/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080226.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 26, 2008, Vol. 12, No. 48 Headlines 45 HOLDINGS: Case Summary & Five Largest Unsecured Creditors AMDL INC: Posts $2.67 Mil. Net Loss in Nine Months Ended Sept 30 AMERICAN AXLE: Declares 1st Qtr. 2008 Dividend Payable on March 28 AMERICAN LAFRANCE: Wants Permission to Solicit Plan Votes AMERICAN LAFRANCE: Panel & INCAT Balk at Terms of Asset Sale AMERICAN LAFRANCE: Committee Wants Interim DIP Order Vacated AMERICAN LAFRANCE: CEO Upbeat on Company's Survival Chances ASBURY AUTOMOTIVE: Reports $12.7MM Adjusted Income for Fourth Qtr. ASSET BACKED: Realized Losses Cues S&P to Junk Rating on Class M4 ASSET BACKED: Fitch Downgrades Ratings on $2.8 Bil. Certificates ASSET BACKED: Fitch Junks Ratings on 30 Certificate Classes AVNET INC: Moody's Upgrades CFR on Improving Operating Efficiency AXCAN INTERMEDIATE: Moody's Holds B1 Ratings on Capital Changes BASIC MORTGAGE: Fitch Chips Ratings on Seven Certificate Classes BEST BRANDS: Covenant Violations Won't Affect S&P's Junk Rating BRANDYWINE REALTY: Earns $31.5 Mil. in Quarter Ended December 31 BROWN SHOE: Richard Schumacher to Retire Effective March 31 BUCYRUS INTERNATIONAL: Amends RAG Coal Share Purchase Deal BUFFETS HOLDINGS: Receives Final Approval for DIP Financing CAPITALSOURCE INC: Reports $15MM Net Loss for 2007 Fourth Quarter CELL THERAPEUTICS: Exchanges $8.943MM of 5.75% Senior Sub. Notes CENTENARY COLLEGE: Operating Deficits Cue Moody's Debt Rating Cut CENTRO NP: Fitch Maintains 'CCC' Issuer Default Rating CHARLES RIVER: S&P Lifts Rating on $350 Mil. Senior Notes to 'BB+' CLAYTON HOLDINGS: Reports $13.5MM Earnings for 2007 Fourth Quarter COMM COMMERCIAL: Fitch Holds Ratings on Upcoming Certs. Maturity COMMERCIAL VEHICLE: S&P Cuts Rating to 'B+' on Weak 2008 Prospects CONGOLEUM CORP: Bankruptcy Court Approves Put/Call Agreement CONMED CORP: S&P Lifts Ratings After 2007 Senior Debt Reduction COUNTRYWIDE FINANCIAL: Puts Sambol In-Charge of New Mortgage Biz COUNTRYWIDE FINANCIAL: Waves Off Business Partners' Resort Meeting DANA CORP: Reorganized Company Names Directors and Officers DB ZWIRN: To Liquidate $4 Billion in Assets from 2 Funds DELPHI CORP: Must Pay Professionals $49 Million in Fees & Expenses DRYDEN HIGH: S&P Withdraws Ratings on Two BB-Rated Notes DURA AUTOMOTIVE: Court OKs Amendments to Revolving DIP Debt Pact DURA AUTOMOTIVE: Must Appear at Final Hearing to OK Bonus Plan DURHAM FURNITURE: To Refocus on Key Canadian, U.S. Markets EMAGIN CORP: Expects 81% Revenues Increase in 2007 Fourth Qtr. ENCORE ACQUISITION: Earns $19.4 Mil. in Fourth Quarter of 2007 EPICOR SOFTWARE: Borrows $160 Million to Finance NSB Acquisition ERIK AIRAPETIAN: Voluntary Chapter 11 Case Summary EXTENDICARE REAL: Dec. 31 Balance Sheet Upside Down by $20M FAIRFAX FINANCIAL: Earns $600M for 2007 Fourth Quarter FIELDSTONE MORTGAGE: Five Note Classes Get S&P's Rating Downgrades FIRST MAGNUS: Court Gives Thumbs Up to Liquidation Plan FISHER COMMS: S&P Upgrades Corporate Credit Rating to 'B' From B- FOAMEX INTERNATIONAL: Expects Unit to Comply with Credit Covenants FOOT LOCKER: Allowable Dividend Payments Increased to $95 Million FORD MOTOR: Announcement of Tata Motors Deal Seen on March 6 or 7 GENERAL MOTORS: Inks Settlement Pact with UAW and Union Retirees GLADUE ISTRE: Case Summary & 19 Largest Unsecured Creditors GLIMCHER REALTY: Net Loss Down to $21MM in Quarter Ended Dec. 31 GLOBAL PAYMENT: Posts $944T Net Loss in 1st Qtr. Ended Dec. 31 GREGORY CRISCUOLO: Case Summary & 10 Largest Unsecured Creditors HEINZ GROHS: Case Summary & 12 Largest Unsecured Creditors HORNBECK OFFSHORE: Earns $25.8 Million for 2007 Fourth Quarter HOST HOTELS: Fitch to Monitor Impact of $500MM Stock Repurchase IMPLANT SCIENCES: Selling 2M Shares to Buy Ion Metrics' Assets INDYMAC ABS: Fitch Slashes Ratings on Six Certificate Classes INDYMAC ABS: Fitch Chips Ratings on $2.6 Billion Certificates INTERLINE BRANDS: Earns $13.5 Mil. for Three Months Ended Dec. 28 JAMES PATTON: Case Summary & 9 Largest Unsecured Creditors JP MORGAN: Fitch Junks Rating on $2.9 Million Certificates JRH HOLDINGS: Selling Historic Properties for $3.75 Million KLAVOHN'S NEW LEAF: Will Likely Stop Operations, Counsel Says MARCAL PAPER: Court Moves Disclosure Statement Hearing to March 14 MARKWEST ENERGY: EquityHolders Approve Redemption and Merger Plan MARKWEST ENERGY: S&P Ratings Unaffected by Approved Planned Merger MAXJET AIRWAYS: Bid Deadline Extended Until February 27 MAXJET AIRWAYS: Court OKs Morten Beyer as Valuation Consultants MBIA INC: Eliminates Quarterly Dividend to Preserve $174 Mil. MCCALL CITY: Decision to File for Bankruptcy Expected Today MEDQUEST INC: Debt Repayment Cues Moody's to Withdraw All Ratings MERITAGE HOMES: Market Pressure Prompts S&P's Rating Downgrades MERITAGE MORTGAGE: Seven Note Classes Obtain S&P's Rating Cuts METRO ONE: Gary Henry Resigns as Director and President MICHAEL VALDEZ: Case Summary & 7 Largest Unsecured Creditors MNJ USED CARS: Owner Nazer Haidar Found Guilty of Bankruptcy Fraud MOBILE MINI: Earns $12.4 Million in Quarter Ended December 31 MQ ASSOCIATES: Moody's Withdraws All Ratings After Debt Repayment NETBANK INC: Asks to Further Move Plan-Filing Deadline to March 10 NEUMANN HOMES: $2.5 Million PFS-Montgomery Asset Sale Approved NEW 118TH: Court OKs Chapter 11 Trustee's Proposed Sale Procedure NEW 118TH: Wants Schedules Filing Deadline Extended to March 31 NEWPARK RESOURCES: Earns $6.75 Mil. in Quarter Ended December 31 NORTH AMERICAN TECH: Dec. 30 Balance Sheet Upside-Down by $6.2 M. PACIFIC RIM: Case Summary & Six Largest Unsecured Creditors PAWNSHOP: To File for Bankruptcy; Closing to Include Artworks Sale PERFORMANCE TRANS: Presents New Sale Protocol; Allied Out PERFORMANCE TRANS: Workers Balk at Allied Participation in Sale PERFORMANCE TRANS: Teamsters Wants Incentive Program Scrapped PRC LLC: Creditors Panel Wants More Time to Review DIP Financing PRC LLC: Inks Pact Recognizing Law Debenture as Collateral Agent PRC LLC: Court Okays Services Agreement With Advanced Contact QUEBECOR WORLD: Final Auction Prices of Bonds Reach 41.25% QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions QUEBECOR WORLD: Various Entities Disclose Stake in Company REFCO INC: SEC Sues Ex-CEO Bennett for Orchestrating Fraud REFCO INC: Ex-Finance Chief Robert Trosten Admits Fraud Charges RELIANT ENERGY: Selling Channelview Cogeneration Plant for $468MM RHODES COS: Projected Weak Cash Flow Cues S&P to Junk Corp. Rating ROCK-TENN CO: Discloses $200 Mil. Sr. Notes Unregistered Offering ROCK-TENN: $200 Mil. Loan Increase Won't Affect S&P's BB+ Rating ROLAND CARTER: Case Summary & 12 Largest Unsecured Creditors SCOTTISH RE: Board Alters Strategies, May Sell Non-Core Assets SCOTTISH RE: S&P's 'B' Rating Unaffected by New Strategic Focus SCOTTISH RE: Change in Strategic Focus Cues Fitch to Cut Ratings SHARPER IMAGE: Common Stock Delisted From the NASDAQ Stock Market SHARPER IMAGE: Asks Court to Obtain $60MM of DIP Financing SHARPER IMAGE: Court Authorizes Firm to Use Cash Collateral SHARPER IMAGE: Allowed to Continue Workers' Compensation Program SHARPER IMAGE: Section 341 Meeting of Creditors Set for March 19 SHILOH INDUSTRIES: Earns $1.6MM for 2008 First Qtr. Ended Jan. 31 SIRVA INC: U.S. Trustee Appoints Committee of Unsecured Creditors SIRVA INC: Proposed Conflicts Firm Rebuts U.S. Trustee's Objection SIRVA INC: 360networks Committee Wants Claims Order Vacated SMART MODULAR: To Purchase Adtron Corporation for $20 Million Cash SOLOMON TECH: Inks Amendment and Waiver Agreement on Debentures SOLUTIA INC: Gets Exit Financing from Lenders; To Emerge Thursday SPACEHAB INC: Stock Purchase Deal with Lanphier, Bruce Fund Ends SPECIALIZED QUALITY: Case Summary & 76 Largest Unsecured Creditors SPEEDEMISSIONS INC: To Restate Financial Statements Due to Errors SYNTAX-BRILLIAN: Enters Into Forbearance Agreement With Lenders TRIPLE CROWN: Liquidity Concerns Cue S&P to Junk Corporate Rating TEMBEC INC: Lenders, Shareholders OK Recapitalization Transaction TEXHOMA ENERGY: Dec. 31 Balance Sheet Upside-Down by $4M TRIAXX FUNDING: Fitch Junks Ratings on Two Classes of Notes UNITED HERITAGE: Posts $1.7M Net Loss in Qtr. Ended Dec. 31 VALENCE TECHNOLOGY: Names Galen H. Fischer as Chief Finc'l Officer VIET-THAI INC: Case Summary & 17 Largest Unsecured Creditors WACHOVIA COMMERCIAL: Fitch Holds 'B-' Rating on $9.5 Mil. Trusts WELLMAN INC: Wants Court Approval on $225 Million DIP Financing WELLMAN INC: Wants Access to Deutsche Bank's Cash Collateral WEST CORP: Plans to Purchase Genesys for $269 Million WHERIFY WIRELESS: Dec. 31 Balance Sheet Upside-Down by $16.5M WILLIAM THOMAS: Case Summary & 17 Largest Unsecured Creditors WILLIAMS PARTNERS: Earns $44.8 Mil. for Fourth Quarter of 2007 WINDSWEPT ENVIRONMENTAL: Dec. 31 Bal. Sheet Upside-Down by $3.7M * Fitch Says Auto Finance Business Will Face Significant Road Work * Moody's Says U.S. Credit Card Performance Continues to Weaken * S&P Downgrades 114 Tranches' Ratings From 17 Cash Flows and CDOs * 2008 Economic Stimulus Act Provides Tax Benefits to Businesses * Lending Firms Oppose Legislation Aimed at Helping Homeowners * Congress Reviewing New Rescue Proposals for the Housing Market * U.S. Bankruptcy Court Clerk Neil Bason Joins Howard Rice * Two Restructuring and Bankruptcy Lawyers Join Chicago DLA Piper * Gersten Savage Advises More than $900 Mil. Transactions in 2007 * Large Companies with Insolvent Balance Sheets ********* 45 HOLDINGS: Case Summary & Five Largest Unsecured Creditors ------------------------------------------------------------ Debtor: 45 Holdings, L.L.C. 45 South Broadway Yonkers, NY 10701 Bankruptcy Case No.: 08-22244 Chapter 11 Petition Date: February 22, 2008 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: Kevin J. Nash, Esq. (FinkGold@aol.com) Finkel, Goldstein, Rosenbloom & Nash, L.L.P. 26 Broadway, Suite 711 New York, NY 10004 Tel: (212) 344-2929 Fax: (212) 422-6836 Total Assets: $5,529,000 Total Debts: $4,264,009 Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Pipeworks Piping Corp. $135,000 55 Main Street, 2nd Floor Yonkers, NY 10701 Ike Electrical Corp. $96,000 601 West 26th Street, Suite 2M New York, NY 10001 Con Edison $41,413 Legal Department 4 Irving Place New York, NY 10004 Alan Eisenberg $35,489 Domino Transport Services, $7,500 Inc. AMDL INC: Posts $2.67 Mil. Net Loss in Nine Months Ended Sept 30 ---------------------------------------------------------------- AMDL Inc. reported net income of $631,026, which includes $247,918 of gain on foreign currency translation, for the third quarter ended Sept. 30, 2007, compared with a net loss of $962,337 for the same period in 2006. The company generated sales of approximately $5.81 million for the third quarter of 2007 compared to $21,005 for the third quarter of 2006. During the nine months ended Sept. 30, 2007, the company generated aggregate net revenues of $9.65 million, compared to $54,105 in the same period in 2006. The company's net loss was $2.67 million, which includes a foreign currency translation gain of $591,254, as compared to a net loss of $2.57 million for the third quarter ended Sept. 30, 2006. The increase in net loss for the nine month period ended Sept. 30, 2007, is primarily due to an increase in selling, general and administrative expenses. Outstanding Debt Total outstanding indebtedness increased to $8.67 million at Sept. 30, 2007, as compared to $6.58 million at Dec. 31, 2006. The primary reason for the increase is due to the increase in accounts payable, value added and other taxes payable and loan amounts. The change in loan amounts is primarily due to the fluctuation of the RMB. Balance Sheet At Sept. 30, 2007, the company's consolidated balance sheet showed $26.2 million in total assets, $8.7 million in total liabilities, and $17.5 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Sept. 30, 2007, are available for free at http://researcharchives.com/t/s?286c Going Concern Doubt Corbin & Company LLP, in Irvine, Calif., expressed substantial doubt about AMDL Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's significant operating losses and negative cash flows from operations through Dec. 31, 2006, and accumulated deficit at Dec. 31, 2006. About AMDL Inc. Based in Tustin, California, AMDL Inc. (AMEX: ADL) -- http://www.amdl.com/-- together with Jade Pharmaceutical Inc., engages in the development, manufacture and marketing of proprietary pharmaceutical and diagnostic products. Through its Jade subsidiaries, AMDL Inc. currently holds licenses for 133 products that are manufactured as large volume injection fluids, tablets and other related products. It currently manufactures over 20 key generic, over the counter and supplemental pharmaceutical products under certified Chinese Good Manufacturing Practice (CGMP) standards. The company's near and long-term operating strategies focus on (i) obtaining Food and Drug Administration and China's State Food and Drug Administration approval for its proprietary diagnostic tumor- marker test kit DR-70(R), (ii) seeking a large pharmaceutical partner for its combination immunogene therapy technology, (iii) increasing sales of JPI's existing products and expanding JPI's distribution networks, (iv) funding the research and development, licensing and/or purchase of new products, and (v) wholesale distribution to retail stores known as "Jade Healthy Supermarkets." AMERICAN AXLE: Declares 1st Qtr. 2008 Dividend Payable on March 28 ------------------------------------------------------------------ American Axle & Manufacturing Holdings, Inc. declared a cash dividend of $0.15 per share payable on March 28, 2008 to stockholders of record on all of the company's issued and outstanding common stock as of March 7, 2008. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on Nov. 27, 2007, Moody's Investors Service affirmed American Axle & Manufacturing Holdings, Inc.'s Corporate Family rating of Ba3 as well its senior unsecured rating of Ba3 to American Axle & Manufacturing Inc.'s notes and term loan. At the same time, the rating agency revised the rating outlook to stable from negative and renewed the Speculative Grade Liquidity rating of SGL-1. AMERICAN LAFRANCE: Wants Permission to Solicit Plan Votes --------------------------------------------------------- American LaFrance, LLC, will appear before the U.S. Bankruptcy Court for the District of Delaware March 3, 2008, at 10:00 a.m., Eastern Time, to seek approval of a disclosure statement explaining its chapter 11 bankruptcy plan. The Debtor filed its Plan and Disclosure Statement February 3, 2008. The Debtor will demonstrate at the hearing that the Disclosure Statement contains "adequate information" as the term is defined in Section 1125(a)(1) of the Bankruptcy Code. The Debtor asserts that the Disclosure Statement provides information that is "reasonably practicable" to permit an "informed judgment" by creditors and interest holders entitled to vote on the Plan. The Debtor maintains that the Disclosure Statement contains ample information as required by the Bankruptcy Code, like claims estimates, risk factors affecting the Plan, financial information and liquidation analysis, among other things. The Debtor will also seek approval of uniform procedures for the solicitation and tabulation of votes to accept or reject the Plan. The Debtor intends to mail these solicitation materials to known holders of claims and interests who are entitled to vote, as of the Record Holder Date: -- Notice of the Plan's confirmation hearing, which is currently set on April 9, 2008, at 10:00 a.m., Eastern Time -- A copy of the Disclosure Statement -- A copy of the Plan -- A copy of the Ballot and the voting instructions In lieu of the Solicitation Materials, holders of unimpaired claims, which are presumed to have accepted the Plan, will be sent a notice, which will, among other things, include a summary of the treatment provided under the Plan to each of the unimpaired class, and the date of the Confirmation Hearing. Record Holder Date Pursuant to Rules 3017 and 3018 of the Federal Rules of Bankruptcy Procedures, the Debtor asks the Court to set March 3, 2008, as the record date by within which the holders of claims may accept or reject the Plan. Form of Ballot The Debtor has prepared Ballots for all of the voting classes of claims under the Plan. Pursuant to Bankruptcy Rule 3018(c), the Debtor proposes to distribute Ballots, with accompanying instructions for both holders of claims and nominees, if applicable, to comply with in completing the Ballots. The Debtor's balloting agent, Kurtzman Carson Consultants, LLC, will customize each Ballot to include the creditor's name, address, and claim information, if available. The Debtor asks Judge Shannon to approve the proposed form of Ballots. The Debtor also asks the Court to authorize the Balloting Agent to inspect, monitor, and supervise the solicitation process, to serve as the tabulator of the Ballots, and to certify to the Court the results of the balloting. Voting Deadline All Ballots must be received by the Balloting Agent on or before March 28, 2008, by 4:30 p.m., Pacific Time. Voting Procedures For voting purposes only, each holder of a Voting Claim will have an allowed claim, in an amount equal to either (i) the amount of the claim as set forth in the Debtor's schedules of liabilities, or (ii) if timely filed, the amount of the claim as set forth in the proof of claim. Assignee of a transferred and assigned claim will be permitted to vote for the claim only if the transfer and assignment has been reflected on the Court's docket as of the Record Date. If a claim is not listed in the Debtor's schedules, but is the subject of a timely filed proof of claim, the claim will be allowed for voting purposes only. If a Voting Claim is listed in the Debtor's schedules as contingent, unliquidated, or disputed and a proof of that claim was not timely filed, the claim will have no voting rights. If an objection is filed and served to a Voting Claim at least five days prior to the Voting Deadline, the claim will be disallowed for voting purposes only, provided that any undisputed portions of the claim will be allowed for voting purposes. Tabulation Procedures The Debtor proposes that each holder of a Voting Claim will be deemed to have voted the full amount of its claim. Holders of Voting Claims will not split their vote within a claim, but will vote their entire claim within a particular class either to accept or reject the Plan. Only original returned Ballots bearing original signatures will be counted. These Ballots will not be counted: -- Unsigned Ballots -- Ballots that are illegible or contain insufficient information -- Ballots that do not indicate an acceptance or rejection of the Plan -- Ballots that indicate both acceptance and rejection of the Plan Whenever a holder of a Voting Claim returns more than one Ballot voting the same claim prior to the Voting Deadline, only the last Ballot that is timely returned will be counted. Confirmation Hearing The Court has scheduled the Confirmation Hearing for April 9, 2008, at 10:00 a.m., prevailing Eastern Time. To permit adequate time in responding to objections prior to the Confirmation Hearing, the Debtor asks Judge Shannon to set March 28, 2008, as the last date for filing and serving written objections to the confirmation of the Plan. The Debtor intend to publish the Confirmation Hearing Notice once in the national edition of The Wall Street Journal, The New York Times, or The USA Today. Distribution Record Date The Debtor also asks the Court to set March 28 as the record date for disbursement purposes pursuant to the Plan. Without a Distribution Record Date, the Debtor notes that it could face potential liability for remitting disbursements on claims that have been or may in the future be transferred by the claimant to other entities. The Debtor further asks Judge Shannon to rule that it is not required to make any disbursements to claimants, whose claims were acquired subsequent to the Distribution Record Date, or from another claimant prior to the Distribution Record Date, but which transfer was not properly filed with the Court prior to Distribution Record Date. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Panel & INCAT Balk at Terms of Asset Sale ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in American LaFrance LLC's case, and INCAT Systems, Inc., object to the proposed sale of the Debtor's assets. As reported in the Troubled Company Reporter on Feb. 6, the Debtor inked an asset purchase agreement for the sale of substantially all of its assets to Patriarch Partners Agency Services LLC, for $150,000,000, subject to higher and better bids. The company will pursue an asset sale if its plan of reorganization filed Feb. 4 is not accepted by creditors and confirmed by the U.S. Bankruptcy Court for the District of Delaware. Patriarch currently has arranged $50,000,000 in postpetition financing to the Debtor. Patriarch has agreed to fund the Debtor's day-to-day obligations from the bankruptcy filing until the close of the proposed sale. The DIP Loan is expected to mature May 1, 2008, or the effective date of a plan of reorganization in the Debtor's case. A. Creditors Committee The Official Committee of Unsecured Creditors argues that American LaFrance may have commenced its Chapter 11 case not for the purpose of reorganizing, but to transfer all of its assets to Patriarch Partners Agency Services, LLC, which incidentally is managed by Lynn Tilton, the sole manager of American LaFrance. "The Debtor does not seek through this process to benefit its estate or its creditors. Rather, the Debtor's only objective is to benefit the proposed asset buyer, the insider," James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, asserts. "Thus, dooming the unsecured creditors to a zero recovery." Mr. Carignan contends that Patriarch Partners Agency, the proposed stalking horse purchaser of the Debtor's assets, completely controls the Debtor and its decisions because it is: -- affiliated with managers of the funds that own all equity in the Debtor, which funds are themselves managed by Ms. Tilton; -- the agent for the Debtor's prepetition secured lenders, which lenders are also the equity holders that are managed by entities managed by Ms. Tilton; -- the agent for the lenders under the proposed DIP financing facility; and -- an affiliate of Partriarch Partners Management Group, the entity that employs nearly all of the Debtor's acting executives. Accordingly, the Creditors Committee asks the Court to deny the Debtor's request to sell substantially all of its assets to Patriarch Partners. In the event the Court determines that a sale must proceed at this early stage in the Debtor's Chapter 11 proceedings, the Creditors Committee maintains that the Debtor's proposed bidding, auction and sale procedures must be modified. The Creditors Committee proposes that any sale of the Debtor's assets and the related sale procedures must include these terms: * The proposed Procedures must expressly state, and any order approving the procedures must explicitly provide, that nothing in the Order or Procedures will permit Patriarch to 'credit bid' for the assets unless the Creditors Committee and the Debtor agree, or unless it is adjudicated by the Bankruptcy Court, that Patriarch has an allowed claim in the amount of its credit bid, secured by a valid, proper, perfected lien in those Assets for which Patriarch is submitting its credit bid. "Nothing in the Procedures nor any Order approving them will be deemed to affect the Creditors Committee's ability to challenge the amount of Patriarch's claim in the Debtor's case and the validity or perfected status of any lien Patriarch asserts," Mr. Carignan maintains. * If Patriarch Partners Agency is permitted to remain the stalking horse bidder, the Reorganization Plan should serve as its stalking horse bid. * The bid deadline should be no earlier than at least 90 days after the date notice of the sale is published. * The Sale Procedures must clearly state that bids will be entertained for any or all of the Assets, and the Debtor's discrete business segments should be separately exposed to the market so as to maximize value. * A data room must be open and accessible to prospective buyers prior to the date notice of the sale is published to permit competing bidders to conduct adequate due diligence. * The Lenders, Patriarch, and Ms. Tilton must be walled off from the seller's side of the transaction. * All decisions with respect to whether bids constitute qualifying bids, winning bids, and backup bids must be made jointly with the Creditors Committee. The Committee must be given regular updates and have access to the data room, management presentations, bids and must be fully immersed in the sale process and evaluation of bids. * Any Order approving the proposed Procedures should provide that: (i) in evaluating competing bids, no presumption of validity will be afforded to the Debtor's business judgment; and (ii) at all points during the marketing and auction process, the parties will have full recourse to seek the Bankruptcy Court's involvement to resolve any problems, issues or perceived deviations from the Sale Procedures. * Minimum overbids should only be required to be $100,000 and assumed liabilities should be accounted for in evaluating overbids. The Committee also urges the Debtor to make good faith efforts at marketing the Assets, including hiring a qualified investment banker experienced in the Debtor's industry to solicit interest and assist bidders through the process of valuation, information gathering and otherwise. The Committee further states that if the Court approves the sale procedures, the Debtor should not be permitted to change the rules of the bidding or auction procedures absent the consent of the Creditors Committee. B. INCAT Systems INCAT Systems, Inc., contends the sale, transfer, or assumption and assignment of its software by the Debtor as well as the procedures proposed by the Debtor on the assumption and assignment of contracts that are included in its Motion to Sell. INCAT Systems, Inc., along with the Dassault Systems Americas Corp., entered into an end user License Agreement with the Debtor, whereby it granted the Debtor a non-exclusive license for the use of a software on its engineering processes as well as upgrades and support services. The Debtor has sought Court approval to sell all of its assets, and assume and assign certain contracts, to Patriarch Partners Agency. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, in Wilmington, Delaware asserts that the Debtor is not allowed to sell or transfer its license of INCAT's software for these reasons: 1. The Debtor is not entitled to assume an intellectual property license, and sell and assign that to third party over INCAT's objection. 2. The Debtor cannot circumvent the protections provided to INCAT by an accomplished transfer of the License through any type of negative notice that involves cure amounts or otherwise. 3. Any order approving the sale process or a sale should provide that the License cannot be sold or assumed and assigned without first obtaining INCAT's affirmative consent. Debtor Talks Back Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, argues that the Committee has failed to cite a single example of an action that the Debtor has taken to the detriment of its creditors in support of its contention that the proposed sale process is a bad faith "farce" designed to confer inappropriate benefits on non-debtor parties. The Debtor asserts that any delay in the sale process could prove fatal to its business operations, as: -- its bonding companies might refuse to supply the $9,000,000 that it projects will be necessary to secure new orders; -- its customers might attempt to cancel a significant number of the nearly 100 truck orders that are four months or more past due on delivery; -- its employees might resign at levels that will hinder or prevent its ability to produce trucks in the backlog; -- it will accrue liabilities of over $50,000 per week in penalties for past-due trucks; and -- its potential customers might remain reluctant or unwilling to place orders without a firm exit date from Chapter 11. Mr. Ward adds that the 90-day delay proposed by the Committee is simply unworkable, as the Lenders have made it clear they are unwilling to advance new funds after April 2008 and the Debtor has been unable to obtain alternate financing. Moreover, the Debtor relates that it has taken immediate action to ensure meaningful review and participation by the Committee in the sales process and to canvass the market to locate all potential bidders for its assets. Mr. Wards maintains the other objections of the Committee are without merit. He points out that the Committee has not cited any authority restricting the Lenders' ability to credit bid for the assets. Based on the Committee's requests, the Debtor agrees to these modifications of the bidding procedures: * The Committee will be granted full access to the data room available to potential bidders. * The Debtor will consult with the Committee regarding the selection of qualified bidders. * The Debtor will notify potential bidders that the Committee may challenge the validity and extent of certain of the Lenders' liens and as a result, the amount of the stalking horse bid may be reduced. * Bid increments will be $100,000. * The Debtor agrees that any material change in bidding procedures will require either the consent of the Committee, or further Court order. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: Committee Wants Interim DIP Order Vacated ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in American LaFrance LLC's chapter 11 case asks the U.S. Bankruptcy Court for the District of Delaware to reconsider its ruling granting the Debtor authority, on an interim basis, to borrow up to $10,000,000 in accordance with a debtor-in-possession financing agreement with ZOHAR CDO 2003-1 Limited, ZOHAR II 2005- 1, Limited, and ZOHAR III, Limited, and Patriarch Partners Agency Services LLC, as agent for the Lenders. As reported in the Troubled Company Reporter on Feb. 5, the Hon. Brendan Linehan Shannon authorized American LaFrance, LLC, to borrow up to $10,000,000 of DIP Financing, on an interim basis, and granted broad liens and superpriority claims to secure the interim financing and the Debtor's use of cash collateral. The Creditors Committee tells the Court that it has begun investigating (i) the Debtor's assets, liabilities and operations, (ii) the Debtor's cash needs and the existence of any need for postpetition financing, and (iii) the lenders' prepetition security interests in and liens upon the Debtor's assets. The Committee notes that funds managed by Patriarch Partners Agency Services own 100% of the membership interests in the Debtor. Patriarch Partners Agency also heads a group of prepetition and postpetition lenders. In addition, Patriarch Partners Management Group, LLC, employs the Debtor's chief executive officer and supplies his services, together with the services of several other executives, to the Debtor under a staffing agreement. James C. Carignan, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, the Creditors Committee's proposed counsel, says that Patriarch's "pervasive control" over the Debtor serves to heighten the Creditors Committee's concerns regarding good faith findings made by the Court on an interim basis in the Interim DIP Order. The Creditors Committee also asks the Court to compel the disgorgement of certain payments made to the Lenders on account of prepetition claims. To the extent that evidence adduced at the final hearing renders any finding in the Interim DIP Order erroneous or any ruling improvident, whether with respect to any "good faith" finding, any right or protection granted to the Lenders, or otherwise, the Creditors Committee urges the Court to alter or amend the Interim DIP Order accordingly. In a separate filing with the Court, the Committee asserts that the Debtor's Chapter 11 case is "most unusual, and disturbing." "The Debtor commenced this Chapter 11 case not for the purpose of reorganizing, but instead with the goal of transferring all of their going concern value to the Debtor's own members (who are also the secured lenders, and affiliates of the Debtor's manager and executives) in a calculated play by the insider to force the assets to be sold (or transferred through a plan) immediately, so that the insider can buy them cheap, flush the trade debt, then realize the future profits of the business for its own benefit alone," Mr. Carignan contends. If the Debtor, controlled by its lenders, has its way, unsecured creditors will receive no benefit from the bankruptcy proceeding, Mr. Carignan tells Judge Brendan Linehan Shannon. Mr. Carignan says that a critical step towards the Debtor's improper goal is the entry of the proposed DIP financing order. He argues that if the DIP Order is entered, it will: -- neuter the Creditors Committee; -- eliminate or drastically reduce the protections provided by the Bankruptcy Code for all parties-in-interest, other than the lenders; and -- mandate the lenders' desired outcome by encumbering all of the bankruptcy estate's assets, even those presently unencumbered, for the payment of all of the lenders' prepetition and postpetition claims. Consequently, Mr. Carignan states, the lenders will force the case to be resolved within less than three months, and will threaten immediate and automatic foreclosure if any party takes action to enforce its rights in a manner that is unacceptable to them. The DIP Loan Agreement is not the result of good faith, arm's- length negotiations, Mr. Carignan argues. Rather, he says, the terms of the DIP loan were dictated to the Debtor by its insider lenders; and reflects (i) the Debtor's abandonment of its business judgment, and (ii) the lenders' blatant attempt to control the Debtor's case to their sole advantage. If the lenders wish to obtain the benefits of Chapter 11, they must also be willing to pay the price of admission and abide by the provisions and policies of the Bankruptcy Code, the Committee maintains. Thus, the Committee asks the Court to deny the Debtor's request for a DIP financing. Debtor Talks Back The Committee's objections to the DIP Motion all stem from the faulty premise that the Lenders' involvement in multiple roles should deprive them of typical protections provided to DIP lenders, Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, contends. Mr. Ward informs the Court that if the Lenders refuse to fund operations, the Debtor's operations will come to a grinding halt. Moreover, he avers, the Lenders are the only parties that, to date, are willing to provide financing necessary for the Debtor's operations. "No provision of the Bankruptcy Code, or any other applicable law, precludes the Lenders from serving in the roles of prepetition secured lenders, DIP lenders and stalking horse bidders," Mr. Ward emphasizes. Similarly, it is common for a secured lender to dictate the timing of a debtor's exit from Chapter 11 as a condition to financing, Mr. Ward continues. "If the Lenders were truly dictating a result designed solely to benefit themselves, they would not be supporting a plan of reorganization that will result in a significant distribution to unsecured creditors and the assumption of millions of dollars of [the Debtor's] liabilities." The Debtor insists that the DIP Motion provides the financing necessary for it to maintain its business as a going concern while it attempts to confirm the Plan. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN LAFRANCE: CEO Upbeat on Company's Survival Chances ----------------------------------------------------------- Four weeks into its bankruptcy proceeding, American LaFrance LLC Chief Executive Officer William Hinz assures creditors in a statement posted on the Company's Web site, that the company will not only survive, but will prosper in the near future. "We have the systemic changes in place from material procurement to financial management to ensure we are poised for not only sustainable market presence but to quickly take THE leadership position in both the fire and vocational market," Mr. Hinz said. Mr. Hinz went on to note that in the very new future, the Company will be able to process and build fire apparatus consistently in the 180 day range from order receipt to delivery. Innovative product designs that will truly differentiate the Company's products from all others are expected. Mr. Hinz also reported three major improvements: -- The Company's Material Requirements Planning (MRP) system is now up and running. "This gives our purchasing team material requirement visibility along with lead times to procure materials as needed for production in a timely manner. This accurate picture of the requirements prevents either a shortage situation which causes production delays or also an overage situation which results in excess inventory and cash that is tied up. Successfully implementing the MRP system will dramatically improve our cycle time and speed us on our way to our 180 day build commitment," Mr. Hinz stated. -- The Company's accounts payable system is successfully implemented to ensure that the Company has visibility to invoices. "This allows us to efficiently process our payables to keep the free flow of parts to the shop floor," according to Mr. Hinz. -- The Company is retraining its workforce instilling the principles of Lean Manufacturing. "This understanding of Lean process will also contribute to our improved throughput and reduced cycle time as well as reduce both material and labor waste," Mr. Hinz noted. "On a more immediate issue," Mr. Hinz averred, "we will be releasing the delivery schedule by the end of the week of February 25th. I know everyone is very anxious to have this information and we have missed our self imposed two week commitment we had promised. We are working through terms and lead times very successfully with all of our vendors and once that portion is confirmed we can plug in those dates to our MRP system and generate the schedule. It is imperative that we have this information before we publish to ensure we provide a schedule that is accurate and sustainable." As reported in the Troubled Company Reporter on Feb. 4, 2008, American LaFrance LLC filed a plan of reorganization and supporting disclosure statement on February 3, 2008. The U.S. Bankruptcy Court for the District of Delaware has set March 3, 2008 to approve the Disclosure Statement and April 9, 2008, to consider confirmation of the Plan. The Plan contemplates satisfaction in full of all senior secured debt, administrative claims, and priority claims. To address the $84 million of contingent and non-contingent general unsecured debt, the Plan provides for the assumption by the reorganized company of approximately $27 million of such claims and establishing a fund of assets including $5 million of cash and litigation assets with an estimated value of $17 million for the remainder of the claimants to share pro-rata. Unsecured creditors with balances $2,500 or below (or those willing to reduce the claim to $2,500) will be paid in full without interest. The Company filed a motion to sell the assets of the Company if the Plan is not approved by creditors and confirmed by the Bankruptcy Court. The Company's related motion to establish bidding procedures is set for hearing on February 21, 2008. The Company has secured an agreement with Patriarch Partners Agency Services to serve as the stalking horse bidder for the asset sale. About American LaFrance Headquartered in Summerville, South Carolina, American LaFrance LLC -- http://www.americanlafrance.com/-- is one of the oldest fire apparatus manufacturers and one of the top six suppliers of emergency vehicles in North America. Thee company filed for Chapter 11 protection on Jan. 28, 2008 (Bankr. D. Del. Case No. 08-10178). Ian T. Peck, Esq., and Abigail W. Ottmers, Esq., at Haynes and Boone LLP, are the Debtor's proposed Lead Counsel. Christopher A. Ward, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP, are the Debtor's proposed local counsel. In its schedules of assets and debts filed Feb. 4, 2008, the Debtor disclosed $188,990,680 in total assets and $89,065,038 in total debts. The Debtor's exclusive period to file a plan expires on May 27, 2008. (American LaFrance Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASBURY AUTOMOTIVE: Reports $12.7MM Adjusted Income for Fourth Qtr. ------------------------------------------------------------------ Asbury Automotive Group Inc. reported adjusted income from continuing operations for the fourth quarter ended Dec. 31, 2007 of $12.7 million compared to $14.6 million in the fourth quarter of last year. For the 2007 fourth quarter, the company generated revenues of $1.3 billion compared to $1.4 billion revenues generated for the same period of the previous year. "Asbury faced a very challenging environment for vehicle sales, both new and used, in the fourth quarter, with notable softness in our key Florida markets," Charles R. Oglesby, president and chief executive officer, said. "Our service businesses again performed well, as fixed operations delivered same-store growth of 4% and F&I income reached a record level of $1,057 per vehicle retailed." "We also made significant progress during the quarter in adjusting expenses to the current market conditions, by reducing our advertising, staffing levels and used vehicle inventories," Mr. Oglesby added. Income from continuing operations, adjusted for non-core items, for the year ended Dec. 31, 2007, increased 5% to $69.5 million from $66.2 million in 2006. For the year, income from continuing operations was $54.3 million compared with $67.1 million in 2006. Net income for the year totaled $51.0 million compared to $60.7 million last year. "For the full year, diluted earnings per share, excluding non-core items, increased 8%, a solid performance in view of the retail environment," Mr. Oglesby continued. "We achieved significant cost savings from our debt refinancing early in the year, and began implementing a new dealership technology platform that will reduce expenses and drive efficiency gains in the years ahead." "We also successfully stepped up our acquisition program, acquiring dealerships with approximately $350 million in annualized revenues, well above our target of $200 million," Mr. Oglesby stated. "While retail market conditions are likely to remain difficult throughout 2008, we believe our expense reductions have positioned us well," J. Gordon Smith, senior vice president and chief financial officer, commented. "We are establishing an initial guidance range for 2008 diluted earnings per share from continuing operations of between $1.80 and $2.00." "This guidance is based on a range for U.S. new vehicle unit sales of between 15.3 million and 15.5 million for the full year, as well as a projected decline in our same store used unit volumes of between 5% and 8%," Mr. Gordon continued. On Jan. 31, 2008, Asbury's board of directors declared a quarterly cash dividend of $0.225 per share of the company's outstanding common stock payable on Feb. 29, 2008, to stockholders of record as of the close of business on Feb. 8, 2008. About Asbury Automotive Headquartered in New York, New York, Asbury Automotive Group Inc. (NYSE:ABG) -- http://www.asburyauto.com/-- is an automotive retailer in the United States. It operated in 114 franchises at 87 dealership locations in 21 metropolitan markets as of Dec. 31, 2006. The company offers its customers a range of automotive products and services, including new and used vehicles and related financing; vehicle maintenance and repair services; replacement parts, and warranty, insurance and extended service contracts. As of March 8, 2006, the companys retail network was organized into principally four regions and included 10 locally branded dealership groups: Florida; West; Mid-Atlantic, and South. Asbury Automotive Group Inc.s Plaza, Gray Daniels and Northern California dealerships remain standalone operations. In February 2007, the company sold two dealerships in Little Rock, Arkansas. * * * On September, 2006, Moody's Investor's Service assigned to Asbury a 'B1' probability of default rating. Such rating action still holds to date. Moody's gave its positive outlook to the company on March 2007. ASSET BACKED: Realized Losses Cues S&P to Junk Rating on Class M4 ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class M2, M3, and M4 asset-backed pass-through certificates issued by Asset Backed Securities Corp. Home Equity Loan Trust 2002-HE3. At the same time, S&P removed its rating on class M4 from CreditWatch with negative implications. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses. As of the February 2008 remittance date, cumulative realized losses, as a percentage of the original pool balance, were 4.09%. Severe delinquencies (90- plus days, foreclosures, and REOs), as a percentage of the current pool balance, were 13.43%. Losses have outpaced excess interest over the past six months by an average of 3.62x. Overcollateralization for this series is 136 basis points below its target. S&P removed its rating on class M4 from CreditWatch negative because S&P lowered it to 'CCC' and it does not anticipate further actions on this class in the near future. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The collateral for this transaction originally consisted primarily of first-lien, fixed- and adjustable-rate mortgage loans with original terms to maturity of not more than 30 years. Ratings Lowered Asset Backed Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-HE3 M2 BBB A 2002-HE3 M3 B BBB Rating Lowered and Removed From CreditWatch Negative Asset Backed Securities Corp. Home Equity Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2002HE3 M4 CCC B/Watch Neg ASSET BACKED: Fitch Downgrades Ratings on $2.8 Bil. Certificates ---------------------------------------------------------------- Fitch Ratings has taken rating actions on Asset Backed Securities Corporation mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously on Rating Watch Negative are now removed. Affirmations total $773.2 million and downgrades total $2.8 billion. Additionally, $1.1 billion remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: ABSC 2006-HE1 -- $170.4 million class A1 affirmed at 'AAA', (BL: 50.89, LCR: 2.01); -- $174.7 million class A3 affirmed at 'AAA', (BL: 54.06, LCR: 2.13); -- $21.8 million class A4 rated 'AAA', remains on Rating Watch Negative (BL: 50.60, LCR: 1.99); -- $43.5 million class M1 rated 'AA+', remains on Rating Watch Negative (BL: 44.38, LCR: 1.75); -- $40.2 million class M2 downgraded to 'BB' from 'AA' (BL: 37.94, LCR: 1.49); -- $28.1 million class M3 downgraded to 'BB' from 'AA-' (BL: 33.37, LCR: 1.31); -- $19.3 million class M4 downgraded to 'B' from 'A+' (BL: 30.20, LCR: 1.19); -- $19.3 million class M5 downgraded to 'B' from 'A' (BL: 27.01, LCR: 1.06); -- $17.1 million class M6 downgraded to 'CCC' from 'A-' (BL: 24.13, LCR: 0.95); -- $18.2 million class M7 downgraded to 'CCC' from 'BBB+' (BL: 20.93, LCR: 0.82); -- $13.2 million class M8 downgraded to 'CC' from 'BBB' (BL: 18.56, LCR: 0.73); -- $12.1 million class M9 downgraded to 'CC' from 'BBB-' (BL: 16.29, LCR: 0.64); -- $12.1 million class M10 downgraded to 'CC' from 'BB+' (BL: 14.20, LCR: 0.56); -- $8.3 million class M11 downgraded to 'CC' from 'BB' (BL: 12.88, LCR: 0.51); Deal Summary -- Originator: Aegis Mortgage Corporation (100%) -- 60+ day Delinquency: 27.36% -- Realized Losses to date (% of Original Balance): 1.80% -- Expected Remaining Losses (% of Current balance): 25.38% -- Cumulative Expected Losses (% of Original Balance): 16.09% ABSC 2006-HE2 -- $158.3 million class A1 rated 'AAA', remains on Rating Watch Negative (BL: 53.50, LCR: 1.99); -- $17.6 million class A1-A downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 46.23, LCR: 1.72); -- $1.1 million class A2 affirmed at 'AAA', (BL: 99.53, LCR: 3.7); -- $118.3 million class A3 rated 'AAA', remains on Rating Watch Negative (BL: 49.13, LCR: 1.83); -- $15.4 million class A4 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 46.13, LCR: 1.71); -- $36.2 million class M1 downgraded to 'BB' from 'AA+' (BL: 38.70, LCR: 1.44); -- $23.9 million class M2 downgraded to 'B' from 'AA' (BL: 33.44, LCR: 1.24); -- $14.2 million class M3 downgraded to 'B' from 'AA-' (BL: 30.28, LCR: 1.13); -- $13.1 million class M4 downgraded to 'B' from 'A+' (BL: 27.34, LCR: 1.02); -- $12.7 million class M5 downgraded to 'CCC' from 'A' (BL: 24.49, LCR: 0.91); -- $11.6 million class M6 downgraded to 'CCC' from 'BBB+' (BL: 21.82, LCR: 0.81); -- $10.8 million class M7 downgraded to 'CC' from 'BBB-' (BL: 19.20, LCR: 0.71); -- $5.6 million class M8 downgraded to 'CC' from 'BB+' (BL: 17.78, LCR: 0.66); -- $5.6 million class M9 downgraded to 'CC' from 'BB' (BL: 16.15, LCR: 0.6); -- $6.0 million class M10 downgraded to 'CC' from 'B+' (BL: 14.46, LCR: 0.54); -- $7.5 million class M11 downgraded to 'C' from 'CCC' (BL: 12.62, LCR: 0.47); Deal Summary -- Originator: New Century Mortgage Corporation (100%) -- 60+ day Delinquency: 28.50% -- Realized Losses to date (% of Original Balance): 1.16% -- Expected Remaining Losses (% of Current balance): 26.90% -- Cumulative Expected Losses (% of Original Balance): 17.98% ABSC 2006-HE3 -- $85.9 million class A1 downgraded to 'AA' from 'AAA' (BL: 49.36, LCR: 1.98); -- $83.1 million class A2 rated 'AAA', remains on Rating Watch Negative (BL: 49.57, LCR: 1.99); -- $18.7 million class A3 affirmed at 'AAA', (BL: 97.22, LCR: 3.9); -- $165.3 million class A4 rated 'AAA', remains on Rating Watch Negative (BL: 48.72, LCR: 1.96); -- $25.6 million class A5 downgraded to 'AA' from 'AAA' (BL: 47.20, LCR: 1.89); -- $70.5 million class M1 downgraded to 'BB' from 'AA' (BL: 35.54, LCR: 1.43); -- $19.3 million class M2 downgraded to 'BB' from 'AA' (BL: 32.19, LCR: 1.29); -- $16.4 million class M3 downgraded to 'B' from 'AA-' (BL: 29.33, LCR: 1.18); -- $15.4 million class M4 downgraded to 'B' from 'A+' (BL: 26.57, LCR: 1.07); -- $14.0 million class M5 downgraded to 'CCC' from 'A' (BL: 23.91, LCR: 0.96); -- $13.5 million class M6 downgraded to 'CCC' from 'BBB+' (BL: 21.22, LCR: 0.85); -- $11.6 million class M7 downgraded to 'CCC' from 'BBB' (BL: 18.85, LCR: 0.76); -- $6.8 million class M8 downgraded to 'CC' from 'BBB-' (BL: 17.31, LCR: 0.69); -- $4.8 million class M9 downgraded to 'CC' from 'BBB-' (BL: 16.20, LCR: 0.65); -- $9.7 million class M10 downgraded to 'CC' from 'BB+' (BL: 14.06, LCR: 0.56); -- $7.7 million class M11 downgraded to 'CC' from 'BB-' (BL: 12.64, LCR: 0.51); Deal Summary -- Originators: Option One Mortgage Corporation (100%) -- 60+ day Delinquency: 22.16% -- Realized Losses to date (% of Original Balance): 0.76% -- Expected Remaining Losses (% of Current balance): 24.92% -- Cumulative Expected Losses (% of Original Balance): 15.73% ABSC 2006-HE4 -- $69.5 million class A1 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 49.65, LCR: 1.47); -- $8.8 million class A1-A downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 49.20, LCR: 1.46); -- $81.4 million class A2 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 48.69, LCR: 1.45); -- $42.9 million class A4 affirmed at 'AAA', (BL: 86.87, LCR: 2.58); -- $101.0 million class A5 downgraded to 'AA' from 'AAA' (BL: 51.24, LCR: 1.52); -- $23.2 million class A6 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 47.87, LCR: 1.42); -- $87.3 million class M1 downgraded to 'CCC' from 'AA' (BL: 31.66, LCR: 0.94); -- $25.0 million class M2 downgraded to 'CCC' from 'AA-' (BL: 26.98, LCR: 0.8); -- $17.7 million class M3 downgraded to 'CC' from 'A-' (BL: 23.65, LCR: 0.7); -- $16.8 million class M4 downgraded to 'CC' from 'BBB' (BL: 20.46, LCR: 0.61); -- $10.5 million class M5 downgraded to 'CC' from 'BBB-' (BL: 18.43, LCR: 0.55); -- $11.4 million class M6 downgraded to 'C' from 'BB' (BL: 16.13, LCR: 0.48); -- $6.8 million class M7 downgraded to 'C' from 'BB-' (BL: 14.72, LCR: 0.44); -- $10.9 million class M8 downgraded to 'C' from 'B+' (BL: 12.33, LCR: 0.37); -- $11.4 million class M9 downgraded to 'C' from 'CCC' (BL: 9.94, LCR: 0.3); -- $9.1 million class M10 downgraded to 'C' from 'CCC' (BL: 8.45, LCR: 0.25); Deal Summary -- Originator: New Century Mortgage Corporation (100%) -- 60+ day Delinquency: 29.03% -- Realized Losses to date (% of Original Balance): 2.16% -- Expected Remaining Losses (% of Current balance): 33.68% -- Cumulative Expected Losses (% of Original Balance): 22.03% ABSC 2006-HE5 -- $155.8 million class A1 downgraded to 'AA' from 'AAA' (BL: 55.53, LCR: 1.7); -- $58.2 million class A2 affirmed at 'AAA', (BL: 80.15, LCR: 2.45); -- $65.3 million class A3 affirmed at 'AAA', (BL: 65.39, LCR: 2); -- $92.2 million class A4 downgraded to 'AA' from 'AAA' (BL: 53.54, LCR: 1.64); -- $15.4 million class A5 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 52.17, LCR: 1.59); -- $55.8 million class M1 downgraded to 'BB' from 'AA+' (BL: 43.93, LCR: 1.34); -- $48.9 million class M2 downgraded to 'B' from 'AA' (BL: 36.36, LCR: 1.11); -- $17.8 million class M3 downgraded to 'B' from 'AA-' (BL: 33.59, LCR: 1.03); -- $22.9 million class M4 downgraded to 'CCC' from 'A+' (BL: 30.03, LCR: 0.92); -- $18.3 million class M5 downgraded to 'CCC' from 'A' (BL: 27.17, LCR: 0.83); -- $13.3 million class M6 downgraded to 'CCC' from 'A-' (BL: 25.06, LCR: 0.77); -- $16.0 million class M7 downgraded to 'CC' from 'BBB+' (BL: 22.41, LCR: 0.69); -- $8.7 million class M8 downgraded to 'CC' from 'BBB' (BL: 20.90, LCR: 0.64); -- $11.9 million class M9 downgraded to 'CC' from 'BBB-' (BL: 18.56, LCR: 0.57); -- $15.1 million class M10 downgraded to 'C' from 'BB-' (BL: 15.59, LCR: 0.48); -- $11.0 million class M11 downgraded to 'C' from 'B' (BL: 13.85, LCR: 0.42); Deal Summary -- Originator: Option One Mortgage Corporation (100%) -- 60+ day Delinquency: 26.43% -- Realized Losses to date (% of Original Balance): 0.55% -- Expected Remaining Losses (% of Current balance): 32.71% -- Cumulative Expected Losses (% of Original Balance): 23.52% ABSC 2006-HE6 -- $120.2 million class A1 downgraded to 'A' from 'AAA' (BL: 44.78, LCR: 1.4); -- $137.9 million class A2 affirmed at 'AAA', (BL: 66.87, LCR: 2.1); -- $78.2 million class A3 rated 'AAA', remains on Rating Watch Negative (BL: 56.82, LCR: 1.78); -- $125.5 million class A4 downgraded to 'A' from 'AAA' (BL: 46.47, LCR: 1.46); -- $40.9 million class A5 downgraded to 'A' from 'AAA' (BL: 44.31, LCR: 1.39); -- $50.7 million class M1 downgraded to 'B' from 'AA+' (BL: 37.47, LCR: 1.17); -- $42.0 million class M2 downgraded to 'CCC' from 'AA' (BL: 31.73, LCR: 0.99); -- $15.9 million class M3 downgraded to 'CCC' from 'AA-' (BL: 29.53, LCR: 0.93); -- $18.8 million class M4 downgraded to 'CCC' from 'A+' (BL: 26.89, LCR: 0.84); -- $16.9 million class M5 downgraded to 'CCC' from 'A' (BL: 24.45, LCR: 0.77); -- $11.1 million class M6 downgraded to 'CC' from 'A-' (BL: 22.79, LCR: 0.71); -- $11.6 million class M7 downgraded to 'CC' from 'A-' (BL: 20.95, LCR: 0.66); -- $8.7 million class M8 downgraded to 'CC' from 'BBB+' (BL: 19.46, LCR: 0.61); -- $11.6 million class M9 downgraded to 'CC' from 'BBB' (BL: 17.36, LCR: 0.54); -- $14.5 million class M10 downgraded to 'C' from 'BB' (BL: 14.83, LCR: 0.46); -- $13.0 million class M11 downgraded to 'C' from 'B+' (BL: 12.95, LCR: 0.41); Deal Summary -- Originators: Nationstar Mortgage (52.84%), Ameriquest Mortgage Company (47.16%) -- 60+ day Delinquency: 19.89% -- Realized Losses to date (% of Original Balance): 0.22% -- Expected Remaining Losses (% of Current balance): 31.91% -- Cumulative Expected Losses (% of Original Balance): 24.57% ABSC 2006-HE7 -- $209.7 million class A1 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 41.91, LCR: 1.24); -- $104.0 million class A2 affirmed at 'AAA', (BL: 70.61, LCR: 2.09); -- $76.3 million class A3 downgraded to 'AA' from 'AAA' (BL: 56.96, LCR: 1.69); -- $134.4 million class A4 downgraded to 'A' from 'AAA' (BL: 43.86, LCR: 1.3); -- $32.8 million class A5 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 41.96, LCR: 1.24); -- $55.8 million class M1 downgraded to 'B' from 'AA+' (BL: 34.98, LCR: 1.04); -- $47.6 million class M2 downgraded to 'CCC' from 'AA' (BL: 29.03, LCR: 0.86); -- $13.4 million class M3 downgraded to 'CCC' from 'AA-' (BL: 27.33, LCR: 0.81); -- $22.2 million class M4 downgraded to 'CC' from 'A+' (BL: 24.47, LCR: 0.73); -- $18.6 million class M5 downgraded to 'CC' from 'A' (BL: 22.04, LCR: 0.65); -- $9.8 million class M6 downgraded to 'CC' from 'A-' (BL: 20.72, LCR: 0.61); -- $11.4 million class M7 downgraded to 'CC' from 'BBB+' (BL: 19.11, LCR: 0.57); -- $9.3 million class M8 downgraded to 'CC' from 'BBB' (BL: 17.64, LCR: 0.52); -- $11.9 million class M9 downgraded to 'C' from 'BBB-' (BL: 15.65, LCR: 0.46); -- $13.4 million class M10 downgraded to 'C' from 'BB' (BL: 13.41, LCR: 0.4); -- $14.0 million class M11 downgraded to 'C' from 'B' (BL: 11.54, LCR: 0.34); Deal Summary -- Originators: Ameriquest Mortgage Company (100%) -- 60+ day Delinquency: 25.54% -- Realized Losses to date (% of Original Balance): 0.49% -- Expected Remaining Losses (% of Current balance): 33.73% -- Cumulative Expected Losses (% of Original Balance): 26.66% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. ASSET BACKED: Fitch Junks Ratings on 30 Certificate Classes ----------------------------------------------------------- Fitch Ratings has taken rating actions on four Asset Backed Funding Corp. mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $494.1 million and downgrades total $2.6 billion. In addition, $1.1 billion is placed on or remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class, rated 'B' or higher, are included with the rating actions as: ABFC 2006-HE1 -- $234.0 million class A-1 downgraded to 'A' from 'AAA' and remains on Rating Watch Negative (BL: 36.96, LCR: 1.38); -- $249.9 million class A-2A affirmed at 'AAA' (BL: 56.55, LCR: 2.12); -- $107.9 million class A-2B, rated 'AAA' and remains on Rating Watch Negative (BL: 48.33, LCR: 1.81); -- $180.4 million class A-2C downgraded to 'A' from 'AAA' (BL: 39.89, LCR: 1.49); -- $118.2 million class A-2D downgraded to 'A' from 'AAA' and remains on Rating Watch Negative (BL: 36.29, LCR: 1.36); -- $46.0 million class M-1 downgraded to 'B' from 'AA+' (BL: 32.29, LCR: 1.21); -- $43.2 million class M-2 downgraded to 'B' from 'AA' (BL: 28.48, LCR: 1.07); -- $26.9 million class M-3 downgraded to 'CCC' from 'AA-' (BL: 26.08, LCR: 0.98); -- $23.4 million class M-4 downgraded to 'CCC' from 'A+' (BL: 23.94, LCR: 0.90); -- $22.6 million class M-5 downgraded to 'CCC' from 'A' (BL: 21.80, LCR: 0.82); -- $21.2 million class M-6 downgraded to 'CC' from 'A-' (BL: 19.71, LCR: 0.74); -- $18.4 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 17.77, LCR: 0.66); -- $12 million class M-8 downgraded to 'CC' from 'BBB' (BL: 16.38, LCR: 0.61); -- $10.6 million class M-9 downgraded to 'CC' from 'BBB-' (BL: 15.14, LCR: 0.57); -- $14.2 million class B downgraded to 'CC' from 'B+' (BL: 13.90, LCR: 0.52). Deal Summary -- Largest Originator: 72.54% Accredited Home Lenders, Inc.; -- 60+ day Delinquency: 18.93%; -- Realized Losses to date (% of Original Balance): 0.79%; -- Expected Remaining Losses (% of Current Balance): 26.73%; -- Cumulative Expected Losses (% of Original Balance): 22.84%. ABFC 2006-OPT1 -- $102.2 million class A-1 downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 51.94, LCR: 1.69); -- $100.9 million class A-2 downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 52.19, LCR: 1.70); -- $75.7 million class A-3A affirmed at 'AAA' (BL: 77.37, LCR: 2.52); -- $79.7 million class A-3B affirmed at 'AAA' (BL: 64.07, LCR: 2.08); -- $75.0 million class A-3C1 downgraded to 'AA' from 'AAA' (BL: 53.46, LCR: 1.74); -- $33.5 million class A-3C2 downgraded to 'AA' from 'AAA' (BL: 53.46, LCR: 1.74); -- $18.8 million class A-3D downgraded to 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 51.76, LCR: 1.68); -- $57.4 million class M-1 downgraded to 'BB' from 'AA+' (BL: 44.91, LCR: 1.46); -- $55.2 million class M-2 downgraded to 'B' from 'AA' (BL: 37.92, LCR: 1.23); -- $20.0 million class M-3 downgraded to 'B' from 'AA-' (BL: 35.38, LCR: 1.15); -- $23.3 million class M-4 downgraded to 'B' from 'A+' (BL: 32.40, LCR: 1.05); -- $21.1 million class M-5 downgraded to 'CCC' from 'A' (BL: 29.69, LCR: 0.97); -- $16.2 million class M-6 downgraded to 'CCC' from 'A-' (BL: 27.56, LCR: 0.90); -- $20.6 million class M-7 downgraded to 'CCC' from 'BBB' (BL: 24.54, LCR: 0.80); -- $12.4 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 22.63, LCR: 0.74); -- $15.2 million class M-9 downgraded to 'CC' from 'BB' (BL: 20.10, LCR: 0.65); -- $20.0 million class B downgraded to 'CC' from 'CCC' (BL: 17.21, LCR: 0.56). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 22.37%; -- Realized Losses to date (% of Original Balance): 0.46%; -- Expected Remaining Losses (% of Current Balance): 30.76%; -- Cumulative Expected Losses (% of Original Balance): 22.70%. ABFC 2006-OPT2 -- $162.2 million class A-1 downgraded to 'A' from 'AAA' (BL: 42.37, LCR: 1.42); -- $146.2 million class A-2 downgraded to 'A' from 'AAA' (BL: 43.79, LCR: 1.47); -- $88.9 million class A-3A affirmed at 'AAA' (BL: 65.22, LCR: 2.19); -- $52.9 million class A-3B, rated 'AAA' and remains on Rating Watch Negative (BL: 55.62, LCR: 1.87); -- $97.0 million class A-3C, rated 'AA' from 'AAA' and remains on Rating Watch Negative (BL: 45.18, LCR: 1.52); -- $45.9 million class A-3D downgraded to 'A' from 'AAA' (BL: 42.28, LCR: 1.42); -- $49.5 million class M-1 downgraded to 'B' from 'AA+' (BL: 36.27, LCR: 1.22); -- $30.6 million class M-2 downgraded to 'B' from 'AA' (BL: 32.52, LCR: 1.09); -- $21.6 million class M-3 downgraded to 'B' from 'AA-' (BL: 29.84, LCR: 1.00); -- $19.2 million class M-4 downgraded to 'CCC' from 'A+' (BL: 27.42, LCR: 0.92); -- $19.2 million class M-5 downgraded to 'CCC' from 'A' (BL: 24.84, LCR: 0.83); -- $18.7 million class M-6 downgraded to 'CCC' from 'A-' (BL: 22.23, LCR: 0.75); -- $17.0 million class M-7 downgraded to 'CC' from 'BBB+' (BL: 19.71, LCR: 0.66); -- $10.4 million class M-8 downgraded to 'CC' from 'BBB' (BL: 18.13, LCR: 0.61); -- $8.8 million class M-9 downgraded to 'CC' from 'BBB-' (BL: 16.65, LCR: 0.56); -- $11.0 million class B downgraded to 'CC' from 'B+' (BL: 15.12, LCR: 0.51). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 22.50%; -- Realized Losses to date (% of Original Balance): 0.17%; -- Expected Remaining Losses (% of Current Balance): 29.82%; -- Cumulative Expected Losses (% of Original Balance): 22.59%. ABFC 2006-OPT3 -- $87.7 million class A-1 downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.96, LCR: 1.22); -- $91.3 million class A-2 downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.69, LCR: 1.22); -- $142.9 million class A-3A downgraded to 'AA' from 'AAA' (BL: 59.92, LCR: 1.63); -- $165.1 million class A-3B downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 45.01, LCR: 1.23); -- $5.5 million class A-3C downgraded to 'BBB' from 'AAA' and remains on Rating Watch Negative (BL: 44.75, LCR: 1.22); -- $35.0 million class M-1 downgraded to 'B' from 'AA+' (BL: 39.61, LCR: 1.08); -- $32.1 million class M-2 downgraded to 'CCC' from 'AA' (BL: 34.90, LCR: 0.95); -- $18.6 million class M-3 downgraded to 'CCC' from 'AA-' (BL: 32.10, LCR: 0.87); -- $16.0 million class M-4 downgraded to 'CCC' from 'A+' (BL: 29.53, LCR: 0.80); -- $15.6 million class M-5 downgraded to 'CC' from 'A' (BL: 26.94, LCR: 0.73); -- $13.9 million class M-6 downgraded to 'CC' from 'A-' (BL: 24.52, LCR: 0.67); -- $13.5 million class M-7 downgraded to 'CC' from 'BBB' (BL: 22.01, LCR: 0.60); -- $12.2 million class M-8 downgraded to 'CC' from 'BBB-' (BL: 19.66, LCR: 0.54); -- $10.6 million class M-9 downgraded to 'C' from 'BB+' (BL: 17.80, LCR: 0.48); -- $10.1 million class B downgraded to 'C' from 'B+' (BL: 16.35, LCR: 0.45). Deal Summary -- Originator: 100% Option One Mortgage Corp.; -- 60+ day Delinquency: 23.53%; -- Realized Losses to date (% of Original Balance): 0.18%; -- Expected Remaining Losses (% of Current Balance): 36.72%; -- Cumulative Expected Losses (% of Original Balance): 30.66%. The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006, and late 2005 with regard to continued poor loan performance and home price weakness. AVNET INC: Moody's Upgrades CFR on Improving Operating Efficiency ----------------------------------------------------------------- Moody's Investors Service raised the corporate family and senior unsecured ratings of Avnet Inc. to Baa3 from Ba1 with a stable outlook. "The upgrade reflects our expectation that Avnet's operating performance will continue to benefit from the secular outsourcing trend underway in the electronics OEM space, improved product mix, as ll as enhanced scale, increasing geographic diversity and an expanded line card with access to new customer relationships as a result of recent acquisitions," according to Moody's Vice President & Senior Analyst Gregory Fraser, CFA. Moody's cited the upgrade considers the solid execution, operating efficiency improvements and working capital management that have exceeded expectations resulting in operating margin and ROA expansion, improved credit protection measures, higher gross cash flow levels and an enhanced business model that has the propensity to deliver consistent levels of positive free cash flow especially during periods of industry akness. The steady improvement in financial leverage, which Moody's expects to continue, also supports the upgrade, as does Avnet's disciplined financial philosophy with respect to maintaining strong balance sheet liquidity and modest financial leverage. "Barring an extended period of economic weakness, we expect Avnet to continue to grow operating income at a faster pace than revenues and maintain a focus on balance sheet de-leveraging via either free cash flow generation targeted towards debt reduction or higher levels of operating cash flow," Mr. Fraser added. The stable ratings outlook reflects expectations for stable financial leverage and interest coverage metrics, relatively steady vendor/customer relationships, and maintenance of operating margins in the 2-4% range during an economic cycle. The rating outlook factors in Moody's expectation that debt to book capitalization will remain below 35% and retained cash flow to debt will remain above 25% in a downturn scenario. Despite Avnet's end market and geographic diversification, there is some concern that the current weak macro-economic environment could result in a broad-based corporate IT spending slowdown, potentially impacting Avnet's operating profitability. However, in a reasonable downside scenario, which is incorporated in the Baa3 rating, Moody's does not expect operating margins to fall below 2.5% based on Avnet's enhanced scale and current operating leverage. Additionally, given Avnet's ongoing focus on cost controls, Moody's believes the company should be less vulnerable during an industry retrenchment than in previous cycles. Nonetheless, the rating could experience downward pressure to the extent operating margins were to fall below 2.5% on a sustained basis (two to four quarters). The rating factors the volatility of inventory and payables usage which can be irregular from quarter to quarter given the working capital intensity of the business model driven by seasonal demands. Mitigating this concern is Avnet's improved working capital leverage and cash conversion cycle as well as higher absolute yearly gross cash flow levels that cushion periods of high working capital consumption. The company maintains very good liquidity and financial flexibility. This is driven by Avnet's $417 million of cash, Moody's expectations for free cash flow generation of at least $300 million in fiscal 2008, plus full access to a $450 million accounts receivable securitization program (maturing 2008) and $500 million unsecured revolver (maturing 2012). These ratings were upgraded: -- Corporate Family Rating to Baa3 from Ba1 -- Senior Unsecured Notes to Baa3 from Ba1 -- Senior / Subordinated Shelf Ratings to (P)Baa3 / (P)Ba1 from (P)Ba1 / (P)Ba2 Concurrently, Moody's has withdrawn these ratings and expects to withdraw the corporate family rating shortly as well, as these measures are applicable only for below investment grade companies: -- Probability of Default Rating -- All LGD Assessments Avnet, Inc., headquartered in Phoenix, Arizona, is one of the largest worldwide distributors of electronic components and computer products, primarily for industrial customers. Revenues and EBITDA for the twelve months ended Dec. 29, 2007 were $17.0 billion and $873 million, respectively. AXCAN INTERMEDIATE: Moody's Holds B1 Ratings on Capital Changes --------------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family and Probability of Default ratings of Axcan Intermediate Holdings, Inc., following changes to the capital structure that had originally been proposed in connection with the acquisition of Axcan Pharma Inc. The changes to the capital structure reflect difficult market conditions in the bank loan market. The ratings rationale was set out in a press release dated Jan. 25, 2008. Moody's took these rating actions: -- Withdrew the Ba2 (LGD 2, 26%) rating on the originally proposed $350 million senior secured term loan B due 2015; -- Assigned Ba2 (LGD 2, 29%) to $175 million senior secured term loan A due 2014; -- Assigned Ba2 (LGD 2, 29%) to $228 million senior secured notes due 2015; -- Affirmed the B1 Corporate Family Rating; -- Affirmed the B1 Probability of Default Rating; -- Affirmed the Ba2 (LGD 2, 29%) rating on $115 million senior secured revolving credit facility due 2014; -- Affirmed the B3 (LGD 5, 83%) rating on $235 million senior unsecured notes due 2016; The ratings outlook is stable. Moody's also affirmed the Speculative Grade Liquidity Rating of SGL 2. Axcan Pharma Inc., based in Mont St-Hilaire, Quebec, is a specialty pharmaceutical company concentrating in the field of gastroenterology with operations in North America and Europe. Axcan had revenue of approximately $349 million for the fiscal year ended Sept. 30, 2007. BASIC MORTGAGE: Fitch Chips Ratings on Seven Certificate Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on BASIC mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $63.3 million and downgrades total $45.6 million. Additionally, $11.4 million remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: BASIC Asset Backed Securities Trust 2006-1 -- $5.8 million class A-1 affirmed at 'AAA', (BL: 97.72, LCR: 3.56); -- $57.4 million class A-2 affirmed at 'AAA', (BL: 54.60, LCR: 1.99); -- $11.4 million class A-3 rated 'AAA', remains on Rating Watch Negative (BL: 50.27, LCR: 1.83); -- $16.2 million class M-1 downgraded to 'BB' from 'AA' (BL: 37.24, LCR: 1.36); -- $13.1 million class M-2 downgraded to 'CCC' from 'A' (BL: 26.82, LCR: 0.98); -- $6.9 million class M-3 downgraded to 'CCC' from 'BBB+' (BL: 21.09, LCR: 0.77); -- $2.9 million class M-4 downgraded to 'CC' from 'BBB-' (BL: 18.48, LCR: 0.67); -- $2.3 million class M-5 downgraded to 'CC' from 'BB+' (BL: 16.38, LCR: 0.6); -- $2.1 million class M-6 downgraded to 'CC' from 'BB' (BL: 14.57, LCR: 0.53); -- $2.1 million class M-7 downgraded to 'C' from 'B+' (BL: 13.14, LCR: 0.48); Deal Summary -- Originators: Various -- 60+ day Delinquency: 30.94% -- Realized Losses to date (% of Original Balance): 0.54% -- Expected Remaining Losses (% of Current balance): 27.47% -- Cumulative Expected Losses (% of Original Balance): 16.78% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. BEST BRANDS: Covenant Violations Won't Affect S&P's Junk Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and outlook on Minnetonka, Minn.-based Best Brands Corp. (CCC/Negative/--) remain unchanged following the company's disclosure that it is in violation of its financial covenant compliance under its first- and second-lien bank credit agreement for the quarter ended Dec. 31, 2007. Financial results have been weaker than expected due to high commodity costs and sales weakness within select product categories. In addition, integrating the December 2006 Telco acquisition has been more complex than anticipated. Best Brands had about $17 million in cash on its balance sheet at Dec. 31, 2007 and currently has access to its $30 million revolver. However, S&P is concerned about the company's liquidity, and ratings could be lowered if the company is unable to obtain a waiver and bank amendment in a timely and cost- effective manner given current market conditions. BRANDYWINE REALTY: Earns $31.5 Mil. in Quarter Ended December 31 ---------------------------------------------------------------- Brandywine Realty Trust reported its financial and operating results for the three and twelve month periods ended Dec. 31, 2007. Net income totaled $31.5 million in the fourth quarter of 2007, compared to $22.1 million in the fourth quarter of 2006. Net income in the fourth quarter of 2007 included a $40.5 million gain on the disposition of real estate related to the formation of its joint venture with DRA Advisors LLC and the $3.7 million hedge settlement expense, while net income in the fourth quarter of 2006 included an $11.6 million gain on the disposition of undepreciated real estate and a $15.1 million gain on the disposition of discontinued real estate. Net income totaled $48.5 million for 2007, compared to $2.5 million or $0.03 per diluted share for 2006. Net income in 2007 included the $40.5 million gain on the disposition of real estate related to the formation of our joint venture with DRA Advisors, a $25.7 million gain on the disposition of discontinued real estate and the $3.7 million hedge settlement expense, while net income in 2006 included a $14.2 million gain on the disposition of undepreciated real estate, a $20.2 million gain on the disposition of discontinued real estate and a $3.1 million gain on the settlement of a purchase contract. At Dec. 31, 2007, the company's core portfolio was 93.9% occupied and 94.7% leased, reflecting leases commencing after Dec. 31, 2007, versus 91.5% and 93.2% at Dec. 31, 2006. The company owned 257 properties at Dec. 31, 2007, encompassing 243 properties in its core portfolio and 14 properties under development or redevelopment. At Dec. 31, 2007, the company's balance sheet showed total assets of $5.21 billion, total liabilities of $3.47 billion and total beneficiaries' equity of $1.74 billion. Investment Highlights -- The company acquired no properties in the fourth quarter of 2007. -- During the fourth quarter of 2007, it sold two office properties, 111/113 Pencader Drive in Newark, Delaware and 2490 Boulevard of the Generals in West Norriton, Pennsylvania, for $5.1 million and $1.5 million, and realized total gains on the sales of $0.3 million. The company also completed the sale and contribution of a portfolio of 29 suburban Philadelphia office properties to a joint venture consisting of DRA Advisors LLC with an 80% interest and affiliates of Brandywine Realty Trust with a 20% interest. The company sold the venture an 89% interest in three of the properties, and sold or contributed 100% interests in the rest. The overall portfolio was valued at $245.4 million, reflecting 100% interests throughout. In conjunction with the sale and contribution, the company realized $230.9 million of net proceeds after deducting its transaction expenses, and recorded a gain on the sale and contribution of $40.5 million. -- At Dec. 31, 2007, the company was working on seven ground-up office developments and seven office redevelopments with a total identified cost of $718.3 million of which $442.6 million remained to be funded. These amounts include $375.0 million of costs for the combined 30th Street Post Office and garage development in Philadelphia, Pennsylvania of which $331.9 million remained to be funded at Dec. 31, 2007, for the most part in 2009 and 2010. Since Sept. 30, 2007, the company signed a series of new leases aggregating 301,487 square feet, bringing the total leasing rate to 57.5% for our seven ground-up developments and to 69.4% for its seven redevelopments. Capital Markets Highlights -- During the fourth quarter of 2007, the company closed and funded a $150 million, three-year unsecured term loan with a floating rate of LIBOR plus 80 basis points. The net proceeds were used to reduce indebtedness under its unsecured revolving credit facilities. -- At Dec. 31, 2007, its net debt to gross assets measured 53.6% compared to 52.0% at Dec. 31, 2006 and 54.3% at Sept. 30, 2007. At Dec. 31, 2007, the company has $475.7 million available for use and drawdown under its various credit facilities. -- The company achieved 2.5 times interest coverage ratio for the year ended Dec. 31, 2007 versus 2.4 for the year ended Dec. 31, 2006. "Throughout the year, we have maintained consistently high levels of occupancy, retention and absorption in our core portfolio, while continuing to reduce the capital outlays to achieve these results," Gerard H. Sweeney, president and CEO of Brandywine Realty Trust, stated. "Our joint venture with DRA Advisors has established a good, alternative source of capital and we hope to increase our activities in this area as part of our overall capital recycling and balance sheet strengthening initiatives." "We have also had some recent success in the lease-up of our development and redevelopment projects and will continue to push hard on that front," Mr. Sweeney added. "Our 2008 business and capital plans reflect a somewhat more cautious view on the economy, yet reinforce our commitment to maximizing total shareholder return. On a personal note, I want to thank Mike Prentiss and Tom August, our departing board trustees, for their fine service and contributions to Brandywine and wish them well in their future endeavors." Distributions On Dec. 11, 2007, the company's board of trustees declared a quarterly dividend distribution of $0.44 per common share that was paid on Jan. 18, 2008, to shareholders of record as of Jan. 4, 2008. Its board also declared quarterly dividend distributions of $0.46875 per 7.50% Series C Cumulative Redeemable Preferred Share and $0.460938 per 7.375% Series D Cumulative Redeemable Preferred Share that were paid on Jan. 15, 2008, to holders of record as of Dec. 30, 2007, of the Series C and Series D Preferred Shares. Share Repurchase Program The company wa authorized to purchase an additional 539,200 common shares and may make repurchases from time to time in the open market or in privately negotiated transactions, subject to market conditions and compliance with legal requirements. The share repurchase program does not contain any time limitation and does not obligate us to repurchase any shares. The company did not purchase any shares in the fourth quarter of 2007 or to date in 2008 and may discontinue the program at any time. About Brandywine Headquartered in Radnor, Pennsylvania, Brandywine Realty Trust (NYSE: BDN), http://www.brandywinerealty.com/-- is one of the full-service, integrated real estate companies in the United States and is focused primarily on the ownership, management and development of class A, suburban and urban office buildings in selected markets aggregating approximately 42 million square feet. * * * Fitch and Moody's each assigned a 'BB+' rating on Brandywine Realty Trust's Preferred Stock. The ratings still hold to date with positive and stable outlooks. BROWN SHOE: Richard Schumacher to Retire Effective March 31 ----------------------------------------------------------- Richard C. Schumacher, senior vice president and chief accounting officer of Brown Shoe Company Inc., will be retiring from the company effective March 31, 2008, the company disclosed in a regulatory filing with the U.S. Securities and Exchange Commission dated Feb. 19, 2008. About Brown Shoe Company Headquartered in St. Louis, Missouri, Brown Shoe Company Inc. (NYSE:BWS) -- http://www.brownshoe.com/-- is a $2.4 billion footwear company. Brown Shoe's Retail division operates Famous Footwear, the 1,000-store chain that sells brand name shoes for the family, approximately 300 specialty retail stores in the U.S. and Canada under the Naturalizer, FX LaSalle, and Franco Sarto names, and Shoes.com, the company's e-commerce subsidiary. Brown Shoe, through its wholesale divisions, owns and markets footwear brands including Naturalizer, LifeStride, Via Spiga, Nickels Soft, Connie and Buster Brown; it also markets licensed brands including Franco Sarto, Dr. Scholl's, Etienne Aigner, and Carlos by Carlos Santana and Barbie, Disney and Nickelodeon character footwear for children. * * * Moody's Investor Services placed Brown Shoe Company Inc.'s probability of default rating at 'Ba3' in September 2006. The rating still holds to date with a positive outlook. BUCYRUS INTERNATIONAL: Amends RAG Coal Share Purchase Deal ---------------------------------------------------------- On Feb. 18, 2008, Bucyrus International Inc. and its special- purpose acquisition subsidiary, DBT Holdings GmbH, entered into a Third Addendum to the Dec. 16, 2006 Share Purchase Agreement with RAG Coal International GmbH, pursuant to which the company purchased the shares of DBT GmbH on May 4, 2007. In accordance with this amendment, the parties agreed to a cash settlement of certain of the company's indemnification claims against the RAG Coal under the Agreement, in exchange for the company agreeing to an accelerated release of the lock-up and transfer restrictions on the 471,476 shares of the company's class A common stock issued to the RAG Coal pursuant to the Agreement. Under the original Agreement, with certain limited exceptions, RAG Coal could not, without the company's prior written consent, directly or indirectly sell or otherwise transfer (i) any of its company shares prior to May 4, 2008; (ii) more than 30% of its company shares prior to May 4, 2009; and (iii) more than 60% of its company shares prior to May 4, 2010. Under the terms of the Amendment, RAG Coal may now sell or transfer (subject to certain requirements to help ensure an orderly market distribution) up to 50% of its company shares beginning on Feb. 15, 2008, with the next 25% of its company shares eligible for sale on or after May 4, 2009, and the final 25% eligible for sale on or after May 4, 2010. About Bucyrus International Headquartered in South Milwaukee, Wisconsin, Bucyrus International Inc. (Nasdaq: BUCY) -- http://www.bucyrus.com/-- is a global manufacturer of electric mining shovels, walking draglines and rotary blasthole drills and provides aftermarket replacement parts and services for these machines. In 2006, it had sales of $738 million. * * * Moody's Investor Service placed the company's long-term corporate family rating at 'Ba3' in April 2007. The rating still holds to date with a stable outlook. BUFFETS HOLDINGS: Receives Final Approval for DIP Financing ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted on February 22, 2008, final approval of Buffets Holdings, Inc.'s debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. The Debtors sought permission to borrow up to $385 million. The DIP credit facility will be used to enhance the company's liquidity during the reorganization process. The Court authorized and directed each Debtor to pay from the borrowings under the DIP Documents interest, fees and expense reimbursements, and all fees -- including an annual administrative agent fee of $200,000 and an arrangement fee of $250,000 -- and expense reimbursements of Credit Suisse Cayman Islands Branch, as DIP Agent, and Credit Suisse Securities (USA) LLC, as sole lead arranger and book runner, and the reasonable fees and expense reimbursements of their attorneys, financial advisors and other professionals, and the reasonable fees and expenses of the attorneys for each of the DIP Lenders. All of the DIP Obligations, including the Roll-Up, will constitute an allowed claim, subject to payment of the Carve-Out against each Borrower and each Guarantor, with priority over any and all administrative expenses, diminution claims, all claims of any kind asserted by the Prepetition Lenders, and all other claims against the Debtors. This Superpriority Claim will be payable from and have recourse to all pre- and postpetition property of the Debtors and all proceeds from the property, subject only to the payment of the Carve-Out. As security for the DIP Obligations, security interests and liens are granted to the Agent for its own benefit and the benefit of the DIP Lenders, subject only to the extent of any payment of the Carve-Out. In addition, the Court authorized the Debtors to use all Cash Collateral of the Prepetition Lenders, and the Prepetition Lenders are directed promptly to turn over to the Debtors all Cash Collateral received or held by them. The Debtors' right to use Cash Collateral will terminate automatically, without further order or relief from the Court, on the earlier to occur of (i) the acceleration of any DIP Obligations and (ii) the Final DIP Order ceasing to be in full force and effect for any reason. The Prepetition Lenders are entitled to adequate protection of their interest in the Prepetition Collateral, including the Cash Collateral to the extent of the diminution in the value of their valid and perfected security interests and liens in the Prepetition Collateral as of the Petition Date. The Debtors acknowledge, among other things, that as of the Petition Date, they were indebted to the Prepetition Lenders in the aggregate principal amount of $565,353,000 under the revolving credit facilities and the term facility, and $67,261,633 in face amount of issued letters of credit, each plus accrued per diem interest with respect thereto and any fees, costs and charges provided under the Existing Credit Agreement. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. CAPITALSOURCE INC: Reports $15MM Net Loss for 2007 Fourth Quarter ----------------------------------------------------------------- CapitalSource Inc. reported a net loss of $15.0 million for the fourth quarter ended Dec. 31, 2007 compared to net income of $60.3 million for the same period of the previous year. For the year ended Dec. 31, 2007, the company earned $176.3 million compared to the net income for fiscal 2006 at $279.3 million. The company's consolidated net income was negatively impacted in the fourth quarter by net unrealized losses relating to interest rate swaps executed to minimize the company's exposure to interest rate risk in its commercial finance and healthcare net lease segments. As of Dec. 31, 2007, the company's balance sheet showed a total assets of $18.0 billion, total liabilities of $15.4 billion and a total shareholder's equity of $2.6 billion. "The unique value of CapitalSource was evident once again this quarter as we delivered strong and stable credit, excellent liquidity and superior returns on equity in the midst of a broad and dramatic financial dislocation," John K. Delaney, CapitalSource chairman and chief executive officer, said. "As competitors retreat from our market, the near term prospects for high quality lending opportunities have never been better." "I am both extremely pleased with how well the company continues to navigate the capital markets disruption and excited about our future prospects." Mr. Delaney continued. "Given the strength and performance of our business and, in particular, credit metrics that remain at the low end of historical ranges, we declared a $0.60 per share cash dividend for the first quarter of 2008 yesterday and we are projecting a $0.60 per share quarterly cash dividend for the balance of 2008." "Our business performed well in 2007, particularly in the context of a market environment that has become difficult for many financial institutions," Thomas A. Fink CapitalSource chief financial officer, said. "Full year Adjusted Earnings increased 5% to $448.2 million and consolidated adjusted return on equity was 18.8%, with the Commercial Finance segment delivering a 21.5% adjusted return on equity." "While managing the left side of our balance sheet has always been important to us, we focus as much attention on managing the right side of our balance sheet, and this has become another area of success for CapitalSource," Mr. Fink added. "During the fourth quarter we continued this success and enhanced our already strong liquidity levels through two term financings totaling $835 million and the continued operation of our Dividend Reinvestment and Stock Purchase Plan." "We ended the quarter with undrawn credit facility capacity of $3.4 billion, up $500 million from the prior quarter," Mr. Fink stated. "These are significant accomplishments, especially in light of current market conditions." "Patience and discipline will be rewarded in the current environment," Mr. Delaney went on to say. "We expect our growth in 2008 to be attractive but highly selective, capitalizing on the significant opportunities available to us." "From our perspective, those opportunities continue to get better, with pricing, terms and structures the best I have seen since we started CapitalSource," Mr. Delaney imparted. "As always, job one is to maintain ample liquidity and stable credit performance." About CapitalSource Based in Chevy CHase, Maryland, CapitalSource Inc. (NYSE:CSE) -- http://www.capitalsource.com/-- is a commercial lending, investment and asset management company focused on the middle market. The company operates as a real estate investment trust and provides senior and subordinated commercial loans, invest in real estate, engage in asset management and servicing activities, and invest in residential mortgage assets. On Jan. 1, 2006, it began operating in two segments: commercial lending & investment and residential mortgage investment. The commercial lending & investment segment includes commercial lending and investment business, and the residential mortgage investment segment includes activities related to the residential mortgage investments. During the year ended Dec. 31, 2006, the company diversified its business to include real estate lease financing products and asset management services. During 2006, the company began acquiring real estate for long-term investment purposes, all of which involved healthcare properties. * * * CapitalSource Inc. continues to carry Fitch Ratings' 'BB+' senior subordinate debt rating, given on May, 2007, with a stable outlook. CELL THERAPEUTICS: Exchanges $8.943MM of 5.75% Senior Sub. Notes ---------------------------------------------------------------- Cell Therapeutics Inc. exchanged $8.943 million in aggregate principal of its outstanding 5.75% Convertible Senior Subordinated Notes due 2008 and approximately $150,000 in aggregate principal of its outstanding 5.75% Convertible Subordinated Notes due 2008, together with the accrued and unpaid interest on the Notes, for approximately 6.85 million shares of the company's common stock, no par value. The common stock was issued in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. Approximately $10.7 million in Senior Subordinated Notes and Subordinated Notes remain outstanding and mature in June 2008. The common stock to be issued pursuant to the exchange agreement has not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state laws. Based in Seattle, Cell Therapeutics Inc. (NasdaqGM: CTIC) -- http://cticseattle.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Cell Therapeutics Inc.'s Sept. 30, 2007, consolidated balance sheet showed $84.9 million in total assets, $180.8 million in total liabilities, and 149,000 in minority interest in subsidiary, resulting in a $119.3 million total shareholders' deficit. CENTENARY COLLEGE: Operating Deficits Cue Moody's Debt Rating Cut ----------------------------------------------------------------- Moody's Investors Service downgraded Centenary College's long-term debt rating to Ba2 from Ba1. The rating outlook remains negative. The rating is on the College's Series 1999 Revenue and Refunding Bonds issued through the Louisiana Public Facilities Authority, with $16.5 million outstanding. The downgrade reflects continued operating deficits, a challenging student market position limiting the ability to increase net tuition revenue and expected thin levels of unrestricted financial resources. Legal security: The Series 1999 bonds are unsecured general obligations of the College. Debt-related interest rate derivatives: None Strengths * Sound balance sheet position for the small liberal arts college, with expendable resources covering debt and operations by 1.9 times and 1.0 times, respectively. However, expendable financial resources ($31.3 million at the end of FY 2007) have not recovered to the FY 2002 and prior levels. * Progress in growing net tuition revenue per student as well as overall total net tuition. In FY 2007, net tuition per student grew 23% to $8,681. Total net tuition and fees grew to $7.9 million in FY 2007, up 19% from the prior year, as the College continues to seek reduction in its discount rate despite fierce competition from other private and public universities. * Ability to borrow up to $17.2 million of certain permanent endowments to provide the College additional liquidity in the event of an acceleration of the Series 1999 bonds. * No current plans for additional debt although student residence facilities may require investment over time. * Prospect for increased donor support. With average gift revenue of $5.6 million for the last three years, the College is beginning to prepare for a comprehensive campaign which would provide funds for endowed scholarships as well as capital investment in a new science building seen as important in attracting targeted students. Challenges * Student market and recruiting challenges given a highly competitive environment with efforts to reduce tuition discounting impacting enrollment levels which have edged downward each of the last three academic years to 890 full-time equivalent students in fall 2007 down from 969 in 2004. Yield on admitted students fell to 28.6% in fall 2007, down from 34.6% the prior year as the incoming freshman class was only 199 as compared to 241 in prior year. * Deep operating deficits that are expected to continue into the foreseeable future, with an average operating loss of 32.2% for FY 2007, and negative operating cash flow. Operating performance has been hampered by the College's NCAA Division I athletic status with generous financial aid given to student athletes. * Endowment spending of 8.0% for FY 2008 that is well above industry norms and contributes to Moody's measure of operating deficits, with the spend rate expected to remain high or, at best, only modestly declining due to operating demands. Recent Developments or Results Centenary's balance sheet remains its primary credit strength and provides the College with some resources to work through and address its strategic and operational challenges. Total finance resources stood at $124 million at FY 2007, up from the $115 million level for the prior year, and having risen to its prior FY 2000 peak. Despite an endowment return of 17.2% in FY 2007, unrestricted financial resources increased just $929,000 to $16.1 million. Moody's remains concerned that a period of materially weaker investment returns, as the College has experienced in the first half of the current fiscal year, when combined with the high endowment spending rate could produce a dramatic decline in liquid financial resources. Unrealized investment losses in FY 2002 and FY 2003 triggered technical defaults on the Series 1999 bonds due to the debt service coverage calculations, although the College made full and timely payment on the bonds. The College met the calculation for FY 2007 and anticipates doing so for the current fiscal year but that is dependent on investment returns in a challenging environment as well as incremental gifts from the start of the silent phase of the new comprehensive campaign. The College is authorized to borrow from certain permanent endowments up to $17.2 million, if necessary, to make payment on the Series 1999 bonds. This ability to borrow from the endowment provides an additional source of liquidity should the Series 1999 Bonds be accelerated. However, Moody's notes that access to those funds is not available to the Trustee of the Series 1999 bonds, but is provided only to the College which sought the special authorization and would likely use it in the event of acceleration. Outlook The negative rating outlook for Centenary College reflects Moody's belief that it will face continued challenges in recruiting students and growing net tuition revenue. Although the College has taken steps to control expenses, longer term financial stability will need to be achieved through top-line revenue growth from tuition and philanthropy. If the College is unable to address revenue and expense pressures to improve operating performance, this could place further pressure on the rating, particularly if the College experiences a period of poor investment performance that further reduces unrestricted liquidity. What Could Change the Rating Up Strengthening of student demand resulting in a favorable impact on net tuition revenue; improvement in unrestricted liquidity relative to debt and operations, and a return to at least balanced operating performance, with endowment draws approximating those of peer institutions. What Could Change the Rating Down Deterioration in liquidity; continuance or worsening of operating deficits, further weakening of student market position, additional borrowing. Key Indicators (FY 2007 financial statements, fall 2007 enrollment) -- Total Enrollment: 890 full-time equivalent students -- Undergraduate Selectivity: 61.9% of applicants accepted -- Undergraduate Matriculation: 38.6% of accepted applicants enrolled -- Total Financial Resources: $123.8 million -- Total Long-Term Obligations: $16.5 million -- Expendable Resources to Debt: 1.9 times -- Expendable Resources to Operations: 1.0 times -- Three Year Average Operating Margin: -32.2% CENTRO NP: Fitch Maintains 'CCC' Issuer Default Rating ------------------------------------------------------ Fitch Ratings maintained the ratings for Centro NP LLC, formerly New Plan Excel Realty Trust, as: -- Issuer Default Rating at 'CCC'; -- $350 million revolving bank credit facility at 'CC/RR6'; -- $830 million senior unsecured notes at 'CC/RR6'. The Centro NP LLC ratings reflect the financial difficulties of the entity's Australian-based parent company Centro Properties Group in connection with the refinancing of over $2.3 billion of indebtedness due to dislocations in the credit markets. On Feb. 15, 2008 CNP announced that the company, led by newly appointed chief executive officer Glenn Rufrano, has successfully negotiated further extensions of its maturing short-term debt facilities. Facilities of AUS$2.3 billion under the Australian extension arrangements have been extended until April 30, 2008. This includes AUS$1.3 billion previously extended to Feb. 15, 2008 plus an additional AUS$1.0 billion maturing between Feb. 16, 2008 and April 30, 2008. Facilities of US$1.3 billion associated with the 2007 acquisition of Centro NP have been extended to Sept. 30, 2008 though extension beyond April 30, 2008 is contingent to similar arrangements being agreed under the Australian extension arrangements. The rating concerns continue to center on CNP's liquidity and refinancing issues and do not pertain to the operating performance of Centro NP. The portfolio of needs-based, grocery-anchored shopping centers across the U.S. is performing well and expected to be well positioned in an economic slowdown. The strong geographic and tenant diversity of the portfolio helps insulate the company from regional downturns or tenant credit deterioration. Furthermore, Centro NP has seasoned executive and regional management teams and a strong regional infrastructure. Fitch views positively the appointment of Glenn Rufrano, the CEO of New York-based Centro NP, to CEO of Centro Properties Group and his success to-date in negotiating with lenders for the extension. However, significant challenges and uncertainties remain as CNP continues to explore strategies to present to lenders by the April 30, 2008 deadline that will enable CNP to ultimately repay these short-term facilities and also create a more viable company by lowering overall debt levels. CNP is exploring strategic options including an infusion of equity interests and/or asset sales. Centro NP is a US$5.9 billion total assets real estate company focusing on the ownership, management and development of community and neighborhood shopping centers. Centro NP operates a national portfolio of community and neighborhood shopping centers across the U.S. with approximately 67 million square feet of GLA. Centro Properties Group is a Melbourne-based company (ASX: CNP) focusing on the ownership, management, and development of retail shopping centers. Centro has AUS26.6 billion of retail property assets. CHARLES RIVER: S&P Lifts Rating on $350 Mil. Senior Notes to 'BB+' ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Charles River Laboratories International Inc. to 'BBB-' following a review of the company's sound financial policies and leading position in the market for research model and preclinical services. At the same time, Standard & Poor's raised the rating on the company's $350 million convertible senior subordinated notes to 'BB+', in accordance with the notching criteria for investment-grade companies. The outlook is positive. "The upgrade reflects Charles River's demonstrated willingness to operate with moderate leverage while expanding the company's capability to serve growing demand, at a time when many customers, especially large pharmaceutical companies, are reducing in-house capability to perform these services in order to concentrate on their core research competencies," said Standard & Poor's credit analyst Alain Pelanne. Since the 2004 acquisition of Inveresk Research Group Inc., Charles River has made only one bolt-on acquisition, while divesting certain operations outside of its core markets of preclinical and early-stage contract research. While management is expected to continue making acquisitions to expand its global capabilities, it is expected to be within the scope of Charles River's sound financial policy and not result in any sustained levels of meaningfully higher leverage. Share repurchases are expected to largely offset dilution from share-based compensation. However, the company's strong cash balances and ability to generate cash from ongoing operations are expected to afford the company the ability to pursue measured repurchases within the scope of the rating. Standard & Poor's ratings on Wilmington, Massachusetts-based Charles River continue to reflect industry dynamics that support strong demand for the company's services. CLAYTON HOLDINGS: Reports $13.5MM Earnings for 2007 Fourth Quarter ------------------------------------------------------------------ Clayton Holdings Inc. reported a net income of $13.5 million for fourth quarter ended Dec. 28, 2007 compared to $11.4 million net income for fourth quarter ended Dec. 29, 2006. The company's total net sales for the 2007 fourth quarter was $300.2 million compared to $293.3 million net sales for the 2006 fourth quarter. For the full fiscal year ended Dec. 28, 2007, the company's net income was $50.96 million in comparison to the net income of the previous year at $31.18 million. The company's total net sales for the full fiscal year of 2007 is $1.2 billion from $1.1 billion of fiscal 2006. The company also reported a loss from continuing operations of $91.7 million on revenues of $24.8 million for the fourth quarter ended Dec. 28, 2007. These results include a $92.8 million charge to reflect the impairment of goodwill and other intangible and fixed assets related to the transaction management business. "The new issuance market for nonconforming securities remained virtually shut down in the fourth quarter and our volumes were negatively impacted," Frank Filipps, chairman and chief executive officer of Clayton, said. "However, our strong cash generation enabled us to repay $25 million of debt and renegotiate our bank credit facility, giving us greater flexibility to weather this market." "As we announced in December, the prolonged decline in this market resulted in an impairment in the value of goodwill and intangibles related to our transaction management business, and thus we incurred a $92.8 million non-cash impairment charge during the quarter," Mr. Filipps continued. Cash generated from operations was $13.4 million in the fourth quarter of 2007 and Clayton had $40.2 million of cash as of Dec. 31, 2007. On Feb. 21, 2008 Clayton executed an amendment to its debt facility including these terms: -- $25 million of debt was prepaid; -- revolving debt facility was reduced from $50 million to $10 million; -- existing financial covenants are waived until March 31, 2009; -- $5 million debt payment due March 31, 2009; -- Clayton must maintain minimum $6 million of liquidity, including unused revolver commitment; -- interest rate increases by 125 basis points. As of Dec. 28, 2007, the company's balance sheet reflected total assets of $936.8 million, total liabilities of $599.4 million and a total stockholder's equity of $377.4 million. About Clayton Holdings Headquartered in Shelton, Connecticut, Clayton Holdings Inc. (NASDAQ:CLAY) -- http://www.clayton.com/-- provides outsourced services, mortgage-related analytics and specialized consulting services for buyers and sellers of, and investors in, mortgage- related loans and securities and other debt instruments. Clayton's services include transaction management, credit risk management and securities surveillance, and special servicing. The company provides a majority of its services to participants in the non-agency segment of the mortgage-backed securities, market and the non-conforming mortgage loan market. As of Dec. 31, 2006, the company had three reportable segments which it operates and manages as business units: transaction management, special servicing and surveillance. On Feb. 3, 2006, Clayton acquired M R Network I Ltd. (dba Clayton Lender Solutions Inc.). * * * As reported in the Troubled Company Reporter on Dec. 11, 2007, Moody's Investors Service downgraded Clayton Holdings Inc.'s senior secured bank credit facility and corporate family ratings to B1 from Ba3. The ratings remain under review for downgrade. The downgrade reflected Clayton's deteriorating operating performance as a result of stress in the mortgage market. Moody's said the review will focus on Clayton's ability to maintain positive free cash flow for the foreseeable future, as well as stabilize its cost structure and revenue streams. COMM COMMERCIAL: Fitch Holds Ratings on Upcoming Certs. Maturity ---------------------------------------------------------------- Fitch Ratings has affirmed COMM commercial mortgage pass-through certificates, series 2000-C1, as: -- $471 million class A-2 at 'AAA'; -- Interest only class X at 'AAA'; -- $38.1 million class B at 'AAA'; -- $39.2 million class C at 'AAA'; -- $13.5 million class D at 'AAA'; -- $25.8 million class E at 'AAA'; -- $11.2 million class F at 'AA'; -- $26.9 million class G at 'BBB'; -- $6.7 million class H at 'BB+'; -- $6.7 million class J at 'B+'; -- $10.1 million class K at 'B'; -- $7.9 million class L remains at 'CCC/DR1'; -- $6.7 million class M remains at 'C/DR6'; -- $607,317 class N remains at 'C/DR6'. The balance of class O has been reduced to zero due to realized losses. Class A-1 has been paid in full. Although the transaction has had additional paydown and defeasance since Fitch's last review, affirmations are warranted due to upcoming maturities and adverse selection with a more concentrated pool. As of the February 2008 distribution date, the pool's aggregate certificate balance has decreased 26% to $664.6 billion from $897.9 billion at issuance. Thirty-two loans (28.4%) have been fully defeased, including the largest loan (12.2%) which was also shadow rated investment grade at issuance. Of the original 112 loans in the pool, 102 remain. Two assets (1.8%) are currently in special servicing. Fitch projected losses on the specially serviced assets are expected to fully deplete class M and N and affect class L. Fitch has identified 12 (8.3%) loans of concern, including the two specially serviced assets (1.8%). The largest Fitch loan of concern (1.6%) is collateralized by a portfolio of five retail centers in various locations throughout NY which have experienced a decline in occupancy. The second largest Fitch loan of concern (1.3%) not in special servicing is collateralized by a manufactured housing community in Thetford Township, Michigan. The property's expenses have increased resulting in a decrease in the debt service coverage ratio. The larger specially serviced asset (1.3%) is a real estate owned retail property in Cincinnati, Ohio. The asset became REO on May 8, 2006. The special servicer is currently marketing the property. Recent values indicate losses upon liquidation. The smaller specially serviced asset (0.5%) is an office property located in Farmington Hills, Michigan. The property transferred to the special servicer on Sept. 6, 2007, when the largest tenant gave notice that it would be vacating the property upon termination of its lease on Dec. 31, 2007. The special servicer is currently working with the borrower. Fitch reviewed the most recent servicer-provided operating statement analysis report for the remaining non-defeased shadow rated loan, Crystal Park One (5.7%). Based on stable performance since issuance the loan maintains an investment grade shadow rating. Crystal Park One (5.7%) is a 416,524 square foot, 11-story office building located in the Crystal City section of Arlington, Virginia. The loan consists of an A note which is included in the trust and a B note which is held outside of the trust. As of June 30, 2007, occupancy is 97% compared to 99.3% at issuance. Mortgage coupons for the remaining loans range from 6.97% to 12.50%. Forty-three loans (42.3%) mature in 2008-2009, of which 27 are non-defeased (29.0%). The weighted average mortgage coupon of the maturing non-defeased loans is 7.99% and the servicer reported weighted average DSCR is 1.72 times. COMMERCIAL VEHICLE: S&P Cuts Rating to 'B+' on Weak 2008 Prospects ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Commercial Vehicle Group Inc. to 'B+' from 'BB-'. At the same time, the senior unsecured debt rating was lowered to 'B' from 'B+' and the ratings were removed from CreditWatch, where they were placed on July 27, 2007. The outlook is negative. "The downgrade reflects CVG's weak prospects for fiscal 2008 given the severity and increased duration of the commercial truck downturn in North America, following worse-than-expected financial performance in 2007," said Standard & Poor's credit analyst Nancy Messer. "We no longer expect the company's already-weak credit measures to recover sufficiently in the year ahead to maintain the previous rating. In addition, the company faces tight covenants in 2008." The ratings on New Albany, Ohio-based CVG reflect the company's weak business profile as a supplier of a concentrated group of price-sensitive original equipment commercial truck manufacturers. CVG's market risk is concentrated in North America, where it generates about 77% of its revenues. The company's exposure to volatile commodity costs and the highly cyclical and competitive nature of its end markets is a key risk. The ratings also reflect CVG's highly leveraged financial profile, which has been pressured more than S&P originally expected by the volatility of earnings and cash flow in the trough of the business cycle. The company's recent performance and prospects for improvement in 2008 are worse than S&P had projected, even taking into account the widely expected downturn. S&P expects business to rebound in advance of the next round of emissions regulation changes, in 2010. The negative outlook reflects S&P's concern about CVG's profit and cash flow potential during 2008, which stems from low visibility for heavy-truck production in the face of a potential U.S. recession. Still, S&P expects the company's financial profile to eventually become consistent with the 'B+' rating. S&P could lower the ratings if CVG is unable to access its revolving credit facility, or if free cash flow turns substantially negative for consecutive quarters. S&P could also lower the rating if the commercial vehicle production upturn is delayed beyond early 2009--perhaps because of persistent North American economic weakness. To revise the outlook to stable, S&P would require improved profitability that leads to sustained cash flow as a result of a continuous rebound in the heavy-truck market combined with benefits of CVG's facility rationalization. This seems unlikely to occur in 2008. CONGOLEUM CORP: Bankruptcy Court Approves Put/Call Agreement ------------------------------------------------------------ On Feb. 19, 2008, the United States Bankruptcy Court for the District of New Jersey approved a put/call agreement between Congoleum Corporation, certain holders of Congoleum's 8 5/8% Senior Notes due Aug. 1, 2008, and upon its formation, the trust to be formed pursuant to a proposed joint plan of reorganization of Congoleum dated Feb. 5, 2008. As reported in the Troubled Company Reporter on Feb. 21, 2008, the Court approved the disclosure statement with respect to the Plan. As reported in the Troubled Company Reporter on Feb. 22, 2008, the Court scheduled a confirmation hearing for June 26, 2008. The Plan provides that Reorganized Congoleum will issue shares of Congoleum common stock, par value $.01 per share, on the Effective Date of the Plan, of which 50.1% go to the Trust and 49.9% go to the holders of Congoleum's 8 5/8% Senior Notes due Aug. 1, 2008 on a pro rata basis. Pursuant to the Put/Call Agreement, for the first 60 days after the effective date of the Plan, the Trust may, at its sole option, elect to cause participating Bondholders (Backstop Participants) to purchase all, but not less than all, of the Trust Shares (the Put Right)for an aggregate purchase price equal to $5.25 million. Similarly, for the first 90 days after the Effective Date, the Backstop Participants shall have the right to cause the Trust to sell all, but not less than all, of the Trust Shares to the Initial Backstop Participants and the Call Participants for an aggregate purchase price equal to $7.5 million. All Bondholders will have the ability to become Backstop Participants and thus participate in the Put/Call Option. However, it is possible that some Bondholders will choose not to participate. To ensure that the Trust can exercise its right to sell the Trust Shares, the Initial Backstop Participants, including, Plainfield Special Situations Master Fund Limited and various affiliates of Deutsche Bank, have agreed, subject to and in accordance with the terms and conditions set forth in the Put/Call Agreement, to backstop the Put Purchase Price and the Call Purchase Price to the full extent not funded by other Bondholders. In connection with the Put/Call Agreement, Congoleum agreed to: (a) pay to the Initial Backstop Participants a commitment fee of $262,500, which fee which was fully earned upon the Court's order approving the Put/Call Agreement, (b) reimburse or pay up to $150,000 of the standard fees and out-of-pocket expenses of one law firm retained by the Initial Backstop Participants and (c) indemnify the Backstop Participants to the extent set forth in the Put/Call Agreement. A full-text copy of the Put/Call Agreement is available for free at http://researcharchives.com/t/s?2870 About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. At March 31 2007, Congoleum reported $180,091,000 in total assets and $226,990,000 in total liabilities, resulting in a stockholders' deficit $46,899,000. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drydale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and james R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. CONMED CORP: S&P Lifts Ratings After 2007 Senior Debt Reduction --------------------------------------------------------------- Standard & Poor's Rating Services raised its senior secured rating on Utica, New York-based ConMed Corp.'s $100 million revolver and $135 million term loan. S&P raised the senior secured rating to 'BB' (one notch higher than the corporate credit rating on ConMed) from 'BB-' and S&P changed the recovery rating to '2', indicating the expectation for substantial (70%-90%) recovery in the event of default, from '3'. S&P also affirmed all other ratings, including the 'BB-' corporate credit rating, on ConMed. The outlook remains positive. "The ratings revision reflects ConMed's senior secured debt reduction throughout 2007," said Standard & Poor's credit analyst Jesse Juliano, "as well as an improvement in the enterprise value multiple assumption used in our recovery analysis." COUNTRYWIDE FINANCIAL: Puts Sambol In-Charge of New Mortgage Biz ---------------------------------------------------------------- Countrywide Financial Corp. draws skepticism as it places its chief operating officer and president David Sambol on the director's seat of the new mortgage business soon to be created by the company's merger with Bank of America Corp., James R. Hagerty and Valerie Bauerlein at The Wall Street Journal report. Mr. Sambol advocated Countrywide's push to include in its portfolio almost all types of mortgage products in the market, including loans made to people with questionable credit histories, relates WSJ. The mortgage lender originated a large number of subprime loan applications during the U.S. housing boom, exposing the company to rising defaults and falling home prices, says WSJ. Mr. Sambol previously ignored warnings that the company's lending practices were "too lax". A former risk manager lashed out at the company's go-all approach, saying that it was being reckless in its lending policies. Yet, according to a colleague, he rebuffed their warnings and said that the company would turn into a "nice little boutique" if it continued treading lightly, WSJ relates. "The stress level was unbelievable," an employee commented last year, pointing at the company's consummate push for growth. As reported in the Troubled Company Reporter on Feb. 20, 2008, the mortgage lender disclosed high delinquency and foreclosure rates in January, depicting the mounting homebuilding sector woe in the U.S. Early this year, Countrywide signed a definitive agreement to sell its business to Bank of America in an all-stock transaction worth approximately $4 billion. Under the terms of the agreement, shareholders of Countrywide would receive 0.1822 of a share of Bank of America stock in exchange for each share of Countrywide. The purchase is expected to close in the third quarter and to be neutral to Bank of America earnings per share in 2008 and accretive in 2009, excluding merger and restructuring costs. WSJ notes that it was "too soon to tell" what Mr. Sambol intends to do with the new business, which will be integrated not sooner than 2009. Bank of America-Charlotte CEO Kenneth Lewis told WSJ that he planned to retain highly talented senior employees over at Countrwide. However, Martin Eakes, a CEO at a credit union, observed that Mr. Sambol was "willing to cut corners to get market share." Mr. Eakes said he would be disappointed if Mr. Sambol runs the new business. About Bank of America Bank of America -- http://www.bankofamerica.com/-- is a financial institution, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk- management products and services. The company serves clients in 175 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 80 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. * * * As reported in the Troubled Company Reporter on Jan. 15, 2008, Moody's placed the ratings of Countrywide Financial Corporation and its subsidiaries under review for upgrade. CFC and Countrywide Home Loans senior debt is rated Baa3 and short-term debt is rated Prime-3. Countrywide Bank FSB's bank financial strength rating is C-, deposits are rated Baa1 and short-term debt Prime-2. All long and short-term ratings are placed under review for possible upgrade. COUNTRYWIDE FINANCIAL: Waves Off Business Partners' Resort Meeting ------------------------------------------------------------------ Countrywide Financial Corp. called off its three-day business meetings with various partners and bankers at a Colorado resort, after it was pelted with criticism for its alleged "extravagance", Michael J. de la Merced at The New York Times reports. The company planned to have a number of luncheon meetings and dinner engagements at a ski resort in the Ritz-Carlton Bachelor Gulch, in Avon, Colorado. According to The Wall Street Journal, Countrywide hosted the gathering for around 30 representatives from mortgage banks it had dealings with, treating them to expensive dinners, skiing sessions, four-hour business meetings over cocktails, and classy hotel cabins in excess of $700. Although treating business partners to lavish junkets are common in the business world, the company has come under fire among the press for that event, in light of its dire financial situation caused by the latest mortgage crisis, the Times notes. The company "moved quickly", cancelling the event to avert more criticism, relates the Times. As reported in the Troubled Company Reporter on Feb. 20, 2008, the lender disclosed high delinquency and foreclosure rates in January, depicting the mounting homebuilding sector woe in the U.S. As also cited in previous TCR reports, the company signed a definitive agreement to sell its business to Bank of America Corporation in an all-stock transaction worth roughly $4 billion. Sen. Charles Schumer had urged the mortgage lender to forget about the event and instead concentrate on helping the distraught homeowners, says WSJ. Company representatives did not offer any comments. About Bank of America Bank of America -- http://www.bankofamerica.com/-- is a financial institution, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk- management products and services. The company serves clients in 175 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 80 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. * * * As reported in the Troubled Company Reporter on Jan. 15, 2008, Moody's placed the ratings of Countrywide Financial Corporation and its subsidiaries under review for upgrade. CFC and Countrywide Home Loans senior debt is rated Baa3 and short-term debt is rated Prime-3. Countrywide Bank FSB's bank financial strength rating is C-, deposits are rated Baa1 and short-term debt Prime-2. All long and short-term ratings are placed under review for possible upgrade. DANA CORP: Reorganized Company Names Directors and Officers ----------------------------------------------------------- Dana Holding Corporation, successor to Dana Corporation, said in a regulatory filing with the U.S. Securities and Exchange Commission that it has appointed nine individuals to its Board of Directors: * Michael J. Burns, * Gary L. Convis, * John M. Devine, * Mark T. Gallogly, * Richard A. Gephardt, * Stephen J. Girsky, * Terrence J. Keating, * Mark A. Schulz, and * Jerome B. York. Subsequent to his election as member of the Board, on the Effective Date, Mr. Burns tendered his resignation as president, chief executive officer, chief operating officer and director, the SEC filing said. On Jan. 31, 2008, when the Third Amended Joint Plan of Reorganization of Old Dana and its debtor-affiliates effective, other former members of the Old Dana Board also resigned pursuant to the terms of the Plan. These resigned members are A. Charles Baillie, David E. Berges, Edmund M. Carpenter, Richard M. Gabrys, Samir G. Gibara, Cheryl W. Grise, James P. Kelly, Marilyn R. Marks and Richard B. Priory. Executive Officers On the Effective Date, Dana named John M. Devine as the company's executive chairman, and elected other executive officers: Executive Officer Position ----------------- -------- John M. Devine Executive Chairman Michael J. Burns President, Chief Executive Officer, and Chief Operating Officer Kenneth A. Hiltz Chief Financial Officer Richard J. Dyer Vice President & Chief Accounting Officer Ralf Goettel President, Europe & Engine Products Groups Paul E. Miller Vice President, Purchasing Nick L. Stanage President, Heavy Vehicle Products Thomas R. Stone President, Global Traction Products Group Robert H. Marcin Chief Administrative Officer In connection with his appointment as Dana's Executive Chairman, the Compensation Committee agreed to provide Mr. Devine: -- a $1,000,000 annual salary; -- an annual target bonus of 150% of base salary based on the achievement of performance measures set by the Board; -- an initial grant of options to purchase 800,000 shares of Common Stock with an exercise price of $12.75 based on the closing stock price on the grant date, one third of which will vest on each of Aug. 4, 2008, Aug. 4, 2009 and Aug. 4, 2010; -- an initial term of one year, subject to renewal for additional one-year terms; -- reimbursement for reasonable temporary residence expenses including use of private corporate aircraft up to 30 round trips; -- inclusion in future change of control agreements; and -- participation in life and disability insurance and other benefit programs of Dana generally applicable to senior executives. According to Marc S. Levin, Dana's general counsel and secretary, Mr. Devine's employment agreement will provide for severance payments in the event that his position with the company is involuntarily terminated without cause or terminated by Mr. Devine for "good reason," as well as payments following a change in control of the company. Indemnification Agreements Dana also entered into an indemnification agreement with each current member of the company's Board of Directors. The Indemnification Agreements generally provide that the company will indemnify the D&O to the fullest extent permitted or required by the laws of the state of Delaware, against any and all expenses, judgments, fines, penalties and amounts paid in settlement of the claim. 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 Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a total shareholders' deficit of $534,000,000. 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, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served 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. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Toledo, Ohio-based Dana Holding Corp. following the company's emergence from Chapter 11 on Feb. 1, 2008. The outlook is negative. At the same time, Standard & Poor's assigned Dana's $650 million asset-based loan revolving credit facility due 2013 a 'BB+' rating (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating an expectation of very high recovery in the event of a payment default. In addition, S&P assigned a 'BB' bank loan rating to Dana's $1.43 billion senior secured term loan with a recovery rating of '2', indicating an expectation of average recovery. DB ZWIRN: To Liquidate $4 Billion in Assets from 2 Funds -------------------------------------------------------- D.B. Zwirn & Co. will liquidate assets in its Special Opportunities Fund and a sister offshore fund, its two largest hedge funds, which hold about $4 billion, Reuters reports citing a person familiar with the matter. DB Zwirn was forced to make the move after receiving requests from investors to redeem $2 billion in the aggregate from the hedge fund, that source said. DB Zwirn is a $5 billion hedge fund group managed by investor Daniel Zwirn, Reuters says. The withdrawal requests came after DB Zwirn disclosed facing questions from its auditors about its accounting for operational expenses, that source explained. Elise Hubsher, managing director of investor relations for DB Zwirn, declined to comment, Reuters says. DB Zwirn said it may take years to liquidate the funds, because much of the holdings are illiquid assets, like private loans, derivatives and other thinly traded assets, the source told Reuters. Mr. Zwirn was a former senior portfolio manager of the Special Opportunities Group of Highbridge Capital Management, which is majority owned by JPMorgan Chase & Co. He was also a portfolio manager with MSD Capital LP, the private investment firm of Dell Inc. founder Michael Dell, Reuters relates. The liquidation "is a blow" to Mr. Zwirn, according to Reuters. "Anytime a fund reportedly is losing 80 percent of its assets, it calls into question how sustainable the firm is on a continuing basis," said Daniel Farkas, a hedge fund analyst at Morningstar Inc., according to Reuters. "But things are still playing out so it's too early to say." Mr. Farkas said most hedge funds face redemption requests when they face large losses, such as in the case of Amaranth Advisors and Sowood Capital, two funds that collapsed in recent years. It is relatively unusual for firms to face large redemption requests over accounting issues, he added. DELPHI CORP: Must Pay Professionals $49 Million in Fees & Expenses ------------------------------------------------------------------ The Hon. Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York directed Delphi Corp. and its debtor-affiliates to pay the professionals retained in the Debtors' bankruptcy cases approximately $45,000,000 in fees and $3,000,000 in expenses. Blake, Cassels & Graydon LLP seeks payment of CDN$16,920 for its professional fees for the period June 1, 2007, through Sept. 30, 2007, and reimbursement of CDN$1,312 for expenses incurred during the same period. Blake Cassels serves as the Debtors' Canadian counsel. Headquartered in Troy, Michigan, Delphi Corporation (PINKSHEETS: 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 Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 16, 2008, Moody's Investors Service assigned ratings to Delphi Corporation for the company's financing for emergence from Chapter 11 bankruptcy protection: Corporate Family Rating of (P)B2; $3.7 billion of first lien term loans, (P)Ba3; and $0.825 billion of 2nd lien term debt, (P)B3. In addition, a Speculative Grade Liquidity rating of SGL-2 representing good liquidity was assigned. The outlook is stable. As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services expects to assign its 'B' corporate credit rating to Troy, Michigan-based automotive supplier Delphi Corp. upon the company's emergence from Chapter 11 bankruptcy protection, which may occur by the end of the first quarter of 2008. S&P expects the outlook to be negative. In addition, Standard & Poor's expects to assign these issue-level ratings: a 'B+' issue rating (one notch above the corporate credit rating), and '2' recovery rating to the company's proposed $3.7 billion senior secured first-lien term loan; and a 'B-' issue rating (one notch below the corporate creditrating), and '5' recovery rating to the company's proposed $825 million senior secured second-lien term loan. DRYDEN HIGH: S&P Withdraws Ratings on Two BB-Rated Notes -------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A-1, A-2, A-3, B-1, B-2, B-3, C-1, and C-2 notes issued by Dryden High Yield CDO 2001-I, an arbitrage corporate high-yield CBO transaction originated Nov. 26, 2001. The rating withdrawals follow the optional redemption of the notes pursuant to section 9.1 (a) of the indenture. The redemption took place on the Nov. 25, 2007, payment date. Ratings Withdrawn Dryden High Yield CDO 2001-I Rating Balance (million) ------ ----------------- Class To From Original Current ----- -- ---- -------- ------- A-1 NR AAA $269.00 $0.00 A-2 NR AA $23.60 $0.00 A-3 NR AA $20.50 $0.00 B-1 NR BBB $27.00 $0.00 B-2 NR BBB $8.00 $0.00 B-3 NR BBB $10.00 $0.00 C-1 NR BB $5.00 $0.00 C-2 NR BB $7.25 $0.00 NRNot rated. DURA AUTOMOTIVE: Court OKs Amendments to Revolving DIP Debt Pact ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted final approval to Amendment No. 5 to Revolving DIP Credit Agreement, dated as of Jan. 30, 2008, by and among the Debtors, as Borrowers and Guarantors; General Electric Capital Corporation, as Administrative Agent; Barclays Capital, the investment banking division of Barclays Bank PLC, as Joint Lead Arranger and Documentation Agent; and Bank of America, N.A., as Issuing Bank. As reported in the Troubled Company Reporter on Feb. 5, 2008, the Revolver Amendment amended the terms of the existing Revolving DIP Credit Agreement to, among other things, (i) extend its final maturity date from Jan. 31, 2008 to June 30, 2008; (ii) reduce the commitment from $115,000,000 to $90,000,000; (iii) delete the minimum EBITDA covenant and amend the budget compliance covenant to provide for a 25% cushion during the months of February and March and a 20% cushion thereafter, in each case with respect to the amount budgeted for revolver borrowings during the time; (iv) permit the Debtors to retain certain asset sale proceeds; (v) amend the Revolving DIP Credit Agreement to include certain representations, warranties and covenants contained in the New Term Loan DIP Agreement; (vi) include a covenant requiring the Debtors to meet certain milestones in their restructuring plan; (vii) amend the excess availability covenant to increase the minimum excess availability requirement to $25,000,000 subject to subsequent decreases to $20,000,000 and $15,000,000 upon compliance with certain conditions set forth in the Revolver Amendment; and (viii) increase the interest rate set forth in the Revolving DIP Credit Agreement by 0.50%; provided that LIBOR Rate will not be available to the Debtors during the remaining term of the Revolving DIP Credit Agreement. In light of the Debtors' entry into the $170,000,000 replacement facility, which was earlier given final approval by the Court, the Debtors have repaid the outstanding amounts under their Senior Secured Super-Priority Debtor In Possession Term Loan and Guaranty Agreement, dated as of October 31, 2006, with a syndicate of lenders led by Goldman Sachs Credit Partners L.P., as administrative agent. The Court said that the Existing Term DIP Facility is now terminated with the payment of the Debtors' obligations in full in cash. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Must Appear at Final Hearing to OK Bonus Plan -------------------------------------------------------------- The Hon. Kevin J. Carey agreed to approve a 2008 Bonus Plan after forcing DURA Automotive Systems Inc. and its debtor-affiliates to agree to come back for a final hearing before the Debtors pay key managers, should the company still be in bankruptcy in July 2008, Steven Church at Bloomberg News reported. According to Bloomberg, Judge Carey said the goal of a final hearing would be to find out whether a delay in the Debtors' plan to exit Chapter 11 in June 2008 is "attributable to the employees' performance." "I want to get to the heart of why the case is not out by then," Bloomberg quoted Judge Carey as saying. Bloomberg also reported that Judge Carey rejected an objection of the United Automotive Workers union to the Bonus Plan ruling that performance targets were reasonable. 2008 Annual Bonus Plan Filed The Debtors had asked the Court to approve the 2008 Bonus Plan. To address the concerns raised by the Official Committee of Unsecured Creditors, the Debtors entered into discussions with the Creditors Committee and, based on those discussions, produced a modified 2008 annual bonus plan for certain key management and other employees. The 2008 Annual Bonus Plan provides incentive bonus program for about 110 non-senior management and other key employees whom the Debtors employ in their North American operations. The 2008 ABP does not include bonus payments to the Debtors' chief executive officer, chief financial officer, chief operating officer, or the chief administrative officer. None of those officials will receive any payment under the 2008 ABP. The 2008 Bonus Plan will make available $2,600,000, allocated as: -- $1,680,000 if targets are met in timely completion of certain operational restructuring initiatives related to the "Metals Move;" and -- $920,000 if the Debtors achieve its projected EBITDA targets. The Operational Restructuring Incentive Bonuses are designed to provide incentives for on-time, below budget execution of the production relocations from the Jacksonville, Florida; Moberly, Missouri; and Gladwin, Michigan, plants to Matamoros, Mexico. A bonus payment of $700,000 will be awarded if the Jacksonville Donor Plant production relocation is completed on or before June 30, 2008. The $700,000 Bonus Payment will not be awarded if the relocation is not completed before June 30. Each 2008 Bonus Plan Participant's EBITDA Incentive Bonus payment will vary proportionally from 50% of the target amount if 90% of the participant's target is met to 150% of the target if 120% of the participant's target is achieved. No EBITDA Incentive Bonus will be awarded if actual achievement is less than 90% of the target EBITDA. The Debtors will make the bonus payments as soon as practicable after their emergence from Chapter 11, provided that emergence will not be later than July 11, 2008, and further payments on Oct. 31, 2008, and Jan. 31, 2009. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, tells the Court that the 2008 Annual Bonus Plan is very similar in scope and intent to the Debtors' historic annual bonus plans, albeit certain frontloaded payments. The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, has objected to the Debtors' proposed 2008 key management incentive plan and asked the Court to deny approval of that incentive plan. The UAW asserted that: (a) the proposed 2008 KMIP operates quite differently from the Debtors' prepetition Annual Bonus Plan; (b) the proposed 2008 KMIP was prepared by senior management, including executives who sought to be covered under the program; (c) there is nothing in the 2008 KMIP that connects the payment of a bonus to any individualized or team performance goals; and (d) the Debtors are proposing the 2008 KMIP not because due diligence has revealed any specific need for a program but because the Debtors' exit from bankruptcy has been delayed and they do not want unhappy and disappointed managers. The Debtors, in response to UAW's objections, noted that the 2008 Annual Bonus Plan was developed, not only with the input of a multitude of compensation consultants, but also with an independent counsel as well as input of the Creditors Committee. The Creditors Committee withdrew its objection to the proposed 2008 KMIP as a result of the creation of the 2008 Bonus Plan. Rochester Hills, Mich.-based DURA Automotive Systems Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The company has three locations in Asia -- China, Japan and Korea. It has locations in Europe and Latin-America, particularly in Mexico, Germany and the United Kingdom. The Debtors filed for chapter 11 petition on Oct. 30, 2006 (Bankr. D. Del. Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co-counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for the Debtors. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. The Debtors have asked the Court to extend their plan filing period to April 30, 2008. (Dura Automotive Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURHAM FURNITURE: To Refocus on Key Canadian, U.S. Markets ---------------------------------------------------------- Durham Furniture will refocus its sales and distribution on its key markets in Canada and the United States east of the Mississippi River, according to Michael J. Knell of Furniture Today (N.C.). "We are focusing our U.S. distribution on a core strategy that includes the East Coast and the Midwest. We need to lower the risks that have developed with the currency and the business climate in the U.S.," said president and CEO Michael Pitman, according to the report. Durham will focus on development of five or six new collections, two of which will probably be unveiled over the coming 18 months, the report said. Mr. Pitman and Ron Fuhrman, vice president of marketing and product development, will leave the company March 31. Wayne Brohman, chief operating officer, and Gord Dilworth, vice president of manufacturing, will head Durham's management team starting April 1. As reported by the Troubled Company Reporter on Jan. 11, 2008, the Ontario Superior Court of Justice granted Durham Furniture protection from creditors under the Companies' Creditors Arrangement Act (Canada). As part of the restructuring, the company will shut down its plant in Chesley, Ontario. It is exploring sale opportunities for the factory and related equipment. All production will shift to the main plant by mid-March. The company will also shut down its High Point Showroom and will no longer join the High Point Market Show this April, Home Furniture Business related. The company announced plan to lay off 150 workers as it consolidates its production in Durham, Home Furniture Business reported. The Furniture Today reports that the company is, in addition, reducing wages by about 5% for both hourly and salaried employees. The Ontario Superior Court gave the company an extension until April 4 to file a restructuring plan, according to the report. A court-appointed monitor said the company has reached an interim financing agreement with the Royal Bank of Canada, and is meeting its payment obligations. Durham, Ontario-headquartered Durham Furniture -- http://www.durhamfurniture.com/-- handcrafts solid wood furniture since 1899. It boasts of its heat and stain resistant products. It offers various collections of home furnitures inlcuding Mallard Creek, Manhattan, Savile Row and Richmoor. It has a showroom in the United States located in High Point, North Carolina. EMAGIN CORP: Expects 81% Revenues Increase in 2007 Fourth Qtr. -------------------------------------------------------------- eMagin Corporation reported selected preliminary results for its fourth quarter and full year 2007. Each of the results reported are preliminary and subject to completion of the company's year- end independent audit of its financial statements covering the periods referenced. eMagin expects to report revenues for the fourth quarter of 2007 of approximately $4.7 million, an increase of approximately 81% compared to the same period the prior year. Full year revenues are expected to be $17.6 million, approximately 115% greater than those reported in 2006. Improvement of gross margin as a percent of revenues for the fourth quarter of fiscal 2007 is expected to remain strong despite a non-recurring production issue during the quarter ended Dec. 31, 2007, that resulted in an inventory expense of approximately $0.4 million and a warranty return reserve of approximately $0.6 million. Full year gross margin for 2007 is expected to be approximately 29%, a significant improvement over the 39% loss margin recorded for 2006. Audited financial results for the year ending Dec. 31, 2007, are expected to be reported during the last week of March 2008. About eMagin Corp. Headquartered in Bellevue, Washington, eMagin Corporation (AMEX: EMA) -- http://www.emagin.com/-- designs, develops, manufactures, and markets virtual imaging products which utilize OLEDs, or organic light emitting diodes, OLED-on-silicon microdisplays and related information technology solutions. Going Concern Doubt Eisner LLP expressed substantial doubt on eMagin Corp.'s ability to continue as a going concern after auditing the company's annual report for the year ended Dec. 31, 2006. Eisner reported that the company has had recurring losses from operations which is likely to continue, and has working capital and capital deficits at Dec. 31, 2006. ENCORE ACQUISITION: Earns $19.4 Mil. in Fourth Quarter of 2007 -------------------------------------------------------------- Encore Acquisition Company reported unaudited fourth quarter and full year 2007 results. Encore reported net income for the fourth quarter of 2007 of $19.4 million, as compared to $10.1 million for the fourth quarter of 2006. Net income for 2007 was $17.2 million, as compared to $92.4 million for 2006. Encore reported total revenues of $239.7 million in the fourth quarter of 2007, compared to $157.7 million in the fourth quarter of 2006. For the year 2007, Encore disclosed total revenues of $754.9 million, compared to total revenues of $640.8 million for the year 2006. Lease operations expenses were $38.2 million for the fourth quarter of 2007 versus $27.9 million for the fourth quarter of 2006. "2007 was a great year for Encore," Jon S. Brumley, Encore's Chief Executive Officer and President, stated. "We refocused on long- life oil properties that increased our margins and capital efficiency while at the same time exposing Encore to a significant resource play in the Bakken. After making $810 million of primarily oil acquisitions in early 2007, we delevered by selling high-cost deep gas properties in Oklahoma and bringing to market a publicly sponsored oil and gas MLP. All of these decisions were timely and panned out. Our West Texas JV with ExxonMobil is getting bigger and less risky as we have moved through 75% of the commitment phase, and we see better and better results from bringing the wells on quicker and drilling bigger and better wells. Encore is positioned for a great 2008 by planning a low- risk development budget and by helping to ensure a high level of revenue through 2009 by entering into swaps, collars and put contracts. Our project inventory is strong, and our exposure to resource plays is increasing, while we are shrinking our outstanding share base through a stock repurchase program. We are ready for 2008 and well positioned for a long-term profitable production growth rate through 2011." At Dec. 31, 2007, the company's balance sheet showed total assets of $2.7 billion and total liabilities of $1.9 billion, resulting in a $870.5 million stockholders' equity. Equity, at Dec. 31, 2006, was $816.8 million Headquartered in Fort Worth, Texas, Encore Acquisition Company (NYSE: EAC) -- http://www.encoreacq.com/-- is an independent energy company engaged in the acquisition, development and exploitation of North American oil and natural gas reserves. Organized in 1998, Encore's oil and natural gas reserves are in four core areas: the Cedar Creek Anticline of Montana and North Dakota; the Permian Basin of West Texas and Southeastern New Mexico; the Mid Continent area, which includes the Arkoma and Anadarko Basins of Oklahoma, the North Louisiana Salt Basin, the East Texas Basin and the Barnett Shale; and the Rocky Mountains. * * * Moody's Investors Service confirmed Encore Acquisition Co.'s Ba3 corporate family rating, Ba3 probability of default rating, and B1 senior subordinated note rating in June 2007. The rating still holds to date. EPICOR SOFTWARE: Borrows $160 Million to Finance NSB Acquisition ---------------------------------------------------------------- On Feb. 19, 2008, Epicor Software Corp. borrowed $160.0 million under the company's Credit Agreement dated Dec. 16, 2007, as arranged by Banc of America Securities LLC. Epicor used the proceeds to finance the acquisition of NSB Retail Systems PLC and to pay certain fees and expenses incurred in connection with the NSB Acquisition. As reported in the Troubled Company Reporter on Dec. 21, 2007, The boards of directors of Epicor Software Corporation and NSB Retail Systems PLC reached an agreement on the terms of the recommended acquisition of NSB by Epicor pursuant to a scheme of arrangement under section 425 of the United Kingdom Companies Act 1985 whereby shareholders of NSB will receive 38 pence in cash per NSB ordinary share. The terms of the transaction value the fully diluted share capital of NSB at approximately $322 million, based on the US$:GBP exchange rate on Dec. 14, 2007. About Epicor Software Headquartered in Irvine, California, Epicor Software Corporation (Nasdaq: EPIC) -- http://www.epicor.com/-- provides integrated enterprise resource planning, customer relationship management, supply chain management and professional services automation software solutions to the midmarket and divisions of the Global 1000 companies. Founded in 1984, Epicor serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. Epicor offers a comprehensive range of services with its solutions, providing a single point of accountability to promote rapid return on investment and low total cost of ownership. * * * As reported in the Troubled Company Reporter on Dec. 21, 2007, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and revised its outlook on Epicor Software Corp. to negative from stable. ERIK AIRAPETIAN: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Erik Airapetian 5512 East Lonesome Trail Cave Creek, AZ 85331 Bankruptcy Case No.: 08-01632 Chapter 11 Petition Date: February 22, 2008 Court: District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Donald W. Powell, Esq. (d.powell@cplawfirm.com) Carmichael & Powell, P.C. 7301 North 16th Street, Suite 103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 http://www.cplawfirm.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. EXTENDICARE REAL: Dec. 31 Balance Sheet Upside Down by $20M ----------------------------------------------------------- Extendicare Real Estate Investment Trust reported net earnings of CDN$10.5 million for the three months ended Dec. 31, 2007 compared to CDN$48.7 million net loss for the same period of the prior year. For the twelve months ended Dec. 31, 2007, the company earned CDN$70.4 million, compared to the net loss of CDN$35.7 million for the same period in 2006. As of Dec. 31, 2007, the company's balance sheet showed total assets of $1.44 billion, total debts of $1.46 billion resulting to a unitholder's deficiency of $20 million. The company reported earnings from continuing operations of CDN$75.1 million for the year ended Dec. 31, 2007 compared to a loss of CDN$43.4 million for the same period in 2006. "In our first full year since converting to a REIT, we achieved significant progress with our business strategy, including raising revenue rates by serving a greater proportion of high-acuity residents with intense rehabilitative needs, particularly in the Medicare and HMO components of our business, undertaking value- creating acquisitions and development projects, and also continuing to reinvest in our owned facilities," Phil Small, president and chief executive officer of Extendicare REIT, commented. "In the fourth quarter of 2007, Medicare rates increased, average acuity levels rose, we saw some improvement in both Medicare and private-pay census, with further progress being achieved since year end, and we recorded the first financial contribution from the acquired operations of Tendercare." During 2007 EHSI acquired 36 senior care facilities with 3,880 beds for a total cost of CDN$261.7 million, including cash acquired of CDN$14.7 million. Consideration paid consisted of net cash of CDN$142.3 million and debt assumed or issued of CDN$104.7 million. The cash to fund these acquisitions came primarily from proceeds from the issuance of CDN$115.0 million of convertible debentures by the REIT in June 2007 and the sale of Extendicare's investment in Crown Life Insurance Company for CDN$82.5 million in July 2007. The most significant acquisition made in 2007 was the purchase of Tendercare Inc. and affiliated entities, which added 30 senior care facilities, with two additional facilities under development. For the two months of 2007 after the completion of the transaction, Tendercare's operations contributed CDN$38.6 million of revenue. However, Tendercare's EBITDA for these two months was adversely affected by post-closing integration costs of approximately USCDN$0.3 million. The operations of Tendercare, as if EHSI had owned them for the 12 months beginning on January 1, 2007, generated USCDN$219.2 million of revenue and USCDN$22.1 million of EBITDA. Based on these annual results, management estimates that these operations will contribute approximately CDN$0.06 per diluted unit of AFFO to the REIT. At Dec. 31, 2007, the REIT had cash and cash equivalents of CDN$44.2 million compared with CDN$28.1 million at Dec. 31, 2006. Cash provided by operating activities was CDN$115.6 million in 2007 compared to CDN$128.8 million in 2006. Cash provided by operating activities includes discontinued operations, which in 2006 included ALC. Capital additions to property and equipment, excluding acquisitions, were CDN$75.0 million in 2007 compared to CDN$76.6 million in 2006. Growth expenditures totalled CDN$40.1 million in 2007 versus CDN$29.5 million in 2006. Facility maintenance costs were CDN$34.9 million in 2007 compared to CDN$32.2 million in 2006. These costs fluctuate on a quarterly basis with the timing of projects and seasonality. Long-term debt, including current portion, was CDN$1,071.7 million at Dec. 31, 2007, and was net of CDN$20.6 million of deferred financing costs. The current portion of long-term debt at Dec. 31, 2007 of CDN$80.4 million included mortgage loans of CDN$59.6 million maturing in 2008. About Extendicare Headquartered in Markham, Ontario, Extendicare Real Estate Investment Trust (TSE:EXE.UN), formerly known as Extendicare Inc., -- http://www.extendicare.com/-- is an open-ended real estate investment trust. The company, through its wholly owned subsidiaries, is a provider of long-term care and related services in North America. Through its subsidiary, Extendicare Inc., the company operates 234 senior care facilities consisting of nursing homes in North America, with capacity for close to 27,000 residents. Extendicares United States operations are conducted through Extendicare Health Services, Inc. and in Canada through Extendicare Inc. EHSIs medical specialty services, such as subacute care and rehabilitative therapy services are provided through The Progressive Step Corporation. Through Virtual Care Provider Inc., Extendicare offers information technology services to smaller long-term care providers. In Canada, home health care services are provided through ParaMed Home Health Care. * * * Extendicare, on May, 2007, was given a 'BB+' rating on its long term foreign and local issuer credit by Moody's Investor's Service with a stable outlook. That rating action still holds to date. FAIRFAX FINANCIAL: Earns $600M for 2007 Fourth Quarter ------------------------------------------------------ Fairfax Financial Holdings Limited reported net earnings of $600 million for the fourth quarter of 2007 compared with $100 million net income for the 2006 fourth quarter. A net earnings of $1.1 billion for the 2007 year ended Dec. 31 reflected record investment income as well as increased underwriting profit generated by the company's insurance and reinsurance operations, compared with $0.2 billion net earnings for 2006. Total revenues generated for 2007 fourth quarter are $2.4 billion compared to $1.6 billion of the same quarter in 2006. For the year ended Dec. 31, 2007, the company's total revenues are $7.5 billion in comparison with $6.8 billion revenues for 2006. "Our results in 2007 were the best in our twenty-two year history," Prem Watsa, chairman and chief executive officer, said. "As a result of exceptional performance by our operating and investment teams, we achieved record earnings in excess of $1 billion, driven by $281 million of underwriting profit produced by our insurance and reinsurance operations and record investment income, resulting in a 49% increase in our book value per share to $230.01." "Also, we ended the year with almost $1 billion in cash and marketable securities at the holding company," Mr. Watsa added. During the year ended Dec. 31, 2007, Fairfax sold $965.5 million notional amount of credit default swaps for proceeds of $199.3 million and net gains on sale of $184.7 million. The net mark-to-market gain recorded for the year ended Dec. 31, 2007 on the remaining $18.5 billion notional amount of credit default swaps was $960.3 million. In the first quarter of 2008, up to February 15, Fairfax sold an additional $2.7 billion notional amount of credit default swaps for proceeds of $651.1 million and net gains on sale of $150.9 million. The net mark-to-market gain for the January 1 to Feb. 15, 2008 period on the $18.0 billion notional amount of credit default swaps remaining at Feb. 15, 2008 was $596.5 million, bringing total net gains related to credit default swaps for this period to $747.4 million. The fair value of the $18.0 billion notional amount of credit default swaps remaining at Feb. 15, 2008 was $1,277.6 million. The credit default swaps are extremely volatile, with the result that their market value and their liquidity may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known upon their disposition. About Fairfax Financial Headquartered in Toronto, Ontario, Fairfax Financial Holdings Limited (NYSE:FFH) -- http://www.fairfax.ca/-- is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management. The companys business segments comprises Canadian insurance, United States insurance, Asian insurance, reinsurance, runoff and other. The companys subsidiaries are wholly owned except for Odyssey Re Holdings Corp with a 59.6% interest, Northbridge Financial Corporation with a 59.2% interest and Cunningham Lindsey Group Inc. with an 81% interest. The company also has investments in a 26.1% interest in Hub International Limited, a 44.5% interest in Advent Capita PLC and a 26% interest in ICICI Lombard. During the year ended Dec. 31, 2006, the company sold its 10.3% interest in Zenith National Insurance Corp. * * * As reported in the Troubled Company Reporter on Dec. 5, 2007, Fitch Ratings upgraded the ratings of Fairfax Financial Holdings Limited as, issuer default rating to 'BB+' from 'BB-'; senior debt to 'BB' from 'B+'. FIELDSTONE MORTGAGE: Five Note Classes Get S&P's Rating Downgrades ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on five classes of mortgage-backed notes issued by Fieldstone Mortgage Investment Trust Series 2004-4. Concurrently, S&P affirmed its 'AA' rating on class M-2, the remaining class from this transaction. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses and a high amount of severe delinquencies (90-plus days, foreclosures, and REOs) relative to credit support, as well as a principal write-down to one of the classes. As of the Jan. 25, 2008, remittance date, cumulative realized losses, as a percentage of the original pool balance, were 1.65%. Severe delinquencies, as a percentage of the current pool balance, were 29.47%. Losses have consistently outpaced excess interest over the past six months by approximately 3.7x. Overcollateralization has been eroded completely. Class M-7 saw a principal write-down of $612,801 in January, and as a result, S&P downgraded the class to 'D'. The affirmation reflects sufficient credit enhancement available to support the current rating. The class has actual and projected credit support percentages that are in line with their original levels. Subordination, overcollateralization, and excess spread provide credit support for this transaction. The collateral consists of single-family residences, two- to four-family dwelling units, condominiums, planned unit developments, and manufactured housing. Ratings Lowered Fieldstone Mortgage Investment Trust Series 2004-4 Mortgage-backed notes Rating ------ Class To From ----- -- ---- M3 A AA M4 BB A- M5 B BB M6 CCC B- M7 D CCC Rating Affirmed Fieldstone Mortgage Investment Trust Series 2004-4 Mortgage-backed notes Class Rating ----- ------ M2 AA FIRST MAGNUS: Court Gives Thumbs Up to Liquidation Plan ------------------------------------------------------- The Honorable James M. Marlar of the U.S. Bankruptcy Court for the District of Arizona approved First Magnus Financial Corp.'s Chapter 11 Plan of Liquidation, the Associated Press reports. In addition, he also denied WNS North America, Inc.'s request to convert the Debtor's bankruptcy case into a Chapter 7 liquidation proceeding. As reported in the Troubled Company Reporter on Feb. 20, 2008, Judge Marlar already indicated that he will approve the liquidation plan following a two-day hearing. In a memorandum decision dated Feb. 15, 2008, Judge Marlar stated that the Plan could be confirmed as it has satisfied all the requirements for confirmation under Sections 1129(a) and 1129(b) of the Bankruptcy Code. Judge Marlar said that all objections to the Plan, unless otherwise resolved by agreement or stipulation, are overruled. WNS also raised the question whether the creditors would realize more under the auspices of a Chapter 7 trustee than the Plan's scheme for a two-trust, advisory board system. Judge Marlar accepted the testimony of the Debtor's witnesses that the company's assets, if managed properly with existing, limited personnel, can be more effectively managed and sold than if the entire estate were given over to a new person, a Chapter 7 trustee. Plan Provisions The plan proposed by the Debtor, and supported by the Official Committee of Unsecured Creditors consists of a short-term continuance of the Debtor's business, operated solely for the purpose of winding-down and disposing of the Debtor's specialized asset portfolio in a businesslike manner. To accomplish a higher return, however, the Plan requires an experienced core staff to remain employed, so that their particular expertise can be utilized in a way that hopefully returns more to the creditors than forced asset sales. The Plan replaces the Debtor's current management with an advisory board, consisting of representatives from the unsecured class of creditors. The board's principal duty will oversee the operation of two trusts, one designed to most effectively manage or sell the Debtor's assets, and the other designed to analyze the numerous legal issues associated with the Debtor's pre- bankruptcy operations, as well as review all claims for payment which have been presented to the reorganized Debtor. If any member of current management is to remain on the short-term payroll, that person or persons serves at the will of the advisory board. Judge Marlar directed the Debtor to finalize its distribution plans for its creditors, relates the AP. The Debtor also told the Court that they will pay a maximum of $10,000 to each of its employees. About First Magnus Based in Tucson, Arizona, First Magnus Financial Corporation -- http://www.firstmagnus.com/-- purchases and sells prime and Alt-A mortgage loans secured by one-to-four unit residences. The company filed for chapter 11 protection on Aug. 21, 2007 (Bankr. D. Ariz. Case No.: 07-01578). John R. Clemency, Esq., at Greenberg Traurig LLP serves as the counsel for the Debtor. The Official Committee of Unsecured Creditors has selected the firm Warner Stevens LLP as its counsel. When the Debtor filed for bankruptcy, it listed total assets of $942,109,860 and total debts of $812,533,046. The Debtor's exclusive period to file a plan expired on Dec. 19, 2007. The confirmation hearing on the Debtor's liquidation plan commenced on Feb. 7, 2008. FISHER COMMS: S&P Upgrades Corporate Credit Rating to 'B' From B- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Seattle, Washington-based TV broadcaster Fisher Communications Inc. to 'B' from 'B-'. The rating outlook is stable. "The upgrade reflects a combination of better performance at its TV segment and additional geographical diversity," said Standard & Poor's credit analyst Deborah Kinzer. The recent acquisition of two TV stations in Bakersfield, California, provides geographical diversity. "Fisher's improved leverage and consistent positive discretionary cash flow support the rating action," added Ms. Kinzer. FOAMEX INTERNATIONAL: Expects Unit to Comply with Credit Covenants ------------------------------------------------------------------ Foamex International Inc. expects Foamex L.P., the company's primary operating subsidiary, to achieve the requisite level of Consolidated EBITDA for 2007, as defined in Foamex L.P.'s credit agreements, to be in compliance with its financial covenants as of year-end. Under Foamex L.P.'s credit agreements, the minimum amount of Consolidated EBITDA for compliance with its financial covenants as of the end of the fourth quarter of 2007 is approximately $97 million. The company also significantly exceeded its targets for debt reduction in 2007. The company anticipated that its net debt would be under $560 million by the end of 2007. Net debt as of Dec. 30, 2007, was approximately $529 million and gross debt was approximately $534 million. "I'm pleased with the company's strong ability to generate cash to reduce debt," Bob Larney, executive vice president and chief financial officer of Foamex, said. In addition, the company has received commitments for up to $20 million of additional investment from D.E. Shaw Laminar Portfolios L.L.C., Goldman Sachs & Co. and Sigma Capital Management LLC. The company believes these commitments will assist in its compliance with financial covenants under its credit agreements during the entire 2008 year. "With these commitments, our major shareholders have shown that they are very supportive of the company, and now management can spend more time and effort on our operational and strategic growth plans." Jack Johnson, president and chief executive officer of Foamex, said. About Foamex International Inc. Headquartered in Linwood, Pennsylvania, Foamex International Inc. (FMXIQ.PK) -- http://www.foamex.com/-- produces cushioning for bedding, furniture, carpet cushion and automotive markets. The company also manufactures polymers for the industrial, aerospace, defense, electronics and computer industries. The company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05- 12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. On Feb. 2, 2007, the Court confirmed the Debtors' Second Amended Joint Plan of Reorganization. The Plan of Reorganization of Foamex International Inc. became effective and the company emerged from chapter 11 bankruptcy protection on Feb. 12, 2007. At July 1, 2007, Foamex International Inc.'s balance sheet showed total assets of $566.2 million and total liabilities of $823.5 million, resulting to a total stockholders' deficit of $257.3 million. FOOT LOCKER: Allowable Dividend Payments Increased to $95 Million ----------------------------------------------------------------- On Feb. 19, 2008, Foot Locker Inc. entered into an amendment of its Fifth Amended and Restated Credit Agreement dated as of April 9, 1997, and amended and restated as of May 19, 2004, to increase the amount permitted to be paid by the company as dividends during the 2008 fiscal year ending Jan. 31, 2009, from $90.0 million to $95.0 million. A full-text copy of the Amendment is available for free at: http://researcharchives.com/t/s?2869 About Foot Locker Headquartered in New York, Foot Locker, Inc. (NYSE: FL) --- http://www.footlocker-inc.com/ -- is a specialty athletic retailer that operates approximately 3,800 stores in 21 countries in North America, Europe and Australia. * * * As reported in the Troubled Company Reporter on Oct. 11, 2007, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured ratings on New York City-based Foot Locker Inc. to 'BB' from 'BB+'. S&P have removed the ratings from CreditWatch, where they were placed with negative implications on Aug. 18, 2006. The outlook is negative. FORD MOTOR: Announcement of Tata Motors Deal Seen on March 6 or 7 ----------------------------------------------------------------- The announcement of the sale of Ford Motor Co.'s Jaguar and Land Rover luxury brands to Tata Motors Limited will be made on March 6 or 7, media reports say. Tata Motors became the front-runner to buy the two luxury brands, outbidding Mahindra & Mahindra in collaboration with buyout firm Apollo; and One Equity Partners LLC. As reported by the Troubled Company Reporter-Asia Pacific on Feb. 1, 2008, Tata Motors is closing in on an agreement with Ford for the purchase. Last week, Tata and Ford met with British union leaders to resolve final details before drawing up a memorandum of understanding for the sale, AFX News said quoting a report by Automotive News. Media reports noted that the union is satisfied with Tata Motors assuring them, among others, of keeping employment in the United Kingdom at its current level. To pave the way for the final takeover, Tata Motors will sign a three-way Heads of Agreement with Ford and the Jaguar-Land Rover labor union Unite within a few days, The Times of India said citing Dave Osboerne, Motor Industry Leader for Unite. The HoA, a tripartite document, would outline the assurances and agreements reached among the three key players regarding the deal, Mr. Osboerne told the news agency. The parties will also enter into a final memorandum of understanding on the takeover soon, The Times added. Announcement of the deal could have been earlier than March 6 or 7, but it is being delayed so as not to overshadow the introduction of an updated Ford Fiesta at the Geneva auto show next week, Automotive News cited an unnamed source from Ford as saying. About Tata Motors India's largest automobile company, Tata Motors Limited -- http://www.tatamotors.com/-- is mainly engaged in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the company. The Company's operating segments consists of Automotive and Others. In addition to its automotive products, it offers construction equipment, engineering solutions and software operations. Tata Motors has operations in Russia and the United Kingdom. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. * * * As reported in the Troubled Company Reporter on Feb. 15, 2008, Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor Company and Ford Motor Credit Company at 'B', and maintained the Rating Outlook at Negative. As reported in the Troubled Company Reporter on Nov. 19, 2007, Moody's Investors Service affirmed the long-term ratings of Ford Motor Company (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured, and B3 probability of default), but changed the rating outlook to Stable from Negative and raised the company's Speculative Grade Liquidity rating to SGL-1 from SGL-3. Moody's also affirmed Ford Motor Credit Company's B1 senior unsecured rating, and changed the outlook to Stable from Negative. These rating actions follow Ford's announcement of the details of the newly ratified four-year labor agreement with the UAW. GENERAL MOTORS: Inks Settlement Pact with UAW and Union Retirees ---------------------------------------------------------------- General Motors Corporation, the International Union, United Automobile, Aerospace and Agricultural Workers of America and the class representatives in a class action case filed with the U.S. District Court for the Eastern District of Michigan against GM on Sept. 26, 2007 by the UAW and putative class representatives of GM-UAW, entered into a settlement agreement on Feb. 21, 2008. The Settlement Agreement effects the transactions contemplated by the Memorandum of Understanding -- Post-Retirement Medical Care that was entered into between GM and the UAW on Sept. 26, 2007, in conjunction with the negotiation by GM and the UAW of a new national collective bargaining agreement governing the wages, hours and terms and conditions of employment for UAW-represented employees. "This proposed settlement will put into effect what we negotiated in 2007," UAW President Ron Gettelfinger said. "Through hard work and hard bargaining, we have negotiated an innovative way to secure health care benefits for UAW GM retirees." The VEBA trust, Mr. Gettelfinger said, "will be managed by independent trustees with expertise in health care, investments, finance and other key areas. We are confident it will have sufficient assets and sufficient cash flow to pay benefits to our retirees for the next 80 years. "The VEBA trust will protect our retirees. That's why we negotiated it last year, and that's why we're supporting this proposed settlement." The Settlement Agreement provides that on the later of Jan. 1, 2010 or final court approval of the Settlement Agreement, GM will transfer its obligations to provide covered UAW employees with post-retirement medical benefits to a new retiree health care plan to be established and funded by a newly established Voluntary Employee Beneficiary Association trust. GM will fund the New VEBA through a number of sources including: funds that are currently in existing voluntary employee beneficiary association trusts, GM- issued convertible and short term notes, as well as cash on hand or additional sources of liquidity. The parties to the Settlement Agreement have acknowledged that GM's obligations to pay into the New VEBA are fixed and capped as provided in the Settlement Agreement and that GM is not responsible for, and does not provide a guarantee of: (1) the payment of future benefits to plan participants, (2) the asset returns of the funds in the New VEBA, or (3) whether there will be sufficient assets in the New VEBA to fully pay the obligations of the New VEBA or New Plan. In the event the assets of the New VEBA are not sufficient to fully fund the obligations of the New Plan, the New VEBA and New Plan will be required to reduce benefits to plan participants. The Settlement Agreement is subject, in its entirety, to: obtaining a class certification order from the United States District Court for the Eastern District of Michigan such that the class in the certification order is defined in the same manner as Class is defined in the Settlement Agreement; obtaining Court approval in a form acceptable to GM, the UAW and the Class; completing discussions between GM and the Securities Exchange Commission regarding accounting treatment on a basis satisfactory to GM. The Settlement Agreement may be terminated by any party upon 30 days notice if, among other things, satisfactory class certification or Court approval has been received and such certification or Court approval is subsequently overturned on appeal. GM may immediately terminate the Settlement Agreement if, after discussions with the SEC, GM does not believe that the accounting treatment for the New VEBA and the New Plan is satisfactory to GM. The U.S. District Court has scheduled a hearing June 3, 208, in Detroit to consider approval of the proposed settlement. A full-text copy of the Settlement Agreement is available for free at: http://ResearchArchives.com/t/s?2875 Convertible Note On Feb. 22, 2008, GM issued $4,372,500,000 principal amount of its 6.75% Series U Convertible Senior Debentures Due Dec. 31, 2012 to LBK, LLC, a Delaware limited liability company of which GM is the sole member, pursuant to the Settlement Agreement. LBK will hold the Convertible Note until it is transferred to the New VEBA in accordance with the terms of the Settlement Agreement. Interest on the Convertible Note is payable semiannually. In accordance with the Settlement Agreement LBK will transfer any interest it receives on the Convertible Note to a temporary asset account maintained by GM. The funds in the temporary asset account will be transferred to the New VEBA in accordance with the terms of the Settlement Agreement. The Convertible Note was issued pursuant to an indenture, dated as of Jan. 8, 2008, between GM and The Bank of New York, as trustee, as supplemented by the First Supplemental Indenture dated as of Feb. 22, 2008. The Convertible Note matures on Dec. 31, 2012 and will constitute a part of GM's senior debt and will rank equally with all of GM's other unsecured and unsubordinated debt. GM may redeem the Convertible Note, in whole or in part, at any time on or after Jan. 1, 2011 in cash at a price equal to 100% of the principal amount being redeemed plus (1) accrued and unpaid interest and (2) under certain circumstances if the Convertible Note is held by the New VEBA, an additional redemption adjustment amount. The Convertible Note will be initially convertible, subject to certain conditions, by a holder, other than LBK, into shares of GM common stock at a conversion rate of .625 shares of common stock per $25 principal amount of the Convertible Note, representing an initial effective conversion price of $40 per share. The conversion rate is subject to adjustment upon certain circumstances. Upon conversion, GM has the right to pay cash in lieu of any shares of common stock that otherwise would have been issuable. In conjunction with the issuance of the Convertible Note, GM and LBK have entered into certain cash-settled derivative instruments maturing on June 30, 2011 that will have the economic effect of reducing the conversion price of the Convertible Note from $40 to $36. These derivative instruments will also entitle GM to partially recover the additional economic value provided if GM's common stock price appreciates to between $63.48 and $70.53 per share and to fully recover the additional economic value provided if GM's common stock price reaches $70.53 per share or above. Pursuant to the Settlement Agreement, LBK will transfer its interests in the derivatives to the New VEBA when the Convertible Note is transferred from LBK to the New VEBA. Short Term Note On Feb. 21, 2008, GM issued a short term note in the principal amount of $4,015,187,871 to LBK pursuant to the Settlement Agreement. The Short Term Note pays interest at a rate of 9% and matures on the date that the face amount of the Short Term Note is paid with interest to the New VEBA in accordance with the terms of the Settlement Agreement. LBK will hold the Short Term Note until it matures. Upon maturity, and in accordance with the Settlement Agreement, GM will cause LBK to pay to the New VEBA in cash the face value of the Short Term Note, plus cash in an amount equal to the interest accrued on such amount from and including the date of the Short Term Note, but excluding the date of payment to the New VEBA. As a wholly owned consolidated subsidiary of GM, LBK will hold the convertible note, the short term note, and the derivatives until they are transferred or paid to the New VEBA. As such, these three securities will be effectively eliminated in GM's consolidated financial statements until they are transferred to the New VEBA. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on Nov. 9, 2007, Moody's Investors Service affirmed its rating for General Motors Corporation (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured and SGL-1 Speculative Grade Liquidity rating) but changed the outlook to Stable from Positive. In an environment of weakening prospects for US auto sales GM has announced that it will take a non-cash charge of $39 billion for the third quarter of 2007 related to establishing a valuation allowance against its deferred tax assets (DTAs) in the US, Canada and Germany. As reported in the Troubled Company Reporter on Oct. 23, 2007, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating and other ratings on General Motors Corp. and removed them from CreditWatch with positive implications, where they were placed Sept. 26, 2007, following agreement on the new labor contract. The outlook is stable. GLADUE ISTRE: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gladue Joseph Istre, III Pamela A. Istre 1726 Sunswept Lane Harvey, Los Angeles 70058 Bankruptcy Case No.: 08-10336 Chapter 11 Petition Date: February 22, 2008 Court: Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtor's Counsel: Leo D. Congeni, Esq. 424 Gravier Street New Orleans, Los Angeles 70130 Tel: (504) 586-9120 Fax: (504) 581-4962 LeoCongeni@bellsouth.net Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sallie Mae 3rd Party LSC educational $54,732 Attn: Claims Department P.O. Box 9400 Wilkes Barre, PA 18773 Ford Motor Credit automobile $44,017 Corporation Ford Credit National Bankruptcy Center P.O. Box 537901 Livonia, MI 48153 American Express check credit or $38,863 Becket and Lee line of credit P.O. Box 3001 Malvern, PA 19355 Discover Financial credit card $14,521 American Express credit card $13,838 HSBC Nv/GM Card credit card $7,647 Sears credit card $7,456 First USA, N.A. credit card $6,838 American General Fin. household goods $5,200 and other collateral auto GEMB / Dillards charge account $4,335 Chase credit card $2,651 Wffinance charge account $2,145 Bank Of Louisiana credit card $1,483 Capital 1 Bank credit card $750 Shell Oil / Citibank credit card $583 Chase - Cc credit card $313 Amer General Fin. unknown Aurora Loan Services conventional unknown real estate mortgage Chase unknown GLIMCHER REALTY: Net Loss Down to $21MM in Quarter Ended Dec. 31 ---------------------------------------------------------------- Glimcher Realty Trust reported financial results for the fourth quarter and year ended Dec. 31, 2007. Net loss available to common shareholders during the fourth quarter of 2007 was $21.3 million as compared to a loss of $57.3 million in the fourth quarter of 2006. Funds From Operations during the fourth quarter of 2007 was $0.9 million, compared to $42.4 million in the fourth quarter of 2006. Included in the results of the fourth quarter 2006 are non-cash impairment charges and debt extinguishment costs of $72.5 million. For the year ended Dec. 31, 2007, net income available to common shareholders was $20.9 million compared to a net loss of $94.6 million for the year ended Dec. 31, 2006. FFO for the year ended Dec. 31, 2007 was $55.4 million as compared to $25.5 million in 2006. "Our operating fundamentals demonstrated solid progress once again this quarter," Michael P. Glimcher, chairman of the board and CEO, stated. "Our core mall assets had 94% mall store occupancy with growth in both rents and operating income." Financial Highlights -- Net operating income for comparable held-for-investment mall properties increased 2.7% in the fourth quarter of 2007 over the fourth quarter of 2006. When including mall properties classified as held-for-sale, net operating income increased less than 1% for the quarter. -- Core Malls store average rents were $31.27 per square foot at Dec. 31, 2007, an increase of 2% from the $30.65 per square foot at Dec. 31, 2006. Re-leasing spreads for the leases signed during fiscal year 2007 were favorable by 13% with base rents averaging $31.64 per square foot. -- Occupancy for the Core Malls stores at Dec. 31, 2007, was 94.4% compared to 94.3% at Dec. 31, 2006. -- Debt-to-total-market capitalization at Dec. 31, 2007, including the company's pro-rata share of joint venture debt was 67.1% based on the common share closing price of $14.29, compared to 56.3% at Dec. 31, 2006, based on the common share closing price of $26.71. Debt with fixed rates represented approximately 85% of the company's total outstanding borrowings at Dec. 31, 2007, as compared to 86% as of Dec. 31, 2006. The increase in the debt-to-market capitalization is the result of the decrease in the company's Common share price. Outstanding debt levels actually decreased by approximately $25 million during fiscal year 2007. Dec. 31, 2007, the company's balance sheet showed total assets of $1.83 billion compared to $1.89 billion in Dec. 31, 2006. About Glimcher Realty Trust Headquartered in Columbus, Ohio, Glimcher Realty Trust (NYSE: GRT) is a real estate investment trust, which owns, manages, acquires and develops regional and super-regional malls. The company is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. * * * As reported in the Troubled Company Reporter on Dec. 3, 2007, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating assigned to Glimcher Realty Trust. Additionally, S&P affirmed all other Glimcher-related ratings, affecting roughly $210 million in preferred stock. The outlook is stable. GLOBAL PAYMENT: Posts $944T Net Loss in 1st Qtr. Ended Dec. 31 -------------------------------------------------------------- Global Payment Technologies Inc. reported a net loss of $944,000 on net sales of $2,511,000 for the first quarter ended Dec. 31, 2007, compared with a net loss of $1,249,000 on net sales of $3,964,000 in the corresponding period ended Dec. 31, 2006. The sales decrease was due to $1,228,000 decreased sales to the gaming market and $225,000 decreased sales to the beverage and vending market. Last year's sales included special incentives to customers in order to reduce inventory levels in the company's Aurora product. Gross profit decreased to $517,000, or 20.6% of net sales, in the three months ended Dec. 31, 2007, as compared with $712,000, or 18.0% of net sales, in the comparative prior-year period. Operating expenses decreased to $1,453,000, or 58.0% of sales, in the three months ended Dec. 31, 2007, as compared with $1,950,000, or 49.2% of sales, in the comparative prior-year period. This decrease of $497,000 is primarily the result of lower payroll, travel, and consulting expenses. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $5,646,000 in total assets, $3,062,000 in total liabilities, and $2,584,000 in total shareholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?286e Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 31, 2008, New York-based Eisner LLP expressed substantial doubt about Global Payment Technologies Inc.'s ability to continue as a going concern following its audit of the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm pointed to Global Payment's recurring losses and deficiencies in cash flows from operations. About Global Payment Headquartered in Bohemia, New York, Global Payment Technologies Inc. (NasdaqCM: GPTX) -- http://www.gptx.com/-- designs, manufactures, and markets automated currency acceptance and validation systems used to receive and authenticate currencies in a variety of payment applications worldwide. GREGORY CRISCUOLO: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Gregory R.J. Criscuolo 7 Mountaincrest Drive Cheshire, Connecticut 06410 Bankruptcy Case No.: 08-30519 Chapter 11 Petition Date: February 21, 2008 Court: District of Connecticut (New Haven) Judge: Lorraine Murphy Weil Debtor's Counsel: Neil Crane, Esq. Law Offices of Neil Crane LLC 2700 Whitney Avenue Hamden, Connecticut 06518 Tel: (203) 230-2233 Fax: 203-230-8484 neilcranelaw@snet.net Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 1040 taxes $339,880 135 High Street, Stop 155 Hartford, CT 06103 The William W. Backus loan $252,000 Hospital Attn: Mr. Dan Lohr Senior VP/CFO 326 Washington Street Norwich, CT 06360 Wells Fargo Bank, N.A. real estate $153,178 101 North Phillips Avenue value of Sioux Falls, SD 57104 security: $610,000; value of senior lien: $488,000 Bank of America credit card $118,642 purchases MBNA credit card $102,317 purchases State of Connecticut 1040 taxes $45,365 Chase Bank credit card $35,041 purchases Sovereign Bank automobile $13,500 Webster Bank any personal $12,216 liability Chase Bank credit card $10,368 purchases HEINZ GROHS: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Heinz Grohs Dawn Grohs 11 Boardman Avenue Manchester, Massachusetts 01944 Bankruptcy Case No.: 08-11185 Chapter 11 Petition Date: Feb. 22, 2008 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Timothy M. Mauser, Esq. Deutsch Williams Brooks DeRensis & Holland P.C. One Design Center Place Suite 600 Boston, Massachusetts 02210 Tel: 617-951-2300 Fax: 617-951-2323 tmauser@dwboston.com Total Assets: $8,730,853 Total Debts: $5,916,552 Debtor's list of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America credit card $61,113 P.O. BOX 15026 purchases Wilmington, DE 19850-5026 American Express credit card $49,958 P.O. Box 981535 purchases El Paso, TX 79998-1531 Bryan County Tax real estate taxes $49,362 Commission P.O. BOX 447 Pembroke, GA 31321 BMW Financial Services automobile $25,747 Customer Service value of security: $21,965 BMW VISA credit card $14,932 BMW Bank of North America purchases City of Richmond Hill 2006 & 2007 taxes $10,032 Tax Department Chubb Group of Insurance insurance $983 Chrysler Financial $615 Chatham Orthopedic $468 Associates Coastal Electric Cooperative utility bill $535 Scanna Energy utility bill $269 Royal Alarms Inc. miscellaneous $74 HORNBECK OFFSHORE: Earns $25.8 Million for 2007 Fourth Quarter -------------------------------------------------------------- Hornbeck Offshore Services Inc. reported $25.8 million net income for 2007 fourth quarter ended Dec. 31, 2007 compared to $16.6 million net income for the same period of 2006. Net income for the full fiscal year ended Dec. 31, 2007 is $94.8 million from $75.7 million of net income for fiscal 2006. Fourth quarter 2007 revenues increased 54.8% to $101.1 million compared to $65.3 million for the fourth quarter of 2006. Operating income was $40.7 million for the fourth quarter of 2007 compared to $25.5 million for the prior year quarter. Revenues for 2007 increased 23.5% to $339.0 million compared to $274.6 million for 2006. Operating income was $145.9 million for 2007 compared to $120.4 million for 2006. Net income in 2006 and 2007 each included pre-tax gains on vessel sales of $1.9 million. The company's results for 2007 were favorably impacted by a significant increase in effective new generation OSV dayrates and the incremental contribution from recently acquired or newly constructed vessels delivered during the latter half of 2007. As of Dec. 31, 2007, the company's balance sheet showed total stockholder's equity of $562.3 million. On Feb. 20, 2008, the company completed its plans to increase the $100.0 million borrowing base of its existing senior secured revolving credit facility to $250.0 million, the maximum amount of its "accordion" feature. As required by the September 2006 credit agreement, the company posted 16 additional OSVs as collateral. While presently undrawn, the expanded credit facility is expected to fund, during the peak of its aggregate construction draw schedule, a portion of the company's on-going newbuild and conversion programs. However, any such draw is projected to be repaid in full by the end of the construction cycle in 2010. About Hornbeck Offshore Headuqrtered in Covington, Louisiana, Hornbeck Offshore Services Inc. (NYSE:HOS) -- http://www.hornbeckoffshore.com/-- provides offshore supply vessels (OSVs) to customers in the offshore oil and gas industry, primarily in the United States Gulf of Mexico and in select international markets. The focus of the company's OSV business is on complex exploration and production activities, which include deepwater, deep well and other logistically demanding projects. Such other projects include, among others, the construction, maintenance and repair of offshore infrastructure. Hornbeck Offshore Services Inc. is also a transporter of petroleum products through its tug and tank barge segment serving the energy industry, primarily in the northeastern United States and Puerto Rico. Oil companies, independent oil and gas exploration, development and production companies, and oil service companies constitute the majority of its customers for its OSV services, while refining, marketing and trading companies constitute the majority of its customers for its tug and tank barge services. * * * As reported in the Troubled Company Reporter on Jan. 11, 2008, Standard & Poor's Ratings Services said that its ratings and outlook on Hornbeck Offshore Services Inc. (BB-/Stable/--) are unaffected by Hornbeck's announcement that it has agreed to buy the Superior Achiever, a multipurpose support vessel currently being constructed by Merwede Shipyard in the Netherlands for Superior Offshore International Inc. At the same time, Superior Offshore contracted with Hornbeck for a five-year time charter on this vessel or another, similar one. HOST HOTELS: Fitch to Monitor Impact of $500MM Stock Repurchase --------------------------------------------------------------- The Board of Directors of Host Hotels & Resorts, Inc. has authorized a program for HST to repurchase up to $500 million of Host's common stock. While Fitch acknowledges that the program does not obligate Host to repurchase any specific number of shares and may be suspended at any time at management's discretion, Fitch will monitor share repurchase activity going forward and its impact on the company's debt-to-adjusted EBITDA ratios and liquidity. If the operating environment for lodging real estate investment trusts were to continue to deteriorate in 2008 and Host pursues aggressive share repurchase activity, Fitch may review its ratings. Host's debt-to-adjusted EBITDA ratio, currently calculated at 3.7 times by Fitch, gives Host some flexibility for the company's current ratings. As Host considers exercising share repurchases, Fitch will also monitor Host's RevPAR, average daily rate, and average occupancy statistics, as well as credit metrics such as unencumbered asset coverage and fixed-charge coverage ratios, which are currently consistent with the company's ratings. Fitch's ratings for Host are: Host Hotels & Resorts, Inc. -- Issuer Default Rating 'BB+'; -- Preferred stock 'BB'. Host Hotels & Resorts, L.P. -- Bank credit facility 'BB+'; -- Senior unsecured notes 'BB+'; -- Exchangeable senior unsecured debentures 'BB+'. The Rating Outlook is Stable. Host is a Bethesda, Maryland-based REIT with $11.8 billion in total book assets as of Dec. 31, 2007. The company owns hotel properties throughout several regions of the U.S., as well as Canada, Chile and Mexico, and in Europe through an unconsolidated JV. IMPLANT SCIENCES: Selling 2M Shares to Buy Ion Metrics' Assets -------------------------------------------------------------- Implant Sciences Corporation executed a binding letter of intent to acquire Ion Metrics Inc. In connection with this transaction, the company plans to acquire all the assets of Ion Metrics, and will also be assuming certain specified liabilities. The company plans to issue 2 million shares of its common stock as consideration for the transaction. The Ion Metrics assets include mass spectrometer technology, differential mobility spectrometer technology, ion mobility spectrometry technology, miniature, light weight vacuum pump technology, patents, manufacturing fixtures, and other related technological capabilities. The common stock to be issued will be restricted pursuant to the provisions of Securities and Exchange Commission Rule 144. The acquisition is subject to the execution of a definitive purchase agreement, which is expected to occur no later than March 31, 2008, and the satisfaction of other conditions which are customary in these types of transactions. Ion Metrics has adapted its mass spectrometer technology, and other innovative front-end detection and separation technologies, to meet the need for field deployable, high-throughput screening instruments in industries such as drug discovery, security, and safety. Ion Metrics's approach revolves around innovative miniaturized devices and system designs providing improved performance and reliability in combination with low manufacturing costs. "After conducting a global search for the right partner to team up with for the commercialization of our leading edge mass spec technology, the board of Ion Metrics determined the technology and corporate fit with Implant Sciences represented a significant opportunity for us to gain a leadership position in the worldwide security and threat detection arena," David J. Ferran, executive chairman of Ion Metrics commented. "We believe Implant Sciences has the right management focus, growth strategy, and complementary technologies to be successful. Our team is proud to become the newest members of Implant Sciences." "The acquisition of Ion Metrics and its rich technology suite fits perfectly with our ongoing strategy to grow our security business," Phillip C. Thomas, chairman and CEO of Implant Sciences stated. "Integral components of this strategy are the enhancement of our core technology with new capabilities and the integration of these capabilities into new product offerings. After a thorough evaluation by our team of scientists and engineers, we believe Ion Metrics has demonstrated the capability of successfully miniaturizing advanced MS, DMS, and IMS technologies with clear applications for security, safety and defense." "Furthermore, the integration of the Ion Metrics technologies into our Quantum Sniffer product line provide us with opportunities to introduce smaller, lower cost, and higher performance security solutions, Mr. Thomas added. "Looking ahead, we also see the added benefit of being able to detect narcotics, chemical warfare agents, and toxic industrial chemicals as part of our product line expansion." "The innovative technology developed by Ion Metrics is, in part, the result of over $2 million in government funding over the past 3 years," Mr. Thomas continued. "The willingness of Ion Metrics' senior management, who represent the majority shareholders, to accept Implant Sciences' common stock in lieu of cash as substantially all of the up-front consideration for this transaction demonstrates their commitment to the success of Implant Sciences. We look forward to bringing the Ion Metrics and Implant Sciences teams together to collectively execute on our ongoing plan for growth and the achievement of sustained profitability." About Ion Metrics Inc. Headquartered in San Diego, California, Ion Metrics Inc. is in the business of producing low cost mass sensor systems for the detection and analysis of chemical compounds such as explosives, chemical warfare agents, narcotics, and toxic industrial chemicals for the homeland defense, forensic, environmental, and safety/security markets. About Implant Sciences Based in Wakefield, Massachusetts, Implant Sciences Corporation -- http://www.implantsciences.com/-- develops, manufactures, and markets products for the medical device and explosives detection industry. Its core technology involves ion implantation and thin film coatings of radioactive and nonradioactive materials. The company manufactures and sells I-Plant Iodine-125 radioactive seed for the treatment of prostate cancer, and Ytterbium-192 for breast cancer therapy. It also provides surface engineering technology to manufacturers of orthopedic hip and knee total joint replacements. The company has a strategic alliance with Rapiscan Systems, Inc. for the manufacture and sale of explosives detection equipment on a private label basis. * * * As reported in the Troubled Company Reporter on Oct. 19, 2007, UHY LLP raised substantial doubt about Implant Sciences Corporation's ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended June 30, 2007. The auditing firm pointed to the company's recurring losses from operations. INDYMAC ABS: Fitch Slashes Ratings on Six Certificate Classes ------------------------------------------------------------- Fitch Ratings has taken rating actions on IndyMac ABS Inc., mortgage pass-through certificates. Downgrades total $207.4 million. Break Loss percentages and Loss Coverage Ratios for each class rated 'B' or higher are included with the rating actions as: IndyMac, Series INDS-2006 A -- $141.1 million class A downgraded to 'B' from 'A-' (BL: 53.26, LCR: 1.02); -- $19.2 million class M-1 downgraded to 'B' from 'BBB' (BL: 44.98, LCR: 0.86); -- $21 million class M-2 downgraded to 'C/DR6' from 'BB'; -- $9 million class M-3 downgraded to 'C/DR6' from 'BB-'; -- $8.1 million class M-4 downgraded to 'C/DR6' from 'B+'; -- $8.6 million class M-5 downgraded to 'C/DR6' from 'B'; -- $7.2 million class M-6 remains at 'C/DR6'; -- $6.1 million class M-7 remains at 'C/DR6'; -- $5.7 million class M-8 remains at 'C/DR6'; -- $6.8 million class M-9 remains at 'C/DR6'. Deal Summary -- Originators: 100% IndyMac -- 60+ day Delinquency: 15.8%; -- Realized Losses to date (% of Original Balance): 12.67%; -- Expected Remaining Losses (% of Current Balance): 52.40%; -- Cumulative Expected Losses (% of Original Balance): 45.84%. The rating actions are based on deterioration in the relationship between credit enhancement and expected losses and reflect continued poor loan performance and home price weakness. Minimum LCRs specifically for subprime second lien transactions are: AAA: 2.00; AA: 1.75; A: 1.50; BBB: 1.30; BB 1.10; B: 1.00. INDYMAC ABS: Fitch Chips Ratings on $2.6 Billion Certificates ------------------------------------------------------------- Fitch Ratings has taken rating actions on IndyMac ABS Inc. mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $276 million and downgrades total $2.6 billion. Additionally, $1 billion remains on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class is included with the rating actions as: INABS 2006-A -- $14.1 million class A-1 affirmed at 'AAA', (BL:97.99, LCR: 3.2 ); -- $89.5 million class A-2 affirmed at 'AAA', (BL:66.73, LCR: 2.18 ); -- $98.5 million class A-3 downgraded to 'AA' from 'AAA' (BL:46.42, LCR: 1.52 ); -- $30.6 million class A-4 downgraded to 'A' from 'AAA' (BL:43.09, LCR: 1.41 ); -- $21.3 million class M-1 downgraded to 'B' from 'AA+' (BL:37.13, LCR: 1.21 ); -- $19.3 million class M-2 downgraded to 'B' from 'AA+' (BL:31.71, LCR: 1.04 ); -- $11.5 million class M-3 downgraded to 'CCC' from 'AA+' (BL:28.47, LCR: 0.93 ); -- $9.8 million class M-4 downgraded to 'CCC' from 'A+' (BL:25.68, LCR: 0.84 ); -- $9.8 million class M-5 downgraded to 'CCC' from 'A-' (BL:22.89, LCR: 0.75 ); -- $8.7 million class M-6 downgraded to 'CC' from 'BBB+' (BL:20.37, LCR: 0.67 ); -- $8.1 million class M-7 downgraded to 'CC' from 'BBB-' (BL:17.91, LCR: 0.59 ); -- $7.8 million class M-8 downgraded to 'CC' from 'BB+' (BL:15.45, LCR: 0.5 ); -- $5.6 million class M-9 downgraded to 'C' from 'BB-' (BL:13.56, LCR: 0.44 ); -- $6.4 million class M-10 downgraded to 'C' from 'B' (BL:11.86, LCR: 0.39 ). Deal Summary -- Originators: IndyMac -- 60+ day Delinquency: 31.13% -- Realized Losses to date (% of Original Balance): 0.88% -- Expected Remaining Losses (% of Current balance): 30.61% -- Cumulative Expected Losses (% of Original Balance): 20.29% INABS 2006-B -- $82.3 million class 1A-1 downgraded to 'A' from 'AAA' (BL:43.57, LCR: 1.33 ); -- $82.3 million class 1A-2 downgraded to 'A' from 'AAA' (BL:43.57, LCR: 1.33 ); -- $53 million class 2A-2 affirmed at 'AAA', (BL:66.69, LCR: 2.04 ); -- $64.4 million class 2A-3 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 47.02, LCR: 1.43 ); -- $20.2 million class 2A-4 downgraded to 'A' from 'AAA' (BL:43.79, LCR: 1.34 ); -- $26.6 million class M-1 downgraded to 'B' from 'AA+' (BL:37.59, LCR: 1.15 ); -- $23.8 million class M-2 downgraded to 'CCC' from 'AA' (BL:32.18, LCR: 0.98 ); -- $14 million class M-3 downgraded to 'CCC' from 'AA-' (BL:28.99, LCR: 0.88 ); -- $12.6 million class M-4 downgraded to 'CCC' from 'A+' (BL:26.10, LCR: 0.8 ); -- $12.2 million class M-5 downgraded to 'CC' from 'A-' (BL:23.30, LCR: 0.71 ); -- $11.2 million class M-6 downgraded to 'CC' from 'BBB+' (BL:20.69, LCR: 0.63 ); -- $9.8 million class M-7 downgraded to 'CC' from 'BBB-' (BL:18.32, LCR: 0.56 ); -- $4.9 million class M-8 downgraded to 'CC' from 'BB+' (BL:17.15, LCR: 0.52 ); -- $7 million class M-9 downgraded to 'C' from 'B+' (BL:15.57, LCR: 0.48 ). Deal Summary -- Originators: IndyMac -- 60+ day Delinquency: 30.98% -- Realized Losses to date (% of Original Balance): 0.77% -- Expected Remaining Losses (% of Current balance): 32.77% -- Cumulative Expected Losses (% of Original Balance): 21.28% INABS 2006-C -- $86.1 million class 1A downgraded to 'A' from 'AAA' (BL:44.26, LCR: 1.44 ); -- $83.2 million class 2A downgraded to 'A' from 'AAA' (BL:44.81, LCR: 1.45 ); -- $22 million class 3A-1 affirmed at 'AAA', (BL:97.11, LCR: 3.15 ); -- $73.2 million class 3A-2 rated 'AAA', remains on Rating Watch Negative (BL: 58.21, LCR: 1.89 ); -- $75.8 million class 3A-3 downgraded to 'A' from 'AAA' (BL:45.25, LCR: 1.47 ); -- $32.1 million class 3A-4 downgraded to 'A' from 'AAA' (BL:42.54, LCR: 1.38 ); -- $29.1 million class M-1 downgraded to 'B' from 'AA+' (BL:37.02, LCR: 1.2 ); -- $25.7 million class M-2 downgraded to 'B' from 'AA' (BL:32.16, LCR: 1.04 ); -- $15.3 million class M-3 downgraded to 'CCC' from 'AA-' (BL:29.24, LCR: 0.95 ); -- $13.8 million class M-4 downgraded to 'CCC' from 'A' (BL:26.61, LCR: 0.86 ); -- $13.4 million class M-5 downgraded to 'CCC' from 'A-' (BL:24.01, LCR: 0.78 ); -- $12.3 million class M-6 downgraded to 'CC' from 'BBB' (BL:21.57, LCR: 0.7 ); -- $11.9 million class M-7 downgraded to 'CC' from 'BB+' (BL:19.06, LCR: 0.62 ); -- $8.8 million class M-8 downgraded to 'CC' from 'BB' (BL:17.22, LCR: 0.56 ); -- $5 million class M-9 downgraded to 'CC' from 'B+' (BL:16.33, LCR: 0.53 ). Deal Summary -- Originators: IndyMac -- 60+ day Delinquency: 26.03% -- Realized Losses to date (% of Original Balance): 0.52% -- Expected Remaining Losses (% of Current balance): 30.82% -- Cumulative Expected Losses (% of Original Balance): 21.60% INABS 2006-D -- $138.6 million class 1A downgraded to 'A' from 'AAA', remains on Rating Watch Negative (BL: 41.60, LCR: 1.26 ); -- $97.4 million class 2A-1 affirmed at 'AAA', (BL:71.03, LCR: 2.15 ); -- $125.4 million class 2A-2 downgraded to 'AA' from 'AAA' (BL:52.92, LCR: 1.6 ); -- $115.5 million class 2A-3 downgraded to 'A' from 'AAA' (BL:43.98, LCR: 1.33 ); -- $56.3 million class 2A-4 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 41.06, LCR: 1.24 ); -- $37.5 million class M-1 downgraded to 'B' from 'AA+' (BL:36.07, LCR: 1.09 ); -- $33.2 million class M-2 downgraded to 'CCC' from 'AA' (BL:31.59, LCR: 0.96 ); -- $19.5 million class M-3 downgraded to 'CCC' from 'AA-' (BL:28.94, LCR: 0.88 ); -- $17.1 million class M-4 downgraded to 'CCC' from 'A+' (BL:26.59, LCR: 0.8 ); -- $17.1 million class M-5 downgraded to 'CC' from 'A' (BL:24.22, LCR: 0.73 ); -- $16.1 million class M-6 downgraded to 'CC' from 'A-' (BL:21.90, LCR: 0.66 ); -- $12.4 million class M-7 downgraded to 'CC' from 'BBB+' (BL:19.95, LCR: 0.6 ); -- $8.6 million class M-8 downgraded to 'CC' from 'BBB' (BL:18.52, LCR: 0.56 ); -- $11.4 million class M-9 downgraded to 'CC' from 'BBB-' (BL:16.44, LCR: 0.5 ); -- $12.4 million class M-10 downgraded to 'C' from 'BB-' (BL:14.25, LCR: 0.43 ); -- $9.5 million class M-11 downgraded to 'C' from 'B+' (BL:12.95, LCR: 0.39 ). Deal Summary -- Originators: IndyMac -- 60+ day Delinquency: 24.40% -- Realized Losses to date (% of Original Balance): 0.59% -- Expected Remaining Losses (% of Current balance): 33.05% -- Cumulative Expected Losses (% of Original Balance): 26.66% INABS 2006-E -- $164.6 million class 1-A1 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.15, LCR: 1.19 ); -- $164.6 million class 1-A2 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.15, LCR: 1.19 ); -- $180.1 million class 2-A1 rated 'AAA', remains on Rating Watch Negative (BL: 60.08, LCR: 1.87 ); -- $142.3 million class 2-A2 downgraded to 'AA' from 'AAA', remains on Rating Watch Negative (BL: 47.81, LCR: 1.49 ); -- $144.5 million class 2-A3 downgraded to 'A' from 'AAA' (BL:40.04, LCR: 1.25 ); -- $50.8 million class 2-A4 downgraded to 'BBB' from 'AAA', remains on Rating Watch Negative (BL: 38.37, LCR: 1.19 ); -- $53.3 million class M-1 downgraded to 'B' from 'AA+' (BL:33.39, LCR: 1.04 ); -- $47.5 million class M-2 downgraded to 'CCC' from 'AA' (BL:29.09, LCR: 0.91 ); -- $27.3 million class M-3 downgraded to 'CCC' from 'AA-' (BL:26.59, LCR: 0.83 ); -- $24.7 million class M-4 downgraded to 'CCC' from 'A+' (BL:24.30, LCR: 0.76 ); -- $24 million class M-5 downgraded to 'CC' from 'A' (BL:22.01, LCR: 0.69 ); -- $14.3 million class M-6 downgraded to 'CC' from 'A-' (BL:20.51, LCR: 0.64 ); -- $16.2 million class M-7 downgraded to 'CC' from 'BBB+' (BL:18.71, LCR: 0.58 ); -- $9.1 million class M-8 downgraded to 'CC' from 'BBB' (BL:17.58, LCR: 0.55 ); -- $15.6 million class M-9 downgraded to 'C' from 'BBB-' (BL:15.64, LCR: 0.49 ); -- $18.2 million class M-10 downgraded to 'C' from 'BB' (BL:13.46, LCR: 0.42 ); -- $16.2 million class M-11 downgraded to 'C' from 'B+' (BL:11.79, LCR: 0.37 ). Deal Summary -- Originators: IndyMac -- 60+ day Delinquency: 21.28% -- Realized Losses to date (% of Original Balance): 0.12% -- Expected Remaining Losses (% of Current balance): 32.12% -- Cumulative Expected Losses (% of Original Balance): 28.19% The rating actions are based on changes that Fitch has made to its subprime loss forecasting assumptions. The updated assumptions better capture the deteriorating performance of pools from 2007, 2006 and late 2005 with regard to continued poor loan performance and home price weakness. INTERLINE BRANDS: Earns $13.5 Mil. for Three Months Ended Dec. 28 ----------------------------------------------------------------- Interline Brands Inc. earns $13.5 million for three months ended Dec. 28, 2007 compared to $11.4 million net income for the same period of the prior year. For the twelve months ended Dec. 28, 2007, the company earned $51.0 million in comparison to $31.2 million net income of the previous year. Net sales for the three month period ended Dec. 28, 2007 was $300.2 million from $293.3 million sales of the same period of the prior year. For the twelve months ended Dec. 28, the company's net sales increased $0.1 billion to $1.2 billion from $1.1 billion of the twelve months ended Dec. 29, 2006. The acquisition of AmSan in July 2006 added $131.6 million in sales in the first half of 2007. Average organic daily sales growth for 2007 was 3.7%. Gross profit for 2007 increased $65.0 million to $473.9 million from $408.9 million in 2006. Gross profit as a percentage of sales was 38.2% in 2007 compared to 38.3% in 2006. Operating income increased $12.4 million, or 12%, to a record $114.1 million in 2007 from $101.7 million in 2006. Operating income as a percentage of sales was 9.2% in 2007 versus 9.5% in 2006. Cash provided by operations was $57.7 million in 2007, compared to cash provided by operations of $29.9 million in 2006. As of Dec. 28, 2007, the company's balance sheet reflected total assets of $936.8 million, total debts of $559.4 million resulting to a total shareholder's equity of $377.4 million. "2007 was another strong year for Interline Brands. Since going public in 2004, we have increased sales by over 65%, grown pro forma earnings per share 71%, and have continued to achieve strong returns on tangible capital," Michael Grebe, Interline's chairman and chief executive officer, commented. "I would like to congratulate the entire team for their outstanding performance in a challenging market." "Solid execution in our facilities maintenance markets, which now represent 67% of Interline's sales, offset weakness in our pro- contractor and specialty distributor markets which resulted from deteriorating conditions in the housing industry," William Sanford, president and chief operating officer, stated. About Interline Brands Interline Brands Inc. distributes and markets maintenance, repair and operations products. The company stocks over 80,000 plumbing, electrical, hardware, security, heating, ventilation and air conditioning, janitorial and sanitary, as well as other MRO products, and sells to approximately 200,000 active customer accounts. Its products are primarily used for the repair, maintenance, remodeling and refurbishment of properties and non- industrial facilities. Its customer base includes facilities maintenance customers, which consist of multi-family housing facilities, educational institutions, lodging and healthcare facilities, government properties and building service contractors; professional contractors who are primarily involved in the repair, remodeling and construction of residential and non- industrial facilities, and specialty distributors, including plumbing and hardware retailers. On July 3, 2006, Interline New Jersey acquired AmSan LLC. * * * Moody's Investor's Service assigned its 'Ba2' bank loan debt rating and 'B1' probability of default rating to Interline Brands on September, 2006. That rating action still holds to date. JAMES PATTON: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: James Daniel Patton Janna Rae Patton 2286 S. Summerbrook Place Fayetteville, Arkansas 72701 Bankruptcy Case No.: 08-70620 Chapter 11 Petition Date: February 21, 2008 Court: Western District of Arkansas (Fayetteville) Debtor's Counsel: David G. Nixon, Esq. Nixon Law Firm 2340 Green Acres Road, Ste. 12 Fayetteville, Arkansas 72703 Tel: (479) 582-0020 Fax: (479) 582-0030 david@nixonlaw.com Estimated Assets: $500,001 to $1 million Estimated Debts: $1,000,001 to $10 million Debtor's list of its 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ ANB Financial NA value of $839,769 706 Walton Boulevard collateral: Bentonville, AR $610,000; value of security: $609,400 Joan Stafford value of $85,000 901 N. Pinto Avenue collateral: $32,200; value of security: $32,200 First Security Bank $69,133 Collection Department P.O. Box 1009 Searcy, AR Chase $18,800 Discover Card $12,139 First Federal Bank $11,850 Discover $10,300 Citibank $7,506 Bank of America $6,200 JP MORGAN: Fitch Junks Rating on $2.9 Million Certificates ---------------------------------------------------------- Fitch Ratings has downgraded one class of JP Morgan Commercial Mortgage 2003-PM1: -- $2.9 million class P to 'CCC' from 'B-'. In addition, Fitch has affirmed these classes: -- $2.5 million class A-1 at 'AAA'; -- $326.8 million class A1A at 'AAA'; -- $114.4 million class A-2 at 'AAA'; -- $82.6 million class A-3 at 'AAA'; -- $282 million class A-4 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- -$33.2 million class B at 'AAA'; -- $13 million class C at 'AAA'; -- $27.5 million class D at 'AAA'; -- $13 million class E at 'AA+'; -- $15.9 million class F at 'AA-'; -- $13 million class G at 'A'; -- $18.8 million class H at 'BBB+'; -- $15.9 million class J at 'BBB-'; -- $7.2 million class K at 'BB+'; -- $8.7 million class L at 'BB'; -- $7.2 million class M at 'B+'; -- $4.3 million class N at 'B'. Fitch does not rate the $20.2 million class NR certificates. The downgrade is due to the transfer of four loans (2.4%) to special servicing and the potential for losses resulting in decreased credit support. Three loans (2.2%) are secured by multifamily properties located in Fort Worth and Houston, Texas and are controlled by MBS Cos., a property owner and operator that has recently defaulted on other CMBS loans. Updated appraised values are not yet available on two of these assets The fourth loan (0.2%) is secured by a multifamily property located in Springfield, Illinois. Expected losses are anticipated to impact class P. The affirmations reflect scheduled amortization and defeasance since Fitch's last rating action. As of the February 2008 distribution date, the pool's aggregate certificate balance has decreased 12.6% to $1.01 billion from $1.16 billion at issuance. Eighteen loans (27%), including the largest two loans in the transaction (12.9%), are fully defeased. The majority of the non-defeased pool (55.2%) matures in 2013. The weighted average interest rate for these loans is 5.54%. The largest non-defeased loan in the pool (5.5%) is secured by a retail property in West Palm Beach, Florida, has an interest rate of 6.20% and matures in October 2012. The servicer reported September 2007 DSCR was 1.34x. JRH HOLDINGS: Selling Historic Properties for $3.75 Million ----------------------------------------------------------- The properties of JRH Holdings, dba The Woodfield Inn, including 24 acres of land and a house, are being sold for at least $3.75 million, Leigh Kelley writes for the Times-News, citing Edward Hay, Esq. Mr. Hay told Times-News that despite aggressive marketing efforts, he has not found a purchaser for the properties. Additional information on the properties for sale is available at -- http://www.innmarketing.com/listing.php/1267/-- and can be obtained from: Claude or Mariette Gagne MarketPlace Realty Inc. Hickory, North Carolina Tel: (800) 871-8977 or (828) 324-7291 Email: BBsales@charter.net or The B&B and Country Inn MarketPlace 926 Lenoir Rhyne Blvd., SE Hickory, NC 28602 Local: (828) 324-7291 Toll Free: (800) 871-8977 Residence: (828) 267-9850 http://www.innmarketing.com/ According to Claude and Mariette Gagne, they expect to sell the property by April, Times-News says. Based on the report, in May 2007, a mortgage holder was awarded foreclosure orders on the Debtor's properties but decided not to proceed with the foreclosure after owner, Eric Myers, promised to repay his debt. Times-News notes that Mr. Myers paid in June and July 2007 but missed his August 2007 dues, the same month he filed for bankruptcy. Holders of gift certificates were also notified that their "certificates were worthless" when the company became bankrupt, Times-News relates. Mr. Hay told Times-News that parties owed money by the Debtor must sent a letter to: The Woodfield Inn 2905 Greenville Highway Flat Rock, NC 28731 Mr. Hay added that with or without a buyer, the inn will reopen in April, Times-News reports. Flatrock, North Carolina-based JRH Holdings, dba The Woodfield Inn, -- http://www.woodfieldinn.com/-- built in 1852, is on the National Register of Historic Places. Owner, Eric Myers, filed chapter 11 petition in Aug. 16, 2007 (Bankr. W.D.N.C. Case No. 07- 10556) and laid off workers in January. Edward C. Hay, Jr., Esq., at Pitts, Hay & Hugenschmidt PA represents the Debtor in its restructuring efforts. The Debtor had total assets of $4,528,939 and total debts of $3,873,076, when it filed for bankruptcy. The inn is valued at $3,800,000 and another house structure on the lot is valued at $310,000. KLAVOHN'S NEW LEAF: Will Likely Stop Operations, Counsel Says ------------------------------------------------------------- Klavohn's New Leaf Inc. also known as Klavohn's Home Furnishings, likely "will close" operations, opined Barry Barash, Esq., counsel to David and Patty Robinson, the company's owners. According to Quad-City Times in Davenport, Iowa, Mr. Barash said the "hopeful plan was for a liquidation sale (to occur) before the bankruptcy case was filed," but "that just didn\u2019t happen." Mr. Barash is in talks to decide the next move, the QC Times' Doug Schorpp says. Mr. Barash said a plan must be determined soon. He said the company might pursue a standalone reorganization, a liquidation sale, or a liquidation under Chapter 7 of the Bankruptcy Code, QC Times relates. The first meeting with creditors under Section 341 of the Bankruptcy Code has not yet taken place, QC Times says. QC Times relates that the Debtor's more than 100 customers are worried over paid furniture that they won't receive or be refunded. Claims ranged from as little as $13 to just under $5,000, including claims of vendors, other furniture stores, furniture manufacturers, and Central Bank of Geneseo, which holds accounts receivable, inventory, furniture, fixtures and equipment. The bank holds claims for $900,000, $723,861 of which is secured, Court records reveal. QC Times discloses that Pinnacle Properties Group, which owns the buildings that houses the Debtor's stores, has claims that total $160,000. The 10-year lease agreement between the parties that began in 2005, requires Klavohn's to pay $14,000 a month for rent. QC Times relates that $68,415 of O'Rourke Sales Co. claims is listed under "lease arrears." According to Court documents, the parties' 10-year lease agreement that began in 2003 calls for a monthly rent of $24,800. Based in Geneseo, Illinois, Klavohn's New Leaf Inc. also known as Klavohn's Home Furnishings -- http://www.klavohnfurniture.com/-- sells furnitures. The company filed for bankruptcy on Feb. 14, 2008 (Bankr. C.D. Ill. Case No. 08-80401). Barry M. Barash, Esq., at Barash & Everett LLC, in Galesburg, Illinois, represents the Debtor. When the Debtor filed for protection from its crediotrs, its listed total assets of $770,848 and total debts of $1,728,053. MARCAL PAPER: Court Moves Disclosure Statement Hearing to March 14 ------------------------------------------------------------------ The Hon. Morris Stern of the United States Bankruptcy Court for the District of New Jersey deferred to March 14, 2008, at 10:00 a.m., the hearing to consider approval of the adequacy of Marcal Paper Mills Inc.'s Second Amended Disclosure Statement dated Jan. 11, 2008, describing its Second Amended Chapter 11 Plan of Reorganization. Judge Stern originally set the hearing on Feb. 22, 2008. As reported in the Troubled Company Reporter on Jan. 21, 2008, the Debtor delivered amended Disclosure Statement dated Jan. 10, 2008, explaining its amended Plan of Reorganization to the Court. Overview of the Plan The amended Plan provides for the sale of substantially all of the Debtor's assets to a designee of NexBank SSB as agent under the second lien loan agreement. On Oct. 2, 2007, the Debtor gave notice that it was going to sell its assets. NexBank offered $121.6 million for the assets, which includes a credit bid of $35 million and $6 million cash. In November 2007, as reported in the Troubled Company Reporter, the Debtor's proposed bidding procedure was approved by the Court. The Plan also provides for the disposition of any remaining assets for distribution by a liquidating trustee under a liquidating trust agreement, and the distribution of net proceeds to holders of allowed claims consistent with the priority provisions of the Bankruptcy Code. The Plan does not contemplate the continuation of the Debtor's business after the consummation of the proposed sale. Treatment of Claims Under the Plan, these claims are unimpaired and will be paid in full: -- administrative expense claims; -- reclamation claims; -- postpetition administrative trade claims; -- priority tax claims; -- other priority claims; and -- other secured claims. Holders of prepetiton second lien secured lender claims, totaling between $64,000 and $65,000, will be satisfied, if the proposed purchaser became the prevailing bidder. If not, cash portion of the purchase price allocable to outstanding allowed obligations under the prepetition second lien secured loan pursuant to the prevailing bidder's assets purchase agreement and in accordance with the requirements of the bidding procedures, will be paid to the agent under the prepetition second lien secured loan at the closing of any sale approved by the Court. General Unsecured claims, totaling between $71,000 and $1,100,000, will be entitled to receive a pro rata share of the net assets of the liquidation trust. Holders of equity interests will not receive any distribution of property and all equity interests will be cancelled on the effective date of the Plan. About Marcal Paper Mills Based in Elmwood Park, New Jersey, Marcal Paper Mills Inc. -- http://www.marcalpaper.com/-- is a privately-held, fourth generation family business. Founded in 1932, it employs over 900 people in its Elmwood Park, New Jersey and Chicago, Illinois manufacturing operations. The company produces over 160,000 tons of finished paper products, including bath tissue, kitchen towels, napkins and facial tissue, distributed to retail outlets for home consumption and to distributors for away-from- home use in hotels, restaurants, hospitals, offices and factories. The Debtor filed for chapter 11 protection on Nov. 30, 2006 (Bankr. D. N.J. Case No. 06-21886). Gerald H. Gline, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard P.A., represent the Debtor. The Debtor selected Logan and Company Inc. as noticing and claims agent. Kenneth Rosen, Esq., and Mary E. Seymour, Esq., at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor disclosed total assets of $178,626,436 and total debts of $178,890,725. MARKWEST ENERGY: EquityHolders Approve Redemption and Merger Plan ----------------------------------------------------------------- MarkWest Energy Partners L.P. and MarkWest Hydrocarbon Inc. disclosed that their respective equityholders approved and adopted the previously stated agreement and plan of redemption and merger between the two companies as well as the transactions contemplated by the redemption and merger agreement. At separate special meetings of equityholders held in Denver, Colorado on Feb. 21, 2008, approximately 21.4 million units of MarkWest Energy Partners and approximately 9.8 million shares of MarkWest Hydrocarbon, representing approximately 63% and 82%, respectively, of the total units and shares outstanding and entitled to vote at the respective meetings, were voted in favor of the redemption and merger and related proposals. The number of units and shares voted in favor of the redemption and merger and related proposals represent approximately 97% and 99%, respectively, of the total units and shares that were voted at the equityholders meetings. "The combination of MarkWest Energy Partners and MarkWest Hydrocarbon is very compelling for our equityholders, and will unlock substantial long-term value for MarkWest Energy Partners," Frank Semple, president and chief executive officer of MarkWest Energy Partners and MarkWest Hydrocarbon, said. "We believe the elimination of the incentive distribution rights will result in MarkWest having one of the lowest costs of capital in the MLP industry, which will drive improved financial results from our expansion projects and will greatly improve our ability to compete for new acquisitions." "Looking ahead, we remain focused on our primary business objective of providing superior and sustainable returns for our stakeholders, coupled with a customer-focused growth strategy," Mr. Semple continued. About Markwest Energy Headquartered in Denver, Colorado, MarkWest Energy Partners L.P. (NYSE:MWE) -- http://www.markwest.com -- is engaged in the gathering, transportation and processing of natural gas; the transportation, fractionation and storage of natural gas liquids, and the gathering and transportation of crude oil. MarkWest Energy is a processor of natural gas in the northeastern and southwestern United States, processing gas from the Appalachian Basin, and from East Texas, Gulf Coast and Michigan. The company conducts its operations in three geographical areas: the southwest, the northeast and the gulf coast. On Dec. 29, 2006, the company acquired 100% ownership interest in Santa Fe Gathering L.L.C. It acquired the Grimes gathering system as part of the Santa Fe acquisition. The gathering system is located in Roger Mills and Beckham Counties, Oklahoma. As of Dec. 31, 2006, the Grimes systems throughput was approximately 16 million cubic feet of natural gas per day. MARKWEST ENERGY: S&P Ratings Unaffected by Approved Planned Merger ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its ratings and outlook on MarkWest Energy Partners L.P. (B+/Stable/--) would be unaffected by the company's announcement that its equityholders have approved and adopted the previously announced planned merger with MarkWest Hydrocarbon Inc. S&P expects the transaction will increase leverage somewhat as well as increase commodity price exposure. In addition, liquidity may be tight in the short term, given the company's large capital- expenditure plan. However, potentially favorable aspects include eliminated incentive distribution rights. In total, S&P believes that the company has sufficient room to absorb these effects at the current rating. MAXJET AIRWAYS: Bid Deadline Extended Until February 27 ------------------------------------------------------- MAXjet Airways Inc. further extended the deadline for receipt of qualified bids to Wednesday Feb. 27, 2008, at 5:00 p.m. Eastern Time, thereafter, MAXjet will determine which offer is the winning bid, according to a Regulatory News Service report intercepted by Bloomberg News. The Debtor expects that all proceeds from the sale of its assets will be for the benefit of its creditors, but not for the shareholders, source reports. As previously reported in the Troubled Company Reporter, the Debtor wanted to set Feb. 6 as deadline for submission of initial bids and Feb. 11 for final bids. The Debtor proposed that the public auction will be held on Feb. 20, 2008, at the Wilmington, Delaware office of MAXjet's counsel, Pachulski Stang Ziehl & Jones LLP. The United States Bankruptcy Court for the District of Delaware approved the modified procedures for the auction and sale of the Debtor's asset, as reported in the Troubled Company Reporter on Feb. 5, 2008. Among the assets for sale are 27 operating certificates from the Federal Aviation Administration. The Debtor's ability to transfer its certificates are subject to approval by certain government entities, according to reports. Interested bidders may contact the Debtor's chief executive officer Bill Stockbridge at bstockbridge@maxjet.com. About MAXjet Airways Dulles, Virginia-based MAXjet Airways Inc. -- http://www.maxjet.com/-- is an all-business class, long-haul airline company. It has introduced scheduled services with flights from London Stansted Airport to New York. As of December, 2006, it leased five B767 aircraft. Its customers are both business and leisure travelers. At the airport, its product features check-in facilities located in primary terminals, security and a business class departure lounge and arrivals facility. Its flights features deep-recline seats (170 degree) spaced at a 60 inch pitch, portable entertainment systems, stowage space and business class catering. The Debtor filed for chapter 11 protection on Dec. 24, 2007 (Bankr. D. Del. Case No. 07-11912). The Debtor selected Pachulski Stang Ziehl & Jones LLP and Pillsbury Winthrop Shaw Pittman LLP as its bankruptcy counsels. Arent Fox LLP represents the Official Committee of Unsecured Creditors. The Debtor listed assets between $10 million and $50 million and debts between $50 million and $100 million when it filed for bankruptcy. MAXJET AIRWAYS: Court OKs Morten Beyer as Valuation Consultants --------------------------------------------------------------- MAXjet Airways Inc. asks the U.S. Bankruptcy Court for the District of Delaware for authority to employ Morten Beyer & Agnew as its expert valuation consultants, nunc pro tunc Jan. 11, 2008. As reported in the Troubled Company Reporter on Feb. 13, 2008, Morten Beyer will work closely with the Debtor and its professionals in providing advise with regard to a valuation of the Debtor's aviation assets. The firm is also expected to provide: a) maintenance adjusted appraisal of aircraft and engines at varying values with market commentary by aircraft type; b) line-by-line appraisal of rotable, repairable, and expendable parts with value type; c) industry analysis on a project-by-project basis, and d) expert witness and advisory support. Morten Beyer will bill the Debtor according to these fixed rates on a per item or per report basis: Project Rate ------- ---- Aircraft Appraisal $1,353 for the first aircraft of each type and $270 for each additional aircraft of the same type in the same report Engine Appraisal $541 for the first engine of each type and $270 for each additional engine of the same type in the same report Spare Part Appraisal $4,000 minimum, total cost depending on the number of items and detail of data provided Industry Analysis Quoted by specific assignment General Consulting Principals $400/hour EVP/SVP/Chief $350/hour MD/VP/Sr. Associate $275/hour Director/Associate $200/hour Manager/Associate $160/hour Analyst $115/hour Administrative $88/hour Expert Witness Consulting Principals/EVP/Chief $450/hour SVP/VP/MD $400/hour Other Staff $325/hour To the best of the Debtor's knowledge, the firm holds no interest adverse to the Debtor and its estates and is "disinterested" as that term defined in Section 101(14) of the Bankruptcy Code. Dulles, Virginia-based MAXjet Airways Inc. -- http://www.maxjet.com/-- is an all-business class, long-haul airline company. It has introduced scheduled services with flights from London Stansted Airport to New York. As of December, 2006, it leased five B767 aircraft. Its customers are both business and leisure travelers. At the airport, its product features check-in facilities located in primary terminals, security and a business class departure lounge and arrivals facility. Its flights features deep-recline seats (170 degree) spaced at a 60 inch pitch, portable entertainment systems, stowage space and business class catering. The Debtor filed for chapter 11 protection on Dec. 24, 2007 (Bankr. D. Del. Case No. 07-11912). The Debtor selected Pachulski Stang Ziehl & Jones LLP and Pillsbury Winthrop Shaw Pittman LLP as its bankruptcy counsels. Arent Fox LLP represents the Official Committee of Unsecured Creditors. The Debtor listed assets between $10 million and $50 million and debts between $50 million and $100 million when it filed for bankruptcy. MBIA INC: Eliminates Quarterly Dividend to Preserve $174 Mil. ------------------------------------------------------------- MBIA Inc.'s board of directors voted to eliminate the quarterly dividend. The elimination of the dividend will preserve approximately $174 million on an annualized basis, which is the amount that the company paid out in dividends in 2007. This action was taken at the recommendation of Jay Brown, as the company's new chairman and chief executive officer, to further strengthen the company's financial resources and to increase its operating flexibility. The dividend was most recently reduced on Jan. 9, 2008 to 13 cents, although no dividends were paid out at that rate. Additionally, the board voted to move to an annual dividend evaluation in the first quarter of each year. In his letter to the owners, Mr. Brown said the company will, within a five-year period, restructure operations "in such a way as to insure public and structured finance business from separate operating entities." "We have already made the decision to cease ensuring new derivative credit contracts from our insurance companies," Mr. Brown imparted. "My goal is to retain the highest ratings that we can for both our structured and public finance businesses, and I believe this can be accomplished by separating these two business lines and leaving the derivative market to the traders on Wall Street." "While we continue to evaluate our options, I have suspended the writing of all new structured finance business for approximately six months," Mr. Brown disclosed. "Further, the flexibility and preservation of our capital remains a high priority for us." Mr. Brown said they have been cordinating with Eric Dinallo, superintendent of the New York State Insurance Department. He is also in close contact with the rating agencies to assure that MBIA's transformation strategy achieves the highest ratings for its insurance business. Mr. Brown said in a news statement, "MBIA will continue to take reasonable and prudent actions such as this dividend elimination in an effort to retain and strengthen our Triple-A ratings. As a very large individual shareholder of MBIA, I'm the first one to feel the pinch from this action." "But I think this, coupled with my recent commitment to buy a substantial number of additional shares, demonstrates my absolute commitment to be aligned with our owners and to maximize long-term value," Mr. Brown stated. A copy of the letter to the owners by Jay Brown, MBIA's chairman and chief executive officer is available at: http://ResearchArchives.com/t/s?2874 About MBIA Headquartered in Armonk, New York, MBIA Inc. (NYSE:MBI) -- http://www.mbia.com-- provides financial guarantee insurance, investment management services, and municipal and other servicesto public finance and structured finance clients on a globalbasis. The company conducts its financial guarantee business through its wholly owned subsidiary, MBIA Insurance Corporation and provides investment management products and financial services through its wholly owned subsidiary MBIA Asset Management, LLC. MBIA manages its activities primarily through two principal business operations: insurance and investment management services. In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico, S.A. de C.V. During the year ended Dec. 31, 2006, MBIA discontinued its municipal services operations. These operations included MBIA MuniServices Company. On Dec. 5, 2006, the company completed the sale of MBIA MuniServices Company. * * * As reported in the Troubled Company Reporter on Jan. 21, 2008, Moody's Investors Service placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In the same rating action, Moody's also placed the surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade. This rating action reflects Moody's growing concern about the potential volatility in ultimate performance of mortgage and mortgage-related CDO risks, and the corresponding implications for MBIA's risk-adjusted capital adequacy. Prior to this rating action, the rating outlook for MBIA was negative. MCCALL CITY: Decision to File for Bankruptcy Expected Today ----------------------------------------------------------- Lora Volkert of Idaho Business Review reports that the city of McCall, Idaho, may decide to declare bankruptcy today. The city council met yesterday night to decide on filing a petition under Chapter 9 of the U.S. Bankruptcy Code. A bankruptcy filing will allow it to postpone paying $6 million to St. Clair Contractors, a wastewater treatment facility contractor and Employers Insurance of Wausau, which provided the contractor's performance bond. McCall had claimed that the contractor didn't do the agreed work properly. The contractor demanded payment of $6.5 million. Since May of last year, the city has paid back $1 million of that debt, according to KTVB.com of Idaho. Wasau is now asking a judge to force the city to pay all the debt back immediately. They want to prohibit McCall from making any payments to anyone until that judgment is satisfied, according to the report. The city has also applied for judicial confirmation. A judicial confirmation hearing scheduled for Wednesday. McCall is a city in Valley County, Idaho. MEDQUEST INC: Debt Repayment Cues Moody's to Withdraw All Ratings ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings of MedQuest, Inc. and MQ Associates, Inc. MedQuest is the operating subsidiary of MQ Associates, Inc. The ratings action follows the repayment of substantially all of the debt that Moody's rated. The tender offer and consent solicitation for MQ Associates' 12 1/4% senior discount notes expired on Jan. 29, 2008 and as a result, 97.955% of the notes were tendered for. In addition, MedQuest's 11 7/8% senior subordinated notes were redeemed in full as of Feb. 15, 2008. On Nov. 9, 2007 MQ Associates completed its merger with Novant Health, Inc. The ratings outlook had been developing pending the close of the merger and the completion of the consent solicitation and notes redemption. These ratings were withdrawn: MQ Associates (parent): -- $136 million 12 1/4% senior discount notes due 2012, rated Caa3 (LGD6, 90%) -- Corporate Family Rating, rated Caa1 -- Probability of Default Rating, rated Caa1 MedQuest: -- $180 million 11 7/8% senior subordinated notes due 2012, rated Caa1 (LGD4, 56%) MedQuest is a leading operator of fixed-site, outpatient diagnostic imaging centers in the United States. These centers provide diagnostic imaging services using a variety of technologies, including magnetic resonance imaging, computed tomography, nuclear medicine, general radiology, ultrasound and mammography. MERITAGE HOMES: Market Pressure Prompts S&P's Rating Downgrades --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Meritage Homes Corp. (BB-/Negative/--). The outlook remains negative. The rating actions affect $479 million of senior unsecured notes and $150 million of senior subordinated notes. "The downgrades reflect continued pressure on Meritage's primary homebuilding markets of Arizona, California, and Nevada, which has left the company heavily reliant on Texas operations to shore up its deteriorating financial profile," said credit analyst Tom Taillon. "Financial credit metrics have weakened as the company struggles to profitably deliver homes during this challenging period. Near-term liquidity is adequate at this point, but will weaken if market conditions do not begin to stabilize." The company's heavy reliance on stability in Texas markets does not provide substantial protection against very weak conditions in other primary regions. S&P will lower the ratings an additional notch if market conditions deteriorate further, or if impairments force the company to renegotiate the terms of its credit facility in a manner that meaningfully reduces liquidity. S&P would revise its outlook on Meritage to stable when it becomes clear that covenant pressures are alleviated and the company's homebuilding operations are consistently profitable at lower volume levels. MERITAGE MORTGAGE: Seven Note Classes Obtain S&P's Rating Cuts -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on seven classes of asset-backed certificates issued by Meritage Mortgage Loan Trust's series 2004-1 and 2004-2. Concurrently, S&P affirmed its ratings on the remaining 10 classes from these transactions. The downgrades reflect a reduction in credit enhancement as a result of monthly realized losses and high amounts of severe delinquencies (90-plus days, foreclosures, and REOs) relative to credit support. As of the Jan. 25, 2008, remittance date, cumulative realized losses, as a percentage of the original pool balances, were 3.03% (series 2004-1) and 2.55% (series 2004-2). Severe delinquencies, as a percentage of the current pool balances, were 24.23% (series 2004-1) and 31.62% (series 2004-2). Losses have outpaced excess interest over the past six months by an average of 3.77x (series 2004-1) and 3.56x (series 2004-2). Overcollateralization has been depleted for both transactions as losses are currently being taken by classes that have already been downgraded to 'D'. The affirmations reflect sufficient credit enhancement available to support the current ratings. Subordination, overcollateralization, and excess spread provide credit support for these transactions. The collateral for these series originally consisted primarily of a pool of fixed- and adjustable-rate, fully amortizing, and balloon payment mortgage loans secured by first liens on one- to four-family residential properties. Ratings Lowered Meritage Mortgage Loan Trust Rating ------ Series Class To From ------ ----- -- ---- 2004-1 M4 B B+ 2004-1 M5 CCC B 2004-1 M6 CCC B- 2004-2 M4 BBB- A- 2004-2 M5 BB BBB+ 2004-2 M6 B BB 2004-2 M7 CCC B Ratings Affirmed Meritage Mortgage Loan Trust Series Class Rating ------ ----- ------ 2004-1 M1 BBB 2004-1 M2 BB+ 2004-1 M3 BB 2004-1 M7 CCC 2004-2 M1, M2 AA+ 2004-2 M3 AA 2004-2 M8, M9, M10 CCC METRO ONE: Gary Henry Resigns as Director and President ------------------------------------------------------- Metro One Telecommunications disclosed in a regulatory filing dated Feb. 22, 2008, that Gary Henry has submitted his resignation from the Board of Directors of the company, effective immediately. His resignation from the Board of Directors coincides with the termination of his employment as president of the company, which also became effective Feb. 21, 2008. About Metro One Based in Portland, Oregon, Metro One Telecommunications Inc. (Nasdaq: INFO) -- http://www.metro1.com/-- is a developer and provider of Enhanced Directory Assistance(R) and other information services. The company operates call centers located in the United States. Going Concern Doubt BDO Seidman LLP, in Seattle, expressed substantial doubt about Metro One Telecommunications Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2006. The auditing firm pointed to the company's recurring losses from operations and loss of significant customers. MICHAEL VALDEZ: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Michael D. Valdez 300 Flynn El Paso, Texas 79932 Bankruptcy Case No.: 08-30275 Chapter 11 Petition Date: February 21, 2008 Court: Western District of Texas (El Paso) Debtor's Counsel: E. P. Bud Kirk, Esq. 6006 N. Mesa, #806 El Paso, Texas 79912 Tel: (915) 584-3773 budkirk@aol.com Total Assets: $1,011,850 Total Debts: $1,164,381 Debtor's list of its 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Amex $27,078 P.O. Box 297871 Fort Lauderdale, FL 33329 Internal Revenue Service $17,576 P.O. Box 21126 Philadelphia, PA 19114 Missouri Department of Revenue $5,264 P.O. Box 3400 Jefferson City, MO 65015 U.S. Bank $5,194 Rich Porter $1,700 Hillerman Nursery $1,000 Alameda Carpet Company $1,000 MNJ USED CARS: Owner Nazer Haidar Found Guilty of Bankruptcy Fraud ------------------------------------------------------------------ MNJ Used Cars owner Nazer Ali Haidar is set to be sentenced May 7, 2008, for up to five years imprisonment plus $250,000 fine, Wichita Business Journal reports. Mr. Haidar was charged by a federal jury of falsifying statements submitted in bankruptcy proceeding and of committing bankruptcy fraud, BizJournal relates. Richard Wieland, U.S. Trustee for Kansas, Oklahoma, and New Mexico, stated that the "criminal bankruptcy fraud threatens the integrity of the bankruptcy system," BizJournal says. He added that the efforts of the U.S. Attorney's office and the Federal Bureau of Investigation helped fight "abuse in the bankruptcy system," according to the report. Mr. Haidar sought protection under chapter 7 of the U.S. Bankruptcy Code on Sept. 23, 2002, and listed $5,100 in total assets and $211,278 in total debts, BizJournal notes. The report relates, that based on court evidence, Mr. Haidar kept a personal checking account at Commerce Bank during bankruptcy and transferred money to his wife and brother from his business account. In addition, that during August 2001 to August 2002 Mr. Haidar bought plane tickets, jewelries, and other items using his credit cards, which increased his debt to above $125,000, BizJournal reports, citing court evidence. MNJ Used Cars is headquartered in Wichita, Kansas and owned by Nazer Ali Haidar. MOBILE MINI: Earns $12.4 Million in Quarter Ended December 31 ------------------------------------------------------------- Mobile Mini Inc. reported financial results for the fourth quarter ended Dec. 31, 2007, as compared to results for the fourth quarter ended Dec. 31, 2006. The company's net income of $12.4 million declined from last years $14.0 million. Total revenues increased 9.0% to a quarterly record of $83.6 million, up from $76.7 million a year ago. Lease revenues increased 8.2% to $74.2 million from $68.6 million. Lease revenues comprised 88.9% of total revenues as compared to 89.5%. As of Dec. 31, 2007, the company's balance sheet showed total assets of $1.0 billion and total liabilities of $570.9 million, resulting in a $457.8 million stockholders' equity. Equity, at Dec. 31, 2006, was $442.0 million. 2007 Highlights * entered four new markets last year: Pittsburgh, Pennsylvania; Worcester, Vermont; and Windsor, Ontario and Vancouver, British Columbia; * redeemed $97.5 million aggregate outstanding principal balance of our 9.5% Senior Notes due 2013 with the issuance of $150 million 6.875% Senior Notes due 2015; and * repurchased 2,174,828 shares of common stock through Dec. 31, 2007 and there were no repurchases thereafter; the stock repurchase program has expired. Business Overview Mr. Bunger pointed out, "On a Company-wide basis, 2007 lease revenues continued to grow, 8.2% for the fourth quarter and 16.1% for the year as a whole. While Europe and certain regions in the U.S. are doing robust business, economic conditions in California, Arizona and Florida slowed the pace of our growth, and lease revenues came in slightly below expectations. 2007 EBITDA and diluted earnings per share were within the guidance ranges we previously provided, which is all the more satisfying considering the fleet optimization program and related costs underway. Mobile Minis after tax return on invested capital for the years ended December 31, 2007 and 2006 were 13.3% and 14.8%, respectively." Mr. Bunger continued, "One of the big advantages of the merger with Mobile Storage Group Inc. will be our ability to more easily move available units within our fleet to where they are needed and therefore we look forward to a significant reduction in capital expenditures. Going forward, the combined companies should be free cash flow positive. We are also delighted that in addition to Doug Waugaman, several key Mobile Storage Group executives are set to sign employment agreements with our combined company upon closing." He continued, "Moving forward, some of the metrics, such as internal growth rate, that we previously used in our quarterly reporting will become less relevant due to the scale, size and depth of our operations and industry position following the merger. While we expect first quarter 2008 EBITDA to be slightly below last year, we are confident that we will be able to achieve our prior 2008 diluted EPS guidance of between $1.50 and $1.60, excluding the impact of the Mobile Storage Group transaction. Lawrence Trachtenberg, Mobile Minis Executive Vice President & CFO noted, "The above 2008 guidance does not factor in the combination with Mobile Storage Group, although we expect the merger to be slightly accretive in 2008 before merger related expenses. We need to point out that there will be a one-time charge, which we are currently estimating at between $19 million and $20 million, pre-tax, relating to the business combination, the consolidation of branches and the integration of the two companies, which we will record when the transaction closes. The integration and consolidation benefits, including $25 million or more in cost savings, should be fully apparent in 2009. Additionally, the $1 billion revolving credit facility that we have secured provides us with ample borrowing capacity, even after the repayment of Mobile Storage Groups outstanding indebtedness and the cash portion of the purchase price." About Mobile Mini Headquartered in Tempe, Arizona, Mobile Mini Inc. (Nasdaq GS: MINI) -- http://www.mobilemini.com/-- provides portable storage solutions through its total fleet of over 165,000 portable storage units and portable offices with 66 branches in U.S., United Kingdom, Canada and The Netherlands. * * * As reported in yesterday's Troubled Company Reporter, Moody's Investors Service placed all ratings of Mobile Mini, Inc. (Corporate Family at Ba3) on review for possible downgrade. In addition, Moody's placed all ratings of Mobile Services Group (Corporate Family at B2) on review for possible upgrade. Standard & Poor's Ratings Services placed its ratings on Mobile Mini Inc., including the 'BB' long-term corporate credit rating, on CreditWatch with negative implications. MQ ASSOCIATES: Moody's Withdraws All Ratings After Debt Repayment ----------------------------------------------------------------- Moody's Investors Service withdrew all ratings of MedQuest, Inc. and MQ Associates, Inc. MedQuest is the operating subsidiary of MQ Associates, Inc. The ratings action follows the repayment of substantially all of the debt that Moody's rated. The tender offer and consent solicitation for MQ Associates' 12 1/4% senior discount notes expired on Jan. 29, 2008 and as a result, 97.955% of the notes were tendered for. In addition, MedQuest's 11 7/8% senior subordinated notes were redeemed in full as of Feb. 15, 2008. On Nov. 9, 2007 MQ Associates completed its merger with Novant Health, Inc. The ratings outlook had been developing pending the close of the merger and the completion of the consent solicitation and notes redemption. These ratings were withdrawn: MQ Associates (parent): -- $136 million 12 1/4% senior discount notes due 2012, rated Caa3 (LGD6, 90%) -- Corporate Family Rating, rated Caa1 -- Probability of Default Rating, rated Caa1 MedQuest: -- $180 million 11 7/8% senior subordinated notes due 2012, rated Caa1 (LGD4, 56%) MedQuest is a leading operator of fixed-site, outpatient diagnostic imaging centers in the United States. These centers provide diagnostic imaging services using a variety of technologies, including magnetic resonance imaging, computed tomography, nuclear medicine, general radiology, ultrasound and mammography. NETBANK INC: Asks to Further Move Plan-Filing Deadline to March 10 ------------------------------------------------------------------ On Feb. 22, 2008, two days after the U.S. Bankruptcy Court for the Middle District of Florida approved NetBank Inc.'s request extending its exclusive periods to file and solicit its chapter 11 plan, the Debtor submitted another request to further extend its plan-filing exclusivity deadline to March 10, 2008, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on Jan. 28, 2008, NetBank Inc., with the consent of the Official Committee of Unsecured Creditors, had asked the Honorable Jerry A. Funk to extend its exlcusive periods to file a Chapter 11 plan until Feb. 25, 2008, and solicit acceptances of that plan until April 25, 2008. The Debtor was intending to use the extension to propose and negotiate one or more plan of reorgnization or liquidation. The Debtor told the Court that the takeover of its bank subsidiary by the Office of Thrift Supervision, the appoinment of the Federal Deposit Insurance Corporation as receiver, and seizure by the FDIC of all the Debtor's books and records, have affected its ability to gather information necessary to formulate a plan. Investigations by the U.S. Securities and Exchange Commission and the Department of Labor added to the delay. Mr. Rochelle relates that the Debtor will ascertain, after a Feb. 28 meeting with its Official Committee of Unsecured Creditors, if it can produce a plan acceptable to the creditors. Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. Rogers Towers and Kilpatrick Stockton LLP represent the Committee in this case. As of Sept. 25, 2007, the Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NEUMANN HOMES: $2.5 Million PFS-Montgomery Asset Sale Approved -------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of Illinois authorized Neumann Homes Inc. and its debtor-affiliates to sell Precision Framing Systems, LLC's assets that are being utilized in its business operations in Montgomery, Illinois. As reported in the Troubled Company Reporter on Feb. 14, 2008, the Debtors proposed to sell the Assets for $2,500,000 to Builder Services, Group, Inc., an affiliate of Masco Corporation, pursuant to the terms stated in a commitment letter dated February 8, 2008. As previously reported, the Debtors were authorized to sell Precision Framing's business assets, located at Denver, Colorado, for $1,000,000 to 4908 Tower, LLC, a Colorado-based limited liability company. The Commitment Letter provided, among other things, that the purchase price will be payable to the Debtors in cash at closing, plus the value of certain usable inventory, to be mutually agreed upon by the parties at closing, with the purchase price of the inventory payable within 10 days following the closing and valued at the lower of cost or fair market value. The Commitment Letter further provided that the proposed sale is subject to these conditions: (i) Builder Services and Precision Framing will enter into a bill of sale agreement to be filed with the Court in advance of the February 20, 2008 hearing to consider the sale conveying the assets free and clear of any liens, encumbrances or security interests; (ii) David Krawczyk, president of Precision Framing, will enter into a two-year employment or consulting agreement with Building Services on terms satisfactory to the parties; (iii) Builder Services will enter in an agreement with the Chicago Regional Council of Carpenter's Union Local Chapter 1027 on the terms and conditions satisfactory to Builder Services; (iv) Builder Services will retain a qualified management team and sufficient employees to operate the assets as a business following the closing, with the assistance of Mr. Krawczyk and Precision Framing; and (v) Builder Services will enter into a lease agreement concerning the premises located at 900 Knell Road, Montgomery, Illinois, upon terms and conditions satisfactory to it. Assumption of Leases, Contracts In connection with the proposed sale, the Debtors also sought to assume and assign certain unexpired leases and executory contracts, says George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois. "If there are defaults under the assumed leases and contracts, the Debtors will cure any defaults pursuant to cures agreed upon with the concerned lessor or contract counterparty, or as otherwise ordered by the Court," Mr. Panagakis further says. The cure claims of the lessors and counter-parties under the assumed leases and contracts, or objections regarding Builder Services' ability to provide adequate assurance of future performance must be filed with the Court and served upon the Debtors no later than February 18, 2008. The Debtors asked the Court at the Sale Hearing to bar from asserting claim or objection any party that fails to file its cure claim or objection by the deadline. Extensive Marketing Mr. Panagakis stated that the Debtors did not seek to establish formal bidding procedures or schedule an auction after determining that no other party has any interest in submitting an offer for the assets that is higher and better than that of Builder Services. He says, however, that they made an extensive marketing of the assets since January 2007, with the assistance of JMP Securities, LLC, and Schaffer Associates, LLC. According to Mr. Panagakis, of the 20 parties contacted, only Masco and SelectBuild Construction, Inc., expressed interest in purchasing the assets. Negotiations with SelectBuild, however, slowed substantially after the Debtors filed for bankruptcy and announced the orderly liquidation of Precision Framing's business operation, Mr. Panagakis notes. SelectBuild continued to express limited interest in purchasing the assets, but substantially reduced its prior offers for the assets. He adds that the proposal to employ Mr. Krawczyk or condition was also never materially negotiated and was not included in its offer. On February 7, 2008, SelectBuild advised the Debtors that they were not interested in submitting a competing bid for the assets, but would continue to leave its offer open to the Debtors. Mr. Panagakis said that if SelectBuild increases its offer or the Debtors receive a competing bid from another party in advance of the Sale Hearing, the Debtors will consider the proposal. About Neumann Homes Headquartered in Warrenville, Illinois, Neumann Homes Inc. -- http://www.neumannhomes.com/-- develops and builds residential real estate throughout the Midwest and West US. The company is active in the Chicago area, southeastern Wisconsin, Colorado, and Michigan. The company have built more than 11,000 homes in some 150 residential communities. The company offer formal business training to employees through classes, seminars, and computer- based training. The company filed for Chapter 11 protection on Nov. 1, 2007 (Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the Debtors to represent them in these cases. The Official Committee of Unsecured Creditors has selected Paul, Hastings, Janofsky & Walker LLP, as its counsel in these bankruptcy proceeding. When the Debtors filed for protection against its creditors, they listed assets and debts of more than $100 million. The Debtors have the exclusive right to file a plan of reorganization until February 29, and the exclusive right to solicit acceptances of that plan until April 29. NEW 118TH: Court OKs Chapter 11 Trustee's Proposed Sale Procedure ----------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York approved bidding procedures proposed by Richard L. Wasserman, the appointed Chapter 11 Trustee of New 118th LLC and its debtor-affiliates' cases, for the sale of certain property of the Debtors. According to a Stalking Horse contract, the Chapter 11 Trustee will sell the Debtors' partially completed condominium project to Grasso Holdings Acquisitions LLC for $10,850,000. The project is located at the corner of 249 East 118th Street and 2301-03 Second Avenue in New York. To participate in the public sale, Qualified Bidders must top Grasso Holdings' offer by at least $300,000. Bidders must make a $1,335,000 cash deposit before Feb. 28, 2008. The Chapter 11 Trustee will conduct an auction on March 4, 2008, at 11:00 a.m., at the offices of Venable LLP in 1270 Avenue of the Americas, 25 floor in New York. The Chapter 11 Trustee says that he agreed to pay a $250,000 break-up fee as provided in the sale contract. A sale hearing has been set on March 6, 2008. Objections to approval of the sale, if any, must be filed by March 5, 2008. About New 118th Headquartered in New York, New 118th LLC owns real property in New York, which comprised of residential apartment buildings and an occupied condominium project. M. Salvioli Trust et al. filed an involuntary Chapter 11 case on July 30, 2008, against New 118th LLC and its 19 affiliates (Bankr. S.D.N.Y. Lead Case No.07-12333 through 07-12350). Joseph Corneu, Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winter LLP in New York, represents the petitioners. On Aug. 1, 2007, the Court appointed Richard L. Wasserman as Chapter 11 Trustee and, subsequently, a final order was entered with regard to Mr. Wasserman's appointment on Aug. 9, 2007. On Aug. 27, 2007, the Court entered an order for Chapter 11 relief and directed the Chapter 11 Trustee to file schedules along with a list of creditors when the Debtor failed to answer within the time prescribed by the Bankruptcy Code. The U.S. Trustee for Region 2 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in these cases. Massey Knakal Realty Services represents the Committee as special real estate counsel. NEW 118TH: Wants Schedules Filing Deadline Extended to March 31 --------------------------------------------------------------- Richard L. Wasserman, the appointed Chapter 11 Trustee for New 118th and its debtor-affiliates' bankruptcy cases, asks the United States Bankruptcy Court for the Southern District of New York to further extend, until March 31, 2008, the period within which he may file schedules of assets and liabilities and statement of financial affairs for the Debtors. The Chapter 11 Trustee says that he needs additional time to adequately complete the process of collecting important information for him to file the schedules and statements. The process is complicated by the fact that these are involuntary cases, the Chapter 11 Trustee says. The Chapter 11 Trustee's deadline for filing the schedules and statements was originally set for Oct. 15, 2007. This is the Chapter 11 Trustee's third request for extension. About New 118th Headquartered in New York, New 118th LLC owns real property in New York, which comprised of residential apartment buildings and an occupied condominium project. M. Salvioli Trust et al. filed an involuntary Chapter 11 case on July 30, 2008, against New 118th LLC and its 19 affiliates (Bankr. S.D.N.Y. Lead Case No.07-12333 through 07-12350). Joseph Corneu, Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winter LLP in New York, represents the petitioners. On Aug. 1, 2007, the Court appointed Richard L. Wasserman as Chapter 11 Trustee and, subsequently, a final order was entered with regard to Mr. Wasserman's appointment on Aug. 9, 2007. On Aug. 27, 2007, the Court entered an order for Chapter 11 relief and directed the Chapter 11 Trustee to file schedules along with a list of creditors when the Debtor failed to answer within the time prescribed by the Bankruptcy Code. The U.S. Trustee for Region 2 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in these cases. Massey Knakal Realty Services represents the Committee as special real estate counsel. NEWPARK RESOURCES: Earns $6.75 Mil. in Quarter Ended December 31 ---------------------------------------------------------------- Newpark Resources Inc. reported results for the fourth quarter and year ended Dec. 31, 2007. The company reported net income of $6.75 million for the fourth quarter compared to net loss of $42.12 million for the same period in the previous year. The company reported income from continuing operations of $5.5 million. The fourth quarter 2007 results include a pretax charge of $4 million or $2.7 million after-tax, related to the repayment and termination of the company's previous credit facilities. Excluding the $4 million charge, income from continuing operations was $8.2 million. "The fourth quarter continued to be an extremely tough environment for oil service companies in North America," Paul Howes, president and chief executive officer of Newpark, stated. "Many of the headwinds the industry faced during the third quarter remained in effect through the end of the year. Nevertheless, in spite of this uncertain and soft market, our fluids business showed strong revenue growth and improved margins on a sequential basis." "We continue to grow this business and gain acceptance in the market place as a leading provider of fluids and related services, as evidenced by market share gains in the Rockies where we picked up work on all of the rigs for a major independent in this region," Mr. Howes said. "Looking internationally, drilling activity continued to show strength," Mr. Howes added. "We've benefited greatly from this long-term trend, as our AVA business grew 41% in 2007, with much of this growth due to a strong North African market. "We successfully completed our second test well in Egypt, which now puts us in position to grow our business in this important market. Our AVA business, which consists of our European and North African operations, generated $87 million of revenue for the full year in 2007. We also saw revenues from Brazil for the first time as we are now providing both fluids and services to land-based rigs there. Our goal is to leverage our presence in Brazil and expand into the country's deepwater market. "Finally, we are very pleased to disclose that the board has authorized a $25 million stock repurchase program. We will look for opportunities to buy back shares as we believe the stock is undervalued at the current share price," Mr. Howes concluded. For full year 2007, the company has a net income of $26.66 million compared to a net loss of $32.28 million in 2006. Income from continuing operations was $25 million for 2007 compared to $28.1 million for 2006. 2007 income from continuing operations excluding the fourth quarter charge of $4 million related to the termination of the previous credit facility and $2.4 million of legal costs incurred during the first quarter of 2007, was $29.4 million. For 2006, excluding certain items, income from continuing operations was $28.2 million. Stock Repurchase Program Newpark's board of directors has approved a stock repurchase program that authorizes the company to purchase up to $25 million of outstanding shares of Newpark common stock. These purchases will be funded with borrowings under the company's revolving credit facility. As part of the stock repurchase program, the company's management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, which the company intends to establish soon as practicable. At Dec. 31, 2007, the company's balance sheet showed total assets of $644.06 million, total liabilities of $283.40 million and total stockholders' equity of $360.66 million. About Newpark Resources Headquartered in Metarie, Louisiana, Newpark Resources Inc. (NYSE: NR) -- http://www.newpark.com/-- provides drilling fluids, temporary worksites and access roads for oilfield and other commercial markets, and environmental waste treatment solutions. * * * Moody's Investor Services assigned a B1 rating on Newpark Resources Inc.'s long-term corporate family rating and probability of default rating. The outlook is stable. Standard and Poor's placed its long term foreign and local issuer credit rated at B+ in November 2006. The ratings still hold to date. NORTH AMERICAN TECH: Dec. 30 Balance Sheet Upside-Down by $6.2 M. ----------------------------------------------------------------- North American Technologies Group Inc.'s consolidated balance sheet at Dec. 30, 2007, showed $18.0 million in total assets and $24.2 million in total liabilities, resulting in a $6.2 million total stockholders' deficit. At Dec. 30, 2007, the company's consolidated balance sheet also showed strained liquidity with $7.8 million in total current assets available to pay $9.9 million in total current liabilities. The company reported a net loss of $939,553 on sales of $7.0 million for the first quarter ended Dec. 30, 2007, compared with a net loss of $4.7 million on sales of $4.0 million in the same period ended Dec. 31, 2006. The decrease in net loss during the three months ended Dec. 30, 2007, is primarily due to a gross profit of $964,084 as compared to a gross loss of $1.3 million in the December 2006 quarter, a decrease in selling, general and administrative expenses of $702,555, a decrease in interest expense of $707,961, and a decrease of $59,499 in depreciation and amortization expense. During the quarter ended Sept. 30, 2007, the company recorded an $1.8 million impairment charge related to its now closed Houston facility equipment, primarily because it did not have sufficient orders to support the operation of the equipment. The increase in revenues resulted from a 29.0% increase in the number of ties sold and a 35.0% increase in the average sales price of ties sold during the three month period ended Dec. 30, 2007, compared to the three month period ended Dec. 31, 2006. The increase in the number of ties sold resulted from the increased production of crossties at the Marshall Facility, which is currently producing ties from its two production lines at their approximate design capacity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 30, 2007, are available for free at http://researcharchives.com/t/s?286d Going Concern Doubt KBA Group LLP, in Dallas, Texas, expressed substantial doubt about North American Technologies Group Inc.'s ability to continue as a going concern following the completion of its audit of the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm cited that the company has suffered recurring losses from operations, has used significant cash flows in operating activities and has liabilities significantly in excess of assets. About North American North American Technologies Group Inc. (OTC BB: NATK) -- http://www.natk.com/-- is principally engaged in the manufacturing and marketing of engineered composite railroad crossties through its 100% owned subsidiary TieTek LLC. The company's composite railroad crosstie is a direct substitute for wood crossties, but with a longer expected life and with several environmental advantages. PACIFIC RIM: Case Summary & Six Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Pacific Rim Petroleum, L.L.C. 4160 Suisun Valley Road, Suite 204 Fairfield, CA 94534 Bankruptcy Case No.: 08-22056 Type of Business: The Debtor is a management company. Chapter 11 Petition Date: February 22, 2008 Court: Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: Anthony Asebedo, Esq. 1545 River Park Drive, Suite 550 Sacramento, CA 95815 Tel: (916) 925-1800 Total Assets: $1,450,000 Estimated Debts: $772,402 Debtor's Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ D.C.I. $29,850 1390 Willow Pass Road, Suite 1000 Concord, CA 94520 Robert Lando bank loan $16,300 1260 Travis Boulevard, Suite 350 Fairfield, CA 94533 Kleinfelder $4,000 P.O. Box 51958 Los Angeles, CA 90051-6258 Terry Meader, C.P.A. trade debt $2,100 Franchise Tax Board taxes $1,100 Internal Revenue Service taxes $552 PAWNSHOP: To File for Bankruptcy; Closing to Include Artworks Sale ------------------------------------------------------------------ The art project Pawnshop announced a plan to file for bankruptcy protection after failing to reach a deal for further financing with Manhattan-based Angelo, Lewis & Co., E-Flux (N.Y.) reports. The artists behind Pawnshop, Julieta Aranda, Liz Linden and Anton Vidokle, have stopped accepting new submissions, and will close at the end of the month. The closing of Pawnshop's operation in New York on Feb. 29 is expected to feature a massive "going out of business" sale. Talks are underway with potential buyers, according to the report. The report states that unconfirmed rumors surrounding the closing in New York suggest that the artists are trying to relocate Pawnshop to a more robust economic zone. Rotterdam and Beijing were named among several possible new locations. Pawnshop has reduced its workforce in recent months. E-Flux learned from three employees, who refused to give their names, that they have been laid off. PERFORMANCE TRANS: Presents New Sale Protocol; Allied Out --------------------------------------------------------- Performance Transportation Services, Inc., and its debtor- affiliates ask the U.S. Bankruptcy Court for the Western District of New York to approve a modified protocol for selling all or substantially all of their assets. As previously reported, the Debtors sought Judge Michael Kaplan's approval of a sale protocol pursuant to which they would sell their business to Allied Systems Holding, Inc., or to another party, but the proposed protocol was scrapped following Allied's decision to back out from its prior offer to sign an asset purchase agreement with the Debtors. The proposed sale procedures contemplate a March 14, 2008 auction if multiple bids are received. Diamond Capital Management, L.L.C., is among the bidders, the Debtors relate. The Debtors will appear before the Court later today to seek approval of the procedures. As a condition to authorizing the use of cash collateral and providing postpetition financing, management was required to commit itself to the disposition of the Debtors' assets. With this imperative, the Debtors have commenced marketing efforts to sell their business. Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, says the Debtors have determined that the proposed protocol will enable the Debtors to obtain the best offer for their assets and maximize their assets' value for their estates. Disposition Procedures A. Due Diligence Potential bidders -- parties interested in acquiring the Debtors' assets -- must submit an executed confidentiality agreement and evidence demonstrating financial ability to consummate a transaction. The Debtors will provide each Potential Bidder: a. access to confidential information with respect to the assets sought to be acquired; and b. forms of an asset purchase agreement and, if applicable, a plan of reorganization or liquidation including provision to implement a sale or similar disposition through a plan in the Debtors' Chapter 11 cases. B. Stalking-Horse Bid The Debtors will have authority to execute an asset purchase or similar disposition agreement with any third party, provided that the disposition agreement, which will be considered as a lead bid, must be executed no later than March 5, 2008. No later than one business day following its execution, the Debtors will file with the Court and provide all Potential Bidders and Black Diamond, with a copy of the Lead Bid. The Debtors propose to pay, at their sole discretion, a topping fee of $1,250,000 plus reimbursement of reasonable fees and costs of up to $1,250,000 to the Lead Bidder. The Lead Bidder may be entitled to the topping fee if: -- the proposal contained in the Lead Bid remains open and irrevocable until the earlier of two business days after the sale hearing or May 15; -- the disposition of the Debtors' business to a third party is approved and consummated; and -- the Lead Bidder is not in breach of its obligations. C. Bid Deadline Parties who intend to join the auction are required to deliver their bids by 2:00 p.m., Eastern Time, on March 11, 2008. In order to submit a "qualified bid", a Potential Bidder must provide: 1. a letter stating that: -- it offers to acquire the Assets upon the terms and conditions set forth in the Lead Bid marked to show any amendments the bidder proposes; -- its offer is not subject to any due diligence or financing contingency and is irrevocable until two business days after the earlier of (i) the closing of the proposed transaction, (ii) the termination of an executed Disposition Agreement and withdrawal of the Assets for disposition by the Debtors, and (iii) 30 days after the Debtors receive the bid; and -- it proposes a purchase price that exceeds the purchase price contained in the Disposition Agreement by the amount of the Topping Fee plus $500,000. 2. a certified check for $500,000 representing a portion of its bid price and written evidence of available cash, a commitment for financing or ability to obtain a satisfactory commitment if selected as the successful bidder and evidence of ability to consummate the transaction, including any evidence of the ability through a "credit bid." 3. to the extent it proposes to include non-cash consideration in its bid, the form of notes or other type of instrument in connection with the non-cash consideration. 4. a list of prepetition contracts it would not assume from the Debtors. Pursuant to the Bidding Procedures, the Debtors deem Black Diamond as a Qualified Bidder. After the bid deadline, the Debtors will select the Initial Bid, the highest and best offer, from the bids submitted by the parties. The Initial Bid will be selected based upon factors: a. the amount of the Qualified Bid; b. the value provided to the Debtors; c. the risks associated with any non-cash consideration; and d. any other factors that the Debtors may deem relevant to the transaction. The Debtors intend to give each Qualified Bidder a copy of the Initial Bid at least three days before the Auction. Each Qualified Bidder must inform the Debtors whether it intends to participate in the Auction. The Debtors will not conduct the Auction if there is no Lead Bid and if only one Qualified Bid is submitted by the bidding deadline. If the Debtors will not reject the Qualified Bid, they will declare it as the "successful bid". D. Auction The Debtors propose that the Auction to be held on March 14, 2008, at the offices of Jones Day in Chicago, Illinois. The bidding will start at, as proposed, $500,000 more than the purchase price proposed in the Initial Bid plus the amount of the Topping Fee, if applicable, and continue in increments of at least $500,000 in cash. The Debtors will review each bid made at the Auction on the basis of financial and contractual terms and the factors relevant to the process; and identify the highest or best bid for the Assets and Assumed Liabilities at the Auction -- at the end of each round of the bidding during the Auction. The Debtors intend to disclose to all Qualified Bidders at the Auction the name of the successful bidder for the Assets and Assumed Liabilities, and the amount and other material terms of the successful bid -- immediately before the conclusion of the Auction. E. Disposition Hearing The Debtors will present the successful bid to the Bankruptcy Court for approval at a hearing on March 18, 2008. PTS Wants Bid Protections Approved The Debtors intend to offer bid protections to a party that submits an early bid, incurs the costs of preparing its bid, and agrees to remain bound to honor its bid for a fixed period of time while the seller and its assets are marketed. The Debtor will offer the "stalking-horse" bidder a topping fee of $1,250,000 plus reimbursement of reasonable fees and costs of up to $1,250,000, and a minimum overbid of $500,000 for competing bids if they deem it necessary and appropriate. The Debtors believe that if a stalking-horse agreement is negotiated and disclosed to all interested parties, it will assist them in generating higher and better offers. Mr. Graber adds that the $1.25MM topping fee has been established, in consultation with the Debtors' financial advisors, to maximize the chances of enticing bidders and generate interest in the sale in a timely manner. He avers that the Bid Protections will not chill the bidding, but will encourage it and do not unduly burden the Debtors' estates. Toyota Wants Contracts Identified Toyota Motor Credit Corporation says the Disposition Procedures do not allow each contract counterparties an opportunity to assess whether any proposed assignee satisfies the conditions precedent as set forth in the Bankruptcy Code. Daniel H. Slate, Esq., at Hughes Hubbard & Reed LLP, in New York, says TMCC does not, in concept, object to expedited procedures to sell substantially all of the Debtors' assets. He notes, however, that nearly three months since the filing of the Debtors' original sale motion, the Debtors have again failed to address any of the issues related to the potential assignment of executory contracts under a revised sale process. Mr. Slate notes the Disposition Procedures are wholly devoid of any procedures addressing executory contract issues. In particular, under the current Bid Procedures, TMCC is not accorded "adequate and reasonable" notice of the proposed sale transaction sufficient for it to assess its rights under Section 365 of the Bankruptcy Code and under the terms of the Leases. The executory contract issues should be addressed before the Bid Procedures Motion is approved, Mr. Slate contends. He argues that the Disposition Procedures should be modified to provide for, among other things, (i) TMCC an opportunity to know, well in advance of the sale hearing, which contracts the Debtors and the assignee agree are to be assigned, (ii) sufficient time and information for TMCC to review and analyze related to adequate assurance of future performance, and (iv) a fair process for resolution of any disputes related to the amount necessary to cure any defaults under the Leases, without forcing any party to waive any rights it may have while that process is proceeding. CIT & HVB Says Bid Protections 'Premature' The CIT Group/Business Credit, Inc., and HypoVereinsbank want the Court to modify the proposed bid protections, noting that the Debtors are currently seeking approval of a break up fee and a expense reimbursement commitment for a stalking horse bid that does not currently exist. Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., contends the proposed $1,250,000 topping fee and $500,000 expense reimbursements are premature and should not be considered or approved by the Court at this time. Mr. Fiorillo says, at worst, the Bid Protections will chill the bidding process and will ensure that the Lead Bid, if one is ever found, will become the only bid because of the high overbid requirement of $1,750,000 and truncated time period between the March 6 Lead Bid notice date and March 11 Bid Deadline. It is widely known in the Chapter 11 cases, Mr. Fiorillo further relates, that entities have each expressed an interest in purchasing the Debtors' assets and have been conducting due diligence into the prospective purchase: -- Allied Systems Holdings, a corporate affiliate of the Debtors; -- D.E. Shaw Laminar Portfolios, L.L.C., one of the Debtors' second lien lenders; and -- Black Diamond, the Debtors' prepetition first lien and DIP priming lien lender agent. Accordingly, Mr. Fiorillo says, any Lead Bid arising from the parties must be carefully scrutinized in connection with awarding any type of bid protections, as the bidding inducements are clearly not required to cause these parties to "come to the table" and bid. Mr. Fiorillo avers that the Debtors should schedule a hearing on the Bid Protections only after they are able to locate a Lead Bidder and negotiate and come to terms on a stalking horse bid that warrants the inclusion of a reasonable break-up fee and expense reimbursement commitment. Prior to the hearing, the Debtors, he asserts, should provide notice to the Objecting First Lien Lenders and the other major constituents so that the Bid Protections may be fairly evaluated in the context of the identity of the proposed Lead Bidder, among other things. About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims and balloting agent is Kutzman Carson Consultants LLC. The Debtors have until March 18, 2008, to file a plan of reorganization. (Performance Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Workers Balk at Allied Participation in Sale --------------------------------------------------------------- The Automobile Transport Chauffeurs Demonstrators and Helpers Union, Teamsters Local 604, and George Warner ask the U.S. Bankruptcy Court for the Western District of New York to postpone the sale process involving Performance Transportation Services, Inc.'s assets, if Allied Holdings Inc., now known as Allied Systems Holdings, Inc., is selected as a qualified bidder. Allied Holdings previously announced plans to acquire PTS. Local 604 and Mr. Warner, however, aver that the terms of the sale proposal violate Allied's substantially consummated plan of reorganization. Local 604 and Mr. Warner have filed an adversary proceeding in the U.S. Bankruptcy Court for the Northern District of Georgia seeking preliminary and permanently to enjoin the alleged Plan violation. The ruling on the injunction motion, which is scheduled for hearing on March 17, likely will impact Allied's ability to implement the terms of purchase previously announced by Allied or, in all probability, any other purchase by Allied, relates Mark Potashnick, Esq., at Weinhaus & Potashnick, in St. Louis, Missouri. The sale procedures proposed by PTS do not permit sufficient opportunity or time for the Teamsters Local 604 to obtain information regarding the results of the Auction proposed by the Debtors before the Injunction Hearing, Mr. Potashnick tells Judge Michael Kaplan. Further, the Disposition Procedures likely provide insufficient time for the Georgia Bankruptcy Court to fully consider and rule upon the Injunction Motion; the facts form the bases for the objections the Local 604 asserts, Mr. Potashnick says. Local 604 and Mr. Warner ask Judge Kaplan to: -- require the Debtors to file a notice that Allied is a Qualified Bidder within one day of determining that Allied is a Qualified Bidder; -- require the Debtors to modify the Disposition Procedures to allow public attendance at the Auction including attendance by telephone; -- require the Debtors to modify the Disposition Procedures to require the Debtors to file a document identifying the Successful Bidder, as well as a copy of any proposed contracts for sale, with all exhibits and attachments, with the Court within two hours after the conclusion of the Auction; and -- direct set the Disposition Hearing on March 18, but if Allied is the Successful Bidder, then the Hearing will not be conducted until the time as the Georgia Court rules on the Injunction Motion. TNATINC: Local 604 Has No Standing to Object The Teamsters National Automobile Transporters Industry Negotiating Committee asserts that the Court should rebuff Local 604 and Mr. Warner's efforts to to use litigation in an unrelated adversary proceeding as an excuse to postpone the sale proceedings. TNATINC, the exclusive representative for collective bargaining purposes of approximately 2000 of the employees of the Debtors and their affiliates in the United States and Canada, says it has no objection to the Disposition Procedures. TNATINC says two of the objectors have no standing to object: -- Mr. Warner is a member of the Teamsters' bargaining unit employed by PTS; he has no independent standing from TNATINC to enforce the collective bargaining agreement, nor does he have the authority to oppose agreements reached by the union with Allied and PTSC. -- TNATINC represents all local unions for purposes of the NMATA. Local 604, local affiliate of the International Brotherhood of Teamsters, has conveyed all of its bargaining rights in the automobile transportation industry to TNATINC. Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller and Brueggeman, s.c., in Milwaukee, Wisconsin, relates that Mr. Warner and Local 604, in their adversary proceeding in Allied's Chapter 11 case, filed a motion for a preliminary injunction alleging that TNATINC and Allied were violating the terms of their reorganization plan in that case due to modifications to their collective bargaining agreement. The modifications, which were ratified by an overwhelming majority of the Teamster-represented employees at Allied, concerned certain changes to the agreement which might facilitate an acquisition of PTS by Allied if Allied chooses to bid for PTS's assets. Mr. Perillo asserts that there is no merit in either bankruptcy or labor law to Mr. Warner and Local 604's allegations that the substantial consummation of the Allied Plan prevents Allied and TNATINC from ever agreeing to any modifications of their CBA. He explains that: (a) TNATINC and Allied were co-sponsors of a reorganization plan in that case, together with the Yucaipa Companies. The parties reached a Term Sheet (i) described the terms of a plan of reorganization that TNATINC and Yucaipa would co-sponsor; and provided the terms of a labor deal that TNATINC would offer to reorganized Allied, subject to ratification by union members. Allied ultimately accepted the Term Sheet, became a co-sponsor of the TNATINC/Yucaipa plan, and accepted the proffered terms of a labor deal, which were also ratified by Allied Teamster-represented employees. The Plan was confirmed and consummated, but at no time did the Allied court freeze the terms of the CBA in place against any future changes. (b) No part of the Allied Term Sheet was ever intended for the benefit of, or even to apply to, any employee of PTS. PTS employees are not "beneficiaries" of the Allied reorganization plan or Term Sheet in any circumstance; and they are not beneficiaries of the Allied CBA unless and until they are hired by Allied and become Allied employees. (c) Nothing in the CBA modification modifies the Allied Plan. The Allied Plan, the Term Sheet and the CBA all contemplated that there might be, and probably would be, future changes to the labor agreement and Term Sheet, and in fact, those documents explicitly say that the Terms can be modified with the parties' consent. Mr. Perillo reminds Judge Kaplan that he has no jurisdiction to enforce Warner's and Local 604's erroneous understanding of the Allied Reorganization Plan in the PTS case. "There is no reason for this Court to force parties-in-interest in the PTS proceedings to wait for a decision, largely irrelevant to them, by Judge Mullins in the Northern District of Georgia." The interests of the PTS Debtors and other parties-in-interest should be paramount; not the fortunes of a tiny faction of employees whose goal is to embarrass Allied Holdings, Mr. Perillo asserts. "All parties in the PTS matter now apparently believe that the future of PTS depends upon a successful sale of the company, either as an asset sale or in the context of a reorganization plan." About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims and balloting agent is Kutzman Carson Consultants LLC. The Debtors have until March 18, 2008, to file a plan of reorganization. (Performance Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PERFORMANCE TRANS: Teamsters Wants Incentive Program Scrapped ------------------------------------------------------------- The Teamsters National Automobile Transporters Industry Negotiating Committee asks the U.S. Bankruptcy Court for the Western District of New York to: -- deny approval of an employee incentive program proposed by Performance Transportation Services, Inc., and its debtor- affiliates; or, -- in the alternative, establish a discovery and trial schedule for the ultimate issues raised by the TNATINC. The Incentive Program would create a pool of $559,529 to be distributed to 63 key employees with an aggregate salary of $5,100,000 or an average salary of $80,952. The money would be disbursed entirely at the Debtors' discretion. To be eligible, an insider must remain employed and in good standing with the Debtors until the sale of the Debtors' assets or the effective date of a Chapter 11 plan. Key employees will then be eligible for a bonus upon their departure. The TNATINC says there is no performance metric to guide the disbursements. The only parameter is that individual bonuses are capped at the equivalent of 16 weeks of the individual's salary, the TNATINC adds. The TNATINC and the International Brotherhood of Teamsters say they have interest to protect against the Incentive Program. Frederick Perillo, Esq., at Previant, Goldberg, Uelmen, Gratz, Miller and Brueggemen, s.c., in Milwaukee, Wisconsin, explains that the Debtors and the Teamsters are parties to a single master collective bargaining agreement setting forth the wages, hours and working conditions of the Debtors' employees who perform productive labor making its business possible. The Teamsters employed by the Debtors are both numerous and have substantial claims. The accrued but unpaid benefits under the CBA, known as The National Master Automobile Transporters Agreement, are conservatively estimated at about $4,000,000, according to him. TNATINC opposes the Incentive Program citing it is a "thinly- disquised" retention bonus and severance plan that violates the proscriptions in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Mr. Perillo argues the bonuses are realized by managers for merely continuing to work for the Debtors doing their current jobs. Despite labeling it an incentive program, the Debtors state that the only performance expected from bonus recipients is "continue effective job performance," he asserts. In other words, he says, employees need not make any contribution to reorganization to qualify for a bonus, other than report to work and do the tasks in the same manner as they have always done them. Mr. Perillo contends, if the Incentive Program is not a retention bonus, then it is certainly a severance plan, as employees are only eligible for the bonus once they leave the Debtors' employ for reasons other than cause. He asserts the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 also explicitly prohibits severance payments to insiders of the Debtors, unless that payment is part of a program applicable to all full-time employees and is not greater than 10 times the amount of the mean severance pay given to non-management employees. Nothing about the Incentive Program suggests that the bonuses sought are fair and reasonable or actually tied to performance, Mr. Perillo avers. About Performance Transportation Performance Transportation Services Inc. is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America, and operates under three key transportation business lines including: E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport. The company and 13 of its affiliates previously filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Lead Case No. 06- 00107). The Court confirmed the Debtors' plan on Dec. 21, 2006, and that plan became effective on Jan. 29, 2007. Garry M. Graber, Esq. of Hodgson, Russ LLP and Tobias S. Keller, Esq. of Jones Day represented the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors it reported more than $100,000,000 in total assets. It also disclosed owing more than $100,000,000 to at most 10,000 creditors, including $708,679 to Broadspire and $282,949 to General Motors of Canada Limited. The company and its debtor-affiliates filed their second Chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. W.D.N.Y. Case Nos: 07-04746 thru 07-04760). Tobias S. Keller, Esq., at Jones Day, represents the Debtors. Garry M. Graber, Esq., at Hodgson, Russ LLP, serve as the Debtors' local counsel. The Debtors' claims and balloting agent is Kutzman Carson Consultants LLC. The Debtors have until March 18, 2008, to file a plan of reorganization. (Performance Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000). PRC LLC: Creditors Panel Wants More Time to Review DIP Financing ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in PRC LLC and its debtor-affiliates' Chapter 11 cases asks the U.S. Bankruptcy Court for the Southern District of New York to extend, until Feb. 27, 2008, the final hearing to consider the Debtors' postpetition financing facility, in order to allow the Committee a fair opportunity to review the DIP Facility. The Committee asserts that the DIP Financing Motion has global and far-reaching implications. The Debtors sought Court authority to borrow up to $30,000,000 in postpetition financing from The Royal Bank of Scotland plc and certain other lenders. RBS and the other lenders are also the Debtors' prepetition lenders. "The proposed Final DIP Order, when viewed in conjunction with the Plan Term Sheet and Lock-Up, is in effect a sub rosa plan, the complete control over which is placed in the hands of the Debtors' Lenders at the very early stages of these cases, without a disclosure statement or the benefit of an opportunity for the Creditors Committee to perform its fiduciary duties," Andrew B. Eckstein, Esq., at Blank Rome LLP, in New York, asserts. The Plan Term Sheet was presented by the Debtors to the Court on the bankruptcy filing. The Plan Term Sheet contemplates that on the Plan Effective Date, the Lenders will be fully paid by an exit facility of up to $40,000,000 to $45,000,000. The Plan Term Sheet also describes a Lock-Up between the Debtors and the Prepetition Lenders, which requires the Debtors to support the material terms of the Plan. "[T]hese circumstances require additional review and discovery," Mr. Eckstein maintains. Moreover, it is uncertain whether unsecured creditors will receive any distribution from the pre-negotiated Plan, Mr. Eckstein contends. The adjournment of the hearing will not affect the Debtors' ability to operate, as the Court has already granted them an interim funding of up to $10,000,000, the Committee notes. Mr. Eckstein also argues that the DIP Financing Motion is objectionable on these grounds: (1) The imposition of Plan terms which turn over to the Lenders the debt and equity of the Debtors and complete control of the reorganization process at the inception of these cases is incongruous with the Bankruptcy Code provisions regarding disclosure and due process. (2) The Proposed Final DIP Order improperly seeks to skew the outcome of the Debtors' cases in favor of the DIP Lenders. It allows the Lenders to use the bankruptcy process to extract value from the Debtors' assets to the detriment of the unsecured creditors. (3) The Prepetition Lenders should not be allowed payment of professional fees and interest unless they can demonstrate that they are oversecured -- an issue which appears to be inconsistent with the Debtors' proposed Plan Term Sheet. In addition, the DIP Lenders have bargained for a $900,000 underwriter fee which is equal to 3% of the DIP Facility. Because it is unclear if the Debtors will need the full $30,000,000, the underwriter fee is strikingly high, Mr. Eckstein avers. (4) Avoidance actions are designed to benefit the unsecured creditors of the Debtors' estates. The DIP Lenders should not be granted a lien on Avoidance Actions and other causes of action. The granting of such liens will effectively shield the Prepetition Lenders from litigation. (5) Limitations on investigation of claims against Lenders should be stricken from the Proposed Final Order. The Proposed Final DIP Order provides that, other than $25,000 that the Committee may use to investigate the liens of the Prepetition Lenders, no portion of the DIP Facility or the Carve-Out may be used to challenge the amount and validity of the Lenders' liens. (6) The waiver of the Debtors' rights under Section 506(c) of the Bankruptcy Code to recover reasonable and necessary costs of preserving and disposing of the Lenders' collateral should be denied. (7) The Committee should be provided with equal notice and information as is afforded to the Lenders. If the Court is inclined to place a cap on the Committee's ability to investigate the prepetition activities between the Debtors and the Prepetition Lenders, the Court should grant at least $150,000 to the Committee in order to allow it the ability to carry out its fiduciary duties on behalf of the creditors of the Debtors' estates, Mr. Eckstein maintains. "A mere $25,000 is woefully inadequate." He adds that the Proposed Final DIP Order is also objectionable in that it: -- seeks to grant the Lenders relief from the automatic stay five days after an Event of Default; -- states that the DIP Lenders will bot be subject to the doctrine of marshalling with respect to any Collateral; -- states that the exception under Section 552(b) of the Bankruptcy Code will not apply to the DIP Lenders with respect to proceeds, offspring or profits of any of the Collateral; -- seeks to grant the Prepetition Lenders other adequate protection as agreed upon by the Lenders and the Debtors. This provision must be clarified. Absent the hearing adjournment, the Committee further asked the Court to deny the Debtors' request. Debtors Talk Back The Debtors maintain that they intend to confirm a Chapter 11 plan of reorganization. Every creditor will have the opportunity to review that plan, cast a ballot, and object, if they so desire, Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, avers. "The DIP Motion does not replace or even thwart the confirmation process." The Committee's contention that the DIP Motion effects a sub rosa plan ignores the fact that the Committee will have ample time at a later date to consider a Chapter 11 plan and whether that plan deserves confirmation, Mr. Perez asserts. Agreeing to promptly file a plan and disclosure statement in no way places the Debtors at the complete mercy of their lenders, Mr. Perez says. Rather, he states, it is prudent strategy that recognizes that value for all stakeholders will be maximized if the Debtors emerge from Chapter 11 as promptly as possible. Mr. Perez also contends the other objections raised by the Committee are misplaced. He emphasizes that: * The payment of the Prepetition Lenders' fees, and interest to the First Lienholders, represents an appropriate concession that those creditors deserve adequate protection against any diminution in the value of their collateral; * Although the Committee complains of the liens placed on Chapter 5 causes of action, the Debtors have neither assigned nor lost control of those claims. Those liens simply protect the DIP Lenders in the event of a default. Otherwise, any proceeds of those actions remain property of the estate and will be free and clear of all liens upon repayment of the DIP Facility; * It is hardly unreasonable for a lender to limit the amount it will pay for an investigation of its own affairs. Moreover, these estates should not be burdened by the expense and delay that would be occasioned by a lengthy fishing expedition in search of a claim; * Waivers of Section 506(c) surcharge rights are entirely appropriate because the DIP Lenders have offered new consideration to the Debtors' estates in exchange for this concession. Moreover, the Debtors' estates are poised for reorganization, not a liquidation, of the Prepetition Lenders' collateral. Thus, the policy concerns behind those waivers are not at issue. The Debtors have submitted a motion for financing under the best terms available, Mr. Perez says. "None of the Committee's objections refutes the essential fact that all creditors and other stakeholders will benefit from the survival of the Debtors as a going concern." The Debtors also assert that the Final DIP Hearing should not be adjourned. There is no statutory or other authority requiring the Debtors to adhere to any schedule suggested by the Committee, Mr. Perez says. The Debtors further contend that they are working with the Committee to provide information, subject to the execution of a confidentiality agreement that is satisfactory in form and substance to the Debtors. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Inks Pact Recognizing Law Debenture as Collateral Agent ---------------------------------------------------------------- PRC LLC and its debtor-affiliates, The Royal Bank of Scotland plc, and Law Debenture Trust Company of New York entered into a stipulation to permit the execution and filing of documents and assignment of rights, powers and privileges from RBS to Law Debenture as collateral andadministrative agent under a Second Lien Credit Agreement. Before the bankruptcy filing, RBS served as the collateral and administrative agent for the First Lien Lenders under the $160,000,000 Amended and Restated First Lien Credit and Guaranty Agreement, dated as of November 29, 2006, as amended and restated on December 20, 2006, entered into by the Debtors. RBS, however, tendered its resignation as agent, which became effective Dec. 3, 2007. The Debtors are also parties to a $67,000,000 Amended and Restated Second Lien Credit and Guaranty Agreement, dated as of Nov. 29, 2006, as amended and restated on Dec. 20, 2006. As of the bankruptcy filing, about $119,400,000 was outstanding under the First Lien Credit Agreement, and about $67,000,000 was outstanding under the Second Lien Credit Agreement. With consent from PRC, LLC, the Lenders appointed Law Debenture as successor to RBS pursuant to a Successor Agent and Amendment Agreement dated Jan. 18, 2008. Due to time exigencies, certain documents evidencing the lien transfers could not be filed before the bankruptcy filing. In an abundance of caution, the parties agreed to enter into the Stipulation. The parties stipulate that they are authorized, and the Debtors are directed, to enter into, deliver and file any agreements, certificates and other documents, and take other actions necessary to reflect the resignation of RBS and the appointment of Law Debenture as administrative and collateral agent. The automatic stay under Section 362 of the Bankruptcy Code is modified to permit the execution and filing of the documents. Nothing in the Stipulation is construed to modify the terms of any of the Second Lien Credit Agreement and related documents, including the Intercreditor Agreement dated Nov. 29, 2006, or to modify the obligations of any of the Debtors under the Second Lien Loan Documents. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Court Okays Services Agreement With Advanced Contact ------------------------------------------------------------- PRC LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to assume a services contract with Advanced Contact Solutions Inc., nunc pro tunc to Feb. 20, 2008. The Debtors entered into a Master Services Agreement dated Feb. 1, 2006, with Advanced Contact. Under the Agreement, ACS provides representatives to answer inbound service-related communication from the customers of the Debtors' clients. The initial term of the Agreement is set to expire on Feb. 1, 2011. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, asserts that the assumption of the Agreement is necessary to avoid any significant disruption on the Debtors' business that would result if ACS ceased to provide services. "If the Debtors were unable to continue their relationship under the agreement, the Debtors would have to immediately invest significant capital by hiring and training additional service representatives and other production-related employees, in addition to acquiring new contact centers, telephone lines, and other business equipment to fulfill obligations under current contracts with clients," Mr. Perez argues. He further says that the Agreement is a substantial portion of the Debtors' gross revenues, pointing out that the Debtors raked in more than $79,000,000 in gross revenue in 2007 based on work performed under the Agreement. The Debtors also obtained the Court's approval to pay: (i) ACS $2,766,962 and $4,310,306 on March 7 and April 4, 2008, for their prepetition defaults under the Agreement; and (ii) the balance of any cure amount in three monthly installments starting May 2008. However, in the event a Chapter 11 plan is confirmed, the Debtors are obliged to pay any remaining monthly installments on the day that plan takes effect, the Court ruled. According to Mr. Perez, the Debtors' ability to keep current on their postpetition obligations combined with the cure payments will serve as adequate assurance to ACS for future performance. Objections to the proposed assumption of the ACS Agreement were overruled by the Court, including the arguments raised by the Official Committee of Unsecured Creditors. The Creditors Committee expressed concerns over the unusually broad relief sought by the Debtors given the early stage of their Chapter 11 cases. The Court's decision is not yet final and would not take immediate effect until February 20, 2008 at 4:00 p.m., unless the Creditors Committee and the Debtors' lenders file an objection before that date, Judge Glenn clarified. The assumption of the ACS Agreement is also subject to entry of the Court's final ruling on the Debtors' request to obtain postpetition financing. Committee Files Conditional Objection The Creditors Committee advised the Court about the possibility of the Debtors' customers filing administrative claims in connection with a possible rejection of their contracts. The Committee urged the Court to include a ruling in its Final Assumption Order, releasing PRC, LLC, from any liability for those administrative claims other than payment in connection with the services provided. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) QUEBECOR WORLD: Final Auction Prices of Bonds Reach 41.25% ---------------------------------------------------------- A Credit Event Auction for Quebecor World Inc. took place on Feb. 19, 2008, with 13 participating dealers. The auction was run in accordance with the ISDA 2008 Quebecor CDS Protocol. Markit Group Limited and Creditex Group Inc. acted as official auction administrators. The Credit Event Auction mechanism is designed to ensure orderly and operationally efficient trade settlement for credit derivatives by determining the final cash settlement price for defaulted Quebecor CDS contracts. During the Quebecor Credit Event Auction, major dealers submited orders electronically on the Creditex platform. Markit calculated and verified the auction results. The final price of Quebecor World's bonds is 41.25%. Karen Brettell of Reuters reported that based on the final price, this would mean that the amount of principal the Quebecor bonds recover would be 41.25% of par. "Thus a buyer of protection would be compensated 58.75% the amount of debt insured," Ms. Brettell wrote. The auction results are available at: http://ResearchArchives.com/t/s?2868 The Credit Event Auction process was launched in 2005 by Markit and Creditex in collaboration with ISDA and major credit derivative dealers to facilitate the settlement of credit derivative contracts in the event of a corporate default. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Quebecor World Inc. and its affiliates permission to pay accrued prepetition commissions due and owing as of Feb. 1, 2008, to their sales representatives. As reported in the Troubled Company Reporter on Feb. 19, 2008, Michael J. Canning, Esq., at Arnold & Porter LLP, in New York, related that the Debtors' sales representatives are located in plants or in regional offices throughout North America, Europe and Latin America, and customers are able to coordinate simultaneous printing throughout the Debtors' network through a single sales representative. The Debtors' sales representatives are compensated primarily on a commission basis and are paid from 30 to 90 days after a sale actually occurred. Accordingly, the sales representatives may go for long periods without receiving commissions, at which point they may be entitled to several months worth of commissions. Mr. Canning said that the Debtors owe 59 sale representatives, as of February 1, $1,792,993. Of this amount, $1,234,641 reflects amounts in excess of $10,950 per employee, with the proposed prepetition payments per employee ranging from $933 to $117,868. The Debtors intends to provide the Office of the United States Trustee and counsel to the Official Committee of Unsecured Creditors a schedule showing for each employee scheduled to receive sales commissions on Feb. 1, 2008, the amount of payment and the amount of additional compensation previously received by the employee on account of 2007. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Court Approves Payment of Prepetition Commissions ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Quebecor World Inc. and its affiliates permission to pay accrued prepetition commissions due and owing as of Feb. 1, 2008, to their sales representatives. As reported in the Troubled Company Reporter on Feb. 19, 2008, Michael J. Canning, Esq., at Arnold & Porter LLP, in New York, related that the Debtors' sales representatives are located in plants or in regional offices throughout North America, Europe and Latin America, and customers are able to coordinate simultaneous printing throughout the Debtors' network through a single sales representative. The Debtors' sales representatives are compensated primarily on a commission basis and are paid from 30 to 90 days after a sale actually occurred. Accordingly, the sales representatives may go for long periods without receiving commissions, at which point they may be entitled to several months worth of commissions. Mr. Canning said that the Debtors owe 59 sale representatives, as of February 1, $1,792,993. Of this amount, $1,234,641 reflects amounts in excess of $10,950 per employee, with the proposed prepetition payments per employee ranging from $933 to $117,868. The Debtors intends to provide the Office of the United States Trustee and counsel to the Official Committee of Unsecured Creditors a schedule showing for each employee scheduled to receive sales commissions on Feb. 1, 2008, the amount of payment and the amount of additional compensation previously received by the employee on account of 2007. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. QUEBECOR WORLD: Various Entities Disclose Stake in Company ---------------------------------------------------------- In separate filings with the United Stated Securities and Exchange Commission, several entities disclosed holding a stake in Quebecor World Inc.: 1. Ronald Gutfleish Ronald Gutfleish disclosed that he may be deemed to beneficially own 7,552,055 subordinate voting shares issued by Quebecor World Inc. Mr. Gutfleish is a managing member of Elm Ridge Capital Management LLC. 2. Avenue Capital, et al. Avenue Capital Management II LP, Avenue Capital Management II GenPar LLC, and Marc Lasry disclosed that each of them may be deemed to beneficially own 5,518,000 subordinate voting shares issued by Quebecor World Inc. On the same day, Avenue Capital, et al., filed an amendment stating that the number of subordinate voting shares each of them may now be deemed to beneficially own is down to 776,000 shares. Marc Lasry is a managing member of Avenue Capital Management II LP, and Avenue Capital Management II GenPar, LLC. Avenue Capital Management II GenPar is the general partner of Avenue Capital Management II LP. 3. Brandes Investment, et al. Brandes Investment Partners LP, Brandes Investment Partners Inc., Brandes Worldwide Holdings LP, Charles Brandes, Glenn Carlson, and Jeffrey Busy disclosed that each of them may be deemed to beneficially own 9,205,888 shares of Quebecor World Inc.'s common stock. Brandes entities' shares represent 10.82% of the 85,079,000 Quebecor World common shares outstanding as of February 1, 2008. They disclaim any direct ownership of the 9,205,888 shares. Brandes Investment Partners LP, is an investment adviser. Brandes Investment Partners Inc., Brandes Worldwide Holdings LP, Mr. Brandes, Mr. Carlson, and Mr. Busy are control persons of the investment adviser. Mr. Brandes is also the president of Brandes Investment Partners Inc. 4. Phillips, Hager & North Investment Management Ltd. Phillips, Hager & North Investment Management Ltd., disclosed that as of Dec. 31, 2007, his company was deemed to beneficially own 105,300 shares of Quebecor World Inc.'s common stock. Phillips Hager's shares represent 0.12% of the 85,079,000 shares of Quebecor World's common stock outstanding as of Feb. 1, 2008. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. In Canada it has 17 facilities in five provinces, through which it offers a mix of printed products and related value-added services to the Canadian market and internationally. The company is an independent commercial printer in Europe with 19 facilities, operating in Austria, Belgium, Finland, France, Spain, Sweden, Switzerland and the United Kingdom. In March 2007, it sold its facility in Lille, France. Quebecor World (USA) Inc. is its wholly owned subsidiary. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The company has until May 20, 2008, to file a plan of reorganization in the Chapter 11 case. The Debtors' CCAA stay has been extended to May 12, 2008. (Quebecor World Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 13, 2008 Moody's Investors Service assigned a Ba2 rating to the $400 million super priority senior secured revolving term loan facility of Quebecor World Inc. as a Debtor-in-Possession. The related $600 million super priority senior secured term loan was rated Ba3 (together, the DIP facilities). The RTL's better asset value coverage relative to the TL accounts for the ratings' differential. REFCO INC: SEC Sues Ex-CEO Bennett for Orchestrating Fraud ---------------------------------------------------------- The U.S. Securities and Exchange Commission filed on Feb. 19 a civil injunctive action in the United States District Court for the Southern District of New York against Phillip R. Bennett, the former chairman and chief executive officer of Refco Inc. and its corporate predecessor, Refco Group Ltd. The Commission's complaint alleges that Mr. Bennett orchestrated a scheme that periodically concealed hundreds of millions of dollars owed to Refco by a private entity that he controlled. The public revelation of Mr. Bennett's scheme in October 2005, two months after the company's initial public offering of common stock, caused hundreds of millions of dollars in losses to Refco shareholders. The complaint also alleges that Mr. Bennett directed practices that artificially inflated Refco's financial results. As a result, the complaint alleges, Mr. Bennett violated Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5, 13b2-1, and 15d 14, and aided and abetted Refco's violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Exchange Act Rules 15d-2 and 15d-13. According to the complaint, from at least 1998 to October 2005, Mr. Bennett's scheme periodically concealed debt owed to Refco by Refco Group Holdings, Inc., a non-Refco entity that he controlled. The debt was primarily the result of trading losses and operating expenses that Refco transferred over time to RGHI. Refco utilized a series of short-term loans that temporarily transferred the debt to third parties immediately prior to the ends of Refco fiscal periods. A few days after the fiscal periods ended, the transactions were reversed, and the debt was transferred back to RGHI. The Commission's complaint alleges that Mr. Bennett directed the fiscal period-end transactions and took certain actions to implement them, including executing many of the documents used in those transactions. The Commission's complaint also alleges that Mr. Bennett instituted practices that artificially inflated Refco's reported financial results in 2005. The practices involved Refco recording fictitious interest income and income from sham foreign exchange transactions. The inflation of financial results was undertaken by Mr. Bennett to make Refco more attractive to potential investors. The Commission's complaint further alleges that, in 2005, Refco filed with the Commission and provided to investors registration statements and periodic reports that contained materially false and misleading misstatements and omissions. The filings failed to disclose the debt and the period end transactions, and some of the filings reported income that had been fraudulently inflated. Mr. Bennett signed the registrations statements and periodic filings while knowing, or reckless in not knowing, that the filings were materially false and misleading. Moreover, Mr. Bennett explicitly certified the accuracy of the disclosures and financial statements in the periodic filings. The complaint seeks a permanent injunction enjoining Mr. Bennett from violating Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Exchange Act Rules 10b-5, 13b2-1, and 15d 14, and from aiding and abetting violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 15(d) of the Exchange Act and Exchange Act Rules 15d-2 and 15d-13. The complaint also seeks payment by Mr. Bennett of unjust enrichment that he received as a result of his actions, with prejudgment interest thereon, and imposition of civil money penalties against him pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act. The U.S. Attorney's Office for the Southern District of New York announced February 15, that Mr. Bennett has pleaded guilty to all twenty counts of a superseding indictment previously returned against him and charging him with conspiracy, securities fraud, making false filings with the Commission, wire fraud, making false statements to Refco's auditors, bank fraud, and money laundering, for his actions in connection with the Refco fraud. The Commission acknowledged the assistance and cooperation of the Office of the United States Attorney for the Southern District of New York, the United States Postal Inspection Service, and the Commodity Futures Trading Commission. The Commission's investigation is continuing. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets Ltd. and Refco F/X Associates LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Refco Commodity's exclusive period to file a chapter 11 plan expired on Feb. 13, 2007. REFCO INC: Ex-Finance Chief Robert Trosten Admits Fraud Charges --------------------------------------------------------------- Robert Trosten, Refco Inc.'s former chief financial officer, pleaded guilty to charges that includes conspiracy to commit securities fraud, wire fraud, bank fraud, money laundering and making false filings to the U.S. Securities and Exchange Commission, Edith Honan and Paritosh Bansal write for Reuters. "I take full responsibility for my conduct and my actions," Mr. Trosten was quoted by Reuters as saying before Judge Naomi Buchwald of the U.S. District Court for the Southern District of New York." I apologize to my family and those I have harmed by my conduct, which I sincerely and deeply regret." "He deeply regrets his involvement in these fraudulent activities, and is attempting to rectify the misjudgment that he made ... by cooperating with the government," Mr. Trosten's lawyers was quoted by Reuters as saying. Mr. Trosten has agreed to serve as a witness in trials of other defendants in the case as part of his guilty plea, Reuters reports. He previously pleaded not guilty. Mr. Trosten's guilty plea followed a similar move by former Refco CEO Phillip Bennet. Messrs. Bennett and Trosten were set to face trial on March 17, 2008, along with Tone Grant, Refco's former president. Mr. Trosten will appear in court in February 2009. Bennett's Guilty Plea As reported in the Troubled Company Reporter-Europe on Feb. 20, 2008, Bennett pleaded guilty to 20 charges that includes conspiracy to commit securities fraud, wire fraud, bank fraud, money laundering and making false filings to the U.S. Securities and Exchange Commission. Mr. Bennett faces a maximum 315 years in prison under federal sentencing guidelines as well as forfeiture of US$2.4 billion in assets. Mr. Bennett's sentencing is set for May 20, 2008. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its direct and indirect subsidiaries, including Refco Capital Markets Ltd. and Refco F/X Associates LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Refco Commodity's exclusive period to file a chapter 11 plan expired on Feb. 13, 2007. RELIANT ENERGY: Selling Channelview Cogeneration Plant for $468MM ----------------------------------------------------------------- Reliant Energy reached an agreement to sell the Channelview Cogeneration Plant and related contracts to an affiliate of Kelson Energy for $468 million. The transaction is expected to provide value to Reliant Energy for its equity interest in the project well as resolve the bankruptcy proceedings that began in August 2007 when four subsidiaries related to the Channelview plant filed for Chapter 11 bankruptcy protection. Proceeds from the sale will be used to settle: -- the claims of secured creditors, including approximately $379 million of debt, accrued interest and make-whole payments as of Jan. 31, 2008; -- the claims of unsecured creditors, approximately $29 million as of Jan. 31, 2008; and -- a cash-sharing agreement, amount subject to a bankruptcy court ruling. Residual proceeds will be retained by Reliant. The sale is subject to several closing conditions, including the approval of the court overseeing the bankruptcy. The Channelview Cogeneration Plant is an 830-megawatt, combustion turbine-based cogeneration facility located in Channelview, Texas. The plant, which began its commercial operation in 2002, is located approximately 20 miles east of downtown Houston. About Kelson Energy Kelson Energy is an independent power producer engaged in the business of owning and operating electric generating facilities. Kelson owns or leases four combined-cycle gas-fired facilities located in the Southwestern and Southeastern regions of the United States. The comapny has an aggregate total capacity of 4,002 megawatts. About Reliant Energy Inc. Headquartered in Houston, Texas, Reliant Energy Inc. (NYSE: RRI) - http://www.reliant.com/-- provides electricity and energy services to retail and wholesale customers in the United States. In Texas, the company provides service to nearly 1.9 million retail electricity customers, including residential and small business customers and commercial, industrial, governmental and institutional customers. Reliant also serves commercial, industrial, governmental and institutional customers in the PJM, Pennsylvania, New Jersey and Maryland market. The company is an independent power producers in the nation with approximately 16,000 megawatts of power generation capacity across the United States. These strategically located generating assets utilize natural gas, fuel oil and coal. * * * Moody's Investor Service placed Reliant Energy Inc.'s probability of default rating at 'B2' in September 2006. The ratings still hold to date with a stable outlook. RHODES COS: Projected Weak Cash Flow Cues S&P to Junk Corp. Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Rhodes Cos. LLC to 'CCC+' from 'B'. At the same time, S&P lowered its ratings on the company's rated first- and second- lien bank debt. Additionally, S&P placed all of the ratings on CreditWatch with negative implications. The downgrades and CreditWatch listings reflect S&P's expectation that the company's near-term operating cash flow will remain very weak, further constraining this privately held homebuilder and developer's limited liquidity position. Rhodes has not yet announced its fourth-quarter results. Given continued very competitive conditions in Rhodes' Las Vegas housing markets, however, S&P assumes that like most of its rated peers, the company will need to obtain additional covenant relief from its secured bank lenders. Although the company is much smaller and substantially more geographically concentrated than many of its larger, public peers, Rhodes controls a desirable land base in several well-positioned master-planned communities within the metro Las Vegas market. In addition, the company has been aggressively downsizing operations to better match the reduced demand, and it has thus far maintained comparatively healthy margins and experienced lower-than-average cancellation rates. Nonetheless, S&P does not expect market conditions to improve in the near term. Standard & Poor's will review the company's fourth-quarter results once they are available and evaluate any potential revisions to the covenants, terms, and/or conditions of the company's secured bank debt. Ratings Lowered and Placed on CreditWatch Negative Rhodes Cos. LLC Rating ------ To From -- ---- Corporate credit CCC+/Watch Neg/-- B/Negative/-- Secured debt First-lien B/Watch Neg (Recov rtg: 1) BB- (Recov rtg: 1) Second-lien CCC/Watch Neg (Recov rtg: 5) B- (Recov rtg: 5) ROCK-TENN CO: Discloses $200 Mil. Sr. Notes Unregistered Offering ----------------------------------------------------------------- Rock-Tenn Company, in connection with its proposed acquisition of Southern Container Corp., intends to offer, pursuant to Rule 144A and regulation S under the Securities Act of 1933, as amended, an unregistered offering of $200 million aggregate principal amount of senior notes due 2016. The notes will be guaranteed on a senior unsecured basis by all of Rock-Tenn's domestic subsidiaries that guarantee obligations under its amended and restated credit facilities. The notes will rank equally in right of payment with all of Rock-Tenn's existing and future unsecured senior debt and senior in right of payment to all of Rock-Tenn's existing and future subordinated debt. The notes will be effectively subordinated to any of Rock-Tenn's and the guarantors' existing and future secured debt to the extent of the value of the assets securing such debt including all borrowings under the amended and restated credit facilities. The notes will be structurally subordinated to all existing and future liabilities of Rock-Tenn's subsidiaries that do not issue guarantees of the notes. The specific terms of the notes will be determined at pricing. If the notes are not freely tradable without a restrictive legend as of the 365th day after the date the notes are issued, Rock-Tenn will offer to exchange the unregistered notes for substantially identical registered notes. The net proceeds from the offering, together with cash on hand and borrowings under Rock-Tenn's amended and restated credit facilities, will be used to finance the acquisition of Southern Container Corp., to refinance Rock-Tenn's existing senior credit facility, and to pay for fees and expenses incurred in connection with the acquisition and the related transactions. About Rock-Tenn Company Headquartered in Norcross, Georgia, Rock-Tenn Company (NYSE:RKT) - http://www.rocktenn.com/-- manufactures packaging products, paperboard and merchandising displays. The company has annual net sales of approximately $2.3 billion and operating locations in the United States, Canada, Mexico, Chile and Argentina. The company operates in four segments: packaging products, paperboard, merchandising displays, and corrugated packaging. ROCK-TENN: $200 Mil. Loan Increase Won't Affect S&P's BB+ Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that ratings on Rock-Tenn Co. (BB+/Negative/--) are unaffected by the company's announcement that it has increased the commitment under its term loan A by $200 million. The secured loan rating is 'BBB-' (one notch above the 'BB+' corporate credit rating on the company), and the recovery rating of '2' indicates the expectation of substantial (70% to 90%) recovery in the event of a payment default. Although the amount of secured debt in the pro forma capital structure has increased, the expected enterprise value available at projected default continues to yield the expectation of substantial recovery. ROLAND CARTER: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Roland Carter 2626 Lancelot Drive Huntsville, AL 35803 Bankruptcy Case No.: 08-80489 Chapter 11 Petition Date: February 21, 2008 Court: Northern District of Alabama (Decatur) Judge: Jack Caddell Debtor's Counsel: Michael E. Lee, Esq. 200 West Side Square, Suite 803 Huntsville, AL 35801-4816 Tel: (256) 536-8213 Fax: (256) 536-8262 mikeelee@bellsouth.net Estimated Assets: $1,316,525 Estimated Debts: $1,484,879 Debtor's list of its 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ ------------ --------- James Presto Residence located $750,000 10103 McDowling Court at 2626 Lancelot ($564,600 Huntsville, AL 35803 Crive, Huntsville secured) Madison County, Alabama Citi Residential Loan Real Property $171,312 P.O. Box 5926 located at 3504 ($168,000 Carol Stream, IL 60197-5926 Oakwood Avenue, secured) Huntsville, Madison County, Alabama Real Property $68,426 located at 5006 ($67,300 Lori Circle, secured) Huntsville, Madison County, Alabama Americredit 2006 Lincoln $17,377 P.O. Box 78143 Navigator ($15,000 Phoenix, AZ 85062-8143 secured IRS Taxes $12,000 Capital one Unsecured $8,493 Sallie Mae Unsecured $8,447 Home Depot Unsecured $8,000 Mercedez Benz Financial 2002 Mercedes ML 320 $5,325 ($5,000 secured) Alabama Department of Revenue Taxes $3,500 GE Money Bank Furniture $2,010 ($300 secured) J.C. Penney Unsecured $312 Comprehensive Rehab Unsecured $22 SCOTTISH RE: Board Alters Strategies, May Sell Non-Core Assets -------------------------------------------------------------- The Board of Directors of Scottish Re Group Limited determined to alter the company's strategic focus. The change in strategy is a direct response to prevailing market conditions and other business challenges including: * the continuing deterioration in the market for sub-prime and Alt-A residential mortgage-backed securities and the resulting adverse impact this has had, and will likely continue to have, on the company's consolidated investment portfolio; * the ratings action taken by Standard & Poor's on Jan. 31, 2008 lowering the financial strength ratings of the company's operating subsidiaries from BB+ to BB (marginal) and placing the ratings on CreditWatch with negative implications, as well as the negative outlook placed on the company's financial strength ratings by other rating agencies, with the resulting material negative impact on the company's ability to achieve its goal of an A- or better rating by the middle of 2009; and * the material negative impact of ratings declines and negative outlooks by rating agencies on the company's ability to grow its life reinsurance businesses and maintain its core competitive capabilities. In light of these circumstances, the Board instructed management to prepare an assessment of the various strategic alternatives that might be available to the company to maximize shareholder value. In that regard, on Jan. 21, 2008 the Board established a Special Committee of the Board to evaluate the alternatives developed by management. The Special Committee does not include any Board members designated for election by SRGL Acquisition, LDC (an affiliate of Cerberus Capital Management, L.P.) nor MassMutual Capital Partners LLC (or their affiliates), who together are the Company's majority shareholders. The Special Committee engaged a financial advisor and legal counsel to assist in their evaluation process. Subsequent to various meetings and upon careful consideration, the Special Committee recommended to the Board, at its regularly scheduled meeting on Feb. 21, 2008, to accept management's revised business strategy. The Board unanimously adopted the Special Committee's recommendations and the company will now actively pursue these key strategies: * pursue dispositions of the company's non-core assets or lines of business, including the International Life Reinsurance segment and the Wealth Management business; * develop, through strategic alliances or other means, opportunities to maximize the value of the company's core competitive capabilities within the North American Life Reinsurance segment, including mortality assessment and treaty administration; and * rationalize the company's cost structure to preserve capital and liquidity. There can be no assurance that any of these key strategies will be successful and each of them may be subject to review by insurance regulators. The company will report further developments regarding any strategic actions only as circumstances warrant. As a result of the decision by the Board to pursue the revised strategies and in recognition of the change in the company's circumstances and the impact thereof on the company's growth prospects, the company has established a retention program for certain essential employees that provides financial incentives to remain with the company. About Scottish Re Scottish Re Group Ltd. -- http://www.scottishre.com/-- is a global life reinsurance specialist. Scottish Re has operating businesses in Bermuda, Grand Cayman, Guernsey, Ireland, the United Kingdom, United States, and Singapore. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re (US), Inc. Scottish Re Capital Markets, Inc., a member of Scottish Re Group Ltd., is a registered broker dealer that specializes in securitization of life insurance assets and liabilities. SCOTTISH RE: S&P's 'B' Rating Unaffected by New Strategic Focus --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings and CreditWatch negative status on Scottish Re Group Ltd. (B/Watch Neg/--) and related entities were not affected by the company's announcement of a new strategic focus recognizing its deteriorated financial strength. On Jan. 31, 2008, Standard & Poor's lowered its ratings on Scottish Re and placed them on CreditWatch with negative implications because of the company's continuing exposure to increasing investment losses and meaningful risk of losing some reserve credits secured through Ballantyne Re plc. These concerns are not affected by the company's announcement. As previously stated, Standard & Poor's will resolve the CreditWatch when it completes the process of refining its view of expected losses and assesses the risk of the company incurring loss of reserve credits. If and when the company disposes of certain lines of business, the proceeds would likely provide only a modest offset to the erosion of capital caused by its investments in subprime and Alt-A MBS. In addition, in Standard & Poor's recent action, it noted that the "deterioration in the company's financial condition has severely disrupted Scottish Re's ability to generate new [insurance] business&." This observation anticipated the company's prospective focus on leveraging its non-risk-taking competencies to drive shareholder value. SCOTTISH RE: Change in Strategic Focus Cues Fitch to Cut Ratings ---------------------------------------------------------------- Fitch Ratings has downgraded Scottish Re Group Limited's Issuer Default Rating to 'B' from 'BB-' and the Insurer Financial Strength ratings of its primary operating subsidiaries to 'BB' from 'BBB-'. All ratings have been placed on Rating Watch Negative with the exception of Scottish Re Limited which has been placed on Rating Watch Evolving. The actions follow SCT's announcement of a change in strategic focus. The downgrades reflect Fitch's heightened concern over continued subprime losses in the consolidated investment portfolio, uncertainty over the SCT's strategic direction and the potential impact to the Reg. XXX securitization structures. In addition, the ratings of the holding company and the U.S. operating companies have been placed on Rating Watch Negative. The IFS rating of Scottish Re Limited has been placed on Rating Watch Evolving reflecting SCT plans to pursue a disposition of that business. The resolution of the Rating Watch will depend on the success of that pursuit and the financial strength of a potential buyer. Fitch has downgraded and placed these ratings on Rating Watch Negative: Scottish Re Group Ltd. -- IDR to 'B' from 'BB-'; -- 7.25% non-cumulative perpetual preferred stock to 'CCC+/RR6' from 'B/RR6'. Scottish Annuity & Life Insurance Company (Cayman) Limited -- IFS rating to 'BB' from 'BBB-'. Scottish Re (U.S.) Inc. -- IFS rating to 'BB' from 'BBB-'. Stingray Pass-Through Trust -- $325 million 5.902% collateral facility securities due Jan. 12, 2015 to 'BB' from 'BBB-'. Fitch has downgraded and placed this rating on Rating Watch Evolving: Scottish Re Limited -- IFS rating to 'BB' from 'BBB-'. SHARPER IMAGE: Common Stock Delisted From the NASDAQ Stock Market ----------------------------------------------------------------- Sharper Image Corporation received notification on February 20, 2008, from the NASDAQ Stock Market indicating that the staff of the NASDAQ Stock Market had determined, in accordance with NASDAQ Marketplace Rules 4300, 4450(f) and IM-4300, that the company's common stock should be delisted from the NASDAQ Stock Market in light of the company's filing for protection under Chapter 11 of the U.S. Bankruptcy Code and concerns about the residual equity interest of the existing listed securities holders and the company's ability to sustain compliance with all of NASDAQ's listing requirements. Trading in the company's common stock will be suspended at the opening of business on February 29, 2008 unless the company requests an appeal of NASDAQ's delisting decision. The company does not intend to appeal NASDAQ's delisting decision and expects that its common stock may continue to trade on the over the counter market following February 28, 2008. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of$251,500,000 and total debts of $199,000,000. (Sharper Image Bankruptcy News Issue No. 3, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Asks Court to Obtain $60MM of DIP Financing ---------------------------------------------------------- Sharper Image Corp. seeks to obtain up to $60,000,000 of debtor- in-possession financing from Wells Fargo Retail Finance, LLC, as the arranger and administrative agent for the DIP Lenders. Proposed counsel for the Debtor, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, asserts that Wells Fargo's proposal is desirable because it permits the Debtor to secure necessary postpetition financing to continue operations. Wells Fargo is the agent for the Debtor's prepetition lenders. The proceeds of the DIP Facility, net of any amounts used to pay fees, costs and expenses under the DIP Credit Agreement, will be used, solely for: (a) working capital and general corporate purposes, (b) payment of costs of administration of the Case, (c) all prepetition letters of credit issued under the Prepetition Financing Agreements will be deemed issued under the DIP Credit Agreement, and (d) payment in full of the Prepetition Debt. The Debtor and Wells Fargo have agreed on a budget projecting cash flow for 13 weeks. On a weekly basis, the Debtor will provide to Wells Fargo an updated budget. The Debtor believes that the Budget is achievable and will allow it to operate and pay its postpetition obligations as they mature. A full-text copy of the 13-week budget is available for free at http://bankrupt.com/misc/SI13WeekBudget.pdf Pending entry of a final order authorizing the DIP Financing Agreement, the U.S. Bankruptcy Court in Delaware authorizes the Debtor -- at its behest -- and on an interim basis, to borrow up to $35,000,000 pursuant to the terms of the DIP Financing Agreement. DIP Terms The salient terms of the DIP Agreement are: (1) The maximum amount available to the Debtor under the senior revolving credit facility is $60,000,000, with a sublimit for letters of credit up to $10,000,000. (2) During the term of the DIP Financing Agreement, each Postpetition Lender agrees to make revolving advances to the Debtor in an amount at anyone time outstanding not to exceed the Postpetition Lender's Pro Rata Share of any amount equal to the lesser of (i) (a) until entry of the Final DIP Order, $35,000,000, and (b) after entry of the Final DIP Order, $60,000,000 less the the aggregate undrawn amount of all outstanding Letters of Credit, or (ii) the Borrowing Base less the Adjusted Letter of Credit Usage. (3) All Obligations, except for undrawn Letters of Credit and Bank Product Obligations, that have been charged to the Loan Account will bear interest on the Daily Balance at a per annum rate equal to the Base Rate plus the Applicable Margin. For purposes of the DIP Financing Agreement, the term "Applicable Margin" means (a) with respect to the FILO Advance, 4.50% per annum, and (b) with respect to all other Loans and Obligations, 1.50% per annum. Bank Product Obligations refer to all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Debtor to Wells Fargo or any of its affiliates. (4) All (i) DIP Obligations of the Debtor to the DIP Lenders will be immediately due and payable, and (ii) authority to use the proceeds of the DIP Financing Agreements and to use cash collateral will cease, both on the date that is the earliest to occur of: (a) August 20, 2008; (b) the date on which the maturity of the Obligations is accelerated and the Commitments are irrevocably terminated in accordance with the DIP Credit Agreement; (c) the failure of the Debtor to obtain a Final Borrowing Order on or before the date which is 30 days after the effective date of the DIP Financing Agreement; or (d) the date of substantial consummation of a plan of reorganization confirmed by a final order. (5) The Debtor will pay the fees -- including a closing fee and a monthly service fee -- as and when due and payable under its terms and, on the first day of each month during the term of the DIP Financing Agreement, an unused line fee in an amount equal to 0.25% per annum times the result of (i) the Maximum Revolver Amount at such time, less (ii) the sum of (a) the average Daily Balance of Revolving Advances that were outstanding during the immediately preceding month, plus (b) the average Daily Balance of the Letter of Credit Usage during the immediately preceding month. The Debtor must pay a prepayment premium in the amount of $525,000 if all Obligations and all Prepetition Obligations are paid and all Commitments are terminated after the date that is 30 days after the Petition Date. A full-text copy of the DIP Credit Agreement is available for free at http://bankrupt.com/misc/SIDIPFinancingPact.pdf The Court will convene a hearing on March 7, 2008, to consider final approval of the Debtor's DIP Financing request. Objections are due February 29. The DIP Agent is represented by David S. Berman, Esq., at Riemer & Braunstein LLP. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of$251,500,000 and total debts of $199,000,000. (Sharper Image Bankruptcy News Issue No. 2, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Court Authorizes Firm to Use Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court in Delaware granted Sharper Image Corp.'s request to use cash collateral of its pre-bankruptcy secured lenders. As of the company's bankruptcy filing on Feb. 19, the Debtor is a party to a Loan and Security Agreement dated October 31, 2003, with Wells Fargo, as lender, arranger, and administrative agent, and the lenders party. The Prepetition Credit Agreement provides for a revolving credit facility and letter of credit subfacility against a "borrowing base" determined by inventory levels and specified accounts receivable in the maximum aggregate amount of the lesser of: (a) $85,000,000 during the period from January 1 through July 31 of each year; (b) $100,000,000 during the period from August 1 through September 30 of each year; (c) $120,000,000 during the period from October 1 through December 31 of each year; and (d) the borrowing base. The Prepetition Credit Agreement also provides for a term loan facility in the amount of $10,000,000, which was made immediately available, with an additional $10,000,000 to be available upon the successful completion of syndication of the term loan. The contemplated syndication did not occur. The amounts borrowed under the Prepetition Credit Agreement were used to fund, among other things, working capital requirements. As of the Petition Date, approximately $44,500,000 is outstanding under the Prepetition Credit Agreement. Pursuant to the Prepetition Credit Agreement, the Debtor granted first priority liens and security interests in favor of the Prepetition Secured Parties in the Debtor's then owned or thereafter acquired right, title, and interest in and to, among others, each of these assets: (i) Accounts, (ii) Books, (iii) Deposit Accounts, (iv) Equipment, (v) General Intangibles, (vi) Goods, (vii) Inventory, (viii) Investment Property, (ix) Negotiable Collateral, (x) Commercial Tort Claims, (xi) Leasehold Interests, (xii) money or other assets of Sharper Image, and (xiii) the proceeds and products of any of the assets. To address its working capital needs and fund its reorganization efforts, the Debtor sought and obtained the Court's permission, on an interim basis, to use the cash collateral of the Prepetition Secured Parties. The use of Cash Collateral will provide the Debtor with the additional necessary capital with which to operate its business, pay its employees, maximize value, and pursue reorganization under Chapter 11. Proposed counsel for the Debtor, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, informs the Court that the Prepetition Secured Parties have consented to the Debtor's use of Cash Collateral in the ordinary course of business in accordance with a budget, subject to the adequate protection liens and payments and the other terms and conditions. The Prepetition Secured Parties have requested and are entitled, pursuant to Sections 361 and 363(e) of the Bankruptcy Code, to adequate protection of their interests in collateral under the Prepetition Credit Agreement to the extent that there is a diminution in the value of the collateral from and after the Petition Date, Mr. Kortanek explains. As adequate protection for any diminution in value, the Prepetition Secured Parties will be granted additional and replacement security interests and liens in the Collateral in and upon all existing and after acquired real and personal, tangible and intangible, assets of the Debtor. The Collateral will not include any proceeds of bankruptcy recoveries under Chapter 5 of the Bankruptcy Code, other than proceeds of any avoidance action brought pursuant to Section 549 of the Bankruptcy Code, Mr. Kortanek says. The Replacement Liens will be junior only to the liens granted to the DIP lenders and Wells Fargo Retail Finance, LLC, as the arranger and administrative agent for the DIP Lenders; the Carve- Out; and liens permitted by the Prepetition Financing Agreement. The Replacement Liens are and will be valid, perfected, enforceable, and effective as of February 20, 2008, without any further action by the parties and without the necessity of the execution by the Debtor of mortgages, security agreements, pledge agreements, financing statements, or other agreements. In addition to the Replacement Liens, the Debtor will grant or pay the Prepetition Secured Parties, among other things, as adequate protection: (a) an allowed superpriority administrative claim, which will have priority -- except with respect to the DIP Liens, the DIP Superpriority Claim, the Replacement Liens, the Carve-Out, and the Permitted Prior Liens -- under Sections 364(c)(l), 503(b), and 507(b) of the Bankruptcy Code, and otherwise over all administrative expense claims and unsecured claims against the Debtor and its estate, now existing or arising, of any kind or nature whatsoever; (b) repayment of the principal amount of the Prepetition Debt in accordance with the DIP Orders; and (c) payments in the amount of non-default interest, fees, and expenses with respect to the Prepetition Debt in accordance with the Prepetition Financing Agreements. These claims are to be granted and the payments are to be made to the Prepetition Secured Parties because, among other things, the Prepetition Credit Facility will be primed and the Debtor will continue to use the Cash Collateral and other collateral under the Prepetition Credit Agreement in the Debtor's ongoing operations until the entry of the Final DIP Order. At that time, the prepetition debt will be satisfied by the proceeds of the DIP Financing Agreement. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of$251,500,000 and total debts of $199,000,000. (Sharper Image Bankruptcy News Issue No. 2, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Allowed to Continue Workers' Compensation Program ---------------------------------------------------------------- The U.S. Bankruptcy Court in Delaware granted Sharper Image Corp.'s request to maintain its workers' compensation program. In the course of its business operations, the Debtor maintained a workers' compensation program with Chubb/Federal Insurance Company. Renewed annually on April 1, the Workers' Compensation Program provides coverage for claims arising from the Debtor's employees based in the United States. Under the Debtor's Workers' Compensation Program, of which there are 110 open workers' compensation claims: -- the Debtor pays to Chubb an annual premium that is calculated based on the Debtor's projected payroll and historic loss rates; -- the Debtor is responsible for paying a deductible totaling $150,000 per claim asserted; and -- Chubb is obligated to pay the balance of the claim amount above the Workers' Compensation Deductible, of up to $1,000,000 per claim. At the conclusion of each policy year, Chubb conducts an audit of the Debtor's payroll records and issues a premium adjustment based on the difference between the Debtor's projected and annual payroll for the previous year. The Debtor believes it may have outstanding liability for $75,000, on account of the Workers' Compensation Claims, proposed counsel for the Debtors, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, says. The Debtor also maintains various liability, product, and property-related insurance programs, which provide insurance coverage for liabilities relating to, among other things, personal injuries, crime, directors' and officers' liability. The Debtor is required to pay premiums under the Liability, Product, and Property Insurance Programs aggregating $1,781,524, annually, a portion of which the Debtor finances through AIC Imperial Credit Companies. As of the Petition Date, the Debtor's total financed outstanding Insurance Premiums totaled approximately $458,652, and its total outstanding non-financed totals approximately $138,568. The Debtor estimates that no more than $275,000 in the aggregate is currently owned for Insurance Deductibles with respect to claims relating to the period prior to the Petition Date. According to the Mr. Kortanek, the continuation of its Insurance Programs is essential to the ongoing operation of the Debtor's business. Furthermore, applicable state law also mandates that the Debtor maintains a workers' compensation coverage for its employees. Accordingly, the Debtor sought and obtained the Court's permission to maintain its Insurance Programs without interruption. The Court authorized the Debtor to pay, in its sole discretion, all premiums, claims, deductibles, excess, retrospective adjustments, administrative fees, and all other obligations arising under the Insurance Program, for an amount not exceeding $950,000. Judge Kevin Gross also ordered that, to the extent any of the Debtor's employees hold claims under the Debtor's Workers' Compensation Programs, these employees are authorized, at the Debtor's direction, to proceed with their workers' compensation claims in the appropriate judicial or administrative forum under the Workers' Compensation Program. The Court authorized Wells Fargo Retain Finance, LLC to receive, process, honor and pay checks related to the Insurance Obligations. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of$251,500,000 and total debts of $199,000,000. (Sharper Image Bankruptcy News Issue No. 2, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHARPER IMAGE: Section 341 Meeting of Creditors Set for March 19 ---------------------------------------------------------------- Kelly Beaudin Stapleton, U.S. Trustee for Region 3, will convene a meeting of the creditors of Sharper Image Corp. at 10:00 a.m., on March 19, 2008, at Room 2112, J. Caleb Boggs Federal Building, 2nd Floor, on Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtor's bankruptcy cases. Attendance by the Debtor's creditors at the meeting is welcome, but not required. The Sec. 341(a) meeting offers the creditors a one-time opportunity to examine the Debtor's representative under oath about the Debtor's financial affairs and operations that would be of interest to the general body of creditors. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of$251,500,000 and total debts of $199,000,000. (Sharper Image Bankruptcy News Issue No. 2, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). SHILOH INDUSTRIES: Earns $1.6MM for 2008 First Qtr. Ended Jan. 31 ----------------------------------------------------------------- Shiloh Industries Inc. reported increased net earnings for the first quarter ended Jan. 31, 2008 of $1.6 million as compared to the first quarter of 2007 net earnings of $1.5 million. Sales for the first quarter ended Jan. 31, 2008 were $134.9 million, which decreased 8.6% from $147.6 million in the first quarter of fiscal 2007. Sales in the quarter are consistent with the reduction in production volumes of the company's largest automotive customers' production volumes and an approximate 50% decrease in production in the heavy-duty truck industry. For the first quarter of fiscal 2008, the company reported operating income of $3.8 million or 2.8% of sales, compared to $4.0 million or 2.7% of sales in the first quarter of fiscal 2007. The decrease in the operating income dollars with an increase in the operating income percentage is a reflection of the lower sales volumes offset by improvements in productivity and structural cost reductions related to reduced production volumes and the closure of the Cleveland Stamping facility. Interest expense decreased by over $400,000 from the prior year due to lower debt levels and lower average borrowing rates as compared to the prior year. "As expected, our first quarter of fiscal year 2008 has been challenging with automotive industry related decreases in production in response to general uneasiness of consumer spending patterns," Theodore K. Zampetis, president and chief executive officer, said. "The implementation of our capacity rationalization program along with our alignment of costs to anticipated customer requirements has helped us to offset the effect of reduced production volumes and improve profitability during the first quarter." "We continue to evaluate our capacity rationalization program to improve our capital and operational efficiencies," Mr. Zampetis continued. "Combined with our continuous analysis of the markets we serve and seek to expand, we continue to pursue new business development opportunities." "During the quarter," Mr. Zampetis added. "Shiloh reinvested approximately $1.7 million in capital assets to support existing and new customer programs and improve operational efficiency." "At the same time, we were able to further reduce total debt by $6.1 million during the quarter, giving us an ending debt balance of $70 million," Mr. Zampetis went on to say. "Our focus into 2008 remains on product quality, cost and delivery." "We are continuing to monitor our customers' production schedules closely so that we can respond accordingly," Mr. Zampetis concluded. "We are also maintaining our focus on working capital management in order to generate positive cash flow for future investments, continued debt reduction, and value creation for our shareholders." About Shiloh Industries Headquartered in Wilmington, Detroit, Shiloh Industries Inc. (NASDAQ:SHLO) -- http://www.shiloh.com-- manufactures first operation blanks, engineered welded blanks, complex stampings and modular assemblies for the automotive, heavy truck and other industrial markets. In addition, Shiloh is a designer and engineer of precision tools and dies, and welding and assembly equipment for use in its blanking and stamping operations, as well as for sale to original equipment manufacturers, Tier I automotive suppliers and other industrial customers. The company's largest customer is General Motors Corporation. * * * Shiloh Industries continues to carry Moody's Investors Service's 'Ba2' bank loan debt rating and 'B1' probability of default rating, assigned on September, 2006. SIRVA INC: U.S. Trustee Appoints Committee of Unsecured Creditors ----------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, appoints five creditors to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Sirva Inc. and its debtor-affiliates: 1. Owner Operator Independent Drivers Association INW OOIDA Drive Grain Valley, Missouri 64029 Attn: James Johnston Tel: (800)444-5791 2. Natalie Hutt c/o Mark C. Tanenbaum, Esq. 241-243 East Bay Street Charleston, South Carolina 24913-0757 Tel: (843)577-5100 3. AboveNet Communication Inc. as a member of and on behalf of The Official Committee of Unsecured of 360networks (USA) Inc. et al., on behalf of itself and 360networks (USA) Inc. and 360fiber Inc. and their debtor subsidiaries c/o AboveNet Communications, Inc. 360 Hamilton Avenue White Plains, New York 10601 Attn: Lisa Gugliada 4. Team relocations Limited Drury Way, London NW10 OJN, United Kingdom Attn: Timothy Romer 5. Beltmann Group Incorporated 2480 Long Lake Road Roseville, Minnesota 55113 Attn: Dann W. Battina Tel: (651)639-2989 About SIRVA Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. When the Debtors filed for bankruptcy, it reported total assets of $924,457,299 and total debts of $1,232,566,813 for the quarter ended Sept. 30, 2007. (Sirva Inc. Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIRVA INC: Proposed Conflicts Firm Rebuts U.S. Trustee's Objection ------------------------------------------------------------------ Togut Segal & Segal LLP, the firm that Sirva Inc. and its debtor- affiliates propose to hire as conflicts counsel, responds to the objection raised by the U.S. Trustee for Region 2. As reported in the Troubled Company Reporter on Feb. 13, 2008, the Debtors propose that Togut Segal will perform services on matters that the Debtors may encounter which are not appropriately handled by Kirkland & Ellis LLP, the Debtors' proposed counsel, and other professionals because of a potential conflict of interest or, alternatively, which can be more efficiently handled by the firm. Eryk J. Spytek, senior vice president, general counsel and secretary of SIRVA, clarifies that Togut Segal will not perform the usual scope of services, other than to maintain a familiarity with the case and progress of the Debtors' reorganization. In the event there is a conflict of interest requiring immediate attention, the firm is able to assume its duties without impeding the progress of the bankruptcy case. As reported in the Troubled Company Reporter on Feb. 15, 2008, the U.S. Trustee for Region 2 objected to the employment of Togut Segal & Segal as conflicts counsel. "[T]he Debtors have not disclosed any conflicts necessitating the employment of conflicts counsel," Diana G. Adams, United States Trustee for Region 2, tells the Court. Togut Segal & Segal seeks to perform services upon the approval of its retention, which at this juncture would solely be to enable to stay ahead of the learning curve to obviate the need for them to come up to speed later in the case if an actual conflict is disclosed, Paul K. Schwartzberg, Esq., trial attorney for the U.S. Trustee, says. Mr. Schwartzberg argues that the determinative question in approving the employment of a professional is whether it is reasonably necessary to have that professional employed. Togut Disagrees with U.S. Trustee Albert Togut, Esq., senior member of Togut, Segal & Segal, tells Judge James M. Peck that a conflicts counsel is necessary to satisfy the requirements of Section 327(a) of the Bankruptcy Code, providing for the disinterestedness of the Debtors' general bankruptcy counsel. Mr. Togut says it can be a challenge for Kirkland & Ellis which has 1,400 lawyers, offices in Chicago, New York, Washington, D.C., Los Angeles, San Francisco, London, Munich and Hong Kong, more than $1,000,000,000 in revenues, and every kind of client. Mr. Togut pointed out that since the Debtors have 60,000 creditors, 3,200 employees, 50 subsidiaries, and more than $4,000,000,000 in revenues, it is possible that prior to confirmation, there can be a conflict between these complex business structures. The purpose of conflicts counsel, Mr. Togut explains, is recognized as necessary "to ensure the integrity of these highly complex reorganization cases, especially where there is a mega- debtor, and a mega-lawfirm as its counsel." Togut Segal specializes in being conflicts counsel, and have no regular retainers, Mr. Togut adds. The existence of a conflicts counsel avoids any arguments that the Debtors' counsel is favoring one of its regular clients over the interests of the estate, Mr. Togut relates, citing In re Oneida Ltd., et al., 06-10489 (ALG). According to Mr. Togut, bringing the conflicts counsel into the case in the beginning allows it to familiarize with the contested matters especially in multi-billion dollar, fast-track cases. It will also be cost-effective, since the Debtors can rely on the conflicts counsel's judgment on what to do, when to do it, and how much effort needs to be expended as the case unfolds. In addition, the Debtors have agreed that the Togut Segal's fees and expenses should not be subject to any terms or conditions other than as provided in their agreement, and in accordance with the Bankruptcy Code and Bankruptcy Rules, Mr. Togut insists, and the U.S. Trustee's judgment should not substitute for the Debtors' business judgment. Mr. Togut maintains that Togut Segal intends to provide irreducible minimum services, and will not "duplicate Kirkland's fine efforts." About SIRVA Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, it reported total assets of $924,457,299 and total debts of $1,232,566,813 for the quarter ended Sept. 30, 2007. (Sirva Inc. Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIRVA INC: 360networks Committee Wants Claims Order Vacated ----------------------------------------------------------- The Official Committee of Unsecured Creditors of 360networks (USA) Inc. and its debtor-subsidiaries asks the U.S. Bankruptcy Court for the Southern District of New York to reconsider its order authorizing the payment of Sirva Inc.'s and its debtor- affiliates' pre-bankruptcy filing unsecured claims dated Feb. 5, 2008, pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure. The 360networks Committee holds an unliquidated claim against Debtor SIRVA Relocation LLC resulting from an action captioned "The Official Committee of Unsecured Creditors of 360networks (USA) Inc., et al. v. U.S. Relocation Services, Inc.," Adv. Pro. No. 03-03127 (ALG), pending before Judge Allan L. Gropper before the United States Bankruptcy Court for the Southern District of New York. In the Preference Action before Judge Gropper, the 360networks Committee, on behalf of itself and 360networks (USA), Inc., and 360fiber Inc. and their debtor subsidiaries, are seeking the avoidance, recovery and return, from U.S. Relocation Services, Inc. -- now known as SIRVA Relocation LLC -- of $1,863,014 in preferential transfers made by 360 to U.S. Relocation, plus prejudgment interest at the highest applicable rate from March 26, 2002, plus sanctions in connection with counsel for U.S. Relocation's conduct in defending the Preference Action, for a total claim against U.S. Relocation estimated to be in the excess of $2,200,000. The Preference Action, prior to it being stayed by the commencement of the bankruptcy proceedings, had been sub judice with Judge Gropper on fully-briefed cross motions for summary judgment. Norman N. Kinel, Esq., at Dreier LLP in New York, asserts that the Debtors' proposed treatment of unsecured creditors is discriminatory and impermissible under applicable law. The Debtors propose, in their Plan of Reorganization dated Jan. 28, 2008, that in the two classes of unsecured creditors -- one will receive a 100% distribution, and the other will receive no distribution. Mr. Kinel explains that although debtors are permitted to pay unsecured prepetition debts to critical vendors, the relief sought and obtained by the Debtors in the Prepetition Claims Order classifies an open-ended category of creditors as critical, without adequate basis. Moreover, the Prepetition Claims Order was entered without due notice to the parties-in-interest that are adversely affected, including the 360networks Committee, depriving them of the opportunity to object or be heard, Mr. Kinel states. "[T]he 360networks Committee is not even listed as a creditor in the Debtors' list of thirty (30) largest creditors attached to their petitions, even though the 360networks Committee is in fact one of the 10 largest creditors of the Debtors, notwithstanding that such claim is presently unliquidated," Mr. Kinel maintains. About SIRVA Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, it reported total assets of $924,457,299 and total debts of $1,232,566,813 for the quarter ended Sept. 30, 2007. (Sirva Inc. Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SMART MODULAR: To Purchase Adtron Corporation for $20 Million Cash ------------------------------------------------------------------ SMART Modular Technologies (WWH) Inc. signed a definitive agreement to acquire privately held Adtron Corporation. Under the terms of the agreement, this all cash transaction is valued at approximately $20 million with up to an additional $15 million should certain calendar year 2008 financial and operational performance goals be achieved. The acquisition has been approved by the boards of directors of both companies, and was expected to close on or about Feb. 15, 2008. "SMART has long discussed our goal to expand our non-DRAM business, and this transaction is a next logical step in building for future growth," Iain MacKenzie, president and chief executive officer of SMART. "The addition of Adtron's technical expertise, product family, and customer base to SMART will complement SMART's existing SSD business and provide a path to a more robust set of solutions to address the fast-growing SSD market." "Taking into account Adtron's products and technologies, our aggregate SSD TAM expands to $3 billion," Mr. MacKenzie added. "Adtron will now have the ability to leverage SMART's size, scale and customer base to grow more aggressively. Together, we will meet a wider set of customer needs and have a significantly greater opportunity to grow into new markets such as the Enterprise Storage SSD market." About Adtron Corporation Headquartered in Phoenix, Arizona, Adtron Corporation -- http://www.adtron.com/-- is a designer and supplier of high performance and high capacity solid state flash disk drives. It markets to customers in the aerospace and defense, industrial automation, medical, telecommunications, and transportation industries. Its devices can be found in diverse settings as spacecraft and semiconductor equipment machinery. Adtron was established in 1985 by founder and chairman Alan Fitzgerald. About SMART Modular Fremont, Calif.-based SMART Modular Technologies (WWH) Inc. (Nasdaq: SMOD) -- http://www.smartm.com/-- is an independent designer, manufacturer and supplier of electronic subsystems to original equipment manufacturers. SMART offers more than 500 standard and custom products to OEMs engaged in the computer, industrial, networking, gaming, telecommunications, and embedded application markets. * * * Moody's Investor Service placed SMART Modular Technologies (WWH) Inc.'s long term corporate family and probability of default ratings at 'B1' in January 2008. SOLOMON TECH: Inks Amendment and Waiver Agreement on Debentures --------------------------------------------------------------- On Feb. 15, 2008, Solomon Technologies Inc. entered into an Amendment and Waiver Agreement with each of Truk Opportunity Fund LLC, Truk International Fund LP and Shelter Island Opportunity Fund, LLC with respect to the company's Variable Rate Self- Liquidating Senior Secured Convertible Debentures due April 17, 2009. Each Fund is a holder of Debentures. Under the agreement, the company agreed to issue to the three Funds an aggregate of 1,077,791 shares of common stock, par value $.001 per share, in satisfaction of the redemption payments due to the three Funds on Feb. 1, 2008. To induce each of the Funds to enter into the Agreement, the company also agreed to issue to them an aggregate of 350,000 restricted shares of common stock. The three Funds also agreed to extend the due date of the Debentures by one month and to defer the monthly redemptions for January and March 2008 until May 2009. On Feb. 15, 2008, the company also issued an aggregate of 931,821 shares of common stock to true-up the Feb. 1, 2008 redemption payments previously made for seven holders of Debentures in accordance with the provisions of Section 6 thereof. On Feb. 15, 2008, pursuant to notice previously given in accordance with the terms of the Debentures, the company issued an aggregate of 2,464,776 shares of common stock to ten of the Debentures holders as pre-redemption payments for the monthly redemption of the Debentures due on March 1, 2008. On Feb. 14, 2008, the company issued to Richard A. Fisher 53,944 restricted shares of common stock in payment for services provided as corporate counsel to the company. About Solomon Technologies Tarpon Springs, Florida Solomon Technologies Inc. (OTC BB: SOLM.OB) http://www.solomontechnologies.com/ -- through its Motive Power and Power Electronics divisions, develops, licenses, manufactures and sells precision electric power drive systems. * * * At Sept. 30, 2007, the company had total assets of $11,789,312 and total liabilities of $15,636,933, resulting in a $3,847,621 total stockholders' deficit. SOLUTIA INC: Gets Exit Financing from Lenders; To Emerge Thursday ----------------------------------------------------------------- Solutia Inc. and its debtor-affiliates have reached an agreement with Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. to fund Solutia's exit financing package and has scheduled a closing date on Feb. 28, 2008, at which time Solutia's plan of reorganization will become effective and the company will emerge from Chapter 11. "We are extremely pleased to have reached an agreement on the exit financing package that will result in Solutia's emergence from Chapter 11," said Jeffry N. Quinn, chairman, president and CEO of Solutia Inc. "Importantly, this agreement enables Solutia to emerge with the plan of reorganization intact, providing significant recoveries for our stakeholders and providing a firm foundation for Solutia's future success." Under the terms of the revised exit financing package, the banks have agreed to waive the market material adverse change provision that was contained within the original loan commitment documents and increase the size of the senior secured asset-based revolving credit facility from $400 million to $450 million. The banks will provide a $1.2 billion senior secured term loan facility at LIBOR plus 500 basis points with a minimum LIBOR floor of 350 basis points for the first four years. Additionally, the exit financing package includes a $400 million senior unsecured bridge facility. The total cost of the financing, as well as the available liquidity of the company, is substantially consistent with the projections that were included in the disclosure statement previously approved by the U.S. Bankruptcy Court for the Southern District of New York. Solutia has also agreed to dismiss the lawsuit, with prejudice, that it filed on Feb. 6, 2008 against the banks once the exit financing is funded. The parties have agreed to request that the Court authorize the parties to enter into the revised exit financing package and find that the revisions are substantially consistent with the order confirming the company's plan of reorganization that was previously approved by the court on Nov. 29, 2007. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ)(NYSE:SOA- WI) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. SPACEHAB INC: Stock Purchase Deal with Lanphier, Bruce Fund Ends ---------------------------------------------------------------- On Feb. 19, 2008, the Stock Purchase Agreement among SPACEHAB Incorporated, and Lanphier Capital Management Inc. and Bruce Fund Inc. dated Feb. 11, 2008, terminated. The purchase of the Series D convertible preferred stock under the Stock Purchase Agreement was contingent upon the company's receipt of an award of a Space Act Agreement of not less than $120 million under NASA's Commercial Orbital Transportation Services Demonstration Program. On Feb. 19, 2008, NASA disclosed that the company would not receive an award under this program. As disclosed by the company on Feb. 12, 2008, SPACEHAB Incorporated entered into a Stock Purchase Agreement with certain investors for the purchase of 55,000 shares of the company's Series D convertible preferred stock for a total price of $5.5 million. About SPACEHAB Incorporated Headquartered in Webster, Texas, SPACEHAB Inc. (NASDAQ: SPAB) -- http://www.spacehab.com/-- offers space access and payload integration services, production of valuable commercial products in space, spacecraft pre-launch processing facilities and services, development and extension of space-based products to the consumer market, and program and engineering support ranging from development and manufacturing of flight hardware to large scale government project management. Going Concern Doubt PMB Helin Donovan LLP in Houston, Texas, expressed substantial doubt about Spacehab Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm reported that the company has sustained recurring losses and negative cash flow from operations. SPECIALIZED QUALITY: Case Summary & 76 Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: Specialized Quality Vending, L.P. 2701 Cold Springs Road Fort Worth, TX 76106 Bankruptcy Case No.: 08-40784 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- M.M. Vending Acquisition, Inc. 08-40786 Vending Distributors of D.F.W., Inc. 08-40788 M-C Vending Co., Inc. 08-40789 Type of Business: The Debtors install vending machine and provide related services. Chapter 11 Petition Date: February 22, 2008 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtors' Counsel: Joseph F. Postnikoff, Esq. (jpostnikoff@gpaplaw.com) Goodrich, Postnikoff, Albertson & Petrocch, L.L.P. 777 Main Street, Suite 1360 Fort Worth, TX 76102 Tel: (817) 347-5261 http://www.gpaplaw.com/ Specialized Quality Vending, LP's Financial Condition: Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million A. Specialized Quality Vending, LP's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DrPepper trade debt $348,058 2304 Century Center Boulevard Irving, TX 75062 Firestone Financial Corp. various notes $269,533 27 Christina Street P.O. Box 610325 Newton, Massachusetts 02461-0325 Coca-Cola trade debt $214,930 P.O. Box 132008 Dallas, TX 75313-9773 American Express Corp. credit card $210,246 Pepsi Cola trade debt $208,845 Jones Vend & O.C.S. trade debt $200,030 Distributing Frito Lay, Inc. trade debt $142,995 C.W. McDonald note $116,485 L.J. Investments trade debt $78,334 P.F.G. trade debt $62,173 Sam's Club trade debt $83,152 P.F.G. trade debt $31,645 Kraft Foods trade debt $29,089 Mrs. Baird's Bakery trade debt $28,507 Sysco Food Service open account $24,965 Lagasse trade debt $18,616 Vistar trade debt $13,680 Wingfoot Commercial Tire arrearage $9,899 Schepps Dairy trade debt $9,323 B. M.M. Vending Acquisition, Inc's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DrPepper trade debt $348,058 2304 Century Center Boulevard Irving, TX 75062 Firestone Financial Corp. various notes $269,533 27 Christina Street P.O. Box 610325 Newton, Massachusetts 02461-0325 Coca-Cola trade debt $214,930 P.O. Box 132008 Dallas, TX 75313-9773 American Express Corp. credit card $210,246 Pepsi Cola trade debt $208,845 Jones Vend & O.C.S. trade debt $200,030 Distributing Frito Lay, Inc. trade debt $142,995 C.W. McDonald note $116,485 L.J. Investments trade debt $78,334 P.F.G. trade debt $62,173 Sam's Club trade debt $83,152 P.F.G. trade debt $31,645 Kraft Foods trade debt $29,089 Mrs. Baird's Bakery trade debt $28,507 Sysco Food Service open account $24,965 Lagasse trade debt $18,616 Vistar trade debt $13,680 Wingfoot Commercial Tire arrearage $9,899 Schepps Dairy trade debt $9,323 C. Vending Distributors of D.F.W., Inc's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DrPepper trade debt $348,058 2304 Century Center Boulevard Irving, TX 75062 Firestone Financial Corp. various notes $269,533 27 Christina Street P.O. Box 610325 Newton, Massachusetts 02461-0325 Coca-Cola trade debt $214,930 P.O. Box 132008 Dallas, TX 75313-9773 American Express Corp. credit card $210,246 Pepsi Cola trade debt $208,845 Jones Vend & O.C.S. trade debt $200,030 Distributing Frito Lay, Inc. trade debt $142,995 C.W. McDonald note $116,485 L.J. Investments trade debt $78,334 P.F.G. trade debt $62,173 Sam's Club trade debt $83,152 P.F.G. trade debt $31,645 Kraft Foods trade debt $29,089 Mrs. Baird's Bakery trade debt $28,507 Sysco Food Service open account $24,965 Lagasse trade debt $18,616 Vistar trade debt $13,680 Wingfoot Commercial Tire arrearage $9,899 Schepps Dairy trade debt $9,323 D. M-C Vending Co., Inc's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ DrPepper trade debt $348,058 2304 Century Center Boulevard Irving, TX 75062 Firestone Financial Corp. various notes $269,533 27 Christina Street P.O. Box 610325 Newton, Massachusetts 02461-0325 Coca-Cola trade debt $214,930 P.O. Box 132008 Dallas, TX 75313-9773 American Express Corp. credit card $210,246 Pepsi Cola trade debt $208,845 Jones Vend & O.C.S. trade debt $200,030 Distributing Frito Lay, Inc. trade debt $142,995 C.W. McDonald note $116,485 L.J. Investments trade debt $78,334 P.F.G. trade debt $62,173 Sam's Club trade debt $83,152 P.F.G. trade debt $31,645 Kraft Foods trade debt $29,089 Mrs. Baird's Bakery trade debt $28,507 Sysco Food Service open account $24,965 Lagasse trade debt $18,616 Vistar trade debt $13,680 Wingfoot Commercial Tire arrearage $9,899 Schepps Dairy trade debt $9,323 SPEEDEMISSIONS INC: To Restate Financial Statements Due to Errors ----------------------------------------------------------------- Speedemissions Inc. has disclosed that certain of the company's previously issued financial statements should no longer be relied upon because of errors in such financial statements. The company said it would restate its previously filed financial statements for the quarters ended Sept. 30, June 30, and March 31, 2007, and the year ended Dec. 31, 2006, to reclassify its presentation of (gain)/loss from disposal of non-strategic assets to include the (gain)/loss as a component of operating loss and its presentation of Series A convertible preferred stock on its balance sheets and certain other items. The company said that restatement would have no effect on the company's annual or quarterly net income/(loss), cash flows or liquidity, and its effects on the company's financial position are immaterial. About Speedemissions Inc. Headquartered in Atlanta, Speedemissions Inc. (OTC BB: SPMI.OB) -- http://www.speedemissions.com/ -- is a vehicle emissions (and safety inspection where required) testing company in the United States in areas where emissions testing is mandated by the Environmental Protection Agency. The focus of the company at the present time is the Atlanta, Houston, and Salt Lake City markets. Going Concern Doubt Tauber & Balser P.C., in Atlanta, expressed substantial doubt about Speedemissions Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses from operations, past history of operating cash flow deficiencies and its limited capital resources. SYNTAX-BRILLIAN: Enters Into Forbearance Agreement With Lenders --------------------------------------------------------------- On Feb. 14, 2008, Syntax-Brillian Corp. entered into a second amendment to its credit and guaranty agreement dated as of Oct. 26, 2007 with certain lenders and Silver Point Finance LLC, as administrative agent, collateral agent, and lead arranger provides that: -- credit parties may enter into a third amendment to the credit agreement, which third amendment would set forth amended covenants, and provide a revolving facility in the aggregate principal amount of $20,000,000. -- a floor to the interest rate for base rate loans at 15.5% and for LIBOR rate loans at 13.5%. Additionally, the second amendment increased the applicable margin from 6% to 9% for LIBOR rate loans and from 5% to 8% for base rate loans. -- the company is restricted access to the revolving loans and letters of credit, and provides that no revolving loans will be made and no letters of credit will be issued without the prior written consent of the necessary Lenders. The unused line fee will cease to accrue until such time that this restriction on access to the revolving loans and letters of credit is removed. -- the company is required to make these payments: (a) $4,540,625 for application to the payment of interest due on the term loans; (b) in the amount of $3,750,000,the Initial Payment; (c) $254,286.71 for out of pocket expenses incurred by collateral agent; (d) an amount necessary to cash collateralize any outstanding letters of credit; (e) an amount necessary to repay a portion of the principal of the term loan; and (f) an amount necessary to pay the make-whole amount required by the fee letter in connection with the company's prepayment of the term loans. -- the company must prepay the term loans to be not more than $120 million minus an amount to be determined based on principal payments made on or after the second amendment effective date . The second amendment adds additional affirmative covenants, including, without limitation, requirements that the company must: -- enter into an agreement with an operational advisor, which operational advisor will have oversight authority of the cash management of the credit parties and work with collateral agent on various matters. -- provide to administrative agent a weekly budget which budget must be approved by the operational advisor. -- provide weekly reconciliations of the actual cash receipts, disbursements, net cash, and availability of credit parties to the amount set forth in each budgeted line item in the budget for such week. -- provide weekly reports identifying the funds received into and disbursed from each deposit account maintained by any credit party during the immediately preceding week, and the total amount of funds on deposit in each such deposit account as of the last business day of such immediately preceding week. -- cause title to all "in-transit" inventory to transfer to us at the point of shipment and take any actions to grant and perfect a first priority lien in favor of collateral agent on such inventory, including consigning all negotiable bills of lading to the order of Silver Point Finance LLC. -- take all actions necessary to grant and perfect a first priority lien in favor of collateral agent in all insurance policies of any credit party. -- provide a schedule of reworked inventory, and cause such reworked inventory to be: (i) converted for use in the united states and delivered to a common carrier for transport to the united stated by march 4, 2008, and (ii) delivered to the united states by March 31, 2008. -- use commercially reasonable efforts to collect all accounts receivable owing from account debtors located outside of the United States on or before March 4, 2008. -- arrange for a third party inspector selected by the agents to have access to the inventory of credit parties located in Asia, and cooperate with such third party inspector to provide the written results of such inspection. The second amendment also allows the collateral agent to have access to the customers and suppliers of the credit parties promptly upon request, and not merely after the occurrence and during the continuation of an event of default. If no event of default has occurred and is continuing, the company's representative shall be given the opportunity to be present for any communication with customers and suppliers. The second amendment extends the time period in which the company must complete certain post-closing requirements. The company must also provide to agents certain of the company's projections, which projections must be: (a) reviewed and approved by the Operational Advisor, and (b) consistent with the Budget. The company has also amended its negative covenants to provide: -- certain items in the budget will not deviate from the benchmarks set forth for those items in the budget. -- At any time that Availability is less than $15,000,000, or during the occurrence and continuance of a Default or an event of default, no Credit Party will, or will permit any of its subsidiaries to generate accounts from sales of inventory to account debtors, other than account debtors located in the United States that are acceptable to agents. The second amendment also adds as a new event of default a breach, default or event of default shall occur under the factoring agreement if the effect of such breach, default or event of default is to permit the factor to terminate the factor agreement, the factoring agreement or factoring assignment agreement shall terminate for any reason, or the factor shall exercise any remedies under the factoring agreement; provided that after Dec. 31, 2008, the company may replace the factoring agreement with a similar agreement satisfactory to administrative agent at administrative agents sole discretion. In addition, on Feb. 21, 2008, the company entered into a forbearance agreement with the parties to the credit agreement. Pursuant to the forbearance agreement, the company has acknowledged certain specified events of default under the credit agreement, and the lenders have agreed to forbear from exercising their remedies as a result of these specified events of default until the earlier of: (1) Feb. 29, 2008; or (2) one of these "termination events," which will be deemed to occur if: (a) any party to the forbearance agreement shall be enjoined pursuant to an order of any court from complying with any of the terms or conditions of the forbearance agreement; (b) any Default or event of default shall occur; (c) the administrative agent, in its sole business judgment, determines that adequate progress is not being made by the credit parties toward executing the third amendment to the credit agreement currently under discussion among the parties; or (d) the administrative agent terminates the forbearance period. The forbearance agreement further provides that the obligations under the credit agreement shall accrue interest at the default rate for each day on which any event of default, including the specified events of default, has occurred. About Syntax-Brillian Based in Tempe, Arizonoa, Syntax-Brillian Corporation (NASDAQ:BRLC) is engaged in designing, developing and distribution of high-definition televisions, liquid crystal display and liquid crystal on silicon technologies through �levia brand name. In Nov. 21, 2006, the company acquired Vivitar, a supplier of both digital and film cameras. The companys products include high- definition televisions, digital imaging products, micro display products, project applications and near-to-eye applications. TRIPLE CROWN: Liquidity Concerns Cue S&P to Junk Corporate Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Triple Crown Media LLC to 'CCC+' from 'B'. The ratings were removed from CreditWatch, where they were placed with negative implications Nov. 15, 2007. The rating outlook is negative. "The downgrade reflects our concern about the company's liquidity position over the next several quarters, given a weakening economy and negative trends across the newspaper industry," said Standard & Poor's credit analyst Liz Fairbanks. "We expect that the company's recently amended credit facilities provide only limited cushion relative to financial covenants, based on our expectation for Triple Crown's near-term operating performance." The 'CCC+' rating reflects the Lexington, Kentucky-headquartered newspaper publisher's high debt levels and limited cushion in bank covenants. On Feb. 15, 2008, lenders approved a fourth amendment to the first- and second-lien credit agreements, after management was unable to refinance its second-lien debt at a more favorable interest rate and risked violating its coverage covenant in the near term. Although the amendment eases financial covenants, S&P expects that revenue must stabilize and the company must aggressively cut costs for it to avoid violating its total leverage covenant at the end of calendar 2008, which is set at 6.75x. In addition, as a condition of the amendment, first- and second-lien lenders will receive incremental pay-in-kind interest of 2%. In November 2007, Triple Crown announced the sale of its Host Communications Inc. businesses. While the transaction resulted in the repayment of approximately $66 million of first-lien debt, credit measures did not improve because the much higher cost second-lien debt became a more significant part of the capital structure (43% of debt, versus 22% before the transaction). Thus, the company's average cost of debt rose, leading to weaker coverage of interest expense, since the company's EBITDA was lower following the sale. Moreover, the amended facility now requires incremental PIK interest for each of the first- and second-lien lenders; while noncash, this obligation puts additional pressure on the capital structure as it accretes. In addition, without the Host Communications businesses, Triple Crown is entirely reliant on the newspaper industry for EBITDA generation. Newspaper publishers have faced challenging operating conditions amid declining advertising revenue and circulation, which S&P believes stem, in part, from a secular shift away from print media. Triple Crown's newspapers, which are local in nature, have fared better in the current climate, but have experienced declines that S&P expects to continue and even accelerate in the coming quarters. TEMBEC INC: Lenders, Shareholders OK Recapitalization Transaction ----------------------------------------------------------------- Tembec Inc.'s recapitalization transaction disclosed on Dec. 19, 2007, has been approved by the requisite majority of shareholders of Tembec and the requisite majority of holders of notes of Tembec Industries Inc. Tembec Inc. held a Special Meeting of Shareholders and Tembec Industries Inc. held a Meeting of Noteholders at which votes were held on matters relating to the approval of the Recapitalization. The Meetings were held in accordance with the Management Proxy Circular dated Jan. 25, 2008, and, with respect to the Meeting of Noteholders, an Order of the Ontario Superior Court of Justice made on Jan. 24, 2008. At the Special Meeting of Shareholders, all of the resolutions relating to the approval of the Recapitalization were approved by in excess of 95.34% of Shareholders who voted in person or by proxy. At the Meeting of Noteholders, all of the resolutions relating to the approval the Recapitalization were approved by in excess of 98.25% of Noteholders who voted in person or by proxy. "We are obviously pleased with the support shown by our shareholders and noteholders in favor of the recapitalization transaction," James Lopez, president and CEO of Tembec, said. "These approvals bring us one significant step closer towards the completion of the Recapitalization." Tembec also reached agreement with Investissement Quebec and the Societe generale de financement du Quebec in relation to the proposed recapitalization transaction. IQ and SGF currently own all of the preferred shares of Tembec and IQ is also a lender to Tembec. The Plan of Arrangement relating to the recapitalization transaction is subject to approval of the Ontario Superior Court of Justice and such approval hearing is being held on Feb. 27, 2008. The recapitalization transaction is expected to close on Feb. 29, 2008. About Tembec Headquartered in Montreal Quebec, Tembec Inc. (TSC:TBC) -- http://www.tembec.com -- operates an integrated forest products business. The company's operations consist of four business segments: forest products, pulp, paper and chemicals. The forest products segment consists primarily of forest and sawmills operations, which produce lumber and building materials. The pulp segment includes the manufacturing and marketing activities of a number of different types of pulps. The paper segment consists primarily of production and sales of newsprint and bleached board. The chemicals segment consists primarily of the transformation and sale of resins and pulp by-products. As of Sept. 29, 2007, Tembec operated manufacturing facilities in New Brunswick, Quebec, Ontario, Manitoba, Alberta, British Columbia, the states of Louisiana and Ohio, as well as in Southern France. * * * Standard & Poor's placed Tembec Inc.'s long-term foreign and local issuer credit ratings at 'CC' in Dec. 20, 2007. TEXHOMA ENERGY: Dec. 31 Balance Sheet Upside-Down by $4M -------------------------------------------------------- Texhoma Energy Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $5,265,590 in total assets and $9,253,064 in total liabilities, resulting in a $3,989,474 total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $370,126 in total current assets available to pay $1,317,790 in total current liabilities. The company reported net income of $542,590 on oil and gas revenues of $417,590 for the first quarter ended Dec. 31, 2007, compared with a net loss of $52,660 on oil and gas revenues of $477,665 in the corresponding period ended Dec. 31, 2006. The company recorded general and administrative income of $340,000 for the three months ended Dec. 31, 2007, mainly in connection with the expiration of previously granted warrants and options, offset by legal and accounting fees associated with the company's periodic filings. This income compares with general and administrative expenses of $246,000 for the same period in 2006. The company recorded an impairment in its investment in Morgan Creek Energy of $196,000 for the three months ended Dec. 31, 2006, compared with $-0- for the three months ended Dec. 31, 2007, due to the exchange of Morgan Creek Energy shares shares as a partial release with the company's former Director, Frank Jacobs. In conjunction with the release retained from Mr. Jacobs, the company recorded a $370,000 gain on the extinguishment of debt for the three months ended December 31, 2007 as compared with no extinguishment of debt for the same period ended Dec. 31, 2006. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2863 Going Concern Doubt As reported in the Troubled Company Reporter on Jan. 18, 2008, Houston-based GLO CPA's LLP expressed substantial doubt about the Texhoma Energy Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company has recurring operating losses, negative working capital and is dependent on financing to continue operations. The company reported net income from operations of $542,590 for the three months ended Dec. 31, 2007, but has incurred $14,462,626 in cumulative losses. About Texhoma Energy Headquartered in Dallas, Texhoma Energy Inc. (Other OTC: TXHE.PK) -- http://texhomaenergy.com/-- engages in the exploration for and the production of hydrocarbons, more commonly known as the exploration and production of crude oil and natural gas. In March 2006, Texhoma incorporated a subsidiary, Texaurus Energy Inc. in Delaware for the same purposes. TRIAXX FUNDING: Fitch Junks Ratings on Two Classes of Notes ----------------------------------------------------------- Fitch Ratings has downgraded these classes of mezzanine floating- rate notes from Triaxx Funding High Grade I, Ltd., effective immediately: -- $80,000,000 class B-1 to 'CCC' from 'BB'; remains on Rating Watch Negative; -- $41,000,000 class B-2 to 'CCC' from 'B'; remains on Rating Watch Negative; -- $149,375,000 class C deferrable interest notes to 'C' from 'CCC'; removed from Rating Watch Negative; -- $8,000,000 class D deferrable interest notes to 'C' from 'CCC'; removed from Rating Watch Negative. The ratings of the classes B-1 and B-2 notes reflect the likelihood that investors will receive periodic interest payments through the redemption date as well as their respective stated principal balances. The ratings of the classes C and D notes only reflect the likelihood that investors will ultimately receive their interest and principal balances by the legal final maturity date. Triaxx Funding High Grade I Ltd. invests in 'AAA' rated residential mortgage backed securities assets using proceeds raised by issuing notes and equity and using repo funding. The credit quality of the underlying assets has remained stable but the market prices have continued to drop. The downgrades are due to concerns about potential margin calls by the repo counterparty if there is a further drop in market prices, the short-term nature of the repo financing, and delevering of the program that has led to further realization of losses. -- 'Fitch Downgrades 2 Classes of Triaxx Funding High Grade I, Ltd.' (Nov. 29, 2007); -- 'Fitch Downgrades 4 Classes of Triaxx Funding High Grade I, Ltd.' (Nov. 6, 2007); -- 'Fitch Places 1 Class of Triaxx Funding High Grade I Ltd. On Rating Watch Negative' (Nov. 2, 2007); -- 'Fitch Downgrades 3 Classes of Triaxx Funding High Grade I Ltd.' (Oct. 4, 2007); -- 'Fitch Places 2 Classes from Triaxx Funding High Grade I Ltd. on Rating Watch Negative' (Sept. 18, 2007). UNITED HERITAGE: Posts $1.7M Net Loss in Qtr. Ended Dec. 31 ----------------------------------------------------------- United Heritage Corp. reported a net loss of $1,744,076 on oil and gas sales of $24,311 for the third quarter ended Dec. 31, 2007, compared with a net loss of $627,150 on oil and gas sales of $253,904 in the same period ended Dec. 31, 2006. This decrease in revenues was primarily attributable to the sale by the company of the assets of UHC New Mexico, which had previously accounted for a significant portion of the its production and sale of oil and all of its production and sale of natural gas. As of Feb. 19, 2008, the only remaining field owned by company, the Wardlaw Field in Edwards County, Texas, is producing less than 10 barrels of oil per day. General and administrative expenses increased $1,464,221, or approximately 849.0%, from $172,557 for the three months ended Dec. 31, 2006, to $1,636,778 for the three months ended Dec. 31, 2007. This increase is primarily attributable to stock compensation expenses. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $6,223,378 in total assets, $3,518,832 in total liabilities, and $2,704,546 in total stockholders' equity. The company's consolidated balance sheet at Dec. 31, 2007, also showed strained liquidity with $298,233 in total current assets available to pay $3,432,158 in total current liabilities. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2864 Going Concern Doubt Weaver and Tidwell L.L.P., in Fort Worth, Texas, expressed substantial doubt about United Heritage Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended March 31, 2007, and 2006. The auditing form reported that the company sold all of its proved reserves in 2006 and currently does not have significant revenue producing assets. In addition, the auditing firm said that the company has limited capital resources and it's majority shareholder who was financing the company's development filed for bankruptcy subsequent to March 31, 2007. About United Heritage Headquartered in Midland, Texas, United Heritage Corporation (NasdaqCM: UHCP) -- http://www.unitedheritagecorp.com/ -- is an independent producer of natural gas and crude oil based in Midland, Texas. The company produces from properties it leases in Texas. Lothian Oil Inc., formerly the company's largest shareholder, provided the company with the funds to operate from November 2005 until it declared bankruptcy on June 13, 2007. VALENCE TECHNOLOGY: Names Galen H. Fischer as Chief Finc'l Officer ------------------------------------------------------------------ Valence Technology Inc. appointed Galen H. Fischer, CPA, as chief financial officer, effective March 3. Mr. Fischer will be replacing Thomas F. Mezger who has resigned from the company. "We are delighted to welcome Galen Fischer to the senior management team," Robert L. Kanode, president and CEO of Valence Technology, stated. "Galen brings more than 20 years of global finance, accounting and operations experience with companies ranging in size from venture-funded technology startups to a mature Fortune 100 financial services business. With his background in senior-level strategic and operational financial positions, as well as hands-on, day-to-day tactical execution skills, Galen is well prepared to lead Valence's expansion globally." "I also want to thank Tom Mezger for his dedicated service to the company over the last few years and wish him every success in his future endeavors," Mr Kanode added. Prior to joining Valence Technology, Mr. Galen held the title of corporate controller for Motive, a publicly traded global communications software company. Previous to his role with Motive, he was vice president of Finance with United Devices, a venture-funded, grid software company. During his 10 years as a private consultant, he also worked with vcfo Inc., a business consulting firm that specializes in helping early-stage, rapid-growth companies. His clients were high-tech, including software, hardware, contract manufacturing, and services. Prior to consulting, Mr. Galen was with NYLACOR for eight years, a subsidiary of New York Life. During his career with NYLACOR, he rose to the senior financial and operations positions and was responsible for Accounting, Finance, IT, Underwriting, Billing, Customer Service, Compliance, and Claims Processing. Mr. Galen started his career in public accounting and as the senior financial officer for companies in diverse industries. Mr. Galen, 52, is a Texas Certified Public Accountant and earned a BBA in Accounting from Texas State University San Marcos, and an MBA from The University of Texas at Austin. About Valence Technology Headquartered in Austin, Texas, Valence Technology Inc. (Nasdaq: VLNC) -- http://www.valence.com/-- develops and markets Lithium Phosphate Rechargeable Batteries. The company has facilities in Austin, Texas; Las Vegas, Nevada; Mallusk, Northern Ireland and Suzhou, China. Going Concern Doubt PMB Helin Donovan LLP, in Austin, Texas, expressed substantial doubt about Valence Technology Inc.'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 recurring losses from operations, negative cash flows from operations and net stockholders' capital deficit. At Sept. 30, 2007, the company's principal sources of liquidity were cash and cash equivalents of $2.5 million. The company expects that its sources of liquidity will not be sufficient for the remaining fiscal year. VIET-THAI INC: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Viet-Thai, Inc. 2526 Riva Road, Suite A Annapolis, MD 21401 Bankruptcy Case No.: 08-12369 Type of Business: The Debtor operates a restaurant. Chapter 11 Petition Date: February 21, 2008 Court: District of Maryland (Baltimore) Judge: Duncan W. Keir Debtor's Counsel: Alan M. Grochal, Esq. Tydings and Rosenberg 100 Eeast Pratt Street, Floor 26 Baltimore, MD 21202 Tel: (410) 752-9700 Fax: (410) 727-5460 agrochal@tydingslaw.com Estimated Assets: $100,000 to $1 million Estimated Debts: $100,000 to $1 million Debtor's list of its 17 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ ------------ --------- Bank of America $40,010 P.O. Box 15710 Wilmington, DE 19886 Advanta $13,711 P.O. Box 8088 Philadelphia, PA 19101 Jonathan P. Kagan, Esq. Attorney for Henry $13,180 112 West Street C. Pham, President Annapolis, MD 21401 of Viet-Thai Inc. F. Joseph gornley, Esq. Attorney for the $8,324 Company Chase $8,236 St. John Properties, Inc. $8,028 American Express $5,850 Wing Fat Trading Corporation $2,940 BGE $2,695 Republic National Distributing Co., LLC $1,968 L&M Produce $1,735 Leonard Paper Company $1,570 Sam's Club $1,233 U.S. Food Service $1,091 AM Briggs $801 Best Buy, Inc. $595 Linens of the Week $549 WACHOVIA COMMERCIAL: Fitch Holds 'B-' Rating on $9.5 Mil. Trusts ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings of Wachovia Commercial Mortgage Securities Trust 2005-C22 as: -- $32.9million class A-1 at 'AAA'; -- $93.9 million class A-2 at 'AAA'; -- $164.6 million class A-3 at 'AAA'; -- $148.5 million class A-PB at 'AAA'; -- $941 million class A-4 at 'AAA'; -- $375.6 million class A-1A at 'AAA'; -- $253.4 million class A-M at 'AAA'; -- $152 million class A-J at 'AAA'; -- Interest-only class IO at 'AAA'; -- $22.2 million class B at 'AA+'; -- $31.7 million class C at 'AA'; -- $25.4 million class D at 'AA-'; -- $47.5 million class E at 'A'; -- $31.7 million class F at 'A-'; -- $28.5 million class G at 'BBB+'; -- $28.5 million class H at 'BBB'; -- $34.8 million class J at 'BBB-'; -- $15.8 million class K at 'BB+'; -- $12.7 million class L at 'BB'; -- $12.7 million class M at 'BB-'; -- $6.3 million class N at 'B+'; -- $6.3 million class O at 'B'; -- $9.5 million class P at 'B-'; Fitch does not rate the $41.2 million class Q. The rating affirmations reflect stable transaction performance and minimal paydown since issuance. As of the January 2008 distribution date, the pool's aggregate certificate balance has decreased 0.7% to $2.517 billion from $2.534 billion at issuance. Two loans (0.8%) are currently specially serviced. The largest specially serviced loan (0.7%) is 90+ days delinquent and is secured by an industrial/ warehouse property located in Brooklyn, New York. Any losses on the specially serviced loans are expected to be absorbed by the non-rated class Q. At issuance, Fitch shadow rated the following three loans; Metro Pointe at South Coast, 1201 Broadway and The Shoppes at Eastchase. These loans maintain their investment grade shadow ratings based on stable performance and occupancy levels since issuance. As of September 2007, the properties reported occupancy of 100%, 98% and 98.7%, respectively. The majority of the loans in the pool mature in 2015 (86.8%). Interest only loans represent 21.6% of the pool and 56.1% have interest only periods. Fitch considers four loans (3.1%) as loans of concern. The largest is secured by a multifamily property (1.7%) located in Phoenix, Arizona is considered a Fitch Loan of Concern due to declines in occupancy and performance since issuance. Servicer reported year end 2006 occupancy and net operating income have declined to 92% and $2.8 million from 93.3% and $3.5 million at issuance. The loan is interest only during the first five years of the loan term and will begin amortizing in 2010. WELLMAN INC: Wants Court Approval on $225 Million DIP Financing --------------------------------------------------------------- Wellman, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to obtain up to $225,000,000 of debtor-in-possession financing from Deutsche Bank Securities Inc., as lead arranger and bookrunner for a syndicate of lenders. Beginning January 2008, Wellman, through Lazard Freres & Co. LLC, solicited proposals for debtor-in-possession financing from various institutions. Thomas M. Duff, chief executive officer and chairman of the Board of Directors, relates that the Debtors selected Deutsche Bank's proposal because it offered attractive pricing terms, provided less uncertainty with respect to the size of the Debtors' borrowing base, allowed the Debtors to immediately utilize up to $40,000,000 of letters of credit, and provided relief under liquidity covenants in their existing $225,000,000 revolving loan facility. The DIP Facility will be used to pay fees and expenses related to the DIP Financing, support the Debtors' working capital and general corporate purposes, and repay the aggregate principal amount outstanding, and all interests and fees under the Prepetition Revolving Loan Facility. The Debtors and its financial advisor, Lazard Freres negotiated, at arm's length and in good faith, a credit agreement dated February 25, 2008, among Wellman, Inc., and each of its domestic subsidiaries, as Borrowers, with Wellman, Inc., as funds administrator, Deutsche Bank Securities, Inc., as lead arranger and bookrunner, and a syndicate of banks as lenders. A full-text copy of the DIP Facility Agreement is available for free at http://bankrupt.com/misc/wellman_$225MCreditPact.pdf DIP Terms The salient terms of the DIP Agreements are: Borrowers: Wellman, Inc.; Prince, Inc.; Wellman of Mississippi, Inc.; Carpet Recycling of Georgia, Inc.; ALG, Inc.; PTA Resources, LLC; and Fiber Industries, Inc. Guarantors: Warehouse Association, Inc.; MRF, Inc.; JOSDAV, Inc.; and MED Resins, Inc. Lenders: Deutsche Bank Trust Company of Americas, as administrative agent and collateral agent; Deutsche Bank Securities, Inc., as lead arranger and bookrunner; JPMorgan Chase Bank, National Association, as syndication agent; and General Electric Capital Corporation, LaSalle Business Credit, LLC, Wachovia Capital Finance Corporation (Central), as co-documentation agents Commitment: Up to $225,000,000 senior secured superpriority revolving credit facility, subject to a Borrowing Base, with a $40,000,000 letter of credit sublimit Term: DIP Facility will terminate on the earliest of: * 365 days after the Closing Date; * the date as the Commitments will have been terminated or otherwise reduced to $0, all Loans have been repaid, all Letters of Credit have been terminated or have been cash collateralized at 105% and the Borrowers are entitled to a release of the Collateral under the terms of the DiP Agreement; * Feb. 28, 2008, if an interim DIP order has not been approved by the Court; * April 9, 2008, if a final DIP order has not been approved by the Court, unless an Interim DIP Order has been extended with Agent's written consent; * the expiration date of an Interim DIP Order unless a Final DIP Order has been entered and become effective on that date; * the consummation date of any plan of reorganization in any of the Debtors' Chapter 11 case; and * contemporaneously with the funding of the Wellman Sale. Interest Rate: All loans outstanding under the Revolving Credit Facility will bear interest, at the Borrower's option, at: -- Base Rate plus 1.75% per annum, or -- Adjusted LIBOR Rate plus 2.75% per annum. Revolving Letter of Credit Fees: The standby letter of credit fee will be 2.75% per annum, plus 2.00% after the occurrence and during the continuance of an event of default, and an additional 0.25% per annum. Superpriority Claims: The Debtors' obligations under the DIP Facility will have superpriority administrative expense status. Subject to the Carve-Out Reserve, the administrative claim will have priority over all other claims, costs and expenses, and at all times be senior to the rights of any Credit Party. DIP Liens: As security for the DIP Obligations, subject only to the Carve-Out Reserve and other liens permitted to be senior pursuant to the DIP Documents, the DIP Lenders will be granted: * first lien on unencumbered property, provided that the First Lien DIP Collateral will not include proceeds from any avoidance actions; * liens junior to first lien term facility liens; * liens priming second lien term loan lenders' liens; and * liens senior to certain other liens. Carve-Out Reserve: Carve-Out Reserve refers to (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the office of the U.S. Trustee; and (ii) payment of unpaid professional fees and expenses incurred by the Credit Parties and any statutory committee, in an amount not exceeding $2,500,000. Fees: An upfront fee will be paid to each Lender equal to 1.25% of the Lender's commitment under the Revolving Credit Facility, plus a closing fee equal to 0.50% of the maximum amount of the DIP Financing, payable on the Closing Date. Commitment Fees equal to 0.375% per annum multiplied by the daily average unused portion of the Revolving Credit Facility will also be paid. All fees will be fully earned and non-refundable upon entry of an Interim DIP Order. Expenses: All costs, fees, expenses and other compensation payable to the Arrangers, the Administrative Agent or the Lenders will be paid to the extent due. Events of Default: The DIP Credit Agreements provide for customary events of default, including the entry of an order dismissing the Borrower's Chapter 11 case or an order converting its Chapter 11 case to that under Chapter 7; failure to comply with any negative covenants or certain covenants specified in the DIP Documents; failure to sign an engagement letter for a chief restructing officer; or failure of Wellman, Inc., to close a sale of the company by July 31, 2008. The DIP Agreement provides that on the last date of each calendar month commencing March 1, 2008, the Borrowers will not permit EBITDA to be less than: Applicable Month Minimum EBITDA ---------------- -------------- March 2008 $2,100,000 April 2008 $5,610,000 May 2008 $10,370,000 June 2008 $15,810,000 July 2008 $19,635,000 August 2008 $22,865,000 September 2008 $23,800,000 October 2008 $27,455,000 November 2008 $28,560,000 December 2008 $30,855,000 January 2009 $31,500,000 In addition, no Borrower will, or permit any of its subsidiaries to, directly or indirectly, make or incur capital expenditures in any fiscal month, in the aggregate for all Borrowers and their respective subsidiaries combined, in excess of $1,000,000 (Basic Allocation), provided 50% of any unused portion may be carried over and spent in the following month but not carried over thereafter. The DIP Lenders have committed to provide the Debtors with DIP Financing in these amounts: Lender Commitment ------ ---------- Deutsche Bank Trust Company Americas $18,000,000 JPMorgan Chase Bank, N.A. $18,000,000 General Electric Capital Corporation $18,000,000 LaSalle Business Credit, LLC $18,000,000 Wachovia Capital Finance Corporation $18,000,000 Wells Fargo Foothill, LLC $15,000,000 GMAC Commercial Finance LLC $18,000,000 Merril Lynch Capital $18,000,000 PNC Bank, N.A. $18,000,000 Allied Irish Bank, plc $15,000,000 Webster Business Credit Corp. $15,000,000 UPS Capital Corporation $18,000,000 E*Trade Bank $18,000,000 ------------ TOTAL $225,000,000 DIP Request Hearing The Debtors also ask the Court to convene a hearing on April 1, 2008, to consider final approval of the DIP request. The DIP Agreement will be terminated if the Court does not enter the Final DIP Order (1) by the earlier of (x) the date of expiration of the Interim Financing Order, or (y) 45 days after the Petition Date, or (2) within two days after the 45 day period or the date of expiration of the Interim Financing Order, if earlier. The preliminary hearing on the proposed financing and hearings to the Debtors' other "first day" motions have not yet been scheduled by the U.S. Bankruptcy Court, according to Kurtzman Carson Consultants LLC, the proposed claims agent. The first priority and priming secured revolving credit commitment of up to $225,000,000 will be made available by the DIP Lenders upon entry of an interim order approving the DIP Financing. About Wellman Inc. Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WELLMAN INC: Wants Access to Deutsche Bank's Cash Collateral ------------------------------------------------------------ Wellman Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to use the cash collateral for, among other things, continuing the operation of their business in an orderly manner, maintaining business relationship with vendors, suppliers, and customers, paying employees and satisfying other working capital and operational needs. Before the bankruptcy filing, the Debtors were parties to three secured credit agreements: Maturity Balance as of Credit Agreement Credit Amount Date Petition Date ---------------- ------------- -------- ------------- First Lien Revolving Credit Agreement $225,000,000 05/4/2011 $125,000,000 First Lien Term Loan Credit Agreement $185,000,000 02/10/2009 $185,000,000 Second Lien Term Loan Credit Agreement $265,000,000 02/10/2010 $265,000,000 Deutsche Bank Trust Company Americas serves as administrative agent and collateral agent under the Prepetition Agreements. The indebtedness under the Prepetition Revolving Loan Facility is secured by liens on, among other things, the Debtors' accounts receivable, inventory, general intangibles, goods, certain investment property, certain deposit accounts, money and cash equivalents and their proceeds. The First and Second Lien Term Loans are secured by, among other things, liens on the Debtors' collateral accounts and all funds deposited therein, equipment and fixtures, tax reduction bonds, lease documents and their proceeds. The accounts, goods, inventory and fixtures used as collateral to secure the Second Lien Term Loan are not included in the First Lien Term Loan collateral package, proposed counsel for the Debtors' Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York, tells the Court. As adequate protection, the Debtors will: (a) repay the Prepetition Revolving Facility, pursuant to their proposed DIP Financing Agreement with a syndicate of lenders led by with Deutsche Bank Securities Inc.; (b) grant to the First Lien Term Loan Agent a valid, perfected replacement security interest in and lien on the collateral securing the First Lien Term Loan, subject and subordinate only to the Carve-Out Reserve; (c) grant to the Second Lien Term Loan Agent a valid and perfected replacement lien on the First DIP Lien Collateral, subject only to the liens of the DIP Agent and Lenders and the Carve-Out Reserve, and the Second Lien DIP Collateral, subject only to the liens of the First Lien Agent and Lenders, the DIP Agent and Lenders and the Carve-Out Reserve. In addition, the First and Second Lien Agent will receive from the Debtors current cash payment of all reasonable fees and expenses payable under the Prepetition First Lien Term Loan documents, including the fees and expenses of the First Lien Agent's advisors. About Wellman Inc. Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WEST CORP: Plans to Purchase Genesys for $269 Million ----------------------------------------------------- West Corporation will seek to acquire Genesys and combine it with InterCall Inc., its subsidiary. West will make a cash offer of EUR2.50 per ordinary share and for the American Depositary Shares at the U.S. dollar equivalent. The total transaction value, excluding transaction expenses, is approximately EUR182.9 million or approximately $268.8 million. For that purpose, West International Holdings Limited, a subsidiary of West, filed with the French Autorite des Marches Financiers a draft Tender Offer Prospectus. Genesys' board of directors has unanimously expressed support for this project and authorized the execution of a tender offer agreement between the two companies. Genesys' board of directors intends to recommend the offer to its shareholders. In accordance with French law and the tender offer agreement, such recommendation will be published in a draft Response Document to be filed by Genesys with the AMF within the next 10 business days. The tender offer price of EUR2.50 or approximately $3.681 per share of common stock of Genesys, represents a premium of 50% above the closing price of Genesys' shares on Feb. 18, 2008, the last trading day prior to this disclosure, and a premium of 42% above the average closing price of Genesys' shares, volume- weighted over the last three months. The acquisition is expected to be funded with a combination of West's cash on hand and West's bank credit facilities. West expects to close the transaction during the second quarter. "West is committed to expanding InterCall's presence and this statement represents a significant step in achieving this goal," Thomas B. Barker, chief executive officer of West Corporation, stated. "When completed, this transaction will strengthen our leadership position and give our combined client base more collaboration solutions and personal attention in more locations than any other conferencing provider in the world." "Genesys has developed a leading multimedia conferencing solution for the global enterprise and is recognized by the industry as a leader in conferencing technology," Francois Legros, chairman and CEO of Genesys, said. "The board of directors and I are excited to see that the innovation and hard work of our employees and partners are validated and will now be part of a much bigger organization." Houlihan Lokey Howard & Zukin (Europe) Limited acted as financial advisor to Genesys and Lehman Brothers Inc. acted as financial advisor to West Corporation. Ricol Lasteyrie & Associes was appointed by Genesys as independent expert in accordance with Article 261-1 I� of the AMF General Regulations. The independent expert's report, once finalized, will be included in Genesys' draft Response Document. The transaction is to take the form of a tender offer subject to the standard procedure under applicable French laws and regulations for all Genesys shares and bonds redeemable in shares and all ADSs representing ordinary shares. The offer will only be opened for acceptance once the French regulatory authority, the AMF, has granted approval. The offer will be subject to these conditions: (i) Genesys securities tendered in the offer represent more than 66.66% of all the shares, including shares represented by ADSs, of Genesys on a fully diluted basis; and (ii) receipt of antitrust approvals in the United States, the United Kingdom and Germany. About Genesys Founded in 1986, Genesys (Euronext Eurolist: FR0004270270) -- http://www.genesys.com/-- is a provider of converged collaboration and communication services to thousands of organizations, including more than 250 of the Fortune Global 500. The company's flagship product, Genesys Meeting Center, provides an integrated multimedia conferencing solution that is easy to use and available on demand. With offices in more than 20 countries across North America, Europe and Asia Pacific. About West Corporation Headquartered in Omaha, Nebraska, West Corporation -- http://www.west.com/-- is a provider of outsourced communication solutions to many companies, organizations and government agencies. West has a team of 42,000 employees based in North America, Europe, and Asia. West helps its clients communicate effectively, maximize the value of their customer relationships and drive greater profitability from every interaction. InterCall Inc. -- http://www.intercall.com/-- is a subsidiary of West Corporation, is a service provider in the world specializing in conference communications. Founded in 1991, InterCall helps people and companies be more productive by providing advanced audio, event, Web and video conferencing solutions that are easy- to-use and save them time and money. Along with a team of over 600 Meeting Consultants, the company employs more than 1,500 operators, customer service representatives, call supervisors, accounting, marketing and IT professionals. InterCall's U.S. presence, which includes four call centers and 26 sales offices, extends to Canada, Mexico, Latin America, the Caribbean, the United Kingdom, Ireland, France, Germany, Australia, New Zealand, India, Hong Kong, Singapore and Japan. As reported in the Troubled Company Reporter on Feb. 4, 2008, the company's Dec. 31, 2007, balance sheet for the year showed a stockholders' deficit of $2.2 million. WHERIFY WIRELESS: Dec. 31 Balance Sheet Upside-Down by $16.5M ------------------------------------------------------------- Wherify Wireless Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $3,029,605 in total assets and $19,538,384 in total liabilities, resulting in a $16,508,779 total stockholders' deficit. At Dec. 31, 2007, the company's consolidated balance sheet also showed strained liquidity with $2,292,927 in total current assets available to pay $19,538,384 in total current liabilities. The company reported a net loss of $2,803,058 on revenues of $358,945 for the second quarter ended Dec. 31, 2007, compared with net income of $1,733,889 on revenues of $324,459 in the corresponding period in 2006. Operating expenses for the three months ended Dec. 31, 2007, were $2.2 million versus $4.9 million for the three months ended Dec. 31, 2006. No derivative gain or loss was recorded in the quarter ended Dec. 31, 2007, compared to a derivative gain of $7,090,14 in the quarter ended Dec. 31, 2006. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2865 Going Concern Doubt Malone & Bailey, PC, in Houston, expressed substantial doubt about Wherify Wireless Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm pointed to the company's recurring losses from operations and working capital deficiency. About Wherify Wireless Inc. Based in Redwood Shores, California, Wherify Wireless Inc. (OTC BB: WFYW) -- http://www.wherifywireless.com/ -- is engaged primarily in the the development and sale of wireless location products and services. WILLIAM THOMAS: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: William P. Thomas P.O. Box 5717 Cleveland, Tennessee 37320 Bankruptcy Case No.: 08-10888 Chapter 11 Petition Date: February 22, 2008 Court: Eastern District of Tennessee (Chattanooga) Judge: R. Thomas Stinnett Debtor's Counsel: Richard L. Banks, Esq. Richard Banks & Associates PC P.O. Box 1515 Cleveland, Tennessee 37364-1515 Tel: (423) 479-4188 Total Assets: $1,678,699 Total Debts: $1,139,005 Debtor's list of its 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Tim Clark $37,500 7711 Owl Hollow Road McDonald, TN 37353 Toyota Motor Credit $28,768 P.O. Box 5236 Carol Stream, IL 60197-5236 Emment & Galen Champion $12,000 141 Chestnut Oak Drive Cleveland, TN 37311 Curtis Haman $12,000 Cleveland Plywood $8,809 Wholesale Carpet $6,034 Wayne & Bertha King $4,700 Bobette Trexler $4,000 AT&T Mobility $3,382 Collins Oil Company $3,000 FSG Bank/Visa $3,000 Landmark Title Loans $2,850 BB & T $2,490 Macke & Associates $2,469 Castle Lake Mobile Home Community $2,100 Linda F. Wooten $1,975 Covalence Plastics $1,641 WILLIAMS PARTNERS: Earns $44.8 Mil. for Fourth Quarter of 2007 -------------------------------------------------------------- Williams Partners L.P. reported $44.8 million net income for 2007 fourth quarter ended Dec. 31 compared to $46.3 million net income for the 2006 fourth quarter. Net income for 2007 was higher due primarily to the growth of the partnership through its 2006 acquisition of Four Corners and higher equity earnings from Discovery, partially offset by higher interest expense and additional units outstanding. For the full fiscal year ended Dec. 31, 2007 net income of $164.6 million compared with fiscal 2006 net income of $214.6 million. However, net income for 2007, which includes pre-partnership income allocated to the general partner in association with the partnership's acquisitions, was lower than the recast 2006 net income due primarily to interest expense associated with the Four Corners and Wamsutter acquisitions. Total distributable cash flow in 2007 for limited-partner unitholders was $103.7 million, compared with $42.5 million for 2006. The increase in distributable cash flow during 2007 is due to the growth of the partnership through its 2006 acquisition of Four Corners, its 2007 acquisition of an additional 20 percent interest in Discovery, and the partnership's steady business performance. Total distributable cash flow for limited-partner unitholders totaled $26.6 million in fourth-quarter 2007, compared with $15.8 million for fourth-quarter 2006. The slight increase in distributable cash flow during the fourth quarter is also due to the growth of the partnership and its business performance. These benefits were partially offset by lower volumes at Four Corners, due to the Ignacio fire. Total revenues for the 2007 fourth quarter is $150.1 million compared with the revenues generated for 2006 fourth quarter at $142.9 million. For the full fiscal year ended Dec. 31, 2007, the company generated revenues of $572.8 million compared to $563.4 million total revenues for fiscal 2006. "The partnership had a solid performance in 2007," Alan Armstrong, chief operating officer of the general partner of Williams Partners, said. "The core assets performed well and our two acquisitions, the additional interest in Discovery and Wamsutter , provide a foundation for future growth." "In particular, the fourth-quarter acquisition of an interest in the Wamsutter system should be a key driver in the partnership's future growth," Mr. Armstrong added. "Wamsutter includes large- scale assets in a high-growth natural gas basin." "This investment will increase the diversity of our cash flows and reduce our dependence on commodity margins," Mr. Armstrong continued. "We also continued to increase our cash distributions in 2007 and our coverage ratio remains strong." Subsequent to the close of the fourth quarter, the board of directors of the general partner of Williams Partners increased the quarterly cash distribution payable to unitholders to 57.5 cents from 55 cents. This was the eighth consecutive quarter the partnership increased its cash distribution. For 2007, Williams Partners' total cash distribution to unitholders was $2.15 per unit, compared with $1.725 per unit in 2006, an increase of 25 percent. About Williams Partners Based in Tulsa, Oklahoma, Williams Partners L.P. (NYSE:WPZ) -- http://www.williamslp.com/-- owns natural gas gathering, transportation, processing and treating assets in the regions of the United States, including the Gulf of Mexico, the San Juan Basin in New Mexico and Colorado, and the Washakie Basin in Wyoming. The partnership also serves the natural gas liquids market through its NGL fractionating and storage assets. Operations are organized into three business segments: gathering and processing-west, gathering and processing-gulf and NGL services. Williams owns and controls the partnerships general partner. * * * As reported in the Troubled Company Reporter on Jan. 30, 2008, Moody's Investors Service upgraded the ratings of Williams Partners L.P. and its affiliate, Williams Partners Finance Corporation. Moody's upgraded WPZ's corporate family rating and its senior unsecured rating to Ba2 from Ba3. This action concludes the rating review begun on Nov. 2, 2007 following WPZ's announcement that it intended to acquire the Wamsutter natural gas gathering and processing assets from The Williams Companies Inc. The outlook is stable. WINDSWEPT ENVIRONMENTAL: Dec. 31 Bal. Sheet Upside-Down by $3.7M ----------------------------------------------------------------- Windswept Environmental Group Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $10,368,999 in total assets, $12,799,496 in total liabilities, and $1,300,000 in Series A redeemable convertible preferred stock, resulting in a $3,730,497 total stockholders' deficit. The company reported a net loss of $2,363,691 for the second quarter ended Dec. 31, 2007, compared with a net loss of $2,203,390 in the same period ended Dec. 31, 2006. Total revenues for the three months ended Dec. 31, 2007, increased $381,173, or 18.8%, to $2,404,631 from $2,023,458 for the three months ended Dec. 31, 2006. Selling, general and administrative expenses decreased $631,128, or 28.6%, to $1,574,835 for the three months ended Dec. 31, 2007, from $2,205,963 for the three months ended Dec, 31, 2006, and constituted approximately 65.5% and 109.0% of revenues in such periods, respectively. This decrease was largely due to the reduction in the provision for doubtful accounts of $764,727. Interest expense increased $50,553, or 8.6%, to $640,392 for the three months ended Dec. 31, 2007, from $589,839 for the three months ended Dec. 31, 2006. The increase was mainly due to interest accrued to taxing authorities for outstanding liabilities. Principally due to the decrease in selling, general and administrative expenses, loss before benefit/provision for income taxes decreased to $2,359,566 from $2,875,637 for the three months ended Dec. 31, 2006. The provision for income taxes for the three months ended Dec. 31, 2007, was $4,125 as compared to a benefit of $672,247 for the three months ended Dec. 31, 2006. This difference was the result of a small state tax liability for the current quarter as compared to a taxable loss in the prior year that resulted in a carryback offset of a prior year's tax liability. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?2866 Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 22, 2007, Holtz Rubenstein Reminick LLP expressed substantial doubt about Windswept Environmental Group Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended June 30, 2007. The auditing firm pointed to the company's losses from operations, dependence on outside financing, and stockholders' deficit. About Windswept Environmental Group Based in Bay Shore, New York, Windswept Environmental Group Inc. (OTC BB: WEGI) through its subsidiaries, Trade-Winds Environmental Restoration Inc. -- http://www.tradewindsenvironmental.com/-- and North Atlantic Laboratories Inc., provides the full range of emergency/catastrophe response and environmental restoration services. * Fitch Says Auto Finance Business Will Face Significant Road Work ------------------------------------------------------------------ The U.S. auto finance business will face some significant road work in 2008, according to Fitch Ratings in a new report. A weakening economy, rising unemployment, geographic weaknesses, residential mortgage spillover, falling used car prices, and a highly leveraged consumer, all pressured credit metrics of U.S. auto lenders in the second half of 2007. In discussing the outlook for 2008, Meghan Crowe, Director in Fitch's Financial Institutions group said, 'The same headwinds will lead to further asset quality deterioration in 2008, and recent dislocations in the bond insurance and capital markets heighten the potential that funding costs and liquidity pressures will be greater in 2008 than Fitch saw last year.' In a special report, Fitch examines the portfolio size, asset quality, profitability metrics, and funding strategies for some of the largest captive and non-captive auto lenders in the US. According to Ms. Crowe, 'Asset quality deterioration, higher funding costs, and uncertain ABS market conditions, could result in negative rating action for non-captive lenders in 2008, although, the larger lenders benefit from significant business line diversity and stable deposit funding.' Fitch believes the domestic auto captives have endured negative rating action in recent years, due to declining demand, competition from foreign manufacturers, auto supplier struggles, and rising pension obligations, among other issues, at parent manufacturers. Fitch believes captive asset quality and funding costs are a concern in 2008, but asset quality deterioration should be less severe than in non-captive portfolios, given the prime-focus of the captive business. Fitch's report also provides an overview of the auto finance market, including a discussion of business drivers, the role of the auction market, and the relationship between lenders and car dealerships. * Moody's Says U.S. Credit Card Performance Continues to Weaken --------------------------------------------------------------- Fourth quarter performance of the U.S. credit card sector continued to weaken across several of the performance measures tracked by Moody's Credit Card Indices. With the charge-off and delinquency rates headed upwards, Moody's has a negative Outlook for the US credit card sector. Even so, Moody's sees no immediate rating implications for credit card asset-backed securities. Moody's believes that fundamental differences in credit underwriting standards, risk management, issuer credit strength, and macroeconomic drivers may explain why the credit card sector does not appear to be following the downturn in the sub-prime mortgage sector at this time. Throughout 2007, the charge-off and delinquency rates rose from year-earlier levels, and both rates ended at their highest points for the year in the fourth quarter, 4.98% and 4.26%, respectively. Both the charge-off and delinquency rates are clearly on the rise and, in the coming months, will likely continue to rise. For some trusts, charge-off rates may increase close to the upper bound of Moody's range of expected performance by year end. Bankruptcy filings, an important component of the reported charge- off rate, also rose throughout 2007 and are expected to continue to rise throughout 2008. The payment rate for the fourth quarter 2007 was 18.30%. Although lower than the year-earlier rate, the payment rate remains within the historically high range of between 18% and 20%. The average yield on credit cards for the credit card companies has been stable-to-improving despite lowered interest rates, thanks to risk-based re-pricing, the discretion that many card issuers have to change rates, and also the increase in collected late fees as more borrowers are delinquent. The excess spread (i.e., portfolio revenues less asset-backed deal expenses like interest coupon, the cost of servicing and charge- offs) remained robust by historical standards. For fourth quarter 2007, the excess spread margin averaged 8.36%. The long-term quarterly average of excess spread is about 5.8% Moody's Indices track key performance metrics of more than $460 billion of U.S. bank credit card loans backing securities rated by Moody's. 4th Quarter Charge-off Rate Rose to 4.98% The charge-off rate rose to 4.98% in 4th quarter 2007 from 4.27% posted in the same period a year ago. This marks the fourth quarterly year-over-year increase in the charge-off rate after twelve consecutive quarters of improvement that began in 1st quarter 2004. In December 2007, the charge-off rate rose to 5.10% from 4.38% a year ago. This is the first time the charge-off rates went above 5% since the October 2005 change in the personal bankruptcy law. The charge-off rate measures those credit card balances written off as uncollectible as an annualized percent of total loans outstanding. 4th Quarter Delinquency Rate Rose to 4.26% The delinquency rate in 4th quarter 2007 rose to 4.26% from 3.83% posted in 4th quarter 2006. Meanwhile, the December 2007 delinquency rate rose to 4.33% from 3.80% a year ago. The delinquency rate measures the proportion of account balances for which a monthly payment is more than 30 days late as a percent of total balances. 4th Quarter Payment Rate Fell to 18.30% The 4th quarter payment rate fell to 18.30% from 18.90% in 4th quarter a year ago. This marks the fourth year-over-year decrease in the quarterly payment rate after a long period of consecutive increases that began in the 4th quarter 2002. In December 2007, cardholders paid back, on average, 17.89% of their credit card debts, down from last year's December rate of 18.60%. The payment rate started to decline in December 2006 after posting a record-setting forty-two months of consecutive year- over-year improvement. 4th Quarter Yield Increased to 20.01% The 2007 4th quarter yield increased to 20.01% from 18.70% a year earlier. Similarly, the December yield figure increased to 19.94% from 18.74% a year ago. Yield is the annualized percentage of income, primarily finance charges and fees, collected during the month as a percent of total loans. 4th Quarter Excess Spread Rose to 8.36% Excess spread, a proxy for the profitability of securitized credit card portfolios, rose to 8.36% for the 4th quarter of 2007 from 7.45% in the 4th quarter of 2006. In December, the one-month excess spread rose to 8.06% from 7.13% posted a year earlier. The long-term historical average excess spread is approximately 5.78%. * S&P Downgrades 114 Tranches' Ratings From 17 Cash Flows and CDOs ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 114 tranches from 17 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 112 of the lowered ratings from CreditWatch with negative implications. Additionally, S&P affirmed its ratings on eight classes--seven at 'AAA' and one at 'AA-'--and removed them from CreditWatch negative. The downgraded tranches have a total issuance amount of $12.685 billion. All of the affected transactions are mezzanine structured finance CDOs of asset-backed securities, which are CDOs of ABS collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. This CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on subprime U.S. RMBS securities. To date, including the CDO tranches and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 1,840 tranches from 453 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1,913 ratings from 562 transactions are currently on CreditWatch negative for the same reasons. In all, the affected CDO tranches represent an issuance amount of $348.638 billion. Standard & Poor's will continue to monitor the CDO transactions it rates and take rating actions, including CreditWatch placements, when appropriate. Rating and CreditWatch Actions Rating ------ Transaction Class To From ----------- ----- -- ---- ACA Aquarius 2006-1 A1-J BB+ AA/Watch Neg ACA Aquarius 2006-1 A1-S BBB AAA/Watch Neg ACA Aquarius 2006-1 A2 B- BBB-/Watch Neg ACA Aquarius 2006-1 A3 CCC- B/Watch Neg ACA Aquarius 2006-1 B1 CC CCC/Watch Neg ACA Aquarius 2006-1 B2 CC CCC-/Watch Neg Cairn Mezz ABS CDO 1 PLC II BBB AAA/Watch Neg Cairn Mezz ABS CDO 1 PLC III BBB- AA/Watch Neg Cairn Mezz ABS CDO 1 PLC IV BBB- AA-/Watch Neg Cairn Mezz ABS CDO 1 PLC Q Combo Nt AAA AAA/Watch Neg Cairn Mezz ABS CDO 1 PLC V BB+ A/Watch Neg Cairn Mezz ABS CDO 1 PLC VI BB- BBB/Watch Neg Cairn Mezz ABS CDO 1 PLC VII B+ BB+/Watch Neg Cairn Mezz ABS CDO III Ltd A1-VF BBB- AAA/Watch Neg Cairn Mezz ABS CDO III Ltd A2A BB AAA/Watch Neg Cairn Mezz ABS CDO III Ltd A2B B AAA/Watch Neg Cairn Mezz ABS CDO III Ltd B1 B- AA/Watch Neg Cairn Mezz ABS CDO III Ltd B2 B- AA-/Watch Neg Cairn Mezz ABS CDO III Ltd C1 CCC+ A+/Watch Neg Cairn Mezz ABS CDO III Ltd C2 CCC+ A/Watch Neg Cairn Mezz ABS CDO III Ltd C3 CCC+ A-/Watch Neg Cairn Mezz ABS CDO III Ltd D1 CCC BBB+/Watch Neg Cairn Mezz ABS CDO III Ltd D2 CCC BBB/Watch Neg Cairn Mezz ABS CDO III Ltd D3 CCC- BBB-/Watch Neg Cairn Mezz ABS CDO III Ltd E BB- BB+/Watch Neg Charles Fort CDO I Ltd A-1 BB AAA/Watch Neg Charles Fort CDO I Ltd A-2 CCC+ AAA/Watch Neg Charles Fort CDO I Ltd B CCC- AA/Watch Neg Charles Fort CDO I Ltd C CC BBB+/Watch Neg Charles Fort CDO I Ltd D-1 CC BBB-/Watch Neg Charles Fort CDO I Ltd D-2 CC B+/Watch Neg Charles Fort CDO I Ltd E CC CCC/Watch Neg Commodore CDO II Ltd A-2(a) AA AAA Commodore CDO II Ltd A-2(b) AA AAA Commodore CDO II Ltd B CCC- A+/Watch Neg Commodore CDO II Ltd C CC BBB-/Watch Neg Coriolanus Ltd. (Barrumundi Super Senior Repack) CLN A+ AAA Costa Bella CDO Ltd. A1A BB- AAA/Watch Neg Costa Bella CDO Ltd. A2 CCC+ AA+/Watch Neg Costa Bella CDO Ltd. B CCC- A-/Watch Neg Costa Bella CDO Ltd. C CCC- BBB+/Watch Neg Costa Bella CDO Ltd. D CC BB/Watch Neg Costa Bella CDO Ltd. E CC B-/Watch Neg Costa Bella CDO Ltd. F CC CCC/Watch Neg Costa Bella CDO Ltd. G CC CCC-/Watch Neg Furlong Synthetic ABS CDO 2006-1 Sr Sec AAA AAA/Watch Neg Furlong Synthetic ABS CDO 2006-1 A1 BBB+ AAA/Watch Neg Furlong Synthetic ABS CDO 2006-1 A2 BB+ AA/Watch Neg Furlong Synthetic ABS CDO 2006-1 A3 BB- BBB+/Watch Neg Furlong Synthetic ABS CDO 2006-1 B CCC B+/Watch Neg Furlong Synthetic ABS CDO 2006-1 Combo Nts CC BBB+/Watch Neg Glacier Funding CDO II Ltd. B BBB- AA/Watch Neg Glacier Funding CDO II Ltd. C CCC- BBB/Watch Neg Glacier Funding CDO II Ltd. D CC BB/Watch Neg Glacier Funding CDO II Ltd. Pref Shrs CC BB-/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd A-b BB- AAA/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd A-f BB- AAA/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd B B- AA/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd C CCC- BBB/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd D CC B/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd S AA AAA/Watch Neg Hudson Mezzanine Funding 2006-1 Ltd UnfdSrSwp BBB-srb AAAsrb/Watch Neg Independence IV CDO Ltd. A-1 Series 1 AAA AAA/Watch Neg Independence IV CDO Ltd. A-1 Series 2 AAA AAA/Watch Neg Independence IV CDO Ltd. A-2 AA AAA/Watch Neg Independence IV CDO Ltd. A-3 BBB+ AAA/Watch Neg Independence IV CDO Ltd. B BB- BBB+/Watch Neg Independence IV CDO Ltd. C CC CCC-/Watch Neg Libra CDO Ltd. A B AA/Watch Neg Libra CDO Ltd. B CCC+ A-/Watch Neg Libra CDO Ltd. C CC BB+/Watch Neg Libra CDO Ltd. D CC CCC-/Watch Neg Libra CDO Ltd. Sr Swap BBsrs AAAsrs/Watch Neg Neptune CDO IV Ltd A-1 CCCsrb AAAsrb/Watch Neg Neptune CDO IV Ltd A-2 CC AA+/Watch Neg Neptune CDO IV Ltd B CC A+/Watch Neg Neptune CDO IV Ltd C CC A-/Watch Neg Neptune CDO IV Ltd D CC BB+/Watch Neg Neptune CDO IV Ltd E CC B-/Watch Neg Neptune CDO IV Ltd X BB AAA/Watch Neg Octans II CDO Ltd. A-1 Swap BBsrp AAAsrp/Watch Neg Octans II CDO Ltd. A-2 B- AA+/Watch Neg Octans II CDO Ltd. A-3A B- AA+/Watch Neg Octans II CDO Ltd. A-3B B- AA+/Watch Neg Octans II CDO Ltd. B CCC A+/Watch Neg Octans II CDO Ltd. C-1 CCC- BBB/Watch Neg Octans II CDO Ltd. C-2 CC BB+/Watch Neg Octans II CDO Ltd. D CC BB/Watch Neg Octans II CDO Ltd. X-1 CC B/Watch Neg Octans II CDO Ltd. X-2 CC CCC-/Watch Neg Stack 2006-1 Ltd. I BBB- AAA/Watch Neg Stack 2006-1 Ltd. II BB AA/Watch Neg Stack 2006-1 Ltd. III B+ BBB+/Watch Neg Stack 2006-1 Ltd. IV B BBB/Watch Neg Stack 2006-1 Ltd. V CCC+ BBB-/Watch Neg Stack 2006-1 Ltd. VI CCC- B-/Watch Neg Stack 2006-1 Ltd. VII CC CCC-/Watch Neg Summer Street 2007-1 Ltd. A-1SA AAA AAA/Watch Neg Summer Street 2007-1 Ltd. A-1A B AAA/Watch Neg Summer Street 2007-1 Ltd. A-1B CCC+ AAA/Watch Neg Summer Street 2007-1 Ltd. A-1SB BBB- AAA/Watch Neg Summer Street 2007-1 Ltd. A-2 CCC AAA/Watch Neg Summer Street 2007-1 Ltd. B CCC- AA/Watch Neg Summer Street 2007-1 Ltd. C CC A-/Watch Neg Summer Street 2007-1 Ltd. D CC BB/Watch Neg Tourmaline CDO III Ltd A-1a A AAA/Watch Neg Tourmaline CDO III Ltd A-1b A AAA/Watch Neg Tourmaline CDO III Ltd A-2 FLT BBB AAA/Watch Neg Tourmaline CDO III Ltd A-2 FXD BBB AAA/Watch Neg Tourmaline CDO III Ltd B-1 BBB- AA/Watch Neg Tourmaline CDO III Ltd B-2 BB AA-/Watch Neg Tourmaline CDO III Ltd C CCC+ A/Watch Neg Tourmaline CDO III Ltd Combo Nts CCC- BBB/Watch Neg Tourmaline CDO III Ltd D-1 CCC BBB+/Watch Neg Tourmaline CDO III Ltd D-2 FLT CCC- BBB/Watch Neg Tourmaline CDO III Ltd D-2 HYB CCC- BBB/Watch Neg Tourmaline CDO III Ltd D-3 CC BBB-/Watch Neg Tourmaline CDO III Ltd E CC BB+/Watch Neg Tourmaline CDO III Ltd PrncPtdNts AA- AA-/Watch Neg Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ ACA Aquarius 2006-1 B3 CC ACA Aquarius 2006-1 I Sub Nts CC Commodore CDO II Ltd A-1MM AAA/A-1+ Glacier Funding CDO II, Ltd. A-1NV AAA Glacier Funding CDO II, Ltd. A-1V AAA Glacier Funding CDO II, Ltd. A-2 AAA Hudson Mezzanine Funding 2006-1 Ltd E CC Libra CDO Ltd. X CC * 2008 Economic Stimulus Act Provides Tax Benefits to Businesses ---------------------------------------------------------------- In addition to providing stimulus payments to individuals, the Economic Stimulus Act of 2008 provides incentives to businesses. These incentives include a special 50-percent depreciation allowance for 2008 purchases and an increase in the small business expensing limitation for tax years beginning in 2008. 50-Percent Special Depreciation Allowance Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property over several years. It is an annual allowance for the wear and tear, deterioration or obsolescence of the property. Under the new law, a taxpayer is entitled to depreciate 50 percent of the adjusted basis of certain qualified property during the year that the property is placed in service. This is similar to the special depreciation allowance was previously available for certain property placed in service generally before Jan. 1, 2005, often referred to as "bonus depreciation." To qualify for the 50 percent special depreciation allowance under the new law, the property must be placed in service after Dec. 31, 2007, but generally before Jan. 1, 2009. To reflect the new 50-percent special depreciation allowance, the IRS is developing a new version of the depreciation and amortization form for fiscal year filers. The new form will be designated as the 2007 Form 4562-FY. Section 179 Expensing In general, a qualifying taxpayer can elect to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property, after the relevant section in the Internal Revenue Code. Under the new law, a qualifying business can expense up to $250,000 of section 179 property purchased by the taxpayer in a tax year beginning in 2008. Absent this legislation, the 2008 expensing limit for section 179 property would have been $128,000. The $250,000 amount provided under the new law is reduced if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000. The new law does not alter the section 179 limitation imposed on sport utility vehicles, which have an expense limit of $25,000. * Lending Firms Oppose Legislation Aimed at Helping Homeowners -------------------------------------------------------------- Top lending institutions in the U.S. are lobbying hard to block a proposal that stands to help consumers and investors threatened by problems in the housing market, the Washington Post reports. The firms are against a proposed revision to the U.S. Bankruptcy Code that would grant judges greater power to rewrite homeowners' mortgages. The legislation, authored by Sen. Richard Durbin of Illinois, would allow bankruptcy judges for the first time to alter the terms of mortgages for primary residences. Under the proposal, borrowers could declare bankruptcy, and a judge would be able to reduce the amount they owe as part of resolving their debts. Currently, judges have no authority to order changes in mortgage terms for homeowners whose property is foreclosed. Mortgage lenders can foreclose against a homeowner in default on a primary residence 90 days after a bankruptcy filing. According to Associated Press, also included in the Senate legislation is a measure mandating $200 million for foreclosure- prevention counseling services and an allowance for states to issue more tax-exempt bonds so that housing agencies could help homeowners refinance high-cost mortgages. The AP report cites The Mortgage Bankers Association as saying the propose measure would end up hurting many more borrowers in the long run by requiring "higher interest rates and larger down payments to offset the risk" of bankruptcy court intervention on behalf of some homeowners. The bankruptcy measure is part of a larger housing assistance bill. A separate version of the measure was approved late last year. * Congress Reviewing New Rescue Proposals for the Housing Market ---------------------------------------------------------------- Marcy Gordon, a business writer for the Associated Press, reports that the United States Congress is reviewing various new proposals to rescue the struggling housing market. According to the AP report, among the proposals being considered are bills pertaining to the easing of bankruptcy rules, granting protection to banks from lawsuits and providing government assistance to homeowners facing foreclosure. AP said that the proposed changes in the U.S. Bankruptcy Code includes allowing courts to lower interest rates and condone part of the mortgage borrowers' debt. The proposed revision is being strongly opposed by some lenders and many Republicans. The Mortgage Bankers Association said that the proposed bill, once enacted into law, would hurt rather than help borrowers, as it would lead banks to increase interest rates and require larger down payments. Legislators are also considering proposals to protect banks from lawsuits by investors whose inventory of mortgage securities may be negatively impacted by revisions in the loan terms. Congress is also considering a proposal by Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee for the creation of a federal corporation, who would acquire distressed mortgages and provide refinancing to troubled homeowners. According to the New York Times, the government would buy the mortgages at a substantial discount from the original loan amount. The mortgage lenders, or the investors who bought mortgage-backed securities, would rid themselves of the bad loans but would still have to book their losses. * U.S. Bankruptcy Court Clerk Neil Bason Joins Howard Rice ---------------------------------------------------------- Howard Rice Nemerovski Canady Falk & Rabkin P.C. reported that Neil W. Bason, former law clerk to the Honorable Dennis Montali, United States Bankruptcy Judge Northern District of California, joins the firm's bankruptcy & reorganization practice as Special Counsel. Mr. Bason will officially join Howard Rice on March 10, 2008, after having clerked for Judge Montali for approximately eight years, during which time he divided his attentions between Judge Montali's normal bankruptcy caseload and numerous appeals that Judge Montali heard in his capacity as a member of the Ninth Circuit Bankruptcy Appellate Panel. "We are thrilled that Neil is joining us," said William J. Lafferty, a senior partner in Howard Rice's Bankruptcy & Reorganization practice. "Given the fall-out from the sub-prime mortgage crisis and the slowing economy, we anticipate that the market for bankruptcy and restructuring services will increase. Neil brings a unique perspective to our practice that will be invaluable to our full spectrum of clients, including companies contemplating or initiating bankruptcy cases, creditors' committees, large case trustees, and third parties whose interests need to be protected in bankruptcy cases or who seek to purchase assets out of bankruptcy. We see growth in the practice and believe that having Neil on our team will be a real plus." Prior to becoming Judge Montali's clerk in 2000, Mr. Bason was in private practice in California and in Massachusetts. He graduated magna cum laude from Boston University School of Law in 1988, where he was Note Editor on the Law Review. Following graduation, he clerked for the Chief Justice of the Supreme Judicial Court of Massachusetts. Prior to attending law school, Neil earned his B.A. at Johns Hopkins University in 1984. "Over the last eight years, I have had the honor and privilege of working for and with Judge Montali on many complicated bankruptcy and restructuring cases. I'm looking forward to bringing that experience and understanding to bear in helping clients as they work through difficult situations. I've watched the Howard Rice bankruptcy lawyers in action over a number of years, and I'm very happy to be joining such an outstanding and well-regarded group," said Mr. Bason. Howard Rice's Bankruptcy & Restructuring Practice has a national reputation, with a highly regarded and wide-ranging practice. The firm is virtually unique among large, full-service law firms in that we undertake substantial debtor, creditors' committee and Chapter 11 trustee representations, as well as the more typical direct representation of individual creditors. The firm's representation of specific creditors in both the workout and bankruptcy context encompasses a wide range of parties involved in creditors' rights issues, including secured creditors, lessors, licensors, licensees, acquirers of assets from bankruptcy estates, and acquirers of entities in bankruptcy. In such representations, Howard Rice attorneys work closely with investors, lenders, entrepreneurs, and established businesses to help them understand the alternatives available to them when dealing with a financially distressed counter party, and to formulate and implement a cost-benefit justified strategy. Where appropriate, we seek innovative approaches and solutions in the workout context, but we also always stand prepared to draw upon the substantial expertise of our large commercial litigation group in complex bankruptcy litigation. About Nemerovski Canady San Francisco-based Howard Rice Nemerovski Canady Falk & Rabkin P.C. -- http://www.howardrice.com/-- represents entities and individuals across a range of practice areas, include: Amazon Digital, Services Inc.; Beverages & More!; The Charles Schwab Corporation; Citigroup Global Markets, Inc.; Digital River, Inc.; First Republic Bank; Genentech, Inc.; Hewlett-Packard Co.; Morgan Stanley; The Oakland Raiders; PlanetOut Inc.; Research In Motion Limited; salesforce.com, inc.; Sony Online Entertainment; United States Olympic Committee; and Wells Fargo & Company. * Two Restructuring and Bankruptcy Lawyers Join Chicago DLA Piper ----------------------------------------------------------------- DLA Piper disclosed that Albert E. Fowerbaugh, Jr., Andrew R. Gifford, Randall A. Hack, Matthew S. Klepper, Ronald M. Lepinskas, Timothy W. Brink, and Forrest B. Lammiman have joined the firm's Chicago office as partners and Douglass F. Rohrman has joined as of counsel from Locke Lord Bissell & Liddell LLP. Mr. Fowerbaugh, Mr. Gifford, Mr. Hack, Mr. Klepper and Mr. Lepinskas join DLA Piper's Litigation practice group. Mr. Brink and Mr. Lammiman join the financial restructuring and bankruptcy practice group, and Mr. Rohrman joins the environmental practice group. "We are excited to add these respected lawyers to our Chicago office," William Rudnick, managing partner of DLA Piper's Chicago office, said. "Our unique global platform will support the group and provide a catalyst for the growth of their practices." "In addition, each of them will help fuel the firm's growth across our offices and practice areas," Mr. Rudnick continued. Mr. Fowerbaugh, Mr. Gifford, Mr. Hack, Mr. Klepper and Mr. Lepinskas join the firm's litigation platform which includes approximately 1,400 litigators working from 64 offices in 25 countries. "This newly added team of attorneys increases the already robust capabilities of our Litigation group in the Chicago office which continues to serve as an important part of the firm's litigation platform," Robert Mathias, chair of DLA Piper's Litigation practice group, said. "In addition, the arrival of such seasoned lawyers to DLA Piper enhances the mentoring and training opportunities available to our talented, younger litigation attorneys." "Our new colleagues are a complementary addition to our dynamic Chicago litigation practice," Samuel Isaacson, chair of the Chicago Litigation practice, said. "This provides yet another excellent opportunity for DLA Piper to strengthen its regional, national and global presence as a leading litigation firm." Mr. Lammiman and Mr. Brink join DLA Piper's financial restructuring & bankruptcy practice group which includes approximately 50 attorneys based in Baltimore, Chicago, Las Vegas, Los Angeles, New York, Northern Virginia, Tampa and Washington, D.C. "Forrest and Tim are well known, experienced and accomplished bankruptcy attorneys who will enhance the overall breadth and visibility of our group," Mark Berkoff, co-chair of the financial restructuring and bankruptcy practice group, added. "We welcome them to the team." The team's arrival represents yet another addition to the Chicago office in recent months as the firm's platform continues to attract some attorneys and executives in the region. Last week, DLA Piper formed a strategic alliance with former LaSalle Bank chairman Norman R. Bobins, who will help lead the expansion of the firm's presence in the banking and financial services industry. In September, DLA Piper stated that a group of five private equity and fund formation attorneys had joined the firm in Chicago from Winston & Strawn, led by Steven Napolitano, who now serves as co- chair of DLA Piper's US Private Equity group. With the arrival of this latest group of attorneys, DLA Piper continues to expand its core practice groups in Chicago, including corporate and finance, litigation, intellectual property, real estate and franchise law, with a particular emphasis on corporate and litigation capabilities. About DLA Piper Based in Baltimore, Maryland, DLA Piper -- http://www.dlapiper.com -- has 3,400 lawyers operating out of 65 offices in the US; Europe, the Middle East, and Africa; and the Asia Pacific region. It serves corporate clients through a broad range of practices divided into a dozen key groups; specialties include intellectual property, regulatory and government affairs, and technology and media. The firm, which shortened its name from DLA Piper Rudnick Gray Cary in 2006, was formed in 2005 when Maryland-based Piper Rudnick merged with California-based Gray Cary Ware & Freidenrich and UK firm DLA. * Gersten Savage Advises More than $900 Mil. Transactions in 2007 ----------------------------------------------------------------- Gersten Savage LLP advised on transactions totaling in excess of $900 million in 2007. Gersten Savage transactions in 2007 included these: -- $530 million private placement/asset purchase for Vancouver- based gold producer Rusoro Mining Ltd. Gersten Savage also acted as special counsel for Rusoro's acquisition of the Venezuelan assets of Gold Fields Ltd. -- $51 million SPAC offering for China Healthcare Acquisition Corp. -- $50 million senior bank facility, $9 million sale of 8% senior subordinated notes and a $5 million common stock shelf offering for Teton Energy Corporation, an oil and gas exploration and production company headquartered in Denver, Colorado. -- $25 million private placement and $5.85 million offering of common stock to U.S. and Israeli investors for Xfone Inc., a holding company providing international voice, video and data communications services with operations in the UK, US and Israel. -- $22.5 million sale of senior secured convertible promissory notes and warrants for Terra Nostra Resources Corp., a copper and stainless steel producer in China through joint ventures in that country. -- $14 million registered direct offering for Delcath Systems Inc., which is in clinical trials for a delivery system in the treatment of liver cancer. -- $10 million private placement for Titan Energy Worldwide Inc., which provides solutions for distributed, renewable and alternative energy in the US and worldwide. -- $5 million sale of 10% convertible promissory notes and warrants for HC Innovations Inc., which provides healthcare information systems and nursing services for public and private programs and providers in nine states. -- $5 million debenture offering and subsequent acquisition of Challenger Power Boats Sugar Sands power jet boats for Executive Sports Inc. , which designs, develops and markets water sports products. -- $3.5 million unit offering and $6 million senior term note for Aftersoft Group Inc., a supplier of supply chain management solutions to automotive parts manufacturers, distributors and retailers. -- Merger of Future Now Group Inc. with Future Now Inc. and closing of $1.8 million financing. Future Now Group Inc. offers a proprietary marketing planning framework and software for businesses to measure and improve their online marketing initiatives. "2007 was a very robust year for us, as demonstrated by our League Table ranking in the top seven percent of law firms in the country acting as issuer's counsel," Jay Kaplowitz, founding partner, said. Mr. Kaplowitz said the firm marked other significant milestones in 2007. Gersten Savage celebrated its 30th anniversary last year as an independent firm. The firm renewed its lease for its midtown Manhattan headquarters at 600 Lexington Avenue and completed $1 million in capital improvements. In addition, the firm said it took steps to facilitate a measured growth plan in 2008 and acquired additional works of contemporary art to add to its already impressive art collection. In 2008, Gersten is looking to add attorneys in its core corporate, finance, hedge fund and litigation practices, as well as to expand other practice areas including real estate, bankruptcy, and trusts and estates. "We're targeting strategic growth across our practice areas this year. As our core practice areas grow and become more sophisticated, it is necessary to bring additional sophistication in related segments," David Danovitch, senior partner, commented. "The firm has established a lateral hiring committee that is intended to facilitate the recruitment of senior attorneys to supplement and augment its sophisticated practice specialties. "It is early in the new year and we have already succeeded in recruiting a senior bank regulatory and international finance partner who will oversee our growing international banking practice," Mr. Danovitch added. About Gersten Savage LLP Gersten Savage LLP, founded in 1977, is a full-service firm, Gersten Savage's practice groups cover corporate, finance, tax, litigation, bankruptcy, real estate, and intellectual property in the United States and throughout the world. The firm has about 50 employees. Gersten Savage represents issuers and broker dealers on matters ranging from private placements, public underwritings, regulatory compliance, and merger and acquisitions. The firm also represents principals in the establishment of hedge funds and off- shore financing entities. In addition, the firm represents start-up companies, established public and private enterprises, domestic and offshore investment partnerships, and registered investment advisors. Its international and tax planning division is able to provide a full range of legal services to its clients is enhanced by intellectual property, bankruptcy and real estate expertise. The firm's clients span a broad range of industries, including investment banking, e-commerce, consumer products, insurance, health-care, manufacturing, importing, mining, oil and gas, distribution, and retailing. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 77 28 AFC Enterprises AFCE (36) 151 (7) Alaska Comm Sys ALSK (28) 557 24 Bare Escentuals BARE (132) 214 76 Blount International BLT (78) 472 140 CableVision System CVC (5,131) 9,807 (630) Carrols Restaurant TAST (13) 463 (29) Centennial Comm CYCL (1,063) 1,343 14 Cheniere Energy CQP (203) 1,962 109 Choice Hotels CHH (149) 338 (31) Cincinnati Bell CBB (671) 1,966 17 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (48) 722 145 Corel Corp. CRE (20) 249 (19) Crown Media HL CRWN (619) 703 48 CV Therapeutics CVTX (157) 281 204 Cyberonics CYBX (18) 132 (28) Deltek Inc PROJ (144) 148 (12) Denny's Corporation DENN (201) 413 (65) Domino's Pizza DPZ (1,434) 497 82 Dun & Bradstreet DNB (467) 1,419 (262) Einstein Noah Re BAGL (41) 146 0 Entropic Communications ENTR (33) 177 29 Extendicare Real EXE-U (24) 1,277 161 Gencorp Inc. GY (52) 995 77 General Motors GM (40,071) 149,500 (1,798) Healthsouth Corp. HLS (1,025) 2,529 (351) IDEARC Inc IAR (8,531) 1,658 391 IMAX Corp IMX (77) 213 0 IMAX Corp IMAX (77) 213 0 Incyte Corp. INCY (141) 283 238 Indevus Pharma IDEV (74) 183 39 Intermune Inc ITMN (13) 292 237 Koppers Holdings KOP (24) 676 186 Life Sciences Re LSR 0 236 7 Linear Tech Corp LLTC (564) 1,410 912 Lodgenet Entertn LNET (18) 709 18 Mediacom Comm MCCC (188) 3,631 (276) National Cinemed NCMI (579) 439 40 Navistar Intl NAVZ (1,699) 10,786 164 Netsuite Inc N (49) 56 (46) Nexstar Broadcasting NXST (87) 708 (19) NPS Pharm Inc NPSP (210) 361 (119) PRG-Schultz Intl PRGX (29) 115 21 Primedia Inc PRM (129) 282 6 Protection One PONN (13) 675 (287) Radnet Inc. RDNT (53) 434 41 Regal Entertainment RGC (93) 2,594 (41) Riviera Holdings RIV (42) 219 18 RSC Holdings Inc RRR (73) 3,554 (283) Rural Cellular RCCC (595) 1,328 98 Sally Beauty Hol SBH (761) 1,405 354 Sealy Corp. ZZ (113) 1,025 22 Sipex Corp SIPX (18) 44 2 Sirius Satellite SIRI (641) 1,587 (262) Sonic Corp SONC (102) 765 (27) Spectrum Brands SPC (104) 3,211 779 St. John Knits Inc. SJKI (52) 213 80 Station Casinos STN (291) 3,932 (50) Stelco Inc STE (64) 2,657 693 Town Sports Int. CLUB (6) 483 (71) UST Inc. UST (292) 1,461 446 Voyager Learning VLCY (53) 917 (637) Warner Music Gro WMG (36) 4,572 (687) Weight Watchers WTW (945) 1,037 (134) WR Grace & Co. GRA (383) 3,871 (1,057) XM Satellite XMSR (724) 1,709 (244) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Joseph Medel C. Martirez, Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Philline P. Reluya, Ma. Cristina I. Canson, Christopher G. Patalinghug, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***