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 18, 2007, Vol. 11, No. 299 Headlines ACE SECURITIES: Moody's Reviews Ratings on 69 Tranches ADVANCED MICRO: Goodwill Recorded After ATI Buy Likely Impaired AEGIS MORTGAGE: Court Extends Removal Period Deadline to Feb. 11 AEGIS MORTGAGE: Wants Plan-Filing Period Extended to April 9 APARTMENT INVESTMENT: Moody's Puts Corporate Rating at Ba1 ARLINGTON HOSPITALITY: Plan Confirmation Hearing Moved to Jan. 28 ARMSTRONG HOLDINGS: Completes Asset Distribution to Shareholders ATLANTIC MARINE: S&P Affirms B+ Corporate Credit Rating BCE INC: Denies Renegotiation of Investor Group's Purchase Terms BEAR STEARNS: Four Law Firms File Investor Claims BEAR STEARNS: Moody's Downgrades Ratings on 16 Tranches BLACKHAWK AUTOMOTIVE: Court Approves Proposed Asset Sale Procedure BLUE HERON: Moody's Slashes Rating on Class B Notes to Ba1 BNC MORTGAGE: Fitch Rates $32.2 Mil. Class Certificates at Low-B CAPITAL GUARDIAN: Moody's Junks Ratings on Class B Notes CARRINGTON MORTGAGE: Fitch Cuts Ratings on $40.3MM Certs. to Low-B CENTRAL GARDEN: S&P Lowers Ratings Corporate Credit Rating to B CHARLES RIVER: Moody's Junks Ratings on $4.8 Mil. Notes CHESAPEAKE CORP: Board Elects Mary Jane Hellyar as Board Director CHICAGO H&S: Files Schedules of Assets and Liabilities CITGO PETROLEUM: Proposed $1 Bil. Loan Cues S&P to Hold Ratings CITGO PETROLEUM: $1 Billion Loan Cues Moody's to Affirm Ratings COINMACH SERVICES: Moody's Confirms then Withdraws Ratings COMPLETE RETREATS: Court Confirms Joint Plan of Liquidation CONTINENTAL AIRLINES: Fitch Holds Sr. Unsecured Debt's Junk Rating CPI INTERNATIONAL: Earns $2.8 Million in Quarter Ended Sept. 28 CREDIT-BASED ASSET: Fitch Pares Ratings on $25.2MM Certs. to Low-B CREDIT SUISSE: Fitch Cuts Ratings on $11.5MM Class Certs. to Low-B CREDIT SUISSE: Fitch Junks Rating on $14.4 Mil. Class M-9 Certs. CREDIT SUISSE: S&P Revises CreditWatch on Three Classes DANA CORP: Rhodes Wants Cape Girardeau Property Offer Considered DELTA FINANCIAL: Files for Bankruptcy Protection in Delaware DELTA FINANCIAL: Case Summary & 27 Largest Unsecured Creditors DUNMORE HOMES: 7 More Creditors Want Venue Moved to California DUNMORE HOMES: Panel Wants Ruling on DIP Financing Postponed DUNMORE HOMES: Panel Wants Cash Collateral Budget Ruling Deferred DURA AUTOMOTIVE: Wants Plan Confirmation Hearing Deferred to 2008 DURA AUTOMOTIVE: Defers Exit Financing Process Due to Market Riff DURA AUTOMOTIVE: Subprime Lending Mess Blamed for Lack of Funding DUTCH HILL: Moody's Junks Ratings on $2 Million Class E Notes EAGLEPICHER CORP: Moody's Junks Rating on Second-Lien Term Loan EMPORIA PREFERRED: Stable Performance Cues Fitch To Hold Ratings ENTERGY GULF: Moody's Changes Rating Outlook to Positive FAB FIVE: Case Summary & 12 Largest Unsecured Creditors GRAND AVENUE: Moody's Reviews Ratings for Possible Downgrade GRANT PRIDECO: Selling Assets to National Oilwell for $23.20/Share GRANT PRIDECO: $7.4 Bil. Deal Cues S&P to Put BB+ Rating on Watch GRANT PRIDECO: Moody's Places Ba1 Corp Family Rating Under Review GSCP LP: Moody's Downgrades Senior Debt Rating to B2 HANCOCK FABRICS: Wants to Conduct GOB Sales at Seven Retail Stores HANSCOM FAMILY: S&P Lowers Housing Revenue Bonds' Ratings HAWAIIAN AIRLINES: Court Bars Mesa Air's Request for New Trial HEALTHEAST & CONTROLLED: Fitch Lifts Rating on $278 Million Bonds HOMEBANC MORTGAGE: Moddy's Says No Rating Action Taken on Transfer INDEPENDENCE IV: Moody's Cuts Ratings on Class C Notes to Ba3 INDEPENDENCE VI: Moody's Downgrades Rating on Preference Shares INDEPENDENT OPTICAL: Case Summary & 20 Largest Unsecured Creditors INPHONIC INC: Can Hire Goldsmith Agio as Investment Banker INPHOHIC INC: Court Approves Bayard Firm as Bankruptcy Co-Counsel INTERNATIONAL RECTIFIER: Moody's Withdraws Ba3 Ratings JAYS FOODS: Committee Initiates Probe on Parent Ubiquity JOHN EADS: Case Summary & 23 Largest Unsecured Creditors JP MORGAN: Fitch Chips Rating on $3.8MM Class 1-B-3 Certs. to BB- KEY HOSPITALITY: Stockholders Approve Dissolution and Liquidation LAND O'LAKES: Posts $2.8 Million Net Loss in Third Quarter of 2007 LINENS 'N THINGS: S&P Junks Ratings with Negative Outlook MASTR ADJUSTABLE: Moody's Lowers Ratings on Seven Tranches MICHAEL BRANGERS: Case Summary & 20 Largest Unsecured Creditors MOODY FAMILY: S&P Junks Ratings on Series 2005A & 2005B Bonds MOTORSPORT AFTERMARKET: Weak Performance Cues S&P to Cut Rating MQ ASSOCIATES: Closes Tender Offers to Buy $316 Mil. Senior Notes NATIXIS: Fitch Junks Ratings on $20 Mil. Class B-3 and B-4 Certs. NAVISTAR INT'L: Ratifies New Three-Year Contract with UAW Members NEUMANN HOMES: Wants to Sell Precision Framing Assets for $1 Mil. NEUMANN HOMES: Wants to Walk Away from Warrenville Lease NEUMANN HOMES: Wants to Sell 36 Trailers to CTPC for $631,208 NICHOLS BROTHERS: Asks Approval on New Construction Pact with RGWT NORTHSTAR PETROLEUM: Voluntary Chapter 11 Case Summary OPTION ONE: Fitch Junks Ratings on $12.6 Mil. Class Certificates OPTION ONE: Moody's Downgrades Ratings on 29 Tranches PATRICK FAMILY: S&P Lowers Ratings on Housing Revenue Bonds PHARMED GROUP: Contracts Assumption Hearing Set on December 20 PIKE NURSERY: Has Until Dec. 31 to File Schedules & Statements PIKE NURSERY: U.S. Trustee Appoints 7-Member Creditors Panel PIKE NURSERY: Committee Wants to Employ Pachulski Stang as Counsel PORTER SQUARE: Moody's Cuts Rating on $9 Million Class D Notes PRORHYTHM INC: Organizational Meeting Scheduled on Thursday PUTNAM STRUCTURED: Moody's Junks Ratings on Two Note Classes QUEBECOR WORLD: Aborts $341 Mil. Sale of European Assets to RSDB ROWECOM INC: Trustee Expects Final Distribution in 2nd Qtr of 2008 SAINT AGNES: Wants Jameson & Associates as Bankruptcy Counsel SAINT AGNES: Wants to Employ Tracy Mathews as Accountant SECURITIZED ASSET: Fitch Slices Ratings on Two Classes to BB SG MORTGAGE: Fitch Pares Ratings on $9.8 Mil. Class Certs. to BB SL COCKRELL: Files List of 20 Largest Unsecured Creditors SL COCKRELL: Section 341(a) Meeting Slated for Wednesday SL COCKRELL: Submits Schedules of Assets and Liabilities SOFA EXPRESS: Court OKs $2 Million DIP Financing on Interim Basis SOFA EXPRESS: Taps Alston & Bird LLP as Lead Bankruptcy Counsel SOFA EXPRESS: Wants to Employ Boult Cummings as Local Counsel SOLOMON DWEK: Says Remaining in Ch. 11 Violates Anti-Slavery Law SOLSTICE ABS: Moody's Junks Ratings on Four Notes SOUTH COAST: Moody's Cuts Rating on Class C Notes to B1 STACK 2005-2: Moody's Lowers Rating on $7.5 Mil. Class F Notes STEPHEN COEN: Case Summary & Eight Largest Unsecured Creditors STRUCTURED ADJUSTABLE: Moody's Lowers Ratings on Six Tranches STRUCTURED ASSET: Delinquency Rates Cue Moody's to Cut Ratings SUNCOAST ROOFERS: Get Interim OK to Access BofA's $18.5MM DIP Fund SUNCOAST ROOFERS: Wants Huron Consulting as Financial Advisor THIERMAN LLC: Case Summary & 10 Largest Unsecured Creditors THORPE INSULATION: Fergus Approved as Future Rep.'s Counsel THORPE INSULATION: Court OKs Hamilton as Future Rep. Consultant THORPE INSULATION: Files Schedules of Assets and Liabilities TIAA STRUCTURED: Moody's Cuts Ratings on Two Note Classes to B2 TREMONIA CDO: Moody's Reviews B3 Rating on Class D Notes TRINCON CONSTRUCTION: Case Summary & 20 Largest Unsec. Creditors TROPICANA ENT: Moody's Junk Ratings on Denied License Renewal UNISYS CORP: Moody's Confirms B2 Rating with Negative Outlook VERASUN ENERGY: S&P Affirms B+ Ratings with Stable Outlook VLP INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors WALKERVILLE BREWING: Continues as a Going Concern Amid Bankruptcy WAMU HOME: Fitch Junks Ratings on Classes M-7 to M-9 Certificates WAMU MORTGAGE: 73 Tranches' Ratings Downgraded by Moody's WASHINGTON MUTUAL: Fitch Junks Ratings on Classes B-4 & B-5 Certs. WEEKS STREET: Case Summary & 20 Largest Unsecured Creditors WELLS FARGO: Fitch Junks Ratings on $7.4 Mil. Certificates Classes WOLF HOLLOW: Moody's Reviews Ratings for Possible Downgrade * Amendments to Insolvency, CCAA, and Wage Acts Get Royal Assent * Thacher Proffitt Promotes Robert A. Klausner to Partner * Large Companies with Insolvent Balance Sheets ********* ACE SECURITIES: Moody's Reviews Ratings on 69 Tranches ------------------------------------------------------ Moody's Investors Service has placed on review for possible downgrade sixty-nine tranches from fourteen ACE Securities Corp. Home Equity Loan Trust transactions. The subprime mortgage loan backed transactions closed in 2002, 2003, 2004, and 2005. The rating actions are based on the respective tranches current credit enhancement levels compared to current projected pool losses. The complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2002- HE1 -- Cl. M-1; currently Aa2, under review for possible downgrade. -- Cl. M-2; currently Baa1, under review for possible downgrade. -- Cl. M-3; currently Caa2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2002- HE2 -- Cl. M-1; currently Aa2, under review for possible downgrade. -- Cl. M-2; currently A2, under review for possible downgrade. -- Cl. M-3; currently Baa1, under review for possible downgrade. -- Cl. M-4; currently Baa2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2002- HE3 -- Cl. M-1; currently Aa2, under review for possible downgrade. -- Cl. M-2; currently Baa2, under review for possible downgrade. -- Cl. M-3; currently Caa3, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2003- HE1 -- Cl. M-1; currently Aaa, under review for possible downgrade. -- Cl. M-2; currently A2, under review for possible downgrade. -- Cl. M-3; currently A3, under review for possible downgrade. -- Cl. M-4; currently Baa1, under review for possible downgrade. -- Cl. M-5; currently Baa2, under review for possible downgrade. -- Cl. M-6; currently Ba3, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- HE1 -- Cl. M-2; currently A2, under review for possible downgrade. -- Cl. M-3; currently A3, under review for possible downgrade. -- Cl. M-4; currently Baa3, under review for possible downgrade. -- Cl. M-5; currently B1, under review for possible downgrade. -- Cl. M-6; currently Caa2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- HE2 -- Cl. B-1; currently Ba2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- HE3 -- Cl. M-3; currently Aa3, under review for possible downgrade. -- Cl. M-4; currently A1, under review for possible downgrade. -- Cl. M-5; currently A2, under review for possible downgrade. -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. M-8; currently Baa2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- HE4 -- Cl. M-3; currently Aa3, under review for possible downgrade. -- Cl. M-4; currently A1, under review for possible downgrade. -- Cl. M-5; currently A2, under review for possible downgrade. -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. M-8; currently Baa2, under review for possible downgrade. -- Cl. M-9; currently Baa3, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- HS1 -- Cl. M-1; currently Aa2, under review for possible downgrade. -- Cl. M-2; currently A2, under review for possible downgrade. -- Cl. M-3; currently A3, under review for possible downgrade. -- Cl. M-4; currently Baa1, under review for possible downgrade. -- Cl. M-5; currently Ba2, under review for possible downgrade. -- Cl. M-6; currently B1, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- RM1 -- Cl. B-1; currently Ba2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2004- RM2 -- Cl. M-5; currently A2, under review for possible downgrade. -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. B-1; currently Baa2, under review for possible downgrade. -- Cl. B-2; currently Baa3, under review for possible downgrade. -- Cl. B-3; currently Ba1, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005- HE1 -- Cl. M-1; currently Aa1, under review for possible downgrade. -- Cl. M-2; currently Aa2, under review for possible downgrade. -- Cl. M-3; currently Aa3, under review for possible downgrade. -- Cl. M-4; currently A1, under review for possible downgrade. -- Cl. M-5; currently A2, under review for possible downgrade. -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. M-8; currently Baa2, under review for possible downgrade. -- Cl. M-9; currently Baa3, under review for possible downgrade. -- Cl. B-1; currently Ba2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005- RM1 -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. M-8; currently Baa2, under review for possible downgrade. -- Cl. M-9; currently Baa3, under review for possible downgrade. -- Cl. B-1; currently Ba2, under review for possible downgrade. Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005- RM2 -- Cl. M-6; currently A3, under review for possible downgrade. -- Cl. M-7; currently Baa1, under review for possible downgrade. -- Cl. M-8; currently Baa2, under review for possible downgrade. -- Cl. M-9; currently Baa3, under review for possible downgrade. -- Cl. M-10; currently Ba1, under review for possible downgrade. -- Cl. M-11; currently Ba2, under review for possible downgrade. ADVANCED MICRO: Goodwill Recorded After ATI Buy Likely Impaired --------------------------------------------------------------- Advanced Micro Devices, Inc., disclosed in a regulatory filing with the U.S. Securities and Exchange Commission, that the current carrying value of its goodwill which the company had recorded as a result of its October 2006 acquisition of ATI Technologies Inc. was impaired. The company relates that this conclusion was reached based on the results of an updated long-term financial outlook for the businesses of the former ATI as part of AMD's strategic planning cycle conducted annually during the company's fourth quarter and based on the preliminary findings of the company's annual goodwill impairment testing that commenced in the beginning of October 2007. Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired. All of AMD's goodwill and acquisition-related intangible assets outstanding as of Sept. 29, 2007 were related to its acquisition of ATI. The company expects that the impairment charge will be material, but the company has determined that, as of the time of this filing, it is unable in good faith to make a determination of an estimate of the amount or range of amounts of the impairment charge. Results for the third quarter of 2007 included ATI acquisition- related charges of $76 million, an impairment charge on AMD's investment in Spansion Inc.'s common stock of $42 million, stock- based compensation expense of $27 million and a tax expense of $27 million primarily due to the need for a deferred tax liability related to the large tax deductions AMD received for the amortization of goodwill from the acquisition of ATI, which is not amortized through earnings for financial reporting purposes, and for foreign current taxes. AMD's cash, cash equivalents and marketable securities as of Sept. 29, 2007 were $1.5 billion, a decrease of $66 million compared to June 30, 2007 due to the repayment of its October 2006 Term Loan, offset by positive cash flows from operations of $223 million, net proceeds from the issuance of its 5.75% Convertible Senior Notes due 2012 and the inclusion of the fair market value of AMD's ownership interest in Spansion Inc. of $119 million in its marketable securities balance. Headquartered in Sunnyvale, California, Advanced Micro Devices Inc. -- http://www.amd.com/-- (NYSE: AMD) designs and manufactures microprocessors and other semiconductor products. * * * As reported in the Troubled Company Reporter on Aug. 14, 2007, Standard & Poor's Ratings Services affirmed its B/Negative/-- corporate credit rating on Sunnyvale, California-based Advanced Micro Devices Inc. At the same time, S&P assigned its 'B' rating to the company's $1.5 billion 5.75% senior convertible notes due 2012, and raised the rating on the company's existing senior unsecured debt to 'B' from 'B-', because the company no longer has secured debt in its capital structure. Fitch Ratings has assigned a 'CCC+/RR6' rating to Advanced Micro Devices Inc.'s private placement of $1.5 billion 5.75% convertible senior notes due 2012. Fitch also affirmed the company's Issuer Default Rating at 'B'; and Senior unsecured debt at 'CCC+/RR6'. AEGIS MORTGAGE: Court Extends Removal Period Deadline to Feb. 11 ---------------------------------------------------------------- The Honorable Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware has granted Aegis Mortgage Corp. and its debtor-affiliates' request to extend the deadline by which to file notices of removal with respect to pending civil actions, to and including Feb. 11, 2008. As reported in the Troubled Company Reporter on Nov. 22, 2007, Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, in Wilmington, Delaware, asserted it was prudent to seek an extension so to protect the Debtors' right to remove the actions. Since the Aug. 13, 2007 Petition Date, the Debtors have been occupied with matters of immediate importance to their Chapter 11 cases, Mr. Cairns explained. The Debtors, he said, focused on the orderly wind down of their businesses and the sale of their remaining assets. "Accordingly, the Debtors have not had an opportunity to appropriately review actions to determine whether there are any that may need to be removed," Mr. Cairns said. The Debtors reserve their rights to seek further extension of deadline to remove civil proceedings. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 13, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AEGIS MORTGAGE: Wants Plan-Filing Period Extended to April 9 ------------------------------------------------------------ Aegis Mortgage Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend to: (i) April 9, 2008, the period during which they have the exclusive right to file a Chapter 11 plan, and (ii) June 9, 2008, the period during which they have the exclusive right to solicit acceptances of that plan. The Debtors requested for an extension on Dec. 10, 2007, a day before the Exclusive Plan Filing Period was set to expire. Pursuant to Del.Bankr.LR 9006-2, the Exclusive Plan Filing Period is automatically extended until the conclusion of the hearing on the Debtors' request. The Court will convene a hearing on January 14, 2008, at 2:00 p.m., Eastern Time, to consider the requested 120-day extensions. Deadline to submit objections to the Exclusivity Motions is on Dec. 28, 2007 at 4:00 p.m. "The Debtors are not seeking the extension to delay the administration of their cases or to pressure creditors to accept unsatisfactory plans but to facilitate an orderly, efficient, and cost-effective plan process for the benefit of all creditors," Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, says. He adds that the brief extension will further the intent of Section 1121 of the Bankruptcy Code, which gives the Debtors opportunity to negotiate with their creditors and to propose and confirm a consensual plan. Mr. Cairns says the request is appropriate since the Debtors met the requirements for a valid extension. He contends that: * the Debtors' cases involved the liquidation of the assets of a company engaged in complex financial transactions; * the cases have been pending for less than four months; * the Debtors are generally paying their postpetition obligations as they become due; * the Debtors have acted in good faith to maximize the value of estates for the creditors' benefits and they continue to expeditiously move their cases forward; and * the extension is not sought to pressure creditors. The Debtors reserve their right to seek further extensions. Headquartered in Houston, Texas, Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offers a variety of mortgage loan products to brokers through its subsidiaries. The company together with 10 affiliates filed for chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119) Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470. (Aegis Bankruptcy News, Issue No. 13, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). APARTMENT INVESTMENT: Moody's Puts Corporate Rating at Ba1 ---------------------------------------------------------- Moody's Investors Service assigned a Ba1 corporate family rating to Apartment Investment and Management Company, and affirmed the REIT's preferred equity rating at Ba3. The ratings outlook is stable, which reflects AIMCO's improving operations, combined with stable leverage, thin coverage and laddered debt maturities, all trends Moody's expects to continue. According to Moody's, AIMCO's Ba1 corporate family rating reflects the REIT's material leverage, largely encumbered portfolio and modest fixed charge coverage. Offsetting these challenges, the REIT enjoys a geographically diverse asset base, improving tenant quality, staggered debt maturities and recent operational upgrades. Following reporting and forecasting miscues in 2003, AIMCO has taken meaningful steps to improve the maintenance and oversight of its operations. These include information technology improvements, increased staffing and management changes. The REIT has had success in raising the credit profile of its tenants, leading to significant decreases in bad debt and receivables, all of which Moody's views as credit positives. In order to move its ratings up, AIMCO would need to demonstrate sustained fixed charge coverage near 2x, lowered leverage (closer to 50% of gross assets including pro rata share of joint ventures) and dividend payout ratio below 100%. The REIT's capital structure would need to be altered significantly to include a meaningful level of unencumbered assets. Moody's does not perceive these changes as likely. Simplification of AIMCO's structure would also be viewed positively. Conversely, a downgrade would likely result from a fixed charge coverage below 1.3x (recurring EBITDA divided by interest, preferred dividends, principal amortization and pro rata for joint ventures) and increase in effective leverage to over 65%. These rating was assigned with a stable outlook: -- Apartment Investment and Management Co. -- corporate family rating, Ba1. This rating was affirmed with a stable outlook: -- Apartment Investment and Management Co. -- preferred equity rating, Ba3. AIMCO (NYSE: AIV) is a multifamily REIT headquartered in Denver, Colorado that owns and operates a geographically diversified portfolio of apartment communities in the United States, representing 1,194 properties with 206,217 apartment units. ARLINGTON HOSPITALITY: Plan Confirmation Hearing Moved to Jan. 28 ----------------------------------------------------------------- The Honorable A. Benjamin Goldgar of the United States Bankruptcy Court for the Northern District of Illinois continued the hearing to consider confirmation of Arlington Hospitality Inc. and its debtor-affiliates' Amended Joint Plan of Orderly Liquidation to 10:00 a.m. on Jan. 1, 2008. The hearing will be held at at 219 South Dearborn, Courtroom 613 in Chicago, Illinois. The Court previously scheduled the Debtors' Plan confirmation hearing on Dec. 12, 2007. On Oct. 19, 2007, Judge Goldgar had approved the adequacy of the Debtors' Amended Disclosure Statement describing their Amended Joint Liquidation Plan. As reported in the Troubled Company Reporter on Nov. 27, 2007, the Plan will be funded by all property of the Debtors' estates, including proceeds received and remaining from the operation of the Debtors' business prior to the sales, remaining proceeds from the sales and preference recoveries, if any. Treatment of Claims Under the Plan, Administrative Claims and Priority Tax Claims will be paid in full. Holders of Secured Claims will receive either cash equal to the amount of the unpaid allowed secured claim or relief from the automatic stay arising under Section 362(a) of the Bankruptcy Code in order to collect and liquidate the property securing their claim. The Debtors disclosed that they have satisfied all priority claims. On the effective date, each holder of an Insurance Claim will automatically be granted relief from the automatic stay to permit the holder to proceed to prosecute and liquidate its claim against the Debtors. When the claim is liquidated, it will be paid first by the Debtors' insurance carrier to the extent of any insurance coverage. To the extent the Debtors would be required to pay a deductible, premium or retention before the insurance carrier will defend or satisfy the claim, the Debtors or the Plan Administrator, may elect to: a) pay such deductible, premium or retention; or b) have the entire claim treated as an unsecured claim. Holders of Convenience Claims, which the Debtors estimate to be $52,000, will receive cash equal to the lesser of 27% of their claims. General unsecured creditors will receive a pro rata share of the available cash. The Debtors estimate that unsecured claims total between $3.4 million to $5.5 million and holders will receive between 1% to 28% of their claims. Holders of Penalty Claims will also receive a pro rata share of the available cash after all valid claims have been paid. Equity Interests will be cancelled and holders will not receive anything under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://ResearchArchives.com/t/s?25b5 About Arlington Hospitality Based in Arlington Heights, Illinois, Arlington Hospitality, Inc., dba Amerihost Properties, Inc., and its affiliates develop and construct limited service hotels and own, operate, manage and sell those hotels. The Debtors operate 15 AmeriHost Inn Hotels under leases from PMC Commercial Trust. Arlington Hospitality, Inc., serves as a guarantor under these leases. Arlington Inns Inc., an affiliate, filed for bankruptcy protection on June 22, 2005 (Bankr. N.D. Ill. Case No. 05-24749), the Honorable A. Benjamin Goldgar presiding. Arlington Hospitality and additional debtor-affiliates filed for chapter 11 protection on Aug. 31, 2005 (Bankr. N.D. Ill. Lead Case No. 05-34885). Catherine L. Steege, Esq., at Jenner & Block LLP, provides the Debtors with legal advice and Chanin Capital LLC serves as the company's investment banker. David W. Wirt, Esq., at Winston & Strawn, represents the Official Committee of Unsecured Creditors. As of March 31, 2005, Arlington Hospitality reported $99 million in total assets and $94 million in total debts. ARMSTRONG HOLDINGS: Completes Asset Distribution to Shareholders ---------------------------------------------------------------- Armstrong Holdings Inc. has completed the distribution of its entire net assets to shareholders. Checks to record holders were mailed on Dec. 12, 2007. Shareholders who have ACKH stock in brokerage accounts will receive the distribution in their accounts in the near future. Direct shareholders do not need to return their stock certificates to receive a distribution. Those certificates are void and have no value. When the stockholders receive their distribution checks through the mail, direct shareholders should follow instructions enclosed with their payment to cancel or destroy those Armstrong Holdings stock certificates. The company will file Articles of Dissolution with the Commonwealth of Pennsylvania and will cease to exist. Direct shareholders with questions concerning their accounts should contact American Stock Transfer & Trust Company at (800) 937-5449. Based in Lancaster, Pennsylvania, Armstrong Holdings Inc. (OTC Bulletin Board: ACKH) -- http://www.armstrong.com/-- was the parent holding company of Armstrong World Industries Inc. On Oct. 2, 2006, Armstrong World Industries Inc. emerged from Chapter 11 reorganization under its Fourth Amended Plan of Reorganization, which provided for the cancellation of the AWI stock owned by the company. The company has conducted no business and had no operations since Oct. 2, 2006. ATLANTIC MARINE: S&P Affirms B+ Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on Atlantic Marine Holding Co. At the same time, S&P affirmed its 'BB-' bank loan rating on the company's proposed $230 million secured amended credit facility, which is being increased to fund a dividend. The '2' recovery rating on the facility is unchanged. The outlook is stable. "The ratings on Atlantic Marine reflect weak credit protection measures, a modest revenue base [about $275 million], especially compared with some competitors in the government sector, and growth dependent on the more competitive and cyclical nonmilitary and marine fabrication segments," said Standard & Poor's credit analyst Christopher DeNicolo. "These factors are partly offset by the high barriers to entry in the marine repair industry and the company's fairly good diversity of vessels serviced," the analyst continued. As Atlantic Marine has performed better than expected when acquired by J.F. Lehman & Co., a private equity firm, in August 2006, JFL is proposing to take a $69.5 million dividend funded with additional bank borrowings and cash on hand. This follows a $71.1 million dividend in March 2007. Debt to EBITDA in 2007 was expected to be around 2.7x, below initial expectations, but would deteriorate to 3.4x pro forma for the proposed dividend. Overall, credit protection measures are likely to be appropriate for the rating, with EBITDA interest coverage of 3.5x-4x and funds from operations to debt in the mid-teens percentage range. S&P expects modest free cash flows to be used to reduce debt. Jacksonville, Fla.-based Atlantic Marine provides maintenance, repair, overhaul, and conversion services for military and commercial vessels, as well as manufacturing and assembling ship modules and subsections for other shipyards. The MROC industry has high barriers to entry due to the need for a coastal location, with a deep draft and unobstructed access, and large, expensive assets such as drydocks. The company operates out of three locations: Mobile, Ala. (about 51% of revenues) on the Gulf coast, Jacksonville, Fla. (32%) on the Atlantic, and Naval Station Mayport near Jacksonville (17%), which exclusively services the U.S. Navy. The company is able to service ships up to almost 1,000 feet in length, including large cruise ships. Although the customer base is fairly concentrated, with the top 10 representing almost 65% of sales over the last five years, the company has longstanding relationships with most of them and 90% of business is from repeat customers. Steady demand in key market segments and satisfactory profitability should result in good revenue and earnings growth and allow for some debt reduction. Overall, S&P expects the company to maintain a credit profile consistent with current ratings in the intermediate term. We could revise the outlook to negative if demand or profitability in growth areas, especially marine fabrication, falls significantly below expectations or if leverage increases materially to fund acquisitions or further dividends. Although not likely, S&P could revise the outlook to positive if the company moderates its financial policy and uses excess cash flows to reduce debt, resulting in a sustained improvement in credit protection measures. BCE INC: Denies Renegotiation of Investor Group's Purchase Terms ---------------------------------------------------------------- BCE Inc. issued a statement in response to certain rumours in the market regarding the status of its definitive agreement to be acquired by an investor group led by Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, Providence Equity Partners Inc. and Madison Dearborn Partners, LLC. While it is BCE's policy not to comment on market rumours or speculation, in the interest of its shareholders, the company is confirming that neither BCE nor its Board of Directors is involved in any discussions regarding any renegotiation of any of the terms of the definitive agreement entered into on June 29, 2007. Under the terms of the definitive agreement, the Investor Group has agreed to acquire all of BCE's outstanding common shares for $42.75 per share in cash and all of BCE's outstanding preferred shares at prices set out in the definitive agreement. Headquartered in Montreal, Quebec, BCE Inc. (TSX/NYSE: BCE) -- http://www.bce.ca/-- is a communications company, providing comprehensive and innovative suite of communication services to residential and business customers in Canada. Under the Bell brand, the company's services include local, long distance and wireless phone services, high-speed and wireless Internet access, IP-broadband services, information and communications technology services (or value-added services) and direct-to-home satellite and VDSL television services. Other BCE holdings include Telesat Canada and an interest in CTVglobemedia. * * * As reported in the Troubled Company Reporter on Dec. 14, 2007, Standard & Poor's Ratings Services kept its ratings on BCE Inc. and its related entities on CreditWatch with negative implications, pending the completion of the company's leveraged buyout by a consortium of private equity investors led by Teachers Private Capital as announced on June 30, 2007. As a result of the proposed LBO, S&P expect reported debt to increase to about CDN$37 billion from about CDN$10 billion at Sept. 30, 2007. As reported in the Troubled Company Reporter on Sept. 26, 2007, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on BCE Inc. and wholly owned subsidiary Bell Canada to 'BB-' from 'A-'. BEAR STEARNS: Four Law Firms File Investor Claims ------------------------------------------------- A legal team of four law firms has filed investor claims against two subsidiaries of Bear Stearns Companies, Inc. -- Bear Stearns & Co., Inc. and Bear Stearns Securities Corp. -- over the recent collapse of Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage (Overseas) Fund, which invested heavily in the subprime mortgage market. According to Joseph A. Giannone of Reuters, the arbitration claims, which were filed with the Financial Industry Regulatory Authority, assert that an "unidentified fund-of-funds manager" invested $1,000,000 in the Overseas Fund in March, when the subprime mortgage market was already showing some signs of strain. The arbitration claims were filed by the law firms: * Maddox, Hargett & Caruso, P.C., * Aidikoff, Uhl & Bakhtiari, * Page Perry, LLC, and * David P. Meyer & Associates Co., LPA. "Bear Stearns did not properly disclose related party transactions, the true nature of the risk of the illiquid securities in the investment portfolio and failed to protect the interests of their clients," Steven B. Caruso, Esq., at Maddox Hargett & Caruso, P.C., in New York, said in a press release. "Our investigation indicates that officials at Bear Stearns engaged in a concerted effort to conceal the true state of affairs at both of these hedge funds for an extended period of time before they imploded," Mr. Caruso continued. "Given Bear Stearns' dominance in the mortgage-backed securities underwriting market, they knew or should have known how much subprime exposure both of these hedge funds faced," Ryan Bakhtiari, Esq., at Aidikoff, Uhl & Bakhtiari, in Beverly Hills, California, stated. "We're finding, in our investigation of these funds, that many investors in these funds simply were unaware of what was being held in their portfolios because it was not adequately disclosed," Mr. Bakhtiari added. According to the press release, the legal team pursuing the arbitration claims includes: -- immediate past president and several current and former directors of the Public Investors Arbitration Bar Association; -- co-chairman of the American Bar Association Securities Arbitration Subcommittee; -- current chair and past members of the FINRA National Arbitration and Mediation Committee; -- a former general counsel of a national brokerage company; -- a former state securities commissioner; and -- a past member of the NASD Securities Arbitration Policy Task Force. Reuters said that FINRA keeps the names of arbitration parties confidential. The legal team who filed the arbitration claims declined to identify their clients. Reuters added that Bear Stearns spokesman Russell Sherman declined to comment, saying he had not seen the complaint. About Bear Stearns Funds Grand Cayman, Cayman Islands-based Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd. and Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. are open-ended investment companies, which sought high income and capital appreciation relative to the London Interbank Offered Rate, and designed for long-term investors. On July 30, 2007, the Funds filed winding up petitions under the Companies Law (2007 Revision) of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen Beighton at KPMG were appointed joint provisional liquidators. The joint liquidators filed for Chapter 15 petitions before the U.S. Bankruptcy Court for the Southern District of New York the next day. On August 30, 2007, the Honorable Burton R. Lifland denied the Funds protection under Chapter 15 of the Bankruptcy Code. Fred S. Hodara, Esq., Lisa G. Beckerman, Esq., and David F. Staber, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the liquidators in the United States. The Funds' assets and debts are estimated to be more than $100,000,000 each. (Bear Stearns Funds Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). BEAR STEARNS: Moody's Downgrades Ratings on 16 Tranches ------------------------------------------------------- Moody's Investors Service has downgraded the ratings of sixteen tranches and has placed under review for possible downgrade the ratings on six tranches from five transactions issued by Bear Stearns Mortgage Funding Trust in 2006. The collateral backing these classes consists of primarily first lien, adjustable-rate negative amortizing Alt-A mortgage loans. The ratings were downgraded and placed under review for downgrade based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. In its analysis Moody's has also applied its published methodology updates to the non delinquent portion of the transactions. Issuer: Bear Stearns Mortgage Funding Trust 2006-AR1 -- Cl. I-B-6, Downgraded to Baa3, previously Baa2, -- Cl. I-B-7, Downgraded to Ba1, previously Baa3, -- Cl. II-B-2 Currently Aa2 on review for possible downgrade, -- Cl. II-B-3, Downgraded to A3, previously A1, -- Cl. II-B-4, Downgraded to Baa2, previously A3, -- Cl. II-B-5, Downgraded to B1, previously Ba2, Issuer: Bear Stearns Mortgage Funding Trust 2006-AR2 -- Cl. II-B-1 Currently Aaa on review for possible downgrade, -- Cl. II-B-2 Currently Aa3 on review for possible downgrade, -- Cl. II-B-3, Downgraded to Baa1, previously A3, -- Cl. II-B-4, Downgraded to Baa3, previously Baa1, -- Cl. II-B-5, Downgraded to B1, previously Ba1, Issuer: Bear Stearns Mortgage Funding Trust 2006-AR3 -- Cl. II-B-1 Currently Aaa on review for possible downgrade, -- Cl. II-B-2 Currently Aa3 on review for possible downgrade, -- Cl. II-B-3, Downgraded to Ba1, previously A3, -- Cl. II-B-4, Downgraded to Ba3, previously Baa1, -- Cl. II-B-5, Downgraded to Caa2, previously Ba2, Issuer: Bear Stearns Mortgage Funding Trust 2006-AR4 -- Cl. B-2 Currently Aa3 on review for possible downgrade, -- Cl. B-3, Downgraded to Baa1, previously A3, -- Cl. B-4, Downgraded to Baa2, previously Baa1, -- Cl. B-5, Downgraded to B1, previously Ba1, Issuer: Bear Stearns Mortgage Funding Trust 2006-AR5 -- Cl. II-B-4, Downgraded to Baa2, previously Baa1, -- Cl. II-B-5, Downgraded to B1, previously Ba1. BLACKHAWK AUTOMOTIVE: Court Approves Proposed Asset Sale Procedure ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Ohio approved the bidding procedure proposed by Blackhawk Automotive Plastics Inc. for the public sale of its business. W. Y. Campbell & Company, the Debtor's investment banker, will serve as the Debtor's agent for the sale of the assets. The Debtor will ask the Court on or before Feb. 8, 2008, to set the auction and sale hearing dates. An auction is expected to take place prior to an anticipated sale closing date of March 14, 2008. To participate in the auction, bids must be received by the sale agent before 5:00 p.m. (Eastern Time) on Feb. 29, 2008. Bids must accompany an earnest money cash deposit equivalent to five percent of the proposed purchase price but not to exceed $1.0 million. Qualifying bidders may then submit successive bids in increments of not less than $100,000. The sale is part of the Debtor's postpetition financing agreement with certain of its lenders. Salem, Ohio-based Blackhawk Automotive Plastics Inc., formerly Warren Molded/Custom Plastics, manufactures injection molded plastic products and motor vehicle parts and accessories. BAP's customers include General Motors, Delphi, Lear, Chrysler, Honda, Navistar, and Visteon. BAP employs about 1,574 workers domestically, and generated $136 million in sales in 2006. BAP owns Canadian subsidiary, Blackhawk Automotive Plastics Ltd. which operated a manufacturing facility in Ontario until Johnson Controls Inc. bought BAP Canada's assets in May 2005. BAP Canada's remaining assets consist primarily of net operating loss carryforwards for Canadian tax purposes. The NOLs had a book value of about $8.2 million as of December 2005. BAP also owns a plant in Upper Sandusky, Ohio, which ceased operations in 2006. The company filed for chapter 11 protection on Oct. 22, 2007 (Bankr. N.D. Ohio, Case No. 07-42671). Its parent company, Tier e Automotive Group Inc., filed a separate chapter 11 petition on the same day (Bankr. N.D. Ohio, Case No. 07-42673). Tier e acquired BAP from Worthington Industries Inc. in 1999. Tier e also owns 49% stake in Nescor Holdings Inc., a holding company for Nescor Plastics Corporation, also an automotive plastics supplier. William I. Kohn, Esq., David M. Neumann, Esq., Stuart A. Laven, Jr., Esq., at Benesch, Friedlander, Coplan & Aronoff LLP represent the Debtors in their restructuring efforts. Donlin Recano & Company Inc. provides the Debtors with claims, noticing, balloting and distribution services. The Debtors' schedules disclosed total assets of $58,665,229 and total liabilities of $51,244,592. As of bankruptcy filing, BAP's aggregate debt to its senior facility lenders was about $33 million. BLUE HERON: Moody's Slashes Rating on Class B Notes to Ba1 ---------------------------------------------------------- Moody's Investors Service has downgraded and placed these notes issued by Blue Heron Funding VI, Ltd. on review for possible downgrade: Class Description: EUR89,936,000 ($105,000,000) Class B Blue Heron Funding VI Notes, due May 21, 2047 -- Prior Rating: A3 -- Current Rating: Ba1, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. BNC MORTGAGE: Fitch Rates $32.2 Mil. Class Certificates at Low-B ---------------------------------------------------------------- Fitch Ratings has taken these rating action on one BNC mortgage pass-through certificate. Affirmations total $974.7 million. In addition, approximately $45.7 million are placed on Ratings Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: BNC 2007-2 -- $386.8 million class A1 affirmed at 'AAA' (BL: 36.41, LCR: 3.51); -- $220.8 million class A2 affirmed at 'AAA' (BL: 62.02, LCR: 5.98); -- $100.8 million class A3 affirmed at 'AAA' (BL: 42.78, LCR: 4.12); -- $30.7 million class A4 affirmed at 'AAA' (BL: 36.39, LCR: 3.51); -- $42.9 million class A5 affirmed at 'AAA' (BL: 36.41, LCR: 3.51); -- $50.7 million class M1 affirmed at 'AA+' (BL: 31.62, LCR: 3.05); -- $50.7 million class M2 affirmed at 'AA' (BL: 26.73, LCR: 2.58); -- $17.8 million class M3 affirmed at 'AA-' (BL: 24.94, LCR: 2.40); -- $21.7 million class M4 affirmed at 'A+' (BL: 22.71, LCR: 2.19); -- $17.8 million class M5 affirmed at 'A' (BL: 20.82, LCR: 2.01); -- $12.2 million class M6 affirmed at 'A-' (BL: 19.38, LCR: 1.87); -- $11.7 million class M7 affirmed at 'BBB+' (BL: 17.85, LCR: 1.72); -- $9.4 million class M8 affirmed at 'BBB+' (BL: 16.67, LCR: 1.61); -- $13.3 million class M9 rated 'BBB' (BL: 15.06, LCR: 1.45) and placed on Rating Watch Negative; -- $17.2 million class B1 rated 'BB+' (BL: 13.06, LCR: 1.26) and placed on Rating Watch Negative; -- $15 million class B2 rated 'BB' (BL: 11.60, LCR: 1.12) and placed on Rating Watch Negative. Summary -- Originators: (100% BNC); -- 60+ day Delinquency: 6.60%; -- Realized Losses to date (% of Original Balance): 0.01%; -- Expected Remaining Losses (% of Current Balance): 10.38%; -- Cumulative Expected Losses (% of Original Balance): 9.77%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. CAPITAL GUARDIAN: Moody's Junks Ratings on Class B Notes -------------------------------------------------------- Moody's Investors Service has downgraded these notes issued by Capital Guardian ABS CDO I: Class Description: Class B Second Priority Senior Secured Floating Rate Notes due April 2037 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa2 According to Moody's, the rating action is the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CARRINGTON MORTGAGE: Fitch Cuts Ratings on $40.3MM Certs. to Low-B ------------------------------------------------------------------ Fitch Ratings has taken these rating actions on Carrington mortgage pass-through certificates. Affirmations total $622.7 million and downgrades total $224.1 million. In addition, approximately, $26.4 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2007-FRE1 -- $335.9 million class A-1 affirmed at 'AAA' (BL:58.49, LCR:3.36); -- $143.3 million class A-2 affirmed at 'AAA' (BL:48.43, LCR:2.78); -- $143.3 million class A-3 affirmed at 'AAA' (BL:41.84, LCR:2.4); -- $26.4 million class A-4 rated 'AAA' and placed on Rating Watch Negative (BL:38.03, LCR:2.18); -- $58.5 million class M-1 downgraded to 'AA-' from 'AA+' (BL:33.88, LCR:1.95); -- $40.3 million class M-2 downgraded to 'A+' from 'AA' (BL:29.37, LCR:1.69); -- $20.6 million class M-3 downgraded to 'A' from 'AA-' (BL:26.97, LCR:1.55); -- $17.6 million class M-4 downgraded to 'A-' from 'A+' (BL:24.84, LCR:1.43); -- $16.6 million class M-5 downgraded to 'BBB+' from 'A' (BL:22.82, LCR:1.31); -- $15.1 million class M-6 downgraded to 'BBB' from 'A-' (BL:20.97, LCR:1.2); -- $14.6 million class M-7 downgraded to 'BBB-' from 'BBB+' (BL:19.22, LCR:1.1); -- $13.6 million class M-8 downgraded to 'BB' from 'BBB' (BL:17.66, LCR:1.01); -- $12.6 million class M-9 downgraded to 'B' from 'BBB-' (BL:16.31, LCR:0.94); -- $14.1 million class M-10 downgraded to 'B' from 'BB+' (BL:15.05, LCR:0.86). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 11.31%; -- Realized Losses to date (% of Original Balance): 0.00%; -- Expected Remaining Losses (% of Current Balance): 17.41%; -- Cumulative Expected Losses (% of Original Balance): 15.95%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. CENTRAL GARDEN: S&P Lowers Ratings Corporate Credit Rating to B --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Central Garden & Pet Co. to 'B' from 'B+', its senior secured bank loan rating to 'B+' from 'BB-', and its senior subordinated debt rating to 'CCC+' from 'B-'. The ratings remain on CreditWatch, where they were placed with negative implications on June 7, 2007, following the company's downward revision of its fiscal third-quarter and full-year 2007 earnings guidance; the ratings were subsequently lowered one notch on Oct. 12, 2007, following continued weak operating performance and tight financial covenants, and kept on CreditWatch negative. Approximately $610 million of debt was outstanding as of Sept. 30, 2007. "The downgrade and continued CreditWatch listing reflect the company's very weak operating performance in fiscal 2007 as it copes with increased grain costs, unseasonable weather in its lawn & garden business, and lower demand for its aquatics products," said Standard & Poor's credit analyst Patrick Jeffrey. "We expect these trends will continue at least through the first quarter of fiscal 2008." Despite bank amendments in March and August 2007 to obtain covenant relief, the company was barely in compliance with its 5x maximum debt leverage covenant for fiscal 2007. As a result, Standard & Poor's believes the company will be challenged to maintain compliance under its financial covenants in the near term. This will be a particular concern when the company heads into its peak seasonal borrowing needs in the second quarter of fiscal 2008. CHARLES RIVER: Moody's Junks Ratings on $4.8 Mil. Notes ------------------------------------------------------- Moody's Investors Service has placed these notes issued by Charles River CDO I, Ltd. on review for possible downgrade: Class Description: $3,000,000 Class B-F Fixed Rate Notes Due December 9, 2037 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $18,000,000 Class B-V Floating Rate Notes Due December 9, 2037 -- Prior Rating: Baa2 -- Current Rating: Baa2, on review for possible downgrade In addition Moody's also has downgraded and left on review for possible downgrade these notes: Class Description: $4,800,000 Class C Fixed Rate Notes Due December 9, 2037 -- Prior Rating: Ba3 -- Current Rating: Caa2, on review for possible downgrade Class Description: $15,000,000 Combination Securities Due December 9, 2037 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. CHESAPEAKE CORP: Board Elects Mary Jane Hellyar as Board Director ----------------------------------------------------------------- The board of directors of Chesapeake Corporation has elected Mary Jane Hellyar, executive vice president of Eastman Kodak Company and president of Kodak's Film Products Group, a director of Chesapeake. She will replace Dr. Frank S. Royal, a Chesapeake director since 1990, who has retired for health reasons. Ms. Hellyar joined Eastman Kodak in 1982 as a research scientist and has served in a number of positions, including general manager, Consumer Film Business, and president, Display and Components Group. She has a bachelor's degree in chemistry and mathematics from the College of St. Catherine in St. Paul, Minnesota, master's and doctoral degrees in chemical engineering from Massachusetts Institute of Technology and an MBA degree in the management of technology from the Sloan School at the Massachusetts Institute of Technology. "We are pleased to have Dr. Hellyar join our board of directors and look forward to her contributions, especially in the areas related to her knowledge of and experience with retail and industrial marketing," Sir David Fell, chairman of the Chesapeake board of directors, said. Dr. Royal, a physician in Richmond, Virginia, served on all the standing committees on Chesapeake's board during his tenure, including chairing the corporate governance and nominating committee. "Frank Royal has been a sage voice of experience in corporate governance matters on Chesapeake's board and his fellow directors have benefited from his broad experience as a corporate director," Sir Fell said. "We will miss him in our board meeting room." About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:CSK) -- http://www.cskcorp.com/-- is a supplier of specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end- use markets. Chesapeake has 47 locations in Europe, North America, Africa and Asia and employs approximately 5,500 people. * * * Moody's Investor Service placed Chesapeake Corporation's probability of default rating at 'B1' in September 2006. The rating still hold to date with a stable outlook. CHICAGO H&S: Files Schedules of Assets and Liabilities ------------------------------------------------------ Chicago H&S Hotel Property, LLC filed with the U.S. Bankruptcy Court for the Northern District of Illinois, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $125,000,000 B. Personal Property $8,553,529 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $102,486,649 E. Creditors Holding Unsecured Priority Claims $1,845,390 F. Creditors Holding Unsecured Non-priority Claims $2,530,673 ----------- ----------- TOTAL $133,553,529 $106,862,713 Based in Chicago, Illinois, Chicago H&S Hotel Property, LLC, dba Hotel 71, owns and operates a 40-story, 437 guestroom full service hotel. The company filed for Chapter 11 protection on Oct. 29, 2007 (Bankr. N.D. Ill. Case No. 07-20088). Charles R. Gibbs, Esq. at Akin Gump Strauus Hauer & Feld LLP, and Daniel A. Zazove, Esq., and Jason d. Horwitz, Esq., at Perkins Coie LLP, represent the Debtor in its restructuring efforts. CITGO PETROLEUM: Proposed $1 Bil. Loan Cues S&P to Hold Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its ratings, including the 'BB' corporate credit rating, and its senior secured and recovery ratings, on CITGO Petroleum Corp., after the company proposed $1 billion in unrated, additional secured debt, to be ranked pari passu with its existing credit facility. The outlook on the company is stable. Houston, Texas,-based CITGO had $1.3 billion of funded debt as of Sept. 30, 2007. CITGO will use proceeds from the $1 billion first-lien financing to fund a 1 billion intercompany loan to its parent, Petroleos de Venezuela S.A. (PDVSA; foreign currency BB-/Stable/--). "Although the increase in debt is clearly unfavorable for credit, CITGO's resulting leverage is within the low end of our range of expectations for the current rating," said Standard & Poor's credit analyst Ben Tsocanos. The first-lien facilities currently consist of a $1.15 billion term revolving credit facility and a $700 million term loan. The 'BBB-' bank loan rating (two notches above the 'BB' corporate credit rating on the company) and recovery rating of '1' indicate the expectation of very high (90%-100%) recovery in the event of a payment default. (For the complete recovery analysis, see Standard & Poor's research report published Oct. 17, 2005, on RatingsDirect.) The ratings on CITGO reflect a satisfactory business risk profile and an aggressive financial risk profile, but are limited by the ratings on PDVSA. CITGO's credit strength as a stand-alone entity is based on the scale and complexity of its refining operations, which have net crude processing capacity of 750,000 barrels per day through three fuel refineries, placing it among the largest refiners in the U.S. The company gains substantial competitive advantage from its ability to process large volumes of heavy sour crude oils--which trade at sharp discounts to better-quality crude oil--into high- margin products, and from its relatively large refineries, which give it economies of scale. CITGO PETROLEUM: $1 Billion Loan Cues Moody's to Affirm Ratings --------------------------------------------------------------- Moody's Investors Service affirmed CITGO Petroleum Corporation's Ba1 corporate family rating and the senior secured bank loan and industrial revenue bonds, rated Baa3 (LGD 3, 31% changed to LGD 2, 25%), in response to the company's plan to lend $1 billion to its parent company, Petroleos de Venezuela (rated B1 GLCR and B1 FC issuer rating). The affirmation reflects the CITGO's baseline credit assessment of 12, mapping to Ba2, which already incorporates political risk and expected parent demands on CITGO's assets and cash flow. In addition, CITGO's moderate leverage position can accommodate the $1 billion increase in total debt and financial leverage within the framework of the Ba2 BCA. The Ba1 CFR reflects uplift on the basis of CITGO's status as a government related issuer. CITGO has indicated it plans to undertake a $1 billion senior secured loan that will be pari passu with its existing debt, the proceeds of which will be upstreamed to PDVSA via an inter-company loan. CITGO will take a note from PDVSA and receive interest income approximately equal to its debt service on the new secured loan. Because of the deductibility of the interest expense, a loan will be more tax efficient than dividends as a way for PDVSA to access CITGO's assets and cash flow. Moody's notes that CITGO's dividends have recently been increased in line with cash proceeds from asset sales of approximately $3.7 billion, but that the dividend policy going forward are expected to be tied to normalized net income and also will be restricted by a maximum debt covenant in its bank agreements. In addition, CITGO continues to invest in necessary environmental and maintenance projects and generate free cash flow after capital spending. The new loan is consistent with PDVSA's desire to redeploy CITGO's free cash flow outside of the company. In affirming the ratings for the bank loan and IRBs, the existing probability of default rating will change to Ba2 from Ba1, reflecting a higher recovery rate, since first lien secured debt represents a large portion of liabilities in the capital structure relative to unsecured non-debt liabilities. Moody's is maintaining a stable outlook on CITGO's ratings, based on an outlook for reasonably strong refining margins, internal funding of its capital needs, and a normal dividend policy. While CITGO has to date maintained a moderate leverage profile and continues to operate within its financial covenants, the stable outlook and current ratings have only limited scope for further leveraging by CITGO to provide cash up to PDVSA. CITGO Petroleum Corporation is headquartered in Houston, Texas. It is a wholly-owned subsidiary of Petroleos de Venezuela, the national oil company of Venezuela. COINMACH SERVICES: Moody's Confirms then Withdraws Ratings ---------------------------------------------------------- Moody's Investors Service confirmed the corporate family rating of Coinmach Services Corp. following the recent announcement that the company has been acquired by an affiliate of Babcock & Brown Limited. The confirmation was prompted by the company's completion of $1.2 billion of acquisition financing, which included secured credit and unsecured bridge facilities. In connection with the merger, Coinmach has issued a notice of redemption to redeem all of its outstanding 11% Senior Secured Notes due 2024 on Dec. 21, 2007. Subsequent to the redemption, all of the company's rated debt will be repaid. In anticipation of the note redemption, Moody's has withdrawn all of Coinmach's ratings. These ratings were confirmed and subsequently withdrawn: Coinmach Service Corp. -- Corporate family rating, B2 -- Probability of default rating, B2 -- 11% IDS Sr. Sec. 1st Lien notes due 2024, Caa1 (LGD6, 94%) Coinmach Corporation (Subsidiary) -- Senior secured 1st lien bank facility due 2010, B2 (LGD3, 45%) -- Senior secured 1st lien bank facility due 2012, B2 (LGD3, 45%) On June 15, 2007, Moody's placed Coinmach's ratings on review for possible downgrade following the announcement that the company had entered into an agreement to be acquired by Babcock & Brown Limited and a syndicate of investors. The review was prompted by the likelihood that Coinmach's debt levels would increase as a result of the acquisition. Coinmach Services Corp., through its wholly owned subsidiaries, is the single largest provider of outsourced laundry services for multi-family housing properties in North America. COMPLETE RETREATS: Court Confirms Joint Plan of Liquidation ----------------------------------------------------------- The Honorable Alan H.W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut confirmed Complete Retreats LLC and its debtor- affiliates' First Amended Joint Plan of Liquidation. Majority of Creditors Accept the Plan The Debtors, according to information provided by their balloting agent, certified that sufficient acceptances have been received. The number of eligible voters in Class 3 total 1,815. Approximately 199 creditors with claims totaling $48,992,868 submitted ballots. Approximately 176 holders of Class 3 claims voted to accept the Plan, representing $44,631,242 in claims. Approximately 23 holders of Class 3 claims voted to reject the Plan, representing $4,361,626 in claims. Thus, approximately 90% in number and 89% in amount of Claims in Class 3 of the Plan that voted on the Plan voted to accept the Plan. Of the 81 eligible voters in Class 4, about 21 creditors representing $14,826 submitted ballots. Approximately 18 holders of Class 4 claims voted to accept the Plan, representing $13,930 in claims; while three holders of Class 4 claims rejected the Plan, representing $895 in claims. Thus, approximately 86% in number and 94% in amount of Claims in Class 4 of the Plan that voted on the Plan voted to accept the Plan. Holders of claims in Class 1 and Class 2 are unimpaired and are deemed to accept the Plan. Holders of interests in Class 5 receive nothing under the plan and are deemed to reject the Plan. Objections Resolved According to the Debtors, the only objection to the Plan came from Jeffrey Gram, Private Island Management Limited, and Casa Olita Limited. The Debtors believe that this objection has been resolved and will be withdrawn, and no other objections to the Plan were timely filed. Revised Liquidating Trust Agreement On November 20, 2007, the Debtors delivered to the Court a revised Liquidating Trust Agreement. Non-material changes were made to the draft. A full-text copy of the Revised Liquidating Trust Agreement is available for free at: http://bankrupt.com/misc/revised_liquidatingtrustpact.pdf With respect to the payment and treatment of outstanding professional fees, the Debtors disclosed, among others, that: -- they owe Bingham McCutchen LLP, Dechert LLP, Kramer Capital Partners LP, and XRoads Solutions Group LLC $4.8 million for incurred and unpaid fees and expenses for services rendered as of September 30, 2007, which sum includes "holdbacks" of approximately $300,000; and -- the Estate Professionals each agree to take a note payable for their portions of the remaining approximately $4.8 million of professional fees and expenses. The Note will be secured by a first-priority security interest in and lien against all of the assets transferred to the Liquidating Trust under the Plan. The Note will bear interest at 4% per annum and will mature on June 30, 2008. Modified Plan As reported in the Troubled Company Reporter on Sept. 5, 2007, the Court approved the disclosure statement explaining the Debtors' Plan holding that the Modified Disclosure Statement contained adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Modified Plan dated August 30, 2007, is predicated upon substantive consolidation of (i) the Debtors' estates, (ii) DR Umbria, Ltd., a non-debtor Northern Irish limited company, which is indirectly wholly owned by Complete Retreats, and (iii) Retreats Europe, Ltd., a non-debtor United Kingdom limited company, which is wholly owned by Preferred Retreats. Substantive consolidation results in, among other things, (i) pooling the assets of, and claims against, the consolidated entities, (ii) satisfying liabilities from a common fund, (iii) eliminating intercompany claims, and (iv) combining the creditors of the consolidated entities for purposes of voting on a plan. Holders of Class 3 General Unsecured Claims will receive less under the Modified Plan: (a) between 0 and 2% -- instead of 4.9% -- for former members or vendors who declined Ultimate Resort LLC's membership offer in the Ultimate Destination Club, and other general unsecured creditors; and (b) between 0 and 0.6% -- instead of 1.7% -- for Accepting Offerees. Ultimate acquired substantially all of the Debtors' assets in 2006 for $98,000,000 cash. Roughly 645 of the Offerees with claims aggregating approximately $220,000,000 accepted New Membership Contracts with Ultimate., including eight of the 11 members of the Official Committee of Unsecured Creditors in the Debtors' cases. More than 230 Former Members and General Unsecured Creditors that were offered New Membership Contracts declined Ultimate's offer, and their aggregate Claims are roughly $130,000,000. Accepting Offerees lose their bargained-for, contractual right under their Membership Agreements with the Debtors to redeem the amount of their deposit from the Debtors. Under the Modified Plan, the Debtors estimate having roughly $400,000 of cash on hand on the Plan Effective Date. The Debtors anticipate that the sale of any remaining Assets should generate between $588,000 and $6,500,000 in proceeds after payment of any and all Allowed Convenience Class Claims, Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims, and Allowed Other Secured Claims and without taking into account any potential proceeds from a lawsuit relating to Private Retreats Belize, LLC's prepetition sale transaction with Jeffrey Gram and Private Island Management Limited, or any other Causes of Action or from any insurance policies of the Debtors. The Debtors could not estimate what the potential recoveries may be on Causes of Action that may be pursued by the Liquidating Trustee appointed under the Plan. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor-affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONTINENTAL AIRLINES: Fitch Holds Sr. Unsecured Debt's Junk Rating ------------------------------------------------------------------ Fitch Ratings has affirmed the debt ratings of Continental Airlines, Inc. as: -- Issuer Default Rating at 'B-'; -- Senior unsecured debt at 'CCC'/RR6 The Rating Outlook for Continental is Stable. Ratings for CAL reflect the airline's heavy fixed obligation funding burden, the risk of rising leverage levels in a potentially difficult 2008 industry operating environment, as well as ongoing vulnerability to fuel price and air travel demand shocks. While CAL's recent cash flow generation performance has been encouraging, the operating outlook is increasingly uncertain in light of $90-plus per barrel crude oil prices and growing worries over a possible U.S. economic slowdown in 2008. Planned available seat mile capacity growth will be relatively low next year (2-3%); however, CAL is financing new aircraft deliveries with additional secured debt, and it may see a modest increase in lease-adjusted leverage by year-end 2008. Cost pressures remain a significant credit concern, especially in light of the big run-up in crude and refined product prices witnessed since September. With relatively modest fuel hedge positions in place (approximately 32% of Q4 purchases hedged with protection above $2.23 per gallon of jet fuel), operating margins will suffer this winter as a result of the fuel price spike. Moreover, the outlook for 2008 is clearly being influenced by increasing doubts over the health of the U.S. economy and the resilience of both business and leisure air travel demand trends. Fitch expects revenue per available seat mile growth for CAL and the entire industry to slow materially next year, pressuring margins and constraining free cash flow generation in a year when CAL's capital spending commitments and debt balances will rise. On the positive side, CAL's liquidity position is now much stronger after two years of solid unit revenue expansion and good free cash flow generation. As of Sept. 30, unrestricted cash totaled $3 billion. CAL now expects year-end cash balances to total $2.7 billion to $2.8 billion. Fixed obligations for 2008 include approximately $629 million of scheduled debt maturities and approximately $200 million of required cash pension funding. Fitch expects CAL to continue funding its defined benefit pension plans at levels beyond minimum required amounts. CAL continues to outperform the broader industry in terms of yield and RASM growth?despite the fact that it has been growing faster than most of the other U.S. legacy carriers. International route economics in particular have remained excellent, and the airline expects to grow its international operations further with recently-announced twice-daily trips to London-Heathrow from both the Houston and Newark Liberty hubs, as well as expansion into new Latin American markets to be met partially through the new B737 NG aircraft entering the fleet next year. Industry-wide adjustments to 2008 capacity growth plans have been consistent during Q4, with CAL, Delta and Southwest all announcing earlier this month that they will pull some additional seats out of the domestic schedule for 2008. This provides some support for a more credible RASM soft landing scenario next year, but Fitch expects earnings and free cash flow to weaken as a result of the softening operating environment. A change in the Rating Outlook to Positive could follow in 2008 if a significant pull-back in energy prices and/or a continuation of reasonably strong U.S. economic growth drives stable or improving margins and modest improvements in leverage and cash flow coverage metrics. Movement toward industry consolidation could also improve the credit outlook for CAL and all of the legacy carriers. CPI INTERNATIONAL: Earns $2.8 Million in Quarter Ended Sept. 28 --------------------------------------------------------------- CPI International Inc. reported financial results for its fourth quarter of fiscal 2007 and year ended Sept. 28, 2007. Net income in the recent quarter was $2.8 million compared to net income of $6.2 million in the fourth quarter of the previous fiscal year. CPI's net income in the fourth quarter of 2007 were negatively impacted by the expenses related to the debt refinancing implemented during the quarter, lowering net income by $3.9 million. Consequently, CPI's net income decreased from the same quarter in the previous year. In fiscal 2007, CPI International generated net income of $22.5 million, a 31% increase from the $17.2 million generated in fiscal 2006. "CPI enjoyed an excellent fiscal 2007, and we finished the year on a strong note," Joe Caldarelli, chief executive officer, said. "We grew our net income significantly, despite facing $2.6 million in currency headwind from a weakening U.S. dollar and recognizing $3.9 million, after taxes, in expenses related to our debt refinancing. We met or exceeded our projections for all financial metrics on which we had issued guidance and generated increased sales, orders, net income and EBITDA results." "We continued to grow our business in the medical and communications markets, maintained our valuable and stable business in the defense markets and won important contracts in our emerging military communications business," Mr. Caldarelli added. "Fiscal 2007 also included significant corporate developments for CPI. With the acquisition of Malibu Research Associates, which we funded from cash on hand, we expanded our product offerings in the radar, electronic warfare and communications markets by adding specialized antennas to our product portfolio." "In addition, we strengthened our capital structure by successfully completing a debt refinancing which we expect will generate approximately $2 million in annual interest savings in the future," Mr. Caldarelli related. CPI's net income were impacted by the implementation of a number of operational excellence, lean manufacturing and cost reduction initiatives throughout the company, combined with the realization of savings from the recent integration of the company's Eimac operations into its Microwave Power Products Division. In addition, higher sales volume and sales of products with higher gross margins contributed to the year-over-year growth in CPI's net income. These increases were partially offset by a $2.6 million currency headwind related to CPI's Canadian dollar denominated expenses as a result of the weakening of the U.S. dollar and the increase in CPI's year-over-year average effective exchange rate, as well as by expenses related to the extinguishment of debt. Liquidity and Capital Resources CPI's fourth quarter and fiscal 2007 net income were negatively impacted by $3.9 million in expenses, after taxes, related to the debt refinancing. As of the end of the previous fiscal year, CPI's cash and cash equivalents totaled $30.2 million. Notwithstanding the August 2007 payment of approximately $22 million in connection with the acquisition of Malibu Research Associates Inc., funded entirely from cash on hand, CPI ended fiscal 2007 with cash and cash equivalents totaling $20.5 million, demonstrating its ability to continue to generate solid cash flow. At Sept. 28, 2007, the company's balance sheet showed total assets of $476.2 million and total liabilities of $350.3 million, resulting in a total shareholders' equity of $125.9 million. About CPI International Headquartered in Palo Alto, California, CPI International Inc. (Nasdaq: CPII) -- http://www.cpii.com/-- is the parent company of Communications & Power Industries Inc., a provider of microwave, radio frequency, power and control solutions for critical defense, communications, medical, scientific and other applications. * * * Moody's Investor Service plaved CPI International Inc.'s long term corporate family and probability of default ratings at 'B1' in July 2007. The ratings still hold to date with a stable outlook. CREDIT-BASED ASSET: Fitch Pares Ratings on $25.2MM Certs. to Low-B ------------------------------------------------------------------ Fitch Ratings has taken these rating actions on classes from Credit-Based Asset Servicing & Securitization LLC transactions. Affirmations total $292.2 million and downgrades total $161.3 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: C-BASS 2007-CB4 -- $149.6 million class A-1A affirmed at 'AAA' (BL: 61.08, LCR: 3.25) -- $55.8 million class A-1B affirmed at 'AAA' (BL: 40.63, LCR: 2.16) -- $28.3 million class A-1C downgraded to 'AA' from 'AAA' (BL: 37.98, LCR: 2.02) -- $57.8 million class A-2A affirmed at 'AAA' (BL: 71.57, LCR: 3.81) -- $28.9 million class A-2B affirmed at 'AAA' (BL: 50.63, LCR: 2.69) -- $18 million class A-2C downgraded to 'AA' from 'AAA' (BL: 38.88, LCR: 2.07) -- $12.6 million class A-2D downgraded to 'AA' from 'AAA' (BL: 39.40, LCR: 2.1) -- $17.9 million class M-1 downgraded to 'AA-' from 'AA+' (BL: 34.38, LCR: 1.83) -- $16.4 million class M-2 downgraded to 'A+' from 'AA+' (BL: 30.91, LCR: 1.65) -- $10.2 million class M-3 downgraded to 'A' from 'AA' (BL: 28.64, LCR: 1.52) -- $8.9 million class M-4 downgraded to 'A-' from 'AA-' (BL: 26.55, LCR: 1.41) -- $8.2 million class M-5 downgraded to 'BBB+' from 'A+' (BL: 24.56, LCR: 1.31) -- $7.4 million class M-6 downgraded to 'BBB' from 'A' (BL: 22.67, LCR: 1.21) -- $7.4 million class B-1 downgraded to 'BBB-' from 'A-' (BL: 20.71, LCR: 1.1) -- $6.4 million class B-2 downgraded to 'BB' from 'BBB+' (BL: 18.97, LCR: 1.01) -- $5.9 million class B-3 downgraded to 'B' from 'BBB' (BL: 17.42, LCR: 0.93) -- $7.7 million class B-4 downgraded to 'B' from 'BBB-' (BL: 15.70, LCR: 0.84) -- $5.4 million class B-5 downgraded to 'B' from 'BB+' (BL: 14.62, LCR: 0.78) Deal Summary -- Originators: Wilmington (18.61%), People's Choice (19.90%), New Century (19.94%); -- 60+ day Delinquency: 11.48%; -- Realized Losses to date (% of Original Balance): 0.00%; -- Expected Remaining Losses (% of Current Balance): 18.79%; -- Cumulative Expected Losses (% of Original Balance): 17.74%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. CREDIT SUISSE: Fitch Cuts Ratings on $11.5MM Class Certs. to Low-B ------------------------------------------------------------------ Fitch Ratings has taken these rating actions on Credit Suisse First Boston Mortgage Securities Corp. Home Equity Mortgage Trust 2005-2 mortgage pass-through certificates. Affirmations total $83.5 million and downgrades total $11.5 million. In addition, the $11.5 million of downgraded bonds were also placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class, rated B or higher, are included with the rating actions as: CSFB HEMT 2005-2 -- $8.6 million class M-2 affirmed at 'AA' (BL: 96.80, LCR: 4.62); -- $11.5 million class M-3 affirmed at 'AA-' (BL: 88.55, LCR: 4.22); -- $11.7 million class M-4 affirmed at 'A+' (BL: 77.60, LCR: 3.7); -- $11.5 million class M-5 affirmed at 'A' (BL: 66.09, LCR: 3.15); -- $10.8 million class M-6 affirmed at 'A-' (BL: 55.10, LCR: 2.63); -- $10.8 million class M-7 affirmed at 'BBB+' (BL: 44.03, LCR: 2.1); -- $10.8 million class M-8 affirmed at 'BBB' (BL: 26.13, LCR: 1.25); -- $7.6 million class M-9 affirmed at 'BBB-' (BL: 22.99, LCR: 1.1); -- $7.9 million class B-1 downgraded to 'BB-' from 'BB+' (BL: 19.11, LCR: 0.91), placed on Rating Watch Negative; -- $3.6 million class B-2 downgraded to 'B' from 'BB' (BL: 17.72, LCR: 0.85), placed on Rating Watch Negative; Deal Summary -- Originators: Various -- 60+ day Delinquency: 8.13% -- Realized Losses to date (% of Original Balance): 3.56%; -- Expected Remaining Losses (% of Current Balance): 20.97%; -- Cumulative Expected Losses (% of Original Balance): 7.96%. The information above is based off the October 2007 remittance period. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. Minimum LCR's specifically for subprime second lien transactions are as follows: 'AAA':2.00; 'AA':1.75; 'A':1.50; 'BBB':1.20; 'BB':0.95; 'B':0.75. CREDIT SUISSE: Fitch Junks Rating on $14.4 Mil. Class M-9 Certs. ---------------------------------------------------------------- Fitch Ratings has taken these rating actions on classes from Credit Suisse First Boston Home Equity Asset Trust transactions. Affirmations total $378.3 million and downgrades total $691.6 million. In addition, $677.2 million is placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: CSFB HEAT 2007-2 -- $420 million class 1-A-1 downgraded to 'AA-' from 'AAA' (BL: 37.93, LCR: 1.76) and placed on Rating Watch Negative; -- $226.3 million class 2-A-1 affirmed at 'AAA' (BL: 68.86, LCR: 3.19); -- $73 million class 2-A-2 affirmed at 'AAA' (BL: 56.84, LCR: 2.63); -- $79 million class 2-A-3 affirmed at 'AAA' (BL: 43.65, LCR: 2.02); -- $40 million class 2-A-4 downgraded to 'AA-' from 'AAA' (BL: 37.78, LCR: 1.75) and placed on Rating Watch Negative; -- $48 million class M-1 downgraded to 'A' from 'AA+' (BL: 33.39, LCR: 1.55) and placed on Rating Watch Negative; -- $45 million class M-2 downgraded to 'BBB+' from 'AA+' (BL: 29.32, LCR: 1.36) and placed on Rating Watch Negative; -- $26.4 million class M-3 downgraded to 'BBB' from 'AA' (BL: 26.86, LCR: 1.24) and placed on Rating Watch Negative; -- $22.8 million class M-4 downgraded to 'BBB-' from 'AA-' (BL: 24.72, LCR: 1.15) and placed on Rating Watch Negative; -- $21.6 million class M-5 downgraded to 'BB' from 'A+' (BL: 22.68, LCR: 1.05) and placed on Rating Watch Negative; -- $20.4 million class M-6 downgraded to 'BB' from 'A' (BL: 20.49, LCR: 0.95) and placed on Rating Watch Negative; -- $18.6 million class M-7 downgraded to 'B' from 'BBB+' (BL: 18.42, LCR: 0.85) and placed on Rating Watch Negative; -- $14.4 million class M-8 downgraded to 'B' from 'BBB' (BL: 16.92, LCR: 0.78) and placed on Rating Watch Negative; -- $14.4 million class M-9 downgraded to 'CCC' from 'BBB-' (BL: 15.70, LCR: 0.73). Deal Summary -- Originators: Equifirst (39.7%), ResMAE (37.7%); -- 60+ day Delinquency: 14.59%; -- Realized Losses to date (% of Original Balance): 0.09%; -- Expected Remaining Losses (% of Current Balance): 21.58%; -- Cumulative Expected Losses (% of Original Balance): 20.24%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. CREDIT SUISSE: S&P Revises CreditWatch on Three Classes ------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch placements on three classes of commercial mortgage pass-through certificates issued by Credit Suisse First Boston Mortgage Securities Corp.'s series 2001-FL2 to negative from developing (see list). The ratings were placed on CreditWatch developing on June 1, 2007, after discussions with the special servicer, Archon Group, revealed that the remaining asset in the pool, the Hotel Royal Plaza, was expected to be liquidated before Dec. 31, 2007. The projected liquidation proceeds were expected to repay all outstanding exposure on the securities at the time of liquidation, including accumulated interest shortfalls. Standard and Poor's revised the CreditWatch placements to negative because recent discussions with Archon indicated that potential buyers are having trouble procuring financing, and the asset will most likely not be liquated for months. S&P will resolve the CreditWatch after S&P examines the asset's year-to-date financial reports and the structural mechanics of the trust. As of the Nov. 15, 2007 remittance report, the Hotel Royal Plaza asset had a total exposure of $51.4 million, which included $16.4 million of servicer advances. The master servicer, KeyBank Real Estate Capital, has stopped advancing on the asset, and the property's generated cash flow is being used to reduce the outstanding servicer advances and interest thereon. Ratings Placed on CreditWatch Negative CSFB Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2001-FL2 Rating ------ Class To From ----- -- ---- J B-/Watch Neg B-/Watch Dev K CCC/Watch Neg CCC/Watch Dev L CCC-/Watch Neg CCC-/Watch Dev DANA CORP: Rhodes Wants Cape Girardeau Property Offer Considered ---------------------------------------------------------------- Rhodes Development Company, LLC. is interested in purchasing the Cape Girardeau property at a higher purchase price, hence, it asks Dana Corp. and its debtor-affiliates to consider its offer. Rhode says that is willing to participate in any reasonable auction format established for the sale of the Property. As reported in the Troubled Company Reporter on Dec. 14, 2007, the Debtors had asked authority from the U.S. Bankruptcy Court for the Southern District of New York the to sell a 15-acre parcel of real estate and a 150,000 square-foot building located at 2075 Corporate Circle in Cape Girardeau, Missouri, to Schaefer's Power Panels, Inc., for $2,841,750. The Debtors currently use the property for manufacturing, and they are in the process of closing the manufacturing operations, Corinne Ball, Esq., at Jones Day, in New York related. Request to Delay Sale Approval Furthermore, Rhodes asks the Court to delay the approval of the sale of the Property pending further discussions among the interested parties. In a separate filing, the Official Committee of Unsecured Creditors asks the Debtors to immediately put in place auction procedures for the sale of the Property to ensure that the Property is sold at a maximum value. About Dana Headquartered in Toledo, Ohio, Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Aug. 31, 2007, the Debtors listed US$6,878,000,000 in total assets and $7,551,000,000 in total debts resulting in a total shareholders' deficit of $673,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. The Court has set Dec. 10, 2007, to consider confirmation of the Plan. (Dana Corporation Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA FINANCIAL: Files for Bankruptcy Protection in Delaware ------------------------------------------------------------ Delta Financial Corporation has filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. The filing comes after it defaulted on its warehouse facilities including a financing transaction with Angelo Gordon & Co. The Angelo Gordon deal contemplates an aggregate financing of $100 million, including amounts outstanding under a residual financing facility established in August 2007. The Angelo Gordon financing agreement was subject to several conditions, including, among other things: -- due diligence with Angelo Gordon; -- the company's ability to complete a securitization of substantially all the loans on its loan and repurchase facilities; and -- standstill with warehouse lenders. On Nov. 15, 2007, the company entered into a standstill agreement with three of its warehouse providers. Each of the agreements was subject to several varying conditions, including the company's pricing a securitization of mortgage loans. However, the company stated that the recent deterioration of market conditions failed to complete the securitization transactions upon satisfactory terms. Following receipt of notices of default on its warehouse facilities, the company ceased taking new loan applications and began working out the remaining loans in its pipeline. On Dec. 6, 2007, the company terminated 430 employees to limit costs. Founded in 1982, Delta Financial Corporation (NASDAQ: DFC) -- http://www.deltafinancial.com/-- is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming mortgage loans. DELTA FINANCIAL: Case Summary & 27 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Delta Financial Corp. 1000 Woodbury Road, Suite 200 Woodbury, NY 11797 Bankruptcy Case No.: 07-11880 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Delta Funding Corp. 07-11881 Renaissance Mortgage Acceptance Corp. 07-11882 Renaissance R.E.I.T. Investment Corp. 07-11883 Type of Business: The Debtors are specialty consumer finance companies that originate, securitize and sell non-conforming mortgage loans. Their loans are primarily fixed rate and secured by first mortgages on one- to four-family residential properties. They are focused on lending to individuals who generally do not satisfy the credit, documentation or other underwriting standards set by more traditional sources of mortgage credit, including those entities that make loans in compliance with the conforming lending guidelines of Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac). They make mortgage loans to these borrowers for purposes, such as debt consolidation, refinancing, education and home improvements. See http://www.deltafinancial.com Chapter 11 Petition Date: December 17, 2007 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtors' Counsel: David B. Stratton, Esq. James C. Carignan, Esq. Pepper Hamilton, L.L.P. Hercules Plaza, Suite 5100 1313 Market Street Wilmington, DE 19899-1709 Tel: (302) 777-6500 Fax: (302) 421-8390 Consolidated Quarterly Financial Condition as of September 30, 2007: Total Assets: $7,223,528,000 Total Debts: $7,108,232,000 A. Delta Financial Corp's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ D.B. Structured Products, Inc. $19,500,000 Attention: Vincent D'Amore 60 Wall Street New York, NY 10005 Fax: (212) 797-5160 H.S.B.C. Mortgage Services $1,200,000 Attention: Vice-President, Business Related Risk Management 2700 Sanders Road Prospect Heights, IL 60070 B.D.O. Seidman, L.L.P. $312,750 Attention: Greg Kiemchek P.O. Box 642743 Pittsburgh, PA 15264-2743 K.P.M.G., L.L.P. $10,000 B. Delta Funding Corp's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ D.B. Structured Products, Inc. $19,500,000 Attention: Vincent D'Amore 60 Wall Street New York, NY 10005 Fax: (212) 797-5160 Conn. General Life Insurance $2,000,000 Attention: Kathy Gibson 5082 Collection Center Drive Chicago, IL 606983-0050 H.S.B.C. Mortgage Services $1,200,000 Attention: Vice-President, Business Related Risk Management 2700 Sanders Road Prospect Heights, IL 60070 CitiFinancial Mortgage Co., $800,000 Inc. Attention: Business Control 4050 Regent Boulevard Mail Stop N2B 260 BC Irving, TX 75063 Equifax Information Service, $290,000 L.L.C. Attention: Donna Sbarra or Michael Einrican P.O. Box 105835 Atlanta, GA 30348 A.T.&T. Corp. $201,000 New York State Banking $149,000 Department Angelo, Gordon & Co. $129,000 American General Financial $125,000 Services, Inc. Wachovia Mortgage Corp. $100,000 Hansen Quality, L.L.C. $92,200 A.T.&T. Mobility II, L.L.C. $90,000 Aschinger Electric Co. $61,200 J2 Global Communications, Inc. $40,000 K.P.M.G., L.L.P. $35,000 LendingTree $80,000 Mortgage Information Services $60,000 Quality Moving & Storage $43,500 Woodbury Office Seven $36,100 Littler Mendelson, P.C. $35,000 C. Renaissance Mortgage Acceptance Corp's Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ K.P.M.G., L.L.P. $237,000 Attention: George Humes 1660 International Drive McLean, VA 22102-4828 Emphasys Technologies, Inc. $12,000 Attention: David Anthony 261 Old York Road The Pavillion, Suite 822 Jenkintown, PA 19046 D. Renaissance REIT Investment Corp's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ D.B. Structured Products, I