/raid1/www/Hosts/bankrupt/TCR_Public/080416.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, April 16, 2008, Vol. 12, No. 90
Headlines
2038 NOTES: Moody's Junks Rating on $82.5 Million Class B Notes
ABITIBIBOWATER INC: S&P Junks Ratings on $350MM Convertible Notes
ADAM AIRCRAFT: Pueblo City Demands $2 Million Repayment
AMERICAN TECH: Sells North Texas Steel & Whitco Shares to NTS-WIT
AMDL INC: CFO Ariura's Annual Compensation Increased to $210,000
ASARCO LLC: Judge Schmidt Clarifies Examiner's Duties
ASARCO LLC: Court Stretches Plan-Filing Period to June 10
ASARCO LLC: Wants to Obtain $5 Mil. Credit Facility from JPMorgan
ASPEN TECH: Posts $9 Million Net Loss in Quarter Ended Sept. 30
ASPEN TECH: Earns $45.5 Million in Fiscal Year Ended June 30
ATHLETES WORLD: Impacts Forzani's Fourth Quarter 2008 Earnings
ATLANTIC WINE: Inks LOI to Acquire IEC's Oil & Gas Business
ATSI COMMS: Accounts Receivable Financing Increased to $5,000,000
AMERICAN AXLE: Mexico Axle Plant Supplies Auto Parts to GM
BALLY TOTAL: Discloses Plan Distribution for Former Stockholders
BANCO FIBRA: S&P Puts 'BB-' Foreign Currency Rtng. on $150MM Notes
BAYOU GROUP: Court Slaps 20-Yr. Prison Sentence to Exec. for Fraud
BEAR STEARNS: JPMorgan Buys 3.9 Million Shares for $33.1 Million
BERRY PLASTICS: $530 Mil. Note Issuance Spurs Moody's 'B3' Rating
BERRY PETROLEUM: S&P Lifts Corp. Credit Rating to BB from BB-
BLOCKBUSTER INC: Circuit City Bid Won't Affect S&P's Ratings Now
BOMBARDIER INC: S&P Lifts Ratings to BB+ from BB; Removes Watch
BUFFETS HOLDINGS: Seeks Court OK To Reject 23 Exectory Contract
BUFFETS HOLDINGS: Wants to Hire Quinn Emanuel as Counsel
BUFFETS HOLDINGS: U.S. Trustee Balks at Tahoe Joe's Bonus Payment
BUFFETS HOLDINGS: Wants Until April 21 to File Schedules
CAPITALSOURCE INC: Planned Fremont Deal Cues Fitch to Hold Ratings
CARRINGTON MORTGAGE: Fitch Lowers Ratings on $245.4MM Certificates
CHRYSLER LLC: Confirms New OEM Product Pacts with Nissan Motor
CLASSICSTAR LLC: Court Approves U.S. Trustee's Conversion Plea
CLAYTON HOLDINGS: Greenfield Deal Wont Affect S&P's 'B' Rating
CLST HOLDINGS: Posts $310,000 Net Loss in Quarter Ended Feb. 29
CRAB BARN: Case Summary & 19 Largest Unsecured Creditors
DEL MONTE: Solid Market Position Cues Moody's Rating Affirmations
DELTA AIR: Reaches $17.7 Bil. All-Stock Merger Pact with Northwest
DELTA AIR: Northwest Pilots and Machinist Oppose Merger
DILLARD'S INC: Moody's Downgrades Corporate Credit Rating to 'B1'
DILLARD'S INC: S&P Cuts Rating to BB- from BB with Stable Outlook
DIOMED HOLDINGS: To Pay Hercules $6 Mil. from Settlement Proceeds
DORADO BECKVILLE: Case Summary & 20 Largest Unsecured Creditors
EMAGIN CORP: Dec. 31 Balance Sheet Upside Down by $3.975 Million
ESKIM LLC: Case Summary & Seven Largest Unsecured Creditors
FLOWSERVE CORP: Fitch Affirms 'BB' Ratings with Positive Outlook
FORD CREDIT: Moody's Gives 'Ba1' Initial Rating on Class D Notes
FORD CREDIT: Fitch to Assign 'BB' Rating on $21MM Class D Trusts
FORD CREDIT: S&P Puts 'BB+' Preliminary Rating on Class D Notes
FRED LEIGHTON: Chapter 11 Filing Stays Auction of $34 Mil. Assets
FRED LEIGHTON: Voluntary Chapter 11 Case Summary
FRESHWATER OF HARRISBURG: Case Summary & 12 Largest Creditors
FRIEDMAN INC: White Jewelers Acquires Certain Assets for $14.3MM
FRONTIER AIRLINES: Bankruptcy Filing Prompts Securities Delisting
GENTA INC: Eliminates 30% Workforce in Restructuring Operations
GENERAL MOTORS: Reopens Two Plants Supplied by Axle in Mexico
GREAT PANTHER: Reduces Exercise Price of WK Warrants to $1.42
GTM HOLDINGS: Weak Credit Metrics Cues Moody's Rating Cut to 'B3'
HEARTLAND AUTOMOTIVE: Wants Until September 6 to File Ch. 11 Plan
HSBC HOME: Fitch Downgrades Ratings on $225.6 Million Certificates
ICEWEB INC: Names Ret. Gen. Harry E. Soyster to Board of Directors
INGLESIDE TEXAS: S&P Lifts Bond Rating to BBB from BB
INGLESIDE TEXAS: S&P Lifts Rating on GO Debt to BBB from BB
JEFFERSON COUNTY: Deadline to Pay Sewer Debt Extended by 30 Days
JPMORGAN CHASE: S&P Affirms Low-B Ratings on Five Cert. Classes
KEY COMMERCIAL: Stable Performance Cues Fitch to Affirm Ratings
KNIGHT INC: Reduction in Leverage Prompts Moody's Rating Upgrades
LANDING DEVELOPMENT: Case Summary & 31 Largest Unsecured Creditors
LEVITT AND SONS: Wants Plan-Filing Period Stretched to May 12
LEVITT AND SONS: Committee Can Hire Bilzin Sumberg as Tax Counsel
LEVITT AND SONS: Wants to Reject CBS Outdoor Contracts
LID LTD: Gets Court Approval to Access Banks' Cash Collateral
LINENS 'N THINGS: To Defer $16.1MM Interest Payment on Sr. Notes
LINENS 'N THINGS: Likely Default Cues Fitch to Cut ID Rating to C
MAJESTIC STAR: Dec. 31 Balance Sheet Upside-Down by $167.8 Million
MANITOWOC COMPANY: Moody's Confirms Low-B Ratings on Enodis Deal
MERRILL LYNCH: S&P Chips Ratings on Five Classes of Certificates
MGM MIRAGE: Saves $75MM on Costs with 440 Managerial Staff Cuts
MOVIE GALLERY: Files Additional Supplements to 2nd Amended Plan
MOVIE GALLERY: Assumes More Leases to Appease Landlords
MOVIE GALLERY: Rejects 320+ Leases Including Hollywood Stores
MYSTIQUE ENERGY: Court Extends CCAA Protection Until Sept. 15
NEUROGEN CORP: Offers Exchangeable Preferred Stock for $30.6MM
NEW CENTURY: Fitch Chips Ratings on $692.8 Million Certificates
NEWPORT TELEVISION: Moody's Junks Rating on $100 Mil. Senior Notes
NEW YORK TIMES: Eliminates 100 News Staff to Cut Operating Costs
NICK'S OF BOCA: Placed into Chapter 7 Liquidation by Owner
NIELSEN COMPANY: Confirms 10% Reduction of Total Workforce
NORTH COAST: A.M. Best Affirms C++(Marginal) Issuer Credit Rating
NORTHWEST AIRLINES: Reaches $17.7BB All-Stock Pact with Delta
NORTHWEST AIRLINES: Pilots and Machinist Oppose Delta Merger
ORIGEN FINANCIAL: Completes $46 Million Secured Note Financing
PACIFIC LUMBER: Court Extends Confirmation Hearing to April 29
PACIFIC LUMBER: More Parties Back Marathon/Mendocino Plan
PACIFIC LUMBER: Scopac Challenges Validity of BoNY Liens
PARADISE MUSIC: Employs Carlton Capital as Financial Advisor
PARKER HUGHES: Seeks Liquidation of Assets Under Chapter 7
PINE TREE: Moody's Cuts Rating on $4 Mil. Notes to 'B1' From 'A3'
PLACER VINEYARDS: Case Summary & Three Largest Unsecured Creditors
PLASTECH ENGINEERED: Panel Opposes Payment to Repudiating Vendors
PLASTECH ENGINEERED: Rejects 70 Reclamation Demands on Claims
PORTOLA PACKAGING: Feb. 29 Balance Sheet Upside Down by $103.3MM
PRICELINE.COM INC: Good Performance Prompts S&P to Lift Ratings
QUALITY DISTRIBUTION: Weak Performance Cues S&P to Revise Outlook
RECKSON OPERATING: Fitch Holds 'BB+' Rating; Removes Neg. Watch
REMY WORLDWIDE: Court Sets Hearing to Close Case on April 23
REVLON INC: Posts Preliminary Results For the 2008 First Quarter
REVLON INC: Receives Requisite Approvals For Reverse Stock Split
RIVER ROCK: Dec. 31, 2007 Balance Sheet Upside Down by $26.0 Mil.
SEA CONTAINERS: Court OKs Navigant Consulting as Pension Advisors
SEA CONTAINERS: Panel Obtains International Judicial Assistance
SPECTRUM BRANDS: S&P Holds 'CCC+' Rating Revises Outlook to Dev.
ST JOSEPH'S HOSPITAL: Patients Seek Medical Records Copy
STRUCTURED INVESTMENTS: Moody's Reviews 'B2' Rating on $10MM Notes
TCM MEDIA: Moody's Withdraws All Ratings on Business Reasons
TRICOM SA: Banco Multiple Leon Wants Bankruptcy Plan Revised
TRUMP ENTERTAINMENT: Moody's Junks Probability of Default Rating
TUCSON ELECTRIC: S&P's Rating Unaffected by ACC's Letter to UNS
VERMILLION INC: Appoints John Hamilton to Board of Directors
WASHINGTON MUTUAL: Amends Performance Bonuses Plan for Executives
* S&P Says 38 Rated Entities Are Identified As Fallen Angels
* S&P Expects Global Packaging Sector to Face Downgrade Pressures
* S&P Downgrades Ratings on 31 Tranches From Eight Hybrid CDOs
* S&P Cuts Ratings on Eight Classes from Four US RMBS Transaction
* David A. White Joins McCarter & English as Litigation Partner
* Justin Mirro Joins as a Managing Director of Moelis & Company
* Two Jefferies Advisors Join Moelis' Restructuring Group
* SMH Capital is Exclusive Agent in Liquidation of $2.8 Bil. CDOs
* Total Bankruptcy Filings Increase Nearly 38 Percent in 2007
* Upcoming Meetings, Conferences and Seminars
*********
2038 NOTES: Moody's Junks Rating on $82.5 Million Class B Notes
---------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade these notes:
Class Description: $60,000,000 Class A-1 Floating Rate Senior
Subordinate Secured Notes Due 2038
-- Prior Rating: Aaa
-- Current Rating: A3, on review for possible downgrade
Class Description: $15,000,000 Class A-2 Floating Rate Subordinate
Secured Notes Due 2038
-- Prior Rating: Aaa
-- Current Rating: Baa1, on review for possible downgrade
Moody's also downgraded these notes:
Class Description: $82,500,000 Class B Floating Rate Junior
Subordinate Secured Notes Due 2038
-- Prior Rating: Baa3, on review for possible downgrade
-- Current Rating: Ca
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's
underlying collateral pool, which consists primarily of structured
finance securities.
ABITIBIBOWATER INC: S&P Junks Ratings on $350MM Convertible Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned recovery ratings to
the senior unsecured debt issues of AbitibiBowater Inc., Abitibi-
Consolidated Inc., and Bowater Inc. At the same time, S&P lowered
the issue-level rating on these debts to 'CCC+' from 'B-'.
Based on a separate recovery analysis of each entity, S&P assigned
a recovery rating of '5 ' to the issues, indicating the
expectation for a modest (10%-30%) recovery in the event of a
payment default.
S&P also assigned an issue-level rating of 'CCC+', with a recovery
rating of '5', to the US$350 million convertible notes issued by
AbitibiBowater. These notes are guaranteed by Bowater, and
therefore rank pari passu with Bowater's unsecured debts.
Ratings List
AbitibiBowater Inc.
Corporate credit rating B-/Negative/--
Abitibi-Consolidated Inc.
Corporate credit rating B-/Negative/--
Bowater Inc.
Corporate credit rating B-/Negative/--
Ratings Lowered/Recovery Rating Assigned
To From
-- ----
AbitibiBowater Inc.
Senior unsecured debt CCC+ (Recovery rating: 5) B-
Abitibi-Consolidated Inc.
Senior unsecured debt CCC+ (Recovery rating: 5) B-
Bowater Inc.
Senior unsecured debt CCC+ (Recovery rating: 5) B-
Rating Assigned
AbitibiBowater Inc.
US$350 mil. convertible notes CCC+ (Recovery rating: 5)
ADAM AIRCRAFT: Pueblo City Demands $2 Million Repayment
-------------------------------------------------------
Officials of Pueblo City, Colorado, indicated plans to demand
payment of $2 million from bankrupt Adam Aircraft Inc., aka Adam
Aircraft Industries, The Associated Press reports.
The city extended $1.4 million to the Debtor in exchange for a
promise of the creation of 440 jobs, AP quotes Pueblo attorney Tom
Jagger, Esq. Pueblo City also claimed it acquired and renovated a
building for Adam Aircraft, AP relates.
As reported in the Troubled Company Reporter on April 9, 2008,
Adam Aircraft's assets were sold to AAI Acquisition Inc. for $10
million plus assumption of debts. AP reports that the U.S.
Bankruptcy Court in Colorado approved that sale a week ago.
According to AP's report, AAI Acquisition intends to resume
operations at Centennial, Colorado but has no immediate plans to
resume operations at the cities of Pueblo or Ogden.
About Adam Aircraft
Denver, Colorado-based Adam Aircraft Inc., aka Adam Aircraft
Industries -- http://www.adamaircraft.com/-- designs and
manufactures advanced aircraft for civil and government markets.
The A500 twin-engine piston aircraft has been Type Certified by
the FAA, and the A700, which is currently undergoing flight test
and development.
The Debtor filed for chapter 7 liquidation on Feb. 15, 2008, with
the U.S. Bankruptcy Court in Colorado after failing to secure
financing. It also laid off 800 workers and listed assets between
$1 million and $10 million, and debts between $50 million and
$100 million.
AMERICAN TECH: Sells North Texas Steel & Whitco Shares to NTS-WIT
-----------------------------------------------------------------
On April 7, 2008, American Technologies Group Inc., as the owner
of all of the issued and outstanding shares of Omaha Holdings
Corp., Omaha Holdings Corp. and NTS-WIT Holdings LLC entered into
a Stock Purchase and Sale Agreement pursuant to which Omaha
Holdings agreed to sell to NTS-WIT Holdings all of its issued and
outstanding shares in wholly owned North Texas Steel Company Inc.
and Whitco Poles Inc.
The shares comprise substantially all of the assets of Omaha
Holdings, and the issued and outstanding shares of stock of Omaha
Holdings, comprise substantially all of the assets of the company.
NTS-WIT Holdings is a wholly owned subsidiary of Laurus Master
Fund Ltd. As disclosed in the company's Quarterly Report on Form
10-QSB for the quarter ended Jan. 31, 2008, the company received a
notice of default with respect to its current obligations due to
Laurus and a demand for the immediate payment of all past due
amounts owned to Laurus in the amount of $13,580,810.
A summary of material terms of the purchase agreement:
-- Seller will sell to purchaser the shares for a purchase
price equal to the then total outstanding principal amount of
indebtedness owned by the company to Laurus plus all accrued
and unpaid interest thereon. Simultaneously, all evidence of
indebtedness owed by the company to Laurus will be deemed
paid in full and shall be cancelled. The company is also
indebted to the Gryphon Master Fund L.P. in the amount of
$500,000 plus accrued and unpaid interest, and the Gryphon
Debt will be simultaneously satisfied and cancelled.
-- Warrants and options of the company issued to Laurus will be
partially terminated so that Laurus shall not own more than
25% of the issued and outstanding shares of common stock of
the company on a fully diluted basis, as of the date of
closing.
-- Conditions precedent to closing include, but are not limited
to, (i) completion of due diligence by purchaser to its sole
satisfaction, (ii) entry into a management agreement by and
between purchaser and a management team, and (iii) approval
of the purchase agreement by the shareholders of the company.
The company will seek shareholder approval of the purchase
agreement through a special shareholders meeting to be held on
June 15, 2008, subject to the company's ability to file a
Definitive Schedule 14A with the Securities and Exchange
Commission.
A full-text copy of the Stock Purchase and Sale Agreement, dated
April 7, 2008, is available for free at:
http://researcharchives.com/t/s?2a8d
About American Technologies
Based in Fort Worth, Texas, American Technologies Group Inc.
(NASDAQ: ATEG) -- was engaged, prior to 2001, in the development,
commercialization and sale of products and systems using patented
and proprietary technologies including catalyst technology and
water purification.
The company largely ceased operations during 2001 and began
focusing efforts on restructuring and refinancing. In September
2005, the company entered into various financing transactions and
acquired North Texas Steel Company Inc., an AISC Certified
structural steel fabrication company based in Fort Worth, Texas.
On April 25, 2006, the company purchased certain assets of Whitco
Company LP, a business conducting the sale and distribution of
steel and aluminum lighting poles. The Whitco assets are held in
a separate subsidiary called Whitco Poles Inc.
As reported in the Troubled Company Reporter on March 27, 2008,
American Technologies Group Inc.'s consolidated balance sheet at
Jan. 31, 2008, showed $17,747,188 in total assets and $23,753,019
in total liabilities, resulting in a $6,005,831 total
stockholders' deficit.
Going Concern Doubt
RBSM LLP, in New York, expressed substantial doubt about American
Technologies Group Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended July 31, 2007. The auditing firm reported that the
the company has suffered recurring losses and is experiencing
difficulty in generating sufficient cash flow to meet its
obligations and sustain its operations.
AMDL INC: CFO Ariura's Annual Compensation Increased to $210,000
----------------------------------------------------------------
Effective April 8, 2008, the base annual compensation of AMDL
Inc.'s chief financial officer, Akio Ariura, was increased from
$185,000 per year to $210,000.
Mr. Ariura may also receive additional bonuses or other
compensation as awarded from time to time by the company's
Compensation Committee. Mr. Ariura does not serve under a written
employment agreement with AMDL Inc.
About AMDL Inc.
Based in Tustin, California, AMDL Inc. (AMEX: ADL) --
http://www.amdl.com/-- is a vertically integrated specialty
pharmaceutical company with operations in Shenzshen, Jiangxi, and
Jilin, China. In combination with its subsidiary Jade
Pharmaceutical Inc., AMDL engages in the research, development,
manufacture, and marketing of diagnostic products.
At Dec. 31, 2007, the company's consolidated balance sheet showed
$32,867,178 in total assets, $7,145,665 in total liabilities, and
$25,721,513 in total stockholders' equity.
Going Concern Disclaimer
KMJ Corbin & Company LLP, in Irvine, Calif., expressed substantial
doubt about AMDL Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the years ended Dec. 31, 2007, and 2006. The auditing firm said
that the company has incurred significant operating losses and
negative cash flows from operations through Dec. 31, 2007, and has
an accumulated deficit at Dec. 31, 2007.
ASARCO LLC: Judge Schmidt Clarifies Examiner's Duties
-----------------------------------------------------
The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for
the Southern District of Texas ruled that the examiner in the
Debtors' cases will monitor and assess whether the Plan Sponsor
Selection Meeting is being conducted in a manner consistent with
the Interim Bidding Procedures Order.
The Court directed the Examiner to exercise caution so as not to
chill the bidding or negatively affect the bid process.
The Examiner may attend the Plan Sponsor Selection Meeting at the
office of Baker Botts L.L.P., at 2001 Ross Avenue, in Dallas,
Texas. Counsel for the Debtors will notify the Examiner of the
date and time of the Plan Sponsor Selection Meeting. The Debtors
will timely provide all submitted bids and proposals to the
Examiner, and provide background as the Examiner reasonably deems
appropriate in the performance of his duties. The Examiner will
be entitled to receive confidential information, provided that
the Examiner will maintain the confidentiality of the
information.
In the event any participant in the Plan Sponsor Selection
Meeting believes that the plan sponsor selection process is being
conducted in a manner inconsistent with the Interim Bidding
Procedures Order, the participant may discuss the alleged
inconsistency with the Examiner. The Examiner will examine the
inconsistency, may seek to facilitate communications among the
parties, and to the extent the Examiner deems appropriate, report
to the Court regarding the plan sponsor selection process.
The Examiner will be paid for its duties.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/
-- is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
The Debtors have until June 10, 2008 to file a Chapter 11 plan of
reorganization. (ASARCO Bankruptcy News, Issue No. 70; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
ASARCO LLC: Court Stretches Plan-Filing Period to June 10
---------------------------------------------------------
The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for
the Southern District of Texas extended ASARCO LLC and its debtor-
affiliates' exclusive period to file a plan of reorganization
until June 10, 2008, and their exclusive period to solicit
acceptances of that plan until Aug. 12, 2008.
Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital
Partners Special Situations Fund, L.P., and Citigroup Global
Markets, Inc., as holders of majority of the unsecured bonds
issued by ASARCO LLC, told the Court that they support further
extension of ASARCO's exclusive periods to the extent that ASARCO
remain committed to the timeline established by the bidding
procedures. If the Debtors abandon or materially alters the
timetable for selecting a plan sponsor or if the process if
unnecessarily delayed to the detriment of creditors for any
reason, the Majority Bondholders said they reserve the right to
seek termination of exclusivity.
Asarco Incorporated and Americas Mining Corporation said they
object to further extension of the exclusive periods to the
extent duties have not been assigned to a Chapter 11 examiner.
Asarco Inc. and Americas Mining believe that unless duties are
assigned to an examiner, exclusivity should be terminated to
allow them to propose their own plan of reorganization.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/
-- is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
(ASARCO Bankruptcy News, Issue No. 70; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
ASARCO LLC: Wants to Obtain $5 Mil. Credit Facility from JPMorgan
-----------------------------------------------------------------
ASARCO LLC and its debtor-affiliates seek authority from the U.S.
Bankruptcy Court for the Southern District of Texas to enter into
a $5,000,000 letter of credit facility with JPMorgan Chase Bank,
N.A., and pay a $15,000 up-front deposit to JPMorgan for due
diligence and documentation fees and expenses.
The salient terms of the JPMorgan Credit Facility are:
Credit Facility: $5,000,000 twelve-month credit facility
for the issuance of letters of credit
Closing Date: On or before May 15, 2008
Collateral: Each letter of credit issued under the
Credit Facility and all fees and associated
expenses and all interests on any
unreimbursed draws will be secured by cash
collateral, to be provided in advance of the
issuance, in the amount of 110% of the face
amount of the Letter of Credit
Commitment Fee: A commitment fee equal to 0.50% per annum on
the Commitment, payable annually to JPMorgan
from the Closing Date until termination of
the Commitment.
Letter of
Credit Fee: A letter of credit fee, equal to 1.5% per
annum, on the daily maximum amount to be
drawn under all letters of credit, payable
monthly in arrears to JPMorgan, together
with a $500 per issuance fee, plus any
documentary and processing charges in
accordance with JPMorgan's standard schedule
for charges with respect to the issuance,
amendment, cancellation, negotiation or
transfer of each letter of credit and each
drawing made thereunder.
Expenses: ASARCO will pay all reasonable, documented
out-of-pocket expenses of JPMorgan
associated with the preparation, execution,
delivery, administration and enforcement of
the Credit Facility and any amendment or
waiver and reasonable, documented fees and
expenses of other advisors and professionals
engaged by JPMorgan.
Deposit: A $15,000 deposit will be used to cover
JPMorgan's reasonable, documented out-of-
pocket expenses, including reasonable fees,
time charges and expenses of its attorneys,
due diligence expenses, syndication
expenses, if any, consultants' fees and
expenses, if any, and travel expenses.
Additional deposits may be required. If the
Credit Facility is not consummated for
whatever reason, the unused portion of the
deposit will be returned to ASARCO.
Default Rate: After default, the Letter of Credit Fee will
be increased by 2% per annum.
In December 2005, the Court authorized ASARCO to signed a
$75,000,000 DIP loan facility with The CIT Group/Business Credit.
The CIT DIP Facility, which included a letter of credit sub-
facility for ASARCO's ongoing business needs, expired on its own
terms on December 15, 2007. In light of ASARCO's cash reserves,
the CIT DIP Facility was not renewed, Ishaq Kundawala, Esq., at
Baker Botts L.L.P., in Dallas, Texas, says.
In this light, the CIT DIP Facility must be replaced by a new
stand-alone letter of credit facility, ASARCO asserts.
About ASARCO
Based in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/
-- is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The
Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr.
S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L.
Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P.,
and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and
Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C.,
represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
And investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and $1
billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to
06-20776).
The Debtors have until June 10, 2008 to file a Chapter 11 plan of
reorganization. (ASARCO Bankruptcy News, Issue No. 70; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
ASPEN TECH: Posts $9 Million Net Loss in Quarter Ended Sept. 30
---------------------------------------------------------------
Aspen Technology Inc. reported a net loss of $9.0 million in the
first quarter ended Sept. 30, 2007, compared with a net loss of
$1.6 million in the same period ended Sept. 30, 2006.
Net loss applicable to common shareholders was $9.0 million in the
first quarter of fiscal 2008 compared to net loss applicable to
common shareholders of $5.3 million in the same period in fiscal
2007.
For the quarter ended Sept. 30, 2007, AspenTech reported total
revenue of $64.8 million, compared to $64.2 million in the first
quarter of fiscal 2007. License revenue was $31.1 million, an
increase of 11%, and services revenue was $33.7 million, a
decrease of 6%, compared to the first quarter of fiscal 2007.
AspenTech's loss from operations, determined in accordance with
GAAP, was $8.4 million in the first quarter of fiscal 2008. This
compares to an operating loss of $17,000 in the first quarter of
fiscal 2007.
GAAP operating expenses in the first quarter of fiscal 2008
included $2.5 million of non-cash stock-based compensation,
$7.2 million in restructuring charges due to the previously
announced move of the company's headquarters, and $1.5 million in
incremental professional services fees associated with completing
the financial restatement. In the first quarter of fiscal 2007,
the company's GAAP operating expenses included $1.7 million in
non-cash stock-based compensation, $1.9 million in amortization in
intangibles and $1.4 million in restructuring charges.
AspenTech had cash and cash equivalents of $129.5 million at
Sept. 30, 2007, a decrease of approximately $2.8 million from
$132.3 million at the end of June 30, 2007.
Operating Cash Flow
For the three months ended Sept. 30, 2007, operating activities
provided $22.3 million of cash. A net loss of $9.0 million was
offset by non-cash expenses for stock-based compensation and
depreciation and amortization totaling $5.3 million, a
$14.5 million decrease in installments and accounts receivable, a
$3.0 million decrease in unbilled services, a $1.2 million
decrease in prepaid expenses and other current assets, and a
$4.8 million increase in accounts payable and accrued expenses.
Balance Sheet
At Sept. 30, 2007, the company's consolidated balance sheet showed
$507.9 million in total assets, $378.0 million in total
liabilities, and $129.9 million in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended Sept. 30, 2007, are available for
free at http://researcharchives.com/t/s?2a83
About AspenTech
Based in Cambridge, Massachusetts, Aspen Technology Inc.
(Nasdaq: AZPN) -- http://www.aspentech.com/-- provides process
optimization software and services. AspenTech's integrated
aspenONE(TM) solutions enable manufacturers to reduce costs,
increase capacity, and optimize operational performance end-to-end
throughout the engineering, plant operations, and supply chain
management processes.
* * *
Moody's Investor Service placed the company's long-term corporate
family rating at B2 and its equity-linked rating at Caa1 in
October 2001. These ratings still hold to date with a stable
outlook.
ASPEN TECH: Earns $45.5 Million in Fiscal Year Ended June 30
------------------------------------------------------------
Aspen Technology Inc. filed on Friday its Annual Report on Form
10-K for the fiscal year ending June 30, 2007, including the
restatement of prior period results.
Net income was $17.9 million in the fourth quarter of fiscal 2007.
This represented a significant increase compared to net income of
$3.9 million in the same period of fiscal 2006. Preferred stock
discounts and dividends totaled $3.9 million in the fourth quarter
of fiscal 2006 and zero in the fourth quarter of fiscal 2007,
resulting in net income applicable to common shareholders of
$17.9 million and $52,000 in the fourth quarter of fiscal 2007 and
2006, respectively.
For the fourth quarter ended June 30, 2007, AspenTech reported
total revenue of $101.4 million, an increase of 27% from the
fourth quarter of the prior fiscal year, and above the company's
original guidance of $85 million to $89 million. Within total
revenue, license revenue was $68.0 million, an increase of 52%,
and services revenue was $33.4 million, a decrease of 4%, compared
to the fourth quarter of fiscal 2006, respectively.
Brad Miller, chief financial officer of AspenTech, said "We are
pleased to bring approximately nine months of comprehensive review
of our financial accounts to a close with the filing of our fiscal
2007 10-K and first quarter fiscal 2008 10-Q financial statements.
Our work included a detailed examination and restatement of prior
financial statements, as well as a review of all significant
accounting policies and processes.
"Although it took longer than expected, we believe it was in the
long-term interest of our shareholders and will benefit the
company as we look to scale the business in the years ahead. With
this significant body of work now behind us, we are highly focused
on completing our overall goal of bringing our financial
statements current and becoming relisted on a national securities
exchange."
Mark Fusco, chief executive officer of AspenTech, said "While the
finance department has been focused on completing our financial
statement filings, the company's customer facing operations have
continued to execute at a high level. Following a record fiscal
2007 performance, the company has generated year-over-year license
bookings growth of 25% during the first nine months of fiscal
2008, including 31% year-over-year growth during the third
quarter."
Fusco added, "The company ended the third fiscal quarter with a
strong financial position highlighted by $137 million in cash, an
increase from $132 million at Dec. 31, 2007, and net of
$12 million used during the third quarter to retire our previously
existing Key Bank secured borrowing facility. We continue to be
optimistic about the company's long-term fundamental outlook based
on our industry leading domain expertise, unique suite of aspenONE
solutions and solid demand in our core markets."
AspenTech's income from operations, determined in accordance with
generally accepted accounting principles, was $24.0 million in the
fourth quarter of fiscal 2007, exceeding the mid-point of the
company's original guidance of approximately $16 million and
representing an operating margin of 23.7%. This compares to
operating income of $7.7 million in the fourth quarter of fiscal
2006, which represented an operating margin of 9.7%.
GAAP operating expenses in the fourth quarter of fiscal 2007
included $3.1 million of non-cash stock-based compensation,
$1.3 million of non-cash amortization of intangibles associated
with previous acquisitions, $1.0 million in restructuring charges
due to the company's continued office consolidations, and $800,000
in incremental auditing and professional fees associated with
bringing the company's financial statements current - the
combination of which reduced the company's operating margin by
approximately 6 percentage points. These items reduced the prior
year's operating margin by approximately 8 percentage points.
Fiscal Year 2007 Financial Results
For the fiscal year ended June 30, 2007, AspenTech reported total
revenue of $341.0 million, an increase of 16% from fiscal 2006.
Within total revenue, license revenue was $199.8 million, an
increase of 30%, and services revenue was $141.3 million, an
increase compared to $140.7 million, in fiscal 2006, respectively.
AspenTech's income from operations, determined in accordance with
GAAP, was $55.4 million in fiscal 2007, representing an operating
margin of 16.2%. This compares to operating income of
$18.8 million in fiscal 2006, which represented an operating
margin of 6.4%.
GAAP operating expenses in fiscal 2007 included $11.1 million of
non-cash stock-based compensation, $6.5 million of non-cash
amortization of intangibles associated with previous acquisitions,
$4.6 million in restructuring charges due to the company's
continued office consolidations, and $800,000 in incremental
auditing and professional fees associated with bringing the
company's financial statements current - the combination of which
reduced the company's operating margin by approximately 7
percentage points. These items reduced the prior fiscal year's
operating margin by approximately 7 percentage points.
Net income was $45.5 million in fiscal 2007, compared with net
income of $6.5 million in fiscal 2006.
Net income applicable to common shareholders was $38.2 million in
fiscal 2007, which was net of $7.3 million in preferred stock
discounts and dividends. This represented a significant increase
compared to a loss attributable to common shareholders of
$8.9 million in fiscal 2006, which was net of $15.4 million in
preferred stock discounts and dividends.
AspenTech had cash and cash equivalents of $132.3 million at
June 30, 2007, an increase of approximately $31.5 million from
$100.8 million at the end of March 31, 2007.
Summary of Restatement Effects
of Prior Period Financial Results
The company's Annual Report on Form 10-K for fiscal 2007 included
the restatement of its financial statements for fiscal years ended
June 30, 2006, and 2005, in addition to the first three quarters
of the year ended June 30, 2007.
On June 11, 2007, the company announced that it had identified
errors related to the accounting for sales of installment
receivables. In particular, the company determined that certain
sales of installments receivable did not meet criteria for true
sale accounting on an ongoing basis.
As a result, two new balance sheet accounts were created -
Collateralized Receivables and the related Secured Borrowing
liability. The restated consolidated balance sheet as of June 30,
2006, includes the recording of $211.3 million in collateralized
receivables, the related recording of $182.4 million in secured
borrowings, and the elimination of $19.0 million in retained
interest in sold receivables.
As previously stated, the company views this newly reported
liability as self funding, with collections of collateralized
receivables servicing the liability. The company does not believe
that this accounting conclusion alters its arrangements with its
customers, and it has not changed its economic relationship with
the financial institutions.
The summary impact to income/loss from operations related to the
restatement of installments receivable, in addition to correcting
other errors in the company's previously reported financial
statements, was:
-- Income from operations improved from $28.1 million as
previously reported to $31.4 million as restated for the nine
months ended March 31, 2007;
-- Income from operations in fiscal 2006 was $18.8 million both
as previously reported and as restated;
-- Loss from operations in fiscal 2005 improved from a
previously reported operating loss of $70.0 million to a
restated operating loss of $59.0 million.
On Feb. 11, 2008, the company announced it had identified errors
relating to its historical accounting for income taxes for certain
international tax obligations, primarily arising from transactions
among consolidated subsidiaries or from revaluation of foreign
currencies. As a result, the company increased tax provisions for
these potential obligations in the applicable period in the
amounts of $4.1 million for the nine months ended March 31, 2007,
$3.2 million for the year ended June 30, 2006, $6.8 million for
the year ended June 30, 2005, and $4.6 million as of June 30,
2004.
The summary impact on net income or loss as a result of the
restatement was:
-- Net income for the nine months ended March 31, 2007 as
restated was $27.6 million, a decrease from $31.9 million as
previously reported;
-- Net income for fiscal 2006 as restated was $6.5 million, a
decrease from $12.8 million as previously reported;
-- Net loss for fiscal 2005 as restated was $69.1 million, an
improvement from $73.6 million as previously reported.
In addition, in the calculation and disclosure of deferred tax
balances, errors were identified for the book or tax accounting
treatment for certain items. These errors resulted in the
incorrect disclosure of components of the company's deferred taxes
and the related offsetting valuation allowance within the income
tax footnote.
Accordingly, the deferred tax balances included in the income tax
footnote and the offsetting valuation allowance has been restated
as of June 30, 2006. As these net deferred tax assets had a full
valuation allowance, the adjustments to deferred tax assets had no
net impact on the company's consolidated balance sheet or
statements of operations.
Ending cash balances were not affected as a result of the
restatement; however, the presentation of the cash flow statement
was restated. The net proceeds from the sale of installments
receivable were previously classified in cash flows from
operations and have been restated as cash flows from financing
activities. Payments made on secured borrowings are now similarly
classified as cash flows from financing activities.
Annual collections relating to installments receivable that were
previously transferred to a financing institution are recognized
as cash flows from operations. The company did not previously
recognize these collections within its cash flow statement
following the transfer of the installments receivable to the
financing institution.
Liquidity and Capital Resources
a) Operating Cash Flow
In fiscal 2007, operating activities provided $55.7 million of
cash as net income, plus non-cash expenses for stock-based
compensation and depreciation and amortization totaling
$30.5 million, was partially offset by a $30.9 million increase
in installments receivables, primarily related to the sale of
receivables to Key Bank, the proceeds from which are presented as
a component of cash from financing activities. Accrued expenses
increased by $1.8 million due to increases in accruals for income
taxes and professional fees associated with the restatement of the
company's financial statements.
b) Borrowings Collateralized by Receivable Contracts
(i) Traditional Programs
The company historically has maintained arrangements with
financial institutions providing for borrowings that are secured
by the company's installment and other receivable contracts, and
for which limited recourse exists against the company.
As of June 30, 2007, the company had outstanding secured
borrowings of $180.3 million that were secured by
collateralized receivables totaling $183.2 million.
Availability under these arrangements is dependent upon the
company's generation of additional customer receivables and the
financial institutions' willingness to continue to enter into
these transactions. The company estimates that there was in
excess of $64.0 million available under the Traditional Programs
at June 30, 2007.
(ii) Securitization of Accounts Receivable
The securitization transactions in fiscal 2005 and 2007 include
collateralized receivables whose value exceeds the related
borrowings from the financial institutions. The company receives
and retains collections on these securitized receivables after all
borrowing and related costs are paid to the financial institution.
The financial institutions' rights to repayment are limited to the
payments received from the collateralized receivables.
The carrying value of the collateralized receivables at June 30,
2007, under these arrangements was $61.9 million and the secured
borrowings totaled $25.8 million.
(iii) Fiscal 2005 Securitization
On June 15, 2005, the company securitized and transferred
installments receivable with a net carrying value of 71.9 million
and received cash proceeds of $43.8 million. The transfers of
installments receivable to the securitization facility did not
qualify as a sale for accounting purposes and has been accounted
for as a secured borrowing. These borrowings are secured by
collateralized receivables and the debt and borrowing costs are
repaid as the receivables are collected.
(iv) Fiscal 2007 Securitization
On Sept. 29, 2006, the company entered into a three-year revolving
securitization facility and securitized and transferred
installments receivable with a net carrying value of $32.1 million
and received cash proceeds of $20.0 million. The transfers of
installments receivable to the securitization facility did not
qualify as a sale for accounting purposes and have been accounted
for as a secured borrowing. These borrowings are secured by
collateralized receivables and the debt and borrowing costs are
repaid as the receivables are collected.
In December 2007, the company paid the outstanding amount of the
Fiscal 2005 securitization at its carrying value.
The company had been in violation of certain covenants related to
the Fiscal 2007 Securitization due to the delay in filing its
financial statements and other violations. In March 2008, the
company paid the outstanding amount of the Fiscal 2007
Securitization at its carrying value plus a termination fee of
$800,000, and this securitization is no longer available.
c) Credit Facility
In January 2003 and through subsequent amendments, the company
executed a loan arrangement with Silicon Valley Bank. This
arrangement provides a line of credit of up to the lesser of
(1) $15.0 million or (2) 70% of eligible domestic receivables, and
a line of credit of up to the lesser of (1) $10.0 million or
(2) 80% of eligible foreign receivables.
As of June 30, 2007, there were $7.4 million in letters of credit
outstanding under the line of credit, and there was $13.1 million
available for future borrowing. On Oct. 16, 2007, the company
executed an amendment to the Loan Arrangement that adjusted the
terms of certain financial covenants, including modifying the date
the company must provide monthly unaudited and annual audited
financial statements to the bank.
The loan arrangement expires in May 2008. The company is
currently in negotiations to either: (i) extend this line of
credit with the company's current lender and amend the terms of
the facility; or (ii) obtain a facility from another lender.
Contractual Obligations
The company's total contractual obligations, which primarily
consisted of operating leases for the company's headquarters and
other facilities, sub-contractor purchase commitments, and other
debt obligations, totaled $62.9 million at June 30, 2007. Other
than these, there were no other commitments for capital or other
expenditures.
Total contractual future sublease rental income as of June 30,
2007, was $7.2 million, which is not included.
On Sept. 5, 2007, the company entered into an additional sublease
agreement related to its former office space in Cambridge,
Massachusetts, effective Oct. 1, 2007, for approximately 50,000
square feet that expires on Sept. 30, 2012. This new sublease
agreement represents $5.5 million of scheduled sublease payments
not included in the total.
Effective Sept. 1, 2007, the landlord terminated a portion of the
company's lease in Houston, Texas with respect to approximately
14,000 square feet of the original leased space. This termination
agreement has not been included in the total and represents future
reductions of $2.6 million in lease payments.
Balance Sheet
At June 30, 2007, the company's consolidated balance sheet showed
$528.9 million in total assets, $391.7 million in total
liabilities, and $137.2 million in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the year ended June 30, 2007, are available for
free at http://researcharchives.com/t/s?2a82
About AspenTech
Based in Cambridge, Massachusetts, Aspen Technology Inc.
(Nasdaq: AZPN) -- http://www.aspentech.com/-- provides process
optimization software and services. AspenTech's integrated
aspenONE(TM) solutions enable manufacturers to reduce costs,
increase capacity, and optimize operational performance end-to-end
throughout the engineering, plant operations, and supply chain
management processes.
* * *
Moody's Investor Service placed the company's long-term corporate
family rating at B2 and its equity-linked rating at Caa1 in
October 2001. These ratings still hold to date with a stable
outlook.
ATHLETES WORLD: Impacts Forzani's Fourth Quarter 2008 Earnings
--------------------------------------------------------------
The Forzani Group Ltd. reported fiscal 2008 fourth quarter and
year-end results for the 14- and 53-week periods ended Feb. 3,
2008. Unless otherwise stated, prior year comparisons are to the
13- and 52-week periods ended Jan. 28, 2007. The company's fourth
quarter 2008 results were impacted by its acquisition of bankrupt
Athletes World Ltd.
Forzani CEO Robert Sartor was quoted by The Canadian Press as
stating that he expects Forzani to emerge from Companies Creditors
Arrangement Act proceedings sometime in late May and that the 66
Athletes World Stores it plans to keep will be immediately
accretive to Forzani's business after that.
As reported in the Troubled Company Reporter on Dec. 6, 2007,
Forzani disclosed that it plans to close 37 of Athletes World's
138 stores. Forzani CFO Bill Gregson said that the stores to be
closed are those that have been continuing to incur losses.
Fourth Quarter Results
Net earnings for the fourth quarter were $28.7 million, or $0.85
per share, compared to the prior year's fourth quarter of
$21.1 million, or $0.62 per share, a 36.0% increase in profits and
a 37.1% increase in earnings per share. The negative impact to
net earnings and earnings per share, as a result of the
acquisition of Athletes World, was less than $0.3 million or $0.01
per share. Net earnings were positively impacted during the
quarter, by a reduction in corporate income tax rates, which added
$2.2 million or $0.06 per share.
Retail system sales for the quarter were $524.7 million, an
increase of $84.5 million, or 19.2% from the prior year 13-week
sales of $440.2 million. The results were positively impacted by
a return to seasonal weather in the East which drove sales of
winter hardgoods and outerwear, the additional week of operations
in the quarter, and the Athletes World acquisition during the
quarter.
Same store sales, in corporate locations were up 10.6% and up
17.7% in franchise locations, for an overall same store sales
increase of 13.0%. Excluding the impact of the 53rd week,
quarterly sales were up 5.9% in corporate locations and 12.8% in
franchise locations for an overall same store sales increase of
8.3%.
Revenue, consisting of corporate store sales, wholesale sales,
service income, equipment rentals, franchise fees and franchise
royalties, was $410.6 million, up $57.4 million, or 16.3% over the
4th quarter last year.
Yearly Results
Net earnings for the year were $47.5 million, or $1.40 per share
compared to $35.2 million and $1.06 per share in the prior year, a
34.9% increase in profits and a 32.1% increase in earnings per
share. Cash flow from operations increased to $82.7 million from
$77.4 million. On a per share basis, cash flow increased 4.7% to
$2.45 compared to $2.34 in the prior year. The negative impact to
net earnings and earnings per share, as a result of the
acquisition of Athletes World Limited, was less than $0.3 million,
$0.01 per share. Net earnings and earnings per share were
positively impacted by a reduction, in the fourth quarter, in the
corporate income tax rate. The rate reduction added $2.2 million
or $0.06 per share to earnings for the year.
Retail system sales for the 53 weeks were $1,529.1 million, a
$112.4 million increase from sales for fiscal 2007. Same store
sales in corporate stores increased 3.3%, while franchise stores
increased 10.0%, with total same store retail system sales
increasing 5.6%. Excluding the impact of the 53rd week, sales
were up 1.3% in corporate locations and 8.5% in franchise
locations for an overall same store sales increase of 3.8%.
Revenue was $1,331.0 million, a $67.0 million, or 5.3% increase
over the 52-week period last year.
Balance Sheet
The company's working capital of $125.1 million declined by 22.3%
or $36.0 million from the prior year. The decrease is the result
of the reclassification of $50 million in term financing as a
current liability during the year, due for repayment on June 30,
2008. The company expects to renew this credit facility prior to
its expiry on June 30, 2008.
As at Feb. 3, 2008, there were 32,970,021 Common Shares issued and
outstanding. During the 12 months, ended March 26, 2008, pursuant
to the normal course issuer bid approved by the Toronto Stock
Exchange on March 23, 2007, the company purchased 1,832,900 Common
Shares of the company. The company's application for a renewal of
the normal course issuer bid commencing March 28, 2008, and
expiring March 27, 2009, was accepted by the Toronto Stock
Exchange on March 26, 2008.
On April 9, 2008 the company declared a dividend of $0.075 per
Class A common share, payable on May 5, 2008 to shareholders of
record on April 21, 2008.
Management's Comments
The momentum that was lost in the third quarter of the year was
regained despite the ongoing impact of the surge in the Canadian
dollar. Seasonal weather, particularly in Eastern Canada drove
comparative store sales through to year end, resulting in record
quarterly and annual results for the company. The company exited
fiscal 2008 with a clean inventory position, solid margins, and
growth potential throughout the organization. The results include
the operations of Athletes World stores, which were acquired
Nov. 26, 2007.
For the first 8 weeks of the first quarter of the company's fiscal
2009 year, same store sales from corporate stores were down 8.0%
and franchise same store sales decreased 4.3% for an overall
retail system sales decline of 6.6% as continuing winter weather
across the country hampered sales of spring products. Corporate
margins rose versus prior year as a result of cleaner winter
inventories.
About The Forzani Group
The Forzani Group Ltd. (TSX: FGL) -- http://www.forzanigroup.com/
is Canada's largest national retailer of sporting goods, offering
a comprehensive assortment of brand-name and private-brand
products, operating stores from coast to coast, under corporate
banners: Sport Chek, Coast Mountain Sports, Sport Mart, National
Sports and Hockey Experts. The company also retails on-line at
-- http://www.sportmart.ca-- and provides a content rich sporting
goods information site at -- http://www.sportchek.ca-- The
Forzani Group is also a franchisor under the banners: Sports
Experts, Intersport, Econosports, Atmosphere, Tech Shop, Pegasus,
The Fitness Source and Nevada Bob's Golf.
About Athletes World
Headquartered in Ontario, Athletes World Ltd. is a shoe retailer
with more than 100 stores in Canada. It is the only remaining
Canadian retailer unit of Bata Ltd., -- http://www.bata.com/-- a
privately owned global shoe manufacturer and retailer. Bata is
led by a third generation of the Bata family. With operations in
68 countries, Bata is organized into four business units. Bata
Canada, based in Toronto, serves the Canadian market with 250
stores. Based in Paris, Bata Europe serves the European market
with 500 stores. With supervision located in Singapore, Bata
International has 3,000 stores to serve markets in Africa, the
Pacific, and Asia, Finally, Bata Latin America, operating out of
Mexico City, sells footwear throughout Latin America. Bata owns
more than 4,700 retail stores and 46 production facilities. Total
employment for the company exceeds 50,000.
Athletes World filed for protection from its creditors under the
Companies' Creditors Arrangement Act with the Ontario Superior
Court of Justice on Oct. 30, 2007. It owes about $152 million,
about $115 million of which is owed to its parent company, Bata.
The Forzani Group Ltd. acquired Athletes World on Nov. 30, 2007,
and expects that the CCAA proceedings of Athletes World will end
in late May 2008.
ATLANTIC WINE: Inks LOI to Acquire IEC's Oil & Gas Business
-----------------------------------------------------------
Atlantic Wine Agencies Inc. announced on April 8, 2008, that it
had executed a letter of intent with Independence Energy
Corporation, a privately held company located in Alberta, Canada,
that sets forth an agreement for Atlantic to acquire all of IEC's
issued and outstanding common shares.
The acquisition is based upon securing an operating oil and gas
production company with assets consisting of 31 sections of land
under direct ownership and 80 sections held under farm-in
agreements with six producing gas wells together with pipeline and
infrastructure collection facilities.
Atlantic disclosed that its Board of Directors sought out a
business in the energy sector which was positioned to profit from
the continued growth and strength in the price of oil as well as
the emerging reliance and appreciation in price of domestic
natural gas.
The company said that its Board has spent considerable time and
energy identifying potential targets and reviewing assets
throughout North America with the goal of providing substantial
value and potentially significant long term growth for the current
Atlantic shareholders. IEC appears to be a suitable candidate as
it has successfully explored and developed reserves as well as
contributed to a reliable ongoing rate of growth.
Consideration for the acquisition will consist of a share exchange
agreement the specific terms of which will be determined in
accordance with a valuation of IEC's interests based upon a
geological reserve report prepared by an independent third party.
The Letter of Intent and acquisition is subject to the completion
of due diligence, board and shareholder approvals, the
satisfaction/release of any security interests held in IEC's
interests to be conveyed, and the execution of definitive
agreements.
Other material terms of the Letter of Intent are as follows:
-- Atlantic shall recapitalize the number of shares of common
stock outstanding through a reverse stock split of 25:1
thereby resulting in 4,520,798 shares outstanding immediately
prior to the Share Exchange
-- Atlantic shall issue approximately 40,000,000 shares in
exchange for IEC's assets and certain expenses related to the
Share Exchange
-- Atlantic shall change its name to "First Canadian Petroleum
Corporation" or a similar name
Although there can be no assurances, the parties to the Letter of
Intent have allocated approximately 30 days to complete their due
diligence efforts and anticipate signing the definitive agreements
within that time, with a closing within 30 days thereafter.
About Atlantic Wine
Based in Somerset West, South Africa, Atlantic Wine Agencies Inc.
(OTC BB: AWNA.OB) -- http://www.atlanticwineagencies.com/ --
through its two wholly owned subsidiaries, Mount Rozier Estates
(Pty) Limited and Mount Rozier Properties (Pty) Limited, owns a
vineyard in the Stellenbosch region of Western Cape, South Africa.
The vineyard and surrounding properties consist of 80.9 hectares
of arable land for viticultural as well as residential and
commercial purposes.
In 2006, the company decided, after expending considerable
resources and efforts, to exit the winery business.
At Dec. 31, 2007, the company's consolidated balance sheet showed
$2,810,799 in total assets, $2,772,074 in total liabilities, and
$38,725 in total stockholders' equity.
Going Concern Doubt
Meyler & Company LLC, in Middletown, N.J., expressed substantial
doubt about Atlantic Wine Agencies Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the years ended March 31, 2007, and 2006. The
auditing firm reported that the company has incurred cumulative
losses of $7,749,230 since inception, has negative working capital
of $1,912,728, and there are existing uncertain conditions the
company faces relative to its ability to obtain capital and
operate successfully.
ATSI COMMS: Accounts Receivable Financing Increased to $5,000,000
-----------------------------------------------------------------
On March 26, 2008, ATSI Communications Inc. amended its Account
Transfer Agreement with Wells Fargo Business Credit, a division of
Wells Fargo Bank, N.A. to increase the maximum amount that may be
outstanding at any time from $3,000,000 to $5,000,000.
Under the terms of the amended Agreement, the company may offer to
sell with recourse not less than $350,000 nor more than $5,000,000
in its accounts receivable to WFBC each month until Dec. 6, 2008,
up to a maximum amount outstanding at any time of $5,000,000. The
company is not obligated to offer accounts in any month and WFBC
has the option to decline to purchase any accounts.
WFBC will pay the company the face amount of each domestic account
sold less a fee of 0.0349% of the face amount for each day after
the sale until the account is collected in full. WFBC will pay
the company the face amount of each foreign account sold less a
fee 1.02% of the face amount for the 1st day outstanding and an
additional 0.0349% of the face amount of such account for each
additional day period that an account remains unpaid thereafter.
If any account is not collected within 90 days after sale or WFBC
determines that the account debtor is not financially able to pay
the account, the company is required to repurchase such account
from WFBC for the face amount.
Performance of the agreement is secured by a security interest in
all of the company's accounts receivable and certain officers of
the company have provided a limited guaranty for the benefit of
WFBC in the event of a breach of representations by the company
with respect to any account sold or the improper receipt and
retention of payments under any account by any person.
The agreement may be terminated by the the company or WFBC upon 30
days written notice before Dec. 6, 2008, and renews automatically
for an additional one-year term if not terminated by either party.
The company is required to pay a fee in the amount of 0.3% of the
Maximum Credit Facility ($5,000,000), or $15,000, if the agreement
is terminated by WFBC for default or is terminated by the company.
About ATSI Communications
Headquartered in San Antonio, Texas, ATSI Communications Inc.
(OTC BB: ATSX) -- http://www.atsi.net/-- operates through two
wholly owned subsidiaries, Digerati Networks Inc. and Telefamilia
Communications Inc.
Digerati is a global VoIP carrier serving markets in Asia, Europe,
the Middle East, Latin America and Mexico. Telefamilia provides
retail communication services to the Hispanic market in the United
States.
ATSI also owns a minority interest of a subsidiary in Mexico, ATSI
Comunicaciones S.A. de C.V., which operates under a 30-year
government issued telecommunications license.
At Jan. 31, 2008, the company's consolidated balance sheet showed
$2,516,000 in total assets and $2,766,000 in total liabilities,
resulting in a $250,000 total stockholders' deficit.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 22, 2007,
Malone & Bailey, PC, in Houston, Tex., expressed substantial doubt
about ATSI Communications Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years ended July 31, 2007, and 2006. The
auditing firm stated that ATSI has a working capital deficit, has
suffered recurring losses from operations and has a stockholders'
deficit.
AMERICAN AXLE: Mexico Axle Plant Supplies Auto Parts to GM
----------------------------------------------------------
General Motors Corp. is reopening two assembly factories within
April with axles supplied by American Axle & Manufacturing
Holdings Inc.'s plant in Guanajuato, Mexico, according to David
Barkholz and Robert Sherefkin of Crain News Service citing
Automotive News sources.
GM continued manufacturing Chevrolet Silverados and GMC Sierras in
its plant in Fort Wayne, Indiana, last week, and plans to resume
pickup production in a plant in Oshawa, Ontario, on April 21,
2008.
As reported in the Troubled Company Reporter on April 14, 2008,
the strike called by the United Auto Workers union at Axle's
original U.S. locations continues into its 47th day.
Approximately 3,650 associates are represented by the UAW at five
facilities in Michigan and New York.
With the objective of reaching a compromise agreement, Axle
requested the Federal Mediator assigned by the Federal Mediation &
Conciliation Service to assist in the company's ongoing
negotiations with the UAW. Axle had hoped that the involvement of
an impartial third party at the bargaining table could assist both
sides. The UAW refused to allow the Federal Mediator to help the
parties reach agreement. Axle was disappointed in the UAW's
decision.
"While the UAW had conversations with a representative of the
Federal Mediation and Conciliation Service, it was concluded that
a mediator could add little to the process at this juncture; in
fact, it would place the mediator in a no-win situation," UAW
President Ron Gettelfinger said. "Throughout these negotiations,
the UAW has repeatedly offered responsible proposals and counter-
proposals to Axle in an attempt to bring a conclusion to
bargaining."
As reported in the Troubled Company Reporter on April 11, 2008,
negotiators representing AAM and the UAW met at the bargaining
table for the first time in over three weeks on April 9, 2008. At
this meeting, the UAW presented a new economic proposal to Axle.
Although it was a slight improvement from the UAW's previous
bargaining positions, the all-in labor cost proposed by the UAW is
still approximately 200% of the market rate of Axle's competitors
in the United States automotive supply industry.
Axle expressed disappointment over the UAW's failure to make
proposals that address the competitive reality Axle and its UAW-
represented associates jointly face in the U.S. driveline
marketplace.
Axle needs a structural change in labor costs at its original U.S.
locations that is comparable to the agreements the UAW has
previously made with Axle's competitors in the United States
automotive supply industry. If the UAW continues to refuse to
make realistic economic proposals, Axle will be forced to consider
closing these facilities.
Axle has no desire to close the original U.S. locations. Axle's
preferred approach is to reach an agreement with the UAW on a new
U.S. market competitive labor cost structure for these facilities.
If such a market competitive agreement is accomplished, these
facilities will be able to bid competitively for new business and
Axle will be able to continue investing in these operations.
Axle has offered generous buy-outs for associates who do not wish
to continue to work for Axle subject to a competitive wage and
benefits package. Axle has also offered to make annual buy-down
cash payments to associates who accept a competitive wage and
benefits package. Axle's proposed buy-outs and buy-downs will
provide its associates and families a financial cushion and soft
landing during the transition to a new U.S. market competitive
labor cost structure. These proposals are similar to those that
have been successfully used by Chrysler, Ford, GM and Delphi in
recent agreements with the UAW.
Negotiations are continuing. Axle remains hopeful that the
International UAW will soon put forward economic and operating
proposals that will allow Axle to compete on a level playing field
with its competitors in the United States automotive supply
industry and maintain its manufacturing operations in the original
U.S. locations.
GM has about 30 facilities affected by the strike at Axle as the
supplier attempts to negotiate with the union.
Chrysler LLC is temporarily closing its vehicle assembly facility
in Newark, Delaware as the strike among UAW union members at AAM
stretches. AAM supplies Chrysler components for the Dodge Durango
and Chrysler Aspen sport utility vehicles in Newark and two
versions of the Dodge Ram pickup made in Saltillo, Mexico.
About GM
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.
About Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its
wholly owned subsidiary, American Axle & Manufacturing, Inc.,
manufactures, engineers, designs and validates driveline and
drivetrain systems and related components and modules, chassis
systems and metal-formed products for light trucks, sport utility
vehicles and passenger cars. In addition to locations in the
United States (in Michigan, New York and Ohio), the company also
has offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, South Korea and the United Kingdom.
* * *
As reported in the Troubled Company Reporter on April 4, 2008,
Moody's Investors Service placed American Axle & Manufacturing
Holdings, Inc.'s Ba3 Corporate Family Rating under review for
downgrade.
As reported in the Troubled Company Reporter on Nov. 27, 2007,
Moody's Investors Service affirmed American Axle & Manufacturing
Holdings, Inc.'s Corporate Family rating of Ba3 as well its
senior unsecured rating of Ba3 to American Axle & Manufacturing
Inc.'s notes and term loan. At the same time, the rating agency
revised the rating outlook to stable from negative.
BALLY TOTAL: Discloses Plan Distribution for Former Stockholders
----------------------------------------------------------------
Bally Total Fitness Holding Corp. and its debtor-affiliates
notified the U.S. Bankruptcy Court for the Southern District of
New York that, pursuant to their First Amended Joint Prepackaged
Chapter 11 Plan of Reorganization, they were set to make an
initial distribution to holders of Class 7 Old Common Stock.
Under the interim distribution, the Debtors were to distribute
$12,778,669 to the holders of Old Common Stock, which corresponds
to $0.31 per share.
The Debtors may make further distributions to the Holders of Old
Common Stock upon the resolution of remaining Claims under Section
510(b) of the Bankruptcy Code filed against their bankruptcy
estates, Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres &
Freidman LLP, in New York, informed Judge Lifland.
Approximately $3.5 million has been reserved by Bally's
disbursing agent, pending disallowance of certain outstanding
claims that were filed in Bally's chapter 11 case. These
reserved funds may fund a second distribution to holders of Old
Common Stock, but such a distribution is subject to satisfactory
resolution of the outstanding claims.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection on
July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining
requisite number of votes in favor of their pre-packaged chapter
11 plan. Joseph Furst, III, Esq. at Latham & Watkins, L.L.P.
represents the Debtors in their restructuring efforts. As of June
30, 2007, the Debtors had $408,546,205 in total assets and
$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. On Aug. 13, 2007, they filed an
Amended Joint Prepackaged Plan and on Aug. 17 filed a Modified
Amended Prepackaged Plan.
(Bally Total Fitness Bankruptcy News Issue No. 14; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
BANCO FIBRA: S&P Puts 'BB-' Foreign Currency Rtng. on $150MM Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' foreign
currency rating to Banco Fibra S.A.'s upcoming $150 million
unsecured, unsubordinated, two-year medium-term notes, issued
through its principal office in Brazil or its Cayman Island
branch. S&P's foreign currency rating on Fibra is BB-/Stable/B.
The ratings on Fibra incorporate the increasing competition
affecting most Brazilian banks operating in the small and midsize
company segment. In addition, the ratings reflect potentially
higher delinquency ratios, given increases in consumer-finance
loans, and the bank's challenge to maintain an increasing and
diversified funding base. Fibra's still-strong asset quality
indicators, good track record, expertise in the corporate and
middle-market segments, improved profitability, and the benefits
of the implicit support of its shareholder, the Vicunha Group,
temper these risks.
Fibra's credit operations remain concentrated in the low corporate
and middle-market segments. We believe the bank has the necessary
knowledge, flexibility, and customer service policies to compete
in the market and sustain its position as a relevant player.
Although increasing competition from larger banks could pressure
interest margins further, S&P believe Fibra will be able to
gradually replace low corporate operations with middle-market
credits and retail loans, strengthening its strategy and
sustaining its margins. The increasing proportion of retail loans
in the total loan portfolio (13.7% of the bank's total credit
operations as of December 2007, compared with 10.5% in June 2007)
indicates that Fibra's retail strategy was executed successfully.
S&P expect the retail portfolio to represent approximately
20%-30% of the loan portfolio in the future, contributing to a
diverse portfolio mix and enhanced profitability. Fibra's adjusted
ROA is stable, averaging 1.7% for the past three years.
The stable outlook on Fibra reflects our expectation that the bank
will be able to sustain its good asset quality indicators at a
rate of less than 4%, while growing its funding base and
maintaining adequate capitalization and profitability. S&P could
revise the outlook to negative or lower the ratings if there is a
significant deterioration in Fibra's asset-quality ratios; if the
bank's liquidity and funding are pressured; or if Fibra fails to
show more robust profitability levels.
On the other hand, S&P could revise the outlook to positive or
raise the ratings depending on the bank's ability to deliver a
consistent and successful growth strategy for the longer term.
Such a positive rating action would also depend on the bank
sustaining an adequate liquidity position, and improving
profitability and capitalization.
BAYOU GROUP: Court Slaps 20-Yr. Prison Sentence to Exec. for Fraud
------------------------------------------------------------------
The Honorable Colleen McMahon of the U.S. District Court for the
Southern District of New York sentenced former Bayou Group LLC
executive Samuel Israel III to 20 years in prison, Andrew Edwards
of The Wall Street Journal reports.
Mr. Israel, who was also ordered to pay restitution for $300
million, was primarily responsible for duping investors of more
than $450 million through false misrepresentation of the company's
financial condition, says WSJ.
WSJ relates that Judge McMahon had already sentenced Mr. Israel's
co-conspirators, Daniel Marino and James G. Marquez, in January.
As reported in the Troubled Company Reporter on Feb. 18, 2008,
Judge McMahon denied Mr. Marquez's request to spend spring break
with his children in Florida. The Court sentenced Mr. Marquez to
a term of 51 months in prison, who will officially report to
prison on Monday, April 21.
As reported in the Troubled Company Reporter on March 7, 2008,
Bayou Group and its debtor-affiliates delivered 47 adversary
complaints to the Honorable Adlai S. Hardin Jr. of the U.S.
Bankruptcy Court for the Southern District of New York, seeking to
recover certain fraudulent transfers made by investors against the
Debtors. Bayou Fund expects to recover at least $8 million.
The Bayou entities are:
-- Bayou Management LLC;
-- Bayou Advisors LLC;
-- Bayou Equities LLC
-- Bayou Fund LLC;
-- Bayou Superfund;
-- Bayou No Leverage Fund LLC;
-- Bayou Affiliates Fund LLC; and
-- Bayou Accredited Fund LLC.
The Debtors related that these proceedings arose from a massive
fraudulent investment scheme committed by the Bayou entities,
which controlled private pooled investment hedge funds. The
Debtors said that the Bayou entities have attracted at least
$450 million in investments for their hedge funds before suffering
millions of dollars in trading losses.
The Bayou entities attempted to stay afloat and prolonged the
scheme by disclosing false investment performance and creating
false financial statements. In addition, the entities attempted
to conceal their losses through a series of fraudulent transfers
to certain of their investor creditors.
As a result, the Bayou entities used their depleted capital and
capital from new investors to pay redemption proceeds to investor
creditors seeking to exit the hedge funds, according to the
complaint. These redemption proceeds were paid based on inflated
statements of what the investments were worth and with fraudulent
intent by the the Bayou entities.
Consequently, the Bayou entities' fraudulent investment scheme
collapsed, with at least $250 million in principal unpaid to
hundreds of creditors.
The Debtors continue to seek the return of the fictitious
investment gains fraudulently transferred to redeeming investors
so that the funds can be equitably redistributed pro rata to all
of the Bayou entities' creditors.
"[P]eople who commit crimes while wearing a tie do not get a
break. . . [but will be] punished severely," WSJ quotes Judge
McMahon as saying. WSJ says that Mr. Israel is expected to be
officially imprisoned on June 9.
About Bayou Group
Based in Chicago, Illinois, Bayou Group LLC operates and manages
hedge funds. The company and its affiliates filed for chapter 11
protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306) in
order to pursue recoveries for the benefit of defrauded investors.
Bayou also filed lawsuits against former investors who allegedly
received fictitious profits and an inequitably large return of
their principal investments. Jeff J. Marwil at Jenner & Block was
appointed on April 28, 2006 as the federal equity receiver.
Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors
in their restructuring efforts. Joseph A. Gershman, Esq., and
Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman,
LLP, represents the Official Committee of Unsecured Creditors.
Kasowitz, Benson, Torres & Friedman LLP is counsel to the
Unofficial Committee of the Bayou Onshore Funds. Sonnenschein
Nath & Rosenthal LLP represents the Sonnenschein Investors. When
the Debtors filed for protection from their creditors, they
estimated assets and debts of more than $100 million.
BEAR STEARNS: JPMorgan Buys 3.9 Million Shares for $33.1 Million
----------------------------------------------------------------
Between April 11, 2008 and April 14, 2008, JPMorgan Chase & cO.
acquired 3,298,600 shares of Bear Stearns Companies Inc. common
stock in the open market for an aggregate purchase price of
$33,154,017, according to a regulatory JPMorgan filed with the
Securities and Exchange Commission.
As of April 14, 2008, JPMorgan Chase beneficially owned
119,855,914 shares of common stock, or approximately 49.78% of the
outstanding shares of common stock of Bear Stearns.
Bear Stearns had 240,750,092 shares of common stock issued and
outstanding as of April 14, 2008.
Of these shares, JPMorgan Chase had the sole power to vote or to
direct the vote and the sole power to dispose of or to direct the
disposition of 118,380,394 shares of common stock, and shared
voting and dispositive power with respect to 1,475,520 shares.
As reported in the Troubled Company Reporter on April 9, 2008, the
share exchange between JPMorgan and Bear Stearns had been
completed. Pursuant to the terms of the share exchange agreement
between the parties, on April 8, 2008, JPMorgan Chase purchased 95
million newly issued shares of Bear Stearns common stock, or 39.5%
of the outstanding Bear Stearns common stock after giving effect
to the issuance, in exchange for 20,665,350 shares of JPMorgan
Chase common stock.
Last month, as previously reported, investors Wayne County
Employees' Retirement System of Michigan and the Police and Fire
Retirement System of the City of Detroit asked the Delaware
Chancery Court in Wilmington to issue a restraining order to
prevent the purchase of 95 million new Bear Stearn shares by
JPMorgan, contending that the new shares will make JPMorgan a
major shareholder and will enable it to vote in favor of an
unsubtantial $10 per share merger deal.
Yesterday's TCR reported that Bear Stearns 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.
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'.
BERRY PLASTICS: $530 Mil. Note Issuance Spurs Moody's 'B3' Rating
-----------------------------------------------------------------
Moody's Investors Service affirmed the Corporate Family Rating of
B3 of Berry Plastics Corporation and assigned a B1 rating to the
new senior secured notes due 2015. The outlook is stable.
This rating action is in response to the company's announcement on
April 14, 2008 that it issuing $530 million senior secured
floating rate notes to replace the $520 million senior secured
bridge facility used to finance its $500 million acquisition of
Captive Holdings, Inc. Instrument rating actions are detailed
below.
The affirmation of Berry's Corporate Family Rating reflects the
company's success to date integrating previous acquisitions,
potential for significant synergies, and Captive's strategic fit
with Berry's core rigid plastic business. Berry's pro-forma
competitive profile includes annual revenue of $3.4 billion, and a
low customer concentration, with no single customer accounting for
more than 6%. The combined organization is also expected to
maintain healthy liquidity.
The ratings are constrained by Berry's aggressive financial and
acquisition policies, weakened credit metrics, and heightened
integration and financial risk. The large interest expense burden
leaves the company dependent upon realization of synergies to
drive improvements in EBITDA and generate free cash flow to de-
leverage. Potentially lengthy lags in contractual raw material
cost pass-throughs and integration and operating risk pose a
threat to the de-leveraging plan. There remains little room in
Berry's credit profile for any material acquisitions or negative
variance in operating performance.
Moody's took these rating actions for Berry Plastics Corporation:
-- Affirmed Corporate Family Rating of B3
-- Affirmed Probability of Default Rating of B3
-- Assigned $530 million senior secured FRN due 2015, B1
(LGD 2, 27%)
-- Affirmed $1,200 million senior secured term loan due 2015, B1
(LGD 2, 27%)
-- Affirmed $225 million senior secured second lien FRN due
2014, Caa1 (LGD 4, 63%)
-- Affirmed $525 million senior secured second lien notes due
2014, Caa1 (LGD 4, 63%)
-- Affirmed $265 million senior subordinated notes due 2016,
Caa2 (LGD 5, 85%)
-- Affirmed Speculative Grade Liquidity Rating of SGL-2
Moody's took these rating actions for Berry Plastics Group, Inc.:
-- Affirmed $500 million senior unsecured term loan due 2014,
Caa2 (LGD 6, to 94% from 93%)
The rating outlook for Berry is stable.
The ratings and outlook are subject to receipt of final
documentation.
Based in Evansville, Indiana, Berry Plastics Corporation is a
supplier of plastic packaging products, serving customers in the
food and beverage, healthcare, household chemicals, personal care,
home improvement, and other industries. Net sales for the twelve
months ended Dec. 29, 2007 amounted to approximately $3.1 billion.
BERRY PETROLEUM: S&P Lifts Corp. Credit Rating to BB from BB-
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Berry Petroleum Co. to 'BB' from 'BB-'. The outlook is
stable. At the same time, S&P raised the issue rating on the
senior subordinated notes to 'B+' from 'B'. The recovery rating
remains at '6'.
"The ratings action follows our revision of the company's outlook
to positive on Dec. 27, 2007, and reflects the company's
successful execution of its growth strategy and increasing
production while maintaining moderate financial leverage," said
Standard & Poor's credit analyst Aniki Saha-Yannopoulos. "Also
driving the upgrade are our expectations that the company's 2008
capital budget will stay within internally generated cash
flow," she said.
The ratings on Berry Petroleum Co. reflect its heavy oil
concentration, high lifting costs for the capital-intensive oil
fields, lower operating margins relative to its peers, and
volatile commodity prices. Tempering these weaknesses are the
relatively low-risk nature of the company's reserve base,
competitive finding and development costs, good reserve
replacement, and a fairly moderate capital structure.
Berry's reserve base, which consisted of 169 million barrels of
oil equivalent as of Dec. 31, 2007 (approximately 70% oil; 61%
developed), is in the midst of a multiyear transition that began
in 2003. The company is diversifying its asset base to reduce its
concentration of California heavy oil production. Through several
acquisitions over the past three years that totaled about
$485 million, Berry has amassed significant acreage and modest
production in the Piceance, Uinta, and Denver-Julesberg basins.
The acquired acreage, particularly in the Piceance Basin, offers
Berry a large inventory of lower-risk, relatively inexpensive,
primarily natural gas drilling prospects. By adding natural gas
production, the company naturally hedges itself to an extent
against spikes in natural gas prices needed for their tertiary oil
production. The expanded gas strategy also provides Berry with
growth opportunities that it previously lacked.
Berry has had solid reserve replacement--averaging nearly 270%
over the past three years--with competitive three-year average
finding and development costs around $13.75 per boe. The 2007 F&D
costs for the company were at $10.07 per boe as the company proved
its significant probable and possible reserves. S&P expect F&D
costs to remain in line for 2008.
Ratings List
Upgraded
To From
-- ----
Berry Petroleum Company
Corporate Credit Rating BB/Stable/-- BB-
/Positive/--
Berry Petroleum Company
Subordinated
Local Currency B+ B
Recovery Rating 6 6
BLOCKBUSTER INC: Circuit City Bid Won't Affect S&P's Ratings Now
----------------------------------------------------------------
Standard & Poor's Ratings Services said that Dallas-based
Blockbuster Inc.'s (B-/Negative/--) bid for Circuit City will not
have an immediate effect on the video rental company's ratings or
outlook. Blockbuster has launched a bid to acquire Richmond,
Virginia-based Circuit City for at least $6 per share, or
approximately $1 billion. The company has stated that financing
would be a combination of cash and equity. S&P remain concerned
that the acquisition could significantly increase Blockbuster's
leverage, and it may be difficult for the company to secure the
necessary funding to consummate the transaction.
Blockbuster's operations have been challenged for a number of
years due to the declining video rental industry and increased
competition for the home entertainment market. Circuit City has
performed poorly in the consumer electronics markets, especially
against its main competitor, Best Buy Co. Inc. S&P will continue
to monitor the ratings as additional information about the
proposed transaction becomes available.
BOMBARDIER INC: S&P Lifts Ratings to BB+ from BB; Removes Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services raised the long-term corporate
credit and senior unsecured debt ratings on Montreal-based
Bombardier Inc. to 'BB+' from 'BB'. At the same time, S&P removed
the ratings from CreditWatch, where they were placed Dec. 3, 2007.
S&P also assigned a '4' recovery rating to the senior unsecured
notes, indicating the expectation for average (30%-50%) recovery
in the event of a payment default. The outlook is stable.
"Our rating action on Bombardier reflects the material improvement
in its financial measures and liquidity, and management's focus on
financial health and cost efficiency," said Standard & Poor's
credit analyst Greg Pau.
It also reflects the company's leading market positions in the
business aircraft and transportation business, its increasing
geographic diversity, and recent demand recovery, particularly in
the commercial aircraft business. These positive factors are
partially offset by the cyclicality of each individual business
segment, substantial execution risk in new aircraft programs, and
thin operating margins in the transportation business.
The US$1 billion debt reduction and US$826 million contribution to
pension plan assets, together with improved operating cash flow in
fiscal 2008, resulted in a material improvement in cash flow and
leverage measures. Bombardier's financial measures, supported by
strong liquidity, are now more appropriate for the rating level.
Bombardier's wide product range of business aircraft and
established transportation track record and expertise in Europe
support its strong market positions in aerospace and
transportation. The increasing geographic and customer diversity,
with only 35% of its revenue generated in North America, should
reduce the exposure to the financially weak U.S. airline industry
and to the slowing U.S. economy.
This, together with its improved financial flexibility, should
place Bombardier in a better position to weather the next downturn
in the cyclical aerospace and transportation industries and to
support the capital spending required for its businesses.
In fiscal 2008, continued firm demand and favorable business
conditions in both its aerospace and transportation divisions led
to strong order acquisition and a significant increase in total
backlog. While current business conditions are benign,
Bombardier's aerospace business remains exposed to significant
cyclicality and event risks. Although demand in transportation is
more stable, project implementation issues or credit risk could
erode traditionally thin operating margins.
The likelihood that Bombardier will proceed with the planned
110- to 130-seat C-Series aircraft program is now higher, given
the commitment of a prominent engine supplier and expressed
interest by some potential buyers. Market demand should be
supported by the C-Series' projected fuel efficiency and
replacement need of aged aircraft in operation. Standard & Poor's
has considered the potential financial impact of the C-series
program and expects the company to be able to support the program
with a moderate degree of cost escalation or delays.
The stable outlook reflects that Bombardier's improved financial
flexibility and geographic diversification should place the
company in a better position to weather a cyclical downturn. S&P
could raise the ratings or revise the outlook to positive if the
company improves its financial measures by further reducing debt
and maintaining strong cash flow. Conversely, the ratings could
be lowered or the outlook revised downward if management adopts
a more aggressive set of financial targets, or if Bombardier's
liquidity position and free cash flow substantially weaken due to
market disruption or aggressive capital expenditure.
BUFFETS HOLDINGS: Seeks Court OK To Reject 23 Exectory Contract
---------------------------------------------------------------
Buffets Holdings Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware for authority
to reject more than 20 contracts, which are not essential to their
business, nunc pro tunc as of March 31, 2008.
According to Pauline K. Morgan, Esq., at Young Conaway Stargatt &
Taylor LLP, in Wilmington, Delaware, the Contracts consist of (1)
an employment-related agreement between the Debtors and a former
employee of an entity that merged with the Debtors in 2006 and
(2) certain portions of miscellaneous executory contracts related
to closed restaurant locations.
Ms. Morgan contends that the Contracts create a financial burden
on the Debtors' estates. Thus, the Debtors seek to reject the
Contracts and avoid the unnecessary operating costs associated
with them.
In addition, Ms. Morgan tells the Court that the Debtors have
determined that it is highly unlikely that they would ever be
able to locate a third party willing to accept an assignment of
any of the Contracts. In the meantime, the Debtors would accrue
administrative obligations, as well as the attendant cost of
continuing to market the Contracts.
The Contracts are:
Party Agreement
----- ---------
Allied Waste Services of Service Agreement
Crestwood Non-Hazardous Wastes
Alsco Service Agreement
American Disposal Refuse Removal Service
Agreement
BFI Waste Services LLC d/b/a Customer Service Agreement
Allied Waste Services of Nos. 6301 and 6302
Nashville (solid waste & recycling)
Cintas Corporation Facility Services Rental
Service Agreement
City of Mesa Service Agreement
Non Hazardous Waste
Removal/Recycling Services
Coca-Cola North America Letter Agreement dated
1/8/2007
Letter Agreement dated
2/23/2006
Letter Agreement dated
9/4/2001
Ecolab, Inc. Product and Services Supply
Agreement
Pest Elimination Services
Agreement
Jonset Corporation d/b/a Service Agreement
Sunset Property Services
Muzak LLC Muzak Multi Territory
Account
Service Agreement
National Guardian Security Agreement
Services
NUCO2, Inc. Product Purchase Agreement
Bulk CO2 Budget Plan
Agreement
S&D Coffee, Inc. Email from Jim Edmonsonn to
Janet Parker Describing
Agreement
Swisher Sanitation Service Service Agreement
Hygiene Services and
Products Agreement Terms and
Condition
Tarrant Regional Water Lease Agreement
District
Waste Management of Denver Service Agreement
Non Hazardous Wastes
Waste Management of PA, Inc. Service Agreement
Non Hazardous Wastes
Charles D. Way Salary Continuation
Agreement
City of Mesa Responds
Seth Weld, City of Mesa's customer service supervisor, says that
Mesa will not be filing any objection to the Debtors' request.
Mesa has provided service to the Debtors from March 31, 2008, and
has ceased on April 7, 2008.
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc.,
which operates 626 restaurants in 39 states, comprised of 615
steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse
restaurants, and franchises sixteen steak-buffet restaurants in
six states. The restaurants are principally operated under the
Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain
brands. Buffets, Inc. employs approximately 37,000 team members
and serves approximately 200 million customers annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at
Young Conaway Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Bankruptcy
Solutions LLC as claims and balloting agent. The U.S Trustee for
Region 3 appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. The Committee selected
Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
BUFFETS HOLDINGS: Wants to Hire Quinn Emanuel as Counsel
--------------------------------------------------------
Pursuant to Section 327(a) of the Bankruptcy Code and and Rules
2014 and 2016 of the Federal Rules of Bankruptcy Procedure,
Buffets Holdings Inc. and its debtor-affiliates seek authority
from the United States Bankruptcy Court for the District of
Delaware to employ Quinn Emanuel Urquhart Oliver & Hedges, LLP, as
their special bankruptcy litigation counsel, nunc pro tunc to
March 28, 2008.
Mike Andrews, chief executive officer of Buffets Holdings, Inc.,
says the Debtors seek to employ Quinn Emanuel to represent them
as special bankruptcy litigation counsel based on the firm's:
(a) vast experience in matters concerning bankruptcy
litigation, including financing disputes, valuation
litigation, and contested confirmations, among others; and
(b) extensive experience in handling complex litigation, which
makes it especially suited to deal effectively with many
of the potential contested issues that may arise in the
Debtors' bankruptcy case.
Quinn Emanuel has been employed by the Debtors since March 28,
2008, Mr. Andrews relates.
As the Debtors' special bankruptcy litigation counsel, Quinn
Emanuel will work closely with (i) Young Conaway Stargatt &
Taylor, LLP, the Debtors' general bankruptcy and reorganization
counsel, (ii) Paul, Weiss, Refkind, Wharton & Garrison LLP, the
Debtors' special corporate counsel, and (iii) other professionals
as may be retained by the Debtors.
Quinn Emanuel's duties is limited to these issues:
1. issues relating to sale-lease back transactions and any
related litigation;
2. significant litigation with the Debtors' principal
constituencies;
3. issues relating to any anticipated or actual contest in
connection with disclosure or confirmation of one or more
Chapter 11 plans in the Debtors' cases; and
4. issues relating any anticipated or actual contest in the
Debtors' valuation of assets, and any related litigation.
Susheel Kirpalani, Esq., a partner at Quinn Emanuel and chairman
of the firm's Bankruptcy and Restructuring group, is in charge of
the engagement.
Quinn Emanuel's professionals will be paid based on the firm's
hourly rates:
Partners $660 to $950
Other attorneys $380 to $950
Legal Assistants $250 to $280
The firm will be reimbursed for reasonable expenses incurred.
Quinn Emanuel has received no fees from the Debtors and holds no
retainer fee.
Mr. Kirpalani assures the Court that Quinn Emanuel is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc.,
which operates 626 restaurants in 39 states, comprised of 615
steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse
restaurants, and franchises sixteen steak-buffet restaurants in
six states. The restaurants are principally operated under the
Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain
brands. Buffets, Inc. employs approximately 37,000 team members
and serves approximately 200 million customers annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at
Young Conaway Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Bankruptcy
Solutions LLC as claims and balloting agent. The U.S Trustee for
Region 3 appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. The Committee selected
Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
BUFFETS HOLDINGS: U.S. Trustee Balks at Tahoe Joe's Bonus Payment
-----------------------------------------------------------------
Kelly Beaudin Stapleton, the United States Trustee for Region 3,
asks the United States Bankruptcy Court for the District of
Delaware to deny Buffets Holdings Inc. and its debtor-affiliates'
request to pay a sale-related incentive bonus to Greg Graber,
Tahoe Joe's, Inc.'s president and chief operating officer.
On behalf of the U.S. Trustee, Jane M. Leamy, Esq., in
Wilmington, Delaware, relates that the Debtors have not
demonstrated that the proposed bonus payment is appropriate under
Section 503(c) of the Bankruptcy Code. She contends that while
the proposed bonus payment contains an incentive component, it
does not establish any minimum trigger for the payment of the
proposed bonus.
"As a result, it appears to have retention as its primary
purpose," Ms. Leamy says. "The Debtors have essentially
guaranteed a payment to Mr. Graber based on any amount received
as proceeds from a sale of the Tahoe Joe's restaurants."
Ms. Leamy contends that the Debtors did not provide adequate
information that the Incentive Plan is performance-based as the
Debtors did not disclose any performance objectives that Greg
Graber, Tahoe Joe's, Inc.'s president and chief operating
officer, must meet.
Ms. Leamy notes that the Debtors are silent with respect to Mr.
Graber's current compensation, thereby precluding any comparison
or review of his proposed overall compensation.
As reported in the Troubled Company Reporter on March 31, 2008,
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, relates that before the Petition Date,
the Debtors determined that the Tahoe Joe's branded restaurant
operations do not fit within their core buffet restaurant chain
concept and accordingly commenced a process to sell Tahoe Joe's.
Ms. Morgan tells the Court that Mr. Graber is uniquely positioned
to interface with potential buyers. Along with J.H. Chapman Group
LLC, who is being employed by the Debtors to assist in the sale,
Mr. Graber will meet with at least two parties who expressed
interest in serving as stalking horse bidders for Tahoe Joe's
assets.
"Chapman will undoubtedly rely on Graber to provide assistance
and cooperation in its efforts and to be the primary business
contact and conduit through whom all due diligence and
negotiations with interested parties will flow," Ms. Morgan says.
In addition, Ms. Morgan notes that to maintain Tahoe Joe's as a
valuable brand and asset, Mr. Graber will be required to continue
to maintain Tahoe Joe's high operational levels and standards on
a day-to-day basis while simultaneously spearheading marketing
efforts between Tahoe Joe's and interested bidders.
To align Mr. Graber's interest with those of Tahoe Joe's estate,
the Debtors propose to implement a sale-based incentive bonus.
Ms. Morgan says that the Incentive Plan is designed to provide
incentives to Mr. Graber based on the need for Mr. Graber's
efforts and expertise to facilitate the entry into and
consummation of a transfer event that maximizes the value of
Tahoe Joe's assets, and in turn, the net recovery available to
Tahoe Joe's estate and creditors.
Pursuant to the Incentive Plan, Mr. Graber will be eligible to be
awarded a bonus, over and above his base compensation at
prepetition levels. In the event of a successful transfer, Mr.
Graber would be eligible for a bonus equal to one percent of up
to $17,000,000 of the net proceeds and two percent of the net
proceeds above $17,000,000.
To be eligible for a bonus, Mr. Graber must remain continuously
employed by Tahoe Joe's as its chief operating officer or in a
capacity superior to that position, from the date of entry into
the Incentive Plan through the date of a Transfer Event.
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc.,
which operates 626 restaurants in 39 states, comprised of 615
steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse
restaurants, and franchises sixteen steak-buffet restaurants in
six states. The restaurants are principally operated under the
Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain
brands. Buffets, Inc. employs approximately 37,000 team members
and serves approximately 200 million customers annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at
Young Conaway Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Bankruptcy
Solutions LLC as claims and balloting agent. The U.S Trustee for
Region 3 appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. The Committee selected
Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
BUFFETS HOLDINGS: Wants Until April 21 to File Schedules
--------------------------------------------------------
Buffets Holdings Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware to extend
their time to file Schedules and Statements for an additional two
weeks, or until April 21, 2008.
Pursuant to Section 521 of the Bankruptcy Code and Rule 1007 of
the Federal Rules of Bankruptcy Procedure, a debtor is required
to file a schedule of assets and liabilities; schedule of current
income and expenditures; schedule of executory contract and
unexpired leases; and statement of financial affairs within 15
days after the Petition Date.
As previously reported, the Court extended the Debtors' deadline
to file their schedules and statements until April 7, 2008.
Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP,
in Wilmington, Delaware, relates that the necessity of the
extension is largely due to the Debtors' focus on finishing
restatements of their annual and quarterly reports for the year
2007 by March 31, 2008, which was also the deadline to file the
Debtors' quarterly report for the second quarter of the fiscal
year 2007.
Pursuant to their Senior Secured Super Priority DIP Credit
Agreement with Credit Suisse Cayman Islands Branch and Credit
Suisse Securities (USA) LLC, the Debtors are required to timely
complete the public reporting of their financial statements by
March 31, Ms. Morgan says.
Ms. Morgan contends that a further extension of the time to file
Schedules and Statements is necessary to enhance their accuracy
and completeness. The extension is also appropriate given the
number of the Debtors' creditors, the size and complexity of the
Debtors' businesses, and the limited staffing available to
complete the Schedules and Statements, she says.
The Court will convene a hearing on May 2, 2008, at 11:30 a.m., to
consider the Debtors' request.
Del.Bankr. LR 9006-2 provides that the deadline for debtors to
file schedules and statements of financial affairs will
automatically be extended until the time that the Court acts on
the Motion.
About Buffets Holdings
Headquartered in Eagan, Minnesota, Buffets Holdings Inc. --
http://www.buffet.com/-- is the parent company of Buffets,
Inc.,
which operates 626 restaurants in 39 states, comprised of 615
steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse
restaurants, and franchises sixteen steak-buffet restaurants in
six states. The restaurants are principally operated under the
Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain
brands. Buffets, Inc. employs approximately 37,000 team members
and serves approximately 200 million customers annually.
The company and all of its subsidiaries filed Chapter 11
protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to
08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at
Young Conaway Stargatt & Taylor LLP, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Bankruptcy
Solutions LLC as claims and balloting agent. The U.S Trustee for
Region 3 appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. The Committee selected
Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors'
balance sheet as of Sept. 19, 2007, showed total assets of
$963,538,000 and total liabilities of $1,156,262,000.
As reported in the Troubled Company Reporter on Feb. 26, 2008,
the Court granted on February 22, 2008, final approval of the
Debtors' debtor-in-possession credit facility, consisting of $85
million of new funding and $200 million carried over from the
company's prepetition credit facility. (Buffets Holdings
Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
CAPITALSOURCE INC: Planned Fremont Deal Cues Fitch to Hold Ratings
------------------------------------------------------------------
Fitch Ratings has affirmed these ratings of CapitalSource, Inc.:
-- Issuer Default Rating 'BBB-';
-- Senior unsecured 'BBB-'.
-- Senior subordinated 'BB+'
The Rating Outlook is Stable. Approximately $800 million of debt
is affected by this rating action.
The ratings affirmation follows CSE's recent announcement to form
a de novo California-chartered industrial bank in connection with
an asset purchase agreement with Fremont Investment & Loan. Under
the terms of its agreement with FIL, CSE will assume $5.6 billion
of retail deposits and acquire 22 retail banking branches from
FIL, $3.0 billion of cash and a participation interest in a
commercial real estate loan with a principal balance of
approximately $2.7 billion as of March 31, 2008.
Fitch views this transaction as neutral to CSE and recognizes that
this transaction reflects the company's plan to secure access to
deposit-based funding that would further diversify its funding
platform. Furthermore, CSE has structured this transaction in a
way that strongly insulates itself from the contingent liabilities
of FIL and Fremont General Corp. Fitch's rating concerns specific
to the transaction center on management's inexperience with
operating a regulated entity and reduced financial flexibility
associated with maintaining both regulatory capital and REIT
dividend payout requirements.
Although CSE's recent overall operating performance remains good
and reflects the underlying performance of the portfolio,
portfolio performance through weak or recessionary economic
conditions remains relatively uncertain. Any significant
deterioration in operating performance or credit quality trends
would represent rating concerns. Furthermore, Fitch expects that
recent management actions will begin to reduce hedging-related
losses which have been recognized as a result of GAAP
requirements.
These hedges require mark-to-market accounting; however, the
corresponding asset or liability is not accounted for on a mark-
to-market basis. Continued recognition of sizeable mark-to-market
losses would generate negative pressure on the current rating.
Fitch believes that CSE's current capital, liquidity and leverage
continue to support the current ratings and Outlook. Fitch is
aware that management intends to utilize higher leverage within
the industrial bank. Fitch remains comfortable with management's
plan to maintain prudent leverage and capitalization. Fitch
intends to review the proposed changes in capital structure
resulting from the creation of the industrial bank, assess the
relative risk of the portfolio assets that support unsecured debt
and ensure that overall leverage and capitalization remain
appropriate for the current rating level.
Based in Chevy Chase, Maryland, CapitalSource operates as a real
estate investment trust and, via its commercial loan and
investment and residential mortgage investment businesses,
provides senior and subordinated commercial loans, engages in
asset management and servicing activities, invests in real estate
and residential mortgage assets.
CARRINGTON MORTGAGE: Fitch Lowers Ratings on $245.4MM Certificates
------------------------------------------------------------------
Fitch Ratings has taken rating actions on six Carrington Mortgage
Loan Trust mortgage pass-through certificates. Unless stated
otherwise, any bonds that were previously placed on Rating Watch
Negative are removed. Affirmations total $1.8 billion and
downgrades total $245.4 million. Break Loss percentages and Loss
Coverage Ratios for each class are included with the rating
actions as:
Carrington Mortgage Loan Trust, Series 2005-NC1
-- $34.9 million class M-1 affirmed at 'AA+',
(BL: 88.76, LCR: 6.23);
-- $32.4 million class M-2 affirmed at 'AA',
(BL: 70.14, LCR: 4.93);
-- $27.8 million class M-4 affirmed at 'A',
(BL: 29.20, LCR: 2.05);
-- $20.6 million class M-3 affirmed at 'AA-',
(BL: 36.56, LCR: 2.57);
-- $17.0 million class M-5 affirmed at 'A-',
(BL: 25.15, LCR: 1.77);
-- $16.0 million class M-6 downgraded to 'BBB' from 'BBB+'
(BL: 21.11, LCR: 1.48);
-- $12.9 million class M-7 downgraded to 'BB' from 'BBB'
(BL: 18.60, LCR: 1.31);
-- $10.3 million class M-8 downgraded to 'B' from 'BBB-'
(BL: 16.66, LCR: 1.17);
-- $10.3 million class M-9 downgraded to 'B' from 'BB+'
(BL: 15.14, LCR: 1.06).
Deal Summary
-- Originators: 100% New Century;
-- 60+ day Delinquency: 34.29%;
-- Realized Losses to date (% of Original Balance): 0.66%;
-- Expected Remaining Losses (% of Current balance): 14.24%;
-- Cumulative Expected Losses (% of Original Balance): 3.36%.
Carrington Mortgage Loan Trust, Series 2005-NC2
-- $15.4 million class M-1 affirmed at 'AA+',
(BL: 98.92, LCR: 5.45);
-- $25.6 million class M-2 affirmed at 'AA',
(BL: 87.02, LCR: 4.80);
-- $15.4 million class M-3 affirmed at 'AA',
(BL: 77.53, LCR: 4.27);
-- $26.7 million class M-4 affirmed at 'A',
(BL: 60.26, LCR: 3.32);
-- $12.1 million class M-5 affirmed at 'A-',
(BL: 52.00, LCR: 2.87);
-- $11.0 million class M-6 affirmed at 'BBB+',
(BL: 44.19, LCR: 2.44);
-- $9.9 million class M-7 affirmed at 'BBB',
(BL: 33.48, LCR: 1.85);
-- $8.8 million class M-8 affirmed at 'BBB',
(BL: 29.21, LCR: 1.61);
-- $7.7 million class M-9 affirmed at 'BB+',
(BL: 25.53, LCR: 1.41).
Deal Summary
-- Originators: 100% New Century;
-- 60+ day Delinquency: 40.26%;
-- Realized Losses to date (% of Original Balance): 0.46%;
-- Expected Remaining Losses (% of Current balance): 18.14%;
-- Cumulative Expected Losses (% of Original Balance): 4.34%.
Carrington Mortgage Loan Trust, Series 2005-NC3
-- $53.9 million class A-1C affirmed at 'AAA',
(BL: 80.34, LCR: 5.81);
-- $131.5 million class A-1D affirmed at 'AAA',
(BL: 77.66, LCR: 5.61);
-- $20.6 million class A-2 affirmed at 'AAA',
(BL: 97.67, LCR: 7.06);
-- $52.7 million class M-1 affirmed at 'AA+',
(BL: 69.11, LCR: 4.99);
-- $81.3 million class M-2 affirmed at 'AA',
(BL: 55.43, LCR: 4.01);
-- $26.8 million class M-3 affirmed at 'AA-',
(BL: 50.85, LCR: 3.68);
-- $53.6 million class M-4 affirmed at 'A',
(BL: 41.66, LCR: 3.01);
-- $29.5 million class M-5 affirmed at 'A-',
(BL: 33.93, LCR: 2.45);
-- $33.0 million class M-6 affirmed at 'BBB+',
(BL: 25.15, LCR: 1.82);
-- $25.9 million class M-7 affirmed at 'BBB',
(BL: 21.81, LCR: 1.58);
-- $19.6 million class M-8 affirmed at 'BBB-',
(BL: 19.32, LCR: 1.40);
-- $21.4 million class M-9 downgraded to 'BB' from 'BB+'
(BL: 17.15, LCR: 1.24).
Deal Summary
-- Originators: 100% New Century;
-- 60+ day Delinquency: 28.97%;
-- Realized Losses to date (% of Original Balance): 0.66%;
-- Expected Remaining Losses (% of Current balance): 13.84%;
-- Cumulative Expected Losses (% of Original Balance): 5.32%.
Carrington Mortgage Loan Trust, Series 2005-NC4
-- $73.1 million class A-2 affirmed at 'AAA',
(BL: 87.57, LCR: 8.69);
-- $108.2 million class A-3 affirmed at 'AAA',
(BL: 61.62, LCR: 6.11);
-- $29.1 million class M-1 affirmed at 'AA+',
(BL: 53.75, LCR: 5.33);
-- $26.0 million class M-2 affirmed at 'AA',
(BL: 46.58, LCR: 4.62);
-- $18.0 million class M-3 affirmed at 'AA',
(BL: 35.36, LCR: 3.51);
-- $27.0 million class M-4 affirmed at 'A+',
(BL: 31.50, LCR: 3.13);
-- $11.8 million class M-5 affirmed at 'A',
(BL: 28.82, LCR: 2.86);
-- $11.4 million class M-6 affirmed at 'A-',
(BL: 25.94, LCR: 2.57);
-- $9.3 million class M-7 affirmed at 'BBB+',
(BL: 23.50, LCR: 2.33);
-- $6.9 million class M-8 affirmed at 'BBB',
(BL: 21.61, LCR: 2.14);
-- $13.2 million class M-9 affirmed at 'BBB-',
(BL: 18.29, LCR: 1.82);
-- $5.5 million class M-10 affirmed at 'BB+',
(BL: 17.23, LCR: 1.71).
Deal Summary
-- Originators: 100% New Century;
-- 60+ day Delinquency: 18.86%;
-- Realized Losses to date (% of Original Balance): 0.47%;
-- Expected Remaining Losses (% of Current balance): 10.08%;
-- Cumulative Expected Losses (% of Original Balance): 5.72%;
Carrington Mortgage Loan Trust, Series 2005-NC5
-- $246.4 million class A-2 affirmed at 'AAA',
(BL: 66.75, LCR: 3.6);
-- $39.3 million class A-3 affirmed at 'AAA',
(BL: 64.32, LCR: 3.47);
-- $52.4 million class M-1 affirmed at 'AA+',
(BL: 55.44, LCR: 2.99);
-- $49.0 million class M-2 affirmed at 'AA',
(BL: 47.08, LCR: 2.54);
-- $32.9 million class M-3 affirmed at 'AA-',
(BL: 36.11, LCR: 1.95);
-- $24.2 million class M-4 affirmed at 'A+',
(BL: 35.22, LCR: 1.90);
-- $23.5 million class M-5 affirmed at 'A',
(BL: 32.11, LCR: 1.73);
-- $20.8 million class M-6 downgraded to 'BBB' from 'A'
(BL: 28.95, LCR: 1.56);
-- $16.1 million class M-7 downgraded to 'BB' from 'A-'
(BL: 26.25, LCR: 1.42);
-- $18.1 million class M-8 downgraded to 'BB' from 'BBB+'
(BL: 23.07, LCR: 1.24);
-- $16.1 million class M-9 downgraded to 'B' from 'BBB'
(BL: 20.18, LCR: 1.09);
-- $14.8 million class M-10 downgraded to 'B' from 'BBB-'
(BL: 17.75, LCR: 0.96);
-- $6.7 million class M-11 downgraded to 'CCC' from 'BB+'
(BL: 16.89, LCR: 0.91).
Deal Summary
-- Originators: 100% New Century;
-- 60+ day Delinquency: 36.50%;
-- Realized Losses to date (% of Original Balance): 0.73%;
-- Expected Remaining Losses (% of Current balance): 18.54%;
-- Cumulative Expected Losses (% of Original Balance): 8.96%.
Carrington Mortgage Loan Trust, Series 2005-OPT2
-- $31.9 million class A-1D affirmed at 'AAA',
(BL: 98.56, LCR: 4.37);
-- $87.8 million class M-1 affirmed at 'AA+',
(BL: 79.32, LCR: 3.52);
-- $48.4 million class M-2 affirmed at 'AA',
(BL: 66.30, LCR: 2.94);
-- $28.3 million class M-3 affirmed at 'AA-',
(BL: 58.37, LCR: 2.59);
-- $26.8 million class M-4 affirmed at 'A+',
(BL: 50.83, LCR: 2.25);
-- $24.6 million class M-5 affirmed at 'A',
(BL: 42.15, LCR: 1.87);
-- $22.3 million class M-6 downgraded to 'BBB' from 'A-'
(BL: 36.62, LCR: 1.62);
-- $20.1 million class M-7 downgraded to 'BB' from 'BBB+'
(BL: 31.29, LCR: 1.39);
-- $14.4 million class M-8 downgraded to 'B' from 'BBB+'
(BL: 27.21, LCR: 1.21);
-- $25.1 million class M-9 downgraded to 'CCC' from 'BBB-'
(BL: 21.04, LCR: 0.93).
Deal Summary
-- Originators: 100% Option One;
-- 60+ day Delinquency: 38.91%;
-- Realized Losses to date (% of Original Balance): 0.90%;
-- Expected Remaining Losses (% of Current balance): 22.55%;
-- Cumulative Expected Losses (% of Original Balance): 6.49%.
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.
CHRYSLER LLC: Confirms New OEM Product Pacts with Nissan Motor
--------------------------------------------------------------
Chrysler LLC and Nissan Motor Co., Ltd., disclosed two new
agreements for the supply of products between both companies. As
reported in the Troubled Company Reporter on Jan. 24, 2008, Nissan
agreed to supply Chrysler with a new car based on the Nissan Versa
sedan for limited distribution in South America on an Original
Equipment Manufacture basis in 2009.
This new OEM exchange benefits both companies through range
extension and the utilization of global manufacturing capacity.
Highlights of the new agreement:
Nissan will manufacture an all-new, fuel-efficient small car based
on a unique Chrysler concept and design. This new segment entry
for Chrysler will be sold in North America, Europe and other
global markets in 2010, and manufactured at Nissan's Oppama Plant
in Japan.
Chrysler will manufacture a full-size pickup for Nissan. Based on
a Nissan unique design, this truck will be manufactured at
Chrysler's Saltillo (Mexico) Assembly Plant. In order to
accommodate this product, Chrysler will shift volume from Mexico
to its U.S.-based assembly plants that produce pickup trucks.
Sales of the pickup in North America will start in 2011.
This latest OEM supply agreement extends a long standing product
exchange relationship between the two corporations, with Nissan
affiliate JATCO already supplying Chrysler with transmissions
since 2004.
"Forging the right tactical partnerships is critical to the long-
term success of Chrysler," Tom LaSorda, Chrysler LLC President and
Vice Chairman, said. "It also builds on the Company's inherent
strengths, including the ability to respond rapidly and creatively
to emerging opportunities."
"In January, we said we would continue to look for additional OEM
opportunities with Chrysler," Carlos Tavares, Executive Vice
President, Nissan Motor Company, said." This latest agreement
builds on Nissan's proven track record to deliver win-win product
exchanges with multiple manufacturers around the world."
Since the signing of the first OEM agreement in January, the two
companies have also agreed to maintain an open dialogue to explore
further product-sharing opportunities.
About Nissan Motor
Headquartered in Tokyo, Japan, Nissan Motor Co., Ltd. --
http://www.nissan-global.com/-- provides automotive products and
services that deliver superior measurable values to all
stakeholders in alliance with Renault. Nissan is present in all
major global auto markets selling a comprehensive range of cars,
pickup trucks, SUVs and light commercial vehicles under the Nissan
and Infiniti brands. Nissan employs 224,000 people worldwide.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K.,
Argentina, Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2007,
Standard & Poor's Ratings Services revised its recovery rating on
Chrysler's $2 billion senior secured second-lien term loan due
2014. The issue-level rating on this debt remains unchanged at
'B', and the recovery rating was revised to '3', indicating an
expectation for 50% to 70% recovery in the event of a payment
default, from '4'.
Both the issue-level and recovery ratings on Chrysler's $7 billion
first-lien term loan due 2013 remain unchanged. The issue-level
rating on this debt is 'BB-' with a recovery rating of '1',
indicating an expectation for 90% to 100% recovery in the event of
a payment default.
CLASSICSTAR LLC: Court Approves U.S. Trustee's Conversion Plea
--------------------------------------------------------------
The Hon. William S. Howard of the United States Bankruptcy Court
for the Eastern District of Kentucky converted ClassicStar LLC's
Chapter 11 case to a Chapter 7 liquidation proceeding, various
sources report.
As reported in the Troubled Company Reporter on March 27, 2008,
Richard F. Clippard, the U.S. Trustee for Region 8, asked the
Court to convert the Debtor's Chapter 11 case to a Chapter 7
liquidation proceeding or, to the possible extent, dismiss its
case. It said that there is no reasonable likelihood that the
Debtor will propose a bankruptcy plan.
The U.S. Trustee said Boyce Sanderson, the appointed spokeperson
of the Debtor, could no longer perform his duties due to an
on-going criminal investigation. The Debtor has informed the
Official Committee of Unsecured Creditors and the U.S. Trustee
about Mr. Sanderson's criminal case.
The U.S. Trustee pointed out that the Debtor does not have any
representative other than Mr. Sanderson who willing to prepare,
review and approve monthly operating reports of the Debtor, which
are required under the Bankruptcy Code.
The Debtor did not file monthly operating reports for January and
February this year, trial attorney Philip L. Hanrahan, Esq., says.
The Committee and the U.S. Trustee do not know the current
financial status of the Debtor.
About ClassicStar
Headquartered in Lexington, Kentucky, ClassicStar LLC operates as
a thoroughbred horse breeder. The company also leases horses and
rents out the reproductive systems of select thoroughbred mares.
The company filed for Chapter 11 protection Sept. 14, 2007 (Bankr.
E.D. Ky. Case No.07-51786). James W. Gardner, Esq., at Henry Watz
Gardner Sellars & Gardner, PLLC, represents the Debtor. The U.S.
Trustee for Region 8 appointed creditors to serve on an Official
Committee of Unsecured Creditor in this case. Elizabeth Lee
Thompson, Esq., at Stites & Harbison, PLLC, represents the
Committee. When the Debtor filed for protection against its
creditors, it listed assets and debts between $1 million to
$100 million.
According to Bloomberg News, the Debtor posted assets of
$227 million, comprised of account receivable owed to National
Equine Lending Corp., and debts of $72.7 million.
* * *
On Jan. 11, 2008, the Court extended the Debtor's exclusive rights
to file a plan until May 15, 2008.
CLAYTON HOLDINGS: Greenfield Deal Wont Affect S&P's 'B' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on
Shelton, Connecticut-based Clayton Holdings Inc. (B/Stable/--) are
not affected by the announcement that the company will be acquired
by an affiliate of a fund managed by Greenfield Partners LLC. The
purchase price is $6 per share, or about $134 million, plus the
repayment of $24 million of outstanding debt. Clayton is a
service provider to buyers and sellers of, and investors in,
nonconforming loans and nonagency mortgage-backed securities.
The transaction is expected to close in the third quarter of 2008,
pending shareholder and regulatory approvals. The investment fund
affiliated with TA Associates, which owns about 37% of Clayton's
outstanding common stock, has agreed to vote in favor of the
transaction. When Clayton's $24 million senior secured credit
facility due 2011, outstanding as of Dec. 31, 2007, is repaid, S&P
will withdraw the ratings on Clayton. If the new entity is
to be rated, S&P will evaluate it at that point.
CLST HOLDINGS: Posts $310,000 Net Loss in Quarter Ended Feb. 29
---------------------------------------------------------------
CLST Holdings Inc. reported a net loss of $310,000 for the first
quarter ended Feb. 29, 2008, compared with a net loss of
$2,966,000 in the same period ended Feb. 28, 2007.
During the second quarter of 2007, the company sold its operations
in the U.S., Miami and Mexico and during the third quarter of 2007
sold its operations in Chile. As a result of these transactions
the company no longer has any operations, other than the expenses
associated with the winding down of the company.
Overview
The company continues to follow the plan of dissolution. However,
consistent with the plan of dissolution and its fiduciary duties,
the company's board of directors will continue to consider the
proper implementation of the plan of dissolution and the exercise
of the authority granted to it thereunder, including the authority
to abandon the plan of dissolution.
The company's board of directors has in the past year considered
whether it is possible, and if it would be in the best interest of
the company, to de-register with the Securities and Exchange
Commission and thereby eliminate the company's responsibilities to
file reports with the SEC. Due to the number of current
stockholders and the steps the company would need to take to
reduce the number of stockholders, the company's board of
directors is not currently considering de-registering with the
SEC, but may reconsider doing so in the future.
On Dec. 21, 2007, the company announced, consistent with its
fiduciary duties, that the Board of Directors is giving careful
consideration to the strategic alternatives available to the
company, with a view to maximizing stockholder value.
Among other matters, the Board is reviewing potential acquisitions
and the value of the company's tax assets. If the Board
determines that it is in the best interest of the company to
pursue an acquisition, it will likely require the company to
obtain debt or equity financing.
Liquidity and Capital Resources
As of Feb. 29, 2008, the company had cash and cash equivalents of
$16.5 million. The company had no loans outstanding as of
Feb. 29, 2008.
At Nov. 30, 2007, the company had cash and cash equivalents of
$11.8 million.
Net cash provided by operating activities was $4.7 million for the
first quarter of fiscal 2008, compared to $20.0 million in the
first quarter 2007, which includes $24.5 million of cash flow from
discontinued operations.
The company did not have any significant investing activities
during the first quarter 2008.
The company did not have any financing activities during the first
quarter 2008.
Balance Sheet
At Feb. 29, 2008, the company's consolidated balance sheet showed
$23,698,000 in total assets, $15,145,000 in total liabilities, and
$8,553,000 in total stockholders' equity.
Full-text copies of the company's consolidated financial
statements for the quarter ended Feb. 29, 2008, are available for
free at http://researcharchives.com/t/s?2a98
About CLST Holdings
Dallas-based CLST Holdings Inc. (OTC Pink Sheets: CLHI) fka.
CellStar Corp. -- http://www.clstholdings.com/-- was prior to the
sale of its North America and Chili operations in 2007, a provider
of logistics and distribution services to the wireless
communications industry.
* * *
Moody's Investors Service's assigned a Subordinated Debt rating of
Ca on CLST Holdings Inc. on Sept. 6, 2001. This ratings hold to
date.
CRAB BARN: Case Summary & 19 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: The Crab Barn, Inc.
2613 Hampden Blvd.
Reading, PA 19604
dba The Crab Barn
Bankruptcy Case No.: 08-20722
Type of Business: The Debtor owns and manages a restaurant with a
bar. See http://www.thecrabbarn.com/
Chapter 11 Petition Date: April 9, 2008
Court: Eastern District of Pennsylvania (Reading)
Debtor's Counsel: Joseph T. Bambrick Jr. Esq.
(NO1JTB@juno.com)
529 Reading Avenue, Suite K
West Reading, PA 19611
Tel: (610) 372-6400
Total Assets: $1,395,227
Total Debts: $1,038,815
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Pennsylvania Department of Past Due Sales $63,362
Revenue Tax
Commonwealth of Pennsylvania
Bankruptcy Division
Harrisburg, PA 17128-0496
Super Duper Seafood Misc. Purchases $47,678
8472 Allentown Pike, Suite 2
Blandon, PA 19510
Internal Revenue Service Past Due Taxes $27,670
P.O. Box 21126
Philadelphia, PA 19114-0326
Past Due Payroll $7,227
Taxes 2nd Quarter
2007
Department of Labor & Industry Past Due $11,259
Commonwealth of Pennsylvania Unemployment
Unemployment Compensation Tax Compensation
Services contributions
Sysco Food Services of Central Misc. Purchases $10,049
PA, LLC
Bedway Produce Co. Miscellaneous $8,122
Purchases
UGI Utilities, Inc. Past Due Utility $7,644
Reinsel Kuntz Lesher Services Rendered $6,425
Yellow Book Advertising Expense $5,744
Singer Equipment Co. Misc. Purchases $5,196
Penn National Insurance Insurance Purchases $4,117
Pat C. Lupia, Tax Collector Property Taxes $3,728
Chester Irwin & Son Misc. Purchases $3,578
Special Dry Cleaners Services Rendered $2,743
Met Ed Past Due Utility $2,608
MacIntosh Linen and Uniform Misc. Purchases $1,897
Rental, Inc.
Restaurant Technologies, Inc. Services Rendered $1,779
Vigilant Internet Services Past Due Utility $1,550
Corp.
National City Auto Lease Leased Vehicle $1,489
DEL MONTE: Solid Market Position Cues Moody's Rating Affirmations
-----------------------------------------------------------------
Moody's Investors Service affirmed Del Monte Corporation's long
term ratings, including its Ba3 corporate family rating. The
company's speculative grade liquidity rating was lowered to SGL-3
from SGL-2, based on Moody's expectation that cash flow generation
over the next 12 months will be less robust in a climate of rising
commodity input costs, and that Del Monte's modest covenant
cushion will deteriorate. The rating outlook remains stable.
Ratings affirmed:
-- Corporate family rating at Ba3
Ratings affirmed and LGD percentage adjusted
-- Senior secured revolving credit agreement, Term Loan A and
Term Loan B at Ba2 (LGD3); LGD % to 34% from 33%
-- $250 million 6.75% senior subordinated notes due 2015 and
$450 million 8.625% senior subordinated notes due 2012 at B2
(LGD5). LGD % to 85% from 84%
Rating lowered:
-- Speculative grade liquidity rating to SGL-3 from SGL-2
The company's speculative grade liquidity rating of SGL-3
(adequate liquidity) reflects Moody's expectation that Del Monte's
free cash flow generation over the next 12 months could be less
robust than in the recent past, as high raw materials costs
continue to pressure margins. What has been modest covenant
cushion under Del Monte's bank agreements is likely to
deteriorate, in Moody's view. Moody's anticipates nonetheless
that the company's free cash flow will be sufficient to fund its
working capital, maintenance capital expenditures, shareholder
enhancement and scheduled debt payments over the next 12 months.
However, Del Monte will probably need to draw on its revolving
credit facility to cover seasonal working capital swings, as it
usually does.
The affirmation of the company's long term ratings is based on Del
Monte's solid market position; volume sales increased for the nine
fiscal months ended Jan. 27, 2008, and market share in the recent
third fiscal quarter grew in about 90% of the company's product
lines (pet, vegetables, fruit and seafood). While reported
operating profit margin in each of the first three quarters of
fiscal 2008 slightly trails the prior year's period, and LTM debt
to EBITDA has not improved over fiscal 2007, Moody's expects that
credit metrics will remain appropriate for the company's Ba3.
Headquartered in San Francisco, California, Del Monte Corporation
is one of the largest producers, distributors and marketers of
premium quality, branded food and pet products for the U.S. retail
market. Revenues for the twelve months ended Jan. 27, 2008 were
approximately $3.6 billion.
DELTA AIR: Reaches $17.7 Bil. All-Stock Merger Pact with Northwest
------------------------------------------------------------------
Delta Air Lines Inc. and Northwest Airlines Corporation reached
an agreement on April 14, 2008, in which the two carriers will
combine in an all-stock transaction with a combined enterprise
value of $17,700,000,000.
[This is a supplementary report to the Delta-Northwest board
approved merger story that the Troubled Company Reporter issued
yesterday.]
Delta agreed to buy Northwest in a $3.63 billion stock deal that
would create the world's largest carrier, according to Bloomberg
News.
The new airline, which will be called Delta, will provide
employees with greater job security, an equity stake in the
combined airline, and a more stable platform for future growth in
the face of significant economic pressures from rising fuel costs
and intense competition, the carriers said in a statement. Small
communities throughout the United States will enjoy enhanced
access to more destinations worldwide. According to the news
statement, customers also will benefit from the combined carriers'
complementary route networks, which together will offer people
greater choice, competitive fares and a superior travel experience
to more cities than any other airline. In addition, combining
Delta and Northwest will create a global U.S. flag carrier
strongly positioned to compete with foreign airlines that are
continuing to increase service to the United States.
Delta CEO Richard Anderson will be chief executive officer of the
combined company. Delta Chairman of the Board Daniel Carp will
become chairman of the new Board of Directors and Northwest
Chairman Roy Bostock will become vice chairman. Ed Bastian will
be president and chief financial officer.
The Board of Directors will be made up of 13 members, seven of
whom will come from Delta's board, including Anderson, and five
of whom will come from Northwest's board, including Mr. Bostock
and Doug Steenland, the current Northwest CEO. One director will
come from the Air Line Pilots Association.
Delta will have executive offices in Atlanta, Minneapolis/St.
Paul and New York, and international executive offices in
Amsterdam, Paris and Tokyo. The company's world headquarters
will be in Atlanta. Delta is committed to retaining significant
jobs, operations and facilities in Minnesota.
Combined, the company and its regional partners will provide
access to more than 390 destinations in 67 countries. Delta and
Northwest, together, will have more than $35,000,000,000 in
aggregate annual revenues, operate a mainline fleet of nearly 800
aircraft and employ approximately 75,000 people worldwide.
In an industry where the U.S. network carriers have shed more
than 150,000 jobs and lost more than $29 billion since 2001, the
combination of Delta and Northwest creates a company with a more
resilient business model that is better able to withstand
volatile fuel prices than either can on a standalone basis.
Merging Delta and Northwest is the most effective way to offset
higher fuel prices and improve efficiencies, increase
international presence and fund long-term investment in the
business.
The transaction is expected to generate more than $1,000,000 in
annual revenue and cost synergies from more effective aircraft
utilization, a more comprehensive and diversified route system
and cost synergies from reduced overhead and improved operational
efficiency. The company expects to incur one-time cash costs to
not exceed $1,000,000,000 to integrate the two airlines. The
combined company will have a stronger, more durable financial
base and one of the strongest balance sheets in the industry,
with expected liquidity of nearly $7,000,000,000 at closing.
Under the terms of the transaction, Northwest shareholders will
receive 1.25 Delta shares for each Northwest share they own.
This exchange ratio represents a premium to Northwest shareholders
of 16.8% based on April 14 closing prices. The transaction is
expected to be accretive to current Delta shareholders in year one
excluding one-time costs. The merger is subject to the approval
of Delta and Northwest shareholders and regulatory approvals. It
is expected that the regulatory review period will be completed
later this year.
Richard Anderson, Delta CEO, stated: "We said we would only enter
into a consolidation transaction if it was right for all of our
constituencies; Delta and Northwest are a perfect fit. Today,
we're announcing a transaction that is about addition, not
subtraction, and combines end-to-end networks that open a world
of opportunities for our customers and employees. We believe by
partnering with our employees, including providing equity to
U.S.-based employees of Delta and Northwest, this combination is
off to the right start. Together, we are creating America's
leading airline -- an airline that is financially secure, able to
invest in our employees and our customers, and built to thrive in
an increasingly competitive marketplace."
Doug Steenland, Northwest CEO, said: "Today's announcement is
exciting for Northwest and its employees. The new carrier will
offer superior route diversity across the U.S., Latin America,
Europe and Asia and will be better able to overcome the
industry's boom-and-bust cycles. The airline will also be better
able to match the right planes with the right routes, making
transportation more efficient across our entire network. In
short, combining the Northwest and Delta networks will allow the
strengthened airline to realize its full global potential and
invest in its future."
Customers, Communities to Benefit from Expanded Global
Route System, More Competitive, Financially Secure Airline
The Delta and Northwest merger will offer customers and
communities direct service between the United States and the
world's major business centers. Specific benefits include:
* Customers will be able to fly to more destinations, have
more schedule options and more opportunities to earn and
redeem frequent flyer miles in what will become the
world's largest frequent flyer program.
* The merged airline will maintain all hubs at Atlanta,
Cincinnati, Detroit, Memphis, Minneapolis/St. Paul,
New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita
-- each of which will benefit from improved global
connectivity.
* Delta customers will benefit from Northwest's extensive
service to Asian markets and Northwest's customers will
have access to Delta's strengths across the Caribbean,
Latin America, Europe, the Middle East and Africa.
* Both airlines' customers will benefit from a strengthened
SkyTeam alliance that more closely aligns the combined
airline with its respective trans-Atlantic partners Air
France and KLM.
Customers also will benefit from the combined carrier's financial
stability. The merger creates one of the strongest balance
sheets among major U.S. airlines, permitting the combined airline
to invest in its fleet and services to enhance the customer
experience. For instance:
* The combination will accelerate the upgrading of existing
international aircraft with lie-flat seats and personal
on-demand entertainment.
* The combined company will have the opportunity to exercise
options for delivery of up to 20 widebody jets between
2010 and 2013 to provide more international service than
ever before.
* The combined company also will be able to improve
customers' travel experience through new products and
services, including enhanced self-service tools, better
bag-tracking technology, new seats and refurbished cabin
interiors.
No Hub Closures; Improved International Access
to Benefit Small Communities
This combination will expand Delta's international and domestic
reach, and there will be no reductions in the number of hubs. In
addition, building on both airlines' proud, decades-long history
of serving small communities, Delta will improve worldwide
connections to small towns and cities across the U.S., enhancing
their access to the global marketplace. Following the merger,
Delta will serve more than 140 small communities in the United
States -- more than any other airline.
"Delta and Northwest are an excellent strategic fit, with
complementary and geographically distinct route systems," said
Edward Bastian, Delta president and chief financial officer.
"Together, we will have a more robust platform for profitable
international growth. Combining both carriers' international and
domestic strengths, with our worldwide SkyTeam partners, we are
well positioned to lead the industry and deliver value to our
shareholders."
Merger Helps Offset Record Oil Prices, Creates
Stronger Global Airline to Compete in Open Skies environment
Record fuel prices have fundamentally changed the economics of
the airline industry. Fuel is the highest single expense for
Delta and Northwest, significantly eroding the financial benefits
of restructuring and placing the airlines' new found strength and
stability at long-term risk. At the beginning of 2007, oil
prices were approximately $55 a barrel. Now, oil prices have
nearly doubled. This dramatic run-up in the price of oil makes
the transaction even more compelling.
Internationally, the two carriers, along with their partners at
Air France and KLM, will have a broader global network similar in
scope and depth to what other foreign flag carriers already
possess and a significant presence in key business centers,
with improved prospects for growing corporate business globally.
This presence is essential for U.S. network carriers due to Open
Skies agreements that have expanded aviation markets around the
world and have created a more competitive international
environment.
Merger combines Delta's strengths in the South, Mountain West,
Northeast, Europe and Latin America with Northwest's leading
positions in the Midwest, Canada and Asia; competition will be
preserved and enhanced as a result of complementary networks.
The Delta-Northwest combination will be pro-competitive. There
is little overlap in the nonstop routes the two airlines serve,
with direct competitive service on only 12 of more than 1,000
nonstop city pair routes currently flown by both airlines. In
fact, the merger will create a stronger, more efficient global
competitor. Discount carriers, which now carry one third of
domestic passengers, and other network airlines will remain
competitors in the airline's markets.
Delta Pilot Leadership Reaches Agreement
on Post-Merger Contract
Delta also announced that it has reached agreement with the
company's pilot leadership to extend its existing collective
bargaining agreement through the end of 2012. The agreement,
which is subject to pilot ratification, facilitates the
realization of the revenue synergies of the combined companies
once the transaction is completed. It also provides the Delta
pilots a 3.5% equity stake in the new company and other
enhancements to their current contract.
Delta will use its best efforts to reach a combined Delta-
Northwest pilot agreement, including resolution of pilot
seniority integration, prior to the closing of the merger.
Employees to be Provided Seniority Protection
and Equity In The New Airline
Frontline employees of both airlines will be provided seniority
protection through a fair and equitable seniority integration
process, as the airlines are combined. In addition, U.S.-based
non-pilot employees of both companies will be provided a 4%
equity stake in the new airline upon closing. The company also
expects no involuntary furloughs of frontline employees as a
result of this transaction and the existing pension plans for both
companies' employees will be protected. Additionally, all Delta
and Northwest employees will enjoy reciprocal pass privileges on
both airlines, beginning as soon as possible during the regulatory
review process.
"We are pleased that the people of Delta and Northwest will
participate directly in the growth and future success of the
combined company," Anderson said. "Thanks to the hard work and
professionalism of the more than 75,000 Delta and Northwest
employees over the last few years, our new, combined company will
be positioned for a bright future as a leader in the global
airline industry."
Integrated SkyTeam Frequent Flyer Programs
and Partner Networks Enable Faster Integration;
Existing Air France, KLM Joint Venture
Partnerships Strengthened
Delta and Northwest's complementary networks and common
membership in the SkyTeam alliance will ease the integration risk
that has complicated some airline mergers. The carriers
participate in a joint SkyTeam frequent flyer program with common
customer lounges and airline partner networks. In addition, they
share a common IT platform, which has already been partially
integrated through the existing alliance between Delta and
Northwest. Further, the combination of Delta and Northwest will
enable an accelerated joint venture integration with Air
France/KLM, creating the industry's leading alliance network.
Over the course of the regulatory process, a detailed integration
plan will be created by the transition committee made up of
leaders from both companies. After closing of the merger, the
consolidation of overlapping corporate and administrative
functions will result in some job reductions or company-paid
transfers. Involuntary reductions for management and
administrative employees will be minimized by normal attrition.
Advisers
Financial advisers to Delta were Greenhill & Co. and Merrill
Lynch & Co. and legal advisers were Wachtell, Lipton, Rosen &
Katz and Hunton & Williams, LLP. Financial advisers to Northwest
were Morgan Stanley and J.P. Morgan Securities and legal advisers
were Simpson Thacher & Bartlett LLP and O'Melveny & Myers, LLP.
Investor and Analyst Call Details
There will be a webcast for the investment community today, April
15, at 9:00 a.m. EDT. Participants will include Richard
Anderson, Delta's CEO; Doug Steenland, Northwest's President and
CEO; and Ed Bastian, Delta's President and CFO. webcast log-in is
available on:
www.delta.com/about_delta/investor_relations/webcasts or
http://ir.nwa.com
A replay of the webcast will be archived for 30 days. Further
information is available in the investor relations section of
http://www.delta.com.
Press Conference Details and Satellite Coordinates
Delta and Northwest will hold a joint press conference today,
April 15, at 10:30 a.m. EDT, at The Intercontinental, The
Barclay, New York, 111 East 48th St, New York, NY 10017.
Participants will include Richard Anderson, Delta's CEO; Doug
Steenland, Northwest's President and CEO; and Ed Bastian, Delta's
President and CFO.
The press conference will be webcast LIVE over the internet at
http://www.newglobalairline.com. The replay of the webcast will
be archived for 30 days.
Audio News Release
An audio news release will be available for download on
http://www.newglobalairline.com/
Photography
Photographs of both companies operations and management teams is
available on the news center section of
http://www.newglobalairline.com/
Further details regarding the combination can be found at
http://www.newglobalairline.com/
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,
Issue No. 91; 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, Issue No. 95; 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: Northwest Pilots and Machinist Oppose Merger
-------------------------------------------------------
The merger agreement between Northwest Airlines Corporation and
Delta Air Lines Inc. is disadvantageous to NWA pilots, Dave
Stevens, chairman of the Northwest chapter of the Air Line Pilots
Association, said in an e-mailed statement, reports Bloomberg.
Mr. Stevens said pilot leaders at Northwest "will use all
resources available" to aggressively oppose the merger.
The International Association of Machinists and Aerospace Workers'
(IAM) General Vice President Robert Roach, Jr., on April 14, 2008,
issued this statement in response to the proposed merger between
Northwest Airlines and Delta Air Lines:
"Airline industry consolidation will come at tremendous public
expense. The Machinists Union's Merger Committee has examined the
Northwest-Delta merger proposal, and we firmly believe this merger
is not in the best interest of passengers, employees or the
communities these airlines currently serve.
Northwest and Delta have both lobbied Congress for pension
relief. Both have also frozen their underfunded pension plans.
If this ill-advised mega venture fails, the liability for these
plans will fall on the Pension Benefit Guaranty Corporation, and
ultimately the American taxpayer.
We will do everything legally possible to oppose any merger that
threatens our members' jobs, labor contracts, pensions, seniority,
and their right to union representation."
Northwest's IAM members are the only employees at either airline
that still have an active, secure defined benefit pension
plan, the IAM National Pension Plan. The IAM represents 12,500
Northwest Airlines Ramp Service Employees, Stores Clerks,
Customer Service Agents, Reservation Agents, Flight Simulator
Technicians and Plant Protection employees. The Machinists Union
is currently organizing Delta Air Lines' Ramp Service, Customer
Service, Reservation and Maintenance employees.
The Machinists Union is the largest Airline and Rail Union in
North America, representing more than 170,000 Flight Attendants,
Customer Service Agents, Reservation Agents, Ramp Service
Personnel, Mechanics, Railroad Machinists and related
transportation industry workers. Additional information about
the Machinists Union is available at
http://www.goiam.org/transportation/
MAC Chairman's Statement
In response to the announcement of a proposed merger
between Northwest and Delta Airlines, Metropolitan Airports
Commission Chairman Jack Lanners, said on April 15, 2008, that:
"Northwest Airlines has been a Minnesota institution for
more than 80 years, contributing greatly to the growth in air
service at Minneapolis-St. Paul International Airport and to the
region's economic vitality.
"In 1992 and again in 2007, Northwest Airlines made legally
binding commitments to the Metropolitan Airports Commission to
keep the airline's hub and headquarters, or that of its
successor, here. In the days and weeks ahead, we will work to
the best of our ability to leverage those commitments and to
protect air service and jobs in Minnesota.
"I am confident Minneapolis-St. Paul International Airport
will remain a major hub for the consolidated airline. We look
forward to working with Richard Anderson and Doug Steenland to
explore opportunities for continued growth in air service to the
Twin Cities and jobs in Minnesota."
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,
Issue No. 91; 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, Issue No. 95; 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.
DILLARD'S INC: Moody's Downgrades Corporate Credit Rating to 'B1'
-----------------------------------------------------------------
Moody's Investors Service downgraded Dillard Inc.'s corporate
family rating to B1 from Ba3. The outlook remains stable.
The downgrade was prompted by the company's weak operating
margins, highly negative comparable store sales, and erosion of
the company's revenues resulting from challenges it has had
implementing its merchandising strategy. The company's strategy
-- which includes offering of higher priced, upscale, and
contemporary merchandise -- has failed to gain momentum and
meaningful traffic. The downgrade also reflects Moody's opinion
that the company's financial policies might become more aggressive
following recent pressure from shareholder activists.
Furthermore, it is Moody's opinion that the Dillard's margins will
not substantially improve over the next twelve months given the
slowdown in consumer spending and the aggressive competition in
the retail environment.
These ratings were downgraded:
-- Corporate family rating to B1 from Ba3
-- Probability of default rating to B1 from Ba3
-- Senior unsecured notes to B2 (LGD 5, 72%) from B1
(LGD 4, 67%)
-- Dillard's Capital Trust I to B3 (LGD 6, 95%) from B2
(LGD 6, 94%)
Moody's does not rate any of the company's secured bank debt.
Dillard's B1 corporate family rating reflects the company's weak
operating margin, which is below its peer group average, negative
comparable store sales, moderate scale in terms of revenue, weak
interest coverage, and negative free cash flow. In addition, the
company is also highly seasonal and heavily reliant on the fourth
quarter holiday selling season. Balancing the ratings are the
company's strong liquidity, solid portfolio of valuable real
estate assets, and its strong presence in secondary markets.
"Increased competition among the retailers and the slowdown in
consumer spending will place additional pressure on the company's
margins and cash flow ," said Ed Henderson, Senior Analyst at
Moody's.
Dillard's, Inc. is a regional department store chain headquartered
in Little Rock, Arkansas. It operates 326 department stores in 29
U.S. states located primarily in the southeast, southwest, and
mid-west. Revenues for fiscal year ended Feb. 2, 2008 were
approximately $7.2 billion.
DILLARD'S INC: S&P Cuts Rating to BB- from BB with Stable Outlook
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered the ratings on Little
Rock, Arkansas-based Dillard's Inc. to 'BB-' from 'BB.' The
outlook is stable.
"The rating change is based on continued poor operating
performance," explained Standard & Poor's credit analyst
Jackie E. Oberoi, "including a 4% decrease in total sales and a 5%
drop in same-store sales for the year ended Feb. 2, 2008."
Performance has not improved to date in fiscal 2008, with same-
store sales declining 10% in March and 2% in February. Credit
metrics worsened accordingly, with leverage of 3.7x and interest
coverage of 3.7x compared to 2.4x and 4.8x, respectively, a year
ago.
"We believe there may be some further erosion in credit metrics
during 2008," added Ms. Oberoi.
DIOMED HOLDINGS: To Pay Hercules $6 Mil. from Settlement Proceeds
-----------------------------------------------------------------
Hercules Technology Growth Capital Inc. will receive repayment of
principal on the company's debt financing to Diomed Holdings Inc.,
which is currently in Chapter 11 reorganization.
Diomed recently announced it has entered into a settlement
agreement with AngioDynamics Inc., for the purpose of resolving
the patent infringement lawsuit between the companies originally
filed in January 2004.
As a result of the settlement over varicose vein laser treatment
technology, AngioDynamics agreed to pay $7.0 million to Diomed.
Of the $7.0 million settlement proceeds, $6.0 million will be used
to repay the outstanding loan principal balance to Hercules per a
settlement order approved by the United States Court of Bankruptcy
for the District of Massachusetts.
"Our anticipated repayment of our outstanding loan from Diomed
demonstrates Hercules' ability to minimize risks to our investors,
even amid distressed situations," said Manuel A. Henriquez, co-
founder, chairman and chief executive officer of Hercules.
Additionally, Vascular Solutions Inc., said on April 9, 2008, that
it has entered into a separate settlement agreement with Diomed
for the purpose of resolving the patent infringement lawsuit
between the companies. Pursuant to the settlement agreement, all
claims and appeals by each side will be dismissed following a one-
time payment of $3.6 million from Vascular Solutions to Diomed.
As reported in the Troubled Company Reporter on April 14, 2008,
Diomed Holdings entered into an asset purchase agreement with
AngioDynamics Inc. for the sale of Diomed's U.S. operations for a
cash purchase price of $8 million.
The assets subject to the Agreement exclude the proceeds of
Diomed's settlement of its patent litigation with AngioDynamics,
under which AngioDynamics agreed to pay $7 million, and the
proceeds of Diomed's anticipated $3.6 million settlement with
Vascular, pending bankruptcy court approval, as well as certain
patents.
About AngioDynamics
AngioDynamics Inc. (NASDAQ: ANGO) -- http://www.angiodynamics.com/
-- is a provider of medical devices used in minimally invasive,
image-guided procedures to treat peripheral vascular disease
(PVD). The Company designs, develops, manufactures and markets a
line of therapeutic and diagnostic devices that enable
interventional physicians (interventional radiologists, vascular
surgeons and others) to treat PVD and other non-coronary diseases.
Its product lines consist primarily of angiographic products and
accessories, dialysis products, vascular access products, venous
products, thrombolytic products, percutaneous transluminal
angioplasty (PTA) products and drainage products. During the
fiscal year ended June 3, 2006, 4.1% of the Company's net sales
were in non-United States markets. In January 2007, the Company
completed the acquisition of RITA Medical Systems, Inc.
About Vascular Solutions
Vascular Solutions Inc. (NASDAQ: VASC) --
http://www.vascularsolutions.com/-- is a medical device company
focused on bringing clinically advanced solutions to
interventional cardiologists and interventional radiologists
worldwide. The company's product lines consist of hemostat (blood
clotting) products, consisting of the D-Stat Dry hemostat, a
topical thrombin-based pad with a bandage used to control surface
bleeding, and the D-Stat Flowable, a thick yet flowable thrombin-
based mixture for preventing bleeding in subcutaneous pockets;
extraction catheters, principally consisting of the Pronto
extraction catheter, a mechanical system for the removal of soft
thrombus from arteries; Vein products, principally consisting of
the Vari-Lase endovenous laser, a laser and procedure kit used for
the treatment of varicose veins; specialty catheters, consisting
of a variety of catheters for clinical uses, including the
Langston dual lumen catheters, Twin-Pass dual access catheter and
Skyway support catheters, and access product.
About Hercules Technology
Hercules Technology Growth Capital Inc. (NASDAQ: HTGC) --
http://www.herculestech.com/-- or -- http://www.htgc.com/-- is a
specialty finance company that provides debt and equity growth
capital to technology related and life sciences companies at all
stages of development. It primarily finances privately-held
companies backed by major venture capital and private equity firms
and also may finance certain select publicly-traded companies that
lack access to public capital or are sensitive to equity ownership
dilution. Hercules invests primarily in structured mezzanine debt
and, to a lesser extent, in senior debt and equity. Its
structured mezzanine debt investments will be secured by some or
all of the assets of the portfolio company.
About Diomed Holdings
Headquartered in Andover, Massachusetts, Diomed Holdings Inc. --
http://www.diomedinc.com/-- develops and commercializes minimally
invasive medical procedures that employ its laser technologies and
associated disposable products. They offer endovenous laser
treatment, a minimally invasive laser procedure for the treatment
of varicose veins caused by greater saphenous vein reflux. They
also develop and market lasers and disposable products for
photodynamic therapy cancer procedures; and products for other
clinical applications, including dental and general surgical
procedures. In addition, they provide customers with physician
training and practice development support. They serve hospitals,
private physician practices, and clinics, as well as focus on
specialists in vascular surgery, interventional radiology, general
surgery, phlebology, interventional cardiology, gynecology, and
dermatology. They sell their products through a direct sales
force, and a network of distributors in the EU, Latin America and
Mexico, the UK, the US, Japan, Australia, South Korea, the
Peoples' Republic of China, and Canada.
The company and its debtor-affiliate Diomed Inc. filed for Chapter
11 protection on March 14, 2008 (Bankr. D. Mass. Case Nos. 08-
40750 and 08-40749). Douglas R. Gooding, Esq., at Choate, Hall &
Stewart, in Boston, Massachusetts, represents the Debtors. When
the Debtors filed for protection from their creditors, they listed
assets and debts between $10 million and $50 million.
DORADO BECKVILLE: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Dorado Beckville Partners I, L.P.
5950 Berkshire Lane, Suite 1650
Dallas, TX 75225
Bankruptcy Case No.: 08-31796
Debtor-affiliate filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Dorado Operating, Inc. 08-31800
Type of Business: The Debtors are diversified oil and gas
exploration and production companies active in
the East Texas Basin, the inland waters of
South Louisiana, and Western Alabama.
See http://www.doradoexploration.com/
Chapter 11 Petition Date: April 15, 2008
Court: Northern District of Texas (Dallas)
Judge: Barbara J. Houser
Debtors' Counsel: Marcus Alan Helt, Esq.
(mhelt@gardere.com)
Richard McCoy Roberson, Esq.
(rroberson@gardere.com)
Gardere Wynne Sewell, LLP
1601 Elm Street, Suite 3000
Dallas, TX 75201
Tel: (214) 999-4526
Fax: (214) 999-3526
http://www.gardere.com/
Dorado Beckville Partners I, LP's Financial Condition:
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
A. Dorado Beckville Partners I, L.P. did not file a list of its
largest unsecured creditors.
B. Dorado Operating, Inc's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Weatherford trade debt $1,780,921
P.O. Box 200098
Houston, TX 77216
Attn: William G. Lowere,
(Bill.Lowerre@weatherfod.com)
Corporate Counsel
Weatherford
515 Post Oak Blvd.
Houston, TX 77027
Tel: (713) 693-4105
Fax: (713) 693-4480
http://www.weatherfod.com/
Martin Lake Construction, Inc. trade debt $1,034,278
P.O. Drawer H.
Carthage, TX 75633
Attn: Charles "Brick"
Dickerson, Dickerson Law
Offices
325 West Sabine Street, Ste. 4
Carthage, TX 75633
Tel: (903) 693-8212
Fax: (903) 693-7961
Rauh's Frac Service, Ltd. trade debt $438,724
P.O. Box 1753
Kilgore, TX 75663
Attn: Elizabeth Aten
(elamberson@crouchfirm.com)
Lamberson, Crouch & Ramey
1445 Ross Ave., Ste. 3600
Dallas, TX 75202
Tel: (214) 922-7100
Fax: (214) 922-7101
http://www.crouchfirm.com
Nabor's Well Service trade debt $349,517
(jesparza@gjtbs.com)
515 W. Greens Rd., Ste. 1000
Houston, TX 77067
Attn: Jacob Esparza
Galloway, Johnson, Tompkins,
Burr & Smith
1301 Mckinney, Ste. 1400
Houston, TX 77010
Tel: (713) 599-0700
Fax: (719) 599-0777
http://www.gjtbs.com/
Pinnergy trade debt $328,889
111 Congress Ave., Ste. 202
Austin, TX 78701
Attn: Mark A. Mayfield
Clark, Thomas & Winters, P.C.
P.O. Box 1148
Austin, TX 78767
Tel: (512) 472-8800
Fax: (512) 474-1129
Schlumberger Technology trade debt $278,432
Corp.
P.O. Box 201193
Houston, TX 77216
Attn: Neil J. Orleans
Goins, Underkoffer, Crawford
& Langdon, L.L.P.
1201 Elm Street, Suite 4800
Dallas, TX 758270
Tel: (214) 969-5454
Fax: (214) 969-5902
(neilo@gucl.com)
http://www.gucl.com
Texas CES, Inc. dba Bell trade debt $262,807
Supply
P.O. Box 201644
Dallas, TX 75320
Attn: James A. Collura, Jr.
Coats Rose
3 East Greenway Plaza,
Ste. 2000
Houston, TX 77046
Tel: (713) 651-0111
Fax: (713) 651-0220
Baker Hughes trade debt $227,059
LATX Operations trade debt $203,135
Dan Blocker Petroleum trade debt $189,348
JW Williams trade debt $163,205
Offshore Energy Services, Inc. trade debt $159,534
MI SWACO trade debt $144,800
J-W Wireline Co. trade debt $135,738
United Fuel & Energy trade debt $131,724
OST Fluid Services trade debt $128,109
Core Lab trade debt $120,444
Smith International trade debt $105,718
Sabine Mud Logging, Inc. trade debt $105,302
C.C. Forbes trade debt $102,635
EMAGIN CORP: Dec. 31 Balance Sheet Upside Down by $3.975 Million
----------------------------------------------------------------
eMagin Corporation, as of Dec. 31, 2007, reported total assets of
$6.648 million, total liabilities of $10.623 million resulting to
a total capital deficit $3.975 million.
Net loss for the three months ending Dec. 31, 2007 was
$1.2 million compared to $1.5 million in 2006. For the full year
2007 net loss was $18.5 million compared to a net loss of
$15.3 million during 2006. Approximately $10.7 million of the
loss in 2007 was related to the exchange of the 8% senior secured
convertible notes and related warrants for the 6% senior secured
convertible notes and warrants.
Revenue for the three and twelve months ending Dec. 31, 2007, of
$4.6 million and $17.6 million increased 81% and 115%,
respectively, from $2.6 million and $8.2 million for the quarter
and year ending Dec. 31, 2006. The growth in revenue was directly
attributable to increased sales of our microdisplays to military,
industrial, and dual-use OEMs, with military OEM growth of 100%
driving results.
Cost of goods increased 46% to $3.5 million for the quarter ended
Dec. 31, 2007 from $2.4 million in 2006. For the full year the
cost of goods were $12.6 million in 2007 as compared to
$11.4 million in 2006.
Gross margins were a record $1.1 million in the fourth quarter and
$4.9 million for the full year, compared to gross margins of
positive $138,000 and negative $3.2 million for the same periods
the prior year. These improvements reflect the impact of
increased sales volumes and low variable production costs in the
cost of sales.
Operating expenses for 2007 were $2.0 million for the fourth
quarter and $9.5 million for the full year compared to
$3.1 million and $13.3 million for the same periods in 2006.
"2007 was a year of significant achievements in terms of advancing
our strategic objectives," Admiral Thomas Paulsen, eMagin's non-
executive chairman and interim chief executive officer, said.
"Increased demand for high performance power efficient displays to
support combat, simulation and training was the primary driver,
complemented by contributions from our homeland defense and
private sector business."
"We continue to fulfill the promise of growing sales revenues
while improving our margins. Our ongoing progress in expanding our
product pipeline and strategic marketing along with operational
and technology developments has positioned us for a productive
2008," Adminral Paulsen continued.
About eMagin Corporation
Headquartered in Bellevue, Washington, eMagin Corporation (AMEX:
EMA) -- http://www.emagin.com/-- designs, develops, manufactures,
and markets virtual imaging products which utilize OLEDs, or
organic light emitting diodes, OLED-on-silicon microdisplays and
related information technology solutions.
Going Concern Doubt
Eisner LLP expressed substantial doubt on eMagin Corp.'s ability
to continue as a going concern after auditing the company's annual
report for the year ended Dec. 31, 2006. Eisner reported that the
company has had recurring losses from operations which is likely
to continue, and has working capital and capital deficits at
Dec. 31, 2006.
ESKIM LLC: Case Summary & Seven Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Eskim, LLC
819 North Queen St.
Martinsburg, WV 25401
Bankruptcy Case No.: 08-00509
Chapter 11 Petition Date: April 9, 2008
Court: Northern District of West Virginia (Martinsburg)
Judge: Patrick M. Flatley
Debtor's Counsel: Aaron C. Amore, Esq.
Kratovil & Amore PLLC
211 West Washington Street
P.O. Office Box 337
Charles Town, WV 25414
Tel: (304) 728-7718
Fax: (304) 728-7720
(amore@charlestownlaw.com)
http://www.charlestownlaw.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's Seven Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
BB & T 9.2 Acres, Bunker $237,000
Bankruptcy Dept. Hill, WV (210
Mail code 100-50-01- Outback Dr.) improved
51 land with prelimiary
P.O. Box 1847 plat approval for 30
Wilson, NC 27894 single family homes;
value of security:
$600,000; value of
senior lien: $442,463
Centra Bank 331 East Burke Street $92,000
405 Foxcroft Ave. Martinsburg, WV
Martinsburg, WV 25401 single family home;
value of security:
$60,000
Bank of America credit card $27,168
Attn: Bankruptcy Dept. NC4-
105-03-14
P.O. Box 26012
Greensboro, NC 27420
credit card $23,500
extensions to pay
Eskim expenses and
debts
Berkeley County Sheriff & real property taxes $48,000
Treasurer
Citibank credit card $33,938
UNVL/CITI credit card $23,240
City of Martinsburg fire and garbage $12,500
fees
FLOWSERVE CORP: Fitch Affirms 'BB' Ratings with Positive Outlook
----------------------------------------------------------------
Fitch Ratings has affirmed Flowserve Corporation's Issuer Default
Rating and senior secured bank facilities at 'BB' and revised the
Rating Outlook to Positive from Stable.
Flowserve's ratings are:
-- IDR at 'BB';
-- Senior secured bank facilities at 'BB';
The ratings affect approximately $558 million of debt outstanding
at Dec. 31, 2007.
The Positive Rating Outlook reflects Flowserve's improving
operating performance, substantial progress toward resolving
concerns about contingent litigation liabilities and financial
reporting, and Fitch's expectation that the company intends to
maintain disciplined financial policies that should help it to
sustain improved credit measures. Flowserve's solid results in
2007 contributed to a significant decline in debt/EBITDA to 1.2
times as of Dec. 31, 2007 despite a stable debt level. The
company has benefited from strong demand across most of
Flowserve's businesses, particularly in its important energy and
water markets.
Flowserve has also benefited from better operating efficiency
related to the increase in sales volumes and from its focus on
improving its operating capabilities and its reporting and
controls. The long term outlook for activity in the company's
global infrastructure markets remains favorable although Fitch
recognizes the inherent cyclicality in Flowserve's business and
its sensitivity to economic conditions. This concern is partly
offset by the company's substantial aftermarket business.
Previous concerns about controls over financial reporting and
potential litigation liabilities have been eliminated or
significantly reduced. The company has not reported any material
weaknesses since the end of 2006. In February 2008, Flowserve
agreed to settlements totaling $10.6 million with the U.S. Dept.
of Justice and the SEC concerning investigations into its
compliance with the U.N. Oil-for-Food Program.
In addition, recent developments surrounding shareholder lawsuits
have been in Flowserve's favor although the risk of further
litigation cannot be dismissed. Remaining legal matters include
numerous asbestos-related lawsuits and Flowserve's compliance with
U.S. export controls. Asbestos liabilities are reduced by
insurance coverage or indemnities by other companies. While the
effectiveness of such coverage is difficult to ascertain, the
ratings incorporate Fitch's view that, in the absence of
unexpectedly large awards against it, Flowserve's net litigation
liabilities are not likely to result in a substantial use of cash.
The ratings also consider Flowserve's global presence in the flow
control industry, its product and geographic diversification, and
its conservative debt structure. Discretionary spending for
acquisitions and share repurchases have been limited in recent
years, but favorable financial results have contributed to the
company's decision to initiate dividends in 2007, and in February
2008 it announced a $300 million share repurchase program.
Flowserve has not said how quickly it might repurchase shares.
However, it has sufficient financial capacity to fund modest
levels of share repurchases and acquisitions as well as working
capital requirements and capital expenditures that may be needed
to fund internal growth. Fitch believes large acquisitions or
other leveraging transactions are unlikely based on opportunities
for meaningful internal growth, Flowserve's commitment to making
further improvements in its operating and reporting processes, and
its demonstrated willingness to control debt and leverage. An
upgrade in Flowserve's ratings will be contingent on continued
strong financial results, effective execution of its operating
strategies, reasonable clarity about contingent litigation
liabilities, and disciplined cash deployment.
At Dec. 31, 2007, Flowserve's liquidity included $373 million of
cash and a $400 million revolver that matures in 2012, offset by
$7 million of current maturities and $115 million of Letter of
Credit usage under the revolver. Nearly all of Flowserve's debt
consisted of a $555 million bank term loan that has no significant
scheduled payments until 2011. The bank facilities are secured by
substantially all of Flowserve's domestic assets and 65% of the
capital stock of certain foreign subsidiaries. The facilities
would become unsecured if the company maintains investment grade
ratings, as defined in the agreement, for at least 90 days.
During 2008, Flowserve expects to terminate its factoring
facilities which represented $64 million of non-recourse financing
at the end of 2007.
FORD CREDIT: Moody's Gives 'Ba1' Initial Rating on Class D Notes
----------------------------------------------------------------
Moody's Investors Service assigned provisional ratings to the
notes to be issued by Ford Credit Auto Receivables 2008-B Owner
Trust.
The complete rating actions are:
Issuer: Ford Credit Auto Receivables 2008-B Owner Trust
-- A-1 Notes, rated (P) Prime-1
-- A-2a Notes, rated (P) Aaa
-- A-2b Notes, rated (P) Aaa
-- A-3a Notes, rated (P) Aaa
-- A-3b Notes, rated (P) Aaa
-- A-4a Notes, rated (P) Aaa
-- A-4b Notes, rated (P) Aaa
-- B Notes, rated (P) Aa3
-- C Notes, rated (P) A3
-- D Notes, rated (P) Ba1
Moody's said the ratings are based on the quality of the
underlying auto loans and their expected performance, the strength
of the structure, the availability of excess spread over the life
of the transaction, and the experience of Ford Motor Credit
Company as servicer.
FORD CREDIT: Fitch to Assign 'BB' Rating on $21MM Class D Trusts
----------------------------------------------------------------
Fitch Ratings expects to assign these ratings to Ford Credit Auto
Owner Trust 2008-B:
-- $260,000,000 class A-1 'F1+';
-- $332,500,000 class A-2a and A-2b 'AAA';
-- $292,500,000 class A-3a and A-3b 'AAA';
-- $113,800,000 class A-4 'AAA';
-- $31,500,000 class B 'A';
-- $21,000,000 class C 'BBB';
-- $21,000,000 class D 'BB'.
FORD CREDIT: S&P Puts 'BB+' Preliminary Rating on Class D Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Ford Credit Auto Owner Trust 2008-B's $1.072 billion
asset-backed notes series 2008-B.
The preliminary ratings are based on information as of April 14,
2008. Subsequent information may result in the assignment of
final ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The characteristics of the pool being securitized;
-- The credit enhancement in the form of subordination, cash,
and excess spread that is augmented through the yield
supplement overcollateralization amount;
-- The extensive securitization performance history of Ford
Motor Credit Co. (B/Stable/B-3);
-- The timely interest and principal payments made under
stressed cash flow modeling scenarios appropriate to the
rating categories; and
-- The transaction's legal structure.
Preliminary Ratings Assigned
Ford Credit Auto Owner Trust 2008-B
Class Rating Type Interest Amount Legal final
rate* ** maturity
----- ------ ---- -------- ------ -----------
A-1 A-1+ Senior Fixed $260,000,000 May 2009
A-2*** AAA Senior Fixed/floating $332,500,000 December 2010
A-3*** AAA Senior Fixed/floating $292,500,000 May 2012
A-4*** AAA Senior Fixed/floating $113,800,000 March 2013
B A+ Sub Fixed $31,500,000 July 2013
C BBB+ Sub Fixed $21,000,000 December 2013
D BB+ Sub Fixed $21,000,000 October 2014
* The interest rate for each class will be determined on the
pricing date.
** The actual size of these tranches will be determined on the
pricing date.
*** Class A-2, A-3, and A-4 will be due either a fixed- or
floating-rate of interest, or a combination of both.
FRED LEIGHTON: Chapter 11 Filing Stays Auction of $34 Mil. Assets
-----------------------------------------------------------------
The Appellate Division of New York State Supreme Court halted the
public auction of $34 million assets owned Ralph O. Esmerian and
his jewelry company, Fred Leighton Holding Inc., Bloomberg News
and The New York Times report. The Appellate Court's decision was
based on a chapter 11 petition Mr. Esmerian filed with the U.S.
Bankruptcy Court for the Southern District of New York on behalf
of Fred Leighton and seven debtor-affiliates, the reports say.
Bloomberg says that Mr. Esmerian defaulted on a $178 million loan
owed to Merrill Lynch & Co. NY Times relates that the loan is
$187 million.
According to Bloomberg, Mr. Esmerian used the funds for a
$100 million acquisition of Fred Leighton in 2006. After the
default, Merrill Lynch moved to seize and liquidate some of Mr.
Esmerian's priced jewelries through international auction firm,
Christie's International -- http://www.christies.com/
A week ago, the Hon. Helen E. Freedman of the New York State
Supreme Court issued an order approving the sale, which was
subsequently junked by the Appellate Court, the reports note.
The assets held up for sale included a $15 million diamond ring
and a $6 million diamond brooch previously owned by Napoleon III's
wife, NY Times reports. Mr. Esmerian's family has been collecting
antique jewelries, NY Times quotes Debtors' counsel Helen Davis
Chaitman, Esq., at Phillips Nizer LLP as stating.
Mr. Esmerian's petition listed debts between $100 million and
$500 million owed to about 50 creditors.
Merrill Lynch Contests Suspension of Auction
Howard R. Hawkins, Jr., Esq., representing Merrill Lynch is quoted
by NY Times as commenting that "a preliminary injunction against
the auction would be wrong." He added that selling the Debtors'
assets through Christie's "is the best way" and that they will
seek another order from Judge Freedman to continue with the
auction, NY Times says.
Based on Bloomberg's report, the Hon. Richard Andrias of the NY
Appellate Court awarded Merrill Lynch a favorable ruling allowing
the sale. However, Bloomberg relates, Mr. Esmerian's counsel told
the Appellate Court they'd file for bankruptcy "just minutes after
the" issuance of the order.
Mr. Esmerian asserted that more money could be derived if his
assets were sold privately not publicly, Bloomberg and NY Times
revealed.
The Bankruptcy Court is set to hear the issue today at 11:00 a.m.
on whether to continue the auction originally scheduled at 6:00
p.m. tonight, reports Bloomberg.
About Fred Leighton
Fred Leighton Holding Inc. -- http://www.fredleighton.com/-- is a
New York-based jewelry retailer owned by Ralph O. Emerian. Fred
Leighton has decked countless red-carpet-dwellers in diamonds,
including Sarah Jessica Parker, Nicole Kidman, and Catherine Zeta-
Jones. It specializes in vintage jewelry from the 18th and 20th
centuries, including antique cushion-cut diamonds and antique and
estate brooches. It also produces Fred Leighton signature
collection that combines past aura and the present's materials and
craftmanship.
FRED LEIGHTON: Voluntary Chapter 11 Case Summary
------------------------------------------------
Lead Debtor: Fred Leighton Holding, Inc.
766 Madison Avenue
New York, NY 10065
Bankruptcy Case No.: 08-11363
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Calypso Mines, LLC 08-11362
Fred Leighton BH, LLC 08-11364
Fred Leighton, LLC 08-11365
Phoenix Nevada 1, LLC 08-11366
Endymion, LLC 08-11367
Foxtrot, LLC 08-11368
Tango, LLC 08-11369
Type of Business: The Debtors are jewelers. Fred Leighton is a
jewelry retailer owned by Ralph O. Emerian.
Fred Leighton has decked countless red-carpet-
dwellers in diamonds, including Sarah Jessica
Parker, Nicole Kidman, and Catherine Zeta-Jones.
It specializes in vintage jewelry from the 18th
and 20th centuries, including antique cushion-
cut diamonds and antique and estate brooches.
It also produces Fred Leighton signature
collection that combines past aura and the
present's materials and craftmanship. See
http://www.fredleighton.com/
Chapter 11 Petition Date: April 15, 2008
Court: Southern District of New York (Manhattan)
Debtors' Counsel: Joshua Joseph Angel, Esq.
Herrick, Feinstein LLP
2 Park Avenue
New York, NY 10016
Tel: (212) 592-5912
Fax: (212) 592-1500
(jangel@herrick.com)
http://www.herrick.com/
Fred Leighton Holding, Inc's Financial Condition:
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
The Debtors did not file lists of their largest unsecured
creditors.
FRESHWATER OF HARRISBURG: Case Summary & 12 Largest Creditors
-------------------------------------------------------------
Debtor: Freshwater of Harrisburg, LLC
5 Emes Lane
Monsey, NY 10952
Bankruptcy Case No.: 08-01260
Chapter 11 Petition Date: April 9, 2008
Court: Middle District of Pennsylvania (Harrisburg)
Judge: Mary D. France
Debtor's Counsel: Robert E. Chernicoff, Esq.
(rec@cclawpc.com)
Cunningham & Chernicoff, PC
2320 North Second Street
Harrisburg, PA 17110
Tel: (717) 238-6570
Fax: (717) 238-4809
http://www.cclawpc.com/
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
United Water trade debt $47,204
4211 E. Park Circle
Harrisburg, PA 17111
PPL Utilities trade debt $20,491
827 Hausman Rd.
Allentown, PA 18104-9392
Home Depot Credit Services trade debt $11,015
P.O. Box 9055
Des Moines, IA 50368-9055
Wilmar Industries trade debt $8,571
United Flooring trade debt $8,000
UGI Utilities trade debt $5,347
Verizon trade debt $2,321
MAB Paint trade debt $2,000
Patriot News trade debt $1,918
Home Paramount Pest Control trade debt $890
Hornungs True Value trade debt $480
Paxton Herald trade debt $270
FRIEDMAN INC: White Jewelers Acquires Certain Assets for $14.3MM
----------------------------------------------------------------
White Jewelers, a subsidiary of Whitehall Jewelers Holdings,
bought certain assets in 78 stores -- including inventories,
deposits, prepaid assets and other real properties -- of
Friedman's Inc. and Crescent Jewelers, subject to adjustments,
Bloomberg News reports.
Report says that White Jewelers has paid roughly 67% of the
$14.3 million purchase price and submitted an irrevocable standby
letter of credit to the Debtors. White Jewelers can purchase more
assets from the Debtors which is presently up for sale, the report
adds.
About Friedman's Inc.
Addison, Texas-based Friedman's Inc. -- http://www.friedmans.com/
-- and -- http://www.crescentonline.com/-- is the parent company
of a group of companies that operate fine jewelry stores located
in strip centers and regional malls in the southeastern United
States. Friedman's and eight its affiliates filed for chapter 11
protection on Jan. 14, 2005 (Bankr. S.D. Ga. Case No. 05-40129).
On Sept. 22, 2005, the Bankruptcy Court entered an order approving
the Debtors' Disclosure Statement explaining their Amended Joint
Plan of Reorganization. On Nov. 23, 2005, the Court confirmed the
Debtors' Amended Plan and that Plan became effective on Dec. 9,
2005.
Crescent Jewelers, the largest jewelry retailer on the West Coast,
filed for Chapter 11 protection on Aug. 12, 2004 (Bankr. N.D.
Calif. Case No. 04-44416). On June 15, 2006, the California
Bankruptcy Court approved Crescent Jewelers' Second Amended
Disclosure Statement its Second Amended Plan of Reorganization.
The Court confirmed that Plan on July 13, 2006. Crescent Jewelers
was acquired by Friedman's and became a wholly-owned subsidiary in
2006. In Jan. 22, 2008, five parties, which declared claims
aggregating $9,081,199.07, filed an involuntary Chapter 7 petition
against Friedman's. The parties that filed the involuntary
petition were Rosy Blue, Inc.; Rosy Blue Jewelry Inc.; Jay Gems,
Inc., dba Jewelmark; Simply Diamonds Inc.; and Paul Winston-
Eurostar LLC.
As of Jan. 28, 2008, Friedman's operated 388 stores in 19 states
with over 2,890 employees while Crescent Jewelers operated 85
stories in 3 states with over 600 employees. Friedman's and
Crescent Jewelers filed for chapter 11 protection on Jan. 28, 2008
(Bankr. D. Del. Case Nos. 08-10161 and 08-10179).
The Official Committee of Unsecured Creditors has been appointed
in the Debtors' cases.
Athanasios E. Agelakopoulos, Esq., at Kilpatrick Stockton LLP, and
Jason M. Madron, Esq., and Michael Joseph Merchant, Esq., at
Richards, Layton & Finger PA represent the Debtors in their
restructuring efforts. Kurtzman Carson Consultants LLC is the
Debtors' claims, balloting, and noticing agent. As of Dec. 28,
2007, the Debtors listed total assets of $245,787,000 and total
liabilities of $171,877,000.
FRONTIER AIRLINES: Bankruptcy Filing Prompts Securities Delisting
-----------------------------------------------------------------
Frontier Airlines Inc. received a Staff Determination Letter from
The Nasdaq Stock Market indicating that, as a result of the
company's filing for protection under Chapter 11 of the U.S.
Bankruptcy Code, Nasdaq has determined that the company's
securities will be delisted from Nasdaq in accordance with the
discretionary authority granted to Nasdaq under Marketplace Rules
4300, 4450(f) and IM-4300.
The company does not intend to appeal this determination, and, as
a result, trading of the company's common stock will be suspended
at the opening of business on April 22, 2008, and a Form 25-NSE
will be filed with the Securities Exchange Commission to remove
the company's securities from listing and registration on Nasdaq.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provide air transportation for
passengers and freight. They operate jet service carriers linking
their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities
in Mexico, and 1 city in Canada, as well as provide service from
other non-hub cities, including service from 10 non-hub cities to
Mexico. As of May 18, 2007, they operated 59 jets, including 49
Airbus A319s and 10 Airbus A318s.
The Debtor and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297
thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell
represent the Debtors in their restructuring efforts. Togul, Segal
& Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is
the Debtors' Special Counsel, Epiq Bankruptcy LLC is Debtors'
Notice & Claims Agent and Kekst and Company is the Debtors'
Communications Advisors. Frontier Airlines Holdings Inc. and its
subsidiaries' financial condition as of Dec. 31, 2007, showed
total assets of $1,126,748,000 and total debts of $933,176,000.
GENTA INC: Eliminates 30% Workforce in Restructuring Operations
---------------------------------------------------------------
Genta Incorporated restructured certain of its operations to
conserve cash and focus on its priority oncology development
operations. Accordingly the company has reduced its workforce by
16 people, or approximately 30%.
In March 2008, the company received notice that its appeal of an
adverse decision by the Food and Drug Administration's Center for
Drug Evaluation and Research regarding its New Drug Application
for the use of Genasense(R) in patients with chronic lymphocytic
leukemia would not be reversed.
While the company is undertaking certain actions recommended by
CDER, this decision precludes a commercial launch of Genasense
during 2008.
"The highest priority for the company is the timely completion of
accrual and data readout from AGENDA, our ongoing Phase 3 trial of
Genasense in patients with advanced melanoma," Dr. Raymond P.
Warrell, Jr., Genta's chairman and chief executive officer, said.
"Since these products address important patient needs and generate
revenue for the company, we will be maintaining our "named-
patient" programs for Genasense and Ganite."
"However, given the delays in commercialization of our lead
product, we have underinvested in our marketed drug, Ganite(R),
and will be seeking buyers for that product," Dr. Warrell added.
"In other actions, we expect to file a complete response to FDA's
clinical hold on tesetaxel, our new oral taxane, and we anticipate
clinical presentations on both Genasense and G4544 -- an oral
compound that reduces calcium loss from bone -- at the ASCO
meeting in the second quarter."
"I am very pleased that Lloyd Sanders has agreed to increase his
leadership role in this consolidation as COO by assuming oversight
responsibility for Information Technology, Business Development,
Manufacturing Operations, and Commercial Operations," Dr. Warrell
continued. "The steps we are taking today will conserve cash,
maintain our pace of enrollment into AGENDA, while enabling
continued regulatory progress on our pipeline products. We
project a one-time expense of $235,000 for severance in the second
quarter, and an annualized reduction in payroll expense of
approximately $2 million."
About Genta Inc.
Genta Incorporated (NasdaqGM: GNTA) -- http://www.genta.com --
operates as a biopharmaceutical company with a diversified product
portfolio that is focused on delivering products for the treatment
of cancer patients. Its research platform has two principal
programs: DNA/RNA-based Medicines and Small Molecules. The
company's lead compound from its DNA/RNA Medicines program is
Genasense (oblimersen sodium) injection. Genta Incorporated is
recruiting patients to the AGENDA Trial, a global Phase 3 trial of
Genasense in patients with advanced melanoma.
The company is marketing its Ganite (gallium nitrate injection),
the leading drug in its Small Molecule program, in the United
States for the treatment of symptomatic patients with cancer-
related hypercalcemia that is resistant to hydration. It also
developed G4544, an oral formulation of the active ingredient in
Ganite, which entered clinical trials as a potential treatment for
diseases associated with accelerated bone loss. Genta
Incorporated sells Ganite and Genasense on a named-patient' basis
in countries outside the United States. The company was founded
in 1988 and is based in Berkeley Heights, New Jersey.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 28, 2008,
Deloitte & Touche LLP raised substantial doubt about the ability
of Genta Incorporated to continue as a going concern after it
audited the company's financial statements for the year ended
Dec. 31, 2007. The auditing firm pointed to the company's
recurring losses from operations and negative cash flows from
operations.
The company posted a net loss of $23,320,000 on $0.00 sales for
the year ended Dec. 31, 2007, as compared with a net loss of
$56,781,000 on $0.00 sales in the prior year.
GENERAL MOTORS: Reopens Two Plants Supplied by Axle in Mexico
-------------------------------------------------------------
General Motors Corp. is reopening two assembly factories within
April with axles supplied by American Axle & Manufacturing
Holdings Inc.'s plant in Guanajuato, Mexico, according to David
Barkholz and Robert Sherefkin of Crain News Service citing
Automotive News sources.
GM continued manufacturing Chevrolet Silverados and GMC Sierras in
its plant in Fort Wayne, Indiana, last week, and plans to resume
pickup production in a plant in Oshawa, Ontario, on April 21,
2008.
As reported in the Troubled Company Reporter on April 14, 2008,
the strike called by the United Auto Workers union at Axle's
original U.S. locations continues into its 47th day.
Approximately 3,650 associates are represented by the UAW at five
facilities in Michigan and New York.
With the objective of reaching a compromise agreement, Axle
requested the Federal Mediator assigned by the Federal Mediation &
Conciliation Service to assist in the company's ongoing
negotiations with the UAW. Axle had hoped that the involvement of
an impartial third party at the bargaining table could assist both
sides. The UAW refused to allow the Federal Mediator to help the
parties reach agreement. Axle was disappointed in the UAW's
decision.
"While the UAW had conversations with a representative of the
Federal Mediation and Conciliation Service, it was concluded that
a mediator could add little to the process at this juncture; in
fact, it would place the mediator in a no-win situation," UAW
President Ron Gettelfinger said. "Throughout these negotiations,
the UAW has repeatedly offered responsible proposals and counter-
proposals to Axle in an attempt to bring a conclusion to
bargaining."
As reported in the Troubled Company Reporter on April 11, 2008,
negotiators representing AAM and the UAW met at the bargaining
table for the first time in over three weeks on April 9, 2008. At
this meeting, the UAW presented a new economic proposal to Axle.
Although it was a slight improvement from the UAW's previous
bargaining positions, the all-in labor cost proposed by the UAW is
still approximately 200% of the market rate of Axle's competitors
in the United States automotive supply industry.
Axle expressed disappointment over the UAW's failure to make
proposals that address the competitive reality Axle and its UAW-
represented associates jointly face in the U.S. driveline
marketplace.
Axle needs a structural change in labor costs at its original U.S.
locations that is comparable to the agreements the UAW has
previously made with Axle's competitors in the United States
automotive supply industry. If the UAW continues to refuse to
make realistic economic proposals, Axle will be forced to consider
closing these facilities.
Axle has no desire to close the original U.S. locations. Axle's
preferred approach is to reach an agreement with the UAW on a new
U.S. market competitive labor cost structure for these facilities.
If such a market competitive agreement is accomplished, these
facilities will be able to bid competitively for new business and
Axle will be able to continue investing in these operations.
Axle has offered generous buy-outs for associates who do not wish
to continue to work for Axle subject to a competitive wage and
benefits package. Axle has also offered to make annual buy-down
cash payments to associates who accept a competitive wage and
benefits package. Axle's proposed buy-outs and buy-downs will
provide its associates and families a financial cushion and soft
landing during the transition to a new U.S. market competitive
labor cost structure. These proposals are similar to those that
have been successfully used by Chrysler, Ford, GM and Delphi in
recent agreements with the UAW.
Negotiations are continuing. Axle remains hopeful that the
International UAW will soon put forward economic and operating
proposals that will allow Axle to compete on a level playing field
with its competitors in the United States automotive supply
industry and maintain its manufacturing operations in the original
U.S. locations.
GM has about 30 facilities affected by the strike at Axle as the
supplier attempts to negotiate with the union.
Chrysler LLC is temporarily closing its vehicle assembly facility
in Newark, Delaware as the strike among UAW union members at AAM
stretches. AAM supplies Chrysler components for the Dodge Durango
and Chrysler Aspen sport utility vehicles in Newark and two
versions of the Dodge Ram pickup made in Saltillo, Mexico.
About Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its
wholly owned subsidiary, American Axle & Manufacturing, Inc.,
manufactures, engineers, designs and validates driveline and
drivetrain systems and related components and modules, chassis
systems and metal-formed products for light trucks, sport utility
vehicles and passenger cars. In addition to locations in the
United States (in Michigan, New York and Ohio), the company also
has offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, South Korea and the United Kingdom.
About GM
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.
GREAT PANTHER: Reduces Exercise Price of WK Warrants to $1.42
-------------------------------------------------------------
Great Panther Resources Limited is amending the terms of 3,621,999
outstanding share purchase warrants -- WK Warrants -- and 479,375
Broker Warrants by reducing the exercise price to $1.42. The move
is subject to Toronto Stock Exchange approval.
The expiry date remains at June 1, 2008. The amendment will
become effective on April 23, 2008.
Upon the amendment becoming effective, the current certificates
representing the WK Warrants and the Broker Warrants will be
deemed to have been amended to provide that the exercise price is
$1.42.
On June 1, 2006, the company issued 7,500,000 common shares,
3,749,998 WK Warrants and 479,375 Broker Warrants in connection
with a $15,000,000 bought deal private placement underwritten by
Jennings Capital Inc. The WK Warrants are currently exercisable
at $2.65 until June 1, 2008. The Broker Warrants are currently
exercisable at $2.00 until the same date. No WK Warrants are held
by insiders of the company. 127,999 WK Warrants were exercised on
Dec. 6, 2006, by three institutional investors.
Subject to Toronto Stock Exchange and shareholder approval, the
company is also amending the exercise price of 2,070,000
outstanding incentive stock options currently exercisable at $2.65
and 925,000 outstanding incentive stock options currently
exercisable at $2.00. The exercise price of these options is
being reduced to $1.42 to enable the company to retain and secure
key personnel in the current competitive job market.
The reduction in the exercise price will also become effective on
April 23, 2008, provided, however, that no exercise of such
options may occur until shareholder approval is obtained.
Shareholder approval will be sought at the company's annual
general meeting in June 2008. Votes attaching to shares held
directly or indirectly by insiders and other persons benefiting
from this amendment will be excluded.
About Great Panther
Headquartered in Vancouver, Canada, Great Panther Resources
Limited (TSX: GPR) -- http://www.greatpanther.com/-- is a mining
and exploration company. The company owns a 100% interest in two
operating mines and two high quality exploration projects in
Mexico, and employs almost 600 people.
At Dec. 31, 2007, the company's consolidated balance sheet showed
CDN$31,053,110 in total assets, CDN$9,856,641 in total
liabilities, and CDN$21,196,469 in total stockholders' equity.
Going Concern Doubt
KPMG LLP, in Vancouver, Canada, expressed substantial doubt about
Great Panther Resources Ltd.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007, and 2006. The
auditing firm pointed to the company's recurring losses and
operating cash flow deficiencies.
GTM HOLDINGS: Weak Credit Metrics Cues Moody's Rating Cut to 'B3'
-----------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of GTM Holdings Inc. to B3 from B2, the probability of default
rating to Caa1 from B2, and the $105 million second lien term loan
to Caa2 from Caa1.
The downgrades reflect material negative variance under
expectations due to lower than expected operating performance and
weak credit metrics (adjusted debt EBITDA exceeding 7.5 times as
of Dec. 31, 2007). Additionally, the ratings incorporate an
expectation that operating challenges throughout the retail
industry are likely to continue to pressure results. The negative
ratings outlook reflects Moody's opinion that headroom under
financial covenant is tenuous, notably if near term operating
performance does not materially improve while existing financial
covenants contractually tighten in June 2008.
"Though showing some improvement from 2006 levels, inventory
management by customers during this soft retail environment is
resulting in prolonged negative free cash flow which is outside of
Moody's expectation following the merger of Gold Toe Corporation
and Moretz Inc. in 2006" said Moody's Analyst, Mike Zuccaro.
While continuing to recognize some retention of enterprise value
in distress, Moody's assessment of GTM's tight liquidity profile
is reflected in the downgrade of the probability of default rating
to Caa1 from B2.
Ratings downgraded:
GTM Holdings, Inc.
-- Corporate Family Rating to B3 from B2
-- Probability of Default Rating to Caa1 from B2
-- Second lien term loan facility to Caa2 (LGD 4, 69%) from Caa1
(LGD 5, 84%)
Ratings affirmed:
-- First lien revolver and term loan facility at B1 (LGD 2, 22%)
Based in Whitsett, North Carolina, GTM Holdings, Inc. is a leading
manufacturer, marketer and distributor of socks in the U.S. with
revenue in excess of $330 million in 2007. The company primarily
manufactures product under the "Gold Toe" brand name, as well as
other owned brands such as "AURO" and "gt" lines sold exclusively
at Target and Wal-Mart, respectively, licenses including "New
Balance" and 'Under Armor," and private label brands.
HEARTLAND AUTOMOTIVE: Wants Until September 6 to File Ch. 11 Plan
-----------------------------------------------------------------
Heartland Automotive Holdings Inc. and its debtor-affiliate ask
the Hon. D. Michael Lynn of the United States Bankruptcy Court for
the Northern District of Texas, Forth Worth Division, to further
extend the exclusive periods to:
a) file a Chapter 11 plan until Sept. 3, 2008, and
b) solicit acceptances of that plan until Nov. 5, 2008.
The Debtors are presently in talks with third-parties who have
expressed their willingness to invest in the Debtors' future
business. The Debtors are also exploring strategic alternatives.
Jeff P. Prostok, Esq., at Forshey & Prostok LLP in Ft. Worth,
Texas, the extension enables the Debtors to develop and implement
a viable long-term business plan.
The Debtors' exclusive rights to file a plan will end on May 6,
2008.
A hearing is set on May 6, 2008, at 10:30 a.m., to consider the
Debtors' request. Objections, if any, are due May 1, 2008.
About Heartland Automotive
Based in Omaha, Nebraska, Heartland Automotive Holdings Inc. --
http://www.heartlandjiffylube.com/-- and its debtor-affiliates
are franchisees of Jiffy Lube International Inc. since 1980. The
Debtors operate 438 quick-oil-change stores in 20 states across
the Eastern, Midwestern and Western U.S. They employed in excess
of 4,000 employees.
The company and its nine affiliates filed for Chapter 11
protection on Jan. 7, 2008 (Bank. N.D. Tex. Lead Case No.
08-40057). Jeff P. Prostok, Esq., at Forshey & Prostok, LLP
represents the Debtors in their restructuring efforts. The
Debtors selected Epiq Bankruptcy Solutions LLC as claims, noticing
and balloting agent. The U.S. Trustee for Region 6 appointed
creditors to serve on an Official Committee of Unsecured Creditors
on these cases. The Committee selected Cadwalader Wickersham &
Taft LLP as counsel. As of Nov. 29, 2007, the Debtors' financial
statements reflected assets totaling about $334 million and
liabilities totaling about $396 million.
HSBC HOME: Fitch Downgrades Ratings on $225.6 Million Certificates
------------------------------------------------------------------
Fitch Ratings has taken rating actions on 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 $1.69 billion and downgrades total
$225.6 million. Additionally, $49 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 affirmed at 'AAA'
(BL: 33.82, LCR: 2.83);
-- $5.9 million class II-A-1 affirmed at 'AAA',
(BL: 81.87, LCR: 6.86);
-- $41.3 million class II-A-2 affirmed at 'AAA',
(BL: 51.45, LCR: 4.31);
-- $112.7 million class II-A-3 affirmed at 'AAA'
(BL: 33.81, LCR: 2.83);
-- $30.0 million class II-A-4 rated 'AAA', placed on Rating
Watch Negative (BL: 24.27, LCR: 2.03);
-- $32.8 million class M1 downgraded to 'A' from 'AA+'
(BL: 20.38, LCR: 1.71);
-- $9.2 million class M2 downgraded to 'BBB' from 'AA'
(BL: 17.64, LCR: 1.48);
-- $3.2 million class M3 downgraded to 'BB' from 'AA-'
(BL: 16.60, LCR: 1.39);
-- $2.9 million class M4 downgraded to 'BB' from 'A+'
(BL: 15.61, LCR: 1.31);
-- $2.9 million class M5 downgraded to 'B' from 'A'
(BL: 14.58, LCR: 1.22);
-- $7.2 million class M6 downgraded to 'B' from 'A-'
(BL: 11.96, LCR: 1.00).
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): 11.93%
-- Cumulative Expected Losses (% of Original Balance): 6.53%
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.
ICEWEB INC: Names Ret. Gen. Harry E. Soyster to Board of Directors
------------------------------------------------------------------
IceWEB Inc. elected Retired U.S. Army Lieutenant General Harry E.
Soyster to the company's board of directors.
Gen. Soyster served as director, Defense Intelligence Agency
during Desert Shield/Storm. He also served as Deputy Assistant
Chief of Staff for Intelligence, Department of the Army;
Commanding General, U.S. Army Intelligence and Security Command;
and in the Joint ReconnaissanceCenter, Joint Chiefs of Staff.
In Vietnam, he was a field artillery battalion operations officer,
and was twice decorated for valor and wounded in action. Upon
retirement, Gen. Soyster was vice president for international
operations with Military Professional Resources Incorporated where
he helped pioneer the concept of providing retired military
expertise to support emerging democracies in Eastern Europe and
Africa.
In 2006, he served as special assistant to the SEC Army for World
War II 60th Anniversary Commemorations. He serves as consultant
to numerous corporations and participates in studies by the Center
for Strategic and International Studies and the National Institute
for Public Policy.
In 1957, Gen. Soyster graduated from the United States Military
Academy with a Bachelor of Science degree in Engineering. He also
holds a Masters of Science degree in Chemistry from Pennsylvania
State University in Chemistry and a Masters of Science degree in
Management from theUniversity of Southern California.
His military education includes completion of the Field Artillery
School, Basic and Advanced Courses; the U.S. Army Command and
General Staff College; and the National War College. Gen. Soyster
has an active Top Secret/Sensitive Compartmented Information
clearance.
"We feel very privileged to have the opportunity to tap
Gen. Soyster's extensive knowledge, business expertise and sphere
of influence within the federal government," John R. Signorello,
chairman and chief executive officer of IceWEB. "As the newest
addition to our board of directors, we look forward to him playing
a proactive role in helping IceWEB break into key government
accounts with our storage products and on-line application
services."
"Moreover, his innumerable strengths are sure to complement and
enhance those of our other distinguished board members, helping
IceWEB to further elevate our corporate governance practices,"
Mr. Signorello added.
"IceWEB has extraordinary potential," Gen. Soyster stated. "I'm
looking forward to working with the IceWEB management team and the
Board to help ensure the company is well positioned to optimize
new business opportunities within the federal government market
place. IceWEB's products and services simplify how businesses
communicate, manage and protect their data - exactly what
organizations, public or private, large or small, need."
About IceWEB Inc.
Headquartered in Herndon, Virginia, IceWeb Inc. (OTC: IWEB) --
http://www.iceweb.com/-- is a diversified technology company.
The company is a provider of hosted web-based collaboration
solutions that enable organizations to establish Internet,
Intranet, and email/collaboration services with little or no
up-front capital investment. The company also provides
consulting services to larger enterprise and government customers
including network infrastructure, enterprise email/collaboration,
and Internet/Intranet portal implementation and support services.
The company also markets an array of information technology
services and third party computer network hardware and software to
large enterprise and government clients.
Going Concern Doubt
Sherb & Co. LLP, in Boca Raton, Florida, expressed substantial
doubt about Ice Web Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Sept. 30, 2007 and 2006. The auditing firm pointed
to the company's net losses for the years ended Sept. 30, 2007,
2006 and 2005.
At Dec. 31, 2007, the company has a working capital deficit of
$3,608,868 and an accumulated deficit of $14,331,873.
INGLESIDE TEXAS: S&P Lifts Bond Rating to BBB from BB
-----------------------------------------------------
Standard & Poor's Ratings Services raised its underlying rating on
Ingleside, Texas' waterworks and sewer system revenue bonds to
'BBB' from 'BB' due to an improved, albeit still weak, financial
position at fiscal 2007 year-end. The outlook is positive.
The upgrade reflects solid coverage of annual debt service by
fiscal 2007 pledged revenues; low, but improved, liquidity
combined with the city council's recent adoption of a 25%
enterprise fund reserve target; and well above-average utility
rates.
The system's net revenue pledge secures the bonds.
Ingleside relies on transfers from the water and sewer enterprise
fund to subsidize general fund operations. In 2005, the
dependence extended to the point where the city used money in the
enterprise debt service reserve fund for general purposes. Though
debt service payments were made, this action caused the city to go
into technical default on its revenue bonds. Management reports
that, in fiscal 2007, it restored the debt service reserve fund to
its required level.
Although the general fund's reliance on the enterprise fund
effectively increases coverage on the revenue bonds, over the past
several years city officials have transferred nearly all surplus
revenues out of the enterprise fund. Therefore, system liquidity
is currently very low. Enterprise fund unrestricted cash was an
adequate $593,411 at fiscal year-end 2003, providing 115 days'
operating expenses; but after four consecutive drawdowns, it was a
very low $2,228 at fiscal year-end 2006, providing zero days'
expenditures. The utility fund had $337,321 of unrestricted cash
at fiscal 2007 year-end, equal to an improved, albeit still weak,
54 days' expenditures. Management reports that there will be a
significant cash transfer to the general fund in fiscal 2008 but
that the utility fund will retain about $200,000.
"Sharp reductions in liquidity notwithstanding, the enterprise
fund's financial performance is solid," said Standard & Poor's
credit analyst Hilary Sutton. "In fiscal 2007, net enterprise
fund revenues, before transfers and excluding onetime revenues and
expenditures, provided good annual debt service coverage of
4.96x," she added.
INGLESIDE TEXAS: S&P Lifts Rating on GO Debt to BBB from BB
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its underlying rating on
Ingleside, Texas' general obligation debt to 'BBB' from 'BB'.
"The upgrade is due to an improved, albeit still weak, financial
position at fiscal 2007 year-end," said Standard & Poor's credit
analyst Hilary Sutton. The outlook is positive, reflecting the
potential for further rating upside should the city's financial
condition continue to improve.
Ingleside's financial performance is significantly better than in
recent years, as reflected by the restoration of the utility
fund's debt service reserve and repayment of its tax and revenue
anticipation notes ahead of schedule. Other key rating factors
include the adoption of a reserve policy, even though it might be
several years before the city meets the target; uncertainty
regarding the impending closure of Naval Station Ingleside, a
leading employer and utility customer; and general fund reliance
on transfers from the city's enterprise fund.
The city's full faith and credit pledge secures the bonds. In
recent years, Ingleside's financial condition deteriorated
dramatically as its general fund became increasingly reliant on
transfers from other funds, particularly the enterprise fund. In
fiscal 2005, this dependence extended to the point where the city
used funds in the water and sewer debt service reserve fund for
general purposes. Management, however, reports that it restored
the debt service reserve fund to its required level in fiscal
2007.
Ingleside is located 17 miles northeast of the City of Corpus
Christi along the Gulf Coast.
JEFFERSON COUNTY: Deadline to Pay Sewer Debt Extended by 30 Days
----------------------------------------------------------------
William Selway and Martin Z. Braun of Bloomberg News report that
Jefferson County, Alabama officials approved an agreement with
banks to delay a $53 million bond payment that was due Tuesday.
According to the report, "the agreement extends by 30 days the
deadline for paying off some sewer debt that banks were forced to
acquire under agreements to act as buyers of last resort."
Jefferson County had negotiated a standstill agreement under which
it agreed to delay until April 15 the bond payment, and instead
paid $4.2 million in interest. The payment was to be the first of
16 equal quarterly installments on $850 million in sewer bond
debt.
Jefferson County has $4.6 billion in overall debt, including $3.2
billion in sewer bonds. As reported by the Troubled Company
Reporter on March 10, 2008, Jefferson County was in technical
default in relation to the sewer debt. The county was unable to
post $184 million in collateral on $5.4 billion of interest-rate
swaps tied to the bonds. The collateral was required under the
agreement after a series of downgrades on the debt. The county
commissioners' vote on Tuesday also extends an agreement with
banks to avert paying the collateral.
The county has 13 interest-rate swap transactions with Bank of
America, Bear Stearns Inc., JPMorgan Chase & Co. and Lehman
Brothers. Previously, Jefferson county refused to pledge reserves
against the interest-rate swaps tied to the sewer debt.
Bloomberg notes an estimate made by Commission President Bettye
Fine Collins last month that absent a restructuring of the bonds,
interest costs on Jefferson County's sewer debt may reach
$250 million, nearly twice the $138 million the system produces in
revenue.
Two of the companies that guarantee to make the payments on
Jefferson County's sewer bonds in the event of default were FGIC
Corp. and XL Capital Assurance Inc. As reported by the Troubled
Company on April 14, 2008, both affirm their commitment to
continue to work with Jefferson County to develop solutions to the
County's debt crisis.
About Jefferson County
Jefferson County has its seat in Birmingham. It has a population
of 660,000. It ended its 2006 fiscal year with a $42.6 million
general fund balance, according to Standard & Poor's. The county
currently has about $82 million of cash on hand, and about $105
million in a separate sewer fund, S&P said. Patrick Darby, a
lawyer with the Birmingham firm of Bradley Arant Rose & White,
represents Jefferson County. Porter, White & Co. in Birmingham is
the county's financial adviser.
* * *
As reported by the TCR on March 28, 2008, Moody's Investors
Service downgraded to Caa3 from B3 the rating on the $3.2 billion
outstanding sewer revenue warrants. Moody's said the county has
not presented a concrete plan that would prevent a default on its
sewer obligations. The county has publicly proposed using excess
funds generated by a countywide 1% sales and use tax, currently
securing the outstanding school warrants. The tax generated an
additional $27 million in fiscal 2007 over the school warrant debt
service; the initial intention was to use the excess for early
redemption of debt. This proposal would require state legislation
and it is unclear that the additional funds would provide enough
revenue to cover the county's sewer obligations.
As reported by the TCR on April 2, 2008, Standard & Poor's
Ratings Services lowered its underlying rating on Jefferson
County's series 2003 B-2 through 2003 B-7 sewer revenue refunding
warrants to 'D' from 'CCC' due to the sewer system's failure to
make a principal payment on the warrants when due on April 1,
2008, in accordance with the terms of the standby warrant purchase
agreement.
As reported by the TCR on April 10, 2008, Moody's Investors
Service downgraded the rating on $800,000 of outstanding Jefferson
County Assisted Housing Corporation, First Mortgage Refunding
Housing Revenue Bonds (Spring Gardens Project) Series 1999 to Ba2
from Baa1. The outlook has been revised to negative from stable.
The downgrade is based on a significant decline in debt service
coverage, resulting from an increase in property expenses and a
lack of rental rate increases.
JPMORGAN CHASE: S&P Affirms Low-B Ratings on Five Cert. Classes
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on three
classes of commercial mortgage pass-through certificates from
JPMorgan Chase Commercial Mortgage Securities Corp.'s series
2001-CIBC3. Concurrently, S&P affirmed its ratings on 12 classes
from the same transaction.
The raised and affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
As of the Apr. 17, 2008, remittance report, the collateral pool
consisted of 112 loans with an aggregate trust balance of
$715 million, down from 124 loans with a $867.5 million balance at
issuance. Excluding the defeased loans ($235 million, 33%), the
master servicer, Wachovia Bank N.A., reported financial
information for 98% of the pool. The servicer-provided financial
information was full-year 2006 and interim 2007 data. Based on
this information, Standard & Poor's calculated a weighted average
debt service coverage of 1.83x, up from 1.42x at issuance. All
of the loans in the pool are current, except for two that are 90-
plus-days delinquent ($9.4 million).
These two loans are with the special servicer, Centerline
Servicing Inc., and are discussed below. An appraisal reduction
amount of $2.4 million is in effect for one of these loans. To
date, the trust has experienced five losses totaling $4.4 million.
The top 10 loans secured by real estate have an aggregate
outstanding balance of $262.8 million (37%) and a weighted average
DSC of 2.12x, up from 1.58x at issuance. The sixth-largest loan
is on the watchlist and is discussed below. Standard & Poor's
reviewed property inspections provided by the master servicer for
all of the assets underlying the top 10 loans and all of the
properties were characterized as "good."
Credit characteristics for two of the top 10 loans continue to be
consistent with those of investment-grade obligations. Details are
as:
-- Franklin Park Mall ($83.1 million, 12%) is the largest
loan in the pool and is secured by 737,382 sq. ft. of a
1.2-million-sq.-ft. super regional mall in Toledo, Ohio.
At issuance, the collateral was 512,397 sq. ft. The mall
expanded its in-line space in 2005-2006, which increased
the collateral size for this loan. As a result, the DSC
had increased to 3.17x as of year-end 2007 from 1.63x at
issuance. The increase in DSC was due to increased base
rent and expense recovery. As of Dec. 31, 2007, occupancy
was 97%.
-- The second-largest loan in the pool, Kings Plaza, has a
trust balance of $43 million (6%) and a whole-loan balance
of $120.8 million. The loan is split into two pari passu
pieces, the A-1 note of which is included in the JPMCC
2001-KP transaction, which was not rated by Standard &
Poor's. The loan is secured by a 748,051-sq.-ft. regional
mall, opened in 1970, in Marine Park, Brooklyn, New York.
The loan reported a DSC of 2.34x as of year-end 2007, up
8% from its level at issuance. The increase in DSC is
primarily due to increased revenues. As of Jan. 2, 2008,
rent roll occupancy at the property was 98%.
Wachovia reported a watchlist of 33 loans with an
aggregate outstanding balance of $108.6 million (15%),
with one of the top 10 loans representing approximately
2.2% ($16.1 million) of the loans on the watchlist. The
sixth-largest loan, Bullfinch Triangle, has a balance of
$16.1 million (2.2%). This loan is secured by a
100,868-sq.-ft. office building in Boston, Massachusetts,
that was built in 1898 and renovated in 1985. The year-
end 2007 DSC for this property was 0.53x. The low DSC was
a result of the largest tenant vacating the property. The
year-end 2007 occupancy was 87.0%.
There are two assets ($9.4 million, 1.3) with the special
servicer, Centerline.
-- The largest asset with the special servicer, 1988 Tarob
Court ($5.7 million, 0.8%), is secured by a 46,050-sq.-ft.
office/research and development building in Milpitas,
California. The loan was transferred to Centerline in
November 2007 due to payment default. An ARA of
$2.4 million is in effect for this asset. Standard &
Poor's expects a loss upon the resolution of this asset.
-- Terrance View Apartments ($3.7 million, 0.5%) is secured
by a 192-unit multifamily property in Grand Prairie,
Texas. The loan was transferred to Centerline due to
payment default attributable to short-term cash flow
problems. The borrower has submitted a short-term
forbearance proposal to bring the loan current within 90
days. Centerline anticipates that the loan will be
returned to the master servicer within 90 days.
Standard & Poor's stressed various loans in the mortgage pool,
paying closer attention to the loans on the watchlist and those
with low DSCs. The expected losses and resultant credit
enhancement levels adequately support the raised and affirmed
ratings.
Ratings Raised
JPMorgan Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 2001-CIBC3
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
E A A- 9.70%
F A- BBB+ 8.18%
G BBB BBB- 5.75%
Ratings Affirmed
JPMorgan Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certificates series 2001-CIBC3
Class Rating Credit enhancement
----- ------ ------------------
A-2 AAA 25.17%
A-3 AAA 25.17%
B AAA 20.01%
C AA+ 14.85%
D AA 13.49%
H BB+ 4.84%
J BB 3.93%
K B+ 2.87%
L B 2.27%
M B- 1.66%
X-1 AAA N/A
X-2 AAA N/A
N/A -- Not applicable.
KEY COMMERCIAL: Stable Performance Cues Fitch to Affirm Ratings
---------------------------------------------------------------
Fitch Ratings has affirmed Key Commercial Mortgage Securities
Trust 2007-SL1, commercial mortgage pass-through certificates as:
-- $30.6 million class A-1 at 'AAA';
-- $91.7 million class A-2 at 'AAA';
-- $78.8 million class A-1A at 'AAA';
-- Interest-only class X at 'AAA';
-- $5.3 million class B at 'AA';
-- $5.6 million class C at 'A';
-- $4.8 million class D at 'BBB+';
-- $2.1 million class E at 'BBB';
-- $1.8 million class F at 'BBB-';
-- $1.2 million class G at 'BB+';
-- $1.2 million class H at 'BB';
-- $891 thousand class J at 'BB-';
-- $593 thousand class K at 'B+'.
Fitch does not rate the $4.8 million class L.
The rating affirmations reflect the stable performance. As of the
March 2008 distribution date, the pool has paid down 3.5%, to
$237.5 million from $229.3 million at issuance. There have been
no specially serviced loans delinquencies since issuance.
The transaction is secured by 151 small balance loans with
interest rates ranging from 5.7% to 8%. Approximately 92% of the
loans are full recourse to the sponsor. Most of the loans do not
have reserve and escrow structures. The pool is concentrated
geographically in Washington (56.1%) and Ohio (19.4%).
KNIGHT INC: Reduction in Leverage Prompts Moody's Rating Upgrades
-----------------------------------------------------------------
Moody's Investors Service upgraded the debt of Knight Inc. and its
supported subsidiaries (senior secured debt to Ba1 from Ba2,
subordinated debt to Ba3 from B1). The preferred stock rating of
Kinder Morgan G.P., Inc. was upgraded to Ba1 from Ba2. With the
upgrade of Knight, Moody's views the combined Kinder Morgan family
of companies to have investment grade characteristics. Therefore,
Moody's withdrew Knight's Corporate Family Rating, Probability of
Default Rating, Loss Given Default assessments and its Speculative
Grade Liquidity Rating. The outlook is stable.
Knight's ratings were upgraded as a result of its substantial
reduction in leverage resulting from the sale of 80% of Natural
Gas Pipeline Company of America. Knight used sales proceeds and
cash to repay $6 billion of debt, leaving about $3 billion of debt
remaining at Knight. Knight repaid the remaining MBO debt, and
their ratings (except for the revolver which remains outstanding)
are withdrawn. The company also retired $1.6 billion of legacy-
Knight debt through a tender offer.
Moody's views Knight as essentially a holding company for Kinder
Morgan Energy Partners, L.P., as approximately 90% of Knight's
cash flow required to service its debt is from distributions from
KMP. Knight's Ba1 senior secured debt rating is two notches lower
than KMP's Baa2 senior unsecured rating, reflecting Knight's
structural subordination to KMP as well as its reliance on equity
distributions from KMP.
Upgrades:
Issuer: K N Capital Trust I
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B1
Issuer: K N Capital Trust III
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B1
Issuer: Kinder Morgan Finance Company, ULC
-- Senior Secured Regular Bond/Debenture, Upgraded to Ba1 from
Ba2
Issuer: Kinder Morgan G.P., Inc.
-- Preferred Stock Preferred Stock, Upgraded to Ba1 from Ba2
Issuer: Knight Inc.
-- Junior Subordinated Regular Bond/Debenture, Upgraded to Ba3
from B1
-- Senior Secured Bank Credit Facility, Upgraded to Ba1 from Ba2
-- Senior Secured Regular Bond/Debenture, Upgraded to Ba1 from
Ba2
Outlook Actions:
Issuer: K N Capital Trust I
-- Outlook, Changed To Stable From Positive
Issuer: K N Capital Trust III
-- Outlook, Changed To Stable From Positive
Issuer: Kinder Morgan Finance Company, ULC
-- Outlook, Changed To Stable From Positive
Issuer: Kinder Morgan G.P., Inc.
-- Outlook, Changed To Stable From Positive
Issuer: Knight Inc.
-- Outlook, Changed To Stable From Positive
Withdrawals:
Issuer: K N Capital Trust I
-- Preferred Stock Preferred Stock, Withdrawn, previously rated
96 - LGD6
Issuer: K N Capital Trust III
-- Preferred Stock Preferred Stock, Withdrawn, previously rated
96 - LGD6
Issuer: Kinder Morgan Finance Company, ULC
-- Senior Secured Regular Bond/Debenture, Withdrawn, previously
rated 49 - LGD3
Issuer: Knight Inc.
-- Probability of Default Rating, Withdrawn, previously rated
Ba2
-- Corporate Family Rating, Withdrawn, previously rated Ba2
-- Junior Subordinated Regular Bond/Debenture, Withdrawn,
previously rated 96 - LGD6
-- Senior Secured Bank Credit Facility, Withdrawn, previously
rated 49 - LGD3
-- Senior Secured Regular Bond/Debenture, Withdrawn, previously
rated 49 - LGD3
Knight Inc. and its affiliates are headquartered in Houston,
Texas.
LANDING DEVELOPMENT: Case Summary & 31 Largest Unsecured Creditors
------------------------------------------------------------------
Lead Debtor: Landing Development, LLC
aka Volare at Eagle Landings
aka Marnella Homes
18318 S.E. Abernethy Lane
Milwaukie, OR 97267-6657
Bankruptcy Case No.: 08-31686
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Tony Marnella Inc. 08-31685
Anthony Lawrence Marnella 08-31688
Type of Business: The Debtors ae home builders. See
http://www.marnellahomes.com/
Chapter 11 Petition Date: April 14, 2008
Court: District of Oregon
Judge: Elizabeth L. Perris
Debtors' Counsel: Susan S. Ford, esq.
Sussman Shank, LLP
1000 S.W. Broadway, Ste. 1400
Portland, OR 97205
Tel: (503) 227-1111
Fax: (503) 248-0130
(susanf@sussmanshank.com)
http://www.sussmanshank.com/
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
A. Landing Development, LLC's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Moore Excavation, Inc. Sub-Contractor $180,617
P.O. Box 30569
Portland, OR 97294-3569
Tel: (503) 252-1180
Veritas Investment Co. Services $91,950
Attn: Adrian Huetner, CFO
10220 S.E. Causey Ave.
Happy Valley, OR 97086
Tel: (503) 936-1400
SuperFloors Sub-Contractor $80,429
6911 S. 196th Street
Kent, WA 98032
Tel: (971) 249-1400
Marnella Communities $76,762
Turn Key Building Products, Sub-Contractor $56,786
LLC
P.R. Drywall, LLC Sub-Contractor $35,394
AK Painting, LLC Sub-Contractor $28,428
5-J's Construction Services, Sub-Contractor $26,254
LLC
Whirlpool Sub-Contractor $24,281
Richard Smith Concrete Sub-Contractor $24,228
B&G Plumbing Sub-Contractor $22,339
Frame Tech Group Sub-Contractor $21,489
Crystal Springs Sub-Contractor $21,039
Marnella Homes $18,674
Valley Line Cabinets Sub-Contractor $12,512
Oregon Comfort Heating, Inc. Sub-Contractor $11,602
DMS Electric & Lighting, Inc. Sub-Contractor $11,029
E&L Cabinets Sub-Contractor $9,883
ESP Supply Co. Sub-Contractor $9,680
Room by Room Sub-Contractor $6,887
B. Tony Marnella, Inc's Five Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
American Family Insurance vendor unknown
Attn: Bankruptcy
P.O. Box 9462
Minneapolis, MN 55440-9462
AT&T vendor unknown
Attn: Bankruptcy
P.O. Box 30459
Los Angeles, CA 90030
Tel: 1-800-331-0500
Marnella Homes, LLC vendor $1,019
Attn: Liz Cantu
18318 S.E. Abernethy Lane
Portland, OR 97267
Tel: (503) 654-6642
Providenza & Boekelheide, Inc. vendor $487
Verizon Northwest vendor $65
C. Anthony Lawrence Marnella's Six Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
IRS Insolvency III Income Tax $1,250,000
Attn: Jeffrey Werstler
Bkcy. Dept. MS O240
1220 S.W. 3rd Ave.
Portland, OR 97204
Tel: (503) 326-3292
ODR-Bkcy Income Tax $300,000
Attn: Melissa Jungling
955 Center N.E., Ste. 353
Salem, OR 97301-2555
Tel: (503) 945-8145
Sterling Savings Bank Credit Card $50,575
FIA Card Services
P.O. Box 37271
Baltimore, MD 21297
Attn: Heidi B. Stanley,
President & CEO
2550 North Loop West
Houston, TX 77092
Tel: (713) 466-8300
Citi Cards Credit Card $36,927
P.O. Box 6414
The Lakes, NV 88901
Attn: Vikram Pandit,
President & CEO
111 Sylvan Ave.
Englewood Cliffs, NJ 07632
Tel: (605) 335-2222
Key Bank Credit Line $18,700
P.O. Box 94932
Cleveland, OH 44101
Attn: Henry L. Meyer III, CEO
127 Public Square
Cleveland, OH 44114
Tel: (716) 838-7200
Laurel P. Hook Personal Debt $15,000
Attn: Stahancyk Kent Johnson
& Hook
808 S.W. 15th Ave.
Portland, OR 97205
Tel: (503) 222-9115
LEVITT AND SONS: Wants Plan-Filing Period Stretched to May 12
-------------------------------------------------------------
Levitt and Sons LLC and its debtor-affiliates ask the Honorable
Raymond B. Ray of the U.S. Bankruptcy Court for the Southern
District of Florida to extend:
i) the exclusive period by which they must file a plan of
reorganization through and including May 12, 2008, and
ii) the exclusive time by which they must solicit acceptances to
that plan through and including July 10, 2008.
With respect to the Debtors' first extension request of their
Exclusive Periods, Judge Ray signed an order dated April 11,
2008, extending the Debtors' Exclusive Plan Proposal Period
through and including April 10, 2008, and their Exclusive
Solicitation Period through and including June 10, 2008.
The Debtors maintain that they have collaborated with the
Official Committee of Unsecured Creditors and the Home Purchase
Deposit Creditors Committee with respect to all matters affecting
the administration of their Chapter 11 cases.
Specifically, the Debtors and the Creditors Committee are
currently engaged in discussions regarding the terms of a joint
liquidating plan of reorganization, Jordi Guso, Esq., at Berger
Singerman, P.A., in Miami, Florida, relates. The Debtors have
prepared a proposed plan, as to which the Creditors Committee has
had substantial input, Mr. Guso informs the Court. The Creditors
Committee is likely to be a co-proponent of the plan, he adds.
The Debtors aver that they have provided the Depositors Committee
with a draft of the plan.
Since the Debtors promulgated the draft plan to the Committees,
the Creditors Committee and Levitt Corporation have been in
discussions regarding, among other things, the treatment of the
claims of LEV and the resolution of potential claims against it,
Mr. Guso relates. He says though that while aware of these
discussions with LEV, the Deposit Holders Committee has not taken
an integral part in the ongoing discussions. Thus, based on the
pendency of those discussions, the Debtors advised the Creditors
Committee and LEV that they would seek an extension of the
Exclusive Periods.
No creditor or party-in-interest will be prejudiced by the
approximately 30-day extension of the Exclusive Periods, Mr. Guso
asserts. The Creditors Committee supports the Debtors' request,
he adds.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors' latest consolidated financial condition as of
Sept. 30, 2007 reflect total assets of $900,392,000, and total
liabilities of $780,969,000.
(Levitt and Sons Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
LEVITT AND SONS: Committee Can Hire Bilzin Sumberg as Tax Counsel
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Levitt and Sons
LLC and its debtor-affiliates' Chapter 11 cases obtained authority
from the U.S. Bankruptcy Court for the Southern District of
Florida to retain Samuel C. Ullman, Esq., and the law firm Bilzin
Sumberg Baena Price & Axelrod LLP, as its special tax counsel,
nunc pro tunc to Feb. 13, 2008.
The Creditors Committee related that its investigation indicates
that there are several complex tax and tax-related issues related
to the Debtors and their non-debtor affiliates that need to be
analyzed and addressed as part of its efforts to maximize
recovery for all creditors.
Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A., in
Miami, Florida, told the Court that Mr. Ullman and Bilzin have
substantial experience and expertise in all tax and tax-related
matters, specifically in the context of complex Chapter 11 cases
in Florida and throughout the United States. Mr. Ullman and
Bilzin are "well-known to the this Court and the legal community"
for their tax experience and expertise, Mr. Bilzin added.
The proposed Special Tax Counsel will, among other things:
-- advise the Creditors Committee with respect to all tax and
tax-related matters involving the Debtors, their estates
and certain non-debtor affiliates, including in regard to
the recovery and allocation of substantial tax refunds in
the Debtors' Chapter 11 cases;
-- assist and advise the Creditors Committee in its
consultations with the Debtors and other parties relative
to those tax matters; and
-- represent the Creditors Committee at all hearings on all
tax and tax-related matters.
Mr. Ullman, the Bilzin partner who will be principally
responsible for the representation of the Creditors Committee,
will be paid an hourly rate of $560. The current hourly rates of
other Bilzin professionals are:
Designation Hourly Rate
----------- -----------
Attorneys $225 - $700
Legal assistants and paralegals $165 - $205
Mr. Ullman and Bizlin do not hold or represent any interest
adverse to the Debtors or their estates on any matters in which
they are to be engaged. The firm will not represent other
entities in connection with the Debtors' Chapter 11 cases, Mr.
Sakalo assures the Court.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors' latest consolidated financial condition as of
Sept. 30, 2007 reflect total assets of $900,392,000, and total
liabilities of $780,969,000.
The Debtors are currently asking the Court to extend their plan-
filing period to May 12, 2008. (Levitt and Sons Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
LEVITT AND SONS: Wants to Reject CBS Outdoor Contracts
------------------------------------------------------
Debtors Levitt and Sons, LLC; Levitt and Sons of Osceola County,
LLC; Levitt and Sons of Manatee County, LLC; Levitt and Sons of
Lake County, LLC; and Levitt and Sons of Hernando County, LLC,
ask permission from the U.S. Bankruptcy Court for the Southern
District of Florida to reject certain advertising contracts with
CBS Outdoors, Inc.
Before the bankruptcy filing, the Debtors entered into about 30
Contracts with CBS, under which CBS provided the Debtors
advertising services in the form of billboards with respect to
communities the Debtors had developed.
The Debtors inform the Court that they no longer need or use the
services provided by CBS. The Debtors thus seek to reject the
contracts as of the date of bankruptcy.
A list of the 30 CBS Contracts is available for free at:
http://researcharchives.com/t/s?2a9b
The Debtors do not agree that the Contracts are executory
agreements as contemplated under Section 365(a) of the Bankruptcy
Code, Leslie Gern Cloyd, Esq., at Berger Singerman, P.A., in
Miami, Florida, says. She tells the Court that it is unclear from
the Debtors' records which of the Debtors are parties to
prepetition contracts with CBS.
To the extent that it is determined that there are additional
contracts in addition to the ones identified, the Debtors also
seek the Court's authority to reject those contracts.
About Levitt and Sons
Based in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors' latest consolidated financial condition as of
Sept. 30, 2007 reflect total assets of $900,392,000, and total
liabilities of $780,969,000.
The Debtors are currently asking the Court to extend their plan-
filing period to May 12, 2008. (Levitt and Sons Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
LID LTD: Gets Court Approval to Access Banks' Cash Collateral
-------------------------------------------------------------
The Hon. James M. Peck of the United States Bankruptcy Court
for the Southern District of New York authorized L.I.D., Ltd. to
further access the cash collateral of Bank Leumi USA, ABN AMRO
Bank N.V., Sovereign Bank, New England and HSBC Bank U.S.A., until
May 31, 2008, as set forth in the proposed extended budget.
According to court documents, the banks allow the Debtors to
use the cash collateral for preparing and conducting a sale under
Section 363 of the Bankruptcy Code of their loose stone and
finished jewelry inventory and other assets.
Depending upon the results of the sale, they may be willing to
fund, out of their collateral, a liquidating Chapter 11 plan,
wherein the Debtor can liquidate its remaining assets, including
avoidance action and other litigation.
Avrum J. Rosen, Esq., at Avrum J. Rosen, PLLC, says the cash
collateral will also be used to pay other additional expenses
provided that the Debtor obtains consent of the banks.
The extended budget is subject to a $45,000 carve-out for payment
to professionals to the Debtor for the period from Feb. 6, 2008,
to March 25, 2008. It will also provide the full payment of all
fees due by the U.S. Trustee of Court.
As adequate protection, the banks will be entitled to take control
of all of the Debtor's assets.
A full-text copy of the proposed extended budget is available for
free at:
http://ResearchArchives.com/t/s?2a9c
Headquartered in New York, L.I.D. Ltd., a jeweler, filed a chapter
11 petition on March 17, 2007 (Bankr. S.D. N.Y. Case No. 07-10725)
Avrum J. Rosen, Esq., at The Law Offices of Avrum J. Rosen and
Rochelle R. Weisburg, Esq., at Shiboleth, Yisraeli, Roberts &
Zisman LLP represent the Debtor in its restructuring efforts. No
case trustee, examiner, or official committee of unsecured
creditors has been appointed in the case. When the Debtor sought
protection from its creditors, it listed total assets of
$157,784,935 and total debts of $143,867,465.
LINENS 'N THINGS: To Defer $16.1MM Interest Payment on Sr. Notes
----------------------------------------------------------------
Linens Holding Co. decided to defer $16.1 million quarterly
interest payment due April 15, 2008 to the holders of the Senior
Secured Floating Rate Notes due 2014 issued by the Holding's
wholly owned subsidiaries, Linens 'n Things, Inc. and Linens 'n
Things Center, Inc. It is in discussions with an ad hoc committee
of holders of the Notes regarding a restructuring of the company's
capital structure. The lenders under the company's senior asset-
backed revolving credit facility are supportive of efforts toward
a consensual restructuring.
"Despite the strides that LNT has made to improve the operational
side of its business over the past two years, these measures have
not produced acceptable financial results. The increasing
deterioration of the credit markets and the residential real
estate meltdown, both stemming from the turmoil in the subprime
mortgage market, and the resulting downturn in consumer spending,
especially in the home sector, have combined to create additional
and acute financial challenges for the Company and the retail
sector as a whole," Robert J. DiNicola, Chairman and Chief
Executive Officer, said.
"The rapidly increasing financial storm outside the company,
together with our operating results, have accelerated credit and
insurance problems for our vendors, causing them to recently begin
imposing significantly more restrictive payment terms on LNT.
These factors have had a dramatic effect on our liquidity outlook
for the remainder of the year. We have made the decision to
postpone today's interest payment as we continue to work with our
constituencies to explore a number of alternatives to strengthen
our balance sheet and improve liquidity."
Under the terms of the indenture governing the Notes, LNT and
Centers have a grace period of 30 days from the payment due date
with respect to the interest payment before the nonpayment becomes
an event of default. There is no right to accelerate the
obligations under the notes based on the nonpayment unless
interest remains unpaid upon expiration of the grace period.
Pursuant to a Forbearance Agreement with the company dated as of
April 15, 2008, the company's senior lenders have agreed, subject
to the terms and conditions of the Forbearance Agreement, to
forbear for a limited period from exercising their rights and
remedies under the credit agreement based upon nonpayment of
interest on the notes, including the right which they would
otherwise have, to stop making loans and other credit extensions
under the credit agreement based upon such nonpayment.
The forbearance period ends on the earliest to occur of May 13,
2008, the occurrence of any other default or event of default
under the credit agreement, the date on which Excess Availability
is less than $50.0 million, and the occurrence of certain other
events specified in the Forbearance Agreement.
The parties to the Forbearance Agreement are lenders General
Electric Capital Corporation, as U.S. Administrative Agent, GE
Canada Finance Holding Company, as Canadian Administrative Agent,
LNT and Center as the U.S. borrowers, Linens 'n Things Canada
Corp. as the Canadian borrower.
The company has retained Conway, Del Genio, Gries & Co., LLC as
financial advisor. The committee is represented by financial
advisor Houlihan Lokey Howard & Zukin Capital, Inc. and the law
firm of Kasowitz, Benson, Torres & Friedman LLP.
A full-text copy of the Forbearance Agreement is available for
free at http://ResearchArchives.com/t/s?2aa7
Bankruptcy Speculation
As reported in the Troubled Company Reporter on April 9, 2008,
the New York Post's James Covert said Linens 'N Things may be
headed for bankruptcy. Mr. Covert reported that Leon Black's
Apollo Management, which took the company private in 2005 for
$1.3 billion, is weighing the idea of a potential "prepackaged"
bankruptcy, according to sources. In such a plan, Apollo and
creditors would settle on a restructuring plan before a Chapter 11
filing is made, Mr. Covert said.
The New York Post, citing sources, related that the bankruptcy
speculation comes as the company faces a clampdown on its
$700,000,000 revolving line of credit from GE Capital. While GE
hasn't cut off the flow altogether, sources said payments to
suppliers of sheets, towels, curtains and kitchenware have become
more selective, Mr. Covert said. One source, according to Mr.
Covert, said about half of the company's 25 largest vendors have
halted deliveries because of late or insufficient payments.
About Linen N' Things
The Clifton, New Jersey-based Company is the second largest
specialty retailer of home textiles, housewares and home
accessories in North America operating 589 stores in 47 U.S.
states and seven Canadian provinces as of December 29, 2007. The
Company is a destination retailer, offering one of the broadest
and deepest selections of high quality brand-name as well as
private label home furnishings merchandise in the industry.
* * *
As reported in the Troubled Company Reporter on April 15, 2008,
Moody's Investors Service downgraded Linens 'N Things, Inc.'s
ratings, including probability of default rating to Caa2 from
Caa1, corporate family rating to Caa2 from Caa1; and the company's
$650 million senior secured guaranteed notes due 2014 to Caa3 from
Caa2. Moody's placed the ratings on review for further possible
downgrade. Moody's also affirmed Linens' speculative grade
liquidity rating of SGL-4.
As reported in the Troubled Company Reporter on April 11, 2008,
Fitch Ratings has downgraded its ratings on Linens 'n Things, Inc.
as Issuer Default Rating to 'CC' from 'CCC'; Asset-based revolver
to 'CCC-/RR3' from 'CCC+/RR3'; and Senior secured notes to 'C/RR5'
from 'CCC-/RR5'. At the same time, LIN remains on Rating Watch
Negative by Fitch.
LINENS 'N THINGS: Likely Default Cues Fitch to Cut ID Rating to C
-----------------------------------------------------------------
Fitch Ratings has taken these rating actions on Linens 'n Things,
Inc.:
-- Issuer Default Rating downgraded to 'C' from 'CC';
-- Asset-backed revolver downgraded to 'CC/RR3' from 'CCC-/RR3';
-- Senior secured notes remain at 'C/RR5'.
LIN remains on Rating Watch Negative.
The downgrades reflect Fitch's concern that default is imminent
given that LIN has decided to defer its $16.1 million quarterly
interest payment to the holders of the senior secured floating-
rate notes due 2014. The company is also in discussion with an ad
hoc committee of holders of the notes regarding a restructuring of
LIN's capital structure. Under the terms of the indenture on the
notes, LIN has a grace period of 30 days from the due date with
respect to the interest payment before the nonpayment becomes an
event of default. The company has also signed a forbearance
agreement with the lenders of the asset-backed revolving credit
facility.
In resolving the Rating Watch Negative status, Fitch is monitoring
LIN's ability to sustain operations and the potential for a
bankruptcy filing.
MAJESTIC STAR: Dec. 31 Balance Sheet Upside-Down by $167.8 Million
------------------------------------------------------------------
The Majestic Star Casino LLC and subsidiaries reported total
assets of $505.7 million, total liabilities of $673.5 million and
total member's deficit of $167.8 million, at Dec. 31, 2007.
At Dec. 31, 2007, the company's consolidated balance sheet also
showed strained liquidity with $42.1 million in total current
assets available to pay $59.2 million in total current
liabilities.
Majestic Star and subsidiaries reported a net loss of
$26.1 million for the year ended Dec. 31, 2007, compared with a
net loss of $14.3 million in 2006.
For the year ended Dec. 31, 2007, consolidated net operating
revenues were $358.1 million compared to $354.2 million for 2006,
an increase of $3.9 million, or 1.1%. The increase in net
revenues of $3.7 million at the Majestic Properties and
$2.8 million at Fitzgeralds Tunica was partly offset by a decrease
of $2.7 million at Fitzgeralds Black Hawk.
a) Casino Revenues
For the year ended Dec. 31, 2007, compared to the same prior year
period, consolidated casino revenues, which comprised 88.9% of
consolidated gross revenues during 2007, decreased $9.2 million,
or 2.5%, to $365.9 million, due to decreases at all of the
company's properties.
Casino revenue decreased $3.2 million at the Majestic Properties,
$3.4 million at Fitzgeralds Tunica and $2.6 million at Fitzgeralds
Black Hawk. Casino revenues were reduced at the Majestic
Properties and Fitzgeralds Tunica for the year ended Dec. 31,
2007, by $5.6 million and $6.0 million, respectively, compared to
the year ended Dec. 31, 2006, due to the implementation of
downloadable promotional credits.
b) Promotional Allowances
Promotional allowances for the year ended Dec. 31, 2007, were
$53.4 million compared to $55.1 million for the year ended
Dec. 31, 2006. Promotions have decreased as a result of the
implementation of downloadable promotional credits, partially
offset by increased complimentary services as a result of efforts
at the Majestic Properties and Fitzgeralds Tunica toward
increasing casino volume and attracting and retaining a higher
level casino customer.
c) Operating Expenses
For the year ended Dec. 31, 2007, compared to the same period last
year, operating expenses increased $14.5 million to $323.1 million
from $308.6 million in 2006, with $8.7 million of this increase
attributable to the Majestic Properties and $6.6 million to
Fitzgeralds Tunica. Operating expenses at Fitzgeralds Black Hawk
decreased by $600,000.
d) Operating Income
Operating income for the year ended Dec. 31, 2007, was
$35.0 million, a decrease of $10.7 million, or 23.4%, compared to
operating income of $45.7 million for the year ended Dec. 31,
2006.
e) Interest Expense
Interest expense, net of interest income, increased $1.1 million
to $61.0 million from $59.9 million in 2006. The majority of this
increase is interest expense associated with the accretion of the
12 1/2% Senior Discount Notes. The net proceeds from the Discount
Notes, with a face value at maturity of $63.5 million, were pushed
down to the company from Majesco Holdco LLC, the company's parent,
to assist in funding the Trump Indiana Acquisition.
Liquidity and Capital Resources
To date, the company has financed its operations with internal
cash flows from operations and borrowings under its Senior Secured
Credit Facility.
For the years ended Dec. 31, 2007 and 2006, the company reported
cash flows from operating activities of $29.1 million and
$27.7 million, respectively.
The company has significant debt outstanding at Dec. 31, 2007,
including $56.4 million drawn on its Senior Secured Credit
Facility, $300.0 million of Senior Secured Notes, $200.0 million
of Senior Notes and $313,000 of capital leases and other debt.
The company had unrestricted cash and cash equivalents of
$29.2 million at Dec. 31, 2007, compared with $25.5 million at
Dec. 31, 2006.
Full-text copies of the company's consolidated financial
statements for the year ended Dec. 31, 2007, are available for
free at http://researcharchives.com/t/s?2a9d
About Majestic Star
Headquartered in Las Vegas, Nevada, Majestic Star Casino LLC --
http://www.majesticstar.com/-- either directly or indirectly
through wholly owned subsidiaries, owns and operates four casino
properties as follows: two riverboat casinos and a hotel located
in Gary, Indiana; a casino and hotel located in Tunica,
Mississippi; and a casino located in Black Hawk, Colorado.
MANITOWOC COMPANY: Moody's Confirms Low-B Ratings on Enodis Deal
----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of The Manitowoc
Company, Inc. following the company's recent announcement that it
has agreed to acquire Enodis plc for approximately $2.1 billion.
The ratings include: corporate family rating - Ba2; probability of
default - Ba2; and, senior unsecured notes - Ba3 (LGD4, 66%). The
rating outlook remains stable.
Manitowoc recently announced that it has agreed to acquire Enodis
for approximately $2.1 billion including the assumption of Enodis'
net debt in an all cash transaction. Cash for this transaction
comes from a combination of Manitowoc's existing cash balance and
new debt. While the incremental debt associated with the
acquisition will increase Manitowoc's financial leverage, the
strong performance of the company's three existing business
segments -- cranes, foodservice equipment, and shipbuilding or
ship repair -- should enable the company to maintain financial
metrics generally supportive of the Ba2 rating. As with past
acquisitions, Manitowoc anticipates applying free cash flow to
reduce acquisition debt, which should help to restore credit
metrics over time.
While affirming the corporate family rating and probability of
default ratings, Moody's noted that under its Loss Given Default
methodology the structure of any new debt incurred to finance the
acquisition could still have an impact on the rating of
Manitowoc's existing $150 million senior unsecured notes due 2013.
If the company's proposed capital structure following the
acquisition contains a significant amount of secured debt, the
lower relative priority of the unsecured notes in the capital
structure could result in a downgrade of the rating on that
specific debt instrument. Moody's will evaluate the ratings on
the unsecured notes once the terms and conditions of the new debt
are finalized.
Enodis is a global supplier of food and beverage equipment
supporting the restaurant, convenience store, supermarkets and
institutional end markets. Sales totaled about $1.6 billion
(equivalent) for FY07 ended Sept. 29, 2007. Enodis will add new
products to Manitowoc's foodservice equipment portfolio such as
"hot-side" equipment and complement its existing "cold-side" ice
machines and beverage products. Additionally, Enodis will enable
Manitowoc's foodservice equipment business to expand its European
footprint and become less reliant on the North American economy.
This acquisition creates a larger foodservice component, which
provides more stability into the underlying fundamentals of
Manitowoc and reduces exposure to the cyclicality of the crane
business.
Moody's is maintaining a Ba2 corporate family rating for
Manitowoc. Over the several past years the company's financial
metrics have improved to levels that could be supportive of a
higher corporate family rating. The company's strong operating
performance has resulted from continued favorable global
infrastructure construction end markets, the main driver for
Manitowoc's crane business; domestic residential construction is a
very small portion of the company's end market demand. Despite
this favorable operating trend, the proposed acquisition could
increase Manitowoc's overall debt upwards of $2.0 billion and
partially offset the improvement that has occurred in its
financial metrics. Key credit metrics on a pro forma basis for
2007 will likely erode in these manner when compared to
Manitowoc's 2007 actual results: EBITA margin to below 13% from
13.4%; debt EBITDA exceeding 3.3x from 1.1x; and EBIT interest
expense about 3.7x from 11.2x (all ratios adjusted per Moody's
methodology). Moody's notes that the pro forma credit metrics
should improve by 2009 as Manitowoc continues to benefit from its
healthy backlog of crane orders, growth in international
restaurant equipment sales and potential synergy savings
associated with the transaction.
Constraining Manitowoc's corporate family rating is the
significant integration risk associated with such a large
acquisition. Also, the company must contend with potential anti-
trust issues, commodity price and foreign exchange volatility,
cyclicality of the construction end markets, and a softening of
the domestic restaurant industry.
The stable outlook reflects Moody's expectation that Manitowoc
will continue to follow prudent financial policies historically
embraced by management characterized by debt reduction and ample
liquidity.
The Manitowoc Company, Inc., based in Manitowoc, Wisconsin, is a
global manufacturer with operations in over 20 countries. The
company provides a diverse array of capital goods and equipment
within its three core business segments -- cranes and related
products, foodservice equipment, and marine operations. Revenues
for 2007 totaled $4.0 billion.
MERRILL LYNCH: S&P Chips Ratings on Five Classes of Certificates
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on five
classes of commercial mortgage pass-through certificates from
Merrill Lynch Mortgage Trust 2003-KEY1. At the same time, S&P
affirmed its ratings on 18 other classes from this series.
The downgrades of the raked WW-1, WW-2, WW-3, and WW-X
certificates reflect the declining financial performance of the 77
West Wacker Drive loan. The junior participation provides 100% of
the cash flow to the raked certificates noted with a "WW" prefix.
The downgrade of the class P pooled certificates reflects S&P's
anticipation of principal losses and credit support erosion upon
the eventual resolution of one asset that is currently with the
special servicer.
The affirmed ratings reflect credit enhancement levels that
provide adequate support in various stress scenarios.
As of the March 12, 2008, remittance report, the collateral pool
consisted of 79 loans with an aggregate trust balance of $1.024
billion, compared with 79 loans totaling $1.055 billion at
issuance. The master servicer, KeyBank Real Estate Capital
Markets Inc., reported full-year 2006 and 2007, and interim 2007
financial information for 99% of the pool excluding the loans for
defeased collateral ($84.0 million, 8%). Based on this
information, Standard & Poor's calculated a weighted average debt
service coverage of 1.79x, down from 1.89x at issuance. All of
the loans in the pool are current except for one real estate owned
asset totaling $4.3 million that is with the special servicer. To
date, the trust has not experienced any losses.
Details concerning the 77 West Wacker Drive asset and the
specially serviced Euless Square loan are:
-- The largest exposure in the pool, the 77 West Wacker Drive
loan, is encumbered by a $140.7 million class A note and a
$20.4 million junior participation. The loan is secured
by the fee interest in a 959,258-sq.-ft. office property
in Chicago. Occupancy at the property was 86% as of
Dec. 31, 2007, but will increase to 91% starting June 2008
when an existing tenant will lease additional space. The
property reported a year-end 2007 DSC of 1.46x compared
with 2.29x at issuance. Standard & Poor's adjusted net
cash flow is down 25% from issuance. S&P attribute the
decrease in NCF to the former largest tenant (26%, net
rentable area), RR Donnelley & Sons Co., vacating its
space in May 2006, before its May 2007 expiration date.
The property has been leased since but at lower rents.
This loan continues to have credit characteristics
consistent with those of investment-grade obligations.
-- Euless Square($4.3 million, 1%), the one asset with the
special servicer, Centerline Capital Inc., is secured by a
150-unit multifamily property, built in 1971 in Euless,
Texas. The asset was transferred to the special servicer
for payment default and is now REO. The property is
currently for sale. Based on the most recent valuations
provided by the special servicer, Standard & Poor's
expects a loss upon resolution of this asset.
The top 10 loans have an aggregate outstanding balance of
$610.3 million (62%) and a weighted average DSC of 1.89x,
which is the same as at issuance.
This calculation excludes the eighth-largest loan, which
is secured by a leasehold interest in a cooperative in
Manhattan. Two of the top 10 loans are on the watchlist
and are discussed below. Standard & Poor's reviewed
property inspections provided by the master servicer for
all of the assets underlying the top 10 loans, and all of
the properties were characterized as "good."
In addition to the 77 West Wacker Drive loan, credit
characteristics for three of the top 10 loans in the pool
continue to have credit characteristics consistent with
those of investment-grade obligations. Details of these
loans are:
-- The second-largest exposure in the pool, the Solomon Pond
Mall loan, has a trust balance of $110.9 million (11%).
The loan is secured by 427,439 sq. ft. of a 911,959-sq.-
ft. regional mall in Marlborough, Mass. The manager of the
property is Simon Property Group Inc. (A-/Stable/--).
Occupancy at the collateral property was 95% as of
Sept. 30, 2007. For the nine months ended Sept. 30, 2007,
the DSC was 2.13x.
-- The third-largest exposure in the pool, the Miami
International Mall loan, has a trust balance of
$95.7 million (9%). The loan is secured by a fee interest
in 292,509 sq. ft. of a 1.1 million-sq.-ft. regional mall
in Miami, Florida. Occupancy at the collateral property
was 98% as of Sept. 30, 2007. For the nine months ended
Sept. 30, 2007, the DSC was 2.44x.
-- The ninth-largest exposure in the pool, the Mall at
Fairfield Commons loan, has a trust balance of
$26.8 million and a whole-loan balance of
$107.0 million. An $80.2 million pari passu portion not
included in the trust serves as collateral for the CSFB
2003 C-5 transaction. The loan is secured by 856,879
sq. ft. of a 1.1 million-sq.-ft. enclosed regional mall
built in 1993 in Beavercreek, Ohio. Occupancy was 99.4%
as of Nov. 30, 2007. For the full-year 2007, the DSC was
1.92x.
Ten loans totaling $103.6 million (10%) are on the watchlist,
including two of the top 10 loans.
The largest loan on the watchlist and the fifth-largest exposure
in the pool is the Circa Capital portfolio with an outstanding
loan balance of $41.6 million (4%). The loan is composed of two
cross-collateralized and cross-defaulted loans. Each loan is
secured by three Holiday Inn lodging properties in various states.
The loan appears on the watchlist primarily due to low DSCs and/or
occupancy at three of the properties. The portfolio reported a
combined year-end 2007 DSC of 1.35x.
Anchor Bay is the sixth-largest loan in the pool with an
outstanding balance of $39.7 million (4%) and is secured by a
1,384-pad manufactured housing property in Fair Haven, Michigan.
The loan appears on the watchlist because the collateral property
reported a DSC of 0.97x for year-end 2007.
Standard & Poor's stressed the loans on the watchlist and other
loans with credit issues as part of its analysis. The resultant
credit enhancement levels support the lowered and affirmed
ratings.
Rating Lowered (Pooled Certificates)
Merrill Lynch Mortgage Trust 2003-KEY1
Commercial mortgage pass-through certificates series 2003-KEY1
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
P CCC+ B- 1.18
Ratings Lowered (Raked Certificates)
Merrill Lynch Mortgage Trust
Commercial mortgage pass-through certificates series 2003-KEY1
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
WW-1 BBB- BBB+ N/A
WW-2 BB+ BBB N/A
WW-3 BB- BBB- N/A
WW-X BBB- BBB+ N/A
Ratings Affirmed (Pooled Certificates)
Merrill Lynch Mortgage Trust 2003-KEY1
Commercial mortgage pass-through certificates series 2003-KEY1
Class Rating Credit enhancement
----- ------ -----------------
A-1A AAA 15.25%
A-2 AAA 15.25%
A-3 AAA 15.25%
A-4 AAA 15.25%
B AA+ 11.83%
C AA 10.25%
D A+ 7.75%
E A- 6.70%
F BBB+ 5.52%
G BBB 4.73%
H BBB- 3.68%
J BB+ 3.15%
K BB 2.63%
L BB- 2.23%
M B+ 1.58%
N B 1.31%
XC AAA N/A
XP AAA N/A
N/A -- Not applicable.
MGM MIRAGE: Saves $75MM on Costs with 440 Managerial Staff Cuts
---------------------------------------------------------------
MGM Mirage Inc. will dismiss approximately 440 administration
staff as part of its cost cutting measures. This alternative was
reached after the company saw the financial struggle at its
Bellagio, MGM Grand, Mirage, and Mandalay Bay facilities since
August 2007, Associated Press reports.
According to various reports, the gambling business has suffered a
decline in profit, visitors and a weakening national economy.
Last week, records by Nevada authorities reflected a drop in Las
Vegas gambling income for two consecutive months. Also, shares of
top gambling companies have dipped in the previous months.
The workforce downsizing will affect the middle corporate and
property executive departments in Michigan and Mississippi units,
though the most of the job cuts will be in Las Vegas.
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company.
It owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
* * *
Standard and Poor's Ratings Services placed MGM Mirage's long-term
foreign and local issuer credit rating at 'BB' in October 2007.
The ratings still hold to date with a positive outlook.
MOVIE GALLERY: Files Additional Supplements to 2nd Amended Plan
---------------------------------------------------------------
In addition to previously filed supplements to their Chapter 11
Plan of Reorganization, Movie Gallery Inc. and its debtor-
affiliates delivered additional supplementary documents to the
U.S. Bankruptcy Court for the Eastern District of Virginia prior
to the confirmation hearing.
These documents include:
* a copy of the Amended Non-Released Parties that reflect
these entities:
-- Boards, Inc. and any Affiliates;
-- Boards Video Company, LLC and any Affiliates; and
-- Mark J. Wattles and any relative, as defined in
Section 101(45) of the Bankruptcy Code; and
* a copy of the Registration Rights Agreement, which provides
among others, that after the effective date of the Plan, the
holders of a majority of the Registrable Securities then
outstanding may request registration under the Securities
Act with respect to up to three Long-Form Registrations and
an unlimited number of registrations.
A full-text copy of the Registration Rights Agreement is
available at no charge at:
http://researcharchives.com/t/s?2a8e
* the Warrant Agreement, a full-text copy of which is
available for free at:
http://researcharchives.com/t/s?2a8f
* the Exit Facility, a full-text copy of which is available
for free at:
http://researcharchives.com/t/s?2a90
* the Seasonal Overadvance Facility, a full-text copy of which
is available for free at:
http://researcharchives.com/t/s?2a91
* a revised form of the Amended And Restated First Lien Credit
Agreement, a full-text copy of which is available for free
at:
http://researcharchives.com/t/s?2a92
* a revised form of the Amended and Restated Second Lien
Credit Agreement,a full-text copy of which is available for
free at:
http://researcharchives.com/t/s?2a93
* the New Organizational Documents for Reorganized Debtor MG
Real Estate, a full-text copy of which is available for free
at:
http://researcharchives.com/t/s?2a94
* the Litigation Trust Agreement, a full-text copy of which is
available for free at:
http://researcharchives.com/t/s?2a95
* the Plan Administrator Agreement, a full-text copy of which
is available for free at:
http://researcharchives.com/t/s?2a96
* the Revised Schedule of Executory Contracts and Unexpired
Leases, a full-text copy of which is available for free at:
http://researcharchives.com/t/s?2a97
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kutzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Debtors' spokeswoman Meaghan Repko said that the company does
not expect to exit bankruptcy protection before the second quarter
of 2008. The Court confirmed the Debtors' Second Amended Chapter
11 Plan of Reorganization on April 9, 2008. (Movie Gallery
Bankruptcy News Issue No. 25; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Assumes More Leases to Appease Landlords
-------------------------------------------------------
Movie Gallery Inc. and its debtor-affiliates entered into more
stipulations resolving objections filed by certain Landlords with
regard to the confirmation of the Debtors' Chapter 11 Plan.
Pursuant to the Stipulations, the Debtors, as of the effective
date of the Plan, will assume their Leases with:
* EVP I, LLC, located at 1134 B S Clearview Parkway in
Harahan, Louisiana.
* Macerich Company, et al., for:
Store No. Address
--------- -------
005725 4447 Candlewood Street, in Lakewood, CA
046736 3925 Jefferson Davis Highway, in Alexandria, VA
005829 100 East Compton Boulevard, in Compton, CA
005653 7221 Van Nuys Blvd, Suite B2, in Van Nuys, CA
005583 3105 El Cajon Boulevard, in San Diego, CA
005408 1492 Fitzgerald Drive, in Pinole, CA
005768 32160 Dyer Street, Union City, CA
005538 3501 McHenry Avenue, Building K, in Modesto, CA
005641 8610 Firestone Boulevard, in Downey, CA
003956 6350 South McClintock Drive, in Tempe, AZ
005411 2200 West Beverly Boulevard, in Montebello, CA
203690 421 Village Drive, in Prestonsburg, KY
* WRI/TEXLA, LLC and Weingarten Realty Investors, et al. for
Store Nos. 18506, 043616, 043350, 005526, 006721, 047245,
047220, 043323, 003402, 010517, 005892, 005961, 004734,
043619, 009684, 009411, 200163, 051756, 032629, 032833,
032612.
As a result, the Landlords have withdrawn their objections to the
confirmation of the Plan, with prejudice.
The stipulations are deemed approved upon entry of the
confirmation order.
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kutzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Debtors' spokeswoman Meaghan Repko said that the company does
not expect to exit bankruptcy protection before the second quarter
of 2008. The Court confirmed the Debtors' Second Amended Chapter
11 Plan of Reorganization on April 9, 2008. (Movie Gallery
Bankruptcy News Issue No. 25; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MOVIE GALLERY: Rejects 320+ Leases Including Hollywood Stores
-------------------------------------------------------------
Movie Gallery Inc. and its debtor-affiliates notified parties-in-
interest that they will reject around 320 leases nationwide.
The Honorable Douglas O. Tice of the U.S. Bankruptcy Court for the
Eastern District of Virginia directed the Debtors to notify the
landlords and parties-in-interest of any lease abandonment to
allow third parties to retrieve any property deemed for
abandonment prior to the effective dates of lease rejection.
The Debtors related that they generally evaluated the designated
leases, on an individual basis, using current and projected
financial and qualitative data to determine the expected
profitability of the Debtors' store locations under each Lease.
To increase the likelihood that a store location under a lease
could be profitable, the Debtors generally attempted to negotiate
rent concessions with counterparties to the leases; however, the
financial performance under these leases remained either
unprofitable or was projected to be unprofitable in the future.
The Debtors explained that, as of the effective dates of
rejection, they are deemed to have abandoned any furniture,
fixtures, equipment, inventory and other personal property to the
leases without any administrative expense liability to their
landlords for rental charges or occupancy of the leased premises.
The landlords may, in their sole discretion and without further
notice, dispose of any abandoned property without liability to
the Debtors or any third party claiming any interest to the
property. To the extent applicable, the automatic stay is
modified to allow the disposition.
Pursuant to the Debtors' Court-approved procedures for rejecting
executory contracts and unexpired leases, the Debtors sent notices
to interested parties that 94 leases of Movie Gallery US, LLC
stores and 83 leases of Hollywood Video stores.
A complete schedule of these 177 leases for rejection is available
for free at:
http://researcharchives.com/t/s?2a99
In addition, Judge Tice authorized the Debtors to reject 242
unexpired non-residential real property leases, a complete
schedule of which is available for free at:
http://researcharchives.com/t/s?2a9a
The Debtors also obtained the Court's authority to reject the
following leases:
Rejection
Lessor/Sublessor Store Address Date
---------------- ------------- ---------
CVS EGL Hwy 190 3310 Highway 190 03/28/08
Mandeville LA, Inc., Mandeville, Louisiana
CVS Pharmacy, Inc.
Fruitvale Station LLC 3070 East 9th Street, 03/26/08
Suite A
Oakland, California
Mala, LLC 891 NE Street 03/27/08
Homestead, Florida
Counterparties and lessors under the rejected leases must file
claims arising from rejection damages by the later of:
(a) 30 days after the entry of the Rejection Order; and
(b) 30 days after the Effective Date of Lease rejection.
About Movie Gallery
Based in Dothan, Alabama, Movie Gallery Inc. --
http://www.moviegallery.com/-- is a home entertainment specialty
retailer. The company owns and operates 4,600 retail stores that
rent and sell DVDs, videocassettes and video games.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to
07-33853). Anup Sathy, Esq., Marc J. Carmel, Esq., and Richard M.
Cieri, Esq., at Kirkland & Ellis LLP, represent the Debtors.
Michael A. Condyles, Esq., and Peter J. Barrett, Esq., at Kutak
Rock LLP, is the Debtors' local counsel. The Debtors' claims &
balloting agent is Kutzman Carson Consultants LLC. When the
Debtors' filed for protection from their creditors, they listed
total assets of $891,993,000 and total liabilities of
$1,419,215,000.
The Official Committee of Unsecured Creditors has selected Robert
J. Feinstein, Esq., James I. Stang, Esq., Robert B. Orgel, Esq.,
and Brad Godshall, Esq., at Pachulski Stang Ziehl & Jones LLP, as
its lead counsel, and Brian F. Kenney, Esq., at Miles &
Stockbridge PC, as its local counsel.
The Debtors' spokeswoman Meaghan Repko said that the company does
not expect to exit bankruptcy protection before the second quarter
of 2008. The Court confirmed the Debtors' Second Amended Chapter
11 Plan of Reorganization on April 9, 2008. (Movie Gallery
Bankruptcy News Issue No. 24; Bankruptcy Creditors' Service Inc.;
http://bankrupt.com/newsstand/or 215/945-7000)
MYSTIQUE ENERGY: Court Extends CCAA Protection Until Sept. 15
-------------------------------------------------------------
The Court of Queen's Bench extended Mystique Energy Inc.'s
creditor protection under the Companies' Creditors Arrangement Act
(Canada) until Sept. 15, 2008.
The extension will provide additional time for Mystique to
conclude the anticipated merger by way of an amalgamation or other
business arrangement with Petro Energy Corp. The final business
arrangement will require approval by both companies and by
regulatory agencies.
During the extension period, Mystique will make its final
distribution of its remaining cash assets to its unsecured
creditors. The initial distribution was made in January 2008.
Trading in Mystique shares will remain halted until such time as
may be determined by the TSX Venture.
Mystique is anticipating making a final distribution of its
remaining cash assets to its unsecured creditors during the
upcoming six months.
About Mystique Energy
Headquartered in Alberta, Canada, Mystique Energy Inc. --
http://www.mystiqueenergy.ca/-- (TSXV: MYS) is a junior oil & gas
company focused on exploration and development of petroleum and
natural gas reserves, with production in western Alberta.
The company filed for creditor protection under the Companies
Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended on
April 24, 2007. The Court appointed Ernst & Young Inc. to act as
officer of the Court to monitor the business and affairs of the
company until discharged by the Court.
NEUROGEN CORP: Offers Exchangeable Preferred Stock for $30.6MM
--------------------------------------------------------------
Neurogen Corporation disclosed Wednesday that it has entered into
definitive agreements for a private placement offering of
exchangeable preferred stock and warrants with selected
institutional investors for gross proceeds of approximately
$30.6 million before fees and expenses.
The net proceeds from this offering will be used for clinical
development of existing product candidates and other general
corporate purposes. The exchangeable preferred stock will
automatically be exchanged for common stock upon shareholder
approval, subject to certain conditions. The company plans to
seek shareholder approval for the exchange this quarter.
Neurogen also announced that it has reduced its workforce by
approximately 45 positions in research and administrative
functions, as part of an initiative to focus resources on
advancing the company's four clinical programs in insomnia,
anxiety, restless legs syndrome (RLS), and Parkinson's disease.
Stephen R. Davis, president and chief executive officer of
Neurogen said, "This financing, together with our cash and
marketable securities of $42.6 million as of Dec. 31, 2007, and
the operational changes announced today, enable us to get to
important clinical milestones in our insomnia, anxiety,
Parkinson's disease and RLS programs in 2008 and to fund our
planned operations into the second half of 2009.
"Our clinical portfolio is expanding and advancing as we leverage
the potential of adipiplon and aplindore in several indications.
We began Phase 2 studies in both Parkinson's disease and RLS with
aplindore earlier this year. An upcoming Phase 2/3 study with
adipiplon for insomnia enables us to examine how our drug compares
to the current market leader, Ambien CR(TM), in a side-by-side
comparison study. We will also run a human proof-of-concept study
in anxiety to examine adipiplon's ability to relieve anxiety at
doses substantially below those that produce sedation--an exciting
finding we have observed in animal studies. We anticipate data
from all four programs by the end of the year."
Mr. Davis continued, "We are deeply grateful for the contributions
of the talented employees whose positions are impacted by this
refocusing, and we wish them every success in their future
endeavors."
The $30.6 million offering is for the sale of 981,411 units. Each
unit consists of one share of exchangeable preferred stock and a
warrant to acquire additional shares of common stock. Upon
shareholder approval, each share of preferred stock will be
exchanged for 26 shares of Neurogen's common stock, subject to
certain conditions. The warrants included in the unit allow
investors to purchase 50% of the number of common shares into
which the purchaser's preferred stock is exchangeable at an
exercise price of $2.30 per share.
Pacific Growth Equities, LLC acted as lead placement agent, and
Leerink Swann & Co., Oppenheimer & Co. and Merriman Curhan Ford &
Co. acted as placement agents for the offering.
The company has agreed to file a registration statement under the
Securities Act of 1933 for the common shares to be issued upon
exchange of the preferred stock and the exercise of the warrants.
The company is providing severance and career transition
assistance to employees directly affected by the reduction in
force, and Neurogen expects to incur restructuring charges,
primarily associated with severance benefits, of approximately
$2.6 million in the second and third quarters of 2008. Neurogen
also expects to take a non-cash charge to write down the value of
property and equipment associated with its research operations but
cannot estimate the amount of such charge at this time. The
company expects to defer clinical studies previously planned for
schizophrenia in 2008 until a future date.
About Neurogen Corp.
Neurogen Corporation (NasdaqGM: NRGN) -- http://www.neurogen.com/
-- is a drug development company focusing on small-molecule drugs
to improve the lives of patients suffering from disorders with
significant unmet medical need, including insomnia, anxiety,
restless legs syndrome (RLS), Parkinson's disease, and pain.
Neurogen conducts its development independently and, when
advantageous, collaborates with world-class pharmaceutical
companies to access additional resources and expertise.
At Dec. 31,2007, the company's consolidated balance sheet showed
$71,370,000 in total assets, $16,763,000 in total liabilities, and
$54,607,000 in total stockholders' equity.
* * *
PricewaterhouseCoopers LLP, in Hartford, Conn., expressed
substantial doubt about Neurogen Corporation'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 said that the company expects to incur
substantial and increasing losses for at least the next several
years and will need substantial additional financing to obtain
regulatory approvals, fund operating losses, and if deemed
appropriate, establish manufacturing and sales and marketing
capabilities.
NEW CENTURY: Fitch Chips Ratings on $692.8 Million Certificates
---------------------------------------------------------------
Fitch Ratings has taken rating actions on New Century mortgage
pass-through certificates. Unless stated otherwise, any bonds
that were previously placed on Rating Watch Negative are removed.
Affirmations total $2.1 billion and downgrades total
$692.8 million. Additionally, $108.4 million was placed on Rating
Watch Negative. Break Loss percentages and Loss Coverage Ratios
for each class are included with the rating actions as:
New Century 2005-A
-- $41.3 million class A-2 affirmed at 'AAA',
(BL: 90.81, LCR: 9.65);
-- $43.8 million class A-3 affirmed at 'AAA',
(BL: 79.05, LCR: 8.4);
-- $113.2 million class A-4 affirmed at 'AAA',
(BL: 38.49, LCR: 4.09);
-- $108.9 million class A-4w affirmed at 'AAA',
(BL: 99.43, LCR: 10.57);
-- $20.0 million class A-5 rated 'AAA', placed on Rating Watch
Negative (BL: 21.60, LCR: 2.3);
-- $71.9 million class A-5w affirmed at 'AAA',
(BL: 99.43, LCR: 10.57);
-- $88.4 million class A-6 rated 'AAA', placed on Rating Watch
Negative (BL: 21.60, LCR: 2.3);
-- $24.2 million class M-1 downgraded to 'A' from 'AA+'
(BL: 17.48, LCR: 1.86);
-- $6.7 million class M-3 downgraded to 'BB' from 'AA-'
(BL: 12.23, LCR: 1.3);
-- $23.7 million class M-2 downgraded to 'BB' from 'AA'
(BL: 13.40, LCR: 1.42);
-- $7.4 million class M-4 downgraded to 'B' from 'A+'
(BL: 10.93, LCR: 1.16);
-- $5.9 million class M-5 downgraded to 'B' from 'A'
(BL: 9.90, LCR: 1.05);
-- $4.9 million class M-6 downgraded to 'B' from 'A-'
(BL: 9.06, LCR: 0.96);
-- $4.9 million class M-7 downgraded to 'CCC/DR5' from 'BBB+'
(BL: 8.25, LCR: 0.88);
-- $3.8 million class M-8 downgraded to 'CCC/DR5' from 'BBB'
(BL: 7.64, LCR: 0.81);
-- $4.9 million class M-9 downgraded to 'CCC/DR5' from 'BBB-'
(BL: 6.85, LCR: 0.73);
-- $5.4 million class B-1 downgraded to 'CC/DR5' from 'BB+'
(BL: 5.98, LCR: 0.64);
-- $5.4 million class B-2 downgraded to 'CC/DR6' from 'BB'
(BL: 5.21, LCR: 0.55);
Deal Summary
-- Originators: New Century (100%)
-- 60+ day Delinquency: 8.40%
-- Realized Losses to date (% of Original Balance): 0.50%
-- Expected Remaining Losses (% of Current balance): 9.41%
-- Cumulative Expected Losses (% of Original Balance): 6.14%
New Century 2005-1 Total
-- $29.6 million class A-1ss affirmed at 'AAA',
(BL: 97.49, LCR: 5.29);
-- $31.7 million class A-2c affirmed at 'AAA',
(BL: 95.73, LCR: 5.19);
-- $95.7 million class M-1 affirmed at 'AA+',
(BL: 81.65, LCR: 4.43);
-- $83.8 million class M-2 affirmed at 'AA',
(BL: 68.52, LCR: 3.71);
-- $47.9 million class M-3 affirmed at 'AA-',
(BL: 59.67, LCR: 3.24);
-- $62.8 million class M-4 downgraded to 'A' from 'A+'
(BL: 32.43, LCR: 1.76);
-- $52.3 million class M-5 downgraded to 'BBB' from 'A'
(BL: 27.54, LCR: 1.49);
-- $32.9 million class M-6 downgraded to 'BB' from 'A-'
(BL: 24.78, LCR: 1.34);
-- $44.9 million class M-7 downgraded to 'B' from 'BBB+'
(BL: 21.33, LCR: 1.16);
-- $34.4 million class M-8 downgraded to 'B' from 'BBB'
(BL: 18.97, LCR: 1.03);
-- $35.9 million class M-9 downgraded to 'CCC/DR2' from 'BBB-'
(BL: 17.00, LCR: 0.92);
Deal Summary
-- Originators: New Century (100%)
-- 60+ day Delinquency: 26.81%
-- Realized Losses to date (% of Original Balance): 1.20%
-- Expected Remaining Losses (% of Current balance): 18.44%
-- Cumulative Expected Losses (% of Original Balance): 5.24%
New Century 2005-3 Total
-- $30.6 million class A-1mz affirmed at 'AAA',
(BL: 94.07, LCR: 5.21);
-- $112.5 million class A-1ss affirmed at 'AAA',
(BL: 96.15, LCR: 5.32);
-- $212.7 million class A-2c affirmed at 'AAA',
(BL: 72.37, LCR: 4.01);
-- $126.0 million class A-2d affirmed at 'AAA',
(BL: 67.60, LCR: 3.74);
-- $100.1 million class M-1 affirmed at 'AA+',
(BL: 58.42, LCR: 3.23);
-- $91.4 million class M-2 affirmed at 'AA',
(BL: 48.35, LCR: 2.68);
-- $58.0 million class M-3 affirmed at 'AA-',
(BL: 43.72, LCR: 2.42);
-- $52.2 million class M-4 affirmed at 'A+',
(BL: 39.25, LCR: 2.17);
-- $49.3 million class M-5 affirmed at 'A',
(BL: 34.83, LCR: 1.93);
-- $43.5 million class M-6 affirmed at 'A-',
(BL: 30.70, LCR: 1.7);
-- $39.2 million class M-7 downgraded to 'BBB' from 'BBB+'
(BL: 26.87, LCR: 1.49);
-- $33.4 million class M-8 downgraded to 'B' from 'BBB'
(BL: 21.50, LCR: 1.19);
-- $29.0 million class M-9 downgraded to 'B' from 'BBB-'
(BL: 19.15, LCR: 1.06);
-- $24.7 million class M-10 downgraded to 'B' from 'BBB-'
(BL: 17.94, LCR: 0.99);
Deal Summary
-- Originators: New Century (100%)
-- 60+ day Delinquency: 24.06%
-- Realized Losses to date (% of Original Balance): 1.25%
-- Expected Remaining Losses (% of Current balance): 18.06%
-- Cumulative Expected Losses (% of Original Balance): 8.08%
New Century 2005-4 Total
-- $153.5 million class A-1 affirmed at 'AAA',
(BL: 72.94, LCR: 3.14);
-- $206.9 million class A-2b affirmed at 'AAA',
(BL: 68.46, LCR: 2.94);
-- $37.8 million class A-2c affirmed at 'AAA',
(BL: 66.87, LCR: 2.88);
-- $81.1 million class M-1 affirmed at 'AA+',
(BL: 57.50, LCR: 2.47);
-- $66.6 million class M-2 affirmed at 'AA',
(BL: 48.17, LCR: 2.07);
-- $47.8 million class M-3 affirmed at 'AA-',
(BL: 43.32, LCR: 1.86);
-- $34.3 million class M-4 downgraded to 'BBB' from 'A+'
(BL: 39.61, LCR: 1.7);
-- $34.3 million class M-5 downgraded to 'BBB' from 'A'
(BL: 35.77, LCR: 1.54);
-- $32.2 million class M-6 downgraded to 'BB' from 'A-'
(BL: 31.99, LCR: 1.38);
-- $33.3 million class M-7 downgraded to 'B' from 'BBB+'
(BL: 27.94, LCR: 1.2);
-- $22.9 million class M-8 downgraded to 'B' from 'BBB'
(BL: 25.18, LCR: 1.08);
-- $22.9 million class M-9 downgraded to 'B' from 'BBB-'
(BL: 22.39, LCR: 0.96);
-- $26.0 million class M-10 downgraded to 'CC/DR5' from 'BBB-'
(BL: 19.74, LCR: 0.85);
Deal Summary
-- Originators: New Century (100%)
-- 60+ day Delinquency: 31.51%
-- Realized Losses to date (% of Original Balance): 1.24%
-- Expected Remaining Losses (% of Current balance): 23.25%
-- Cumulative Expected Losses (% of Original Balance): 10.98%
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.
NEWPORT TELEVISION: Moody's Junks Rating on $100 Mil. Senior Notes
------------------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating
and a B2 Probability of Default Rating to Newport Television
Holdings LLC and a Caa1 rating to its $100 million 10-year Senior
Discount Notes. In addition, Moody's assigned a Ba3 rating to
Newport Television LLC's, a subsidiary of Newport, $590 million
senior secured credit facility ($75 million revolver due 2016 and
$515 million term loan due 2016) and a Caa1 rating to its
$200 million 9-year Senior PIK Toggle Notes. The ratings outlook
is stable.
Newport used the proceeds of the senior secured term loan, a
$200 million opco senior interim loan (which is to be refinanced
with the PIK Toggle Notes) and a $100 million holdco senior
interim loan (which is to be refinanced with the Senior Discount
Notes) along with $259 million of cash equity from the equity
sponsor, Providence Equity Partners Inc., to acquire Clear Channel
Communications, Inc.'s television station group. This is the
first time that Moody's has assigned ratings to Newport Television
Holdings LLC.
Ratings or assessments assigned:
Newport Television Holdings LLC
-- Corporate family rating -- B2
-- Probability-of-default rating -- B2
-- $100 million Senior Discount Notes -- Caa1 (LGD 6, 94%)
Newport Television LLC
-- $590 million senior secured credit facility -- Ba3
(LGD 3, 30%)
-- $200 million Senior PIK Toggle Notes -- Caa1 (LGD 5, 81%)
The outlook is stable.
Newport's B2 rating reflects the company's significant debt to
EBITDA leverage of 10.4x (based on 2007 EBITDA pro-forma for the
expected cost savings and including Moody's standard adjustments),
modest free cash flow relative to debt, weak operating margins
relative to its broadcast peer group and execution risk associated
with improving the operating performance and completing the sale
of certain identified assets. The rating also incorporates
Newport's relatively weak market share in several of its markets,
the inherent cyclicality of the advertising business and the
increasing business risk associated with declining trends in
broadcast television audiences and increasing cross-media
competition for advertising spending.
Newport's ratings are supported by the diversity in its geographic
footprint and network affiliations and significant proportion of
local advertising revenues. Moody's believes Newport stands to
benefit from the experience of its management team in executing
its strategy of improving the operating performance through cost
control and increasing market share.
Newport's EBITDA minus capital expenditures to interest expense is
expected to be weak. However, the financing structure offers some
flexibility to the company in managing its cash interest costs.
Newport has the ability to PIK interest on the $200 million senior
notes for the first five years after closing. In addition, the
company does not have any meaningful debt amortization over the
intermediate term. The company also maintains a $75 million
revolving credit facility which is expected to have moderate
seasonal drawings.
Newport Television Holdings LLC, headquartered in Kansas City,
Missouri, owns and operates 56 television stations (including 18
digital multicast stations) in 24 markets. The company's 2007
revenue was approximately $338 million.
NEW YORK TIMES: Eliminates 100 News Staff to Cut Operating Costs
----------------------------------------------------------------
New York Times expects to dismiss 100 of its journalists for the
first time in years after the company's buyout offers, in their
effort to cut costs, yielded few takers, Shira Ovide at The Wall
Street Journal reports.
According to WSJ citing assistant managing editor Bill Schmidt,
the company suffers the same fate as any other businesses, its
profit and stock price also declined. The New York Times is even
more pressed down with bombardments from its shareholders to
improve financial administration, WSJ notes.
The deadline for the voluntary resignation is on April 21. To
limit termination torture, employees are advised to opt buyouts
before then.
About The New York Times Company
Headquartered in New York City, The New York Times Company
(NYSE:NYT) -- http://www.nytco.com/-- is a diversified media
company, including newspapers, Internet businesses, television and
radio stations, and investments in paper mills and other
investments. During the year ended Dec. 31, 2007, the company
operated in two segments: News Media Group and the About Group.
NICK'S OF BOCA: Placed into Chapter 7 Liquidation by Owner
----------------------------------------------------------
Nick's of Boca LLC, dba Nick's Fishmarket of Hawaii in Boca Raton,
in Florida, sought protection under chapter 7 of the U.S.
Bankruptcy Code on April 9, 2008, South Florida Business Journal
relates.
Nick Nickolas launched the business in September 2006, Business
Journal says. Another Nick's Fishmarket was shut down in July
2006, which was the successor of the Boca Raton Resort & Club for
18 years, the report notes. Mr. Nickolas developed and sold about
33 Nick's restaurants located throughout the country within 40
years, Business Journal adds.
Nick's of Boca listed assets of less than $50,000 and debts
between $1 million and $10 million owed to at least 50 creditors,
based on Business Journal's report.
Nick's of Boca is at 150 Eest Palmetto Park Road, No. 175 in Boca
Raton, Hawaii.
NIELSEN COMPANY: Confirms 10% Reduction of Total Workforce
----------------------------------------------------------
The Nielsen Company confirmed reports of a company-wide
restructuring plan that involved reduction of an estimated 4,000
jobs, or almost 10% of its workforce, including at its Nielsen
Business Media Inc. unit, Jason Fell at Folio Magazine in Norwalk,
Connecticut says.
The company said the job cuts were "not concentrated in any
particular brand" and is part of its December 2006 restructuring
plan, according to Folio.
Spokesman Gary Holmes told Folio in an e-mail message that he
cannot reveal as to when the company intends to impose the
workforce reduction. He added that the move is part of Nielsen's
attempt at operating "more efficiently," report notes.
Folio recounts the company's disclosure in 2006 regarding the
restructuring plan headed by CEO David Calhoun. According to the
report, the restructuring started early 2007.
DeSilva + Phillips managing partner Reed Phillips said that the
recent job cut news shouldn't come as a surprise based on the
moves of Mr. Calhoun, Folio relates.
Mr. Holmes assured that amid the restructuring, the company won't
let go of its Business Media unit through sale or merger efforts,
says Folio.
About Nielsen Business Media
New York-based Nielsen Business Media Inc. --
http://www.nielsenbusinessmedia.com/-- a part of The Nielsen
Company, provides integrated information and sales and marketing
solutions, helping businesses go to market more effectively and
efficiently. Serving six major market groups, and 30 individual
industries, spanning entertainment, media and marketing, retail,
travel and performance and design, Nielsen Business Media provides
business-to-business products and services in print, online and in
person. With 42 publications, over 135 trade shows and
conferences, and 195 digital products and services, Nielsen
Business Media offers insight, analysis and face-to-face contacts
to help professionals better understand their markets, serve their
customers and grow their businesses.
About Nielsen Company
The Nielsen Company -- http://www.nielsen.com/-- is headquartered
in New York, U.S.A. and Haarlem, The Netherlands. It operates in
more than 100 countries with a global team. It provides marketing
information, audience measurement, and business media products and
services. By delivering a combination of insights, market
intelligence, advanced analytical tools, and integrated marketing
solutions, Nielsen provides clients with a view of their consumers
and their markets.
NORTH COAST: A.M. Best Affirms C++(Marginal) Issuer Credit Rating
-----------------------------------------------------------------
A.M. Best Co. has affirmed the financial strength rating of
C++(Marginal) and issuer credit rating of "b+" of North Coast Life
Insurance Company. The outlook for both ratings is stable.
The ratings reflect North Coast Life's low level of risk-adjusted
capitalization, high level of below investment grade bond holdings
relative to capital and a decline in its new premium production.
Partially offsetting these rating factors is the continued
positive, albeit declining, trend in the company's net operating
gains, recent restructuring of its investment portfolio to attempt
to reduce credit risk and the ongoing evolution of its technology
platform to further develop its business profile.
NORTHWEST AIRLINES: Reaches $17.7BB All-Stock Pact with Delta
-------------------------------------------------------------
Delta Air Lines Inc. and Northwest Airlines Corporation reached
an agreement on April 14, 2008, in which the two carriers will
combine in an all-stock transaction with a combined enterprise
value of $17,700,000,000.
[This is a supplementary report to the Delta-Northwest board
approved merger story that the Troubled Company Reporter issued
yesterday.]
Delta agreed to buy Northwest in a $3.63 billion stock deal that
would create the world's largest carrier, according to Bloomberg
News.
The new airline, which will be called Delta, will provide
employees with greater job security, an equity stake in the
combined airline, and a more stable platform for future growth in
the face of significant economic pressures from rising fuel costs
and intense competition, the carriers said in a statement. Small
communities throughout the United States will enjoy enhanced
access to more destinations worldwide. According to the news
statement, customers also will benefit from the combined carriers'
complementary route networks, which together will offer people
greater choice, competitive fares and a superior travel experience
to more cities than any other airline. In addition, combining
Delta and Northwest will create a global U.S. flag carrier
strongly positioned to compete with foreign airlines that are
continuing to increase service to the United States.
Delta CEO Richard Anderson will be chief executive officer of the
combined company. Delta Chairman of the Board Daniel Carp will
become chairman of the new Board of Directors and Northwest
Chairman Roy Bostock will become vice chairman. Ed Bastian will
be president and chief financial officer.
The Board of Directors will be made up of 13 members, seven of
whom will come from Delta's board, including Anderson, and five
of whom will come from Northwest's board, including Mr. Bostock
and Doug Steenland, the current Northwest CEO. One director will
come from the Air Line Pilots Association.
Delta will have executive offices in Atlanta, Minneapolis/St.
Paul and New York, and international executive offices in
Amsterdam, Paris and Tokyo. The company's world headquarters
will be in Atlanta. Delta is committed to retaining significant
jobs, operations and facilities in Minnesota.
Combined, the company and its regional partners will provide
access to more than 390 destinations in 67 countries. Delta and
Northwest, together, will have more than $35,000,000,000 in
aggregate annual revenues, operate a mainline fleet of nearly 800
aircraft and employ approximately 75,000 people worldwide.
In an industry where the U.S. network carriers have shed more
than 150,000 jobs and lost more than $29 billion since 2001, the
combination of Delta and Northwest creates a company with a more
resilient business model that is better able to withstand
volatile fuel prices than either can on a standalone basis.
Merging Delta and Northwest is the most effective way to offset
higher fuel prices and improve efficiencies, increase
international presence and fund long-term investment in the
business.
The transaction is expected to generate more than $1,000,000 in
annual revenue and cost synergies from more effective aircraft
utilization, a more comprehensive and diversified route system
and cost synergies from reduced overhead and improved operational
efficiency. The company expects to incur one-time cash costs to
not exceed $1,000,000,000 to integrate the two airlines. The
combined company will have a stronger, more durable financial
base and one of the strongest balance sheets in the industry,
with expected liquidity of nearly $7,000,000,000 at closing.
Under the terms of the transaction, Northwest shareholders will
receive 1.25 Delta shares for each Northwest share they own.
This exchange ratio represents a premium to Northwest shareholders
of 16.8% based on April 14 closing prices. The transaction is
expected to be accretive to current Delta shareholders in year one
excluding one-time costs. The merger is subject to the approval
of Delta and Northwest shareholders and regulatory approvals. It
is expected that the regulatory review period will be completed
later this year.
Richard Anderson, Delta CEO, stated: "We said we would only enter
into a consolidation transaction if it was right for all of our
constituencies; Delta and Northwest are a perfect fit. Today,
we're announcing a transaction that is about addition, not
subtraction, and combines end-to-end networks that open a world
of opportunities for our customers and employees. We believe by
partnering with our employees, including providing equity to
U.S.-based employees of Delta and Northwest, this combination is
off to the right start. Together, we are creating America's
leading airline -- an airline that is financially secure, able to
invest in our employees and our customers, and built to thrive in
an increasingly competitive marketplace."
Doug Steenland, Northwest CEO, said: "Today's announcement is
exciting for Northwest and its employees. The new carrier will
offer superior route diversity across the U.S., Latin America,
Europe and Asia and will be better able to overcome the
industry's boom-and-bust cycles. The airline will also be better
able to match the right planes with the right routes, making
transportation more efficient across our entire network. In
short, combining the Northwest and Delta networks will allow the
strengthened airline to realize its full global potential and
invest in its future."
Customers, Communities to Benefit from Expanded Global
Route System, More Competitive, Financially Secure Airline
The Delta and Northwest merger will offer customers and
communities direct service between the United States and the
world's major business centers. Specific benefits include:
* Customers will be able to fly to more destinations, have
more schedule options and more opportunities to earn and
redeem frequent flyer miles in what will become the
world's largest frequent flyer program.
* The merged airline will maintain all hubs at Atlanta,
Cincinnati, Detroit, Memphis, Minneapolis/St. Paul,
New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita
-- each of which will benefit from improved global
connectivity.
* Delta customers will benefit from Northwest's extensive
service to Asian markets and Northwest's customers will
have access to Delta's strengths across the Caribbean,
Latin America, Europe, the Middle East and Africa.
* Both airlines' customers will benefit from a strengthened
SkyTeam alliance that more closely aligns the combined
airline with its respective trans-Atlantic partners Air
France and KLM.
Customers also will benefit from the combined carrier's financial
stability. The merger creates one of the strongest balance
sheets among major U.S. airlines, permitting the combined airline
to invest in its fleet and services to enhance the customer
experience. For instance:
* The combination will accelerate the upgrading of existing
international aircraft with lie-flat seats and personal
on-demand entertainment.
* The combined company will have the opportunity to exercise
options for delivery of up to 20 widebody jets between
2010 and 2013 to provide more international service than
ever before.
* The combined company also will be able to improve
customers' travel experience through new products and
services, including enhanced self-service tools, better
bag-tracking technology, new seats and refurbished cabin
interiors.
No Hub Closures; Improved International Access
to Benefit Small Communities
This combination will expand Delta's international and domestic
reach, and there will be no reductions in the number of hubs. In
addition, building on both airlines' proud, decades-long history
of serving small communities, Delta will improve worldwide
connections to small towns and cities across the U.S., enhancing
their access to the global marketplace. Following the merger,
Delta will serve more than 140 small communities in the United
States -- more than any other airline.
"Delta and Northwest are an excellent strategic fit, with
complementary and geographically distinct route systems," said
Edward Bastian, Delta president and chief financial officer.
"Together, we will have a more robust platform for profitable
international growth. Combining both carriers' international and
domestic strengths, with our worldwide SkyTeam partners, we are
well positioned to lead the industry and deliver value to our
shareholders."
Merger Helps Offset Record Oil Prices, Creates
Stronger Global Airline to Compete in Open Skies environment
Record fuel prices have fundamentally changed the economics of
the airline industry. Fuel is the highest single expense for
Delta and Northwest, significantly eroding the financial benefits
of restructuring and placing the airlines' new found strength and
stability at long-term risk. At the beginning of 2007, oil
prices were approximately $55 a barrel. Now, oil prices have
nearly doubled. This dramatic run-up in the price of oil makes
the transaction even more compelling.
Internationally, the two carriers, along with their partners at
Air France and KLM, will have a broader global network similar in
scope and depth to what other foreign flag carriers already
possess and a significant presence in key business centers,
with improved prospects for growing corporate business globally.
This presence is essential for U.S. network carriers due to Open
Skies agreements that have expanded aviation markets around the
world and have created a more competitive international
environment.
Merger combines Delta's strengths in the South, Mountain West,
Northeast, Europe and Latin America with Northwest's leading
positions in the Midwest, Canada and Asia; competition will be
preserved and enhanced as a result of complementary networks.
The Delta-Northwest combination will be pro-competitive. There
is little overlap in the nonstop routes the two airlines serve,
with direct competitive service on only 12 of more than 1,000
nonstop city pair routes currently flown by both airlines. In
fact, the merger will create a stronger, more efficient global
competitor. Discount carriers, which now carry one third of
domestic passengers, and other network airlines will remain
competitors in the airline's markets.
Delta Pilot Leadership Reaches Agreement
on Post-Merger Contract
Delta also announced that it has reached agreement with the
company's pilot leadership to extend its existing collective
bargaining agreement through the end of 2012. The agreement,
which is subject to pilot ratification, facilitates the
realization of the revenue synergies of the combined companies
once the transaction is completed. It also provides the Delta
pilots a 3.5% equity stake in the new company and other
enhancements to their current contract.
Delta will use its best efforts to reach a combined Delta-
Northwest pilot agreement, including resolution of pilot
seniority integration, prior to the closing of the merger.
Employees to be Provided Seniority Protection
and Equity In The New Airline
Frontline employees of both airlines will be provided seniority
protection through a fair and equitable seniority integration
process, as the airlines are combined. In addition, U.S.-based
non-pilot employees of both companies will be provided a 4%
equity stake in the new airline upon closing. The company also
expects no involuntary furloughs of frontline employees as a
result of this transaction and the existing pension plans for both
companies' employees will be protected. Additionally, all Delta
and Northwest employees will enjoy reciprocal pass privileges on
both airlines, beginning as soon as possible during the regulatory
review process.
"We are pleased that the people of Delta and Northwest will
participate directly in the growth and future success of the
combined company," Anderson said. "Thanks to the hard work and
professionalism of the more than 75,000 Delta and Northwest
employees over the last few years, our new, combined company will
be positioned for a bright future as a leader in the global
airline industry."
Integrated SkyTeam Frequent Flyer Programs
and Partner Networks Enable Faster Integration;
Existing Air France, KLM Joint Venture
Partnerships Strengthened
Delta and Northwest's complementary networks and common
membership in the SkyTeam alliance will ease the integration risk
that has complicated some airline mergers. The carriers
participate in a joint SkyTeam frequent flyer program with common
customer lounges and airline partner networks. In addition, they
share a common IT platform, which has already been partially
integrated through the existing alliance between Delta and
Northwest. Further, the combination of Delta and Northwest will
enable an accelerated joint venture integration with Air
France/KLM, creating the industry's leading alliance network.
Over the course of the regulatory process, a detailed integration
plan will be created by the transition committee made up of
leaders from both companies. After closing of the merger, the
consolidation of overlapping corporate and administrative
functions will result in some job reductions or company-paid
transfers. Involuntary reductions for management and
administrative employees will be minimized by normal attrition.
Advisers
Financial advisers to Delta were Greenhill & Co. and Merrill
Lynch & Co. and legal advisers were Wachtell, Lipton, Rosen &
Katz and Hunton & Williams, LLP. Financial advisers to Northwest
were Morgan Stanley and J.P. Morgan Securities and legal advisers
were Simpson Thacher & Bartlett LLP and O'Melveny & Myers, LLP.
Investor and Analyst Call Details
There will be a webcast for the investment community today, April
15, at 9:00 a.m. EDT. Participants will include Richard
Anderson, Delta's CEO; Doug Steenland, Northwest's President and
CEO; and Ed Bastian, Delta's President and CFO. webcast log-in is
available on:
www.delta.com/about_delta/investor_relations/webcasts or
http://ir.nwa.com
A replay of the webcast will be archived for 30 days. Further
information is available in the investor relations section of
http://www.delta.com.
Press Conference Details and Satellite Coordinates
Delta and Northwest will hold a joint press conference today,
April 15, at 10:30 a.m. EDT, at The Intercontinental, The
Barclay, New York, 111 East 48th St, New York, NY 10017.
Participants will include Richard Anderson, Delta's CEO; Doug
Steenland, Northwest's President and CEO; and Ed Bastian, Delta's
President and CFO.
The press conference will be webcast LIVE over the internet at
http://www.newglobalairline.com. The replay of the webcast will
be archived for 30 days.
Audio News Release
An audio news release will be available for download on
http://www.newglobalairline.com/
Photography
Photographs of both companies operations and management teams is
available on the news center section of
http://www.newglobalairline.com/
Further details regarding the combination can be found at
http://www.newglobalairline.com/
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, Issue No. 95; 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,
Issue No. 91; 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: Pilots and Machinist Oppose Delta Merger
------------------------------------------------------------
The merger agreement between Northwest Airlines Corporation and
Delta Air Lines Inc. is disadvantageous to NWA pilots, Dave
Stevens, chairman of the Northwest chapter of the Air Line Pilots
Association, said in an e-mailed statement, reports Bloomberg.
Mr. Stevens said pilot leaders at Northwest "will use all
resources available" to aggressively oppose the merger.
The International Association of Machinists and Aerospace Workers'
(IAM) General Vice President Robert Roach, Jr., on April 14, 2008,
issued this statement in response to the proposed merger between
Northwest Airlines and Delta Air Lines:
"Airline industry consolidation will come at tremendous public
expense. The Machinists Union's Merger Committee has examined the
Northwest-Delta merger proposal, and we firmly believe this merger
is not in the best interest of passengers, employees or the
communities these airlines currently serve.
Northwest and Delta have both lobbied Congress for pension
relief. Both have also frozen their underfunded pension plans.
If this ill-advised mega venture fails, the liability for these
plans will fall on the Pension Benefit Guaranty Corporation, and
ultimately the American taxpayer.
We will do everything legally possible to oppose any merger that
threatens our members' jobs, labor contracts, pensions, seniority,
and their right to union representation."
Northwest's IAM members are the only employees at either airline
that still have an active, secure defined benefit pension
plan, the IAM National Pension Plan. The IAM represents 12,500
Northwest Airlines Ramp Service Employees, Stores Clerks,
Customer Service Agents, Reservation Agents, Flight Simulator
Technicians and Plant Protection employees. The Machinists Union
is currently organizing Delta Air Lines' Ramp Service, Customer
Service, Reservation and Maintenance employees.
The Machinists Union is the largest Airline and Rail Union in
North America, representing more than 170,000 Flight Attendants,
Customer Service Agents, Reservation Agents, Ramp Service
Personnel, Mechanics, Railroad Machinists and related
transportation industry workers. Additional information about
the Machinists Union is available at
http://www.goiam.org/transportation/
MAC Chairman's Statement
In response to the announcement of a proposed merger
between Northwest and Delta Airlines, Metropolitan Airports
Commission Chairman Jack Lanners, said on April 15, 2008, that:
"Northwest Airlines has been a Minnesota institution for
more than 80 years, contributing greatly to the growth in air
service at Minneapolis-St. Paul International Airport and to the
region's economic vitality.
"In 1992 and again in 2007, Northwest Airlines made legally
binding commitments to the Metropolitan Airports Commission to
keep the airline's hub and headquarters, or that of its
successor, here. In the days and weeks ahead, we will work to
the best of our ability to leverage those commitments and to
protect air service and jobs in Minnesota.
"I am confident Minneapolis-St. Paul International Airport
will remain a major hub for the consolidated airline. We look
forward to working with Richard Anderson and Doug Steenland to
explore opportunities for continued growth in air service to the
Twin Cities and jobs in Minnesota."
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,
Issue No. 91; 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, Issue No. 95; 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.
ORIGEN FINANCIAL: Completes $46 Million Secured Note Financing
--------------------------------------------------------------
Origen Financial, Inc. disclosed Wednesday that it has completed a
$46 million secured financing arrangement provided by an affiliate
of one of Origen's principal stockholders.
Ron Klein, chief executive officer of Origen, stated "We are
extremely pleased with this financing. Given the pending
expiration of the extended term of our credit facilities, and amid
difficult credit markets, we are fortunate to have arranged this
financing on competitive terms. We have applied the proceeds of
this financing to pay off our remaining obligations to our primary
bank lender under our supplemental advance facility.
"Our loan portfolio continues to experience excellent credit
performance. We are gratified that by making this investment one
of our largest shareholders has confirmed his confidence in
Origen. Acknowledging that the credit markets may remain
unsettled for some time, we will continue to monitor our liquidity
and act on opportunity to ensure that we have the financial
flexibility to navigate through this difficult market environment
and continue to preserve the value of our assets for our
shareholders."
The financing consists of a secured note bearing interest at 14.5%
per year secured by all of Origen's assets. The note matures in
three years, subject to a one-year extension option by Origen. As
part of the financing, Origen issued 5-year warrants to the lender
to purchase 2,600,000 shares of Origen common stock at an exercise
price of $1.22 per share, which equals the closing price for
Origen common stock on April 7, 2008.
In connection with completing the financing, the lender agreed to
cancel outstanding warrants to acquire 500,000 shares of Origen
common stock at an exercise price of $6.16 per share and
terminated the right to convert up to $5 million of existing debt
to Origen common stock at a conversion price of $6.237 per share.
About Origen Financial
Based in Southfield, Mich., Origen Financial Inc. (Nasdaq: ORGN)
-- http://www.origenfinancial.com/-- is an internally managed and
internally advised company that has elected to be taxed as a real
estate investment trust. Origen specializes in home only retail
fiancing for the manufactured housing market with significant
operations in Ft. Worth, Tex.
At Dec. 31, 2007, the company's consolidated balance sheet showed
$1.284 billion in total assets, $1.136 billion in total
liabilities, and $148.4 million in total stockholders' equity.
* * *
Grant Thornton LLP, in Southfield, Michigan, expressed substantial
doubt about Origen Financial 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 deteriorating credit and mortgage
securitization markets and the expiration of the supplemental
advance facility on June 13, 2008.
On March 14, 2008, the company's supplemental advance credit
facility secured by a pledge of the company's residual interests
in its securitizations was extended until June 13, 2008. As of
March 14, 2008, the amount outstanding under such facility was
$46 million.
PACIFIC LUMBER: Court Extends Confirmation Hearing to April 29
--------------------------------------------------------------
Judge Richard Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas, Corpus Christi Division, extended the
dates for the Pacific Lumber Company confirmation trial to April
29, 2008, through May 2, 2008.
The Court's task is to confirm one of five rival Chapter 11 plans
proposed for the restructuring of PALCO, Scotia Pacific Company
and their debtor affiliates. The competing plans were (i) a
joint plan by the PALCO Debtors, (ii) an alternative plan by
PALCO, (iii) an alternative plan by Scopac, (iv) a plan presented
by The Bank of New York Trust Company, N.A., as Indenture Trustee
for the Timber Notes, and (v) a plan filed by Marathon Structured
Finance Fund, the Debtors' DIP Lender, and Mendocino Redwood Co.
The PALCO confirmation trial commenced on April 8. As of
April 11, the Court has not concluded the hearings; thus, the
need to set additional hearing dates.
Bloomberg News previously reported that Judge Schmidt believes
the Joint PALCO Plan and the PALCO Alternative Plan are not
confirmable.
PALCO's balloting agent, Logan & Company Inc., released the
voting and tabulation results of the rival plans in late March
2008. Not one of the plans received acceptances from all of the
classes of voting creditors. In this light, the judge overseeing
the case may have to use a "cramdown" process to confirm a plan
in PALCO. A cramdown is a feature of bankruptcy law that allows
a debtor to force confirmation of a plan over the objections of
dissenting classes if certain tests are met.
First Four Days of Trial
The PALCO confirmation trial opened on April 8, with the plan
proponents and other interested parties making their opening
statements, insisting that their own plan is best for the PALCO
creditors and the Scotia, California community.
Of all the rival plans presented, the Marathon/Mendocino Plan has
received the most support, specifically from the Official
Committee of Unsecured Creditors, several California state
agencies, California Governor Arnold Schwarzenegger, U.S.
Congressman Mike Thompson, and the Environmental Protection
Information Center.
The Marathon/Mendocino Plan contemplates integrating the
commercial timberland and sawmill operations of, and inaugurating
a new management style in, the PALCO Debtors. Marathon/Mendocino
also seek to contribute $225 million cash into the new company.
Marathon counsel David Neier, Esq., at Winston & Strawn, LLP,
told the Court on April 8 that Marathon is ready to implement its
plan, The Times-Standard noted.
According to John Driscoll of The Times-Standard, the first
hearing day revealed that differing positions held by the PALCO
parties seemed to be irreconcilable. One of the parties' main
dispute is on how much the Scopac timberlands are worth.
Mendocino Board Chairman Alexander Dean took the stand on April
9, and testified that his company "never discussed [about] buying
Scopac for $600 million to $760 million," according to the The
Times-Standard in a separate report. Mr. Dean noted that an
estimate of $600 to $760 million for the 210,000-acre Scopac
timberlands was put together by UBS in 2004.
Beal Bank Bid
Beal Bank owned by billionaire Andy Beal reportedly made known
late April 8, its interest in making a $603 million offer for the
Scopac timberlands, if ever the property will be auctioned, The
Times-Standard disclosed. Mr. Beal is said to own 38% of the
timber notes issued by Scopac, the paper added.
Beal Bank representative Jacob Churner affirmed to the Court on
April 11 that the Bank has the ability to fund the $603 million
bid.
The paper also noted that there are two other bids for the Scopac
timberlands -- one from The Nature Conservancy, and the other
from a confidential bidder. Details on the bids were not
disclosed.
BoNY Wants Dean Testimony Excluded
Separately, Bank of New York asked the Court to strike and exclude
the expert testimony of Alexander L. Dean, Jr., chairman of the
board of directors of Mendocino Redwood Company, LLC, at the
confirmation hearing of the competing Plans of Reorganization
filed in the Debtors' Chapter 11 cases.
Toby L. Gerber, Esq., at Fulbright & Jaworski LLP, in Houston,
Texas, argued that, inter alia, Mr. Dean was neither timely
designated as an expert, nor was any production made by, or on
behalf of, Mr. Dean in support of his proffered expert testimony
on valuation.
All parties, including Marathon Structured Finance Fund L.P., the
Debtors' DIP Lender and Agent under the DIP Credit Facility, and
Mendocino, expressly agreed to a March 14, 2008 deadline for the
designation of experts and the deadline for those experts to
submit expert reports for trial relating to confirmation, Mr.
Gerber reminded the Court.
Mr. Gerber argued that Mr. Dean was:
-- never designated as an expert by Mendocino on the issue of
valuation; and
-- failed to provide any expert reports or supporting material
regarding the now-proffered value of the assets of Scotia
Pacific Company LLC and The Pacific Lumber Company.
The Debtors support BoNY's request.
Judge Schmidt Comments on Rival Plans
After hearing the preliminary arguments of the PALCO parties,
Judge Schmidt believes that the best course yet to take is for
Marathon and the Timber Noteholders to engage in negotiations,
The Times-Standard stated in separate report dated April 12.
Judge Schmidt said at the court hearing that while he is having a
hard time deciding between the Marathon/Mendocino Plan and the
Indenture Trustee Plan and though he views the Marathon/Mendocino
Plan as more appealing, he'd like to see the creditor parties
work out a consensual agreement on the plans.
Judge Schmidt said he is aware of the importance of the PALCO
company as a going concern to the California community and
Humboldt economy, the paper noted. In that light, he
acknowledged that the Indenture Plan which contemplates the sale
of the Scopac timberlands is not an attractive plan for the
California community.
Judge Schmidt, however, cited that there might be legal problems
in approving the Marathon/Mendocino plan as "they may not have
put enough money on the table to make the main secured creditor
whole," Mr. Driscoll of The Times-Standard pointed out.
The Court is also concerned on the valuation of the Scopac
timberlands. Marathon values the property to be about $500
million, while the Timber Noteholders values the property to be
about $600 million. The Times Standard quotes Judge Schmidt as
relating that the property appears to be $500 to $600 million, a
value that is lower than PALCO's estimate.
About Pacific Lumber
Based in Oakland, California, The Pacific Lumber Company --
http://www.palco.com/-- and its subsidiaries operate in several
principal areas of the forest products industry, including the
growing and harvesting of redwood and Douglas-fir timber, the
milling of logs into lumber and the manufacture of lumber into a
variety of finished products.
Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber
Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned
subsidiaries of Pacific Lumber.
Scotia Pacific, Pacific Lumber's largest operating subsidiary, was
established in 1993, in conjunction with a securitization
transaction pursuant to which the vast majority of Pacific
Lumber's timberlands were transferred to Scotia Pacific, and
Scotia Pacific issued Timber Collateralized Notes secured by
substantially all of Scotia Pacific's assets, including the
timberlands.
Pacific Lumber, Scotia Pacific, and four other subsidiaries filed
for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case
Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker
Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter
Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan,
Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific
Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J.
Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia
Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond
McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter &
Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones
LLP, represents the Official Committee of Unsecured Creditors.
When Pacific Lumber filed for protection from its creditors, it
listed estimated assets and debts of more than $100 million.
Scotia Pacific listed total assets of $932,000,000 and total debts
of $765,978,335.
The Debtors filed their Joint Plan of Reorganization on Sept. 30,
2007, which was amended on Dec. 20, 2007. Four other parties-in-
interest have filed competing plans for the Debtors -- The Bank of
New York Trust Company, N.A., as Indenture Trustee for the Timber
Notes; the Official Committee of Unsecured Creditors; Marathon
Structured Finance Fund L.P, the Debtors' DIP Lender and Agent
under the DIP Credit Facility; and the Heartlands Commission,
which represents the tribal members of the Bear River Band of
Rohnerville Rancheria and PALCO employees.
The Debtors' exclusive plan filing period expired on Feb. 29,
2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 55;
http://bankrupt.com/newsstand/or 215/945-7000).
PACIFIC LUMBER: More Parties Back Marathon/Mendocino Plan
---------------------------------------------------------
As reported by the Troubled Company Reporter on April 14, the
Official Unsecured Creditors Committee, certain California State
Agencies, State of California Governor Arnold Schwarzenegger, and
United States Congressman Mike Thompson expressed their support
for the First Amended Joint Plan of Reorganization proposed by
Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and
Agent, and Mendocino Redwood Company, LLC.
In separate correspondences with the Court, Angland Engineering,
Inc.; Walsh Timber; and Barnum Timber Company also conveyed their
support for the Marathon/Mendocino Plan. Walsh Timber and Barnum
Timber represents 25 families who own and manage 400,000 acres of
timberland in Humboldt and Mendocino Counties.
Steve Hackett, president and CEO of Angland Engineering, says
that what he fears the most is "indiscriminate liquidation
precipitating a conversion of land use from commercial forestry".
Mr. Hackett tells Judge Schmidt that the Marathon/Mendocino Plan,
among other things:
-- provides the best prospect for continued economies because
the Plan Proponents' experience in the private sector and
their "inhibited stewardship";
-- gives the Humboldt community members with the best solution
on repayment of their unpaid invoices; and
-- gives the best prospect for mitigating the risk of
liquidation.
Representing Walsh Timber, Danny Walsh notes that preserving the
Pacific Lumber Company business as an integrated enterprise is
critical to the health and well-being of the local community and
economy.
"MRC's plan provides an opportunity to bring stability and long
term health to The Pacific Lumber Company and forestland owners
throughout the redwood region," Mr. Walsh states.
Mr. Walsh contends that the other proposed Plans intend to break
up the Debtors' assets for the purpose of selling them
independently, "thereby creating severe economic impacts that
will be felt by the entire North Coast of California."
About Pacific Lumber
Based in Oakland, California, The Pacific Lumber Company --
http://www.palco.com/-- and its subsidiaries operate in several
principal areas of the forest products industry, including the
growing and harvesting of redwood and Douglas-fir timber, the
milling of logs into lumber and the manufacture of lumber into a
variety of finished products.
Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber
Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned
subsidiaries of Pacific Lumber.
Scotia Pacific, Pacific Lumber's largest operating subsidiary, was
established in 1993, in conjunction with a securitization
transaction pursuant to which the vast majority of Pacific
Lumber's timberlands were transferred to Scotia Pacific, and
Scotia Pacific issued Timber Collateralized Notes secured by
substantially all of Scotia Pacific's assets, including the
timberlands.
Pacific Lumber, Scotia Pacific, and four other subsidiaries filed
for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case
Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker
Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter
Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan,
Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific
Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J.
Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia
Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond
McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter &
Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones
LLP, represents the Official Committee of Unsecured Creditors.
When Pacific Lumber filed for protection from its creditors, it
listed estimated assets and debts of more than $100 million.
Scotia Pacific listed total assets of $932,000,000 and total debts
of $765,978,335.
The Debtors filed their Joint Plan of Reorganization on Sept. 30,
2007, which was amended on Dec. 20, 2007. Four other parties-in-
interest have filed competing plans for the Debtors -- The Bank of
New York Trust Company, N.A., as Indenture Trustee for the Timber
Notes; the Official Committee of Unsecured Creditors; Marathon
Structured Finance Fund L.P, the Debtors' DIP Lender and Agent
under the DIP Credit Facility; and the Heartlands Commission,
which represents the tribal members of the Bear River Band of
Rohnerville Rancheria and PALCO employees.
The Debtors' exclusive plan filing period expired on Feb. 29,
2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 55;
http://bankrupt.com/newsstand/or 215/945-7000).
PACIFIC LUMBER: Scopac Challenges Validity of BoNY Liens
--------------------------------------------------------
Scotia Pacific Company LLC filed a complaint before the United
States Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division, against The Bank of New York Company, N.A., as
Indenture Trustee for the Timber Notes, to determine the extent
and validity of liens asserted in BoNY's Claim No. 557.
The BoNY Claim seeks $899,078,300, arising out of an indenture
dated July 20, 1998 between Scopac and State Street Bank and
Trust Company, as the predecessor indenture trustee to BONY.
Under the Indenture, Scopac issued in 1998 Timber Notes in the
aggregate principal amount of $867.2 million -- the amount is
under series of notes, for $160.7 million; $243.2 million; and
$463.3 million.
Kathryn Coleman, Esq., at Gibson, Dunn & Crutcher LLP, in New
York, relates that in a footnote to the April 4, 2008,
confirmation objection BoNY filed with the Court, it stated that
"The Debtors and MRC/Marathon assert that the amount of the
Indenture Trustee's claim is solely outstanding principal and
interest is approximately $800,000,000 [sic]. This calculation
ignores the 'make whole' and 'yield maintenance' provisions of
the Indenture to which the Indenture Trustee would be entitled
were it oversecured."
BONY, however, makes no attempt to specify the amount of any
add-on claims or to provide information about how or why they
might be triggered under specific provisions of the Indenture,
Ms. Coleman argues. BONY merely refers to the fact that Claim
No. 557 was "filed in the amount of approximately $900,000,000."
"[Moreover], BONY's claim for add-on prepayment penalties is not
supported by the terms of the Indenture and is, in any event,
time-barred," Ms. Coleman asserts.
She maintains that the difference between the amount of BONY's
allowed claim and the value of all of the collateral that secures
it is a critical issue.
Accordingly, the Debtors object to Claim No. 557 on these counts:
(1) Overstatement of Balance
(2) Claim is subject to reduction for postpetition fees paid
to BoNY.
(3) No "makewhole" or "yield maintenance" charges are payable
under the terms of the Indenture.
(4) Judicial estoppel
(5) Equitable estoppel
(6) Claim provides inadequate notice of BoNY's intent to seek
Add-on Charges
(7) Any attempted amendment of Claim No. 557 to seek Add-On
Charges would be time-barred
(8) Determination of extent of lien
Ms. Coleman asserts that BoNY has incorrectly stated the
principal amount of Timber Notes outstanding on the Petition Date
and the interest, if any, accrued to date. She adds that BoNY
has received postpetition payments from Scopac in the form of
professional fee reimbursements.
Ms. Coleman informs the Court that:
-- The correct principal balance of the BoNY claim is $711.1
million. BONY has acknowledged that the unpaid principal
amounts under the Timber Notes are subject to amendment to
reflect reduction for application of payments since the
Timber Notes were issued in 1998, but it has never
undertaken that required amendment.
-- The correct figure of unpaid professional fees is
$26,600,000, which was accrued but not payable as of the
Petition Date. Claim No. 557 asserts that $31.83 million
is owing in unpaid professionals fees, plus interest.
-- Assuming that Scopac's estate is solvent and postpetition
interest has been accruing, an additional $64,997,360 in
interest has accrued postpetition through April 7, 2008.
Taking into consideration these amounts, the correct maximum
amount of the BoNY Claim is approximately $802.7 million, Ms.
Coleman emphasizes.
Item Amount
---- ------------
Principal balance $711,100,000
Unpaid professional fees 26,600,000
Postpetition interest 65,000,000
------------
$802,700,000
Moreover, Ms. Coleman argues that the maximum amount of the BoNy
Claim is subject to downward revision if Scopac is determined to
be insolvent. In that scenario, BONY will not be entitled to
postpetition interest, and BONY will be obligated to disgorge the
professional fees for which it has been reimbursed.
No "make whole" or "yield maintenance" charges are payable under
the terms of the Indenture, Ms. Coleman adds.
She also points out that because the Timber Notes were deemed
under the terms of the Indenture and bankruptcy law to have been
accelerated as of the Petition Date, and the prepayment premium
and excess amortization premium provisions of the Indenture are
not applicable in the case of an acceleration, no prepayment
penalty is due under the terms of the Indenture.
Moreover, BoNY recently has begun to assert that the lien
securing the Timber Notes extends to Scopac's interest in certain
litigation, including a Headwaters litigation. The lien,
however, does not extend to the Litigation Claims, Ms. Coleman
contends. While BONY asserts that the value of the Litigation
Claims is too speculative to be given serious consideration in
the confirmation process, Scopac believes that the Litigation
Claims have significant value that is available for Scopac's
other debt and equity constituencies.
Against this backdrop, the Debtors ask the Court to:
(a) hold that the liens of BoNY do not attach to, and are not
valid as to, any and all rights that Scopac may have in
any claims or choses in action; and
(b) allow Claim No. 557 as a secured claim for a maximum
amount of $802.7 million, subject to potential reduction
upon further consideration of Scopac's solvency.
Claim Estimation
In the event the Court does not sustain the claim objection in
whole or in part, Scopac asks Judge Schmidt to estimate Claim No.
557 for:
(i) $713.8 million in principal amount;
(ii) plus any postpetition interest that may be found to be
payable if the Court finds that Scopac is solvent and
that BoNy is not estopped to assert a claim for
postpetition interest;
(iii) less any professional fees BoNY might be required to
disgorge.
Ms. Coleman asserts that estimation is required because BoNY
recently has asserted that Claim No. 557 greatly exceeds the
amount set forth in the Disclosure Statement. BONY also has
asserted that the larger claim amount should be considered in the
context of its objections to confirmation of Chapter 11 plan
proposed both by Marathon Structured Finance Fund and Mendocino
Redwood Co., by the Debtors and their affiliates. In the case of
the Marathon/MRC plan, BONY objects to receiving a package of
payments and new securities worth less than the value of its
collateral, and objects to the treatment of its resulting
deficiency claim. In the case of Scopac's plan, BONY objects to
receiving a return of a portion of its collateral that BONY
asserts is worth less than the full amount of its claim.
"If BONY is permitted to inflate its claim on the eve of
confirmation, it will succeed in disrupting the confirmation
process at the last possible moment," Ms. Coleman maintains.
About Pacific Lumber
Based in Oakland, California, The Pacific Lumber Company --
http://www.palco.com/-- and its subsidiaries operate in several
principal areas of the forest products industry, including the
growing and harvesting of redwood and Douglas-fir timber, the
milling of logs into lumber and the manufacture of lumber into a
variety of finished products.
Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber
Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned
subsidiaries of Pacific Lumber.
Scotia Pacific, Pacific Lumber's largest operating subsidiary, was
established in 1993, in conjunction with a securitization
transaction pursuant to which the vast majority of Pacific
Lumber's timberlands were transferred to Scotia Pacific, and
Scotia Pacific issued Timber Collateralized Notes secured by
substantially all of Scotia Pacific's assets, including the
timberlands.
Pacific Lumber, Scotia Pacific, and four other subsidiaries filed
for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case
Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker
Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter
Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan,
Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific
Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J.
Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia
Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond
McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter &
Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones
LLP, represents the Official Committee of Unsecured Creditors.
When Pacific Lumber filed for protection from its creditors, it
listed estimated assets and debts of more than $100 million.
Scotia Pacific listed total assets of $932,000,000 and total debts
of $765,978,335.
The Debtors filed their Joint Plan of Reorganization on Sept. 30,
2007, which was amended on Dec. 20, 2007. Four other parties-in-
interest have filed competing plans for the Debtors -- The Bank of
New York Trust Company, N.A., as Indenture Trustee for the Timber
Notes; the Official Committee of Unsecured Creditors; Marathon
Structured Finance Fund L.P, the Debtors' DIP Lender and Agent
under the DIP Credit Facility; and the Heartlands Commission,
which represents the tribal members of the Bear River Band of
Rohnerville Rancheria and PALCO employees.
The Debtors' exclusive plan filing period expired on Feb. 29,
2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 55;
http://bankrupt.com/newsstand/or 215/945-7000).
PARADISE MUSIC: Employs Carlton Capital as Financial Advisor
------------------------------------------------------------
Paradise Music & Entertainment Inc. entered into a financial
advisory agreement with Carlton Capital Inc., a subsidiary of
Clayton Dunning Group Inc., wherein CCI agreed to provide
consulting and advisor services to Paradise.
The financial advisory agreement provides that the company may
request CCI to provide recommendations concerning corporate
finance matters including matters as:
(i) changes in the capitalization of the company;
(ii) changes in the company's corporate structure;
(iii) redistribution of shareholdings of the company's stock;
(iv) offerings of securities in public and private transactions;
(v) alternative uses of corporate assets;
(vi) structure and use of debt;
(vii) sales of stock by insiders pursuant to Rule 144 or
otherwise;
(viii) counsel management with respect to listing on a National
Exchange;
(ix) strategic planning for the company;
(x) the acquisition of and/or merger with other companies, the
sale of the company itself, or any of its assets,
subsidiaries or affiliates, or similar type of transaction;
and
(xi) financings from financial institutions, including but not
limited to lines of credit, performance bonds, letters of
credit, loans or other financings.
In consideration for the consulting services rendered by CCI to
the company pursuant to this agreement the company agreed to pay
to CCI compensation of ten thousand shares of the company's Series
C Preferred Stock. Other fees and expenses may be incurred by the
company in the event that CCI provides such services.
"We are very pleased to have the services of Carlton Capital
available to the company's next phase of our growth plan," stated
Dick Rifenburgh, CEO of Paradise.
"Carlton is excited about working with Paradise and its
environmental business," Chris Messalas, managing partner of
Carlton Capital Inc. and CEO of Clayton Dunning Group Inc. said.
"We look forward to a long and exciting relationship as we deploy
the resources of Carlton Capital and its affiliated organizations
to help Paradise grow."
About Paradise Music & Entertainment Inc.
Paradise Music & Entertainment Inc. (Other OTC: PDSE.PK) is a
diversified holding company which, through its wholly owned
subsidiary, Environmental Testing Laboratories Inc., operates in
the environmental testing industry. The company is seeking to
attract and subsequently acquire additional companies operating in
the environmental testing industry and manufacturing industries.
The company operates offices in New York and Colorado.
* * *
On Feb. 29, 2008, Tinter Scheifley Tang LLP in Denver, Colorado,
expressed substantial doubt about Paradise Music & Entertainment
Inc.'s ability to continue as a going concern after auditing the
company's financial statements for the years ended Dec. 31, 2006
and 2005. The auditor related that the company has suffered a
loss from operations and has working capital and stockholders'
deficits.
PARKER HUGHES: Seeks Liquidation of Assets Under Chapter 7
----------------------------------------------------------
Parker Hughes Institute, dba Parker Hughes Cancer Center, is
bankrupt again but this time it's a chapter 7 liquidation,
according to Pioneer Press and Minneapolis/St. Paul Business
Journal.
The clinic filed chapter 7 petition on April 7, 2008, declaring
assets of $206,748 and debts of $467,085, mostly owed to its
utilities and lease providers reports say.
Kenneth Corey-Edstrom, Esq., of Larkin Hoffman Daly & Lidgreen of
Minneapolis, represents the Debtor in the case, based on the
reports.
Parker Hughes Institute, dba Parker Hughes Cancer Center --
http://www.ih.org/-- and Parker Hughes Clinics --
http://www.parkerhughes.org/-- are non-profit research
organizations in the United States devoted to the development of
new drugs for the treatment of chronic and life-threatening
illnesses. The drug discovery program at Parker Hughes
Institute has been awarded numerous patents for multiple
anti-cancer and anti-HIV drugs that are at various stages of
development.
The company and its affiliate filed for chapter 11 protection on
Jan. 23, 2007 (Bankr. D. Minn. Case Nos. 07-30237 & 07-30238).
Kenneth Corey-Edstrom, Esq., at Larkin Hoffman Daly and Lingren
Ltd., represented the Debtors. When the Debtors filed for
protection from their creditors, they listed estimated assets of
less than $10,000 and debts between $100,000 to $100 million.
The Debtor emerged from Chapter 11 bankruptcy on July 25, 2007,
after the Court approved its plan ending several leases and
repaying debts.
PINE TREE: Moody's Cuts Rating on $4 Mil. Notes to 'B1' From 'A3'
-----------------------------------------------------------------
Moody's Investors Service downgraded these notes issued by Pine
Tree I:
Class Description: $4,000,000 Secured Floating Rate Credit Linked
Notes due 2012
-- Prior Rating: A3, on review for possible downgrade
-- Current Rating: B1
Moody's explained that this rating action reflects deterioration
in the credit quality of the transaction's underlying collateral
pool, which consists primarily of corporate securities.
PLACER VINEYARDS: Case Summary & Three Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Placer Vineyards 2nd Lenders, LLC
18124 Wedge Parkway, Box 1012
Reno, NV 89511
Bankruptcy Case No.: 08-50546
Chapter 11 Petition Date: April 8, 2008
Court: District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Bonnie Jean Boyce, esq.
(boycelaw@xmission.com)
Albright, Stoddard, Warnick & Albright
801 S. Rancho Dr., Ste. D-4
Las Vegas, NV 89106
Tel: (702) 384-7111
Total Assets: $7,000,000
Total Debts: $65,000
Debtor's Three Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
FDH Management, LLC Business debt $65,000
18124 Wedgewood
Reno, NV 89511
USA Capital Liquidating Trust $0
Attn: Rob Charles, Jr.
Lewis & Roca
3993 Howard Hughew Pkwy.,
Ste. 600
Las Vegas, NV 89169
USACM Liquidating Trust $0
Development Specialists, Inc.
333 S. Grand Ave., Ste. 4070
Los Angeles, CA 90071-1544
PLASTECH ENGINEERED: Panel Opposes Payment to Repudiating Vendors
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Plastech
Engineered Products Inc. and its debtor-affiliates' Chapter 11
cases objects to the Debtors' payment of prepetition claims to
repudiating vendors prior to the confirmation of a reorganization
plan, pursuant to Section 362(a)(6) of the U.S. Bankruptcy Code.
Section 362(a)(6) provides that any act to collect, assess,
or recover a claim against the debtor that arose before the
commencement of the Debtor's Chapter 11 cases.
Joel D. Applebaum, Esq., at Clark Hill PLC, in Detroit, Michigan,
states that the demands by the repudiating vendors for payment of
their prepetition claims constituted acts to recover a claim
against the Debtors that arose prepetition and, therefore,
constitute violations of the automatic stay. They should not be
rewarded for their transgressions with satisfaction of their
alleged prepetition claims, Mr. Applebaum asserts.
Moreover, he says the refusal to perform under an executory
contract also constitutes a violation of the automatic stay
where, as the Debtors have offered to pay for new deliveries.
Mr. Applebaum also asserts the Debtors should not be forced to
pay their prepetition claims as hostage payments to secure
continued supply of essential goods and services.
So long as the repudiating vendors are assured of the Debtors'
continued performance, the Repudiating Vendors must perform
postpetition to the extent required under contract, he says.
Mr. Applebaum states that to the extent that the Repudiating
Vendors are not bound by executory contracts, the payments should
only be permitted to stand if the Repudiating Vendor can satisfy
these criteria for treatment as a "Critical Vendor":
(a) it must be critical that the debtor deal with the
claimant;
(b) unless it deals with the claimant, the debtor risks the
probability of harm, or, alternatively, loss of economic
advantage to the estate or the debtor's going concern
value, which is disproportionate to the amount of the
claimant's prepetition claim.
(c) there is no practical or legal alternative by which the
debtor can deal with the claimant other than by payment of
the claim.
Absent these showings, the Vendor payments should not be applied
to reduce prepetition claims, Mr. Applebaum avers.
Mr. Applebaum says payment of the Repudiating Vendors'
prepetition claims prior to a Chapter 11 plan is prejudicial to
unsecured creditors because (i) it diminishes the cash that may
be available to pay general unsecured creditors, and (ii) if the
payment involves postpetition borrowings, payment of the
Repudiating vendors' prepetition claims increases the claims of
creditors with higher rights of payment. This will further
diminish the pool of assets available for distribution to general
unsecured creditors. Accordingly, payment should be permitted
only under limited circumstance, Mr. Applebaum says.
Tool-Plas Added
The Debtors informed Tool-Plas Systems, Inc., and SL Sungsan to
appear before the Court for a repudiating vendors hearing on
April 30, 2008 at 9:30 a.m.
The Debtors have paid Tool-Plas Systems, Inc., $285,000, and SL
Sungsan $206,841 for the Vendors' alleged prepetition claims
against the Debtors. The Vendors have ceased to provide services
to the Debtors postpetition.
In the event an agreement cannot be reached before the hearing,
the Debtors will have the burden to demonstrate that the Vendors
have committed a violation to their contracts.
The Court will then determine if (i) there have been valid and
enforceable contracts between the Debtors and the Vendors, and
(ii) if the Vendors have refused to ship in violation of the
contracts.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Rejects 70 Reclamation Demands on Claims
-------------------------------------------------------------
Plastech Engineered Products Inc. and its debtor-affiliates have
rejected more than 70 separate reclamation demands of various
claimants.
According to Deborah L. Fish, Esq., at Allard & Fish, P.C., in
Detroit, Michigan, the claims were rejected in their entirety
because goods that the claimants sought to reclaim were subject
to the prior rights of the holders of a security interest in the
goods or proceeds from the eventual sale of the goods.
A complete list of the names of the parties whose reclamation
claims have been rejected is available for free at:
http://researcharchives.com/t/s?2a9f
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PORTOLA PACKAGING: Feb. 29 Balance Sheet Upside Down by $103.3MM
----------------------------------------------------------------
Portola Packaging Inc., as of Feb. 29, 2008, reported total assets
of $164.3 million, total liabilities of $267.6 resulting to a
total shreholders' deficiency of $103.3 million.
Portola reported a net loss of $5.1 million for the second quarter
of fiscal year 2008 compared to a net loss of $3.3 million for the
second quarter of fiscal year 2007. For the first six months of
fiscal year 2008, the company had a net loss of $7.6 million
compared to a net loss of $5.4 million for the same period in
fiscal year 2007.
The company reported sales of $66.6 million for the second quarter
of fiscal year 2008 compared to $63.7 million for the second
quarter of fiscal year 2007, an increase of 4.6%. For the first
six months of fiscal 2008, sales were $139.2 million compared to
$131.1 million for the first six months of fiscal 2007, an
increase of 6.2%.
Portola reported an operating loss of $0.4 million for the second
quarter of fiscal year 2008, compared to operating income of
$2.4 million reported in the second quarter of fiscal year 2007, a
decrease of $2.8 million.
The decrease quarter over quarter was primarily due to lower gross
margins of $2.4 million and higher product development and selling
expenses. Gross margins were substantially impacted by a lag in
passing higher resin costs to customers as well as higher utility,
freight and labor costs. The increase in product development
costs and selling expense relates to new product introductions
that are being made over the next two quarters. For the first six
months of fiscal 2008, the company had operating income of
$1.6 million compared to operating income of $5.7 million for
fiscal year 2007.
Although the second quarter was extremely challenging principally
due to resin and other energy related cost increases, there were
some positives. The company has continued to make gains in
growing sales as unit volume has increased 5.6% for the first six
months of fiscal 2008 compared to the first six months of fiscal
2007. This growth has been assisted by various new product
introductions in both existing markets as well as new markets.
Throughout the second quarter, the company continued to implement
several improvement initiatives aimed at reducing cost and
enhancing margins in the coming quarters.
Several cost reduction actions, including a re-structuring effort,
were recently completed with more planned in the third quarter.
These re-structuring efforts are expected to result in an
annualized reduction in compensation expense of approximately
$2.7 million. In response to rising energy and non-resin related
cost increases that have been encountered in recent months, the
company has begun implementing price increases. These price
increases and cost reduction efforts should assist in providing a
recovery in earnings later this fiscal year.
Furthermore, in April the company secured an extension to the
$60.0 million senior secured revolving credit facility through
April, 2011. In addition, the company secured a $15.0 million
second lien term loan from Wayzata Investment Partners LLC that
matures in July, 2011, which together with the amendments to the
senior secured revolving credit facility, has increased credit
availability to approximately $19 million. With these facilities
the company has adequate liquidity to support needs.
About Portola Packaging
Headquartered in Batavia, Illinois, Portola Packaging Inc. --
http://www.portpack.com/-- designs, manufactures and markets
tamper-evident plastic closures used in dairy, fruit juice,
bottled water, sports drinks, institutional food and other non-
carbonated beverage markets. The company also produces a wide
variety of plastic bottles for use in dairy, water and juice
markets, including various high density bottles, as well as five-
gallon polycarbonate water bottles. In addition, the company
designs, manufactures and markets capping equipment for use in
high speed bottling, filling and packaging production lines.
Portola is also engaged in the manufacture and sale of tooling and
molds used for blow molding.
* * *
As reported by the Troubled company Reporter on Mar. 19, 2008,
Standard & Poor's Ratings Services affirmed its 'B-' issue-level
rating on Portola Packaging Inc.'s $60 million revolving credit
facility. The issue rating is two notches higher than the
corporate credit rating on Portola, and the recovery rating on
this debt remains unchanged at '1', indicating the expectation for
very high (90% to 100%) recovery in the event of a payment
default.
PRICELINE.COM INC: Good Performance Prompts S&P to Lift Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Norwalk,
Connecticut-based Priceline.com Inc., including the corporate
credit rating to 'BB-' from 'B+'. At the same time, S&P removed
the ratings from CreditWatch with positive implications, where
they were placed on Dec. 17, 2007. The outlook is stable.
"The upgrade is based on continuing good operating performance
from a strong competitive position in Europe," said Standard &
Poor's credit analyst Andy Liu, "coupled with significant
improvement in the credit metrics." While economic uncertainty in
the U.S. and Europe could dampen overall industry growth somewhat,
Standard & Poor's expects Priceline.com will continue to gain
market share and post good operating results.
QUALITY DISTRIBUTION: Weak Performance Cues S&P to Revise Outlook
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Quality
Distribution Inc. to stable from positive. At the same time, S&P
affirmed its ratings on the company, including the 'B-' long-term
corporate credit rating.
"The outlook revision reflects the company's weaker-than-expected
earnings performance and the slowing U.S. economy, both of which
limit the likelihood of a rating upgrade over the near term," said
Standard & Poor's credit analyst Anita Ogbara.
The ratings on Quality Distribution Inc. reflect its participation
in a low-margin, fragmented industry, combined with a weak, albeit
improving, financial profile. Quality Distribution is the largest
bulk tank truck carrier in North America. Through a network of
more than 160 terminals, Quality Distribution LLC, a wholly owned
subsidiary, transports a broad range of chemical products. The
company also provides customers and affiliates with supplemental
services such as tank washing. Although the company benefits from
a strong market share in an industry with high barriers to entry,
its customers often have transportation alternatives, depending on
the nature of the shipment.
The company complements its own fleet operations through the use
of affiliates, independent firms contracted by Quality
Distribution to operate their terminals exclusively for Quality
Distribution; and owner operators, independent contractors who
supply one or more drivers, tractors, and tanks for Quality
Distribution and affiliate use. This business model shifts fixed
costs to variable costs for Quality Distribution, compared with a
network that is wholly owned and uses company drivers. This model
also allows the company to expand with minimal capital investment
for fixed assets.
Despite overall weakness in domestic freight volumes, demand for
the company's chemical transportation services remains fairly
stable because of favorable industry trends and Quality
Distribution's strong market position. Although increased
insurance costs and rising wages over the past year have had a
meaningful impact on the company's profitability, operating
margins have been relatively steady at about 10%.
As of fiscal year end 2007, key credit measures are somewhat
stretched, with total debt to EBITDA of about 7.0x. EBITDA to
interest coverage is acceptable for the rating at about 1.5x. Key
credit measures should continue to show modest improvement over
the near term, with total debt to EBITDA trending toward 6x and
EBITDA interest coverage of about 2x. S&P expect freight rates
and volumes in chemical transportation to remain steady over the
near term, which should help financial performance.
Quality Distribution should benefit from steady long-term industry
trends and a strong market position in chemical transportation
services, which is less cyclical than overall domestic freight
transportation. S&P could revise the outlook to negative if
improvements to the company's financial profile fail to
materialize or if the company's operating performance deteriorates
further.
RECKSON OPERATING: Fitch Holds 'BB+' Rating; Removes Neg. Watch
---------------------------------------------------------------
Fitch Ratings has removed from Rating Watch Negative Reckson
Operating Partnership's Issuer Default Rating, senior unsecured
notes, and senior unsecured convertible notes ratings, and has
affirmed all of these ratings at 'BB+'. Approximately
$1.06 billion of securities are affected. The Rating Outlook is
Stable.
Ratings strength is noted in Fitch's assessment of SL Green on a
consolidated basis. Based on the strong legal and operational
ties between SL Green and ROP, Fitch viewed SL Green's credit
statistics on a consolidated basis as an important determinant in
its rating of ROP. SL Green as the guarantor of ROP's unsecured
notes, has exhibited performance metrics and an operating history
that demonstrates its ability to continue to pay debt service
requirements, and subsequently provide full payment of ROP's notes
when due.
Fitch calculated SL Green's total debt-to-EBITDA coverage to be
9.2 times at Dec. 31, 2007 compared to 6.0x at Dec. 31, 2006. At
Dec. 31, 2007, SL Green's total debt-to-undepreciated book capital
was 53.8%, and total debt plus preferred stock to undepreciated
book capital was 56.2%. These levels are consistent with 'BB+'
ratings.
Fitch calculated SL Green's unencumbered real estate asset
coverage to be 1.6x at Dec. 31, 2007, which is adequate for the
rating category, while SL Green's total interest coverage was 2.3x
in 2007, compared to 3.1x in 2006 and 3.3x in 2005, and fixed-
charge coverage was 1.8x in 2007, 1.8x in 2006, and 2.0x in 2005.
The ratings affirmation also acknowledges certain credit concerns,
including the geographic concentration of SL Green's and ROP's
portfolio, the absence of structural firewalls surrounding ROP,
and ROP's weakened liquidity and financial flexibility position
due to the lack of any revolving line of credit or other bank
facility that could source immediate cash needs. The lack of a
revolving credit facility increases its reliance on operating cash
flow and places further reliance on SL Green to fund any
additional capital requirements. However, Fitch does acknowledge
that SL Green has the ability to utilize its access to unsecured
borrowings via its revolving credit facility and term loan
facilities to service ROP's debt.
Further, despite the fact that management has not increased ROP's
leverage since its merger with SL Green in January 2007, ROP is
not a ring-fenced subsidiary of SL Green, thus, SL Green has the
ability to lever ROP up to the thresholds of its unsecured bond
covenants. This absence of structural firewalls to support ROP's
unsecured bondholders, should parent SL Green face a severe
deterioration in liquidity and transfer assets from ROP to SL
Green, was also incorporated into the bond ratings.
An additional credit concern is the geographic concentration of
ROP's portfolio of office properties in only New York City,
Connecticut and Westchester, New York.
Fitch's Stable Outlook acknowledges the fact that since its
acquisition by SL Green, the assets in the ROP portfolio have
remained relatively unchanged, and it is Fitch's belief that SL
Green does not intend to move any assets out of ROP or change the
operation of the properties within ROP to differentiate them from
the rest of the SL Green portfolio. The Stable Outlook also
reflects Fitch's view that, despite the current uncertainty
surrounding the commercial real estate market, the New York City
office market will continue to be one of the better office markets
in the country.
SL Green is a self-administered and self-managed real estate
investment trust that predominantly acquires, owns, repositions
and manages a portfolio of office properties mostly in New York
City.
REMY WORLDWIDE: Court Sets Hearing to Close Case on April 23
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will
convene a hearing, on April 23, 2008, to consider the request of
Remy Worldwide Holdings Inc. for a final decree closing its
Chapter 11 case.
Douglas P. Bartner, Esq., at Shearman & Sterling LLP, in New
York, relates that as contemplated and required by the Plan and
the Confirmation Order, all documents and agreements necessary to
implement and complete the Plan have been executed. "After the
Effective Date, the Reorganized Debtors substantially consummated
the Plan, and substantial distributions thereunder have been
made," he says.
On Dec. 20, 2007, all of the Chapter 11 case of each Debtor other
than Remy Worldwide Holdings Inc. were closed. Mr. Bartner
relates that Remy International's estate has been "fully
administered" and the Plan has been substantially consummated.
He notes:
-- the Confirmation Order has become final and the Effective
Date of the Plan has occurred;
-- there are no deposit requirements in the Plan;
-- the property required to be transferred under the Plan has
been substantially transferred in that all anticipated
distributions have been made;
-- to the extent required, Remy International has assumed the
management of the property dealt with by the Plan; and
-- Remy International has no remaining motions, contested
matters, or pending adversary proceedings by or against
them before the Court.
Remy Worldwide filed a final report for its case pursuant to Local
Rule 5009-1(c). On or before April 30, Remy Worldwide will: (i)
complete all remaining quarterly reports, and (ii) pay all
quarterly fees due and owing to the U.S. Trustee.
Based in Anderson, Indiana, Remy Worldwide Holdings Inc. acts as
a holding company of all the outstanding capital stock of Remy
International Inc. Remy International -- http://www.remyinc.com/
-- manufactures, remanufactures and distributes Delco Remy brand
heavy-duty systems and Remy brand starters and alternators,
locomotive products and hybrid power technology. The company
also provides a worldwide component core-exchange service for
automobiles, light trucks, medium and heavy-duty trucks and
other heavy-duty, off-road and industrial applications. Remy
has operations in the United Kingdom, Mexico and Korea, among
others.
The company and its debtor-affiliates filed for Chapter 11
protection on Oct. 8, 2007 (Bankr. D. Del. Cases No. 07-11481 to
07-11509). Douglas P. Bartner, Esq., Fredric Sosnick, Esq., and
Michael H. Torkin, Esq., at Shearman & Sterling LLP, represent
the Debtors' in their restructuring efforts. Pauline K. Morgan,
Esq., Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., at Young
Conaway Stargatt & Taylor, LLP, serve as co-counsels to the
Debtors. The Debtors' claims agent is Kurtzman Carson
Consultants LLC and their restructuring advisor is AlixPartners,
LLC. Greenbert Traurig, LLP is the Debtors' special corporate
advisory and litigation counsel, and Ernst & Young LLP their
accountant, auditor and tax services provider.
The Debtors obtained confirmation from the Court of a Joint
Prepackaged Plan of Reorganization on Nov. 20, and the Plan became
effective December 5, 2007.
(Remy Bankruptcy News, Issue No. 11; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
REVLON INC: Posts Preliminary Results For the 2008 First Quarter
----------------------------------------------------------------
Revlon Inc. reported preliminary results for the first quarter of
ended March 2008.
For the three months ended March 31, 2008 the preliminary results
reflected a net loss of $5 million compared to the final results
for the three months ended March 31, 2007.
Net sales in the first quarter of 2007 benefited from the initial
shipments related to the launch of Revlon Colorist haircolor,
which was the primary driver of the change in net sales year-over-
year.
The significant improvement in preliminary operating income, net
loss and adjusted EBITDA in the first quarter of 2008 compared to
the same period last year was primarily driven by continuing cost
improvements, and the non-recurrence of brand support related to
the launch of Revlon Colorist haircolor in the first quarter of
last year. The company continued to support brands worldwide with
comparable levels of dollar spending compared to the first quarter
of last year, excluding the brand support on Revlon Colorist.
Operating income, net loss and Adjusted EBITDA in the first
quarter of 2008 include approximately $6 million of proceeds
related to the sale of a non-core trademark. Operating income,
net loss and Adjusted EBITDA in the first quarter of 2007 include
$4.3 million of restructuring charges and a $4.4 million benefit
from the reduction of lease liability related to the consolidation
of office space in New York.
"We believe that a reverse stock split is in the best interest of
our stockholders because we expect it will allow our stock to be
more attractive to a broader range of institutional and other
investors, would reduce certain of our costs, such as listing
fees, and would be intended to satisfy our compliance with the
NYSE's price criteria for continued listing," David Kennedy,
Revlon president and chief executive officer said. "Our strong
preliminary financial results for the first quarter of 2008
continue to build upon our performance in 2007, which was our best
year in many years."
"These results continue to validate our strategy, and we remain
committed to our focus on increasing the value of our Company by
building the Revlon brand and generating profitable sales growth
and positive free cash flow," Mr. Kennedy said.
The Troubled Company Reporter reported on April 8, 2008 that
Revlon Inc.'s Dec. 31, 2007 balance sheet showed total assets of
$889.3 million, total liabilities of $1,971.3 million and total
stockholders' deficiency of $1,082 million.
The report also cited a net loss in the full year 2007 was
$16.1 million compared to a net loss of $251.3 million in the full
year 2006. Adjusted EBITDA in the full year 2007 was $224.5
million, compared to an Adjusted EBITDA of $78.2 million last
year.
About Revlon Inc.
Headquartered in New York City, Revlon Inc. (NYSE:REV) --
http://www.revlon.com/-- conducts its business through its direct
wholly owned operating subsidiary, Revlon Consumer Products
Corporation and its subsidiaries, which manufactures, markets and
sells an array of cosmetics, skincare, fragrances, beauty tools,
hair color and personal care products. The company is a mass-
market cosmetics brand.
REVLON INC: Receives Requisite Approvals For Reverse Stock Split
----------------------------------------------------------------
Revlon Inc.'s board of directors approved the reverse stock split.
MacAndrews & Forbes Holdings Inc. and certain of such entity's
affiliates and related parties also delivered to the company an
executed written consent of stockholders approving the reverse
stock split.
MacAndrews & Forbes, which is wholly owned by Ronald O. Perelman,
chairman of Revlon's board of directors, beneficially owns
approximately 58% of Revlon's class A common stock and
approximately 60% of Revlon's combined shares of class A and class
B common stock, which together represent approximately 74% of the
combined voting power of Revlon's class A and class B common
stock. As a result of MacAndrews & Forbes' approval, no further
stockholder approval or action is necessary.
The same 1-for-10 reverse stock split ratio will be used to effect
the reverse stock split of both Revlon class A and class B common
stock; accordingly all stockholders will be affected
proportionately. No fractional shares will be issued in
connection with the reverse stock split. Shares that would
otherwise have resulted in fractional shares from the reverse
stock split will be collected and pooled by Revlon's transfer
agent and sold in the open market. The proceeds will be allocated
to the stockholders' respective accounts who are entitled to
receive cash in lieu of fractional shares.
The number of common shares subject to Revlon's outstanding
employee and director stock options and unvested employee and
director restricted stock, as well as the relevant exercise price
per share, will be proportionately adjusted to reflect the reverse
split. The number of shares authorized for issuance under
Revlon's stock plan will also be reduced by the same 1-for-10
split ratio.
Revlon Inc. plans to file shortly with the SEC an information
statement on schedule 14C which will include additional
information about the reverse stock split. The company's board of
directors set April 21, 2008 as the record date for stockholders
of record entitled to receive the information statement on
Schedule 14C. It is expected that the reverse stock split will be
consummated in May or June of 2008.
While the company intends to effect the reverse stock split as
soon as practicable, subject to market and other customary
conditions, there can be no assurances that the reverse stock
split will be consummated or that it will achieve its intended
effect of resulting in an increased per share price of Revlon
class A common stock or its other intended effects. The company
reserves the right, in its discretion, to abandon the reverse
stock split at any time prior to filing the applicable charter
amendment with the Delaware Secretary of State.
Investors may obtain a copy of the information statement on
Schedule 14C when and if it is made available, at the SEC's Web
site at http://www.sec.govor by contacting: Abbe F. Goldstein,
senior vice president, investor relations and corporate
communications, at (212) 527-4000.
About Revlon Inc.
Headquartered in New York City, Revlon Inc. (NYSE:REV) --
http://www.revlon.com/-- conducts its business through its direct
wholly owned operating subsidiary, Revlon Consumer Products
Corporation and its subsidiaries, which manufactures, markets and
sells an array of cosmetics, skincare, fragrances, beauty tools,
hair color and personal care products. The company is a mass-
market cosmetics brand.
* * *
As reported by the Troubled company Reporter on Apr. 8, 2008,
Revlon Inc. released financial results for the full year and
fourth quarter ended Dec. 31, 2007.
At Dec. 31, 2007, the company's balance sheet showed total assets
of $889.3 million, total liabilities of $1,971.3 million and total
stockholders' deficiency of $1,082 million.
RIVER ROCK: Dec. 31, 2007 Balance Sheet Upside Down by $26.0 Mil.
-----------------------------------------------------------------
The River Rock Entertainment Authority reported a balance sheet
data reflecting total assets of $184.5 million, total liabilities
of $210.5 million resulting to a total fund deficit of
$26.0 million, as of Dec. 31, 2007.
Net revenues for the fourth quarter ended Dec. 31, 2007 were
$35.5 million. Casino revenues totaled $37.5 million and included
slot revenue of $35.2 million and table game and poker revenue of
$2.3 million. Food, beverage and retail revenues were
$2.0 million. The retail value of food and beverage provided to
customers without charge is included in gross revenues and then
deducted as promotional allowances. The redemption of cash
incentives earned by the Player's Club members is also recorded as
promotional allowances. Promotional allowances for the fourth
quarter of fiscal 2007 were $4.2 million.
Operating expenses for the fourth quarter ended Dec. 31, 2007 were
$24.5 million. Operating expenses consisted of casino expense of
$7.9 million, food, beverage and retail expense of $0.5 million,
selling, general and administrative expense of $12.1 million,
depreciation expense of $2.9 million, gaming commission and
surveillance expense of $0.8 million and compact revenue sharing
trust fund expense of $0.3 million.
Net revenues for the full year ended Dec. 31, 2007 were
$139.4 million. Casino revenues totaled $145.7 million and
included slot revenue of $118.9 million and table games revenue of
$15.2 million. Food, beverage and retail revenues were
$7.5 million. The retail value of food and beverage provided to
customers without charge is included in gross revenues and then
deducted as promotional allowances. The redemption of cash
incentives earned by the Player's Club members is also recorded as
promotional allowances. For the full year ended Dec. 31, 2007,
the promotional allowance was $14.5 million.
Operating expenses for the full year ended Dec. 31, 2007 were
$99.5 million. Operating expenses consisted of casino expense of
$23.4 million, food beverage and retail expense of $4.6 million,
selling, general and administrative expense of $44.0 million,
depreciation of $11.8 million, credit enhancement fees of
$11.3 million, gaming commission and surveillance expense of
$3.0 million and compact revenue sharing trust fund expense of
$1.3 million.
Net cash provided by operating activities for the fourth quarter
totaled $16.4 million. Net cash used in capital and related
financing activities for the fourth quarter totaled $15.1 million.
Cash provided by investing activities totaled $0.5 million for the
fourth quarter. Cash used in non-capital financing activities for
the fourth quarter totaled $3.1 million, which represented net
distributions to the Tribe. Cash and cash equivalents net of
restricted cash at Dec. 31, 2007 totaled $46.5 million.
Current cash balances and operating cash flow are expected to
provide the Authority with sufficient resources to meet its
existing debt obligations, current budgeted capital expenditure
requirements and distributions to the Tribe.
About River Rock
Headquartered in Geyserville, California, River Rock Entertainment
Authority is a governmental instrumentality of the Dry Creek
Rancheria Band of Pomo Indians, a federally recognized Indian
tribe. River Rock Casino is a governmental development project of
the Authority. The Casino offers Class III slot and video poker
gaming machines, house banked table games, including Blackjack,
Three card poker, Mini-baccarat and Pai Gow poker, Poker,
featuring Texas Hold' em, comprehensive food and non-alcoholic
beverage offerings, and goods for sale on tribal land located in
Geyserville, California.
* * *
On October, 2003, Moody's Investor's Service assigned a 'B2'
rating on River Rock Entertainment Authority's long term corporate
family and senior unsecured debt. This rating action stil holds
to date.
SEA CONTAINERS: Court OKs Navigant Consulting as Pension Advisors
-----------------------------------------------------------------
The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware gave authority to the Official Committee of
Unsecured Creditors in Sea Containers Ltd. and its debtor-
affiliates' Chapter 11 cases to employ Navigant Consulting, Inc.,
nunc pro tunc, to Feb. 15, 2008.
The Court authorized the SCL Committee to use Navigant
Consulting's services in connection with any disputes concerning
the claims or rights of the various pension schemes in the
bankruptcy cases, including consulting and testifying expert in
adversary proceedings and contested matters.
Judge Carey ruled that Navigant Consulting may testify on pending
matters concerning the SCL Committee's objections to the proofs
of claim filed by the trustee of the pension schemes. However,
Judge Carey reminded the SCL Committee to notify the Debtors if
it intends to use the firm's services for additional matters
because Navigant Consulting's services will not include matters
other than Pension Issues.
Navigant Consulting's services should not duplicate the efforts
of Houlihan, Lokey Howard & Zukin, the SCL Committee's financial
advisors, Judge Carey maintained.
The Debtors previously tried to block approval of the SCL
Committee's application. They asserted, among other contentions,
that Navigant Consulting's retention will render duplicative,
overly broad services, which the firm may not be qualified to
provide.
"The SCL Committee seeks to use Navigant to establish the amount
of the Scheme's claims under the so-called "prudent investor"
rate applied in some U.S. bankruptcy cases. But the hearing on
the Debtors' motion for approval of the pension settlement . . .
is not a forum for the determination of the prudent investor rate
on the merits," the Debtors told the Court.
The Committee of Unsecured Creditors of Sea Containers Services
Limited supported and joined in the Debtors' objection. The SCSL
Committee argued that it was unclear from the Application whether
Navigant Consulting and the firm's purported expert have the
experience and expertise to perform an appropriate rate
calculation on claims by the U.K. Pension Schemes, particularly
in light of the unique provisions of applicable U.K. law.
In response to the objections, the SCL Committee told the Court
that the Proposed Settlement is a compromise between "the
Debtors, the powerful Scheme's Trustee, and their surrogates on
their special-purpose SCSL Committee. Only the SCL Committee is
left to raise a meaningful challenge on behalf of the estates'
unsecured creditors."
The SCL Committee explained that the only calculations that lie
behind the Settlement were performed by Mercer Human Resources
Consulting Limited on behalf of the Pension Schemes. The SCL
Committee further asserted that expert advice and cross-border
experience are needed concerning the Mercer Human's calculations,
and that will be provided by Navigant Consulting. Hence, the SCL
Committee asked the Court to approve the Application.
About Sea Containers
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083.
The Court gave the Debtors until April 15, 2008 to file
a plan of reorganization. (Sea Containers Bankruptcy News, Issue
No. 39; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SEA CONTAINERS: Panel Obtains International Judicial Assistance
---------------------------------------------------------------
The Official Committee of Unsecured Creditors in Sea Containers
Ltd. and its debtor-affiliates' Chapter 11 cases obtained
permission from the Honorable Kevin J. Carey of the U.S.
Bankruptcy Court for the District of Delaware to issue certain
letters of request for international judicial assistance pursuant
to the Hague Convention of March 18, 1970, on taking of evidence
in civil or commercial matters regarding Mercer Human Resources
Consulting Limited and Neville Hosegood.
William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht &
Tunnell LLP, in Wilmington, Delaware, related that the claims
asserted by the Sea Containers 1983 Pension Scheme and the Sea
Containers 1990 Pension Scheme are based almost exclusively on
work performed by the Pension Trustees' actuary, Mercer Human.
Mercer Human calculated the Scheme Claims based on the estimated
cost of purchasing annuities to discharge the Pension Schemes'
liabilities pursuant to Section 75 of the U.K. Pensions Act of
2004.
The Debtors have produced Mercer Human's summary report for the
actuarial valuations, however, none of the work papers, actuarial
valuation program, methodology or other analysis supporting
Mercer Human's conclusions have been furnished to the Court or
the SCL Committee, Mr. Sudell told Judge Carey.
Mr. Sudell also related that in the Debtors' proposed settlement
of the Pension Claims, both the proposed accepted amount of the
Pension Claims, and the amount reserved by the Debtors for
certain equalization claims is based on work performed by Mercer
Human.
The Pension Trustees and the Official Committee of Unsecured
Creditors of Sea Containers Services Ltd. refused to accept
service of a subpoena on behalf of Mercer Human, Mr. Sudell
informed the Court. Accordingly, the SCL Committee needs to
proceed through the Hague Convention to obtain relevant documents
from Mercer Human, and depose Mr. Hosegood. After obtaining
relevant documents from Mercer Human and Mr. Hosegood, the SCL
Committee intends to object to the Settlement, he added.
Mr. Suddell asserted that issuance of the Letters of Request is
procedurally authorized by Rule 28(b) of the Federal Rules of
Civil Procedure and Article 1 of the Hague Convention.
Judge Carey also rules that the attachments to each of the Letters
of Request may be modified to waive any portion without further
Court order upon agreement of the Debtors, the SCL Committee, SCSL
Committee and the Pension Schemes.
About Sea Containers
Based in Hamilton, Bermuda, Sea Containers Ltd. --
http://www.seacontainers.com/-- provides passenger and freight
transport and marine container leasing. Registered in Bermuda,
the company has regional operating offices in London, Genoa, New
York, Rio de Janeiro, Sydney, and Singapore. The company is
owned almost entirely by United States shareholders and its
primary listing is on the New York Stock Exchange (SCRA and
SCRB) since 1974. On Oct. 3, the company's common shares and
senior notes were suspended from trading on the NYSE and NYSE
Arca after the company's failure to file its 2005 annual report
on Form 10-K and its quarterly reports on Form 10-Q during 2006
with the U.S. Securities and Exchange Commission.
Through its GNER subsidiary, Sea Containers Passenger Transport
operates Britain's fastest railway, the Great North Eastern
Railway, linking England and Scotland. It also conducts ferry
operations, serving Finland and Estonia as well as a commuter
service between New York and New Jersey in the U.S.
Sea Containers Ltd. and two subsidiaries filed for chapter 11
protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156).
Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady,
Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in
their restructuring efforts.
The Official Committee of Unsecured Creditors and the Financial
Members Sub-Committee of the Official Committee of Unsecured
Creditors of Sea Containers Ltd. is represented by William H.
Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris,
Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s
Official Committee of Unsecured Creditors is represented by
attorneys at Willkie Farr & Gallagher LLP.
In its schedules filed with the Court, Sea Containers disclosed
total assets of $62,400,718 and total liabilities of
$1,545,384,083.
The Court gave the Debtors until April 15, 2008 to file
a plan of reorganization. (Sea Containers Bankruptcy News, Issue
No. 39; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: S&P Holds 'CCC+' Rating Revises Outlook to Dev.
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Atlanta,
Georgia-based Spectrum Brands Inc. to developing from negative.
At the same time, Standard & Poor's affirmed all of its ratings on
the company, including the 'CCC+' corporate credit rating.
Approximately $2.6 billion of funded debt is affected by this
action.
"The revised outlook reflects the company's improvement in
liquidity expected over the near term as a result of more
stabilized operating performance in recent quarters," said
Standard & Poor's credit analyst Patrick Jeffrey. "This has
contributed to enhanced cash balances and revolver availability,
as well as improved cushion under its senior secured leverage
covenant."
Spectrum Brands remains in the process of selling assets which, if
successful, could help further enhance liquidity. "However," said
Mr. Jeffrey, "we remain concerned about the company's liquidity
and its ability to meet its financial covenants on a longer-term
basis as it remains highly levered, generates negative free cash
flow, and could face further operating challenges given the weak
economic environment."
ST JOSEPH'S HOSPITAL: Patients Seek Medical Records Copy
--------------------------------------------------------
Alice Merkel, former bookkeeper of St. Joseph's Hospital, is
weighed down with patients' demand for medical records before they
will be exterminated on Oct. 31, 2008. Ms. Merkel is attending to
more than 200,000 case portfolios, Associated Press reports.
According to various statements, requests have magnified since
R. Stephen LaPlante, the bankrupt estate's trustee, applied for
the destruction of those accounts in accordance with Bankruptcy
law. Of the 39,221 letters that Mr. LaPlante disposed in January
2008 to former patients, Ms. Merkel received only about 10,000
applications.
To claim the files, patients must show identification and sign a
release form.
St. Joseph's Hospital closed in January 2007 after filing for
Chapter 7 bankruptcy.
STRUCTURED INVESTMENTS: Moody's Reviews 'B2' Rating on $10MM Notes
------------------------------------------------------------------
Moody's Investors Service placed these notes issued by Structured
Investments Corporation III, Series 2005-5 on review for possible
downgrade:
Class Description: $10,000,000 Notes Due 2015
-- Prior Rating: B2
-- Current Rating, B2, on review for possible downgrade
Moody's explained that this rating action reflects deterioration
in the credit quality of the transaction's underlying collateral
pool, which consist primarily of corporate securities.
TCM MEDIA: Moody's Withdraws All Ratings on Business Reasons
------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings on TCM Media,
Inc. for business reasons.
These ratings were withdrawn:
-- Corporate Family Rating, B2
-- Probability of Default Rating, B2
-- Speculative Grade Liquidity Assessment, SGL-3
-- $20 million senior secured first lien revolving credit
facility, Ba3 (LGD2, 27%)
-- $20 million senior secured first lien term loan, Ba3
(LGD2, 27%)
-- $30 million senior secured second lien term loan, Caa1
(LGD5, 82%)
TCM Media, Inc. is a newspaper publishing company headquartered in
Lexington, Kentucky. For the quarter ended Dec. 31, 2007, the
company reported revenues of $12.5 million.
TRICOM SA: Banco Multiple Leon Wants Bankruptcy Plan Revised
------------------------------------------------------------
Banco Multiple Leon, S.A., objects to the confirmation of Tricom
SA and its debtor-affiliates' Prepackaged Joint Chapter 11 Plan of
Reorganization, and the approval of the disclosure statement
explaining the Joint Plan.
Banco Leon is a holder of a general unsecured claim against
Tricom, S.A., having acquired lender's rights to loans made to
Tricom for $22,000,000.
John Drucker, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
in New York, tells the U.S. Bankruptcy Court for the Southern
District of New York that the Reorganization Plan and the
Disclosure Statement does not provide adequate disclosure,
particularly about Banco Leon's liquidated claim, and how it will
be treated under the Plan.
Mr. Drucker says that Banco Leon is concerned that its claim will
be treated as an unimpaired general unsecured claim in Class 7.
He adds that the Debtor did not solicit a vote from Banco Leon,
an admission that the claim is to be treated as unimpaired.
"The treatment of Banco Leon's claim as unimpaired Class 7 claim
raises serious doubt as to the [reorganization] plan's
feasibility," Mr. Drucker asserts.
In the Disclosure Statement, the Debtors project that on or about
the anticipated effective date of the Reorganization Plan, they
will have cash of about $10,000,000.
According to Mr. Drucker, there is no chance the Debtors can
demonstrate that the Reorganization Plan is feasible, when the
cash needed to satisfy their commitment to Banco Leon is more
than twice the amount available to the Debtors. He further says
that it becomes more difficult to understand how the
Reorganization Plan can be confirmed if the claims of Bancredit
Cayman Limited and Bancredito (Panama), S.A., are taken into
account.
Bancredit Cayman seeks to recover $120,000,000, while Bancredito
Panama asserts claim for $70,000,000.
Mr. Drucker says that if the claim of Banco Leon is treated as a
general unsecured claim, the reorganization plan cannot be
confirmed. "On the other hand, if the Debtors characterize Banco
Leon's claim as impaired claim, the Debtors' deliberate failure
to solicit Banco Leon should bar confirmation," he points out.
According to Mr. Drucker, the Court should direct the Debtors
to:
(a) discuss the nature of the claims of the affiliated
creditors, when and how they came to be creditors, the
claim amount, and the specific distributions they will
receive;
(b) explain why the Debtors have limited information about
their dominant stakeholder that appointed their
management;
(c) disclose further the amount of the loans being borrowed
from GFN International Investments Corp. banking
subsidiaries before 2004, the reasons for borrowing the
loans, among others;
(d) make available the report of the Special Committee,
which was appointed to investigate the $70,000,000
purchase of Tricom's Class A stock; and
(e) further disclose the basis for, or effect of the
provision of the Reorganization Plan that provides for
a continuing commitment by the Debtors to indemnify and
hold harmless its current and former officers and
directors.
Banco Leon asserts that in the event the Court approves the
Disclosure Statement or confirms the Reorganization Plan, the
Plan should not enjoin or release any claim or right the bank has
against a nondebtor.
About Tricom
Tricom, S.A., was incorporated in the Dominican Republic on
January 25, 1988, as a Sociedad Anonima. Tricom is one of the
pre-eminent full service communications services providers in
the Dominican Republic. Headquartered in Santo Domingo, Tricom
offers local, long distance, and mobile telephone services,
cable television and broadband data transmission and Internet
services, which are provided to more than 729,000 customers.
Tricom's wireless network covers about 90% of the Dominican
Republic's population. Tricom's local service network is 100%
digital. The Company also owns interests in undersea fiber-
optic cable networks that connect and transmit
telecommunications signals between Central America, the
Caribbean, the United States and Europe.
Tricom USA, Inc., a wholly owned subsidiary of Tricom, was
incorporated in Delaware in 1992, and at that time was known as
Domtel Communications. A name change was effected in 1997 and
Domtel Communications formally became Tricom USA, Inc.
Tricom USA originates, transports and terminates international
long-distance traffic using switching stations and other
telecommunications equipment located in New York and Florida.
Tricom S.A. and its U.S. affiliates filed for Chapter 11
protection on Feb. 29, 2008 (Bankr. S.D. N.Y. Case No. 08-
10720). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP,
in New York City, represent the Debtors. When the Debtors'
filed for protection from their creditors, they listed total
assets of US$327,600,000 and total debts of US$764,600,000.
(Tricom Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Services Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
TRUMP ENTERTAINMENT: Moody's Junks Probability of Default Rating
----------------------------------------------------------------
Moody's Investors Service downgraded Trump Entertainment Resort
Holdings, Inc.'s probability of default rating to Caa1 from B3.
The company's B3 corporate family rating and Caa1 8.5% senior
secured second lien notes, however, were confirmed. Concurrently,
TER's speculative grade liquidity rating was raised to SGL-3 from
SGL-4, and a negative ratings outlook was assigned. This rating
action ends the review process which began on Dec. 17, 2007.
The PDR downgrade reflects TER's continued vulnerability to
competition from new gaming supply in Pennsylvania which has had a
material negative impact on the Atlantic City gaming market and
the company's operating results. EBITDA coverage of interest was
only 1.1 times at Dec. 31 2007, and is not expected to improve
much through the remainder of 2008. Although TER has discussed at
times pursuing a strategic transaction (perhaps an asset sale or
an equity issuance), Moody's ratings do not assume that any such
transaction is consummated. Thus barring such a transaction,
Moody's does not expect the pace of any improvement in gaming
revenues and EBITDA to be sufficient on its one to alter the
financial profile of the company over the next two years.
The confirmation of TER's B3 CFR acknowledges that, despite the
increased risk of default as indicated by the PDR downgrade to
Caa1, TER's recovery prospects in a liquidation scenario are still
considered above-average. A 60% expected family recovery rate for
TER was assumed. Although the Atlantic City gaming market is
currently under stress, relative to other markets it remains a
large, well-established regional market with a significant
development pipeline, low regulatory risk profile, improved
quantity and quality of amenities, and favorable demographics. As
a result, Moody's expects Atlantic City casino properties would
attract buyers at valuation multiples that are higher than most of
the other gaming markets.
The upgrade to SGL-3 from SGL-4 largely reflects the successful
refinancing of TER's previously existing $500 million first lien
rated bank facility with a new $493 million first lien unrated
bank facility, $393 million of which was funded at closing. The
new facility provides TER with an increased amount of near-term
operating and financial flexibility. The SGL-3 also recognizes
that the company is not subject to any meaningful debt covenants
and currently has enough cash resources available to complete the
Taj Mahal hotel tower as well avoid a payment default in the next
12-months.
The negative rating outlook acknowledges TER's continued exposure
to Atlantic City gaming and its vulnerable capital structure.
Debt EBITDA is currently very high at over 11 times. Ratings
could be lowered in the next six months if the company is not able
to either materially improve its operating performance or
otherwise reduce its very high financial leverage through a
strategic option such as an asset sale or equity issuance.
Although the company recently announced that it is not currently
party to any agreement to sell any of its casino hotel properties,
it continues to engage in discussions with third parties regarding
proposals to acquire company properties. Ratings could also be
lowered in the near-term if the company experiences meaningful
near-term operating cash flows shortfall over the next two
quarters that require it to seek additional liquidity.
TER owns and operates the Trump Taj Mahal Casino Resort, Trump
Plaza Hotel and Casino and the Trump Marina Hotel Casino in
Atlantic City, New Jersey. Net revenue for the fiscal year- ended
Dec. 31, 2007 was about $1 billion.
TUCSON ELECTRIC: S&P's Rating Unaffected by ACC's Letter to UNS
---------------------------------------------------------------
Standard & Poor's Ratings Services said that the Arizona
Corporation Commission's letter to UNS Gas rejecting the company's
filed general rate case will not affect the timing of Tucson
Electric Power Co.'s (TEP; BB/Stable/B-2) current rate case, which
S&P expect to be resolved in late 2008 or early 2009. UNS Gas is
seeking a $10 million increase, or 7% above test-year revenues.
In Arizona, ACC staff has 30 days to certify that a company's case
is complete. In a March 20 letter to UNS, the ACC staff found the
application "deficient." The company used a 12-month, historic
test year ending Sept. 30, 2007. Staff argues that because new
rates for UNS did not go into effect until late 2007, the
company's application is "fundamentally flawed" because the
company used pro forma rates based on rates currently in effect to
develop its historic test year.
If the ACC agrees, Arizona utilities could be required to wait up
to a full year after its last rate case to file a new one. This
would imply that UNS may not be permitted to file for a rate
adjustment until the end of 2008. UNS is owned by UniSource
Energy Corp., which also owns UNS Electric and TEP. Separately,
TEP's rate case, requesting a $193 million rate increase, or about
a 24% rate increase, has been certified as complete and is not
directly affected. But how the issue is resolved could affect the
timing of recovery for TEP in future rate cases.
VERMILLION INC: Appoints John Hamilton to Board of Directors
------------------------------------------------------------
Vermillion, Inc. announced Thursday the appointment of
John F. Hamilton to its board of directors. Mr. Hamilton is the
former vice president and chief financial officer of Depomed Inc.,
a specialty pharmaceutical company.
"John brings more than 20 years of active board-level engagement
on financial, strategic and audit matters to Vermillion. His
solid experience working with small to mid-size companies in the
healthcare sector is a perfect fit with our business model," said
Gail Page, president and chief executive officer of Vermillion.
"We are pleased to welcome John to the board, especially at such
an exciting time in the company's evolution as we prepare to
commercialize several of our diagnostic tests later this year.
His financial savvy and analytical approach will prove invaluable
to the company."
The company said Mr. Hamilton began his career in the banking
industry and went on to hold senior financial positions at several
biopharmaceutical companies including Glyko Inc. now BioMarin
Pharmaceuticals and Chiron Corporation. He sits on the regional
board of directors of the Association of Bioscience Financial
Officers and is past-president of the Treasurers Club of San
Francisco. Mr. Hamilton received his M.B.A. from the University
of Chicago and his B.A. in International Relations from the
University of Pennsylvania.
Mr. Hamilton's appointment to Vermillion's board of directors went
into effect on April 9, 2008. Additionally, Mr. Hamilton will
serve as chairman of the company's audit committee. He will
replace Judy Bruner, executive vice president of administration
and chief financial officer of SanDisk Corporation, who resigned
from the board of directors on April 8, 2008.
"We would like to thank Judy for her leadership, expertise and
contributions as a board member," said Page. "She has added
significant value to Vermillion for the past 5 years and we wish
her well in her future endeavors."
About Vermillion Inc.
Based in Fremont, California, Vermillion Inc. (NASDAQ: VRML) --
http://www.vermillion.com/-- is dedicated to the discovery,
development and commercialization of novel high-value diagnostic
tests that help physicians diagnose, treat and improve outcomes
for patients. Vermillion, along with its scientific
collaborators, has diagnostic programs in oncology, hematology,
cardiology and women's health.
* * *
As reported in the Troubled Company Reporter on Apirl 8, 2008,
Vermillion Inc.'s consolidated balance sheet at Dec. 31, 2007,
showed $24,053,000 in total assets and $35,515,000 in total
liabilities, resulting in a $11,462,000 total stockholders'
deficit.
WASHINGTON MUTUAL: Amends Performance Bonuses Plan for Executives
-----------------------------------------------------------------
Washington Mutual Inc. determined to change the incentive scheme
that screened the management's cash bonuses from costs related to
mortgage losses and foreclosure, in response to the squeezing from
shareholders, Betsy McKay and Karen Richardson of Wall Street
Journal relate.
The move was announced at the annual shareholders meeting, WSJ
says.
According to WSJ, shareholders expressed their discontent on the
method the company is being handled. Roughly 51% of the
shareholders voted for the separation of the chairman post from
the chief executive posts.
Stockholders were also informed of Mary E. Pugh's resignation from
the board of directors, WSJ states. Ms. Pugh was maligned by
stockholders for leaving the company vulnerable to risky mortgages
that have caused tormenting losses. She served the board for nine
years and as chair of its finance committee for three years.
Financial Results
At the April 15 annual meeting, WaMu disclosed a first quarter
2008 net loss of $1.14 billion compared with the fourth quarter
net loss of $1.87 billion and net income of $784 million during
the first quarter of 2007. The quarter's financial results
reflect a higher level of provisioning as steep declines in home
values led to further deterioration in mortgage credit markets.
"By issuing $7 billion of additional capital, we have taken
decisive actions to withstand this period of unprecedented credit
losses, while maintaining strong liquidity," Mr. Killinger said.
"We also disclosed plans to further advance our retail-focused
strategy by:
-- investing in and growing our retail banking stores and call
center production;
-- closing all of our remaining freestanding home loan offices;
and
-- exiting wholesale lending - our broker channel."
TPG Capital Transaction Completion
WaMu also disclosed that it completed the $7 billion capital
issuance to TPG Capital and to other investors, including many of
WaMu's top institutional shareholders. With the proceeds of the
offering, the company's capital ratios are expected to remain well
above its targeted levels while it absorbs elevated credit costs
in its loan portfolios in 2008 and 2009. At the same time, the
company will continue to grow its banking franchise.
"The completion of this offering demonstrates the confidence these
major investors have expressed in WaMu's underlying value and its
growth potential," Kerry Killinger, WaMu chairman and chief
executive officer, said. "This substantial new capital will
position us for a return to profitability as elevated credit costs
subside. With the support of these investors, we have every
confidence in our ability to deal with market conditions and
restore shareholder value."
About Washington Mutual
Washington Mutual Inc. (NYSE: WM) -- http://www.wamu.com/-- is a
consumer and small business banking company with operations in
United States markets. The Company is a savings and loan holding
company. It owns two banking subsidiaries, Washington Mutual Bank
and Washington Mutual Bank fsb, as well as numerous non-bank
subsidiaries. The company operates in four segments: the Retail
Banking Group, which operates a retail bank network of 2,257
stores in California, Florida, Texas, New York, Washington,
Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada,
Utah, Idaho and Connecticut; the Card Services Group, which
operates a nationwide credit card lending business; the Commercial
Group, which conducts a multi-family and commercial real estate
lending business in selected markets, and the Home Loans Group,
which engages in nationwide single-family residential real estate
lending, servicing and capital markets activities.
* * *
As reported in the Troubled Company Reporter on March 17, 2008,
Moody's Investors Service downgraded the senior unsecured rating
of Washington Mutual, Inc. to Baa3 from Baa2. Washington Mutual
Bank's long term deposit rating was downgraded to Baa2 from Baa1.
Washington Mutual Bank's bank financial strength rating at C- and
short term rating at Prime-2 were affirmed. Moody's placed a
negative outlook on all Washington Mutual entities.
* S&P Says 38 Rated Entities Are Identified As Fallen Angels
------------------------------------------------------------
Globally, 38 entities with rated debt totaling US$82.96 (EUR52.84)
billion are identified as potential fallen angels, according to a
report published by Standard & Poor's. The report, titled "Global
Potential Fallen Angels," says that this total is one less than
the annual average count of 39 potential fallen angels in 2007.
"The year-to-date count of fallen angels has surpassed that of
last year, with five more entities moving to speculative-grade
territory since our last report," said Diane Vazza, head of
Standard & Poor's Global Fixed Income Research Group. "This
pushes our total for the year to date to 10 entities, affecting
rated debt worth $16.2 billion, compared with eight out of 42
fallen angels in the first quarter of last year."
Based on rated-debt volume, the U.S.-based third largest wireless
carrier and an S&P 500 constituent, Sprint Nextel Corp., is the
largest potential fallen angel, with more than $24.25 billion in
rated debt.
* S&P Expects Global Packaging Sector to Face Downgrade Pressures
-----------------------------------------------------------------
Standard & Poor's Ratings Services expects the global packaging
sector to experience another year of downward pressure on credit
quality in 2008. In a report published April 11, 2008, "Industry
Credit Outlook: Global Packaging Defaults Could Gain Traction,"
Standard & Poor's examines the factors driving the escalating
number of defaults.
About 63% of all rated packaging companies are in the highly
volatile 'B' category or lower, following the boom in leveraged
buyouts, and S&P expect more issuers to encounter financial
challenges as the economy sputters and credit market conditions
remain difficult.
"As we had expected, defaults have picked up and the packaging
sector has already witnessed two in North America from December
2007 through April 2008," said Standard & Poor's credit analyst
Liley Mehta. "This is consistent with broader trends across
leveraged industries."
The universe of rated North American corporate issuers saw 12
defaults in the first three months of 2008, compared with just 18
for the entire year of 2007.
Interestingly, the level of defaults for packaging companies has
likely been somewhat suppressed because of limited refinancing
requirements and covenant-lite features in credit facilities of
several issuers, owing to the tremendous liquidity in the market
before the credit squeeze began in the summer of 2007.
* S&P Downgrades Ratings on 31 Tranches From Eight Hybrid CDOs
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 31
tranches from eight U.S. cash flow and hybrid collateralized debt
obligation transactions. S&P removed one of the lowered ratings
from CreditWatch with negative implications. At the same time,
S&P withdrew its ratings on six tranches from one transaction.
The downgraded tranches have a total issuance amount of
$1.471 billion.
Five of the eight 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 F SF securities. Two of the eight are CDO of
CDO transactions that were collateralized at origination primarily
by notes from other CDOs, as well as by tranches from RMBS and
other SF transactions. The other transaction is a high-grade SF
CDO of ABS, which is a CDO collateralized at origination primarily
by 'AAA' through 'A' rated tranches of RMBS and other SF
securities.
The CDO downgrades reflect a number of factors, including credit
deterioration and recent negative rating actions on U.S. subprime
RMBS securities, as well as changes Standard & Poor's has made to
the recovery rate and correlation assumptions it uses to assess
U.S. RMBS held within CDO collateral pools.
To date, including the CDO tranches listed below and including
actions on both publicly and confidentially rated tranches, S&P
have lowered its ratings on 3,240 tranches from 756 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, 422 ratings from 135 transactions are
currently on CreditWatch negative for the same reasons. In
all, S&P have downgraded $339.784 billion of CDO issuance.
Additionally, S&P's ratings on $17.808 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
----------- ----- -- ----
ACA ABS 2002-1 Ltd. B A- AA
ACA ABS 2002-1 Ltd. C CC BBB
Davis Square Funding II Ltd. A-1LT-a AA+ AAA
Davis Square Funding II Ltd. A-1LT-b AA+ AAA
Davis Square Funding II Ltd. A-1LT-c AA+ AAA
Davis Square Funding II Ltd. A-1LT-d AA+ AAA
Davis Square Funding II Ltd. A-1LT-e AA+ AAA
Davis Square Funding II Ltd. A-1LT-f AA+ AAA
Davis Square Funding II Ltd. A-1MM-a NR A-1+
Davis Square Funding II Ltd. A-1MM-b NR A-1+
Davis Square Funding II Ltd. A-1MM-c NR A-1+
Davis Square Funding II Ltd. A-1MM-d NR A-1+
Davis Square Funding II Ltd. A-1MM-e NR A-1+
Davis Square Funding II Ltd. A-1MM-f NR A-1+
Marathon Structured Funding I LLC A-1 A
AAA/Watch Neg
Opus CDO I Ltd. A AA+ AAA
Opus CDO I Ltd. B A+ AA
Opus CDO I Ltd. C BBB A
Opus CDO I Ltd. D BB+ BBB
Opus CDO I Ltd. Sub Notes B- BB
Porter Square CDO III Ltd. A-2 AA+ AAA
Porter Square CDO III Ltd. B A- AA
Porter Square CDO III Ltd. C BB+ A
Porter Square CDO III Ltd. D B- BBB
South Coast Funding VII Ltd. A-2 A+ AA+
South Coast Funding VII Ltd. B BBB AA-
South Coast Funding VII Ltd. C BB+ A-
South Coast Funding VII Ltd. D-1A CCC BB
South Coast Funding VII Ltd. D-1B CCC BB
South Coast Funding VII Ltd. D-2 CCC BB
South Coast Funding VII Ltd. Pref Shrs CC CCC-
Tricadia CDO 2006-5 Ltd. E BB+ BBB
Tricadia CDO 2006-5 Ltd. F B- BB
Zais Investment Grade Ltd. VII A-2 AA+ AAA
Zais Investment Grade Ltd. VII A-3 BBB- AA
Zais Investment Grade Ltd. VII B-1A B- A
Zais Investment Grade Ltd. VII B-1B B- A
Other Outstanding Ratings
Transaction Class Rating
----------- ----- ------
ACA ABS 2002-1 Ltd. A AAA
Davis Square Funding II Ltd. A-1MT-a AA
Davis Square Funding II Ltd. A-1MT-b AA
Davis Square Funding II Ltd. A-1MT-c AA
Davis Square Funding II Ltd. A-1MT-d AA
Davis Square Funding II Ltd. A-1MT-e AA
Davis Square Funding II Ltd. A-1MT-f AA
Opus CDO I Ltd. Combo Note BBB
Porter Square CDO III Ltd. A-1 AAA
South Coast Funding VII Ltd. A-1ANV AAA
South Coast Funding VII Ltd. A-1AV AAA
South Coast Funding VII Ltd. A-1B AAA
Tricadia CDO 2006-5 Ltd. B AAA
Tricadia CDO 2006-5 Ltd. C AA
Tricadia CDO 2006-5 Ltd. D A
Zais Investment Grade Ltd. VII A-1A AAA
Zais Investment Grade Ltd. VII A-1B AAA
* S&P Cuts Ratings on Eight Classes from Four US RMBS Transaction
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on an
additional eight classes from four U.S. residential mortgage-
backed securities transactions due to the March 28, 2008,
downgrade of bond insurer Financial Guaranty Insurance Co. FGIC
guarantees all of the classes affected by these actions.
Standard & Poor's lowered its financial enhancement rating on FGIC
to 'BB' from 'A' on March 28, 2008, and removed it from
CreditWatch with negative implications. The rating actions follow
the downgrade of 310 other U.S. RMBS classes wrapped by FGIC. The
revised ratings on the classes referenced below reflect the higher
of the current rating on FGIC ('BB') and the rating on the
respective underlying transaction based on the inherent credit
support, which was re-evaluated.
Standard & Poor's will continue to monitor its ratings on all
classes linked to FGIC and take appropriate rating actions as
necessary.
Ratings Lowered
CWABS Master Trust
Rating
------
Series Class CUSIP To From
------ ----- ----- -- ----
2002-F Notes 126671SX5 BBB A
2003-D Notes 126671ZJ8 BBB AAA
RASC Series 2005-EMX5 Trust
Rating
------
Class CUSIP To From
----- ----- -- ----
A-2 76110W7Q3 BB AAA
A-3 76110W7R1 BB AAA
RAMP Series 2005-EFC7 Trust
Rating
------
Class CUSIP To From
----- ----- -- ----
A-I-2 76112BR51 BB AAA
A-I-3 76112BR69 BB AAA
A-I-4 76112BR77 BB AAA
A-II 76112BR85 BB AAA
* David A. White Joins McCarter & English as Litigation Partner
---------------------------------------------------------------
David A. White joins the Wilmington office of law firm McCarter &
English LLP as a litigation partner. Mr. White has resigned as a
Delaware Superior Court Commissioner, where he played a key role
in the state's asbestos and other toxic tort litigation.
"Dave White earned so much respect throughout the legal
community," Michael Kelly, a McCarter & English partner and member
of the executive committee, said. "He had his pick of options.
We are deeply honored that he's chosen to re-enter private
practice with us."
"I am sorry to leave the Court, but I feel that McCarter is the
right fit for me and look forward to working with this outstanding
group of attorneys," Mr. White said. "At Superior Court, my goal
was always to treat litigants like they were members of my own
family. Although I am back in private practice, I remain
committed to public service and will continue to give back to the
community, as I have always done."
Mr. White, who served seven years on the Superior Court, was
responsible for all pretrial matters in the asbestos and benzene
litigation and regularly served as a mediator for the Superior
Court in toxic tort, personal injury, medical negligence and
commercial matters.
Prior to joining the Court, he practiced with the firms of
Murphy Welch Spadaro & Landon P.A. and Welch & White P.A.,
concentrating on commercial litigation, commercial and consumer
banking and bankruptcy, and real estate.
While in private practice, Mr. White also served as a Special
Deputy Attorney General for the Appeals Division of the Department
of Justice and was often retained as a hearing officer for the
Department of Health & Social Services for adult abuse registry
cases, the Delaware State University, and several local school
districts in employment matters.
>From 1988 to 1993, Mr. White served as a Deputy Attorney General
for the State of Delaware, where he represented several executive
agencies including the State Department of Education, the State
Board of Education, the Department of Homeland Security, Division
of State Police, Division of Motor Vehicles, Division of Emergency
Management, and the Department of Correction.
Mr. White will continue to speak at CLE seminars in the areas of
civil litigation, alternate dispute resolution, toxic torts, and
related ethical issues. He also teaches a civil litigation course
for the University of Delaware, Division of Professional and
Continuing Studies and was named co-winner of the Excellence in
Teaching award of 2007.
Mr. White is a graduate of Widener University School of Law, J.D.
1986, and the University of Delaware, B.A., 1982, and served as
a Judicial Law Clerk to the Hon. Sue L. Robinson, U.S. District
Court, District of Delaware.
Another former member of the Delaware Judiciary, Justice Joseph T.
Walsh, has been of counsel to McCarter & English since 2003.
About McCarter & English LLP
Headquartered in Newark, New Jersey, McCarter & English LLP --
http://www.mccarter.com/-- represents Fortune 500 and mid-cap
companies in their national, regional and local litigation and on
important transactions, including bankruptcy and business
restructuring. Established more than 160 years ago, the firmits
400 lawyers are based in offices in Boston; Hartford; New York;
Newark; Philadelphia; Stamford, Connecticut; and Wilmington.
* Justin Mirro Joins as a Managing Director of Moelis & Company
---------------------------------------------------------------
Moelis & Company said that Justin Mirro will join the firm in July
as a Managing Director based in New York. Mr. Mirro, who has over
13 years of automotive investment banking experience, will lead
the firm's coverage effort in the automotive sector.
Mr. Mirro joins from Jefferies & Company where he built a leading
franchise advising automotive assemblers, suppliers, the
aftermarket, and dealerships on mergers and acquisitions, debt and
equity financings, restructurings, and leveraged buyouts. Before
joining Jefferies, Mr. Mirro was an automotive investment banker
at ABN AMRO, Salomon Smith Barney, and Schroder Wertheim. Prior
to his investment banking career, he worked in the automotive
industry as a design and manufacturing engineer for General Motors
Corporation in Detroit and Toyota Motor Corporation in Japan.
Mr. Mirro has been a member of the Society of Automotive Engineers
since 1991.
"Justin brings deep experience and an extensive relationship
network in the automotive industry, and we are thrilled to have
him on our team," said Ken Moelis, Chief Executive Officer of
Moelis & Company. "Hiring [Mr. Mirro] is consistent with our
strategy of adding new areas of sector expertise to continue to
enhance our ability to support our clients with comprehensive
advice and solutions."
About Moelis & Company
Moelis & Company -- http://www.moelis.com/-- is an investment
bank that provides advice on mergers and acquisitions,
restructurings and other corporate finance matters and manages
investment funds. It was founded in July 2007 on the belief that
clients seek high-quality advice from bankers with decades of
experience who have a deep understanding of their company.
* Two Jefferies Advisors Join Moelis' Restructuring Group
---------------------------------------------------------
Moelis & Company said that Thane Carlston and William Derrough
will join the firm in July as Managing Directors and Co-Heads of
the firm's Restructuring Group based in New York.
Mr. Carlston and Mr. Derrough, who have worked together on
restructuring transactions for over 17 years, were previously at
Jefferies & Company where they built a leading restructuring
practice as Co-Heads of the Recapitalization and Restructuring
Group.
Mr. Carlston spent 10 years at Jefferies advising clients in a
variety of industries on exchange offers, recapitalizations,
restructurings, financings, and M&A transactions. Before joining
Jefferies, he worked at Chanin and Company, a boutique investment
banking firm specialized in providing restructuring advice.
Mr. Derrough also spent 10 years at Jefferies where he advised a
wide spectrum of clients and investors on restructurings,
recapitalizations, financings, mergers, and other engagements.
Prior to joining Jefferies, Mr. Derrough was a Principal at Doyle
& Boissiere, a private investment firm, and before this, worked at
Chanin and Company and Salomon Brothers.
"Building a world class restructuring franchise has been a top
priority of Moelis & Company, particularly as our clients face a
more challenging economic environment," said Ken Moelis, Chief
Executive Officer of Moelis & Company. "[Mr. Carlston] and [Mr.
Derrough] bring tremendous restructuring experience and expertise,
and we could not be more pleased to have them lead this effort for
us. This important step further demonstrates our commitment to
provide the highest quality advice and solutions to support our
clients."
About Moelis & Company
Moelis & Company -- http://www.moelis.com/-- is an investment
bank that provides advice on mergers and acquisitions,
restructurings and other corporate finance matters and manages
investment funds. It was founded in July 2007 on the belief that
clients seek high-quality advice from bankers with decades of
experience who have a deep understanding of their company.
* SMH Capital is Exclusive Agent in Liquidation of $2.8 Bil. CDOs
-----------------------------------------------------------------
SMH Capital Inc. serves as the exclusive agent on the disposal of
collateralized debt obligations worth $2.8 billion, through a six-
series auction this week, Reuters' Nancy Leinfuss wrote, citing
market sources.
Based on the report, offers for $581.0 million CDOs backed by auto
loans, credit cards, student loans and aircraft asset-backed
securities were due Monday, and will be auctioned the same day.
About $323.0 million of commercial mortgage-backed securities was
scheduled for liquidation Monday afternoon, Reuters related.
A third auction was scheduled yesterday morning concerning the
liquidation of $368.0 million collateralized mortgage debts while
a fourth auction of $545.0 million home equity ABS will be done
today at 11:00 a.m., reported Reuters.
The fifth auction will involve liquidation of $562.0 million home
equity ABS to be held tomorrow at 11:00 a.m., according to the
report.
The last wave of the auction will be on Friday, April 18, 2008,
involving the disposal of $471.0 million of home equity ABS and
corporate bonds, Reuters said, citing market sources.
About SMH Capital
SMH Capital Inc. (member FINRA/SIPC) -- http://www.smhcapital.com/
-- provides asset management, wealth management, and capital
markets services to affluent private investors, institutions, and
middle-market corporations. The Asset & Wealth Management
businesses span a range of specialized investment programs. Its
Capital Markets divisions offer a full range of services
including: private placements and public offerings of equity and
debt securities, financial advisory services, institutional equity
sales, trading, and research, as well as prime brokerage services
for hedge funds and fixed income securities sales and trading.
SMH Capital Inc. is a subsidiary of Sanders Morris Harris Group,
(NASDAQ:SMHG) -- http://www.smhgroup.com/-- a financial services
holding company headquartered in Houston that manages
approximately $17 billion in client assets. The subsidiaries and
affiliates of Sanders Morris Harris Group deliver superior wealth
advisory, asset management, and capital markets services to
individual and institutional investors and middle-market
companies. Its operating entities are Dickenson Group, Edelman
Financial Center, Salient Partners, Salient Trust Co. LTA, SMH
Capital, SMH Capital Advisors, Select Sports Group, and The Rikoon
Group. Sanders Morris Harris Group has over 600 employees in 21
states.
* Total Bankruptcy Filings Increase Nearly 38 Percent in 2007
-------------------------------------------------------------
Total bankruptcy filings in the United States increased 37.8
percent last year over calendar year 2006, the American Bankruptcy
Institute cites data released from the Administrative Office of
the U.S. Courts.
Bankruptcy filings totaled 850,912 for the 12-month period ending
Dec. 31, 2007, a significant increase over the previous year's
total of 617,660. While the total filings for calendar year 2006
reflected a significant drop due to the implementation of the
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,
the 2007 filing totals mark an increase across all chapters of the
U.S. Bankruptcy Code for both consumer and business filings from
the previous year.
"The latest figures ratify trends that began last year, depicting
households under growing stress from heavy consumer debts, now in
homes they can't afford and can't sell," said ABI Executive
Director Samuel J. Gerdano.
Business bankruptcies recorded the sharpest percentage increase as
the 28,322 business filings during calendar year 2007 represented
a 43.8 percent increase in filings from the record low of 19,695
filings made during the 12-month period ending Dec. 31, 2006.
While the 12-month business filing total for 2007 was still lower
than any year prior to 2006, the 2007 total was trending towards
the 35,293 business filings averaged annually for the past decade
from 1998 to 2007.
Consumer filings rebounded to 822,590 during the 2007 calendar
year, representing a 37.6 percent increase over the 597,965
recorded during the same period in 2006. The 500,613 consumer
Chapter 7 filings during the 12-month period ending Dec. 31, 2007,
comprised 60.9 percent of the total consumer filings for the 2007
calendar year. The Chapter 7 total for 2007 represented a 43.4
percent increase over the 349,012 consumer Chapter 7 filings
during 2006.
The 321,359 consumers who filed for Chapter 13 during the 12-month
period ending Dec. 31, 2007, comprised 39.1 percent of the overall
consumer filing total. The Chapter 13 total for 2007 represents a
29.4 percent increase over the 248,430 consumer Chapter 13 filings
during 2006.
The 226,413 total bankruptcies recorded during the fourth calendar
quarter of 2007 -- from October 1 to December 31 -- represent a
27.5 percent increase from the 177,599 filings during the same
period in 2006. The 2007 fourth calendar quarter filing total was
the highest of any previous quarter for 2007 and represented a 3.4
percent increase over the third quarter -- from July 1 to
September 30 -- total of 218,909.
The 218,428 consumer filings in the fourth quarter of 2007
represent a 27 percent increase in comparison to the 172,013
consumer filings for the same quarter of 2006. The consumer
filing total for the fourth calendar quarter also represented a
3.2 percent increase from the previous total of 211,742 filings
from the third quarter of 2006.
Business filings, which totaled 7,985 for the fourth calendar
quarter of 2007, represented a 43 percent increase from the 5,586
filed in the same 3-month period in 2006 (Oct. 1 to Dec. 31).
Business filings also rose over the previous quarter as the fourth
calendar quarter represented a 11.4 percent increase over 7,167
business filings reported during the third quarter of 2007 (July 1
to Sept. 30).
The breakdown of business filings for the 3-month period ending
Dec. 31, 2007, is 5,420 Chapter 7's, 1,612 Chapter 11's, 77
Chapter 12's and 869 Chapter 13's.
The breakdown of non-business filings for the 3-month period
ending Dec. 31, 2007 is 132,192 Chapter 7's, 181 Chapter 11's and
86,055 Chapter 13's.
States with the highest per capita filing rate for the 12-month
period ending Dec. 31, 2007 are:
1) Tennessee
2) Georgia
3) Alabama
4) Indiana
5) Michigan
6) Ohio
7) Nevada
8) Arkansas
9) Kentucky
10) Mississippi
Districts with the highest percentage increase in total filings
for the 12-month period ending Dec. 31, 2007, compared to the
identical period in 2006, are:
District Increase
-------- --------
District of Nevada 98.5%
Eastern District of California 93.6%
Central District of California 91.2%
Southern District of California 82.9%
District of Maine 74.2%
Districts with the lowest percentage increase in total filings for
the 12-month period ending Dec. 31, 2007, compared to the
identical period in 2006, are:
District Increase
-------- --------
District of the Virgin Islands 0.0%
District of the Northern Mariana Islands 0.0%
District of Montana 1.8%
Western District of North Carolina 8.9%
Middle District of North Carolina 11.3%
More information will be available at ABI's Statistics Page:
http://www.abiworld.org/statistics/
About ABI World
ABI is the largest multi-disciplinary, nonpartisan organization
dedicated to research and education on matters related to
insolvency. ABI was founded in 1982 to provide Congress and the
public with unbiased analysis of bankruptcy issues. The ABI
membership includes more than 11,700 attorneys, accountants,
bankers, judges, professors, lenders, turnaround specialists and
other bankruptcy professionals providing a forum for the exchange
of ideas and information.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Apr. 25-27, 2008
NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES
NABT Spring Seminar
Eldorado Hotel & Spa, Santa Fe, New Mexico
Contact: http://www.nabt.com/
Apr. 29, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Why Prospects Become Clients
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org//
May 1-2, 2008
TURNAROUND MANAGEMENT ASSOCIATION
2nd Annual Credit & Bankruptcy Symposium
Foxwoods Resort Casino, Ledyard, Connecticut
Contact: http://www.turnaround.org//
May 1-2, 2008
AMERICAN BANKRUPTCY INSTITUTE
Debt Symposium
Hilton Garden Inn, Champagne/Urbana, Illinois
Contact: 1-703-739-0800; http://www.abiworld.org/
May 9, 2008
AMERICAN BANKRUPTCY INSTITUTE
Nuts and Bolts for Young Practitioners - NYC
Alexander Hamilton U.S. Custom House, New York
Contact: 1-703-739-0800; http://www.abiworld.org/
May 12, 2008
AMERICAN BANKRUPTCY INSTITUTE
New York City Bankruptcy Conference
Millennium Broadway Hotel & Conference Center, New York
Contact: 1-703-739-0800; http://www.abiworld.org/
May 12-13, 2008
PRACTISING LAW INSTITUTE
30th Annual Current Developments in
Bankruptcy & Reorganization
PLI Center San Francisco, California
Contact: http://www.pli.edu/
May 13-16, 2008
AMERICAN BANKRUPTCY INSTITUTE
Litigation Skills Symposium
Tulane University, New Orleans, Louisiana
Contact: 1-703-739-0800; http://www.abiworld.org/
May 15-16, 2008
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Fifth Annual Conference on Distressed Investing Europe
Maximizing Profits in the European
Distressed Debt Market
Le Meridien Piccadilly Hotel - London
Contact: 800-726-2524; 903-595-3800;
http://www.renaissanceamerican.com/
May 18-20, 2008
INTERNATIONAL BAR ASSOCIATION
14th Annual Global Insolvency & Restructuring Conference
Stockholm, Sweden
Contact: http://www.ibanet.org/
May 21, 2008
TURNAROUND MANAGEMENT ASSOCIATION
What Happened to My Money - The Restructuring of a Loan
Servicer
Marriott North, Fort Lauderdale, Florida
Contact: http://www.turnaround.org//
June 4-7, 2008
ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS
24th Annual Bankruptcy & Restructuring Conference
J.W. Marriott Spa and Resort, Las Vegas, Nevada
Contact: http://www.airacira.org/
June 12-14, 2008
AMERICAN BANKRUPTCY INSTITUTE
15th Annual Central States Bankruptcy Workshop
Grand Traverse Resort and Spa, Traverse City, Michigan
Contact: http://www.abiworld.org/
June 19 & 20, 2008
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Corporate Reorganizations
Contact: 800-726-2524; 903-595-3800;
http://www.renaissanceamerican.com/
June 24, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Fraud Panel
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org/
June 26-29, 2008
NORTON INSTITUTES ON BANKRUPTCY LAW
Western Mountains Bankruptcy Law Seminar
Jackson Hole, Wyoming
Contact: http://www.nortoninstitutes.org/
July 10, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Cynthia Jackson of Smith Hulsey & Busey
University Club, Jacksonville, Florida
Contact: http://www.turnaround.org/
July 10-13, 2008
AMERICAN BANKRUPTCY INSTITUTE
16th Annual Northeast Bankruptcy Conference
Ocean Edge Resort
Brewster, Massachussets
Contact: http://www.abiworld.org/events
July 29, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Employment Issues Following Hurricanes & Disasters
Centre Club, Tampa, Florida
Contact: http://www.turnaround.org/
July 31 - Aug. 2, 2008
AMERICAN BANKRUPTCY INSTITUTE
4th Annual Mid-Atlantic Bankruptcy Workshop
Hyatt Regency Chesapeake Bay
Cambridge, Maryland
Contact: http://www.abiworld.org/
Aug. 16-19, 2008
AMERICAN BANKRUPTCY INSTITUTE
13th Annual Southeast Bankruptcy Workshop
Ritz-Carlton, Amelia Island, Florida
Contact: http://www.abiworld.org/
Aug. 20-24, 2008
NATIONAL ASSOCIATION OF BANKRUPTCY JUDGES
NABT Convention
Captain Cook, Anchorage, Alaska
Contact: http://www.nabt.com/
Aug. 26, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Do's and Don'ts of Investing in a Turnaround
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org//
Sept. 4-5, 2008
AMERICAN BANKRUPTCY INSTITUTE
Complex Financial Restructuring Program
Four Seasons, Las Vegas, Nevada
Contact: http://www.abiworld.org/
Sept. 4-6, 2008
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
Four Seasons, Las Vegas, Nevada
Contact: http://www.abiworld.org/
Sept. 17, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Real Estate / Condo Restructuring Panel
Marriott North, Fort Lauderdale, Florida
Contact: http://www.turnaround.org//
Sept. 24-26, 2008
INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION
IWIRC 15th Annual Fall Conference
Scottsdale, Arizona
Contact: http://www.ncbj.org/
Sept. 24-27, 2008
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
Desert Ridge Marriott, Scottsdale, Arizona
Contact: http://www.iwirc.org/
Sept. 30, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Private Equity Panel
Centre Club, Tampa, Florida
Contact: http://www.turnaround.org//
Oct. 9, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Luncheon - Chapter 11
University Club, Jacksonville, Florida
Contact: http://www.turnaround.org/
Oct. 28, 2008
TURNAROUND MANAGEMENT ASSOCIATION
State of the Capital Markets
Citrus Club, Orlando, Florida
Contact: http://www.turnaround.org//
Oct. 28-31, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott New Orleans, Louisiana
Contact: 312-578-6900; http://www.turnaround.org/
Oct. 30 & 31, 2008
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Physicians Agreements and Ventures
Contact: 800-726-2524; 903-595-3800;
http://www.renaissanceamerican.com/
Nov. 19, 2008
TURNAROUND MANAGEMENT ASSOCIATION
Interaction Between Professionals in a
Restructuring/Bankruptcy
Bankers Club, Miami, Florida
Contact: 312-578-6900; http://www.turnaround.org/
Dec. 3-5, 2008
AMERICAN BANKRUPTCY INSTITUTE
20th Annual Winter Leadership Conference
Westin La Paloma Resort & Spa
Tucson, Arizona
Contact: http://www.abiworld.org/
May 7-10, 2009
AMERICAN BANKRUPTCY INSTITUTE
27th Annual Spring Meeting
Gaylord National Resort & Convention Center
National Harbor, Maryland
Contact: http://www.abiworld.org/
June 11-13, 2009
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort and Spa
Traverse City, Michigan
Contact: http://www.abiworld.org/
June 21-24, 2009
INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY &
BANKRUPTCY PROFESSIONALS
8th International World Congress
TBA
Contact: http://www.insol.org/
July 16-19, 2009
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Mt. Washington Inn
Bretton Woods, New Hampshire
Contact: http://www.abiworld.org/
Sept. 10-12, 2009
AMERICAN BANKRUPTCY INSTITUTE
17th Annual Southwest Bankruptcy Conference
Hyatt Regency Lake Tahoe, Incline Village, Nevada
Contact: http://www.abiworld.org/
Oct. 5-9, 2009
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900; http://www.turnaround.org/
Dec. 3-5, 2009
AMERICAN BANKRUPTCY INSTITUTE
21st Annual Winter Leadership Conference
La Quinta Resort & Spa, La Quinta, California
Contact: 1-703-739-0800; http://www.abiworld.org/
Oct. 4-8, 2010
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
JW Marriott Grande Lakes, Orlando, Florida
Contact: http://www.turnaround.org/
BEARD AUDIO CONFERENCES
2006 BACPA Library
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
BAPCPA One Year On: Lessons Learned and Outlook
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Calpine's Chapter 11 Filing
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Carve-Out Agreements for Unsecured Creditors
Contact: 240-629-3300; http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Changes to Cross-Border Insolvencies
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Changing Roles & Responsibilities of Creditors' Committees
Audio Conference Recording
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
Chinas New Enterprise Bankruptcy Law
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Clash of the Titans -- Bankruptcy vs. IP Rights
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Coming Changes in Small Business Bankruptcy
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Corporate Bankruptcy Bootcamp: A Nuts & Bolts Primer
for Navigating the Restructuring Process
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
BEARD AUDIO CONFERENCES
Dana's Chapter 11 Filing
Audio Conference Recording
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
Deepening Insolvency Widening Controversy: Current Risks,
Latest Decisions
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Diagnosing Problems in Troubled Companies
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Distressed Claims Trading
Audio Conference Recording
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Distressed Market Opportunities
Audio Conference Recording
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Distressed Real Estate under BAPCPA
Audio Conference Recording
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Employee Benefits and Executive Compensation under the New
Code
Audio Conference Recording
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Equitable Subordination and Recharacterization
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Examining the Examiners: Pros and Cons of Using
Examiners in Chapter 11 Proceedings
Audio Conference Recording
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
Fundamentals of Corporate Bankruptcy and Restructuring
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Handling Complex Chapter 11
Restructuring Issues
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Healthcare Bankruptcy Reforms
Audio Conference Recording
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BEARD AUDIO CONFERENCES
High-Yield Opportunities in Distressed Investing
Audio Conference Recording
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Homestead Exemptions under BAPCPA
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Hospitals in Crisis: The Insolvency Crisis Plaguing
Hospitals Across the U.S.
Audio Conference Recording
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BEARD AUDIO CONFERENCES
IP Rights In Bankruptcy
Audio Conference Recording
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BEARD AUDIO CONFERENCES
KERPs and Bonuses under BAPCPA
Audio Conference Recording
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BEARD AUDIO CONFERENCES
New 'Red Flag' Identity Theft Rules
Audio Conference Recording
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BEARD AUDIO CONFERENCES
Non-Traditional Lenders and the Impact of Loan-to-Own
Strategies on the Restructuring Process
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BEARD AUDIO CONFERENCES
Partnerships in Bankruptcy: Unwinding The Deal
Audio Conference Recording
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Privacy Rights, Protections & Pitfalls in Bankruptcy
Audio Conference Recording
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Real Estate Bankruptcy
Audio Conference Recording
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Reverse Mergersthe New IPO?
Audio Conference Recording
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Second Lien Financings and Intercreditor Agreements
Audio Conference Recording
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Surviving the Digital Deluge: Best Practices in E-Discovery
and Records Management for Bankruptcy Practitioners
and Litigators
Audio Conference Recording
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
Technology as a Competitive Advantage For Todays Legal
Processes
Audio Conference Recording
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BEARD AUDIO CONFERENCES
The Battle of Green & Red: Effect of Bankruptcy
on Obligations to Clean Up Contaminated Property
Contact: 240-629-3300;
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BEARD AUDIO CONFERENCES
The Subprime Sector Meltdown:
Legal Developments and Latest Opportunities
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Twenty-Day Claims
Audio Conference Recording
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Using Virtual Data Rooms to Expedite Corporate Restructuring
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com
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Using Virtual Data Rooms to Expedite M&A and Insolvency
Proceedings
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
BEARD AUDIO CONFERENCES
Validating Distressed Security Portfolios: Year-End Price
Validation and Risk Assessment
Audio Conference Recording
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
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When Tenants File -- A Landlord's BAPCPA Survival Guide
Audio Conference Recording
Contact: 240-629-3300;
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* * *
Featured Conferences
Beard Conferences presents:
May 15-16, 2008
Fifth Annual Conference on Distressed Investing Europe
Maximizing Profits in the European Distressed Debt Market
Le Meridien Piccadilly Hotel - London
Brochure available soon!
* * *
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
*********
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 ***