter 11 plan expired. On the same date, the Debtors and Creditors Committee filed a Plan & Disclosure Statement. On September 26, the Court approved the adequacy of the Disclosure Statement explaining the Second Amended Plan. On Nov. 13, 2007, the Debtors filed a Third Amended Plan and that plan was confirmed by the Court on November 15. (Advanced Marketing Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). AES CORP: Somerset Town Seeks Judge's Disqualification in Lawsuit ----------------------------------------------------------------- The Town of Somerset in New York has sought the disqualification of State Supreme Court Justice Richard C. Kloch Sr. from the lawsuits against the AES Corp.'s planned power plant, The Buffalo News reports. According to the paper, Somerset claimed that Judge Kloch made several statements in open court prejudging the result of the cases and "slamming the attorneys for the town." Shoemaker's partner, Robert S. Roberson, signed the motion. It asserts that Judge Kloch made several statements in court during hearings in June 2007 on the tax break that indicated that he had decided how he would rule on the power plant assessment case if he had to do so. The Buffalo News notes that as indicated by a courtroom transcript, Judge Kloch said on June 11, 2007, "Only one person really knows the value, and that's myself, and that's without the benefit of hearing all the proof." The judge also admitted, "I have a recurring nightmare, and the nightmare is that I have to, in fact, try these [assessment] proceedings." The Buffalo News says that the motion also claims that Judge Kloch made critical comments about Mr. Roberson and Shoemaker in court. The complainants commented to the Buffalo News, "Various actions and statements of Justice Kloch . . . were improper, establish actual impropriety as well as create the appearance of impropriety on behalf of Justice Kloch, [and] establish bias on the part of Justice Kloch toward the town and its attorneys." The report says that the motion demanding that Judge Kloch remove himself from the assessment cases would be heard before him on Jan. 24, 2007. Town Attorney Edwin J. Shoemaker told the Buffalo News that he is positive the complainants will win the appeal on the tax break case. The motion was "obviously without foundation, and highly ironic, because Judge Kloch has ruled against AES in every instance [in the assessment cases]," the Buffalo News says, citing Mark McNamara, the attorney for AES. Judge Kloch was citing other cases. "Since when does looking at legal precedent rise to the level of bias?" Mr. McNamara commented to the Buffalo News. The assessment suits were dismissed but could be reinstated once the town and the Barker Central School District succeed in their appeals on Judge Kloch's ruling that a tax break for the AES plant was legal, the Buffalo News states. AES Corporation -- http://www.aes.com/-- a global power company, operates in South America, Europe, Africa, Asia and the Caribbean countries. Generating 44,000 megawatts of electricity through 124 power facilities, the company delivers electricity through 15 distribution companies. AES has been in Eastern Europe for over ten years, since it acquired three power plants in Hungary in 1996. Currently, AES has two distribution companies in Ukraine, which serve 1.2 million customers and generation plants in the Czech Republic and Hungary. AES is also the leading company in biomass conversion in Hungary, generating 37% of the nation's total renewable generation in 2004. * * * As reported in the Troubled Company Reporter on Nov. 21, 2007, the AES Corp. (AES: B1 Corporate Family Rating) has completed its previously announced offer to purchase up to $1.24 billion of outstanding senior notes. While no ratings changed as a result, the LGD point estimate on its senior secured credit facilities were revised to LGD 1, 2%, from LGD 1, 3%, its second priority secured notes to LGD 3, 38% from LGD 3, 41% and its senior unsecured notes to LGD 4, 53% from LGD 4, 57%. AMERICAN HOME: Asks Feb. 1 Extension for Filing Adversary Action ---------------------------------------------------------------- American Home Mortgage Investment Corp., its debtor-affiliates, the Official Committee of Unsecured Creditors, and Bank of America, N.A., as administrative agent, have agreed to extend until Feb. 1, 2008, the deadline for the Creditors Committee to properly file an adversary proceeding or contested matter: -- challenging the amount, validity, enforceability, priority or extent of indebtedness or the prepetition secured parties' security interests in and liens upon the prepetition collateral; or -- asserting any claims or causes of action against the Prepetition Secured Parties on behalf of the Debtors' bankruptcy estates. BofA was the lead arranger and swingline lender of a prepetition financing for the Debtors. The Debtors' outstanding obligations under the subfacilities as of bankruptcy filing are: Warehouse Facility $608,300,000 Swingline Credit Facility - Working Capital Facility $50,000,000 Servicing Facility $446,250,000 ---------------- TOTAL $1,104,550,000 The Debtor had obtained authority from the U.S. Bankruptcy Court for the District of Delaware to use, on a final basis, the cash collateral securing the prepetition obligation until Nov. 16, 2007. BofA is represented in the Debtors' cases by Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP, in New York; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, in Wilmington, Delaware. 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. 21, 2007. (American Home Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Can Pay Up to $9 Mil. in Incentives to Sr. Managers ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has approved American Home Mortgage Investment Corp. and its debtor- affiliates' request to pay up to $9,000,000 in incentives to members of senior management. Under the 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. However, Judge Sontchi denied the request to withhold the names of senior managers and the bonuses they are entitled to. The exhibit containing the Plan participants' information discloses that the Debtors' chief financial officer, Stephen Hozie, will have a share of 12.65% of the minimum plan pool, which is equivalent to $461,650. Robert Johnson, the secondary markets executive, will get 6.77% amounting to $247,100. Michael Strauss, American Home's founder and chief executive, bypassed the bonus pool. The other Plan participants, whose shares were not disclosed, are: Name Designation ---- ----------- Cavaco, Christopher Chief information Officer Friedman, David EVP, Servicing Hall, David Construction Lending Risk Manager Horn, Alan General Counsel Kwaschyn, Dena Operations Loeffler, Richard Chief Administrative Officer Bernstein, Robert Controller Dickman, Steven SVP, Loan Administration Gonzalez, Carlos SVP, System & Network Gowins, Karen SVP, Dir. of Construction Lending Iorizzo, Robert SVP, System & Network Kalas, John Deputy General Counsel/Chief Compliance Officer Labuskes, Michael SVP, Mortgage Securitization Officer Larsen, Linda SVP, Correspondent Operations Munson, MaryAnn SVP, Director of Human Resources Neer, Tim SVP, Post Closing Operations Newsham, Michele SVP, Wholesale Operations Pino, Craig Chief Investment Officer & Treasurer Sakamoto, Simon Senior Portfolio Manager Trepanier, Thomas SVP, Director of Corp. Real Estate Voulo, Damian SVP, Capital Markets Risk Management Yeckley, Robert SVP, Retail Operations Jannotte, Robert VP, Strategic Initiatives Morelle, Marissa Senior Counsel Parrinelli, Nicholas Deputy Controller 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. 21, 2007. (American Home Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: FGIC Wants Stay Lifted to Transfer Servicing Rights ------------------------------------------------------------------ Financial Guaranty Insurance Company asks the U.S. Bankruptcy Court for the District of Delaware to modify the automatic stay to permit the termination and transition of the rights and responsibilities of American Home Mortgage Servicing Inc. and American Home Mortgage Acceptance Inc. as servicers and subservicer under certain home equity line of credit servicing agreements. Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, contends that FGIC is entitled to relief because, among other reasons: -- after the Debtors sell their mortgage loan servicing business to AH Mortgage Acquisition Co., Inc., the Debtors will have neither a source of funding nor the operational ability to service the HELOC mortgage loans under the HELOC Servicing Agreements; -- there is insufficient time for the Debtors to request any assumption or other transfer of the HELOC Servicing Agreements by separate request, while protecting the rights and interests of FGIC; and -- continuing defaults exist under the HELOC Servicing Agreements and the servicing quality of AHM Servicing and AHM Acceptance has deteriorated and continues to deteriorate, to the direct economic detriment of FGIC and the non-debtor parties to the HELOC Servicing Agreements. Although certain financing has allowed the Debtors to continue their Servicing Business, they do not have financing to support the servicing of the HELOC Mortgage Loans, Mr. Dehney points out. He says that the harm to FGIC and the Non-Debtor Parties in continuing the automatic stay outweighs any harm that may be suffered by the Debtors if the stay is lifted. Thus, FGIC asks the Court to: -- modify the automatic stay to permit FGIC and the Non-Debtor Parties to take all actions necessary to terminate AHM Servicing and AHM Acceptance as servicers and subservicer of the HELOC Mortgage Loans; and -- direct AHM Servicing, AHM Acceptance and the Debtors to: * transfer to GMAC Mortgage, LLC, all documents, files, records and data related to the HELOC Mortgage Loans; * cooperate in connection with transitioning the servicing function to GMAC, including sending "goodbye" letters to borrowers, directing all future collections to GMAC; * provide an accounting of all amounts collected on account of the HELOC Mortgage Loans; * pay all costs and expenses related to the transition of the servicing to GMAC; and * comply with the HELOC Servicing Agreements in transitioning the servicing of the HELOC Mortgage Loans. 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. 21, 2007. (American Home Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN RACING: Posts $1,036,525 Net Loss in Third Quarter ----------------------------------------------------------- American Racing Capital Inc. reported a net loss of $1,036,525 on sales of $277,621 for the third quarter ended Sept. 30, 2007, compared with a net loss of $6,161,217 on sales of $5,375 in the same period in 2006. The company disposed of its ownership of Davy Jones Motorsports Inc. and Fast One Inc. on Oct. 1, 2006, while it acquired a controlling interest in LJJ in June of 2007. Beginning with July 1, 2007, the company consolidates its investment in LJ&J accordingly its revenues are now recognized in the financial statements. Operating expenses for the three months ended Sept. 30, 2007, were $573,287, as compared to $6,084,648, for the three months ended Sept. 30, 2006, a decrease of $5,511,361 or 91%. The decrease is primarily attributable to the company reducing the number of shares of its common stock issued for services. At Sept. 30, 2007, the company's consolidated balance sheet showed $2,406,345 in total assets, $2,344,364 in total liabilities, and $61,981 in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $128,440 in total current assets available to pay $2,344,364 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2638 Going Concern Doubt Moore & Associates, Chartered, in Las Vegas, expressed substantial doubt about American Racing Capital Inc.'s ability to continue as a going concern after completing its audit of the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's lack of operations and sources of revenues. About American Racing Based in San Diego, American Racing Capital Inc. (OTC BB: AMRA) -- http://www.americanracingcapital.com/-- is a holding company for other companies within the Auto Racing industry. ARC is primarily focused on racetrack property acquisitions and the upgrading of those facilities. ANTARES MEZZ: Weaver Hill to Sell Antares Mezz Affiliate on Jan. 3 ------------------------------------------------------------------ Weaver Hill Acquisition LLC, a secured creditor of Antares Mezz SPE LLC, will offer for sale all rights, title and interest of affiliate Antares Mezz II SPE, LLC on Jan. 3, 2008, at 11:00 a.m., in a public auction at the offices of Weil, Gotshal and Manges LLP, 767 Fifth Avenue, 25th Floor, New York City. Together with the 100% membership interests, Weaver Hill will sell all of the other pledged collateral, as defined in a February 2006 pledge agreement between the Debtors and Lehman Brothers Holdings Inc., and assigned to Weaver Hill. Pursuant to the pledge agreement, Weaver Hill was granted a security interest in the membership interests to secure certain indebtedness of the company. Events of default have occurred under the pledge agreement, and the indebtedness is due and payable in full. A bid deposit of $100,000 in the form of a cashier's check or certified check or other immediately available funds payable to Weaver Hill will be required in order to bid. The membership interests will be offered as a single asset at the auction. ASSOCIATES MANUFACTURED: Fitch Retains Junk Rating on Class B-2 --------------------------------------------------------------- Fitch Ratings has taken rating actions on these four Associates Manufactured Housing Contract Trust pass-through certificates: Series 1996-1: -- Class M affirmed at 'AA+'; -- Class B-1 downgraded to 'AA' from 'AA+'; -- Class B-2 downgraded to 'AA' from 'AA+'. Series 1996-2: -- Class M affirmed at 'AA+'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 remains at 'CC/DR3'. Series 1997-1: -- Class M affirmed at 'AA+'; -- Class B-1 downgraded to 'AA' from 'AA+'; -- Class B-2 downgraded to 'AA' from 'AA+'. Series 1997-2: -- Class A-6 affirmed at 'AAA'; -- Class M affirmed at 'AA'; -- Class B-1 downgraded to 'AA' from 'AA+'; -- Class B-2 downgraded to 'AA' from 'AA+'. The affirmations, affecting approximately $169.3 million of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. The ratings on classes B-1 and B-2 of series 1996-1, 1997-1, and 1997-2 are based on a limited guarantee from Associates First Capital Corporation, which completed a merger with Citigroup, Inc. in November of 2000. The downgrades of the limited guarantee bonds, affecting approximately $152 million of the outstanding certificates, reflect Fitch's downgrade of Citigroup's corporate rating to 'AA' on Nov. 5, 2007. The collateral supporting the above transactions consists of fixed-rate contracts secured by manufactured homes. All of the contracts were either originated or purchased by Associates and were originally serviced by Associates. In addition, all of the above transactions are structured to pay interest to the subordinate classes before paying principal to the senior classes. As of the November remittance date, the respective pool factors for series 1996-1, 1996-2, 1997-1, and 1997-2 are 14%, 12%, 14%, and 21% and the respective seasoning is 134, 132, 127, and 121 months. The respective cumulative losses (as a percent of the original collateral balances) for series 1996-1, 1996-2, 1997-1, and 1997-2 are 12.8%, 10.7%, 12.2%, and 18.1%. ATLANTIC WINE: Posts $92,797 Net Loss in Second Quarter ------------------------------------------------------- Atlantic Wine Agencies Inc. reported a net loss of $92,797 on net sales of $68,393 for the second quarter ended Sept. 30, 2007, compared with a net loss of $142,758 on net sales of $44,640 in the same period last year. Operating costs for the three-months ended Sept. 30, 2007, aggregated $166,024 as compared to $187,091 for the three-months ended Sept. 30, 2006. At Sept. 30, 2007, the company's consolidated balance sheet showed $2,824,715 in total assets, $2,415,240 in total liabilities, and $409,475 in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $217,387 in total current assets available to pay $2,415,240 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?263a Going Concern Doubt Meyler & Company LLC, in Middletown, N.J., expressed substantial doubt about Atlantic Wine Agencies Inc.'s ability to continue as a going concern after auditng the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing fir reported that the company has incurred cumulative losses of $7,749,230 since inception, has negative working capital of $1,912,728, and there are existing uncertain conditions the company faces relative to its ability to obtain capital and operate successfully. About Atlantic Wine Based in Somerset West, South Africa, Atlantic Wine Agencies Inc. (OTC BB: AWNA.OB) -- http://www.atlanticwineagencies.com/-- was incorporated in the State of Florida as New England Acquisitions Inc. on April 8, 2001. On Jan. 13, 2004, the company changed its name to Atlantic Wine Agencies. The company through its two wholly owned subsidiaries, Mount Rozier Estates (Pty) Limited and Mount Rozier Properties (Pty) Limited, owns a vineyard in the Stellenbosch region of Western Cape, South Africa. The vineyard and surrounding properties consist of 80.9 hectares of arable land for viticultural as well as residential and commercial purposes. BANCO DEL CARIBE: S&P Cuts Issuer Default Rating to B from B+ ------------------------------------------------------------- Fitch Ratings has downgraded Banco del Caribe's long-term Issuer Default Rating, Individual rating and national rating as: -- Long-term foreign currency IDR to 'B' from 'B+'; -- Long-term local currency IDR to 'B' from 'B+'; -- Individual to 'D/E' from 'D'; -- National long-term to 'A-(ven)' from 'A+(ven)'; -- National short-term to 'F-2(ven)' from 'F-1(ven)'. Fitch has also affirmed the following ratings: -- Short-term Issuer 'B'; -- Short-term local currency rating 'B'; -- Support '5'; -- Support Floor 'NF'. The Rating Outlook is Negative. The downgrade of Bancaribe's IDR, Individual and national ratings reflect the sustained decrease of its capitalization ration due the strong growth achieved in the last 18 months, while profitability levels are undermined by fierce competition and a complex array of controls imposed by the government that limits the bank ability to manage its business, a situation that affects the rest of the system as well. Also, the ratings still incorporate its strong competitive position in the middle market, improved asset quality and adequate income diversification. Downside risk for Bancaribe's ratings would stem from additional government measures that could negatively affect its performance or a more severe decrease in the bank's capitalization ratios. The loan portfolio has increased significantly due to strong loan demand since 2004 and a strategy to expand Bancaribe's participation in the growing consumer loans market. Meanwhile, the improved economic environment and the overhaul of its risk control techniques have strengthened the bank's asset quality metrics. At end-June 2007, the past due loans-to-gross loan ratio stood at 0.5%; however, the rapid growth in loans has resulted in a somewhat tight overall reserves ratio (2% of total loans at the same date). Despite the increased loan portfolio, the bank still holds a significant concentration in government securities, with 4.3 times equity at end-June 2007, 1.2x excluding short-term central bank securities. The lack of foreign exchange gains since 2004, narrower spreads and the increase in loan loss provisions have more than offset the advances in terms of overhead and income diversification, reducing the bank's profitability. At end-June 2007, the bank's return on average assets declined to 2.7%. More modest asset growth and continued pressure on the bank's spreads could further affect Bancaribe's returns. Strong asset growth and still relatively high cash dividends have reduced capital ratios, with the equity-to-asset ratio falling from almost 11% at end-2005 to 8.3% at end-June 2007, while the risk-weighted capital ratio felt to a tight 12%, just in line with the current regulatory minimum. Despite the fact these ratios are similar to the system's average; Bancaribe's above-average holding of fixed assets and investments in subsidiaries significantly reduces the bank's free capital ratio to 3.2%. Given the still- expected increase in lending and the diminished capitalization of the bank, Fitch expects a more conservative capitalization policy in order enhance the financial profile of the bank and mostly considering the inherent volatility of the operating environment. Bancaribe is a medium-sized bank with a 3.3% market share in terms of invested funds at June 2007. At end-2006, 51.1% of Bancaribe was controlled by the Dao family and 26.6% was held by Scotia International Ltd., a wholly owned subsidiary of Scotiabank, with the remainder publicly held. BEARINGPOINT: Moody's Confirms B2 Corporate Family Rating --------------------------------------------------------- Moody's confirmed BearingPoint's B2 corporate family rating and assigned a negative rating outlook. In doing so, Moody's has concluded its review for possible downgrade of the company's ratings. The B2 rating confirmation is supported by the likelihood that, irrespective of a potential further slowdown in the U.S. economy, the company's Public Services, EMEA, and Asia Pacific divisions will continue to provide support for the company's overall revenue growth and achievement of operating profitability. The confirmation also reflects the likelihood that the company will continue reduce its high finance, accounting, and infrastructure costs, raise staff utilization levels, and lower capital expenditures, thereby improving its overall financial operating performance. On Dec. 3, 2007, the company reestablished and expects to maintain current financial reporting status. The corporate family rating is constrained by the company's large operating losses and negative free cash flow, the project consulting industry's exposure to economic cyclicality, including the current downturn in the U.S. financial services sector, the company's high, but declining, finance and accounting costs, and its near-term potential debt refinancing needs related to an April 2009 investor put option on $200 million convertible bonds. The negative rating outlook reflects the company's exposure to economic cyclicality and the potential that a more severe U.S. economic downturn could offset substantial near-term improvement to its financial performance. In addition to the rating confirmation, Moody's assigned a short- term SGL-3 liquidity rating to the company that reflects substantial negative free cash flow in the trailing twelve months ended September 30, 2007, prospects for achieving positive free cash flow over the next twelve months, and a heavy reliance on cash balances and on previously obtained external sources of financing. The company has a $500 million credit facility ($300 million drawn term loan and $200 LOC facility) and is in compliance with the covenants of this facility. The covenants require the company to file its financial statements with the SEC on a timely basis subsequent to Oct. 31, 2008. As of Sept. 25, 2007, cash balances were $431 million. BearingPoint fortified its cash balances in May 2007 with $300 million proceeds from its term loan offering. Potential near-term liquidity needs include potential debt refinancing needs related to an Apr. 15, 2009 investor put option date on its 5% $200 million senior subordinated convertible notes. The Caa1 rating for the Series A and B Unsecured Subordinated Convertible Notes reflects their un-guaranteed and junior position as holding company instruments within the company's capital structure. These notes are subordinate to the $300 million secured term loan, issued May 2007, the $200 million 5.0% senior subordinated convertible notes, as well as to other operating liabilities considered to be senior in priority of claims, including its trade payables, operating leases, and under-funded German pension program. The ratings for these A and B Notes has been downgraded to Caa1 from B3, reflecting the addition of the senior secured term loan into the company's capital structure since the initiation of the review for possible downgrade. Rating Confirmed: -- Corporate Family Rating B2 Ratings Assigned: -- Short-Term Liquidity Rating SGL-3 Ratings Downgraded: -- $250 million Series A Subordinated Convertible Notes to Caa1 from B3 (LGD5, 86%) -- $200 million Series B Subordinated Convertible Notes to Caa1 from B3 (LGD5, 86%) Headquartered in Mclean, Virginia, with approximately $3.4 billion in revenues for the twelve months ended September 2007, BearingPoint, Inc. provides I/T consulting and managed services to commercial and governmental entities worldwide. BIG A: Taps Lewis R. Landau as Co-General Bankruptcy Counsel ------------------------------------------------------------ Big A Drug Stores Inc. asks the United States Bankruptcy Court for the Central District of California for authority to employ Lewis R. Landau, Esq., as its co-general bankruptcy counsel. The Debtor selected Mr. Landau on the recommendation of Steven R. Fox, the Debtor's proposed lead counsel, and because of Mr. Landau's experience, competency and qualifications having served as a commercial bankruptcy attorney for the last 19 years. As co-general bankruptcy counsel, Mr. Landau's services will include all legal services pertaining to the Debtor's bankruptcy case including all contested matters but excluding corporate, tax and securities related services. As compensation for his services, Mr. Landau charges $350 per hour, to increase to $375 per hour effective Jan. 1, 2008. Paralegal hourly rates are $125, increasing to $140 per hour effective July 1, 2008. On Sept. 24, 2007, Mr. Landau received $3,500 from the Debtor's retainer held by Steven R. Fox for general consultation and assistance services, which was fully consumed prior to bankruptcy filing. On Nov. 18, 2007, Mr. Landau received $11,550 from the Debtor's retainer held by Steven R. Fox as full payment of pre- petition services rendered to the Debtor. Mr. Landau assures the Court that he neither represents nor holds any interest adverse to the Debtor or the Debtor's estates, and that he is a "disinterested person" as such term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in South Gate, California, Big A Drug Stores Inc. -- http://www.bigadrug.com/-- operates a chain of 21 retail drug stores, located throughout California. The company's stores offer full service pharmacies and over-the-counter drugs, cigarettes, optical products, liquor, general merchandise, groceries, beer and wine, and beverages. The company filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. C.D. Calif. Case No. 07-20699). Steven R. Fox, Esq., of Encino, California, is the Debtor's proposed lead counsel. As of Nov. 18, 2007, the Debtor listed total assets of $18,788,648 and total debts of $54,424,646. BIG A: Selects Steven R. Fox Law Offices as Co-Counsel ------------------------------------------------------ Big A Drugstores Inc. asks the United States Bankruptcy Court for the Central District of California for authority to employ the Law Offices of Steven R. Fox as its bankruptcy co-counsel. The Debtor selected the Law Offices of Mr. Fox because of the firm's familiarity with bankruptcy practice and the provisions of the Bankruptcy Code, as well as extensive experience in chapter 11 bankruptcy cases. The firm is expected to: a) advise the Debtor with respect to its powers and duties as a Debtor-in-Possession and the continued operation of the business and the management of the property in this Chapter case and to assist the Debtor in performing the duties required of it as a Debtor-in-Possession; b) negotiate, formulate, draft, and confirm a Plan of Reorganization and to attend hearings before the Court in connection with any proposed disclosure statements and plans of reorganization, and, then and there, to conduct, if necessary, examinations of interested parties and to advise the Debtor in connection with any proposed plan of reorganization or any proposal made in connection with a plan of reorganization; c) examine all claims filed in these proceedings in order to determine their nature, extent, validity and priority; d) advise and assist the Debtor in connection with the collection of assets, the sale of assets, or the refinancing of same in order to implement any plan of reorganization which might be confirmed in these proceedings; e) take such actions as may be necessary to protect the properties of the estate from seizure or other proceedings, pending confirmation and consummationof the Plan of Reorganization in this case; f) advise the Debtor with respect to the rejectionor affirmation of executory contracts; g) advise and assist the Debtor in fulfilling its obligations as a fiduciary of the chapter 11 estate; h) prepare all necessary pleadings pertaining to matters of bankruptcy law before the Court; i) advise Debtor on a limited basis with respect to tax obligations, and their payment; j) prepare such obligations and reports as are necessary and for which the services of an attorney are required including responding to the compliance requirements of the U.S. Trustee; and k) render other legal services for the Debtor for which the services of a bankruptcy attorney may be necessary during the pendency of this case including any necessary litigation. As compensation for their services, the firm's professionals engaged in this case bill: Designation Hourly Rate ----------- ----------- Principal $350 Associate $350 Law Clerk/Paralegal $125 Prior to Nov. 19, 2007, the Debtor paid $248,961 to the law firm and the Debtor's principal, Edward J. Dallal, paid $76,000 to the law firm. Prior to bankruptcy filing, the Law Offices of Steven R. Fox incurred fees and costs amounting to $401,753.81 leaving the sum of $224,246.19 on hand in the client trust account at the time of bankruptcy filing. The fees incurred prior to Nov. 19, 2007, includes monies paid to Mr. Lewis Landau, the Debtors' proposed co-counsel, for services rendered to the Debtor prior to bankruptcy. Mr. Fox assures the Court that his firm neither represents nor holds any interest adverse to the Debtor or the Debtors' estate, and that his firm is a "disinterested person" as such term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in South Gate, California, Big A Drug Stores Inc. -- http://www.bigadrug.com/-- operates a chain of 21 retail drug stores, located throughout California. The company's stores offer full service pharmacies and over-the-counter drugs, cigarettes, optical products, liquor, general merchandise, groceries, beer and wine, and beverages. The company filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. C.D. Calif. Case No. 07-20699). As of Nov. 18, 2007, the Debtor listed total assets of $18,788,648 and total debts of $54,424,646. BREK ENERGY: Posts $265,773 Net Loss in Third Quarter ----------------------------------------------------- Brek Energy Corp. reported a net loss of $265,773 on revenue of $45,145 for the third quarter ended Sept. 30, 2007, compared with a net loss of $229,161 on revenue of $83,242 for the third quarter ended Sept. 30, 2006. The increase in net loss was primarily due to a decrease in revenue and an increase in, gathering expenses primarily offset by decreases in administrative and professional fees. The $38,097 decrease in revenue for the three months ended Sept. 30, 2007, was due to reduced production. At Sept. 30, 2007, the company's consolidated balance sheet showed $2,228,570 in total assets, $472,754 in total liabilities, $38,995 in minority interest, and $1,716,821 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2637 Going Concern Doubt As reported in the Troubled Company Reporter on May 2, 2007, Mendoza Berger & Company LLP expressed substantial doubt about Brek Energy Corporation's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. Mendoza Berger pointed to the company's recurring operating losses and accumulated deficit. About Brek Energy Headquartered in Newport Beach, California, Brek Energy Corporation (Other OTC: BREK.PK) -- http://www.brekenergy.com/ -- through its subsidiaries, acquires, operates, and develops unconventional hydrocarbon prospects primarily in the Rocky Mountain region of the U.S. It principally acquires leasehold interests in petroleum and natural gas rights, either directly or indirectly. BROOKLYN STRUCTURED: S&P Puts 'BB' Rating Under Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1Q, A-2, A-3, A-4, B, and C notes issued by Armitage ABS CDO Ltd.; on the class A-1J, A-2L, A-3L, B, and C notes issued by Brooklyn Structured Finance CDO Ltd.; and on the class A-2, A-3, B, C-1, C-2, and D notes issued by Millstone IV CDO Ltd. on CreditWatch with negative implications. Standard & Poor's notes that Armitage ABS CDO Ltd. triggered an event of default on Dec. 3, 2007, under section 5.1(i) of the indenture dated March 29, 2007, when the class A overcollateralization ratio fell below 97.5%. On Nov. 30, 2007, Brooklyn Structured Finance CDO Ltd. triggered an EOD under section 5.01(i) of the indenture dated Nov. 30, 2006, when the ratio calculated by dividing the net outstanding portfolio collateral balance by the aggregate outstanding amount of the class A1S and A1J notes fell below 100%. Millstone IV CDO Ltd. triggered an EOD under section 5.1(h) of the indenture dated June 25, 2007, after the ratio calculated by dividing the net outstanding portfolio collateral balance by the aggregate outstanding amount of the class A notes fell below 100%. When Standard & Poor's receives EOD notices, S&P place all of the affected note ratings on CreditWatch with negative implications. Ratings Placed on Creditwatch Negative Rating ------ Transaction Class To From ----------- ----- -- ---- Armitage ABS CDO Ltd. A-1Q AAA/Watch Neg AAA Armitage ABS CDO Ltd. A-2 AAA/Watch Neg AAA Armitage ABS CDO Ltd. A-3 AAA/Watch Neg AAA Armitage ABS CDO Ltd. A-4 AA/Watch Neg AA Armitage ABS CDO Ltd. B A/Watch Neg A Armitage ABS CDO Ltd. C BBB/Watch Neg BBB Brooklyn Structured Finance A-1J AAA/Watch Neg AAA CDO Ltd. Brooklyn Structured Finance A-2L AA/Watch Neg AA CDO Ltd. Brooklyn Structured Finance A-3L A/Watch Neg A CDO Ltd. Brooklyn Structured Finance B BBB/Watch Neg BBB CDO Ltd. Brooklyn Structured Finance C BB/Watch Neg BB CDO Ltd. Millstone IV CDO Ltd. A-2 AAA/Watch Neg AAA Millstone IV CDO Ltd. A-3 AAA/Watch Neg AAA Millstone IV CDO Ltd. B AA/Watch Neg AA Millstone IV CDO Ltd. C-1 A/Watch Neg A Millstone IV CDO Ltd. C-2 A/Watch Neg A Millstone IV CDO Ltd. D BBB/Watch Neg BBB Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ Armitage ABS CDO Ltd. A-1M AAA Brooklyn Structured Finance CDO Ltd. A-1S AAA Millstone IV CDO Ltd. A-1A AAA Millstone IV CDO Ltd. A-1B AAA Millstone IV CDO Ltd. A-1C AAA BROTMAN MEDICAL: Court Gives Final OK to Access $19.8MM Financing ----------------------------------------------------------------- The United States Bankruptcy Court for the Central District of California gave Brotman Medical Center Inc. authority to access, on an final basis, up to $19,875,000 in postpetition financing and other extensions of credit from CapitalSource Finance LLC. As reported in the Troubled Company Reporter on Nov. 8, 2007, the Debtor told the Court that before its bankruptcy filing, CapitalSource made certain loans, revolving credit and other financial accomodations available to the Debtor. On Oct. 29, 2007, the DIP financing facility was designed to permit the hospital to fund its working capital needs during the chapter 11 case, including obligations to its employees, trade vendors, suppliers and service providers. The Debtor granted in favor of the DIP lender security interest and liens and superiority claims status pursuant to Section 364 of the Bankruptcy Code, as adequate protection. In addition, the DIP lender will be entitled to receive adequate protection payments equal to a rate of prime plus 5.5% per annum on the outstanding amount due under the credit facility. Headquartered in Culver City, California, Brotman Medical Center Inc. -- http://www.brotmanmedicalcenter.com/-- provides range of inpatient and outpatient services, as well as rehabilitation, psychiatric care and chemical dependency. The company filed for Chapter 11 protection on Oct. 25, 2007 (Bankr. C.D. Calif. Case No. 07-19705). The Debtor have selected Kurtzman Carson Consultants LLC as its claims and noticing agent. The U.S. Trustee for Region 16 has not appointed creditors to serve on an Official Committee of Unsecured Creditors in this case. When the Debtor filed for protection against its creditors, it listed assets and debts between $1 million and $100 million. C-BASS MORTGAGE: Moody's Downgrades Ratings on 53 Tranches ---------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 53 tranches and placed on review for possible downgrade the ratings of 3 tranches issued by C-Bass Mortgage Loan Asset Backed Certificates in 2007. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB1 -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Ba2, previously A3, -- Cl. M-7, Downgraded to B1, previously Baa1, -- Cl. M-8, Downgraded to B3 on review for possible further downgrade, previously Baa2, -- Cl. B-1, Downgraded to C, previously Baa3, -- Cl. B-2, Downgraded to C, previously Ba1. Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB2 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. B-1, Downgraded to Ba1, previously Baa1, -- Cl. B-2, Downgraded to Ba2, previously Baa2, -- Cl. B-3, Downgraded to B3, previously Baa3, -- Cl. B-4, Downgraded to Ca, previously Ba1. Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB3 -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Baa3, previously A3, -- Cl. B-1, Downgraded to Ba1, previously Baa1, -- Cl. B-2, Downgraded to Ba2, previously Baa2, -- Cl. B-3, Downgraded to B3, previously Baa3, -- Cl. B-4, Downgraded to Ca, previously Ba1. Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB4 -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. B-1, Downgraded to Baa2, previously Baa1, -- Cl. B-2, Downgraded to Baa3, previously Baa2, -- Cl. B-3, Downgraded to Ba3, previously Baa3, -- Cl. B-4, Downgraded to B3, previously Ba1, -- Cl. B-5, Downgraded to Ca, previously Ba2. Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB5 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa2, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba3, previously Baa2, -- Cl. M-9, Downgraded to B2, previously Baa3, -- Cl. B-1, Downgraded to Ca, previously Ba1. Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB6 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Ba1, previously Baa1, -- Cl. M-8, Downgraded to Ba2, previously Baa2, -- Cl. M-9, Downgraded to B2, previously Baa3, -- Cl. B-1, Downgraded to Caa2, previously Ba1. CAM COMMERCIAL: S&P Affirms 'B-' Rating on Class N Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of commercial mortgage pass-through certificates from CAM Commercial Mortgage Corp.'s series 2002-CAM2. Concurrently, S&P affirmed 10 other ratings from the same series. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Nov. 14, 2007, remittance report, the trust collateral consisted of 26 mortgage loans and one class of subordinated fixed-rate commercial mortgage-backed securities (the class E pass-through certificates from Morgan Stanley Capital I Inc.'s series 1998-XL2) with an aggregate principal balance of $145.5 million. At issuance, the collateral consisted of 32 mortgage loans and two classes of subordinated fixed-rate CMBS pass-through certificates with an aggregate principal balance of $208.3 million. Excluding the $7.8 million (5%) of collateral that was defeased, the master servicer, Midland Loan Services Inc., reported full-year 2006 financial information for 100% of the loans in the pool. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.34x, down from 1.44x at issuance. All of the loans in the pool are current, and no loans are with the special servicer. The trust has not experienced a loss to date. The top 10 assets have an aggregate outstanding balance of $102.8 million (71%). The largest asset is the aforementioned class from Morgan Stanley Capital I Inc.'s series 1998-XL2. Excluding this asset, S&P calculated a weighted average DSC of 1.40x, down from 1.53x at issuance. The third-largest asset, which is the second-largest exposure secured by real estate, is on the master servicer's watchlist due to a low DSC and a decline in revenue and is discussed below. Standard & Poor's reviewed the property inspection reports provided by Midland for the properties underlying the top 10 assets, and all were reported to be in "good" or "excellent" condition. The master servicer's watchlist includes three loans totaling $18.1 million (12%). Among these loans is the second-largest real estate exposure in the pool, Wellington Centre ($13 million, 9%), which is secured by a 10-story, 201,600-sq.-ft. office building in Dallas, Texas. This loan was placed on the watchlist because of a reported low DSC (cash flow was negative as of Dec. 31, 2006) and a decline in revenue. The drop in revenue is attributable to a decrease in occupancy, which was 78% as of March 31, 2007, down from 96% at issuance. The borrower plans to upgrade the property to address the poor performance. Standard & Poor's stressed various assets as part of its analysis, including those on the watchlist and those otherwise considered credit impaired. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised CAM Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2002-CAM2 Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- C AA A+ 17.54% D A+ A 15.75% E A- BBB+ 13.60% F BBB+ BBB 12.88% Ratings Affirmed CAM Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2002-CAM2 Class Rating Credit enhancement ----- ------ ---------------- A-2 AAA 25.77% B AA+ 21.47% G BBB- 10.74% H BB+ 7.16% J BB 6.44% K BB- 5.73% L B+ 4.65% M B 3.94% N B- 3.22% X AAA N/A N/A - Not applicable. CANYON CAPITAL: Case Summary & Two Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Canyon Capital Partners, L.L.C. 6005 South Belvedere Avenue Tucson, AZ 85706 Bankruptcy Case No.: 07-02493 Chapter 11 Petition Date: December 6, 2007 Court: District of Arizona (Tucson) Judge: James M. Marlar Debtor's Counsel: Eric Slocum Sparks, Esq. 110 South Church Avenue, Suite 2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ S.A.R.S., Inc. equipment $1,754,000 6991 North Solaz Tercero rent/purchase+ Tucson, AZ 85718 cb note Dyers goodwill $1,406,000 Dyers 10 year $600,000 property lease Cactus Auto Transport, Inc. goodwill: Phil $396,000 P.O. Box 90498 & Paula Delany Tucson, AZ 85752 c.b. note on $271,000 equipment equity 3rd party equipment $190,000 leases 3rd party pick-up $12,000 truck note [] CASTLETON GROUP: Hearing on Appeal vs. N.C. Insurance Set Today --------------------------------------------------------------- A hearing is scheduled today, Dec. 11, 2007, at the Superior Court of Wake County to discuss the merits of the stay motion filed by Castleton Group Inc. against the North Carolina Department of Insurance's decree denying it a license to operate. Insurance Commissioner Jim Long, on December 4, said that it had reached a decision in the licensure case of Castleton. According to the Department, it denied approval of a license to operate citing the company's "hazardous financial condition," and that these financials have dipped to the point of insolvency. That ruling, Department officials say, could affect 89 of Castleton's client companies, including approximately 3,000 employee, with many client companies seeing a flurry of end-of- year activity, including processing holiday pay checks and preparing W-2 tax forms. "We want Castleton's client companies to be fully aware of this decision so they can review their situations," said Commissioner Long. The Department contends that the company has never been licensed under the 2005 law but that same law has allowed Castleton to keep operating pending the resolution of the licensing dispute. Because of its appeal to the Court, Castleton was granted a temporary stay of the license denial pending a full hearing. The decision from the hearing officer in this case determined that the Castleton Group's liabilities exceed its assets by some $6 million. In addition, evidence showed that the company's former chief financial officer admitted to filing false federal payroll tax reports, resulting in an estimated $8 million in unpaid federal payroll taxes. The Department recommends that any client companies of Castleton Group immediately review their human resources needs in light of this decision. Companies that choose to seek services from a new professional employer organization have 90 licensed organizations in North Carolina from which to choose. Castleton's Side The company however verified the claims that the tax reports filed were false but said that it disclosed the improper accounting when it was discovered, Chris Coletta of the Triangle Business Journal in North Carolina reports, citing a company spokesperson. The company's spokesperson also said that the company had employed forensic accountants in order to look into the matter. The company disclosed revenue of $25 million in 2006, the report adds. The Castleton Group -- http://www.castletongroup.com/-- provides outsourced human resources services including human resources compliance, training, risk management and safety, benefits and payroll administration. CDC MORTGAGE: S&P Assigns Default Rating on Class B Certificates ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M and B mortgage pass-through certificates from CDC Mortgage Capital Trust 2002-HE1. At the same time, S&P affirmed its 'AAA' rating on the class A certificates from this transaction. The lowered ratings reflect the deterioration of available credit support. As of the Oct. 25, 2007, distribution date, the failure of excess interest to cover monthly losses had resulted in the complete depletion of overcollateralization. This lack of O/C has caused a principal write-down of the B class. During the previous six remittance periods, monthly losses have exceeded excess interest by approximately 3.0x. As of the October 2007 distribution period, this transaction was 65 months seasoned and had realized $15.95 million in cumulative losses. Total delinquencies and severe delinquencies were 36.72% and 25.08% of the current pool balance, respectively. The affirmation of the rating on the class A certificates reflects a sufficient loss coverage percentage for the 'AAA' rating. As of the October distribution date, credit support for this class was 55.15%, which is more than 2.0x its original amount. Credit enhancement for this transaction is derived from a combination of subordination, excess interest, and O/C. The collateral supporting this transaction consists of subprime pools of fixed- and adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered CDC Mortgage Capital Trust 2002-HE1 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- M BB A B D CCC Rating Affirmed CDC Mortgage Capital Trust 2002-HE1 Mortgage pass-through certificates Class Rating ----- ------ A AAA CENTRAL MEMPHIS REGIONAL: Sale of GECC Collateral Set for Dec. 18 ----------------------------------------------------------------- General Electric Capital Corporation will attend a public auction and may make offers for the asset of Central Memphis Regional P.E.T. Imaging Center LLC, on account of unpaid debt owed to GECC, secured creditor. The asset offered for sale consist of rights, title and interest of the Debtor on its 2003 GE Discovery LS PET/CT 8 Slice System. The auction will be held at 3:00 p.m. on Dec. 18, 2007, at: Katten Muchin Rosenman LLP 525 West Monroe Street, 19th Floor Chicago, IL 60661 On the sale date, the assets may be offered for sale, with reserve, and sold to the highest bidder at the conclusion of the sales, as determined by GECC in its sole and absolute discretion, on an "as is, where is" basis, without recourse or warranties. Additional terms and conditions applicable to the sale may be obtained from GECC's counsel, Peter J. Young, Esq., through (312) 902-5208. Memphis, Tennessee-based Central Memphis Regional P.E.T. Imaging Center LLC -- http://www.memphispetcenter.com/-- provides doctors with the technology to conduct diagnosis better through its PET - Positron Emission Tomography. They offer services in the fields of oncology, neurology, and cardiology are some areas in which patients are benefiting most from PET technology. CHASE MORTGAGE: Moody's Assigns B2 Rating on Class B-4 Certs. ------------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior certificates and a Aa1 rating to the senior support certificates. Moody's has also assigned ratings ranging from Aa2 to B2 for the suboordinate certificates issued by Chase Mortgage Finance Trust Series 2007-A3. The securitization is backed JPMorgan Chase Bank, N.A. originated adjustable-rate Jumbo mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination. Moody's expects collateral losses to range from 0.45% to 0.55 %. JPMorgan Chase Bank, N.A. will service the loans. Moody's has assigned JPMorgan Chase Bank, N.A. its top servicer quality rating of SQ1 for prime loans. The complete rating actions are: Chase Mortgage Finance Trust Series 2007-A3 Multi-Class Mortgage Pass-Through Certificates -- Cl. 1-A1, Assigned Aaa -- Cl. 1-A2, Assigned Aa1 -- Cl. 1-A3, Assigned Aaa -- Cl. 1-A4, Assigned Aaa -- Cl. 1-A5, Assigned Aaa -- Cl. 1-A6, Assigned Aaa -- Cl. 1-A7, Assigned Aaa -- Cl. 1-A8, Assigned Aaa -- Cl. 1-A9, Assigned Aaa -- Cl. 1-A10, Assigned Aaa -- Cl. 1-A11, Assigned Aaa -- Cl. 1-A13, Assigned Aaa -- Cl. 1-A14, Assigned Aaa -- Cl. 1-A15, Assigned Aaa -- Cl. 1-A16, Assigned Aaa -- Cl. 1-A17, Assigned Aaa -- Cl. 1-A18, Assigned Aaa -- Cl. 1-A19, Assigned Aaa -- Cl. 1-A20, Assigned Aaa -- Cl. 1-A12, Assigned Aaa -- Cl. 2-A1, Assigned Aaa -- Cl. 2-A2, Assigned Aa1 -- Cl. 2-A3, Assigned Aaa -- Cl. 2-A4, Assigned Aaa -- Cl. 2-A5, Assigned Aaa -- Cl. 2-A6, Assigned Aaa -- Cl. 2-A7, Assigned Aaa -- Cl. 2-A8, Assigned Aaa -- Cl. 2-A9, Assigned Aaa -- Cl. 2-A10, Assigned Aaa -- Cl. 2-A11, Assigned Aaa -- Cl. 2-A12, Assigned Aaa -- Cl. 2-A13, Assigned Aaa -- Cl. 2-A14, Assigned Aaa -- Cl. 2-A15, Assigned Aaa -- Cl. 2-A16, Assigned Aaa -- Cl. 2-A17, Assigned Aaa -- Cl. 2-A18, Assigned Aaa -- Cl. 2-A19, Assigned Aaa -- Cl. 2-A20, Assigned Aaa -- Cl. 2-A21, Assigned Aaa -- Cl. 2-A22, Assigned Aaa -- Cl. 2-A23, Assigned Aaa -- Cl. 3-A1, Assigned Aaa -- Cl. 3-A2, Assigned Aa1 -- Cl. 3-A3, Assigned Aaa -- Cl. 3-A4, Assigned Aaa -- Cl. 3-A5, Assigned Aaa -- Cl. 3-A6, Assigned Aaa -- Cl. 3-A7, Assigned Aaa -- Cl. 3-A8, Assigned Aaa -- Cl. 3-A9, Assigned Aaa -- Cl. 3-A10, Assigned Aaa -- Cl. 3-A11, Assigned Aaa -- Cl. 3-A12, Assigned Aaa -- Cl. 3-A13, Assigned Aaa -- Cl. 3-A14, Assigned Aaa -- Cl. 3-A15, Assigned Aaa -- Cl. 3-A16, Assigned Aaa -- Cl. 3-A17, Assigned Aaa -- Cl. 3-A18, Assigned Aaa -- Cl. 3-A19, Assigned Aaa -- Cl. 3-A20, Assigned Aaa -- Cl. 3-A21, Assigned Aaa -- Cl. A-R, Assigned Aaa -- Cl. M, Assigned Aa2 -- Cl. B-1, Assigned A2 -- Cl. B-2, Assigned Baa2 -- Cl. B-3, Assigned Ba2 -- Cl. B-4, Assigned B2 CHASE MORTGAGE: Moody's Assigns Ba2 Rating on Cl. B-3 Certs. ------------------------------------------------------------ Moody's Investors Service has assigned Aaa ratings to super senior certificates and Aa1 for senior support certificates. Moody's has also assigned ratings ranging from Aa2 to B2 for the subordinate certificates issued by Chase Mortgage Finance Trust Series 2007- S6. The securitization is backed by JPMorgan Chase Bank, N.A. originated fixed-rate Jumbo residential mortgage loans. The ratings are based primarily on the credit quality of the loans and on protection from subordination. Moody's expects collateral losses to range from 0.45% to 0.55%. JPMorgan Chase Bank, N.A. will service the loans. Moody's has assigned JPMorgan Chase Bank, N.A. its top servicer quality rating of SQ1 as a primary servicer of prime residential mortgage loans. The complete rating actions are: Chase Mortgage Finance Trust 2007-S6 Multi-Class Mortgage Pass-Through Certificates, Series 2007-S6 -- Cl. 1-A1, Assigned Aaa -- Cl. 1-A2, Assigned Aa1 -- Cl. 1-A3, Assigned Aaa -- Cl. 1-AX, Assigned Aaa -- Cl. 2-A1, Assigned Aaa -- Cl. 2-A2, Assigned Aa1 -- Cl. 2-A3, Assigned Aaa -- Cl. 2-AX, Assigned Aaa -- Cl. A-P, Assigned Aaa -- Cl. A-R, Assigned Aaa -- Cl. M, Assigned Aa2 -- Cl. B-1, Assigned A2 -- Cl. B-2, Assigned Baa2 -- Cl. B-3, Assigned Ba2 -- Cl. B-4, Assigned B2 CHINA DIGITAL: Posts $72,361 Net Loss in Third Quarter ------------------------------------------------------ China Digital Communication Group reported a net loss of $72,361 on revenue of $336,539 for the third quarter ended Sept. 30, 2007, compared with net income of $1,234,730 on revenue of $4,031,597 in the comparable period in 2006. The significant revenue decrease was due to increased competition and decreased demand from customers for the three month period ended Sept. 30, 2007, as compared to the same period ended Sept. 30, 2006, and also because the 2007 numbers does not include the numbers from Sono, which was sold in April 2007. Loss from operations for the three month period ended Sept. 30, 2007 totaled $612,718 compared to income from operations of $1,301,316 for the three month period ended Sept. 30, 2006. The change to a loss from operations was primarily due to decrease in sales during the three month period ended Sept. 30, 2007. Bad debt recovery for the three month period ended Sept. 30, 2007, totaled $522,584 compared to bad debt expense of $5,882 for the three month period ended Sept. 30, 2006. The increase in bad debt recovery was due to significant efforts made by management and the company to collect those receivable previously reserved as bad debt. At Sept. 30, 2007, the company's consolidated balance sheet showed $15.9 million in total assets, $901,595 in total liabilities, and $15.0 million in total in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?263b Going Concern Doubt China Digital Communication group has sustained net losses of $2,725,483 since its inception, and the company's current operations do not generate sufficient cash to cover its operating costs. These conditions raise substantial doubt about the company's ability to continue as a going concern. About China Digital China Digital Communication Group (OTC BB: CHID) -- http://www.chinadigitalgroup.com/-- is a Nevada corporation with business headquarters in Shenzhen, China. Its primary business is the manufacture of components for batteries used in mobile phones and other digital devices. CHRYSLER LLC: Top Spokesman Quits Spurring Corporate Realignment ---------------------------------------------------------------- Jason H. Vines, Chrysler LLC's Vice President-Communications has elected to resign and, therefore, the company is disclosing a realignment of its Corporate Communications Department. "Now that Chrysler is an independent company again, we are taking every opportunity to realign functions in a more holistic manner that allows us to more effectively drive company strategy," Bob Nardelli, Chairman and CEO, said. "As part of this realignment, the corporate communications function will now report to Nancy Rae, Senior Vice President-Human Resources." Several executives in the corporate communications department will report directly to Ms. Rae. David Barnas, who has been in the corporate communications department for six years, will be responsible for internal and corporate communications, which includes dealing with the news media. Mr. Vines' resignation is effective immediately, although he has agreed to remain at Chrysler through the end of December to assist in the transition. "Jason has served Chrysler well, and we are very grateful for his many contributions over the years," Mr. Nardelli said. Mr. Vines began his career at Chrysler Corporation in 1983, serving first as an economics researcher in the Labor Relations Department and later through various assignments in Employee Communications and Public Relations. He left Chrysler in 1998 and became Vice President-Communications for Nissan North America. In February 2000, he was appointed Vice President-Communications for Ford Motor Company. He returned to Chrysler in 2003 as Vice President-Communications. "This was a tough decision, considering the many talented, longtime friends I have throughout the company," Mr. Vines said. "I wish them all the best and will continue to root for them." Mike Aberlich, who has served the company as Director, Corporate and Internal Communications, also announced last week that he has decided to retire at the end of this year. "We thank Mike for his dedication and contributions to the company," Mr. Nardelli added. 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 Dec. 10, 2007, Standard & Poor's Ratings Services revised its recovery rating on Chrysler's $2 billion senior secured second-lien term loan due 2014. The issue-level rating on this debt remains unchanged at 'B', and the recovery rating was revised to '3', indicating an expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '4'. CITIGROUP MORTGAGE: Moody's Lowers Ratings on 52 Tranches --------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 52 tranches and placed on review for possible downgrade the ratings of 7 tranches from 10 transactions issued by Citigroup Mortgage Loan trust in 2007. Additionally, 5 downgraded tranches remain on review for possible further downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: Citigroup Mortgage Loan Trust 2007-AHL1 -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba1, previously Baa1, -- Cl. M-9, Downgraded to B1, previously Baa3, -- Cl. M-10, Downgraded to Caa3, previously Ba1, -- Cl. M-11, Downgraded to C, previously Ba2. Issuer: Citigroup Mortgage Loan Trust 2007-AHL2, Asset-Backed Pass-Through Certificates, Series 2007-AHL2 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa1, previously A3, -- Cl. M-7, Downgraded to Baa3, previously Baa1, -- Cl. M-8, Downgraded to Ba2, previously Baa2, -- Cl. M-9, Downgraded to B1, previously Baa3, -- Cl. M-10, Downgraded to Caa2, previously Ba1. Issuer: Citigroup Mortgage Loan Trust 2007-AHL3 -- Cl. M-6, Downgraded to A3, previously A2, -- Cl. M-7, Downgraded to Baa1, previously A3, -- Cl. M-8, Downgraded to Baa3, previously Baa1, -- Cl. M-9, Downgraded to Ba1, previously Baa2, -- Cl. M-10, Downgraded to B3 on review for possible further downgrade, previously Baa3. Issuer: Citigroup Mortgage Loan Trust 2007-AMC1 -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to Baa1, previously A1, -- Cl. M-5, Downgraded to Ba1, previously A2, -- Cl. M-6, Downgraded to B1, previously A3, -- Cl. M-7, Downgraded to Caa2, previously Baa1, -- Cl. M-8, Downgraded to C, previously Baa2, -- Cl. M-9, Downgraded to C, previously Baa3, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: Citigroup Mortgage Loan Trust 2007-AMC2 -- Cl. M-1 Currently Aa1 on review for possible downgrade, -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to Baa2, previously A1, -- Cl. M-5, Downgraded to Ba3, previously A2, -- Cl. M-6, Downgraded to B3* on review for possible further downgrade, previously A3, -- Cl. M-7, Downgraded to Caa3, previously Baa1, -- Cl. M-8, Downgraded to C, previously Baa2, -- Cl. M-9, Downgraded to C, previously Baa3, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: Citigroup Mortgage Loan Trust 2007-AMC3 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa2, previously A3, -- Cl. M-7, Downgraded to Ba1, previously Baa1, -- Cl. M-8, Downgraded to Ba3, previously Baa2, -- Cl. M-9, Downgraded to B3 on review for possible further downgrade, previously Baa3, -- Cl. M-10, Downgraded to Ca, previously Ba1. Issuer: Citigroup Mortgage Loan Trust 2007-AMC4 -- Cl. M-6 Currently Aa3 on review for possible downgrade, -- Cl. M-7, Downgraded to A2, previously A1, -- Cl. M-8, Downgraded to Baa1, previously A2, -- Cl. M-9, Downgraded to Ba3, previously Baa1, -- Cl. M-10, Downgraded to B1, previously Baa2, -- Cl. M-11, Downgraded to B3 on review for possible further downgrade, previously Baa2. Issuer: Citigroup Mortgage Loan Trust 2007-WFHE1 -- Cl. M-9, Downgraded to Ba2, previously Baa2, -- Cl. M-10, Downgraded to B1, previously Ba1, -- Cl. M-11, Downgraded to Caa3, previously Ba2. Issuer: Citigroup Mortgage Loan Trust 2007-WFHE2 -- Cl. M-8, Downgraded to Baa3, previously Baa1, -- Cl. M-9, Downgraded to Ba3, previously Baa2, -- Cl. M-10, Downgraded to B3 on review for possible further downgrade, previously Baa3. Issuer: Citigroup Mortgage Loan Trust 2007-WFHE3 -- Cl. M-8, Downgraded to Baa1, previously A3, -- Cl. M-9, Downgraded to Baa3, previously Baa1, -- Cl. M-10, Downgraded to Ba3, previously Baa3, -- Cl. M-11, Downgraded to B3, previously Ba2. CJ KELLEY: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: CJ Kelley, LLC 133 Defense Hwy, #103 Annapolis, MD 21401 Bankruptcy Case No.: 07-80765 Chapter 11 Petition Date: December 7, 2007 Court: Northern District of Georgia (Atlanta) Judge: Paul W. Bonapfel Debtor's Counsel: M. Denise Dotson, Esq. Jones & Walden, LLC 21 Eighth Street, NE Atlanta, GA 30309 Tel: (404) 564-9300 Fax : (404) 564-9301 http://www.joneswalden.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Richard Alembik, Esq. legal fees $55,000 315 West Ponce de Leon Ave Ste 250 Decatur, GA 30030 Sawin and Baldwin Insurance property insurance $22,597 107 W Lufkin Ave # 318 Lufkin, TX 75904 Paragon Realty Services $17,699 9920 Misty Cove Lane Gainesville, GA 30506 Robet Philipson & Co. accounting $12,002 City of Atlanta utilities $8,825 Infinite Energy utilities $7,019 Villard Bastien, Esq. legal fees $4,400 Georgia Power utilities $4,000 Charles and Becky Ricketts investor $3,025 Platinum Roofing $1,625 Charles Hunter investor $0 Charles Zarganis investor $0 Denise Stewart $0 Dennis and Anne Small investor $0 John and Tami Zarganis investor $0 Kelly Miller Smith investor $0 Robert and Denise Stewart investor $0 Robert Stewart $0 Tek Singal investor $0 Thomas and Sharon Stanton investor $0 CLAYTON HOLDINGS: Poor Performance Cues Moody's to Cut Ratings -------------------------------------------------------------- Moody's Investors Service downgraded Clayton Holdings Inc.'s senior secured bank credit facility and corporate family ratings to B1 from Ba3. The ratings remain under review for downgrade. The downgrade reflected Clayton's deteriorating operating performance as a result of stress in the mortgage market. Moody's said the review will focus on Clayton's ability to maintain positive free cash flow for the foreseeable future, as well as stabilize its cost structure and revenue streams Clayton Holdings is a service provider to institutions active in the non-conforming mortgage origination and servicing space. The downturn in the mortgage market has resulted in poor performance, including net losses over the last three quarters and a significant decline in EBITDA margin. Moody's had expected that Clayton's business model, given its focus on mortgage analytics, would perform well in a mortgage downturn. However, the decline in transaction volumes in the non-agency sector has dramatically impacted the firm's profitability. These ratings were downgraded: Clayton Holdings, Inc. -- senior secured credit facility to B1 from Ba3, placed on review for possible downgrade; corporate family rating to B1 from Ba3, placed on review for possible downgrade Clayton Holdings, Inc. is based in Shelton, Connecticut, USA, provides outsource services, information-based analytics and specialty consulting for buyers and sellers of, and investors in, mortgage-related loans and securities and other debt instruments. COILPLUS JACKSON: To Be Put Into Liquidation by Mitsubishi ---------------------------------------------------------- Mitsubishi Corporation will dissolve and liquidate its Coilplus Jackson Inc. subsidiary located in Jackson, Mississippi, Reuters says citing a report filed with the Tokyo Stock Exchange on Dec. 7, 2007 According to the filing, Mitsubishi decided to dissolve and liquidate its Coilplus unit in an effort to realign and consolidate the steel processing business within the Coilplus group. Mitsubishi aims to optimize its steel-related logistics and processing operations in the southern United States. The liquidation is expected to be completed by June 30, 2008, Reuters adds. Reuters discloses that the liqudation of this unit will have a neglible effect on its operating results. About Coilplus Jackson Based in Jackson, Mississippi, Coilplus Jackson, Inc., operates a steel sheet processing center. Metal One Holdings America, Inc., holds 100% of the company's stock. Metal One Holdings is an 80% owned subsidiary of Metal One Corporation, which is 60% owned by Mitsubishi Corporation and 12% owned by Mitsubishi International Corporation. COMPUSA: Acquired by Gordon Brothers; Winds Down Retail Operations ------------------------------------------------------------------ CompUSA has been acquired by Gordon Brothers Group LLC and Gordon Brothers will initiate an orderly wind-down of CompUSA's retail store operations. The restructuring firm is engaged in discussions with various parties regarding the sale of certain assets. CompUSA's 103 retail stores will remain open and staffed during the holiday season, and will offer consumers bargains on computer and electronic products as part of store closing sales. Terms of the transaction were not disclosed. Active discussions are under way to sell select stores in key markets as well as the company's highly-regarded technical services business, CompUSA TechPro, and its productive Internet sales operation, CompUSA.com. CompUSA TechPro and CompUSA.com will be operated by the company as going concerns until any sale transactions are closed. CompUSA will be run by Bill Weinstein, a Principal at Gordon Brothers Group, acting as Interim President, and by Stephen Gray, Managing Partner at restructuring firm CRG Partners, who will serve as Chief Restructuring Officer. Current CEO Roman Ross will continue to serve the company in an executive advisory capacity during the transition period. "An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors at this juncture," said Weinstein. "We are focused on assuring that CompUSA's creditors, landlords and other key constituents are treated properly during this process. We are working hard to achieve the maximum recovery possible for the company's constituents while also minimizing unnecessary expenses. We will actively communicate with the various parties and their advisors starting today, and in the days and weeks ahead." The firm assisted CompUSA with the prior sale of under-performing stores. "We worked long and hard with Gordon Brothers Group to achieve a business solution that maximizes CompUSA's assets," said Roman Ross. "Gordon Brothers Group has a breadth of knowledge and expertise in this area and we take great confidence in their capabilities." DJM Realty, a Gordon Brothers Group company that specializes in real estate disposition and valuations, will assist in assessing the leases for CompUSA's store locations. Gordon Brothers, through its affiliate Specialty Equity, LLC, is working with two experienced advisors who are representing creditors -- Lawrence Gottlieb of Cooley Godward Kronish LLP for unsecured creditors, and Jim Carr of Kelley Drye & Warren LLP for landlords. About Gordon Brothers Group Founded in 1903, Gordon Brothers Group -- http://www.gordonbrothers.com/-- is an advisory, restructuring and investment firm specializing in the retail, consumer products, real estate and industrial sectors. The firm provides a wide variety of services to companies at times of growth and restructuring. Gordon Brothers Group's capabilities include asset valuations, dispositions and appraisals, real estate consulting and acquisitions, retail store operations, lending, equity investments, restructuring and advisory services. The firm has unparalleled expertise in assisting healthy and distressed companies in maximizing the value of under-performing assets and expanding operations through new products and distribution channels. Gordon Brothers Group's resources include over 200 professionals and 250 field experts, including former CEOs, CFOs, merchants and executives in offices worldwide. During the past three years, Gordon Brothers Group has appraised over $100 billion of assets, managed more than 7,000 stores, sold more than $10 billion of inventory and restructured or sold over 120 million square feet of retail space. In addition, Gordon Brothers Group currently owns over 1,600 stores through various portfolio companies. DJM Realty, Gordon Brothers Group's real estate division, specializes in real estate dispositions, acquisitions, capital solutions and valuations. DJM Realty services the world's most recognizable brands such as Big Lots, Borders, CVS, Pep Boys, Toys R Us, West Marine and Yum Brands. About CompUSA Based in Dallas, Texas, CompUSA -- http://www.compusa.com/-- is one of the nation's leading retailers and resellers of technology products and services. CompUSA helps customers utilize technology through a unique blend of products and highly knowledgeable sales staff as well as technology support and service. Founded in 1984, CompUSA currently operates 103 stores in major metropolitan markets across the continental United States, Hawaii and Puerto Rico. CompUSA serves consumer retail, small-to-medium businesses, corporate, government and education customers. CompUSA's retail Web site offers an assortment of more than 80,000 products and the ability to schedule technology services and training sessions. Businesses may order from a catalog containing more than 220,000 products as well as select from over 100,000 online products. CROSS READY: Case Summary & 22 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Cross Ready Mix, Inc. 505 Grand Boulevard P.O. Box 323 Westbury, NY 11590 Bankruptcy Case No.: 07-75077 Type of Business: The Debtor manufactures and provides cement, concrete and asphalt. Chapter 11 Petition Date: December 7, 2007 Court: Eastern District of New York (Central Islip) Debtor's Counsel: Richard. J McCord, Esq. Certilman Balin Adler & Hyman 90 Merrick Avenue East Meadow, NY 11554 Tel: (516) 296-7801 Fax: (516) 296-7111 http://www.certilmanbalin.com/ Total Assets: $5,420,462 Total Debts: $5,572,105 Debtor's 22 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lehigh Cement Company trade debt $1,889,162 North Division P.O. Box 8500 - S-3490 Philadelphia, PA 19178-3490 Tilcon New York, Inc. trade debt $948,921 162 Old Mill Road West Nyack, NY 10994 Roanoke Sand & Gravel trade debt $462,282 104 Rocky Point Road Middle Island, NY 11953 Oshkosh/McNeilus Financial trade debt $240,000 Services Partnership Ruttuta & Sons Construction trade debt $132,013 Co. Inc. Risolo Diesel Fuel Inc. trade debt $124,793 Gabrielli Truck Sales Ltd. trade debt $33,254 Seville Central Mix Corp. trade debt $32,600 P.E.M. Materials trade debt $24,169 BASF Construction Chemicals trade debt $23,222 LLC Empire Sand & Stone Corp. trade debt $21,814 Upstate Aggregates LLC trade debt $18,504 International Union of $10,676 Opr. Engineers Barker Materials Ltd. trade debt $9,940 Northeast Solite Corp. trade debt $7,287 Laborers Union Local trade debt $3,922 1298 Benefits Funds LaFarge North America trade debt $3,459 Essroc Cement Corp. trade debt $3,333 St. Lawrence Cement $2,985 City Wide Paper & trade debt $1,901 Specialty Products Co. H.O. Penn Machinery trade debt $1,249 Company Inc. I & E Tire Corp. trade debt $410 Viccaro Equipment Corp trade debt $255 CYGNAL TECH: Canadian Court Extends Stay Period Until January 31 ---------------------------------------------------------------- The Ontario Superior Court extended, until Jan. 31, 2008, the stay of proceedings period against Cygnal Technologies Corporation and its subsidiaries, Cygnal Technologies Ltd. and Accord Communications Ltd., and their property under the Companies' Creditors Arrangement Act. The purpose of the stay of proceedings is to provide the applicants with relief designed to stabilize their operations and business relationships with their customers, suppliers, employees, and creditors and to provide the applicants with an opportunity to develop a plan of arrangement to propose to creditors for the restructuring of, among other things, some or all of the applicants' liabilities. Based in Markham, Ontario, Cygnal Technologies Corporation (TSX:CYN) -- http://www.cygnal.ca/-- provides network communications solutions including the design, integration, installation, maintenance and management of wired and wireless solutions and networks. The company offers a full range of technologies and solutions for service providers and enterprise customers. Cygnal has expertise in voice, video and data solutions over traditional and next generation converged technologies. Cygnal supports end-user customers and business partners through 12 offices across Canada, including Vancouver, Edmonton, Calgary, Winnipeg, London, Burlington, Toronto, Ottawa, Montreal, Quebec City and Halifax. DB KEY: Settlement Plan Sets Philrich as Stalking Horse Bidder -------------------------------------------------------------- D.B. Key Largo LLC asked the U.S. Bankruptcy Court for the Southern District of Florida for approval on its proposal to resolve issues in connection with Philrich of Key Largo LLC's motion to dismiss the Debtor's case over bad faith filing. The terms of the settlement include: a. Philrich, as an oversecured creditor, is entitled to continuing interest at the default rate of 18%, plus attorney's fees and costs, but not late charges; b. the Philrich secured claim is a first priority lien on the Debtor's property; c. Philrich has offered, which the Debtor has accepted, an initial bid for the sale of the property, where Philrich will credit bid the Philrich Secured Claim plus pay an additional $100,000 in cash to the estate in exchange for receiving title to the property free of liens, except taxes due to Monroe County, Florida as of Feb. 1, 2008, amounting to $154,449; d. in the event that the Debtor cannot close on the sale of the property, or the case is dismissed for any reason, then the parties agreed that the automatic stay will be lifted for 18 months; and e. when the automatic stay is lifted, the Debtor, Berman Mortgage Corporation and M.A.M.C. Inc. will waive defenses to a filed foreclosure action and consent to a foreclosure judgment and sale date. The Debtor asked the Court to set a hearing for considering approval of the settlement, which the Court scheduled on Dec. 19, 2007, at 2:30 p.m. The Debtor also asked the Court to remove the continued hearing on Philrich's case dismissal motion, which was set on Dec. 26, 2007, to avoid having the parties incur the expense of preparing for the evidentiary hearing that is rendered moot upon approval of the settlement. The auction of the property is scheduled for Feb. 1, 2008, extendable for cause. Fisher Auction Co. Inc. serves as auctioneer in the sale of the property. Liens on the Debtor's Property The Debtor's real property securing a Philrich Mortgage Obligation is located at Mile Market 104 in Key Largo, Florida and was intended to be developed by the Debtor as a condominium-hotel. The Debtor related that it has no ongoing business operations or any means to fund a chapter 11 plan other than from the liquidation of the property, its only significant asset. The Debtor disclosed that on June 16, 2005, it executed a certain promissory note and a mortgage securing payment of a note to TIB Bank of they Keys in the original amount of $6,234,000. The mortgage was assigned to Philrich pursuant to an assignment of mortgage and loan document dated June 22, 2007. The Philrich Mortgage Obligation matured on April 1, 2007, and the Debtor defaulted by failing to pay its obligation in full on the maturity date. The Debtor said it owes Philrich the sum of $5,870,974 on the principal, with interest from April 1, 2007, to present at 18% per annum or a per diem of $2,895. As of Nov. 1, 2007, Philrich is owed $6,490,653, including accrued interest and excluding attorney's fees. Along with the Philrich mortgage obligation, the property is also subject to a junior mortgage obligation serviced by BMC and MAMC as attorney-in-fact. The subordinated mortgage holds a secured claim of about $7,350,000. About D.B. Key Largo Coconut Grove, Florida-based D.B. Key Largo LLC owns and manages real estate. The company filed for chapter 11 bankruptcy protection on Sept. 28, 2007 (Bankr. S.D. Fl. Case No. 07-18127). Lisa M. Schiller, Esq., and Mark S. Roher, Esq., at Rice, Pugatch, Robinson & Schiller PA represent the Debtor in its restructuring efforts. The U.S. Trustee has not appointed members to the Official Committee of Unsecured Creditors in this case. The Debtor's schedules disclosed total assets of $10,382,165 and total liabilities of $14,090,922. DEL LABORATORIES: Coty and Bella Merger Deal Cues Moody's Review ---------------------------------------------------------------- Moody's Investors Service placed all ratings of Del Laboratories, Inc. under review for possible upgrade. The review for upgrade was prompted by the company's announcement that it had entered into an merger agreement with Coty Inc. and Bella Acquisition, Inc. to acquire DLI Holding Corp., the parent company of Del. Coty, is a subsidiary of Joh. A. Benckiser GmBH, a family- controlled German holding company. The review for possible upgrade is based on Moody's understanding that while publicly financial statements are not available, Coty and its parent company, Benckiser, are significantly larger scale consumer products companies with likely better financial risk profiles as compared with B3 rated, Del. The transaction remains subject to governmental and regulatory approvals as well as approval of the shareholders of Del, and is expected to close by December 31, 2007. It is Moody's understanding that if completed, the merger will constitute a change of control and trigger repayment of its obligations under Del's senior asset based credit facility and is also considered a change of control under its floating rate note and senior subordinated indentures. Accordingly, the company has announced its intention to redeem $185 million in aggregate principal amount of the floating rate notes at 102% of the principal amount plus accrued and unpaid interest to the redemption date which is expected to be no later than February 5, 2008. Under the merger agreement, Coty has the right to request Del to take all reasonably necessary action to redeem the senior sub notes on Feb. 1, 2008 with funds for the redemption being provided by Coty. Moody's review for possible upgrade will focus on the successful execution of the merger including the redemption of the floating rate notes and senior subordinated notes. If substantially all of the outstanding debt obligations are redeemed then Moody's is likely to withdraw all of its ratings on Del according to its Rating Withdrawal Policy. However, should there be any significant principal value of bonds outstanding after the company completes its merger agreement; Moody's review will consider the post-transaction risk profile and creditworthiness of the company under the ownership of Coty. These ratings of Del were put under review for possible upgrade: -- Corporate family rating , B3 -- Probability of default rating , B3 -- $185 million floating rate senior secured notes due 2011, B1 (LGD 2, 28%) -- $175 million 8% senior subordinated notes due 2012, Caa2 (LGD 5, 81%) -- Speculative Grade Liquidity Rating of SGL-3 Del Laboratories, Inc., based in Uniondale, New York, is a manufacturer and marketer of cosmetic and over-the-counter pharmaceutical products. Del's cosmetic products consist primarily of nail color, nail treatment, bleaches and depilatories, beauty implements and value cosmetics sold under the Sally Hansen, La Cross, and N.Y.C. New York Color brand names. Pharmaceutical products include oral analgesics, children's toothpaste and sore throat relief and other specialty OTC products and are sold under the Orajel, Dermarest and Gentle Naturals brand names. Del's reported revenues of approximately $450 million for the twelve months ended September 30, 2007. DELPHI CORP: Sr. Noteholders Balk at Revised Disclosure Statement ----------------------------------------------------------------- Eight holders of Senior Notes in Delphi Corp. asks the United States Bankruptcy Court for the Southern District of New York to disapprove the revised Disclosure Statement explaining the Debtors' Joint Chapter 11 Plan of Reorganization filed on Dec. 3, 2007. As reported in the Troubled Company Reporter on Dec. 6, 2007, the Debtors said it has reached agreements in principle with its Official Committee of Unsecured Creditors, its Official Committee of Equity Security Holders, General Motors Corp. and its Plan Investors on amendments to its Joint Plan of Reorganization, Global Settlement Agreement and Master Restructuring Agreement between Delphi and GM, and the Investment Agreement with Delphi's Plan Investors led by an affiliate of Appaloosa Management L.P. Delphi filed potential amendments to all four documents on Monday evening in the United States Bankruptcy Court for the Southern District of New York as revisions to the company's Disclosure Statement and appendices to the company's Disclosure Statement. Holders of Delphi Corp. Senior Notes: -- Caspian Capital Advisors, LLC; -- Castlerigg Master Investments Ltd.; -- CR Intrinsic Investors, LLC; -- Davidson Kempner Capital Management LLC; -- Elliott Associates, L.P.; -- Everest Capital Limited; -- Nomura Corporate Research & Asset Management, Inc.; -- Northeast Investors Trust; -- Sailfish Capital Partners, LLC; and -- Whitebox Advisors, LLC, maintain that the Disclosure Statement should not be approved because the Joint Plan of Reorganization: * classifies dissimilar claims in the same class in violation of Section 1122(a) of the Bankruptcy Code; * provides different treatment to claims classified together within a single class in violation of Section 1123(a)(4); * does not enforce the subordination agreement between the Senior Notes and TOPrS Claims by lumping the claims in one class in violation of Section 510(a); and * is premised on a substantive consolidation of the Debtors, solely for voting and distribution purposes, that the Debtors are unable to justify. "None of these issues have been addressed by the most recent amendment to the Disclosure Statement filed by the Debtors on Dec. 3, 2007," Allan S. Brilliant, Esq., at Goodwin Procter LLP, in New York, contends. Mr. Brilliant argues that although the Debtors have attempted to provide a more fulsome disclosure regarding several aspects of the Plan, the information in the current proposed Disclosure Statement remains wholly inadequate to enable creditors to make an informed judgment about the Plan as required by Section 1125. The Senior Noteholders maintain that the Disclosure Statement lacks adequate disclosure and information: -- on the implications of the value of the New Common Stock and the range of recoveries afforded to General Unsecured Creditors under the Plan; -- contained in the valuation analysis; -- on the economic interests and involvement of the Plan Investors and General Motors Corp. in "negotiating" the Plan; -- on the Plan's proposed treatment of intercreditor rights; -- on the potential impact to creditors of the Debtors' present lack of committed exit financing; -- regarding substantive consolidation; -- on the GM Claim; -- on releases under the Plan; and -- on the Multi-District Litigation Settlements between the Debtors and plaintiffs in the consolidated Securities Litigation. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Disclosure Statement is Inadequate, Wilmington Says ---------------------------------------------------------------- Wilmington Trust Company, the indenture trustee for $2 billion in senior notes and debentures issued by Delphi Corp., asks the U.S. Bankruptcy Court for the Southern District of New York to disapprove the revised Disclosure Statement explaining the Debtors' Joint Chapter 11 Plan of Reorganization filed on Dec. 3, 2007.unless it is supplemented with adequate information. Wilmington Trust further asks the Court to direct the Debtors to reclassify the Senior Debt and the TOPrS Claims in, and to vote in, different classes. Wilmington Trust contends that the Disclosure Statement, as amended on Dec. 3, 2007, continues to lack "adequate information" within the meaning of Section 1125(a) of the Bankruptcy Code regarding issues that are critical to creditors' ability to make an intelligent and informed evaluation of the Joint Plan of Reorganization. The Debtors' statement that "the Plan continues to provide for full recoveries for unsecured creditors at Plan value" is misleading, Edward M. Fox, Esq., at Kirkpatrick & Lockhart Preston Gates Ellis LLP, in New York, asserts. The concept of "Plan value" is never clearly explained and could lead creditors to believe that they are being paid in full when, based on Rothschild's midpoint valuation, they will receive only an 89.2% recovery, he argues. In order to avoid any confusion on that issue and other issues, Wilmington Trust proposes, inter alia, that the Debtors add after the phrase "for unsecured creditors at Plan Value" this language: ", a negotiated enterprise value of $13.3 billion ("Plan Value") for the Debtors, which is $600 million higher than the $12.7 billion midpoint valuation (the Midpoint Valuation") of the Debtors' enterprise value as determined by the Debtors' financial advisors, and which may not be equivalent to the Debtors' actual enterprise value. At the Midpoint Valuation, unsecured creditors will receive a recovery equal to 89.2% of their allowed claims. The Plan also provides . . . ." About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Revised Plan Disregards ERISA Plaintiffs' Concerns --------------------------------------------------------------- The lead plaintiffs in the consolidated securities class action entitled In re Delphi Corp. Securities Litigation, Master Case No. 05-md-1725 (GER) (E.D.Mich.) pending before the U.S. District Court for the Eastern District of Michigan, inform the Bankruptcy Court that the Dec. 3, 2007 versions of the Debtors' Disclosure Statement and Joint Plan of Reorganization still do not address all of their concerns. The lead plaintiffs, as well as the Employee Retirement Income Security Act plaintiffs in the Securities Litigation, had agreed to reduce the allowed amount of the Section 510(b) Note Claims and the Section 510(b) Equity Claims under the Plan from $204 million to $179 million in exchange for the Debtors' cooperation in the monetization of the Allowed Amount. The lead plaintiffs are the holders of Section 510(b) Note Claims while the ERISA plaintiffs are the holders of the Section 510(b) Equity Claims. The Lead Plaintiffs agreed that the claim reduction will be deemed a non-material modification to their Multi-District Litigation Settlement with the Debtors. The Debtors disclosed the Claim Reduction in their Dec. 3 Disclosure Statement. On Dec. 4, 2007, the District Court tentatively approved the modification of the parties' MDL Settlement subject to certain notice requirements intended to allow class members the opportunity to review and take a position on the proposed modification, Michael S. Etkin, Esq., at Lowenstein Sandler PC, in New York, informs the Bankruptcy Court. Nonetheless, the lead plaintiffs and the Debtors have yet to reach agreement on certain of the Lead Plaintiffs' proposed revisions to the Disclosure Statement and Plan involving third- party releases and conditions to the Plan's effectiveness, Mr. Etkin relates. The lead plaintiffs, he says, have provided the Debtors with suggested language that will resolve their dispute and discussions between the parties are continuing. The lead plaintiffs consist of Teachers' Retirement System of Oklahoma, Public Employees' Retirement System Of Mississippi, Raiffeisen Kapitalanlage-Gesellschaft m.b.H., and Stichting Pensioenfonds ABP. About Delphi Corp. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and US$23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) EL PASO: Board OKs 25% Shareholders to Call Special Meetings ------------------------------------------------------------ The board of directors of El Paso Corporation has voted to amend the company's by-laws to modify the provisions regarding the calling of special meetings. The amendment permits stockholders who own at least 25% of El Paso's outstanding common stock to call a special meeting of stockholders. Previously, a special meeting of stockholders could be called only by a majority of the board of directors, the chairman of the board, the chief executive officer, or the president. A copy of the amended by-laws and corporate governance guidelines is available in El Paso's Web site. Headquartered in Houston, Texas, El Paso Corporation (NYSE: EP) -- http://www.elpaso.com/-- is an energy company that provides natural gas and related energy products. The company owns North America's interstate pipeline system, which has approximately 55,500 miles of pipe. It also owns approximately 470 billion cubic feet of storage capacity and a liquefied natural gas import facility with 806 million cubic feet of daily base load send out capacity. El Paso's exploration and production business is focused on the exploration for and the acquisition, development and production of natural gas, oil and natural gas liquids in the United States, Brazil and Egypt. It operates in three business segments: Pipelines, Exploration and Production and Marketing. It also has a Power segment, which holds its remaining interests in international power plants in Brazil, Asia and Central America. Southern Natural Gas Company's business consists of the interstate transportation and storage of natural gas and LNG terminalling operations. Colorado Interstate Gas Company's business consists of the interstate transportation, storage and processing of natural gas. * * * As reported in the Troubled Company Reporter on Nov. 20, 2007, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit ratings on El Paso Corp. and subsidiaries. The outlook remains positive. ENERSYS INC: To Sell 5,000,000 Common Shares to Jefferies --------------------------------------------------------- EnerSys Inc. and certain of its stockholders, including affiliates of Metalmark Capital LLC and certain other institutional stockholders, have agreed to sell 5,000,000 shares of its common stock to Jefferies & Company, Inc. All net proceeds from the sale of the common stock will be received by the selling stockholders. EnerSys will not receive any of the proceeds. The shares are being sold by the selling stockholders pursuant to an effective shelf registration statement. The copy of the prospectus relating to these securities may be obtained, when available, from: Jefferies & Co., Inc. Capital Markets 520 Madison Avenue New York, NY 10022 Telephone (888) 449-2342 For more information, please contact: Richard Zuidema Executive Vice President EnerSys P.O. Box 14145 Reading, PA 19612-4145 Telephone (800) 538-3627 Headquartered in Reading, Pennsylvania, EnerSys Inc. (NYSE: ENS) -- http://www.enersys.com/-- manufactures industrial battery through 21 manufacturing and assembly facilities worldwide. The company provides expertise in designing, building, installing and maintaining a comprehensive stored energy solution for industrial applications throughout the world. The company's products and services are focused on two primary markets: Motive Power (North & South America) or (Europe) and Reserve Power (Worldwide), (Aerospace & Defense) or (Speciality Batteries). The company's facilities are located at China, France, Mexico, Germany, and the United Kingdom, among others. * * * Standard & Poor's Ratings Services revised its outlook on EnerSys Inc. to stable from negative in May 2007. At the same time, Standard & Poor's affirmed all its ratings on the company, including its 'BB' corporate credit rating. ENTERCOM COMMS: Rising Debt Leverage Cues S&P to Revise Outlook --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Bala Cynwyd, Pennsylvania - based radio broadcaster Entercom Communications Corp. to negative from stable. "The outlook revision reflects the company's rising pro forma debt leverage, partially attributable to continued EBITDA declines over the course of 2007; narrow pro forma margin of covenant compliance; and weakened discretionary cash flow," explained Standard & Poor's credit analyst Michael Altberg. The rating on Entercom reflects financial risk from debt-financed radio station acquisitions, the potential for additional acquisitions that could weigh on credit measures, narrow margin of covenant compliance, a competitive operating environment, and the potential for advertising volatility. The company's good competitive positions in large radio markets, radio broadcasting's decent margin and discretionary cash flow potential, and largely resilient station asset values only partially offset the factors. ENVIROKARE TECH: Sept. 30 Balance Sheet Upside-Down by $1.8 Mil. ---------------------------------------------------------------- Envirokare Tech Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $14.7 million in total assets, $13.1 million in total liabilities, and $3.4 million in minority interest in subsidiary, resulting in a $1.8 million total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $3.5 million in total current assets available to pay $5.6 million in total current liabilities. The company reported a net loss of $1.31 million on revenues of $255,880 for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.27 million on revenues of $135,184 in the same period last year. The net loss for the third quarter of 2007 was largely due to LRM Industries LLC's inability to operate at normal capacity as a result of the relocation of its operating facilities. LRM commenced full-time production activities during the three months ended Sept. 30, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2631 Going Concern Doubt Williams & Webster P.S., in Spokane, Wash., expressed substantial doubt about Envirokare Tech Inc.'s ability to continue as a going concern after completing its audit of the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's significant operating losses. About Envirokare Tech Based in New York, Envirokare Tech Inc. (OTC BB: ENVK) -- http://www.envirokare.com/-- through its joint venture, LRM, is developing state-of-the-art TPF ThermoPlastic Flowforming(TM) technology to manufacture and market large molded products from reinforced and non-reinforced thermoplastic polymers. FAYETTE MRI: To Pay GECC Debt Through December 18 Asset Sale ------------------------------------------------------------ General Electric Capital Corporation will attend a public auction and may make offers for the asset of Fayette MRI LLC, on account of unpaid debt owed to GECC, secured creditor. The asset offered for sale consist of rights, title and interest of the Debtor on its Gold Seal GE Signa 1.5T 5X MR System with AGFA 3000 Drystar Laser Camera. The auction will be held at 9:00 a.m. on Dec. 18, 2007, at: Katten Muchin Rosenman LLP 525 West Monroe Street, 19th Floor Chicago, IL 60661 On the sale date, the assets may be offered for sale, with reserve, and sold to the highest bidder at the conclusion of the sales, as determined by GECC in its sole and absolute discretion, on an "as is, where is" basis, without recourse or warranties. Additional terms and conditions applicable to the sale may be obtained from GECC's counsel, Peter J. Young, Esq., through (312) 902-5208. GE COMMERCIAL: S&P Holds Low-B Ratings on Six Cert. Classes ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on nine classes of commercial mortgage pass-through certificates from GE Commercial Mortgage Corp.'s series 2004-C1. Concurrently, S&P affirmed its ratings on 16 classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The upgrades of several senior classes reflect the defeasance of 15% of the collateral pool. The raised ratings on the "PRS" raked certificates reflect the strong performance of the Paradise Point Resort and Spa loan. As of the Nov. 13, 2007, remittance report, the collateral pool consisted of 128 loans with an aggregate trust balance of $1.2 billion, down from 134 loans with a $1.27 billion balance at issuance. The master servicer, Bank of America, reported year-end 2006 financial information for 95% of the pool's nondefeased loans. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.93x, up from 1.60x at issuance. All of the loans in the pool are current. There are two loans with the special servicer, CWCapital Asset Management LLC, totaling $4.8 million, which are discussed below. To date, the trust has experienced four losses totaling $1.9 million. The top 10 loans secured by real estate have an aggregate outstanding balance of $372.9 million (33%) and a weighted average DSC of 2.26x, up from 1.86x at issuance. Despite the overall DSC increase, two of the top 10 loans have experienced decreases in DSC of 20% or more. These include the fifth- and 10th-largest loans, the latter of which appears on the watchlist and is discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans. Two of the properties were characterized as "excellent," while the remaining collateral was characterized as "good." Credit characteristics for four loans continue to be consistent with those of investment-grade obligations. Three are included in the top 10; the details of these loans are: -- The AFR/Bank of America portfolio is encumbered by mortgage debt of $372.5 million. The debt consists of a $287.8 million A note, which is split into six pari- passu pieces. One of the pari-passu pieces ($51.3 million, 4%) is the largest loan in the trust. The debt also includes an $84.7 million B note held in GMAC 2003-C3. To date, the collateral for $71 million of mortgage debt has been defeased. The remaining collateral includes 121 office properties and retail bank branches totaling 6 million sq. ft. in various locations throughout the U.S. While the AFR/Bank of America portfolio's revenue has remained stable, operating expenses have exceeded Standard & Poor's expectations at issuance. Standard & Poor's lower net cash flow as compared with issuance has been mitigated, in part, by the defeasance noted above as well as scheduled amortization of the loan. DSC and occupancy were reported at 2.02x and 91%, respectively, as of March 2007. -- Metropolitan I and II, the third-largest exposure in the pool ($46.5 million, 4%), consists of two cross- collateralized and cross-defaulted loans secured by multifamily properties in Atlanta, Georgia. Metropolitan I consists of 434 units, while Metropolitan II comprises 274 units. Occupancy was 91% as of March 31, 2007, up from 84% at issuance, while reported DSC was 2.46x as of year-end 2006, compared with 2.53x at issuance. Standard & Poor's adjusted NCF is up from its level at issuance. -- Paradise Point Resort and Spa has a whole-loan balance of $65 million. The whole loan consists of a $47 million senior participation, which is included in the pool as the fourth-largest asset, and an $18 million junior participation, which supports the six, non- pooled "PRS" raked certificates. The cash flow for the raked classes is derived solely from junior participation's interest in the property. A leasehold interest on a 462-room full service, class A resort in San Diego, California, secures the whole loan. Based on an average 2006 occupancy of 80%, the average daily rate and revenue per available room increased over the respective issuance levels of $196.44 and $143.82. Reported year-end 2006 DSC was 5.47x and occupancy was 80% as of June 30, 2007. Standard & Poor's adjusted NCF is 20% higher than its level at issuance. The Shoppes at Grand Prairie ($40.5 million, 3%) is the fifth- largest loan in the pool. It reported a DSC of 0.97x as of year- end 2006, which is down 23% from its level at issuance. The loan is secured by a 488,349-sq.-ft. anchor retail center that opened in 2003 in Peoria, Illinois. As of June 30, 2007, occupancy was 97%. The decline is DSC is primarily due to increased operating expenses. The loan no longer appears on the master servicer's watchlist because the DSC improved to 1.11x as of June 30, 2007. Bank of America reported a watchlist of 17 loans with an aggregate outstanding balance of $157.4 million (13%). Greens at Shawnee is the largest loan on the watchlist and the 10th-largest loan in the pool with a principal balance of $21.0 million (2%). The loan is secured by a 402-unit multifamily property, built in 2002 in Shawnee, Kansas, approximately 13 miles south of Kansas City. The loan is on the watchlist due to a low DSC. Occupancy and DSC as of year-end 2006 were 97% and 1.03x, respectively. There are two loans with the special servicer. Ives Dairy Self Storage ($2.9 million) was transferred to the special servicer in September 2007 due to payment default. The loan was corrected and transferred back to the master servicer on Nov. 15, 2007. Colleyville Plaza Shopping Center ($1.9 million) was transferred to the special servicer on Oct. 29, 2007, due to imminent default. The loan is secured by a 20,657-sq.-ft. retail center, built in 1980 in Colleyville, Texas. The borrower has requested payment relief due to vacancy issues. CWCapital ordered an appraisal and is reviewing the proposal as well as the financial statements received from the borrower. Year-end 2006 DSC was 0.67x. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2004-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AA+ AA 14.41% C AA AA- 13.06% D A+ A 10.49% Paradise Point Resort and Spa Raked certificates Rating ------ Class To From ----- -- ---- PRS-1 AAA AA- PRS-2 AA+ A PRS-3 AA A- PRS-4 AA- BBB PRS-5 A+ BBB- PRS-6 A BBB- Ratings Affirmed GE Commercial Mortgage Corp. Commercial mortgage pass-through certificates series 2004-C1 Class Rating Credit enhancement ----- ------ ---------------- A-1 AAA 17.64% A-2 AAA 17.64% A-3 AAA 17.64% A1-A AAA 17.64% E A- 9.28% F BBB+ 7.53% G BBB 6.45% H BBB- 4.96% J BB+ 4.15% K BB 3.34% L BB- 2.80% M B+ 2.13% N B 1.72% O B- 1.45% X-1 AAA N/A X-2 AAA N/A N/A -- Not applicable. GENERAL MOTORS: Canadian Arm to Idle Oshawa Truck Plant in January ------------------------------------------------------------------ General Motors of Canada Ltd. disclosed plans of temporarily shuttering its truck assembly plant in Oshawa, Ontario, for two weeks in January 2008, cutting roughly 8,800 truck output, various sources report. The move is a result of the slow sales of Chevrolet Silverados and GMC Sierras in the United States. As reported in the Troubled Company Reporter on Dec. 4, 2007, after three consecutive monthly increases, General Motors Corp. dealers in the United States delivered 263,654 vehicles in November, down 11% compared with a year ago, reflecting continuing reductions in daily rental sales and softening industry demand. About General Motors of Canada Headquartered in Oshawa Ontario, General Motors of Canada Ltd. manufactures vehicles, vehicle powertrains, and markets the full range of General Motors vehicles and related services through 743 dealerships and retailers across Canada. Vehicles sold through this network include Chevrolet, Buick, Pontiac, GMC, Saturn, Hummer, Saab and Cadillac. GM of Canada employs more than 19,000 people nationwide. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GENERAL MOTORS: November 2007 Sales in Canada Down 10.2% -------------------------------------------------------- For November 2007, General Motors of Canada Ltd. dealers delivered a total of 28,071 vehicles, down 10.2% from the same month last year. "November was a soft month overall for industry retail sales," Marc Comeau, GM of Canada's vice-president of sales, service, and marketing, said. "At GM we continue to see strength from our recently launched products like the Saturn Outlook, GMC Acadia and Buick Enclave crossover utilities and the Cadillac CTS. The new Chevrolet Malibu and Malibu Hybrid are creating a lot of buzz with impressive product reviews and strong customer acceptance. "We have seen some early success from our year-end Wish & Win promotion, showing customers that the best value on the industry's best vehicles can be found at their local GM Canada dealership." Sales Highlights Mid Utilities were up a combined 67.4% driven by the continued strength of the all-new family of crossovers including the Saturn Outlook, GMC Acadia and Buick Enclave. GMs smaller, fuel efficient cars continue to perform well with the Chevrolet Aveo and Pontiac Wave up a combined 16.8% and the Pontiac Vibe posting gains of 31.3%. Chevrolet Silverado and Sierra Extended Cab pick ups were up a combined 4.9%. Cadillac sales were up 2.9% overall, led by a 38.1% increase for the award winning Cadillac CTS. About General Motors of Canada Headquartered in Oshawa Ontario, General Motors of Canada Ltd. manufactures vehicles, vehicle powertrains, and markets the full range of General Motors vehicles and related services through 743 dealerships and retailers across Canada. Vehicles sold through this network include Chevrolet, Buick, Pontiac, GMC, Saturn, Hummer, Saab and Cadillac. GM of Canada employs more than 19,000 people nationwide. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 280,000 people around the world and manufactures cars and trucks in 33 countries, including the United Kingdom, Germany, France, Russia, Brazil and India. In 2006, nearly 9.1 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GENESCO INC: Faces Class Action Suit in Tennessee Dist. Court ------------------------------------------------------------- Dreier LLP has commenced a class action lawsuit in the United States District Court for the Middle District of Tennessee on behalf of purchasers of Genesco Inc. common stock during the period from April 20, 2007, through Nov. 26, 2007, inclusive. The complaint alleges violations of the federal securities laws, including Sections 10(b) of the Securities Exchange Act of 1934. The complaint alleges that as a result of defendants' representations concerning Genesco's purported success, the company was seen as an attractive acquisition target for Foot Locker Inc., which ultimately made an offer. Subsequently, Finish Line and Headwind Inc., a wholly owned subsidiary of Finish Line, made an increased offer to purchase the Genesco. Shortly thereafter, Finish Line and Genesco entered into a merger agreement. However, when the truth about Genesco's results began to be revealed to the market, Finish Line indicated that it would no longer pursue the merger. Then, on Nov. 26, 2007, Genesco received a subpoena from the Office of the U.S. Attorney for the Southern District of New York, which sought documents related to its merger agreement and in connection with alleged violations of federal fraud statutes. Upon revelation of this news, Genesco common stock declined almost 16% on heavy volume, from its closing price of $30.17 on November 26 to $25.44 on November 27. Persons who have acquired Genesco common stock and want to discuss legal rights, may contact: Dreier LLP Attn: Daniel B. Scotti Email classlaw@dreierllp.com Tel 800-952-8897 About Genesco Inc. Headquartered in Nashville, Tennessee, Genesco Inc. (NYSE: GCO) -- http://www.genesco.com/-- is a specialty retailer of footwear, headwear and accessories in more than 1,900 retail stores in the U.S. and Canada, principally under the names Journeys, Journeys Kidz, Shi by Journeys, Johnston & Murphy, Underground Station, Hatworld, Lids, Hat Zone, Cap Factory, Head Quarters and Cap Connection. The company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers. * * * As reported in the Troubled Company Reporter on Nov. 5, 2007, Moody's Investors Service downgraded Genesco Inc.'s corporate family and probability of default ratings to B1 from Ba3 and maintained the review for possible downgrade. In addition, Moody's downgraded the company's convertible senior subordinated debentures to B2 from B1. GOODYEAR TIRE: Forms New Strategic Business Unit ------------------------------------------------ The Goodyear Tire & Rubber Company has disclosed the formation of a new strategic business unit, combining the former regions of European Union and Eastern Europe, Middle East and Africa. The new region of Europe, Middle East and Africa will be Goodyear's largest in terms of geography and second largest, after North America, in terms of annual sales revenue. Annual combined sales revenue for the two regions in 2006 was $6.5 billion. The change becomes effective Feb. 1, 2008. "While the two former regions are different in terms of approach to the market there are also many similarities which are increasing, especially with the introduction of the new EU member states," Goodyear Chairman and Chief Executive Officer Robert J. Keegan, said. "This new organization is structured to accelerate growth and maximize earnings through simplicity, speed and an intense focus on our customers and markets." Mr. Keegan disclosed the appointment of Arthur de Bok, formerly president, EU, as the president of the new SBU. Mr. De Bok will report to Mr. Keegan. In addition he reported the appointment of Michel Rzonzef, formerly vice president sales and marketing, EEMEA, as president of the EEMEA countries. Mr. Rzonzef will report to Mr. de Bok. Mr. Keegan also announced the retirement, for family reasons, of Jarro Kaplan, president, EEMEA, after a career spanning more than 38 years. He praised the contribution of Mr. Kaplan who had joined the region in 2001 and had steered the business unit to outstanding increases in turnover and profit. "Jarro has been one of the most successful business leaders in our company's history," Mr. Keegan said. "We will miss his contributions and wish him all the best in the next era of his life." Mr. De Bok was appointed to his position in September 2005, having joined the company after a 13 year career with Procter & Gamble. Mr. De Bok has Bachelor's and Master's degrees in law from Erasmus University in the Netherlands. "Since becoming president of the EU organization, Arthur has led a successful market driven approach to our businesses and has simplified the organization," Mr. Keegan said. "His proven leadership capabilities will be invaluable as he leads this newly integrated business into the future." Mr. Rzonzef was appointed to his current position in December 2002. He received a degree in electro-mechanical engineering from Liege University in Belgium in 1987 and joined Goodyear Luxembourg shortly afterwards. After positions in the Goodyear Technical Center he held various roles in sales and marketing before becoming general manager in central Europe in 2001. "Michel has been one of the driving forces behind the success of the EEMEA region and has been responsible for the tremendous growth of the business," Mr. De Bok said. "His knowledge, people skills and experience will be invaluable as we integrate our businesses focusing intensely on our customers and our markets." "I have seen both Arthur and Michel develop rapidly over these past few years into outstanding businessmen and leaders," Mr. Keegan said. "I am confident the new opportunities for both will continue their personal and professional development ." Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. Goodyear's operations are located in Argentina, Austria, Chile, Colombia, France, Italy, Guatemala, Jamaica, Peru, Russia, among others. Goodyear employs more than 80,000 people worldwide. * * * In June 2007, Standard & Poor's Ratings Services raised its ratings on Goodyear Tire & Rubber Co., including its corporate credit rating to 'BB-' from 'B+'. These ratings still apply as of Dec. 4, 2007. GWENDOLYN CHAMBLISS: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Gwendolyn Chambliss aka Gwendolyn Simmons Levester S. Chambliss aka Sam Chambliss 17323-36th Lane South Seattle, WA 98188 Bankruptcy Case No.: 07-15901 Type of Business: The Debtor owns and manages beauty school G.P. Institutes of Cosmetology. See http://gpiofcosmetology.com/ Chapter 11 Petition Date: December 7, 2007 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Jeffrey B. Wells, Esq. 500 Union Street, Suite 927 Seattle, WA 98101-2332 Tel: (206) 624-0088 Total Assets: $4,006,000 Total Debts: $3,089,105 Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Trinidad Holdings loan; value of $300,000 collateral: $2,000,000 Olympic Coast Investment loan $2,160,000 801 Second Ave, Suite 315 value of collateral: Seattle, WA 98104 $2,000,000; value of security: $2,000 Community Capital Development loan $50,000 P.O. Box 22283 Seattle, WA 98122 B.M.W. Financial Services lease; value of $36,123 collateral: $36,000; value of security: $36,000 Mercedes Benz Financial lease $16,000 Bank Of America credit card $10,302 Citi Bank credit card $10,000 Chase credit card $9,182 Charter Adjustments Corp. services $6,431 Titan Outdoors credit account $6,000 N.A.C.M. credit card $3,520 Washington Mutual Bank credit card $1,500 Home Depot credit card $500 HELIX ENERGY: S&P Rates $500MM Proposed Fixed-Rate Notes at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its existing ratings, including the 'BB-' corporate credit rating, on offshore energy services company Helix Energy Solutions Group. Inc. and assigned its 'B+' senior unsecured rating to $500 million in proposed fixed-rate notes due 2015 and floating-rate notes due 2014. Proceeds from the offering will be used to repay amounts currently drawn on Helix's revolving credit facility and to retire a portion of its $835 million term loan B. The outlook is stable. Pro forma for the new notes offering and for majority-owned subsidiary Cal Dive International Inc. financing its pending acquisition of Horizon Offshore Inc., Houston, Texas-based Helix will have about $1.9 billion in consolidated debt. "The ratings on Helix reflect potential challenges in realizing expected synergies between its oilfield services and exploration and production businesses over the longer term, short-lived oil and gas reserves on a proved developed producing basis that are focused primarily in the U.S. Gulf of Mexico, continued high levels of growth capital spending, and an aggressive financial risk profile," said Standard & Poor's credit analyst Jeffrey B. Morrison. Weaknesses are partially mitigated by the company's solid market position in its offshore contracting services businesses, its technically sophisticated fleet of marine contracting vessels, favorable near-term industry fundamentals, and consolidated credit measures that remain in line with expectations for the current ratings. Helix is an international offshore energy company that provides marine contract services to the open market and to its own oil and gas E&P operations. HEREFORD & HOPS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Lead Debtor: Hereford & Hops of Cranberry T.W.P., L.L.C. dba Hereford & Hops Steakhouse & Brewpub 1740 Route 228 Cranberry Township, PA 16066 Bankruptcy Case No.: 07-27763 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Brewmasters of Cranberry T.W.P., L.L.C. 07-27764 Type of Business: The Debtors owned and manages restaurants and breweries. See http://herefordandhops.com/ Chapter 11 Petition Date: December 9, 2007 Court: Western District of Pennsylvania (Pittsburgh) Debtors' Counsel: Brian C. Thompson, Esq. Thompson & Yates, P.C. Duff Office Center 10 Duff Road, Suite 205 Pittsburgh, PA 15235 Tel: (412) 242-1806 Fax: (412) 242-1808 Estimated Assets Estimated Debts ---------------- --------------- Hereford & Hops of Cranberry $1 Million to $1 Million to T.W.P., L.L.C. $10 Million $10 Million Brewmasters of Cranberry $1 Million to $1 Million to T.W.P., L.L.C. $10 Million $10 Million The Debtors did not file a list of its largest unsecured creditors. HIGHRIDGE ABS: S&P Puts 'BB' Rating Under Negative Watch -------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1AT, A-2, A-3, B, C, D, and E notes issued by Highridge ABS CDO I Ltd. and on the class A-2, B-1, and B-2 notes issued by Montrose Harbor CDO I Ltd. on CreditWatch with negative implications. Standard & Poor's notes that Highridge ABS CDO I Ltd. triggered an event of default on Nov. 23, 2007, under section 5.1(i) of the indenture dated Jan. 25, 2007, when the class A sequential pay ratio fell below 100%. On Nov. 29, 2007, Montrose Harbor CDO I Ltd. triggered an EOD under section 5.1(i) of the indenture dated July 31, 2006, when the net outstanding portfolio collateral balance failed to equal or be greater than 103% of the sum of the aggregate outstanding amount of the class A-1 and A-2 notes. When Standard & Poor's receives EOD notices, S&P place all affected note ratings on CreditWatch with negative implications. Ratings Placed on Creditwatch Negative Rating ------ Transaction Class To From ----------- ----- -- ---- Highridge ABS CDO I Ltd. A-1AT AAA/Watch Neg AAA Highridge ABS CDO I Ltd. A-2 AAA/Watch Neg AAA Highridge ABS CDO I Ltd. A-3 AAA/Watch Neg AAA Highridge ABS CDO I Ltd. B AA/Watch Neg AA Highridge ABS CDO I Ltd. C AA-/Watch Neg AA- Highridge ABS CDO I Ltd. D A/Watch Neg A Highridge ABS CDO I Ltd. E BBB/Watch Neg BBB Montrose Harbor CDO I Ltd. A-2 AAA/Watch Neg AAA Montrose Harbor CDO I Ltd. B-1 AA/Watch Neg AA Montrose Harbor CDO I Ltd. B-2 AA-/Watch Neg AA- Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ Highridge ABS CDO I Ltd. A-1AD AAA Montrose Harbor CDO I Ltd. A-1 AAA Montrose Harbor CDO I Ltd. C A-/Watch Neg Montrose Harbor CDO I Ltd. D BB/Watch Neg HJ HEINZ: Moody's Revises Outlook to Stable from Negative --------------------------------------------------------- Moody's Investors Service revised the rating outlook for H.J. Heinz Company to stable from negative and affirmed the company's Baa2 senior unsecured long-term debt rating and its Prime-2 short- term debt rating. The change in outlook to stable reflects improved operating performance over the past 18 months, which reflects the benefits from stronger product innovation, cost reduction efforts, net pricing realization and geographic diversity. "While the company faces challenges in the coming year from high commodity prices and a likely slowdown in the foodservice channel, the success Heinz has achieved globally in retail product innovation, increased pricing, and more efficient promotional spending sets the stage for improved earnings strength over time," said Moody's Vice President and Senior Analyst, Brian Weddington. Moody's notes that Heinz will need to improve its credit metrics and maintain a more moderate financial policy before the ratings are upgraded. "Debt financed share repurchases and a high dividend payout rate have limited improvement in debt protection measures. However, there have not been any major product portfolio shifts over the past year, which we believe has contributed to better performance," added Weddington. Heinz' Baa2 rating reflects the global strength of the Heinz brand, good product and geographic diversity, strong cash flow generation and ample liquidity. These strengths are balanced against weak credit metrics for the Baa2 rating category and a financial policy that has favored shareholder distributions. Ratings affirmed are: H.J. Heinz Company -- Senior unsecured debt at Baa2 H.J. Heinz Finance Company -- Senior unsecured debt at Baa2 under full guarantee of H.J. Heinz Company -- Preferred stock at Ba1 H.J. Heinz Finance UK PLC -- Senior unsecured debt at Baa2 under full guarantee of H.J. Heinz Company H.J. Heinz Company -- Short term debt at Prime-2 H.J. Heinz Finance Company -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz B.V. -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz Finance UK PLC -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz Company of Canada Limited -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company Founded in 1869, H. J. Heinz Company is a leading marketer and producer of branded foods in ketchup, condiments, sauces, meals, soups, seafood, snacks and infant foods. Key brands include Heinz(R) Ketchup, sauces, soups, beans, pasta and infant foods, Ore-Ida(R) French Fries and roasted potatoes, Boston Market(R) and Smart Ones(R) meals and Plasmon(R) baby food. Heinz's 50 companies have number-one or number-two brands in 200 countries. H.J. Heinz Company is located in Pittsburgh, Pennsylvania. HSI ASSET: Moody's Lowers Ratings on 29 Tranches ------------------------------------------------ Moody's Investors Service has downgraded the ratings of 29 tranches and placed on review for possible downgrade the ratings of 4 tranches from 5 transactions issued by HSI Asset Securities Corporation in 2007. Additionally, 2 downgraded tranches remain on review for possible further downgrade. The collateral backing these classes consists of primarily first lien, fixed and adjustable-rate, subprime mortgage loans. In its analysis, Moody's has combined its published methodology updates as of July 13, 2007 to the non delinquent portion of the transactions. Collateral backing these transactions is also experiencing higher than anticipated rates of delinquency, foreclosure, and REO relative to credit enhancement levels. Complete list of Rating Actions: Issuer: HSI Asset Securitization Corporation Trust 2007-HE1 -- Cl. M-2 Currently Aa2 on review for possible downgrade, -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A3, previously A1, -- Cl. M-5, Downgraded to Baa3, previously A2, -- Cl. M-6, Downgraded to Ba2, previously A3, -- Cl. M-7, Downgraded to B2, previously A3, -- Cl. M-8, Downgraded to Caa1, previously Baa1, -- Cl. M-9, Downgraded to Ca, previously Baa2, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: HSI Asset Securitization Corporation Trust 2007-HE2 -- Cl. M-5, Downgraded to A3, previously A2, -- Cl. M-6, Downgraded to Baa2, previously A3, -- Cl. M-7, Downgraded to Ba2, previously Baa1, -- Cl. M-8, Downgraded to B2, previously Baa2, -- Cl. M-9, Downgraded to Caa2, previously Baa3, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: HSI Asset Securitization Corporation Trust 2007-NC1 -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Ba1, previously A3, -- Cl. M-7, Downgraded to B1, previously Baa1, -- Cl. M-8, Downgraded to B3 on review for possible further downgrade, previously Baa2, -- Cl. M-9, Downgraded to Caa2, previously Baa3, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: HSI Asset Securitization Corporation Trust 2007-OPT1 -- Cl. M-3 Currently Aa3 on review for possible downgrade, -- Cl. M-4, Downgraded to A2, previously A1, -- Cl. M-5, Downgraded to Baa1, previously A2, -- Cl. M-6, Downgraded to Ba1, previously A3, -- Cl. M-7, Downgraded to B1, previously Baa1, -- Cl. M-8, Downgraded to B3 on review for possible further downgrade, previously Baa2, -- Cl. M-9, Downgraded to C, previously Baa3, -- Cl. M-10, Downgraded to C, previously Ba1. Issuer: HSI Asset Securitization Corporation Trust 2007-WF1 -- Cl. M-9, Downgraded to Ba2, previously Baa2, -- Cl. M-10, Downgraded to B1, previously Baa3. HURLEY MEDICAL: Moody's Holds Ba1 Rating and Revises Outlook ------------------------------------------------------------ Moody's Investors Service has affirmed Hurley Medical Center's Ba1 long-term rating. This action affects approximately $64 million of outstanding bonds issued through the City of Flint Hospital Building Authority as listed at the conclusion of the report. The outlook is revised to stable from negative and reflects Hurley's materially improved operating performance in fiscal year 2007 and our expectation that Hurley will maintain this level of performance in FY 2008. Legal Security: The bonds are secured by a pledge of net revenues of the obligated group, as defined in the bond documents. Hurley is the only member of the obligated group. The bonds are not secured by the full faith and credit of the City of Flint. Interest Rate Derivatives: In connection with the Series 2003 bonds, Hurley entered into a fixed-to-floating interest rate swap agreement in July 2004 with Piper Jaffray. The swap has a notional amount of $35 million and terminates in 2011. Under the swap, Hurley pays a variable rate based on the SIFMA index (previously known as BMA index) and receives a fixed rate of 2.91%. Swap payments are on parity with bond payments. The swap may be terminated at any time at Hurley's option, or at the counterparty's option upon downgrade of Hurley to below Ba1. There is no collateral requirement under the swap agreement upon Hurley's downgrade. Strengths * Differentiation of essential high-end tertiary services generates a strong draw of patients beyond the City of Flint and Genesee County for this regional referral center * Materially improved operating results in FY 2007, although performance remains modest (2.9% operating cash flow margin in FY 2007) * Adequate liquidity position at the Ba1 rating category with cash-to-debt good at 94% at fiscal year end 2007 and cash on hand adequate at 66 days; Moody's notes Hurley received a significant portion of special funding from the state in the first quarter of FY 2008 (which had been recorded as revenue in FY 2007), thereby boosting liquidity materially in the current fiscal year * Medicare DRG changes expected to enhance net revenue favorably given Hurley's patient mix Challenges * Located in demographically challenged Flint, Michigan leads to weak payor mix with Medicaid representing a high and growing 35% of gross patient revenues * Vulnerable economy in Michigan threatens Medicaid budget and other state healthcare funding programs on which Hurley depends * Track record of variable operating performance and weak operating margins; as recently as FY 2006 Hurley recorded an operating loss of -5.1% and negative operating cash flow of -0.5% * Declining surgical and inpatient admission volumes since FY 2005 lead to declining market share in the service area * Competitive service area, with the presence of two like- sized competitors in the immediate Flint area, both of which are part of larger healthcare systems Recent Developments/Results Moody's view Hurley's location in Flint, Michigan with concern, as the city's economy has been challenged for years. Hurley is a 22,000-admission tertiary regional referral center owned by the City of Flint. Both Delphi and General Motors have a sizeable presence in Flint and both companies are facing considerable challenges. The city is characterized by a declining industrial base, high unemployment rate, a low median income level, and population decline. Accordingly, Hurley's payor mix is weak, as Medicaid represents a high and increasing 35% of gross revenues. In addition to poor demographics, Hurley faces strong competition in the area. Hurley's primary competitors are 25,000-admission Genesys Regional Medical Center (a member of Aa2-rated multi-state Ascension Health) and 20,000-admission McLaren Regional Medical Center (a member of A1-rated multi-hospital McLaren Health Care). Genesys is the market leader in the primary service area - defined as Genesee County - with more than 34% market share. Hurley holds the number two position, capturing a declining nearly 30% share, while McLaren captures a growing share of more than 25% of the market. Moody's have concerns regarding Hurley's declining market share, although Moody's note that Hurley continues to have a number of cooperative joint ventures with both Genesys and McLaren. Favorable market factors that help somewhat to mitigate our concerns regarding the demographics of Flint and the competitive environment include: (a) the demographics of A2-rated Genesee County are more favorable than those of Flint, as the county is characterized by modest population growth and income levels more in-line with state and national averages; and (b) Hurley's service differentiation as the only market provider of high-end essential services in the broader region such as a burn unit, Level I trauma, and neonatal intensive care unit, all of which help to provide a regional draw as evidenced by the fact that more than 40% of Hurley's admissions come from outside of the City of Flint. Hurley's operating performance improved materially in FY 2007, which Moody's view favorably. In audited FY 2007, Hurley recorded an operating loss of $5.8 million (-1.7% operating loss margin) and operating cash flow of $9.9 million (2.9% operating cash flow margin). While still modest, these results are significantly better than the $16.8 million operating loss (-5.1% margin) and $1.7 million negative operating cash flow (-0.5% margin) recorded in FY 2006. The improved performance in FY 2007 is due to a number of factors, including: (a) despite state budgetary challenges, net favorable funding from the state's quality assurance assessment program (QAAP, which is similar to a provider tax) to Hurley increased to approximately $14 million in FY 2007 from approximately $8 million in FY 2006 and $7.6 million in FY 2005 (management expects to receive approximately $14 million again in FY 2008); (b) improved labor productivity and reduction in full time equivalents; (c) Hurley's Chief Executive Officer, who has been on board since summer 2005, has implemented a number of senior management changes, including the elimination of a number of redundant responsibilities; (d) days in accounts receivable decreased to 65 days at FYE 2007 from 72 days at FYE 2006 and 80 days at FYE 2005; (e) increased acuity, largely the result of improved coding (Hurley's Medicare case mix index increased to 1.48 in FY 2007 from 1.42 in FY 2006 and 1.40 in FY 2005); and (f) the state earmarked $1 million to support Hurley's operations in the 2007 state budget. While Moody's view the state's increased funding to Hurley through the QAAP program and special earmarked funds as demonstration of strong support for the medical center, Moody's view these revenues as at risk for Hurley. Any contraction of these funds will require commensurate cost reductions. Hurley Management is projecting continued operating gains in the current fiscal year, budgeting operating cash flow of $13.8 million for the medical center in FY 2008. Given the revision of the outlook to stable, we expect full year FY 2008 results at least to match FY 2007. Improvement efforts include: (a) reduced employee health benefit costs (Hurley recently agreed to new three-year contracts with seven of nine unions and is negotiating with the other two, employee health benefits being a major concession point); (b) continued gains in revenue cycle management and labor productivity; (c) better marketing efforts, particularly to patients who reside in the broader service area outside of Flint; (d) enhanced program development, particularly in cardiovascular, as Hurley is adding a new cath lab; and (e) revenue enhancements due to favorable Medicare DRG changes. As a result of stronger operating performance in FY 2007, Hurley's debt ratios improved considerably. Debt-to-cash flow decreased to a manageable 7.4 times in FY 2007 from a very high 112 times in FY 2006 while peak debt service coverage strengthened to an adequate 1.70 times from a low 0.6 times. Hurley tripped its debt service coverage covenant based on the weak performance in FY 2006. Despite improved cash flow generation, Hurley's unrestricted cash position weakened in FY 2007, although we note that Hurley's liquidity is a relative area of strength at the Ba1 rating category. At FYE 2007, absolute unrestricted cash and investments decreased to $62 million from $66 million at FYE 2006. As a result, cash on hand decreased to a still adequate 66 days at FYE 2007 from 72 days at FYE 2006, while cash-to-debt remained essentially unchanged at 94%. Liquidity levels at FYE 2007 were depressed somewhat artificially because some of the state subsidies booked for FY 2007 were not received until early FY 2008. As a result, Hurley's unrestricted cash increased materially to $79 million as of Sept. 30, 2007. On the other hand, Moody's believe that if operating performance were to revert to FY 2006 levels, cash balances could deteriorate quickly. Hurley management continues to pursue a county-wide tax mileage in Genesee County. This issue is expected to be presented to county voters for approval in summer 2008 and if approved would provide funding to Hurley beginning in 2009. Outlook The outlook revision to stable from negative reflects Moody's belief that improved operating results achieved in FY 2007 at least will be matched in FY 2008. Despite the revision in outlook, Moody's recognize the longer term challenges that Hurley faces given the demographic trends in Flint and the overall challenges currently faced by the state. What could change the rating -- UP Increase in profitable patient volumes resulting in sustained elevated cash flow generation and improved debt ratios; significant market share gain; strengthening of the balance sheet What could change the rating -- DOWN Decline in liquidity measures; failure to sustain material operating improvements achieved in FY 2007; sustained loss of inpatient admission and/or surgical volumes; increase in debt without commensurate growth in cash flow Key Indicators Assumptions & Adjustments: -- Based on Hurley Medical Center consolidated financial statements -- First number reflects consolidated audited FY 2006 for the year ended June 30, 2006 -- Second number reflects consolidated audited FY 2007 for the year ended June 30, 2007 -- Bad debt expense and interest expense reclassified as operating expenses -- Investment returns smoothed at 5% * Inpatient admissions: 22,495; 22,245 * Total operating revenues: $327 million; $348 million * Moody's-adjusted net revenues available for debt service: $5.1 million; $13.4 million * Total debt outstanding: $69.5 million; $65.9 million * Maximum annual debt service (MADS): $8.1 million; $7.8 million * MADS Coverage with reported investment income: 0.15 times; 1.70 times * Moody's-adjusted MADS Coverage with normalized investment income: 0.63 times; 1.70 times * Debt-to-cash flow: 111.7 times; 7.43 times * Days cash on hand: 72 days; 66 days * Cash-to-debt: 94%; 94% * Operating margin: -5.1%; -1.7% * Operating cash flow margin: -0.5%; 2.9% Rated Debt (debt outstanding as of June 30, 2007) Issued through City of Flint Hospital Building Authority: -- Series 1998A Hospital Revenue Bonds ($13.4 million outstanding), rated Ba1 -- Series 1998B Hospital Revenue Bonds ($17.7 million outstanding), rated Ba1 -- Series 2003 Hospital Revenue Bonds ($35.0 million outstanding), rated Ba1 IMAX CORP: Inks Deal with AMC to Install 100 IMAX(R) Systems ------------------------------------------------------------ IMAX Corporation and AMC Entertainment Inc. enter a joint-venture agreement to install 100 IMAX(R) digital projection systems at AMC locations in 33 major U.S. markets. The theatres will feature IMAX's digital projection system which is being developed for the IMAX MPX(R) theatre design. The agreement is projected to double IMAX's current commercial theatre footprint in North America and accelerates the momentum behind IMAX and AMC's transition to digital projection technology. "We are committed to delivering a premium entertainment experience by offering a menu of entertainment alternatives inside our facilities," Peter C. Brown, chairman and chief executive officer, AMC Entertainment Inc., said. "Our expanded relationship with IMAX and the deployment of its state-of-the-art, next-generation digital projection systems is a key part of our strategy of continuing to broaden and enhance the AMC experience. It also builds on the successful partnership we have had with IMAX since June of 2005 and complements our overall digital plan." The rollout of the first 50 IMAX digital projection systems will begin in July 2008 at premier AMC theatre locations in 24 of the 33 selected markets, with an additional 25 scheduled for rollout in 2009 and 25 more in 2010. The IMAX theatres are slated to be installed in many of AMC's top- performing locations in the United States, including: AMC South Barrington 30, Chicago; AMC Mesquite 30, Dallas; AMC Gulf Pointe 30, Houston; AMC Century City 15, Los Angeles; AMC Empire 25, New York; AMC Neshaminy 24, Philadelphia; AMC Eastridge 15, San Francisco; AMC Hoffman Center 22, Washington D.C. "The agreement cements a partnership between two great brands," IMAX co-chairmen and co-CEOs Richard L. Gelfond and Bradley J. Wechsler, said. "Partnering with AMC in a theatre deal of this size and scope is a transformational moment for our company from both a financial and strategic perspective. We couldn't be more pleased that The IMAX Experience(R) will be more accessible to consumers in nearly every major market in the United States. "AMC is unique in the number of successful, stadium-seat megaplexes in locations that could accommodate this large number of new IMAX(R) theatres," they continued. "Further, AMC's confidence in our digital projection system is a terrific endorsement. We look forward to rolling out our ground-breaking new technology and delivering the premium experience that moviegoers have come to expect from the IMAX(R) brand." In October of this year, IMAX disclosed that it had moved up the launch date of its digital projection system to mid-2008 from its anticipated timeframe of the end of 2008 to mid-2009. The anticipated IMAX digital projection system will further enhance The IMAX Experience and help to drive profitability for studios, exhibitors and IMAX theatres by virtually eliminating the need for film prints, increasing program flexibility and ultimately increasing the number of movies shown on IMAX screens. IMAX has already secured important parts of its film slate for 2008, 2009 and 2010 through agreements with major Hollywood studios including: The Spiderwick Chronicles (February 2008), Shine A Light (April 2008), Kung Fu Panda (June 2008), The Dark Knight (July 2008), Deep Sea-quel 3D (working title, February 2009), Monsters vs. Aliens 3D (March 2009), How to Train Your Dragon 3D (November 2009), Hubble 3D (working title, February 2010) and Shrek Goes Forth 3D (May 2010). "An agreement of this magnitude significantly jumpstarts our joint venture initiative, which we expect will generate increased recurring revenues for IMAX going forward," added Messrs. Gelfond and Wechsler. "AMC's decision to enter into this agreement will accelerate the growth of our theatre network in North America and should help power the digital transition underway at our company, which we believe will help drive our operating and financial performance for years to come." AMC's initial 50 IMAX digital locations will include: MARKET AMC THEATRE ------ ----------- Atlanta AMC Barrett Commons 24 AMC Southlake Pavilion 24 Baltimore AMC Columbia Mall 14 AMC Loews White Marsh 16 Boston AMC Loews Boston Common 19 Charlotte AMC Concord Mills 24 Chicago AMC South Barrington 30 AMC Loews Crestwood 18 Cincinnati AMC Newport on the Levee 20 Dallas AMC Mesquite 30 Denver AMC Highlands Ranch 24 AMC Orchards 12 AMC Westminister Promenade 24 Houston AMC First Colony 24 AMC Gulf Pointe 30 Jacksonville AMC Orange Park 24 AMC Regency Square 24 Kansas City AMC BarryWoods 24 AMC Independence Commons 20 Los Angeles AMC Burbank 16 AMC Century City 15 AMC Del Amo 18 AMC Promenade 16 AMC Puente Hills 20 AMC Santa Anita 16 Miami AMC Aventura 24 AMC Sunset Place 24 New Orleans AMC Elmwood Place 20 New York AMC Loews 34Th Street 14 AMC Empire 25 AMC Loews Kips Bay 15 AMC Rockaway 16 AMC Loews Stony Brook 17 AMC Loews Monmouth Mall 15 Norfolk AMC Lynnhaven 18 Orlando AMC Altamonte Mall 18 Philadelphia AMC Loews Cherry Hill 24 AMC Hamilton 24 AMC Neshaminy 24 Pittsburg AMC Loews Waterfront 22 San Diego AMC Palm Promenade 24 San Francisco AMC Bay Street 16 AMC Eastridge 15 AMC Mercado 20 Seattle AMC Loews Alderwood 16 AMC Southcenter 16 Tampa AMC Veterans Expressway 24 Washington D.C. AMC Hoffman Center 22 AMC Potomac Mills 18 AMC Tysons Corner 16 About AMC Entertainment Inc. Headquartered in Kansas City, Missouri, AMC Entertainment Inc. -- http://www.amctheatres.com/-- is an innovative theatrical exhibition company. Established in 1920, the company serves more than 230 million guests annually through interests in 358 theatres with 5,128 screens in six countries. About IMAX Corporation Based in New York City and Toronto, Canada, IMAX Corporation (NASDAQ:IMAX) -- http://www.imax.com/-- is an entertainment technology company, with emphasis on film and digital imaging technologies including 3D, post-production and digital projection. IMAX is a fully-integrated, out-of-home entertainment enterprise with activities ranging from the design, leasing, marketing, maintenance, and operation of IMAX(R) theatre systems to film development, production, post-production and distribution of large-format films. IMAX also designs and manufactures cameras, projectors and consistently commits significant funding to ongoing research and development. IMAX has locations in Guatemala, India, Italy, among others. * * * Moody's Investor Services placed IMAX Corporation's long term corporate family and probability of default ratings at 'Caa1' in July 2007. The ratings still hold to date with a positive outlook. INGLESIDE GO DEBT: Good Performance Cues S&P's Positive Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on its 'BB' underlying rating (SPUR) on Ingleside, Texas' GO debt to positive from stable due to an improved, albeit still weak, financial position in fiscal 2007, according to unaudited financial reports provided by city representatives, and the potential for further rating improvement should the city's financial condition continue to rebound. The rating service also affirmed the rating. Primary rating factors include previous deficit operations that decreased general fund reserves to a negative 30.1% of expenditures in fiscal 2006 from a high 25.0% in fiscal 2002; uncertainty regarding the impending closure of Station Ingleside, a leading local employer and utility customer; and general fund reliance on transfers from the city's cash-depleted enterprise fund. These weaknesses are offset, in part, by the recent actions that have strengthened the city's utility fund; the city's limited additional capital needs; and the recent adoption of a reserve policy, even though it might be several years before the city meets the target. The positive outlook reflects the city's council's adoption of a 25% general fund target. Reserves of this magnitude, to be achieved by 2011, should restore the city's financial flexibility. The city's ability to overcome the lost revenues and economic dislocation associated with Naval Station Ingleside's closure will also determine the rating's future direction. "Should Ingleside's financial position continue to improve, we will likely raise the rating," said Standard & Poor's credit analyst Hilary Sutton. "If, however, Ingleside officials cannot sustain the financial position's recent improvement, we will likely return the outlook to stable." In recent years, Ingleside's financial condition deteriorated dramatically as its general fund became increasingly reliant on transfers from other funds, in particular the enterprise fund. In fiscal 2005, this dependence extended to the point where the city used funds in the water and sewer debt service reserve fund for general purposes. Management, however, reports that it restored the debt service reserve fund to its required level in fiscal 2007. While unaudited financial reports for fiscal 2007 indicate an $826,505 general fund balance deficit at year-end, management reports the actual deficit should be smaller because the city intends to transfer all unrestricted cash in the utility fund, totaling $336,552, into the general fund. The fiscal 2008 budget includes an $87,386 general fund surplus, after a $750,000 transfer in from the utility fund. At fiscal year-end 2006, the city had a $370,804 cash balance, or 24.0% of total assets, compared with $2,772, or less than 0.5%, at fiscal year-end 2005. Unaudited financial reports for fiscal year-end 2007 indicate a $162,603 cash balance, or 8% of total assets, and $698,252 of cash held in an investment pool, or 34%. INGLESIDE WATERWORKS: S&P Revises Outlook to Pos. from Stable ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on its 'BB' underlying rating (SPUR) on Ingleside, Texas' waterworks and sewer system revenue debt to positive from stable based on management's report that it restored the enterprise debt service reserve fund to its required level during fiscal 2007. The positive outlook also reflects the city council's recent adoption of a 25% enterprise fund reserve target, as well as the potential for further rating improvement should system liquidity rebound to a level commensurate with an investment-grade rating. In addition, the rating service affirmed the rating. Additional rating factors include very low liquidity; well above- average utility rates; and the impending closure of Naval Station Ingleside, the utility system's leading customer, which accounted for 20% of total revenues in fiscal 2007. Offsetting these weaknesses, in part, are a trend of adequate debt service coverage; the system's willingness to raise already-high rates; and an adequate supply and treatment capacity. "We believe Ingleside's adoption of a reserve target of this magnitude, to be achieved by 2011, should restore the system's liquidity and financial flexibility," said Standard & Poor's credit analyst Hilary Sutton. "We also believe Ingleside's ability to sustain structural balance in the enterprise fund and overcome the lost revenues and economic dislocation associated with Naval Station Ingleside's closure will also determine the rating's future direction." Ingleside relies on transfers from the water and sewer enterprise fund to subsidize general fund operations. In 2005, the dependence extended to the point where the city used money in the enterprise debt service reserve fund for general purposes. Though debt service payments were made, this action caused the city to go into technical default on its revenue bonds. Management reports that, in fiscal 2007, it restored the debt service reserve fund to its required level. Although the general fund's reliance on the enterprise fund effectively increases coverage on the revenue bonds, over the past several years city officials have transferred nearly all surplus revenues out of the enterprise fund. Therefore, system liquidity is currently very low. After four consecutive drawdowns, enterprise fund unrestricted cash was a very low $2,228 at fiscal year-end 2006, providing zero days' expenditures. Management indicates that, in fiscal 2007, the city intends to transfer all unrestricted cash in the enterprise fund, which currently stands at roughly $336,000 according to unaudited reports, into the general fund. In addition, management states these transfers will continue and that it does not plan to implement policies that would place restrictions on transfer amounts. Sharp reductions in liquidity notwithstanding, the enterprise fund's financial performance remains adequate. In fiscal 2006, net enterprise fund revenues, before transfers and excluding onetime grant revenues, provided adequate fiscal 2006 annual debt service coverage at 1.09x and a strong 2.60x future maximum annual debt service coverage. INPHOHIC INC: Court Approves DLA Piper as Bankruptcy Counsel ------------------------------------------------------------ The United States Bankruptcy Court for the District of Delaware gave Inphonic Inc. and its debtor-affiliates authority to employ DLA Piper US LLP as their bankruptcy counsel, nunc pro tunc to Nov. 8, 2007. The Debtors selected DLA Piper because of the firm's considerable experience and qualifications in reorganization matters and because the firm's professionals have represented debtors, offical and unofficial committees and other parties in interest in major Chapter 11 cases. As the Debtors' bankruptcy counsel, DLA Piper will: a) advise management concerning their fiduciary obligations to the estates, the creditors and the Court; b) assist regarding the administration of these Chapter 11 cases, including prosecution of motions and adversary proceedings, defense of actions commenced against the Debtors, commencement and prosecution of objections to claims, representation in the claims reconciliation process and counseling regarding the preparation of schedules, statements and operating reports; c) assist in the formulaion, negotiation and confirmation of a Chapter 11 plan of reorganization and related disclosure statement; and d) render such other legal services as may be requested by management and as may be required in furtherance of these Chapter 11 cases. As compensation for their services, DLA Piper's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Thomas R. Califano, Esq. Partner $720 Mark J. Friedman, Esq. Partner $600 Maria Ellena Chavez-Ruark, Esq. Partner $485 Jason Hardman, Esq. Associate $420 Ashleigh Blaylock, Esq. Associate $330 William Countryman Paralegal $195 The Debtors paid DLA Piper $250,000 as retainer for professional fees and expenses to be incurred in its representation of the Debtors. Mr. Thomas R. Califano, Esq., a partner at DLA US Piper LLP, assured the Court that DLA Piper does not hold nor represent any interest adverse to the Debtors or the Debtors' estates, and that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. The company and its debtor-affiliates filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to 07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, is the Debtors' proposed co-counsel. When the Debtors filed from protection from their creditors, they listed total assets of $120,916,991 and total debts of $179,402,834. INPHOHIC INC: Taps Bayard Firm as Bankruptcy Co-Counsel ------------------------------------------------------- Inphonic Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to employ The Bayard Firm P.A. as their co-counsel, nunc pro tunc to Nov. 8, 2007. The Debtors selected The Bayard Firm because of the firm's extensive experience and expertise in handling chapter 11 cases, and because the firm is well-qualified to represent them in a most efficient and timely manner before the Delaware Bankruptcy Court. As the Debtors' co-counsel, Bayard Firm will: a) take all necessary action to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; b) provide legal advice with respect to the Debtors' powers and duties as debtors in possession in the continued operation of their business and management of their properties; c) negotiate, prepare and pursue confirmation of a plan and approval of a disclosure statement; d) prepare on behalf of the Debtors, as debtors in possession necessary motions, applications, answers, orders, reports, and other legal papers in connection with the administration of the Debtors' estates; e) appear in Court and to protect the interest of the Debtors before the Court; f) assist with any disposition of the Debtors' assets, by sale or otherwise; and g) perform all other legal services in connection with these chapter 11 cases as may reasonably be required. The Debtors tell the Court that the firm has advised the Debtors that it intends to work closely with co-counsel to the Debtors, DLA Piper US LLP, to ensure that there is no duplication of services performed. Prior to the Debtors' bankrupty filing, they paid $149,000 retainer fee to Bayard Firm on Nov. 7, 2007. Paper filed with the Court did not disclosed the firm's compensation rates. To the best of the Debtors' knowledge, The Bayard Fim represents no interest adverse to the Debtors or the Debtors' estate, and that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. The company and its debtor-affiliates filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to 07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, represent the Debtors. When the Debtors filed from protection from their creditors, they listed total assets of $120,916,991 and total debts of $179,402,834. INPHONIC INC: U.S. Trustee Appoints Five Member Creditors Panel --------------------------------------------------------------- Kelly Beaudin Stapleton, the United States Trustee for Region 3, appointed five creditors to serve on an Official Committee of Unsecured Creditors in Inphonic Inc. and its debtor-affiliates' Chapter 11 cases. The Creditors Committee members are: a) JBR Media Ventures LLC Attn: John Brenton Shaw 2 Wisconsin Circle, Suite 700 Chevy Chase, MD 20815 Tel No.: (202) 247-7757 Fax No.: (202) 318-4064 b) Google Inc. Attn: Stacey L. Wexler 1600 Amphitheatre Parkway Mountain View, CA 94043 Tel No.: (650) 253-0000 Fax No.: (650) 253-0001 c) Infinite Computer Solutions Inc. Attn: Timothy J. McGary 10500 Sager Avenue, Suite G Fairfax, VA 22030 Tel No.: (703) 352-4985 Fax No.: (703) 352-5938 d) Yahoo! Inc. Attn: Teresa Simms-Johnson 701 First Avenue Sunnyvale, CA 94089 Tel No.: (408) 349=7762 Fax No.: (408) 349=3301 e) ACN Communications Services Inc. Attn: James F. Mulcahy 13620 Reese Blvd E. Building XII, Suite 400 Tel No.: (704) 370-4967 Fax No.: (704) 632-8072 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. Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)-- http://www.inphonic.com/-- is an online seller of wireless services in the United States. The company operates its business through three business segments: wireless activation and services; mobile virtual network enabler services, and data services. The company and its debtor-affiliates filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to 07-11673). Thomas R. Califano, Esq., Mark J. Friedman, Esq., and Maria Ellena Chavez-Ruark, Esq., at DLA Piper US LLP represent the Debtors as Counsel. Mary E. Augustine, Esq., and Neil B. Glassman, Esq., at The Bayard Firm, in Wilmington, Delaware, is the Debtors' proposed co-counsel. When the Debtors filed from protection from their creditors, they listed total assets of $120,916,991 and total debts of $179,402,834. INTERPLAY ENT: Sept. 30 Balance Sheet Upside-Down by $1,810,000 --------------------------------------------------------------- Interplay Entertainment Corp.'s consolidated balance sheet at Sept. 30, 2007, showed $1,851,000 in total assets and $3,661,000 in total liabilities, resulting in a $1,810,000 total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $1,850,000 in total current assets available to pay $3,661,000 in total current liabilities. The company reported net income of $497,000 and an operating loss of $289,000, on revenues of $47,000 for the third quarter ended Sept. 30, 2007, compared with net income of $1,633,000 and an operating loss of $163,000, on revenues of $335,000 in the comparable period of 2006. The revenue decrease resulted from a 99% decrease in North American net revenues, a 100% decrease in OEM, royalty and licensing net revenues, and a 72% decrease in International net revenues. Other income of $786,000 for the three months ended Sept. 30, 2007, compared to other income of $1,796,000 for the same period last year. Other income for the three months ended Sept. 30, 2007, consists primarily of reversal and adjustments to certain accrual and accounts payables in the amount of $786,000, interest expense on debt in the amount of $10,000, foreign currency exchange transactions gains and losses, and rental income in the amount of $10,000. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2630 Going Concern Doubt Jeffrey S. Gilbert, in Los Angeles, expressed substantial doubt about Interplay Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. Mr. Gilbert reported that the company has limited liquid resources, a history of losses, negative working capital of $8,098,000, and stockholders' deficit of $8,087,000. In addition, on Nov. 1, 2006, an involuntary petition under Chapter 7 of the Bankruptcy Code was filed in Federal Court by several of the company's creditors. The company is opposing the petition. No other details were provided as to the status of the involuntary petition. About Interplay Entertainment Based in Beverly Hills, Calif., Interplay Entertainment Corp. (OTC BB: IPLY) -- http://www.interplay.com/-- develops and publishes interactive entertainment software for both core gamers and the mass market. Titus Interactive S.A., a France-based developer, publisher and distributor of interactive entertainment software, which owns majority of the company's common stock, was placed in involuntary bankruptcy in January, 2005. INTREPID TECH: Posts $695,694 Net Loss in 1st Qtr. Ended Sept. 30 ----------------------------------------------------------------- Intrepid Technology and Resources Inc. reported a net loss of $695,694 on net revenues of $25,976 for the first quarter ended Sept. 30, 2007, compared with a net loss of $295,894 on net revenues of $149,253 in the same period last year. The revenue decrease was mainly the result of decreased sales of contracted "work for others" over the corresponding periods of one year ago. The quarter ending Sept. 30, 2006, also included a $50,000 grant from the Idaho Department of Water Resources. The increase in net loss is due to start-up plant operating costs without corresponding revenue and increased interest expense. At Sept. 30, 2007, the company's consolidated balance sheet showed $14.6 million in total assets, $14.0 million in total liabilities, and $572,395 in total stockholders' equity. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $1.2 million in total current assets available to pay $2.8 million in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2633 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 10, 2007, Logan, Utah-based Jones Simkins PC expressed substantial doubt about Intrepid Technology and Resources Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm noted that the company has incurred recurring losses, has negative working capital, and has negative cash flows from operations. About Intrepid Technology Headquartered in Idaho Falls, Idaho, Intrepid Technology and Resources Inc. (OTC BB: IESV.OB) -- http://www.intrepid21.com/-- is an application innovator in alternative energy technology and production and of biogas products and services designed to assist in worldwide energy independence, reduce pollution and carbon emissions from renewable agriculture feedstock and industrial and agriculture waste materials. J&T TRANSPORTATION: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: J.&T. Transportation Service of Illinois, Inc. P.O. Box 444 Metamora, IL 61548 Bankruptcy Case No.: 07-82767 Type of Business: The Debtor, established in 1992, has a fleet of 20 tractors and 102 22 feet by 53 feet reefer trailers. Its fleet consists mainly of Peterbilts, although it does run a Freightliner and one Kenworth. Its tractors run in age from 1997 to 2002's . Also we are the proud owners of the last Classic 359 of the 359 model Peterbilt. See http://www.jttransportation.com/ Chapter 11 Petition Date: December 10, 2007 Court: Central District of Illinois (Peoria) Judge: Thomas L. Perkins Debtor's Counsel: Raymond L. Huff, Esq. 7820 North University Street, Suite 103 Peoria, IL 61614-8306 Tel: (309) 689-3330 Fax: (309) 692-3333 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Clemens & Associates, Inc. insurance $237,616 P.O. Box 5190 Bloomington, IL 61702-5190 Internal Revenue Service employment and $115,000 U.S. Department of Treasury income taxes 320 West Washington Street, Stop 5000 Springfield, IL 62701-1154 Pomp's Tire Service, Inc. $54,157 P.O. Box 1630 Green Bay, WI 54305-1630 Soris $38,544 Cummins Cross Point $37,831 United Healthcare $25,141 Americal International Group, workers $23,728 Inc. compensation insurance CitiCapital (S.M.) $11,296 East Peoria Tire & $8,204 Vulcanizing Illinois Department of employment and $7,879 Revenue income tax Citi Card $7,280 J.X. Enterprises, Inc. $7,094 G.E. Capital Corp. $6,025 River City Sealcoat 7 Asphalt parking lot repair $5,890 Paaving Volvo Gateway Industrial $5,225 Power A.G. View F.S., Inc. $5,157 Carrier-Transicold $4,288 Brickhouse Capital equipment lease $3,784 JDJ WILTON: Case Summary & 16 Largest Unsecured Creditors --------------------------------------------------------- Debtor: J.D.J. Wilton Manors Development, L.L.C. 2101 North Commerce Parkway Fort Lauderdale, FL 33326 Bankruptcy Case No.: 07-20929 Chapter 11 Petition Date: December 10, 2007 Court: Southern District of Florida (Fort Lauderdale) Judge: John K. Olson Debtor's Counsel: Susan D. Lasky, Esq. 2101 North Andrews Avenue, Suite 405 Wilton Manors, FL 33311 Tel: (954) 565-5854 Fax: (954) 462-8411 Total Assets: $3,617,452 Total Debts: $4,361,300 Debtor's 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jade Organization Building 578, Units Unknown 2101 North Commerce Parkway 1,3- 9, 11-18, Fort Lauderdale, FL 33326 inclusive and Building 566, Units 1, 3-12, inclusive of Riverview Waterfront Condominium; value of security: $3,600,000; value of senior lien: $3,228,750 Construction $244,389 Contract, plus interest and attorney's fees: $244,389 Pamela M. Wilkes, as Trustee Building 578, Units Unknown 821 South Rio Vista Boulevard 1,3- 9, 11-18, Fort Lauderdale, FL 33316 inclusive and Building 566, Units 1, 3-12, inclusive of Riverview Waterfront Condominium; value of security: $3,600,000; value of senior lien: $2,428,750 Revier Real Estate Corp. Building 578, Units Unknown 2801 East Oakland Park 1,3- 9, 11-18, Boulevard inclusive and Fort Lauderdale, FL 33306 Building 566, Units 1, 3-12, inclusive of Riverview Waterfront Condominium; value of security: $3,600,000; value of senior lien: $3,228,750 claim for $62,100 commissions for sales that did not close Professional Investment Group, Building 578, Units $800,000 Inc. 1,3- 9, 11-18, 17 Southeast 24th Avenue inclusive and Pompano Beach, FL 33062 Building 566, Units 1, 3-12, inclusive of Riverview Waterfront Condominium; value of security: $3,600,000; value of senior lien: $2,428,750 $500,000 loan from Unknown Pamela Wilkes, trustee, and interest thereon; additional loan of $119,999 D.&J. Development, L.L.C. Equity loan $760,700 2101 North Commerce Parkway Fort Lauderdale, FL 33326 John Wilkes, Esq. Believed to be paid Unknown 821 South Rio Vista in full for legal Fort Lauderdale, FL 33316 services equity loan of $500,000 from wife as trustee paid in full for all Unknown legal services Wilkes, Pamela as Trustee $500,000 equity Unknown 821 South Rio Vista Boulevard loan and interest Fort Lauderdale, FL 33316 thereon; additional sum of $119,999 loaned as operating capital George Colony Same as Remax Unknown claim for deposits: $62,100 Broward County Property real estate and $40,101 Appraiser property tax Thomas E. Henz claim for common $12,548 charges ( sales concessions) A.E.D. Services, Inc. Loan for legal fees $7,819 Freedman & McCloskey, P.A. legal fees $3,471 Brent Lipinoski common charges $1,421 for condominium association (sales concession) Adorno & Yoss Claim for attoneys Unknown fees related to claims of Revier Realty, Remax and George Colony and Colony Group. Riverview Waterfront Developer is Unknown Condominium Association responsible to fund shortages William W. Haury, Jr. Esq, Possible claim for Unknown attorneys fees related to loan from Wilkes assigned to Professional Investment JOHN FRUHMORGEN: Case Summary & Eight Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: John V. Fruhmorgen Rosann M. Fruhmorgen 5007 South Quincy Tampa, FL 33611 Bankruptcy Case No.: 07-12083 Chapter 11 Petition Date: December 7, 2007 Court: Middle District of Florida (Tampa) Judge: Paul M. Glenn Debtor's Counsel: Buddy D. Ford, Esq. 115 North MacDill Avenue Tampa, FL 33609 Tel: (813) 877-4669 Fax: (813) 877-5543 Total Assets: $1,621,452 Total Debts: $1,569,671 Debtor's Eight Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Suncoast Schools M.C./V.I. Credit Card $30,030 P.O. Box 11904 Tampa, FL 33680 Suncoast Schools Federal 2006 Dodge $27,211 Credit Union Durango (19,0000 P.O. Box 11904 miles); value of Tampa, FL 33680 security: $19,000 Washington Mutual/Providian Credit card $8,528 Attention: Bankruptcy Department P.O. Box 10467 Greenville, SC 29603 Internal Revenue Service 2006 taxes $8,500 Doug Belden, Hillsborough Real Taxes $7,167 Tampa Bay Federal Credit Union Credit card $4,578 Visa/M.C. Volkswagon Credit, Inc. 2006 volkswagen $4,041 Tampa Tribune Services $487 c/o M.A.F. Collection Service 134 South Tampa Street Tampa, FL 33602 JP MORGAN: S&P Assigns Low-B Ratings on Six Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Trust 2007-C1's $1.2 billion commercial mortgage pass-through certificates series 2007-C1. The preliminary ratings are based on information as of Dec. 6, 2007. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, A-SB, X-2, A-M, and A-J are currently being offered publicly. Standard & Poor's analysis of the portfolio determined that, on a weighted average basis, the pool has debt service coverage of 1.14, a beginning LTV of 112.6%, and an ending LTV of 103.1%. The rated final maturity date for these certificates is February 2051. Unless otherwise indicated, pool balances and statistics do not include the B notes that have not been contributed to the trust, but are related to A notes of A/B loans included in the pool. For the purpose of calculating the number of loans, Standard & Poor's considers each group of cross-collateralized and cross-defaulted loans as one loan. Preliminary Ratings Assigned J.P. Morgan Chase Commercial Mortgage Securities Trust 2007-C1 Class Rating Amount Recommended credit support ----- ------ ------ ----------------- A-1 AAA $32,771,000 30.000% A-2 AAA $49,212,000 30.000% A-3 AAA $105,514,000 30.000% A-4 AAA $595,230,000 30.000% A-SB AAA $60,304,000 30.000% X-2* AAA $1,197,733,000 N/A A-M AAA $120,433,000 20.000% A-J AAA $54,195,000 15.500% X-1* AAA $1,204,331,244 N/A B AA+ $16,560,000 14.125% C AA $15,054,000 12.875% D AA- $12,043,000 11.875% E A+ $13,549,000 10.750% F A $10,538,000 9.875% G A- $13,549,000 8.750% H BBB+ $15,054,000 7.500% J BBB $16,559,000 6.125% K BBB- $13,549,000 5.000% L BB+ $7,527,000 4.375% M BB $9,033,000 3.625% N BB- $4,516,000 3.250% P B+ $6,022,000 2.750% Q B $4,516,000 2.375% T B- $3,011,000 2.125% NR NR $25,592,244 N/A *Interest-only class with a notional amount. N/A -- Not applicable. NR -- Not rated. KMART FUNDING: Fitch Retains Junk Ratings on $26.5MM Bonds ---------------------------------------------------------- Fitch Ratings said that Kmart Funding Corporation's secured lease bonds long term credit ratings and distressed recovery ratings are maintained as: -- $17.4 million class F at 'C/DR6'; -- $9.1 million class G at 'C/DR6'. The secured lease bonds are currently collateralized by an assignment of rents on operating properties guaranteed by absolute net leases to Kmart Corporation, in which Kmart is obligated to pay rental payments with no setoff, abatement or reduction. It also consists of leases assumed by other retailers. The collateral originally consisted of 22 stores, and two ground leases, of which 13 closed when Kmart rejected the leases after the bankruptcy filing in January 2002. The bankruptcy filing triggered an acceleration of the of the bond payments. When payments are received from the four operating properties, the bonds are allocated pro rata principal payments. The ratings were taken to 'D' when Fitch determined that the values of the properties with rejected leases would not support the outstanding loan balances or repay the interest shortfalls. Since that time, the bonds have received both payments of principal, as well as realized losses due to the non payment of leases on the rejected properties. The ratings were revised to 'C/DR6' during Fitch's DR rating review in April 2006. The ratings are no longer dependent on Kmart's corporate rating, or the rating of Kmart's parent, Sears Holding Corporation. KRISPY KREME: Posts $798,000 Net Loss in Quarter Ended October 28 ----------------------------------------------------------------- Krispy Kreme Doughnuts, Inc. reported financial results for the third fiscal quarter ended Oct. 28, 2007. The net loss for the third quarter of fiscal 2008 was $798,000, compared to a net loss of $7.2 million in the comparable period last year. During the third quarter of fiscal 2008, 29 new Krispy Kreme stores, comprised of 8 factory stores and 21 satellites, were opened systemwide, and 17 Krispy Kreme factory stores were closed systemwide. This brings the total number of stores systemwide at the end of the third quarter of fiscal 2008 to 423, consisting of 290 factory stores and 133 satellites. The net increase of 12 stores in the quarter reflects a net increase of 24 international stores and a net decrease of 12 domestic stores. Third quarter systemwide sales decreased approximately 2.6% from the third quarter of last year. Satellite stores made up 31% of the total systemwide store count as of Oct. 28, 2007, compared to 23% at Oct. 29, 2006. Systemwide average weekly sales per store are lower than Company average weekly sales per store principally because satellite stores, which have lower average weekly sales than factory stores, are operated almost exclusively by franchisees. Systemwide average weekly sales per store decreased approximately 9.2% to approximately $36,400. Company Stores average weekly sales per store decreased 0.4% to approximately $52,900. Company revenues for the third quarter of fiscal 2008 decreased 11.7% to $103.4 million compared to $117.1 million in the third quarter of last year. Company Stores revenues decreased 11.3% to $72.8 million, Franchise revenues were flat at $5.7 million and KK Supply Chain revenues decreased 15.1% to $24.9 million. The company recorded a net credit to impairment charges and lease termination costs of $268,000 in the third quarter this year, compared to a charge of $5.4 million in the third quarter of fiscal 2007. Most of the prior year charge relates to underperforming stores, including stores closed and likely to be closed. As of Oct. 28, 2007, the company's consolidated balance sheet reflects cash and indebtedness of approximately $23 million and $88 million, respectively. The maximum additional indebtedness permitted under the company's credit facilities (and the amount of additional borrowings available to the Company under those facilities) was approximately $11 million at that date. During the first nine months of fiscal 2008, the company prepaid approximately $21.9 million under the company's $110 million term loan entered into in February 2007. A substantial portion of these prepayments was made in order to reduce the likelihood of violation of the financial covenants contained in the company's credit facilities. Several franchisees have been experiencing financial pressures which, in certain instances, appear to have become more exacerbated during fiscal 2008. Franchisees closed 25 stores in the first nine months of fiscal 2008. The company believes franchisees will close additional stores in the foreseeable future, and the number of such closures is likely to be significant. Royalty revenues and most of KK Supply Chain revenues are directly correlated to sales by franchise stores and, accordingly, store closures have an adverse effect on the company's revenues and results of operations. "Although we still have much to do, performance improved in the third quarter compared to the second quarter, and the organization made progress on the transformation steps previously announced," Daryl Brewster, the company's President and Chief Executive Officer, said. Since the end of the second quarter, the company has: * closed an additional five underperforming company stores; * opened over 20 new satellites systemwide as part of its hub and spoke strategy, including converting an additional company-owned factory store to a non-producing hot shop; * reduced Supply Chain costs by outsourcing its coffee supply and announcing the planned closure of a manufacturing and distribution facility; * increased international franchisee sales 48% year-over-year; * realigned company stores and franchise management with experienced leadership; * continued to reduce G&A costs; and * completed an amended Franchise Disclosure Document (formerly called a Uniform Franchise Offering Circular). "As we look past the third quarter, we continue to focus on improving Company shop performance, driving the hub and spoke model, growing our international franchise business, refranchising certain domestic markets and reducing costs to help offset rising commodity prices," Mr. Brewster added. Systemwide sales, a non-GAAP financial measure, include sales by both company and franchise stores. The company believes systemwide sales data are useful in assessing the overall performance of the Krispy Kreme brand and, ultimately, the performance of the company. The company's consolidated financial statements include sales by company stores, sales to franchisees by the KK Supply Chain business segment, and royalties and fees received from franchisees, but exclude sales by franchise stores to their customers. A full-text copy of the company's financial report for the quarter ended Oct. 28, 2007, is available for free at: http://ResearchArchives.com/t/s?2636 About Krispy Kreme Headquartered in Winston-Salem, North Carolina, Krispy Kreme Doughnuts Inc. (NYSE: KKD) -- http://www.krispykreme.com/-- retails doughnuts. There are about 411 Krispy Kreme stores including satellites operating system-wide in 41 U.S. states, Australia, Canada, Hong Kong, Indonesia, Japan, Kuwait, Mexico, the Philippines, the Republic of South Korea, the United Arab Emirates and the United Kingdom. * * * As reported in the Troubled Company Reporter on Sept. 17, 2007, Moody's Investors Service lowered Krispy Kreme Doughnut Corporation's Speculative Grade Liquidity rating to SGL-4 from SGL-3, indicating weak liquidity. Concurrently Moody's revised the rating outlook to negative while affirming Krispy Kreme's Caa1 corporate family rating and B3 rating of its $160 million senior secured credit facilities. LEHMAN MORTGAGE: Fitch Downgrades Ratings on $26.7MM Certs. ----------------------------------------------------------- Fitch Ratings has taken these rating actions on three Lehman mortgage pass-through certificates. Affirmations total $1.12 billion and downgrades total $26.7 million. In addition, approximately $8.7 million are placed on Ratings Watch Negative. LMT 2006-6 Group 1 -- Class A affirmed at 'AAA'; -- Class 1B1 affirmed at 'AA'; -- Class 1B2 downgraded to 'A-' from 'A'; -- Class 1B3 downgraded to 'BB' from 'BBB'; -- Class 1B4 downgraded to 'CC/DR2' from 'BB'; -- Class 1B5 downgraded to 'C/DR4' from 'B'; removed from Rating Watch Negative. LMT 2006-6 Group 2 -- Class A affirmed at 'AAA'; -- Class 2B1 affirmed at 'AA'; -- Class 2B2 affirmed at 'A'; -- Class 2B3 affirmed at 'BBB'; -- Class 2B4 affirmed at 'BB'; -- Class 2B5 affirmed at 'B'. LMT 2006-9 -- Class A affirmed at 'AAA'; -- Class M1-A affirmed at 'AA+'; -- Class M1-B affirmed at 'AA+'; -- Class B1 is rated 'AA', placed on Rating Watch Negative; -- Class B2 downgraded to 'A-' from 'A'; -- Class B3 downgraded to 'BBB-' from 'BBB'; -- Class B4 downgraded to 'BB+' from 'BBB-'; -- Class B5 downgraded to 'B' from BB'; -- Class B6 downgraded to 'C/DR3' from 'B'. The affirmations affect approximately $1.12 billion in outstanding certificates and reflect adequate relationships of credit enhancement to future loss expectations. The downgrades, affecting approximately $26.7 million of the outstanding certificates, reflect deterioration in the relationship between credit enhancement and expected losses. The class placed on Rating Watch Negative reflects the deterioration in the relationship of CE to future loss expectations and affects $8.7 million in outstanding certificates. The above trust consists of fixed and adjustable rate loans extended to Alt-A borrowers. Aurora Loan Services Inc., rated 'RMS1-' by Fitch, is the Master Servicer for the above transaction. For 2006-6 Group 1, the loans in 90+ delinquency at 13 months seasoning as a percentage of the current pool balance is 3.08%. The CE of the 1B2, 1B3, 1B4 and 1B5 classes are 2.23%, 1.39%, 0.84% and 0.39% respectively. For 2006-6 Group 2, the amount of loans in 90+ at 13 months seasoning as a percentage of the current pool balance is 0.05%. The CE of 2B5 class is 0.27%. For 2006-9, the loans in 90+ delinquency at 11 months seasoning as a percentage of the current pool balance is 1.78%. The CE of the B1, B2, B3, B4, B5 and B6 classes are 3.11%, 2.04%, 1.29%, 1.13%, 0.75% and 0.32% respectively. LPATH INC: Posts $4.6 Million Net Loss in Third Quarter ------------------------------------------------------- Lpath Inc. reported a net loss of $4.6 million on grant and royalty revenue of $11,926 for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.3 million on grant and royalty revenue of $97,077 in the same period in 2006. Research and development expenses increased from $883,000 for the third quarter of 2006 to $4.1 million for the third quarter of 2007. The increase reflects the progress of pre-clinical research and development activities from the third quarter of 2006 to the third quarter of 2007. Outside services expense increased by approximately $2.7 million primarily due to the costs of IND- enabling studies performed or initiated during the third quarter of 2007, and the costs of manufacturing drug supplies to be used in clinical trials. The increase in research and development expenses also included a $395,000 increase in stock-based compensation expense related to consultants used to support research and development activities. At Sept. 30, 2007, the company's consolidated balance sheet showed $11.8 million in total assets, $2.3 million in total liabilities, and $9.5 million in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?263d Going Concern Doubt As reported in the Troubled Company Reporter on May 2, 2007, LevitZacks CPAs expressed substantial doubt about Lpath Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's significant cash losses from operations since inception and the company's expectation to continue to incur cash losses from operations in 2007 and beyond. About Lpath Inc. Headquartered in San Diego, Calif., Lpath Inc., formerly Lpath Therapeutics Inc., (OTC BB: LPTN) -- http://www.lpath.com/ -- is a biotechnology company focused on the discovery and development of lipidomic-based therapeutics. Lipidomics is an emerging field of medical science whereby bioactive signaling lipids are targeted to treat important human diseases. The company's lead product candidate, Sphingomab(TM), is a humanized monoclonal antibody against a validated cancer target, sphingosine-1-phosphate, and has demonstrated compelling results in preclinical studies against multiple forms of cancers, against age-related macular degeneration, and against heart failure. MARK IV: S&P Retains 'B' Rating Under Negative CreditWatch ---------------------------------------------------------- Standard & Poor's Ratings Services said that its 'B' corporate credit rating and related issue-level ratings on Mark IV Industries Inc. remained on CreditWatch with negative implications after the company agreed to be acquired by a new equity sponsor and began renegotiating a change-in-control provision and financial covenants with its lenders. S&P originally placed the company on CreditWatch on Oct. 19, 2007, because of weak financial results that have led to key credit ratios that are below S&P's expectations for the current rating. Mark IV, an Amherst, New York-based supplier of automotive, heavy- duty truck, and other transportation and off-highway equipment, has total debt of about $1.2 billion after Standard & Poor's adjustments for pensions and other postretirement benefits, operating leases, and trade receivables sold. Private equity firm Sun Capital Partners has reached a definitive agreement to acquire Mark IV from current equity sponsor BC Partners and other minority equity holders. Terms were not disclosed. "The transaction is contingent upon Mark IV's lenders' agreeing to waive a change-of-control provision in the company's secured credit agreements," said Standard & Poor's credit analyst Gregg Lemos Stein. Mark IV is also asking lenders to approve looser financial covenants beginning in the quarter ending Feb. 29, 2008, as thresholds for these covenants step down after that period and would become an issue as a result of softness in Mark IV's automotive and heavy truck markets. Both matters require 51% approval of senior secured lenders. S&P plan to resolve the CreditWatch listing once resolution of the lender issues discussed above becomes known, which will likely happen in the next several weeks. "The focus of our CreditWatch resolution will be Mark IV's prospects for stabilizing or improving credit measures over the near term," Mr. Lemos Stein added. MARINER ENERGY: Solid Performance Cues S&P to Lift Rating to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on oil and gas exploration and production company Mariner Energy Inc., including raising the corporate rating to 'B+' from 'B'. The outlook is stable. "The rating action reflects Mariner's solid operational performance since the acquisition of Forest Oil Corp.'s Gulf of Mexico assets in 2006, as well as improving debt leverage measures," said Standard & Poor's credit analyst Paul B. Harvey. Additionally, production and cost improvement should continue in 2008, as the company's Bass Lite and Nansen developments are expected to come online. Further support for the upgrade comes from Mariner's improved debt leverage, which has strengthened to roughly 1x debt to EBITDA from around 2.5x since Mariner's initial 2006 rating. The ratings on Mariner reflect its aggressive growth and exploration strategy, short reserve life, concentrated reserve base focused in the Gulf of Mexico, and elevated costs relative to Standard & Poor's long-term pricing assumptions. Support for ratings is provided by Mariner's satisfactory financial performance, relatively moderate debt leverage, and expectations for improving operating results in 2008. MDWERKS INC: Sept. 30 Balance Sheet Upside-Down by $962,602 ----------------------------------------------------------- Mdwerks Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $3,508,963 in total assets and $4,471,565 in total liabilities, resulting in a $962,602 total stockholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $2,911,733 in total current assets available to pay $4,073,519 in total current liabilities. The company reported a net loss of $2,184,840 on total revenue of $136,573 for the third quarter ended Sept. 30, 2007, compared with a net loss of $1,670,829 on total revenue of $158,113 in the same period in 2006. For the three months ended Sept. 30, 2007, total operating expenses were $1,835,304 as compared to $2,484,610 for the three months ended Sept. 30, 2006, a decrease of $649,306 or 26.1%. For the three months ended Sept. 30, 2007, interest expense was $500,601 as compared to $372,291 for the three months ended Sept. 30, 2006, an increase of $128,310. This increase was due to an increase in borrowings and amortization of debt discount and deferred fees in connection with the company's notes payable. The company recorded a gain of $1,030,338 related to the change in fair value of the warrants during three months ended Sept. 30, 2006. There was no gain or loss related to the change in fair value of warrants during the three months ended Sept. 30, 2007. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2640 Going Concern Doubt Sherb & Co. LLP, in Boca Raton, Fla., expressed substantial doubt about Mdwerks Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations. About Mdwerks Inc. Headquartered in Deerfield Beach, Fla., Mdwerks Inc. (OTC BB: MDWK.OB) -- http://www.mdwerks.com/ -- provides Healthcare professionals with automated electronic insurance claims management solutions and advance funding of medical claims. MDwerks(TM) solutions comprise an innovative web-based, HIPAA- compliant system of comprehensive administrative and financial services designed for physician practices of all sizes and specialties whether in a single or multi-location operation. MECHANICAL PRODUCTS: Lender Selling Assets at December 21 Auction ----------------------------------------------------------------- The Hillstreet Fund LP and the Hillstreet Fund III LP will hold a public sale of substantially all of the assets of Mechanical Products Manufacturing Company LLC at 11:00 a.m. on Dec. 21, 2007. The auction will be held at the offices of Keating Muething Klekamp PLL in One East Fourth Street, Suite 1400 in Cincinnati, Ohio 45202. The sale is being held as a result of foreclosure on the Debtor's assets by Hillstreet as lender and a secured party. The assets, which is offered as a single lot, include all equipment, inventory, and general intangibles at the Debtor's manufacturing facility in located at 3880 Grace Street in New Boston, Ohio 45662. Headquartered in Lucasville, Ohio, Mechanical Products Manufacturing Company LLC engages in fabricating, welding and machining parts and assemblies for a variety of industries. MGM MIRAGE: Board Authorizes 20 Million Common Stock Repurchase --------------------------------------------------------------- MGM MIRAGE's board of directors has approved a new stock repurchase program authorizing the company to purchase up to 20 million shares of company common stock. The purchases can be made from time to time through open market purchases, privately negotiated third party transactions or other transactions including but not limited to tender offers as market conditions warrant. Additionally, the company has repurchased 5.08 million shares in the current quarter to date, thereby leaving 420,000 shares outstanding under the previous share repurchase program approved in July 2004. Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. * * * As reported in the Troubled Company Reporter on Oct. 12, 2007, Standard & Poor's Ratings Services affirmed the 'BB' corporate credit rating on MGM MIRAGE and removed them from CreditWatch, where they were placed with positive implications Aug. 22, 2007. The rating outlook is positive. MORGAN STANLEY: S&P Cuts Rating on Class A-6 Notes to B- from B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the $3 million class A-6 secured fixed-rate notes from Morgan Stanley ACES SPC's series 2006-8 to 'B-' from 'B+' and removed it from CreditWatch, where it was placed with negative implications on July 19, 2007. The rating action reflects the Nov. 28, 2007, lowering of the ratings on Lyondell Chemical Co. and its related entities and their removal from CreditWatch negative. Morgan Stanley ACES SPC's $46 million secured fixed-rate notes series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of (i) the ratings on the reference obligations for each class (with respect to class A- 6, the senior unsecured notes issued by Millennium America Inc., {'B-'}, a subsidiary of Lyondell Chemical Co.); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement (in each instance, Morgan Stanley {AA-/Negative/A-1+}); and (iii) the rating on the underlying securities, BA Master Credit Card Trust II's class A certificates from series 2001-B due 2013 ('AAA'). MORGAN STANLEY: S&P Lowers Rating on Class A-10 Notes to B- from B ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the $3 million class A-10 secured fixed-rate notes from Morgan Stanley ACES SPC's series 2006-8 to 'B-' from 'B' and removed it from CreditWatch, where it was placed with negative implications on Nov. 9, 2007. The rating action reflects the Dec. 4, 2007, lowering of the ratings on Mediacom Communications Corp., and its related entities, and their removal from CreditWatch negative. Series 2006-8 is a credit-linked note transaction. The rating on each class of notes is based on the lowest of (i) the ratings on the respective reference obligations for each class (with respect to class A-10, the senior unsecured notes issued by Mediacom LLC, {'B-'}, a subsidiary of Mediacom); (ii) the rating on the guarantor of the counterparty to the credit default swap, the interest rate swap, and the contingent forward agreement (in each instance, Morgan Stanley {'AA-'}; and (iii) the rating on the underlying securities, BA Master Credit Card Trust II's class A certificates from series 2001-B due 2013 ('AAA'). MORGAN STANLEY: S&P Places Ratings Under Negative CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on nine classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Trust 2006-IQ11 on CreditWatch with negative implications. Concurrently, S&P affirmed its ratings on 13 other classes from this series. S&P placed nine ratings on CreditWatch negative due to concerns with the third-largest loan, LeNature, which is secured by a 530,856-sq.-ft. vacant industrial building in Phoenix, Arizona. Future debt service payments are dependent upon the borrower funding debt service on the loan. To date, debt service has been met through the use of reserves and payments that were made by the owner of bottling equipment that was located on the premises. The bottling-equipment maker stopped making payments as of November 2007 because the equipment was removed from the property. The CreditWatch negative placements will remain in effect while Standard & Poor's monitors the loan work out process. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The third-largest exposure in the pool, LeNature's Headquarters, has a balance of $55.8 million and additional advances, including interest thereon, totaling $290,057. At issuance, the loan was $62.6 million; proceeds from a $3.5 million LOC and cash reserves were used to pay down the loan to its current balance. The fee interest in a 530,856-sq.-ft. industrial building in Phoenix, Arizona, secures the loan. The loan was transferred to the special servicer, LNR Partners Inc., on Nov. 1, 2006, after the sole tenant, LeNature Inc., filed for bankruptcy. LeNature vacated the property in December 2006 and the debt service was being paid by the owner of the bottling equipment until the equipment was removed from the property in November 2007. To date, LNR has not ordered a new appraisal. If the borrower fails to make debt service payments, it is possible that a new appraisal will result in an appraisal reduction amount, which will cause appraisal subordinate entitlement reduction shortfalls. The CreditWatch negative placements will be updated and/or resolved as more details concerning the work-out process and property status become available to Standard & Poor's. As of the Nov. 15, 2007, remittance report, the collateral pool consisted of 232 loans with an aggregate trust balance of $1.595 billion, compared with 232 loans totaling $1.616 billion at issuance. Co-op loans secure 11.9% of the pool. Excluding these loans, the master servicer, Wells Fargo Commercial Mortgage Servicing, reported financial information for 88% of the pool. All of the servicer-provided information was full-year 2006 data. Using this information, Standard & Poor's calculated a weighted average debt service coverage of 1.63x, up from 1.44x at issuance. Two loans, including LeNature, are with the special servicer. To date, the trust has not experienced any losses. The top 10 loans have an aggregate outstanding balance of $562.2 million (35%) and a weighted average DSC of 1.55x, down from 1.60x at issuance. The weighted average DSC calculation excludes the LeNature loan and the ninth-largest loan (1%), which is secured by a co-op property. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. All the properties were characterized as "good." The credit characteristics of the Home Depot in Jamaica N.Y. loan, are consistent with those of investment-grade obligations. The Home Depot in Jamaica N.Y., is the seventh-largest loan in the pool and has a balance of $26.5 million. The fee and leasehold interest in 3.1 acres of land beneath a 105,196-sq.-ft. Home Depot Inc. (BBB+/Stable/A-2) retail property in Queens, New York., secures the loan. Standard & Poor's calculated a DSC of 1.27x based on the net ground rent payments. The ground lease expires in May 2025 and has five, five-year extension options and one, four-year extension option available. The remaining loan with the special servicer, Brasswood II Apartments, is a 132-unit multifamily property in Greenville, North Carolina. The loan has an unpaid principal balance of $5.0 million and additional advances, including interest thereon, totaling $37,199. The loan was transferred to the special servicer in March 2007 due to payment default. The loan is currently in its grace period; however, it has been delinquent numerous times since securitization. The property did not report a DSC. Wells Fargo reported a watchlist of 13 loans ($54.1 million, 3%), each of which represents less than 1% of the aggregate loan pool. The loans appear on the watchlist primarily due to low occupancy or low DSC. Standard & Poor's stressed the loans on the watchlist and the other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the affirmations. Ratings Placed on Creditwatch Negative Morgan Stanley Capital I Trust 2006-IQ11 Commercial mortgage pass-through certificates Rating ------ Class To From Credit enhancement ----- -- ---- ---------------- F BBB+/Watch Neg BBB+ 5.07% G BBB/Watch Neg BBB 3.93% H BBB-/Watch Neg BBB- 3.04% J BB+/Watch Neg BB+ 2.53% K BB/Watch Neg BB 2.28% L BB-/Watch Neg BB- 2.03% M B+/Watch Neg B+ 1.65% N B/Watch Neg B 1.27% O B-/Watch Neg B- 1.14% Ratings Affirmed Morgan Stanley Capital I Trust 2006-IQ11 Commercial mortgage pass-through certificates Class Rating Credit enhancement ----- ------ ---------------- A-1 AAA 30.41% A-1A AAA 30.41% A-2 AAA 30.41% A-3 AAA 30.41% A-4 AAA 30.41% A-M AAA 20.27% A-J AAA 11.02% B AA 9.12% C AA- 8.36% D A 6.97% E A- 5.95% X AAA N/A X-Y AAA N/A N/A -- Not applicable. MSB OF DESTIN: Section 341(a) Meeting Slated for December 20 ------------------------------------------------------------ The United States Trustee for Region 21 scheduled a meeting of MSB of Destin Inc.'s creditors for Dec. 20, 2007, 3:00 p.m. at Suite 700, 220 W. Garden Street, Pensacola, Florida. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Destin, Florida, MSB of Destin Inc. dba AJ's Restaurant & Marina, aka Southside Investments Inc., operates a restaurant and bar. The Debtor filed for voluntary Chapter 11 protection on November 26, 2007 (Bankr. N.D. Fla. Case No.: 07- 31149). John E. Venn, Esq. of the John E. Venn, Jr., P.A. represents the Debtors in its restructuring efforts. The Debtor's financial condition as of Sept. 30, 2007, shows total assets of $39,041,476 and total debts of $9,114,105. Hubert A. Laird, the Debtor's stockholder filed for Chapter 11 protection on Nov. 19, 2007, (Bankr. N.D. Fla. Case No. 07-31128). MTI GLOBAL: Inks Forbearance Deal with its Principal Lender ----------------------------------------------------------- MTI Global Inc. has entered into a forbearance agreement with its principal lender, a Canadian chartered bank. Under the agreement, the Bank has agreed not to enforce its security prior to March 31, 2008, subject to MTI satisfying certain conditions. In addition certain provisions of the credit facilities have been amended. As reported on Nov. 14, 2007, MTI was notified by the Bank that it was in breach of a financial covenant in its credit facility agreement and in the transfer of assets and financial support of MTI de Baja as at June 30, 2007, and Sept. 30, 2007. The conditions to the forbearance include, among others, -- that guarantees and additional security be provided by MTI Groendyk and MTI Specialty Silicones; -- that MTI provide certain additional financial information to the Bank; and -- that MTI meet certain agreed upon deliverables at various dates up to and including March 31, 2008. The amendments to the credit facilities include: -- that a $3 million term facility is now classified as a current portion of long term debt and therefore repayable upon demand, the term facility is related to the acquisition of the silicone division of Mold-Ex on July 12, 2007; -- that interest on the operating facility is now payable at prime plus 2% and on the term facility at prime plus 2.5%; and -- that MTI comply with certain additional financial reporting and general covenants on an on-going basis. MTI is developing a long term plan, which will include a review of financial, corporate and operational structures to stabilize its financial situation. In the shorter term, MTI will: a) focus specifically on improving and streamlining customer and sales relationships; b) implementing more stringent discipline with respect to processes; and c) tighter management of working capital including inventory and overall financial performance. The restructuring plan is to be submitted to the Bank on or before Jan. 21, 2008. About MTI Global Headquartered in Mississauga, Ontario, MTI Global Inc. (TSX: MTI) -- http://www.mtiglobalinc.com/-- designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The company serves a variety of specialty markets focused on three main product categories: Silicone, Aerospace and Fabricated Products. MTI's Canadian manufacturing operations are located in Mississauga, Ontario, with international manufacturing operations located in Richmond and Buchanan, Virginia; Pensacola, Florida; Bremen, Germany; and a contract manufacturer venture in Ensenada, Mexico. The company also has sales operations in England and Sweden, and an engineering support centre in Brazil. MUSICLAND HOLDING: Extends Plan Effective Date Until January 31 --------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates, the Official Committee of Unsecured Creditors and the current members of the Informal Committee of Secured Trade Vendors agree that the deadline set under the Debtors' Second Amended Plan of Liquidation for: (a) the Confirmation Order to become a Final Order is extended until December 31, 2007; and (b) the occurrence of the Effective Date is extended until January 31, 2008. In their stipulation, the parties indicated that at the Nov. 15, 2007 hearing to consider confirmation of the Debtors' Plan, the U.S. Bankruptcy Court for the Southern District of New York had found that the Plan has satisfied the feasibility requirement under Section 1129 of the Bankruptcy Code. The Court adjourned the confirmation hearing until Dec. 11, 2007. Judge Bernstein commenced hearing to confirm the Debtors' Plan on November 28, 2006. Judge Bernstein found that all confirmation requirements had been satisfied other than feasibility and left the confirmation hearing open to allow the Debtors further time to satisfy the feasibility requirements. The Debtors, the Creditors' Committee, the Trade Vendors, and Wachovia Bank, N.A., are negotiating the final terms resolving Wachovia's objection to the Plan and the order confirming the Plan will then be submitted to the Court. As previously reported, Wachovia objected to the Plan claiming that its alleged indemnification claim against the Debtors' estates resulting from a lawsuit brought against Wachovia by current and former secured trade creditors renders the Plan unconfirmable. Wachovia asserted that it has an administrative claim, potentially in excess of $25,000,000, arising out of the Debtors' alleged obligation to indemnify Wachovia against the claims asserted in the Adversary Complaint filed by the Trade Creditors against Wachovia pertaining to a revolving loan with Harris Bank N.A. On August 27, 2007, the Adversary Complaint filed by the Trade Creditors was dismissed by the Bankruptcy Court, which held that Wachovia did not tortuously interfere with the Trade Creditors' contractual rights or participate in the conversion of the Trade Creditors' collateral, and that Harris Bank N.A was not unjustly enriched with the repayment of the $25,000,000 supplemental Term Loan. The Trade Creditors have taken an appeal before the U.S. District Court of the Southern District of New York of the Bankruptcy Court's decision. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. At March 31, 2007, the Debtors disclosed $20,121,000 in total assets and $321,546,000 in total liabilities. On May 12, 2006, the Debtors filed their Joint Plan of Liquidation with the Court. On Sept. 14, 2006, they filed an amended Plan and a Second Amended Plan on Oct. 13, 2006. The Court approved the adequacy of the Amended Disclosure Statement on Oct. 13, 2006. The hearing to consider confirmation of the 2nd Amended Joint Plan started on Nov. 28, 2006. (Musicland Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NABI BIOPHARMA: Completes Sale of Unit to Biotest AG for $185 Mil. ------------------------------------------------------------------ Nabi Biopharmaceuticals has completed the sale of assets constituting its Biologics strategic business unit to Biotest Pharmaceuticals Corporation, a wholly-owned subsidiary of Biotest AG, for $185 million in cash. Subject to the interim arrangements described below, Biotest has acquired or will acquire the Biologics SBU's products, including Nabi- HB(R) and other plasma business assets, including Nabi's state-of-the-art plasma protein production plant and nine FDA-certified plasma collection centers across the U.S. The acquisition also includes certain of Nabi's Corporate Shared Services group assets, the company's Boca Raton, Florida headquarters and other facilities as well as the assumption of certain liabilities. Nabi Biopharmaceuticals is now headquartered in Rockville, Maryland. Nabi will retain, on an interim basis pending Biotest's receipt of certain Florida regulatory approvals and licenses, title to all Nabi-HB(R) inventory and work-in-progress, and regulatory oversight and operational authority for the manufacture, marketing, distribution and sale of Nabi-HB(R). Upon receipt of such regulatory approvals, title to Nabi-HB(R) inventory and work- in- progress, and oversight and authority for the manufacture, marketing, distribution and sale of Nabi-HB(R) will transfer to Biotest. During the interim period prior to receipt of such approvals, revenues and expenses relating to Nabi-HB(R) sales shall be attributed to Biotest and Biotest shall indemnify Nabi for liability arising from post-closing conduct of the Biologics SBU. "The completion of this transaction marks a significant milestone in our strategic alternatives process," Dr. Leslie Hudson, Interim President and Chief Executive Officer of Nabi, said. "Nabi is now focused on building and realizing the significant value of Nabi's remaining assets including NicVax, our proprietary smoking cessation vaccine for treatment of nicotine addiction and prevention of smoking relapse, StaphVax, and our cash and PhosLo milestone and royalty opportunities." Headquartered in Rockville, Maryland, Nabi Biopharmaceuticals - http://www.nabi.com/-- leverages its experience and knowledge in powering the immune system to develop and market products that fight serious medical conditions. NABI BIOPHARMA: Board Approves $65 Mil. Share Repurchase Program ---------------------------------------------------------------- Nabi Biopharmaceuticals' Board of Directors has approved the repurchase of up to $65 million of the company's outstanding common shares in the open market or in privately negotiated transactions. This share repurchase program includes the $3.1 million outstanding balance from the $5 million share repurchase program that the company announced in 2001. "This repurchase program is the right thing to do for our shareholders and this is the right time to do it," Dr. Leslie Hudson, Interim President and Chief Executive Officer of Nabi, said. "This is a first step. It not only reflects our continuing commitment to maximize shareholder value but also demonstrates our confidence in the value of Nabi's assets after closing the sale of our biologics strategic business unit. We will now shift our primary focus to the various alternatives that we may pursue to maximize the return of value to our shareholders from our considerable remaining assets -- which include our NicVAX(R) (Nicotine Conjugate Vaccine) and StaphVAX(R) (Staphylococcus aureus Polysaccharide Conjugate Vaccine) clinical programs, potential PhosLo milestones and royalties, as well as our significant net cash position. These future alternatives may include, but are not limited to, licensing or development arrangements; joint ventures or strategic alliances; the sale or merger of all or part of the company; and additional share repurchase programs or other distributions to our shareholders." Headquartered in Rockville, Maryland, Nabi Biopharmaceuticals -- http://www.nabi.com/-- leverages its experience and knowledge in powering the immune system to develop and market products that fight serious medical conditions. NABI BIOPHARMA: $185MM Biotest Sale Cues S&P's Stable Outlook ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Rockville, Maryland-based Nabi Biopharmaceuticals to stable from negative, following the sale of its biologics unit to Biotest AG for $185 million cash. At the same time, S&P affirmed its 'B-' corporate credit and senior unsecured ratings on Nabi. "The ratings on Nabi Biopharmaceuticals reflect the company's narrow business focus as a niche developer of vaccines, and the cash requirements to commercialize new products. These negative factors are only partly mitigated by the current adequate liquidity," said Standard & Poor's credit analyst Arthur Wong. Nabi recently sold its Nabi Biologics division to Germany-based Biotest AG for $185 million. The sale of the division, which includes Nabi's only marketed product--the hepatitis B treatment, Nabi-HB--as well as the company's plasma production and collection centers, and Boca Raton headquarters, will leave Nabi with two vaccines under development and royalty rights to PhosLo, divested in November 2006 for $65 million, and up to $75 million in future royalty and milestone payments. The sale is the latest phase of Nabi's strategic restructuring in order to focus on the development of its two vaccines, NicVax and StaphVax. Proceeds from the sale will be used to fund operations, provide substantial R&D funding for the two prospects, and fund a recently announced $65 million share repurchase program. NicVax, a vaccine to help stop smoking that currently is in Phase II of development, has received fast-track approval status from the U.S. Food & Drug Administration. In the meantime, Nabi is still searching for a partner to resume development on StaphVax, a vaccine to counter staph infection, after development was stalled in mid-2006 because the drug did not reach its primary endpoints in a late-stage trial. Resumption of the trials will be expensive and the commercial prospects of the drug are uncertain, likely making finding a development partner difficult. NEMASKET PARTNERS: Case Summary & Six Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Nemasket Partners, L.L.C. 93 Main Street Kingston, MA 02364 Bankruptcy Case No.: 07-44293 Chapter 11 Petition Date: December 9, 2007 Court: District of Massachusetts (Worcester) Debtor's Counsel: Earl D. Munroe, Esq. Munroe & Chew 5 Broadway Saugus, MA 01906 Tel: (617) 848-1218 Fax: (617) 507-8377 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Six Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Arthur F. Borden & Associates, $26,316 Inc. 302 Broadway, Unit 4 Raynham, MA 02767 Bowditch & Dewey, L.L.P. $22,000 P.O. Box 15156 Worcester, MA 01615 Mike Pantaleo $7,500 342 North Main Street Andover, MA 01810 Town of Middleborough $5,000 Allen & Major Associates, Inc. $1,245 Robert J. Mather & Associates $1,000 NEPHROS INC: Sept. 30 Balance Sheet Upside-Down by $5.6 Million --------------------------------------------------------------- Nephros Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $14.2 million in total assets and $19.8 million in total liabilities, resulting in a $5.6 million total shareholders' deficit. The company reported a net loss of $1.5 million for the third quarter ended Sept. 30, 2007, compared with a net loss of $1.9 million in the third quarter of 2006. For the quarter ended Sept. 30, 2007, Nephros reported net product revenues of $112,000, compared with net product revenues of $165,000 in the corresponding period of 2006, a decrease of 32%. The decrease is primarily due to decreased sales of the company's Olpur MDHDF Filter Series product to its customers in the U.K., German and Scandinavian markets, down approximately $91,000 collectively. This decrease was mitigated by an approximate $38,000 increase in current quarter sales to the company's primary European distributor. The decrease in net loss for the three months ended Sept. 30, 2007, was primarily due to the the gain on exchange of debt of approximately $330,000 which includes a gain on exchange of the Old Notes of approximately $254,000 and a gain of approximately $76,000 on the cancellation of the warrants that could have been issued upon certain prepayments of the Old Notes by the company. There was no gain or loss on exchange of debt in the three months ended Sept. 30, 2006. As of Sept. 30, 2007, Nephros had cash, cash equivalents and short-term investments of $10,513,000. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?263c Going Concern Doubt As reported in the Troubled Company Reporter on April 20, 2007, Deloitte & Touche LLP expressed substantial doubt about Nephros Inc.'s ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses and difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. About Nephros Inc. Headquartered in New York, Nephros Inc. (Amex: NEP) -- http://www.nephros.com/-- is a medical device company developing and marketing products designed to improve the quality of life for the End-Stage Renal Disease patient, while addressing the critical financial and clinical needs of the care provider. Nephros also markets a line of water filtration products, the Dual Stage Ultrafilter. With an initial focus on health care, the DSU is in a pilot-use program at a major U.S. medical center and has been selected for further development by the U.S. Marine Corps. NEUTRON ENTERPRISES: Posts $2,256,162 Net Loss in Third Quarter --------------------------------------------------------------- Neutron Enterprises Inc. reported a net loss of $2,256,162 on revenue of $742,816 for the third quarter ended Sept. 30, 2007, compared with a net loss of $3,492,782 on revenue of $439,388 in the corresponding period in 2006. The $303,428 increase in revenue is due mainly to contributions to revenue from Stock-Trak, representing approximately 89% of the overall increase over the prior period. Stock-based compensation expense for the three months ended Sept. 30, 2007, decreased to $997,842 from $3,072,444 for the three months ended Sept. 30, 2006. The decrease was due mainly to significant grants of stock options to officers during June and July of 2006 which, due to the use of the graded vesting attribution method, resulted in a higher expense in the three months ended Sept. 30, 2006, than during the comparable period in 2007. At Sept. 30, 2007, the company's consolidated balance sheet showed $4,868,089 in total assets, $3,134,377 in total liabilities, and $1,733,712 in total stockholders' deficit. The company's consolidated balance sheet at Sept. 30, 2007, also showed strained liquidity with $1,246,346 in total current assets available to pay $3,134,377 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2639 Going Concern Doubt PricewaterhouseCoopers LLP expressed substantial doubt about Neutron Enterprises Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's dependence upon financing to continue operations and recurring losses from operations. About Neutron Enterprises Headquartered in Montreal, Quebec, Canada, Neutron Enterprises Inc. (OTC BB: NTRN.OB) -- http://www.neutrongroup.com/-- is a global provider of web-based interactive consumer entertainment, business & education simulation products and interactive media. Through its wholly owned subsidiary, Stock-Trak, Neutron targets the financial services and academic markets with proprietary stock market simulation and training tools. Through Wall Street Survivor, Neutron's consumer division targets online investing, trading and game enthusiasts with a market leading web 2.0 investment oriented educational simulation and contest web site. NEW ORLEANS REGIONAL: Auctions Asset on Dec. 17 to Pay GECC Debt ---------------------------------------------------------------- General Electric Capital Corporation will attend a public auction and may make offers for the asset of New Orleans Regional P.E.T. Imaging Center LLC, on account of unpaid debt owed to GECC, secured creditor. The asset offered for sale consist of rights, title and interest of the Debtor on its 2001 GE Advance PET Imaging System. The auction will be held at 9:00 a.m. on Dec. 17, 2007, at: Katten Muchin Rosenman LLP 525 West Monroe Street, 19th Floor Chicago, IL 60661 On the sale date, the assets may be offered for sale, with reserve, and sold to the highest bidder at the conclusion of the sales, as determined by GECC in its sole and absolute discretion, on an "as is, where is" basis, without recourse or warranties. Additional terms and conditions applicable to the sale may be obtained from GECC's counsel, Peter J. Young, Esq., through (312) 902-5208. The New Orleans Regional PET Center -- http://www.neworleanspetcenter.com/-- provides doctors with the technology to conduct diagnosis better through its PET - Positron Emission Tomography. They offer services in the fields of oncology, neurology, and cardiology are some areas in which patients are benefiting most from PET technology. NEWPAGE CORP: Earns $16 Million in Third Quarter Ended Sept. 30 --------------------------------------------------------------- NewPage Corporation disclosed its financial results for the third quarter of 2007. Net income was $16 million in the third quarter of 2007 compared to net income of $2 million in the third quarter of 2006. Net sales were $545 million in the third quarter of 2007 compared to $522 million in the third quarter of 2006, an increase of 4.4%. The increase was driven by favorable coated paper sales volume, partially offset by a decrease in average coated paper prices and a decrease in sales of uncoated paper and market pulp. Coated paper sales volumes increased from 528,000 tons in the third quarter of 2006 to 576,000 tons in the third quarter of 2007. Average coated paper prices decreased from $907 per ton in the third quarter of 2006 to $884 per ton in the third quarter of 2007. The company did not take any market-related downtime for coated paper in the third quarter of 2007 or 2006. EBITDA was $79 million for the third quarter of 2007 compared to $70 million for the third quarter of 2006. Significant items in 2006 included an unrealized non-cash loss of $2 million for the basket option contract. "With continuing increased input costs, additional industry capacity was closed during the quarter. We recently announced two price increases that we began to realize in the third quarter and we expect to see additional benefits from these announced increases in the fourth quarter of 2007," Mark A. Suwyn, chairman of the board and chief executive officer of NewPage, said. "We believe that these effects will be partially offset by continued low-priced Asian imports as some Asian producers appear to be trying to circumvent the new antidumping and countervailing duties imposed on coated freesheet paper imports from China, Indonesia and South Korea. We expect that business drivers, such as continuing capacity rationalization, gross domestic product growth, lower Canadian and European imports resulting from the strengthening of the Canadian dollar and Euro relative to the U.S. dollar, and continued advertising spending, remain favorable to us." At Sept. 30, 2007, the company's balance sheet showed total assets of $1.984 billion and total liabilities of $1.817 billion, resulting in a stockholders' equity of $167 million. Equity on Dec. 31, 2006, was $194 million. Cash generated from operating activities and availability under the company's revolving senior secured credit facility are its principal sources of liquidity. As of Sept. 30, 2007, the company had available cash on hand of $66 million. In addition, there were no outstanding borrowings under the revolving senior secured credit facility and, based on availability under the borrowing base as of that date, the company had $207 million of borrowing availability under the revolving senior secured credit facility (after taking into account $42 million of outstanding letters of credit). About NewPage Headquartered in Miamisburg, Ohio, NewPage Corporation -- http://www.newpagecorp.com/-- a wholly owned subsidiary of NewPage Holding Corporation -- is a U.S. producer of coated papers in North America. The company produces coated papers in sheets and rolls with many finishes and weights to offer design flexibility for a wide array of end uses. With 4,300 employees, NewPage operates integrated pulp and paper manufacturing mills located in Escanaba, Michigan; Luke, Maryland; Rumford, Maine; and Wickliffe, Kentucky; and a converting and distribution center in Chillicothe, Ohio. The mills have a combined annual capacity of approximately 2.2 million tons of coated paper. * * * As reported in the Troubled Company Reporter on Sept. 25, 2007, Moody's Investors Service placed the ratings of NewPage Corporation under review for possible downgrade following the company's announcement that it has signed a definitive agreement to acquire Stora Enso's paper manufacturing operations in North America. Ratings on review for possible downgrade include corporate Family Rating at B1; Senior Secured Term Loan at Ba2 (LGD 2, 25%); Second Lien Notes at B2 (LGD 5, 73%) and Senior Subordinated Notes at B3 (LGD 6, 94%). NEWPAGE CORP: Moody's Rates $1.6 Billion Secured Term Loan at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to NewPage Corporation's new $1.6 billion senior secured term loan and a B2 rating to the company's new $456 million second lien notes. Proceeds from the new debt offerings will be used to fund, in part, the acquisition of Stora Enso North America and retire the company's existing senior secured term loan facility. At the same time, Moody's confirmed NewPage's B1 corporate family rating, the B2 rating on the company's existing second lien notes, the B3 rating on the company's existing senior subordinated notes, as well as the company's speculative grade liquidity rating of SGL-2. The rating action concludes a review initiated on Sept. 21, 2007 in response to the company's announcement that it had signed a definite agreement to acquire SENA. The ratings outlook is negative. The rating action reflects the cost competitive asset base of NewPage and the expected strong operating and financial performance of the combined company after the integration of SENA. Moody's expects NewPage's market leading position as the largest producer of coated paper in North America, coupled with the current favorable supply-demand and pricing industry trends to generate the margins and cash flow necessary to sustain the B1 corporate family rating. Coated paper capacity curtailments announced in mid 2007 by three of NewPage's higher cost competitors coupled with the reduction in coated paper imports into North America has produced the current favorable industry dynamics. The SGL-2 speculative grade liquidity rating for NewPage reflects overall good liquidity, given the combined company's expected strong financial performance, ample availability under its proposed $500 million revolver, and the expectation that compliance with financial covenants will not limit access to the credit facility. The rating outlook is negative reflecting the company's increased debt position and the anticipated integration challenges in achieving the announced synergies. The outlook also reflects the concern that the company is increasing its leverage as the US economy potentially enters a period of slowing growth. The new $1.6 billion senior secured term loan is guaranteed by NewPage Holding Corporation, a direct parent of NewPage, and certain key operating subsidiaries. With the guarantees being secured primarily by a first lien on the company's combined fixed asset, the rating is notched up from the B1 corporate family rating to Ba2 in accordance with the loss-given-default methodology. The new $456 million second lien notes will be secured by a second priority security interest, ranking pari passu and sharing the same security as the existing B2 rated second lien secured notes. The Ba2 rating on the existing senior secured term loan will be withdrawn once it is retired. Downgrades: Issuer: NewPage Corporation -- Senior Secured Regular Bond/Debenture, Downgraded to 75 - LGD5 from 73 - LGD5 Upgrades: Issuer: NewPage Corporation -- Senior Subordinated Regular Bond/Debenture, Upgraded to 91 - LGD6 from 94 - LGD6 Assignments: Issuer: NewPage Corporation -- Senior Secured Bank Credit Facility, Assigned a range of 27 - LGD2 to Ba2 -- Senior Secured Regular Bond/Debenture, Assigned a range of 75 - LGD5 to B2 Outlook Actions: Issuer: NewPage Corporation -- Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: NewPage Corporation -- Probability of Default Rating, Confirmed at B1 -- Speculative Grade Liquidity Rating, Confirmed at SGL-2 -- Corporate Family Rating, Confirmed at B1 -- Senior Subordinated Regular Bond/Debenture, Confirmed at B3 -- Senior Secured Bank Credit Facility, Confirmed at 25 - LGD2 -- Senior Secured Regular Bond/Debenture, Confirmed at B2 NewPage Corporation, headquartered in Miamisburg, Ohio, is a leading U.S. producer of coated papers in North America. The company currently produces coated papers in sheets and rolls through four integrated pulp and paper manufacturing mills with a combined annual capacity of approximately 2.3 million tons. When the transaction with Stora Enso closes, NewPage will be the largest coated paper producer in North America with 12 integrated pulp and paper manufacturing mills and annual capacity of approximately 5.5 million tons. NEWPAGE CORP: S&P Rates Proposed $1.6 Billion Term Loan at BB- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to the proposed $1.6 billion term loan B of NewPage Corp. (B/Stable/- -), based on preliminary terms and conditions. The rating, which is two notches higher than the corporate credit rating, and the recovery rating indicate that lenders can expect very high (90%-100%) recovery in the event of a payment default. At the same time, S&P assigned its 'B-' senior secured debt rating and '5' recovery rating to NewPage's proposed second-lien $456 million add-on fixed rate notes, based on preliminary terms and conditions. This rating, which is one notch below the corporate credit rating, and the recovery rating indicate that lenders can expect modest (10%-30%) recovery in the event of a payment default. Standard & Poor's also lowered its ratings on the $225 million senior secured second-lien floating-rate notes and $350 million senior secured second-lien fixed-rate notes of NewPage Corp. The ratings on both issues were lowered to 'B-' from 'B' and removed from CreditWatch, where they were placed with negative implications on Sept. 24, 2007. The recovery ratings were revised to '5' from '3'. The '5' rating indicates the expectation of modest (10%-30%) recovery in the event of a payment default. The downgrades reflect the significant planned increase in the Miamisburg, Ohio-based company's first-priority debt as well as an increase in senior secured second-lien debt. Ratings List Ratings Affirmed NewPage Corp. Corporate Credit Rating B/Stable/-- $750 mil first-lien Term Loan BB- Recovery rtg 1 Sr Sub Notes CCC+ Ratings Lowered To From -- ---- $225 mil. floating-rate 2nd-lien sr scrd nts B- B/Watch Neg Recovery rtg 5 3 $350 mil. 10% 2nd-lien sr scrd nts B- B/Watch Neg Recovery rtg 5 3 Ratings Assigned $1.6 bil. term loan B BB- Recovery rtg 1 $456 mil. 2nd-lien sr scrd nts B- Recovery rtg 5 NEWSTAR TRUST: Fitch Affirms 'BB' Rating on $24.372MM Notes ----------------------------------------------------------- Fitch affirms six classes of notes issued by NewStar Trust 2005-1. These affirmations are the result of Fitch's review process and are effective immediately: -- $155,982,144 class A-1 notes at 'AAA'; -- $35,129,842 class A-2 notes at 'AAA'; -- $18,747,854 class B notes at 'AA'; -- $39,370,493 class C notes at 'A'; -- $24,372,210 class D notes at 'BBB'; -- $24,372,211 class E notes at 'BB'. NewStar 2005-1 is collateralized debt obligation that closed Aug. 10, 2005 and is managed by NewStar Financial, Inc. which is currently rated 'CAM2' by Fitch. Newstar 2005-1 is secured by a portfolio of 69.1% traditional middle market loans, 18.5% large middle-market loans, 5.3% structured finance loans, 3.8% broadly syndicated loans, and 3.3% real estate loans. The transaction features a three-year reinvestment period, during which regularly amortizing principal proceeds are used to purchase new collateral. Sales of loans are limited to 15% of aggregate outstanding loan balance per year during the reinvestment period. Included in this review, Fitch updated the shadow ratings on all underlying loans in the portfolio. These affirmations are the result of the stable credit quality of the underlying collateral. Since the last review on June 6, 2006 the transaction continues to remain in compliance with all collateral quality tests. According to the most recent Oct. 13, 2007 quarterly summary report, the Fitch weighted average rating factor has increased to 25.95 ('B+/B') from 24.5 ('B+/B') at the time of the last review, remaining below its trigger of 33.2 ('B/B-'). During this same time period, the weighted average spread has declined to 4.33% from 4.50% and the weighted average coupon has remained at 9.4%. There are currently no charged off or delinquent loans in the collateral pool. The rating of the class A-1 and A-2 notes addresses the likelihood investors will receive full and timely payments of interest, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B, C, D, and E notes address the likelihood investors will receive ultimate and compensating interest payments, as well as the stated balance of principal by the legal final maturity date. NORTH PARK VILLAGE: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: North Park Village, L.L.C. G.D.C. Real Estate Development 17625 North Seventh Street, Unit 1016 c/o Jeff J. Glover, President & C.O.O. Phoenix, AZ 85022 Tel: (602) 231-0910 Bankruptcy Case No.: 07-06618 Type of Business: The Debtor owns and manages apartments. Chapter 11 Petition Date: December 7, 2007 Court: District of Arizona (Phoenix) Debtor's Counsel: Mark W. Roth, Esq. Hebert Schenk, P.C. 4742 North 24th Street, Suite 100 Phoenix, AZ 85016 Tel: (602) 248-8203 Fax: (602) 248-8840 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its largest unsecured creditors. NORTHWEST AIR: Won't Complete Midwest Acquisition by January 31 --------------------------------------------------------------- Northwest Airlines Corp., Midwest Air Group Inc. and TPG Capital have entered into a timing agreement with the U.S. Department of Justice, under which the parties have agreed that they will not close the transaction before Jan. 31, 2008, without the DOJ's concurrence. Midwest Air Group anticipates that the actual closing will occur as soon as practicable consistent with the agreement. The transaction was approved at a special meeting of Midwest shareholders on October 30. In addition to anti-trust approvals, completion of the transaction is subject to satisfaction of customary closing conditions. Additionally, Midwest Air Group, parent company of Midwest Airlines, disclosed that the parties involved in the pending acquisition of Midwest Air Group by Midwest Air Partners LLC, an affiliate of TPG Capital, have certified substantial compliance in response to the request for additional information from the DOJ under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. About Midwest Airlines Midwest Airlines is the subsidiary of Midwest Air Group (AMEX: MEH)-- http://www.midwestairlines.com/-- features jet service throughout the United States. Catering to business travelers and leisure travelers provides passengers with service and onboard amenities at competitive fares. Both Skyway Airlines Inc. - a wholly owned subsidiary of Midwest Airlines - and SkyWest Airlines Inc. operate as Midwest Connect and offer service to and connections through Midwest Airlines' hubs. Together, the airlines offer service to more than 50 cities. About TPG Capital Headquartered in Fort Worth, Texas, TPG Capital -- http://www.texaspacificgroup.com/-- also known as Texas Pacific Group, has staked its claim on the buyout frontier. The company does not get involved in the day-to-day operations of the companies it invests, it usually holds onto an investment. Notable holdings include Neiman Marcus, Ducati, Lenovo, SunGard Data Systems, and Aleris International. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. * * * Moody's Investor Services placed Northwest Airlines Corp.'s long term corporate family and probability of default ratings at 'B1' in May 2007. The ratings still hold to date with a stable outlook. OCTANS III: S&P Places Ratings Under Negative CreditWatch --------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1, A-2, B, and C notes issued by Octans III CDO Ltd.; and on the class A-1J notes issued by Rockbound CDO I Ltd. on CreditWatch with negative implications. Standard & Poor's notes that Octans III CDO Ltd. triggered an event of default on Dec. 3, 2007, under section 5.1(h) of the indenture dated Dec. 6, 2006, when the net outstanding portfolio balance on such determination date plus the market value swap account excess as of such determination date was less than the sum of the remaining unfunded notional amount plus the outstanding swap counterparty amount plus the aggregate outstanding amount of the class A notes. On Nov. 30, 2007, Rockbound CDO I Ltd. triggered an EOD under section 5.1(h) of the indenture dated July 26, 2007, when the senior credit test fell below 100%. When Standard & Poor's receives EOD notices, S&P place all of the affected note ratings on CreditWatch with negative implications. Ratings Placed on Creditwatch Negative Rating ------ Transaction Class To From ----------- ----- -- ---- Octans III CDO Ltd. A-1 A+/Watch Neg A+ Octans III CDO Ltd. A-2 BBB+/Watch Neg BBB+ Octans III CDO Ltd. B BB/Watch Neg BB Octans III CDO Ltd. C CCC-/Watch Neg CCC- Rockbound CDO I Ltd. A-1J AAA/Watch Neg AAA Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ Rockbound CDO I Ltd. A-1S Fund AAA Octans III CDO Ltd. D CC Octans III CDO Ltd. E CC PASQUAL CASINO: Greater Revenue Cues S&P to Lift Rating to BB- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Valley Center, California-based San Pasqual Casino Development Group Inc. The issuer credit rating was raised to 'BB-' from 'B+', and the rating outlook is stable. The ratings upgrade follows greater-than-anticipated revenue and EBITDA growth, while at the same time, SPCDG is nearing completion of its expansion project. "The 'BB-' rating reflects SPCDG's good operating performance, favorable market demographics, and credit measures that are currently good for the rating," said Standard & Poor's credit analyst Guido DeAscanis. "Somewhat offsetting these factors are the company's narrow business position as an operator of a single casino, competitive market conditions, and expectations for incremental debt financing required to fund the recently announced hotel expansion." SPCDG does not publicly disclose its financial statements; however, credit measures are in line with the new rating. The company has announced that following the completion of the ongoing expansion, it will begin a hotel expansion that is expected to cost $80 million-$100 million. Notwithstanding our expectation for an increase in debt and debt leverage, SPCDG's financial profile provides sufficient cushion to fund the hotel project at the current rating level. PATRIOT TAX: Stays Neutral on Peachtree Partners' Tender Offer -------------------------------------------------------------- Patriot Tax Credit Properties L.P. expresses no opinion and is neutral with respect to whether or not unit holders should tender their units in response to an unsolicited tender offer by Peachtree Partners to purchase up to 4.9% of the 38,125 outstanding limited partnership units of Patriot at a price of $55 per unit, less certain reductions to that purchase price. As Patriot has disclosed to its unit holders, Patriot is in the process of liquidating its portfolio of investments in other limited partnerships. It is uncertain at this time how much money, if any, will be realized by Patriot and its unit holders from the liquidation of Patriot's investments. Patriot notes that the partnership has made distributions in the past from the disposition of its investments, but that there can be no assurances what further dispositions or distributions, if any, may occur in the future. Patriot further notes that future distributions, if any, may be greater or less than the price of the Offer. Patriot has not prepared itself or received from any third party any valuations of its investments. Accordingly, Patriot takes no position on whether or not the Offer and its purchase price are attractive or unattractive to unit holders from an economic point of view. Patriot notes, however, that the administrative fee of $150 per selling investor may substantially reduce the net sales proceeds received by a selling unit holder. Patriot further notes that this $150 "administrative fee" is being charged and received by the Offeror and not by Patriot itself. Patriot imposes only a $50 fee for its processing of transfer requests. In addition, unit holders may also wish to consider these: -- First, the offer raises certain questions about its potential impact on Patriot's tax status for federal income tax purposes. Patriot is treated, and has since its inception been treated, as a partnership and a pass- through entity for federal income tax purposes -- a tax status that is desirable and beneficial to Patriot and its investors. That beneficial tax status might be lost, and Patriot might be taxed as a corporation, if it were deemed to be a "publicly traded partnership" within the meaning of the Internal Revenue Code and certain regulations promulgated by the Internal Revenue Service. It is uncertain whether or not the Offer, if consummated, might cause Patriot to be deemed a "publicly traded partnership" since the offer by itself and/or in combination with other transfers of Patriot's units, could result in a transfer of more than 2% of the interests in Patriot during the year, which might prevent it from relying on an Internal Revenue Service "safe harbor" protecting against publicly traded partnership treatment. Accordingly, Patriot will only permit units to be transferred pursuant to the offer if the general partner determines, in its sole discretion, either that the cumulative total number of transfers in any tax year falls within the safe harbor or that the Offeror has provided sufficient assurances and protection to Patriot, its partners and unit holders to allow the transfers even though the aggregate annual transfers of Patriot units may exceed the two percent safe harbor limitation. Such sufficient assurances and protection by the Offeror would include providing Patriot with: (i) an opinion of counsel that the Offer will not result in Patriot being deemed to be a "publicly traded partnership" for federal income tax purposes; and (ii) an agreement to indemnify Patriot, its partners and its unit holders for any loss or liability relating to any adverse tax consequences arising from the Offer. This legal opinion and indemnity must be in a form and content satisfactory to Patriot and its counsel. -- Second, the offering materials state that the offeror will not purchase more than 4.9% of Patriot's outstanding units, including in that 4.9% amount the units already owned by the offeror. The offering materials, however, do not state how many units the offeror already owns, so it is impossible to determine from those materials how many units the offeror is willing to purchase. -- Third, unit holders are reminded that any unit holder wishing to sell his, her or its units must complete Patriot's standard transfer and subscription documentation in accordance with Patriot's standard practices and procedures. Among other things, each selling unit holder must individually sign each of Patriot's required transfer documents. Pursuant to Patriot's practices and procedures, Patriot does not accept, and will not accept in connection with the offer, signatures by persons other than the selling unit holder who purport to act based on a power of attorney executed by the unit holder. Persons who wish to sell their units to the offeror should so advise the offeror, which will obtain from Patriot, and deliver to the selling unit holder, the required standard transfer documentation. Each unit holder should consult with his, her or its own investment, tax and legal advisors in deciding whether or not to tender units in response to the offer. The offeror is not affiliated with Patriot or its general partner. About Patriot Tax Credit Patriot Tax Credit Properties L.P. is engaged in investing Local Partnerships Properties. * * * At Sept. 30, 2007, the company's balance sheet showed total assets of $3,003,609, total liabilities of $3,619,657, resulting to a total partners' deficit of $616,048. PETSMART INC: Moody's Withdraws All Ratings for Business Reasons ---------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings on PetSmart, Inc. for business reasons. Moody's added that the ratings were withdrawn because the company has no rated debt outstanding. These ratings were withdrawn: Outlook Actions: Issuer: PetSmart, Inc. -- Outlook, Changed To Rating Withdrawn From Stable Withdrawals: Issuer: PetSmart, Inc. -- Corporate Family Rating, Withdrawn, previously rated Ba2 Moody's does not rate the $350 million secured revolving credit facility. PetSmart, Inc., with headquarters in Phoenix, Arizona, is the largest specialty retailer of supplies, food, and services for household pets. The company currently operates 992 stores in the U.S. and Canada. Revenue for the twelve months ending October 28, 2007 was about $4.5 billion. PHARMANET DEVELOPMENT: S&P Holds 'B+' Rating and Revises Outlook ---------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Princeton, New Jersey-based contract research organization PharmaNet Development Group, Inc. to stable from negative. At the same time, S&P affirmed its existing ratings on PharmaNet, including the 'B+' corporate credit rating. "The outlook revision reflects the company's stabilizing operating and financial results, following significant challenges encountered in late-2005," said Standard & Poor's credit analyst Alain Pelanne. A new management team has since been put in place, earnings and revenues have resumed a growth trajectory, and the company has altered its business mix to reduce its reliance on early-stage development. While some uncertainty remains with respect to outstanding derivatives litigation, an SEC investigation, and the long-term impact the late-2005 challenges will have on the company's reputation, the potential for a lower rating in the next two to three years has been reduced. S&P's speculative-grade ratings on PharmaNet continue to reflect the company's position as a growing participant in the global market for outsourced clinical trial services, the risk of contract cancellation and turnover, and the volatility of financial results inherent in the CRO industry. These risks outweigh the company's moderate debt burden, large cash balance, relatively low cost of debt, and fairly strong cash flows. Although PharmaNet is among the larger CROs, it still has a relatively small revenue base ($270 million in net revenues in the nine months ended Sept. 30, 2007) and competes against some larger companies, including Quintiles Transnational, Pharmaceutical Product Development Inc., and PRA International. While no single customer represents more than 10% of revenues, in 2006, the company's top 10 clients represented about 40% of revenues. This concentration compares favorably to some of its peers, but remains a risk, because it is not uncommon for contracts to be cancelled by clients from time to time. Furthermore, financial results for CROs can be volatile because of changes in scope, and because some billings are performed before work has been completed. While these risks are not specific to PharmaNet, and affect all CROs, the company's relatively small size does leave it vulnerable to such developments. PHILIP GIBA: Case Summary & Ten Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Philip A. Giba, Esq. dba Philip A. Giba Farms 28655 Wagon Road Agoura Hills, CA 91301 Bankruptcy Case No.: 07-14813 Chapter 11 Petition Date: December 6, 2007 Court: Central District Of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Stephen L. Burton, Esq. 15260 Ventura Boulevard, Suite 640 Sherman Oaks, CA 91403 Tel: (818) 501-5055 Fax: (818) 501-5849 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's Ten Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Venable, L.L.P. $148,400 2049 Century Park East Suite 2100 Los Angeles CA 90067 The Dunning Law Firm $98,640 4545 Murphy Canyon Road, Suite 200 San Diego CA 92123 Barry Serota and Associates $19,125 P.O. Box 1008 Arlington Height, IL 60006 Joseph, Steven & Associates $8,160 Timothy L. Kleier, Esq. $6,270 Seals & Tenenbaum $3,400 Nordstrom F.S.B. $2,178 Bank of the West $1,321 Lathrop & Gage D.C. $1,168 Designed Receivable Solution $203 PLAINS EXPORATION: Change of Control Offers for Pogo's Notes End ---------------------------------------------------------------- Plains Exploration & Production Company disclosed the expiration of three separate Change of Control Offers to purchase for cash at 101% of principal amount, plus accrued and unpaid interest, any and all of the outstanding: * 7.875% Senior Subordinated Notes due 2013, * 6.625% Senior Subordinated Notes due 2015, and * 6.875% Senior Subordinated Notes due 2017 (CUSIP Nos. 730448 AV 9, 730448 AR 8 and 730448 AT 4, respectively) of Pogo Producing Company LLC, a wholly owned subsidiary of PXP and successor to Pogo Producing Company, which PXP acquired on Nov. 6, 2007. The Change of Control Offers expired immediately after 5:00 p.m., New York City Time, on Dec. 7, 2007 and were required under the indentures governing each series of the Notes as a result of PXP's acquisition of Pogo Producing. On Nov. 20, 2007, PXP also reported the results of Pogo's tender offers and consent solicitations for the Notes, pursuant to which 100% of the 6.625% Notes and over 99% of each of the 7.875% Notes and 6.875% Notes were tendered. All of the remaining outstanding 7.875% Notes and none of the 6.875% Notes were tendered in the Change of Control Offers which expired Dec. 7, 2007. About Pogo Producing Headquartered in Houston, Texas, Pogo Producing Company (NYSE: PPP) -- http://www.pogoproducing.com/-- explores for, develops and produces oil and natural gas. Pogo owns approximately 4,000,000 gross leasehold acres in major oil and gas provinces in North America, 3,119,000 acres in New Zealand and 1,480,000 acres in Vietnam. About Plains Exploration & Production Headquartered in Houston, Plains Exploration & Production Co. (NYSE: PXP) -- http://www.plainsxp.com/-- is an independent oil and gas company primarily engaged in the upstream activities of acquiring, developing, exploiting, exploring and producing oil and gas in its core areas of operation: onshore and offshore California, Colorado and the Gulf Coast region of the United States. * * * As reported in the Troubled Company Reporter on Nov. 8, 2007, Standard & Poor's Ratings Services affirmed its 'BB' corporate rating on independent oil and gas company Plains Exploration & Production Co., and removed from CreditWatch and withdrew its 'BB' corporate credit rating on Pogo Producing Co. The rating actions followed the announcement earlier of the successful close of PXP's acquisition of Pogo. PREMIER PRODUCTS: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Premier Products, Inc. 5260 Lovers Lane Portage, MI 49002 Bankruptcy Case No.: 07-09139 Type of Business: The Debtor produces and assembles automotive filters. See: http://www.premierfilters.com/ Chapter 11 Petition Date: December 7, 2007 Court: Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtor's Counsel: Steven L. Rayman, Esq. Rayman & Stone 141 E Michigan Avenue, Suite 301 Kalamazoo, MI 49007 Tel: (269) 345-5156 http://www.raymanstone.com/ Total Assets: $1,843,572 Estimated Debts: $3,882,280 Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Ko Air Co. $985,168 145-1 Gaegok-Ri Worlgot-Myun, Kimpo-City Kyunggy-Do, Korea F&S Carton Co. $419,324 5265 Kellog Woods Dr. SE P.O. Box 8606 Grand Rapids, MI 49518-5808 Snelling $328,551 3711 South Westnedge Kalamazoo, MI 49008 S.A.N. Steel Fab Ltd. $247,485 Ahlstrom Engine Filtration $240,000 Adhesive Solutions Inc. $116,502 M. Holland Company $102,679 MarChem Corp. $83,638 Michiana Corruged Prod. Co. $80,411 BayOne Urethane Systems LLC $78,052 Americraft Carton Inc. $76,832 Marvin Ganfi $65,000 Hollingsworth & Vose Co. $46,348 Hollingworth & Vose $45,715 Adhesive Equipment Inc. $34,154 Superior Felth & Filtration $32,269 Metalex $27,811 BASF Corp. $20,359 USF Holland $13,561 PYRAMIDS CHILD: Files for Chapter 11 Protection in New York ----------------------------------------------------------- Pyramids Child Development Center filed for Chapter 11 protection last week with the U.S. Bankruptcy Court for the Northern District of New York after nearly five weeks of not paying salary to its workers, Joe LoTemplio of the PressRepublican.com reports. The workers had staged a strike against the center's bank, Champlain National Bank, who froze the institution's assets, including its ability to issue out paychecks to its workers, said the PressRublican. The freeze came as a result of Pyramids being late on a loan payment. "It looks like our workers are finally going to get paid, and that's good news," the PressRepublican quoted Pyramids Executive Director Melissa Dorsett-Felicelli as saying. While the Honorable Robert E. Littefield, Jr. gave Pyramids breathing room by freeing the school to pay its employees, he gave Pyramids 60 days to rectify any deficiencies in its loan payments. Dorsett-Felicelli told the PressRepublican that the school had been trying to get reimbursement from the state for weeks. These reimbursements are needed to fund the schools' child educational services mandated by the state. About Pyramids Child Based in Morrisonville, New York, Pyramids Child Development Center -- http://pyramidscdc.org/-- provides child care, early intervention and education for preschool & special children. The Debtor and its affiliate, Dorsett-Felicelli, Inc., filed for Chapter 11 protection on Dec. 5, 2007 (Bankr. N.D. N.Y. Case No. 07-13344 and 07-13345). Richard L. Weisz, Esq., at Hodgson Russ, LLP, represents the Debtors in their restructuring efforts. When the Center filed for protection from its creditors, it listed $1,947,021 in total assets and $1,154,664 in total liabilities. Affiliate Dorsett-Felicelli, Inc. listed total assets of $120,000 and $986,797 in total liabilities. QUALITY DISTRIBUTION: To Offer $50 Mil. of Senior Floating Notes ---------------------------------------------------------------- Quality Distribution LLC, subsidiary of Quality Distribution Inc., and its subsidiary, QD Capital Corporation, intend to offer, through a private placement, $50 million aggregate principal amount of Senior Floating Rate Notes due 2012, Series B, subject to market and other conditions. The Additional Notes will be in addition to, but not part of the same series as, the company's outstanding $85 million aggregate principal amount of Senior Floating Rate Notes due 2012 issued on Jan. 28, 2005. Consummation of the Additional Notes offering will occur concurrently with, and is conditioned upon, consummation of the acquisition by QDI of Boasso America Corporation, which was disclosed on Aug. 2, 2007. The company intends to use the proceeds of the offering, along with cash on hand, amounts drawn under a new senior secured asset- based loan revolving facility with a maturity of five and one half years and a $2.5 million promissory note to (i) consummate the acquisition of Boasso; (ii) refinance their existing senior secured credit facility; and (iii) pay related fees and expenses. Upon completion of the Additional Notes offering, the company will enter into a new senior secured asset-based loan revolving facility with a maturity of five and one half years with Credit Suisse, Cayman Islands Branch, Credit Suisse Securities (USA) LLC and General Electric Capital Corporation. The ABL Facility will consist of a $195 million current asset tranche and a $30 million fixed asset tranche, with the total commitments under the fixed asset tranche to be reduced, and the total commitments under the current asset tranche correspondingly increased, by $5 million on each of the second and third anniversaries of the closing date of the ABL Facility. It will be used, together with the proceeds from the offering, to finance a portion of the Boasso acquisition, to repay all outstanding indebtedness under the company's existing credit facility and, going forward, for working capital needs and general corporate purposes, including permitted acquisitions. About Quality Distribution Inc. Headquartered in Tampa, Florida, Quality Distribution Inc., through its subsidiary, Quality Carriers Inc., and through its affiliates and owner operators, provides bulk transportation and related services. QDI also provides tank cleaning services to the bulk transportation industry through its QualaWash(R) facilities. QDI is an American Chemistry Council Responsible Care(R) Partner and is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing. * * * As reported in the Troubled Company Reporter on Aug. 28, 2007, Standard & Poor's Ratings Services placed its ratings on Quality Distribution Inc., including the 'B-' corporate credit rating, on CreditWatch with developing implications. QUALITY DISTRIBUTION: Boasso Funding Cues Moody's to Hold Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed its Corporate Family and subordinated debt ratings of Quality Distribution, LLC -- Corporate Family and Probability of Default each of B3 and senior subordinated of Caa2. Moody's downgraded the senior unsecured rating to Caa1. The outlook is stable. The affirmations follow Quality's announced plan to fund the acquisition of Boasso America Corporation ("Boasso", not rated) by issuing a $50 million add-on to the existing $85 million of Senior Unsecured Notes due January 2012 and by refinancing the existing senior secured credit facility ($75 million revolving credit and $64.4 million term loan B) with a new $225 million asset-backed revolving credit (not rated). The downgrade of the senior unsecured rating results from the application of Moody's Loss Given Default rating methodology to the post-transaction debt structure, in which the relative shares of each of senior secured debt and senior unsecured debt have increased. Moody's will withdraw the existing Ba3 senior secured rating upon the closing of the refinancing. The B3 rating reflects the higher leverage and weaker coverage of interest that have returned in 2007, after improvements made during the stronger market of 2006. While the tank truck sector has been less affected by the current weak demand for trucking services, Quality has been unable to leverage its market leading position to increase the number of loads to offset margin pressure from higher costs. "The all debt funded acquisition of Boasso will increase pro forma leverage to the mid-six times range, at a time when economic conditions could weaken demand for bulk chemicals, extending the time required for Quality to de-lever," said Jonathan Root, Moody's High Yield Transportation Analyst. Moody's also believes that cost pressures could continue at least over the near term. The company's market position, low capital intensity of its affiliate model and expectations of improved free cash flow generation from Boasso's higher margin ISO tank depot services support the B3 rating. Liquidity is adequate. The stable outlook reflects Moody's concern that potentially weaker demand from North American customers and cost pressures could hinder the company's efforts to de-lever over the next 12 to 18 months. Additionally, the positive trend in operating results that prompted the change in outlook to positive in June 2006 has waned. The outlook may be changed to positive or the ratings upgraded if EBIT to Interest was sustained above 1.5 times and Debt to EBITDA was sustained below 5.5 times or if free cash flow to debt remained above 5%. The ratings or outlook could be revised downward if EBIT to Interest was sustained below 1.0 time, if Debt to EBITDA was sustained above 7.0 times or if Quality was to sustain negative free cash flow such that it was not able to meet its planned annual debt reduction of about $15 million from the $440 million expected upon the closing of the Boasso transaction. Issuer: Quality Distribution, LLC Downgrades: -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 from B3 Assignments: -- Senior Unsecured Regular Bond/Debenture, Assigned Caa1, 59 - LGD4 LGD Assessments: Issuer: Quality Distribution, LLC -- Senior Unsecured Regular Bond/Debenture, Downgraded to 59 - LGD4 from 52 - LGD4 -- Senior Subordinated Regular Bond/Debenture, Downgraded to 88 - LGD5 from 84 - LGD5 Outlook Actions: -- Outlook, Changed To Stable From Positive Quality Distribution, LLC and Quality Distribution, Inc., its parent holding company, are headquartered in Tampa, Florida. The company is a leading transporter of bulk liquid and dry bulk chemicals. Apollo Management, L.P. owns approximately 52% of the common stock of Quality Distribution, Inc. REAL ESTATE: Submits Schedules of Assets and Liabilities -------------------------------------------------------- Real Estate Partners Inc. and its debtor-affiliates submitted to the U.S. Bankruptcy Court for the Central District of California their schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $0 B. Personal Property 1,774,770 C. Property Claimed as Exempt D. Creditor Holding $6,000 Secured Claims E. Creditors Holding 0 Unsecured Priority Claims F. Creditors Holding 33,619 Unsecured Nonpriority Claims ---------- ----------- TOTAL $1,774,770 $39,619 Based in Irvine, California, Real Estate Partners Inc., dba Coldwell Banker Commercial R.E.P. -- http://www.realestatepartnersinc.com/-- is privately funded real estate investment and management services company specializing in the acquisition, repositioning, management and disposition of high growth properties. The company and seven of its affiliates filed for chapter 11 protection on Oct. 8, 2007 (Bankr. C.D. Calif. Case Nos. 07-13239 though 07-13246). Marc J. Winthrop, Esq., at Winthrop Couchot, P.A., represents the Debtors. ROADHOUSE GRILL: Wants Unexpired Non-Residential Lease Rejected --------------------------------------------------------------- Roadhouse Grill Inc. and its debtor-affiliate, R.H.G. Acquisition Corp., ask authority from the U.S. Bankruptcy Court for the Southern District of Florida to: (i) reject the unexpired lease of nonresidential real property located at 2703-A Gateway Drive, Pompano Beach, Broward County, Florida including all amendments, modifications or subleases and any guaranties, (ii) deduct any and all rent paid by subtenant TRF Systems, Inc., dba VisualTour, directly to landlord Broward Headquarters Group, LLC, from the administrative claim and arrearage amount owed by Debtor to landlord, and (iii) to abandon any equipment, furniture, or fixtures located at the Gateway Drive premises. The Debtors have vacated and surrendered possession of the premises to the landlord and turned over the keys as of Nov. 16, 2007. The Debtors seek rejection of the lease and abandonment of the personal property to reduce administrative claims for rent and related charges for the period subsequent to the surrender of the premises. The estimated annual cost of the lease to be rejected is approximately $346,020. If the rejection of the lease will be approved by the Court, the Debtors said they will be relieved from paying the rent, as well as other costs including taxes, utilities, water, sewer, insurance costs, operating expenses and other future related costs associated with the lease. According to the Debtors, the resulting savings from the rejection of the lease will enable them to increase future cash flow and assist the Debtor in managing their estate. The Debtors tell the Court that the personal property at the leased premises as the personal property has no value and the cost for removal and storage of same is burdensome and does not prove to be fruitful to the estate. Additionally, the abandoned personal property is no longer necessary for the operation of the Debtors' business. The Debtors believe that the rejection of the lease, and any guarantees, and the abandonment of the personal property, is in the best interest of the estate, creditors and other parties in interest. Headquartered in Palm Beach, Florida, Roadhouse Grill, Inc. -- http://www.roadhousegrill.com/-- owned 57 restaurants and franchised 12 branches to five other companies. The company and its affiliate, R.H.G. Acquisition Corp., filed for chapter 11 protection on Oct. 8, 2007 (Bankr. S.D. Fla. Case Nos. 07-18410 and 07-18414). The Debtors are represented by Kelley & Fulton P.A. Paul J. Battista, Esq., and Genovese, Joblove, and Battista, P.A., serve as counsel to the Official Committee of Unsecured Creditors. According to the Debtors' schedules, it listed total assets of $5,209,124 and total liabilities of $21,671,484. SAGITTARIUS CDO: Terminated Facility Cues Moody's to Cut Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the notes issued by Sagittarius CDO I Ltd. The downgrades follow notice from the trustee that the liquidity provider has terminated the liquidity facility because the senior par value coverage ratio fell below 110%. The issuance amount of the downgraded notes from this collateralized debt obligation is $985.00 million. In Standard & Poor's view, the transaction's inability to draw funds under the liquidity facility may expose the CDO to market value risk on the underlying assets in the collateral pool because the balance of cash available to make credit default swap protection payments is limited. If Sagittarius CDO I Ltd. is unable to make the payments required under the CDS agreements, it will have to liquidate cash assets in the portfolio to the extent needed to fulfill its obligations. Therefore, the rating actions reflect the possibility that the collateral in the CDO could be liquidated at depressed prices. These rating actions are more severe than those that S&P would have taken if the liquidity facility were still available. Sagittarius CDO I Ltd. is a hybrid CDO of asset-backed securities transaction collateralized in part by mezzanine classes of first- lien subprime residential mortgage-backed securities transactions. It was originated in March of 2007. Structured Asset Investors is the investment manager for the transaction. Standard & Poor's noted that the transaction experienced an event of default on Nov. 6, 2007. Ratings Lowered and Placed on Creditwatch Negative Sagittarius CDO I Ltd Rating ------ Class To From ----- -- ---- Senior swap BB/Watch Neg AAA S BB/Watch Neg AAA Ratings Lowered and Remaining on Creditwatch Negative Rating ------ Class To From ----- -- ---- A CCC-/Watch Neg AAA/Watch Neg B CCC-/Watch Neg AA/Watch Neg Ratings Lowered and Removed from Creditwatch Negative Rating ------ Class To From ----- -- ---- C CC A/Watch Neg D-1 CC BBB+/Watch Neg D-2 CC BBB/Watch Neg D-3 CC BBB-/Watch Neg E CC BBB-/Watch Neg X CC BBB-/Watch Neg SALANDER-O'REILLY: Sotheby's Withdraws Offer to Auction Art Pieces ------------------------------------------------------------------ Sotheby's Inc. last week withdrew its request to sell artworks in which Salander-O'Reilly Galleries LLC has an interest after allegations that the gallery didn't own the art to be sold broke out, the Associated Press reports. As previously reported in the Troubled Company Reporter, Sotheby's said that it was interested in selling 29 artwork valued at around $2,240,000, and expected an auction for Jan. 28, 2008. According to the AP, Harold A. Olsen, Esq., attorney for Sotheby's, filed a notice with the U.S. Bankruptcy Court for the Southern District of New York saying that it was withdrawing its plan to sell the Debtor's artwork. The notice didn't say why Sotheby's was withdrawing its offer, the AP adds. Established in 1976, New York-based Salander-O'Reilly Galleries LLC -- http://www.salander.com/-- exhibits and manages fine art from renaissance to contemporary. On Nov. 1, 2007, three creditors filed an involuntary chapter 7 petition against the gallery (Bankr. S.D.N.Y. Case Number 07-13476). The petitioners, Carol F. Cohen of Two Swans Farm, Cavallon Family LP, and Richard Ellenberg, disclosed total claims of more than $5 million. Amos Alter, Esq., at Troutman Sanders LLP and John Koegel, Esq., at The Koegel Group LLP represent the petitioners. On Nov. 9, 2007, the Debtor's case was converted to a chapter 11 proceeding (Bankr. S.D.N.Y. Case No. 07-30005). Alan D. Halperin, Esq., at Halperin Battaglia Raicht, LLP, represents the gallery. Salander-O'Reilly Galleries is owned by Lawrence B. Salander and his wife, Julie D. Salander, of Millbrook, New York. The couple also has membership interests in galleries including non-debtor entities, Renaissance Art Investors and Salander Decorative Arts LLC. The couple filed for chapter 11 protection on Nov. 2, 2007 (Bankr. S.D.N.Y. Case No. 07-36735). Douglas E. Spelfogel, Esq. and Richard J. Bernard, Esq. at Baker & Hostetler LLP and Susan P. Persichilli, Esq. at Buchanan Ingersoll PC represent the Debtors in their restructuring efforts. When they filed for bankruptcy, Mr. and Mrs. Salander listed assets and debts between $50 million and $100 million. Prior to bankruptcy, Mr. Salander resigned as Salander-O'Reilly Galleries' manager and turned over the control to Triax Capital Advisors LLC, an independent turnaround firm. SALLY HOLDINGS: Moody's Affirms B2 Rating and Changes Outlook ------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family rating of Sally Holdings, LLC, and changed the outlook to negative from stable. The speculative grade liquidity rating was downgraded to SGL-3 from SGL-2, and the $430 million senior unsecured notes were downgraded to B3 from B2. The change in outlook to negative reflects Moody's concern that the company is not reducing leverage as quickly as anticipated, which was a key assumption in the original assignment of the B2 rating. The B2 corporate family rating reflects Sally's marginal credit metrics for the rating category, as well as its leading position in both the retail and wholesale segments of the hair care supply market. The rating also reflects the expectation that the company will continue to replace the cash flows it lost when one of its prior key vendors -- L'Oreal reduced its relationship with Sally's wholesale segment, effectively compete with L'Oreal in certain markets. It also assumes that Sally's financial policy will remain balanced from a shareholder return perspective. The negative outlook reflects Moody's concern that the company may not deleverage as quickly as forecast at the time of its acquisition by affiliates of Clayton, Dubilier & Rice. "Continued progress towards debt/EBITDA in the 6.5 times range was a key factor in the original rating decision, and remains so, " stated Moody's Senior Analyst Charlie O'Shea. "In the event deleveraging to this level does not occur during 2008, further negative rating pressure would build". The downgrade to B3 of the $430 million in senior unsecured guaranteed notes results from a re-application of Moody's Loss Given Default Methodology recognizing that the $1.07 billion in secured term loans are in a superior position due to their collateralized nature, which results in a higher recovery rate and depresses the recovery rate for the unsecured notes. The downgrade to SGL-3 of the speculative grade liquidity rating reflects Moody's expectation that the company will maintain adequate liquidity, and will likely need to draw on its revolving credit facility to fund cash flow requirements. Moody's expects that Sally will not generate internal cash flow over the next 12 months as strong as it has in the past with working capital turning to a use rather than a source, as was the case in 2007. Rating actions taken include: Ratings affirmed: -- Corporate family rating and at B2; -- Probability of default rating at B2; -- Bank revolving credit facility at Ba2 (LGD 1, 10%); -- Senior secured term loans at B2 (LGD 3, 47%), and -- Subordinated notes at Caa1 (LGD 6, 93%). Ratings downgraded: -- Senior unsecured notes to B3 (LGD 4, 59%) from B2, and -- Speculative grade liquidity rating to SGL-3 from SGL-2. Sally Beauty Holdings, Inc., through its subsidiary Sally Holdings, LLC, headquartered in Denton, Texas, is a leading national retailer and distributor of beauty supplies with operations under its Sally Beauty Supply and Beauty Systems Group businesses. Through the Sally Beauty Supply and Beauty Systems Group subsidiaries, the company sells and distributes beauty supplies through over 3,500 stores, including approximately 200 franchised units, in the United States, the United Kingdom, Canada, Puerto Rico, Mexico, Japan, Ireland, Spain and Germany. In addition, Sally Beauty just recently launched an e-commerce site. For the fiscal year ended September 30, 2007, Sally's revenues exceeded $2.5 billion. SARM: Fitch Lowers Ratings on $149.6 Million Certificates --------------------------------------------------------- Fitch Ratings has taken these rating actions on 17 SARM mortgage pass-through certificates. Affirmations total $6.3 billion and downgrades total $149.6 million. In addition, approximately $63.4 million are placed on Ratings Watch Negative. SARM 2006-2 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I is rated 'AA', and is placed on Rating Watch Negative; -- Class B2-I downgraded to 'A-' from 'A'; -- Class B3-I downgraded to 'B+' from 'BBB', and removed from Rating Watch Negative; -- Class B4-I downgraded to 'B' from 'BB'; -- Class B5-I downgraded to 'C/DR4' from 'B'; -- Class B6-I remains at 'C/DR5'. SARM 2006-2 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II downgraded to 'A-' from 'A'; -- Class B3-II downgraded to 'BB' from 'BBB', and removed from Rating Watch Negative; -- Class B4-II downgraded to 'B' from 'BB'; -- Class B5-II downgraded to 'C/DR4' from 'B'; -- Class B6-II remains at 'C/DR5'. SARM 2006-3 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA'; -- Class B2-I downgraded to 'A-' from 'A'; -- Class B3-I downgraded to 'BB' from 'BBB'; -- Class B4-I downgraded to 'B' from 'BB+'; -- Class B5-I downgraded to 'C/DR4' from 'B+'; -- Class B6-I remains at 'C', and the DR rating is revised to 'DR5' from 'DR4'. SARM 2006-3 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II affirmed at 'A'; -- Class B3-II affirmed at 'BBB'; -- Class B4-II affirmed at 'BBB-'; -- Class B5-II downgraded to 'B' from 'BB-'; -- Class B6-II downgraded to 'C/DR4' from 'CC/DR3'. SARM 2006-4 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I rated 'AA', is placed on Rating Watch Negative; -- Class B2-I downgraded to 'A-' from 'A'; -- Class B3-I downgraded to 'BB-' from 'BBB' and removed from Rating Watch Negative; -- Class B4-I downgraded to 'B' from 'BB'; -- Class B5-I downgraded to 'C/DR4' from 'B'; -- Class B6-I remains at 'C/DR5'. SARM 2006-4 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA+'; -- Class B5-II downgraded to 'BBB-' from 'BBB'; -- Class B6-II downgraded to 'BB' from 'BBB-', and is removed from Rating Watch Negative; -- Class B7-II downgraded to 'B' from 'B+'; -- Class B8-II remains at 'C', and the DR rating is revised to 'DR5' from 'DR4'. SARM 2006-5 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I downgraded to 'A+' from 'AA-'; -- Class B2-I downgraded to 'BBB-' from 'BBB+' and placed on Rating Watch Negative; -- Class B3-I downgraded to 'B' from 'B+' and remains on Rating Watch Negative; -- Class B4-I downgraded to 'C/DR5' from 'B' and removed from Rating Watch Negative; -- Class B5-I remains at 'C/DR5'; -- Class B6-I remains at 'C', and the DR rating is revised to 'DR6' from 'DR5'. SARM 2006-5 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA+'; -- Class B2-II affirmed at 'AA'; -- Class B3-II downgraded to 'AA-' from 'AA'; -- Class B4-II downgraded to 'BBB+' from 'A'; -- Class B5-II downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- Class B6-II downgraded to 'B' from 'BBB-' and remains on Rating Watch Negative; -- Class B7-II downgraded to 'C/DR4' from 'BB-'; -- Class B8-II remains at 'C' and the DR rating is revised to 'DR5' from 'DR4'; SARM 2006-6 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I downgraded to 'A+' from 'AA'; -- Class B2-I downgraded to 'BBB-' from 'A', and placed on Rating Watch negative; -- Class B3-I downgraded to 'CC/DR3' from 'BBB'; -- Class B4-I downgraded to 'C/DR5' from 'BB-'. SARM 2006-6 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA+'; -- Class B2-II affirmed at 'AA'; -- Class B3-II affirmed at 'AA-'; -- Class B4-II downgraded to 'A-' from 'A'; -- Class B5-II downgraded to 'BB+' from 'BBB' and removed from Rating Watch Negative; -- Class B6-II downgraded to 'BB' from 'BB+'; -- Class B7-II downgraded to 'B' from 'B+', and placed on Rating Watch negative; -- Class B8-II remains at 'C', and the DR rating is revised to 'DR5' from 'DR4'. SARM 2006-7 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA'; -- Class B2-I affirmed at 'A'; -- Class B3-I downgraded to 'BB' from 'BBB', and removed from Rating Watch Negative; -- Class B4-I rated 'B', is placed on Rating Watch Negative; -- Class B5-I remains at 'C/DR5'. SARM 2006-7 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II downgraded to 'BBB' from 'A'; -- Class B3-II downgraded to 'BB-' from 'BBB', and remains on Rating Watch Negative; -- Class B4-II downgraded to 'C/DR4' from 'B'; -- Class B5-II remains at 'C', and the DR rating is revised to 'DR5' from 'DR4'. SARM 2006-8 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA'; -- Class B2-I affirmed at 'A'; -- Class B3-I affirmed at 'BBB'; -- Class B4-I affirmed at 'BBB-'; -- Class B5-I affirmed at 'BB'; -- Class B6-I is rated 'B', and is placed on Rating Watch Negative. SARM 2006-8 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II affirmed at 'AA'; -- Class B3-II affirmed at 'A'; -- Class B4-II downgraded to 'BBB-' from 'BBB'; -- Class B5-II downgraded to 'BB+' from 'BBB-'; -- Class B6-II downgraded to 'B' from 'BB'; -- Class B7-II downgraded to 'C/DR4' from 'B'; SARM 2006-10 Group 1 -- Class A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA'; -- Class B2-I affirmed at 'A'; -- Class B3-I rated 'BBB', is placed on Rating Watch negative; -- Class B4-I downgraded to 'B' from 'BB'; -- Class B5-I downgraded to 'C/DR4' from 'B'. SARM 2006-10 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II affirmed at 'A'; -- Class B3-II rated 'BBB', is placed on Rating Watch Negative; -- Class B4-II downgraded to 'B' from 'BB'; -- Class B5-II downgraded to 'C/DR4' from 'B'; SARM 2006-12 Group 2 -- Class A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA'; -- Class B2-II downgraded to 'A-' from 'A'; -- Class B3-II downgraded to 'BB' from 'BBB'; -- Class B4-II downgraded to 'B' from 'BB', and removed from Rating Watch Negative; -- Class B5-II downgraded to 'C/DR5' from 'B', and removed from Rating Watch Negative. The affirmations reflect a stable relationship between credit enhancement and expected losses, and affect approximately $6.3 billion in outstanding certificates. The downgrades reflect deterioration in the relationship between CE and expected losses, and affect approximately $149.6 million in outstanding certificates. In addition, approximately $63.4 million is placed on Rating Watch Negative. The collateral in the transactions consists of adjustable rate and hybrid adjustable rate loans extended to Alt-A borrowers. Aurora Loan Services Inc., rated 'RMS1-' by Fitch, is the master servicer for all transactions. The pools are seasoned in a range of 12 to 24 months. The pool factors (current principal balance as a percentage of original) range from 75% (series 2006-3 Group 1) to 90% (series 2006-12 Group 2). For 2006-2 Group 1, the loans in 90+ delinquency at 20 months seasoning as a percentage of the current pool balance is 4.54%. The CE of the B2-I, B3-I, B4-I, B5-I and B6-I classes are 2.47%, 1.52%, 1.33%, 0.89% and 0.38% respectively. For 2006-2 Group 2, the amount of loans in 90+ at 20 months seasoning as a percentage of the current pool balance is 4.09%. The CE of the B2-II, B3-II, B4-II, B5-II and B6-II classes are 2.85%, 1.66%, 1.39%, 0.93% and 0.33% respectively. For 2006-3 Group 1, the loans in 90+ delinquency at 19 months seasoning as a percentage of the current pool balance is 5.74%. The CE of the B2-I, B3-I, B4-I, B5-I and B6-I classes are 2.92%, 1.78%, 1.51%, 0.98% and 0.38% respectively. For 2006-3 Group 2, the amount of loans in 90+ at 19 months seasoning as a percentage of the current pool balance is 0.40%. The CE of the B5-II and B6- II classes are 0.88% and 0.36% respectively. For 2006-4 Group 1, the loans in 90+ delinquency at 18 months seasoning as a percentage of the current pool balance is 5.55%. The CE of the B2-I, B3-I, B4-I, B5-I and B6-I classes are 2.72%, 1.70%, 1.44%, 0.99% and 0.47% respectively. For 2006-4 Group 2, the amount of loans in 90+ at 18 months seasoning as a percentage of the current pool balance is 1.69%. The CE of the B5-II, B6-II, B7-II and B8-II classes are 1.16%, 0.93%, 0.63% and 0.28% respectively. For 2006-5 Group 1, the loans in 90+ delinquency at 17 months seasoning as a percentage of the current pool balance is 9.31%. The CE of the B1-I, B2-I, B3-I, B4-I, B5-I and B6-I classes are 4.64%, 3.04%, 1.82%, 1.56%, 1.05 and 0.41% respectively. For 2006-5 Group 2, the amount of loans in 90+ at 17 months seasoning as a percentage of the current pool balance is 2.62%. The CE of the B3-II, B4-II, B5-II, B6-II, B7-II and B8-II classes are 2.73%, 1.79%, 1.09%, 0.91%, 0.62% and 0.27% respectively. For 2006-6 Group 1, the loans in 90+ delinquency at 16 months seasoning as a percentage of the current pool balance is 10.43%. The CE of the B1-I, B2-I, B3-I, B4-I and B5-I classes are 5.51%, 3.68%, 2.33%, 1.41% and 0.68% respectively. For 2006-6 Group 2, the amount of loans in 90+ at 16 months seasoning as a percentage of the current pool balance is 2.61%. The CE of the B4-II, B5-II, B6-II, B7-II and B8-II classes are 2.10%, 1.32%, 1.14%, 0.78% and 0.36% respectively. For 2006-7 Group 1, the loans in 90+ delinquency at 15 months seasoning as a percentage of the current pool balance is 4.15%. The CE of the B3-I, B4-I and B5-I classes are 1.56%, 0.94% and 0.37% respectively. For 2006-7 Group 2, the amount of loans in 90+ at 15 months seasoning as a percentage of the current pool balance is 4.41%. The CE of the B2-II, B3-II, B4-II and B5-II classes are 2.44%, 1.52%, 0.91% and 0.43% respectively. For 2006-8 Group 1, the loans in 90+ delinquency at 14 months seasoning as a percentage of the current pool balance is 1.21%. The CE of the B6-I class is 0.37%. For 2006-8 Group 2, the amount of loans in 90+ at 14 months seasoning as a percentage of the current pool balance is 1.12%. The CE of the B4-II, B5-II, B6-II and B7-II classes are 1.19%, 1.00%, 0.69% and 0.26% respectively. For 2006-10 Group 1, the loans in 90+ delinquency at 12 months seasoning as a percentage of the current pool balance is 1.19%. The CE of the B3-I, B4-I and B5-I classes are 1.27%, 0.79% and 0.36% respectively. For 2006-2 Group 2, the amount of loans in 90+ at 12 months seasoning as a percentage of the current pool balance is 2.15%. The CE of the B3-II, B4-II and B5-II classes are 1.51%, 0.91% and 0.42% respectively. For 2006-12 Group 2, the loans in 90+ delinquency at 11 months seasoning as a percentage of the current pool balance is 3.17%. The CE of the B2-I, B3-I, B4-I and B5-I classes are 2.32%, 1.44%, 0.88% and 0.39% respectively. SASCO MORTGAGE: S&P Junks Rating on Class B Certificates -------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B mortgage pass-through certificates from SASCO Mortgage Loan Trust 2004-GEL2 to 'CCC' from 'BB+'. At the same time, S&P affirmed its ratings on the six other classes from the transaction. The downgrade reflects the continued erosion of overcollateralization, as monthly net losses consistently outpace monthly excess interest. As a result, O/C is currently 1.02% of the transaction's original pool balance, well below its target of 2.15%. In addition, total delinquencies are approximately 17% of the outstanding pool balance, and severe delinquencies represent roughly 9.90%. Additionally, the transaction has incurred cumulative realized losses totaling approximately 3.83% of the original pool balance. The transaction is 39 months seasoned and has paid down to approximately 27.31% of its original size. The affirmations are based on credit support percentages that are sufficient for the current ratings. Credit support is provided by subordination, O/C, and excess spread. At origination, the collateral for this transaction consisted of conventional, first- and second-lien, adjustable- and fixed-rate fully amortizing and balloon residential mortgage loans. Rating Lowered SASCO Mortgage Loan Trust 2004-GEL2 Mortgage pass-through certificates Rating ------ Class To From ----- -- ---- B CCC BB+ Ratings Affirmed SASCO Mortgage Loan Trust 2004-GEL2 Mortgage pass-through certificates Class Rating ----- ------ A1, A2 AAA M1 AA M2 A M3 BBB+ M4 BBB SCOTIABANK SUD: Moody's Withdraws All Ratings at Issuer's Request ----------------------------------------------------------------- Moody's Investors Service has withdrawn all of its ratings for Scotiabank Sud Americano for business reasons and at the issuer's request. The bank has no rated foreign currency debt outstanding. These ratings were withdrawn: -- Long Term Foreign Currency Deposits: A2, stable outlook -- Short Term Foreign Currency Deposits: Prime-1 -- Long Term Local Currency Deposits: A2, positive outlook -- Bank Financial Strength: D+, positive outlook -- Local Currency Senior Debt: A2, positive outlook -- Local Currency Subordinated Debt: A3, positive outlook SEAN EUGENE O'CARROLL: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Sean Eugene O'Carroll aka Sean E. O'Carroll aka Sean O'Carroll Janis Lee O'carroll 7638 East Cholla Drive Scottsdale, AZ 85260 Bankruptcy Case No.: 07-06616 Chapter 11 Petition Date: December 7, 2007 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: D. Lamar Hawkins, Esq. Hebert Schenk, P.C. 4742 North 24th Street, Suite 100 Phoenix, AZ 85016 Tel: (602) 248-8203 Fax: (602) 248-8840 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its largest unsecured creditors. SEARS ROEBUCK: S&P Cuts Rating on $60.19MM Certs. to BB from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the Sears Roebuck Acceptance Corp. debenture-backed certificates from the $60,192,000 SATURNS Trust No. 2003-1 to 'BB' from 'BB+'. The rating action reflects the Dec. 5, 2007, lowering of the rating on the underlying securities, the 7.00% notes due June 1, 2032, issued by Sears Roebuck Acceptance Corp., a subsidiary of Sears Holdings Corp. ('BB/Stable'). SATURNS Trust No. 2003-1 is a pass-through transaction, the ratings on which are based solely on the rating assigned to the underlying collateral, the 7.00% notes from Sears Roebuck Acceptance Corp. SMART ENERGY: Posts $1,705,949 Net Loss in Third Quarter -------------------------------------------------------- Smart Energy Solutions Inc. reported a net loss of $1,705,949 on revenues of $258,475 for the third quarter ended Sept. 30, 2007, compared with a net loss of $986,061 on revenues of $289,067 in the corresponding period ended Sept. 30, 2006. The decline in sales of the company's Battery Brain product was the result of the company's efforts to complete its new manufacturing facility in China. The company's total operating expenses for the three months ended Sept. 30, 2007, were $1,682,548. Operating expenses for the three months ended Sept. 30, 2006, were $1,155,300. At Sept. 30, 2007, the company's consolidated balance sheet showed $2,118,130 in total assets, $1,600,824 in total liabilities, and $517,306 in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2634 Going Concern Doubt As reported in the Troubled Company Reporter on April 24, 2007, Chisholm Bierwolf & Nilson LLC, in Bountiful, Utah, expressed substantial doubt about Smart Energy Solutions Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's substantial losses from operations and limited sales of its product. About Smart Energy Headquartered in Pompton Plains, N.J., Smart Energy Solutions Inc. (OTC BB: SMGY.OB) -- http://www.smgy.net/ -- is the sole owner of the Battery Brain line of vehicle accessory products. Battery Brain is an automotive accessory product that easily installs onto the battery of a regular or custom car, truck, SUV, van, or RV. It uses unique electronic technology to ensure the battery always maintains enough power to start the engine. The company also operates out of Zhuhai, China, and Petach Tikva, Israel. SOUTHAVEN POWER: Court Extends Plan Filing Period to January 15 --------------------------------------------------------------- The United States Bankruptcy Court for the Western District of North Carolina further extended Southaven Power LLC's exclusive periods to: a. file a Chapter 11 plan until Jan. 15, 2008; and b. solicit acceptances of that plan until March 17, 2008. As reported in the Troubled Company Reporter on Nov. 8, 2007, the Debtor said that this is its eighth request for further extension of its exclusive periods. The Debtor told the Court that it continue to dispute certain open issues with NEGT Energy Trading - Power L.P., including: a) expected amounts and timing for distributions on the Debtor's claim against NEGT Energy Trading - Power L.P., and b) the proper calculation of interest on any subordinated debt claim that NEGT Energy Trading - Power L.P. has asserted against the Debtor. Additionally, the Debtor told the Court that it will still require a reasonable period of time to conclude the sale of the Plant, and until the amounts that the Debtor will receive in connection with the NEGT Energy Trading - Power L.P. Final Award and the sale of the Plant are conclusively determined, the Debtor will be unable to accurately prject the amount of assets available to the estate to satisfy its obligations. About Southaven Power LLC Headquartered in Charlotte, North Carolina, Southaven Power LLC operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Mark A. Broude, Esq., at Latham & Watkins LLP represents the Debtor in its restructuring efforts, and Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, represents the Debtor in litigation against PG&E Energy Trading-Power L.P, now known as NEGT Energy Trading - Power L.P. No official committee of unsecured creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. SPX CORP: Considers Offering $500 Mil. of Senior Unsecured Notes ---------------------------------------------------------------- SPX Corporation intends to offer $500 million in aggregate principal amount of senior unsecured notes due in 2014 in a private placement, subject to market and other conditions. SPX expects the offering will be completed in December 2007. The issuance of the notes will be subject to customary closing conditions. SPX intends to use the net proceeds from the offering for general corporate purposes, which may include the financing of SPX's acquisition of APV, a manufacturer of process equipment and engineering solutions primarily for the sanitary market. APV is a division of Invensys PLC, an international industrial automation, transportation and controls group located in London. About SPX Corp Headquartered in Charlotte, North Carolina, SPX Corporation (NYSE:SPW) -- http://www.spx.com/-- is a multi-industry manufacturing company. It provides flow technology, test and measurement products and services, thermal equipment and services, and industrial products and services. Its infrastructure-related products and services include wet and dry cooling systems, thermal service and repair work, heat exchangers and power transformers into the global power market. It has four business segments: Flow Technology, Test and Measurement, and Thermal Equipment and Services, and Industrial Products and Services. SPX CORP: Fitch Rates Planned $500MM Sr. Unsecured Notes at BB+ --------------------------------------------------------------- Fitch Ratings expects to assign a rating of 'BB+' to SPX Corporation's planned $500 million of senior unsecured 7-year private placement notes. The notes will be used for general corporate purposes, including financing the previously announced acquisition of APV. SPX's existing ratings are: -- Issuer Default Rating 'BB+'; -- Senior secured bank debt 'BB+'; -- Senior unsecured debt 'BB+'. At Sept. 30, 2007 SPX had approximately $1.2 billion of debt outstanding. The Rating Outlook is Stable. Following SPX's announcement on Oct. 31, 2007 of its agreement to acquire APV, Fitch changed SPX's rating Outlook to Stable from Positive. The change reflected the expected temporary increase in SPX's leverage following the acquisition. As a result, while Fitch continues to anticipate improvements in SPX's operations and cash flow, the current ratings represent an appropriate view of the company's credit profile. SPX is maintaining its long-term leverage target for gross debt/EBITDA at 1.5 times to 2x, as defined in its bank agreement. The company plans to reduce gross debt/EBITDA to 2x or less by early 2009, which Fitch believes is achievable given the company's solid operating results and expected benefits from the integration of APV. The ratings also incorporate SPX's diverse business portfolio, its ongoing implementation of comprehensive and more effective business practices across the company, and solid demand in many of its infrastructure and energy markets. SPX has been focused on developing its key markets, and the APV acquisition is consistent with this strategy. Rating concerns include integration risk related to acquisitions, competitive end-markets, and challenging conditions in the Test & Measurement segment which is exposed to weak demand from North American automotive customers. Additional acquisitions could pressure SPX's ratings. Liquidity at Sept. 30, 2007 consisted of $283 million of cash and $207 million of availability under SPX's credit facility. The company's $2.3 billion bank credit facility includes $600 million of revolving credit facilities, a $750 million term loan, and a $950 million foreign letter of credit facility. The bank facility is secured by capital stock, and would become secured by substantially all assets if credit ratings on the facilities were to fall to certain levels as defined in the bank agreement. SPX CORP: S&P Rates $500 Million Sr. Unsecured Notes at BB ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' senior unsecured debt rating to SPX Corp.'s proposed $500 million senior unsecured notes due in 2014. At the same time, Standard & Poor's affirmed its 'BB+' corporate credit rating on the company. The outlook is stable. "The company will use the proceeds from the new debt offering primarily to fund the announced acquisition of APV, a global manufacturer of process equipment and engineered solutions," said Standard & Poor's credit analyst Sarah Wyeth. SPX will fold APV, which primarily serves the sanitary market, into its flow technology segment. The speculative-grade ratings on Charlotte, North Carolina-based SPX Corp. reflect the company's weak business risk profile and aggressive financial risk profile. S&P could revise the outlook to negative or lower the ratings if the company does not return its credit measures to its expectations within a reasonable time frame. The company's current business profile and financial profile limit an outlook revision to positive or an upward rating action. STEWART & STEVENSON: S&P Removes CreditWatch on 'CCC+' Rating ------------------------------------------------------------- Standard & Poor's Ratings Services removed the 'CCC+' senior unsecured rating on Stewart & Stevenson LLC (B/Stable/--) from CreditWatch. The rating was placed on CreditWatch with positive implications on Nov. 1, 2007, following the company's announcement of an IPO of common stock, with proceeds slated to repay borrowings under its senior secured bank facility. The company recently announced that it has postponed the IPO. Houston, Texas-based Stewart & Stevenson provides capital equipment to the oilfield services industry and other end users (69% of revenues), and related aftermarket parts and services (29%). The company also has a small but growing rental equipment business (2%). As of Aug. 31, 2007, the company had about $301 million in total debt. Ratings List Stewart & Stevenson LLC Corporate Credit Rating B/Stable/-- Rating Removed From CreditWatch To From -- ---- Senior Unsecured CCC+ CCC+/Watch Pos STRIKEFORCE TECH: Sept. 30 Balance Sheet Upside-Down by $4,124,507 ------------------------------------------------------------------ Strikeforce Technologies Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $2,201,358 in total assets and $6,325,865 in total liabilities, resulting in a $4,124,507 total shareholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $663,420 in total current assets available to pay $5,514,208 in total current liabilities. The company reported a net loss of $272,328 on revenues of $70,364 for the third quarter ended Sept. 30, 2007, compared with a net loss of $1,132,132 on revenues of $99,155 in the same period last year. The decrease in revenues was primarily due to a decrease in the number of transactions in the use of the company's hosted technology. The decrease in net loss was primarily due to a decrease in net mark to market changes of $711,698 in the fair value of derivative instruments relating to the convertible promissory notes. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?263e Going Concern Doubt As reported in the Troubled Company Reporter on April 24, 2007, Li & Company PC, in Skillman, N.J., expressed substantial doubt about StrikeForce Technologies Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's accumulated deficit of $12,378,048 and working capital deficiency of $2,590,315 at Dec. 31, 2006, net loss and cash used in operations of $3,154,234 and $1,432,370 in 2006, respectively. About StrikeForce Technologies Headquartered in Edison, N.J., StrikeForce Technologies Inc. (OTC BB: SKFT) -- http://www.strikeforcetech.com/ -- provides solutions that help prevent identity theft. Its total protection solution strengthens companies' defenses against the biggest points of fraud - when the internet is accessed, when accounts are opened, when they're accessed, when they're changed, and each time there's a new transaction. STRUCTURAL INVESTMENT: Involuntary Chapter 11 Case Summary ---------------------------------------------------------- Alleged Debtor: Structural Investment, Inc. 702 East Osborn Road, Suite 200 Phoenix, AZ 85014 Case Number: 07-06627 Involuntary Petition Date: December 7, 2007 Court: District of Arizona (Phoenix) Petitioner's Counsel: David T. Bonfiglio, P.C. 4422 North Civic Center Plaza, Suite 101 Scottsdale, AZ 85251 Tel: (480) 970-0974 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Special Purpose Capital, Inc. monies loaned $325,000 4301 North 21 Street, Suite 42 Phoenix, AZ 85016 Desert Diamond Home, L.L.C. monies loaned $200,000 4422 N. Civic Center Plaza Suite 101 Scottsdale, AZ 85251 A.P. Holdings, L.L.C. monies loaned $53,000 7580 East Gray Road, Suite 202 Scottsdale, AZ 85260 STRUCTURED ASSET: S&P Junks Rating on Class B-4 Certificates ------------------------------------------------------------ Fitch Ratings has taken various rating actions on these Structured Asset Securities Corporation 2003-7H mortgage pass-through certificates: -- 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 downgraded to 'CC/DR3' from 'B', and is taken off Rating Watch Negative; -- Class B-5 remains at 'C/DR5'. The affirmations reflect a stable relationship between credit enhancement and expected losses, and affect approximately $61.2 million in outstanding certificates. The downgrade reflects deterioration in the relationship between CE and expected losses, and affects approximately $248,097 in outstanding certificates. Since the last review in May 2007, the CE for class B-4 has decreased while the percentage of loans in 60+ delinquency has remained near 2.5%. The pool factor is approximately 18%, and the transaction is 57 months seasoned. SVI MEDIA INC: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: S.V.I. Media, Inc. 1520 West Altorfer Peoria, IL 61615 Bankruptcy Case No.: 07-82762 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- OxfordS.V.I., Inc. 07-82763 Type of Business: The Debtors develop hybrid digital video on demand and pay-per-view entertainment systems that offer hotel guests a variety of video content on demand. They have a customer base of over 2,400 hotels, of which 1,970 hotels (160,000 rooms) provide video on demand services. The remaining properties receive internet access and support as well as ancillary services. See http://www.svi.com/ Chapter 11 Petition Date: December 7, 2007 Court: Central District of Illinois (Peoria) Judge: Thomas L. Perkins Debtor's Counsel: Barry M. Barash, Esq. P.O. Box 1408 Galesburg, IL 61402 Tel: (309) 341-6010 Estimated Assets Estimated Debts ---------------- --------------- S.V.I. Media, Inc. $100,000 to $1 Million to $1 Million $100 Million OxfordS.V.I., Inc. $1 Million to $1 Million to $100 Million $100 Million The Debtor did not file a list of its largest unsecured creditors. TECO ENERGY: Completes $405 Million Sale of TECO Transport ---------------------------------------------------------- TECO Energy has closed the sale of TECO Transport Corporation to an investment group led by an affiliate of Greenstreet Equity Partners L.P., for $405 million, subject to the final adjustment of net working capital. Net proceeds from the sale, taking into consideration estimated transaction-related costs and state and federal taxes, are expected to be approximately $375 million. TECO Energy expects to record a pretax book gain in the fourth quarter of between $235 million and $245 million, excluding previously recognized transaction costs. "This outcome is a very positive event for TECO Energy," said Sherrill Hudson, chairman and CEO. "It allows us to continue our debt retirement plans, including the cash tender offer. These actions will strengthen our balance sheet and solidify our focus on TECO Energy's utility businesses. In addition, we hope the completion of this sale will continue to accelerate improvement of TECO Energy's credit ratings." "Our thanks to the entire TECO Transport team for their many years of dedicated service as part of the TECO Energy family of companies," John Ramil, president and COO , said. "Their commitment and professionalism have never wavered, especially during the past few months of transition. We wish them much success as they enter this new era in their long history as a world-class waterborne transportation business." TECO Energy was the guarantor of three TECO Transport vessel leases. The first lease will terminate on Dec. 30, 2007, and the agreement with the purchaser requires it to cause TECO Transport to make the $44.6 million termination payment on that date. Releases with respect to the two other guaranties were obtained at closing, and payments for those releases were included in the net proceeds. About Greenstreet Equity Partners Headquartetered in Miami, Florida, Greenstreet Equity Partners L.P., is a private equity firm founded by Steven Green, the former U.S. Ambassador to Singapore, and Jeffrey Safchik. About TECO Energy Headquartered in Tampa, Florida, TECO Energy Inc. (NYSE:TE) -- http://www.tecoenergy.com/-- is an integrated energy-related holding company with regulated utility businesses, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and electric generation and distribution in Guatemala. * * * As reported in the Troubled Company Reporter on Nov 1, 2007, Fitch Ratings has placed these ratings of TECO Energy Inc.: (i) issuer default rating 'BB+'; and (ii) senior unsecured debt 'BB+'. TECO ENERGY: Extends Expiration Date of Exchange Offers ------------------------------------------------------- TECO Energy Inc. disclosed early results for its debt tender offer and exchange offers and that it has extended the early participation date and the expiration date of the par-for-par exchange offers. As of 5:00 p.m., New York City time, Dec. 5, 2007, the early tender date for TECO Energy's offer to purchase for cash any and all of the $300 million outstanding principal amount of its 7.50% notes due 2010 (CUSIP No. 872375AK6), approximately $294.2 million principal amount of notes had been validly tendered and not withdrawn. Notes validly tendered and not withdrawn prior to the early tender date, and accepted for payment, will have a settlement date of Dec. 7, 2007. The tender offer will expire at 5:00 p.m., New York City time, on Dec. 19, 2007, unless extended. Notes validly tendered after the early tender date and on or before the expiration date, and accepted for payment, will have a settlement date two business days after the expiration of the tender offer. The lead dealer managers will determine the applicable tender offer consideration for the tender offer by reference to a fixed spread specified for such notes over the yield to maturity based on the bid-side price of the reference U.S. Treasury security. Holders whose notes are purchased will be paid accrued and unpaid interest up to the applicable settlement date. Holders of notes who validly tender their notes after the early tender date but on or before the expiration date may not withdraw their notes except in the limited circumstances described in the offer to purchase. TECO Energy intends to fund the tender offer with a portion of the proceeds of the sale of TECO Transport, which closed on Dec. 5, 2007. The information agent and depositary for the tender offer is Global Bondholder Services Corporation. Requests for copies of the offer to purchase and related letter of transmittal should be directed to Global Bondholder Services Corporation at (212) 430-3774 or (866) 857-2200 (toll-free). In four separate exchange offers, TECO Energy and TECO Finance are offering eligible holders: -- to exchange outstanding TECO Energy 7.20% notes due 2011 or TECO Energy 7% notes due 2012, for newly issued TECO Finance notes due 2017, subject to proration to the extent necessary to limit the aggregate principal amount of TECO Finance notes due 2017 to $300 million; or -- to exchange TECO Energy 7.20% notes due 2011, for a like principal amount of newly issued TECO Finance 7.20% notes due 2011; and -- to exchange TECO Energy 7% notes due 2012, for a like principal amount of newly issued TECO Finance 7% notes due 2012; and -- to exchange outstanding TECO Energy 6.75% notes due 2015 for a like principal amount of newly issued TECO Finance 6.75% notes due 2015. As of 5:00 p.m., New York City time, Dec. 5, 2007, these principal amount of notes had been tendered in the exchange offers: a) TECO Energy notes: 7.20% notes due 2011 TECO Finance 2017 notes exchange offer: $236.3 million Par-for-par exchange offer: $169.8 million Total: $406.1 million b) TECO Energy notes: 7% notes due 2012 TECO Finance 2017 notes exchange offer: $155.1 million Par-for-par exchange offer: $144.5 million Total: $299.6 million c) TECO Energy notes: 6.75% notes due 2015 TECO Finance 2017 notes exchange offer: N/A Par-for-par exchange offer: $191.2 million Total: $191.2 million TECO Energy notes accepted for exchange in the TECO Finance 2017 notes exchange offer will be subject to proration so that TECO Finance will only issue a maximum of $300 million aggregate principal amount of TECO Finance notes due 2017. Holders of TECO Energy notes due 2011 participating in the TECO Finance 2017 notes exchange offer will be given priority before holders of TECO Energy notes due 2012 may participate in such exchange offer. Holders participating in the TECO Finance 2017 notes exchange offer whose notes are not accepted, whether due to acceptance priority, proration or termination of such exchange offer, agree to participate in the applicable par-for-par exchange offer. The applicable total exchange price for the TECO Energy notes due 2011 and 2012 tendered in the TECO Finance 2017 notes exchange offer is based on a fixed-spread pricing formula and will be calculated at 2:00 p.m., New York City time, on the second business day prior to the expiration of the TECO Finance 2017 notes exchange offer. TECO Energy notes due 2011, 2012 or 2015 tendered after 5:00 p.m., New York City time, on Dec. 5, 2007, may not be withdrawn except in certain limited circumstances where additional withdrawal rights are required by law. Extension of Early Participation Date and Expiration Date of the Par-for-Par Exchange Offers The early participation date and the expiration date of the par- for-par exchange offers have each been extended to 12:00 midnight, New York City time, on Dec. 19, 2007, unless further extended. The early participation date and the expiration date had been scheduled to be 5:00 p.m., New York City time, on Dec. 5, 2007 and Dec. 19, 2007. The early participation date and expiration date for the TECO Finance 2017 notes exchange offer are unchanged at 5:00 p.m., New York City time, on Dec. 5, 2007 and Dec. 19, 2007, respectively. TECO Energy is offering to exchange for each $1,000 principal amount of TECO Energy notes due 2011, 2012 or 2015 tendered by an eligible holder on or before the expiration date in the applicable par-for-par exchange offer, and accepted for exchange, a like principal amount of the applicable series of TECO Finance notes and cash equal to the early participation payment. The exchange offers are only being made, and copies of the exchange offer documents are only being made available to, holders of TECO Energy notes due 2011, TECO Energy notes due 2012 or TECO Energy notes due 2015 that have certified in an eligibility letter certain matters to TECO Energy, including their status as eligible holders, that is, either "qualified institutional buyers," as that term is defined in Rule 144A under the Securities Act of 1933, or persons other than "U.S. persons," as that term is defined in Rule 902 under the Securities Act of 1933. Eligible holders who would like additional copies of the eligibility letter may contact the information agent for the exchange offers, Global Bondholder Services Corporation, at 866- 857-2200 or 212-430-3774. About TECO Finance and TECO Energy TECO Finance is a wholly-owned subsidiary of TECO Energy Inc. -- http://www.tecoenergy.com/-- whose business activities consist solely of providing funds to TECO Energy for its diversified activities. TECO Energy is an integrated energy-related holding company with regulated utility businesses, complemented by a family of unregulated businesses. Its principal subsidiary, Tampa Electric Company, is a regulated utility with both electric and gas divisions (Tampa Electric and Peoples Gas System). Other subsidiaries are engaged in waterborne transportation, coal and synthetic fuel production and electric generation and distribution in Guatemala. * * * As reported in the Troubled Company Reporter on Nov 1, 2007, Fitch Ratings has placed these ratings of TECO Energy Inc.: (i) issuer default rating 'BB+'; and (ii) senior unsecured debt 'BB+'. THORPE INSULATION: Seeks Injunctive Relief from Coverage Suit ------------------------------------------------------------- Thorpe Insulation Company, Pacific Insulation Company, and the Official Creditors' Committees of Thorpe and Pacific asked the U.S. Bankruptcy Court for the Central District of California to approve an injunctive relief in order to negotiate, prepare and confirm a plan of reorganization in their bankruptcy cases. The Debtors relate that Robert Fults, Thorpe's majority shareholder and only officer and employee, is also Pacific's majority shareholder and president. Mr. Fults has been the senior executive officer of Thorpe since 1972 and of Pacific since it was formed in 200. Thus, a number of the defendants have demanded that they be permitted to depose Mr. Fults in a coverage litigation. However, the Debtors say that Mr. Fults cannot adequately simultaneously: (i) participate in the negotiation and formulation of a plan; (ii) assist the Debtor's reorganization counsel in administering the cases; (iii) operate Pacific's business; (iv) assist the Debtors' litigation counsel with their handling of the coverage cases; and (v) participate in the coverage cases as deponent. The Debtors add that unless they are relieved of their obligation to prosecute the coverage litigation, it will be more difficult to schedule meetings or conference calls to advance the negotiations of a plan due to the competing demands upon the time of all parties and their counsel by the need to prosecute the coverage litigation. The Debtors also say that negotiations toward a plan of reorganization are more likely to be successful if they are conducted and removed from adversarial process. Without the issuance of an injunction by the Court staying the coverage litigation pending this Court's confirmation of a plan, the Debtors say that they and their estates will be irreparably injured in that it will be more difficult for them to propose and confirm a plan. The Debtors say that they will then have to delay the proposal of the plan, causing business losses to the Debtors due to increasing administrative costs and delaying the distribution of dividends to creditors, including holders of asbestos-related claims, many of whom are aged and ill. The Asbestos Coverage Litigation Thorpe Suit A number of companies issued comprehensive general liability policies to Thorpe for the period from May 1948 through October 1984. Those policies provide occurrence based coverage on a continuous trigger basis for bodily injury claims against Thorpe arising from Thorpe's activities as an installer and distributor of asbestos insulation products. On Nov. 14, 2005, Thorpe commenced a lawsuit against the companies (defendants) in the Superior Court for the State of California, County of San Francisco. On Feb. 16, 2007, Thorpe filed its first amended complaint in the Thorpe Suit. The Thorpe suit states eight causes of action, for: (a) declaratory relief as to Thorpe's rights under the insurance policies issued by the defendants; (b) damages as a result of certain of the defendants having breached their obligations under the insurance policies; (c) damages as result of the tortuous breach of the implied covenant of good faith and fair dealing by the defendants; and (d) unjust enrichment. The Thorpe suit also asserts that certain of the defendants have acted inequitably toward Thorpe. Granite State Insurance Company, Maine Bonding and Casualty Company, Middlesex Insurance Company and Transport Insurance company have filed counterclaims in the Thorpe suit, naming, among others, Thorpe and Pacific as counter-defendants. First Chicago Suit On Nov. 15, 2005, Chicago Insurance Company commenced a lawsuit in the Superior Court against Thorpe, Pacific and certain of the defendants in the coverage litigation. The complaint in the First Chicago Suit seeks a declaration with respect to disputes that had arisen between Thorpe and Chicago in respect to insurance policies that been issued to Thorpe by Chicago. Argonaut Insurance Company, Granite State, National Union Fire Insurance Company of Pittsburgh, PA, Main Bonding and Middlesex have filed cross-complaints in the first Chicago Suit naming, among others, Thorpe and Pacific as cross-defendants. Second Chicago Suit On Jan. 31, 2006, Chicago commenced a lawsuit against Thorpe, Pacific and certain defendants in the Superior Court seeking a declaration with respect to Chicago's duties to indemnify Thorpe and Pacific against claims that had been made against them upon Thorpe's distribution and installation of asbestos insulation materials. Granite State and National Union have filed cross-complaints in the second Chicago suit naming Thorpe and Pacific as cross- defendants. The Thorpe Suit, First and Second Chicago Suits were transferred to the Superior Court of Los Angeles on March 6, 2006. On Oct. 16, 2007, Thorpe removed the Thorpe Suit, First and Second Chicago Suit and coordinated proceeding, collectively, the Coverage Litigation, to the Bankruptcy Court for the Central District of California. Phase I Coverage Litigation The Superior Court's most recent trial date for Phase I of the coverage litigation was May 28, 2008, which has been vacated. None of the parties presently know when a new trial date might be set. The May 28, 2008 trial date for Phase I of the coverage litigation was set by the Superior Court based on its ruling that "course of conduct" evidence would not be admitted in relation to the Court's construction of defendants' policies. The ruling is presently reviewed by the Court of Appeal. If ruling is reversed, the Phase I trial would have to be delayed to permit discovery on the course of conduct evidence that would then become relevant to the Phase I trial. About Thorpe Insulation Long Beach, California-based Thorpe Insulation Company, formerly Plant Insulation Company, was incorporated in April 10, 1948. It supplied and distributed asbestos thermal insulation in Southern California before about 1972. The company's products included pipe and boiler insulation, asbestos cloth and insulating mud. After 1972, some of Thorpe's operations also involved asbestos and lead abatement, including repairing insulation that contained asbestos at commercial and industrial sites. On or about Dec. 17, 2004, Thorpe's lender, Pacific Funding Group LLC, sold its collateral at a foreclosure sale to Farwest Insulation Consulting owned by Eric and David Fults. Following the foreclosure, Thorpe ceased operation of its business. To date, Thorpe has been subjected to about 12,000 claims and lawsuits related to asbestos. Thorpe filed for chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-19271). Jeremy V. Richards, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of more than $100 million. Los Angeles-based Pacific Insulation Company was incorporated in California by Thorpe on May 23, 2000, to be its wholly owned subsidiary. On Oct. 1, 2000, Pacific transferred 100% of its shares to Thorpe in exchange for Thorpe's materials division assets. Thorpe's sole shareholders and board members, Robert W. Fults and Linda Fults, own 50.1% and 49.9% of Pacific, respectively. Pacific is a southwest commercial and industrial insulation distributor and fabricator with locations in Southern and Northern California, Arizona, and Nevada. It provides pipe, air handling, fire barrier, board and blanket insulation as well as adhesives, mastics and sealants. Pacific has never installed or sold any materials containing asbestos. It currently has 55 full-time employees. Pacific filed for chapter 11 petition on Oct. 31, 2007 (Bankr. C.D. Calif. Case No. 07-20016) due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. John A. Lapinski, Esq., Leslie R. Horowitz, Esq., and Stephen R. Hyam, Esq., at Clark & Trevithick represent Pacific in its restructuring efforts. On Nov. 6, 2007, Pacific's case was jointly administered under Thorpe Insulation's bankruptcy proceeding. Caplin & Drysdale, Chartered and Heller Ehrman LLP are co-counsels to the Official Committee of Unsecured Creditors. THORPE INSULATION: Three Insurers Wants Ch. 11 Trustee Appointed ---------------------------------------------------------------- Chicago Insurance Company, Continental Insurance Company, and Transcontinental Insurance Company ask the U.S. Bankruptcy Court for the Central District of California to approve the appointment of a chapter 11 trustee in the bankruptcy cases of Thorpe Insulation Company and Pacific Insulation Company. Chicago, Continental, and Transcontinental want a chapter 11 trustee to take possession of the Debtors' assets and operate their business pursuant to Section 1104(a) of the U.S. Bankruptcy Code. Chicago, Continental, and Transcontinental also asked the Court to order the expedited scheduling of the depositions of Robert Fults, Eric Fults, non-party Alan Brayton, and non-party David McClain, as well as depositions of Debtors, Thorpe and Pacific, party-in- interest Farwest Insulating Contractors, and non-party Morgan, Lewis & Bockius LLP. Further, Chicago, Continental, and Transcontinental wants the Court to defer the appointment of Charles B. Renfrew as futures representative until the Court rules on the motion for appointment of a case trustee. The Court will continue to hear the matter on Dec. 26, 2007, at 10:00 a.m. Mark D. Plevin, Esq., at Crowell & Moring LLP represents Chicago Insurance Company. Seyfarth Shaw LLP represents Continental Insurance Company, successor-in-interest to certain policies issued by Harbor Insurance Company, and Transcontinental Insurance Company. About Thorpe Insulation Long Beach, California-based Thorpe Insulation Company, formerly Plant Insulation Company, was incorporated in April 10, 1948. It supplied and distributed asbestos thermal insulation in Southern California before about 1972. The company's products included pipe and boiler insulation, asbestos cloth and insulating mud. After 1972, some of Thorpe's operations also involved asbestos and lead abatement, including repairing insulation that contained asbestos at commercial and industrial sites. On or about Dec. 17, 2004, Thorpe's lender, Pacific Funding Group LLC, sold its collateral at a foreclosure sale to Farwest Insulation Consulting owned by Eric and David Fults. Following the foreclosure, Thorpe ceased operation of its business. To date, Thorpe has been subjected to about 12,000 claims and lawsuits related to asbestos. Thorpe filed for chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-19271). Jeremy V. Richards, Esq., and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl & Jones, LLP, represent the Debtor. When the Debtor filed for protection from its creditors, it disclosed estimated assets and debts of more than $100 million. Los Angeles-based Pacific Insulation Company was incorporated in California by Thorpe on May 23, 2000, to be its wholly owned subsidiary. On Oct. 1, 2000, Pacific transferred 100% of its shares to Thorpe in exchange for Thorpe's materials division assets. Thorpe's sole shareholders and board members, Robert W. Fults and Linda Fults, own 50.1% and 49.9% of Pacific, respectively. Pacific is a southwest commercial and industrial insulation distributor and fabricator with locations in Southern and Northern California, Arizona, and Nevada. It provides pipe, air handling, fire barrier, board and blanket insulation as well as adhesives, mastics and sealants. Pacific has never installed or sold any materials containing asbestos. It currently has 55 full-time employees. Pacific filed for chapter 11 petition on Oct. 31, 2007 (Bankr. C.D. Calif. Case No. 07-20016) due to its alleged asbestos liability and the failure of Thorpe's insurers to pay asbestos claims asserted against Thorpe. John A. Lapinski, Esq., Leslie R. Horowitz, Esq., and Stephen R. Hyam, Esq., at Clark & Trevithick represent Pacific in its restructuring efforts. On Nov. 6, 2007, Pacific's case was jointly administered under Thorpe Insulation's bankruptcy proceeding. Caplin & Drysdale, Chartered and Heller Ehrman LLP are co-counsels to the Official Committee of Unsecured Creditors. TITUS RANCH EAST: Case Summary & 12 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Titus Ranch East, L.L.C. P.O. Box 394 Bloomsbury, NJ 08804 Bankruptcy Case No.: 07-28046 Type of Business: The Debtor offers timber tract operation forestry services. Chapter 11 Petition Date: December 7, 2007 Court: District of New Jersey (Trenton) Debtor's Counsel: Joseph J Mania, III, Esq. 203 Main Street, Suite A 234 Flemington, NJ 08822 Tel: (908) 806-3460 Fax: (908) 806-3795 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wood Stone & Steel contracting fees $312,000 P.O. Box 449 Bloomsbury, NJ 08804 James Kelley operating loans $80,000 264 Goritz Road Little York, NJ 08848 Dreifus, Bonacci & Parker, Jane Wood vs. $80,000 L.L.P. Titus Ranch East, 26 Columbia Turnpike L.L.C., et al Florham Park, NJ 07932 Joan M. Kelley operating loans $80,000 Koerner & Crane Toledo/Casas/Romero $20,000 ero vs. Kelley, et als Citibank $12,000 Robinson, Andujar & Webb DeJesus, et al vs. $12,000 Kelley, et al Pearce judgment $4,000 Attention: Robert Alexander, Esq. Schneider National trucking charges $4,000 Ed O'Brien Architect Fees $3,500 Frank Whittlesey, Esq. Attorney Fees $3,000 Dell Computers equipment lease $1,500 UAL CORP: Board Approves $250 Million Distribution to Shareholders ------------------------------------------------------------------ The UAL Corporation Board of Directors approved a special distribution of $2.15 per share to holders of UAL common stock, or approximately $250 million. The distribution will be made on Jan. 23, 2008, to holders of UAL Corporation common stock outstanding as of Jan. 9, 2008. United also paid down $500 million of the term loan under its existing credit agreement. Both the distribution and the term loan prepayment follow the approval by United's lenders of an amendment to the company's credit agreement. Under the amendment, the company can undertake an additional $250 million in shareholder initiatives without any additional prepayment. In addition, the amendment provides that the company can carry out further shareholder initiatives in an amount equal to future term loan prepayments. "This shareholder distribution underscores our commitment to creating value for our investors," said Glenn Tilton, chairman, president and CEO. "On behalf of our board of directors, we are pleased to make this decision to provide a distribution to our shareholders while strengthening our balance sheet and investing in our business. We compete for shareholders just as we compete for customers." "Building a successful, sustainable enterprise, and providing a return on investment, is what shareholders expect and deserve," Mr. Tilton said, reports The Associated Press. Since exiting bankruptcy, United has reduced its total net debt by $2.7 billion through the end of the third quarter. United has generated more than $2 billion in operating cash flow in the first nine months of the year. The company also plans to invest $4 billion in its business over the next five years. For the 5% Senior Convertible Notes due 2021 -- the "O'Hare Notes"; the 4.5% Senior Limited-Subordination Convertible Notes due 2021 -- the "Employee Notes"; and the PBGC 2% Convertible Preferred Stock -- "PBGC Preferred Stock", the conversion price and the ratios will be adjusted in accordance with their terms. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. * * * As reported in the Troubled Company Reporter on Nov. 29, 2007, Moody's Investors Service affirmed the ratings of UAL Corp. debt - - corporate family rating at B2 -- following the company's announced plans to amend its $2.055 billion bank credit facilities (comprising a term loan facility of $1.8 billion and a revolving credit facility of $255 million) to provide the flexibility to implement up to $500 million of shareholder initiatives. This level of shareholder initiatives would likely be within United's anticipated free cash flow and should still preserve the company's adequate level of liquidity. The outlook remains stable. Standard & Poor's Ratings Services meanwhile affirmed its 'B' corporate credit rating on UAL Corp. and subsidiary United Air Lines Inc. following disclosure of a proposed amendment to United's bank credit agreement that would permit UAL to pursue "shareholder initiatives" (which could include a special dividend or share repurchases) of up to $500 million. The outlook remains stable. UAL CORP: Unions Furious Over Payouts ------------------------------------- The Air Line Pilots Association, the Association of Flight Attendants-CWA, and the International Association of Machinists and Aerospace Workers, representing the overwhelming majority of union-represented employees, are furious with the UAL Corporation Board of Directors and management's decision to give the special shareholder payout to the exclusion of employees. "In every venue available, we have voiced our opposition to any 'shareholder initiative' that does not equally recognize employee sacrifices," the leaders of the three largest Unions at United Airlines, Mark Bathurst, chairman of the United Chapter of the ALPA; Greg Davidowitch, united master executive council president of the AFA-CWA; and Randy Canale, president and directing general chairman of the IAM, District 141, said in a statement. "We have warned management that this move is wrong for the business, wrong for the employees and ultimately wrong for lenders. These executives have pushed through their personal agenda while ignoring serious concerns raised by nearly every stakeholder, industry trends and the company's financial position. This is being done with utter disregard for the interests of employees and the long-term success of United Airlines," the Unions said. "The best shareholder initiative would be one that invests in the employees for the long-term success of United Airlines. Shareholders in the pre-bankrupt UAL were issued new stock in the same manner as every other constituency, including the employees, when United emerged from bankruptcy. Today, employees who lost their pensions and work longer hours for less pay continue to suffer the affects of the bankruptcy. Not one penny of employee concessions has been repaid. The Unions noted that since United Airlines exited Chapter 11, UAL management has renegotiated excessive executive compensation packages for themselves and have renegotiated their agreements with lenders. "If they have the ability to renegotiate their own compensation packages, if they have the ability to negotiate with lenders, if they have the ability to negotiate with shareholders to create another management bonus, then they have the ability to enter negotiations with us." According to AFA-CWA, the move undercuts the value of United Airlines by favoring short-term shareholder returns over a strong, motivated workforce, an improved customer experience and the long- term health of the airline. "The executives at United Airlines are nothing more than charlatans, sweetening the pot to flip our airline like an unscrupulous real estate agent," said Mr. Davidowitch in letter to flight attendants. "This shareholder "initiative" is nothing more than an executive induced plan to enrich themselves at the expense of the working women and men of United Airlines. The best shareholder initiative would be one that invests in the employees for the long-term success of the airline." Mr. Davidowitch pointed out that Flight Attendants and other workers know that any time an employee or shareholder gets a supposed return on United's success, executives are getting an even bigger return on top of their renegotiated compensation packages. "Workers are fed up. They are fed up with these executives initiating class warfare instead of making good decisions for our airline," he said. Susan Carey of The Wall Street Journal, however, says UAL Corp. is making good on its pledge to be more mindful of its investors. United's management is clearly showing investors it can and will execute on its promises of shareholder-friendly actions," William Greene, airline analyst at Morgan Stanley said in a research note, reports WSJ. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. * * * As reported in the Troubled Company Reporter on Nov. 29, 2007, Moody's Investors Service affirmed the ratings of UAL Corp. debt - - corporate family rating at B2 -- following the company's announced plans to amend its $2.055 billion bank credit facilities (comprising a term loan facility of $1.8 billion and a revolving credit facility of $255 million) to provide the flexibility to implement up to $500 million of shareholder initiatives. This level of shareholder initiatives would likely be within United's anticipated free cash flow and should still preserve the company's adequate level of liquidity. The outlook remains stable. Standard & Poor's Ratings Services meanwhile affirmed its 'B' corporate credit rating on UAL Corp. and subsidiary United Air Lines Inc. following disclosure of a proposed amendment to United's bank credit agreement that would permit UAL to pursue "shareholder initiatives" (which could include a special dividend or share repurchases) of up to $500 million. The outlook remains stable. UNISYS CORP: Prices Offering of $210 Mil. of 12.5% Senior Notes --------------------------------------------------------------- Unisys Corporation has priced an offering of $210 million of 12.5% senior notes due 2016. The notes are being sold at 98.719% of the aggregate principal amount with a yield to maturity of 12.75%. Bear, Stearns & Co., Banc of America Securities LLC and Citigroup Global Markets Inc. are joint book-running managers of the offering, which is expected to close, today, Dec. 11, 2007, subject to the satisfaction of customary closing conditions. The company intends to use the net proceeds from the offering to redeem the $200 million aggregate principal amount of its 7-7/8% senior notes due 2008. A copy of the prospectus and the final prospectus supplement, when available, is available by contacting: a) Bear Stearns & Co. Inc. Attn: Prospectus Department 383 Madison Avenue New York, NY 10179 Tel (866) 803-9204 b) Banc of America Securities LLC Attn: Capital Markets Operations 3rd Floor, 100 West 33rd Street New York, NY 10001 Tel (800) 294-1322 c) Citigroup Global Markets Inc. Attn: Prospectus Department 8th Floor, Brooklyn Army Terminal 140 58th Street Brooklyn, NY 11220 Tel (877) 858-5407 Headquartered in Blue Bell, Pennsylvania, Unisys Corporation (NYSE: UIS) -- http://www.unisys.com/-- is an information technology services and solutions company. The company provides consulting, systems integration, outsourcing and infrastructure services, combined with powerful enterprise server technology. Unisys reported a third-quarter 2007 net loss of $31.0 million. Tax expense in the quarter increased to $36.8 million from $16.0 million in the third quarter of 2006. The company's third- quarter 2007 results also included $19.3 million in other expense, compared with $400,000 of other income in the year-ago quarter. * * * As reported in the Troubled Company Reporter on Aug. 22, 2007, Moody's Investors Service placed the B2 corporate family and senior unsecured ratings for Unisys Corporation on review for possible downgrade. UNITED AIRLINES: Planned Pay Out Does Not Affect Fitch's Rating --------------------------------------------------------------- Following the announcement by United Airlines that it intends to pay out a special cash distribution of approximately $250 million to shareholders while reducing its outstanding term loan balance by $500 million, Fitch's ratings on United and its UAL Corp. parent are unaffected. Fitch's Issuer Default Rating on both UAL and United is 'B-', and the secured credit facility is rated 'BB-' with a recovery rating of 'RR1'. The Rating Outlook for UAL and United is Positive. Current ratings reflect the substantial progress made toward balance sheet repair and leverage reduction over the past two years, offset by management's stated intention to return more cash to shareholders through the current $250 million payment, to be made on January 23, and potential future cash distributions. The recently-negotiated amendment to United's secured bank credit facility allows for an additional $250 million to be paid out to shareholders without further required reduction of the term loan balance. In addition, lenders have agreed to allow United to pursue further shareholder initiatives as long as a corresponding amount of debt reduction occurs at that time. The credit facility amendment and the distribution announcement appear to reflect management's view that a portion of the carrier's unrestricted cash position ($4.2 billion as of September 30, 2007) represents excess liquidity that should be allocated to the return of cash to shareholders and the pre-payment of debt. While this will clearly have a positive near-term effect on leverage, the resulting impact of this action on the carrier's liquidity position and free cash flow generation represents a modest credit negative that could limit United's financial flexibility in a potential industry downturn linked to a softening domestic demand outlook and very high jet fuel prices. United has recently adjusted its domestic mainline capacity growth plans for 2008 to reduce scheduled available seat miles by approximately 3%-4% in light of the weaker operating outlook. Other carriers, including Southwest, Continental and Delta have announced similar capacity pull-backs this month. Industry capacity discipline should support domestic unit revenue trends somewhat for 2008, but United and its competitors are likely to experience some margin pressure next year. Fitch expects free cash flow to weaken in 2008, particularly in light of the fact that cash distributions to shareholders could increase beyond the announced $250 million payment. In Fitch's view, proceeds from any prospective asset divestitures-notably United's maintenance services business and/or the Mileage Plus loyalty program-are likely to be allocated toward both shareholder distributions and debt reduction, but the precise allocation is contingent upon developments in the industry operating environment over the next few quarters. US STEEL: Prices $500 Million Offering of 7% Senior Notes --------------------------------------------------------- United States Steel Corporation has priced $500 million of 7% Senior Notes due 2018. The senior notes were priced at 99.087% of the principal amount. The proceeds of the offering will be used to repay the $400 million one-year term loan incurred to finance a portion of the acquisition of Stelco Inc., now known as U. S. Steel Canada Inc. and the balance will be used for general corporate purposes. Banc of America Securities LLC, J.P. Morgan Securities Inc. and Scotia Capital (USA) Inc. are joint book runners for this offering. Copies of the prospectus may also be obtained from: U. S. Steel Attn: Manager-Investor Relations 600 Grant Street Pittsburgh, PA 15219-2800 Headquartered in Pittsburgh, Pennsylvania, United States Steel Corporation (NYSE: X) -- http://www.ussteel.com/-- manufactures a wide variety of steel sheet, tubular and tin products; coke, and taconite pellets; and has a worldwide annual raw steel capability of 26.8 million net tons. U.S. Steel's domestic primary steel operations are: Gary Works in Gary, Indiana; Great Lakes Works in Ecorse and River Rouge, Michigan; Mon Valley Works, which includes the Edgar Thomson and Irvin plants, near Pittsburgh and Fairless Works near Philadelphia, Pennsylvania; Granite City Works in Granite City, Illinois; Fairfield Works near Birmingham, Alabama; Midwest Plant in Portage, Indiana; and East Chicago Tin in East Chicago, Indiana. The company also operates two seamless tubular mills, Lorain Tubular Operations in Lorain, Ohio; and Fairfield Tubular Operations near Birmingham, Alabama. U. S. Steel produces coke at Clairton Works near Pittsburgh, at Gary Works and Granite City Works. On Northern Minnesota's Mesabi Iron Range, U.S. Steel's iron ore mining and taconite pellet operations, Minnesota Taconite and Keewatin Taconite, support the steelmaking effort, and its subsidiary ProCoil Company provides steel distribution and processing services. U.S. Steel's steelmaking subsidiaries U.S. Steel Kosice, s.r.o., in Kosice, Slovakia and U.S. Steel Serbia, d.o.o, in Sabac and Smederevo, Serbia. Acero Prime, the company's joint venture with Feralloy Mexico, S.R.L. de C.V. and Intacero de Mexico, S.A. de C.V., provides Mexico's automotive and appliance manufacturers with total supply chain management services through its slitting and warehousing facility in San Luis Potosi and its warehouse in Ramos Arizpe. * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'BB+' senior unsecured rating to the proposed offering of up to $400 million in senior unsecured notes due Feb. 1, 2018, of United States Steel Corp. (BB+/Negative/--). These notes are being issued under the company's unlimited shelf registration filed on March 5, 2007. UVUMOBILE INC: Sept. 30 Balance Sheet Upside-Down by $2,553,043 --------------------------------------------------------------- uVuMobile Inc.'s consolidated balance sheet at Sept. 30, 2007, showed $2,196,756 in total assets and $4,749,799 in total liabilities, resulting in a $2,553,043 total shareholders' deficit. At Sept. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $786,617 in total current assets available to pay $4,749,799 in total current liabilities. The company reported a net loss of 1,414,039 on revenue of $202,886 for the third quarter ended Sept. 30, 2007, compared with a net loss of $4,147,894 on revenue of $197,302 in the corresponding period a year ago. Broadcast rights expense for the three months ended Sept. 30, 2007, were $22,547 as compared to $616,756 for the same period in 2006. This change is attributable to the decision to change focus to a subscription based model delivering mobile entertainment services direct to the consumer. As a result of the decision to change the company's focus to a subscription based model, the company incurred an impairment charge in September 2007 against broadcast rights assets of ($742,951). For the three months ended Sept. 30, 2007, the company recorded $612,813, as compared to $1,658,705 for the three months ended Sept. 30, 2006, in non-cash, stock-based compensation expense. The decrease in stock-based compensation expense was primarily attributable to a decrease in the number of stock options issued. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?2635 Going Concern Doubt Sherb & Co. LLP, in Boca Raton, Florida, expressed substantial doubt about Smart Video Technologies Inc. nka. uVuMobile Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations, net cash used in operations, net working capital deficit, stockholders' deficit and accumulated deficit. About uVuMobile Inc. Headquartered in Duluth, Georgia, uVuMobile Inc. (OTC BB: UVUM.OB) -- http://www.uvumobile.com/-- fka. SmartVideo Technologies Inc. is a provider of video content distribution services and technology. VALLEY ADVANCED: To Auction GECC Collateral on December 17 ---------------------------------------------------------- General Electric Capital Corporation will attend a public auction and may make offers for the asset of Valley Advanced Gamma Knife LLC, on account of unpaid debt owed to GECC, secured creditor. The asset offered for sale consist of rights, title and interest of the Debtor on its 2001 Leksell Gamma Knife C Model #24001 with Enhanced Conformity Package. The auction will be held at 3:00 p.m. on Dec. 17, 2007, at: Katten Muchin Rosenman LLP 525 West Monroe Street, 19th Floor Chicago, IL 60661 On the sale date, the assets may be offered for sale, with reserve, and sold to the highest bidder at the conclusion of the sales, as determined by GECC in its sole and absolute discretion, on an "as is, where is" basis, without recourse or warranties. Additional terms and conditions applicable to the sale may be obtained from GECC's counsel, Peter J. Young, Esq., through (312) 902-5208. Easton, Pennsylvania-based Valley Advanced Gamma Knife LLC -- http://www.valleyadvancedgammaknife.com/-- offers the Gamma Knife, a revolutionary tool for the non-invasive and virtually painless treatment of specific indications of the brain. It has over 30 years of research, evaluation and clinical results. Gamma Knife is highly effective in the treatment of benign tumors, malignant tumors, functional disorders, and vascular malformations, as well as other conditions, including inoperable vascular lesions and brain tumors. Gamma Knife has a success rate of 85%. WATERFORD EQUITIES: Ombudsman Taps Schottenstein Zox as Counsel --------------------------------------------------------------- R. Brent Martin, the appointed patient care ombudsman for Waterford Equities LLC and its debtor-affiliates' Chapter 11 cases, asks the United States Bankruptcy Court for the District of Connecticut for permission to employ Schottenstein Zox & Dunn Co. LPA as his counsel. Schottenstein Zox will: a) represent the ombudsman in any proceeding or hearing in the Bankruptcy Court and in any action in any other court where the rights and duties of the ombudsman may be litigated or affected; b) prepare and assist the preparation of reports, accounts, applications, notices, pleadings, motions and any necessary responses, objections, answers, and other legal papers; c) conduct examincations of witnesses, claimants, or adverse parties; d) advise the ombudsman concerning the requirements of the Bankruptcy Code, the Federal Rules of Bankruptcy procedure, the requirements of the office of the U.S. Trustee relating to the ombudsman's discharge of its duties under Section 333 of the Bankruptcy Code; e) advise the ombudsman concering the its rights, powers and duties; f) represent the ombudsman in all proceedings in this matter in this or any other Court; and g) perform all other appropriate legal services that the ombudsman may request and the firm may agree in this case. The firm's professionals and their hourly rates are: Professional Designation Hourly Rate ------------ ----------- ----------- Victoria E. Power, Esq. Partner $400 Catherine T. Dunlay, Esq. Partner $385 Daniel M. Anderson, Esq. Partner $340 Taylor Wesley, Esq. Associate $200 Linda Mindritiu, Esq. Associate $185 Nell Chambers Paralegal $135 Designation Hourly Rate ----------- ----------- Attorneys $150-$475 Legal Assistants $110-$175 Victoria E. Powers, Esq., a prinicpal of Schottenstein Zox, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Middletown, Connecticut, Waterford Equities L.L.C. -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long- term care. The company and 44 of its affiliates filed for Chapter 11 protection on November 22, 2007 (Bankr. D. Conn. Lead Case No. 07-32719). Moses and Singer LLP is the Debtors' proposed counsel. When the Debtors filed for protection against their creditors, it listed assets and debt between $1 Million to $100 Million. The Debtors'consolidated list of their 50 largest unsecured creditors showed total claims of more than $20 million. WATERFORD EQUITIES: Taps Houlihan Lokey as Financial Advisor ------------------------------------------------------------ Waterford Equities LLC and its debtor-affiliates ask the United States Bankruptcy Court for the District of Connecticut for permission to employ Houlihan Lokey Howard & Zukin Capital Inc. as their investment banker and financial advisor, nunc pro tunc to Nov. 26, 2007. The Debtors contemplated that Houlihan Lokey will: a) assist the Debtors in the development, preparation and distribution of selcected information, documents and otehr materials in an effort to create interest in and to consumate any transaction(s), as defined in the engagement letter, including, if appropriate, adising the Debtors in the preparation of an offering memorandum; b) solicit and evaluate indications of interest and proposals regarding any transaction(s) from current and potential lenders, equity investors, acquirers and strategic partners; c) assist the Debtors with the development, structuring, negotiation and impelementation of any transaction(s), including, among other things, assist the Debtor with due diligence investigation and participating as a representative of the Debtors in negotiations with creditors and other parties invovled in any transaction(s); d) assist the Debtors in valuing their assets or operations, provided that any real estate or fixed assets appraisals will be undertaken by outside appraisers, separately retain ed and compensated by the Debtors; e) provide expert advice and testimony regarding financial matters related to any transaction(s) and to the Debtors' opposition to any party-in-interest's motion for the appointment of a Chapter 11 trustee; f) advise and attending meetings of the Debtors' board of directors, creditor groups, official constituencies and other interested parties, as the Debtors determine to be necessary; and g) provide other financial advisory and investment banking services as may be agreed upon by the firm and the Debtors. The Debtors tell the Court that they agreed to pay the firm a nonrefundable cash fee of $125,000 per month. In addition to the other fees, the Debtors will also pay a restructuring transaction fee of $1,250,000, upon the date of confirmatiom of a plan of reorganization under Chapter 11 of the Bankruptcy Code. Adam L. Dunayer, a manahing director of the firm, assures the Court that the firm does not hold any interests adverse to the Debtors' estate and creditors and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Dunayer can be reached at: Adam L. Dunayer Houlihan Lokey Howard & Zukin Financial Advisors 200 Crescent Court, Suited 1900 Dallas, TX 75201 Tel: (214) 220-8470 Fax: (214) 220-3808 Headquartered in Middletown, Connecticut, Waterford Equities L.L.C. -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long- term care. The company and 44 of its affiliates filed for Chapter 11 protection on November 22, 2007 (Bankr. D. Conn. Lead Case No. 07-32719). Moses and Singer LLP is the Debtors' proposed counsel. When the Debtors filed for protection against their creditors, it listed assets and debt between $1 Million to $100 Million. The Debtors'consolidated list of their 50 largest unsecured creditors showed total claims of more than $20 million. WATERFORD EQUITIES: U.S. Trustee Appoints 9-Member Creditors Panel ------------------------------------------------------------------ The United States Trustee for Region 2 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in Waterford Equities LLC and its debtor-affiliates' Chapter 11 cases. The Creditors Committee are: a) Value Health Care Services LLC c/o Richard Richow 100 E. Rivercenter Blvd., Suite 1500 Covington, KY 41011 Tel: (859) 392-3495 b) Medventures Consulting, LLC c/o Jim Allen 1349 S.W. 80th Avenue Bell, FL 32619 Tel: (352) 463-3960 c) McKesson Medical-Surgical c/o Ilana Figart 8741 Landmark Road Richmond, VA 23228 Telephone: (804) 264-7749 d) PFG-Springfield c/o Angela Randall and David Easton One Performance Blvd. Springfield, MA 01104 Tel: (413) 846-5443 (804) 380-4005 e) Connecticut Light & Power c/o Mary A. Goffin and Honor S. Heath, Esq. 107 Selden Street Berlin, CT 06037 Tel: (860) 665-4865 f) District 1199 Taft Hartley Benefit Funds c/o Robert Tessier and Steve Bender 77 Huyshope Avenue, 2nd Floor Hartford, CT 06106 Tel: (860) 728-1100 (860) 251-6060 g) Healthcare Services Group c/o Michael Harder 3220 Tillman Drive, Suite 300 Bensalem, PA 19020 Telephone: (800) 363-4274, ext. 171 h) William W. Backus Hospital c/o Daniel E. Lohr 326 Washington Street Norwich, CT 06360 Tel: (860) 823-6360 i) CWPM, LLC c/o Steve Rewenko 25 Norton Place Plainville, CT 06067 Tel: (860)793-6720 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. Headquartered in Middletown, Connecticut, Waterford Equities L.L.C. -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long- term care. The company and 44 of its affiliates filed for Chapter 11 protection on November 22, 2007 (Bankr. D. Conn. Lead Case No. 07-32719). Moses and Singer LLP is the Debtors' proposed counsel. When the Debtors filed for protection against their creditors, it listed assets and debt between $1 Million to $100 Million. The Debtors'consolidated list of their 50 largest unsecured creditors showed total claims of more than $20 million. WILD WEST: Judge Nugent Directs Series of Auction to Begin Today ---------------------------------------------------------------- The Honorable Robert Nugent of the U.S. Bankruptcy Court for the District of Kansas ordered that the public sale of more than 2,000 Wild West World LLC's assets may begin today at 9:30 a.m., the Wichita Eagle reports. This is the first of five auctions that will span through next month, the Eagle relates. Also, at yesterday's hearing, the Court allowed the Debtor's seven golf cart to be returned to Kansas Golf and Turf for sale while the fate of the Debtor's telephone and computer system will be discussed at a hearing set next week, the Eagle adds. As reported in the Troubled Company Reporter on Nov. 22, 2007, Wild West will be up for a series of public sale beginning Dec. 11, 2007, after no buyer turned out to take over and operate the Debtor's business. The Court has approved the retention of Rides-4-U Inc. as the Debtor's broker. Headquartered in Valley Center, Kansas, Wild West World LLC operates an amusement park business. The company filed for Chapter 11 protection on July 9, 2007 (Bankr. D. Kans. Case No. 07-11620). Edward J. Nazar, Esq., at Redmond & Nazar, LLP represents the Debtor in its restructuring efforts. In its schedules filed with the Court, the Debtor disclosed total assets of $22,979,898 and total debts of $25,601,177. Restoration Farms Inc., Wild West's parent company, filed for chapter 11 protection on Aug. 9, 2007 (Bankr. D. Kans. Case No. 07-11913). WILLIAMS COMPANIES: S&P Lifts Credit Rating to BBB- from BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on The Williams Companies Inc. and its affiliates, including its corporate credit rating to 'BBB-' from 'BB+'. In addition, Standard & Poor's removed the ratings from CreditWatch with positive implications. The outlook is stable. Affiliate credits affected by the Williams upgrade include Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp. and Williams Partners L.P. S&P placed the ratings on CreditWatch on May 21, 2007, following the announced sale of William's power business to Bear Energy LP, a unit of The Bear Stearns Cos. Inc. for an adjusted purchase price of $496 million. The upgrade reflects the consummation of the sale of the power unit and the extinguishment of approximately $2.0 billion of imputed debt related to tolling agreements that are assumed by Bear Stearns. The sale also relieves Williams of volatile operating cash flows and the need to post collateral for its mark- to-market power transactions, which should free up to $450 million of liquidity. The rating also reflects the company's improved financial metrics resulting from strong business results across all business segments. Tulsa, Oklahoma-based Williams' business risk profile is considered satisfactory. The company's ongoing business segments include gas pipeline, exploration and production, midstream, and gas marketing services. The stable outlook reflects the expectation that Williams' financial metrics will continue to improve as a result of the strong business performance at the both E&P and midstream segments and the stable cash flow generated from the regulated pipeline business. S&P also expect the company to benefit from low-cost capital. These factors are somewhat offset by the company's inclination to pursue projects aggressively, which could increase capital spending. The outlook could be revised to positive if Williams continues to strengthen its financial metrics and exhibits greater capital discipline. A negative outlook would be warranted if performance deteriorates at the E&P or midstream segments, financial metrics weaken, or debt increases to fund share repurchases or an aggressive capital spending program. XM SATELLITE: Still Awaits FCC and DOJ Approval on Sirius Merger ---------------------------------------------------------------- XM Satellite Radio Holdings Inc.'s planned merger with Sirius Satellite Radio Inc. is still waiting regulatory approval from the Federal Communications Commission and the U.S. Department of Justice. Last week, XM Chairman Gary Parsons said that he was optimistic that the merger would be completed before the year ends, the Associated Press reported. According to Mr. Parsons, the merger must have the DOJ's approval by this week in order for the deal to push through within this year, the AP adds. FCC's approval would likely follow after the DOJ. Despite Mr. Parsons assurances however, Mark Wienkes, analyst at Goldman Sachs, last week cut XM Satellite's shares rating from "neutral" to "sell", Chris Forrester of Rapid TV News reports. Brokers at Stifel Nicholas also lowered their rating on the company's stock from "buy" to "hold," Rapid TV adds. Despite a report from the Wall Street Journal saying that the merger was "imminent," analyst Alden Mahabir of Utendahl Capital Partners said that while the merger would benefit shareholders, both XM and Sirius would have a "hard time" convincing government regulators that the merger wasn't anti-competitive, Rapid TV further relates. XM-Sirius Merger Last month, 99.8% of XM shareholders overwhelmingly favored the acquisition at the company's special meeting of stockholders. Mr. Parsons commented, "We are proud to have received support for our merger from organizations representing African Americans, women, rural Americans and Hispanics, as well as from former FCC Chairmen and Commissioners and a diverse group of elected officials. We appreciate our shareholders' overwhelming support." About SIRIUS Satellite Radio Based in New York, SIRIUS Satellite Radio Inc. (NASDAQ: SIRI) -- http://www.sirius.com/ -- provides sports radio programming, broadcasting play-by-play action of more than 350 pro and college teams. SIRIUS features news, talk and play-by-play action from the NFL, NASCAR, NBA, NHL, Barclays English Premier League soccer, UEFA Champions League, the Wimbledon Championships and more than 125 colleges, plus live coverage of several of the year's top thoroughbred horse races. SIRIUS also features programming from ESPN Radio and ESPNews. About XM Based in Washington, D.C., XM Satellite Radio Holdings Inc. -- http://www.xmradio.com/-- parent of XM Satellite Radio Inc. (Nasdaq: XMSR), is a satellite radio company, with more than 8.5 million subscribers. XM delivers entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Ferrari, Subaru, Suzuki and Toyota. At Sept. 30, 2007, XM's balance sheet reflected total assets of $1.7 billion, total liabilities of $2.4 billion, and a stockholders' deficit of $790 million, compared to $1.8 billion of total assets, $2.2 billion of total liabilities, and a stockholders' deficit of $397 million at Dec. 31, 2007. * * * Standard & Poor's assigned CCC+ long-term foreign and local issuer credit ratings to XM Satellite Radio Holdings Inc. on February 2007. XM Satellite Radio Holdings Inc. also holds Moody's Investors Services' Caa1 long-term corporate family rating (assigned June 2003), Caa3 senior unsecured debt rating (assigned February 2005), and Caa1 probability of default rating (assigned September 2006). These three ratings still hold to date. * Gordon Brothers Acquires CompUSA & Winds Down Retail Operations ----------------------------------------------------------------- Gordon Brothers Group, LLC has acquired CompUSA and will initiate an orderly wind-down of CompUSA's retail store operations. The restructuring firm is engaged in discussions with various parties regarding the sale of certain assets. CompUSA's 103 retail stores will remain open and staffed during the holiday season, and will offer consumers bargains on computer and electronic products as part of store closing sales. Terms of the transaction were not disclosed. Active discussions are under way to sell select stores in key markets as well as the company's highly-regarded technical services business, CompUSA TechPro, and its productive Internet sales operation, CompUSA.com. CompUSA TechPro and CompUSA.com will be operated by the company as going concerns until any sale transactions are closed. CompUSA will be run by Bill Weinstein, a Principal at Gordon Brothers Group, acting as Interim President, and by Stephen Gray, Managing Partner at restructuring firm CRG Partners, who will serve as Chief Restructuring Officer. Current CEO Roman Ross will continue to serve the company in an executive advisory capacity during the transition period. "An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors at this juncture," said Weinstein. "We are focused on assuring that CompUSA's creditors, landlords and other key constituents are treated properly during this process. We are working hard to achieve the maximum recovery possible for the company's constituents while also minimizing unnecessary expenses. We will actively communicate with the various parties and their advisors starting today, and in the days and weeks ahead." The firm assisted CompUSA with the prior sale of under-performing stores. "We worked long and hard with Gordon Brothers Group to achieve a business solution that maximizes CompUSA's assets," said Roman Ross. "Gordon Brothers Group has a breadth of knowledge and expertise in this area and we take great confidence in their capabilities." DJM Realty, a Gordon Brothers Group company that specializes in real estate disposition and valuations, will assist in assessing the leases for CompUSA's store locations. Gordon Brothers, through its affiliate Specialty Equity, LLC, is working with two experienced advisors who are representing creditors -- Lawrence Gottlieb of Cooley Godward Kronish LLP for unsecured creditors, and Jim Carr of Kelley Drye & Warren LLP for landlords. About CompUSA Based in Dallas, Texas, CompUSA -- http://www.compusa.com/-- is one of the nation's leading retailers and resellers of technology products and services. CompUSA helps customers utilize technology through a unique blend of products and highly knowledgeable sales staff as well as technology support and service. Founded in 1984, CompUSA currently operates 103 stores in major metropolitan markets across the continental United States, Hawaii and Puerto Rico. CompUSA serves consumer retail, small-to-medium businesses, corporate, government and education customers. CompUSA's retail Web site offers an assortment of more than 80,000 products and the ability to schedule technology services and training sessions. Businesses may order from a catalog containing more than 220,000 products as well as select from over 100,000 online products. About Gordon Brothers Group Founded in 1903, Gordon Brothers Group -- http://www.gordonbrothers.com/-- is an advisory, restructuring and investment firm specializing in the retail, consumer products, real estate and industrial sectors. The firm provides a wide variety of services to companies at times of growth and restructuring. Gordon Brothers Group's capabilities include asset valuations, dispositions and appraisals, real estate consulting and acquisitions, retail store operations, lending, equity investments, restructuring and advisory services. The firm has unparalleled expertise in assisting healthy and distressed companies in maximizing the value of under-performing assets and expanding operations through new products and distribution channels. Gordon Brothers Group's resources include over 200 professionals and 250 field experts, including former CEOs, CFOs, merchants and executives in offices worldwide. During the past three years, Gordon Brothers Group has appraised over $100 billion of assets, managed more than 7,000 stores, sold more than $10 billion of inventory and restructured or sold over 120 million square feet of retail space. In addition, Gordon Brothers Group currently owns over 1,600 stores through various portfolio companies. DJM Realty, Gordon Brothers Group's real estate division, specializes in real estate dispositions, acquisitions, capital solutions and valuations. DJM Realty services the world's most recognizable brands such as Big Lots, Borders, CVS, Pep Boys, Toys R Us, West Marine and Yum Brands. * Fitch Expects 2008 Will Be An Anxious Year for Paper Industry --------------------------------------------------------------- Fitch Ratings expects that fiscal 2008 will be an anxious year in the U.S. Paper & Forest Products industry. Lumber and panel producers will be occupied with right-sizing production capacities to advance a more profitable 2009. Paper producers will focus on system efficiency in order to make less paper more profitably. Containerboard mills at least through next year will enjoy full capacity runs to feed Europe, but will likely see at best a stagnant domestic market for corrugated boxes. Modestly better results in 2008 are expected but with few distinctions. Manufactured wood companies such as Weyerhaeuser will see lower losses in lumber and oriented strand board and, in Weyerhaeuser's case, better profits overall from other contributing businesses. International Paper is strategically on a good path with international diversification in low-cost fiber baskets to feed developing economies, and Smurfit-Stone Container's makeover of its production system should yield better earnings if its progress on costs can beat inflation in the wood basket. In an otherwise unremarkable year, sporadic consolidations spurred by excess capacity and the benefits of systems integration will be compelling, if enterprise prices are cheap, but financial metrics will be influenced more by constrained capital expenditures rather than by business combinations or earnings. Debt reduction and capital/liquidity preservation will motivate corporate strategies next year as uncertainties still cloud our prognosis for an improving business picture, a view relying on cost efficient productivity and a cheap U.S. dollar rather than growth in fundamental product demand. Lumber & Panels Lumber and wood panel capacity will balance to demand in 2008 before a recovery in housing. Finished goods inventories will work back through the pipeline and cause producers to take additional curtailments at sawmills and OSB plants, rather than run EBITDA negative. Prices are stabilizing, and profit margins should get a break from some additional weakness in log prices as 2008 unfolds. U.S. producers should see operating margins return to a marginal 3%, a remembrance of 2003. Canadian lumber producers will continue to bear most of the industry's pain despite their higher efficiency in the West due to the unfavorable terms built into the Softwood Lumber Agreement. New OSB capacity coming on-stream will replace older plants that will be taken out of service. Fiscal 2008 will be a year of adjustment that will precede a better 2009 when demand starts to run ahead of supply rather than behind it. Fitch's outlook for this segment of the industry is negative, but believes that companies emerging from 2008 will be in a better business environment than when they entered. Pulp & Paper Pulp production is being fueled by export containerboard volumes and also by export pulp demand created by the weak U.S. dollar. Prices are also being pushed by Canadian and Brazilian costs of production and higher prices for domestic fiber created by fewer operating sawmills generating wood chips. Additional softwood and eucalyptus pulp capacities coming online in South America and recycled containerboard capacity in China could disrupt the steady pace of price increases seen this year. U.S. producers should still have one good year left in 2008, but it will be a draw for Canadian pulp exporters. Paper demand in North America is saturated and will continue to be negatively influenced by the move to electronic advertising and a lower level of economic activity. Supply curtailments by International Paper at Bastrop, Louisiana and Pensacola, Florida and by Domtar at Woodland, Maine, Port Edwards, Wisconsin, and Gatineau, Quebec may buttress domestic uncoated freesheet prices and even provide an opportunity for appreciation, but the grade will still lose some volumes to lower priced uncoated mechanical products made by AbitibiBowater and supercalendered grades which will be made by NewPage. Coated freesheet made by the latter has also been losing market share, and in a slowing economy this decline in demand will dominate prices, despite the fall in imports due to the weak U.S. dollar. The deciding profitability factor for North American paper producers will be cost reduction which can still be wrung from high cost capacity. Fitch's outlook for this segment of the industry on balance is stable. Containerboard & Paperboard The sinking value of the U.S. dollar should keep containerboard exports going and mills running at near capacity despite a slowing box demand in North America. North American producers should benefit at the expense of their European counterparts, and the weakness of the dollar will offer the opportunity to raise containerboard prices further, some of which will be jammed down and through North American converting operations. The restructuring of North American box plants by the integrated producers will continue into 2008 and should aid efforts to raise box prices. Improving operating margins will be best for those producers backward-integrated into virgin pulp production. Recycled producers will face higher fiber costs as China continues to suck waste paper out of North America to feed it own increasing recycled capacity. Profits in paperboard because of excess converting capacity will still struggle to stay ahead of cost inflation, particularly in recycled boxboard. The merger of Altivity Packaging with Graphic Packaging may spawn some price increases, but a slowing demand for consumer non-durables, domestic beverage and consumer goods packaging could flatten any increase in prices, despite a healthy increase in export demand for virgin derived products. Fitch's Outlook for corrugated and paperboard packaging is stable. Issuer Default Ratings in Paper & Forest Products: -- AbitibiBowater ('B-', Outlook Negative) -- Georgia-Pacific ('B+', Outlook Stable) -- Graphic Packaging ('B', Watch Evolving) -- International Paper ('BBB-', Outlook Stable) -- Plum Creek Timber Company ('BBB-', Outlook Stable) -- Potlatch Corp. ('BB+', Outlook Positive) -- Smurfit-Stone Container ('B+', Outlook Negative) -- Weyerhaeuser Company ('BBB', Outlook Negative) * S&P Lowers Ratings on 101 Tranches from 24 US Hybrid CDO ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 101 tranches from 24 U.S. cash flow and hybrid collateralized debt obligation transactions. At the same time, S&P affirmed its ratings on another 47 tranches from these transactions. The downgraded tranches have a total issuance amount of $4.498 billion, and all are from CDOs of asset-backed securities collateralized by structured finance securities, including U.S. residential mortgage-backed securities. All but 24 of the lowered ratings were on CreditWatch with negative implications before the downgrades. Thirty-five tranche ratings either remain on CreditWatch negative or were placed on CreditWatch negative, indicating a high likelihood of future downgrades on these tranches. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P have lowered its ratings on 810 tranches from 291 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of exposure to RMBS securities that have seen credit deterioration, and 548 tranche ratings from 147 transactions are currently on CreditWatch negative. The downgraded tranches represent an issuance amount of $30.141 billion, while the tranches with ratings on CreditWatch negative represent an issuance amount of $24.815 billion. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions when appropriate. Additionally, Standard & Poor's will continue to review its current criteria assumptions in light of the recent performance of RMBS assets and CDOs. Downgrades and Creditwatch Actions Rating ------ Transaction Class To From ----------- ----- -- ---- ACA Aquarius 2006-1 A1-J AA AAA ACA Aquarius 2006-1 A2 BBB- AA/Watch Neg ACA Aquarius 2006-1 A3 B A/Watch Neg ACA Aquarius 2006-1 B1 CCC BBB+/Watch Neg ACA Aquarius 2006-1 B2 CCC- BBB/Watch Neg ACA Aquarius 2006-1 B3 CC BBB-/Watch Neg ACA Aquarius 2006-1 I Sub Nts CC BBB-/Watch Neg Alexander Park D-1 BBB- BBB/Watch Neg CDO I Ltd. Alexander Park D-2 BBB- BBB/Watch Neg CDO I Ltd. BFC Genesee CDO Ltd. A-1LB AAA/Watch Neg AAA BFC Genesee CDO Ltd. A-2L AA/Watch Neg AA BFC Genesee CDO Ltd. A-3L BBB+/Watch Neg A/Watch Neg BFC Genesee CDO Ltd. B-1L BB-/Watch Neg BBB/Watch Neg Bluegrass ABS B AA-/Watch Neg AA/Watch Neg CDO II Ltd. Bluegrass ABS C-1 BBB-/Watch Neg BBB/Watch Neg CDO II Ltd. Bluegrass ABS C-2 BBB-/Watch Neg BBB/Watch Neg CDO II Ltd. Bluegrass ABS Type l Com BBB-/Watch Neg BBB/Watch Neg CDO II Ltd. Coldwater CDO Ltd. A-1 AAA/Watch Neg AAA Coldwater CDO Ltd. A-2 AA/Watch Neg AAA/Watch Neg Coldwater CDO Ltd. A-3 A/Watch Neg AA/Watch Neg Coldwater CDO Ltd. B-2 BB+/Watch Neg A/Watch Neg Coldwater CDO Ltd. C CCC+/Watch Neg BBB/Watch Neg GSC ABS CDO 2006-2m Ltd D BBB A/Watch Neg GSC ABS CDO 2006-2m Ltd E CCC BBB/Watch Neg GSC ABS CDO 2006-2m Ltd F CCC- BB+/Watch Neg GSC ABS CDO 2006-2m Ltd G CC BB/Watch Neg Independence IV CDO Ltd B BBB+/Watch Neg AA/Watch Neg Independence IV CDO Ltd C CCC-/Watch Neg BBB/Watch Neg Ischus CDO II Ltd. B AA- AA Ischus CDO II Ltd. C A- A Ischus CDO II Ltd. D BB+ BBB/Watch Neg Libra CDO Ltd. A AA AAA Libra CDO Ltd. B A- AA Libra CDO Ltd. C BB+ A/Watch Neg Libra CDO Ltd. D CCC- BBB/Watch Neg Libra CDO Ltd. X CC BBB-/Watch Neg Lincoln Avenue A-2 AA+/Watch Neg AAA ABS CDO Ltd. Lincoln Avenue B BBB+/Watch Neg AA/Watch Neg ABS CDO Ltd. Lincoln Avenue C B/Watch Neg A/Watch Neg ABS CDO Ltd. Lincoln Avenue D CCC-/Watch Neg BBB/Watch Neg ABS CDO Ltd. Mayflower CDO I Ltd. A-1lB AA-/Watch Neg AAA Mayflower CDO I Ltd. A-2L BBB+/Watch Neg AA/Watch Neg Mayflower CDO I Ltd. A-3L BBB-/Watch Neg A/Watch Neg Mayflower CDO I Ltd. B-1L B/Watch Neg BBB/Watch Neg Montauk Point CDO Ltd. B AA- AA Montauk Point CDO Ltd. C A AA-/Watch Neg Montauk Point CDO Ltd. D BBB A/Watch Neg Montauk Point CDO Ltd. E BB BBB/Watch Neg Montauk Point CDO Ltd. F B+ BBB-/Watch Neg Montauk Point CDO Ltd. G CCC+ BB+/Watch Neg Neptune CDO III Ltd. A-2 AAA/Watch Neg AAA Neptune CDO III Ltd. A-3 AA/Watch Neg AA Neptune CDO III Ltd. B A/Watch Neg A Neptune CDO III Ltd. C BB+/Watch Neg BBB/Watch Neg Octans II CDO Ltd. A-2 AA+ AAA Octans II CDO Ltd. A-3A AA+ AAA Octans II CDO Ltd. A-3B AA+ AAA/Watch Neg Octans II CDO Ltd. B A+ AA/Watch Neg Octans II CDO Ltd. C-1 BBB A/Watch Neg Octans II CDO Ltd. C-2 BB+ A-/Watch Neg Octans II CDO Ltd. D BB BBB/Watch Neg Octans II CDO Ltd. X-1 B BBB-/Watch Neg Octans II CDO Ltd. X-2 CCC- BBB-/Watch Neg Orion 2006-2 Ltd. A-2 A-/Watch Neg AA+/Watch Neg Orion 2006-2 Ltd. B-1 BB/Watch Neg AA/Watch Neg Orion 2006-2 Ltd. B-2 CCC+/Watch Neg AA-/Watch Neg Orion 2006-2 Ltd. C-1 CCC-/Watch Neg A-/Watch Neg Orion 2006-2 Ltd. C-2 CC BBB/Watch Neg Orion 2006-2 Ltd. D-1 CC BB/Watch Neg Orion 2006-2 Ltd. D-2 CC BB-/Watch Neg Orion 2006-2 Ltd. E CC B-/Watch Neg Orion 2006-2 Ltd. X CC BB/Watch Neg Pine Mountain CDO Ltd. A-3 AA+ AAA Pine Mountain CDO Ltd. B A+ AA/Watch Neg Pine Mountain CDO Ltd. C BBB+ A/Watch Neg Pine Mountain CDO Ltd. D B BBB/Watch Neg Pyxis ABS CDO 2007-1 A-2 AA+ AAA Pyxis ABS CDO 2007-1 B A+ AA/Watch Neg Pyxis ABS CDO 2007-1 C BBB- A/Watch Neg Pyxis ABS CDO 2007-1 D-1 CCC+ BBB/Watch Neg Pyxis ABS CDO 2007-1 D-2 CCC BBB-/Watch Neg Pyxis ABS CDO 2007-1 E CCC- BB+/Watch Neg Pyxis ABS CDO 2007-1 F CC BB-/Watch Neg Pyxis ABS CDO 2007-1 S AA+ AAA RFC CDO IV Ltd. B AA- AA RFC CDO IV Ltd. C A- A/Watch Neg RFC CDO IV Ltd. D BBB BBB/Watch Neg Sherwood Funding CDO A-2 AAA/Watch Neg AAA Sherwood Funding CDO B-1 BBB+/Watch Neg AA Sherwood Funding CDO B-2 BBB+/Watch Neg AA Sherwood Funding CDO C BB+/Watch Neg A/Watch Neg Sherwood Funding CDO D CC BBB/Watch Neg South Coast Funding I A-2 B+ A-/Watch Neg South Coast Funding A-2 AA AAA III Ltd. South Coast Funding A-3A A+ AA III Ltd. South Coast Funding A-3B A+ AA III Ltd. South Coast Funding B BBB- A- III Ltd. South Coast Funding C BB- BBB/Watch Neg III Ltd. Springdale CDO 2006-1 A-2 AA AAA Springdale CDO 2006-1 B BBB+ AA/Watch Neg Springdale CDO 2006-1 C BB+ A/Watch Neg Springdale CDO 2006-1 D CCC BBB/Watch Neg Springdale CDO 2006-1 E CC BB+/Watch Neg STAtic ResidenTial A-2 AA+ AAA CDO 2006-A Ltd. STAtic ResidenTial B AA AA+ CDO 2006-A Ltd. STAtic ResidenTial C A+ AA- CDO 2006-A Ltd. STAtic ResidenTial D BBB- A-/Watch Neg CDO 2006-A Ltd. STAtic ResidenTial E BB BBB/Watch Neg CDO 2006-A Ltd. Tabs 2005-4 Ltd. E BBB- BBB/Watch Neg Ratings Affirmed Transaction Class Rating ----------- ----- ------ ACA Aquarius 2006-1 A1-S AAA Alexander Park CDO I Ltd. A-1 AAA Alexander Park CDO I Ltd. A-2 AAA Alexander Park CDO I Ltd. B AA Alexander Park CDO I Ltd. C A Bluegrass ABS CDO II Ltd. A-1MT-a AAA Bluegrass ABS CDO II Ltd. A-1MT-b AAA Bluegrass ABS CDO II Ltd. A-2 AAA BFC Genesee CDO Ltd. A-1LA AAA GSC ABS CDO 2006-2m Ltd. A1A AAA GSC ABS CDO 2006-2m Ltd. A1B AAA GSC ABS CDO 2006-2m Ltd. A-2 AAA GSC ABS CDO 2006-2m Ltd. B AA GSC ABS CDO 2006-2m Ltd. C AA- Independence IV CDO Ltd. A-1 Series 1 AAA Independence IV CDO Ltd. A-1 Series 2 AAA Independence IV CDO Ltd. A-2 AAA Independence IV CDO Ltd. A-3 AAA Ischus CDO II Ltd. A-1A AAA Ischus CDO II Ltd. A-1B AAA Ischus CDO II Ltd. A-2 AAA Libra CDO Ltd. Sr Swap AAAsrs Lincoln Avenue ABS CDO Ltd. A-1 AAA Mayflower CDO I Ltd. A-1LA AAA Mayflower CDO I Ltd. X AAA Montauk Point CDO Ltd. A1 AAA Montauk Point CDO Ltd. A2 AAA Neptune CDO III Ltd. A-1 AAA Neptune CDO III Ltd. S AAA Octans II CDO Ltd. A-1 Swap AAAsrp Orion 2006-2 Ltd. A-1A AAA Orion 2006-2 Ltd. S AAA Pine Mountain CDO Ltd. A-1 AAA Pine Mountain CDO Ltd. A-2 AAA Pyxis ABS CDO 2007-1 Ltd. A-1 AAA RFC CDO IV Ltd. A-2 AAA RFC CDO IV Ltd. A-3 AAA Sherwood Funding CDO Ltd A-1 AAA STAtic ResidenTial CDO 2006-A Ltd. A-1(a) AAA STAtic ResidenTial CDO 2006-A Ltd. A-1(b) AAA South Coast Funding I Ltd. A-1 AA South Coast Funding III Ltd. A-1A AAA South Coast Funding III Ltd. A-1B AAA Tabs 2005-4 Ltd. A AAA Tabs 2005-4 Ltd. B AAA Tabs 2005-4 Ltd. C AA Tabs 2005-4 Ltd. D A Other Outstanding Rating Transaction Class Rating ----------- ----- ------ Orion 2006-2 Ltd. A-1B AAA/Watch Neg * S&P Takes Rating Actions on Various Note Classes -------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the commercial paper and medium-term notes of three structured investment vehicles on CreditWatch with negative implications. In addition, S&P lowered its ratings on all the capital notes issued by the SIVs S&P rate, affecting a total of 14 ratings. At the same time, S&P assigned a negative outlook to the issuer credit ratings on 18 SIVs. SIVs that already have senior ratings on CreditWatch negative maintain their ratings. The CreditWatch negative placement on Orion Finance Corp. is a result of the vehicle's move into the enforcement mode of operation. Standard & Poor's is reviewing the next steps for the vehicle and will resolve the CreditWatch placement after further review. Standard & Poor's has placed its ratings on Premier Asset Collateralized Entity Ltd. on CreditWatch negative because it is very close to breaching the capital adequacy test. If a breach occurs, the vehicle would enter into enforcement. There is also a proposed restructuring, and S&P will update the CreditWatch as those details are confirmed. The ratings on Harrier Finance Funding Ltd. are also placed on CreditWatch negative, reflecting the fact that the NAV has fallen below 50%, as reported by the vehicle's manager, as well as a higher concentration of assets that Standard & Poor's deems to currently have high price volatility compared with its peers. Standard & Poor's analysis includes a review of asset, liability, and operational condition of each SIV, as well as the leverage of each vehicle on a mark-to-market basis. A CreditWatch placement has not been applied to the ratings on those SIVs that are maintaining their stability in these areas. Furthermore, the ratings on SIVs that are actively funding in the general marketplace, or have already submitted advanced restructuring plans that have few or no open questions associated with those plans, are also not placed on CreditWatch negative. It should be noted that managers are generally helping to manage structures to a "soft landing" through the sale of assets in the open market, asset switches with capital investors, and by selecting alternative sources of funding. The backdrop of declining NAVs is mitigated by discussions with managers showing that in some cases, future prospects of repaying senior liabilities may improve as restructuring plans materialize that lead to the full repayment of senior liabilities of the SIVs. Indeed, the rating assumptions for the SIVs assumed that assets would be sold at some point and that the presence of the manager would be to strategically pursue all options to get senior obligations paid in full. Abacas Investments Ltd. has not been assigned a negative outlook because the vehicle has a portfolio of short-term assets that is very different from other SIVs in the sector. Eaton Vance Variable Leverage Fund Ltd. has also not been assigned a negative outlook because its liabilities have been termed out, which means that the liquidity risks associated with funding and asset sales are not to the same degree as other SIVs in the sector. No action is taken on the ICR or senior ratings of Hudson-Thames as all senior debt will be repurchased by the end of next week. The rating actions on the junior ratings are based on an analysis of key rating factors that include the following: NAV, realised losses from asset sales, and the value of the portfolios' exposure to assets considered to be at risk of liquidating at lower than the current reported prices. Portfolios combining low NAV and high concentrations of risky assets have generally seen more significant downgrades. Standard & Poor's continues to monitor all SIV ratings and is in talks with managers regarding all aspects of the vehicles. Future rating actions and CreditWatch resolutions will reflect the full spectrum of factors mentioned above and any additional information that is material to the rating. Ratings List ICR and Senior Ratings Placed on Creditwatch with Negative Implications Rating ------ Class To From ----- -- ---- Harrier Finance Funding Ltd./Harrier Finance Funding (U.S.) LLC ICR AAA/Watch Neg/A-1+ AAA/--/A-1+ CP A-1+/Watch Neg A-1+ MTN AAA/Watch Neg AAA Orion Finance Corp./Asset Backed Capital Finance Inc./Orion Finance (USA) LLC ICR AAA/Watch Neg/A-1+ AAA/--/A-1+ CP A-1+/Watch Neg A-1+ MTN AAA/Watch Neg AAA Premier Asset Collateralized Entity Ltd./Premier Asset Collateralized Entity LLC ICR AAA/Watch Neg/A-1+ AAA/--/A-1+ CP A-1+/Watch Neg A-1+ MTN AAA/Watch Neg AAA Long-Term ICR Assigned Negative Outlook Ratings ------- To From -- ---- Asscher Finance Ltd. AAA/Negative AAA Beta Finance Corp. AAA/Negative AAA Carrera Capital Finance Limited AAA/Negative AAA/Stable Centauri Corp./CC (USA) Inc. AAA/Negative AAA Cortland Capital Limited AAA/Negative AAA/Stable Cullinan Finance Ltd. AAA/Negative AAA/Stable Dorada Corp./Dorada Finance Inc. AAA/Negative AAA Five Finance Corp. AAA/Negative AAA K2 Corp. / K2 (USA) LLC AAA/Negative AAA Links Finance Corp. / Links Finance LLC AAA/Negative AAA Nightingale Finance Ltd. AAA/Negative AAA Parkland Finance Corp. AAA/Negative AAA Sedna Finance Corp. AAA/Negative AAA/Stable Tango Finance Ltd. AAA/Negative AAA Vetra Finance Corp. AAA/Negative AAA Whistlejacket Capital Ltd. (merged with White Pine Corp. Ltd.) AAA/Negative AAA White Pine Corp. Ltd. (merged with Whistlejacket Capital Ltd.) AAA/Negative AAA Zela Finance Corp. AAA/Negative AAA Junior Ratings Lowered Class Ratings ----- ------- To From -- ---- Asscher Finance Ltd. Sub European mezz B/Watch Neg A Sub income note CCC-/Watch Neg BBB Cullinan Finance Ltd. Sub income note B-/Watch Neg BBB Five Finance Corp. Sub capital note CCC/Watch Neg BBB+ Hudson-Thames Capital Ltd. Sub capital note CCC-/Watch Neg BBB K2 Corp. Sub income note BB/Watch Neg A Kestrel Funding PLC Junior sub income note CCC-/Watch Neg BB-/Watch Neg Nightingale Finance Ltd. Sub capital note BB-/Watch Neg BBB Premier Asset Collateralized Entity Ltd./Premier Asset Collateralized Entity LLC Sub capital notes CCC-/Watch Neg BBB Sedna Finance Corp. Sub med-term note B-/Watch Neg A Tango Finance Ltd. Sub med-term note B/Watch Neg BBB+ Whistlejacket Capital Ltd. Sub capital note BB-/Watch Neg BBB+ White Pine Corp Ltd. Sub capital note B-/Watch Neg BBB+ Zela Finance Corp. Sub income note B-/Watch Neg A- * S&P Took Various Rating Actions on Insurance Companies -------------------------------------------------------- Standard & Poor's Ratings Services took various rating actions on insurance companies with public information ratings. Ratings with a 'pi' subscript are based on an analysis of an issuer's published financial information, as well as additional information in the public domain, and are provided without fee to investors and to the public. They do not, however, reflect in- depth meetings with an issuer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event occurs that may affect the issuer's credit quality. Public information ratings, like other Standard & Poor's ratings, may be changed, suspended, converted, and/or withdrawn as a result of changes in or unavailability of information or based on other circumstances. Standard & Poor's public information financial strength ratings are a current opinion of the financial security characteristics of an insurance organization with respect to its ability to pay under its insurance policies and contracts in accordance with their terms. This opinion is not specific to any particular policy or contract, nor does it address the suitability of a particular policy or contract for a specific purpose or purchaser. Furthermore, the opinion does not take into account deductibles, surrender or cancellation penalties, timeliness of payment, nor the likelihood of the use of a defense such as fraud to deny claims. Ratings List To From -- ---- Ratings lowered Homesteaders Life Co. Motorists Life Insurance Co. Counterparty credit rating BBBpi Api Financial strength rating BBBpi Api Louisiana Farm Bureau Mutual Insurance Co. Counterparty credit rating BBpi BBBpi Financial strength rating BBpi BBBpi Ratings raised Amerisafe Group American Interstate Insurance Co. of GA Silver Oak Casualty Inc. Counterparty credit rating BBBpi BBpi Financial strength rating BBBpi BBpi Aurora National Life Assurance Co. Counterparty credit rating BBBpi BBpi Financial strength rating BBBpi BBpi Country Insurance & Financial Services Group Country Mutual Insurance Co. Middlesex Mutual Assurance Co. Holyoke Mutual Insurance Co. in Salem Country Casualty Insurance Co. Country Preferred Insurance Co. Modern Service Insurance Co. MSI Preferred Insurance Co. Counterparty credit rating AApi Api Financial strength rating AApi Api Erie Insurance Group Erie Insurance Exchange Erie Insurance Co. Erie Insurance Co. of New York Erie Insurance Property & Casualty Co. Flagship City Insurance Co. Counterparty credit rating AApi Api Financial strength rating AApi Api Farm Bureau Group Farm Bureau Mutual Insurance Co. of ID Counterparty credit rating Api BBBpi Financial strength rating Api BBBpi Federated Mutual Group Federated Mutual Insurance Co. Federated Service Insurance Co. Counterparty credit rating AApi Api Financial strength rating AApi Api FM Global Group Factory Mutual Insurance Co. Affiliated FM Insurance Co. Appalachian Insurance Co. Counterparty credit rating Api BBBpi Financial strength rating Api BBBpi Guarantee Trust Group Guarantee Trust Life Insurance Co. Guarantee Security Life Insurance Co. of AZ Counterparty credit rating Bpi CCCpi Financial strength rating Bpi CCCpi INSCO DICO Group Developers Surety & Indemnity Co. Indemnity Co. of CA Counterparty credit rating BBBpi BBpi Financial strength rating BBBpi BBpi International Fidelity Insurance Co. Counterparty credit rating BBBpi BBpi Financial strength rating BBBpi BBpi Kentucky Farm Bureau Mutual Insurance Co. Counterparty credit rating AApi Api Financial strength rating AApi Api Lumbermens Underwriting Alliance American Compensation Insurance Co. Counterparty credit rating BBpi Bpi Financial strength rating BBpi Bpi New Era Life Group New Era Life Insurance Co. New Era Life Insurance Co. of the Midwest Counterparty credit rating BBpi Bpi Financial strength rating BBpi Bpi New Jersey Manufacturers Group New Jersey Manufacturers Insurance Co. New Jersey Re-Insurance Co. Counterparty credit rating AApi Api Financial strength rating AApi Api Pekin Insurance Group Farmers Automobile Insurance Assoc. Pekin Insurance Co. Counterparty credit rating Api BBBpi Financial strength rating Api BBBpi SCPIE Group SCPIE Indemnity Co. American Healthcare Specialty Insurance Co. American Healthcare Indemnity Co. Counterparty credit rating BBpi Bpi Financial strength rating BBpi Bpi Ratings affirmed then withdrawn Physicians Insurance Co. of WI First Surety Corp. (formerly known as West Virginia Fire & Casualty Co.) Counterparty credit rating NR BBBpi Financial strength rating NR BBBpi Ratings Assigned American Interstate Ins Co. of TX Counterparty credit rating BBBpi Financial strength rating BBBpi Cotton States Mutual Insurance Co. Shield Insurance Co. Counterparty credit rating AApi Financial strength rating AApi Western Community Insurance Co. Counterparty credit rating Api Financial strength rating Api This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer's management. Standard & Poor's has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 77 28 AFC Enterprises AFCE (37) 151 (7) Alaska Comm Sys ALSK (28) 557 24 Apex Silver Mine SIL (281) 1,366 (167) Bare Escentuals BARE (132) 214 76 Bearingpoint Inc BE (365) 2,021 384 Blount International BLT (78) 472 140 CableVision System CVC (5,131) 9,807 (630) Carrols Restaurant TAST (13) 463 (29) Centennial Comm CYCL (1,078) 1,322 20 Cheniere Energy CQP (203) 1,962 109 Choice Hotels CHH (149) 338 (31) Cincinnati Bell CBB (671) 1,966 17 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (48) 722 145 Corel Corp. CRE (20) 249 (19) Crown Holdings I CCK (65) 6,949 440 Crown Media HL CRWN (619) 703 48 CV Therapeutics CVTX (157) 281 204 Cyberonics CYBX (18) 132 (28) Denny's Corporation DENN (201) 413 (65) Domino's Pizza DPZ (1,434) 497 82 Dun & Bradstreet DNB (467) 1,419 (262) Einstein Noah Re BAGL (41) 146 0 Extendicare Real EXE-U (24) 1,277 161 Gencorp Inc. GY (31) 1,082 74 General Motors GM (40,071) 149,500 (1,798) Healthsouth Corp. HLS (1,025) 2,529 (351) ICO Global C-New ICOG (103) 600 116 IDEARC Inc IAR (8,531) 1,658 391 IMAX Corp IMX (64) 220 12 IMAX Corp IMAX (64) 220 12 Incyte Corp. INCY (141) 283 238 Indevus Pharma IDEV (75) 156 14 Intermune Inc ITMN (13) 292 237 Koppers Holdings KOP (24) 676 186 Life Sciences Re LSR 0 236 7 Linear Tech Corp LLTC (636) 1,334 827 Lodgenet Entertn LNET (18) 709 18 McMoran Exploration MMR (100) 1,807 (223) Mediacom Comm MCCC (188) 3,631 (276) National Cinemed NCMI (579) 439 40 Navisite Inc NAVI (14) 116 11 Nexstar Broadcasting NXST (87) 708 (20) NPS Pharm Inc NPSP (210) 361 (119) ON Semiconductor ONNN (35) 1,526 395 PRG-Schultz Intl PRGX (29) 115 21 Primedia Inc PRM (129) 282 6 Protection One PONN (13) 675 (287) Radnet Inc. RDNT (53) 434 41 Regal Entertainment RGC (93) 2,594 (41) Riviera Holdings RIV (42) 219 18 RSC Holdings Inc RRR (73) 3,554 (283) Rural Cellular RCCC (595) 1,328 98 Sealy Corp. ZZ (128) 1,023 40 Sipex Corp SIPX (18) 44 2 Sirius Satellite SIRI (641) 1,587 (262) Sonic Corp SONC (107) 759 (41) St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (291) 3,932 (50) Stelco Inc STE (64) 2,657 693 Town Sports Int. CLUB (6) 483 (71) Voyager Learning VLCY (53) 917 (637) Weight Watchers WTW (945) 1,037 (134) Western Union WU (146) 5,685 (2,261) Worldspace Inc. WRSP (1,713) 376 (42) WR Grace & Co. GRA (343) 3,794 (1,246) XM Satellite XMSR (724) 1,709 (244) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Jason A. Nieva, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez, and Peter A. Chapman, Editors. Copyright 2007. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***