/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080415.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, April 15, 2008, Vol. 12, No. 89 Headlines ACE SECURITIES: Moody's Junks Rating on Cl. M-4 S. 2005-SL1 Certs. ALERIS INT'L: Posts $128MM Net Loss in Year Ended December 31 ALLIANCE BANCORP: Moody's Slashes Rating on Cl. M-2 Certs. to Caa2 AMES DEPARTMENT: Wants Plan Filing Deadline Moved to October 23 ANSLEY PARK: Moody's Junks Rating on $450MM Notes ANTHRACITE CRE: Moody's Holds Ratings on Stable Performance AUSTIN HOUSING: Moody's Holds 'B1' Rating on $9.135MM Bonds AUSTIN HOUSING: Moody's Affirms B3 Rating with Neg. Outlook AVALON RE: S&P Slashes Ratings to 'CC' After Steam Pipe Explosion BANC OF AMERICA: Fitch Holds Low-B Ratings on Four Cert. Classes BARRINGTON BROADCASTING: S&P Keeps 'B' Ratings; Outlook Now Neg BEAR STEARNS: First Qtr. Earnings Dip to $115MM from 2007's $554MM BEXLEY PLACE: Case Summary & Ten Largest Unsecured Creditors BFWEST LLC: Has $205 Million in Debt to Creditors BLOCKBUSTER INC: Extends $1.3BB Unsolicited Bid for Circuit City BROWN SHOE: Operating Challenges Prompts S&P's Negative Outlook CANADIAN TRUSTS: Investors Want ABCP Plan Voting Deadline Moved CANADIAN TRUSTS: CIBC to Provide Funding for Canadian ABCP Rescue CANADIAN TRUSTS: Canaccord to Redeem 97% of Clients' ABCP Stake C-BASS: Poor Collateral Performance Cues Moody's to Cut Ratings CALEDONIA MINING: Posts CN$4MM Net Loss in Year ended December 31 CHESAPEAKE CORP: Weak Performance Cues S&P to Chip Rating to 'B+' CELSIA TECH: Modifies Debenture Interest Due Dates to May 2010 CITIUS II: Moody's Downgrades Ratings to C on $39 Million Notes COBALT CMBS: Stable Performance Cues Fitch to Affirm Ratings DELTA AIR: Deal with Pilots Clears Way for Northwest Merger DELTA AIR: Board Votes "For" Merger with Northwest Airlines DIRECT INSITE: December 31 Balance Sheet Upside-Down by $1 Million EDM EQUIPMENT: Files Chapter 7 Liquidation in Nebraska EDUCATION RESOURCES: Asks Court to Clarify Creditors' Info Access EDUCATION RESOURCES: Wants to Hire EPIQ Bankruptcy as Claims Agent EGPI FIRECREEK: To Restate Financial Statements Due to Errors FINANCIAL GUARANTY: Explores Options, Including Capital Infusion FIRST FRANKLIN: Moody's Lowers Ratings on 16 Certificate Classes FLOWSERVE CORP: Moody's Holds Ratings and Changes Outlook to Pos. FREMONT GENERAL: Inks $5.6 Bil. Asset Sale Deal with CapitalSource FREMONT GENERAL: NYSE Suspends Shares Trading, Plans Delisting FREMONT HOME: Fitch Slashes Ratings on $704.2MM Certificates FREMONT HOME: Moody's Junks Rating on Cl. SL-A Certificates FRONTIER AIRLINES: Denver Airport Rating Not Affected by Filing FUSION TELECOM: Appoints Gordon Hutchins Jr. to President and CEO GENERAL GROWTH: Moody's Cuts Unsecured Debt Rating to Ba2 from Ba1 GLOBAL CREDIT: S&P Designates 'B+' Ratings on Negative CreditWatch GLOBAL TEL*LINK: Moody's Holds B2 CF Rating with Stable Outlook GENERAL MOTORS: Idles Arlington Assembly Plant for Three Weeks GMAC COMMERCIAL: Moody's Affirms 'C' Rating on $15.261MM Certs. GORDON GANZ: Files for Bankruptcy After Closure of Grain Business GOULD CITY: Council Decides to Hire Bankruptcy Attorney GSC ABS: Poor Credit Quality Cues Moody's to Downgrade Ratings HANCOCK FABRIC: Wants $100 Mil. GE Capital Exit Financing Approved HAWTHORNE ON NORTH: Case Summary & 11 Largest Unsecured Creditors HSBC HOME: Fitch Junks Ratings on 14 Certificate Classes HUDBAY MINERALS: S&P Withdraws 'B+' Corporate Credit Rating HUGHES NETWORK: S&P Changes Outlook to Stable; Retains 'B' Rating JED OIL: December 31 Balance Sheet Upside-Down by $16 Million JHT HOLDINGS: S&P Withdraws 'CCC+' Corporate Credit Rating KIMBALL HILL: Lenders' Waiver Agreement Further Extended to May 9 LAM RESEARCH: S&P Changes Watch Posting of BB- Rating to Negative LB-UBS COMMERCIAL: S&P Low-B Initial Ratings on Six Cert. Classes LBI MEDIA: S&P Revises Outlook to Stable; Confirms 'B' Rating LE-NATURE'S: Court Approves Second Amended Disclosure Statement LE-NATURE'S: Amended Plan Confirmation Hearing Set on June 9 LENNAR CORP: Posts $88MM Net Loss in Quarter Ended February 29 LINEN 'N THINGS: Weak Operating Margin Prompts Moody's Caa2 Rating MAIR HOLDINGS: Big Sky Unit Gets Default Notice from Mesa Air MANITOWOC COMPANY: To Acquire Enodis In Deal Valued at $2.1 Bil. MCDERMOTT SA: Fifth Amendment on Facility Won't Change S&P Ratings MERRILL LYNCH: Fitch Downgrades Ratings on $134.1MM Certificates MS LLC: Case Summary & 17 Largest Unsecured Creditors MTR GAMING: Posts $11 Million Net Loss in Year ended December 31 N-45 FIRST: Moody's Lifts Rating to Ba1 from Ba2 on Class E Certs. NEXSTAR BROADCASTING: S&P Assigns Ratings on Negative CreditWatch NORANDA ALUMINUM: December 31 Balance Sheet Upside-Down by $76,000 NORTH FOREST: S&P Removes 'BB' Rating From CreditWatch Negative NORTHWEST AIRLINES: Board Votes "For" Merger with Delta Air NORTHWEST AIRLINES: Seeks Allowance for $5,954,902 ALPA Claims NORTHWEST AIRLINES: Delta and Pilots Pact Clears Way for Merger NORTHWEST AIRLINES: Dissolves NWA Inc. and NWA Holdings NORTHWEST AIRLINES: Makes Four Additional Shares Distribution ORIGINAL TOTAL: Case Summary & Five Largest Unsecured Creditors PARAMOUNT RESOURCES: Earns $416.2 Million in Year Ended Dec. 31 PEACE ARCH: Insiders May Now Resume Share Trading PERVASIP CORP: Appoints Scott Widham to Board of Directors PHIBRO ANIMAL: Completes AIM Market Listing, Raises $45 Million PILGRIM'S PRIDE: Cuts Weekly Production by 5% on Soaring Feed Cost PLY GEM: Weak Housing Industry Prompts S&P's Negative CreditWatch PSI CORP: Engages Seligson & Giannattasio as its Auditors QUEBECOR WORLD: Seeks Approval to Hire KPMG (US) as Tax Advisor QUEBECOR WORLD: Seeks Court on KPMG (Canada) as Tax Consultant QUEBECOR WORLD: Wants Ernst & Young as Tax Services Provider RAPTOR NETWORKS: Secures $3 Million Financing from Three Investors SAXON ASSET: Fitch Chips Ratings on $354.9 Million Certificates SCOTTISH RE: A.M. Best Downgrades Ratings and Put It Under Review SKYBUS AIRLINES: Seeks Approval of Air Canada Settlement SOLUTIA INC: Has 60,766,560 Outstanding Shares as of February 29 SOLUTIA INC: Settlement Pact with Solvay Gets Court Approval SOLUTIA INC: Harbinger Entities Disclose 30.1% Equity Stake SPANSION INC.: Inks Patent Cross-License Agreement with IBM SPECIALTY UNDERWRITING: Fitch Cuts Ratings on Five Cert. Classes STURGIS IRON: Court OKs Getzler Henrich as Financial Advisors STURGIS IRON: Court Approves Dresser Hiring as Special Counsel TAHERA DIAMOND: Last Day of Filing Bids for Assets is April 28 TAHERA DIAMOND: Wants MCTO Imposed; Gives Operational Update TEKNI-PLEX INC: Inks Restructuring Pact with Key Stakeholders TIENDAS DONATO: Case Summary & 30 Largest Unsecured Creditors ULTRAPETROL LTD: Moody's Holds 'B2' CF Rating on $180 Mil. Notes VIDEOTRON LTD: Prices $455 Mil. Notes Offering; Amends Facility WACHOVIA CORP: Selling $7 Billion Common, Preferred Stocks WACHOVIA CORP: Posts Net Loss of $350MM for Q1; To Cut Dividends WACHOVIA BANK: S&P Upgrades Ratings on Two Classes From Low-Bs WACHOVIA BANK: Moody's Affirms B3 Rating on $2.436MM Class O Cert. WINDSTREAM CORP: S&P Changes Outlook to Stable; Holds 'BB+' Rating WORNICK CO: Can Hire Kurtzman Carson as Claims and Noticing Agent WORNICK CO: Judge Aug Approved Amended Disclosure Statement WORNICK CO: Plan Confirmation Hearing Scheduled on June 23 * Fitch Says Positive Signs Emerged Despite Decline in US Housing * S&P Downgrades 12 Tranches' Ratings From Six Cash Flows and CDOs * S&P Assigns Ratings on 147 CDO Tranches on Negative CreditWatch * David A. McKibbin Joins McDonald Hopkins-WPB Unit as Of Counsel * Structured Finance Lawyer Mark S. Dola Joins King & Spalding * Ascend Says US Major Airlines Face $110BB Fleet Upgrade Costs * Large Companies with Insolvent Balance Sheets ********* ACE SECURITIES: Moody's Junks Rating on Cl. M-4 S. 2005-SL1 Certs. ------------------------------------------------------------------ Moody's Investors Service has downgraded eight certificates and placed on review for possible downgrade one class of certificates, from two transactions issued by ACE Securities Corp. Home Equity Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2005- SL1 -- Cl. M-3, Downgraded to Ba3 from Ba1 -- Cl. M-4, Downgraded to Caa2 from B1 -- Cl. M-5, Downgraded to C from Caa2 Issuer: ACE Securities Corp. Home Equity Loan Trust, Series 2006- SL2 -- Cl. A, Downgraded to B1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa3 from Ba3 -- Cl. M-2A, Downgraded to C from Caa1 -- Cl. M-2B, Downgraded to C from Caa1 -- Cl. M-3, Downgraded to C from Ca ALERIS INT'L: Posts $128MM Net Loss in Year Ended December 31 ------------------------------------------------------------- Aleris International Inc. reported results for the fourth quarter and full year ended Dec. 31, 2007. For three months ended Dec. 31, 2007, the company incurred net loss of $114.0 million compared to net income of $10.9 million for the same period in the previous year. The loss from continuing operations includes $51.2 million of special items, including $21.6 million in restructuring and other charges, $15.1 million from purchase accounting, and $11.2 million in unrealized mark-to-market losses on derivative financial instruments. In addition, the fourth quarter results include amortization expense of $9.2 million as a result of the company's acquisition by Texas Pacific Group, an increase of $4.0 million from the comparable period of 2006. The continued softness in the North American building and construction and automotive industries well as destocking in the North American and European distribution industries impacted fourth quarter shipment levels and profitability. "Fourth quarter performance was significantly impacted by reduced volumes in our Global Rolled and Extruded Products business," Steven J. Demetriou, chairman and chief executive officer, said. "The U.S. construction and automotive industries continued to weaken and demand in certain European end uses was impacted by customer inventory destocking. We have taken aggressive actions to offset the reduced demand in North America, including the announced closure of our Bedford, Ohio and Toronto, Canada paint facilities, and the temporary reduction of manufacturing at our Richmond, Virginia rolling mill." "The cost performance of our European rolled products business in the fourth quarter was negatively impacted by the complexity and activity associated with the completion of our state-of-the-art 160" hot mill in Koblenz, Germany and the Duffel, Belgium plate project. However, both projects are successfully on-line and production has met our expectations. Over the long-term, the investment of capital into our European rolled products business will allow us to expand our production of aerospace and other heat treat plate and sheet, brazing sheet and other high-end product offerings." For full year 2007, the company has net loss of $128.6 million compared to net income of $70.3 million in 2006. The loss from continuing operations contains $146.2 million of unfavorable special items including $104.3 million from purchase accounting, $32.8 million of restructuring and other charges, and $9.1 million in sponsor management fees. In addition, the 2007 results include amortization expense of $40.1 million, an increase of $33.0 million over 2006 as a result of the TPG acquisition. In 2006, Aleris reported revenues of $4.2 billion and income from continuing operations of $30.8 million. The 2006 results included $98.5 million of unfavorable special items. In addition, operating results were negatively impacted by tightening scrap spreads in its North American specification alloy business well as the higher costs of alloys and hardeners used in the manufacturing process, negative effect of metal price lag and approximately $32 million of out of the ordinary cost including higher absorption, environmental reserves and other items. Free cash flow from continuing operations for 2007 was $421.7 million, driven by aggressive working capital management that yielded increased turns from 5.2 to 6.6 per year and a decrease in days of working capital from 70 to 56 in 2007 versus 2006. During the fourth quarter, the company recorded $21.6 million of restructuring and other charges. These charges resulted from the impairment of long-lived assets at the Monterrey, Mexico recycling facility, the Toronto, Ontario paint facility, and the Bedford, Ohio coating facility as a result of the announced closure of those facilities and severance costs related to the departure of certain executive officers. Restructuring and other charges for the full year of $32.8 million included the fourth quarter charges as well as costs associated with several acquisitions that were not consummated and other facility consolidations. Approximately $9.5 million of the total restructuring and other charges will result in cash payments, primarily in 2008. Capital expenditures were $191.8 million in 2007, compared with $119.4 million for the previous year. The increase is primarily attributable to a full year of the Corus Aluminum acquisition and the expansion projects which accounted for $137.1 million of capital expenditures in 2007. The company ended the year with $2.7 billion of net debt and $369 million of liquidity, excluding the impact of the Zinc sale. Pro forma for the application of the net proceeds from the Zinc sale, net debt was $2.4 billion as of Dec. 31, 2007. Aleris' management has completed its assessment of the effectiveness of the company's internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Based upon its documentation, testing and evaluation, Management has concluded that the company did not have effective internal control over financial reporting as of Dec. 31, 2007; within the context of the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. At Dec. 31, 2007, the company's balance sheet showed total assets of $5.117 billion, total liabilities of $4.269 billion and total shareholders' equity of approximately $0.848 billion. About Aleris International Inc Headquartered in Beachwood, Ohio, Aleris International Inc. (NYSE: ARS) -- http://www.aleris.com/-- manufactures rolled aluminum products and offers aluminum recycling and the production of specification alloys. The company also manufactures value-added zinc products that include zinc oxide, zinc dust and zinc metal. The company operates 42 production facilities in the United States, Brazil, Germany, Mexico and Wales, and employs approximately 4,200 employees. * * * Moody's Investor Service placed Aleris International Inc.'s long- term corporate family rating at 'B2' in November 2006. The rating still holds to date with a stable outlook. ALLIANCE BANCORP: Moody's Slashes Rating on Cl. M-2 Certs. to Caa2 ------------------------------------------------------------------ Moody's Investors Service has downgraded seven certificates and maintained on review for possible further downgrade four of those classes of certificates from a transaction issued by Alliance Bancorp Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Alliance Bancorp Trust 2007-S1 -- Cl. A-1, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-3, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-4, Downgraded to B3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa2 -- Cl. M-2, Downgraded to Caa3 from B1 -- Cl. M-3, Downgraded to C from Caa2 AMES DEPARTMENT: Wants Plan Filing Deadline Moved to October 23 --------------------------------------------------------------- Ames Department Stores asks the United States Bankruptcy Court for the Southern District of New York to further extend their exclusive periods to file a Chapter 11 plan and solicit acceptances of that plan until Oct. 23, 2008, according to Bloomberg News. The report, citing court documents, says the Debtor filed its plan and a related disclosure statement but has refrained from soliciting votes pending a determination as to the solvency of the Debtor's estates and recoveries under the plan. A hearing is set on April 23, 2008, to consider the Debtor's request, notes Bloomberg. Founded in Southbridge, Massachusetts, Ames Department Stores is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in 19 states and the District of Columbia. In 1990, Ames sought relief under Chapter 11 of the United States Bankruptcy Code, blaming low profitability and consumers who defaulted on their debt payments. Rocky Hill, Connecticut-based Ames filed for chapter 11 protection on Aug. 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Togut, Segal & Segal LLP and Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. On August 14, 2002, Ames announced plans to go out of business, liquidate and close all 327 stores. ANSLEY PARK: Moody's Junks Rating on $450MM Notes ------------------------------------------------- Moody's Investors Service has downgraded its rating of one class of notes issued by Ansley Park ABS CDO, Ltd. The notes affected by the rating action are: Class Description: $450,000,000 Class A-1 Senior Secured Floating Rate Notes Due 2046 -- Prior Rating: B3, on review with future direction uncertain -- Current Rating: Caa3 Ansley Park ABS CDO, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. The transaction experienced an event of default under the Indenture. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, Moody's was informed by the Trustee that the majority of the Controlling Class directed the Trustee to proceed with the sale and liquidation of the Collateral in accordance with the Indenture. The Trustee also notified Moody's that it sold all of the Collateral, made a final distribution and applied the proceeds of the liquidation in accordance with applicable provisions of the Indenture on March 27, 2008. In that distribution, according to the trustee, the only noteholders to receive a distribution of liquidation proceeds were holders of Class A-1 Notes. Available funds were not sufficient to pay the Class A-1 Notes in full. The rating actions taken reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. ANTHRACITE CRE: Moody's Holds Ratings on Stable Performance ----------------------------------------------------------- Moody's Investors Service affirmed the ratings of 10 classes of Notes issued by Anthracite CRE CDO 2006-HY3, Ltd. as: -- Class A, $174,457,251, Floating Rate Notes Due 2051, affirm at Aaa -- Class B-FL, $50,995,196, Floating Rate Notes Due 2051, affirm at Aa2 -- Class B-FX, $8,946,526, Fixed Rate Notes Due 2051, affirm at Aa2 -- Class C-FL, $42,048,671, Floating Rate Deferrable Interest Notes Due 2051, affirm at A2 -- Class C-FX, $7,157,221, Fixed Rate Deferrable Interest Notes Due 2051, affirm at A2 -- Class D, $12,525,136, Floating Rate Deferrable Interest Notes Due 2051, affirm at A3 -- Class E-FL, $49,205,891, Floating Rate Deferrable Interest Notes Due 2051, affirm at Baa2 -- Class E-FX, $4,473,263, Fixed Rate Deferrable Interest Notes Due 2051, affirm at Baa2 -- Class F, $23,260,967, Floating Rate Deferrable Interest Notes Due 2051, affirm at Baa3 -- Class G, $42,048,671, Fixed Rate Notes Due 2051, affirm at Ba2 Moody's is affirming all Notes due to overall stable pool performance. The collateral of Anthracite CRE CDO 2006-HY3, Ltd. is in the form of a static pool and does not have reinvestment risk. The deal closed on May 23, 2006 and was fully-ramped up by Oct. 23, 2006. It employs a senior sequential and pro rata principal payment structure. CMBS principal proceeds will be paid sequentially, while proceeds from commercial real estate loans will be paid pro rata to rated Notes prior to: 1) an Event of Default; or 2) the date that the current collateral balance is greater than 50% of the effective data balance. BlackRock Financial Management, Inc. serves as the Collateral Administrator. As of the March 24, 2008 distribution date, the transaction's aggregate bond balance has decreased to $596.5 million from $645.4 million at issuance, mainly due to the pay-offs of four commercial real estate loans (Lake Las Vegas Hyatt B-note, Wyndham Hotel Portfolio Mezzanine loan, Lembi Portfolio Mezzanine loan, and Palladium @ City Place Mezzanine loan) and the pay-downs from four other commercial real estate loans (Windsor I B-note, GGP Portfolio B-note, PPG Place Mezzanine loan, and PMSR Portfolio Mezzanine loan). The Notes are currently collateralized by 58 classes of CMBS securities from 15 separate transactions (74.8%) and six commercial real estate loans (25.2%) consisting of three B-notes (9.9%) and three Mezzanine loans (15.3%). Since issuance, there have been no losses on the underlying collateral. Among the Moody's rated CMBS securities (32.6% of the pool balance), there have been no upgrades, and one Moody's rated CMBS security was downgraded. Credit estimates were performed on 27 non-Moody's rated CMBS classes and underlying ratings were updated on six commercial real estate loans (67.4% of the pool balance). Moody's uses a weighted average rating factor as an overall indicator of the credit quality of a CDO transaction. Based on Moody's analysis, the current WARF is 5,357 compared to 5,811 at issuance. Moody's reviewed the ratings, performed credit estimates, or updated the underlying ratings on all the collateral supporting the Notes. The distribution is as follows: Baa1-Baa3 (7.6% compared to 5.5% at issuance); Ba1-Ba3 (21.3% compared to 21.6% at issuance); B1-B3 (23.6% compared to 22.4% at issuance) and Caa1-NR (47.6% compared to 50.5% at issuance). AUSTIN HOUSING: Moody's Holds 'B1' Rating on $9.135MM Bonds ----------------------------------------------------------- Moody's Investors Service has affirmed the B1 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Stony Creek/Princeton Apartments Project), Series 1999 A, of which $9,135,000 remain outstanding. The outlook remains negative based on thin financial performance and fluctuating occupancy levels that will need to stabilize for sometime before considering an outlook change. The taxable Series 1999B bonds have matured on Nov. 1, 2004 and no longer carry Moody's rating. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security from the two properties. Stony Creek is a 132-unit multifamily rental housing facility constructed in 1982, located in the Southwest Austin submarket of Texas. Princeton Apartments is a 90-unit multifamily rental housing facility constructed in 1965, and is located in the East Austin submarket. Credit Strengths -- Current occupancy rate at Princeton increased to 87% from 83% since Moody's last update in August 2007 and is projected to reach 90% by next quarter. -- Fully funded Debt Service Reserve Fund ($805,000) and partially funded Renewal and Replacement Fund ($84,461) provide additional security for bondholders. -- The owner recently engaged Capstone Real Estate Service, a local company that specializes in multifamily housing to manage both properties. Credit Challenges --Thin but improving debt service coverage level of 1.04 times based on un-audited, 12-month operating statement, ending December 2007. -- Replacement and Reserve Fund is underfunded and will likely not be replenished in the immediate future. -- A significant number of tenants at Princeton have Section 8 vouchers, which generally contributes to stable rent revenue and occupancy but limits management's ability to maximize rental income amid increasing expenses. -- The property is subject to rental housing restrictions such as limitation on tenants' income and rent on certain units, restricting both revenue and the pool of potential tenants Recent Developments/Results: The un-audited 12 moth operating statement ending December 2007 shows somewhat thin but improving financial performance. Revenues declined by about 3% in 2007 from 2006 level but operating expenses also declined by more than 9%, resulting in the adjusted debt service coverage of 1.04 times, calculated based on Maximum Annual Debt Service of $805,000. Debt service coverage was adjusted to include the required deposit into the Replacement and Repair Fund. Excluding such deposit, the ratio would increase to 1.12 times. The decline in expenses was largely due to a decline in contracted services and administrative expenses. Rent levels at the project have remained the same over the past few years and no increases are expected in the immediate future. The Replacement and Repair Reserve Fund remains underfunded ($84,461) and Moody's does not anticipate the properties will replenish it in the near term. However, the debt service reserve fund has remained untapped to-date which provides additional security for bondholders. Princeton Apartments which experienced significant declines in occupancy in the past couple of years is now showing signs of improvements. Current physical occupancy increased to 87% from 83% since our last update on August 2007. The owner projects the occupancy rate to reach 90% by next quarter due to improving neighborhood that is expanding with a new hospital and more retail stores opening up nearby, resulting in more traffic but no new significant competition for the property. Further, the owner completed a significant rehabilitation of the property which improved its appeal. Stony Creek Apartments, on the other hand, has always had stronger occupancy rate than Princeton Apartments which currently stands at 94%. Unlike Princeton, Stony Creek is experiencing some competition from new multifamily housing developments but the owner does not foresee any immediate impact on the property. The property owner has recently changed property management from Arbor Property Management to Capstone Real Estate Service, a local company that specializes in multifamily housing. Capstone was founded in 1969 and currently manages about 53,000 multi-family units and 1,000,000 square feet of commercial space nationwide. Capstone is expected to use its expertise in the multifamily housing and knowledge of the service area to improve performance at both properties. Capstone's near term focus is to increase and maintain high occupancy levels while keeping cost low. Outlook The outlook for the bonds remains negative due to thin margins and low but increasing occupancy at Princeton. What could change the rating -UP -- Continued improvement in debt service coverage and replenishment of Replacement and Repair Fund would put an upward pressure on the rating. What could change the rating -DOWN -- Significant decrease in revenues due to increase in vacancy or expenditures that results in weaker project operating performance could result in a downgrade. AUSTIN HOUSING: Moody's Affirms B3 Rating with Neg. Outlook ----------------------------------------------------------- Moody's Investors Service has affirmed the B3 rating on Austin Housing Finance Corporation Multifamily Housing Revenue Bonds (Rutland Place Apartments Project), Series 1998 A, of which $11,675,000 remain outstanding. The B3 rating affirmation is based upon Moody's review of unaudited, 12-month operating statement ending December 2007 and current occupancy reports provided by the property owner. The negative outlook has been affirmed due to length of time it will take to replenish Debt Service Reserve Fund and the Replacement and Repair Fund, both currently well below levels required pursuant to the transaction documents. Further, current physical occupancy declined to mid 80s due to fire in one of the apartment buildings January 2008 that affected 16 units. Mitigating this concern is the fact the property is insured and renovation of affected units has started. The owner has loss of rent insurance but the level of coverage and impact on debt service coverage is unknown at this time. The taxable Series 1998B bonds have matured on Nov. 1, 2005 and no longer carry Moody's rating. Legal Security: The bonds are limited obligations payable solely from the revenues, receipts and security from the project which is a 294-unit multifamily housing development located in North Central Austin submarket, and is comprised of 16 garden style apartment buildings (known as Rutland Place I) and 15 other apartment buildings (known as Rutland Place II). Phase I was built in 1979 and Phase II was built in 1985. Credit Strengths -- The property has been generating positive cash flow over the past couple years, which excess is being used to replenish the Debt Service Reserve Fund but Moody's does not expect full funding in the near term. -- The owner recently engaged Capstone Real Estate Service, a local company that specializes in multifamily housing to manage both properties. -- According to market data provided by Torto Wheaton Research, occupancy in the submarket is forecasted to remain stable while rent is forecasted to grow. Credit Challenges -- Current physical occupancy has declined from an average of 95% to 84% due to fire in one of the buildings affecting 16 units, 5.4% of total units, but the property is insured for loss of rent. -- Debt Service Reserve Fund balance is $107,504 as of Dec. 31, 2007, 12% of total requirement, and Replacement and Repair Fund is depleted. -- Thin debt service coverage level of 1.08 times assuming regularly scheduled deposits into the Replacement and Repair Fund based on un-audited, 12-month operating statement ending Dec. 31, 2007, but a notable improvement from 0.98% in the prior 12-month period. -- The property is subject to rental housing restrictions such as income limitations restricting the pool of potential tenants as well as owner's ability to maximize rental income. Recent Developments/Results: The unaudited operating statement shows improved debt service coverage level to 1.08 from 0.98 times assuming regularly scheduled deposits into the Replacement and Repair Fund and 1.16 times from 1.06 times in 2006 when excluding such deposit. The project has been able to generate excess cash flows, which is being used to replenish the Debt Service Reserve Fund which increased slightly to $107,504 as of Dec. 31, 2007 from $101,000 for same period in 2006. Given the challenges that the project faced in the recent past during which time it needed to rely on various surplus funds to pay for operating, maintenance and repair and replacement needs over the past three years as well as to pay debt service on the bonds, both the Operating Reserve Fund and Replacement and Repair Fund are currently unfunded. Current physical occupancy has declined to about 84% due to fire in January 2008 that affected 16 units. The owner will be collecting loss of rent insurance but it's premature to determine the level of coverage and assess the impact on debt service coverage at this time. There is a significant competition from other multifamily developments in the area and immediate return to prior occupancy levels upon completion of renovation which already started remains somewhat uncertain. Offsetting this concern is the fact that affected apartments will likely be more attractive and appealing to potential tenants upon completion of the renovation. According to property owner, it will take eight to ten months to redo the damaged apartments. TWR also forecasts that occupancy in the property submarket (North Central Austin) will increase in the next three years, estimating 94.2% in 2008, 94.7% in 2009 and 95.3% in 2010. Moody's believes that B3 rating for the bonds is appropriate and reflects the thin debt service coverage and tap on reserves. Further, the volatility the project is currently experiencing justifies the negative outlook. Outlook The rating outlook for the bonds remains negative based upon the underfunded reserve funds which will require the project to be stable for some time to be fully replenished, declining occupancy and uncertainty surround insurance coverage and return to prior occupancy levels. What could change the rating -UP -- Fully funded reserves -- Significant improvement in debt service coverage What could change the rating -DOWN -- Continued tapping Debt Serve Reserve Fund to pay bondholders or a default on the bonds. AVALON RE: S&P Slashes Ratings to 'CC' After Steam Pipe Explosion ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its subordinated debt rating on Avalon Re Ltd.'s Class C notes to 'CC' from 'CCC-'. The action follows notification from HSBC Bank (Cayman) Ltd. that the steam pipe explosion that occurred in New York City on July 18, 2007, would be a covered event under the terms of the reinsurance agreement between Avalon Re Ltd. and Oil Casualty Insurance Ltd. "To date, Avalon Re Ltd. has experienced $297 million of covered losses due to Hurricane Katrina and the explosion at the Buncefield oil depot," said Standard & Poor's credit analyst Gary Martucci. "This leaves only $3 million of covered losses that can be incurred prior to any losses being borne by the Class C noteholders." The covered-loss report indicated that losses could be as high as $50 million. The final determination of the loss payment is not expected to occur in the near future. Although the losses will reduce the amount of subordination supporting the Class A and B notes, Standard & Poor's is not taking action on the Class A and B notes, which are currently rated 'B+' and 'CCC', respectively. Standard & Poor's has been told that there are currently no claims under review that are expected to cause additional losses to Avalon Re. Ltd. The notes are scheduled to mature on June 6, 2008, though they are subject to extension under terms set forth in the transaction documents. BANC OF AMERICA: Fitch Holds Low-B Ratings on Four Cert. Classes ---------------------------------------------------------------- Fitch Ratings has affirmed these Banc of America Commercial Mortgage Inc., series 2003-2, commercial mortgage pass-through certificates: -- $47.2 million class A-1 at 'AAA'; -- $451.5 million class A-1A at 'AAA'; -- $106.3 million class A-2 at 'AAA'; -- $168.1 million class A-3 at 'AAA'; -- $482.3 million class A-4 at 'AAA'; -- Interest-only class XC at 'AAA'; -- Interest-only class XP at 'AAA'; -- $56.7 million class B at 'AAA'; -- $21.0 million class C at 'AAA'; -- $44.1 million class D at 'AAA'; -- $23.1 million class E at 'AAA'; -- $21.0 million class F at 'AA'; -- $23.1 million class G at 'AA-'; -- $21.0 million class H at 'A'; -- $18.9 million class J at 'BBB+'; -- $10.5 million class K at 'BBB-'; -- $10.5 million class L at 'BB'; -- $8.4 million class M at 'BB-'; -- $8.4 million class N at 'B+'; -- $4.2 million class O at 'B'; -- $2.7 million class BW-A at 'AAA'; -- $1.2 million class BW-B at 'AAA'; -- $8.7 million class BW-C at 'AAA'; -- $2.6 million class BW-D at 'AAA'; -- $3.6 million class BW-E at 'AAA'; -- $3.2 million class BW-F at 'AAA'; -- $3.1 million class BW-G at 'AAA'; -- $2.6 million class BW-H at 'AAA'; -- $2.6 million class BW-J at 'AAA'; -- $2.1 million class BW-K at 'AAA'; -- $3.5 million class BW-L at 'AAA'. Fitch does not rate the $27.1 million class P or classes HS-A, HS-B, HS-C, HS-D or HS-E. The affirmations are due to the stable performance and minimal pay down of the pool. As of the March 2008 distribution date, the pool's aggregate certificate balance has decreased 7% to $1.64 billion from $1.77 billion at issuance. In total 43 loans (33.6%) have defeased, including 1328 Broadway (7.9%), a shadow rated and second largest loan in the pool. In February 2008, one (0.7%) loan transferred to special servicing due to imminent default. The loan is secured by a 121-unit multifamily property in Laramie, Wyoming. The coupon rate is 4.9% and maturity is August 2014. The service-reported September 2007 occupancy was 53% and debt service coverage ratio was 0.58 times. Hines-Sumitomo Portfolio (12.8%) and Newgate Mall (2.6%) maintain their investment grade shadow ratings based on stable loan performance. The Hines Sumitomo portfolio, the largest loan in the pool, is secured by three office properties, two of which are located in New York, New York and the third in Washington, DC. Occupancy has remained stable compared to issuance occupancy of 98.9%. The loan is interest only with a maturity date in 2013. The senior pooled portion has a coupon of 4.78% and the non-pooled portion has a coupon of 4.98% Newgate Mall is a 724,619 square feet anchored retail center in Ogden, Utah. Occupancy remained stable at 98.3% from 94.7% at issuance. The loan is a balloon with a coupon rate of 4.8% and maturity in 2010. Only 0.8% of the pool matures in 2008 and no loans are scheduled to mature in 2009. The weighted average coupon rate is 5.4%. There are currently 13 (6%) Fitch loans of concern due to declining DSCR or occupancy. BARRINGTON BROADCASTING: S&P Keeps 'B' Ratings; Outlook Now Neg --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Hoffman Estates, Illinois-based Barrington Broadcasting LLC to negative from stable. At the same time, S&P affirmed all ratings on the company, including the 'B' corporate credit rating. "The outlook revision reflects the difficulties that we believe the company faces over the intermediate term in making meaningful debt reductions and increasing EBITDA," said Standard & Poor's credit analyst Jeanne Mathewson, "both of which will be essential to complying with an aggressive covenant-tightening schedule." Two-year average EBITDA, which smoothes the effects of advertising and Olympics cycles, is used in the covenants' EBITDA definition. BEAR STEARNS: First Qtr. Earnings Dip to $115MM from 2007's $554MM ------------------------------------------------------------------ Bear Stearns Companies Inc. submitted financial results for the quarter ended Feb. 29, 2008 with the Securities and Exchange Commission. The company's net income decreased to $115 million for the quarter ended Feb. 29, 2008, compared to $554 million for the same quarter last year. Total revenues dipped to $3.4 billion for the quarter ended Feb. 29, 2008, compared to total revenues of $4.7 billion for the same period last year. Bear Stearns experienced a significant liquidity crisis during the end of the week of March 10, 2008, that seriously jeopardized its financial viability. On March 16, 2008, the company and JPMorgan Chase & Co. entered into an agreement and plan of merger following the significant liquidity crisis. On March 24, 2008, the company and JPMorgan Chase entered into an amendment to the agreement and plan of merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, a wholly owned subsidiary of JPMorgan Chase will merge with and into the company with the company continuing as the surviving corporation and as a wholly owned subsidiary of JPMorgan Chase. The results for the three months ended Feb. 29, 2008, includes approximately $600 million in net inventory markdowns during the 2008 quarter primarily related to losses experienced in the mortgage-related and leveraged finance areas, as a result of extremely challenging market conditions. Bear Stearns said its net income and revenues will be adversely impacted in the event JPMorgan Chase terminates its operating guaranty in respect of certain trading and other obligations of the company and certain of the company's subsidiaries or its guaranty to the Federal Reserve Bank of New York of the company's borrowings from the Federal Reserve Bank of New York at the Prime Dealer Discount Window. The company said it faces significant legal risks in its businesses, and the volume of claims and amount of damages and penalties claimed in litigation and regulatory proceedings against financial institutions have been increasing. New York City-based The Bear Stearns Companies Inc. (NYSE: BSC) -- http://www.bearstearns.com/-- is a leading financial services firm serving governments, corporations, institutions and individuals worldwide. The company's core business lines include institutional equities, fixed income, investment banking, global clearing services, asset management, and private client services. The company has approximately 14,000 employees worldwide. * * * As reported in the Troubled Company Reporter on Dec. 28, 2007, Fitch Ratings' affirmed its Negative Outlook for The Bear Stearns Companies Inc. following the announcement of the company's fiscal year earnings for 2007. On Nov. 14, 2007, Fitch affirmed Bear Stearns' long-term credit ratings, along with its subsidiaries. Fitch also downgraded the short-term rating to 'F1' from 'F1+', and Individual rating to 'B/C' from 'B'. BEXLEY PLACE: Case Summary & Ten Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Bexley Place, L.P. 5817 Allentown Way Temple Hills, MD 20748 Tel: (301) 440-6025 Bankruptcy Case No.: 08-14869 Chapter 11 Petition Date: April 8, 2008 Court: District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Stanton J. Levinson, Esq. (tiger110@earthlink.net) P.O. Box 1746 Silver Spring, MD 20915 Tel: (301) 649-7888 Estimated Assets: $1,000,001 to $10 million Estimated Debts: $1,000,001 to $10 million Debtor's Ten Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Peter Fillat Architects, Inc. $198,107 720 Aliceanna Street, Suite 200 Baltimore, MD 21202 Tel: (410) 576-9310 Land Design, Inc. Trade $71,369 200 South Peyton Street Alexandria, VA 22314 Tel: (703) 549-7784 (extension) 285 John A. Lally, Esquire Professional services $60,000 14513 Main Street Upper Marlboro, MD 20772 Tel: (301) 466-1668 Facchina-MCG Trade $25,000 Gally Public Affairs Consulting & lobbying $18,182 Trend, Inc. $15,000 RCLCO $13,102 Robert Charles Lesser & Co., $12,040 LLC MuniCap, Inc. $9,348 Delta Telephone & Cabling, Trade $5,005 Inc. BFWEST LLC: Has $205 Million in Debt to Creditors ------------------------------------------------- BFWest LLC owes at least $205 million to a group of creditors, Dawn McCarty of Bloomberg News reports. As reported in the Troubled Company Reporter on March 27, 2008, BFWest is an affiliate of mezzanine lender Builder Financial Corp. BFWest's sister companies Builder Funding and BFSPE LLC make the loans, while the Debtor keeps track of acquisition and development loans. BFWest owed Builder Funding $58.1 million of unsecured debt, and BFSPE LLC $32.5 million. BFWest also owed $114.9 million to WestLB, which is secured by certain loans and mortgages. Headquartered in Fort Lauderdale, Florida, BFWest, LLC -- http://www.builderfinancial.com/-- a privately held specialty finance company that facilitates the financing of residential real estate transactions by providing mezzanine financing to builders. It holds a portfolio of acquisition, development and construction loans. The company filed for Chapter 11 protection on March 26, 2008 (Bankr. S.D. Fla. Case No.08-13528). Eyal Berger, Esq., and Michael D. Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, PL, represent the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for protection against its creditors, it listed assets and debts between $100 million to $500 million. BLOCKBUSTER INC: Extends $1.3BB Unsolicited Bid for Circuit City ---------------------------------------------------------------- Blockbuster Inc. on Monday publicly announced an offer to acquire Circuit City Stores Inc. for at least $6 per share in cash, or roughly $1.3 billion, subject to due diligence. The offer was initially made in a letter sent to Circuit City chairman and chief executive officer Philip Schoonover on Feb. 17, 2008, on behalf of the Blockbuster board of directors, who fully supports the bid. Blockbuster's $1.3 billion buyout bid for Circuit City started a controversy on Wall Street as capitalists wonder how could two financially mixed up companies merge. Stocks of each corporation plummeted in 2007, Merissa Marr and Gary McWilliams of Wall Street Journal report. The letter reiterated Blockbuster's interest in pursuing an acquisition of Circuit City. The company noted that the cash necessary would be generated through the issuance of additional Blockbuster equity, in a rights offering to its existing shareholders. The company also added that the borrowing capacity of the combined business would provide the remaining cash proceeds. To date, however, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal. Blockbuster said it is making its proposal public because it believes the shareholders of Circuit City must have the opportunity to participate in determining the destiny of the company. In addition, as Blockbuster has other strategic opportunities, its offer is conditioned upon timely commencement of the due diligence process. Blockbuster noted the combination of the two companies would result in an $18 billion retail enterprise positioned to capitalize on the growing convergence of media content and electronic devices. The transaction would allow both companies to benefit from the revenue growth generated by their complementary products, while the resulting synergies would substantially improve consolidated financial performance, thereby increasing shareholder value. "Our proposal offers Circuit City a significant premium to its existing stock price and creates a game-changing retail concept with a sustainable competitive advantage," Jim Keyes, Blockbuster chairman and chief executive officer, said. "We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements well as cost synergies." "At Blockbuster, we have successfully deployed a series of strategic initiatives designed to provide our customers with convenient access to media content," Mr. Keyes continued. "These strategic initiatives have already improved our financial results. Driven by strong performance in our domestic same-store revenues, we expect first quarter 2008 adjusted EBITDA to be approximately $110 million versus $23 million for the same period last year." "Additionally, net income for the first quarter of this year should be $30 million compared to a net loss of $49 million for the first quarter of 2007," Mr. Keyes continued. "These results are a clear demonstration that our strategy is working. We look forward to engaging in further conversations with Circuit City and reaching an agreement as soon as possible. Circuit City is still assessing Blockbuster's proposal, WSJ said. Circuit City has also advised its stockholders not to take any move, unless queries on the acquisition are answered. According to WSJ, Blockbuster's extreme action to stay in business is a sign that the DVD rental business is in the process of extinction. WSJ says the bid has the "strong backing" of Blockbuster's biggest shareholder, investor Carl Icahn, and the support of dissident Circuit City shareholder Mark J. Wattles. According to WSJ, Mr. Wattles said he would support Blockbuster's bid and would press for acceptance of any offer "north of $6 a share." Mr. Wattles also indicated Monday, WSJ relates, that he had spoken to Mr. Icahn by phone and the billionaire investor confirmed he would backstop the deal if needed. Mr. Wattles has launched a proxy battle for Circuit City, seeking to remove CEO Schoonover, WSJ says. About Circuit City Stores Inc. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments: domestic and international. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with over 7,800 stores throughout the Americas, Europe, Asia and Australia. (Movie Gallery Bankruptcy News Issue No. 15; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) At Jan. 6, 2008, the company's total debt, including capital lease obligations was $757.8 million compared with $984.2 million in Dec. 31, 2006. * * * As reported in the Troubled company Reporter on Dec. 28, 2007, Fitch Ratings affirmed Blockbuster Inc.'s long-term Issuer Default Rating at 'CCC' and the senior subordinated notes at 'CC/RR6'. The rating outlook is stable. The company had approximately $991 million of debt outstanding as of Sept. 30, 2007. BROWN SHOE: Operating Challenges Prompts S&P's Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on St. Louis, Missouri-based Brown Shoe Co. Inc. to negative from stable. At the same time, S&P affirmed all other ratings on the company, including the 'BB' corporate credit rating. "The outlook revision reflects the operating challenges facing the company given the generally weak economic conditions," said Standard & Poor's credit analyst David Kuntz. S&P also expects sales and margins to be hurt by cost increases from suppliers over the medium term, and a further deterioration in credit metrics for 2008. CANADIAN TRUSTS: Investors Want ABCP Plan Voting Deadline Moved --------------------------------------------------------------- Certain Canadian companies affected by the Canadian asset-backed commercial paper market want to postpone a scheduled April 25, 2008 voting date for the proposed ABCP restructuring plan proposed by the Pan-Canadian Investors Committee for Third-Party Structured ABCP, Bloomberg News reports. The investors assert that they need to study the proposal further. Some of the investors noted that they only received 360 pages of the relevant documents, Doug Alexander at Bloomberg relates. The Pan-Canadian Committee has "not given the other noteholders enough time and information to properly respond to this filing," Peter Linder told Bloomberg. Mr. Linder represents seven junior oil and gas companies that hold more than CN$100 million of ABCP. He has declined to identify his clients. Another consultant of certain ABCP holders, Colin Kilgour, said "[a] request for an extension is reasonable and likely. An extra month or so to make sure everyone has the opportunity to review and understand the situation is prudent," Bloomberg quotes. Investor Meetings The Pan-Canadian Investors Committee for Third-Party Structured ABCP was scheduled to hold a national teleconference for noteholders yesterday. The conference call was to provide an opportunity for noteholders to ask questions about the Committee's proposed plan to restructure 20 of the trusts covered by last summer's Montreal Accord, affecting $32-billion of notes. It also afforded an opportunity for noteholders who were unable to attend those meetings in person to learn more about the plan. The first round of investor meetings called for by the Pan- Canadian Committee was held March 31, 2008, in Toronto and Montreal. Similar meetings were held in Edmonton, Calgary, and Vancouver on April 1. Several retail ABCP holders attended the April 1 meeting, wherein the attendees expressed their confusion about the proposed ABCP restructuring. All the investors want is a sure way to recoup their investments, reports say. Purdy Crawford, chair of the Committee, reiterated in the April 1 meetings that the Committee considers the retail investors a high priority, and that their complaints about the complexity of the proposed ABCP restructuring plan is understood, edmontonjournal.com relates. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: CIBC to Provide Funding for Canadian ABCP Rescue ----------------------------------------------------------------- Canadian Imperial Bank of Commerce is set to contribute funding to five other big banks for the Pan-Canadian Committee for Third- Party Structured ABCP's rescue plan to revive the Canadian ABCP market, according to Reuters. Specifically, the Pan-Canadian Committee has entered into an agreement with CIBC on certain default swaps related to two ABCP Trusts. Under the Agreement, CIBC will put up CN$300 million to a CN$14 billion margin funding facility designed as a reserve, if the ABCP investments ends up in another crisis in the future. CIBC is Canada's fifth largest bank. Pan-Canadian Committee's Statement On April 8, 2008, the Pan-Canadian Committee for Third-Party Structured ABCP announced that satellite trusts of Structured Asset Trust Series E and Structured Investment Trust III Series E have reached an agreement with CIBC concerning the termination of one of CIBC's credit default swaps -- related to SAT Series E -- and the inclusion of CIBC's two other credit default swaps -- related to SAT Series E and SIT III Series E -- as part of the Committee's CCAA restructuring plan. Reaching a mutually satisfactory agreement on the three swaps was a condition of CIBC's participation in the margin funding facility, which is integral to the Committee's restructuring plan. The agreement resulted from negotiations that began several months ago among CIBC and investors who own a substantial majority of the outstanding SAT Series E notes. As part of the agreement, a credit default swap transaction with Nemertes Credit Linked Certificate Trust (Commerce - LSS II) Series 2006, which is a satellite trust of SAT, has been terminated. The termination resulted in a loss to noteholders of SAT Series E of approximately $163 million, or approximately 23% of principal. The maximum recovery of funds for SAT Series E investors as a result of this unwinding is now approximately 77%. "We are pleased to see the successful restructuring of these swaps," said Purdy Crawford, Chair of the Committee. "This restructuring is a long and complicated road comprising many steps, and today's announcement represents further progress towards successful implementation of the overall restructuring plan." CIBC is one of the financial institutions working with the Committee to resolve liquidity issues attached to the ABCP market in Canada and, together with a number of other Canadian Schedule I banks, has agreed, subject to certain conditions, to participate as a lender in the margin funding facilities that are proposed to be put in place upon implementation of the restructuring plan. The Committee held a series of roundtable meetings with investors across the country the past week to talk about its restructuring Plan, details of which are available on Ernst & Young Inc.'s Web site, http://www.ey.com/ca/commercialpaper Under provisions of the Companies' Creditors Arrangement Act, the Plan must be approved by a majority of noteholders (regardless of the size of their holdings) that vote at the meeting, as well as by noteholders representing not less than 66-2/3% of the total aggregate principal amount of affected ABCP that vote at the meeting. If the Plan is approved by the noteholders at the meeting, a further hearing will be held before the Court for its final sanction of the Plan. National Bank of Canada Joins in the Rescue Effort The Financial Post reports that National Bank of Canada has agreed to offer improved credit facilities to roughly 100 corporate and commercial clients affected by the Canadian ABCP crisis, until the notes of those clients mature. National Bank of Canada is Canada's sixth largest bank. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Canaccord to Redeem 97% of Clients' ABCP Stake --------------------------------------------------------------- Canaccord Capital Inc. unveiled on April 9, 2008, details of the Canaccord Relief Program to repurchase, at par value, up to CN$138 million of restructured third-party Asset Backed Commercial Paper (ABCP) from clients who hold CN$1 million or less. "After many months of negotiating on behalf of our clients, Canaccord is pleased to offer a solution that provides them with par value on their ABCP investment. Clients will remain entitled to receive any unpaid interest to the extent it is payable pursuant to the restructuring plan and Canaccord will reimburse the share of the overall restructuring costs borne by our eligible clients," said Mark Maybank, chief operating officer of Canaccord Capital Inc. "We worked hard to secure this deal and have contributed our capital to it. With a tangible restructuring in place and a rally in global credit markets, we have been able to source and evaluate numerous bids from parties interested in purchasing the notes and choose the best outcome for our clients." The Canaccord Relief Program is dependent on a successful restructuring of the third-party ABCP market, and combines a market bid from third-party sources with a Canaccord-funded top- up to achieve par value. Clients will also receive any unpaid interest to the extent that it is available under the restructuring plan, and Canaccord will reimburse the eligible clients' actual share of the restructuring costs. Clients who hold CN$1 million or less of ABCP in aggregate will be eligible for this relief. This includes up to 1,430 -- or 97% -- of Canaccord's impacted clients. All funds required for these repurchases will be deposited in escrow as soon as possible. Eligible clients who wish to participate in the program will be required to execute assignments of all the notes they will receive on the implementation of the restructuring. These assignments will only be effective upon payment of the purchase price. The closing will be subject to a successful restructuring, and certain other conditions required under the market bid for the restructured notes. The closing of this purchase will take place as soon as possible following the closing of the restructuring, but not more than 20 business days after the completion of the distribution of restructured notes in accordance with the restructuring plan. The restructuring plan is currently scheduled to close at the end of May 2008. Canaccord expects to make a further announcement confirming completion of the escrow, and will provide formal documentation about the Canaccord Relief Program in the very near term. "We appreciate our clients' patience during this difficult time and we regret that this process has taken so long to complete and the hardship this has caused our clients. We hope they will view the Canaccord Relief Program as a successful outcome to this unprecedented disruption in the Canadian capital markets," added Paul Reynolds, president and chief executive officer of Canaccord Capital Inc. "Canaccord has a long history of commitment to its clients, which we believe we've demonstrated throughout this challenging process. With these efforts behind us, we look forward to continuing to live up to our values and grow our business as a leading global investment dealer." More information about the Canaccord Relief Program is available to clients at http://www.canaccordrelief.com/ Early this month, Canaccord disclosed a one-time after-tax charge of approximately CN$39.6 million or $0.82 per share, related to the Canaccord Relief Program for clients holding third-party Asset Backed Commercial Paper. The charge also includes a provision for management restructuring and other costs, the company said in a press release. "This is a significant charge to our earnings that reflects our commitment to resolving a very difficult process in the best possible way for our clients," said Mr. Reynolds said. "We remain well capitalized and committed to our clients, which we believe we've demonstrated throughout this process. With these efforts behind us, we look forward to continuing to live up to our values and grow our business as a leading global investment dealer." Through its principal subsidiaries, Canaccord Capital Inc. (TSX & AIM: CCI) is a leading independent, full service investment dealer in Canada with capital markets operations in the United Kingdom and the United States of America. Canaccord is publicly traded on both the Toronto Stock Exchange and AIM, a market operated by the London Stock Exchange. Canaccord has operations in two of the principal segments of the securities industry: private client services and capital markets. Together, these operations offer a wide range of complementary investment products, brokerage services and investment banking services to Canaccord's private, institutional and corporate clients. Canaccord has approximately 1,676 employees worldwide in 30 offices, including 23 Private Client Services offices located across Canada. Canaccord Adams, the international capital markets division, has operations in Toronto, London, Boston, Vancouver, New York, Calgary, Montreal, San Francisco, Houston and Barbados. Pan-Canadian Committee Welcomes Canaccord's Offer The Pan-Canadian Investors Committee for Third-Party Structured ABCP welcomed Canaccord's offer to acquire all the restructured third-party ABCP of its clients who hold CN$1 million or less of the affected ABCP, if the Committee's proposed restructuring plan is accepted by noteholders and the Court. The Committee understands that the Canaccord proposal consists of an offer to repurchase all of the restructured ABCP of those clients at par, plus an amount designed to reimburse their share of the overall restructuring costs allocated to these notes. In addition, Canaccord's clients will remain entitled to receive any amounts payable on account of accrued interest during the restructuring period pursuant to the Committee's plan. "We believe this is an important step in resolving the concerns of smaller noteholders," says Committee chairman Purdy Crawford in a press release. "We have consistently expressed our empathy for the plight of these noteholders, many of whom we recognize face dire circumstances." The Chairman added that: "The Committee encourages other financial intermediaries who may have sold affected ABCP to small investors to follow Canaccord's initiative and address the concerns of their smaller clients by providing liquidity solutions such as this one. The Committee is delighted that the restructured notes available under the Committee's plan have provided a basis for renewed liquidity options such as this." On March 17th, the Ontario Superior Court of Justice granted an application by the Committee, under the provisions of the Companies' Creditors Arrangement Act (CCAA), to establish a procedure for noteholder approval of the restructuring plan filed by the Committee. The plan must now be approved by noteholders at a meeting in Toronto on April 25th and sanctioned by the Court. A copy of the plan, together with the related Information Statement and other documents, has been mailed to all registered and beneficial noteholders, and is available on the public Web site of Ernst & Young Inc., the Court-appointed monitor in the ABCP restructuring (www.ey.com/ca/commercialpaper) Juroviesky Reserves Position on Canaccord's Conditional Partial Offer Juroviesky and Ricci LLP noted in a press statement that it was pleased to read of Canaccord Capital Inc.'s proposal to conditionally purchase a portion of the Frozen ABCP it sold to some of its clients. "While we welcome any offer that may relieve the burden currently being experienced by our Retail Clients, CCI's proposal indicates that the Offer is subject to certain conditions that have not been publicly disclosed, and are not currently known by Juroviesky and Ricci LLP. Accordingly, Juroviesky and Ricci LLP currently reserves on whether or not it supports the offer, subject to obtaining further information regarding the conditions relating to the Offer," said Juroviesky. "We also represent the interests of clients that purchased their ABCP from sources outside Canaccord, and that accordingly, may not be able to participate in the Offer," Juroviesky said. "Juroviesky and Ricci LLP wants to stress that at this time we are still pursuing an offer to be made to all of our clients that purchased their ABCP from all sources that will relieve ALL our clients' frozen ABCP immediately at full value," said Juroviesky. "We accordingly urge our clients to not take any un-informed action until further direction from us, and we have had the opportunity to analyze all the details relating to the Canaccord Proposal," Juroviesky stated. "Further information and direction will be forthcoming from our offices, when we have additional material information." ABCP Investors Still Wary of Canaccord Proposal According to The Canadian Press, the Canaccord Relief Program was disclosed a day before the House of Commons finance committee in Ottawa, Canada, was to give six ABCP retail holders an opportunity to air their ABCP-related concerns. Retail ABCP investors, who hold about CN$350 million worth of non-bank ABCP, are still not satisfied with the Relief Program which Canaccord has put forward. Reuters reports that Diane Urquhart, a financial analyst representing the retail ABCP holders, asserted at an April 10 House of Commons special meeting that the Canaccord Proposal is not sufficient. "This problem has not been resolved yesterday despite the positive press coverage. The offer is incomplete. Only some families are being paid, numerous families have been left out," Reuters quotes Ms. Urquhart. Retail ABCP Investors have hinted at the April 10 parliamentary hearing that they might take legal action with respect to the ABCP they hold, Reuters says. "It is my belief that the ABCP was sold in the Canadian market unlawfully and that it should have been sold with prospectus," Ms. Urquhart added, Reuters notes. While the Canaccord Proposal seeks to repurchase 97% of its impacted clients, it excludes 43 clients that hold more than CN$1 million worth of ABCP. These clients are composed of 28 corporate holders and 15 individual investors, which include New Gold Inc., Redcorp Ventures Ltd. and Universal Uranium Ltd. According to Globe and Mail, the corporate investors intend to ask Mr. Justice Colin Campbell of the Superior Court of Ontario to allow them a veto in the ABCP restructuring process. The Program is "inquitable and arbitrary," Norsemont Mining, Inc. Chief Executive Patrick Evans also told The Canadian Press. He believes the Relief Program was set up to gain enough votes for the Pan-Canadian Committee Restructuring Plan, which is scheduled to be voted on April 25. Norsemont Mining holds CN$7 million in ABCP. Universal Uranium Ltd. Executive Vice President Bill Galine agrees with Mr. Evans. "How can you take care of just 97% of your people?" The Canadian Press quotes Mr. Galine. Universal Uranium holds CN$1,400,000 in ABCP. The Canadian Press noted that several attendees of the parliamentary meeting complained that certain Canadian regulatory bodies like the Ontario Securities Commission and the Office of the Superintendent of Financial Institutions, failed to closely monitor the ABCP market when illegal practices were being carried out. "The current financial regulatory system is broken and offers no protection to Canadian investors," Ms. Urquhart avers, according to The Canadian Press. Credential Securities Working on Relief Plan Credential Securities, Inc., a brokerage firm based in Vancouver, has clients who hold roughly CN$48 million in ABCP investments. Credential Senior Vice President Elaine McHarg said in an interview with Bloomberg News that her firm is currently negotiating a relief plan for its clients. "We are looking at a whole range of possibilities," Ms. McHarg told Bloomberg. "We would not be looking at buying it back without appropriate partnerships." "This proposal would be separate from Canaccord, but we are well informed by the Canaccord proposal," Ms. McHarg added. No details of the plan has been reported as of press time. Credential averred that it has sold debt to about 335 retail ABCP customers. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of September 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). C-BASS: Poor Collateral Performance Cues Moody's to Cut Ratings --------------------------------------------------------------- Moody's Investors Service has downgraded 6 certificates from C-BASS Series 2007-SL1 Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-SL1 -- Cl. M-1, Downgraded to Caa2 from A2 -- Cl. M-2, Downgraded to Caa3 from A3 -- Cl. B-1, Downgraded to Ca from Ba1 -- Cl. B-2, Downgraded to Ca from B2 -- Cl. B-3, Downgraded to C from Caa1 -- Cl. B-4, Downgraded to C from Ca CALEDONIA MINING: Posts CN$4MM Net Loss in Year ended December 31 ------------------------------------------------------------------ Caledonia Mining Corporation reported its fourth quarter and 2007 annual financial results. The company reported net income before discontinued operations of CN$0.494 million compared to net income before discontinued operations of CN$3.841 million for the same period in the previous year. For the year ended Dec. 31, 2007, Caledonia net loss after tax of CN$3.9 million includes an unrealized loss on foreign exchange of CN$1.012 million. Cash available at year end totaled CN$0.076 million from continuing operations. "The extremely challenging economic environment in Zimbabwe caused delays in completing the No 4 shaft expansion at our Blanket Gold Mine, which in turn severely interfered with production and ultimately impacted on the Group's financial performance, stated Stefan Hayden, president and CEO. "However the Nama Project progressed well, which culminated in the recent signing of four off-take agreements with large Chinese refiners." "During the current quarter, I am pleased to disclose that we have signed agreements for the sale of the Barbrook and Eersteling companies for a total cash consideration of $12.91 million," added Mr. Hayden. "These transactions are expected to close during the second and third quarter of this year respectively." At Dec. 31, 2007, the company's balance sheet showed total assets of CN$29.492 million, total liabilities of CN$5.397 million and total shareholders' equity of CN$24.095 million. About Caledonia Mining Caledonia Mining Corporation (TSX: CAL) (OTC BB: CALVF) (AIM: CMCL) -- www.caledoniaminin.com -- is a Canadian registered mining, exploration and development corporation that owns a diversified portfolio of carefully selected, high quality mines and exploration properties in Southern Africa and Canada. In June 2006 Caledonia acquired the Blanket Mine in Zimbabwe from Kinross Gold Corporation of Toronto. Caledonia's two South African gold mines, Barbrook Mine and Eersteling Gold Mine, are both currently on care-and-maintenance and were put up for sale in December 2006. Going Concern Doubt On March 28 2008, BDO Dunwoody LLP's audit report of Caledonia Mining Corp.'s consolidated financial statements for the years ended Dec. 31, 2007, and 2006, is expressed in accordance with Canadian reporting standards which do not require a reference in the auditor's report to events and conditions which cast doubt on the company's ability to continue as a going concern in the auditors' report when these are adequately disclosed in the financial statements. The company's ability to continue as a going concern is dependent upon attaining profitable operations, realizing proceeds from the disposal of mineral properties and obtaining sufficient financing to meet its liabilities, its obligations with respect to operating expenditures and expenditures required on its mineral properties. CHESAPEAKE CORP: Weak Performance Cues S&P to Chip Rating to 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings for Richmond, Virginia-based Chesapeake Corp., including the corporate credit rating, which was lowered to 'B+' from 'BB-'. At the same time, S&P assigned a recovery rating of '6' to the company's existing subordinated notes, indicating S&P's expectation for negligible (0% to 10%) recovery in the event of a payment default. All ratings were removed from CreditWatch, where they were placed with negative implications on Dec. 18, 2007. The outlook is negative. "The downgrade reflects the company's weaker-than-expected operating performance during 2007 due to lower results than expected in certain segments, start-up production costs for a new product line, and expenses for process-improvement initiatives," said Standard & Poor's credit analyst Andy Sookram. "As a result, credit metrics have weakened materially to a level no longer consistent with the former ratings." In addition, S&P expects that earnings may continue to be weak over the next several quarters, which would pressure credit measures and potentially tighten liquidity. Chesapeake supplies specialty paperboard packaging (about 83% of sales) and plastic packaging for pharmaceutical, health care, spirits, confectionery, cosmetics, food, tobacco, household, and chemical products. The company is one of the largest virgin- fiber-based folding carton producers in Europe. CELSIA TECH: Modifies Debenture Interest Due Dates to May 2010 -------------------------------------------------------------- In connection with its previously issued 8% Secured Convertible Debentures pursuant to a Securities Purchase Agreement dated as of May 25, 2007, Celsia Technologies disclosed that on March 26, 2008, the company obtained consent from more than 70% of the holders to modify the terms of Section 2 of the debentures to provide that, in lieu of making the interest payments in cash or in shares of common stock of the company on the interest payment dates, such interest payments will accrue and be paid in full in cash on May 25, 2010 . In consideration for the holders' consent to the modification, the company will distribute to the holders a one time distribution equal to the value of 2% of the outstanding principal amount due under the debentures as of March 31, 2008, which, in lieu of the April 1, 2008 interest payment, will be paid in cash on the maturity date. Each holder will have the right, in its sole discretion, to convert any accrued but unpaid interest on the principal amount due under the debentures into duly authorized, validly issued, fully paid and non-assessable shares of common stock at the applicable interest conversion rate at any time prior to the maturity date. About Celsia Technologies Headquartered in Miami, Florida, Celsia Technologies Inc. (OTC BB: CSAT) -- http://www.celsiatechnologies.com/-- is a full solution provider and licensor of thermal management products and technology for the PC, consumer electronics, lighting and display industries. The company develops anc commercializes next- generation cooling solutions built on patented micro thermofluidic technology. Celsia Technologies' intellectual property portfolio includes patents registered in Korea, the U.S., Japan and Taiwan, with patents pending in the EU, Russia, India and China. At Dec. 31, 2007, the company's consolidated balance sheet showed $6,124,404 in total assets and $6,348,495 in total liabilities, resulting in a $224,091 total stockholders' deficit. Going Concern Disclaimer PKF, in New York, expressed substantial doubt about Celsia Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that at Dec. 31, 2007, the company and its subsidiaries have commenced limited revenue producing operations and have an accumulated deficit of $40,292,494. CITIUS II: Moody's Downgrades Ratings to C on $39 Million Notes --------------------------------------------------------------- Moody's Investors Service has downgraded these notes issued by Citius II Funding, Ltd.: Class Description: $20,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Caa2 -- Current Rating: C Class Description: $19,000,000 Class D Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C In addition Moody's also announced that it has downgraded and left on review for possible downgrade these notes: Class Description: Up to $1,800,000,000 Class A ST Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: Up to $1,800,000,000 Class A LT Notes Due 2047 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $95,000,000 Class A Secured Floating Rate Notes Due 2047 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $50,000,000 Class B Secured Floating Rate Notes Due 2047 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. COBALT CMBS: Stable Performance Cues Fitch to Affirm Ratings ------------------------------------------------------------ Fitch Ratings has affirmed Cobalt CMBS Commercial Mortgage Trust, series 2007-C2, commercial mortgage pass-through certificates as: -- $32.4 million class A-1 at 'AAA'; -- $241.1 million class A-2 at 'AAA'; -- $71.9 million class A-AB at 'AAA'; -- $857.5 million class A-3 at 'AAA'; -- $485.6 million class A-1A at 'AAA'; -- $221.9 million class A-MFX at 'AAA'; -- $102.6 million class A-JFX at 'AAA'; -- $21.2 million class B at 'AA+'; -- $27.2 million class C at 'AA'; -- $21.2 million class D at 'AA-'; -- $15.1 million class E at 'A+'; -- $18.1 million class F at 'A'; -- $20 million class A-MFL at 'AAA'; -- $100 million class A-JFL at 'AAA'; -- $30.2 million class G at 'A-'; -- $24.2 million class H at 'BBB+'; -- $24.2 million class J at 'BBB'; -- $30.2 million class K at 'BBB-'; -- $12.1 million class L at 'BB+'; -- $3 million class M at 'BB'; -- $9.1 million class N at 'BB-'; -- $6 million class O at 'B+'; -- $3 million class P at 'B'; -- $6 million class Q at 'B-'; -- Interest-only class X at 'AAA'. Fitch does not rate the $30.2 million class S. The affirmations are the result of stable pool performance. There have been no delinquent or specially serviced loans since issuance. As of the March 2008 distribution report the transaction's principal balance has decreased slightly as interest-only loans represent 53.4% of the pool. Additionally, 37.6% of the pool presently has an interest-only period ranging from one to 72 months. Fitch reviewed the most recent operating statement analysis reports and occupancy figures for the seven shadow rated loans in the transaction: Peter Cooper Village and Stuyvesant Town (10.4%), Ala Moana Portfolio (4.1%), Shadow Pines Apartments (0.5%), 3505- 3521 East Chapman Retail Center (0.3%), Pathmark Store (0.2%), Highland Orchard Apartments (0.2%) and 201 Wilshire (0.1%). Based on their stable performance since issuance the loans maintain their investment grade shadow ratings. Peter Cooper Village and Stuyvesant Town (10.4%) is a multifamily property comprised of 56 multistory buildings with a total of 11,227 residential apartments in Manhattan, New York. In addition to the residential component, the complex contains approximately 100,000 square feet of retail space, 20,000 sf of professional office space, and six parking garages with 2,260 licensed spaces. The property benefits from the strong sponsorship of Tishman Speyer Properties, LP and Blackrock Realty. The sponsor is in the process of converting the stabilized units to market rate rents as they become vacant, or if criteria established by the State of New York involving the legal rental rate level and occupant income levels are met. As of Dec. 31, 2007, 33.7% of the units are market rate (66.3% are stabilized) compared to approximately 27% at issuance (approximately 73% were stabilized) and an additional 6.7% are currently vacant and undergoing renovations to prepare for market rate tenants. The borrower is expected to spend approximately $125 million in capital expenditures, financed through amounts on deposit in the general reserve which has a current balance of $91.7 million. In addition, the reserve to cover debt service shortfalls, conversion costs, capital expenditures, and operating expenses during the term of the loan has a current balance of $203.8 million. The trust portion represents a $250 million pari passu piece of the entire $3.0 billion A note. There is an additional $1.5 billion of mezzanine debt outside the trust. Ala Moana Portfolio (4.1%) is collateralized by a two million square foot mixed use retail and office property located in Honolulu, Hawaii. Retail anchors include Sears, Macy's and Nordstrom's. Major tenants include Shirokiya, Barnes & Noble, Longs Drugs, Kaiser Foundation and Gap. In-line tenants include Tiffany, Cartier, Louis Vuitton, Chanel, Dior, Banana Republic, Prada, Williams Sonoma, Apple and Disney. The retail portion of the collateral is occupied by nearly 275 tenants while the office portion is occupied by 184 tenants. The property benefits from the experienced sponsorship and management of GGP LP, a real estate investment trust which currently owns and manages a portfolio of 200 regional malls totaling 200 million sf. The pari passu $100 million A-8 note of the $1.315 billion whole A note is included in this transaction with the remainder of notes A-1 through A-7 securitized in various transactions. The $1.5 billion whole loan consists of notes A-1 through A-8 and notes B through F. Occupancy as of Dec. 31, 2007 has increased slightly to 97.1% from 96.9% since issuance. DELTA AIR: Deal with Pilots Clears Way for Northwest Merger ----------------------------------------------------------- Delta Air Lines Inc. and its pilots have reached an agreement in principle on a contract that would purportedly clear the way for the carrier's merger with Northwest Airlines Corp., Bloomberg News reports. [The Wall Street Journal has reported that the board of directors of both airline companies approved the merger. A separate story is included in today's Troubled Company Reporter.] The accord would allegedly raise Delta pilots' pay and give them an equity stake in the consolidated carrier, people familiar with the talks said. Any pact would need to be approved by the leaders of the Delta pilots union, a unit of the Air Line Pilots Association, before the carriers could finalize their deal, says The Atlanta Journal- Constitution. The Delta union's 6,000 members also may vote later on whether to ratify a new labor contract tied to the merger. "With oil at $110 per barrel and the weakening economy, Delta probably got to the point where they felt like they needed to move ahead," said Michael Derchin, an analyst with FTN Midwest Research Securities Corp. in New York. "It always made strategic, long-term sense for these companies." The merger talks hit a snag in February when the airlines' pilots weren't able to agree on a way to protect members' seniority rankings after a consolidation. Now, Delta wants to draw up a new contract with just its 7,000 pilots, and Northwest's 5,000 pilots would be asked to join under a single contract later, said the people who didn't want to be identified because the plan is still private. The plan includes a small premium for Northwest investors, the unidentified sources said, reports Bloomberg. "It's sort of a backhanded slap at the Northwest pilots," said Douglas Marshall, director of the Aviation Graduate Program at the University of North Dakota. "Delta's pilots are going to have more leverage. They will be in a stronger position." Negotiations to create a combined seniority list may take months to complete, Bloomberg says, citing people familiar with the situation. "It is hard to anticipate Northwest pilots' level of interest in agreeing to an unknown Delta seniority integration proposal," said Robert Mann of R.W. Mann & Co. in Port Washington, New York, a consultant for airlines and unions. Betsy Talton, spokeswoman for Delta, and Tammy Lee, a spokeswoman for Northwest, declined to comment. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DELTA AIR: Board Votes "For" Merger with Northwest Airlines ----------------------------------------------------------- The board of directors of both Delta Air Lines Inc. and Northwest Airlines Corp. gave their consent Monday to allow the two airlines to merge based on an all-stock deal, The Wall Street Journal and The Associated Press relate. The combination of Delta and Northwest, which is still subject to regulatory approval, stands to create the world's largest airline operator in the world valued at $17.7 billion, AP says. Under the merger, each Northwest shareholder will get 1.25 shares in the combined company for every share owned, or equivalent to 17% premium as of Monday's trading, based on WSJ's and AP's reports. Both reports recount that Delta and Northwest have emerged from bankruptcy in 2007 and "are in much better shape" as compared with smaller airlines that have recently gone bankrupt. The deal, reportedly, could incite potential workers' protest. Air France-KLM Partnership Reports note that Delta and Northwest have partnered with Air France-KLM SA, which previously indicated plans to invest $750.0 million in the merger of the two U.S. airlines. As reported in the Troubled Company Reporter on Feb. 22, 2008, amid the merger rumors, Franco-Dutch airline Air France-KLM expressed its interest to invest in the entity that would emerge from a Delta and Northwest merger. Pierre-Henri Gourgeon, Air France-KLM's deputy CEO said in an analysts' conference call that the investment would depend on whether the U.S. airlines obtain a green light from competition authorities and probably won't result in any payments before the end of 2008. The investment is said to be close to $1.0 billion or EUR680.0 million. Labor Issues Concerning potential employee protest, the TCR said on April 10, 2008, that Northwest and Delta have revived their merger talks, even without the pre-arranged deal from both carriers' pilots, said people familiar with the situation. Delta's board members convened on April 4, 2008, and agreed to continue the talks which were reportedly intensifying. Delta pilots were granted permits to picket at Northwest hubs from April 8 to 24, to protest over the carriers' pilot-seniority dispute. Northwest's pilots union said it reserves the right to do the same thing at Delta hubs if it chooses. Previously, pilots' leaders from both carriers were unable to reach an agreement on an acceptable seniority list integration. The original deal between the parties included a common pilot labor contract for their combined 11,000 pilots that would give all of them raises, with Northwest's 5,000 aviators getting heftier increases to bring them up to Delta levels. The new deal may include a smaller pay package for pilots. The carriers are not required by law to come up with pre-merger pilots' labor agreements to push through with the deal. Delta and Northwest, however, wanted to avoid a messy, labor wrangle once the deal was consummated and, therefore, made efforts to come up with a "common labor contract." A report about Delta reaching an agreement in principle with its pilots that would purportedly clear the way for the carrier's merger with Northwest is included in today's TCR issue. Expected Revenue Boost After Merger Once approved by regulators, the merger will result in a projected annual sales of $31.7 billion, significantly higher than American Airlines Inc.'s annual sales, according to AP. WSJ reports that the merger will realize annual revenue and cost reduction will reach at least $1.0 billion. WSJ adds that the Delta and Northwest will need less than $1.0 billion to complete the merger. Wave of U.S. Airline Consolidation According to the reports, the merger signals the start of a series of collaborative efforts among U.S. airlines to address the rise in fuel costs, weakened economy, and the financial crisis. Larger airlines also have greater ability to compete internationally, relate the reports. The TCR related on March 24, 2008, that United Air Lines Inc. would pursue a consolidation with Continental Airlines Inc. if given the go-ahead, to create the airline industry's biggest carrier. Stephen Canale, a union representative on United Airlines' board of directors, said that Continental is "without question" the first choice for a United merger. The TCR said that the merger between Delta and Northwest, which was at that time currently under consideration, could incite a United-Continental tie-up. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DIRECT INSITE: December 31 Balance Sheet Upside-Down by $1 Million ------------------------------------------------------------------ Direct Insite Corp.'s balance sheet at Dec. 31, 2007, showed total assets of $4.522 million and total liabilities of $5.567 million, resulting to total shareholders' deficit of $1.045 million. "Strong, consistent demand for our ASP Software as Service model provides a solid base for continued growth in recurring revenues and profitability," James A. Cannavino, chairman and CEOm, said. "Our growing reputation for delivering savings through improved efficiency and increased customer satisfaction are fueling demand for our services." For the year ended Dec. 31, 2007, the company reported net income of $2.100 million compared to net income of $269,000 for the year ended Dec. 31, 2006, an improvement of $1.831 million. Cash provided from operations for the year ended Dec. 31, 2007, was $3.255 million compared to cash provided from operations of $1.149 million for the year ended Dec. 31, 2006. This improvement is due to the increase in sales, continued control of operating costs and lower costs. Cash provided from operations for the year ended Dec. 31, 2007, was $3.255 million, consisting of the net income of $2.100 million, increased by non-cash expenses of $0.941 million, including depreciation and amortization on property and equipment of $0.332 million, and stock based compensation expense of $0.609 million. Cash from operations was further increased by a decrease in accounts receivable, prepaid expenses and other current and non- current assets of $520,000, an increase in accounts payable and accrued expenses of $0.135 million, offset by a decrease in deferred revenue of $0.441 million. Cash used in investing activities was $0.202 million for the year ended Dec. 31, 2007, compared to $0.097 million for the previous year. This was expenditures for equipment in 2007 and 2006. Cash used in financing activities totaled $1.164 million for the year ended Dec. 31, 2007, compared to cash used in financing activities of $1.121 million in 2006. The company has repaid Lines of Credit totaling $0.586 million during 2007. In addition, advances from credit lines for receivable financing decreased $0.481 million for the year ended Dec. 31, 2007 and the company made repayments on capital leases and capital notes of $0.125 million. The company received proceeds on exercise of stock options of $0.028 million. As a result of these operating, investing and financing activities, cash increased by $1.889 million to $2.184 million at Dec. 31, 2007. At Dec. 31, 2007, the company has accrued dividends due to holders of its preferred stock of $3.336 million. In January 2008, the company paid $0.773 million of dividends to the holders of the Series B Preferred Stock. About Direct Insite Headquartered in Bohemia, New York, Direct Insite Corp. (OTC BB: DIRI.OB) -- http://www.directinsite.com/-- provides financial supply chain automation across Procure-to-Pay and Order- to-Cash processing. The company's global eInvoice Management services automate complex manual business processes such as invoice validation, order matching, consolidation, dispute handling, and e-payment processing. Direct Insite solutions are used by more than 7,000 corporations across 62 countries, 15 languages and multiple currencies. EDM EQUIPMENT: Files Chapter 7 Liquidation in Nebraska ------------------------------------------------------ EDM Equipment Co. sought protection from creditors under chapter 7 of the Bankruptcy Code before the U.S Bankruptcy Court for the District of Nebraska, The Associated Press relates. A state court judge awarded creditor TierOne to put the company under temporary receivership until the court decides on the distribution of the Debtor's assets, AP says. The Debtor's bankruptcy filing placed on hold the temporary receivership, based on AP's report. TierOne has claims of about $3 million, according to the report. AP recounts that a week ago, Laurie Rathman, former EDM office manager, was sentenced to six months imprisonment and probation for embezzlement of $150,000 from the company. According to the report, EDM president Jeffrey Mellon informed law officers that Mr. Rathman took $200,000 since 2002, based on court filings. Court documents do not show asset and debt information, AP relates. Details on the bankruptcy filing will be released in two weeks, AP adds. Lincoln, Nebraska-headquartered EDM Equipment Co. -- http://www.edmequipment.com/-- is a local distributor of seven firetrucks a Florida manufacturer built for Lincoln. It supplies fire and rescue and environmental products and equipment. It serves Nebraska, Iowa, Colorado, Kansas and Missouri. EDUCATION RESOURCES: Asks Court to Clarify Creditors' Info Access ----------------------------------------------------------------- The Education Resources Institute Inc. asks the U.S. Bankruptcy Court for the District of Massachusetts to confirm that any committee of creditors appointed under Section 1102(a) of the Bankruptcy Code in the Debtor's Chapter 11 cases is not authorized or required, pursuant to Section 1102(b)(3)(A), to provide access to TERI's confidential, privileged or otherwise non-public proprietary information to the creditors it represents. Congress enacted the new Section 1102(b)(3) as part of the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005. The Section states, in relevant part, that a creditors' committee appointed under Section 1102(a) will "provide access to information for creditors who (i) hold claims of the kind represented by that committee; and (ii) are not appointed to the committee." Section 1102(b)(3)(A), however, does not indicate how a creditors' committee should provide "access to information" and, more importantly, does not indicate the nature, scope, or extent of the "information" that a committee must provide to the creditors that it represents, the Debtor's counsel, Daniel M. Glosband, Esq., at Goodwin Procter LLP, in Boston, Massachusetts, notes. Moreover, there appears to be no legislative history to Section 1102(b)(3) that might provide guidance on the application of the new provision, Mr. Glosband further notes. He tells the Court that the lack of specificity in Section 1102(b)(3)(A) creates significant issues for debtors and creditors' committees -- it raises the issue of whether a creditors' committee could be required to share a debtors' Confidential Information with any creditor that the committee represents; and with any creditor that the committee represents information subject to the attorney-client or some other state, federal, or other jurisdictional law privilege, whether that privilege is solely controlled by the committee or is a joint privilege with the debtor or some other party. According to Mr. Glosband, a creditors' committee appointed in its Chapter 11 case would be permitted, but not required, to provide access to Privileged Information to any party so long as (i) that Privileged Information was not Confidential Information, and (ii) the relevant privilege was held and controlled solely by the Creditors' Committee. The Debtor operates in a highly competitive and, under current market conditions, a highly distressed space, Mr. Glosband contends. Because the Debtor is still formulating its business plan, the dissemination of its Confidential Information to parties who are not bound to any confidentiality agreement with TERI could be disastrous for the Debtor and its creditors, he says. The public dissemination of the Debtor's Confidential Information likely would cause serious harm to the Debtor's estate, he asserts. If there were a risk that Confidential Information given by the Debtor to the creditors' committee would have to be turned over to any creditor, TERI would be highly discouraged from giving Confidential Information to the committee at all. The inability of the committee to gain access to Confidential Information, in turn, could limit the ability of the committee to fulfill its statutory obligations under the Bankruptcy Code, Mr. Glosband adds. Indeed, unless it is made clear that the risk of dissemination of Privileged Information does not exist, the estate representation structure envisioned by the Bankruptcy Code would become immediately dysfunctional, Mr. Glosband states. Procedures The Debtor proposes that the creditors' committee and its individual members and its representatives, advisors, and counsel be deemed to be in compliance with Sections 1102(b)(3) and 1103(c) by implementing certain procedures, which may include: (a) authorizing, but not requiring, establishment of a Web site to make certain information available to creditors; (b) making available on the Web site information regarding the Debtor's Chapter 11 case that the Creditors' Committee or its counsel, in its sole discretion, deems appropriate subject to certain restrictions and limitations; (c) establishing an e-mail address to allow unsecured creditors to send questions and comments in connection with TERI's Chapter 11 case; and (d) authorizing the Creditors' Committee and its counsel, in its reasonable discretion, to review or respond to the e- mail correspondence. Headquartered in Boston, Massachussetts, The Education Resources Institute Inc. -- http://www.teri.org/-- aka Boston Systems Resources Inc., Brockton Education Opportunity Center, TERI, TERI College Access, TERI College Access Centers and TERI Marketing Services Inc., is a nonprofit organization that promotes educational opportunities for all through its college access and loan guarantee activities. Founded in 1985, TERI is a guarantor of private or non-government student loans with more than $17 billion in outstanding guarantees. The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr. D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L. Martin, Esq. at Goodwin Procter LLP represent the Debtor in its restructuring efforts. The Debtor's Conflicts Counsel is Craig and Macauley PC, its financial advisor is Grant Thornton LLP, its Claims Agent is Epiq Bankruptcy Solutions LLC, its investment Banker is Citigroup Global Markets Inc., and its Public Relations & Public Affairs Advisor is Rasky Baerlein Strategic Communications Inc. When the Debtor filed for protection from its creditors, it listed estimated assets of more that $1 billion and estimated debts of $500,000 to $1 billion. (TERI Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EDUCATION RESOURCES: Wants to Hire EPIQ Bankruptcy as Claims Agent ------------------------------------------------------------------ The Education Resources Institute, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Massachusetts to employ EPIQ Bankruptcy Solutions LLC, as its claims, noticing and balloting agent. The Debtor relates that the EPIQ is well-suited to perform the the task of a notice agent. EPIQ is a claims management and case administration firm with more than 17 years of in-depth experience in performing noticing, claims processing, claims reconciliation and other administrative tasks for Chapter 11 debtors. EPIQ is also experienced in performing plan voting and distribution services, and other services relating to its role as a claims and noticing agent. As claims agent to the Debtor, EPIQ is expected to assist the Debtor with the preparation and distribution of all required notices in its Chapter 11 Case including: (a) a notice of the commencement of the Chapter 11 case and any initial meeting of creditors under Section 341(a) of the Bankruptcy Code; (b) notice of claims bar dates; (c) notice of objections to claims; (d) notices of any hearings on the Debtor's disclosure statement and confirmation of the Debtor's Chapter 11 plan; and (e) other miscellaneous notices as the Debtor or the Court may deem necessary or appropriate for the orderly administration of the Chapter 11 case; (f) filing with the Court Clerk's Office a certificate or affidavit of service, promptly after the service of a particular notice, that includes (i) a copy of the notice served; (ii) a list of persons upon whom the notice was served, along with their addresses; and (iii) the date and manner of service; (g) receiving, examining and maintaining copies of all proofs of claim and proofs of interest filed in the Chapter 11 case; (h) maintaining an official registers in the Debtor's Chapter 11 case by docketing all proofs of claim and proofs of interest in the applicable claims database that includes pertinent information for each claim or interest asserted, including: -- the name and address of the claimant or interest holder and its agent, if the proof of claim or proof of interest was filed by an agent; -- the date the proof of claim or proof of interest was received by EPIQ or the Court; -- the claim number assigned to the proof of claim or proof of interest; and -- the asserted amount and classification of the claim, (i) implementing necessary security measures to ensure the completeness and integrity of the claims registers; (j) transmitting to the Court Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; (k) maintaining an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available upon request to the Clerk's Office or any party in interest; (l) providing access to the public for examination of copies of the proofs of claim or proofs of interest filed in the Chapter 11 case without charge during regular business hours; (m) recording all transfers of claims pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and providing notice of the transfers as required by Rule 3001(e); (n) complying with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (o) complying promptly with further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; (p) providing other claims processing, noticing, disbursing and related administrative services as may be requested from time to time by the Debtor, including, assisting in preparation of the Debtor's schedules and statements of financial affairs, if necessary; (q) overseeing the distribution of the applicable solicitation materials to each holder of a claim against or interest in the Debtor if any post-petition distributions are necessary; (r) responding to mechanical and technical distribution and solicitation inquiries, on a postpetition basis; (s) receiving, reviewing and tabulating the ballots cast, and making determinations with respect to each ballot as to its timeliness, compliance with the Bankruptcy Code, Bankruptcy Rules and procedures ordered by the Court subject; and (t) performing other related plan-solicitation services as may be requested by the Debtor. In addition, EPIQ, as notice agent, will assist the Debtor with, among other things, certain data processing and ministerial administrative functions, including: * preparing schedules, statements of financial affairs, if necessary, and preparing the master creditor list, and any amendments; and * acting as solicitation and disbursing agent in connection with the chapter 11 plan process. The Debtor will pay EPIQ according to its customary hourly rates: Professional Hourly Rate ------------ ----------- Clerk $40 - $60 Case Manager (Level 1) $125 - $175 IT Programming Consultant $140 - $190 Case Manager (Level 2) $185 - $220 Senior Case Manager $225 - $275 Senior Consultant $295 Mr. Glosband discloses that on April 1, 2008, EPIQ received a $25,000, retainer from the Debtor. James Katchadurian, senior vice president of EPIQ, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtor's estates or of any class of creditors or equity security holders. About The Education Resources Institute Inc. Headquartered in Boston, Massachussetts, The Education Resources Institute Inc. -- http://www.teri.org/-- aka Boston Systems Resources Inc., Brockton Education Opportunity Center, TERI, TERI College Access, TERI College Access Centers and TERI Marketing Services Inc., is a nonprofit organization that promotes educational opportunities for all through its college access and loan guarantee activities. Founded in 1985, TERI is a guarantor of private or non-government student loans with more than $17 billion in outstanding guarantees. The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr. D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L. Martin, Esq. at Goodwin Procter LLP represent the Debtor in its restructuring efforts. The Debtor's Conflicts Counsel is Craig and Macauley PC, its financial advisor is Grant Thornton LLP, its Claims Agent is Epiq Bankruptcy Solutions LLC, its investment Banker is Citigroup Global Markets Inc., and its Public Relations & Public Affairs Advisor is Rasky Baerlein Strategic Communications Inc. When the Debtor filed for protection from its creditors, it listed estimated assets of more that $1 billion and estimated debts of $500,000 to $1 billion. (TERI Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EGPI FIRECREEK: To Restate Financial Statements Due to Errors ------------------------------------------------------------- On March 25, 2008, management of EGPI Firecreek Inc. determined that these financial statements of the company should not be relied upon: (1) the company's audited consolidated financial statements in the Annual Reports on Forms 10-KSB for the periods ending: Dec. 31, 2005 and 2006; and (2) the company's unaudited consolidated financial statements in the Quarterly Reports on Forms 10-QSB for the periods ending: March 31, 2006, and 2007; June 30, 2006 and 2007; and Sept. 30, 2006, and 2007. The company determined that its accounting for the convertible debentures issued during the fourth quarter of 2005, and during the years ended 2006 and 2007 were not in accordance with U.S. generally accepted accounting principles. Specifically, the incentive debenture and the conversion features were not bifurcated and classified as a derivative liability in the consolidated balance sheets. The corresponding debt discount should be amortized to interest expense over the life of the host convertible debenture. The company's consolidated balance sheets will be affected by a substantial increase in total liabilities and total shareholders' deficit as of Dec. 31, 2006, and a decrease in shareholders' deficit as of Dec. 31, 2005, and an increase in total liabilities as of Dec. 31, 2005. Additionally, there will be a material increase in net loss for the year ended Dec. 31, 2006, and a material decrease in net loss for the year ended Dec. 31, 2005. About EGPI Firecreek Based in Scottsdale, Arizona, EGPI Firecreek Inc. (OTC BB: EFCR) -- http://egpifirecreek.net/-- is currently focused on oil and gas activities in the following areas: i) Development of its domestic interests acquired in Wyoming in late 2005 for production of primarily natural gas, and Texas for production of oil, and ii) to a lesser extent, pursuit of and potential completion of projects overseas in Central Asian and European countries. * * * At Sept. 30, 2007, the company's consolidated balance sheet showed $3,269,432 in total assets and $8,308,184 in total liabilities, resulting in a $5,038,752 total stockholders' deficit. FINANCIAL GUARANTY: Explores Options, Including Capital Infusion ---------------------------------------------------------------- FGIC Corporation the parent company of Financial Guaranty Insurance company has begun discussions with potential investors and other parties regarding strategic alternatives the company is exploring that would enable FGIC to both enhance its capital position and protect its policyholders. The company is optimistic that within the coming weeks it will have a course of action to propose to its board of directors. As previously reported, FGIC has retained Goldman Sachs to assist in these efforts. According to Bloomberg News, FGIC is considering in selling the company. FGIC said that the strategic alternatives it is exploring include raising capital for a newly established triple-A guarantor dedicated exclusively to the global public finance business. This company would also assume FGICs existing public finance and international infrastructure business. "With a high-quality and diversified portfolio, coupled with a focused business strategy, the new company would have a unique platform to deliver superior value to its clients and investors in the securities it insures," a FGIC spokesman said. "Other alternatives include, but are not limited to, the sale of all or part of the company, and a bulk reinsurance transaction on all or parts of FGICs in-force business to a third party." FGIC said it believes that its strategic alternatives are consistent with the goals of the New York Insurance Department with regard to the company and its policyholders. The company said it continues to work closely with Superintendent Dinallo and the NYID as it progresses with its negotiations. About Financial Guaranty Financial Guaranty Insurance Co. -- http://www.fgic.com/-- has enjoyed a reputation for financial strength, underwriting discipline and superior client service. As a leading financial guaranty insurance company, FGIC provides credit enhancement on infrastructure finance and structured finance securities worldwide, enabling bond issuers to obtain capital cost effectively and enhancing their access to the capital markets. The firm is a primary insurer on the $850 million sewer bond debt of Jefferson County. * * * As reported by the Troubled company Reporter on April 1, 2008, Moody's Investors Service downgraded to Baa3, from A3, the insurance financial strength ratings of the operating subsidiaries of FGIC Corporation, including Financial Guaranty Insurance company and FGIC UK Limited. The three notch downgrade of FGIC's IFS ratings to Baa3 reflects Moody's view that the cushion above the required regulatory minimum may not be sufficient to absorb additional losses associated with FGIC's mortgage related exposures and the recent deterioration of Jefferson County bonds, to which FGIC has sizable exposure. FIRST FRANKLIN: Moody's Lowers Ratings on 16 Certificate Classes ---------------------------------------------------------------- Moody's Investors Service has downgraded 16 certificates and maintained on review for possible further downgrade 3 of those classes of certificates from 3 transactions issued by First Franklin Mortgage Loan Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: FFMLT 2007-FFB-SS, Mortgage Pass-Through Certificates, Series 2007-FFB-SS -- Cl. M-2, Downgraded to A2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Baa2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Ba1 from A3 -- Cl. M-5, Downgraded to Ba3 from Baa1 -- Cl. M-6, Downgraded to B3 from Baa2 Issuer: First Franklin Mortgage Loan Trust 2005-FFA -- Cl. B-1, Downgraded to B2 from Baa1 -- Cl. B-2, Downgraded to Caa2 from Ba2 -- Cl. B-3, Downgraded to C from Ca Issuer: First Franklin Mortgage Loan Trust 2007-FFC -- Cl. M-1, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Caa1 from A1 -- Cl. M-3, Downgraded to Caa2 from A2 -- Cl. M-4, Downgraded to Caa3 from A3 -- Cl. B-1, Downgraded to Ca from Baa1 -- Cl. B-2, Downgraded to Ca from Baa2 -- Cl. B-3, Downgraded to C from B2 -- Cl. B-4, Downgraded to C from B3 FLOWSERVE CORP: Moody's Holds Ratings and Changes Outlook to Pos. ----------------------------------------------------------------- Moody's Investors Service affirmed Flowserve Corporation's Ba3 corporate family rating, Ba2 senior secured rating and B1 probability of default rating and changed the rating outlook to positive from stable. The rating action anticipates continued strong end market demand for Flowserve's product offerings which should support robust earnings and cash flow, as well as improved coverage ratios. In conjunction with debt repayment achieved over the last several years, these favorable operating results should enable the company to sustain financial metrics that are supportive of a higher rating. Moody's noted that Flowserve continues to make progress at settling various legal and regulatory issues that have been a constraint on the company's rating. The positive outlook signals Moody's belief that ratings could head higher should Flowserve resolve remaining legal and regulatory issues while demonstrating continued favorable operating trends, and a commitment to maintaining its improved capital structure. These ratings have been affirmed: -- Corporate family rating at Ba3 -- Probability of default rating at B1 -- Senior secured credit facilities at Ba2 (to LGD2, 19% from LGD2, 20%) Outlook Actions: -- Outlook, Changed To Positive From Stable Flowserve's Ba3 corporate family rating considers the company's leading market position as a provider of pumps, valves and mechanical seals. The company's products are used in various end markets globally, with particular strength in the energy and infrastructure markets which may offer favorable demand patterns even as economic trends soften. Flowserve benefits from a global customer base, with a good representation of aftermarket service revenues which should provide an element of stability into future results. Financial performance has improved over the last year and ongoing strength of the company's end markets is likely to support continued improvement in financial metrics. While acknowledging these positive trends and the reduction of indebtedness that has occurred over the last several years, Moody's notes that Flowserve continues to work to resolve legal and regulatory issues related to U.S. export control laws. SEC and DOJ investigations related to the Oil-for-food program were settled in early 2008, which marks important progress in these areas. The positive rating outlook reflects Moody's expectation that the company will continue to make progress at settling its outstanding issues. Headquartered in Irving, Texas, Flowserve Corporation is a leading provider of pumps, valves and mechanical seals as well as related services to various end markets globally. Revenue for 2007 totaled roughly $3.8 billion. FREMONT GENERAL: Inks $5.6 Bil. Asset Sale Deal with CapitalSource ------------------------------------------------------------------ CapitalSource Inc. has entered into a definitive asset purchase agreement with Fremont Investment & Loan to assume all of Fremont Investment's retail deposits of approximately $5.6 billion as of March 31, 2008 and to operate its 22 retail banking branches. The transaction is subject to regulatory approval. The company will file applications with the California Department of Financial Institutions and with the Federal Deposit Insurance Corporation to form a de novo California-chartered industrial bank. CapitalSource has communicated its plans to the FDIC and DFI over recent months and expects to file the required applications within approximately two weeks. The company further expects the transaction to close in the third quarter, following receipt of regulatory approvals. "This acquisition of branches and assumption of deposits will give CapitalSource's new bank access to a significant base of deposits with strong growth prospects," John K. Delaney, CapitalSource chairman and chief executive officer, commented. "Together with CapitalSource's valuable commercial finance lending franchise, this acquisition strengthens our business model and positions us to grow by taking advantage of the attractive lending opportunities now available in the market." As part of the asset purchase agreement, the company's new bank will acquire high quality assets approximately equal to the deposits assumed including, approximately $3.0 billion of cash and short-term investments and a commercial real estate loan participation interest with a March 31, 2008 outstanding principal balance of approximately $2.7 billion. CapitalSource is not acquiring Fremont Investment, Fremont General Corporation, any contingent liabilities, or business operations except the retail branch network. "We have long sought deposit funding as a way to further diversify and strengthen our funding platform," Thomas A. Fink, CapitalSource chief financial officer, said. "This transaction will accomplish that objective in an optimal and expeditious way." "Forming the new bank and acquiring branches with $5.6 billion in deposits will enhance CapitalSource's liquidity profile, increase our profitability and improve our capital efficiency," Mr. Fink added. "Our business plan envisions the sale of approximately $2.5 billion of CapitalSource loans to the new bank, making this transaction immediately accretive." CapitalSource is acquiring an 'A' participation interest and is not acquiring the related 'B' participation interest. The 'A' participation interest receives 70% of the principal payments from a $5.5 billion pool of commercial real estate loans. As of March 31, 2008, the 'A' participation interest was 48.8% of the $5.5 billion pool. The loans are managed by a subsidiary of iStar Financial Inc. "We conducted extensive loan-level diligence on the 'A' participation interest to be acquired," Mr. Delaney stated. "It is well secured by a diverse portfolio of high-quality commercial real estate assets and will continue to experience accelerated paydowns because it has a preferential principal amortization mechanism." "In addition, we view iStar's role as asset manager to be a significant advantage, as we hold iStar in very high regard and view them as a 'best-in-class' manager of commercial real estate debt and loan assets," Mr. Delaney continued. "We look forward to welcoming FIL's retail banking customers and employees to our new bank," Mr. Fink concluded. "CapitalSource will serve as a dependable source of financial strength for them." The Transaction According to Fremont The definitive purchase and sale agreement was entered with CapitalSource TRS Inc., a wholly-owned subsidiary of CapitalSource. The purchaser will pay a 2% premium on all the bank's deposits, and will purchase the bank's participation interest in previously sold commercial real estate loans at a 3% discount to its net book value. The bank's other assets to be sold in the transaction, at net book value include real and personal property, cash and certain other assets. The purchaser will pay the bank at closing an additional $58 million in cash. The deposit premium, the $58 million in cash and the purchase price for the participation interest, cash and other assets being sold by the bank will only partially offset the deposits being assumed by the purchaser. Consequently, in order to facilitate consummation of the transaction, to the extent that the bank does not have sufficient funds available at the time of the closing the agreement provides that an affiliate of CapitalSource will provide the bank with a loan of up to $200 million, to be secured by the bank's servicing advance receivables. The proposed transaction does not include the sale of the bank's loan servicing operations. In response to questions that it has received, the company is advising that, after giving effect to a deposit premium of approximately $112 million, based on estimated deposits of $5.6 billion at March 31, 2008, the additional referenced cash payment of $58 million, less the discount given on the commercial real estate participation interest of approximately $80 million, the company estimates that the net effect of the proposed transaction will result in a premium to the bank of approximately $90 million. After giving effect to the proposed transaction, neither the company nor the bank is able to provide any assurances as to whether there will be any funds available to the company, its creditors or its shareholder in view of the amount of the bank's existing obligations and contingent claims. As previously stated, completion of the proposed transaction is subject to the approval of the Federal Deposit Insurance Corporation and the California Department of Financial Institutions, as well as approval of the company's shareholders and the satisfaction of customary closing conditions. About Fremont General Headquartered in Brea, California, Fremont General Corporation (NYSE: FMT) -- http://www.fremontgeneral.com/-- is a financial services holding company which is engaged in deposit gathering through a retail branch network in Central and Southern California and residential real estate mortgage servicing through its wholly owned subsidiary Fremont Investment & Loan. Fremont Investment funds its operations primarily through deposit accounts sourced through its 22 retail banking branches which are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation. It had $8.8 billion in total assets at Sept. 30, 2007. The Retail banking Division of Fremont Investment & Loan continues to offer a variety of savings and money market products as well as certificates of deposits across its 22 branch network. Customer deposits remain fully insured by the FDIC up to at least $100,000 and retirement accounts remain insured separately up to an additional $250,000. 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. * * * As reported by the Troubled Company Reporter on March 31, 2008, the Federal Deposit Insurance Corporation issued on March 26, 2008, a Supervisory Prompt Corrective Action Directive requiring Fremont to recapitalize the Bank within 60 days, or by May 26, 2008. As reported in the Troubled Company Reporter on March 5, 2008 Fremont General received notices from two affiliated third party purchasers of an aggregate of $3.15 billion of residential sub- prime mortgage loans that the company sold in March 2007, alleging that the company was in default with respect to at least one of several obligations that the company had undertaken in connection with the loan sales. As reported in the TCR on March 6, 2008, Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on Fremont General Corp. to 'CC' from 'CCC-'. The rating remains on CreditWatch Negative. FREMONT GENERAL: NYSE Suspends Shares Trading, Plans Delisting -------------------------------------------------------------- NYSE Regulation Inc. determined that the common stock of Fremont General Corporation should be suspended prior to the opening on Thursday, April 17, 2008. NYSE Regulation will also suspend the 9% trust originated preferred securities of Fremont General Financing I in connection with its removal of the company's common stock. The decision was reached in view of the fact that the company's common stock had fallen below the New York Stock Exchange's continued listing standard for average closing price of less than $1.00 over a consecutive 30 trading day period. NYSE Regulation also considered the "abnormally low" price of the company's common stock, which closed at $0.45 on April 11, 2008 with a resultant common market capitalization of $35.8 million. Furthermore, based on a review of all the circumstances surrounding the company, NYSE Regulation has determined that the company's securities are no longer suitable for listing on the NYSE. NYSE Regulation considered all the pertinent facts in arriving at this determination and the disclosures made in recent company press releases on February 28, March 18, March 28, and April 14 2008, including these: * The Federal Deposit Insurance Corporation and the California Department of Financial Institutions issued a Supervisory Prompt Corrective Action Directive on March 26, 2008 which requires the company and its Bank subsidiary to take one or more actions to recapitalize the Bank within 60 days or by May 26, 2008, as it has been categorized as undercapitalized. Though the company is working with Credit Suisse Securities LLC and Sandler O'Neill LLP to explore strategic alternatives, there is no assurance that these will be successful or that the company will be able to implement a strategy to comply with the Directive. * As part of its efforts to respond to the Directive, the company has entered into a definitive purchase and sale agreement with CapitalSource TRS Inc. that provides for the purchase of substantially all of the Bank's assets, which include the Bank's participation interest in certain previously sold commercial real estate loans, the assumption of all the Bank's deposits, and the acquisition of all the Bank's branches. After giving effect to this proposed transaction, neither the company nor the Bank is able to provide any assurances as to whether there will be any funds available to the company, its creditors or its shareholders in view of the amount of the Bank's existing obligations and contingent claims. * The company has also deferred interest due on two obligations in connection with attempts to negotiate a comprehensive debt restructuring: 1) the 9% trust originated preferred securities of Fremont General Financing I - ticker symbol FMT PR; and 2) Series B 7.875% senior notes due March 2009. * The company is delayed in filing its Dec. 31, 2007 Form 10-K with the Securities and Exchange Commission and is not able to determine when it will be able to file. The delay is attributable to ongoing reviews that may result in additional reserves, write-downs, or adjustments to the company's Bank subsidiary's regulatory capital, which could have an adverse effect on the company's financial condition, results of operations, and business. As a result of the delayed Form 10-K filing, the company will also not be able to hold its combined 2007 and 2008 annual meeting of shareholders by the April 30, 2008 date previously agreed to with NYSE Regulation. The company has a right to a review of this determination by a committee of the board of directors of NYSE Regulation. Application to the SEC to delist the issues is pending the completion of applicable procedures, including any appeal by the company of the NYSE Regulation staff's decision. The NYSE may, at any time, suspend a security if it believes that continued dealings in or listing of the security on the NYSE is not advisable. About Fremont General Headquartered in Brea, California, Fremont General Corporation (NYSE: FMT) -- http://www.fremontgeneral.com/-- is a financial services holding company which is engaged in deposit gathering through a retail branch network in Central and Southern California and residential real estate mortgage servicing through its wholly owned subsidiary Fremont Investment & Loan. Fremont Investment funds its operations primarily through deposit accounts sourced through its 22 retail banking branches which are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation. It had $8.8 billion in total assets at Sept. 30, 2007. The Retail banking Division of Fremont Investment & Loan continues to offer a variety of savings and money market products as well as certificates of deposits across its 22 branch network. Customer deposits remain fully insured by the FDIC up to at least $100,000 and retirement accounts remain insured separately up to an additional $250,000. * * * As reported in the Troubled company Reporter on March 5, 2008 Fremont General received notices from two affiliated third party purchasers of an aggregate of $3.15 billion of residential sub- prime mortgage loans that the company sold in March 2007, alleging that the company was in default with respect to at least one of several obligations that the company had undertaken in connection with the loan sales. As reported in the TCR on March 6, 2008, Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on Fremont General Corp. to 'CC' from 'CCC-'. The rating remains on CreditWatch Negative. FREMONT HOME: Fitch Slashes Ratings on $704.2MM Certificates ------------------------------------------------------------ Fitch Ratings has taken rating actions on three Fremont Home Loan Trust mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed from Rating Watch Negative. Affirmations total $955.4 million and downgrades total $704.2 million. Additionally, $131.8 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2005-1 -- $79.1 million class M-1 affirmed at 'AA+' (BL: 94.16, LCR: 3.86); -- $80.2 million class M-2 affirmed at 'AA' (BL: 76.06, LCR: 3.12); -- $37.7 million class M-3 affirmed at 'AA-' (BL: 66.57, LCR: 2.73); -- $34.8 million class M-4 affirmed at 'A+' (BL: 50.63, LCR: 2.08); -- $40.6 million class M-5 affirmed at 'A' (BL: 46.30, LCR: 1.90); -- $31.9 million class M-6 downgraded to 'BBB' from 'A-' (BL: 39.03, LCR: 1.60); -- $26.1 million class M-7 downgraded to 'BB' from 'BBB+' (BL: 32.18, LCR: 1.32); -- $24.1 million class M-8 downgraded to 'B' from 'BBB' (BL: 25.77, LCR: 1.06); -- $19.3 million class M-9 downgraded to 'CCC' from 'BB' (BL: 20.27, LCR: 0.83); -- $12.6 million class B-1 downgraded to 'CC/DR5' from 'BB-' (BL: 16.43, LCR: 0.67); -- $19.3 million class B-2 revised to 'C/DR6' from 'C/DR4' (BL: 11.22, LCR: 0.46). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 34.43%; -- Realized Losses to date (% of Original Balance): 2.03%; -- Expected Remaining Losses (% of Current balance): 24.36%; -- Cumulative Expected Losses (% of Original Balance): 7.22%. Series 2005-C -- $42.7 million class 1-A-1 affirmed at 'AAA' (BL: 91.14, LCR: 3.37); -- $10.7 million class 1-A-2 affirmed at 'AAA' (BL: 85.12, LCR: 3.15); -- $16.5 million class 2-A-3 affirmed at 'AAA' (BL: 97.45, LCR: 3.60); -- $38.5 million class 2-A-4 affirmed at 'AAA' (BL: 82.84, LCR: 3.06); -- $54.2 million class M-1 affirmed at 'AA+' (BL: 68.47, LCR: 2.53); -- $31.0 million class M-2 affirmed at 'AA' (BL: 59.90, LCR: 2.21); -- $19.1 million class M-3 rated 'AA-', placed on Rating Watch Negative (BL: 51.04, LCR: 1.89); -- $19.1 million class M-4 downgraded to 'A' from 'A+' (BL: 46.79, LCR: 1.73); -- $18.6 million class M-5 downgraded to 'BBB' from 'A+' (BL: 42.27, LCR: 1.56); -- $16.0 million class M-6 downgraded to 'BB' from 'A' (BL: 38.02, LCR: 1.40); -- $16.5 million class M-7 downgraded to 'B' from 'A-' (BL: 33.30, LCR: 1.23); -- $13.4 million class M-8 downgraded to 'B' from 'BBB+' (BL: 29.26, LCR: 1.08); -- $10.3 million class M-9 downgraded to 'CCC' from 'BBB' (BL: 25.98, LCR: 0.96); -- $10.3 million class B-1 downgraded to 'CCC' from 'BB' (BL: 22.68, LCR: 0.84). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 35.07%; -- Realized Losses to date (% of Original Balance): 1.97%; -- Expected Remaining Losses (% of Current balance): 27.06%; -- Cumulative Expected Losses (% of Original Balance): 11.28%. Series 2005-E -- $207.5 million class 1-A-1 affirmed at 'AAA' (BL: 64.58, LCR: 2.12); -- $43.4 million class 2-A-2 affirmed at 'AAA' (BL: 98.63, LCR: 3.23); -- $238.6 million class 2-A-3 affirmed at 'AAA' (BL: 64.10, LCR: 2.10); -- $112.7 million class 2-A-4 rated 'AAA', placed on Rating Watch Negative (BL: 59.09, LCR: 1.94); -- $86.7 million class M-1 downgraded to 'A' from 'AA+' (BL: 50.55, LCR: 1.66); -- $80.2 million class M-2 downgraded to 'BBB' from 'AA' (BL: 43.73, LCR: 1.43); -- $53.8 million class M-3 downgraded to 'BB' from 'A+' (BL: 38.86, LCR: 1.27); -- $38.4 million class M-4 downgraded to 'B' from 'A' (BL: 35.32, LCR: 1.16); -- $38.4 million class M-5 downgraded to 'B' from 'A-' (BL: 31.77, LCR: 1.04); -- $34.0 million class M-6 downgraded to 'CCC' from 'BBB' (BL: 28.50, LCR: 0.93); -- $34.0 million class M-7 downgraded to 'CCC' from 'BBB-' (BL: 24.98, LCR: 0.82); -- $25.3 million class M-8 downgraded to 'CC/DR5' from 'BB' (BL: 22.42, LCR: 0.74); -- $27.5 million class M-9 downgraded to 'CC/DR5' from 'B' (BL: 19.84, LCR: 0.65); -- $25.3 million class B-1 downgraded to 'CC/DR5' from 'B' (BL: 17.65, LCR: 0.58); -- $5.5 million class B2-A revised to 'C/DR6' from 'C/DR5' (BL: 16.05, LCR: 0.53); -- $5.0 million class B2-B revised to 'C/DR6' from 'C/DR5' (BL: 16.05, LCR: 0.53); -- $5.0 million class B2-C revised to 'C/DR6' from 'C/DR5' (BL: 16.05, LCR: 0.53); -- $7.6 million class B2-D revised to 'C/DR6' from 'C/DR5' (BL: 16.05, LCR: 0.53). Deal Summary -- Originators: 100% Fremont Investment & Loan; -- 60+ day Delinquency: 37.41%; -- Realized Losses to date (% of Original Balance): 2.27%; -- Expected Remaining Losses (% of Current balance): 30.50%; -- Cumulative Expected Losses (% of Original Balance): 18.01%. 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 2005 with regard to continued poor loan performance and home price weakness. FREMONT HOME: Moody's Junks Rating on Cl. SL-A Certificates ----------------------------------------------------------- Moody's Investors Service has downgraded two certificates from a transaction issued by Fremont Home Loan Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Fremont Home Loan Trust 2006-B -- Cl. SL-A, Downgraded to Caa2 from B3 -- Cl. SL-M1, Downgraded to C from Ca FRONTIER AIRLINES: Denver Airport Rating Not Affected by Filing --------------------------------------------------------------- Fitch Ratings affirms its 'A+' rating and stable outlook for the City and County of Denver, Colorado's approximately $3.6 billion outstanding revenue bonds issued for Denver International Airport. Frontier Airlines, the airport's second largest carrier, representing approximately 23% of the airport's enplaned passengers in 2007, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The carrier continues to operate its full schedule, and the bankruptcy filing is not expected to have an immediate effect on the airport's financial operations. The airport indicates that the airline owes approximately $1.8 million in pre-petition debt, landing fees payable April 20. The airport required Frontier to post a $3 million letter of credit as a security deposit to mitigate such an event. With Frontier continuing to operate, the immediate effect on the airport should be negligible as the airline is required to make all post-petition payments due under the airport's use and lease agreement. Of more consequence would be an eventual liquidation of Frontier, which would eliminate a sizeable operator at the airport. As Frontier had not established a debtor-in-possession financing facility upon filing for protection, and market factors may work against the carrier as it pursues its reorganization, Fitch cannot rule out this possibility. Denver is a strong origination and destination market, thus Fitch believes other carriers -- notably Southwest Airlines and United Airlines -- will likely act to capture market share in the event of a liquidation of Frontier. However, in light of the current economics of the industry, this backfilling may be on a more limited basis and take place over a longer period of time than in prior years. Thus Fitch would anticipate a decline in annual enplanements and a resultant increase in airport's cost per enplaned passenger. As the airport maintains a strong financial position, with cash on hand consistently exceeding 400 days of expenses and debt service coverage of 1.8 times (x) in 2006, Fitch believes the airport should be able to sustain its financial operations through a short-term market dislocation. The airport is planning a gate expansion on Concourse C. However, the airport has not yet let the contract for this project and thus maintains the ability to defer or eliminate it should conditions warrant. If Frontier leave, the airport would have ample capacity to meet the demand of incumbent carriers for gates on Concourse A. FUSION TELECOM: Appoints Gordon Hutchins Jr. to President and CEO ----------------------------------------------------------------- On March 26, 2008, Fusion Telecommunications International Inc. appointed Gordon Hutchins, Jr. as president and chief operating officer to succeed Matthew D. Rosen, who remains as chief executive officer and director. Mr. Hutchins served as executive vice president - Operations since May 2006, and served as executive vice president - International Operations from December 2005, until May 2006. Prior to his employment with Fusion, Mr. Hutchins served as president and chief executive officer of SwissFone Inc. Prior to SwissFone, Mr. Hutchins was president and chief executive officer of STAR Telecommunications, Inc., an international telecommunications carrier, where he was hired to lead the company's restructuring following the filing of its bankruptcy petition. Mr. Hutchins has also served since 1989 as president and chief executive officer of GH Associates Inc., a management-consulting firm that he founded. As an entrepreneur, Mr. Hutchins also founded Telecom One Inc., a nationwide long distance carrier that he sold to Broadwing Communications Inc., and TCO Network Services Inc., a local wireless services carrier purchased by Winstar Communications Inc. During his early career, Mr. Hutchins served as president and chief executive officer of LDX NET Inc., a fiber optic network company, and held positions with MCI, McDonnell Douglas Corporation, and AT&T. Mr. Hutchins does not have an employment agreement with the company. His promotion to president and chief operating officer provides for an increase in his annual salary from $220,000 to $250,000, and he will retain a targeted bonus opportunity equal to 25% of annual salary, based on achievement of corporate performance metrics. Concurrent with the promotion, he was also granted 200,000 Incentive Stock Options. At the request of Mr. Hutchins, his salary increase has been deferred pending the achievement of certain short-term corporate performance benchmarks. About Fusion Telecommunications Fusion Telecommunications International Inc. (AMEX: FSN) -- http://www.fusiontel.com/-- delivers a full range of advanced IP- based services to corporations, consumers and carriers worldwide. Fusion's Efonica-branded VoIP products and services, which focus primarily on Asia, the Middle East, Africa and Latin America, have over one million subscribers from more than 100 countries. At Dec. 31, 2007, the company's consolidated balance sheet showed $18,128,289 in total assets, $11,433,106 in total liabilities, and $6,695,183 in total stockholders' equity. Going Concern Doubt Rothstein, Kass & Company P.C., in Roseland, N. J., expressed substantial doubt about Fusion Telecommunications International Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's negative working capital balances, negative cash flows from operations, net losses since inception, and limited capital to fund future operations. GENERAL GROWTH: Moody's Cuts Unsecured Debt Rating to Ba2 from Ba1 ------------------------------------------------------------------ Moody's Investors Service has affirmed the Ba2 senior secured bank debt ratings of General Growth Properties, Inc. and certain of its subsidiaries and concurrently downgraded the senior unsecured debt ratings of The Rouse Company LP to Ba2 from Ba1. The outlook on both ratings is stable. The affirmation of General Growth's senior secured bank debt ratings, with a stable outlook, reflects Moody's expectation that General Growth will manage through its significant refinancing and development funding needs over the next two years. Moody's also expects no major retailer bankruptcies, with GGP maintaining solid operating performance at its retail centers, through what could be a protracted economic downturn and remain a leader in the mall space. In addition, Moody's expects that General Growth will continue to reduce its leverage, and at least maintain its credit metrics on a consolidated basis. The downgrade of The Rouse Company LP bonds reflected an increased likelihood that the unencumbered portfolio and unencumbered net operating income of The Rouse Company will be negatively affected due to General Growth's strained financial flexibility in a capital constrained environment. The REIT has significant refinancing and development funding needs over the next two years that are coupled with a substantial weakening in the master-planed communities business and expected earnings pressure due to a potentially protracted downturn in the economy that could pressure the cushion at both the secured debt and interest coverage covenants for the Rouse bonds. Moody's notes that the operating performance of GGP's core retail business remains solid, supported by a high-quality, well- diversified portfolio and a strong market position as one of the top players in the highly concentrated U.S. regional mall sector. Moody's stated that positive ratings movement would reflect the following: fixed charge coverage including principal amortization and joint venture-related debt closer to 1.8X, effective leverage closer to mid 60% and secured debt under 40% of gross assets, supported by deeper market leadership. GGP's ratings are constrained by its highly levered balance sheet. The GGP upgrade story is a balance sheet and funding one, not an operating one. Negative ratings adjustments would likely reflect any weakening of the REIT's current credit metrics, any refinancing or funding challenges, and or an acute reversal in earnings strength or stability. These ratings were affirmed with a stable outlook: * GGP Limited Partnership -- Senior secured bank debt at Ba2, and senior unsecured debt shelf at (P)Ba2 * General Growth Properties, Inc. -- Senior secured bank debt at Ba2, and preferred stock shelf at (P)B1 These ratings were downgraded with a stable outlook: * The Rouse Company LP -- Senior unsecured debt to Ba2 from Ba1. General Growth Properties, Inc. (NYSE: GGP), headquartered in Chicago, Illinois, USA, is one of the largest owners and operators of regional malls in the United States. The REIT reported assets of $28.8 billion, and equity of $1.5 billion, at Dec. 31, 2007. GLOBAL CREDIT: S&P Designates 'B+' Ratings on Negative CreditWatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on the issue of Global Credit Pref Corp.'s preferred shares on CreditWatch with negative implications. The CreditWatch placement mirrors the CreditWatch action on the credit-linked note to which the issue of preferred shares is linked. Standard & Poor's will continue to monitor the underlying portfolio and expects to resolve the CreditWatch placement within a period of 90 days and update its opinion. Global Credit Pref Corp. Ratings Placed On CreditWatch Negative To From -- ---- Preferred shares Global scale: B+/Watch Neg B+ Canada national scale: P-4(High)/Watch Neg P-4(High) (Related CLN: The Toronto-Dominion Bank CN$48,031,000 Portfolio Credit Linked Notes) GLOBAL TEL*LINK: Moody's Holds B2 CF Rating with Stable Outlook --------------------------------------------------------------- Moody's Investors Service affirmed Global Tel*Link Corporation's B2 corporate family rating, senior secured bank ratings and stable outlook. The affirmation and stable outlook assume that GTEL will continue to make steady progress integrating the MCI-DOCS acquisition and that liquidity will remain adequate over the near- term. The B2 corporate family rating continues to reflect GTEL's high leverage, small size, narrow focus within the communications services industry and regulatory risks. Furthermore, low operating margins suggest an intense competitive environment, which Moody's does not expect to change materially over the near- term. Strong market share within the correctional telecommunications industry, a track record of successful integration of acquisitions, and recurring revenue support the ratings. Global Tel*Link Corporation -- Affirmed B2 Corporate Family Rating -- Affirmed B3 Probabiliy of Default Rating -- Affirmed B2 Secured Bank Rating, LGD3, 32% Outlook: Stable Global Tel*Link Corporation, based in Mobile, Alabama, is a telecommunications provider to correctional facilities. GTEL acquired the former MCI corrections division from Verizon on July 18, 2007, to become the largest such provider in the United States, serving 1,500 facilities and over 1 million inmates. GTEL is majority owned by The Gores Group, LLC. Minority owners include Goldman Sachs and members of GTEL's management team. GENERAL MOTORS: Idles Arlington Assembly Plant for Three Weeks -------------------------------------------------------------- General Motors Corp. idled an assembly plant in Arlington, Texas, for three weeks, starting April 14, 2008, due to low demand of sport utility vehicles, The Associated Press reports. The plant, which manufactures large SUVs such as the Chevrolet Tahoe/GMC Yukon, Chevrolet Suburban/GMC Yukon XL, and Cadillac Escalade, will displace 2,400 employees, AP relates. As reported in the Troubled Company Reporter on April 2, 2008, GM dealers in the U.S. delivered 282,732 vehicles in March, a decrease of 13% when compared with the same month a year ago. For the first three months of 2008, GM total sales of 805,720 vehicles were down 11% compared with a year ago. Retail share appears to have remained stable throughout the month and the quarter. AP recounts that GM distributed some axles from the plant to other plants that makes pickup trucks due to the strike of GM auto parts supplier American Axle & Manufacturing Holdings Inc. 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 March 26, 2008, Standard & Poor's Ratings Services placed the ratings on General Motors Corp., American Axle & Manufacturing Holdings Inc., Lear Corp., and Tenneco Inc. on CreditWatch with negative implications. The CreditWatch placement reflects S&P's decision to review the ratings in light of the extended American Axle (BB/Watch Neg/--) strike. The work stoppage that began Feb. 25 at American Axle's U.S. United Auto Workers plants has forced closure of many GM (B/Watch Neg/B-3) plants, as well as plants of certain GM suppliers. The strike began after the expiration of the four-year master labor agreement with American Axle. Although S&P still expects American Axle and the UAW to reach an agreement that will reflect more competitive labor costs, the timing is unknown. To resolve the CreditWatch listings, S&P's will assess the strike's impact on the companies' credit profiles, particularly liquidity, once production resumes. S&P could lower the ratings any time prior to a resolution of the Axle strike if the liquidity of the companies becomes compromised, although downgrades are not likely for another several weeks. As reported in the Troubled Company Reporter on Feb. 28, 2008, Fitch Ratings has affirmed the Issuer Default Rating of General Motors at 'B', with a Rating Outlook Negative. 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 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. GMAC COMMERCIAL: Moody's Affirms 'C' Rating on $15.261MM Certs. --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of three classes of GMAC Commercial Mortgage Securities, Inc., Mortgage Pass-Through Certificates, Series 1997-C2 as: -- Class X, Notional, affirmed at Aaa -- Class E, $5,693,655, upgraded to Aaa from A1 -- Class F, $48,271,000, upgraded to A3 from Ba3 -- Class G, $13,409,000, affirmed at B3 -- Class H, $15,261,921, affirmed at C Moody's is upgrading Classes E and F due to increased credit subordination and defeasance. As of the March 17, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 92.3% to $82.6 million from $1.1 billion at securitization. The Certificates are collateralized by 11 loans ranging in size from less than 1.0% to 21.9% of the pool. Two loans, representing 18.0% of the pool balance, have defeased and are secured by U.S. Government securities. Sixteen loans have been liquidated from the trust, resulting in an aggregate realized loss of approximately $55.8 million. Currently two loans, representing 4.5% of the pool, are in special servicing. Moody's is estimating an aggregate loss of $2.4 million for the specially serviced loans. Currently there are no loans on the master servicer's watchlist. Moody's was provided with full-year 2006 and partial-year 2007 operating results for approximately 92.0% and 57.0% of the performing loans, respectively. Moody's weighted average loan to value ratio is 78.5%, excluding the specially serviced loans, compared to 76.9% at Moody's last full review in September 2006 and 91.4% at securitization. The top three loans represent 55.6% of the outstanding pool balance. The largest loan is the Fruitvale Shopping Center Loan ($18.1 million -- 21.9%), which is secured by a 163,000 square foot retail center located in Oakland, California. The center was 100.0% occupied as of September 2007, essentially the same as at last review. The anchor tenants include Albertson's and Office Depot, which collectively occupy 57.0% of the premises on long term leases. Moody's LTV is 61.6% compared to 65.3% at last review. The second largest loan is the Clinton Hill Apartments Loan ($15.0 million -- 18.1%), which is secured by a 1,221-unit cooperative apartment complex located in Brooklyn, New York. The property was 99.0% occupied as of March 2007 compared to 95.0% at securitization. Moody's LTV is 85.9% compared to 88.3% at last review. The third largest loan is the Boulevard Garden Apartments Loan ($12.9 million -- 15.7%), which is secured by a 968 unit cooperative apartment complex located in Queens, New York. Moody's LTV is 88.9% compared to 91.1% at last review. GORDON GANZ: Files for Bankruptcy After Closure of Grain Business ----------------------------------------------------------------- Gordon Ganz the owner of Alvo Grain and Feed, a grain company in Nebraska, sought bankruptcy protection on April 4, 2008, various reports say. The filing comes after the Nebraska Public Service Commission order the closure of Mr. Ganz's grain warehouses in Alvo and Ashland, Nebraska after his failure to pay debts, reports relate. Mr. Ganz, according to the reports, asked for more funds from bank lenders but failed. Mr. Ganz owes more than $520,000 to creditors, reports quote grain warehouse director John Fecht as saying. A bankruptcy hearing is slated this week, reports adds. GOULD CITY: Council Decides to Hire Bankruptcy Attorney ------------------------------------------------------- The city of Gould has decided to file for Chapter 9 creditor protection, Pine Bluff Commercial (Ark.) reports. City council members have voted to hire a Little Rock bankruptcy attorney to work with the city, the report stated. City mayor Juanita Stephens could not immediately cite the debt total, but she did mention that the city owes $224,000 from the Internal Revenue Service, according to the report. The city reportedly is almost a half-million dollars in the red. Gould is a city in Lincoln County, Arkansas, with a population of 1,305 as of the 2000 U.S. census. It is included in the Pine Bluff, Arkansas Metropolitan Statistical Area. GSC ABS: Poor Credit Quality Cues Moody's to Downgrade Ratings -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade these notes issued by GSC ABS Funding 2006-3g, Ltd.: Class Description: $1,085,000,000 Class A-1LT Floating Rate Notes Due June 2042 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $35,000,000 Class A-1-a Floating Rate Notes Due June 2042 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $192,000,000 Class A-1-b Floating Rate Notes Due June 2042 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade In addition Moody's also announced that it has downgraded these notes: Class Description: $104,000,000 Class A-2 Floating Rate Notes Due June 2042 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. HANCOCK FABRIC: Wants $100 Mil. GE Capital Exit Financing Approved ------------------------------------------------------------------ Hancock Fabrics Inc. and its debtor-affiliates seek the United States Bankruptcy Court for the Delaware's authority to enter into (a) a commitment letter and a fee letter for an exit financing facility, and (b) related indemnification and other obligations, with General Electric Capital Corporation. GE Capital has committed to provide the Debtors with a revolving line of credit in the maximum amount of $100,000,000. In connection with the Commitment and Fee Letters, the Debtors further seek permission to pay related fees and expenses to GE Capital. The Debtors require the exit financing to refinance their existing secured indebtedness, fund a plan of reorganization, and finance their post-emergence operating expenses and other working capital needs, Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, relates. According to Mr. Dehney, the Debtors, with the assistance of Houlihan Lokey Howard & Zukin, LLC, and in close consultation with the Official Committee of Unsecured Creditors and their professionals, canvassed 44 potential lenders to provide the exit financing. Thirty-eight of potential lenders entered into confidentiality agreements with the Debtors and conducted at least some level of due diligence. Two potential lenders were willing to commit to funding an A-piece exit financing. The Debtors, however, determined that the exit financing proposed by GE Capital offers the more competitive terms. Under the exit financing facility, GE Capital will be the lender and the administrative agent. All subsidiaries of Hancock Fabrics, Inc., will be the guarantors. The Debtors may borrow up to $100,000,000, with a term of 60 months. The maximum amount includes a letter of credit sub-facility of up to $20,000,000. The borrowing availability is the sum of up to: (i) 85% of the Debtors' eligible accounts receivable, less reserves; (ii) 90% of the net orderly liquidation value of eligible inventory, less reserves; and (iii) 60% of the adjusted appraised fair market value of owned real estate, less reserves, but not to exceed the maximum amount. The interest rates to be applied will be either a floating rate equal to the index rate plus the applicable margins or, if the Debtors will not commit a default, a fixed rate for periods of one, two or three months equal to the reserve adjusted London Interbank Offered Rate plus the applicable margins. The Exit Financing will be secured by a fully perfected first priority security interest in all of the Debtors' assets, existing or acquired in the future. The Debtors will pay $75,000 as an underwriting deposit upon their acceptance of GE Capital's commitment. The deposit will be used to pay transaction expenses to be incurred before the Debtors make the loan -- the Closing Date. The Debtors will pay additional amounts so that the underwriting deposit's unused balance remains at least $35,000 at all times. GE Capital will return any unused balance as of the Closing Date. GE Capital's commitment to provide financing in accordance with the terms of the Commitment Letter will cease if the Revolver does not close on or before August 29, 2008. In addition, GE Capital's commitment is subject to the satisfaction or waiver of certain conditions specified in the term sheet attached as an exhibit to the Commitment Letter, including: * on or before April 30, 2008, the Commitment Letter will have been approved by the Court; * the Debtors will have received at least $20,000,000 in cash from the issuance of subordinated debt or equity; * GE Capital will have completed all legal due diligence, with results reasonably satisfactory to GE Capital; and * the parties will have negotiated, executed and delivered of definitive agreements. The Debtors will pay an acceptance fee computed as 40% of the Exit Financing's maximum amount upon accepting GE Capital's commitment, and a closing fee computed as 20% of the maximum amount on the Closing Date. The Debtors will pay annual collateral monitoring fees of $50,000, on the Closing Date and on each anniversary of the Closing Date. GE Capital will also receive a prepayment premium of 1% of the Maximum Amount if the commitment is terminated prior to the first anniversary of the closing of the Revolver, and 0.50% upon a prepayment during the second year following the closing of the Revolver -- subject to waiver if GE Capital closes a refinancing facility during that period. Under the Commitment Letter, the Debtors must reimburse other fees related to the Exit Financing, whether or not the Exit Financing Facility closes. The Debtors also must indemnify and release GE Capital and its affiliates from any actions and claims. Mr. Dehney further relates that the Debtors also have been negotiating to secure a B-piece exit financing to supplement the Exit Financing. The B-piece financing is not only necessary to finance the Debtors' emergence from their Chapter 11 Cases, it is also a requirement set forth in the Commitment Letter. The Commitment Letter contemplates that the Debtors secure not less than $20,000,000 in cash from the issuance of subordinated debt or equity. The Debtors will ask the Court to approve a B-piece financing as soon as they finalize their commitment letter, Mr. Dehney says. A full-text copy of the Exit Financing Facility is available for free at http://ResearchArchives.com/t/s?2a7e About Hancock Fabrics Headquartered in Baldwyn, Mississippi, Hancock Fabrics Inc. (OTC: HKFIQ) -- http://www.hancockfabrics.com/-- is a specialty retailer of a wide selection of fashion and home decorating textiles, sewing accessories, needlecraft supplies and sewing machines. Hancock Fabrics is one of the largest fabric retailers in the United States, currently operating approximately 400 retail stores in approximately 40 states. The company employs approximately 7,500 people on a full-time and part-time basis. Most of the company's employees work in its retail stores, or in field management to support its retail stores. The company and six of its debtor-affiliates filed for chapter 11 protection on March 21, 2007 (Bankr. D. Del. Lead Case No. 07-10353). Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represent the Debtors. As of Sept. 1, 2007, Hancock Fabrics disclosed total assets of $159,673,000 and total liabilities of 122,316,000. The Debtors' exclusive period to file a Chapter 11 Plan expires on May 30, 2008. (Hancock Fabric Bankruptcy News, Issue No. 28, Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). HAWTHORNE ON NORTH: Case Summary & 11 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Hawthorne on North 3rd, L.L.C. Attn: Jonathan P. Ibsen Jaburg & Wilk, P.C. 3200 N. Central Ave., Ste. 2000 Phoenix, AZ 85012 Tel: (602) 248-1000 Bankruptcy Case No.: 08-04094 Type of Business: The Debtor is a home builder. Chapter 11 Petition Date: April 14, 2008 Court: District of Arizona (Phoenix) Debtor's Counsel: Jonathan P. Ibsen, Esq. (jpi@jaburgwilk.com) Jaburg & Wilk, PC 3200 N. Central Ave., Ste. 2000 Phoenix, AZ 85012 Tel: (602) 248-1054 Fax: (602) 248-1085 http://www.jaburgwilk.com/ Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Carmen, LLC $578,439 18700 W. 10 Mile Road, 2nd Flr. Southfield, MI 48075 Dale Fuller $451,000 18700 W. 10 Mile Road, 1st Flr. Southfield, MI 48075 Lenox Square, LLC $398,000 18700 W. 10 Mile Road, 2nd Flr. Southfield, MI 48075 JE& SI, LLC $375,000 18700 W. 10 Mile Road, 2nd Flr. Southfield, MI 48075 RDR, LLC $327,200 18700 W. 10 Mile Road, 2nd Flr. Southfield, MI 48075 Ronald Lederman $249,000 Ronald Ossipove $199,900 Fenton Pheasant Run Apts., $125,000 LLC PB & Associates, Inc. $124,326 Maricopa County Treasurer $120,000 Town Center Medical Office $8,000 HSBC HOME: Fitch Junks Ratings on 14 Certificate Classes -------------------------------------------------------- Fitch Ratings has taken rating actions on seven HSBC Home Equity mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $1.5 billion and downgrades total $422.2 million. Additionally, $215.6 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: HSBC Home Equity Loan Trust 2005-1 --$261.3 million class A affirmed at 'AAA', (BL: 65.98, LCR: 15.38); --$73.8 million class M affirmed at 'AA', (BL: 59.24, LCR: 13.81). Deal Summary --Originators: HSBC Finance Corporation (100%); --60+ day Delinquency: 2.67%; --Realized Losses to date (% of Original Balance): 0.49%; --Expected Remaining Losses (% of Current balance): 4.29%; --Cumulative Expected Losses (% of Original Balance): 2.61%. HSBC Home Equity Loan Trust 2005-2 --$217.9 million class A-1 affirmed at 'AAA', (BL: 74.84, LCR: 12.45); --$54.5 million class A-2 affirmed at 'AAA', (BL: 69.19, LCR: 11.51); --$43.0 million class M-1 affirmed at 'AA+', (BL: 65.19, LCR: 10.84); --$43.0 million class M-2 affirmed at 'AA', (BL: 61.97, LCR: 10.31). Deal Summary --Originators: HSBC Finance Corporation (100%); --60+ day Delinquency: 3.60%; --Realized Losses to date (% of Original Balance): 0.66%; --Expected Remaining Losses (% of Current balance): 6.01%; --Cumulative Expected Losses (% of Original Balance): 3.58%. HSBC Home Equity Loan Trust 2005-3 --$199.8 million class A-1 affirmed at 'AAA', (BL: 71.59, LCR: 11.69); --$49.9 million class A-2 affirmed at 'AAA', (BL: 65.43, LCR: 10.69); --$43.3 million class M-1 affirmed at 'AA+', (BL: 60.58, LCR: 9.9); --$35.1 million class M-2 affirmed at 'AA', (BL: 57.44, LCR: 9.38). Deal Summary --Originators: HSBC Finance Corporation (100%); --60+ day Delinquency: 3.31%; --Realized Losses to date (% of Original Balance): 0.54%; --Expected Remaining Losses (% of Current balance): 6.12%; --Cumulative Expected Losses (% of Original Balance): 3.85%. HSI Asset Securitization Corporation Trust 2005-I1 --$53.9 million class I-A downgraded to 'AA' from 'AAA', placed on Rating Watch Negative (BL: 33.18, LCR: 1.59); --$5.9 million class II-A-1 affirmed at 'AAA', (BL: 81.84, LCR: 3.92); --$41.3 million class II-A-2 affirmed at 'AAA', (BL: 51.22, LCR: 2.45); --$112.7 million class II-A-3 downgraded to 'AA' from 'AAA', placed on Rating Watch Negative (BL: 33.29, LCR: 1.59); --$30.0 million class II-A-4 downgraded to 'AA' from 'AAA', placed on Rating Watch Negative (BL: 31.55, LCR: 1.51); --$32.8 million class M1 downgraded to 'B' from 'AA+' (BL: 20.91, LCR: 1); --$9.2 million class M2 downgraded to 'CCC' from 'AA' (BL: 17.80, LCR: 0.85); --$3.2 million class M3 downgraded to 'CCC' from 'AA-' (BL: 16.69, LCR: 0.8); --$2.9 million class M4 downgraded to 'CCC' from 'A+' (BL: 15.65, LCR: 0.75); --$2.9 million class M5 downgraded to 'CC/DR6' from 'A' (BL: 14.61, LCR: 0.7); --$7.2 million class M6 downgraded to 'CC/DR6' from 'A-' (BL: 11.97, LCR: 0.57). Deal Summary --Originators: First Franklin (39.66%), New Century (34.74%), Option One (25.61%); --60+ day Delinquency: 34.01%; --Realized Losses to date (% of Original Balance): 0.21%; --Expected Remaining Losses (% of Current balance): 20.88%; --Cumulative Expected Losses (% of Original Balance): 11.27%. HSI Asset Securitization Corporation Trust 2005-NC1 --$34.7 million class I-A-1 affirmed at 'AAA', (BL: 65.75, LCR: 3.3); --$2.7 million class I-A-2 rated 'AAA', placed on Rating Watch Negative (BL: 37.74, LCR: 1.9); --$52.6 million class II-A-2 affirmed at 'AAA', (BL: 73.97, LCR: 3.72); --$25.2 million class II-A-3 affirmed at 'AAA', (BL: 61.82, LCR: 3.1); --$5.8 million class II-A-4 rated 'AAA', placed on Rating Watch Negative (BL: 37.74, LCR: 1.9); --$18.3 million class M-1 affirmed at 'AA+', (BL: 51.99, LCR: 2.61); --$13.3 million class M-2 affirmed at 'AA+', (BL: 46.16, LCR: 2.32); --$12.0 million class M-3 affirmed at 'AA', (BL: 39.46, LCR: 1.98); --$10.4 million class M-4 downgraded to 'A' from 'AA' (BL: 35.51, LCR: 1.78); --$9.5 million class M-5 downgraded to 'BBB' from 'AA-' (BL: 31.53, LCR: 1.58); --$8.2 million class M-6 downgraded to 'BB' from 'A' (BL: 27.76, LCR: 1.39); --$7.3 million class M-7 downgraded to 'B' from 'A-' (BL: 24.35, LCR: 1.22); --$3.8 million class M-8 downgraded to 'B' from 'BBB' (BL: 22.46, LCR: 1.13); --$3.2 million class M-9 downgraded to 'B' from 'BBB-' (BL: 20.83, LCR: 1.05); --$6.0 million class M-10 downgraded to 'CCC' from 'BB' (BL: 17.78, LCR: 0.89); --$4.4 million class M-11 downgraded to 'CCC' from 'B' (BL: 15.64, LCR: 0.79); --$5.1 million class M-12 downgraded to 'CC/DR5' from 'B' (BL: 13.25, LCR: 0.67); --$5.1 million class M-13 revised to 'C/DR6' from 'C/DR5', (BL: 10.98, LCR: 0.55). Deal Summary --Originators: New Century Mortgage Corporation (100%); --60+ day Delinquency: 33.61%; --Realized Losses to date (% of Original Balance): 0.80%; --Expected Remaining Losses (% of Current balance): 19.91%; --Cumulative Expected Losses (% of Original Balance): 8.19%. HSI Asset Securitization Corporation Trust 2005-NC2 --$24.4 million class I-A affirmed at 'AAA', (BL: 78.77, LCR: 3.27); --$0.0 million class II-A-2 affirmed at 'AAA', (BL: 99.69, LCR: 4.14); --$29.4 million class II-A-3 affirmed at 'AAA', (BL: 74.54, LCR: 3.1); --$16.1 million class II-A-4 affirmed at 'AAA', (BL: 70.09, LCR: 2.91); --$16.9 million class M-1 affirmed at 'AA+', (BL: 59.82, LCR: 2.49); --$15.3 million class M-2 affirmed at 'AA', (BL: 50.49, LCR: 2.1); --$10.6 million class M-3 rated 'AA-', placed on Rating Watch Negative (BL: 41.92, LCR: 1.74); --$7.6 million class M-4 downgraded to 'BBB' from 'A+' (BL: 38.26, LCR: 1.59); --$7.4 million class M-5 downgraded to 'BB' from 'A' (BL: 34.16, LCR: 1.42); --$6.5 million class M-6 downgraded to 'BB' from 'A-' (BL: 30.20, LCR: 1.26); --$6.5 million class M-7 downgraded to 'B' from 'BBB' (BL: 26.00, LCR: 1.08); --$5.1 million class M-8 downgraded to 'CCC' from 'BB' (BL: 22.70, LCR: 0.94); --$3.5 million class M-9 downgraded to 'CCC' from 'BB' (BL: 20.40, LCR: 0.85); --$3.5 million class M-10 downgraded to 'CCC' from 'B' (BL: 18.13, LCR: 0.75); --$4.4 million class M-11 remains at 'C/DR5' (BL: 15.39, LCR: 0.64). Deal Summary --Originators: New Century Mortgage Corporation (100%); --60+ day Delinquency: 43.76%; --Realized Losses to date (% of Original Balance): 0.83%; --Expected Remaining Losses (% of Current balance): 24.06%; --Cumulative Expected Losses (% of Original Balance): 9.54%. HSI Asset Securitization Corporation Trust 2005-OPT1 --$0.9 million class A-2 affirmed at 'AAA', (BL: 99.61, LCR: 5.29); --$113.8 million class A-3 affirmed at 'AAA', (BL: 48.56, LCR: 2.58); --$36.6 million class A-4 affirmed at 'AAA', (BL: 41.98, LCR: 2.23); --$33.5 million class M-1 downgraded to 'BBB' from 'AA+' (BL: 28.13, LCR: 1.49); --$16.6 million class M-2 downgraded to 'B' from 'AA' (BL: 20.38, LCR: 1.08); --$2.8 million class M-3 downgraded to 'B' from 'AA-' (BL: 19.04, LCR: 1.01); --$2.5 million class M-4 downgraded to 'CCC' from 'A+' (BL: 17.79, LCR: 0.95); --$2.5 million class M-5 downgraded to 'CCC' from 'A' (BL: 16.50, LCR: 0.88); --$7.6 million class M-6 downgraded to 'CC/DR6' from 'BBB+' (BL: 12.65, LCR: 0.67). Deal Summary --Originators: Option One Mortgage Corporation (100%); --60+ day Delinquency: 30.64%; --Realized Losses to date (% of Original Balance): 0.43%; --Expected Remaining Losses (% of Current balance): 18.82%; --Cumulative Expected Losses (% of Original Balance): 8.63%. 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. HUDBAY MINERALS: S&P Withdraws 'B+' Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B+' long-term corporate credit rating on Winnipeg-based HudBay Minerals Inc. at the issuer's request. The company has no rated debt obligations outstanding. HUGHES NETWORK: S&P Changes Outlook to Stable; Retains 'B' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Germantown, Maryland-based satellite services provider Hughes Network Systems LLC to stable from negative. At the same time, S&P affirmed all ratings, including the 'B' corporate credit rating. Hughes is the leading provider of very small aperture terminal satellite networking services to domestic and international enterprises, small and midsize businesses, and consumers. The outlook change reflects initiation of commercial operations of SPACEWAY-3, the company's advanced satellite. "As Hughes adds customers onto the SPACEWAY platform we expect the company will begin reducing its need for leased transponder capacity, which will lower its operating costs," said Standard & Poor's credit analyst Naveen Sarma. "As a result, EBITDA margins should improve from the current 14% level, although we note that the bulk of the savings will materialize in 2009," he said. The ratings on Hughes reflect a highly leveraged financial profile, especially when adjusted for operating and transponder leases. They also reflect uncertain long-term growth prospects for the company's consumer and small business broadband service because this service has fewer capabilities than faster cable and telephone data services, which could limit growth as competitors expand their service coverage. Hughes could see significant competitive pressure from WildBlue, and longer term, from ViaSat. Tempering factors include Hughes' leading position in the VSAT industry and a degree of revenue stability with sizeable revenue backlog from three- to five-year contracts with large enterprise customers. JED OIL: December 31 Balance Sheet Upside-Down by $16 Million ------------------------------------------------------------- JED Oil Inc.'s balance sheet at Dec. 31, 2007, showed total assets of 79.615 million and total liabilities of $95.676 million, resulting to total stockholder's deficiency of $16.061 million. Jed Oil reported financial results for the fourth quarter and year ended Dec. 31, 2007. Net income applicable to common stockholders in quarter ended Dec. 31, 2007 was $1.137 million compared to net loss applicable to common stockholders of $16.450 million for the same period in the previous year. For full year 2007, net income applicable to common stockholders was $11.969 million compared to net loss applicable to common stockholders of $77.558 million. During the year ended Dec. 31, 2007, the company realized a negative cash flow from operating activities of $0.503 million compared to negative cash flow of $4.927 million in 2006. At Dec. 31, 2007, JED had a consolidated working capital deficiency of $48.996 million compared to$3.033 million at Dec. 31, 2006. The company's working capital deficiency and change in working capital from the prior year are as a result of the Convertible Notes Payable becoming current during the year. The company requires additional funds to maintain operations and discharge liabilities as they become due. The company related that these conditions raise substantial doubt about its ability to continue as a going concern. The gain on sale of petroleum and natural gas properties and issues of common shares relating to the purchase of Caribou Resources Corp. during 2007 has significantly reduced the stockholder's deficiency. The company settled a contract for drilling services during the year ended Dec. 31, 2007, that resulted in a loss of $1.931 million and a payment by the drilling contractor to JED Oil Inc. of an equal amount in cash. In 2007, the company substantially restructured its operations through cost cutting, debt restructuring and the acquisition of a large productive property that should have a positive impact on the company's activities into 2008. Notes Restructuring During the third quarter of 2007, JED's preferred shareholders agreed to an extension of the redemption date of their shares from Feb. 1, 2008, to Feb. 1, 2010, and have received a reduced conversion price of $3.50 per share to acquire common shares over that period. The agreement reduces the company's current cash requirement to redeem the preferred shares by $28.760 million until 2010. Subsequent to the year end, the holders of the company's 10% Senior Subordinated Convertible Notes have agreed to restructure the Notes and provide for their redemption. Under the terms of the agreement, the company has until May 15, 2008, to complete the credit facility offered by a Canadian Chartered Bank of approximately $32 million. Net proceeds from the loan facility will be used to repay approximately $26 million of the outstanding notes plus accrued interest, an extension fee, and to reduce the working capital deficiency. Notes in the amount of approximately $14 million will be amended or replaced and an additional note in the amount of $4 million will be issued for cash which will be applied to the working capital deficiency. These notes will pay interest quarterly at a rate of 12% per annum and be convertible into common shares of JED at an exercise price of $1.25 per share. Approximately $11 million of the Notes will have a maturity date of 1 year from the date of closing and Notes totaling approximately $7 million will mature 2 years from the closing date. Due to the company's reported working capital deficiency, it will require additional funds to maintain operations and discharge liabilities as they become due. While these conditions raise substantial doubt about the company's ability to continue as a going concern, the restructuring of the Notes has been designed to mitigate this risk. About JED Oil Headquartered in Didsbury, Alberta, JED Oil Inc. (AMEX: JDO) -- http://www.jedoil.com/-- is an oil and natural gas company that commenced operations in the second quarter of 2004 and has begun to develop and operate oil and natural gas properties principally in western Canada and the United States. JHT HOLDINGS: S&P Withdraws 'CCC+' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'CCC+' corporate credit rating on Kenosha, Wisconsin-based JHT Holdings Inc. Standard & Poor's had placed the ratings on JHT Holdings on CreditWatch with negative implications on Sept. 12, 2007, in response to the company's weak operating performance in the first half of 2007. Standard & Poor's subsequently downgraded JHT Holdings to a 'CCC+' rating following breach of the total leverage and minimum EBITDA covenants on its senior credit facility as of third quarter ended Sept. 30, 2007. JHT Holdings has since obtained a waiver and amendment from its lenders which includes an equity infusion from its sponsor, but the company still faces difficult market conditions. Privately held JHT Holdings does not release financials publicly. No further information is available from the company at this time. KIMBALL HILL: Lenders' Waiver Agreement Further Extended to May 9 ----------------------------------------------------------------- Kimball Hill Homes further extended the existing waiver agreement with its lender group through May 9, 2008. The waiver agreement was previously set to expire on April 11, 2008. During this extension period, Kimball Hill will continue active discussions with its lender group to formulate and implement a long-term solution to reposition the company in light of current challenges facing the homebuilding industry. "We are engaged in active discussions with our lenders and we appreciate their support to extend the current waiver agreement to help facilitate a long-term amendment," said Kenneth Love, Chief Executive Officer. "During this period, we continue homebuilding operations as usual." About Kimball Hill Based in Rolling Meadows, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- builds mid-priced single- family detached homes, townhomes, and condominiums under the name Kimball Hill Homes in various markets in 5 states: Texas, Florida, Illinois, Nevada and California. Subsidiary KH Financial offers mortgage financing and refinancing of investment properties in about half a dozen states. LAM RESEARCH: S&P Changes Watch Posting of BB- Rating to Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on the 'BB-' corporate credit rating on Lam Research Corp. to CreditWatch positive from CreditWatch negative. The revision to CreditWatch positive reflects the company's stable operating performance during recent periods and cumulative net adjustments, which did not materially affect its financial profile or liquidity, which are strong for the rating. Fremont, California-based Lam Research recently filed financial statements for its fiscal year ended June 2007, as well as for the first and second quarters of 2008. The rating was initially placed on CreditWatch with negative implications on Aug. 27, 2007, following the company's announcement that it would be unable to file its 2007 form 10-K on time. The delay was caused by a review of the company's historical stock option practices. As of Dec. 23, 2007, on a trailing-12-month basis, Lam generated revenues of $2.6 billion and EBITDA of about $800 million, resulting in adjusted leverage of less than 0.5x. Cash and cash investments in the same period totaled about $1.3 billion. However, on March 11, 2008, the company completed its tender offer for Zurich, Switzerland-based SEZ Holding AG for about $584 million in cash. Additionally, the December quarter experienced some relative weakness, reflecting less spending by chip manufacturers, resulting from expectations for a general economic slowdown and overcapacity issues. "We will meet with management to assess Lam's business strategy, financial policy, and business prospects, given the current operating environment," said Standard & Poor's credit analyst Joseph Spence. LB-UBS COMMERCIAL: S&P Low-B Initial Ratings on Six Cert. Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to LB-UBS Commercial Mortgage Trust 2008-C1's $1.0071 billion commercial mortgage pass-through certificates series 2008-C1. The preliminary ratings are based on information as of April 11, 2008. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type composition of the loans. Classes A-1, A-AB, A- 2, A-M, and A-J are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the collateral pool has a debt service coverage of 1.35x, a beginning loan-to-value ratio of 98.7%, and an ending LTV of 83.1%. Preliminary Ratings Assigned LB-UBS Commercial Mortgage Trust 2008-C1 Recommended Class Rating Amount credit support ----- ------ ------ -------------- A-1 AAA $47,990,000 30.000 A-AB AAA $50,023,000 30.000 A-2 AAA $606,964,000 30.000 A-M AAA $100,711,000 20.000 A-J AAA $69,239,000 13.125 A-2FL(1) AAA TBD 30.000 A-MFL(1) AAA TBD 20.000 A-JFL(1) AAA TBD 13.125 X(2) AAA $1,007,111,098 N/A B AA+ $13,848,000 11.750 C AA $11,330,000 10.625 D AA- $7,553,000 9.875 E A+ $8,813,000 9.000 F A $7,553,000 8.250 G A- $11,330,000 7.125 H BBB+ $11,330,000 6.000 J BBB $12,589,000 4.750 K BBB- $8,812,000 3.875 L BB+ $8,812,000 3.000 M BB $5,036,000 2.500 N BB- $2,518,000 2.250 P B+ $1,258,000 2.125 Q B $2,518,000 1.875 S B- $2,518,000 1.625 T NR $16,366,098 N/A (1) Floating-rate class. (2) Interest-only class with a notional amount. TBD -- To be determined. N/A -- Not applicable. NR -- Not rated. LBI MEDIA: S&P Revises Outlook to Stable; Confirms 'B' Rating ------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on LBI Media Inc. to stable from positive. S&P also affirmed the 'B' corporate credit rating on the company. The Burbank, California-based company had $423 million of total debt outstanding as of Dec. 31, 2007. "The outlook revision reflects our expectation that leverage will remain high over the near term," said Standard & Poor's credit analyst Michael Altberg, "due to the company's acquisitive growth strategy and challenging radio and TV advertising demand in 2008." Further concerns include the onset of cash interest payments on the company's 11% discount notes which begin to accrue on Oct. 15, 2008. The company had previously intended to refinance these notes prior to the onset of cash interest payments. "However," added Mr. Altberg, "we believe the current tight credit environment places increased uncertainty around the company's plans to address these notes." LE-NATURE'S: Court Approves Second Amended Disclosure Statement --------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Pennsylvania approved Le-Nature's Inc. and its debtor-affiliates' Second Amended Disclosure Statement describing their Second Amended Joint Chapter 11 Plan of Liquidation. Treatment of Claims As previously reported in the Troubled Company Reporter, under the Plan, the Debtors intend to pay in full administrative and unclassified fee claims. Priority tax claims will either be paid in full or in equal annual installments, plus 6% interest per annum. Class 1 claims, or lenders secured claims, will be paid in full in exchange for: (a) tier one trust beneficial interests in a percentage ratable to other holders in class 1; (b) additional tier one trust beneficial interests in a percentage ratable to other holders in class 1 as a result of the disallowance of any disputed claim; and (c) all proceeds distributed under the plan and the liquidation trust agreement. Class 2, or other secured claims, will be paid in full in exchange for, at the option of the liquidation trust, one or a combination of: (a) payment in cash from proceeds of sale of collateral securing allowed class 2 claims; (b) surrender of the collateral securing the allowed class 2 claims; or (c) other distributions that satisfy requirements of Bankruptcy Code Section 1129. Class 3, or priority non-tax claims, will be paid in full in cash at the later of: (a) the effective date of the Plan; (b) the date the claim becomes an allowed claim or otherwise becomes payable under the plan; or (c) as soon as reasonably practicable. Class 4A, or lenders unsecured claims, will receive: (a) tier two trust beneficial interests in percentage ratable to other holders of allowed claims in class4A, class 4B, and class4C; (b) additional tier two trust beneficial interests in percentage ratable to other holders of allowed claims in class 4A, B, and C as a result of disallowance of disputed claim in class 4A, B and C; (c) additional tier two trust beneficial interests in percentage ratable to other holders of allowed claims in class4A, B, and C as a result of turnover enforcement of class 4C distributions; (d) proceeds of the foregoing distributed pursuant to the terms of the plan and the liquidation trust agreement; and (e) a percentage of the proceeds of the Tea Systems International LLC/Holdings Property to other holders of claims in class 4A and 4C, subject to: (i) use of proceeds to fund the initial trust funding or liquidation trust reserve; and (ii) reallocation of proceeds to holders of allowed claims in class 4A, B and C. Class 4B, or general unsecured claims, will receive: (a) tier two trust beneficial interests in a percentage ratable to other holders of allowed claims in class 4A, B and C; (b) additional tier two trust beneficial interests in a percentage ratable to other holders of allowed claims in class 4A, B and C, as a result of the disallowance of disputed claim in class 4A, B and C; (c) distributed pursuant to terms of the plan and the liquidation trust agreement; and (d) a percentage of the proceeds of the TSI/Holdings Property ratable to other holders of allowed claims in class 4A, B and C, but only to the extent that: (i) the proceeds are not used to fund the initial trust funding or the liquidation trust reserve; and (ii) the proceeds are reallocated to holders of allowed claims in class 4A, B and C. Class 4C, or unsecured senior subordinated notes claims, will receive: (a) tier two trust beneficial interests in a percentage ratable to other holders of allowed claims in class 4A, B and C; (b) additional tier two trust beneficial interests in a percentage ratable to other holders of allowed claims in class 4A, B and C, as a result of the disallowance of disputed claim in class 4A, B and C; (c) distributed pursuant to terms of the plan and the liquidation trust agreement; and (d) a percentage of the proceeds of the TSI/Holdings Property ratable to other holders of allowed claims in class 4A, B and C, subject to: (i) use of proceeds to fund the initial trust funding or liquidation trust reserve; and (ii) reallocation of proceeds to holders of allowed claims in class 4A, B and C, provided however, that certain distributions will be deemed reallocated and distributed on account claims in class 4A, as a settlement of potential claims by lenders for enforcement of contractual subordination provisions in the senior subordinated notes indenture, in accordance with a turnover enforcement. Class 5, or subordinated litigation claims, will receive: (a) tier three trust beneficial interest in a percentage ratable to other allowed claims in class 5; (b) additional tier three trust beneficial interest as a result of the disallowance of disputed claim in class 5; and (c) proceeds distributed to the terms of the plan and the liquidation trust agreement. Class 6, or interest, will receive: (a) tier four trust beneficial interests in a percentage ratable to other allowed interests in class 6; (b) additional tier four trust beneficial interests as a result of the disallowance of disputed claims in class 6; and (c) proceeds distributed pursuant to the terms of the plan and the liquidation trust agreement. Other than class 3, or priority non-tax claims, all classes of claims and interests are entitled to vote for the rejection or acceptance of the Debtors' second amended plan of liquidation. About Le-Nature's Inc. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- makes bottled waters, teas, juices and nutritional drinks. Its brands include Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. Four unsecured creditors of Le-Nature's filed an involuntary chapter 7 petition against the company on Nov. 1, 2006 (Bankr. W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Judge McCullough converted Le Nature's Inc.'s case to a chapter 11 proceeding. The Debtors' cases are jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., Ronald B. Roteman, Esq., and Stanley Edward Levine, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., Richard M. Pachulski, Esq., Stan Goldich, Esq., Ilan D. Scharf, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and S. Jason Teele, Esq., and Thomas A. Pitta, Esq. at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas represent the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc Committee of Senior Subordinated Noteholders. LE-NATURE'S: Amended Plan Confirmation Hearing Set on June 9 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Pennsylvania will convene a hearing on June 9, 2008, to consider confirmation of Le-Nature's Inc. and its debtor-affiliates' Second Amended Joint Chapter 11 Plan of Liquidation, Bloomberg News reports, citing court documents. About Le-Nature's Inc. Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. -- http://www.le-natures.com/-- makes bottled waters, teas, juices and nutritional drinks. Its brands include Kettle Brewed Ice Teas, Dazzler fruit juice drinks and lemonade, and AquaAde vitamin-enriched water. Four unsecured creditors of Le-Nature's filed an involuntary chapter 7 petition against the company on Nov. 1, 2006 (Bankr. W.D. Pa. Case No. 06-25454). On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's Holdings Inc., and Tea Systems International Inc., filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Judge McCullough converted Le Nature's Inc.'s case to a chapter 11 proceeding. The Debtors' cases are jointly administered. The Debtors' schedules filed with the Court showed $40 million in total assets and $450 million in total liabilities. Douglas Anthony Campbell, Esq., Ronald B. Roteman, Esq., and Stanley Edward Levine, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. The Court appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl, Esq., Richard M. Pachulski, Esq., Stan Goldich, Esq., Ilan D. Scharf, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP, represent the Chapter 11 Trustee. David K. Rudov, Esq., at Rudov & Stein, and S. Jason Teele, Esq., and Thomas A. Pitta, Esq. at Lowenstein Sandler PC, represent the Official Committee of Unsecured Creditors. Edward S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq., at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq., at Manion McDonough & Lucas represent the Ad Hoc Committee of Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J. Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represent the Ad Hoc Committee of Senior Subordinated Noteholders. LENNAR CORP: Posts $88MM Net Loss in Quarter Ended February 29 -------------------------------------------------------------- Lennar Corporation reported results for its first quarter ended Feb. 29, 2008. First quarter net loss in 2008 was $88.2 million compared to first quarter net earnings of $68.6 million in 2007. "Market conditions have remained challenged and continued to deteriorate throughout our first quarter of 2008," Stuart Miller, president and chief executive officer of Lennar Corporation, said. "The housing industry continues to be impacted by an unfavorable supply and demand relationship, which restricts the volume of new home sales and, concurrently, depresses home prices in most markets across the country." "Concurrently, lower consumer confidence has quieted demand among prospective homebuyers and deterred them from a buying decision, while contraction in the lending markets has reduced the availability of credit for those prospective homebuyers that do wish to buy a home." "Our first quarter results reflect the fact that our balance sheet has been and continues to be our top priority," Mr. Miller continued. "With most of the significant work on asset impairment behind us, throughout our first quarter we have remained focused on the delivery of our backlog, curtailing land purchases where possible, restructuring our joint ventures where necessary, and right-sizing our operations in order to protect cash, preserve value and fortify our balance sheet." Financial Condition and Capital Resources At Feb. 29, 2008, the company has cash related to its homebuilding and financial services operations of $1.2 billion, compared to $463.9 million at Feb. 28, 2007. In the three months ended Feb. 29, 2008, cash flows provided by operating activities amounted to $844.5 million, compared to cash used by operating activities of $501.1 million in the same period last year. During the three months ended Feb. 29, 2008, cash flows provided by operating activities were positively impacted by the receipt of a cash tax refund of $852 million generated by losses incurred prior to fiscal 2008. Throughout the first quarter of fiscal 2008, it remained focused on the delivery of its backlog, curtailing land purchases, restructuring its joint ventures when necessary, and right-sizing its operations in order to protect cash, preserve value and fortify its balance sheet. Cash flows used in investing activities totaled $130.6 million in the three months ended Feb. 29, 2008, compared to cash flows provided by investing activities of $481.7 million in the same period last year. In the three months ended Feb. 29, 2008, the company contributed $172.1 million of cash to unconsolidated entities, compared to $178.0 million in the same period last year. Its investing activities also included distributions of capital from unconsolidated entities during the three months ended Feb. 29, 2008, and Feb. 28, 2007, of $43.8 million and $294.7 million. During the three months ended Feb. 28, 2007, the company also received a $354.6 million distribution in excess of its investment in the LandSource unconsolidated entity due to its recapitalization in 2007. At Feb. 29, 2008, the company's balance sheet showed total assets of $8.515 billion, total liabilities 4.835 billion and total stockholders' equity of $3.680 billion. About Lennar Corp. Headquartered in Miami, Florida, Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- founded in 1954, builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title insurance, and closing services for both buyers of the company's homes and others. * * * As reported by the Troubled Company Reporter on Jan. 28, 2008, Lennar reported fourth quarter net loss in 2007 was $1.3 billion, compared to a net loss of $195.6 million in 2006. It reported net loss for the year ended Nov. 30, 2007 of $1.9 billion, compared to net earnings of $593.9 million for the year ended Nov. 30, 2006. Following the earnings report, Standard & Poor's Ratings Services said that its corporate credit rating, debt ratings, and outlook on Lennar Corp.(BB+/Negative/--) are not immediately affected by a large loss in its fiscal fourth-quarter 2007. LINEN 'N THINGS: Weak Operating Margin Prompts Moody's Caa2 Rating ------------------------------------------------------------------ Moody's Investors Service downgraded Linens 'N Things, Inc.'s ratings, probability of default rating to Caa2, and placed the ratings on review for further possible downgrade. Moody's also affirmed Linens' speculative grade liquidity rating of SGL-4. The downgrade in Linens' PDR is prompted by Linens' weaker-than- expected operating margin in the fourth quarter, as well as by evidence that the already challenged "home goods" sales environment has recently worsened. This is evidenced by the recent announcement by industry leader Bed, Bath, and Beyond which yesterday guided its fiscal 2008 earnings per share downward. As a result Moody's expects that Linens 'N Things will be challenged to stem its current level of operating losses and free cash flow drain, thus placing further strain on the company's already weak liquidity position and increasing the probability of default. The review for possible downgrade reflects Moody's concern that the weak "home goods" sector selling environment could potentially cause the company to lose its current level of support by trade creditors. These ratings are downgraded and placed on review for further possible downgrade: -- Corporate family rating to Caa2 from Caa1; -- Probability of default rating to Caa2 from Caa1; -- $650 million of senior secured guaranteed notes due 2014 to Caa3 from Caa2. These rating is affirmed: -- Speculative Grade Liquidity Rating at SGL-4. The LGD Assessment of the $650 million senior secured guaranteed notes (LGD4, 64%) is subject to change. The Caa2 PDR rating reflects Moody's expectation that Linens' sales and earnings in 2008 will be further challenged which will result in a precarious liquidity position, exceptionally weak credit metrics, and increased likelihood of a payment default on or distressed exchange of its debt obligations. Based upon Moody's expectations for a continuation in free cash flow deficits, the company will likely need to continue to make sizable drawings under its revolving credit facility over the next twelve months. This could potentially consume the majority of the company's remaining committed external liquidity. This weakened liquidity greatly diminishes the company's financial flexibility to withstand even minimal further weakening in its earnings or cash flow caused by the already challenged retail sales environment. This tenuous liquidity position is justifies the affirmation of Linens' SGL-4 speculative grade liquidity rating. Given the company's weak operating performance as well as challenges in the bank and broader financial markets, Linens 'N Things could have difficulty obtaining additional financing, if needed. In addition, the rating reflects the company's weak competitive position in the highly competitive home furnishings market, its negative EBITA margins during fiscal year 2007, and its history of mis-positioned offerings. Moody's review will focus on the company's operating performance -- particularly its level of free cash flow deficit, the ongoing level of support by its trade creditors, and its borrowing base availability. In addition, the review will focus on the overall retail selling environment of the home goods sector. Linens N Things Inc., headquartered in Clifton, New Jersey, is a nationwide specialty retailer of home textiles, housewares, and home accessories that operates approximately 589 stores in 47 states and seven Canadian provinces. Revenues for the lagging twelve month period ended December 29, 2007 were approximately $2.8 billion. MAIR HOLDINGS: Big Sky Unit Gets Default Notice from Mesa Air ------------------------------------------------------------- On April 7, 2008, Big Sky Transportation Co., a wholly owned subsidiary of MAIR Holdings Inc., received a notice of default and demand for payment from Mesa Airlines Inc. In the notice, Mesa asserted that Big Sky is in default of its lease agreements for ten aircraft. Mesa's notice of default requested payment by Big Sky of about $4.8 million. Although Big Sky ceased operating flights on March 8, 2008, Big Sky has continued to make all lease payments due to Mesa. According to Big Sky's estimate, the aggregate amount remaining due under the leases for the ten aircraft is about $4.1 million. The default notice further advised of Mesa's intent to draw on the $1.9 million letter of credit that the company established for Mesa's benefit in 2005. The LOC was established in exchange for cancelling the company's guaranty of Big Sky's obligations with respect to the aircraft leases. In response to Mesa's notice of default and attempted draw on the LOC, on April 8, 2008, the company and Big Sky jointly filed a complaint against Mesa in federal court in the District of Montana asserting that Mesa has not suffered any financial damages and that Mesa improperly refused to mitigate its damages under the leases. The complaint requests, among other things, that funds Mesa draws on the LOC be placed in a constructive trust until the court determines the proper amount of damages, if any, to be awarded to Mesa. Big Sky Liquidation As reported in the Troubled Company Reporter on March 17, 2008, Big Sky Airlines ceased all operations effective at midnight on March 8, 2008. MAIR said in a filing with the Securities and Exchange Commission that this decision followed Big Sky's December 2007 announcement that it was ceasing its eastern United States operations and would be attempting to transition its services in the west to another carrier. However, the company concluded that it is not feasible to continue operating Big Sky at a loss until another carrier can begin servicing Big Sky's routes. The company is now focused on liquidating Big Sky's assets and minimizing its subsidiary's liabilities. In addition, the company's board of directors has directed the company's management to prepare a plan of liquidation to present to the company's shareholders, with the continuing goal of returning cash to them. Management expects to file the plan of liquidation with the SEC in early May 2008. About Mesa Airlines Mesa Air Group Inc., dba Mesa Airlines Inc., (NASDAQ: MESA) -- http://www.mesa-air.com/-- is a holding company whose principal subsidiaries operate as regional air carriers providing scheduled passenger and airfreight service. As of Sept. 30, 2007, the company served 184 cities in 45 states, the District of Columbia, Canada, the Bahamas and Mexico and operated a fleet of 182 aircraft with approximately 1,100 daily departures. Approximately 98% of Mesa's consolidated passenger revenues from continuing operations for the fiscal year ended Sept. 30, 2007 (fiscal 2007), were derived from operations associated with code-share agreements. Its subsidiaries have code-share agreements with Delta Air Lines Inc., Midwest Airlines Inc., United Airlines Inc. and America West Airlines Inc., which operates as Unites States Airways and is referred as US Airways. The remaining passenger revenues from continuing operations are derived from its independent go! operations in Hawaii. About MAIR Holdings Minneapolis-based MAIR Holdings Inc. (NasdaqNM: MAIR) -- http://www.mairholdings.com/-- is the holding company for Big Sky Transportaion Co, dba Big Sky Airlines -- http://www.bigskyair.com/-- a regional air carrier based in Billings, Montana. Big Sky has codeshare agreements with Northwest Airlines, Alaska Airlines, Horizon Air and US Air which allows customers the convenience of traveling with one ticket, through baggage checking and economical through fares, to destinations throughout the world. Big Sky provides air service under the Essential Air Service program administered by the Department of Transportation. As of March 31, 2007, MAIR was also the holding company for Mesaba Aviation Inc. Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. Mesaba exited bankruptcy on April 24, 2007, and was later acquired by Northwest Airlines. MANITOWOC COMPANY: To Acquire Enodis In Deal Valued at $2.1 Bil. ---------------------------------------------------------------- The Manitowoc Company Inc. reported that an agreement has been reached on the terms of a recommended acquisition of Enodis Plc in a transaction valued at approximately $2.1 billion, including the assumption of Enodis' net debt of approximately $207 million as of Sept. 29, 2007. The transaction, which was unanimously approved by both companies' boards of directors, provides for a cash payment of 258 pence per Enodis share. In addition, in advance of the closing of the transaction, Enodis will pay a dividend of 2 pence per Enodis share in lieu of an interim dividend in respect of the financial year ending Sept. 30, 2008. The transaction is structured as a court-sanctioned scheme of arrangement under the laws of the U.K. and is expected to close in the fourth quarter of 2008. The transaction is subject to court approval in the U.K., the approval of Enodis shareholders, as well as regulatory approvals in various jurisdictions. Listed in London and operationally headquartered in Tampa, Florida, Enodis, a global leader in commercial foodservice equipment with a variety of premier brands, reported revenues of 0.8 billion GBP ($1.6 billion) in the financial year ended Sept. 29, 2007. Enodis supplies foodservice equipment, with products on the "cold" and "hot" sides of the industry. To date, Manitowoc Foodservice's focus has been on "cold" equipment. A combination with Enodis will allow Manitowoc to enter two major new market segments, hot foodservice and food retail equipment, as well as expand its cold-side businesses. "We have long recognized the value that a combination of the foodservice businesses of Enodis and Manitowoc would create," Glen E. Tellock, Manitowoc president and chief executive officer said. "We believe the strategic benefits of the combination are substantial, and we are pleased to have reached an agreement for this transforming acquisition." "We believe the offer price provides good value to Enodis' shareholders while also allowing Manitowoc's shareholders to realize the benefits that the enhanced global business platform is expected to generate through deeper customer relationships, a more robust R&D process, and operating synergies," Mr. Tellock explained. Manitowoc believes that the successful integration of the two businesses will result in improved growth prospects and the opportunity to deliver significant synergies. Management currently estimates that by 2010 the transaction will generate annual synergies of more than $60 million. Historical revenues for the combined companies for the most recently completed respective financial years exceeded $5.6 billion. "We believe the expanded global footprint of the combined businesses creates an outstanding growth platform for Manitowoc Foodservice," said Michael Kachmer, president of Manitowoc Foodservice. "With the world's largest foodservice companies growing at rates well in excess of the overall industry, we should be well-positioned to partner with our customers in creating modern, efficient kitchens that deliver the dining choices that consumers want." "The acquisition of Enodis provides the opportunity to replicate the tremendous growth strategy that we employed in the lifting industry," Mr. Tellock added. "The same elements are in place for this strategy to succeed again - industry leading brands, a global footprint to meet the specific needs of a global customer base, a commitment to technology, new produce development and world-class aftermarket services, all supported by a team of the industry's most talented people." About The Manitowoc Company Inc. Headquartered in Maniwotoc, Wisconsin, The Manitowoc Company Inc. (NYSE: MTW) -- http://www.manitowoc.com/-- provides lifting equipment for the global construction industry, including lattice- boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * Moody's Investor Service placed The Manitowoc Company Inc.'s long- term corporate family and probability of default ratings at 'Ba2' in June 2007. The ratings still hold to date with a stable outlook. MCDERMOTT SA: Fifth Amendment on Facility Won't Change S&P Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its issue rating and recovery rating on McDermott S.A. remain unchanged following the company's announcement that it entered into a fifth amendment to increase the size of its senior secured credit facility to $800 million from $500 million. S&P's issue rating on this debt is 'BB' with a recovery rating of '3', indicating our expectation of meaningful (50% to 70%) recovery in the event of a payment default. The facility matures on June 6, 2011, and credit capacity may be used for the issuance of lines of credit and revolving debt. As of Dec. 31, 2007, McDermott (J. Ray) had no borrowings and $279 million in performance LOCs issued under the facility. McDermott (J. Ray) is a wholly owned subsidiary of McDermott International Inc. (BB/Stable/--) and is engaged in the engineering, fabrication and installation of offshore drilling and production facilities, as well as marine pipelines and subsea production facilities. Ratings Unchanged McDermott (J. Ray) S.A. Corporate credit rating BB/Stable/-- $800 mil sr secd ln due 2011 BB Recovery rating 3 MERRILL LYNCH: Fitch Downgrades Ratings on $134.1MM Certificates ---------------------------------------------------------------- Fitch Ratings has taken rating actions on three Merrill Lynch Mortgage Investors mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $352.3 million and downgrades total $134.1 million. Additionally, $74.3 million was placed on Rating Watch Negative. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2005-HE1 -- $10.7 million class A-1B affirmed at 'AAA', (BL: 75.70, LCR: 5.55); -- $15.9 million class A-2C affirmed at 'AAA', (BL: 73.84, LCR: 5.42); -- $21.9 million class M-1 rated 'AA', placed on Rating Watch Negative (BL: 46.31, LCR: 3.40); -- $16.1 million class M-2 downgraded to 'B' from 'A' (BL: 14.05, LCR: 1.03); -- $2.5 million class M-3 downgraded to 'CCC' from 'A-' (BL: 12.76, LCR: 0.94); -- $2.5 million class B-1 downgraded to 'CCC' from 'BBB+' (BL: 11.47, LCR: 0.84); -- $2.1 million class B-2 downgraded to 'CCC' from 'BBB' (BL: 10.54, LCR: 0.77); -- $2.1 million class B-3 downgraded to 'CC/DR4' from 'BBB-' (BL: 9.65, LCR: 0.71); -- $2.1 million class B-4 downgraded to 'CC/DR4' from 'BB+' (BL: 9.40, LCR: 0.69); -- $3.1 million class B-5 downgraded to 'CC/DR4' from 'B+' (BL: 8.22, LCR: 0.60). Deal Summary -- Originators: Various; -- 60+ day Delinquency: 25.82%; -- Realized Losses to date (% of Original Balance): 0.96%; -- Expected Remaining Losses (% of Current Balance): 13.63%; -- Cumulative Expected Losses (% of Original Balance): 3.56%. Series 2005-HE2 -- $55.6 million class A-1A affirmed at 'AAA', (BL: 62.80, LCR: 2.87); -- $13.9 million class A-1B affirmed at 'AAA', (BL: 58.75, LCR: 2.68); -- $63.3 million class A-2B affirmed at 'AAA', (BL: 62.30, LCR: 2.85); -- $21.1 million class A-2C affirmed at 'AAA', (BL: 57.79, LCR: 2.64). Deal Summary -- Originators: Various; -- 60+ day Delinquency: 36.45%; -- Realized Losses to date (% of Original Balance): 1.73%; -- Expected Remaining Losses (% of Current Balance): 21.88%; -- Cumulative Expected Losses (% of Original Balance): 10.48%. Series 2005-HE3 -- $100.1 million class A-1A affirmed at 'AAA', (BL: 55.96, LCR: 2.18); -- $25.0 million class A-1B rated 'AAA', placed on Rating Watch Negative (BL: 47.32, LCR: 1.85); -- $71.7 million class A-2B affirmed at 'AAA', (BL: 59.15, LCR: 2.31); -- $27.3 million class A-2C rated 'AAA', placed on Rating Watch Negative (BL: 46.82, LCR: 1.83); -- $41.5 million class M-1 downgraded to 'BB' from 'AA+' (BL: 34.84, LCR: 1.36); -- $28.1 million class M-2 downgraded to 'B' from 'A+' (BL: 27.01, LCR: 1.05); -- $9.1 million class M-3 downgraded to 'CCC' from 'A' (BL: 24.45, LCR: 0.95); -- $9.5 million class M-4 downgraded to 'CCC' from 'BBB+' (BL: 21.75, LCR: 0.85); -- $9.5 million class M-5 downgraded to 'CC/DR5' from 'BBB-' (BL: 19.02, LCR: 0.74); -- $6.0 million class M-6 downgraded to 'CC/DR6' from 'BB' (BL: 17.34, LCR: 0.68). Deal Summary -- Originators: Ameriquest Mortgage Co. (70.18%) and Option One Mortgage Co. (29.82%); -- 60+ day Delinquency: 41.27%; -- Realized Losses to date (% of Original Balance): 1.36%; -- Expected Remaining Losses (% of Current Balance): 25.62%; -- Cumulative Expected Losses (% of Original Balance): 11.97%. 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 2005 with regard to continued poor loan performance and home price weakness. MS LLC: Case Summary & 17 Largest Unsecured Creditors ----------------------------------------------------- Lead Debtor: M.S., LLC aka Crossroads Apartment Site 1105 Quail Street Newport Beach, CA 92660 Bankruptcy Case No.: 08-11748 Debtor-affiliate filing separate Chapter 11 petitions: Entity Case No. ------ -------- Murrieta 180 Apartments, LP 08-11749 Chapter 11 Petition Date: April 8, 2008 Court: Central District Of California (Santa Ana) Judge: Robert N. Kwan Debtors' Counsel: Paul J. Couchot, Esq. (jmartinez@winthropcouchot.com) Winthrop Couchot, PC 660 Newport Center Drive, Suite 400 Newport Beach, CA 92660 Tel: (949) 720-4100 Fax: (949) 720-4111 http://www.winthropcouchot.com/ M.S., LLC's Financial Condition: Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A. M.S., LLC's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rick Engineering Co. trade debt $10,205 1223 University Avenue, Suite 240 Riverside, CA 92507 Salisbury Law Group legal services $6,879 1600 Dove Newport Beach, CA 92660 Steven C. Kiser legal services $1,089 240 Newport Center Drive, Suite 210 Newport Beach, CA 92660 B. Murrieta 180 Apartments, LP's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Palmeri, Tyler, Weiner & legal services $24,535 Wilhelm, LLP Attn: Bob Ihrke 2603 Main Street, East Tower, Suite 1300 Irvine, CA 92614 Tel: (949) 851-7265 KTGY Group, Inc. trade debt $12,694 Attn: Manny Gonzales 17992 Mitchell South Irvine, CA 92867 Tel: (949) 851-2133 ADKAN Engineers, Inc. trade debt $10,865 Attn: Robert Martin 6820 Airport Drive Riverside, CA 92504 Tel: (951) 688-0241 Procopio, Cory Hargreaves trade debt $10,604 PCR Services Corp. trade debt $7,862 Dale Christian Structural trade debt $7,000 Lantex Landscape Architecture trade debt $5,360 Power Plus trade debt $3,788 Consolidated Reprographics trade debt $3,373 Paul McDonnell property taxes $1,228 O'Reilly Public Relations trade debt $462 Property Disclosure Services trade debt $100 Steven C. Kiser legal services $66 Lead Tracking Solutions trade debt $3 MTR GAMING: Posts $11 Million Net Loss in Year ended December 31 ---------------------------------------------------------------- MTR Gaming Group Inc. provided financial results for fourth quarter and year ended Dec. 31, 2008. For the fourth quarter of 2007, MTR reported net loss was $8.6 million compared to net income of $518,000 in the fourth quarter of 2006. MTR Gaming completed the sale of Binion's Gambling Hall & Hotel to TLC Casino Enterprises Inc. on March 10, 2008. The transaction was subject to purchase price adjustments based on changes in net working capital, certain capital expenditures between execution and closing, and, due to market conditions, a $3.5 million working capital adjustment which remained with Binion's upon closing. Net cash to the company at closing was approximately $28.5 million of which $27.6 million was utilized to reduce amounts outstanding under its credit facility. For the year ended Dec. 31, 2007, MTR's net loss of $11.4 million compared to net income of $4.4 million in 2006, included a $3.4 million loss from discontinued operations. The factors contributing to the decline in operating results for continuing operations were the decline in margins at Mountaineer stemming from new competition in Pennsylvania, preopening expenses related to Presque Isle Downs and the commencement of poker and table gaming at Mountaineer, operating inefficiencies at Presque Isle Downs that are inherent in the commencement of a new operation, and increased interest expense. Liquidity and Sources of Capital The company has a working capital deficit of $1.7 million as of Dec. 31, 2007, and its unrestricted cash balance amounted to $31 million. The working capital deficit includes $4.2 million of construction related liabilities and net liabilities held for sale of $1.7 milion. The company anticipated that the operation of poker and table games at Mountaineer, which commenced Oct. 19, 2007, and Dec. 20, 2007, and the anticipated impact of these new offerings on Mountaineer's slot machines, hotel, food and beverage and other departments, will provide additional funds for working capital needs. In addition, during 2008 the company has completed the sale of the real property of the Ramada Inn and Speedway Casino and the sale of the stock of Speakeasy Gaming of Fremont which owns and operates Binion's Gambling Hall & Hotel. The sale of these assets provided additional funding of approximately $39 million of which $27.6 million was used for repayment of debt and the remaining amounts will be used for operations. At Dec. 31, 2007, the balances in bank accounts owned by Mountaineer's horsemen, but to which it contribute funds for racing purses, exceeded its purse payment obligations by $2.2 million. This amount is available for payment of future purse obligations at the company's discretion and in accordance with the terms of its agreement with the HBPA. The company also earn the interest on balances in these accounts. As of Dec. 31, 2007, there was $143.4 million outstanding under the credit agreement. In addition, letters of credit for approximately $1.6 million were outstanding. Borrowings during 2007 included $50 million for the Presque Isle Downs slot license fee. Upon payment of this fee, the issued $50 million slot license fee letter of credit for the benefit of the Commonwealth of Pennsylvania was returned. There were no amounts outstanding under the credit agreement at Dec. 31, 2006. In March 2008, the company applied the net proceeds from the sale of the stock of Speakeasy Gaming of Fremont of $27.6 million to the outstanding balance of the credit agreement. As of March 28, 2008, there were outstanding options to purchase 1,390,800 shares of the company's common stock. If all such stock options were exercised, the company would receive proceeds of approximately $11.8 million. At Dec. 31, 2007, the company's balance sheet showed total assets of $610.962 million, total liabilities of $498.815 million and total shareholders' equity of $112.147 million. About MTR Gaming Headquartered in Chester, West Virginia, MTR Gaming Group Inc. (NasdaqGS:MNTG) -- http://www.mtrgaming.com/-- owns and operates the Mountaineer Race Track & Gaming Resort in Chester, West Virginia; Scioto Downs in Columbus, Ohio; the Ramada Inn and Speedway Casino in North Las Vegas, Nevada; Binion's Gambling Hall & Hotel in Las Vegas, Nevada; and holds a license to build Presque Isle Downs, a thoroughbred racetrack with pari-mutuel wagering in Erie, Pennsylvania. The company also owns a 50% interest in the North Metro Harness Initiative LLC, which has a license to construct and operate a harness racetrack and card room outside Minneapolis, Minnesota and a 90% interest in Jackson Trotting Association LLC, which operates Jackson Harness Raceway in Jackson, Michigan. * * * As reported in the Troubled Company Reporter on April 7, 2008, Moody's Investors Service placed the ratings of MTR Gaming Group Inc. on review for possible downgrade after the announcement in the 10-K of a material weakness in internal controls related to financial reporting. These ratings were placed under review for possible downgrade: (i) corporate family rating, rated B1; (ii) probability of default rating, rated B1; (iii) $130 million 9.75% senior unsecured notes due 2010, rated B2 (LGD4, 60%), and; (iv) $125 million 9% senior subordinated notes due 2012, rated B3 (LGD5, 88%). N-45 FIRST: Moody's Lifts Rating to Ba1 from Ba2 on Class E Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of five classes of N-45 First CMBS Issuer Corp. 2003-1 as: -- Class A-1, $5,962,350, affirmed at Aaa -- Class A-2, $278,574,000, affirmed at Aaa -- Class B, $8,396,000, affirmed at Aaa -- Class C, $16,792,000, upgraded to Aa1 from Aa2 -- Class D, $19,590,000, upgraded to A3 from Baa2 -- Class E, $13,993,000, upgraded to Ba1 from Ba2 -- Class F, $9,095,000, affirmed at B2 -- Class IO, Notional, affirmed at Aaa Moody's is upgrading Classes C, D and E due to increased credit support resulting from loan pay offs, amortization and improved pool performance. As of the Apr. 1, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 34.7% to $365.7 million from $559.7 million at securitization. The Certificates are collateralized by 33 mortgage loans ranging in size from less than 1.0% to 16.6% of the pool, with the top 10 loans representing 49.9% of the pool. The pool includes three loans with underlying ratings, representing 27.4% of the pool. One loan, representing 3.7% of the pool, has defeased and has been replaced with Canadian Government securities. There are no loans on the master servicer's watchlist. There have been no realized losses since securitization and there are no loans in special servicing. Moody's was provided with full-year 2006 operating results for 91.6% of the pool. Moody's loan to value ratio for the conduit portion is 61.4%, compared to 67.0% at Moody's last full review in December 2006 and 79.3% at securitization. The largest loan group with an underlying rating is a crossed pool collateralized by the Place Dupuis Building and Les Atrium Loan Group ($50.6 million -- 13.8%), which is secured by two Class B office buildings located in downtown Montreal, Quebec. The Place Dupuis Building (813,000 square feet) was built in 1972 and renovated in 1979. The Les Atrium building (220,500 square feet) was built in 1939. The major tenant in the Place Dupuis Building is Hydro Quebec (Moody's senior unsecured rating Aa2; 70.0% NRA; lease expirations 2008, 2010 and 2012). The loan amortizes on a 23-year schedule and has amortized 10.5% since securitization. The loan is full recourse to the borrower. Moody's current underlying rating is Baa2, the same as at last review and compared to Baa3 at securitization. The second largest loan with an underlying rating is the Centre Commercial Centre Laval Loan ($32.8 million -- 9.0%). The loan is secured by the borrower's interest in a 500,000 square foot regional mall constructed in four phases between 1968 and 1991 and renovated in 1998. The mall is located approximately 15 miles west of Montreal in Laval, Quebec. The center is anchored by Wal-Mart (30.1% GLA; lease expiration January 2013), Best Buy (7.7% GLA; lease expiration 2020) and Future Shop (7.1% GLA; lease expiration 2019). The center is also shadow anchored by The Bay. As of March 2007, occupancy was 97.5% compared to 98.0% at last review and 99.0% at securitization. The loan is full recourse to the borrower and amortizes on a 20-year schedule. The loan has amortized 13.7% since securitization. Moody's current underlying rating is Aaa compared to Aa2 at last review and A2 at securitization. The third largest loan with an underlying rating is the Preston Crossing Loan ($16.7 million -- 4.6%). The loan is secured by the borrower's interest in a 250,000 square foot regional mall constructed in 2002 and located in Saskatoon, Saskatchewan. The center is anchored by Canadian Tire (32.0% GLA, lease expiring October 2022), Sobeys (16.0% GLA; lease expiration 2022), The Bay (14.0% GLA; lease expiration November 2017). Other tenants include Michaels and Future Shop. As of March 2007, the property was 100.0% occupied, the same as at last review and at securitization. The loan amortizes on a 20-year schedule and is full recourse to the borrower. Moody's current underlying rating is Baa3, the same as at last review and at securitization. The top three conduit loans represent 31.8% of the pool. The largest conduit loan is the State Street Financial Centre Loan ($60.7 million -- 16.6%), which is secured by a 414,000 square foot Class A office building located in downtown Toronto, Ontario. The property was built in 1957, renovated in 2001 and is part 12 and part 17 stories high. The loan amortizes on a 25-year schedule. The largest tenant is International Financial Data Services (32.0% NRA; leased through October 2013). As of March 2008, the property was 86.0% occupied compared to 100.0% at last review and at securitization. The loan is full recourse to the borrower and amortizes on a 25-year schedule. The loan has amortized 8.8% since securitization. Moody's LTV is 69.4%, compared to 75.6% at last review and 84.5% at securitization. The second largest conduit loan group is the Office Campus I, II and IV Loan ($28.6 million -- 7.8%), which is secured by three crossed loans secured by three office properties located in Ottawa, Ontario. The buildings were built in 2001 and contain 230,000 square feet. The loan amortizes on a 25-year schedule. As of March 2007, the property was 100.0% occupied the same as at last review and at securitization. The loan has amortized 9.0% since securitization and matures July 2008. Moody's LTV is 78.9% compared to 82.0% at last review and 88.2% at securitization. The third largest conduit loan is the Place Portobello & Les Galeries de la Chaudiere Loan ($27.1 million -- 7.4%), which is secured by two anchored retail centers totaling 603,000 square feet. Place Portobello is located in Brossard, south of Montreal. Les Galeries de la Chaudiere is situated in Sainte-Marrie, approximately 34 miles south of Quebec City, Quebec. Built in 1965, Place Portobello represents 85.0% of the collateral. The major tenant is Wal-Mart (24.0% GLA; lease expiration January 2010). The loan amortizes on a 20-year schedule and is full recourse to the borrower. The loan has amortized 18.2% since securitization. Moody's LTV is 48.0% compared to 54.4% at last review and 70.2% at securitization. NEXSTAR BROADCASTING: S&P Assigns Ratings on Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Nexstar Broadcasting Group Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. The Irving, Texas-based TV broadcasting company had total debt of about $681 million as of Dec. 31, 2007. "The CreditWatch placement reflects our heightened concern about Nexstar's ability to remain in compliance with its financial covenants," said Standard & Poor's credit analyst Deborah Kinzer. NORANDA ALUMINUM: December 31 Balance Sheet Upside-Down by $76,000 ------------------------------------------------------------------ Noranda Aluminum Holding Corporation's balance sheet at Dec. 31, 2007, showed total assets of $1,650,544,000 and total liabilities of $1,650,620,000, resulting to total shareholders' deficit of $76,000. The company reported financial results for the fourth quarter and fiscal year ended Dec. 31, 2007. Fourth quarter net income was $2.485 million compared to $31.888 million for the same period in the previous year. For full year ended Dec. 31, 2007, the company's net income was $22.424 million compared to $113.912 million in 2006. During the quarter and subsequent to year end, the company entered into additional forward aluminum sales contracts. Including the recent hedges, the company has hedged approximately 50% of forecasted production through 2012 at prices which are attractive compared with the company's expected cost of producing primary aluminum. The company's $250 million revolving credit facility remained undrawn at Dec. 31, 2007, with cash-on-hand of $75.6 million. Total debt at year-end was $1,151.7 million. The company's net debt to EBITDA ratio at year end was 1.13x, 2.77x and 3.48x at the Senior Secured Level, Senior Debt and the Holdco level. About Noranda Aluminum Noranda Aluminum Holding Corp. -- http://www.norandaaluminum.com/ -- is a North American integrated producer of value-added primary aluminum products as well as high quality rolled aluminum coils. The company has two businesses, the primary metals business, or upstream business, which produces approximately 250,000 metric tons of primary aluminum annually, and the rolling mills, or downstream business, which is one of the largest foil producers in North America and a major producer of light gauge sheet products. Noranda is a private company owned by affiliates of Apollo Management LP. * * * Standard & Poor's placed Noranda Aluminum Holding Corp.'s long term foreign and local issuer credit ratings at 'B' in May 2007. The ratings still hold to date with a stable outlook. NORTH FOREST: S&P Removes 'BB' Rating From CreditWatch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services removed its 'BB' issuer credit rating and underlying rating on North Forest Independent School District, Texas' general obligation debt from CreditWatch with negative implications. The negative outlook reflects the potential for additional financial pressure, despite actions by management designed to stabilize the district's financial condition. At the same time, Standard & Poor's affirmed its 'AAA' rating, and stable outlook, on the district's bonds guaranteed by the Texas Permanent School Fund. Standard & Poor's recently lowered its GO debt rating on the district two notches, to 'BB' from 'BBB-', and placed the rating on CreditWatch with negative implications due to the district's significant financial deterioration and the potential for the district to cease operations. Over the past 60 days, however, management has taken several actions that could have an immediate and lasting financial effect, including the reduction of 50 positions for the current fiscal year, the planned reduction of 90 positions for the following school year, and the scheduled merging of four schools into two schools. "The potential exists for additional financial pressure that could cause severe distress and further weaken the district's credit," said Standard & Poor's credit analyst James Breeding. "The district still needs to replenish bond funds used for general operations while cutting expenditures, stabilizing the management team, and consolidating schools." The district ended fiscal 2007 with a severe unreserved general fund balance decline -- to a negative $6.7 million from a positive $14.8 million in fiscal 2006 -- based on a number of factors, including the recording of a $7.3 million liability to the state of Texas for the overpayment of per-pupil funding in the previous year and deficit spending in the instructional, school leadership, and administration areas. According to the auditor, the overpayment by the state was due to improper reporting of student enrollment, while deficit spending was due to the finance department's understaffing and lack of monitoring. The independent auditor also expressed concern about the district's ability to continue to exist. Following reconciliation efforts with the Texas Education Agency, the overpayment amount has been reduced to $5.2 million. The adopted fiscal 2008 budget showed balanced operations, but did not include the state's withholding of $7.3 million. Therefore, a significant shortfall is expected. The operations and maintenance tax rate has already been set at the current state maximum of $1.04 per $100 of assessed value, with an additional levy for debt service; tax collections remain below average, at less than 90%. The district has not adopted a revised budget, and the ending balance will remain negative. For fiscal 2009, district officials are hoping that the cost-cutting measures they have implemented will result in a $10 million to $12 million general fund savings. The rating action affects roughly $68 million of outstanding debt. NORTHWEST AIRLINES: Board Votes "For" Merger with Delta Air ----------------------------------------------------------- The board of directors of both Delta Air Lines Inc. and Northwest Airlines Corp. gave their consent Monday to allow the two airlines to merge based on an all-stock deal, The Wall Street Journal and The Associated Press relate. The combination of Delta and Northwest, which is still subject to regulatory approval, stands to create the world's largest airline operator in the world valued at $17.7 billion, AP says. Under the merger, each Northwest shareholder will get 1.25 shares in the combined company for every share owned, or equivalent to 17% premium as of Monday's trading, based on WSJ's and AP's reports. Both reports recount that Delta and Northwest have emerged from bankruptcy in 2007 and "are in much better shape" as compared with smaller airlines that have recently gone bankrupt. The deal, reportedly, could incite potential workers' protest. Air France-KLM Partnership Reports note that Delta and Northwest have partnered with Air France-KLM SA, which previously indicated plans to invest $750.0 million in the merger of the two U.S. airlines. As reported in the Troubled Company Reporter on Feb. 22, 2008, amid the merger rumors, Franco-Dutch airline Air France-KLM expressed its interest to invest in the entity that would emerge from a Delta and Northwest merger. Pierre-Henri Gourgeon, Air France-KLM's deputy CEO said in an analysts' conference call that the investment would depend on whether the U.S. airlines obtain a green light from competition authorities and probably won't result in any payments before the end of 2008. The investment is said to be close to $1.0 billion or EUR680.0 million. Labor Issues Concerning potential employee protest, the TCR said on April 10, 2008, that Northwest and Delta have revived their merger talks, even without the pre-arranged deal from both carriers' pilots, said people familiar with the situation. Delta's board members convened on April 4, 2008, and agreed to continue the talks which were reportedly intensifying. Delta pilots were granted permits to picket at Northwest hubs from April 8 to 24, to protest over the carriers' pilot-seniority dispute. Northwest's pilots union said it reserves the right to do the same thing at Delta hubs if it chooses. Previouisly, pilots' leaders from both carriers were unable to reach an agreement on an acceptable seniority list integration. The original deal between the parties included a common pilot labor contract for their combined 11,000 pilots that would give all of them raises, with Northwest's 5,000 aviators getting heftier increases to bring them up to Delta levels. The new deal may include a smaller pay package for pilots. The carriers are not required by law to come up with pre-merger pilots' labor agreements to push through with the deal. Delta and Northwest, however, wanted to avoid a messy, labor wrangle once the deal was consummated and, therefore, made efforts to come up with a "common labor contract." A report about Delta reaching an agreement in principle with its pilots that would purportedly clear the way for the carrier's merger with Northwest is included in today's TCR issue. Expected Revenue Boost After Merger Once approved by regulators, the merger will result in a projected annual sales of $31.7 billion, significantly higher than American Airlines Inc.'s annual sales, according to AP. WSJ reports that the merger will realize annual revenue and cost reduction will reach at least $1.0 billion. WSJ adds that the Delta and Northwest will need less than $1.0 billion to complete the merger. Wave of U.S. Airline Consolidation According to the reports, the merger signals the start of a series of collaborative efforts among U.S. airlines to address the rise in fuel costs, weakened economy, and the financial crisis. Larger airlines also have greater ability to compete internationally, relate the reports. The TCR related on March 24, 2008, that United Air Lines Inc. would pursue a consolidation with Continental Airlines Inc. if given the go-ahead, to create the airline industry's biggest carrier. Stephen Canale, a union representative on United Airlines' board of directors, said that Continental is "without question" the first choice for a United merger. The TCR said that the merger between Delta and Northwest, which was at that time currently under consideration, could incite a United-Continental tie-up. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. NORTHWEST AIRLINES: Seeks Allowance for $5,954,902 ALPA Claims -------------------------------------------------------------- The Air Line Pilots Association, International filed Claim No. 9311 against Northwest Airlines Corp. and its debtor-affiliates -- for not less than $921,395,651 -- asserting three separate groups of claims: * prepetition discharge grievances and prepetition non- discharge grievances -- the Disputed Claim -- for no less than $7,581,351; * the second portion of the Claim relating to employee pre- grievances and grievances, was previously allowed by the Court as a general unsecured claim for $888,000,000, pursuant to a restructured collective agreement between the Debtors and ALPA that was approved by the U.S. Bankruptcy Court for the Southern District of New York; and * the final portion of the Claim asserts an unliquidated amount for employee wages and benefits that the Debtors continue to honor in the ordinary course of business. Settlement Agreement with ALPA Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve a settlement agreement resolving Claim No. 9311. The Settlement Agreement provides that in full and final satisfaction of the Non-Discharge Grievances, the Disputed Claim is liquidated and fixed: (a) as an allowed general unsecured claim for $4,954,902; and (b) as an allowed administrative expense claim for $1,000,000. Any amounts contained in Claim No. 9311 in excess of the sum of the Allowed Non-Discharge Grievance Claim and the previously approved Allowed ALPA Claim are disallowed in their entirety. Subject to Court approval, the Debtors will cooperate with ALPA in the sale of ALPA's Allowed General Unsecured Grievance Claim, and make a cash distribution of the net proceeds of the sale to the individual pilots designated by ALPA. The Debtors will make a catch-up distribution to any purchaser of the Allowed General Unsecured Grievance Claim on the later of (i) at least 11 days after the Court's approval of the Settlement Agreement that is not subject to an appeal or stay, or (ii) the first business day that is at least 11 days after the Debtros are notified of the identity of the purchaser. If, for any reason, ALPA is not able to sell its Allowed General Unsecured Grievance Claim, and so notifies the Debtors in writing, the Debtors will make a Catch-Up Distribution on the Allowed General Unsecured Grievance Claim to the individual employees identified by ALPA to receive distributions. The Debtors will then direct their transfer agent to promptly sell the shares on behalf of those individuals, and pay the net proceeds in accordance with the allocation instructions provided by ALPA. Subsequent distributions, if any, will be treated similarly, if feasible in light of the amount of the subsequent distributions, with the Bankruptcy Court to resolve any relating disputes. If the Settlement Agreement is approved by the Court, the only Prepetition Discharge Grievances that will remain unresolved and may be pursued by ALPA are seven grievances specifically mentioned in the Settlement, a full-text copy of which is available for free at: http://bankrupt.com/misc/NWA_ALPASettlementPact.pdf About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. NORTHWEST AIRLINES: Delta and Pilots Pact Clears Way for Merger --------------------------------------------------------------- Delta Air Lines Inc. and its pilots have reached an agreement in principle on a contract that would purportedly clear the way for the carrier's merger with Northwest Airlines Corp., Bloomberg News reports. [The Wall Street Journal has reported that the board of directors of both airline companies approved the merger. A separate story is included in today's Troubled Company Reporter.] The accord would allegedly raise Delta pilots' pay and give them an equity stake in the consolidated carrier, people familiar with the talks said. Any pact would need to be approved by the leaders of the Delta pilots union, a unit of the Air Line Pilots Association, before the carriers could finalize their deal, says The Atlanta Journal- Constitution. The Delta union's 6,000 members also may vote later on whether to ratify a new labor contract tied to the merger. "With oil at $110 per barrel and the weakening economy, Delta probably got to the point where they felt like they needed to move ahead," said Michael Derchin, an analyst with FTN Midwest Research Securities Corp. in New York. "It always made strategic, long-term sense for these companies." The merger talks hit a snag in February when the airlines' pilots weren't able to agree on a way to protect members' seniority rankings after a consolidation. Now, Delta wants to draw up a new contract with just its 7,000 pilots, and Northwest's 5,000 pilots would be asked to join under a single contract later, said the people who didn't want to be identified because the plan is still private. The plan includes a small premium for Northwest investors, the unidentified sources said, reports Bloomberg. "It's sort of a backhanded slap at the Northwest pilots," said Douglas Marshall, director of the Aviation Graduate Program at the University of North Dakota. "Delta's pilots are going to have more leverage. They will be in a stronger position." Negotiations to create a combined seniority list may take months to complete, Bloomberg says, citing people familiar with the situation. "It is hard to anticipate Northwest pilots' level of interest in agreeing to an unknown Delta seniority integration proposal," said Robert Mann of R.W. Mann & Co. in Port Washington, New York, a consultant for airlines and unions. Betsy Talton, spokeswoman for Delta, and Tammy Lee, a spokeswoman for Northwest, declined to comment. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. NORTHWEST AIRLINES: Dissolves NWA Inc. and NWA Holdings ------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates informed Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York that under the terms of their confirmed Plan of Reorganization: -- NWA Inc. would merge with and into Northwest Airlines, Inc.; and -- Northwest Airlines Holdings Corporation would merge with and into NWA Inc. Pursuant to the General Corporation Law of the State of Delaware, and the Business Corporation Act of the State of Minnesota, NWA Inc. filed with the Secretary of State for the State of Minnesota its Certificate of Ownership and Merger Merging NWA Inc. into Northwest Airlines Inc. As provided for by the General Corporation Law of the State of Delaware, Holdings filed with the Secretary of State for the State of Minnesota its Certificate of Ownership and Merger Merging Northwest Airlines Holdings Corporation into NWA Inc. Accordingly, each of NWA Inc. and Northwest Holdings ceased to exist as separate coporate entities, without the necessity for any other or further actions to be taken, or payments to be made, on behalf of the Debtors. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. NORTHWEST AIRLINES: Makes Four Additional Shares Distribution ------------------------------------------------------------- Northwest Airlines Corp. and its debtor-affiliates made four distribution of shares of new common stock, from May 31, 2007, to Jan. 2, 2008: (1) an initial distribution on May 31, 2007; (2) a catch-up distribution on July 16, 2007; (3) a periodic and catch-up distribution on Oct. 1, 2007; and (4) a periodic distribution and a Catch-up Distribution on Jan. 2, 2008. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, informs Judge Gropper that the Debtors were set to make a periodic distribution and a catch-up distribution last April 1, 2008, of: Expected No. New Common Stock of Shares ---------------- ------------ For Creditors Allocable to 2,668,330 Class 1D For Creditors With A Guaranty 30,847 According to Mr. Petrick, the total estimated amount of shares of New Common Stock remaining in the Distribution Reserve are: Expected No. New Common Stock of Shares ---------------- ------------ For Creditors Allocable to 23,564,009 Class 1D For Creditors With A Guaranty 711,915 Mr. Petrick also informs Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York that the total amount of shares of New Common Stock distributed pursuant to the Debtors' Plan of Reorganization, as of March 17, 2008, was: Amount New Common Stock of Shares ---------------- --------- For Creditors Allocable to 195,505,407 Class 1D For Creditors With A Guaranty 7,880,010 Pursuant to Rights Offering 27,777,778 About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and US$17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on June 4, 2007, Standard & Poor's Ratings Services raised its ratings on Northwest Airlines Corp. and its Northwest Airlines Inc. subsidiary, including raising the long-term corporate credit ratings on both entities to 'B+' from 'D', following their emergence from Chapter 11 bankruptcy proceedings. S&P said the rating outlook is stable. In addition, S&P assigned a 'BB-' bank loan rating, one notch above the corporate credit rating, with a '1' recovery rating, to Northwest Airlines Inc.'s $1.225 billion bankruptcy exit financing, based on S&P's expectation of a full recovery of principal in the event of a second Northwest bankruptcy. That bank facility converted from a debtor-in-possession credit facility; S&P withdrew the 'BBB-' rating on the DIP facility. ORIGINAL TOTAL: Case Summary & Five Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Original Total Blend Restaurant, Inc. aka 3921 Original Total Blend Realty, LLC 3817 White Plains Road Bronx, NY 10467 Bankruptcy Case No.: 08-11237 Type of Business: The Debtor owns and manages a restaurant. Chapter 11 Petition Date: April 8, 2008 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Nestor Rosado, Esq. (neslaw2@msn.com) 55 Overlock Terrace, Suite 1H New York, NY 10033 Tel: (212) 781-4808 Fax: (212) 781-5104 Total Assets: $1,300,000 Total Debts: $986,125 Debtor's Five Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $152,285 P.O.Box 37004 Hartford, CT 06176-0004 NYS Department of Taxation & $96,614 Finance 55 Hanson Place Brooklyn, NY 11217 Siegmund Strauss, Inc. $5,664 Attn: Martin Bienstock, City Marshal 36-35 Bell Boulevard Bayside, NY 11361 Tel: (212) 279-3660 State of New York Department $4,251 of Labor Laconia Meat Corp. $4,000 PARAMOUNT RESOURCES: Earns $416.2 Million in Year Ended Dec. 31 --------------------------------------------------------------- Paramount Resources Ltd. reported net earnings of $416.2 million on petroleum and natural gas sales of $283.4 million for the year ended Dec. 31, 2007, compared with a net loss of $17.8 million on petroleum and natural gas sales of $312.6 million for the year ended Dec. 31, 2006. The increase in net earnings was primarily due to: -- Higher income from equity investments, including the gain on sale of North American shares of $528.6 million; -- Higher gains on sale of property, plant and equipment, including the gain on sale of the Surmont Assets of $271.0 million; -- Increased investment and other income; and -- Unrealized foreign exchange gains. These changes were partially offset by: -- A higher future income tax provision; -- A higher write-down of petroleum and natural gas properties; -- Unrealized losses on financial instruments in 2007 versus unrealized gains on financial instruments in 2006; and -- Higher dry hole expense. Revenue from natural gas, oil and NGLs sales in 2007 was $283.4 million, down 9% from 2006 due primarily to the impact of lower realized natural gas prices and sales volumes, partially offset by higher realized oil and NGLs prices. Sales Volumes Average daily natural gas sales volumes decreased to 78.8 MMcf/d in 2007 compared to 81.6 MMcf/d in 2006. The decrease was primarily a result of production declines in Northern at Bistcho and the shut-in of the Maxhamish facility in October 2007, and normal production declines in Grande Prairie at Mirage. These decreases were partially offset by increases in daily natural gas sales volumes as a result of drilling and tie-in activities from Paramount's 2007 capital program, primarily at Musreau and Resthaven in Kaybob and Chain in Southern. Average daily crude oil and NGLs sales volumes decreased to 3,536 Bbl/d in 2007 compared to 3,653 Bbl/d in 2006, primarily as a result of declines in Cameron Hills oil production in Northern, partially offset by new production in Grande Prairie and Kaybob. Oil production increased in Southern in the fourth quarter of 2007 as new wells in North Dakota were bought on production. Paramount's original 2007 annual production outlook was 21,000 Boe/d and actual production was 16,669 Boe/d. The reduction from budget was due to several factors including: weather delays in Southern and Kaybob, lower production than expected in Kaybob, non-core property and facility disposals, equipment and other facility issues, and delays in rig arrival and commissioning in Southern. Commodity Prices Paramount's average realized natural gas price for 2007, before realized gains on financial commodity contracts, decreased to $6.77/Mcf compared to $7.66/Mcf in 2006. Paramount's average realized oil and NGLs price for 2007, before realized losses on financial commodity contracts, increased to $68.74/Bbl compared to $63.27/Bbl in 2006. Royalties Royalties decreased 11% to $42.7 million in 2007 compared to $48.0 million in 2006, primarily as a result of decreases in Paramount's revenue. The 2007 royalty expense included the impact of allowable deductions for operating and capital costs for royalty purposes on frontier lands in the Northwest Territories and lower deep gas royalty holidays in Kaybob. Strategic Investments Strategic Investments at Dec. 31, 2007 include the following: -- equity investments in Trilogy and MGM Energy; -- oil sands investments, including shares in MEG Energy and carbonate bitumen holdings; and -- drilling rigs in the United States operated by Paramount's wholly owned subsidiary, Paramount Drilling U.S. LLC. Income from equity investments includes a $528.6 million gain on sale of Paramount's investment in North American shares. This gain is net of expenses, including a bonus of 150,000 common shares of Paramount paid to the chairman and chief executive officer of Paramount under the company's stock incentive plan. Income from equity investments also includes net dilution gains of $23.1 million and net equity losses of $1.7 million. Prior year equity earnings include dilution gains of $111.3 million related to North American and $18.4 million related to Trilogy. Income and Other Tax Expense (Recovery) Income and other tax expense was $43.2 million for the year ended Dec. 31, 2007, compared with income and other tax recovery of $50.1 million for the year ended Dec. 31, 2006. Liquidity and Capital Resources a) Working Capital Paramount's working capital surplus position at Dec. 31, 2007, was $120.6 million compared to a deficit of $84.3 million at Dec. 31, 2006. Included in working capital as of Dec. 31, 2007, was $83.3 million in cash and cash equivalents and $95.7 million in short-term investments, including the MEG Note. The increase in working capital is primarily the result of the disposition of certain Strategic Investments and non-core Principal Properties during the year for total proceeds of in excess of $1.0 billion. In March 2007, Paramount closed a six month $100 million short-term facility that was repaid and cancelled on June 29, 2007. b) Bank Credit Facility At Dec. 31, 2007, Paramount's credit agreement had a $170 million gross borrowing base with a net borrowing base of $155 million. At Paramount's request, the banking syndicate has provided aggregate commitments to lend up to $125 million. As of Dec. 31, 2007, no balances were drawn on the credit facility, however, Paramount had undrawn letters of credit outstanding totalling $15.5 million that reduce the amount available to the company under the credit facility. c) US Senior Notes During the third quarter of 2007, Paramount made open market purchases of $75.4 million principal amount of its 8.5% US Senior Notes, reducing the net principal outstanding to $138.2 million (CN$136.5 million) at Dec. 31, 2007. Paramount may re-market the purchased debt at its discretion. d) Term Loan B Facility On July 3, 2007, Paramount repaid the entire principal outstanding of its $150 million TLB Facility. The TLB Facility is no longer available to the company. e) Share Capital The company received regulatory approval for a NCIB ending on May 6, 2008. Under the NCIB, the company was permitted to purchase up to 3,298,526 of its common shares for cancellation. Effective Dec. 19, 2007, Paramount received regulatory approval for an amendment to the NCIB which increased the number of shares available for purchase to 3,546,859. To Dec. 31, 2007, Paramount purchased and cancelled 3,298,526 common shares for $54.9 million. At March 10, 2008, Paramount had 67,686,374 common shares outstanding, 6,206,750 stock options (with each entitling the holder to acquire one common share) outstanding (872,850 exercisable) and 300,625 Holdco options outstanding (226,125 exercisable). Contractual Obligations At Dec. 31, 2007, the company has total contractual obligations, which consist of the US Senior Notes (including interest), asset retirement obligations, pipeline transportation commitments, capital and drilling spending commitment, and operatin leases, of $547.5 million. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed $1.300 billion in total assets, $391.2 million in total liabilities, and $908.6 million in total stockholders' equity. About Paramount Resources Headquartered in Calgary, Alberta, Canada, Paramount Resources Ltd. (TSE: POU) -- http://www.paramountres.com/-- is a Canadian oil and natural gas exploration, development and production company with operations focused in Western Canada. * * * As reported in the Troubled Company Reporter on Oct. 25, 2007, Moody's Investors Service raised the rating for Paramount Resources Ltd.'s senior secured notes to Caa1 (LGD 4, 56%) from Caa2 (LGD 4, 60%). Moody's also affirmed Paramount's Caa1 corporate family rating and the Caa1 probability of default rating. The outlook remains stable. PEACE ARCH: Insiders May Now Resume Share Trading ------------------------------------------------- Peace Arch Entertainment Group Inc. disclosed that as of April 3, 2008, a management and insider cease trade order was lifted, allowing certain directors, officers and employees of the company to continue trading in the company's securities. Peace Arch said that after it filed its Nov. 30, 2007 interim financial statements on March 31, 2008, the Ontario Securities Commission and the British Columbia Securities Commission issued a revocation order to the management and insider cease trade order dated Dec. 13, 2007, which prohibited trading by directors, officers and certain employees of Peace Arch in the securities of the company. About Peace Arch Based in Toronto, Los Angeles, and London, Peace Arch Entertainment Group Inc. (AMEX: PAE) (TSX: PAE) -- http://www.peacearch.com/-- produces and acquires feature films, television and home entertainment content for distribution to worldwide markets. Peace Arch owns one of the largest libraries of top quality independent feature films in the world, featuring more than 1000 classic and contemporary titles. * * * As reported in the Troubled Company Reporter on March 28, 2008, Peace Arch's management said in its Form 20-F report to the U.S. Securities and Exchange Commission for the fiscal year ended Aug. 31, 2007, that while the company continues to maintain its day-to-day activities and produce and distribute films and television programming, its working capital situation is severely constrained. The company also that it operates in an industry that has long operating cycles which require cash injections into new projects significantly ahead of the delivery and exploitation of the final production. If the company is unsuccessful in its financing efforts and in achieving sufficient cash flows from operating activities, the company may be required to significantly reduce or limit operations. These factors cast substantial doubt on the company's ability to continue as a going concern. PERVASIP CORP: Appoints Scott Widham to Board of Directors ---------------------------------------------------------- Pervasip Corp. appointed Scott Widham to its board of directors. "We are pleased that a person of [Mr. Widham's] caliber is joining our board of directors," Pervasip's CEO, Paul Riss, said. "His business experience in the cable industry and with Broadwing, which exceeded $875 million in annual revenue before it was purchased by Level 3, will make him a valuable member on the Pervasip board. [Mr. Widham] has already introduced us to two of the ten largest cable carriers, and we anticipate that we can provide our SIP-based voice-over-IP solution in the 'dead spots' that the cable carriers cannot reach with their packet cable telephony product." "The Pervasip team has done an incredible job in making the company a significant force in the wholesale IP telephony world," Mr. Widham said. "I have been particularly impressed with the versatility and scalability of the IP platform and the company's commitment to the open source movement." "I am especially looking forward to bringing their IP voice product to my cable contacts, as the major cable carriers do not have a cost effective solution for reaching their customers in secondary and tertiary markets," Mr. Widham continued. "I have been working with the company since November, and I am very excited about what we may be able to accomplish in 2008." mr. Widham, a Principal in CAS, LLC, a technology and telecom consulting company, has been an entrepreneur in the media and telecom industries for 30 years. Mr. Widham serves on the board of directors of Priva Technologies, Stages and Game Rail. Mr. Widham also serves on the board of directors and as a member of the executive committee of Comptel, a competitive telecommunications association. Mr. Widham was co-CEO of Broadwing Corporation, a voice, data and video service provider acquired by Level 3. Prior to joining Broadwing, Mr. Widham was the founder and CEO of Capital Cable, a multi-system operator that owned cable systems across the U.S. and in Latin America. Capital Cable was acquired by Charter Communications. About Pervasip Corp. Based in White Plains, New York, Pervasip Corp. (OTCBB:PVSP) fka eLEC Communications Corp. -- http://www.voxcorp.net/and http://www.pervasip.com/-- provides an integrated suite of IP- based communications services and offers wholesale broadband voice, origination and termination services, well as enhanced digital telephone service to the small business and residential marketplace. At Nov. 30, 2007, the company's balance sheet showed total assets of $3,917,055 and total liabilities of $10,096,803, resulting to total stockholders' deficit of $6,179,748. The company related that it has requested and received assurances from its principal lender to continue to fund the company and a promise not to call the outstanding debt through Dec. 1, 2008, so as to erase any doubt that the company may not be a going concern. PHIBRO ANIMAL: Completes AIM Market Listing, Raises $45 Million --------------------------------------------------------------- Phibro Animal Health Corporation completed an institutional placement of its common shares, which are now listed on the London Stock Exchange's Alternative Investment Market. Phibro Animal Health realized $45 million of gross proceeds from the sale of new common shares on Alternative Investment Market representing approximately 13% of the post-transaction equity, reflecting an equity valuation of $345 million. The common shares of the company are now held 70% by BFI Co. LLC, a Bendheim family investment vehicle, and 30% by other non-U.S. institutional investors including 3i Quoted Private Equity Limited. Jack Bendheim has sole authority to vote the common shares owned by BFI. 3i QPEL has invested a total of $97.2 million for a 29.9% interest in the company, including its previously announced purchase of common shares of Phibro Animal Health from existing shareholders. After payment of transaction and other related costs, approximately $25 million will be used to reduce amounts outstanding under the company's senior credit facility. "The company is now positioned for the next stage in its strategy to be an even broader based animal health and nutrition business, through organic growth and acquisitions," Jack Bendheim, chairman and president, commented. "3i QPEL's strategic investment and broad global network enhances our growth opportunities." The board of directors now includes Jack Bendheim, chairman and president; Gerald Carlson, chief executive officer; and non- executive directors Sam Gejdenson; Alan MacKay, a founding partner of 3i QPEL; and Mary Lou Malanoski. The company also intends to appoint an additional independent non-executive director with significant industry experience. Marvin Sussman has resigned as a director and as the chairman of Prince Agriproducts. He will continue as a senior advisor to the company. James Herlands also has resigned as a director, following his October 2007 retirement as an executive of the company. About Phibro Animal Health Headquartered in Fort Lee, New Jersey, Phibro Animal Health Corporation (LON: PAHC) -- http://www.pahc.com/-- manufactures and markets animal health pharmaceuticals, animal nutrition products and industrial and fine chemicals. The company manufactures and markets more than 550 specialty chemicals and serve more than 3,500 customers. Phibro Animal Health Corporation operates in four business segments: animal health and nutrition, industrial chemicals, distribution and other. * * * Moody's Investor's Service assigned its 'Caa1' senior subordinate debt rating on Phibro Animan Health Corporation on July 28, 2006. This rating action still holds to date. PILGRIM'S PRIDE: Cuts Weekly Production by 5% on Soaring Feed Cost ------------------------------------------------------------------ Pilgrim's Pride Corp. plans to reduce weekly chicken processing by approximately 5% in the second half of fiscal 2008 when compared to the same period a year ago, as part of its continuing effort to better balance supply and demand amid record-high costs for feed ingredients such as corn and soybean meal. The reduction began with eggs set earlier this month and should take full effect with weekly processing beginning in June. The company said the reduction will remain in effect until average industry margins return to more normalized levels. The 5% reduction includes the impact of the previously stated closing of the Pilgrim's Pride plant in Siler City, North Carolina, which should be completed by June. "Soaring feed-ingredient costs fueled by the federal government's misguided ethanol policy has created a crisis in our industry, the true effects of which are only just now beginning to be felt by American consumers in the form of higher food prices," Clint Rivers, president and chief executive officer, said. "Over the past two weeks, a growing number of smaller chicken producers have announced production cutbacks in an effort to manage these unprecedented increases for corn and soybean meal, which are expected to add billions of dollars of cost to our industry this year." "It is clear that chicken producers of all sizes are feeling the tremendous financial strain from these additional grain costs," Mr. Rivers added. "We have been encouraged by these public announcements, for they indicate that the production cutbacks this time are being shared more broadly across the industry, rather than limited to just the largest processors, as was the case last year." "We believe the cuts we are enacting will strike a better balance between production and demand and strengthen our competitive position," Mr. Rivers continued. "As we have said in the past, reducing overall supply to better match demand is an important component in helping return the industry to profitability." The company also said it is continuing to review its production facilities for potential mix changes, closure and consolidation in response to current negative industry fundamentals. Pilgrim's Pride acknowledged that its processing complex in El Dorado, Arkansas, is among those being reviewed for possible closure. But the company emphasized that no decision has been made at this time. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (NYSE: PPC) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. Pilgrim's Pride employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi and Utah. * * * Pilgrim's Pride Corp. holds Moody's Investors Service's B1 senior unsecured credit rating, B2 senior subordinated notes, and Ba3 corporate family ratings. PPC's planned new $250 million senior unsecured notes also bears Moody's B1 rating and its new $200 million senior subordinated notes bears Moody's B2 rating. The outlook on all ratings is stable. Standard & Poor's Ratings Services gave Pilgrim's Pride Corp. a 'BB-' corporate credit rating. PLY GEM: Weak Housing Industry Prompts S&P's Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Ply Gem Industries Inc., including its 'B' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch listing reflects our assessment that as a result of the ongoing weakness in the U.S. housing industry, which we expect will continue for at least the next several quarters, Ply Gem's operating performance will continue to be negatively affected," said Standard & Poor's credit analyst Thomas Nadramia. "As a result, we expect earnings will be pressured during this period, resulting in a material weakening in credit metrics and a heightened risk that Ply Gem may violate its total leverage covenant in its credit facility in the near term." The company's total leverage (as measured per the calculation required in its bank facility) at December 2007 was 5.1x, compared to the maximum permitted under the covenant of 6.75x. This cushion is likely to materially contract in the first half of 2008 given the difficult operating conditions. In addition, this covenant steps down to 6.25x at March 2009. In resolving S&P's CreditWatch listing, S&P will review the company's near-term operating results and financial strategies. In addition, S&P will closely monitor the cushion under Ply Gem's bank covenants and its near- to intermediate-term liquidity situation. PSI CORP: Engages Seligson & Giannattasio as its Auditors --------------------------------------------------------- On March 31, 2008, PSI Corp. engaged Seligson & Giannattasio to become its independent auditor. PSI Corp. terminated the services of Rosenberg, Rich, Baker, Berman & Company as its independent auditor on the same day. PSI Corp. said it had no disagreements with Rosenberg Rich with respect to accounting or auditing issues between July 3, 2007, and March 31, 2008. The decision to change accountants was approved by the Board of Directors of the company. PSI Corp. engaged Rosenberg Rich on July 3, 2007, to audit its financial statements for the two year period ended Oct. 31, 2007. No such audit has been conducted by the accounting firm. About PSI Corp. Based in Linfield, Pa., PSI Corp. (Pink Sheets: PSCP) provides interactive customer communications systems and applications that support the targeted marketing programs at point-of-purchase service and information. The company has two vertical products: full motion video digital signage and full service Cash Express Kiosks/ATM. * * * At July 31, 2006, the company's consolidated balance sheet showed $1,270,779 in total assets and $3,739,471 in total liabilities, resulting in a $2,468,692 total stockholders' deficit. QUEBECOR WORLD: Seeks Approval to Hire KPMG (US) as Tax Advisor --------------------------------------------------------------- Quebecor World Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to employ KPMG LLP (US) as their tax compliance and tax consulting advisors, nunc pro tunc to April 7, 2008. The Debtors selected KPMG US because of the firm's extensive experience in providing tax consultation and restructuring assistance to businesses pursuing reorganization under chapter 11 of the Bankruptcy Code. The firm is also familiar with the Debtors' operations and books and records. KPMG US has been engaged to provide tax consulting services to the Debtors since 1989. Under an engagement letter dated March 20, 2008, the Debtors expect KPMG US to: (a) prepare federal, state and local corporate tax returns and supporting schedules for 2007; (b) calculate tax depreciation for the 2007 tax year; (c) provide tax consulting advice related to matters not otherwise covered by separate engagement letters; (d) perform tax compliance and consulting services as agreed; and (e) provide other services. A 25-page list of services that KMPG US will provide is available for free at http://researcharchives.com/t/s?2a67 KPMG US's hourly rates for the tax compliance services are: Professional (U.S. and Member Firm) Hourly Rate ---------------------- ----------- Partner $400 Associate Partner/Senior Pricipal $363 Tax Managing Director $325 Senior Manager $305 Manager $213 Senior Tax Associate $168 Tax Associate $138 These rates represent a discount of 25% to 50% from KPMG US's customary hourly rates. KPMG US's hourly rates for the tax consulting services are: Professional (U.S. and Member Firm) Hourly Rate ---------------------- ----------- Partner $505 Associate Partner/Senior Pricipal $475 Tax Managing Director $455 Senior Manager $420 Manager $332 Senior Tax Associate $245 Tax Associate $192 Michael Lawler, a partner at KPMG (US), assures Judge Peck that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. A full-text copy of KPMG US's Engagement Letter is available for free at: http://bankrupt.com/misc/Quebecor_KPMGUSEngagementLetter.pdf 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. 12; 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: Seeks Court on KPMG (Canada) as Tax Consultant -------------------------------------------------------------- Quebecor World Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority Pursuant to Sections 327(a) and 328 of the Bankruptcy Code, the Debtors seek the Court's authority to employ KPMG LLP (Canada) as their tax consultants, nunc pro tunc to April 7, 2008. The Debtors say that KPMG Canada has an extensive familiarity with their businesses, and has experience and knowledge in the fields of taxation, accounting, auditing and tax advisory services for large, sophisticated companies. KPMG Canada has been engaged to provide tax consulting services to the Debtors and their non-debtor affiliates for more than 25 years. In an engagement letter dated April 8, 2008, as tax consultants to the Debtors, KPMG Canada is expected to: (a) provide consulting services needed by the Debtors in connection to a United States Internal Revenue Service examination for the 2005, 2006 and 2007 tax years; (b) work with the Debtors to resolve the IRS Examination in an efficient and timely manner and develop a strategy for best handling the IRS Examination; (c) assist the Debtors in their dealings with the IRS examination team, meet with members of the IRS examination team as necessary, and assist the Debtors in preparing submissions in response to inquiries from the IRS; and (d) represent the Debtors in connection with any tax appeals or participation in an alternative dispute resolution program. KPMG Canada's hourly rates are: Professional Hourly Rate ------------ ----------- Partner/Director $520 Senior Principal $470 Senior Manager $395 Manager $213 Tax Associate $162 These hourly rates represent a reduction of between 35% to 50% from KPMG Canada's customary hourly rates. Before the Petition Date, the Debtors retained KPMG Canada to undertake work for them on certain tax filings and activities. Nathalie Bernier, a partner at KPMG LLP (Canada), relates that at the time the Debtors filed for bankruptcy protection, KPMG Canada was owed approximately CN$2,400,000 for services rendered to Quebecor World Inc. and the Debtors' non-debtor affiliates. As a result, KPMG Canada is a creditor of QWI in the Canadian insolvency proceedings. KPMG Canada also performs services unrelated to the Debtors and their Chapter 11 cases for non-debtor QWI affiliates in Europe and Latin America, and is paid in the ordinary course of business for those services. In addition, KPMG Canada incurred approximately CN$600,000 in fees in connection with prepetition services provided to the Debtors and QWI, of which approximately CN$100,000 is owed on account of engagements where one or more of the Debtors were the sole engaging party. Ms. Bernier tells the Court that KPMG Canada has agreed, in connection with the Debtors' retention of KPMG Canada and with the Debtors' retention of KPMG LLP (US), that if KPMG Canada's retention is approved by the Court, KPMG Canada will waive all of its prepetition claims against the Debtors, whether arising under engagements where one or more of the Debtors was the sole engaging party, or under engagements where one or more of the Debtors signed jointly with certain non-debtor affiliates, including particularly with QWI. Where QWI or another non-Debtor affiliate was a party to a signed engagement letter with KPMG Canada (even if that engagement letter was signed jointly by a Debtor), KPMG Canada will seek to collect outstanding amounts solely from those non-Debtor affiliates, including QWI in the Canadian Proceeding, Ms. Bernier says. In connection with engagements related to U.S. tax services, KPMG Canada has in the past sub-contracted with KPMG US to perform a majority of the work for which KPMG Canada was engaged. KPMG Canada directly paid KPMG US for these services and payment was not dependent upon whether the engaging entity(ies) paid KPMG Canada. In connection with services performed by KMPG US for KPMG Canada before the Debtors' bankruptcy cases, KPMG Canada paid KPMG US approximately $30,000 in the 90-day period prior to the Petition Date, and KPMG Canada currently owes KPMG US approximately $380,000 for work performed in connection with these engagements. According to Ms. Bernier, KPMG US has agreed, subject to approval of its and KPMG Canada's retention, not to collect $100,000 of the amount outstanding from KPMG Canada. KPMG Canada received $104,630 from the Debtors during the 90-day period before the Petition Date in the ordinary course of business. KPMG Canada paid KPMG US approximately $30,000 of this amount. Ms. Bernier assures Judge Peck that her firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. A full-text copy of the KMPG Canada's Engagement Letter is available for free at: http://researcharchives.com/t/s?2a68 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. 12; 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: Wants Ernst & Young as Tax Services Provider ------------------------------------------------------------ Quebecor World Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to employ Ernst & Young LLP as their tax services provider, nunc pro tunc to April 7, 2008. According to the Debtors, E&Y LLP has an extensive experience providing tax consultation to businesses pursuing reorganization under chapter 11 of the Bankruptcy Code. Under the terms set forth in an engagement letter dated March 31, 2008, the Debtors are expecting E&Y LLP to provide: 1. Bankruptcy Tax Services, which entails: (a) understanding reorganization and restructuring alternatives the Debtors are evaluating; (b) assisting and advising the Debtors in developing an understanding of the tax implications of their bankruptcy restructuring alternatives and post-bankruptcy operations; (c) assistance with tax issues arising in the ordinary course of business while in bankruptcy; (d) tax advisory services regarding tax aspects of the bankruptcy process; (e) analysis of legal and other professional fees incurred during the bankruptcy period; (f) documentation, as appropriate or necessary, of tax analysis, opinions, recommendations, conclusions and correspondence; (g) advisory services regarding tax analysis and research related to acquisitions and divestitures; (h) advisory services regarding tax analysis and research related to tax-efficient domestic restructurings; and (i) tax forecast model. 2. Entity Structure Services, which includes working with the Debtors' personnel in developing an efficient U.S. Entity structure, taking into account the Debtors' desire for entity rationalization, tax efficiency, and impact on the Debtors' indirect tax obligations. 3. Loan Staff Services, which includes assigning staff to support the activities of the Debtors' employees in completing ministerial and administrative tasks relating to the preparation of the Debtors' quarterly and annual income taxes, the Debtors' U.S. restructuring, and Internal Revenue Service and state and local income tax authority audits. E&Y LLP's hourly rates are: (a) Bankruptcy Tax Services and Entity Structure Services Professional Hourly Rate ------------ ----------- Executive Director/Principal/Partner $750 Senior Manager $650 Manager $550 Senior $420 Staff $200 - $300 (c) Loan Staff Services Professional Hourly Rate ------------ ----------- Manager $250 Senior $150 Staff $120 Pursuant to the Engagement Letter, E&Y LLP may subcontract certain work in connection with the tax services, in particular to Ernst & Young LLP, an Ontario Limited Liability Partnership. E&Y Canada's hourly rates are: (a) Bankruptcy Tax Services and Entity Structure Services Professional Hourly Rate ------------ ----------- Partner CA$600 Executive Director $550 Senior Manager $475 Manager $375 Senior Tax Staff $300 Tax Staff $200 - $275 (b) Loan Staff Services Professional Hourly Rate ------------ ----------- Manager US$250 Senior $150 Staff $120 E&Y LLP also anticipates subcontracting Ernst & Young (India) Private Limited to assist it in calculations relating to the determination of and availability of certain tax attributes. E&Y LLP will seek reimbursement of fees and expenses incurred by E&Y (Canada) and EYPL under a subcontracting engagement. Upon subcontracting E&Y Canada and EYPL, E&Y LLP will remain solely responsible for the services and will be the only party to receive payment from the Debtors. Lawrence Garret, principal of Ernst & Young LLP, assures Judge Peck that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. A full-text copy of the E&Y LLP Engagement Letter is available for free at: http://bankrupt.com/misc/Quebecor_E&YLLPEngagementLetter.pdf 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. 12; 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. RAPTOR NETWORKS: Secures $3 Million Financing from Three Investors ------------------------------------------------------------------ Raptor Networks Technology Inc. signed a private placement transaction with three institutional investors. The terms of the transaction, included the issuance of senior secured convertible notes, warrants, and shares of the company's common stock for aggregate gross proceeds of $3,125,000. The notes and warrants will have a per share conversion and exercise price of $1. "We believe this most recent round funding from our existing institutional investors reflects their continued confidence in Raptor's superior technology, products, and business outlook," Thomas M. Wittenschlaeger, Raptor's chairman and chief executive officer, stated. "We plan to use this funding to advance our business operations to achieve sustainability across multiple sales verticals." Headquartered in Santa Ana, California, Raptor Networks Technology Inc. -- http://raptor-networks.com/-- provides high speed ethernet and network switching for information access. Going Concern Doubt On March 26, 2008, Mendoza Berger & company LLP in Irvine, California, raised substantial doubt the company's ability to continue as a going concern after auditing financial results for year ended Dec. 31, 2007. The auditor pointed out that the company has sustained accumulated losses from operations totaling $70,200,000 at Dec. 31, 2007. SAXON ASSET: Fitch Chips Ratings on $354.9 Million Certificates --------------------------------------------------------------- Fitch Ratings has taken rating actions on three Saxon Asset Securities Trust mortgage pass-through certificate transactions. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $409.8 million and downgrades total $354.9 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2005-1 --$48.7 million class M-1 affirmed at 'AA+' (BL: 77.03, LCR: 4.47); --$42.0 million class M-2 downgraded to 'A' from 'AA' (BL: 32.76, LCR: 1.90); --$15.5 million class M-3 downgraded to 'BBB' from 'AA' (BL: 29.36, LCR: 1.70); --$23.5 million class M-4 downgraded to 'BB' from 'AA-' (BL: 23.52, LCR: 1.36); --$18.5 million class M-5 downgraded to 'B' from 'A' (BL: 19.51, LCR: 1.13); --$14.5 million class M-6 downgraded to 'B' from 'A' (BL: 17.05, LCR: 0.99); --$15.0 million class B-1 downgraded to 'CCC' from 'BBB+' (BL: 15.29, LCR: 0.89); --$11.5 million class B-2 downgraded to 'CCC' from 'BBB' (BL: 14.09, LCR: 0.82); --$9.0 million class B-3 downgraded to 'CCC' from 'BBB-' (BL: 12.96, LCR: 0.75). Deal Summary --Originators: 100% Saxon Funding Management; --60+ day Delinquency: 27.12%; --Realized Losses to date (% of Original Balance): 1.08%; --Expected Remaining Losses (% of Current balance): 17.25%; --Cumulative Expected Losses (% of Original Balance): 4.63%. Series 2005-2 --$11.0 million class A-1A affirmed at 'AAA' (BL: 95.33, LCR: 4.99); --$2.7 million class A-1B affirmed at 'AAA' (BL: 93.65, LCR: 4.90); --$12.1 million class A-2D affirmed at 'AAA' (BL: 93.69, LCR: 4.90); --$53.9 million class M-1 affirmed at 'AA+' (BL: 73.37, LCR: 3.84); --$45.1 million class M-2 affirmed at 'AA' (BL: 54.22, LCR: 2.84); --$15.7 million class M-3 downgraded to 'BBB' from 'AA' (BL: 31.01, LCR: 1.62); --$31.9 million class M-4 downgraded to 'B' from 'A+' (BL: 22.07, LCR: 1.15); --$15.2 million class M-5 downgraded to 'B' from 'A' (BL: 18.94, LCR: 0.99); --$11.3 million class M-6 downgraded to 'CCC' from 'A' (BL: 17.21, LCR: 0.90); --$20.1 million class B-1 downgraded to 'CCC' from 'BBB+' (BL: 15.06, LCR: 0.79); --$9.8 million class B-2 downgraded to 'CC/DR3' from 'BBB' (BL: 14.17, LCR: 0.74); --$9.8 million class B-3 downgraded to 'CC/DR3' from 'BBB-' (BL: 13.24, LCR: 0.69). Deal Summary --Originators: 100% Saxon Funding Management; --60+ day Delinquency: 27.62%; --Realized Losses to date (% of Original Balance): 0.70%; --Expected Remaining Losses (% of Current balance): 19.12%; --Cumulative Expected Losses (% of Original Balance): 5.71%. Series 2005-3 --$69.0 million class A-1A affirmed at 'AAA' (BL: 65.70, LCR: 3.22); --$50.3 million class A-2C affirmed at 'AAA' (BL: 77.37, LCR: 3.79); --$30.7 million class A-2D affirmed at 'AAA' (BL: 63.23, LCR: 3.09); --$34.2 million class M-1 affirmed at 'AA+' (BL: 53.72, LCR: 2.63); --$31.5 million class M-2 affirmed at 'AA' (BL: 44.81, LCR: 2.19); --$20.7 million class M-3 affirmed at 'AA-' (BL: 39.29, LCR: 1.92); --$16.2 million class M-4 downgraded to 'A' from 'A+' (BL: 34.91, LCR: 1.71); --$15.8 million class M-5 downgraded to 'BBB' from 'A' (BL: 30.68, LCR: 1.50); --$13.1 million class M-6 downgraded to 'B' from 'BBB+' (BL: 20.48, LCR: 1.00); --$14.4 million class B-1 downgraded to 'CCC' from 'BBB-' (BL: 17.40, LCR: 0.85); --$9.9 million class B-2 downgraded to 'CCC' from 'BB' (BL: 16.13, LCR: 0.79); --$9.9 million class B-3 downgraded to 'CC/DR3' from 'BB' (BL: 15.08, LCR: 0.74); --$12.6 million class B-4 downgraded to 'CC/DR3' from 'B' (BL: 13.74, LCR: 0.67). Deal Summary --Originators: 100% Saxon Funding Management; --60+ day Delinquency: 26.95%; --Realized Losses to date (% of Original Balance): 0.72%; --Expected Remaining Losses (% of Current balance): 20.43%; --Cumulative Expected Losses (% of Original Balance): 8.65%. 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 2005 with regard to continued poor loan performance and home price weakness. SCOTTISH RE: A.M. Best Downgrades Ratings and Put It Under Review ----------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from B(Fair) and the issuer credit ratings to "bb-" from "bb" of the primary operating insurance subsidiaries of Scottish Re Group Limited. A.M. Best also has downgraded the ICR to "ccc+" from "b-" and the various debt ratings of Scottish Re. All ratings have been placed under review with negative implications. Subsequent to the Feb. 27, 2008 rating downgrades, A.M. Best has noted a heightened lack of clarity with respect to Scottish Re's financial strength position, underpinned by continuing deterioration in the credit markets and the likely further declines in the market value of its investment portfolio and assets in various special purpose vehicles. Scottish Re has twice postponed the filing of its Form 10-K, primarily due to an inability to complete the evaluation of mark-to-market valuations and other temporary impairments in the carrying value of its available for sale securities. The continuing market deterioration in the subprime mortgage loan market will result in additional delinquencies and losses and there remains uncertainty surrounding the ultimate impact of investment write-downs on Scottish Re, its subsidiaries and SPVs such as Ballantyne Re plc (Ballantyne). The rating downgrades also reflect A.M. Best's concerns with the ongoing pricing, volatility, valuation and default risk in the mortgage-backed securities market, which could result in an additional negative impact on the company's consolidated balance sheet. A.M. Best notes that Scottish Re remains heavily dependent upon off-shore securitizations for its XXX reserves. Scottish Re recently announced a binding letter of intent with ING North American Insurance Holdings Inc. and its affiliates in which a pro-rata portion of business ceded to Ballantyne, an orphan offshore SPV, would be recaptured. The transaction would allow Scottish Re (U.S.) Inc. to continue to receive full NAIC reserve credit for reinsurance for the business currently ceded to Ballantyne. Erosion in the value of the large position in subprime and Alt-A loans held by Ballantyne would further deplete the capital held within this structure. If any further deficiency were to develop, A.M. Best believes that absent the completion of the ING transaction, Scottish Re's operating subsidiaries would be required to pledge additional assets to secure reserve credit outside of the securitization structure. The company also recently expanded the scope of its strategic evaluation to include the sale of its core North American reinsurance business. A.M. Best views this as a departure from Scottish Re's previously announced plans to pursue the disposition of non-core business lines such as its international operations. The ratings will remain under review while A.M. Best monitors the performance of the company's subprime and Alt-A mortgage-backed portfolios and assesses the impact of the ING transaction and the revised strategy on Scottish Re's balance sheet. The FSR has been downgraded to B-(Fair) from B(Fair) and the ICRs to "bb-" from "bb" for these primary operating subsidiaries of Scottish Re Group Limited: -- Scottish Annuity & Life Insurance Company (Cayman) Ltd. -- Scottish Re (U.S.), Inc. -- Scottish Re Life Corporation -- Scottish Re Limited -- Orkney Re, Inc. The ICR has been downgraded to "ccc+" from "b-" for Scottish Re Group Limited. These debt ratings have been downgraded: Scottish Re Group Limited -- -- to "ccc-" from "ccc" on $125 million non-cumulative preferred shares Stingray Pass-Though Trust -- -- to "bb-" from "bb" on $325 million 5.902% senior secured pass-through certificates, due 2012 These indicative ratings have been downgraded: Scottish Re Group Limited -- -- to "ccc+" from "b-"on senior unsecured debt -- to "ccc" from "ccc+" on subordinated debt -- to "ccc-" from "ccc" on preferred stock -- Scottish Holdings Statutory Trust II and III -- -- to "ccc" from "ccc+" on preferred securities SKYBUS AIRLINES: Seeks Approval of Air Canada Settlement -------------------------------------------------------- Skybus Airlines Inc. asks the Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware to approve a settlement agreement dated April 6, 2008 -- including the rejection of two aircraft sub-lease agreements dated Oct. 5, 2007 -- between the Debtor and Air Canada. Pursuant to court documents, the settlement agreement enables the Debtor to eliminate approximately $10 million of claims by Air Canada. As part of the agreement, the Debtor will return the two Airbus A319-100 aircraft that it rented from Air Canada right after the lease agreements expire. However, the Debtor say that the aircraft are presently not in the required "return condition" and it would have to spend about $400,000 to fix both aircraft. In addition to the deal, Air Canada may retain the security deposits in full, all maintenance reserves received under the terms of the parties' sub-lease agreement and prepetition unsecured claims. The Debtor says it has an urgent need to obtain court approval of the settlement by April 30, 2008. A hearing is set on April 28, 2008, to consider the Debtor's request. Objections, if any, are due April 25, 2008. A full-text copy of Skybus and Air Canada's Settlement Agreement is available for free at http://ResearchArchives.com/t/s?2a7f About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc., -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed assets between $100 million and $500 million and debts between $10 million and $100 million. SOLUTIA INC: Has 60,766,560 Outstanding Shares as of February 29 ---------------------------------------------------------------- As of Feb. 29, 2008, Solutia Inc. had 60,766,560 shares of common stock outstanding, according to Rosemary L. Klein, Solutia's senior vice president, general counsel and secretary, in a regulatory filing with the U.S. Securities and Exchange Commission. In addition, Solutia has warrants and options to purchase the outstanding common stock. A more detailed description of Solutia's capitalization as of February 29 is available for free at: http://bankrupt.com/misc/Feb29summary.pdf or through the company's Web site at: http://investor.solutia.com/phoenix.zhtml?c=88803&p=irol-IRhome Ms. Klein notes that some third-party financial information Web sites appear to be reporting or basing their calculation of Solutia's capitalization on approximately 104,000,000 shares of common stock outstanding, which as of February 29, is incorrect. 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. Solutia emerged from chapter 11 protection Feb. 28, 2008. (Solutia Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services raised its corporate credit rating on Solutia Inc. to 'B+' from 'D', following the company's emergence from bankruptcy on Feb. 28, 2008, and the implementation of its financing plan. The outlook is stable. S&P also affirmed its 'B+' rating and '3' recovery rating on Solutia's proposed senior secured term loan. In addition, S&P assigned its 'B-' rating to Solutia's $400 million unsecured bridge loan facility. S&P also withdrew its 'B-' rating on the proposed $400 million unsecured notes, which have been replaced by the bridge facility in Solutia's capital structure. SOLUTIA INC: Settlement Pact with Solvay Gets Court Approval ------------------------------------------------------------ Solutia Inc., and Solvay Advanced Polymers LLC, are parties to a certain purchase agreement, dated Sept. 1, 2002, as amended, pursuant to which Solvay purchased adipic acid and hexamethylenediamine from Solutia. Solutia relates that the Purchase Agreement, and its amendments, is still in full force and effect with respect to the purchase of adipic acid. On Jan. 1, 2007, Solutia and Solvay entered into a new purchase agreement for the purchase of HMDA only. Solvay owes $65,399 under the HMDA Agreement. The exhibits attached to the Debtors' Fifth Amended Joint Plan of Reorganization listed the Purchase Agreement as part of the executory contracts to be assumed. The Plan also provided that entry of an order confirming the Plan would constitute approval of the assumption of the Purchase Agreement, except as to any unresolved cure objections. The Plan was confirmed Nov. 29, 2007. Settlement Agreement Approved by Court On Nov. 9, 2007, Solutia sent Solvay a notice to assume the Purchase Agreement with a proposed cure amount of $0. Solvay objected and asserted a postpetition cure amount of $335,718. Solutia and Solvay have engaged in good-faith, arm's-length negotiations in an attempt to resolve the dispute. Judge Beatty has approved the parties' stipulation, which provides that: * The cure amount due under the Purchase Agreement is $335,718; * Solvay and Solutia will amend the Purchase Agreement; * Solvay owes $65,399 to Solutia. That amount will be set off the Cure Amount owed by Solutia, leaving a net balance of $270,319 owed by Solutia to Solvay; * Upon payment of the Net Cure Amount, the parties will exchange releases of claims in connection with th assumption of the Purchase Agreement; and * Upon payment of the Net Cure Claim, Solutia will have been (i) deemed to satisfy all claims that may have been asserted by Solvay, and (ii) paid by Solvay in full for any amounts due under the HMDA Agreement for the period Jan. 1, 2007, through Dec. 1, 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. Solutia emerged from chapter 11 protection Feb. 28, 2008. (Solutia Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services raised its corporate credit rating on Solutia Inc. to 'B+' from 'D', following the company's emergence from bankruptcy on Feb. 28, 2008, and the implementation of its financing plan. The outlook is stable. S&P also affirmed its 'B+' rating and '3' recovery rating on Solutia's proposed senior secured term loan. In addition, S&P assigned its 'B-' rating to Solutia's $400 million unsecured bridge loan facility. S&P also withdrew its 'B-' rating on the proposed $400 million unsecured notes, which have been replaced by the bridge facility in Solutia's capital structure. SOLUTIA INC: Harbinger Entities Disclose 30.1% Equity Stake ----------------------------------------------------------- These parties disclosed in a joint Form 4 filing with the U.S. Securities and Exchange Commission their ownership of Reorganized Solutia Inc. securities: * Harbinger Capital Partners Master Fund I, Ltd. -- Master Fund; * Harbinger Capital Partners Offshore Manager, L.L.C. -- Harbinger Management -- the investment manager of the Master Fund; * HMC Investors, L.L.C., Harbinger Management's managing member -- HMC Investors; * Harbert Management Corporation -- HMC -- the managing member of HMC Investors and the parent of HMCNY; * Philip Falcone, a shareholder of HMC and the portfolio manager of the Master Fund and Harbinger Capital Partners Special Situations Fund, L.P. -- Special Fund; * Raymond J. Harbert , a shareholder of HMC; and * Michael D. Luce, a shareholder of HMC The non-derivative securities owned: Securities Securities Acquired / Disposed Price Owned Ownership ------------------- ----- ---------- --------- March 25, 2008 filing: 256,400 $12.50 12,095,457 direct 0 0 12,095,457 indirect 25,000 11.90 12,120,457 direct 0 0 12,120,457 indirect 160,402 13.62 12,280,859 direct 0 0 12,280,859 indirect - - 6,026,461 indirect March 26, 2008 filing: 45,000 14.30 12,325,859 direct 0 0 12,325,859 indirect 210,800 14.33 12,536,659 direct 0 0 12,536,659 indirect - - 6,026,461 indirect The securities, except for the 6,026,461 shares, are indirectly owned by Master Fund. These securities may be deemed to be beneficially owned by Harbinger Management, HMC Investors, HMC, and Messrs. Falcone, Harbert, and Luce. Special Fund indirectly owned 6,026,461 shares. These securities may be deemed to be beneficially owned by Harbinger Capital Partners Special Situations GP, LLC -- HCPSS; HMC-New York, Inc. -- HMCNY; HMC; and Messrs. Falcone, Harbert and Luce. HCPSS is the general partner of the Special Situations Fund. HMCNY is the managing member of HCPSS. HMC wholly owns HMCNY. * * * In their joint first amendment to Schedule 13D filed with SEC, as of March 28, 2008, the reporting parties may be deemed to beneficially own these shares: Entity/Person Shares Owned % Ownership ------------- ------------ ----------- Master Fund 12,729,751 21.20% Harbinger Management 12,729,751 21.20% HMC Investors 12,729,751 21.20% Special Fund 6,026,461 10.10% HCPSS 6,026,461 10.10% HMCNY 6,026,461 10.105 HMC 18,756,212 31.30% Mr. Falcone 18,756,212 31.30% Mr. Harbert 18,756,212 31.30% Mr. Luce 18,756,212 31.30% According to Mr. William R. Lucas, Jr., on behalf the entities, no borrowed funds were used to purchase the Shares, other than any borrowed funds for working capital purposes in the ordinary course of business. He adds that the number of outstanding shares is based on the 59,750,000 shares Solutia reported outstanding as of Nov. 2, 2007, adjusted for warrants held by the Reporting Persons. Mr. Lucas says that there is no material change from the Schedule 13D filed on March 11, 2008. 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. Solutia emerged from chapter 11 protection Feb. 28, 2008. (Solutia Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services raised its corporate credit rating on Solutia Inc. to 'B+' from 'D', following the company's emergence from bankruptcy on Feb. 28, 2008, and the implementation of its financing plan. The outlook is stable. S&P also affirmed its 'B+' rating and '3' recovery rating on Solutia's proposed senior secured term loan. In addition, S&P assigned its 'B-' rating to Solutia's $400 million unsecured bridge loan facility. S&P also withdrew its 'B-' rating on the proposed $400 million unsecured notes, which have been replaced by the bridge facility in Solutia's capital structure. SPANSION INC.: Inks Patent Cross-License Agreement with IBM ----------------------------------------------------------- On April 7, 2008, Spansion LLC, a wholly owned subsidiary of Spansion Inc., entered into a patent cross-license agreement with International Business Machines Corp. Under the agreement, Spansion Inc. issued 1,607,717 shares of Spansion Class A common stock, par value $0.001 per share to IBM on April 7, 2008, and will make two additional five million dollar payments to IBM, either in cash or Spansion common stock equivalent to the cash amount at the time of payment, before March 25, 2010. All of the shares of the Spansion LLC's common stock issued to IBM in the transaction were issued in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended. About Spansion Inc. Headquartered in Sunnyvale, California, Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- designs, develops, manufactures, markets and sells flash memory solutions for wireless, automotive, networking and consumer electronics applications. At Dec. 30, 2007, the company's consolidated balance sheet showed $3.81 billion in total assets, $2.18 billion in total liabilities, and $1.63 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on Feb. 28, 2008, Fitch Ratings affirmed Spansion Inc.'s issuer default rating at 'B-' while downgrading these issue-level ratings due to lower recovery prospects: (i) $175 million senior secured revolving credit facility due 2010 to 'B/RR3' from 'B+/RR2'; (ii) $625 million senior secured floating rating notes due 2013 to 'B/RR3' from 'B+/RR2'; (iii) $225 million of 11.25% senior unsecured notes due 2016 to 'CCC/RR6' from 'CCC+/RR5'; and (iv) $207 million of 2.25% convertible senior subordinated debentures due 2016 to 'CCC-/RR6' from 'CCC/RR6'. The rating outlook remains negative. Approximately $1.2 billion of debt is affected. SPECIALTY UNDERWRITING: Fitch Cuts Ratings on Five Cert. Classes ---------------------------------------------------------------- Fitch Ratings has rating actions on one Specialty Underwriting and Residential Finance Trust mortgage pass-through certificate transaction. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $64.8 million and downgrades total $21.6 million. Break Loss percentages and Loss Coverage Ratios for each class are included with the rating actions as: Series 2005-AB1 -- $23.6 million class A1-B affirmed at 'AAA' (BL: 80.58, LCR: 5.44); -- $22.3 million class A1-C affirmed at 'AAA' (BL: 55.52, LCR: 3.75); -- $7.8 million class M-1 affirmed at 'AA+' (BL: 45.87, LCR: 3.09); -- $11.1 million class M-2 affirmed at 'AA' (BL: 32.59, LCR: 2.20); -- $6.8 million class M-3 downgraded to 'BBB' from 'A' (BL: 24.38, LCR: 1.64); -- $4.1 million class M-4 downgraded to 'BB' from 'A-' (BL: 19.39, LCR: 1.31); -- $4.7 million class B-1 downgraded to 'CCC' from 'BBB+' (BL: 13.35, LCR: 0.90); -- $3.4 million class B-2 downgraded to 'CC/DR5' from 'BBB-' (BL: 8.90, LCR: 0.60); -- $2.7 million class B-3 downgraded to 'C/DR6' from 'BB' (BL: 7.08, LCR: 0.48). Deal Summary -- Originators: MILA, Inc. (45.60%), Wilmington Finance (28.59%); -- 60+ day Delinquency: 23.72%; -- Realized Losses to date (% of Original Balance): 1.48%; -- Expected Remaining Losses (% of Current Balance): 14.82%; -- Cumulative Expected Losses (% of Original Balance): 6.22%. 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 2005 with regard to continued poor loan performance and home price weakness. STURGIS IRON: Court OKs Getzler Henrich as Financial Advisors ------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Michigan approve the application of Sturgis Iron & Metal Co., Inc., to employ Getzler Henrich & Associates, LLC as its financial advisors, nunc pro tunc to the petition date. The Debtor needs Getzler Henrich's services to enable the company to execute faithfully its duties as debtor-in-possession and to develop, propose and consummate a chapter 11 plan. The Debtor will pay the firm for its legal services in accordance with customary hourly rates.: Principal/Managing Director $395-$525 Director/Specialist $335-$485 Associate/Paraprofessional $150-$335 William H. Henrich, the Vice Chairman of Getzler Henrich & Associates, LLC, attests that his firm represents no other interests adverse to the Debtor, and that the firm is a "disinterested person", as defined in Section 101 (14) of the Bankruptcy Code. The firm can be reached at: Getzler Henrich & Associates, LLC (ghny@getzlerhenrich.com) 295 Madison Avenue New York, NY 10017 Tel: (212) 697-2400 Fax: (212) 697-4812 http://www.getzlerhenrich.com/ Based in Sturgis, Michigan, Sturgis Iron & Metal Co., Inc. sells ferrous metal scrap & waste in wholesale. It also manufactures secondary nonferrous metals, and provides pre-finishing iron or steel processes services, finishing metal processing services, and smelting metal services. The company filed for chapter 11 protection on Apr. 4, 2008 (Bankr. W.D. Mich. Case No. 08-02966). Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Paige Barr, Esq., Paul R. Hage, Esq. and Richard E. Kruger, Esq., at Jaffe Raitt Heuer & Weiss, P.C. represent the Debtor in its restructuring efforts. At the time of filing, the Debtor listed estimated assets and debts both between $100 million and $500 million. STURGIS IRON: Court Approves Dresser Hiring as Special Counsel -------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Michigan approve the application of Sturgis Iron & Metal Co., Inc., to employ Dresser, Dresser, Haas & Caywood, P.C. as its special counsel, nunc pro tunc to the petition date. The Debtor needs Dresser's services to enable the company to execute faithfully its duties as debtor-in-possession and to develop, propose and consummate a chapter 11 plan. The Debtor will pay the firm for its legal services in accordance with customary hourly rates. John R. Dresser, Esq., a partner at Dresser, attests that his firm represents no other interests adverse to the Debtor, and that the firm is a "disinterested person", as defined in Section 101 (14) of the Bankruptcy Code. The firm can be reached at: John R. Dresser, Esq. (jdresser@dresserlaw.com) 112 South Monroe Street Sturgis, MI 49091 Tel: (269) 651-3281 Fax: (269) 651-3261 http://www.dresserlaw.com/ Based in Sturgis, Michigan, Sturgis Iron & Metal Co., Inc. sells ferrous metal scrap & waste in wholesale. It also manufactures secondary nonferrous metals, and provides pre-finishing iron or steel processes services, finishing metal processing services, and smelting metal services. The company filed for chapter 11 protection on Apr. 4, 2008 (Bankr. W.D. Mich. Case No. 08-02966). Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Paige Barr, Esq., Paul R. Hage, Esq. and Richard E. Kruger, Esq., at Jaffe Raitt Heuer & Weiss, P.C. represent the Debtor in its restructuring efforts. At the time of filing, the Debtor listed estimated assets and debts both between $100 million and $500 million. TAHERA DIAMOND: Last Day of Filing Bids for Assets is April 28 -------------------------------------------------------------- Tahera Diamond Corporation initiated a marketing process of the assets of the company as approved by the Ontario Superior Court of Justice. Interested parties must submit written expressions of interest by no later than April 28, 2008. Blair Franklin Capital Partners has been retained to manage and provide guidance during the marketing process. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. The Court extended until June 30, 2008, the stay it granted to Tahera under the Companies' Creditors Arrangement Act. TAHERA DIAMOND: Wants MCTO Imposed; Gives Operational Update ------------------------------------------------------------ Tahera Diamond Corporation intends to satisfy alternative information guidelines recommended by Ontario Securities Commission Policy 57-603 and Canadian Securities Administrators Staff Notice 57-301. The company requested from the OSC, that a management cease trade order related to the company's securities be imposed against some or all persons who have been directors, officers or insiders of the company since Sept. 30, 2007. After consideration of Tahera's request, the OSC indicated it would not issue a MCTO at this point in time. The OSC requested that Tahera provide bi-weekly up-dates by way of news release, in accordance with the alterative information guidelines under Policy 57-603 and Staff Notice 57-301. This report constitutes the first bi-weekly up-date of the company under the alternative information guidelines. Operational Update The total number of dry tonnes processed during the fourth quarter of 2007 was 155,000 tonnes at an average grade of 0.79 carats per tonne, resulting in carat production of 122,500 carats compared with 127,500 tonnes at an average grade of 0.78 carats per tonne for carat production of 99,300 carats for the third quarter of 2007. The value of production for the fourth quarter of 2007, based on values of the Government Diamond Valuators, was $11.6 million, compared with $8.4 million in the third quarter of 2007. The cash operating cost related to the production of these goods was CA$18.3 million for the fourth quarter of 2007 compared with CA$17.9 million for the third quarter. These costs include all mining, processing and related overhead charges for the quarter. Certain of the cash items consumed during these periods were purchased and paid for in a prior period. The company has held two valuations for goods produced in 2008. Production from Jan. 1, 2008, to Feb. 5, 2008, yielded 45,026 carats at an average value of $95.32 per carat for a total value of $4.3 million. Production from Feb. 6, 2008, to March 12, 2008 included two parcels of goods. Normal run of mine production totalled 31,271 carats at an average value of $106.96 per carat and a batch test of the F1N lobe yielded 2,768 carats at an average value of $87.80 per carat. The combined total for the two parcels from the March valuation was 34,039 carats at an average value of $105.40 per carat for total value of $3.6 million. Mining was suspended at the Jericho mine on Feb. 6, 2008, to conserve cash and fuel inventory while restructuring efforts continued. Processing of ore is now expected to continue until the end of the third week of April 2008. Mining contractors have now demobilized their equipment, supplies, and personnel. The company has purchased certain items required for the Care & Maintenance period, which is expected to begin shortly after production is completed as the mine site assets are properly prepared for a period of inactivity. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. The Court extended until June 30, 2008, the stay it granted to Tahera under the Companies' Creditors Arrangement Act. TEKNI-PLEX INC: Inks Restructuring Pact with Key Stakeholders ------------------------------------------------------------- Tekni-Plex Inc. entered into a restructuring agreement with: (i) entities that have represented that they hold more than 91% of the company's 12.75% Senior Subordinated Notes Due 2010 and more than 67% of the company's 8.75% Senior Secured Notes due 2013, (ii) holders of a majority of the company's preferred stock, (iii) holders of 100% of its common stock, and (iv) Dr. F. Patrick Smith, Chairman, Chief Executive Officer and President of Tekni-Plex. The agreement memorializes the restructuring terms that were agreed to in principle by certain stakeholders on March 27, 2008. The restructuring agreement obligates each party to take actions reasonably necessary to negotiate, document and consummate the restructuring on the agreed-upon terms and conditions, which include: -- general unsecured creditors of Tekni-Plex, including trade creditors, will be unaffected by the restructuring, and the company intends to honor its obligations to those creditors in the ordinary course of business, -- the company will continue to honor its obligations under its $110 million credit facility, its 10.875% Senior Secured Notes due 2012 and its Second Lien Notes, -- the company's existing common stock will be cancelled, redeemed or purchased, and each holder will receive its pro rata share of a cash distribution of $250,000, -- the company's preferred stock will be exchanged or redeemed for three tranches of warrants to purchase 12.5% of the company at various exercise prices, -- holders of at least 95% of the Subordinated Notes will exchange their notes for 100% of the common stock of Tekni-Plex, subject to dilution by a management incentive plan and the exercise of the warrants, -- the obligations of the parties to consummate the restructuring is subject to certain conditions, such as: (a) obtaining consent to the restructuring from holders of not less than (i) 99.5% of the preferred stock, (ii) 100% of the common stock, (iii) 85% of the indirect interests in the common stock (based on unit holdings of the limited liability companies that hold the common stock) and (iv) 95% of the Subordinated Notes, (b) definitive documentation must be reasonably satisfactory to the parties, and (c) consummation of the restructuring must occur on or before May 13, 2008. Tekni-Plex intends to implement the restructuring by May 13, 2008, at which point, if the transactions are satisfactory to each of the lenders under the company's revolving credit facility, the maximum availability under the credit facility will be increased from $95 million to $110 million. There can be no assurance that the parties will be able to consummate the restructuring as contemplated by their agreement. Dr. F. Patrick Smith said: "The execution of this agreement represents a significant step towards the consummation of the company's restructuring, which will significantly deleverage our balance sheet and put the company in a strong financial position to operate and grow its businesses, many of which are leaders in the markets they serve. I once again applaud the efforts of those stakeholders who have demonstrated confidence in Tekni-Plex and have continued to work tirelessly towards the consummation of the restructuring. We fully intend to continue to meet our obligations to our customers and suppliers, and we appreciate their ongoing support." The restructuring will constitute a "Change in Control" under the Indenture governing the company's 10.875% Senor Secured Notes due 2012, which will require that the company make, after consummation of the restructuring, an offer to repurchase the First Lien Notes at a price of 101% plus accrued interest. The restructuring agreement provides that if the restructuring is consummated, certain holders of Subordinated Notes will provide a take-out facility or tender process to replace, redeem or repurchase, as necessary, First Lien Notes that are tendered in connection with the occurrence of the Change in Control. The restructuring will not constitute a Change of Control under the Indenture governing the Second Lien Notes or the Indenture governing the Subordinated Notes as a result of amendments and waivers (as described in the company's Form 8-K filed on Feb. 21, 2008). Agreement in Principle with Noteholders As reported in the Troubled Company Reporter on April 3, 2008, Tekni-Plex Inc. reached an agreement in principle among the holders of a majority of its 12.75% Senior Subordinated Notes Due 2010 and the holders of a majority of its preferred stock regarding the terms of a consensual out-of-court restructuring transaction, according to the company's regulatory filing with the Securities and Exchange Commission. The company also has entered into an extension, through May 13, 2008, of its Forbearance Agreement, dated as of Jan. 16, 2008, with entities that purportedly hold more than 91% of the Subordinated Notes and more than 64% of its 8.75% Senior Secured Notes due 2013. About Tekni-Plex Headquartered in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni-plex.com/-- manufactures packaging, packaging products and materials as well as tubing products. The company primarily serves the food, healthcare and consumer markets. It has built leadership positions in its core markets, and focuses on vertically integrated production of highly specialized products. Tekni-Plex has operations in the United States, Europe, China, Argentina and Canada. As reported in the Troubled Company Reporter on Feb. 22, 2008, Tekni-Plex Inc.'s consolidated balance sheet at Dec. 28, 2007, showed $605.7 million in total assets and $1.01 billion in total liabilities, resulting in a $403.4 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Ratings of Tekni-Plex Inc. to Caa3 from Caa1. TIENDAS DONATO: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Tiendas Donato, Inc. P.O. BOX 13346 San Juan, PR 00908 Bankruptcy Case No.: 08-02127 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Donato Fernandez, Inc. 08-02130 D. Fernandez e Hijos, Inc. 08-02137 Donato's Management Corp. 08-02139 Tiendas Donato Ponce, Inc. 08-02140 Chapter 11 Petition Date: April 8, 2008 Court: District of Puerto Rico (Old San Juan) Debtors' Counsel: Charles Alfred Cuprill, Esq. (cacuprill@aol.com) 356 Calle Fortaleza, Second Floor San Juan, PR 00901 Tel: (787) 977-0515 Tiendas Donato, Inc's Financial Condition: Total Assets: $0 Total Debts: $3,204,046 A. Tiendas Donato, Inc's Ten Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Puerto Rico loan $3,062,908 P.O. Box 191080 San Juan, PR 0919-1080 Plaza las Americas Rent Plaza Las $54,733 P.O. Box 363268 Americas Store San Juan, PR 00936-3268 FOM Puerto Rico/Ron Simking Be rent for Beltz Outlet $34,381 Ron Simkin Belz Enterprises store P.O. Box 3361 Memphis, TN 38173-0661 Centro Gran Caribe rent Bahia Tropical $23,579 (vega alta) DDR Rexville, LLC rent Rexville Plaza $18,182 store TSCPR Family rent manati store $9,342 Martin, Odell & Calabria legal services $444 Xtra Cool Air Conditioning maintenance servicee $295 ANtilles Electronics supplies $106 Tony Iron Work repairs and $75 maintenance B. Donato Fernandez, Inc's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Puerto Rico loan $3,062,908 P.O. Box 191080 San Juan, PR 0919-1080 Royal Finance, Inc. insurance policies $86,714 P.O. Box 9718 San Juan, PR 00908 Xtra Cool Air Conditioning air conditioning $109 P.M.B. 212 service & maintenance P.O. Box 11850 San Juan, PR 00920 C. D. Fernandez e Hijos, Inc's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Puerto Rico loan $2,514,914 P.O. Box 191080 San Juan, PR 0919-1080 Donato Fernandez Fernandez rent $700 P.O. Box 13346 San Juan, PR 00908 Xtra Cool Air Conditioning air conditioning $167 P.M.B. 212 service & maintenance P.O. Box 11850 San Juan, PR 00920 D. Donato's Management Corp's 12 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Puerto Rico loan $2,514,914 P.O. Box 191080 San Juan, PR 0919-1080 Jet Printing supplies $2,891 P.O. Box 14155 San Juan, PR 00916 Wise Systems supplies $2,422 P.O. Box 191793 San Juan, PR 00919 Mr. Diesel truck repairs $1,968 American Ribbons supplies $724 Taller Guerra truct repairs $323 Offic Discount office supplies $80 Nelson Benitez exterminating $80 services Business Computers computer maintenance $75 services ATT Wireless mobile phone $53 equipment ANTilles Electronics electrical $48 maintenance & repairs CC Reciclaje del Norte recycling services $30 E. Tiendas Donato Ponce, Inc's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Banco Santander Puerto Rico loan $2,514,914 P.O. Box 191080 San Juan, PR 0919-1080 Glorialma Realty Corp. rent Ponce store $35,000 ULTRAPETROL LTD: Moody's Holds 'B2' CF Rating on $180 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service has affirmed the B2 corporate family rating and the B2 rating on the $180 million 9% guaranteed first mortgage notes due 2014 of Ultrapetrol (Bahamas) Limited. The outlook remains stable. The affirmation reflects the likelihood of strong earnings and operational cash flow growth over the next 18 months against a large capital spending program underway, an adequate liquidity profile, and the company's recently announced $50 million share repurchase program. Moody's anticipates that Ultrapetrol's use of forward freight agreement derivative contracts in the company's Ocean segment will materially boost day rates earned on three of the company's chartered oil-bulk-ore vessels above the 2007 levels, which will help boost overall earnings. The higher earnings will be required to supplement Ultrapetrol's December 2007 unrestricted cash balance of $64 million as the company plans capital spending of $250 million over 2008-2009, with $111 million of that 2008-2009 spending committed, in addition to the share repurchase program. The stable outlook reflects Moody's view that day rates on the company's Ocean time charter business will remain strong into 2009 while margins in the company's other segments will not deteriorate and debt financing, to help meet vessel payments, will soon be forthcoming. The stable outlook contemplates that the company's liquidity profile will remain adequate over 2008-2009 despite the capital spending program and share repurchase plans. Since the company possesses only a $10 million committed revolving credit facility in addition to the $64 million unrestricted cash to supplement internal cash flow generation, without new committed borrowings near term, the liquidity profile would weaken in coming months, pressuring the ratings or outlook. Ultrapetrol (Bahamas) Limited, Bahamian corporation headquartered in Nassau, Bahamas, is a diverse international marine transportation company. The company operates in four segments: River, Ocean, Offshore Platform Supply and Passenger and had 2007 revenues of $221.7 million. VIDEOTRON LTD: Prices $455 Mil. Notes Offering; Amends Facility --------------------------------------------------------------- Videotron Ltd. disclosed the pricing of its offering of $455 million aggregate principal amount of senior notes. The new senior notes will be sold at a price of 98.432% of par, will carry a coupon of 9% and will mature on April 15, 2018. Videotron intends to use the proceeds of this offering to repay drawings under its senior secured credit facility and for general corporate purposes. Videotron also entered into amendments to its senior secured credit facility pursuant to which commitments under the senior secured credit facility have been increased to $575.0 million and the maturity of the facility has been extended to April 2012. Pursuant to these amendments, Videotron will, subject to certain conditions, also be able to increase the commitments under the senior secured credit facility by an additional $75.0 million, for aggregate commitments of $650.0 million. About Videotron Headquaretred in Montreal,Quebec, Quebecor Media -- http://www.quebecor.com-- is the media arm of Montreal-based holding company Quebecor Inc. Its core Videotron cable division is the largest cable operator in the province of Quebec and among the leading providers in Canada. Videotron serves pay television to more than 2 million homes and offers other services including Internet access and computer telephony. Through Sun Media, Quebecor Media also operates eight metropolitan newspapers, over 12 million combined weekly circulation, including Le Journal de Quebec and The Toronto Sun. The company also broadcasts French- language television programs; publishes books and magazines; and provides IT and Web consulting services. * * * As reported in the Troubled Company Reporter on Apr. 11, 2008, Moody's Investors Service rated Videotron Ltee's $350 million senior unsecured note issue Ba2. Videotron is a wholly-owned subsidiary of Quebecor Media Inc., a diversified media company whose corporate family rating is Ba3. As part of the rating action, QMI's CFR was affirmed along with the prevailing stable outlook. In addition, a speculative grade liquidity rating of SGL-3, indicating adequate liquidity, was assigned. WACHOVIA CORP: Selling $7 Billion Common, Preferred Stocks ---------------------------------------------------------- Wachovia Corp. commenced concurrent offerings of common stock and Non-Cumulative Perpetual Convertible Class A preferred stock, Series L, with a liquidation preference of $1,000 per share, for an aggregate of $7 billion. The completion of either offering is not conditioned on the success of the other. Wachovia Corporation also expects to grant the underwriters for the offerings an over- allotment option to purchase additional shares of the common stock and an over-allotment option to purchase additional shares of the convertible preferred stock. The offerings are being conducted as public offerings registered under the Securities Act of 1933, as amended. "We are taking appropriate and prudent actions to further enhance our capital position in response to unprecedented economic conditions," said Ken Thompson, Wachovia's chairman and chief executive officer. "These actions will significantly increase our capital ratios, and enhance our ongoing financial flexibility. We're extremely pleased with the strong expressions of interest we've already received regarding these issuances, which demonstrate the confidence of investors in our fundamental strengths and long-term outlook." The convertible preferred stock will be convertible into shares of Wachovia Corporation's common stock, plus cash in lieu of fractional shares. The non-cumulative dividend rate, conversion rate and other terms will be determined by negotiations between Wachovia Corporation and the underwriters of the convertible preferred stock offering. An application will be made to list the convertible preferred stock on the New York Stock Exchange under the symbol "WBPrL." Pricing of Common and Convertible Preferred Stock On the same day that it announced the concurrent offerings of $3.5 billion or 145,833,334 shares of common stock and $3.5 billion or 3,500,000 shares of Non-Cumulative Perpetual Convertible Class A preferred stock, Series L, Wachovia announced the pricing of the offerings. Wachovia Corporation has also granted the underwriters for the offerings an over-allotment option to purchase up to 21,875,000 additional shares of the common stock and an over-allotment option to purchase up to 525,000 additional shares of the convertible preferred stock. The offerings are being conducted as public offerings registered under the Securities Act of 1933, as amended. The common stock offering was priced at $24.00 per share. Wachovia Corporation estimates that the net proceeds from the common stock offering will be approximately $3.4 billion, after deducting underwriting commissions (or approximately $3.9 billion, if the underwriters exercise their over-allotment option to purchase additional shares of common stock in full). The convertible preferred stock will pay, only if, as and when declared by Wachovia Corporation's board of directors, cash dividends on each March 15, June 15, September 15 and December 15, beginning on June 15, 2008, at a rate per annum equal to 7.50%, payable quarterly in arrears on a non-cumulative basis. Each share of convertible preferred stock will be convertible at any time, at the holder's option, into 32.0513 shares of Wachovia Corporation's common stock, plus cash in lieu of fractional shares (equivalent to an initial conversion price of approximately $31.20 per share of Wachovia Corporation's common stock). The conversion rate will be subject to customary anti-dilution adjustments and will also be adjusted upon the occurrence of certain other events. In addition, on or after March 15, 2013, Wachovia Corporation may cause some or all of the convertible preferred stock to convert provided that Wachovia Corporation's common stock has a closing sale price exceeding 130% of the applicable conversion price for 20 trading days within any period of 30 consecutive trading days. Wachovia Corporation estimates that the net proceeds from the convertible preferred stock offering will be approximately $3.4 billion, after deducting underwriting commissions (or approximately $3.9 billion, if the underwriters exercise their over-allotment option to purchase additional shares of convertible preferred stock in full). "We're gratified by the significant oversubscription led by strong support from our existing investors for the equity capital offerings that Wachovia issued today," said Mr. Thompson. "This issuance was a prudent response to unprecedented economic conditions, and will sharply increase our capital ratios. With fortified capital and our strong deposit base, we believe we're well-positioned to continue to successfully weather this uniquely challenging period." Wachovia Corporation intends to use the net proceeds from the sale of the common stock and the convertible preferred stock for general corporate purposes. Wachovia Securities is serving as global coordinator and joint bookrunning manager and Goldman, Sachs & Co. is serving as joint bookrunning manager of these offerings. The offerings will be made under Wachovia Corporation's shelf registration statement filed with the Securities and Exchange Commission. Any offer of securities will be made by means of the prospectus supplement and accompanying prospectus relating to each offering. When available, copies of the prospectus supplement and accompanying prospectus relating to each offering can be obtained by contacting: Wachovia Securities Attn: Equity Syndicate 375 Park Avenue, New York New York 10152-4077 E-mail: equity.syndicate@wachovia.com -- or -- Goldman, Sachs & Co. Attn: Prospectus Dept. 85 Broad St., New York, NY 10004 Fax: 212 902 9316 E-mail: prospectus-ny@ny.email.gs.com. About Wachovia Corp. Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is the fifth-largest U.S. bank in stock-market value. It is one of the nation's largest diversified financial services companies, with assets of $782.9 billion and market capitalization of $75.3 billion at December 31, 2007. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to 15 million customers through 3,400 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending, student lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.2 trillion in client assets through 14,600 financial advisors in 1,500 locations nationwide. Online banking is available at http://wachovia.com; online brokerage products and services at http://wachoviasec.com; and investment products and services at http://evergreeninvestments.com. * * * As reported by the Troubled Company Reporter on April 14, 2008, The Walls Street Journal noted that Wachovia's need for additional capital came two months after it raised $3.5 billion through a preferred-stock sale. According to the report, Wachovia's trouble stemmed from its $25 billion purchase of Golden West Financial Corp. nearly two years ago. Golden West's loans -- the vast majority of which are adjustable-rate mortgages loans -- were concentrated in California, one of the hardest-hit housing markets in the U.S. Today, Wachovia announced that it lost $350 million in the first quarter due to $2 billion in asset write-downs and $2.1 billion in new provisions against credit losses. Earnings in the same period last year was $2.3 billion. WACHOVIA CORP: Posts Net Loss of $350MM for Q1; To Cut Dividends ---------------------------------------------------------------- Wachovia Corp. is planning on a series of actions to further enhance its capital base and operational flexibility, and updated its credit reserve modeling to reflect greater emphasis on forecasted changes in customer behavior assuming continued house price depreciation. These actions include: -- Plans to raise capital through a public offering of common stock and perpetual convertible preferred stock; -- Lowering the quarterly common stock dividend, which preserves $2.0 billion of capital annually, to build capital ratios and provide more operational flexibility. The board of directors declared a quarterly common stock dividend of $0.375 cents per common share, payable on June 16, 2008, to stockholders of record on May 30, 2008. This dividend level is consistent with Wachovia's capital needs and growth opportunities for each of its business segments, and with an anticipated 40 percent to 50 percent cash payout ratio over the intermediate horizon; and -- The update in the credit reserve modeling in response to the current and forecasted market environment and its effect on consumer behavior, particularly in stressed markets, resulting in a significant increase in the first quarter 2008 provision for credit losses. In addition, the scope of credit disclosures was increased to provide enhanced insight into the payment option consumer real estate portfolio. In addition, Wachovia reported a first quarter 2008 net loss of $350 million before preferred dividends, or a net loss available to common stockholders of $393 million, (20 cents per common share). These results, which reflect higher credit costs and the continued disruption in the capital markets, compared with earnings of $2.30 billion, or $1.20 per share, in the first quarter of 2007. While solid underlying performance was overshadowed by market disruption-related valuation losses of $2.0 billion, Wachovia generated total revenue of $7.9 billion on higher loans and deposits and strength in fiduciary and asset management fees, brokerage commissions and traditional banking fees, including the impact of the A.G. Edwards acquisition. "I'm deeply disappointed with our first quarter results, but I am confident we're taking prudent and appropriate actions in this challenging period to restore Wachovia to a more profitable path. The precipitous decline in housing market conditions and unprecedented changes in consumer behavior prompted us to update our credit reserve modeling and rely less heavily on historical trends to forecast losses. As a result, we have substantially increased our reserves," said Ken Thompson, Wachovia's chief executive officer. "The most painful decision was to reduce the dividend because it adversely affects our shareholders. But we believe the long-term benefit to shareholder value outweighs the disadvantage of the dividend reduction as we fortify our balance sheet against continued instability in the housing and capital markets. "It's important to note that in early 2007 in advance of the market dislocation, we took steps to bolster our liquidity and reduce market-related exposures in products originally intended for distribution," Mr. Thompson added. "We have generally been a provider of liquidity to the market during this period of market disruption, and we also continue to reduce our market-related exposures. The actions we announced today will further enhance and ensure our ongoing financial flexibility to invest and drive future earnings growth. With strengthened reserves and capital, and our strong deposit base, we believe we're well-positioned to continue to successfully weather this uniquely challenging period." Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is the fifth-largest U.S. bank in stock-market value. It is one of the nation's largest diversified financial services companies, with assets of $782.9 billion and market capitalization of $75.3 billion at December 31, 2007. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to 15 million customers through 3,400 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending, student lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.2 trillion in client assets through 14,600 financial advisors in 1,500 locations nationwide. Online banking is available at http://wachovia.com; online brokerage products and services at http://wachoviasec.com; and investment products and services at http://evergreeninvestments.com. * * * As reported by the Troubled Company Reporter on April 14, 2008, The Walls Street Journal noted that Wachovia's need for additional capital came two months after it raised $3.5 billion through a preferred-stock sale. According to the report, Wachovia's trouble stemmed from its $25 billion purchase of Golden West Financial Corp. nearly two years ago. Golden West's loans -- the vast majority of which are adjustable-rate mortgages loans -- were concentrated in California, one of the hardest-hit housing markets in the U.S. Today, Wachovia announced that it lost $350 million in the first quarter due to $2 billion in asset write-downs and $2.1 billion in new provisions against credit losses. Earnings in the same period last year was $2.3 billion. WACHOVIA BANK: S&P Upgrades Ratings on Two Classes From Low-Bs -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on nine classes of commercial mortgage pass-through certificates from Wachovia Bank Commercial Mortgage Trust's series 2002-C1. Concurrently, S&P affirmed its ratings on the remaining eight classes from this transaction. The raised ratings reflect increased credit support due to principal paydowns and loan amortization, as well as the defeasance of $173.2 million (23%) of the pool. The affirmed ratings reflect credit enhancement that provides adequate support through various stress scenarios. As of the March 17, 2008, remittance report, the collateral pool consisted of 140 loans with an aggregate principal balance of $769.1 million, compared with 156 loans totaling $950.0 million at issuance. The master servicer, Wachovia Bank N.A., reported financial information for 85.4% of the nondefeased loans. The servicer provided full-year 2006, full-year 2007, and interim-2007 financial data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.53x, up from 1.33x at issuance. All of the loans in the pool are current. There are no loans with the special servicer. To date, the trust has experienced only two losses totaling $59,519. The top 10 loan exposures have an aggregate outstanding balance of $151.4 million (19.7%). As of year-end 2006 and interim- and year-end 2007, the weighted average DSC for the top 10 loan exposures was 1.43x, up from 1.28x at issuance. This calculation excludes the 10th-largest loan. The loan was assumed in November 2007, and the new borrower has not yet provided the master servicer with financial statements. The eighth-largest loan appears on the watchlist. Standard & Poor's reviewed property inspections provided by Wachovia for the collateral securing the top 10 loan exposures, and all were characterized as "good." Wachovia reported a watchlist of 22 loans with an aggregate outstanding balance of $99.3 million (12.9%). The largest loan on the watchlist and eighth-largest loan in the pool, the Dana Corp. -- Antioch loan ($13.2 million, 2%), is on the watchlist due to low occupancy. Its sole tenant, Dana Corp., declared bankruptcy in 2006. Dana subsequently vacated its space, and 50% of the property has been leased up. As of Sept. 30, 2007, the reported DSC was 0.57x. In addition, there are two loans also of concern that appear on the watchlist. The Dana Corp. -- Rochester Hills loan ($7.9 million, 1%) is on the watchlist due to Dana Corp.'s bankruptcy. The borrower for this loan is not related to the borrower of the Dana Corp. -- Antioch loan. Occupancy is currently 100%. No recent financial information was provided for this loan. The Avalon Square Apartments loan ($10.9 million, 1%), a 220-unit multifamily property located in Houston, Texas, is a concern. As of the period ended Nov. 30, 2007, the reported DSC was 1.07x. The remaining loans that appear on the watchlist are due to low DSC and low occupancy. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Wachovia Bank Commercial Mortgage Trust Commercial Mortgage pass-through certificates series 2002-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ D AAA AA+ 16.67% E AA+ AA 14.97% F AA A+ 12.81% G A+ A- 11.11% H A- BBB+ 9.10% J BBB+ BBB 6.79% K BBB BBB- 6.17% L BB+ BB 4.87% M BB- B+ 3.96% Ratings Affirmed Wachovia Bank Commercial Mortgage Trust Commercial Mortgage pass-through certificates series 2002-C1 Class Rating Credit enhancement ----- ------ ------------------ A-2 AAA 28.10% A-3 AAA 28.10% A-4 AAA 28.10% B AAA 23.46% C AAA 17.90% N B 3.35% IO-I AAA N/A IO-II AAA N/A N/A -- Not applicable. WACHOVIA BANK: Moody's Affirms B3 Rating on $2.436MM Class O Cert. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of two classes and affirmed the ratings of seventeen classes of Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2003-C8 as: -- Class A-1, $92,425,314, affirmed at Aaa -- Class A-2, $186,550,000, affirmed at Aaa -- Class A-3, $241,738,000, affirmed at Aaa -- Class A-4, $213,104,000, affirmed at Aaa -- Class X-C, Notional, affirmed at Aaa -- Class X-P, Notional, affirmed at Aaa -- Class B, $29,227,000, upgraded to Aa1 from Aa2 -- Class C, $13,396,000, upgraded to Aa2 from Aa3 -- Class D, $28,009,000, affirmed at A2 -- Class E, $13,396,000, affirmed at A3 -- Class F, $15,831,000, affirmed at Baa1 -- Class G, $12,178,000, affirmed at Baa2 -- Class H, $15,831,000, affirmed at Baa3 -- Class J, $7,307,000, affirmed at Ba1 -- Class K, $6,089,000, affirmed at Ba2 -- Class L, $4,871,000, affirmed at Ba3 -- Class M, $2,436,000, affirmed at B1 -- Class N, $4,871,000, affirmed at B2 -- Class O, $2,436,000, affirmed at B3 Moody's is upgrading Classes B and C due to improved pool performance, increased credit support resulting from loan pay offs and amortization. As of the March 17, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 7.4% to $901.9 million from $974.2 million at securitization. The Certificates are collateralized by 52 mortgage loans. The loans range in size from less than 1.0% to 13.3% of the pool, with the top 10 loans representing 29.6% of the pool. The pool includes seven loans with underlying ratings, representing 49.0% of the pool. One loan, representing 3.1% of the pool, has defeased and has been replaced with U.S. Government securities. The pool has not realized any losses since securitization. There are no loans in special servicing at the present time. Nine loans, representing 7.3% of the pool, are on the master servicer's watchlist. Moody's was provided with full-year 2006 and full or partial-year 2007 operating results for 87.7% and 88.0% of the pool, respectively. Moody's average weighted loan to value ratio for the conduit component is 83.0% compared to 90.3% at securitization. The largest loan with an underlying rating is the Tucson Mall Loan ($120.0 million -- 13.3%), which is secured by the borrower's interest in a 1.3 million square foot (447,000 square feet is collateral) regional mall located in downtown Tucson, Arizona. The mall is anchored by Macy's, Dillard's, JC Penney, Sears and Mervyn's, all not part of the collateral. As of September 2007, inline occupancy and overall occupancy were 94.7% and 97.7% compared to 92.3% and 97.6% at securitization. In-line sales are $448 per square foot compared to $365 per square foot at securitization. The loan has amortized 7.6% since securitization and matures October 2008. Moody's current underlying rating is A2, compared to Baa2 at securitization. The second largest loan with an underlying rating is the Meridian Mall Loan ($79.0 million -- 8.8%), which is secured by the borrower's interest in a 977,000 square foot (825,000 square feet is collateral) regional mall located in Okemos, Michigan. The mall is anchored by Macy's, JC Penney, Bed Bath and Beyond, and Dicks Sporting Goods. As of September 2007, overall occupancy was 97.2% compared to 97.4% at securitization. In-line sales are $284 per square foot compared to $315 per square foot at securitization. There is subordinate debt in the amount of $6.7 million held outside the trust. The loan amortizes on a 25- year schedule and matures September 2008. The loan has amortized 10.5% since securitization. Moody's current underlying rating is Baa2, the same as at securitization. The third largest loan with an underlying rating is the Park City Center Loan ($61.3 million -- 6.8%), which is secured by a 50.0% participation interest in a $122.6 million loan. The collateral includes the borrower's interest in a 977,000 square foot (825,000 square feet is collateral) regional mall located in Lancaster, Pennsylvania. The mall is anchored by Boscov's, Sears, JC Penney, The Bon Ton Stores, and Kohl's. As of September 2007, overall occupancy was 97.1% compared to 96.4% at securitization. There is subordinate debt in the amount of $31 million held outside the trust. The loan has amortized 7.0% since securitization. Moody's current underlying rating is A3, compared to Baa2 at securitization. The fourth largest loan with an underlying rating is the Four Seasons Hotel Loan ($52.7 million -- 5.8%), which is secured by the borrower's interest in a 434-room full-service hotel located in Chicago, Illinois. The hotel has two restaurants and 22,000 square feet of meeting and conference space. The hotel is managed by Four Seasons Hotels under a management agreement that expires in 2032 with several renewal options. RevPAR has increased from $234.10 at securitization to $299.50 at year-end 2007. The loan amortizes on a 25-year schedule and has amortized 9.1% since securitization. Moody's current underlying rating is A2, compared to Baa2 at securitization. The fifth loan with an underlying rating is the Parkdale Mall Loan ($51.2 million -- 5.7%), which is secured by the borrower's interest in a 1.36 million square foot (587,629 square feet is the collateral) regional mall located in Beaumont, Texas. The mall is anchored by Dillard's, JC Penney, Macy's and Sears. The loan amortizes on a 25-year schedule and has amortized 9.8% since securitization. Moody's current underlying rating is Baa1, compared to Baa3 at securitization. The sixth loan with an underlying rating is the Regency Square Mall Loan ($48.1 million -- 5.3%), which is secured by secured by a 50.0% participation interest in a $96.3 million loan. The loan is collateralized by the borrower's interest in a 1.45 million square foot (938,031 square feet is the collateral) regional mall located in Jacksonville, Florida. The mall is anchored by Belk, JC Penney, Dillard's and Sears. The loan amortizes on a 30-year schedule and has amortized 8.6% since securitization. Moody's current underlying rating is A3, the same as at securitization. The seventh loan with an underlying rating is the Chandler Festival Loan ($29.6 million -- 3.3%), which is secured by the borrower's interest in a 364,649 square foot anchored shopping center located in Chandler, Arizona, approximately six miles southeast of Phoenix. The property was 98.6% leased as of December 2007, compared to 97.3% at securitization. Major tenants at the property include Linens N Things, Nordstrom Rack and OfficeMax. The loan amortizes on a 30-year schedule and has amortized 7.5% since securitization. Moody's current underlying rating is A2, compared to A3 at securitization. The top three conduit loans represent 17.8% of the pool. The largest conduit loan is the Chelsea Market Loan ($82.7 million -- 9.2%), secured by a 50.0% participation interest in a $165.3 million loan. The 1.2 million square foot mixed-use building includes retail and office portions and is located in the Chelsea District of Manhattan, New York City. The loan was interest only for its first two years and now amortizes on a 30- year schedule. The loan has amortized 3.3% since securitization. Net operating income has increased approximately 11% since securitization. Moody's LTV is 78.0% compared to 85.0% at securitization. The second largest conduit loan is the Rivertowne Commons Loan ($40.6 million -- 4.5%), which is secured by the borrower's interest in a 387,000 square foot grocery-anchored community shopping center located in Oxon Hill, Maryland in the Washington D.C. MSA. The center is anchored by Kmart and Safeway. Other larger tenants include Old Navy, Staples and CVS. As of January 2008, occupancy was 83.8% compared to 99.6% at securitization. The loan has amortized 5.5% since securitization. Moody's LTV is 95.9% compared to 94.9% at securitization. The third largest conduit loan is the Arco Center Loan ($37.0 million -- 4.1%), which is secured by the borrower's interest in two twin 14-story, Class A office towers located in Long Beach, California. As of December 2007, the buildings were 94.0% leased compared to 76.3% at securitization. The loan was interest only for its first two years and now amortizes on a 30-year schedule. The loan has amortized 2.5% since securitization. Moody's LTV is 78.7% compared to 91.5% at securitization. WINDSTREAM CORP: S&P Changes Outlook to Stable; Holds 'BB+' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Little Rock, Arkansas-based Windstream Corp. to stable from negative. At the same time, S&P affirmed the 'BB+' corporate credit rating and all other ratings for Windstream and its related entities. Debt outstanding as of Dec. 31, 2007, totaled about $5.4 billion. "The outlook revision reflects Windstream's success in mitigating revenue losses related to its declining voice business with growth in Internet and data revenues," said Standard & Poor's credit analyst Susan Madison. "Its EBITDA margin has also remained stable, at around 50%, because of continued focus on cost cutting," she said. Additionally, since its 2006 spinoff from ALLTEL Corp. and its merger with Valor Telecommunications Enterprises LLC, Windstream's management has demonstrated a commitment to maintaining debt to EBITDA in the low- to mid-3x area. S&P expects Windstream's credit metrics to remain supportive of a 'BB+' corporate credit rating over the next one to two years as growth in Internet and data services continues to mitigate revenue losses associated with a declining access line base. Longer term, Windstream's inability to slow access line losses, a maturing broadband market or significant price discounting because of competition, could pressure ratings. Windstream is an incumbent local exchange carrier providing voice and data communication services to approximately 3.2 million access lines in 16 states throughout the U.S. The ratings on Windstream continue to reflect an aggressive shareholder-oriented financial policy with a commitment to a substantial common dividend that limits potential debt reduction. The company also faces accelerating competition for voice and data services from cable operators that could lead to pricing and margin pressure, and flat, to declining revenues from its mature local telephone business. Tempering factors include the company's position as the dominant provider of local and long distance telecommunications services in secondary and tertiary markets. Those markets have experienced less aggressive cable-based voice over Internet protocol deployment, yet benefit from growth in data and Internet services, solid operating margins, and moderate capital requirements. WORNICK CO: Can Hire Kurtzman Carson as Claims and Noticing Agent ----------------------------------------------------------------- The Wornick Company and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Ohio to employ Kurtzman Carson Consultants LLC as claims, noticing, balloting and disbursing agents. The Debtors related that they have thousands of creditors and potential creditors and numerous other parties-in-interest in these chapter 11 cases. The Debtors submit that the engagement of an independent third party to act as agent for the Court is the most effective and efficient manner to perform the tasks. The Debtors stated that KCC is well suited to provide these services because KCC is a data-processing firm whose principals and senior staff have in-depth chapter 11 experience in performing noticing, claims processing, claims reconciliation and other administrative tasks for chapter 11 debtors. KCC is also experienced in performing plan voting and distribution services, and other services relating to its role as a claims and balloting agent. Specifically, KCC is expected to: a) prepare and serve required notices in these chapter 11 cases; b) within five business days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service; c) maintain copies of all proofs of claim and proofs of interest filed in these cases; d) maintain official claims registers in this case by docketing all proofs of claim and proofs of interest in a claims database that includes primary information for each such claim or interest asserted: e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available upon request to the Clerk's Office and any party in interest; h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in this case without charge during regular business hours; i) record all transfers of claims pursuant to Rule 3001(e) of the Bankruptcy Rules and provide notice of such transfers as required by Rule 3001(e), if directed to do so by the Court; j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k) utilize temporary employees to process claims, as necessary; l) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and m) provide such other claims processing, noticing, balloting, and relating administrative services as may be requested from time to time by the Debtors. In addition, the Debtors expected KCC to assist them with: (a) the preparation of their schedules, statements of financial affairs and master creditor list and any amendments thereto; (b) the reconciliation and resolution of claims; (c) the preparation, mailing and tabulation of ballots and other related services for the purposes of soliciting votes to accept or reject a plan of reorganization; and (d) provide technical support in connection with the foregoing. Sheryl Betance, Director of Restructuring at Kurtzman Carson Consultants LLC, stated that the Debtors will treat the fees and expenses of KCC as administrative expenses of the Debtors' Chapter 11 estates and will be paid in the ordinary course of business. Ms. Betance assured the Court that KCC is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Cincinnati, Ohio, The Wornick Company -- http://www.wornick.com/-- is a supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods Inc., Gerber Products Company, well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D. Ohio, Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The Debtor selected Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. An official committee of unsecured creditors has not been appointed in these cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. WORNICK CO: Judge Aug Approved Amended Disclosure Statement ----------------------------------------------------------- The Hon. J. Vincent Aug, Jr., of the U.S. Bankruptcy Court for the Southern District of Ohio approved the adequacy of Wornick Co. and its debtor-affiliates' Amended Disclosure Statement dated April 4, 2008, explaining their Amended Joint Chapter 11 Plan of Liquidation. Overview of the Plan As reported in the Troubled Company Reporter on April 9, 2008, Pursuant to the provisions of the U.S. Bankruptcy Code, only holders of allowed claims or equity interests in classes of claims or equity interests that are impaired and that are not deemed to have rejected a proposed chapter 11 plan are entitled to vote to accept or reject such plan. Classes of claims or equity interests in which the holders of claims or equity interests are unimpaired under a Chapter 11 plan are deemed to have accepted the plan and are not entitled to vote to accept or reject the plan. Classes of claims or equity interests in which the holders of claims or equity interests will receive no recovery under a Chapter 11 plan are deemed to have rejected the plan and are not entitled to vote to accept or reject the plan. Pursuant to the Plan, holders of Allowed Claims in Classes 1, 2, 5, 6, and 7 and Equity Interests in Class 10 will either receive distributions equal to the total amount of their Claims or retain their Equity Interests, as applicable, will be Unimpaired and will be deemed to have accepted the Plan. Holders of Allowed Claims in Classes 3 and 4 of the Plan will be entitled to partial distribution on account of their Claims and are Impaired. As a result, holders of Allowed Claims in Classes 3 and 4 are entitled to vote to accept or reject the Plan. Holders of Allowed Claims in Classes 8 and 9 and Equity Interests in Class 11 of the Plan, consisting of holders of TWC Note Claims, Subordinated Securities Claims and Equity Interests in the Non- Surviving Debtors and Wornick, respectively, will not receive any distributions under the Plan. As a result, holders of Allowed Claims in Classes 8 and 9 and Equity Interests in Class 11 are conclusively presumed to have rejected the Plan. Type of Allowed Estimated Claim Treatment Claims Recovery ------- --------- ------- --------- Priority Unimpaired $100,000 100% Tax Claims DIP Financing Unimpaired $35,000,000 100% Claims Other Priority Unimpaired $1,700,000 100% Claims Other Secured Unimpaired -- 100% Claims Prepetition Impaired -- -- Secured Loan Agreement Claims Senior Secured Impaired $140,219,335; $36% Note Claims $125,000,000 in accrued principal plus and $14,219,335 in unpaid prepetition interest accrued interest General Unsec. Unimpaired $1,000,000 100% Claims Unliquidated Unimpaired -- N/A Claims Intercompany Unimpaired -- N/A Claims TWC Note Claims Impaired $38,000,000 0% Subordinated Impaired -- 0% Securities Claims Equity Interests Unimpaired 100% in Surviving Debtors other than Wornick Equity Interests Impaired 0% of Non-Surviving Debtors and Wornick Equity Sale Pursuant to Plan On Feb. 12, 2008, the Debtors entered into an Purchase Agreement with Viren Acquisition Corp. The Purchase Agreement provides for the sale of 100% of the equity of Reorganized Wornick, or substantially all of the Debtors' assets to the Purchaser as well the assumption by the Purchaser of certain of the Debtors' liabilities pursuant to section 363 of the U.S. Bankruptcy Code. The Debtors, in the exercise of their business judgment, believe the Purchase Agreement is the best way to maximize the value of the estates for creditors. The Purchase Price is subject to higher and better offers and the Purchase Price far exceeds the projected recoveries under the Debtors' liquidation analysis. The Debtors intend to address the issue of whether the Purchase Agreement, or a Modified Purchase Agreement, as the case may be, maximizes value at a transaction approval hearing. Following the occurrence of certain events, the Purchaser may elect, by providing written notice to the Debtors, that the Transaction be effected outside a Chapter 11 plan, in the form of a sale of all or substantially all of the Debtors' assets, in which case the Debtors and the Purchaser will seek Court approval of the Asset Sale at the transaction approval hearing. A full-text copy of the Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2a80 A full-text copy of the Amended Joint Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?2a81 Based in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D. Ohio, Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The Debtor selected Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. An official committee of unsecured creditors has not been appointed in these cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. WORNICK CO: Plan Confirmation Hearing Scheduled on June 23 ---------------------------------------------------------- The Hon. J. Vincent Aug, Jr., of the U.S. Bankruptcy Court for the Southern District of Ohio will convene a hearing June 25, 2008, at 10:00 a.m., prevailing Eastern Time, to consider confirmation of Wornick Co. and its debtor-affiliates' Amended Joint Chapter 11 Plan of Liquidation dated April 4, 2008. Objections, if any, are due June 11, 2008, at 4:00 p.m., prevailing Eastern Time. About Wornick Company Based in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D. Ohio, Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The Debtor selected Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. An official committee of unsecured creditors has not been appointed in these cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. * Fitch Says Positive Signs Emerged Despite Decline in US Housing ----------------------------------------------------------------- As the U.S. housing continues its steep cyclical decline, a few positive signs have emerged, though it looks likely that the housing contraction will extend through 2008, according to Fitch Ratings in its latest edition of 'Chalk Line'. 'Continued low mortgages rates, some improvement in affordability, proposed government support for beleagured mortgage holders and the economic stimulus program may signal a possible step in the right direction for U.S. housing,' said Managing Director and lead homebuilding analyst Bob Curran. 'That said, a modest recession, declining home prices, tighter mortgage standards even for conventional loans, poor buyer psychology and record levels of new and existing homes for sale will continue to define the current environment for housing.' Typically homebuilders' operating and financial performances were quite weak in the fourth quarter, a pattern that is likely to be replicated in first-quarter 2008 results. Deterioration in credit metrics continued in 4Q'07 and 1Q'08, particularly for profit related metrics. 'Tangible net worth covenants have been and will be challenged,' said Curran. Fitch will provide a 4Q'07 recap, as well as discuss its outlook for calendar 2008 during a teleconference on Tuesday, April 15, 2008 at 11:00a.m. ET. New features in this report include homebuilders' quarterly growth trends and margin statistics for 4Q'07, excluding the impact of non-recurring, non-cash real estate charges, and information about fourth quarter and fiscal year-to-date option write-offs and land value write-downs. Information is provided on single family starts by intent and design. Fitch assesses actual reductions in inventories since peak levels and discusses the effect of the FAS 109 deferred tax valuation adjustment. Builder fourth quarter and LTM pretax and net income statistics are adjusted for non- recurring charges. The federal government's latest efforts to support housing and the mortgage sector are discussed. The presidential candidates' housing/mortgage proposals are updated as are the Fitch economic and construction forecasts. * S&P Downgrades 12 Tranches' Ratings From Six Cash Flows and CDOs ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 12 tranches from six U.S. cash flow and hybrid collateralized debt obligation transactions. The downgraded tranches have a total issuance amount of $685.5 million. Five of the six transactions are mezzanine structured finance CDOs of asset-backed securities, which are collateralized in large part by mezzanine tranches of residential mortgage-backed securities and other SF securities. The other transaction is a CDO of CDO transaction that was collateralized at origination primarily by notes from other CDOs, as well as by tranches from RMBS and other SF transactions. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS securities. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P has lowered its ratings on 3,215 tranches from 748 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, 358 ratings from 97 transactions are currently on CreditWatch negative for the same reasons. In all, S&P has downgraded $338.665 billion of CDO issuance. Additionally, S&P's ratings on $18.130 billion in securities have not been lowered but are currently on CreditWatch negative, indicating a high likelihood of downgrades. 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 ----------- ----- -- ---- Fortress ABS Opportunities Ltd. A-2 AA- AA+ Fortress ABS Opportunities Ltd. B BB+ BBB Fortress ABS Opportunities Ltd. Ba BB+ BBB Orchid Structured Finance CDO II Ltd. A-2 AA+ AAA Orchid Structured Finance CDO II Ltd. A-3 BBB AA Orchid Structured Finance CDO II Ltd. B BB A- Parapet 2006 Ltd. A A+ AA Putnam Structured Product Funding 2003-1 Ltd. C BBB+ A- Saturn Ventures II Ltd. A-2 AA+ AAA Saturn Ventures II Ltd. A-3 AA- AA Saturn Ventures II Ltd. B BBB- BBB Stack 2004-1 Ltd. D BB+ BBB Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ Fortress ABS Opportunities Ltd. A AA+ Fortress ABS Opportunities Ltd. A-1a AA+ Orchid Structured Finance CDO II Ltd. A-1 AAA Putnam Structured Product Funding 2003-1 Ltd. A-1 AAA/A-1+ Putnam Structured Product Funding 2003-1 Ltd. A-2 AAA Putnam Structured Product Funding 2003-1 Ltd. B AA Putnam Structured Product Funding 2003-1 Ltd. S AAA Saturn Ventures II Ltd. A-1 AAA/A-1+ Stack 2004-1 Ltd. A AAA Stack 2004-1 Ltd. B AA Stack 2004-1 Ltd. C A * S&P Assigns Ratings on 147 CDO Tranches on Negative CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed 147 U.S. synthetic CDO tranche ratings on CreditWatch with negative implications, withdrew one tranche rating, and raised one tranche rating. At the same time, S&P affirmed its ratings on 16 tranches and removed them from CreditWatch negative. The CreditWatch negative placements reflect negative rating migration in the respective portfolios and synthetic rated overcollateralization ratios that had fallen below 100% as of the March month-end run. The rating on one tranche was placed on CreditWatch negative because it failed its step subordination. This tranche, however, did have an SROC that was higher than 100%. The ratings S&P affirmed and removed from CreditWatch negative had SROC ratios of 100% or higher at their current rating levels. S&P withdrew one rating because the transaction unwound. S&P raised one rating because a rebalance of its portfolio brought the SROC above 100% at the next higher rating level, which was the original rating on the tranche at closing. Ratings List ABACUS 2004-2 Ltd. Rating ------ Class To From ----- -- ---- C BBB+/Watch Neg BBB+ ABACUS 2004-3 Ltd. Rating ------ Class To From ----- -- ---- Class B AA/Watch Neg AA Class C A-/Watch Neg A- ABACUS 2005-1 CB1 Ltd. Rating ------ Class To From ----- -- ---- B A+/Watch Neg A+ D BBB+/Watch Neg BBB+ ABACUS 2006-11 Ltd Series 2006-11 Rating ------ Class To From ----- -- ---- A AA/Watch Neg AA A-2 Ser 1 BBB/Watch Neg BBB A-2 Ser 2 BBB/Watch Neg BBB B BB/Watch Neg BB B Ser 2 BB/Watch Neg BB C B+/Watch Neg B+ ABACUS 2006-12 Ltd. Rating ------ Class To From ----- -- ---- A-1 BBB/Watch Neg BBB A-2 BB/Watch Neg BB B BB-/Watch Neg BB- C CCC+/Watch Neg CCC+ D CCC/Watch Neg CCC ABACUS 2006-9 Ltd. Rating ------ Class To From ----- -- ---- A-1 AA-/Watch Neg AA- A-2 A-/Watch Neg A- B BBB/Watch Neg BBB C BBB-/Watch Neg BBB- ABACUS 2006-HGS1 Ltd. Series 2006-HGS1 Rating ------ Class To From ----- -- ---- A-1 BBB/Watch Neg BBB A-2 BB/Watch Neg BB AMSS A/Watch Neg A B B-/Watch Neg B- C CCC+/Watch Neg CCC+ D CCC/Watch Neg CCC ABSpoke 2005-IA Ltd. Rating ------ Class To From ----- -- ---- ABSpoke AAA/Watch Neg AAA ABSpoke 2005-IB Ltd. Rating ------ Class To From ----- -- ---- ABSpoke A/Watch Neg A ABSpoke 2005-IC Ltd. Rating ------ Class To From ----- -- ---- Fxd Rate BBB-/Watch Neg BBB- ABSpoke 2005-VA Ltd. Rating ------ Class To From ----- -- ---- ABSpoke A-/Watch Neg A- Arlo III Ltd. Series 2005 GPARK Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A ARLO VI Ltd. Series 2006-B-1 (Prima II-CDO Long/Short) Rating ------ Class To From ----- -- ---- B-1 AA/Watch Neg AA Bear Stearns High Grade Structured Credit Strategies Rating ------ Class To From ----- -- ---- Unf Cr Def AA AA/Watch Neg Cloverie PLC Series 2006-10 Rating ------ Class To From ----- -- ---- Notes AA-/Watch Neg AA- Cloverie PLC Series 2007-10 Rating ------ Class To From ----- -- ---- 2007-10 AA AA/Watch Neg Cloverie PLC Series 2007-18 Rating ------ Class To From ----- -- ---- 2007-18 AAA AAA/Watch Neg Cloverie PLC Series 2007-19 Rating ------ Class To From ----- -- ---- 2007-19 AAA AAA/Watch Neg Cloverie PLC Series 2007-20 Rating ------ Class To From ----- -- ---- 2007-20 AA AA/Watch Neg Cloverie PLC Series 2007-22 Rating ------ Class To From ----- -- ---- 2007-22 AAA AAA/Watch Neg Cloverie PLC Series 2007-23 Rating ------ Class To From ----- -- ---- 2007-23 AA AA/Watch Neg Coriolanus Ltd. Series 39 Rating ------ Class To From ----- -- ---- Tranche CCC+/Watch Neg CCC+ Credit and Repackaged Securities Limited Series 2007-18 Rating ------ Class To From ----- -- ---- Notes A-/Watch Neg A- Credit Default Swap Series CA1119131 Rating ------ Class To From ----- -- ---- Tranche A-srb/Watch Neg A-srb Credit Default Swap Series MAPLES 2007-12 Rating ------ Class To From ----- -- ---- Tranche BBB+srp/Watch Neg BBB+srp Crown City CDO 2005-1 Limited Rating ------ Class To From ----- -- ---- B AA/Watch Neg AA Dallaglio CDO 2005-4 Ltd. Rating ------ Class To From ----- -- ---- B BB+/Watch Neg BB+ Dunloe 2005-I Ltd Rating ------ Class To From ----- -- ---- A BBB/Watch Neg BBB B BB/Watch Neg BB C B+/Watch Neg B+ Eirles Two Ltd. Series 242 Rating ------ Class To From ----- -- ---- Series 242 AA+/Watch Neg AA+ Eirles Two Ltd. Series 245 Rating ------ Class To From ----- -- ---- Series 245 A/Watch Neg A Eirles Two Ltd. Series 257-259 & 264-266 Rating ------ Class To From ----- -- ---- Series 257 B-/Watch Neg B- Gloucester SPC, acting for the account of Cheyenne 2007-I Segregated Portfolio Rating ------ Class To From ----- -- ---- A B/Watch Neg B Infiniti SPC Limited Kenmore Street 2006-2 Rating ------ Class To From ----- -- ---- 7A-2 AAA/Watch Neg AAA 7B-1 AA/Watch Neg AA 7C-1 A/Watch Neg A 7EA-2 AAA/Watch Neg AAA 7EB-1 AA/Watch Neg AA Infiniti SPC Limited Series CPORTS 2006-3 Rating ------ Class To From ----- -- ---- A AAA/Watch Neg AAA Ixion PLC Series 4, 5, 6, & 7 Rating ------ Class To From ----- -- ---- 5 BB+/Watch Neg BB+ Jefferson Valley CDO SPC Series 2006-1 Rating ------ Class To From ----- -- ---- A A-/Watch Neg A- Jupiter Finance Ltd. Series 2007-002 Rating ------ Class To From ----- -- ---- Port CrLkd AA/Watch Neg AA Kenmare 2005-I Ltd Rating ------ Class To From ----- -- ---- Notes BBB-/Watch Neg BBB- Kiawah (New York) Trust Series 2007-1 Rating ------ Class To From ----- -- ---- Notes A A/Watch Neg Magnolia Finance II PLC Series 2006-5A Rating ------ Class To From ----- -- ---- A AA+/Watch Neg AA+ Magnolia Finance II PLC Series 2006-5B Rating ------ Class To From ----- -- ---- B AA-/Watch Neg AA- Magnolia Finance II PLC Series 2006-5CE Rating ------ Class To From ----- -- ---- CE A-/Watch Neg A- Magnolia Finance II PLC Series 2006-5CG Rating ------ Class To From ----- -- ---- CG A-/Watch Neg A- Magnolia Finance II PLC Series 2006-5CU Rating ------ Class To From ----- -- ---- CU A-/Watch Neg A- Lunar Funding I Ltd. Series 12 Rating ------ Class To From ----- -- ---- 12 AA/Watch Neg AA Mint 2005-1 Ltd. Rating ------ Class To From ----- -- ---- D-1 A/Watch Neg A E BBB/Watch Neg BBB Momentum CDO (Europe) Ltd. Rating ------ Class To From ----- -- ---- Series 2007-9 AAA/Watch Neg AAA Morgan Stanley ACES SPC Series 2005-24 Rating ------ Class To From ----- -- ---- Notes AAA/Watch Neg AAA Morgan Stanley ACES SPC Series 2005-25 Rating ------ Class To From ----- -- ---- ScFltRtNts BBB+/Watch Neg BBB+ Morgan Stanley ACES SPC Series 2006-11 Rating ------ Class To From ----- -- ---- III BBB+/Watch Neg BBB+ Morgan Stanley ACES SPC Series 2006-15 Rating ------ Class To From ----- -- ---- I AA+/Watch Neg AA+ IIA A+ A+/Watch Neg IIB A+ A+/Watch Neg Morgan Stanley ACES SPC Series 2006-16 Rating ------ Class To From ----- -- ---- I AA-/Watch Neg AA- IIA A-/Watch Neg A- III BB+/Watch Neg BB+ Morgan Stanley ACES SPC Series 2006-18 Rating ------ Class To From ----- -- ---- Notes AA+/Watch Neg AA+ Morgan Stanley ACES SPC Series 2006-19 Rating ------ Class To From ----- -- ---- Notes AAA/Watch Neg AAA Morgan Stanley ACES SPC Series 2006-20 Rating ------ Class To From ----- -- ---- IA AAA/Watch Neg AAA II BBB/Watch Neg BBB Morgan Stanley ACES SPC Series 2006-21 Rating ------ Class To From ----- -- ---- IA AA-/Watch Neg AA- III BBB-/Watch Neg BBB- Morgan Stanley ACES SPC Series 2006-24 Rating ------ Class To From ----- -- ---- IA AAA/Watch Neg AAA II BBB/Watch Neg BBB Morgan Stanley ACES SPC Series 2006-26 Rating ------ Class To From ----- -- ---- IA AAA/Watch Neg AAA II BBB-/Watch Neg BBB- Morgan Stanley ACES SPC Series 2007-13 Rating ------ Class To From ----- -- ---- IA AAA/Watch Neg AAA IIA AAA/Watch Neg AAA IIB AAA/Watch Neg AAA IIIA AA/Watch Neg AA IIIB AA/Watch Neg AA IV BB/Watch Neg BB Morgan Stanley ACES SPC Series 2007-2 Rating ------ Class To From ----- -- ---- AI AA+/Watch Neg AA+ AII AA+/Watch Neg AA+ IIA AA-/Watch Neg AA- IIB AA-/Watch Neg AA- IIC AA-/Watch Neg AA- IID AA-/Watch Neg AA- Morgan Stanley ACES SPC Series 2007-25 Rating ------ Class To From ----- -- ---- IA AAA AA Morgan Stanley ACES SPC Series 2007-6 Rating ------ Class To From ----- -- ---- IIA AA+/Watch Neg AA+ IIIA AA-/Watch Neg AA- Morgan Stanley Managed ACES SPC Series 2007-1 Rating ------ Class To From ----- -- ---- IIIA AAA/Watch Neg AAA Morgan Stanley Managed ACES SPC Series 2007-5 Rating ------ Class To From ----- -- ---- III SrB AAA/Watch Neg AAA Morgan Stanley Managed ACES SPC Series 2007-6 Rating ------ Class To From ----- -- ---- IIISrDFloa AAA/Watch Neg AAA North Street Referenced Linked Notes, 2005-7 Limited Rating ------ Class To From ----- -- ---- A BBB/Watch Neg BBB B-1 BB+/Watch Neg BB+ B-2 BB-/Watch Neg BB- C B/Watch Neg B PARCS Ltd. Valley Forge 2007-2 Rating ------ Class To From ----- -- ---- Notes AA/Watch Neg AA PARCS Master Trust Series 2007-19 Englewood Rating ------ Class To From ----- -- ---- TrustUnits A/Watch Neg A PARCS Master Trust Series 2007-20 Englewood Rating ------ Class To From ----- -- ---- TrustUnits BBB+/Watch Neg BBB+ PARCS Master Trust Series 2007-21 Englewood Rating ------ Class To From ----- -- ---- TrustUnits BBB+/Watch Neg BBB+ PARCS Master Trust Series 2007-24 SAVOY Rating ------ Class To From ----- -- ---- Units AA- AA-/Watch Neg PARCS Master Trust Series 2007-3 Calvados Rating ------ Class To From ----- -- ---- Trust Unit A+/Watch Neg A+ PARCS Master Trust Series 2007-6 Calvados Rating ------ Class To From ----- -- ---- Trust Unit BBB+/Watch Neg BBB+ PARCS Master Trust Series 2007-7 Calvados Rating ------ Class To From ----- -- ---- Trust Unit A+/Watch Neg A+ PARCS-R Master Trust Series 2007-26 Rating ------ Class To From ----- -- ---- Trust Unit NR AAA Penn's landing CDO SPC Series 2007-1 Rating ------ Class To From ----- -- ---- A AAA/Watch Neg AAA C A/Watch Neg A D BBB/Watch Neg BBB Prelude Europe CDO Ltd. Series 2006-1 Rating ------ Class To From ----- -- ---- Notes BBB+/Watch Neg BBB+ Prelude Europe CDO Ltd. Series 2006-2 Rating ------ Class To From ----- -- ---- Notes BBB+/Watch Neg BBB+ Primoris SPC Ltd A1-7 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A1-7-2 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A2-7 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A3-10-2 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A3-7 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A5-7 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd A6-7 Rating ------ Class To From ----- -- ---- Notes A/Watch Neg A Primoris SPC Ltd C3-7 Rating ------ Class To From ----- -- ---- Notes BBB/Watch Neg BBB Primoris SPC Ltd E3-7 Rating ------ Class To From ----- -- ---- Notes BBB-/Watch Neg BBB- Primoris SPC Ltd F1-10 Rating ------ Class To From ----- -- ---- Notes BB/Watch Neg BB Pyxis Master Trust Series 2007-28 Rating ------ Class To From ----- -- ---- Units AAA/Watch Neg AAA REPACs Trust Series: CAT 2005-1 Rating ------ Class To From ----- -- ---- Debt Units A/Watch Neg A REPACS Trust Series: Warwick Rating ------ Class To From ----- -- ---- B Debt Uts AAA/Watch Neg AAA REVE SPC Series 2007-47 Rating ------ Class To From ----- -- ---- Series 47 BBB+/Watch Neg BBB+ Rutland Rated Investments Series 30 (Bedford 2006-1) Rating ------ Class To From ----- -- ---- A2-F A+/Watch Neg A+ Seawall 2006-1 Ltd Rating ------ Class To From ----- -- ---- C-2 BBB+/Watch Neg BBB+ Seawall SPC Series 2006-2 Rating ------ Class To From ----- -- ---- A AA/Watch Neg AA Sentinel Limited 2 Rating ------ Class To From ----- -- ---- Tranche AA-/Watch Neg AA- Series 2006-1 Segregated Portfolio of Greystone CDO SPC Series 2006-1 Rating ------ Class To From ----- -- ---- A-1 AA AA/Watch Neg A-2 AA AA/Watch Neg Solar V CDO SPC Series 2007-1 Rating ------ Class To From ----- -- ---- A AA/Watch Neg AA SPGS SPC Series 2006-IA Rating ------ Class To From ----- -- ---- Notes A+/Watch Neg A+ SPGS SPC Series 2006-II Rating ------ Class To From ----- -- ---- Notes BBB+/Watch Neg BBB+ SPGS SPC Series 2006-V Rating ------ Class To From ----- -- ---- Notes BB/Watch Neg BB SPGS SPC Series 2006-VI Rating ------ Class To From ----- -- ---- A BB/Watch Neg BB SPGS SPC, acting for the account of SRRSPOKE 2007-IB Series SRRSPOKE 2007-IB Rating ------ Class To From ----- -- ---- I AA/Watch Neg AA STARTS (Ireland) PLC Series 2007-22 Rating ------ Class To From ----- -- ---- Notes A+ A+/Watch Neg Strata Trust Series 2006-2 Rating ------ Class To From ----- -- ---- Notes AA-/Watch Neg AA- Terra CDO SPC Ltd. Series 2007-1 SEGREGATED PORT Rating ------ Class To From ----- -- ---- B1 BBB+/Watch Neg BBB+ TIERS Derby Synthetic CDO Floating Rate Credit Linked Trust Series 2007-11 Rating ------ Class To From ----- -- ---- Certs AAA AAA/Watch Neg TIERS Montana Floating Rate Credit Linked Trust Series 2007-3 Rating ------ Class To From ----- -- ---- Certificat A/Watch Neg A The Toronto-Dominion Bank Rating ------ Class To From ----- -- ---- Prt Cr Lnk B+/Watch Neg B+ Tribune Ltd. Series 19 MAPLES 2004-1789 Rating ------ Class To From ----- -- ---- Trance D2 BBB+/Watch Neg BBB+ Tribune Ltd. Series 42 Rating ------ Class To From ----- -- ---- Tranche A A/Watch Neg A Tribune Ltd. Series 45 Rating ------ Class To From ----- -- ---- Tranche AAA/Watch Neg AAA Tribune Ltd. Series 47 Rating ------ Class To From ----- -- ---- Notes AA-/Watch Neg AA- * David A. McKibbin Joins McDonald Hopkins-WPB Unit as Of Counsel ----------------------------------------------------------------- David A. McKibbin joined the West Palm Beach office of McDonald Hopkins LLC as Of Counsel. A practicing attorney for more than 30 years, McKibbin focuses on commercial business and real estate law in the firm's Business Department. "We are delighted to have David McKibbin join McDonald Hopkins," John Metzger, managing attorney of the firm's West Palm Beach office, said. "His real estate, hospitality and equine practice is an excellent fit for McDonald Hopkins." Mr. McKibbin's experience includes all facets of commercial business law, such as contract negotiations, lender and borrower loan documentation, and corporate and partnership counseling. He specializes in the real estate, hotel/hospitality and thoroughbred equine industries. Mr. McKibbin's real estate expertise includes drafting condominium and timeshare documents, preparing retail and office leases, representing clients before regulatory bodies, and advising clients on title insurance matters. In the hotel and hospitality industry, Mr. McKibbin counsels clients on sales, acquisitions, and refinancing of properties, and has extensive interaction with national franchisors on behalf of local and regional franchisees. His specialized knowledge of equine law encompasses partnership agreements for racing stables and breeding farms, stallion syndicate agreements, insurance settlement agreements, and appearances before regulatory agencies and legislative committees. About McDonald Hopkins LLC McDonald Hopkins LLC -- http://www.mcdonaldhopkins.com/-- is a full-service firm focused on business law, litigation, restructuring, and estate planning. The company has more than 130 attorneys in Cleveland, Chicago, Columbus, Detroit, and West Palm Beach. * Structured Finance Lawyer Mark S. Dola Joins King & Spalding -------------------------------------------------------------- King & Spalding reported that structured finance lawyer Mark S. Dola has joined the firm's Washington office as counsel. He will focus his practice on structured derivatives and securitization transactions and will participate actively in the firm's subprime and capital markets special task force. "We are delighted to welcome [Mr. Dola] to the firm," Robert S. Finley, head of King & Spalding's finance group, said. "[Mr. Dola] brings substantive experience in the structured finance sector to the firm." "His addition to the finance practice further enhances our ability to provide clients with the expertise and service they need," Mr. Finley added. Mr. Dola advises issuers, underwriters, and placement agents in securitization transactions involving a variety of assets classes, including credit card and trade receivables and has considerable experience with collateralized debt obligations, credit-linked notes, and credit default swaps. Mr. Dola joins King & Spalding from McKee Nelson LLP, where he was of counsel. Mr. Dola earned a B.A. degree at Yale University and a J.D. degree, cum laude, from Georgetown University Law Center. "I am thrilled to be joining King & Spalding," Mr. Dola said. "The solid reputation and talented lawyers of the firm's finance practice present exciting opportunities for someone with my experience, and I look forward to contributing to the firm's growth." About King & Spalding King & Spalding LLP -- http://www.kslaw.com/-- is an international law firm with more than 800 lawyers in Atlanta, Dubai, Houston, London, New York, Riyadh (affiliated office) and Washington, D.C. The firm represents half of the Fortune 100. King & Spalding is into financial restructuring practices. It provides valuable knowledge and in-depth experience to virtually all facets of corporate reorganizations, in-court and out-of-court debt restructuring, bankruptcy and insolvency litigation, and distressed asset mergers and acquisitions. This practice is regularly retained in bankruptcy matters and workouts to represent debtors, trustees, creditors' committees, institutional lenders, other critical creditors and parties-in-interest, and potential acquirers of businesses and large assets. The Houston office of King & Spalding, with more than 100 lawyers, provides a variety of services to clients the world over. Chief among its practices are those focusing on litigation and transactional law, especially energy, international arbitration and Latin American matters. * Ascend Says US Major Airlines Face $110BB Fleet Upgrade Costs --------------------------------------------------------------- Over the next decade the major US airlines are facing a potentially crippling bill running to over one hundred billion dollars to upgrade their ageing fleets, according to industry experts. Analysis by Ascend, a provider of information and consultancy to the aerospace industry, reveals that the airlines face being stuck with old aircraft for years to come because they do not have enough firm orders to replace them. Order backlogs at both Boeing and Airbus means there is unlikely to be any quick fix. The problems are particularly acute for major US carriers American Airlines, Northwest Airlines and United Airlines. All have significant numbers of ageing aircraft in service that will need to be replaced in the next few years. However, order backlogs and delays to new aircraft, such as that for the 787 disclosed by Boeing on April 9, 2008, mean that even if those replacements were ordered, they would not be delivered until around 2012-2015. If American Airlines and United Airlines fail to place those orders soon Ascend's data shows that in 2015 American Airlines' fleet of: -- 15 Boeing 767-200ER will be on average 28 years old; -- 58 Boeing 767-300ER will be on average 21 years old; -- 126 Boeing 757-200 will be on average 19 years old. And for United Airlines, in 2015 its fleet of: -- 64 Boeing 737-300 will be on average 26 years old; -- 30 Boeing 737-500 will be on average 23 years old; -- 97 Boeing 757-200 will be on average 23 years old; -- 35 Boeing 767-300ER will be on average 20 years old. The bill for replacing these aircraft alone is likely to come to around $20 billion for each airline. In the case of Northwest its warhorse fleet of around 100 DC9's is approaching 40 years in service. "It is far from exaggerating to say we really are at crisis point for these airlines," Gehan Talwatte, managing director of Ascend said. "American, Northwest and United will need huge numbers of new aircraft in the next decade. The difficulty is that without already having the orders in place those aircraft are not going to be delivered any time soon." "But this challenge pales next to the issue of where the financing is going come from," Mr. Talwatte continued. "All of the major US carriers, apart from American Airlines, have been through Chapter 11 bankruptcy. But the tightening of the credit markets we have seen this year means lenders are much more risk averse. If a lack of financing delays these orders then American, Northwest and United are likely to be facing their toughest challenges yet." "It is difficult to see how consolidation of the US market will help to solve this problem, unless there is wholesale rationalisation of services and aircraft.'" American Airlines, Northwest Airlines and United Airlines may have short term fleet issues to address, but according to Ascend's analysis all six of the US majors i.e. American Airlines, United Airlines, Delta Air Lines, Northwest Airlines, Continental Airlines and US Airways, will need to place substantial orders for replacement aircraft in the next 5 to 10 years. Ascend estimates that combined, the six airlines have these aircraft in service that over the next 15 years will be coming to the end of their working life: -- 34 Airbus A300-600 -- 435 MD-80 -- 400 Boeing 757-200 -- 145 Boeing 767 -- 289 Boeing 737 "Classic" -- 25 Boeing 747-400 -- 92 DC-9 In total, the bill for replacing these 1420 aircraft will, at current prices, come to over $110 billion. Some orders and options for replacements have already been made by the six airlines, but Ascend's data shows there are still many more orders necessary. Asia ahead Ascend also compared the current situation of the US majors with their rivals in Asia and the Middle East. The data reveals that these carriers already have substantial orders in place for the next generation of aircraft scheduled for delivery in the next few years: -- Emirates Airlines - has 193 new aircraft on order, more than its current fleet of 115. Current average fleet age is just 5 years. -- Qatar Airways - has 145 new aircraft on order. It has a fleet of 61 aircraft, with an average age of 4 years. -- Singapore Airlines - has 82 new aircraft on order. Its existing fleet of 97 aircraft has an average age of 6 years. -- China - more than 800 new aircraft are scheduled for delivery to various airlines by 2016. "What this means for the US majors is that without radical change they will continue to fall further and further behind, " added Mr. Talwatte. "Carriers like Singapore Airlines and Emirates are already flying younger more fuel efficient aircraft and have more on the way." "Newer aircraft are substantially more fuel efficient and require less maintenance," " Mr. Talwatte concluded. "Add in the soaring price of fuel and it is clear there are big savings for carriers with fleets of the newest, most up to date aircraft. US major airlines, with their ageing fleets will not be able to compete." * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($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. 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, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, 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 ***