T R O U B L E D C O M P A N Y R E P O R T E R Thursday, January 3, 2008, Vol. 12, No. 2 Headlines ADVANTA BANK: Fitch Maintains BB- Rating with Stable Outlook ADVANTA CORP: Fitch Affirms BB- Long-Term Issuer Default Rating ALLEGHENY ENERGY: Credit Improvement Cues Fitch to Lift Ratings AMERICAN HOME: Settles Servicing Rights Dispute With Countrywide AMERICAN HOME: Wants 1st Amended DIP Loan & Security Pact Okayed AMERICAN HOME: Wants to Set Servicing Biz. Sale Consummation ANGIOTECH PHARMACEUTICALS: S&P Holds B- Corporate Credit Rating ASCENDIA BRANDS: Senior Lenders Waive Default Until February 28 ASSET BACKED FUNDING: Fitch Junks Ratings on Two Certificates ATARI INC: Has Until March 20 to Comply with Nasdaq Listing Rules BALLY TECHNOLOGIES: Earns $21 Mil. in Quarter Ended September 30 BANK OF AMERICA: Fitch Puts Low-B Ratings on Six Certificates BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Certificates BFA LIQUIDATION: To Sell Arizona Land at Absolute Public Auction BOISE PAPER: S&P Pairs BB- Corporate Rating With Stable Outlook CAM CBO: Review Cues Fitch to Change Rating to C/DR6 from C/DR4 NEW ORLEANS SEWERAGE: Moody's Maintains Ba2 Debt Rating CONSOLIDATED COMMS: Closes $362.6M North Pittsburgh Systems Buyout CONSULTING & SAFETY: Case Summary & 19 Largest Unsecured Creditors CWMBS INC: Fitch Rates $2,747,200 Class B-3 Certificates at BB DANA CORP: 24 Investor Groups to Buy $540 Million New Dana Shares DELPHI CORP: Court Approves Sale of Steering Biz for for $447 Mil. DELPHI CORP: Ct. Extends Exclusive Plan-Filing Period to March 31 DIXIE GROUP: Moody's Withdraws Ratings for Business Reasons DUKE ENERGY: Moody's Places Global Local Currency Rating at Ba2 DUNMORE HOMES: Gets Final OK to Borrow $1 Mil. from Sydney Dunmore DUNMORE HOMES: Can Use Dunmore's Cash Collateral on a Final Basis ECHOSTAR COMMS: Distributes Shares for Separation of Businesses FGX INT'L: Moody's Withdraws All Ratings After Debt Refinancing FIRST DARTMOUTH: Case Summary & 13 Largest Unsecured Creditors FIRST FRANKLIN: Weak Performance Cues S&P to Downgrade Ratings FIRSTLIGHT HYDRO: S&P Holds BB- Rating on $320MM Mortgage Bonds FIRSTLIGHT POWER: S&P Holds BB- Rating on $695MM Sr. Facilities GENTEK INC: Subsidiary Acquires Bay Chemical for $7 Million HARMAN INTERNATIONAL: Elects Gary Steel to Board of Directors JADE ART: Oct. 31 Balance Sheet Upside-Down by $9.77 Million KAUFMAN COUNTY: Case Summary & Four Largest Unsecured Creditors KINGSWAY FINANCIAL: Secures to CDN$70 Million Credit Facility LEAP WIRELESS: S&P Maintains B- Corporate Credit Rating MIDNIGHT HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $36.5MM MORGAN STANLEY: Fitch Rates Three Certificate Classes at Low-B NASDAQ STOCK: Gets CFIUS Clearance on Borse Dubai Investment Deal NASDAQ STOCK: OMX AB Board Backs Borse Dubai's Public Offer NATIONAL LAMPOON: Oct. 31 Balance Sheet Upside-Down by $4.13 Mil. NAVIOS MARITIME: Shareholders OK Class B Directors Election NORTH STREET: Fitch Holds 'B' Rating on $31 Mil. Class C Notes NY RACING: Plan Confirmation Hearing Deferred to January 14 PACIFIC LUMBER: Loses Exclusive Right to File Reorganization Plan PACIFIC LUMBER: Scopac Can Use Funds in SAR Account for 2nd Budget PERFORMANCE TRANS: Gets Interim Nod to Use $6 Mil. DIP Funding PERFORMANCE TRANS: Lenders Want Yucaipa, et al. to Produce Docs PERFORMANCE TRANS: Committee Can Hire Blank Rome as its Counsel PHYTOMEDICAL TECH: Posts $353,094 Net Loss in Third Quarter POPE & TALBOT: Canada Court OKs Bid Procedures for Pulp Business POPE & TALBOT: Bid Protocol for Remaining Wood Business Approved POPE & TALBOT: Court Approves KPMG LLP as Independent Auditor POWERLINX INC: Sept. 30 Balance Sheet Upside-Down by $3.16 Million PUTNAM CBO: Fitch Retains 'CC' Rating on Second Priority Notes RCN CORP: Inks New 3-Year Pact w/ Peter Aquino as President & CEO SALTON INC: Closes APN Holding Buyout; Harbinger Holds 92% Stake SASCO MORTGAGE: Fitch Takes Rating Actions on Diverse Classes SECURITIZED ASSET: Fitch Chips Ratings on Four Certs. to Low-B SOLAR INVESTMENT: Fitch Retains 'CC' Ratings on Two Notes SUN COAST: Case Summary & 20 Largest Unsecured Creditors SUN COAST: Inks $19.7 Million Sale Pact With HCA West Florida TERWIN MORTGAGE: Fitch Junks Rating on Class M-5 Certs. from 'B' TRANSMETA CORP: Posts $9.1 Million Net Loss in Third Quarter UAP HOLDING: Agrium Inc. Withdraws Merger Notification WHEELING ISLAND GAMING: S&P Withdraws "B" Rating on Senior Notes WR GRACE: Charleston City Wants Stay Lifted to Seize Property WR GRACE: Wants to Settle Environmental Claims for $44 Million YRC WORLDWIDE: Earns $40.7 Million in Third Quarter YRC WORLDWIDE: Expects 4th Qtr. Impairment Chgs. of $700-$800 Mil. * Survey Says CMI Finishes 2007 With Another Slight Drop * Trade Credit Index Falls to Record Low Level Says Eueler Hermes * Chapter 11 Cases with Assets & Liabilities Below $1,000,00 ********* ADVANTA BANK: Fitch Maintains BB- Rating with Stable Outlook ------------------------------------------------------------ Fitch Ratings has affirmed the long-term Issuer Default Rating of Advanta Bank Corp. and Advanta Corp. at 'BB-'. The Rating Outlook was revised to Stable from Positive. Approximately $2.0 billion of debt and deposits is affected by the action. Fitch has affirmed these ratings with a Stable Outlook: Advanta Bank Corp. -- Long-term IDR at 'BB-'; -- Short-term IDR at 'B'; -- Long-term Deposits at 'BB' Advanta Corp: -- Long-term Issuer Default Rating (IDR) at 'BB-'; -- Short-term IDR at 'B'; -- Senior Unsecured at 'BB-' Advanta Capital Trust I -- Trust Preferred Stock at 'B'. The rating affirmation reflects the company's solid position in the small business credit card industry, improved asset quality relative to historical levels, consistent profitability metrics, and adequate risk-adjusted capitalization, offset by growing competition in the small business credit card sector, and the risks associated with a lack of revenue diversity and its mono- line business focus. The Outlook revision reflects the recent deterioration in portfolio credit quality, resulting from higher delinquency roll- rates following the 2005 change in bankruptcy legislation, and the uncertain capital markets environment, which could disrupt funding plans for Advanta, which is heavily reliant on the securitization market for funding. The Stable Outlook reflects the company's stable liquidity profile, adequate risk-adjusted capitalization, and the expectation that credit quality metrics will deteriorate from current levels over the near to intermediate-term. Material, persistent, declines in credit metrics and risk-adjusted revenue margins, a reduction in liquidity, and/or a decline in risk- adjusted capitalization could result in negative rating action. Conversely, stabilization of asset quality metrics, increased funding diversity, and higher risk-adjusted capitalization could provide rating momentum. ADVANTA CORP: Fitch Affirms BB- Long-Term Issuer Default Rating --------------------------------------------------------------- Fitch Ratings has affirmed the long-term Issuer Default Rating of Advanta Corp. and Advanta Bank Corp. at 'BB-'. The Rating Outlook was revised to Stable from Positive. Approximately $2.0 billion of debt and deposits is affected by the action. Fitch has affirmed these ratings with a Stable Outlook: Advanta Corp: -- Long-term Issuer Default Rating (IDR) at 'BB-'; -- Short-term IDR at 'B'; -- Senior Unsecured at 'BB-' Advanta Bank Corp. -- Long-term IDR at 'BB-'; -- Short-term IDR at 'B'; -- Long-term Deposits at 'BB' Advanta Capital Trust I -- Trust Preferred Stock at 'B'. The rating affirmation reflects the company's solid position in the small business credit card industry, improved asset quality relative to historical levels, consistent profitability metrics, and adequate risk-adjusted capitalization, offset by growing competition in the small business credit card sector, and the risks associated with a lack of revenue diversity and its mono- line business focus. The Outlook revision reflects the recent deterioration in portfolio credit quality, resulting from higher delinquency roll- rates following the 2005 change in bankruptcy legislation, and the uncertain capital markets environment, which could disrupt funding plans for Advanta, which is heavily reliant on the securitization market for funding. The Stable Outlook reflects the company's stable liquidity profile, adequate risk-adjusted capitalization, and the expectation that credit quality metrics will deteriorate from current levels over the near to intermediate-term. Material, persistent, declines in credit metrics and risk-adjusted revenue margins, a reduction in liquidity, and/or a decline in risk- adjusted capitalization could result in negative rating action. Conversely, stabilization of asset quality metrics, increased funding diversity, and higher risk-adjusted capitalization could provide rating momentum. ALLEGHENY ENERGY: Credit Improvement Cues Fitch to Lift Ratings --------------------------------------------------------------- Fitch Ratings upgraded these Issuer Default Ratings (IDR) and outstanding debt ratings of Allegheny Energy Inc. and subsidiaries: Allegheny Energy, Inc. (AYE) -- IDR to 'BBB-' from 'BB+'. Allegheny Energy Supply Company, LLC (Supply) -- IDR to 'BBB-' from 'BB+'. -- Senior secured to 'BBB' from 'BBB-'. -- Senior unsecured to 'BBB-' from 'BB+'. Allegheny Generating Co. -- IDR to 'BBB-' from 'BB+'. -- Senior unsecured to 'BBB-' from 'BB+'. The Rating Outlook is Stable. The ratings of AYE's three regulated utility subsidiaries: -- West Penn Power Company (West Penn; IDR rated 'BBB-', Outlook Stable); -- Monongahela Power Company (Mon Power; IDR rated 'BBB-', Outlook Stable); and -- Potomac Edison Company (Potomac Ed; IDR rated 'BB+', Outlook Negative) are unaffected by this rating actions. Fitch's rating upgrade of AYE and Supply to 'BBB-' reflects credit improvement resulting from increases in cash flow from higher realized prices on power sales, as well as lower debt balances and associated carrying costs. Consolidated debt has been reduced by approximately $2 billion over the past four years primarily with internal cash flow as well proceeds from asset sales. The ratios of (FFO + Interest)/Interest for AYE on a consolidated basis and for the Supply subsidiary were approximately 4.6 times and 4.4x for the twelve months ending Sept. 30, 2007, which are consistent with guidelines for the new ratings and the issuers' business and operating risk. The ratios of FFO to Debt exceeded 20% as of Sept. 30, 2007 for AYE and Supply. AYE's ratings are supported by these: -- Ownership of increasingly valuable coal-fired generation in PJM; -- Ample liquidity; -- Reasonable residential transition plans in PA and MD utility service territories; and -- Reinstatement of the energy adjustment clause in West Virginia. Supply provides approximately 50% of AYE's consolidated cash flow and its contribution is expected to increase as higher power sales prices are realized. For the next several years, AYE has limited long-term debt maturities. The parent company and Supply have access to two revolving credit facilities in the amounts of $400 million and $400 million, respectively, and also there is a system money pool. There was nearly $200 million of cash and equivalents as of Sept. 30, 2007 and cash balances were subsequently increased by West Penn's $275 million 5.95% first mortgage bond issuance in December 2007. Fitch's rating concerns for the AYE group include risks for these: -- Under-recovery or recovery lags in purchased power and other costs at the utilities; -- Adverse changes in retail market structure or regulation, increases in operating costs and capital spending; -- Stricter environmental regulations; and -- Prolonged outages of super-critical units. While Supply had formerly been the greater source of Fitch's credit concerns, Fitch's current view is that there is greater risk to creditors at the utilities as a result of regulatory uncertainties. AYE's Stable Outlook assumes that Maryland and Pennsylvania regulators permit full recovery of purchased power costs in tariffs following the expiry of the current rate settlements (Dec. 31, 2008 for MD residential load and Dec. 31, 2010 in PA). Approximately 25% of the Maryland residential customer power needs for the post-transition period was procured in an October 2007 auction and the second of four auctions is scheduled for January 2008. However, the Maryland Public Service Commission is considering changes to the market structure that could affect cash flows of AYE or its subsidiaries Supply or Potomac Ed. The continued tightening of PJM Interconnection capacity markets bodes well for Supply as an owner of efficient baseload coal-fired power generation assets. Challenges for Supply include stricter emission standards, successful completion of the scrubber construction program, and improving plant operation factors. The initiation of carbon limits could affect credit because approximately 95% of energy is generated with coal. Fitch anticipates some improvement in unit availability of the company's major coal plants as a result of completion of major maintenance projects in 2007. However, Fitch considers management's availability goal of 91% for 2008 to be aggressive given plant operating track records over the past five years, (reduced maintenance outages should lead to some improvement in 2008 from the 84% estimated 2007 availability). There has been steady progress on the Hatfield and Fort Martin scrubber projects and construction budgets are still on track for $550 million and $725 million, respectively and a significant majority of the remaining scrubber budgets are fixed. The upgrade of Allegheny Generating Co. results from the upgrade of its 59% owner, Supply. Allegheny Generating's single asset is an interest in the Bath County pumped storage unit. It has consistently strong stand-alone credit metrics with (FFO + Interest)/Interest of approximately 6x. AMERICAN HOME: Settles Servicing Rights Dispute With Countrywide ---------------------------------------------------------------- To resolve the objections of Countrywide Bank, N.A., regarding the proposed sale of its servicing rights related to certain loans, which American Home Mortgage Investment Corp. and its debtor-affiliates have been servicing, the parties negotiated, and agreed to a consensual resolution by entering into a purchase agreement approved by the Honorable Christopher S. Sontchi. Pursuant to Sections 105 and 363 of the Bankruptcy Code, the Court authorized the Debtors to enter into a purchase agreement, and to sell, transfer and convey Countrywide's servicing rights to AHM Acquisition Co. Inc., free and clear of all liens and interests, provided that the liens and security interests of the administrative agent will attach to the proceeds of the sale. Judge Sontchi ruled that all proceeds of the sale, including the proceeds from all outstanding documented advances, will be paid in accordance with the terms of his prior order authorizing the limited use of certain secured lenders' cash collateral. He noted that to the extent Countrywide intends to assert a general unsecured claim for service breach, it will be obligated to file a proof of claim on or before January 11, 2008. He added that the automatic stay is modified to the extent necessary to implement the terms and conditions of the Purchase agreement and the provisions of the Court order. Creditors Object to Cure Amounts Certain creditors submit objections to the initial cure amounts set by the Debtors. The Debtors have pegged the cure claim of the creditors at $0. The Creditors contend that the correct cure amounts are: Creditor Cure Claim -------- ---------- UBS Real Estate $2,588,839 Securities, Inc. U.S. Bank National Association 288,590 ZC Real Estate Tax 150,949 Solutions Limited American Security Entities 71,931 Citibank, N.A. 59,783 Wells Fargo Bank, 33,401 National Association CitiMortgage, Inc. 5,302 De Lage Landen Financial 4,431 Services, Inc. Included in the American Security Entities are American Security Insurance Company, Standard Guaranty Insurance Company, Voyager Indemnity Insurance Company, and Assurant Group. DB Structured Products, Inc., whose cure amount was also pegged at $0, objects to the Debtors' cure notice to the extent it would purport to sever cure obligations from the servicing portion of a certain master mortgage loan purchase and servicing agreement between DBSP and certain Debtors prior to the resolution of DBSP's appeal, and in contravention of the second amendment of the Debtors' asset purchase agreement with AH Mortgage Acquisition Co., Inc. The Bank of New York says it is not presently aware of any other defaults or other basis for cure claims, aside from what it previously filed, under its servicing agreements with the Debtors. BofNY tells the Court that its objection is not a waiver of any of its rights including, the right to trial by jury that it may have in any civil proceeding arising in or related to the bankruptcy cases. De Lage Landen reserves its rights to amend and supplement its objection to the extent that it becomes aware of additional information concerning any of the remaining leases the Debtors may seek to assume. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants 1st Amended DIP Loan & Security Pact Okayed ---------------------------------------------------------------- American Home Mortgage Investment Corp., American Home Mortgage Holdings Inc., American Home Mortgage Corp., American Home Mortgage Acceptance Inc., American Home Mortgage Ventures LLC, Homegate Settlement Services Inc., and Great Oak Abstract Corp. seek authority from the U.S. Bankruptcy Court for the District of Delaware to approve certain amendments to the previously approved Debtor-in-Possession Loan and Security Agreement, dated as of Aug. 6, 2007, between them and WLR Recovery Fund III, L.P. The DIP Facility provided for a $50,000,000 postpetition financing, however, it does not permit the Borrowers to utilize the borrowings to fund the operations or expenses associated with their mortgage loan servicing business. Subsequently, certain of the Debtors sought and obtained the Court's approval to obtain a limited recourse postpetition financing in the principal amount of $50,000,000. James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates that recent developments in the bankruptcy cases, including the sale of the Servicing Business and the initial closing, have resulted in the Borrowers' need to modify certain terms of the DIP Facility. As a result, the Borrowers, the Lenders and the administrative agent have agreed to amend the DIP Facility through the terms and conditions of the First DIP Facility Amendment. Among the key terms of the First DIP Facility Amendment are: -- The Total commitment under the DIP Facility is reduced from $50,000,000 to $35,000,000; -- The definition of "Maturity Date" in the DIP Facility is amended to include reference to the sale of all or substantially all of the equity interest of all of the assets of that certain specified banking subsidiary; -- A section of the DIP Facility is amended to provide for the reduction of the borrowing availability under the DIP Facility in the amount of the lender purchased mortgage insurance, the LPMI, reserve amount; -- A section of the DIP Facility is amended to permit the Borrowers to utilize borrowings to fund the making or purchasing of certain advances pursuant to the asset purchase agreement with AH Mortgage Acquisition Co., Inc., in connection with the sale of the Servicing Business; -- The Lenders permit the Borrowers to use the Borrowers' cash, on which the Lenders have a lien, to obtain the release of Bank of America, N.A.'s liens on the BofA construction loans; -- The Amendment will grant a first priority lien on the BofA Construction Loans upon the payment of certain advances. The lien will be released when the Borrowers have recovered an amount equal to the Construction Loan Advance through the collection, payoff, compromise, sale or other disposition of the BofA Construction Loans; -- The Amendment will provide for the Lenders consent to the Borrowers' collection, compromise, sale or other disposition of the BofA Construction Loans in any manner the Borrowers deem appropriate; -- The parties of the DIP Facility waive any default that may have occurred in connection with the Borrower's payment of certain LPMI advances from the Borrowers' cash; and -- The Borrowers agree to pay WLR Recovery $100,000 as an amendment fee. Mr. Patton contends that the reduction of the availability of borrowings under the DIP Facility will result, among other things, in a reduction of the interest escrow required under the DIP Facility by $1,200,000, and thus, interest payment savings to the Borrowers and the bankruptcy estates. He also says that the Amendment is necessary to ensure compliance with the APA and the uninterrupted servicing of the loans not purchased by AHM Acquisition. Additionally, Mr. Patton points out, among other reasons, that the Amendment is necessary because of certain advances made by the Borrowers from Borrowers' cash to fund premiums on LPMI, and to fund an escrow held by BofA pending resolution of disputes between the Debtors and BofA regarding responsibility for LPMI premium obligations. Pursuant to Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to shorten the notice applicable to their request, reducing the time by which interested parties must respond to the request. They ask Judge Sontchi to commence a hearing on Friday, Jan. 4, 2008, at 11:00 a.m., to consider the request. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: Wants to Set Servicing Biz. Sale Consummation ------------------------------------------------------------ American Home Mortgage Investment Corp. and its debtor- affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to undertake certain activities to prepare for the consummation of the previously-approved sale of their mortgage loan servicing business to AH Mortgage Acquisition Co. Inc. pursuant to the terms of an assset purchase agreement. Under the APA, the Sale will close in two steps, in which the initial "economic" close occurred on November 16, 2007. From the Initial Closing Date until the "legal" close on the final closing date, the Debtors will continue to operate the Servicing Business, subject to certain bankruptcy exceptions, for the economic benefit and risk of AHM Acquisition, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, relates. Accordingly, the Debtors seek authority to: -- create one or more non-debtor business entities, which may include corporations, limited liability companies and transition entities, for entering into certain agreements relating to the transition of the purchased assets from the sellers to the purchaser, or relating to the continued operation of the Servicing Business; -- fund the Transition Entities with amounts sufficient to perform their respective obligations under the Transition Entities Agreements; -- enter into a fourth amendment to the APA, which provides, among other things, that the Debtors' interests in the Transition Entities will be deemed Purchased Assets under certain provisions of the APA; -- enter into a employment agreement, between American Home Mortgage Servicing, Inc., and David M. Friedman; -- file the Employment Agreement with the Court under seal, and direct that the Employment Agreement remain under seal, confidential and not be made available to anyone, except for the Court, the office of the U.S. Trustee, counsel to the Official Committee of Unsecured Creditors, counsel to Bank of America, N.A., AHM Acquisition, and counsel to the DIP Lenders; and -- limit service of the request to: * the U.S. Trustee; * counsel to the Creditors Committee; * counsel to BofA; * counsel to the Debtors' postpetition lender; * counsel to AHM Acquisition; and * all other parties entitled to notice under Rule 2002-1(b) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware. Mr. Patton asserts that the Transition Entities will assist the Debtors in transitioning the Purchased Assets to AHM Acquisition, and facilitate the continued operation of the Servicing Business. He notes that the creation of the Transition Entities would provide a smooth transition, which in turn benefits all parties- in-interest to the bankruptcy proceedings. He points out that the Debtors believe that their counterparties to certain contracts will more readily enter into contracts with the non- debtor Transition Entities than with the Debtors, because the Transition Entities are not debtors in the proceedings and will become subsidiaries of AHM Acquisition upon the Final Closing. Prior to the Final Closing, the Transition Entities will be funded by the Sellers to the extent necessary to meet any obligations incurred in connection with the Transition Entities Agreements, Mr. Patton tells Judge Sontchi. However, he assures the Court that the only sources of funding would be the revenues and working capital of the Servicing Business. Mr. Patton argues, among other things, that as provided in the APA, AHM Acquisition, and not the bankruptcy estates: -- bears all of the upside benefit and downside risk of the Servicing Business. -- is responsible for providing the necessary working capital to fund the Servicing Business; and -- is ultimately responsible for the operating expenses of the Servicing Business. In addition, the Debtors ask the Court to shorten the notice applicable to their request, reducing the time by which interested parties must respond to the request. They ask Judge Sontchi to commence a hearing on Friday, Jan. 4, 2008, at 11:00 a.m., to consider the request. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. The Debtors' exclusive period to file a plan expires on March 3, 2008. (American Home Bankruptcy News, Issue No. 21, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ANGIOTECH PHARMACEUTICALS: S&P Holds B- Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the ratings, including the 'B-' long-term corporate credit rating, on Vancouver-based Angiotech Pharmaceuticals Inc. and removed them from CreditWatch with negative implications, where they were placed Oct. 22, 2007. The outlook is negative. "The affirmation reflects our expectation that the company has sufficient cash to support its operations in the medium term, even if revenue growth is stagnant," said Standard & Poor's credit analyst Maude Tremblay. The ratings on Angiotech reflect its continued high dependence on the challenged drug-eluting stent (DES) market for its operating performance, uncertainty regarding the timing and extent of revenue growth from new products, as well as expected negative free cash flow generation in the medium term. The company's leading position within the DES market, a pipeline of products that have the potential to improve and diversity the company's revenue stream, and sufficient liquidity to meet its obligations in the medium term partially offset these factors. Angiotech is a specialty pharmaceutical company whose core strength is adding pharmaceutical compounds to medical devices used by surgeons. A licensing agreement with Boston Scientific Corp. for the Taxus DES, from which Angiotech receives royalty revenues, is the company's most important revenue generator. Due to recent demand decline, Taxus royalties now represent about 40% of the company's last 12 months revenues (at Sept. 30, 2007). The medical products segment, resulting mostly from the American Medical Instruments Inc. acquisition in March 2006, manufactures and markets a wide range of single-use specialty medical products directly to end-users. The company is also investing to research and develop new products linked to surgical procedures; however, these have yet to provide material revenue contribution. Third-quarter royalty payments from BSX declined by 41% year-over- year to $24.9 million, and S&P expects them to contract by about 20% in fourth-quarter 2007 compared with the same period in 2006. Increased competition could cause a further decrease in Taxus royalties of double digits annually in the medium term. The medical products segment underperformed management's expectations during third-quarter 2007: products acquired from AMI generated stable revenues; however, new products have yet to make material contributions. As a result, lease-adjusted EBITDA declined to $63.3 million for the 12 months ended Sept. 30, 2007, compared with $99.0 million for the 12 months ended Dec. 31, 2006. The company's ability to generate free cash flow is under severe constraints, given the deterioration of the operating performance and interest expense of about $50 million annually. Funds from operations were only $3.1 million year-to-date at Sept. 30, 2007, which was sufficient to cover the company's limited investments in working capital and long-term assets in that period. However S&P expects free operating cash flow to become negative during fourth- quarter 2007. The negative outlook reflects S&P's expectation that Angiotech will remain free cash flow negative for several quarters. S&P could lower the rating if weakening market conditions for DES or setbacks in the product pipeline lead to a cash burn in excess of $25 million annually. Conversely, S&P could revise the outlook to stable if contribution from new products or divestment of assets leads to an improvement in free cash flow generation. ASCENDIA BRANDS: Senior Lenders Waive Default Until February 28 --------------------------------------------------------------- Ascendia Brands Inc. has reached agreement with its senior lenders to restructure its $160 million first and second lien debt facilities. Under the agreement, Ascendia's senior lenders will waive certain existing covenant defaults and adjust financial covenant levels from now through the end of Ascendia's fiscal year ending Feb. 28, 2009. As reported in the Troubled Company Reporter on Dec. 17, 2007, Ascendia Brands Inc. notified its senior lenders that it is in default of certain covenants contained in its first and second lien credit facilities and is unable to make certain representations and warranties deemed to be made when drawings are made under its revolving credit facility. On Dec. 12, 2007, the company received notice from the agent for the first lien lenders reserving such lenders' rights under the first lien facility generally, including the right to cease making advances under the revolving credit facility. In connection with the restructuring of Ascendia's senior debt, one or more affiliates of Prentice Capital Management LP will make an investment in convertible preferred equity securities of Ascendia. The aggregate investment of $26.5 million includes the conversion of a $2 million unsecured loan made by Prentice on Nov. 19, 2007. Closing of the debt re-structuring and equity funding is subject to the completion of definitive transaction documents and their approval by Ascendia's board of directors, provision of a fairness opinion and other customary closing conditions. The parties expect that the transaction will close, and funding will occur, on or around Jan. 14, 2008. However, closing of the transaction cannot be assured. "We are very pleased to have reached agreement in principle with our lenders on the restructuring of our debt," Steven R. Scheyer, president & chief executive officer of Ascendia, commented. "We now look forward to starting 2008 on a high note as we prepare to roll out our exciting new the healing garden(R: 47.01, -0.50, - 1.05%) product line." About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands Inc. -- http://www.ascendiabrands.com/-- (AMEX: ASB) fka Cenuco Inc. manufactures, markets and sells known branded products in the health and beauty care categories. The company's portfolio includes Baby Magic(R), Binaca(R), Mr. Bubble(R), Calgon(TM), the healing garden(R), Lander(R), Lander essentials(R), Ogilvie(R), Tek(R), Dorothy Gray(R) and Tussy(R). The company sells its products through a variety of channels, concentrating primarily on the mass merchandiser, drug, grocery and dollar store outlets. The company operates two manufacturing facilities, in Binghamton, New York, and Toronto, Canada. ASSET BACKED FUNDING: Fitch Junks Ratings on Two Certificates ------------------------------------------------------------- Fitch Ratings has taken these rating actions on these Asset Backed Funding Corp. mortgage pass-through certificates: Series 2004-FF1 -- Class M-1 affirmed at 'AA-'; -- Class M-2 affirmed at 'BBB+'; -- Class M-3 affirmed at 'BBB-'; -- Class M-4 downgraded to 'B' from 'BB+'; -- Class M-5 downgraded to 'CC/DR4' from 'BB'; -- Class M-6 downgraded to 'C/DR4' from 'BB-'. Series 2004-OPT1 -- Class M-1 affirmed at 'AA+'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class M-4 affirmed at 'A-'; -- Class M-5 affirmed at 'BBB+'; -- Class M-6 downgraded to 'B' from 'BBB'. The affirmations reflect a satisfactory relationship between credit enhancement and future loss expectations and affect approximately $128.06 million of outstanding certificates, as of the December 2007 distribution date. The negative rating actions total $11.49 million of outstanding certificates and reflect the deterioration of credit enhancement relative to future expected losses. The transactions are seasoned from a range of 40 months (series 2004-FF1) to 46 months (series 2004-OPT1). The pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 12% (series 2004-FF1) to 14% (series 2004-OPT1). The cumulative losses to date, as a percentage of the pools' initial balances, range from 0.78% (series 2004-FF1) to 0.94% (series 2004-OPT1). For the transactions listed above, the underlying collateral consists of fixed-rate and adjustable-rate mortgage loans secured by first and second liens on residential mortgage properties extended to subprime borrowers. The mortgage loans were originated by First Franklin Financial Corporation (series 2004- FF1) and Option One Mortgage Corporation (series 2004-OPT1). The servicers for the loans in these transactions are Option One Mortgage Corporation (series 2004-OPT1) and Countrywide Home Loans, Inc. (series 2004-FF1). Option One is rated 'RPS2+', with a Negative Rating Watch by Fitch, and Countrywide Home Loans, Inc. is rated 'RPS1-', with an Evolving Rating Watch. For the 2004-FF1 transaction, the overcollateralization is below the stepped-down target of $3,615,935. The 60+ delinquencies are 14.70% of the current collateral balance, which includes real estate owned of 8.5%. For the 2004-OPT1 transaction the OC is $162,419, which is well below the target of $2,214,022. The 60+ delinquencies are 16.82% of current collateral balance. This includes foreclosures and REO of 7.1% and 3.5%, respectively. ATARI INC: Has Until March 20 to Comply with Nasdaq Listing Rules ----------------------------------------------------------------- Atari Inc. has received a notice from The Nasdaq Stock Market advising that in accordance with Nasdaq Marketplace Rule 4450(e)(1), Atari Inc. has 90 calendar days, or until March 20, 2008, to regain compliance with the minimum market value of Atari Inc.'s publicly held shares required for continued listing on the Nasdaq Global Market, as stated in Nasdaq Marketplace Rule 4450(b)(3). Atari Inc. received the notice because the market value of its publicly held shares, which is calculated by reference to Atari Inc.'s total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more, was less than $15 million for 30 consecutive business days prior to Dec. 21, 2007. This notification has no effect on the listing of Atari Inc.'s common stock at this time. The notice letter also states that if, at any time before March 20, 2008, the market value of Atari Inc.'s publicly held shares is $15 million or more for a minimum of 10 consecutive trading days, the Nasdaq staff will provide Atari Inc. with written notification that it has achieved compliance with the minimum market value of publicly held shares rule. However, the notice states that if Atari Inc. cannot demonstrate compliance with such rule by March 20, 2008, the Nasdaq staff will provide Atari Inc. with written notification that its common stock will be delisted. In the event that Atari Inc. receives notice that its common stock will be delisted, Nasdaq rules permit Atari Inc. to appeal any delisting determination by the Nasdaq staff to a Nasdaq Listings Qualifications Panel. About Atari Inc. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com/-- develops interactive games for all platforms and is a third-party publisher of interactive entertainment software in the U.S. Atari Inc. is a majority-owned subsidiary of France-based Infogrames Entertainment SA, an interactive games publisher in Europe. Going Concern Doubt New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. BALLY TECHNOLOGIES: Earns $21 Mil. in Quarter Ended September 30 ---------------------------------------------------------------- Bally Technologies, Inc. financial results for the fiscal quarter ended Sept. 30, 2007. Net income increased to $21.2 million, or 11% of total revenue, compared with a net loss of $225,000 in the same period last year, as a result of improved margin and cost leverage. Total revenues increased 23% to $189.0 million as compared with $153.7 million for the same period last year. "We are very pleased with our continued improvement in both business momentum and margins in all the key parts of our business," Richard M. Haddrill, the Company's Chief Executive Officer, said. Cash and cash equivalents increased to approximately $51.6 million at Sept. 30, 2007 as compared with approximately $40.8 million at June 30, 2007. Selling, general and administrative expenses increased 6% to $52.3 million and declined to 28% of total revenue from 32 percent as compared with the same period last year. Adjusted EBITDA was $58.5 million, a 122% increase as compared with the same period last year. The company made an unscheduled $15.0 million payment on its term loan during the first quarter of fiscal 2008. "In addition to improving our margins, the quarterly results also reflect our improving operating leverage," Robert C. Caller, the Company's Chief Financial Officer, said. "Our SG&A and R&D expenses were favorably impacted by better control over costs and savings from our India Development Centers." At Sept. 30, 2007, the company's balance sheet showed total assets of $871.0 million and total liabilities of $647.2 million, resulting in $222.5 million stockholders' equity. Equity, at June 30, 2007, was $199.4 million. About Bally Technologies Inc. Headquartered in Las Vegas, Nevada, Bally Technologies Inc. (NYSE:BYI) - http://www.ballytech.com/-- is engaged in the design, manufacture, assembly and distribution of technology based products to commercial gaming markets. The company's business consists of two business units: the Bally Gaming and Systems business unit and the Rainbow Casino (Rainbow) business unit. The Bally Gaming and Systems unit consists of three primary sub- groups: Gaming Equipment, which includes the sale of gaming devices; Gaming Operations, which includes the rent and lease of gaming devices, and Systems, which includes the sale and support of gaming systems. It also owns and operates the Rainbow Casino in Vicksburg, Mississippi. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings upgraded Bally Technologies' Issuer Default Rating and senior secured bank debt ratings as: IDR to 'B' from 'B-' and Secured bank credit facilities to 'BB/RR1' from 'B/RR3'. BANK OF AMERICA: Fitch Puts Low-B Ratings on Six Certificates ------------------------------------------------------------- Bank of America Commercial Mortgage Inc., series 2007-5, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $25,000,000 class A-1 'AAA'; -- $77,000,000 Class A-2 'AAA'; -- $281,000,000 Class A-3 'AAA'; -- $48,322,000 Class A-SB 'AAA'; -- $612,000,000 Class A-4 'AAA'; -- $257,694,000 Class A-1A 'AAA'; -- $185,850,000 Class A-M 'AAA'; -- $139,405,000 Class A-J 'AAA'; -- $1,858,595,583 Class XW 'AAA'; -- $20,909,000 Class B 'AA+'; -- $13,939,000 Class C 'AA'; -- $20,909,000 Class D 'AA-'; -- $18,585,000 Class E 'A+'; -- $11,616,000 Class F 'A'; -- $18,585,000 Class G 'A-'; -- $20,909,000 Class H 'BBB+'; -- $16,262,000 Class J 'BBB'; -- $18,585,000 Class K 'BBB-'; -- $11,616,000 Class L 'BB+'; -- $6,969,000 Class M 'BB'; -- $4,646,000 Class N 'BB-'; -- $6,969,000 Class O 'B+'; -- $2,323,000 Class P 'B'; -- $4,646,000 Class Q 'B-'. Class XW is a notional amount and interest only. The $34,856,583 class S is not rated by Fitch. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 100 fixed-rate loans having an aggregate principal balance of approximately $1,858,595,583, as of the cutoff date. BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Certificates ------------------------------------------------------------- Fitch rates Bear Stearns Commercial Mortgage Securities Trust 2007-PWR18, commercial mortgage pass-through certificates: -- $74,891,059 class A-1 'AAA'; -- $291,900,000 class A-2 'AAA'; -- $269,700,000 class A-3 'AAA'; -- $131,900,000 class A-AB 'AAA'; -- $709,998,000 class A-4 'AAA'; -- $272,415,000 class A-1A 'AAA'; -- $211,557,000 class A-M 'AAA'; -- $38,916,000 class AM-A 'AAA'; -- $182,468,000 class A-J 'AAA'; -- $33,566,000 class AJ-A 'AAA'; -- *$2,502,224,530 class X-1 'AAA'. -- *$2,442,815,000 class X-2 'AAA'; -- $25,047,000 class B 'AA+'; -- $25,047,000 class C 'AA'; -- $18,786,000 class D 'AA-'; -- $25,047,000 class E 'A+'; -- $18,786,000 class F 'A'; -- $25,047,000 class G 'A-'; -- $21,916,000 class H 'BBB+'; -- $18,786,000 class J 'BBB'; -- $25,047,000 class K 'BBB-'; -- $9,393,000 class L 'BB+'; -- $9,393,000 class M 'BB'; -- $9,392,000 class N 'BB-'; -- $6,262,000 class O 'B+'; -- $3,131,000 class P 'B'; -- $3,131,000 class Q 'B-'; -- $40,702,471 class S 'NR'. *Notional amount and interest only Classes A-1, A-2, A-3, A-AB, A-4, A-1A, A-M, AM-A, A-J and AJ-A are offered publicly while classes X-1, X-2, B, C, D, E, F, G, H, J, K, L, M, N, O, P, Q, and S are privately placed pursuant to Rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 185 fixed- or floating-rate loans having an aggregate principal balance of approximately $2,502,224,530, as of the cutoff date. BFA LIQUIDATION: To Sell Arizona Land at Absolute Public Auction ---------------------------------------------------------------- On Jan. 17, 2007, the BFA Liquidation Trust will sell its remaining real estate parcels located in the State of Arizona at absolute public auction -- to the highest and final bidders. Sale of the Trust's land will further assist in recovering debt from the bankrupt Baptist Foundation of Arizona. At one time, the Baptist Foundation of Arizona controlled a portfolio of over $500 million in holdings. In 1999, the Arizona Corporation Commission's Securities Division found evidence that the foundation's officers used fraudulent transactions in the last decade to conceal real estate losses. Also cited were poor investment decisions, deceptive accounting and a high overhead. That resulted in bad information about the condition of the BFA when talking to potential investors. As a part of the ensuing bankruptcy case, the BFA Liquidation Trust was created to convert the assets and allow for the settlement to the investors. Clifton R. Jessup, Jr. has been serving as the Liquidating Trustee working in conjunction with the Trust. Southwest Real Estate Auctioneers of Phoenix, AZ has been retained by the BFA Liquidation Trust to conduct the auction event at which their properties and a few other select parcels located throughout Maricopa County will be sold at the Phoenix Sheraton Crescent Hotel. For more information, contact Southwest Real Estate Auctioneers at 1-800-895-9064 or visit their website at www.swreauctioneers.com/ Headquartered in Phoenix, Arizona, BFA Liquidating Trust -- http://www.bfaz.org/-- is the successor to the Baptist Foundation of Arizona, a non-profit organization that sold real-estate investments to 13,000 mostly elderly Christians. BOISE PAPER: S&P Pairs BB- Corporate Rating With Stable Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating and stable outlook to Boise Paper Holdings LLC. At the same time, S&P assigned its bank loan and recovery ratings to Boise's proposed $975 million first-lien credit facilities and $200 million second-lien term loan. The first-lien facilities were assigned a 'BB+' senior secured bank loan rating, two notches above the corporate credit rating, and '1' recovery rating, indicating expectation of very high (90%- 100%) recovery in the event of a payment default. Concurrently, S&P assigned its 'B' senior secured bank loan rating, two notches below the corporate credit rating, and '6' recovery rating to the company's $200 million second-lien term loan. The recovery rating indicates that lenders can expect negligible (0%-10%) recovery in the event of a payment default. These ratings are based on preliminary terms and conditions. Proceeds from the proposed credit facilities, along with about $400 million of cash and $325 million of common shares, will be used by Aldabra 2 Acquisition Corp. to acquire the paper, packaging, and newsprint divisions of Boise Cascade LLC for about $1.6 billion. Boise Cascade will still own about 40% of Boise. The transaction is expected to close in February 2008. "The ratings on Boise reflect its participation in the cyclical paper and packaging markets, moderate size and lower profitability relative to other leading paper producers, customer concentration risk, and aggressive pro forma debt leverage," said Standard & Poor's credit analyst Pamela Rice. "The ratings also incorporate moderate product diversity, a growing value-added product mix, and prospects for good market conditions in the near term." Boise, Idaho-based Boise is the third-largest producer of uncoated free sheet in North America, with a market share of about 11%. It also manufactures containerboard, corrugated products, and newsprint. CAM CBO: Review Cues Fitch to Change Rating to C/DR6 from C/DR4 --------------------------------------------------------------- Fitch has revised the Distressed Recovery rating on one class of notes issued by CAM CBO I, Ltd. This revision is a result of Fitch's review process and is effective immediately: -- $39,676,494 class C notes to 'C/DR6' from 'C/DR4'. CAM CBO is a collateralized debt obligation managed by Conning Asset Management which closed Nov. 13, 1998. CAM CBO is composed of mainly high yield bonds. The class C notes have failed to receive full periodic interest and the interest shortfall has been capitalized and is expected to continue to do so. In addition, ultimate principal recovery of the class C notes will likely be nominal. The DR rating takes into account both expected future interest distributions as well as any principal recovery. The remaining portfolio includes approximately $12 million par amount of defaulted assets and various equity positions. To date, the class C notes have capitalized approximately $18 million missed interest payments on the original balance of $21 million. The ratings of the class C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. NEW ORLEANS SEWERAGE: Moody's Maintains Ba2 Debt Rating ------------------------------------------------------- Moody's Investors Service affirmed the Ba2 rating and changed the outlook to positive from negative on the City of New Orleans Sewerage and Water Board's revenue debt. The Ba2 and positive outlook affect $206 million in sewer revenue debt and $44 million in water revenue debt outstanding. Debt is secured by net revenues of each respective system. The rating was lowered to Ba2 in November of 2005 following Hurricane Katrina. The change in the outlook to positive from negative reflects more favorable revenue results than anticipated and State and Federal funding which have bolstered financial operations following Hurricane Katrina. The outlook also reflects water rate increases that were recently adopted by the Sewerage and Water Board. The Ba2 rating continues to take into consideration a decreased customer base, which exists from the wholesale out-migration of population as a result of the hurricane, thereby resulting in decreased system revenues. Long Term Debt Issued Through Board of Liquidation All long term debt issued by the W&S Board has been issued through the Board of Liquidation and is insured. Moody's believes the Board of Liquidation provides additional bondholder protection given its authority to raise rates and its autonomy as an independent Board. The S&W Board is mandated by statute to increase rates necessary to produce 1.30 times debt service coverage from net revenues. Should the S&W Board not implement such rates, the Board of Liquidation has the authority to compel it to do so. The Board is currently working with outside consultants to determine what rate increases may be necessary. The Board of Liquidation maintains reserves able to meet an annual debt service requirement, on behalf of the sewerage and water board; however, the reserves have not been utilized, even after the storm, as service fees were sufficient to meet debt service needs. Actual Revenues Better than Budgeted The Ba2 reflects ongoing concerns regarding a projected slow revenue recovery. Water revenue collections in fiscal 2006 were 38% below 2004 (which represents the last "normal" fiscal year prior to Katrina) while sewer service charges in fiscal 2006 were 13% below 2004. After the devastation from Hurricane Katrina, management adopted a very conservative budget for fiscal 2006 assuming only 30% of prior year revenues would be collected. However, actual results were better than anticipated and the $33.8 million in water service charges exceeded the budget by 99%. Sewer revenues exceeded the budget by 112% with $62.6 million total collected. Management reports customer loss is approximately 26,000 but that water usage remains strong given ongoing rebuilding efforts. Additionally, residents who are rebuilding are adding additions such as bathrooms and/or pools which help to increase overall usage. The Board also received significant funding from State and Federal sources in fiscal years 2005, 2006 and 2007. FEMA will be reimbursing the Board for infrastructure improvements that are necessary as a result of storm damage. To-date, the Board has received approximately $113 million in reimbursements. The Board also received $61.9 million from the Federal Community Disaster Loan program and this entire amount has been drawn down since April of 2007. Moody's is waiting to see the results of proposed legislation which would allow the government to forgive this loan. Although the Board is prepared to repay the CDL loan, forgiveness of the loan would afford them some financial flexibility in the future. The State provided $73 million in Gulf Opportunity Zone funding to support debt service requirements for the water and sewer systems and the State has also established a $100 million revolving fund for the Board to access for cash needs. These combined external funding sources have allowed the Sewerage and Water Board to continue daily operations and have allowed the Board to meet debt service requirements with service charges. Strong Management Expected to Continue; Challenges Remain for the Long-Term The Ba2 rating and positive outlook also reflect the S&W Board's demonstrated ability to fund normal operations, at least for the immediate future with service charges that are being collected on a daily basis. Management at the utility is strong and has historically demonstrated prudent fiscal management. For example, interim financial statements and a three-month proforma are prepared and presented to the Board on a monthly basis. Moody's believes strong management will continue and will manage through the multiple challenges that they face; however, it will take time and could take years to recover and stabilize operations. Management indicates that they are in compliance with all existing EPA requirementes regarding the outstanding consent decree. In November of 2007, the Board adopted multiple year water rate increases: 17% effective July 1, 2008, 5% in 2009, 5% in 2010 and 4% in 2011. The rate increases are based on a rate study conducted by an outside consultant in 2005 but were adjusted in 2007 based on the new customer base. Moody's believes that actual results on the revenues of the water system will be positive and could result in upward pressure on the Ba2 rating. Outlook The positive outlook reflects better than anticipated financial results for the 2006 fiscal year end. The outlook also takes into consideration water rate increases which will support revenue growth and stability in the system. CONSOLIDATED COMMS: Closes $362.6M North Pittsburgh Systems Buyout ------------------------------------------------------------------ Consolidated Communications Holdings Inc. has completed its acquisition of North Pittsburgh Systems Inc. for approximately $362.6 million, based upon the closing price of Consolidated's common stock on Dec. 28, 2007. The acquired company will operate in Pennsylvania under the Consolidated Communications brand name. "We are excited to complete this transaction and are looking forward to the opportunities that lie ahead," Bob Currey, Consolidated's President and Chief Executive Officer, said. "We have said from the start that North Pittsburgh has a strong network that, when coupled with Consolidated's back office platforms and technical experience, can be leveraged to roll out enhanced broadband services. We plan to launch our IPTV product in the North Pittsburgh area in the first quarter of 2008 and expect to pass approximately 12,000 homes at that time. By the end of 2008, we anticipate passing a total of approximately 34,000 homes." The merger agreement provided that North Pittsburgh shareholders could elect to receive either $25.00 in cash, without interest, or 1.1061947 shares of Consolidated common stock for each share of North Pittsburgh common stock, subject to proration so that 80 percent of the North Pittsburgh shares are exchanged for cash and 20 percent are exchanged for stock. Consolidated also announced the preliminary results of elections made by North Pittsburgh shareholders and the preliminary effect of proration. Of the 15,005,000 shares of North Pittsburgh common stock outstanding immediately prior to closing the merger, approximately: -- 13,378,590 shares, or 89.2 percent, elected to receive cash; -- 1,361,806 shares, or 9.1 percent, elected to receive stock; -- 264,604 shares, or 1.8 percent, did not make an effective election. As a result, on a preliminary basis, North Pittsburgh shares as to which a stock election was made will receive Consolidated common stock; North Pittsburgh shares as to which a cash election was made will receive cash for approximately 89.73% of those shares and Consolidated common stock for the remainder; and shares with respect to which no effective election was made will receive Consolidated common stock. Consolidated will not issue any fractional shares of stock and, instead, each North Pittsburgh shareholder immediately prior to the merger who would otherwise be entitled to a fractional share of Consolidated common stock (based on the total stock consideration into which the holder's North Pittsburgh shares have been converted in the merger) will receive an amount in cash equal to $18.53 multiplied by the fractional share interest to which the shareholder would otherwise be entitled. About Consolidated Communications Based in Mattoon, Illinois, Consolidated Communications Holdings, Inc. -- http://www.consolidated.com/-- is a rural local exchange company providing voice, data and video services to residential and business customers in Illinois and Texas. Each of the operating companies has been operating in their local markets for over 100 years. With approximately 241,000 local access lines and over 43,000 digital subscriber lines, the Company offers a wide range of telecommunications services, including local and long distance service, custom calling features, private line services, dial-up and high-speed Internet access, digital TV, carrier access services, and directory publishing. Consolidated Communications is the 17th largest local telephone company in the United States. * * * As reported in the Troubled Company Reporter on Oct. 19, 2007, Moody's Investors Service affirmed the B1 corporate family rating for Consolidated Communications Holdings Inc. and assigned a B1 rating to the proposed $950 million senior secured credit facilities at the company's direct subsidiaries, Consolidated Communications Acquisition Texas Inc., Consolidated Communications Inc., and Fort Pitt Acquisition Sub Inc. Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Consolidated Communications Holdings Inc. and the 'BB' rating on the company's existing bank loan. The outlook is negative. CONSULTING & SAFETY: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Consulting & Safety Specialists, Inc. 924 Lefort By-Pass Road Thibodaux, LA 70301 Bankruptcy Case No.: 07-12585 Debtor-affiliate filing separate Chapter 11 petitions: Entity Case No. ------ -------- Benoit Properties, L.L.C. 07-12586 Type of Business: The Debtor specializes in consulting and training services on safety. See http://www.safetytrainingacademy.com Chapter 11 Petition Date: December 28, 2007 Court: Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtors' Counsel: Darryl T. Landwehr, Esq. 1010 Common Street, Suite 1710 New Orleans, LA 70112 Tel: (504) 561-8086 Fax: (504) 561-8089 Estimated Assets Estimated Debts ---------------- --------------- Consulting & Safety $1 Million to $100,000 to Specialists, Inc. $10 Million $500,000 Benoit Properties, L.L.C. $1 Million to $1 Million to $10 Million $10 Million A. Consulting & Safety Specialists, Inc's 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dryades Savings Bank Bank loan $2,015,086 233 Carondelet Street New Orleans, LA 70130 Cash Flow Resources Bank loan $262,000 1604 Oretha C. Haley Boulevard New Orleans, LA 70130 Internal Revenue Service Trade debt $200,000 423 Lafayette Street, Suite 200 Tel: (985) 876-3140 Houma, LA 70360 Louisiana Department of Trade debt $42,000 Revenue Lexington Insurance Co. Trade debt $26,000 D.K.S. Law Firm Trade debt $15,000 Petroleum Education Council Trade debt $14,000 Shell Fleet Card Processing Trade debt $13,000 Cananwill Trade debt $13,000 United Healthcare Trade debt $11,000 State Farm Trade debt $10,000 International Association of Trade debt $8,000 Drilling Contractors U.S.I. Gulf Coast, Inc. Trade debt $8,000 Ramada Inn Trade debt $8,000 Lafourche Parish Tax Assessor Trade debt $7,500 Coastal Training Trade debt $7,000 Ford Motor Credit Bank loan; value of $11,000 collateral: $4,000 B. Benoit Properties, LLC's Two Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lafourche Parish Sheriff's $14,527 Office P.O. Box 5608 Thibodaux, LA 70302-4431 Internal Revenue Service $500 423 Lafayette Street, Suite 200 Houma, LA 70360 CWMBS INC: Fitch Rates $2,747,200 Class B-3 Certificates at BB -------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, CHL mortgage pass-through trust 2007-21 are: -- $759,390,236 classes 1-A-1 through 1-A-3, 1-X, 1-PO, 2-A-1 through 2-A-3, 2-X, 2-PO and A-R certificates (senior certificates) 'AAA'; -- $12,951,000 class M certificates 'AA'; -- $3,924,500 class B-1 certificates 'A'; -- $1,962,300 class B-2 certificates 'BBB'; -- $2,747,200 non-offered class B-3 certificates 'BB'; -- $785,000 non-offered class B-4 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 3.25% subordination provided by the 1.65% class M, the 0.50% class B-1, the 0.25% class B-2, the 0.35% non-offered class B-3, the 0.10% non- offered class B-4 and the 0.40% non-offered class B-5. Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB', 'BB', and 'B' based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults. In addition, the rating also reflects the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. This transaction contains certain senior classes designated as exchangeable certificates and others as depositable certificates. The classes 1-A-3 and 2-A-3 are exchangeable certificates. The remainder of the senior classes are depositable certificates. The exchangeable and depositable certificates may be exchanged in certain combinations per Annex I of the Prospectus Supplement. The mortgage pool consists of two separate loan groups. All loans are secured by first liens on one- to four-family residential properties. Group 1 consists of 966 primarily 30-year conventional, fixed-rate mortgage loans. As of the cut-off date, Dec. 1, 2007, the total mortgage pool balance is $556,925,334, the average mortgage pool balance is $576,527, with an approximate weighted-average original loan-to-value ratio of 72.24%. The weighted average FICO credit score is approximately 744. Cash-out refinance loans represent 17.76% of the mortgage pool and second homes 7.09%. The states that represent the largest portion of mortgage loans are California (43.11%), Florida (5.54%) and New York (5.01%). All other states represent less than 5% of the pool as of the cut-off date. Group 1 will have a prefunding amount equal to $146,974,666. Group 2 consists of 90 primarily 15-year conventional, fixed-rate mortgage loans. As of the cut-off date the total mortgage pool balance is $74,999,956, the average mortgage pool balance is $833,333, with an approximate OLTV of 65.63%. The weighted average FICO credit score is approximately 752. Cash-out refinance loans represent 22.86% of the mortgage pool and second homes 13.28%. The states that represent the largest portion of mortgage loans are California (43.87%), New York (7.30%), New Jersey (7.13%), Florida (6.17%), and Texas (6.02%). All other states represent less than 5% of the pool as of the cut-off date. Group 2 will have a prefunding amount equal to $6,000,004. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. DANA CORP: 24 Investor Groups to Buy $540 Million New Dana Shares ----------------------------------------------------------------- Dana Corp. and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to file an Allocation Report, indicating Participating Claims totaling more than $1.5 billion that were allocated 5.4 million shares of New Series B Preferred Stock on a pro rata basis, under seal. Dana entered into an Investment Agreement dated July 26, 2007, with Centerbridge Capital Partners, L.P.; Centerbridge Capital Partners Strategic, L.P., as successor by assignment from CBP Parts Acquisition Co. LLC; Centerbridge Capital Partners SBS, L.P., as successor by assignment from CBP Parts. The Investment Agreement allows for $790 million cash infusion in the Reorganized Debtors. Centerbridge will purchase $250 million in aggregate liquidation preference of New Series A Preferred Stock and qualified creditors of the Debtors who are Qualified Investors will have an opportunity to purchase an additional $540 million in aggregate liquidation preference of New Series B Preferred Stock on a pro rata basis. To be permitted to invest to purchase a pro rata share of the Series B Shares, the Investment Agreement required parties, among other things, be a "Qualified Investor" under the Investment Agreement and to deliver a duly executed Subscription Agreement prior to 5:00 p.m. EST on Dec. 5, 2007. To be a "Qualified Investor," a party was required, among other things, to (a) beneficially own "Qualified Bond Claims," "Acquired Bond Claims" or "Qualified Trade Claims" in excess of $25 million by certain dates and (b) timely execute and deliver a signature page to the Plan Support Agreement dated July 26, 2007, among Dana, United Steelworkers, International Union, UAW, Centerbridge Capital Partners, L.P. and certain Dana creditors. The BMC Group, Inc., as Subscription Agent for the Debtors, mailed subscription agreements and instructions for subscription on Nov. 2, 2007, to all parties that the Debtors reasonably believed might be entitled to participate in the subscription based upon information available at that time. Corinne Ball, Esq., at Jones Day in New York, reports that as of Dec. 26, 2007, BMC has received, excluding duplicates, 106 Subscription Agreements from 96 entities constituting 24 investors -- if affiliated entities are counted as one investor. BMC and the Debtors have since undertaken to reconcile the information that was submitted in the subscription agreements. The Debtors have reviewed the information received by BMC and other relevant information, which has been shared with counsel to the Ad Hoc Committee of Dana Noteholders and counsel to the Official Committee of Unsecured Creditors, Ms. Ball says. Based on the information and other numerous meetings at which they consulted with the Ad Hoc Committee and the Creditors' Committee, the Debtors have determined and have prepared a report setting forth: (a) which parties will purchase Series B Shares as part of the subscription process; and (b) the number of Series B Shares to be allocated to each Subscribing Investor for purchase. The Debtors believe that the allocation of New Series B Preferred Stock is commercially sensitive information to them. Publicly disclosing the holdings of preferred shareholders is confidential information that is not customarily disclosed unless and until Securities Exchange Act of 1934 rules require the shareholder to file with the Securities and Exchange Commission after crossing a specified threshold of ownership percentage (generally 5%). The Debtors believe that publicly publishing the individual allocations of New Series B Preferred Stock would only serve to potentially cause delays in the Debtors' ability to obtain the necessary funds. In addition, counsel to the Ad Hoc Committee has advised the Debtors that the Subscribing Investors prefer that their exact holdings in New Series B Preferred Stock not be publicly disclosed because such parties consider their individual allocated holdings to be confidential commercial information. A full-text copy of the redacted version of the Allocation Report identifying each of the Subscribing Investors without identifying the number of shares of New Series B Preferred Stock being allocated to each party, is available at no charge at: http://bankrupt.com/misc/DANA_Subscribing_Investors.pdf Ms. Ball relates the Debtors are providing individualized notices to each Subscribing Investor of, among other things: (a) the number of shares of New Series B Preferred Stock allocated to them; (b) instructions for submitting payment for the shares by Dec. 28, 2007; and (c) information regarding additional documentation that must be completed prior to a Subscribing Investor's receipt of its allocated New Series B Preferred Stock. About Dana Based 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 $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. 67; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELPHI CORP: Court Approves Sale of Steering Biz for for $447 Mil. ------------------------------------------------------------------ The Honorable Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has authorized Delphi Corp. and its debtor-affiliates to auction off their global steering and halfshaft businesses, in accordance with the proposed bidding procedures. Pursuant to a Master Sale And Purchase Agreement dated Dec. 10, 2007, the Debtors have agreed to sell their steering business to Steering Solutions Corp. for $447 million, subject to higher and better offers. Judge Drain agreed to to the Debtors' request to grant a break-up fee and an expense reimbursement for Steering Solutions, noting that the bidder was unwilling to commit to hold open its offer for the Steering Business absent bid protections. The Court, however, held that, pursuant to an agreement by the Official Committee of Unsecured Creditors, the Debtors, and Steering Solutions, (i) the break-up fee will be reduced from $6 million to $5.5 million and (ii) Steering Solutions retain the right to seek an expense reimbursement in an amount up to $6 million if a break-up fee is not paid. The Court denied Steering Holding, LLC's objection to the proposed bid procedures. Steering Holding had asked the Court not to approve the Debtors' selection of Steering Solutions as the stalking horse bidder on grounds that it intends to submit an alternative bid, which would raise the cash portion of the purchase price from $1 million to $10 million and would reduce the break-up fees and expense reimbursements by $4 million. The Court will convene a hearing on Feb. 21, 2008, at 10:00 a.m., Eastern time, to confirm the results of the auction, if any, and approve the sale. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Ct. Extends Exclusive Plan-Filing Period to March 31 ----------------------------------------------------------------- The Honorable Robert Drain extends Delphi Corp. and its debtor- affiliates': (a) exclusive period for filing a plan of reorganization through and including March 31, 2008; and (b) exclusive period for soliciting acceptance of that plan through and including May 31, 2008. The Debtors' current Exclusive Plan Proposal Period expired on Dec. 31, 2007. As reported in the Troubled Company Reporter on Dec. 4, 2007, the Debtors' good-faith progress towards reorganization, according to John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, is most convincingly demonstrated by the filing of the Joint Plan of Reorganization and Disclosure Statement on Sept. 6, 2007. The Debtors sought an extension of the Exclusive Periods to give them sufficient time to complete the Plan solicitation and confirmation processes in a timeframe that will allow them to emerge from bankruptcy in the first quarter of 2008. Headquartered in Troy, Michigan, Delphi Corporation (OTC: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of March 31, 2007, the Debtors' balance sheet showed $11,446,000,000 in total assets and $23,851,000,000 in total debts. The Debtors' exclusive plan-filing period expires on Dec. 31, 2007. On Sept. 6, 2007, the Debtors filed their Chapter 11 Plan of Reorganization and a Disclosure Statement explaining that Plan. (Delphi Bankruptcy News, Issue No. 102; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DIXIE GROUP: Moody's Withdraws Ratings for Business Reasons ----------------------------------------------------------- Moody's Investors Service withdrew the ratings of The Dixie Group, Inc. for business reasons. These ratings have been withdrawn: -- Corporate Family Rating, rated B1; -- Probability of Default Rating, rated B1; -- $20 million 7% convertible subordinated debentures due 2012, rated B3 (LGD 6, 92%). Moody's last affirmed Dixie's ratings on Nov. 20, 2007. Headquartered in Chattanooga, Tennessee, The Dixie Group, Inc. is a leading manufacturer and marketer of carpets and rugs to higher-end residential and commercial customers through the Fabrica International, Masland Carpets and Dixie Home brands. Founded in 1920 as a textile manufacturer, Dixie has since exited the textiles business and is focused entirely on the floorcovering market, selling to a diverse customer base through retailers, designers, home builders and commercial end user channels. Revenues are derived from residential floorcovering products (66%), commercial floorcovering products (30%) and carpet yarn products (4%). Net revenues for the twelve months ended Sept. 29, 2007 were approximately $322 million. DUKE ENERGY: Moody's Places Global Local Currency Rating at Ba2 --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 Global Local Currency corporate family rating with a stable outlook to Duke Energy International, Geracao Paranapanema S.A. In addition, Moody's assigned an A1.br Brazil National Scale corporate family rating to Duke. This is the first time Moody's assigned a rating to Duke. The rating is not constrained by Brazil's foreign currency country ceiling. Moody's assigned these ratings: -- Corporate Family Rating: Ba2; -- Brazil National Scale Corporate Family Rating: A1.br Duke's rating reflects the company's solid capital structure characterized by its low level of indebtedness, healthy debt profile, steady cash generation and profitability. This largely stems from a 30-year concession contract granted in 1999, which allows the company to operate in a relatively secure regulated market with predictable profitability and cash flow. Duke intends to raise up to R$1 billion in debentures to redeem existing long- term debt with Eletrobras, which is expected to improve its debt profile and reduce the average cost of capital. Currently, the company relies on medium-term energy supply contracts equally divided between the regulated and unregulated markets. These contracts should generate predictable and stable cash flows for the next four to five years, given their relatively secure nature. Almost half of Duke's revenues are in the unregulated business segment, but the bulk of the company's client portfolio is made up of large consumers with a solid credit track record. As contracts expire in the future, Duke is expected to benefit from higher energy tariffs in light of current market expectations of a continued low reserve margin in Brazil. Expectations of higher energy tariffs are supported by recent auctions for new energy in which prices have dramatically exceeded prevailing market rates. Generally, Moody's prefers regulated business segment revenues, which generally are more predictable and allow for more stable operating margins and cash flow. Unregulated energy contracts expose Duke to potentially lower energy prices and revenues in a scenario where future tariffs decline, which Moody's considers unlikely. Moody's rating has also taken into consideration the company's outstanding commitment of increasing by 15% the installed generation capacity in the state of Sao Paulo by the end of 2007, as stated in its concession contract. Duke's fulfillment of this commitment has not yet been recognized by the regulator or the state of Sao Paulo. Duke has had difficulty in meeting this commitment because there are few sites for new hydroelectric facilities in Sao Paulo and natural gas shortages make new thermoelectric capacity a questionable investment. Duke has been discussing this situation with ANEEL and the Government of the State of Sao Paulo and is reportedly seeking to postpone the expansion obligation for another three years. The outcome and/or eventual penalties are difficult to predict at this stage of discussions, but Moody's does not believe that Duke's concession will be revoked since neither the current hydrology nor natural gas constraints are within its power. However, the rating is constrained by the potential increased capital expenditures related to the fulfillment of this commitment. Additional capital expenditures could reach as much as R$1 billion over a three to four year period without jeopardizing Duke's ability to service its debt. Moody's believes that Duke would most likely finance a part of these investments with additional debt, thus causing some deterioration in credit metrics, but Moody's expects that they would remain appropriate for the rating category, particularly if the current relatively high dividend payout ratio were adjusted downward somewhat. The rating incorporates Duke's current strong credit metrics, which are in line with its local peer group and strong for the rating category when compared with global peers, with FFO (Funds from Operations) / Adjusted gross debt of 20.7% in 2006 and 25.9% in the last twelve months ended Sept. 30, 2007 along with interest coverage of over 3.0x for the last three years. These two metrics were impacted by a reduction in operating margins in 2006, resulting from lower energy generation and increased taxes not passed on to tariffs. Moody's expects a sustainable improvement in these metrics in light of higher energy tariffs in 2007 resulting from higher auction prices and improved terms with unregulated customers. The rating is constrained by the low level of retained cash flow (Funds from Operations minus Dividends) to Adjusted gross debt of approximately 10% in the past four years, which is below peer group metrics. Low retained cash flow results from a high level of dividends paid to its parent company, which is expected to remain a limiting factor for the rating in the future. Duke's cash flow as measured by FFO is expected to improve somewhat from 2007 levels but remain stable thereafter up to 2010, when approximately 30% of existing energy contracts matures. This expected turnover of available energy contracts would, most likely, result in higher tariffs with a positive impact on cash flow. Duke's capital expenditures have been very limited when compared to its peers at approximately R$30 million per annum, which could eventually change should the company be obligated to expand capacity to meet concession contract requirements. The most important factor constraining the ratings is the Brazilian regulatory framework, which has undergone substantial change over the past several years and has a history of being unpredictable. The federal utility regulatory body in Brazil is part of the Brazilian government, which has a Ba1 foreign currency and local currency bond rating. Cost recovery and regulated tariffs are currently undergoing a period of significant uncertainty, due to ongoing reviews and revisions by the regulator of existing asset and cost bases. Potential future electricity shortages due to a tight reserve margin, limited independence of the regulator and minimal jurisprudence backing the new regulatory framework were also taken into consideration in Moody's evaluation of this factor. Duke has adequate liquidity, with short-term debt of R$143.6 million and cash and marketable securities of R$137 million, in addition to positive free cash flow. The bulk of short term debt is related to the current portion of the long term Eletrobras'debt with a final maturity on May 15, 2013. This debt is expected to be refinanced with a proposed issuance of R$1 billion in debentures maturing in 2014 and 2016. The stable outlook reflects Moody's expectation that Duke will maintain strong credit metrics, but low free cash flow, due to a high dividend pay-out ratio. An upgrade in the rating would require a resolution of the ongoing negotiation with regulators and the state government with regard to the mandatory capacity expansion clause in Duke's concession contract. In addition, an upgrade would require sustainable RCF/ Adjusted gross debt ratio above 15% and interest coverage ratio above 3.5x. An increased likelihood of a stable regulatory environment could also be positive for the ratings. Downward rating pressure could result from higher than expected capital expenditures and/or dividends or increased uncertainty with regard to margins, such that it became likely that RCF/Adjusted gross debt ratio would remain below 10%, and interest coverage would remain below 2.0x for an extended period of time. Duke Energy International, Geracao Paranapanema S.A is an electricity generation company controlled by Duke Energy Corporation, which indirectly holds 94.7% of its voting and total capital. The company has an installed capacity of 2,306 MW in eight hydroelectric power plants along the Paranapanema river, which represents approximately 2.3% of Brazil's total installed capacity. In the last twelve months ended Sept. 30, 2007, Duke reported net sales of R$627 million ($309 million) and net profit of R$83 million ($41 million). DUNMORE HOMES: Gets Final OK to Borrow $1 Mil. from Sydney Dunmore ------------------------------------------------------------------ The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York has given its permission to Dunmore Homes Inc. to borrow, on a final basis, funds of no more than $1,000,000 from Sidney P. Dunmore pursuant to the terms and conditions of the DIP Facility. The Debtor is authorized to grant Mr. Dunmore the liens, mortgages and security interests provided for under the DIP Facility, the Court held. Pursuant to Sections 362, 363(e), 364(c) and 503 of the Bankruptcy Code, the Court ruled that the obligations under the DIP Facility, including those under the DIP Financing Agreement, are administrative expenses for which the Debtor is authorized to grant to Mr. Dunmore, a valid, binding, enforceable and perfected senior lien and security interest -- the DIP Lender's Lien -- subject to only to the Carve-out and to any valid lien existing as of the Petition Date in any asset owned by the Debtor. Each prepetition creditor holding a Prepetition Lien in assets owned by the Debtor as of the bankruptcy filing date is granted valid and binding Replacement Liens or security interests in the Debtor's Collateral, subject to the Carve-out and junior to the DIP Lender's Lien and the Prepetition Liens as adequate protection for the Debtor's use of cash collateral. Notwithstanding the liens, mortgages and security interest granted under the Final DIP Order, the Collateral may be used by the Debtor, if sufficient funds are not available from the Debtor's estate to pay (i) fees to the U.S. Trustee pursuant to Section 1930(a)(6) of the Judicial Procedures Code and fees payable to the Bankruptcy Court Clerk; and (ii) the expenses of Committee members and the reasonable fees and expenses of professionals retained or employed by the Debtor or the Committee in the Chapter 11 case. The fees and expenses must not exceed $100,000 in the aggregate. Fees and expenses incurred in connection with any challenge to the claims of or against the Lender will not be included in the fees and expenses of the Carve-Out and may not be paid from any funds borrowed under the DIP Facility, the Court clarified. Mr. Dunmore, the DIP Lender, has a certain debt to the Debtor under that certain Loan Agreement dated as of June 7, 2005 -- the Lender Receivable. The Court approved the modification of the maturity date of the Lender Receivable by 15 days, for the Lender's benefit, and reduction by 30 days of the time for the Lender to notify the Debtor of any setoff with respect to the Lender Receivable in connection with the release of escrowed funds, for the Debtor's benefit, as provided in the DIP Financing Agreement. Moreover, upon the Lender's request, if the Debtor and the Lender mutually agree that the Lender is entitled to an offset against the Lender Receivable, upon 20 days' notice and opportunity to object to the the 20 largest unsecured creditors, U.S. Trustee and any special notice parties, the Court will approve that determination. The DIP Facility will be in effect pursuant to the Final DIP Order until such time as all obligations to the Lender under the DIP Facility are paid in full. It is deemed an event of default if the Debtor fails to pay the Obligations under the DIP Financing Agreement by March 31, 2008. The Final DIP Order is without prejudice to and fully reserves all rights of Weyerhaeuser Realty Investors Inc., MW Housing Partners III L.P. and WRI Communities Fund I LLC to assert: -- that Debtor Dunmore Homes Inc. does not own an equity interest in Dunmore Croftwood LLC, Dunmore Diamond Ridge LLC, Dunmore Highlands LLC and Dunmore Viscaya LLC; -- that the Joint Entities had no authority to execute any agreements without the consent of Weyerhaeuser; -- that the Joint Entities cannot sell, convey or transfer or encumber their assets and properties without the consent of Weyerhaeuser; and -- all other rights and remedies of Weyerhaeuser. A full-text copy of the Dunmore Final DIP Order is available for free at http://researcharchives.com/t/s?26af As reported in the Troubled Company Reporter on Dec. 18, 2007, The Official Committee of Unsecured Creditors in Debtor's bankruptcy case asked the Bankruptcy Court to defer ruling on the DIP Financing Motion until it has ruled on the venue transfer request of Cal Sierra Construction Inc., et al. The Committee related that it has joined in Cal Sierra's request. Because the outcome of the Court's ruling on the Venue Transfer Motion may significantly impact the administration of Dunmore Homes Inc.'s case, and may result in the transfer of the Debtor's case to the Eastern District of California, it is premature for the Court to rule on the DIP Motion, the Committee asserted. About Dunmore Homes Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has selected Morrison & Foerster LLP as its counsel in this bankruptcy proceeding. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DUNMORE HOMES: Can Use Dunmore's Cash Collateral on a Final Basis ----------------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York authorized Dunmore Homes Inc., on a final basis, to use cash collateral for all purposes permitted by the DIP Facility up to the aggregate amount of disbursements and accruals in a prepared cash collateral budget. As reported in the Troubled Company Reporter on Nov. 27, 2007, Judge Glenn had authorized the Debtor, on an interim basis, to use cash collateral for all purposes permitted by the DIP facility pursuant to a cash collateral budget. Cash collateral for which the Debtor is granted use does not include cash collateral generated postpetition from the Montecito, Diamond Ridge, Stone Creek or Providence projects as to which RBC Centura Bank alleges to provide financing. As reported in the Troubled Company Reporter on Nov. 22, 2007, RBC Centura Bank told the Court that it objects to the use of cash collateral as it relates to the Montecito, Diamond Ridge, Stone Creek and Providence projects, on the basis that it has a security interest in those projects, and the adequate protection proposed by the Debtor is not sufficient. About Dunmore Homes Headquartered in Granite Bay, California, Dunmore Homes Inc. is a privately-owned homebuilder. The company filed for Chapter 11 protection on Nov. 8, 2007 (Bankr. S.D.N.Y. Case No. 07-13533). Maria A. Bove, Esq., and Debra I. Grassgreen, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has selected Morrison & Foerster LLP as its counsel in this bankruptcy proceeding. When the Debtor filed for protection against its creditors, it listed assets and liabilities of more than $100 million. The Debtor's exclusive period to file a plan expires on March 7, 2008. (Dunmore Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ECHOSTAR COMMS: Distributes Shares for Separation of Businesses --------------------------------------------------------------- EchoStar Communications Corporation distributed shares of common stock of EchoStar Holding Corporation at 12:01 a.m. MST (2:01 a.m. EST) on Jan. 1, 2008. EchoStar Communications Corporation will retain its pay-TV business, DISH Network and EchoStar Holding Corporation will hold the technology and certain infrastructure assets of EchoStar Communications Corporation, including its set- top box business and certain satellite assets. The record date for the distribution was the close of business (5:00 p.m. EST) on Dec. 27, 2007. EchoStar Communications Corporation plans to change its name to "DISH Network Corporation" following the completion of the separation. EchoStar Communications Corporation commenced mailing of the final information statement, which outlines the operations of EchoStar Holding Corporation and provides additional details regarding the separation on Dec. 31, 2007. A copy of the final information statement will be available on the Securities and Exchange Commission's Web site -- http://www.sec.gov/-- under the company name "EchoStar Holding Corporation." Each shareholder of EchoStar Communications Corporation will receive for each share of common stock held as of the record date, 0.20 of a share of the same class of common stock of EchoStar Holding Corporation. If a shareholder of EchoStar Communications Corporation sells shares of EchoStar Communications Corporation common stock between the record date for the distribution and the distribution date, the buyer of those shares and not the seller will become entitled to receive the shares of EchoStar Holding Corporation common stock distributed in respect of those shares. Shares of EchoStar Holding Corporation Class A common stock have been approved for listing on the Nasdaq Global Select Market under the symbol "SATS." Shares of Class A common stock of EchoStar Communications Corporation will continue to trade on the Nasdaq Global Select Market under the symbol "DISH." Regular-way trading in shares of EchoStar Holding Corporation Class A common stock commenced on Jan. 2, 2008. About EchoStar Communications Based in Englewood, Colorado, EchoStar Communications Corporation (Nasdaq: DISH) -- http://www.echostar.com/-- serves more than 13.6 million satellite TV customers through its DISH Network(TM), a pay-TV provider in the country since 2000. DISH Network's services include hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. EchoStar has been into satellite TV equipment sales and support for more than 27 years. * * * As reported in the Troubled Company Reporter on Sept. 28, 2007, Standard & Poor's Ratings Services placed its ratings on EchoStar Communications Corp., including the 'BB-' corporate credit rating, on CreditWatch with developing implications. This affects about $5.5 billion of rated debt. FGX INT'L: Moody's Withdraws All Ratings After Debt Refinancing --------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings on FGX International Limited for business reasons. Moody's added that the ratings were withdrawn because the company had no rated debt outstanding following the completion of its IPO and debt refinancing. These ratings were withdrawn: * Issuer: FGX International Limited -- Corporate Family Rating, Withdrawn, previously rated B2 -- Probability of Default Rating, Withdrawn, previously rated B2 -- Senior Secured Bank Credit Facility Due 2010, Withdrawn, previously rated B1 (LGD 3, 35%) -- Senior Secured Bank Credit Facility Due 2012, Withdrawn, previously rated B1 (LGD 3, 35%) -- Senior Secured Bank Credit Facility Due 2013, Withdrawn, previously rated Caa1 (LGD 5, 84%) -- Outlook, Changed To Rating Withdrawn From Stable FGX International Limited, based in Smithfield, Rhode Island, is a leading marketer and distributor of branded and private-label eyewear and costume jewelry, particularly in the mass retail channels and primarily under the FosterGrant and Magnivision brands. Net sales for the twelve-month period ending Sept. 30, 2007 were approximately $248 million. FIRST DARTMOUTH: Case Summary & 13 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: First Dartmouth Homes 724-A 2nd Avenue South &n