/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080508.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, May 8, 2008, Vol. 12, No. 109 Headlines ARROWHEAD GENERAL: S&P Chips Rating to B- with Negative Outlook ATLAS ENERGY: Announces $150MM Follow-On Offering of 10.75% Notes ATLAS ENERGY: S&P Holds 'B' Rating on Proposed $150MM Note Issue ATLAS ENERGY: Moody's Affirms B1 Corporate Family Rating BEAZER HOMES: Gets Default Notice from Trustee of $103MM Jr. Notes BLUE HERON: Fitch Slashes 'AAA' Rating on $25 Million Notes to 'B' BLUE HERON: Fitch Cuts Ratings on Notes Due to Collateral Decline BLUE WATER: Wants Lease Decision Period Moved to September 9 BLUE WATER: Incentive Payments to Critical Employees Challenged BUILDING MATERIALS: Dec. 31 Balance Sheet Upside-Down by $96.3MM CANADIAN TRUSTS: Ontario Court Adjourns Plan Hearing to May 12 CANADIAN TRUSTS: Xceed Objects to Plan Release Provisions CANADIAN TRUSTS: Monitor Files Reports on CCAA Proceedings CAPITAL AUTO: S&P Assigns 'BB' Preliminary Rating on Class D Notes CAPITAL AUTO: Moody's Puts (P)Ba1 Rating on $6.593MM Notes CASH TECH: Unit Completes $3MM Asset Buyout Deal w/ Champion Parts C-BASS: Fitch Lowers Ratings on $54.5 Million Certificates CHAMPION PARTS: Assets Sold to CPI Holdings for $3MM CONGOLEUM CORP: March 31 Balance Sheet Upside-Down by $45 Million COREY LANDINGS: Wants to Hire Berger Singerman as Bankr. Counsel CORONADO CDO: Fitch Cuts Ratings on Two Note Classes from BBB to B CSFB MORTGAGE: Fitch Cuts Ratings on $97.6 Million Certificates DIAMOND GLASS: Trustee Appoints Five Members to Creditors Panel DOLE FOOD: Posts $28.9 Million Net Loss in 1st Qtr. Ended March 22 EOS AIRLINES: Wants to Hire Kurtzman Carson as Claims Agent EOS AIRLINES: Seeks to Hire Alvarez & Marsal as Financial Advisor EXECUTE SPORTS: March 31 Balance Sheet Upside-Down by $1.6 Million FAIRCHILD SEMICONDUCTOR: S&P Lifts Ratings on Debt Refinancing FEDERAL-MOGUL: Posts $32 Million Net Loss in 2008 First Quarter FEDERAL-MOGUL: PepsiAmericas Seeks Court OK on $6MM Claims Payment GENERAL MOTORS: Resumes Labor Talks with UAW Local 31 in Kansas GOLDMAN SACHS: Fitch Cuts Rating on $2MM Class B-3 Certs. to B GREAT NORTHWEST: S&P Holds 'BB-' Rating; Revises Outlook to Stable GSR MORTGAGE: Moody's Junks Rating on Cl. M-1 Certificates HAVEN HEALTHCARE: Selling All Assets for $109 Million HEARTLAND AUTOMOTIVE: Can File Chapter 11 Plan Until September 3 IMAX CORP: Amends Credit Facility; Sells $18MM in Common Shares INDEPENDENCE VI: Moody's Junks Ratings on Four Note Classes JEFFERSON COUNTY: Raise More Capital to Cut Debt, Insurers Say JOHN B. SANFILIPPO: Posts $8.8MM Net Loss in Qtr. Ended March 27 JOURNAL REGISTER: Covenant Concern Cues S&P to Junk Credit Rating JP MORGAN CERTS: Stable Performance Cues Fitch to Affirm Ratings KIMBALL HILL: Court Extends Schedules Filing Deadline to June 9 KIMBALL HILL: Wants to Employ Houlihan Lokey as Financial Advisor KIMBALL HILL: Wants Claims Notice & Sell Down Procedures Created LINENS N THINGS: Seeks Extension of Time to File Schedules LINENS N THINGS: To Pay $73,000,000 to Critical Vendors LINENS N THINGS: Wants Kurtzman Carson as Claims Agent MAGNA ENTERTAINMENT: Posts $46.5 Million Net Loss in First Quarter MAR-ROX: Voluntary Chapter 11 Case Summary MBIA INC: No Reason to Deploy $1.1BB Offering Proceeds, CEO Says MCJUNKIN RED: $475M Shareholder Payment Cues Moody's B1 CF Rating MDI INC: Has Until November 3 to Comply w/ Nasdaq's Bid Price Rule MERRILL LYNCH TRUST: Moody's Junks Ratings on Five Cert. Classes MEZZ CAP: Fitch Puts 'CCC/DR5' Rating on $500,000 Class J Certs. MEZZ CAP: Fitch Junks Ratings on Two Certificate Classes MORRIS PUBLISHING: Moody's Cut Ratings on Covenant Breach Risk NETBANK INC: Has Until May 12 to File Chapter 11 Plan NEWFIELD EXPLORATION: S&P Rates $600MM Subordinated Notes BB- OFFICE PORTFOLIO: Fitch Lifts Rating on $17.1MM Certs. to 'BB+' OTC INTERNATIONAL: Can Hire Garden City as Claims & Noticing Agent OTC INTERNATIONAL: Court OKs Klestadt & Winters as Bankr. Counsel PACIFIC LUMBER: Asks Court to Approve Global Plan Settlement PACIFIC LUMBER: Plan Confirmation Trial Extended to May 15 PEOPLE'S CHOICE: Panel Is Sole Plan Proponent; CEO Dispute Fixed PEOPLE'S CHOICE: Panel Can Solicit Votes On Liquidation Plan PNM RESOURCES: S&P Cuts Corporate Credit Rating to BB- from BB+ POWERMATE HOLDINGS: Gets Court OK on $10.3 Mil. Asset Sale PRC LLC: ACE American et al. Oppose Disclosure Statement PRC LLC: Court Extends Action Removal Period to July 21 PRC LLC: Court Extends Lease Decision Period to August 20 PRIMUS TELECOM: Posts $3MM Net Loss in 1st Quarter Ended March 31 PROPEX INC: Can Exercise Business Judgment for Idle Assets PROPEX INC: Wants Court to Reject Two Chattanooga Office Leases SACO I: Moody's Downgrades Ratings on 97 Certificate Classes SHARPER IMAGE: Asks Court to Approve Asset Sale Procedures SIRVA INC: First Amended Plan Gets 100% Vote from Class 1 SIRVA INC: Court Approves Pre-Packaged Plan of Reorganization SIX FLAGS: Management Outlines Cost-Cutting Measures to Investors SMART BALANCE: Moody's Lifts Ratings on Leverage Improvement SPRINT NEXTEL: Hooks Up With Clearwire on $14BB Wireless Venture STRUCTURED ASSET: Fitch Lowers Ratings on $153.2MM Certificates THORNBURG MORTGAGE: Seeks Stockholders' Approval to Dilute Shares TIMBERWOLF I: Expected Loss Prompts Moody's to Lower Ratings TOPANGA CDO: Moody's Chips Ratings on Six Note Classes TROPICANA ENTERTAINMENT: Gets Court's Nod on First Day Motions TROPICANA ENT: S&P Puts Rating at Default After Bankruptcy Filing TROPICANA ENT: Bankruptcy Filing Cues Moody's Default Rating UBS AG: To Cut 5,500 Jobs and Sell $15BB of Mortgage Assets VALLAMBROSA HOLDINGS: Case Summary & Five Largest Unsec. Creditors VALLEJO CITY: City Officials Finally Opt for Bankruptcy Protection VOUGHT AIRCRAFT: S&P Holds 'B-' Rating; Revises Outlook to Stable VOUGHT AIRCRAFT: Moody's Holds Ratings; Revises Outlook to Stable WASHINGTON MUTUAL: Moody's Cuts Ratings on 82 Tranches WELLMAN INC: Court OKs FTI Consulting as Panel's Financial Advisor WELLMAN INC: Court Approves Ropes & Gray as Committee Counsel WESTLAKE CHEMICAL: S&P Puts 'BB-' Prelim. Rating on Unsecured Debt WILSHIRE MORTGAGE: Fitch Affirms 'B+' Rating on $300,000 Certs. WORLD HEART: Gets NASDAQ Warning on Minimum Bid Price Compliance ZIFF DAVIS: Further Amends Disclosure Statement and Plan * Fitch Expects Store Sales Performance to Remain Weak in 2008 * S&P Says US Banks May Have Made It Through Recent Market Turmoil * S&P Says Slowing of Bank Lending May Not Lead to Rating Actions * S&P Says Credit Card Charge-Offs Continue to Mount in March '08 * Rebecca Winthrop Joins Ballard Spahr in Los Angeles *Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* ARROWHEAD GENERAL: S&P Chips Rating to B- with Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on San Diego-based Arrowhead General Insurance Agency Inc. to 'B-' from 'B'. Standard & Poor's also said that the outlook on Arrowhead is negative. "This rating action reflects our view that the company is unable to sustain the financial-performance goals that were established when we initially assigned the ratings in 2006," explained Standard & Poor's credit analyst Michael Gross. These metrics include sustained adjusted EBITDA fixed-charge coverage of 2.4x, annual net income of about $10 million, and the maintenance of larger bank loan covenant cushions relative to actual recent experience. Declining property/casualty premium rates and some carrier disruption have hurt Arrowhead. For full-year 2007, Arrowhead had net income of $0.4 million and adjusted EBITDA coverage of 1.5x. For the quarter ending March 31, 2008, the company reported a net loss of $3.2 million and adjusted EBITDA fixed-charge coverage of 1.0x. Standard & Poor's expects that the company will continue to pursue expense savings aggressively in the face of ongoing soft market conditions. S&P anticipate minimal organic revenue growth for full-year 2008. The current rating anticipates that for full-year 2008, Arrowhead will have an adjusted EBITDA fixed-charge coverage ratio of about 1.5x-1.8x in 2008, report positive operating cash flow each of the remaining quarters, report an improved cash and cash equivalent balance, and earn $4 million-$7 million in net income. The negative outlook reflects S&P's concern over the impact of continuing soft market conditions and management's ability to manage through the trough of the premium rate cycle and otherwise challenging market conditions. "We could revise the outlook to stable if management were to prove successful in reducing expenses, continue to perform in-line with existing bank loan covenants, and provide evidence of more stable financial performance," Mr. Gross added. "We could lower the ratings if the company's financial performance were to deteriorate further." Although unlikely in the near term, the ratings could be raised subject to improved market conditions, improved operational control, and sustained financial performance. ATLAS ENERGY: Announces $150MM Follow-On Offering of 10.75% Notes ----------------------------------------------------------------- Atlas Energy Resources, LLC disclosed a $150 million follow-on offering of its 10.75% senior unsecured notes due 2018. The notes priced at 104.75% of par to yield approximately 9.85% to the par call on Feb. 1, 2016. On Jan. 23, 2008, Atlas Energy completed a private placement for $250 million of senior unsecured notes due 2018 to qualified institutional buyers under Rule 144A. The notes from the follow- on offering disclosed and the notes issued on Jan. 23, 2008 shall be treated as a single class of debt securities. Atlas Energy intends to use the net proceeds of the offering to repay a portion of its outstanding balance under its revolving credit facility. The increased borrowing capacity will be used to fund additional acreage acquisitions and accelerated development of the Marcellus Shale as well as further development of its other drilling programs and lease acquisition activities. The notes are not registered under the Securities Act of 1933 or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. Atlas Energy plans to offer and issue the notes only to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S of the Securities Act. About Atlas Energy Resources LLC Based in Moon Township, Pennsylvania, Atlas Energy Resources LLC (NYSE: ATN) -- http://www.atlasenergyresources.com/-- focuses on the development and production of natural gas and, to a lesser extent, oil principally in the eastern United States. Atlas Energy sponsors and manages tax advantaged investment partnerships, in which it co-invests, to finance the exploration and development of its acreage in the Appalachian Basin and drills on its own account in the Antrim Shale of Michigan. ATLAS ENERGY: S&P Holds 'B' Rating on Proposed $150MM Note Issue ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed on May 6, 2008, its 'B' issue-level rating on the senior unsecured notes co-issued by Atlas Energy Operating Company LLC and Atlas Energy Finance Corp. The companies are wholly owned subsidiaries of Atlas Energy Resources LLC (B+/Stable/--). The action followed the proposed $150 million add-on to the $250 million notes due 2018. The recovery rating remains at '5', indicating the expectation for modest (10% to 30%) recovery in the event of a payment default. The senior unsecured notes are guaranteed by the parent company. At the same time, S&P affirmed its 'B+' corporate credit rating on Atlas Energy Resources. The outlook is stable. "Proceeds from the notes will be used to pay down bank debt," said Standard & Poor's credit analyst David Lundberg, CFA. Pro forma for the proposed bond issuance and recent $25 million equity issuance, the company had $804 million in debt. Atlas Energy Resources is an oil and gas exploration and production company based in Moon Township, Pennsylvania. ATLAS ENERGY: Moody's Affirms B1 Corporate Family Rating -------------------------------------------------------- Moody's Investors Service affirmed the ratings of Atlas Energy Operating Company, LLC, including its B1 Corporate Family Rating and the B3 rating on its 10.75% senior unsecured notes due 2018. The B3 rating applies to the $150 million follow-on offering announced. The loss-given-default point estimate on the senior notes was from changed to 83% from 87% (both LGD 5), reflecting pro forma changes the liability waterfall. Proceeds from the offering will be used to repay borrowings under Atlas Energy's credit facility. The outlook is stable. The affirmation reflects that little has changed since ratings were initially assigned in January 2008. Ratings were assigned to a proposed $400 million of senior notes, which was subsequently reduced to $250 million. Thus, the $150 million of additional senior notes priced was within the amount contemplated in the initial rating action. Atlas Energy's performance for the first quarter of 2008 was in line with Moody's expectations. Pro forma for the sale of $25 million of equity to Atlas America, total debt as of March 31, 2008 was approximately $804 million. After allocating approximately $225 million of debt to its partnership management business (using a 3x multiple against $75 million of LTM segment EBITDA), strictly for the purposes of improved comparison to other E&P companies, Atlas Energy's pro forma debt/average daily production was approximately $6,310/Mcfe ($37,900/Boe) as of March 31, 2008. Pro forma interest expense, after allocating a portion of interest expense to the partnership management business, was approximately $0.91/Mcfe ($5.46/Boe) during the first quarter of 2008. Moody's believes that debt/average daily production and interest expense/production are better metrics to use in comparing Atlas Energy's leverage to other E&P companies than reserves-based metrics (such as debt/PD reserves) because its proved reserves have a much longer life than average. Recent statements by management indicate a growing inclination to accelerate exploitation of the partnership's Marcellus Shale position. Managing such an acceleration could prove challenging to Atlas Energy as an MLP/LLC is dependent on the capital markets, both debt and equity, for growth capital. In addition, flush production from increased drilling could steepen the average decline rate for the partnership, which could eventually introduce sustainability challenges. A healthy level of distribution coverage (such as 1.4-1.5x, or higher) provides some cushion against these challenges. Given the higher risk generally associated with E&P MLPs, Moody's would expect growth capex to be funded with at least 50% equity and excess cash flow within each calendar year. Atlas Energy's estimated maintenance capex used in computing distributable cash flow was $13 million during the first quarter, or approximately $1.57/Mcfe ($9.42/Boe). Atlas Energy Operating Company, LLC, headquartered in Moon Township, Pennsylvania, is the principal operating subsidiary of publicly traded Atlas Energy Resources, LLC. Atlas Energy Resources is managed by Atlas Energy Management, Inc., a wholly- owned subsidiary of Atlas America. BEAZER HOMES: Gets Default Notice from Trustee of $103MM Jr. Notes ------------------------------------------------------------------ Beazer Homes USA Inc. stated in a filing with the Securities and Exchange Commission that it received a default notice from The Bank of New York Trust Company National Association, the trustee under the indenture governing the company's outstanding $103.1 million unsecured junior subordinated notes due July 2036. The notice alleges that the company is in default under the indenture because the company has not provided certain required information, including its annual audited and quarterly unaudited financial statements. The builder, which has discovered possible accounting problems during a review of its lending practices, delayed the filing of audited financial statements because of its need to restate certain results that could impact fiscal years 1998 through 2007, The Wall Street Journal reports. The notice, according to the company's 8-K filing, stated that this default will become an event of default under the indenture if not remedied within 30 days. The company expects to be able to cure this default on or before May 15, 2008. About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilder with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also provides mortgage origination and title services to its homebuyers. * * * As reported in the Troubled Company Reporter on March 7, 2008, Fitch Ratings downgraded Beazer Homes USA Inc.'s Issuer Default Rating and other outstanding debt ratings as, including IDR to 'B+' from 'BB-'; Senior notes to 'B/RR5' from 'BB-'; Convertible senior notes to 'B/RR5' from 'BB-'; and Junior subordinated debt to 'CCC+/RR6' from 'B'. Fitch has assigned a Recovery Rating to Beazer's Secured revolving credit facility of 'BB/RR1' . The TCR said on Feb. 19, 2008, that Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured note ratings on Beazer Homes USA Inc. to 'B' from 'B+'. The ratings remain on CreditWatch, where they were placed with negative implications on Aug. 14, 2007. BLUE HERON: Fitch Slashes 'AAA' Rating on $25 Million Notes to 'B' ------------------------------------------------------------------ Fitch downgraded three classes of notes and one additional interest component, and affirmed one class of notes issued by Blue Heron Funding VI, Ltd. Two classes of notes remain on Rating Watch Negative. These rating actions are effective immediately: -- $1,068,898,656 class A-1 notes downgraded to 'BBB-' from 'AAA'; remains on Rating Watch Negative; -- $25,000,000 class A-2 notes downgraded to 'B' from 'AAA'; remains on Rating Watch Negative; -- EUR89,936,000 (US$ equivalent $105,000,000) class B notes downgraded to 'C' from 'A'; removed from Rating Watch Negative; -- EUR89,936,000 (US$ equivalent $105,000,000) class B additional interest component downgraded to 'C' from 'BBB-'; removed from Rating Watch Negative (interest only); -- $6,250,000 certificates affirmed at 'AAA' (principal only). Blue Heron VI is a collateralized debt obligation that closed on Dec. 21, 2005 and is managed by Brightwater Capital Management. Blue Heron VI's reinvestment period will end in May 2008. Blue Heron VI's portfolio contains approximately 28.5% subprime residential mortgage-backed securities bonds, 12.3% structured finance CDOs, and other structured finance assets. Subprime RMBS bonds of the 2005 and 2006 vintages account for approximately 4.7% and 3.7% of the portfolio, respectively. The SF CDO exposure includes SF CDOs originated in 2006 (4.5%) and 2007 (7.0%). Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically with regard to RMBS and SF CDOs with underlying exposure to subprime RMBS. Since the beginning of 2007, approximately 17.9% of the portfolio has been downgraded, with 8.7% of the portfolio currently on Rating Watch Negative. Approximately 13.2% of the portfolio is currently below investment grade. As of the March 17, 2008 trustee report approximately $96.6 million (8.0%) of the portfolio, consisting of SF CDO and subprime RMBS assets, was considered to be defaulted. As a result of the collateral deterioration, Blue Heron VI is currently failing its classes A and B overcollateralization tests. The class A OC test failure resulted in the class B notes not receiving any interest proceeds at the last payment date on March 25, 2008. The rating assigned to the certificates is based on the rating of the certificate protection assets, which are comprised of U.S. government-backed Resolution Funding Corp zero-coupon bonds. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS and SF CDOs with underlying exposure to subprime RMBS. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the classesA-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B notes addresses the ultimate repayment of principal and the ultimate payment of interest at a rate equal to LIBOR by the legal final maturity date. The rating on the class B additional interest component addresses the ultimate payment of class B interest at a rate equal to 1.5% per annum. The rating on the certificates addresses the ultimate repayment of principal only by the legal final maturity date. BLUE HERON: Fitch Cuts Ratings on Notes Due to Collateral Decline ----------------------------------------------------------------- Fitch downgraded three classes of notes and one additional interest component, and affirmed one class of notes issued by Blue Heron Funding VII, Ltd. Two classes of notes remain on Rating Watch Negative. These rating actions are effective immediately: -- $1,063,326,672 class A-1 notes downgraded to 'BBB-' from 'AAA'; remains on Rating Watch Negative; -- $25,000,000 class A-2 notes downgraded to 'B' from 'AAA'; remains on Rating Watch Negative; -- EUR88,451,000 (US$ equivalent $105,000,000) class B notes downgraded to 'C' from 'A'; removed from Rating Watch Negative; -- EUR88,451,000 (US$ equivalent $105,000,000) class B additional interest component downgraded to 'C' from 'BBB-'; removed from Rating Watch Negative (interest only); -- $6,250,000 certificates affirmed at 'AAA' (principal only). Blue Heron VII is a collateralized debt obligation that closed on Dec. 28, 2005 and is managed by Brightwater Capital Management. Blue Heron VII's reinvestment period will end in May 2008. Blue Heron VII's portfolio contains approximately 29.2% subprime residential mortgage-backed securities bonds, 11.8% structured finance CDOs, and other structured finance assets. Subprime RMBS bonds of the 2005 and 2006 vintages account for approximately 4.6% and 4.5% of the portfolio, respectively. The SF CDO exposure includes SF CDOs originated in 2006 (4.2%) and 2007 (6.8%). Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically with regards to subprime RMBS and SF CDOs with underlying exposure to subprime RMBS. Since the beginning of 2007, approximately 17.3% of the portfolio has been downgraded, with 8.3% of the portfolio currently on RWN. Approximately 12.6% of the portfolio is currently rated below investment grade. As of the March 20, 2008 trustee report approximately $99.0 million (8.3%) of the portfolio, consisting of SF CDO and subprime RMBS assets, was considered to be defaulted. As a result of the collateral deterioration, Blue Heron VII is currently failing its classes A and B overcollateralization tests. The class A OC test failure resulted in the class B notes not receiving any interest proceeds at the last payment date on March 31, 2008. The rating assigned to the certificates is based on the rating of the certificate protection assets, which are comprised of U.S. government-backed Resolution Funding Corp zero-coupon bonds. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS and SF CDOs with underlying exposure to subprime RMBS. Additionally, Fitch is reviewing its SF CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the class A-1 and class A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B notes addresses the ultimate repayment of principal and the ultimate payment of interest at a rate equal to LIBOR by the legal final maturity date. The rating on the class B additional interest component addresses the ultimate payment of class B interest at a rate equal to 1.5% per annum. The rating on the certificates addresses the ultimate repayment of principal only by the legal final maturity date. BLUE WATER: Wants Lease Decision Period Moved to September 9 ------------------------------------------------------------ Upon filing for bankruptcy in February, Blue Water Automotive Systems, Inc. and its affiliated debtors were parties to various unexpired leases of non-residential real property, including: Counterparty Property ------------ -------- Blue Water Automotive Properties in Caro, Port Systems Properties, LLC Huron, Range Road, Haas Drive, and Lexington, Michigan North Winds Investment Corp. Manufacturing space at 1044 Durant Drive, in Howell, Michigan North Winds Investment Corp. Storage space at the Durant Drive manufacturing space RL Enterprises, LLC Property at 1045 Durant Drive DMC Hamilton Street, LLC Property at 215 Hamilton Street, in Leominster, Massachusetts Injectronics, Inc. Property at 2804 Troxler Road, in Burlington, North Carolina The Debtors have until June 11, 2008, to assume or reject the nonresidential real property leases. Judy A. O'Neill, Esq., at Foley & Lardner, LLP, in Detroit, Michigan, says the Debtors will be unable to make informed, value-maximizing decisions regarding the leases before the June 11 deadline as they are still in the process of negotiating the terms of a sale of the Debtors' assets and the assumption and assignment of all unexpired leases. Section 365(d)(4)(B) of the Bankruptcy Code provides that "[t]he court may extend the period determined under subparagraph (A), prior to the expiration of the 120-day period, for 90 days on the motion of the trustee or lessor for cause." Accordingly, pursuant to Section 365(d)(4), the Debtors ask the United States Bankruptcy Court Eastern District of Michigan to extend the time by which they will decide whether to assume or reject the leases until September 9, 2008, or the effectiveness of the Debtors' confirmed Chapter 11 plan of reorganization. "The extension is reasonable because the Leases are critical to the Debtors' estates and are integral to a potential sale of the Debtors' businesses," Ms. O'Neill asserts. Furthermore, without the extension, the Debtors may be compelled to make a potentially detrimental determination of either inadvertently rejecting a valuable lease or prematurely assuming a lease and incur a substantial administrative obligation, which might negatively impact either the sale or the creditors of the estates." Ms. O'Neill adds. The disposition of the leases is likely to be governed by the sale of the Debtors' assets and the Chapter 11 plan. Given the early stages of the sale process, and the fact that a purchase agreement, which will dictate which leases the Debtors assume and assign or reject, is not likely to be executed before May 28, 2008, the Debtors require an extension of time, Ms. O'Neill states. The Debtors ask that the extension of the lease decision deadline apply to all of their leases, whether or not included in the list. Ms. O'Neill says the Debtors have attempted to list all of their nonresidential real property leases but some leases may have been inadvertently omitted. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The hearing on the Debtors' disclosure statement and plan is set for Aug. 5, 2008. (Blue Water Automotive Bankruptcy News, Issue No. 13, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BLUE WATER: Incentive Payments to Critical Employees Challenged --------------------------------------------------------------- Blue Water Automotive Systems, Inc. and its affiliated debtors will appear before the United States Bankruptcy Court Eastern District of Michigan on May 12, 2008, to address concerns raised by various parties regarding their request to make incentive payments totaling $497,812 to a limited number of critical, non- insider employees. The Debtors and the objecting parties agreed to the hearing schedule, pursuant to a Court-approved stipulation. As reported by the Troubled Company Reporter on April 21, 2008, the Debtors proposed that the payments be treated as administrative expenses of the Debtors' estates. Nicole Y. Lamb- Hale, Esq.,at Foley & Lardner LLP, in Detroit, Michigan, said that while certain of the Employees have titles suggesting they are insiders, like vice president, they are not covered by Sections 101(31) and 503(c). She said the Critical Employees are mid-level employees who are critical to the day-to-day operations of the Debtors. The Debtors argued that the Incentive Payments are necessary to appropriately compensate the Critical Employees, given the enormous additional burdens placed on them by these bankruptcy proceedings, and to ensure that the Employees remain motivated to perform the important tasks necessary to maintain the value of the Debtors' businesses. The Debtors said if they are unable to make the Incentive Payments, there will be more departures of employees that will be harmful to the enterprise value of the Debtors' businesses. A schedule of the Critical Employees and their incentive payments is available for free at: http://bankrupt.com/misc/Bluewater_list_of_employees.pdf The Official Committee of Unsecured Creditors objects to the Debtors' proposed incentive payments to critical employees to the extent that granting of the Motion is construed to create any administrative expense claims or obligations of the Debtors' estates in the event their Chapter 11 cases are converted to cases under Chapter 7 of the Bankruptcy Code. Furthermore, the Committee is against the payment of incentives until all currently existing administrative expenses have been paid. The Committee believes that it is unlawful and unfair to current holders of administrative expense claims, including Section 503(b)(9) claimants, for the Debtors to create new obligations in favor of its employees and then prefer to those new obligations over pre-existing administrative expenses which the U.S. Congress has granted priority. The Committee wants the Debtors' request denied. On behalf of the International Brotherhood of Teamsters Local Union No. 339, representing 450 people at the Debtors' Port Huron and Haas Drive Plants, Ronald Hreha, president of Local Union No. 339, relates that the collective bargaining agreements between the Debtors and the Union provide that the Debtors will negotiate a bonus plan for 2008 to replace the 2007 Bonus Plan, and yet, as of April 21, 2008, the Debtors did not negotiate with the Teamsters despite repeated requests. Though the Debtors claim that "the incentive payments are essential to reward the [Critical] Employees for all their efforts throughout these bankruptcy cases, to maintain the morale of the Debtors' management and employees," the Union contends that incentive payments to select employees is counterproductive as it will decrease morale for hourly employees who are trying to negotiate a minimal plan, therefore discriminating against the majority of employees. "We are strongly discouraged by the morale crushing actions of Sam Serra and Amy Harding both of which are proposed to receive Incentive Bonuses. These individuals terminated as Steward from each plant for protected concerted actions. The two Stewards merely posted information regarding the Debtors' motion for Incentive Bonuses which is public knowledge," the Union tells Judge McIvor. The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, and the United Steel, Paper, Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, also questioned the proposed payments. The unions, however, withdrew their objections. UAW and USW did not state the cause of their action. About Blue Water Automotive Blue Water Automotive Systems, Inc. designs and manufactures engineered thermoplastic components and assemblies for the automotive industry. The company's product categories include airflow management, full interior trim/sub-systems, functional plastic components, and value-added assemblies. They are supported by full-service design, program management, manufacturing and tooling capabilities. With more than 1,400 employees, Blue Water operates eight manufacturing and product development facilities and has annual revenues of approximately US$200 million. The company's headquarters and technology center is located in Marysville, Mich. The company has operation in Mexico. In 2005, KPS Special Situations Fund II, L.P., and KPS Special Situations Fund II(A), L.P., acquired Blue Water Automotive through a stock purchase transaction. In 2006, the company acquired the automotive assets and operations of Injectronics, Inc., a manufacturer of thermoplastic injection molded components and assemblies. KPS then set about reorganizing the company. The company implemented a program to improve operating performance and address its liquidity issues. During 2007, the company replaced senior management, closed two facilities, and reduced overhead spending by one third. Blue Water Automotive and four affiliates filed for chapter 11 bankruptcy protection Feb. 12, 2008, before the United States Bankruptcy Court Eastern District of Michigan (Detroit) (Case No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel. Administar Services Group LLC acts as the Debtors' claims, noticing, and balloting agent. Blue Water's bankruptcy petition lists assets and liabilities each in the range of US$100 million to US$500 million. The hearing on the Debtors' disclosure statement and plan is set for Aug. 5, 2008. (Blue Water Automotive Bankruptcy News, Issue No. 13, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BUILDING MATERIALS: Dec. 31 Balance Sheet Upside-Down by $96.3MM ---------------------------------------------------------------- At Dec. 31, 2007, the consolidated balance sheet of Building Materials Corp. of America showed $2.3 billion in total assets and $2.4 billion in total liabilities, resulting in roughly $96.3 million total stockholders' deficit. The company reported a net loss of $134.5 million for the year ended Dec. 31, 2007, compared to net income of $38.8 million for the year ended Dec. 31, 2006. Net sales for 2007 were $2.3 billion as compared with $2.0 billion in 2006. The increase in net sales for 2007 was primarily attributable to the acquisition of ElkCorp, which was partially offset by lower net sales of residential roofing products and commercial roofing products driven by lower unit volumes resulting from softer market demand and $15.1 million of restructuring- related sales discounts. The increase in reported net loss for 2007 was primarily attributable to approximately $119.9 million of higher interest expense, as well as $181.0 million of restructuring and other expenses due to the acquisition of ElkCorp., of which $15.1 million was included as a reduction in net sales and $24.3 million was included in cost of products sold related to the integration of Elk operations. Included in restructuring and other expenses are plant closing expenses related to the closure of several manufacturing facilities together with the write-down of plant assets at these facilities, integration-related costs and the write-down of selected inventories. The company had a loss before interest expense and income taxes for 2007 of $27.4 million compared with income before interest expense and income taxes of $124.8 million in 2006. Interest expense in 2007 increased to $181.4 million as compared with $61.5 million in 2006. Interest expense in 2007 included $23.2 million of debt restructuring costs and an additional $3.5 million of interest expense of ElkCorp from the date of acquisition. Acquisition of ElkCorp On Feb. 22, 2007, a subsidiary of the company acquired approximately 90% of the outstanding common shares of ElkCorp, a Dallas, Texas-based manufacturer of roofing products and building materials. The remaining shares of Elk were acquired on March 26, 2007, resulting in ElkCorp becoming an indirect wholly-owned subsidiary of the company. The acquisition of the ElkCorp shares was completed at a purchase price of approximately $945.3 million, net of $100,000 of cash acquired and net of the repayment of $195.0 million of the then outstanding Elk senior notes, which were assumed in connection with the acquisition and were repaid in March 2007. The company financed the purchase of ElkCorp, and refinanced certain of the company's then outstanding debt and repaid all of ElkCorp's then outstanding senior notes of $195.0 million with the proceeds from the company's new senior secured credit facilities. The company's new senior secured credit facilities consist of a $600.0 million Senior Secured Revolving Credit Facility, a $975.0 million Term Loan and a $325.0 million Junior Lien Term Loan Facility. Available Liquidity At Dec. 31, 2007, the company had $210.4 million available liquidity under its $600.0 million Senior Secured Revolving Credit Facility. 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?2b8c About Building Materials Based in Wayne, New Jersey, Building Materials Corporation of America is a manufacturer and marketer of a broad line of asphalt and polymer-based roofing products and accessories for the residential and commercial roofing markets. The company also manufactures specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. The company is a wholly owned subsidiary of BMCA Holdings Corporation, which is a wholly owned subsidiary of G-I Holdings Inc. The company's products are marketed in three groups: residential roofing, commercial roofing and specialty building products and accessories. On March 26, 2007, the company completed the acquisition of ElkCorp, a manufacturer of roofing products and building materials. * * * As reported in the Troubled Company Reporter on April 10, 2008, Moody's Investors Service lowered the ratings of Building Materials Corp. of America including the corporate family rating to B3 from B2, first lien term loan rating to B3 from B2, senior notes rating to B3 from B2, and junior term loan rating to Caa2 from Caa1. The probability of default rating was lowered to Caa1 from B2. The ratings outlook remains negative. CANADIAN TRUSTS: Ontario Court Adjourns Plan Hearing to May 12 -------------------------------------------------------------- Ontario Superior Court Justice Colin Campbell has tentatively rescheduled the hearing to approve a Plan of Compromise and Arrangement proposed by the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper to May 12 and 13, 2008, Reuters reports. The plan hearing was originally scheduled for May 2. According to the paper, Justice Campbell delayed the hearing so he can sort out various issues including separate requests from various ABCP investors who want to sue banks and investment dealers that transacted the Canadian commercial papers. Several companies have claimed that there were misleading disclosures about the assets behind the ABCP, and have complained that the Plan's release provisions are overly broad, Reuters said. The Pan-Canadian Committee, however, has insisted that the Plan releases have to remain intact, or its restructuring proposal will "fall apart," Reuters noted. Mr. Justice Campbell said that he could possibly move the hearing forward to May 7 and 8, according to Reuters. But for a matter "of this magnitude and importance", the Ontario Court is likely to opt for the later dates to have additional time to study the issues closer, Reuters stated. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Xceed Objects to Plan Release Provisions --------------------------------------------------------- The Pan-Canadian Investors Committee for Third Party Structured ABCP related in a press statement dated April 25, 2008, that noteholders have voted overwhelmingly in favor of its proposed Plan of Compromise and Agreement. Nevertheless, on April 30, 2008, Xceed Mortgage Corporation asked the Ontario Superior Court of Justice to declare that the release provisions of the proposed ABCP Restructuring Plan do not operate to release any claims or rights arising from, relating to, or in connection with an QSPE-EXCD Trust. In particular, Xceed contends, the Plan Release does not have the effect of releasing Coventree Inc., Coventree Capital Inc., Coventree Mortgage Finance Corp., or 1462888 Ontario Inc. -- in its capacity as Trustee of QSPE-EXCD Trust -- from potential liability for conduct alleged in a litigation filed by Exceed Mortgage, also in the Ontario Superior Court. Xceed Mortgage is in the business of providing mortgage financing to residential home owners. In March 2002, Exceed Mortgage and the Coventree Parties agreed to create and structure a securitization-based funding program for Xceed Mortgage's residential mortgages. Under the program, Xceed Mortgage sold certain of its mortgages and other assets to the QSPE-EXCD Trust, a special purpose vehicle established and administered by the Coventree Parties for the sole purpose of purchasing these assets. QSPE-EXCD Trust is not a Conduit which is subject to the Plan. The Program continues to be operated pursuant to the provisions of a mortgage purchase agreement between Xceed Mortgage and QSPE- EXCD Trust. Xceed Mortgage's claims in the Ontario Action are entirely unrelated to the Plan, nor is the MPA an agreement affected by the Plan, Gordon Capern, Esq., at Paliare Roland Rosenberg Rothstein LLP, in Toronto, Ontario, tells the Honorable Justice Colin Campbell. Xceed Mortgage asserts Claims in the Ontario Action against the Coventree Parties, alleging that the Coventree Parties (i) invested funds held in cash accounts of QSPE-EXCD Trust in breach of the investment criteria set out in the MPA, and (ii) invested some of the QSPE-EXCD Trust funds in ABCP that the Conduits issued. Xceed Mortgage does not make any claims directly against or concerning the ABCP or Conduits affected by the Plan, Mr. Capern clarifies. Some or all of the Coventree Parties are Released Parties under the Plan. The language of the Release could be interpreted to prohibit claims against the Coventree Parties in respect of their alleged conduct relating to the QSPE-EXCD Trust, despite the fact that it is not subject to the Plan, Mr. Capern explains. He notes that the Coventree Parties have asserted that the Plan Release would release them from any liability to Xceed Mortgage in the Ontario Action. "A release of claims relating to the QSPE-EXCD Trust which is not subject to re-structuring under the Plan is unfair," Mr. Capern argues. "[T]he rights of innocent third parties as beneficiaries of an unrelated Trust would be defeated because the defendants in the [Ontario] Action happen to have made allegedly unauthorized investments in ABCP." About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Monitor Files Reports on CCAA Proceedings ---------------------------------------------------------- Ernst & Young, Inc., as monitor of the proceedings commenced by the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper under Canada's Companies' Creditors Arrangement Act, delivered its fifth monitor report on April 28, 2008, and sixth report on May 1, to the Ontario Superior Court of Justice. The fifth report provides Honorable Justice Colin Campbell with information on an an additional tabulation of the vote on the noteholders' meeting held in Toronto on April 25, including a report on the Monitor's tabulation of the votes cast as a single Class as well as the votes cast in respect of each Series. The sixth report provides the Court with information on the additional tabulation of the vote on the Restructuring Resolution the Monitor performed as directed by the Court. Fifth Report Murray A. McDonald, an officer of the Monitor, chaired the April 25 Noteholders Meeting. The sole item of business presented to the Meeting was the vote on the Restructuring Resolution, seeking approval of the Plan and ancillary matters by the single class of Noteholders as established in the Plan. The Monitor disclosed that it received 2,039 Voter Identification Forms and Voter Confirmation Forms, representing Affected ABCP holdings of more than C$31 billion. Of these, the Monitor noted, 1,940 Noteholders holding an aggregate principal amount of C$30.1 billion of Affected ABCP voted on the Restructuring Resolution either in person or by proxy. The Meeting Order also provided that the Monitor will mark as Unconfirmed Votes any VIF or VCF submitted by a Noteholder that is, in its determination, improperly completed or improperly submitted. In tabulating the votes, the Monitor included all Confirmed Votes and Unconfirmed Votes. The results of the vote on the Restructuring Resolution are: Accepting Rejecting -------------------------- ------------------------- No. of Amount No. of Amount Claimants Held Claimants Held --------- ---------------- --------- --------------- 1,861 C$28,945,184,629 79 C$1,169,003,789 (96%) (96%) (4%) (4%) The Monitor clarified that its results are slightly different from those reported to the Meeting by the Chair because they include additional VIFs and Proxies received by the Monitor at its offices on April 25, 2008, prior to the commencement of the Meeting that were not "delivered to the Chair." Tabulation By Series As required by the Meeting Order, the Monitor has tabulated the votes cast in respect of each Series, a full-text copy of which is available for free at: http://bankrupt.com/misc/ABCP_TabulationBySeries.pdf Based on the tabulation by series, the Monitor observed that if the Restructuring Resolution had been voted on with each Series voting in its own class, it appears that all Series except for Ironstone Series B would have approved the Restructuring Resolution with the required majorities. The Monitor confirmed that, in its assessment, the aggregate Unconfirmed Votes are not sufficient to alter the indicative outcomes reflected in its tabulation except that the sole vote recorded in respect of Aurora Series B is an Unconfirmed Vote. A full-text copy of the Fifth Monitor Report is available for free at http://bankrupt.com/misc/ABCP_5thMonitorReport.pdf Monitor's Sixth Report In preparing its Sixth Report, the Monitor relied on information provided by various parties, including the Sponsors of the Conduits, the Investors Committee and its advisors and Noteholders who have submitted Voter Identification Forms, Voter Confirmation Forms and Forms of Proxy, including supporting documentation. The Monitor relates that it reviewed the information submitted in the abridged time available, but has not audited or otherwise verified the provided information. On April 22 and 23, 2008, the Court heard a number of motions brought by various Noteholders, seeking among other things, that the Pan-Canadian Committee's proposed Plan be amended to provide for multiple classes of Noteholders. Consequently, on April 24, 2008, the Honourable Mr. Justice Campbell issued an endorsement directing that the Meeting of Noteholders be held as scheduled on April 25, with a single class of Noteholders for voting purposes. Pursuant to the Meeting Order and the April 24 endorsement, the Noteholders Meeting took place in Toronto on April 25, 2008. Murray A. McDonald, an officer of the Monitor, chaired the Meeting. The sole item of business presented to the Meeting was the vote on the Restructuring Resolution seeking approval of the Plan and ancillary matters by the single class of Noteholders as established in the Plan. Mr. Justice Campbell convened a case conference on April 29, 2008, to discuss various issues raised in his endorsement and timing with respect to a sanction hearing on the Plan. Certain parties requested that the Monitor provide an additional tabulation of the voting on the Restructuring Resolution, separating Noteholders into two distinct classes. Accordingly, the Monitor was directed by Justice Campbell to tabulate the votes: A. Class A Noteholders Names of Parties in Class (1) Applicants or members * ATB Financial of the Investors Quebec * Caisse de Depot et Placement du Committee * Canaccord Capital Corporation * Canada Mortgage and Housing Corporation * Canada Post Corporation * Credit Union Central Alberta Limited * Credit Union Central of British Columbia * Credit Union Central of Canada * Credit Union Central of Ontario * Credit Union Central of Saskatchewan * Desjardins Group * Magna International Inc. * National Bank Financial Inc./ National Bank of Canada * NAV Canada * Northwater Capital Management Inc. * Public Sector Pension Investment Board * The Governors of the University of Alberta (2) ABCP Dealers * National Bank of Canada and National Bank Financial * Canaccord Capital Corporation * Credential Securities * HSBC Bank Canada; * Canadian Imperial Bank of Commerce and CIBC World Markets Inc. * Bank of Montreal * Scotia Capital Inc. (3) Clients of * Bank of America, N.A. Stikeman Elliott * Citibank, N.A. * Citibank Canada, in its capacity as Credit Derivative Swap Counterparty and not in any other capacity * Deutsche Bank AG * HSBC Bank Canada * HSBC Bank USA, National Association * Merrill Lynch International * Merrill Lynch Capital Services, Inc. * Swiss Re Financial Products Corporation * UBS AG (4) Canadian Banks * Bank of Montreal * Canadian Imperial Bank of Commerce * Royal Bank of Canada * The Bank of Nova Scotia * The Toronto-Dominion Bank * National Bank of Canada (5) Customers of * Customers of Canaccord and Canaccord Capital Credential with holdings Corporation and reported to the Monitor in the Credential Securities voter identification process, under C$1,000,000, based on principal amount. B. Class B Noteholders * All other Noteholders that are not members of Class A. The Monitor notes that while the CCAA Applicants, the clients of Stikeman Elliott LLP, and the Canadian Banks are specifically listed by name in the materials filed in the Applicants' CCAA proceedings, a comprehensive list of parties that might meet the definition of "ABCP Dealers" is not available. The Amended Plan defines ABCP Dealers as any dealer, broker, financial institution or intermediary that sold, directly or indirectly, any of the Affected ABCP to one or more Noteholders or that rendered advice with respect to the purchase and sale of the Affected ABCP. In the absence of a specific list of ABCP Dealers, the Monitor reviewed the motion materials filed by various parties and compiled a list of the parties identified as ABCP Dealers. The Monitor circulated on April 29, 2008, a schedule to the service list setting out a specific list of the parties to be included in each of the Class A groupings so that the service list would be notified of the parties that had been identified as being included in each grouping. The Monitor further notes that subsequent to the case conference it received a request to add an additional grouping to Class A to include any parties that have elected to participate in MAV1. While the Monitor has not included this additional grouping in its updated list of Class A parties, the Monitor confirms that each of the parties that has elected to participate in MAV 1 also falls into one of the other Class A groupings and that accordingly, the results of the tabulation would be the same had this additional grouping been added. The Monitor summarized the results of the vote on the Restructuring Resolution: Accepting Rejecting -------------------------- ------------------------- No. of Amount No. of Amount Class Claimants Held Claimants Held ----- --------- ---------------- --------- ------------- A 1,572 C$23,898,232,639 9 C$867,666 (99.4%) (100.0%) (0.6%) (0.0%) B 289 5,046,951,989 70 1,168,136,123 (80.5%) (81.2%) (19.5%) (18.8%) The parties included in Class B include several Noteholders for which the Monitor has information to suggest that they may meet the definition of an ABCP Dealer. While the Monitor has included those parties in Class B for tabulation purposes, it confirms that even if these parties were re-classified to Class A, there would be no material change to the voting results. The Monitor also confirms that, in its assessment, the aggregate Unconfirmed Votes are not sufficient to alter the tabulation outcome. A full-text copy of the Sixth Monitor Report is available for free at http://bankrupt.com/misc/ABCP_6thMonitorReport.pdf About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CAPITAL AUTO: S&P Assigns 'BB' Preliminary Rating on Class D Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Capital Auto Receivables Asset Trust 2008-2's $1.31 billion asset-backed notes series 2008-2. The preliminary ratings are based on information as of May 6, 2008. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The credit quality of the underlying pool, which has a weighted average FICO score of 717.27 and consists of prime automobile loans; -- The timely interest and principal payments made under stressed cash flow modeling scenarios that are consistent with the ratings assigned to each class of notes; -- The credit enhancement; and -- The sound legal structure. Preliminary Ratings Assigned Capital Auto Receivables Asset Trust 2008-2 Class Rating Type Interest rate* Amount** ----- ------ ---- -------------- -------- A-1*** A-1+ Senior N.A. $237,000,000 A-2 AAA Senior N.A. $415,000,000 A-3 AAA Senior N.A. $435,000,000 A-4 AAA Senior N.A. $155,619,000 B**** A Sub N.A. $42,849,000 C**** BBB Sub N.A. $19,776,000 D**** BB Sub N.A. $6,593,000 * The interest rate on each class of notes will be a fixed rate, a floating rate, or a combination of both if that class has both a fixed- and floating-rate tranche. If the interest rate is floating, the rate will be tied to one-month LIBOR, and the trust will enter into a swap agreement with the swap counterparty. ** The actual dollar amounts will be determined at pricing. *** The class A-1 notes will be sold in one or more private placements. **** The class B, C, and D notes may be initially retained by the depositor or sold in one or more private placements. N.A. -- Not available. CAPITAL AUTO: Moody's Puts (P)Ba1 Rating on $6.593MM Notes ---------------------------------------------------------- Moody's Investors Service has assigned provisional ratings to Capital Auto Receivables Asset Trust 2008-2. The complete rating actions are: Issuer: Capital Auto Receivables Asset Trust 2008-2 -- $237,000,000 Class A-1 Asset Backed Notes, rated (P)P-1 -- $415,000,000 Class A-2 Asset Backed Notes, rated (P)Aaa -- $435,000,000 Class A-3 Asset Backed Notes, rated (P)Aaa -- $155,619,000 Class A-4 Asset Backed Notes, rated (P)Aaa -- $42,849,000 Class B Asset Backed Notes, rated (P)A2 -- $19,776,000 Class C Asset Backed Notes, rated (P)Baa2 -- $6,593,000 Class D Asset Backed Notes, rated (P)Ba1 The ratings are based on the quality of the underlying auto loans and their expected performance, the strength of the transaction's structure, the enhancement provided by subordination (except for Class D), overcollateralization of 0.50% as a percentage of the initial aggregate receivables principal balance, a fully funded non-declining 0.50% reserve account (also expressed as a percentage of the initial aggregate receivables principal balance), available excess spread, and the experience of GMAC LLC as servicer. CASH TECH: Unit Completes $3MM Asset Buyout Deal w/ Champion Parts ------------------------------------------------------------------ Cash Technologies Inc.'s subsidiary, CPI Holdings LLC, completed its acquisition of certain assets of Champion Parts Inc. from PNC Business Credit Inc. for $2.97 million. The assets have a book value of approximately $12.1 million. PNC is the primary lender of Champion Parts. The purchase of the Champion Assets will permit CPI to create a new business using the Champion name, products, staff, facilities and national retail distribution network without assuming any liabilities of the bankrupt entity. Cash Tech first entered the automotive products market in November 2004 when its TAP Holdings LLC subsidiary acquired certain assets of Tomco Auto Products Inc. for $2.5 million. TAP sold the Tomco assets in November 2006 to Champion for approximately $10.8 million. Champion's October 2007 bankruptcy, caused by an unresolved default in its financing facility with PNC, created the opportunity for CPI to acquire the combined Tomco and Champion assets at a substantial discount. The company relates that the accretive transaction will generate extraordinary non-cash income and an as-yet undetermined increase in shareholder equity. The completion of this transaction is also a requirement of the company's plan to regain compliance with the Amex listing qualifications. CPI has hired the pre-bankruptcy management of Champion to operate the business. In addition, CPI intends to expand the Champion product line to include innovative fuel-efficiency products that will be marketed under the brand name Champion Performance and distributed through Champion's extensive retail network consisting of thousands of stores in the U.S. "I'm delighted that we have been able to turn the problem created by the Champion bankruptcy into an opportunity to substantially increase shareholder equity and other fundamentals, Bruce Korman, CEO of Cash Technologies, stated. "While Champion's core business produced profitability for the nearly ten years prior to its bankruptcy, we believe that its nationally recognized brand name and retail presence are perhaps its greatest assets and can be leveraged to successfully deliver new fuel-efficiency and other desirable products into the auto products market," Mr. Korman added. About Champion Parts Based in Hope, Arkansas, Champion Parts Inc. (OTC:CREBQ) -- http://www.championparts.net/-- re-manufactures fuel system components, air conditioning compressors, front wheel drive assemblies, and other underhood electrical and mechanical products for the passenger car and light truck, agricultural, heavy-duty truck and marine parts aftermarket. The company filed for chapter 11 bankruptcy protection on Oct. 10, 2007 (Bankr. W.D. Ark. Case No. 07-73253). James F. Dowden, Esq. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of $26,389,000 and total debts of $25,251,000. The Court converted Champion Parts Inc.'s Chapter 11 bankruptcy case to a Chapter 7 liquidation proceeding on Jan. 25, 2008. About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. As reported in the Troubled Company Reporter on April 23, 2008, Cash Technologies Inc.'s consolidated balance sheet at Feb. 29, 2008, showed $5,952,493 in total assets, $11,331,245 in total liabilities, and ($116,987) in minority interest, resulting in a $5,261,765 total stockholders' deficit. At Feb. 29. 2008, the company's consolidated balance sheet also showed $1,371,405 in total current assets available to pay $9,883,025 in total current liabilities. Going Concern Doubt Vasquez & Company LLP expressed substantial doubt about Cash Technologies Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended May 31, 2007. The auditing firm noted that the company has suffered significant recurring losses and is in immediate need of substantial working capital to continue its business and operations. At Feb, 29, 2008, the company had a working capital deficit of $8,511,620 compared to working capital deficit of $6,662,505 at May 31, 2007. The large change is a direct result of a write off of the Champion note receivable. To date, the company has been funding its operations primarily through the issuance of equity in private placement transactions with existing stockholders or affiliates of stockholders. C-BASS: Fitch Lowers Ratings on $54.5 Million Certificates ---------------------------------------------------------- Fitch Ratings has taken rating actions on C-BASS Mortgage Loan Trust mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $709.7 million and downgrades total $54.5 million. Additionally, $3.3 million was placed on Rating Watch Negative. C-BASS 2003-RP1 -- $1.9 million class A affirmed at 'AAA'; -- $13.5 million class M-1 affirmed at 'AA+'; -- $2.7 million class M-2 downgraded to 'BB' from 'A+'; -- $2.1 million class B-1 downgraded to 'C/DR4' from 'BB'; -- $1.3 million class B-2 downgraded to 'C/DR6' from 'CCC/DR2'; C-BASS 2004-RP1 -- $8.1 million class M-1 affirmed at 'AA+'; -- $4.4 million class M-2 affirmed at 'AA'; -- $3.8 million class M-3 affirmed at 'AA-'; -- $5.4 million class B-1 affirmed at 'A-'; -- $3.5 million class B-2 affirmed at 'BBB+'; C-BASS 2005-RP1 -- $6.3 million class AF-2 affirmed at 'AAA'; -- $12.8 million class AF-3 affirmed at 'AAA'; -- $7.9 million class AV affirmed at 'AAA'; -- $10.2 million class M1 affirmed at 'AA'; -- $6.5 million class M2 affirmed at 'A'; -- $4.7 million class M3 affirmed at 'A-'; -- $3.6 million class B-1 affirmed at 'BBB+'; -- $3.3 million class B-2 rated 'BB', placed on Rating Watch Negative; C-BASS 2005-RP2 -- $7.5 million class AF-1 affirmed at 'AAA'; -- $8.4 million class AF-2 affirmed at 'AAA'; -- $12.0 million class AF-3 affirmed at 'AAA'; -- $2.9 million class AV-1 affirmed at 'AAA'; -- $22.0 million class AV-2 affirmed at 'AAA'; -- $13.1 million class M-1 affirmed at 'AA'; -- $7.9 million class M-2 affirmed at 'A'; -- $6.1 million class M-3 affirmed at 'A-'; -- $3.9 million class B-1 downgraded to 'BBB' from 'BBB+'; -- $3.5 million class B-2 downgraded to 'BBB-' from 'BBB'; C-BASS 2006-RP1 -- $49.6 million class A-1 affirmed at 'AAA'; -- $72.2 million class A-2 affirmed at 'AAA'; -- $16.6 million class M-1 affirmed at 'AA+'; -- $14.0 million class M-2 affirmed at 'A+'; -- $4.0 million class M-3 affirmed at 'A'; -- $5.0 million class B-1 affirmed at 'A-'; -- $3.6 million class B-2 affirmed at 'BBB+'; -- $4.6 million class B-3 downgraded to 'BBB-' from 'BBB'; -- $4.2 million class B-4 downgraded to 'BB' from 'BBB-'; C-BASS 2006-RP2 -- $51.5 million class A1 affirmed at 'AAA'; -- $65.9 million class A2 affirmed at 'AAA'; -- $14.0 million class A3 affirmed at 'AAA'; -- $14.8 million class A4 affirmed at 'AAA'; -- $19.4 million class M1 affirmed at 'AA'; -- $15.1 million class M2 affirmed at 'A'; -- $4.6 million class M3 affirmed at 'A-'; -- $4.8 million class B1 affirmed at 'BBB+'; -- $3.5 million class B2 affirmed at 'BBB'; -- $4.8 million class B3 downgraded to 'BB' from 'BBB-'; C-BASS 2007-RP1 -- $130.4 million class A affirmed at 'AAA'; -- $22.9 million class M-1 affirmed at 'AA+'; -- $19.2 million class M-2 affirmed at 'A+'; -- $5.8 million class M-3 affirmed at 'A'; -- $6.1 million class M-4 downgraded to 'BBB' from 'A-'; -- $4.2 million class M-5 downgraded to 'BB+' from 'BBB+'; -- $7.5 million class M-6 downgraded to 'BB' from 'BBB'; -- $9.5 million class B downgraded to 'B' from 'BBB-' CHAMPION PARTS: Assets Sold to CPI Holdings for $3MM ----------------------------------------------------- Champion Parts Inc. disclosed that Cash Technologies Inc.'s CPI Holdings LLC subsidiary completed the acquisition of certain assets of Champion Parts from PNC Business Credit Inc. for $2.97 million which have a book value of approximately $12.1 million. PNC is the primary lender of Champion Parts. The purchase of the Champion Assets will allow CPI to create a new business using the venerable Champion name, products, staff, facilities and national retail distribution network without assuming any liabilities of the bankrupt entity. Cash Tech first entered the automotive products market in November 2004 when its TAP Holdings LLC subsidiary acquired certain assets of Tomco Auto Products Inc. for $2.5 million. TAP sold the Tomco assets in November 2006 to Champion for approximately $10.8 million. Champion's October 2007 bankruptcy, caused by an unresolved default in its financing facility with PNC, created the opportunity for CPI to acquire the combined Tomco and Champion assets at a substantial discount. Champion Parts related that the accretive transaction will provide CPI extraordinary non-cash income and an as-yet undetermined increase in shareholder equity. The completion of this transaction is also a requirement of Cash Technolgies' plan to regain compliance with the Amex listing qualifications. CPI has hired the pre-bankruptcy management of Champion to operate the business. In addition, CPI intends to expand the Champion product line to include innovative fuel-efficiency products that will be marketed under the brand name Champion Performance and distributed through Champion's extensive retail network consisting of thousands of stores in the U.S. "I'm delighted that we have been able to turn the problem created by the Champion bankruptcy into an opportunity to substantially increase shareholder equity and other fundamentals, Bruce Korman, CEO of Cash Technologies, stated. "While Champion's core business produced profitability for the nearly ten years prior to its bankruptcy, we believe that its nationally recognized brand name and retail presence are perhaps its greatest assets and can be leveraged to successfully deliver new fuel-efficiency and other desirable products into the auto products market," Mr. Korman added. About Cash Technologies Headquartered in Los Angeles, Cash Technologies Inc. (AMEX: TQ) -- http://www.cashtechnologies.com/-- develops and markets innovative data processing solutions in the healthcare and financial services industries. As reported in the Troubled Company Reporter on April 23, 2008, Cash Technologies Inc.'s consolidated balance sheet at Feb. 29, 2008, showed $5,952,493 in total assets, $11,331,245 in total liabilities, and ($116,987) in minority interest, resulting in a $5,261,765 total stockholders' deficit. At Feb. 29. 2008, the company's consolidated balance sheet also showed $1,371,405 in total current assets available to pay $9,883,025 in total current liabilities. About Champion Parts Based in Hope, Arkansas, Champion Parts Inc. (OTC:CREBQ) -- http://www.championparts.net/-- remanufactures fuel system components, air conditioning compressors, front wheel drive assemblies, and other underhood electrical and mechanical products for the passenger car and light truck, agricultural, heavy-duty truck and marine parts aftermarket. The company filed for chapter 11 bankruptcy protection on Oct. 10, 2007 (Bankr. W.D. Ark. Case No. 07-73253). James F. Dowden, Esq. represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it listed total assets of $26,389,000 and total debts of $25,251,000. The Court converted Champion Parts Inc.'s Chapter 11 bankruptcy case to a Chapter 7 liquidation proceeding on Jan. 25, 2008. CONGOLEUM CORP: March 31 Balance Sheet Upside-Down by $45 Million ----------------------------------------------------------------- Congoleum Corporation's balance sheet at March 31, 2008, showed total assets of $172.628 million and total liabilities of $217.4 million, resulting in a total stockholders' deficit of about $44.8 million. The company reported net income for the quarter of $1.7 million, compared with a net loss of $351,000 in the first quarter of 2007. The loss for the three months ended March 31, 2007, includes $2.8 million of interest on Congoleum's 8-5/8% Senior Notes. Under the terms of its pending reorganization plan, Congoleum will not pay interest on the Senior Notes for the period commencing with the filing of its bankruptcy. In the fourth quarter of 2007, Congoleum reversed the post- bankruptcy interest it had recorded on the Senior Notes. Congoleum is no longer recording interest expense on the Senior Notes, and there was no interest expense on the Senior Notes in the three months ended March 31, 2008. During the first quarter of 2008, Congoleum received a payment of $10.1 million, including $1.0 million of interest, on a note for settlement of a legal fee disgorgement. The $1.0 million of interest income is included in net income for the three months ended March 31, 2008. "Given the sharp deterioration in economic conditions versus the first quarter of 2007, I am very pleased that we were able to hold our sales decline to under 4%," Roger S. Marcus, chairman of the board, commented. "All three of our markets -- manufactured housing, new construction, and remodeling -- are down to a much greater degree, in excess of 20% by my estimate. The relative strength of our own performance in this climate reflects the continued sales growth of our unique Dura products, well as new marketing initiatives launched in the fourth quarter of 2007 and the benefit of selling price increases." "We have maintained our operating expenses at the reduced levels established last year, despite inflationary pressures on medical benefits and other costs," Mr. Marcus continued. "Unfortunately, raw material costs have escalated significantly with the price of oil, and we were only able to partly mitigate this through continued improvements in manufacturing efficiency and pricing actions, resulting in a gross margin decline of 1.5% of net sales versus the first quarter of 2007." "While this is unquestionably one of the most difficult periods we have ever faced in terms of market conditions, the steps we have taken to reduce our break-even point have served us well," added Mr. Marcus. "We have been able to offset much of the impact of lower sales volume and higher raw material costs that we have experienced. These efforts should help assure our viability not only through this severe downturn, but also position us to take significant advantage of the recovery when it comes." "In addition to a lean cost structure, we also have the benefit of significant liquidity which was augmented by the $10.1 million legal fee disgorgement we collected in March," Mr. Marcus said. "We ended the quarter with over $29 million in cash." "Our employees deserve tremendous credit for the results achieved in this economic environment, especially given the extra challenges presented by our reorganization proceedings," stated Mr. Marcus. "On that front, I am pleased to report that the reorganization plan has been distributed for voting and initial results of the voting are encouraging. All creditor groups have shown their commitment to remaining on schedule for the June 26th confirmation hearing, and I remain hopeful that Congoleum will emerge from bankruptcy some time this year." About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander & DeLuca, LLP, represent the Debtors. The Asbestos Claimants' Committee is represented by Peter Van N. Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale, Chtd. The Bondholders' Committee is represented by Michael S. Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC, represents the Official Committee of Unsecured Creditors. R. Scott Williams, Esq., of Haskell Slaughter Young & Rediker, LLC, the Court-appointed Futures Claimants Representative, is represented by Roger Frankel, Esq., Richard Wyron, Esq., and Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC. American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum, is represented by Matthew Ward, Esq., Mark S. Chehi, Esq., Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden Arps Slate Meagher & Flom. Going Concern Doubt As reported in the Troubled Company Reporter on April 28, 2008, in Congoleum Corp.'s 2007 annual report filed with the U.S. Securities and Exchange Commission, the company's management said there is "substantial doubt about the company's ability to continue as a going concern unless it obtains relief from its substantial asbestos liabilities through a successful reorganization under Chapter 11 of the Bankruptcy Code." Moreover, Ernst & Young LLP, the company's auditor, raised substantial doubt about the company'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. Ernst & Young related that the company "has been and continues to be named in a significant number of lawsuits stemming primarily from the company's manufacture of asbestos-containing products. The company has recorded significant charges to earnings to reflect its estimate of costs associated with this litigation. On Dec. 31, 2003, Congoleum filed a voluntary petition with the U.S. Bankruptcy Court for the District of New Jersey (Case No. 03- 51524) seeking relief under Chapter 11 of the United States Bankruptcy Code, as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago." COREY LANDINGS: Wants to Hire Berger Singerman as Bankr. Counsel ---------------------------------------------------------------- Corey Landings Development, LLC asks permission from the U.S. Bankruptcy Court for the Middle District of Florida to employ Berger Singerman P.A. as its general bankruptcy counsel. Berger Singerman will provide necessary legal services required in the administration of the the Debtor's estate. Arthur J. Spector, Esq., a shareholder at Berger Singerman, tells the Court that the firm's professionals bill these hourly rates: Arthur J. Spector $480 Debi Evans Galler $375 Paralegals $75 - $170 Mr. Spector assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Based in St. Petersburg, Florida, Corey Landings Development, LLC develops real estate property. The company filed for Chapter 11 protection on March 14, 2008 (Bankr. M.D. Fla. Case No. 08-03353). Arthur J. Spector, Esq., at Berger Singerman, represents the company in its restructuring efforts. When the company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million, and estimated debts of $50 million to $100 million. CORONADO CDO: Fitch Cuts Ratings on Two Note Classes from BBB to B ------------------------------------------------------------------ Fitch downgraded six classes of notes issued by Coronado CDO, Ltd. Four classes of notes remain on Rating Watch Negative. These rating actions are effective immediately: -- $277,331,614 class A-1 notes downgraded to 'AA' from 'AAA'; removed from Rating Watch Negative; -- $3,678,138 class A-2 notes downgraded to 'AA' from 'AAA'; removed from Rating Watch Negative; -- $62,000,000 class B-1 notes downgraded to 'BB' from 'AA'; remains on Rating Watch Negative; -- $15,000,000 class B-2 notes downgraded to 'BB' from 'AA'; remains on Rating Watch Negative; -- $6,750,000 class C-1 notes downgraded to 'B' from 'BBB'; remains on Rating Watch Negative; -- $13,500,000 class C-2 notes downgraded to 'B' from 'BBB'; remains on Rating Watch Negative. Coronado is a collateralized debt obligation that closed on Sept. 4, 2003 and is managed by Western Asset Management Company. Coronado's reinvestment period ended in March 2007. Coronado has a portfolio comprised primarily of subprime residential mortgage- backed securities bonds (42.7%), asset-backed securities (16.1%), commercial mortgage-backed securities (15.4%), prime RMBS (11.1%), Alternative-A RMBS (5.1%), CDOs (3.8%) and other structured finance assets. Subprime RMBS bonds of the 2005, 2006, and 2007 vintages account for approximately 7.8%, 12.8%, and 1.9% of the portfolio, respectively. Alt-A RMBS of the 2005, 2006 and 2007 vintages total approximately 4.5% of the portfolio. Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically with regards to subprime RMBS and Alt-A RMBS. Since Fitch's last review in May 2007, approximately 21.1% of the portfolio has been downgraded with 3.2% of the portfolio currently on Rating Watch Negative. Approximately 16.7% of the portfolio is currently rated below investment grade. The classes A-1 and A-2 notes are insured via an unconditional, irrevocable financial guarantee from MBIA Insurance Corporation (Insurer Financial Strength rated 'AA', Rating Outlook Negative by Fitch). The rating of the classes A-1 and A-2 notes reflect the current rating of MBIA Insurance Corporation as guarantor of the notes. The Rating Watch Negative reflects the continued credit deterioration in subprime RMBS, as well as growing concerns with the performance of Alt-A RMBS. Additionally, Fitch is reviewing its structured finance CDO approach and will comment separately on any changes and potential rating impact at a later date. The ratings of the classes A-1, A-2, B-1, and B-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the classes C-1 and C-2 notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the transaction's governing documents, as well as the stated balance of principal by the legal final maturity date. CSFB MORTGAGE: Fitch Cuts Ratings on $97.6 Million Certificates --------------------------------------------------------------- Fitch Ratings has taken rating actions on CSFB mortgage pass- through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed from Rating Watch Negative. Affirmations total $608.4 million and downgrades total $97.6 million. CSFB 2004-CF2 Group 1 -- $2.4 million class I-A-1 affirmed at 'AAA'; -- $19.2 million class I-A-2 affirmed at 'AAA'; -- $8.5 million class I-M-1 affirmed at 'AA+'; -- $6.2 million class I-M-2 affirmed at 'A+'; -- $4.3 million class I-B affirmed at 'BBB+'; CSFB 2004-CF2 Group 2 -- $3.5 million class II-A-1 affirmed at 'AAA'; -- $1.6 million class II-A-2 affirmed at 'AAA'; -- $0.8 million class II-A-3 affirmed at 'AAA'; -- $8.7 million class II-M-1 affirmed at 'AA+'; -- $6.1 million class II-M-2 affirmed at 'A+'; -- $5.3 million class II-B affirmed at 'BBB+'; CSFB 2005-CF1 -- $5.8 million class A-2 affirmed at 'AAA'; -- $28.3 million class A-3 affirmed at 'AAA'; -- $22.6 million class M-1 affirmed at 'AA'; -- $12.5 million class M-2 affirmed at 'A'; -- $10.3 million class B affirmed at 'BBB'; CSMC 2006-CF1 -- $75.3 million class A-1 affirmed at 'AAA'; -- $14.6 million class M-1 affirmed at 'AA'; -- $8.7 million class M-2 affirmed at 'A'; -- $4.3 million class B-1 downgraded to 'BBB-' from 'BBB+'; -- $1.3 million class B-2 downgraded to 'BB' from 'BBB'; -- $2.6 million class B-3 downgraded to 'BB-' from 'BBB-'; CSMC 2006-CF2 -- $54.0 million class A-1 affirmed at 'AAA'; -- $12.5 million class M-1 affirmed at 'AA+'; -- $3.8 million class M-2 affirmed at 'AA'; -- $7.0 million class M-3 affirmed at 'AA-'; -- $6.5 million class B-1 downgraded to 'A-' from 'A'; -- $3.9 million class B-2 downgraded to 'BB' from 'BBB+'; -- $3.5 million class B-3 downgraded to 'B' from 'BBB'; CSMC 2006-CF3 -- $66.2 million class A-1 affirmed at 'AAA'; -- $12.5 million class M-1 affirmed at 'AA'; -- $3.8 million class M-2 affirmed at 'AA-'; -- $6.4 million class M-3 affirmed at 'A'; -- $5.6 million class M-4 affirmed at 'BBB+'; -- $2.2 million class M-5 affirmed at 'BBB'; -- $2.6 million class M-6 downgraded to 'BB-' from 'BBB-'; -- $0.7 million class B-1 downgraded to 'B' from 'BB'; Credit Suisse Mortgage Corporation Trust 2007-CF1 -- $189.8 million class A affirmed at 'AAA'; -- $29.7 million class M-1 downgraded to 'AA-'from 'AA'; -- $19.2 million class M-2 downgraded to 'BBB+' from 'A'; -- $9.3 million class M-3 downgraded to 'BBB-'from 'BBB+'; -- $4.3 million class M-4 downgraded to 'BB' from 'BBB'; -- $3.4 million class M-5 downgraded to 'BB-' from 'BBB-'. DIAMOND GLASS: Trustee Appoints Five Members to Creditors Panel --------------------------------------------------------------- Kelly Beaudin Stapleton, the U.S. Trustee for Region 3, appointed five members to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Diamond Glass Inc. and DT Subsidiary Corp. The Committee members are: 1) U.S. National Association as Indenture Trustee Attn: Laura L. Moran, Vice-President One Federal Street Ex-Ma-Fed Boston, MA 02110 Tel: (617) 603-6429 Fax: (617) 603-6640 2) Plainfield Special Situations Master Fund, Ltd. Attn: Thomas Walper 55 Railroad Avenue Greenwich, CT 06830 Tel: (203) 302-1737 Fax: (203) 302-1779 3) Newport Global Advisors Attn: Ryan L. Langdon 21 Waterway Avenue, Suite 150 The Woodlands, TX 77380 Tel: (713) 559-7400 Fax: (713) 559-7499 4) SIKA Corporation Attn: Jacqueline Lumley 201 Polito Avenue Lyndhurst, NJ 07071 Tel: (201) 508-6607 Fax: (201) 804-1075 5) Pilkington North America, Inc. Attn: Jeffery T. Bowman 811 Madison Avenue Toledo, OH 43604 Tel: (419) 247-4839 Fax: (419) 247-3941 About Diamond Glass Based in Kingston, Pennsylvania, Diamond Glass Inc. -- http://www.diamongtriumph.com/and http://www.daimondtriumphglass.com/-- is a provider of automotive glass replacement and repair services. The company and and its debtor-affiliate DT Subsidiary Corp., filed for Chapter 11 bankruptcy petition on April 1, 2008 (Bankr. D. Del. Lead Case No. 08-10601). Michael P. Richman, Esq., at Foley & Lardner LLP, and Donald J. Bowman Jr., Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy protection, they listed estimated assets of between $10 million and $50 million and estimated debts of between $100 million and $500 million. DOLE FOOD: Posts $28.9 Million Net Loss in 1st Qtr. Ended March 22 ------------------------------------------------------------------ Dole Food Company Inc. reported a net loss of $28.9 million for the first quarter ended March 22, 2008, compared to a net loss of $10.2 million for the same period ended March 24, 2007. For the quarter ended March 22, 2008, revenues increased 13% to $1.8 billion from $1.6 billion for the quarter ended March 24, 2007. The company attributed the increase in revenues to higher worldwide sales of fresh fruit and packaged food products in North America and Asia. Operating Income For the quarter ended March 22, 2008, operating income increased to $50.2 million from $33.5 million for the quarter ended March 24, 2007. The increase was primarily attributable to better pricing in the company's worldwide banana operations, European ripening and distribution business, as well as improvements in the company's packaged salads and packaged foods businesses. Interest Income and Other Income (Expense), Net For the quarter ended March 22, 2008, interest income and other income (expense), net was an expense of $26.9 million compared to income of $3.2 million in the prior year. The change was primarily due to an unrealized loss of $32.4 million recorded on the company's cross currency swap in 2008 compared to an unrealized loss of $1.8 million recorded in 2007. Interest Expense Interest expense for the quarter ended March 22, 2008, was $43.5 million compared to $44.2 million for the quarter ended March 24, 2007. Interest expense decreased primarily as a result of lower borrowing rates on the company's secured debt facilities partially offset by the impact of additional borrowings. Income Taxes The company recorded $9.1 million of income tax expense on $20.2 million of pretax losses from continuing operations for the quarter ended March 22, 2008. Income tax expense for the quarter included $5.4 million recorded to establish a valuation allowance against deferred income tax assets in Ecuador which, as a result of a recently enacted tax law, have been determined to not be recoverable. Additionally, income tax expense included interest expense of $2.8 million (net of associated income tax benefits of approximately $1.3 million) related to the company's unrecognized tax benefits. The income tax expense for the quarter ended March 24, 2007, was $2.0 million, including interest expense of $2.4 million (net of associated income tax benefits of approximately $1.5 million) related to the company's unrecognized tax benefits. Liquidity and Capital Resources For the quarter ended March 22, 2008, cash flows used in operating activities were $62.8 million compared to cash flows used in operating activities of $42.1 million for the quarter ended March 24, 2007. Cash flows used in operating activities were $20.7 million higher, primarily due to higher levels of accounts receivable resulting mainly from increased sales in the fresh fruit segment. This change was partially offset by higher accrued liabilities due in part to the timing of payments. The company had a cash balance and available borrowings under the asset based revolving credit facilit ("ABL revolver") of $94.9 million and $108.1 million, respectively, at March 22, 2008. The company believes that its existing cash balance and available borrowing capacity under the ABL revolver together with its future cash flow from operations, planned asset sales and access to capital markets will enable it to meet its working capital, capital expenditure, debt maturity and other commitments and funding requirements during the next twelve months. The company has $350.0 million of unsecured notes maturing May 1, 2009. The company is working with its bankers and advisors to assess various alternatives available for addressing this maturity. At this time, the company plans to replace these notes with newly issued notes before the end of the year. In addition, the company is evaluating retiring up to $50.0 million of these unsecured notes with available funds, as allowed under the existing terms of its credit agreements. Balance Sheet At March 22, 2008, the company's consolidated balance sheet showed $4.8 billion in total assets, $4.5 billion in total liabilities, and $297.3 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 22, 2008, are available for free at http://researcharchives.com/t/s?2b91 About Dole Food Based in Westlake Village, California, Dole Food Company Inc. -- http://www.dole.com/ -- is the world's largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh- cut flowers. Dole markets a growing line of packaged and frozen foods and is a produce industry leader in nutrition education and research. * * * Dole Food Company Inc. carries Moody's Investors Service's Caa1 Senior Unsecured Debt rating assigned on Feb. 25, 2008. Rating holds to date. EOS AIRLINES: Wants to Hire Kurtzman Carson as Claims Agent ----------------------------------------------------------- EOS Airlines Inc. asks permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Kurtzman Carson Consultants LLC as its claims, noticing, and balloting agent. KCC will perform various noticing, claims management and reconciliation, disbursement and other services, if necessary, at the request of the Debtor or the Clerk's Office. James M. Le, the chief operating officer at Kurtzman Carson, tells the Court that it will receive from the Debtor a $15,000 evergreen retainer for services to be rendered, as well as expense reimbursement. Documents submitted to the Court did not disclose the specific hourly consulting fees of the firm. Mr. Le assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About EOS Airlines Based in Staten Island, New York, Eos Airlines Inc. -- http://www.eosairlines.com/-- is a transatlantic airline that offers flights between New Yorks John F. Kennedy International Airport and London's Stansted Airport. As of April 26, 2008, Eos operated 31 weekly flights between JFK and Stansted. The company filed for Chapter 11 protection April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection against it creditors, it listed total assets of US$70,233,455 and total debts of US$34,858,485. In connection with the Chapter 11 bankruptcy filing, Menzies Corporate Restructuring was appointed as joint administrators in the U.K. EOS AIRLINES: Seeks to Hire Alvarez & Marsal as Financial Advisor ----------------------------------------------------------------- EOS Airlines Inc. asks permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Alvarez & Marsal Transaction Advisory Group LLC as its financial advisor, nunc pro tunc to April 26, 2008. Alvarez & Marsal will, among others, give assistance in developing a 13-week cash flow forecast in order to assess short-term cash flow needs, assist in the development of contingency plans and vendor management, and assist in the Debtor's preparation of financial statements. Mark Dominic Alvarez, a managing director at Alvarez & Marsal, tells the Court that the firm's professionals bill these hourly rates: Managing Directors $550 - $750 Directors $400 - $550 Associates $300 - $450 Analysts $175 - $300 Mr. Alvarez assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About EOS Airlines Based in Staten Island, New York, Eos Airlines Inc. -- http://www.eosairlines.com/-- is a transatlantic airline that offers flights between New Yorks John F. Kennedy International Airport and London's Stansted Airport. As of April 26, 2008, Eos operated 31 weekly flights between JFK and Stansted. The company filed for Chapter 11 protection April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection against it creditors, it listed total assets of US$70,233,455 and total debts of US$34,858,485. In connection with the Chapter 11 bankruptcy filing, Menzies Corporate Restructuring was appointed as joint administrators in the U.K. EXECUTE SPORTS: March 31 Balance Sheet Upside-Down by $1.6 Million ------------------------------------------------------------------ Execute Sports Inc.'s consolidated balance sheet at March 31, 2008, showed $5,914,108 in total assets and $7,536,243 in total liabilities, resulting in a $1,622,135 total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $645,148 in total current assets available to pay $3,111,899 in total current liabilities. The company reported a net loss of $570,823 for the first quarter ended March 31, 2008, compared with a net loss of $465,511 for the same period last year. Results for 2007 includes a net gain of $206,691 recognized by the company upon the disposition of the Academy brand. Net Sales for the three months ended March 31, 2008, and 2007, were $1,804,954 and $553,482, respectively, representing a $1,251,472, or 226.0% increase. The three month year-over-year increase is due to $1,475,731 of sales related to Sugar Sand boats that were not part of the company's product portfolio during the same period in the previous year. Gross margin for the three months ended March 31, 2008, and 2007, was $153,700, or 9.0% of revenue, and $212,535, or 38.0% of revenue, respectively. The $58,835 decrease in gross margin over the previous year was primarily due to Sugar Sand sales which have approximately a 5% gross margin compared to watersports whose gross margin is higher than Sugar Sand boats at 24,0% and 38.0% during the three months ended March 31, 2008, and 2007, respectively. Net loss from continuing operations for the three months ended March 31, 2008, and 2007, was $570,823 and $672,202, respectively, representing a $101,379, or 15.0% decrease in the net loss from continuing operations compared to the same period last year. The improvement in net loss from continuing operations is due primarily to decreased amortization costs related to the company's convertible debentures. Full-text copies of the company's consolidated financial statements for the quarter ended March 31, 2008, are available for free at http://researcharchives.com/t/s?2b8e Going Concern Disclaimer Bedinger & Company, in Concord, Calif., expressed substantial doubt about Execute Sports Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations. The company has financed its operations since inception primarily through a combination of debt and equity financing. During the three months ended March 31, 2008, the company had a net decrease in cash of $321,153. Total cash resources as of March 31, 2008, were $78,102, compared with $399,255 at Dec. 31, 2007. The company said that currently it does not have sufficient funds to continue for the next twelve months. About Execute Sports Headquartered in Torrance, Calif., Execute Sports Inc. (OTC BB: EXCS) -- http://www.executesports.com/-- engages in the design, manufacture, and sale of water sports products for the power sports and action sports markets in the United States and internationally. Its water sports products include vests, wetsuits, rash guards, wake skates, and accessories, which are marketed under the Execute brand name to the wake board and ski markets. The company markets its products through a network of independent dealers in the United States and through various distributors internationally. It also sells its products through online retailers, as well as through sporting goods stores, marine dealers, and independently owned pro shops. FAIRCHILD SEMICONDUCTOR: S&P Lifts Ratings on Debt Refinancing -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on South Portland, Maine-based Fairchild Semiconductor International Inc. to 'BB' from 'BB-'. The outlook is stable. At the same time, S&P affirmed the 'BB' issue-level rating on Fairchild Semiconductor Corp.'s senior secured credit facilities following the company's proposed $100 million add-on to its $375 million term loan. The recovery rating has been revised to '3', indicating the expectation for meaningful (50% to 70%) recovery in the event of a payment default, from '2'. The secured financing will consist of a $475 million term loan and a $100 million revolving credit facility upon close. The new debt will be issued under the existing credit agreement. Standard & Poor's also raised its issue-level rating on Fairchild Semiconductor Corp.'s senior subordinated debt to 'B+' (two notches below the 'BB' corporate credit rating on parent company Fairchild Semiconductor International) from 'B'. The recovery rating on this debt remains unchanged at '6', indicating the expectation for negligible (0% to 10%) recovery in the event of a payment default. S&P will withdraw both of these ratings upon redemption. The rating actions follow the company's announcement that it will refinance $200 million of maturing senior subordinated debt with the proposed new senior secured debt, $50 in million cash, and a draw on its revolving credit facility. Pro forma for the refinancing, leverage improves to about 1.8x, from 2.2x as of March 31, 2008. In addition to the modest impact that the refinancing will have on leverage, operational trends continue to improve modestly. "The rating on Fairchild reflects the company's low margins relative to peers, modest scale, and challenges to improving its product mix," said Standard & Poor's credit analyst Lucy Patricola. "These factors are offset partially by a solid financial profile, selected market strength, and diverse end markets." Fairchild is a vertically integrated manufacturer of a wide variety of power and logic analog semiconductors and integrated circuits. FEDERAL-MOGUL: Posts $32 Million Net Loss in 2008 First Quarter --------------------------------------------------------------- Federal-Mogul Corp. reported its first quarter 2008 financial results with record quarterly sales of $1.86 billion, an increase of 8% over the same period of the prior year. According to a company press release, during the first quarter, the company recorded a one-time, non-cash charge of $68 million relating to re-valuation of inventory, as required by fresh start reporting following emergence from Chapter 11 in December 2007. The company reported a net loss of $32 million as compared to net income of $5 million in the first quarter of 2007. Without the inventory charge and the associated tax impact, net income would have been $32 million, or 2% of sales. Approximately $206 million or 11% for Q1 2008, up from the same period in 2007 when the company reported Operational EBITDA of $199 million. Financial Summary (in millions) Three Months Ended March 31 -------------- 2008 2007 ------ ------ Net sales $1,859 $1,716 Gross margin 266 308 Adjusted gross margin 335 308 Selling, general & admin expenses (209) (207) Net income (loss) (32) 5 Adjusted net income 32 5 Operational EBITDA 206 199 During the quarter, sales were $1.86 billion, up $143 million, or eight percent above the same period in 2007. The sales results were impacted by favorable currency exchange of $120 million and increased sales of $23 million, principally to European original equipment vehicle manufacturers. The company continues to benefit from strong new business bookings with balanced regional sales and a globally diverse customer base with no single customer accounting for more than seven percent of global sales as of Dec. 31, 2007. Federal-Mogul realized a gross margin of $266 million or 14.3% of sales in the first quarter of 2008, versus $308 million or 17.9% of sales in the first quarter of 2007. The gross margin was unfavorably impacted by a $68 million, non-cash inventory adjustment previously discussed. Without the inventory adjustment, gross margin for the quarter would have been $335 million, or 9% above the prior year and at 18% of sales. This improvement shows that the company maintained its operating performance in spite of ongoing raw materials, energy and other general industry cost pressure. Selling, general and administrative expense for the quarter was $209 million, in comparison to $207 million in the same period in 2007. SG&A as a percentage of sales was favorably reduced in the first quarter of 2008 to 11.2% compared to 12.1% in the same period a year ago. The change in SG&A comprised a reduction of $8 million offset by unfavorable currency exchange of $10 million during the quarter. Federal-Mogul reported cash flow for the first quarter of 2008 of $49 million, which compares favorably to $12 million in the same period of 2007. On April 23, Federal-Mogul listed its Class A Common Stock on the NASDAQ Global Market, and will trade under the symbol "FDML." "We are pleased to report a strong quarter, which shows the benefits of our solid operating performance, combined with our customer, regional and product line diversification. More than 60 percent of our revenue in the quarter was generated outside the U.S.," said President and Chief Executive Officer Jose Maria Alapont. "The operational EBITDA is improved as a result of our restructuring and cost-reduction efforts as outlined in our strategy for sustainable global profitable growth." At March 31, 2008, the Federal-Mogul's balance sheet total assets of $8,245,200,000 and total liabilities of $6,080,300,000, resulting in a $2,164,900,000 billion stockholders' equity. A full-text-copy of Federal-Mogul Corp.'s First Quarter 2008 Results filed on Form 10-Q is available at no charge at: http://ResearchArchives.com/t/s?2b8a Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on Nov. 14. Federal-Mogul emerged from Chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 167; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 10, 2008, Moody's Investors Service confirmed the ratings of the reorganized Federal-Mogul Corporation -- Corporate Family Rating, Ba3; Probability of Default Rating, Ba3; and senior secured bank credit facilities, Ba2. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Nov. 28, 2007. As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. FEDERAL-MOGUL: PepsiAmericas Seeks Court OK on $6MM Claims Payment ------------------------------------------------------------------ PepsiAmericas, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to allow Claim Nos. 6093 and 6441 as administrative priority expense claims and to direct Federal-Mogul Corp. and its debtor-affiliates to pay those claims. The Claims assert damages, aggregating more than $6,000,000, arising from: -- the Reorganized Debtors' alleged breach of a purchase agreement with PepsiAmericas' predecessor; and -- damages incurred by PepsiAmericas as a result of a lawsuit the Reorganized Debtors filed in an Ohio state court relating to certain insurance policies. Kirk T. Hartley, Esq., at Butler Rubin Saltarelli & Boyd LLP, in Chicago, Illinois, asserts that the Claims are administrative claims and PepsiAmericas has a right to recover for its losses as administrative claims. Mr. Hartley relates that in December 2007, the Debtors filed an insurance coverage complaint in an Ohio state court seeking recovery from various insurers for expenses incurred in connection with various "environmental sites." The State Court Action includes allegations regarding the purported rights of the Debtors to recover monies from insurance policies issued to PepsiAmericas. Mr. Hartley asserts that by filing the State Court Action, the Reorganized Debtors have trespassed against the chattels of PepsiAmericas and have caused harm to PepsiAmericas. Mr. Hartley tells the Court that one of the insurer defendant, Liberty Mutual Insurance Company, demanded from PepsiAmericas reimbursement of all expenses and losses it incurred in connection with the State Court Action. He says the Reorganized Debtors have provided to PepsiAmericas some indications that they intend to limit or dismiss the claims in the State Court Action in the future. However, Mr. Hartley notes that there is no concrete assurances that the Debtors will accomplish a dismissal at a certain time. Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on Nov. 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on Feb. 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on Nov. 8, 2007, and affirmed by the District Court on Nov. 14. Federal-Mogul emerged from Chapter 11 on Dec. 27, 2007. (Federal-Mogul Bankruptcy News, Issue No. 167; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Jan. 10, 2008, Moody's Investors Service confirmed the ratings of the reorganized Federal-Mogul Corporation -- Corporate Family Rating, Ba3; Probability of Default Rating, Ba3; and senior secured bank credit facilities, Ba2. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Nov. 28, 2007. As reported in the Troubled Company Reporter on Jan. 7, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Southfield, Michigan-based Federal-Mogul Corp. following the company's emergence from Chapter 11 on Dec. 27, 2007. The outlook is stable. GENERAL MOTORS: Resumes Labor Talks with UAW Local 31 in Kansas --------------------------------------------------------------- General Motors Corp. and United Auto Workers union representatives continued labor contract negotiations on Wednesday morning, the Kansas City Business Journal, citing a UAW Local 31 spokeswoman, reports. No update has been disclosed as of press time. The paper relates that more than a thousand union workers in GM's Fairfax assembly plant in Kansas walked off the their jobs at 9 a.m. on Monday after talks on a new labor deal failed. The automaker and the UAW Local 31 are in discussions aimed at continuing plant production of Chevy Malibus and resolving plant- specific issues such as work rules, seniority, job selection and the use of outside contractors. The Associated Press adds that the impasse, UAW representatives insist, is on the automaker's oversight in awarding jobs at the facility based on seniority. The sticking point supplements the national contract GM hourly employees ratified late last year. UAW Local 602 union workers, at GM's Delta Township plant in Lansing, Michigan, are on its third week on strike, based on a report from the Troubled Company Reporter in April 21, 2008. The strike will greatly affect auto production which is still reeling on the impact of the 6-week Axle strike. To date, 30 GM plants was shut down as Axle continues negotiations with the UAW. According to the various sources, industry analysts suspect that the UAW have strategically planned the strikes to hit factories that manufacture better-selling brands. The Wall Street Journal recounts that the work stoppage is cutting Malibu supply when the demand is high. Although another plant in Orion, Michigan, also produces Malibus, they make less than that of the Fairfax factory. 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 April 28, 2008, Standard & Poor's Ratings Services said that its 'B' long-term and 'B-3' short-term corporate credit ratings on General Motors Corp. remain on CreditWatch with negative implications, where they were placed March 17, 2008. The CreditWatch update follows downgrades of 49%-owned subsidiaries GMAC LLC (B/Negative/C) and Residential Capital LLC (CCC+/Watch Neg/C). The rating actions on Residential Capital LLC and GMAC were triggered by the resignation of the only independent directors at Residential Capital LLC. GOLDMAN SACHS: Fitch Cuts Rating on $2MM Class B-3 Certs. to B -------------------------------------------------------------- Fitch Ratings has taken rating actions on Goldman Sachs mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $48.6 million and downgrades total $28.2 million. Additionally, $66.5 million was placed on Rating Watch Negative. GSRPM 2004-1 -- $4.1 million class A-1 affirmed at 'AAA'; -- $2.6 million class A-2 affirmed at 'AAA'; -- $1.6 million class A-3 affirmed at 'AAA'; -- $11.8 million class M-1 affirmed at 'AA'; -- $10.0 million class M-2 affirmed at 'A'; -- $5.9 million class B-1 affirmed at 'BBB+'; GSRPM Mortgage Loan Trust 2006-2 -- $12.7 million class A-1A affirmed at 'AAA'; -- $14.5 million class A-1B rated 'AAA', placed on Rating Watch Negative; -- $52.0 million class A-2 rated 'AAA', placed on Rating Watch Negative; -- $7.3 million class M-1 downgraded to 'A' from 'AA+'; -- $8.9 million class M-2 downgraded to 'BBB' from 'AA-'; -- $5.1 million class B-1 downgraded to 'BBB-' from 'A'; -- $1.9 million class B-2 downgraded to 'BB' from 'A-'; -- $2.0 million class B-3 downgraded to 'B' from 'BBB'; -- $3.1 million class B-4 downgraded to 'C/DR6' from 'BB+'. GREAT NORTHWEST: S&P Holds 'BB-' Rating; Revises Outlook to Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Great Northwest Insurance Co. to stable from negative. Standard & Poor's also said that it affirmed its 'BB-' counterparty credit and financial strength ratings on GNIC. "The rating action reflects our opinion that GNIC has successfully addressed the integration issues arising from its September 2006 acquisition of a substantial book of business in Hawaii," explained Standard & Poor's credit analyst Tracy Dolin. The Hawaiian business is a separate legal entity -- Hawaiian Insurance & Guaranty Co. -- but HIG shares many of GNIC's managerial and operational resources. S&P believe that management has in place the controls necessary to minimize the risk associated with its highly decentralized business strategy. HIG operates in the same personal lines business as GNIC, using the same Micro Insurance Center business model, which is integral to the notional group's long-term strategy. Standard & Poor's expects that GNIC's net premium growth will be in the low single digits in 2008, driven primarily by the appointment of new agents in Western expansion states. The company will continue to compete under soft pricing conditions in the personal auto market. S&P expect that as long as there aren't frequent catastrophes, the combined ratio will improve somewhat to less than 100%. In a frequent catastrophe year, we believe GNIC will produce unsatisfactory underwriting results similar to those reported in 2007. The consolidated capital adequacy ratio should remain at more than 175%. HIG will likely continue to manage its property catastrophe exposure through high reinsurance protection. Over the longer term, Standard & Poor's believes GNIC's business strategy has above-average operating risk. A disciplined approach to growth and strong controls for selecting and monitoring agents are critical to the rating. Therefore, any deterioration in these areas would likely lead to negative rating actions. GSR MORTGAGE: Moody's Junks Rating on Cl. M-1 Certificates ---------------------------------------------------------- Moody's Investors Service has downgraded 6 certificates and maintained on review for possible further downgrade two of those classes of certificates from GSR Mortgage Loan Trust 2005-HEL1. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by second lien collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: GSR Mortgage Loan Trust 2005-HEL1 -- Cl. A-1, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. A-2B, Downgraded to Baa3 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to Caa2 from Aa2 -- Cl. M-2, Downgraded to Ca from Ba2 -- Cl. M-3, Downgraded to C from B3 -- Cl. M-4, Downgraded to C from Ca HAVEN HEALTHCARE: Selling All Assets for $109 Million ----------------------------------------------------- Haven Healthcare Management LLC and its debtor-affiliates submitted to Hon. Albert S. Dabrowski of the United States Bankruptcy Court for the District of Connecticut a supplemental bidding procedures for the sale of all the Debtors' assets, free and clear of liens and interests, subject to higher and better offers. Qualified bidders are required to submit a sum of at least $109,000,000, which comprised of: -- a $105,000,000 purchase price,; -- a $3,000,000 break-up fee; and -- a $1,000,000. LifeHouse Retirement Properties Inc. is the "stalking-horse" bidder pursuant to an asset purchase agreement dated April 16, 2008, entered between the Debtors and LifeHouse. LifeHouse will not receive any break-up fee if it terminates the purchase agreement. On the one hand, if the Debtors end the contract and sell their assets for less than $90,000,000, the break-up fee will be reduced to $2,000,000. An auction will take place on May 14, 2008, at 10:00 a.m., at the Offices of Wiggin & Dana LLP at One Century Tower in New Haven, Connecticut. A sale hearing is set for May 16, 2008, at 157 Church Street, 18th Floor in New Haven, Connecticut. Objections, if any, are due May 15, 2008. A full-text copy of the Supplemental Bidding Procedures is available for free at http://ResearchArchives.com/t/s?2b90 On April, 10, 2008, Judge Dabrowski approved the Debtors' proposed bidding procedures for the sale of all assets. As reported in the Troubled Company Reporter on March 26, 2008, certain leased facilities located in five states in New England, and all assets at the Debtors' corporate headquarters will be sold. During the public auction to be conducted by Houlihan Lokey Howard & Zukin Capital Inc. as investment banker and financial advisor, qualified bidders are required to bid in $250,000 increments as set forth in the agreement. The Debtors proposed a 3% break-up fee to any stalking-horse bidder. Alan Kolod, Esq., at Moses & Singer LLP in New York, said that all of the Debtors' assets have been pledge to their debtor-in- possession lender CapitalSource Finance LLC and other lenders, who agreed to finance up to $50,000,000 under a revolving credit facility. The approved postpetition revolving credit facility compelled to obtain an order approving the sale by May 30, 2008. Failure to meet these requirement could result in the automatic lifting of the stay to allow foreclosure by the DIP and the prepetition secured lenders. About Haven Healthcare Headquartered in Middletown, Connecticut, Haven Healthcare Management LLC -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long-term care. The company and 46 of its affiliates filed for Chapter 11 protection on November 22, 2007 (Bankr. D. Conn. Lead Case No. 07-32719). Moses and Singer LLP serves as the Debtors' counsel. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in this case. Pepper Hamilton LLP is counsel and Neubert Pepe & Monteith P.C. as its co-counsel to the Creditors Committee. When the Debtors sought protection from their creditors, they listed assets and debts between $1 million to $100 million. The Debtors' consolidated list of 50 largest unsecured creditors showed total claims of more than $20 million. * * * As of Feb. 29, 2008, the Debtors' balance sheet showed total assets of $25,965,631 and total liabilities of $38,597,720 resulting in a $12,632,089 stockholders' deficit. HEARTLAND AUTOMOTIVE: Can File Chapter 11 Plan Until September 3 ---------------------------------------------------------------- The Hon. D. Michael Lynn of the United States Bankruptcy Court for the Northern District of Texas extended the exclusive Chapter 11 plan filing period of Heartland Automotive Holdings Inc. and its debtor-affiliates until September 3, 2008, Bloomberg News' Dawn McCarty reported citing court documents. As reported in the Troubled Company Reporter on April 16, 2008, the Debtors were in talks with third-parties who have expressed willingness to invest in the Debtors' future business, and were exploring strategic alternatives. Jeff P. Prostok, Esq., at Forshey & Prostok LLP in Ft. Worth, Texas, said the extension will enable the Debtors to develop and implement a viable long-term business plan. 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 five 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. IMAX CORP: Amends Credit Facility; Sells $18MM in Common Shares --------------------------------------------------------------- IMAX Corporation disclosed Tuesday that it has entered into two significant financing transactions, one with Wachovia Capital Finance Corporation to increase future availability and modify other terms under the company's existing credit facility, and one with the Douglas family, IMAX's largest shareholder, for the sale of approximately 2.73 million common shares in a private placement at an aggregate purchase price of $18 million. The company said that proceeds from these transactions will be used to fund the company's IMAX(R) Digital projection roll-out, slated to begin this summer, and for general corporate purposes. "We have always believed that the attractive returns from existing joint ventures would enable us to finance our broader digital rollout," said IMAX co-chairmen and co-chief executive officers Richard L. Gelfond and Bradley J. Wechsler. "Now our bank and our largest shareholder have each stepped forward to provide us with increased availability of credit and cash, which we believe will enable us to effectively execute on our existing plan. Coupled with our cash on hand, we expect that these deals will ultimately provide us with access to roughly $55 - $60 million in funding." IMAX and Wachovia entered into an amendment on May 5, 2008, which extends the term of the facility to Oct. 31, 2010, removes an EBITDA maintenance covenant provided the company maintains certain minimum liquidity requirements, and is likely to increase the company's borrowing base. "We believe these changes will ensure our access to more money for a longer period of time, mitigating operating risk," added Messrs. Gelfond and Wechsler. "The amended terms of the line allow us to draw down approximately $24.4 million [], and we believe that as our borrowing base increases in accordance with the terms of the agreement we may be able to take down close to $30 million." Additionally, on May 5, 2008, the company entered into an agreement with the Douglas family, IMAX's largest shareholder, for the sale of approximately 2.73 million of the company's common shares for a total purchase price of $18 million, or approximately $6.60 per share (the equivalent of the average closing IMAX common share price over the most recent five trading days). The Douglas family, which will own 19.9% of the company's common shares post-transaction, has agreed to a five-year standstill with the company whereby it will refrain from certain activities, such as increasing its percentage ownership in the company and entering into various arrangements with the company, such as fundamental or change-of-control transactions. The company has granted the Douglas family registration rights in connection with the newly-acquired shares. The rivate placement is expected to close on May 8, 2008, and is subject to customary closing conditions. "The Douglas family has been an extremely supportive shareholder group, and we're pleased that they have recognized the potential in IMAX and the opportunity to invest at this level at this time," said Messrs. Gelfond and Wechsler. "The good news is that as a result of [the] announcements, we do not believe we will need additional financing to fund our digital rollout under the current business model." The company said that exhibitors and other customers have been extremely enthusiastic in their response to IMAX's pending transition to digital, signing deals for 170 IMAX Digital theatre systems in the last two quarters. In December 2007, IMAX announced a joint venture agreement with AMC Entertainment Inc. for 100 IMAX Digital theatre systems. In March 2008, IMAX announced a joint venture agreement with Regal Cinemas Inc. for 31 IMAX Digital theatre systems. These deals, according to the company, will dramatically increase the IMAX(R) theatre footprint in North America and accelerate the momentum behind IMAX's transition to digital projection technology over the next few years. The company expects to deliver the first of those digital theatre systems and open its initial joint venture theatres with AMC in July 2008. Overview of 2007 Operations The company has six reportable segments identified by category of product sold or service provided: IMAX systems; film production and IMAX DMR; film distribution; film post-production; theater operations; and other. The IMAX systems segment designs, manufactures, sells or leases and maintains IMAX theater projection system equipment. The film production and IMAX DMR segment produces films and performs film re-mastering services. The film distribution segment distributes films for which the company has distribution rights. The film post-production segment provides film post-production and film print services. The theater operations segment owns and operates certain IMAX theaters. The other segment includes camera rentals and other miscellaneous items. IMAX Corporation reported a net loss of $26.9 million for the year ended Dec. 31, 2007, compared with a net loss of $16.8 million during the same period ended Dec. 31, 2006. For the year ended Dec. 31, 2007, the company's total revenues decreased to $115.8 million, versus $127.7 million reported for the prior year, primarily as a result of a $13.1 million decline in systems revenue. The decrease was due principally to a slowdown in installations as exhibitors waited to see the company's digital product. As at Dec. 31, 2007, the company's principal sources of liquidity included cash and cash equivalents of $16.9 million, its revolving credit facility, trade accounts receivable of $25.5 million and anticipated collection from financing receivables due in the next 12 months of $11.0 million. The revolving credit facility, which expires on Oct. 31, 2009, permits maximum aggregate borrowings of up to $40.0 million. As at Dec. 31, 2007, the company's current borrowing capacity under the revolving credit facility is $19.4 million after deduction for outstanding letters of credit of $10.9 million and the excess availability reserve of $5.0 million. About IMAX Corporation Headquartered in Ontario, Canada, IMAX Corporation (Nasdaq: IMAX)(TSX: IMX) -- http://www.imax.com/-- is a digital entertainment and technology company. As of Dec. 31, 2007, there were 299 IMAX theatres operating in 39 countries. The company's groundbreaking IMAX DMR digital remastering technology allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality. * * * At Dec. 31, 2007, the company's consolidated balance sheet showed $208.0 million in total assets and $293.4 million in total liabilities, resulting in a $85.4 million total stockholders' deficit. INDEPENDENCE VI: Moody's Junks Ratings on Four Note Classes ----------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible downgrade these notes issued by Independence VI CDO, Ltd.: Class Description: $675,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $94,500,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2041 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $92,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2041 -- Prior Rating: Aa2 -- Current Rating: B1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $15,950,000 Class C Fourth Priority Mezzanine Deferrable Floating Rate Notes Due 2041 -- Prior Rating: A2 -- Current Rating: Ca Class Description: $21,250,000 Class D Fifth Priority Mezzanine Deferrable Floating Rate Notes Due 2041 -- Prior Rating: Baa2 -- Current Rating: Ca Class Description: $19,000,000 Class E Sixth Priority Mezzanine Deferrable Floating Rate Notes Due 2041 -- Prior Rating: Baa3 -- Current Rating: C Class Description $38,300,000 Preference Shares Due 2041 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. JEFFERSON COUNTY: Raise More Capital to Cut Debt, Insurers Say -------------------------------------------------------------- Financial Guaranty Insurance Company, a wholly owned subsidiary of FGIC Corporation, and XL Capital Assurance Inc., a wholly owned subsidiary of Security Capital Assurance Ltd. presented a variety of alternatives to the Commissioners of Jefferson County, Alabama and their advisors. The bond insurers believe these solutions allow the County to resolve its debt crisis in a manner that is fair and equitable to all parties involved. FGIC and XL Capital are two of the companies that guarantee to make the payments on Jefferson County's sewer bonds in the event of default. In a joint statement, the bond insurers commented, "FGIC and XLCA are confident that the ideas discussed over the past few weeks represent productive strides towards an overall solution to Jefferson County's debt crisis. We have presented a set of solutions that we believe to be fair for all parties, including Jefferson County's ratepayers and its bondholders. "The key to a successful resolution of the issues associated with the County's debt burden is a constructive, engaged and cooperative approach between the County, the bond insurers, and other financial participants. The plans that we have presented are focused on an overall solution that makes use of the existing sales tax revenues to raise additional capital, the proceeds of which will be used to meaningfully reduce the debt of the sewer system. "Our plans have also included recommendations to improve the overall operating efficiency of the sewer system which will allow the system to re-access the capital markets to refinance the remainder of the sewer warrants and reduce debt service costs. The bond insurers remain focused on the County's desire to keep current average residential sewer bills unchanged and our proposals are consistent with that objective. Such a comprehensive plan is ultimately required to ensure the long-term stability of Jefferson County and its sewer system, as well as avoid the possibly far-reaching and negative economic and political impacts of failing to successfully address the crisis." The proposals have been developed over the past few weeks in coordination with the team put together by the bond insurers that include experts from R.W. Beck Inc., Lamont Financial Services Corporation, Blackstone Group Advisory Services, Adams & Reese LLP, and King & Spalding LLP. Further meetings, critical to the resolution of this crisis, are scheduled to take place this week. On April 15, 2008, the County's commercial banks entered into a forbearance agreement on an approximately $53 million debt payment. The forbearance agreement expires on May 15, 2008. There can be no assurance that the proposed solutions will be adopted by all parties, and if adopted, that they will successfully resolve the debt crisis, a joint statement from the insurers stated. 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. JOHN B. SANFILIPPO: Posts $8.8MM Net Loss in Qtr. Ended March 27 ---------------------------------------------------------------- John B. Sanfilippo & Son Inc. reported Monday operating results for its fiscal 2008 third quarter ended March 27, 2008. Net loss for the current quarter was $8.8 million, compared to a net loss of approximately $6.1 million for the third quarter of fiscal 2007. The effective income tax rate for the current quarter declined to 6.5% of loss before income taxes from 35.0% for the third quarter of fiscal 2007, which resulted in a lower tax benefit of $608,000 in comparison to the tax benefit of $3.3 million for last year's third quarter. The decline in the effective income tax rate occurred because the majority of the tax benefit from the loss in the current quarter may only be applied to profits in future periods, to the extent there is taxable income, due to the full utilization of the company's net operating loss carry backs in prior periods. The net loss for the current quarter included expenses of $6.7 million for the refinancing of the company's former financing facilities, which was completed in February, 2008, and $362,000 associated with the company's restructuring initiatives. Net sales decreased slightly to $106.7 million for the third quarter of fiscal 2008 from $107.0 million for the third quarter of fiscal 2007, a decrease of 0.3%. Sales volume, measured as pounds shipped, decreased by 10.6% for the same time period. Net sales, measured in dollars and sales volume, increased in the company's food service and contract packaging distribution channels and decreased in the company's industrial and export distribution channels. Net sales in the company's consumer distribution channel increased in dollars but decreased in sales volume. The average net sales price per pound increased in all distribution channels. Gross profit increased to $12.8 million in the current quarter, versus $6.1 million in the third quarter of fiscal 2007. Gross profit margin, as a percentage of net sales, increased from 5.7% for the third quarter of fiscal 2007 to 12.0% for the current quarter. The current third quarter gross profit margin, as a percentage of net sales, increased in all distribution channels when compared to the gross profit margin for those channels for the third quarter of fiscal 2007. The increase in the gross profit margin in the quarterly comparison was driven mainly by higher selling prices and lower pecan acquisition costs. Largely as a result of the increase in gross profit, income from operations increased to $130,000 for the current quarter, compared to a loss from operations of $6.0 million during the same period in fiscal 2007. Interest expense for the third quarter of fiscal 2008 decreased to $2.7 million from $2.9 million for the third quarter of fiscal 2007 mainly because of lower short-term interest rates in the new revolving credit facility and a reduction in total debt. "We have accomplished a great deal in the current quarter," noted Jeffrey T. Sanfilippo, chief executive officer. "We completed the relocation of our peanut butter line to our Bainbridge, Georgia facility, which was the most challenging and expensive production line to move. Our item rationalization and route migration initiatives have been implemented and are already delivering benefits. "In February, we refinanced our previous bank credit facility and notes, which in the current quarter has resulted in lower interest expense and the elimination of fees associated with being in non- compliance with financial covenants," Mr. Sanfilippo stated. "With these initiatives behind us, we were able to focus on improving manufacturing efficiency in our new facility in the wake of the start up of production lines through increased training, improved hiring practices, workforce stabilization and streamlined manufacturing practices. Though we have more work to do in this area, these measures have proved effective in their early stages as unfavorable labor and efficiency variances in the new facility declined by approximately 38% in the third quarter of fiscal 2008 as compared to those unfavorable variances in the previous quarter of fiscal 2007," Mr. Sanfilippo added. "Finally, we implemented measures in procurement and production planning during the current quarter to reduce finished goods and packaging inventories, which led to a decrease of approximately 23% in the third quarter of fiscal 2008 as compared to the total value of those inventories on hand at the end of the third quarter of fiscal 2007. "Some of the major commodities that we buy are volatile at the moment, especially cashews, and we anticipate that we will incur higher input costs for other commodities, energy and packaging materials for the next fiscal year. However, we believe that our pricing, productivity and item rationalization strategies should help position us to grow value added unit volume by continuing to build innovative nut programs for our key customers," Mr. Sanfilippo concluded. First Three Quarters For the first three quarters of fiscal 2008, net sales decreased to $416.5 million from $418.5 million for the first three quarters of fiscal 2007. Total unit volume sold fell by 7.6% in the year to date comparison. Net loss decreased to $8.6 million for the three quarters ended March 27, 2008, compared with a net loss of $9.4 million in the same period ended March 29, 2007. The net loss for the year to date period included expenses of $6.7 million for the refinancing of the company's former financing facilities, which was completed in February, 2008, and restructuring expenses of $1.8 million. Financing Arrangements On Feb. 7, 2008, the company entered into a credit agreement with a new bank group providing a $117.5 million revolving loan commitment and letter of credit subfacility. The new credit facility is secured by substantially all assets of the company other than real property and fixtures. Also on Feb. 7, 2008, the company entered into a loan agreement with an insurance company providing the company with two term loans, one in the amount of $36.0 million and the other in the amount of $9.0 million, for an aggregate amount of $45.0 million. This mortgage facility is secured by mortgages on the company's owned real property located in Elgin, Ill., Gustine, Calif. and Garysburg, N.C. At the time that the company entered into the new credit facility and mortgage facility, the company terminated its previous revolving credit facility and prepaid all amounts due under its previous long-term financing facility. As of March 27, 2008, the company had $26.5 million of available credit under the new credit facility. As of March 27, 2008, letters of credit, attributable to obligations totaling $8.0 million, were still held by the company's former bank. Because of the refinancing and the resultant bank change, the company was required to deposit $10.2 million in cash with this former lender as collateral for the letters of credit. The remaining balance of $8.0 million of these funds has been classified as restricted cash on the balance sheet as of March 27, 2008. The company currently anticipates that these letters of credit will be transferred to the new credit facility by the end of fiscal 2008, and these funds will be used to pay down the new credit facility. As of March 27, 2008, the company had $5.5 million in aggregate principal amount of industrial development bonds outstanding, which was originally used to finance the acquisition, construction and equipping of the company's Bainbridge, Georgia facility. The bonds bear interest payable semiannually at 4.55% through May 2011. On June 1, 2011, and on each subsequent interest reset date for the bonds, the company is required to redeem the bonds at face value plus any accrued and unpaid interest, unless a bondholder elects to retain the bonds. Balance Sheet At March 27, 2008, the company's consolidated balance sheet showed $377.4 million in total assets, $222.0 million in total liabilities, and $155.4 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended March 27, 2008, are available for free at http://researcharchives.com/t/s?2b8f Going Concern Doubt PricewaterhouseCoopers LLP expressed substantial doubt about John B. Sanfilippo & Son Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended June 28, 2007, and June 29, 2006. The auditing firm pointed to the company's significant losses from operations in 2007 and 2006. The company said that its ability to continue as a going concern is dependent on its future profitability and cash flows and its ability in the near term to meet the restrictive covenants associated with its new financing arrangements. About John B. Sanfilippo Headquartered in Elgin, Illinois, John B. Sanfilippo & Son Inc. (Nasdaq: JBSS) -- http://www.fishernuts.com/ -- is a processor, packager, marketer and distributor of shelled and in-shell nuts and extruded snacks that are sold under a variety of private labels and under the company's Fisher(R), Snack 'N Serve Nut Bowl(TM), Sunshine Country(R), Flavor Tree(R) and Texas Pride(TM) brand names. The company also markets and distributes a diverse product line of other food and snack items. JOURNAL REGISTER: Covenant Concern Cues S&P to Junk Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Yardley, Pennsylvania-based Journal Register Co.; the corporate credit rating was lowered to 'CCC' from 'B-'. The ratings were removed from CreditWatch, where they were placed with negative implications on April 7, 2008. The rating outlook is negative. "The rating downgrade reflects our concern that the flexibility provided by the recently amended bank covenants will not be sufficient given the pace of earnings declines that the company is experiencing," said Standard & Poor's credit analyst Liz Fairbanks. "In addition, we expect that the newspaper operating environment will remain challenging over the near term." While asset sales are a possibility for Journal Register, S&P expect that, given the performance of the industry over the last several quarters, there are fewer potential buyers for newspapers, and valuations have declined. Thus, it may be difficult for the company to sell assets in a manner that reduces debt leverage and allows it to remain in compliance with bank covenants. Journal Register's bank facility was amended on April 29, 2008. Among covenants, total leverage is set at 7.00x and tightens to 6.65x on July 24, 2008, 6.50x on Oct. 1, 2008, and 6.30x on Jan. 1, 2009. S&P estimate that the bank's calculation of total leverage was 6.87x as of March 30, 2008, which compares to the amended covenant of 7.00x. To comply with covenants, the company will have to meaningfully reduce debt, possibly through the sale of assets. Given S&P's expectation for cash flow to continue to decline over the next several months, after-tax proceeds from asset sales will need to be at least in the mid-7x area in order for the company to remain in compliance with covenants as of July 24. S&P's measure of leverage, which is different from that required in the bank covenants (as S&P incorporate adjustments for operating leases and debt-like unfunded pension and post- employment benefit obligations), was estimated to be about 7.8x at March 30, 2008. Total debt outstanding was $643.9 million. While the company repaid approximately $105 million of debt in 2007 and an additional $12.5 million in January 2008 through asset sales and free cash flow, the operating environment remained challenged. Advertising revenues in 2007 declined 8.9% on a comparable-week basis from 2006, with declines in retail (-7.3%), classifieds (-9.8%), and national (-20.1%). Growth in online revenue of 24.3%, which represents about 4% of total revenues, partially offsets these declines. Despite cost-cutting efforts reducing costs by about 6% in 2007, reported 2007 EBITDA declined 19.9% to $90.2 million, after adding back a one-time senior executive severance expense. JP MORGAN CERTS: Stable Performance Cues Fitch to Affirm Ratings ---------------------------------------------------------------- Fitch Ratings affirmed J.P. Morgan's commercial mortgage pass- through certificates, series 2004-CIBC9, as: -- $24 million class A-1 at 'AAA'; -- $146 million class A-2 at 'AAA'; -- $103.7 million class A-3 at 'AAA'; -- $466.3 million class A-4 at 'AAA'; -- $161.1 million class A-1A at 'AAA'; -- Interest-only class X at 'AAA'; -- $27.5 million class B at 'AA'; -- $13.8 million class C at 'AA-'; -- $20.7 million class D at 'A'; -- $11 million class E at 'A-'; -- $15.2 million class F at 'BBB+'; -- $9.6 million class G at 'BBB'; -- $17.9 million class H at 'BBB-'; -- $2.8 million class J at 'BB+'; -- $4.1 million class K at 'BB'; -- $5.5 million class L at 'BB-'; -- $5.5 million class M at 'B+'; -- $2.8 million class N at 'B'; -- $2.8 million class P at 'B-'. Fitch does not rate the $13.8 million class NR. The affirmations reflect stable pool performance and limited paydown (4.4%) since issuance. As of the April 2008 distribution date, the pool's aggregate principal balance is $1.05 billion compared to $1.10 billion at issuance. Loans with full or partial interest-only periods comprise approximately 32.6% of the transaction. Currently, there are two loans in special servicing (4.8%), one of which (0.5%) is expected to incur losses. The loan is secured by three industrial properties in Portage, Michigan and is 90+ days delinquent. The loan transferred to special servicing in April 2006 due to delinquency. Fitch-projected losses on the specially serviced loan are expected to be absorbed by the nonrated class NR. The second loan being specially serviced (4.3%) is secured by a retail mall located in Sacramento, California. The loan transferred in March of 2008 and the special servicer is in the process of gathering more details on the loan. At this time, the loan remains current. Fitch reviewed the shadow ratings of both the Centro Retail Portfolio II (13.5%) and Grace Building (11.0%). Both loans maintain investment-grade shadow ratings. The Centro Retail Portfolio is secured by seven, cross- collateralized anchored retail properties in northern and southern California. Performance for the portfolio has improved slightly from issuance and occupancy remains strong at 99% as of year-end 2007. The Grace Building is secured by a 1,518,210 square foot office building located in New York. Only the A-1 note is included in the trust; the pari-passu A-2 and A-3 notes and a subordinate B- note are held outside the trust. The interest-only period of the loan has expired and the borrower is now making principal and interest payments. Servicer provided occupancy as of YE 2007 is 97.2%. KIMBALL HILL: Court Extends Schedules Filing Deadline to June 9 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois extended, until June 9, 2008, the deadline for Kimball Hill Inc. and its debtor-affiliates to file their schedules and statements. As reported in the Troubled Company Reporter on April 30, 2008, the Debtors related that they have operations in numerous locations around the United States, including multiple metropolitan markets in five major geographic regions. In addition, the Debtors estimated that more than 10,000 creditors and other parties-in-interest will be included in the Statements and Schedules to be filed in their Chapter 11 cases. The Debtors contended that due to the size and complexity of the Debtors' business operations, preparing their Statements and Schedules accurately and in sufficient detail will require significant attention from their personnel and advisors aside from their regular duties in connection with running the Debtors' business. Since the the Debtors have reduced their workforce by more than 50% over the past year, requiring their remaining personnel to sustain their day-to-day responsibilities and compile the Statements and Schedules within the statutory time frame would impose an unreasonable burden on the Debtors. The Debtors assured the Court that their creditors and other parties-in-interest will not be harmed by the proposed extension because even under the extended deadline, the statements and schedules will be filed well in advance of any proposed bar date or other significant milestone event in their bankruptcy cases. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Wants to Employ Houlihan Lokey as Financial Advisor ----------------------------------------------------------------- Kimball Hill Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their investment banker and financial advisor, effective Dec. 17, 2007. The Debtors relate that Houlihan Lokey has extensive restructuring experience and an excellent reputation in providing high quality investment banking and financial advisory services to debtors and creditors in bankruptcy reorganizations and other restructurings. The Debtors believe that Houlihan Lokey is uniquely qualified to serve as their investment banker and financial advisor given its knowledge of the Debtors' business and financial affairs. Having worked with the Debtors' management and their advisors, Houlihan Lokey has developed relevant experience and expertise regarding the Debtors that will assist it in providing effective and efficient services in these Chapter 11 cases, Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, the Debtors' proposed counsel, says. Accordingly, the Debtors entered into an engagement letter with Houlihan Lokey for the provision of certain advisory services. The Debtors expect the firm to assist them in certain transactions that can include, among others, (i) a recapitalization or restructuring of the Debtors' outstanding equity or debt securities; (ii) the disposition of a portion of all the Debtors' assets or operations or equity securities; or (iii) a refinancing of all or any portion of the Debtors' existing obligations. As the Debtors' investment banker and financial advisor, Houlihan Lokey will: (a) assist the Debtors with the development, structuring, negotiation, and implementation of any Transaction, including assisting the Debtors with due diligence investigations and participating as a representative of the Debtors in negotiations with creditors and other parties involved in any Transaction; (b) assist the Debtors in the development, preparation, and distribution of selected information, documents, and other materials in an effort to create interest in and to consummate any transaction, including, if appropriate, advising the Debtors in the preparation of an offering memorandum; (c) solicit and evaluate proposals and any indications of interest regarding any Transaction from current and potential lenders, equity investors, acquirers, and strategic partners; (d) assist the Debtors in valuing the Debtors and, as appropriate, value the Debtors' assets or operations, provided that any real estate or fixed asset appraisals will be undertaken by outside appraisers, separately retained and compensated by the Debtors; (e) provide expert advice and testimony regarding financial matter related to any Transaction; (f) advise and attend meetings of the Debtors' board of directors, creditor groups, official constituencies, and other interested parties, as the Debtors determine to be necessary or desirable; (g) provide other investment banking and financial advisory services as may be agreed upon by Houlihan Lokey and the Debtors. In exchange for the contemplated services, Houlihan Lokey will be entitled to monthly and transaction fees. (1) Monthly Fees. The Debtors will pay Houlihan Lokey a $175,000 non-refundable cash fee each month. The firm will apply 50% of each of the Monthly Fees beginning with the 7th monthly fee payable under the Engagement Letter plus $500,000 as a credit to any Sale Transaction Fee, Financing Transaction Fee, or Restructuring Transaction Fee to which it is becomes entitled. (2) Transaction Fees. * Amendment Transaction Fee. Upon closing of any Amendment Transaction, the Debtors will pay Houlihan Lokey a $1 million fee. * Restructuring Transaction Fee. On the earlier occurrence of an out-of-court Restructuring Transaction and an in-court Restructuring Transaction that, in either case, that results in the Debtors continuing as a going concern, the Debtors will pay Houlihan Lokey a $4 million fee. * Sale Transaction Fee. On the closing of each Sale Transaction of (1) all or a material portion of the Company's equity securities or all or substantially all of the Company's assets, a fee paid from the proceeds of that Sale Transaction equal to $4 million; and (2) a significant portion of the Company's assets, a fee paid from the proceeds of that Sale Transaction equal to the aggregate products of (a) AGC, as defined in the Engagement Agreement, and (b) the applicable percentage, which are: ** Up to $50 million 2% ** Greater than $50 million up to $100 million 1% ** In excess of $100 million 0.5% * Financing Transaction Fee. On the closing of each Financing Transaction, the Debtors will pay Houlihan Lokey a fee in the amount of (a) 1% of the gross proceeds of any indebtedness issued that is senior to the Debtors' other indebtedness, secured by a first priority lien and unsubordinated, with respect to both lien priority and payment to any other obligations of the Debtors; (b) 3% of the gross proceeds of any indebtedness issued that is not secured by a first lien, is unsecured or is subordinated; and (c) 5% of the gross proceeds of all equity or equity-linked securities placed or committed. In addition, the Debtors will reimburse Houlihan Lokey for the reasonable out-of-pocket expenses it incurs in connection with the contemplated services. In certain instances, the Transaction Fees will be credited against any Restructuring Transaction Fee earned by Houlihan Lokey. Specifically, a Financing Transaction Fee or subject to the circumstances, either all or one half of a Sale Transaction Fee earned by and paid to Houlihan Lokey will be credited against any Restructuring Fee earned by the firm, subject to an overall cap of $6 million on the combination of the amounts payable relating to the Sale Transaction Fee and the Restructuring Transaction Fee. Prior to the date of bankruptcy, the Debtors paid Houlihan Lokey a $175,000 classic retainer. The Debtors applied the classic retainer to each monthly invoice and refreshed the classic retainer each month. Prior to the bankruptcy filing, the Debtors have paid Houlihan Lokey a total of $1,375,000 for fees and $23,248 for reimbursement of expenses. As of the date of bankruptcy, the firm do not hold a prepetition claim against the Debtors for services rendered. The parties' Engagement Letter also contains a standard indemnification provisions with respect to Houlihan Lokey's services. The Debtors intend that the services of Houlihan Lokey will complement, and not duplicate, the services to be rendered by their restructuring officers, Deloitte Tax LLP, Deloitte & Touche LLP, or any other professional retained in these Chapter 11 cases. Andrew Turnbull, a managing director at Houlihan Lokey, assures the Court that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code and does not hold or represent an interest adverse to the Debtors' estates. To the extent any new relevant facts or relationships bearing on the matters during the period of Houlihan Lokey's retention are discovered or arise, the firm will use reasonable efforts to file promptly a supplemental declaration, Mr. Turnbull avers. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). KIMBALL HILL: Wants Claims Notice & Sell Down Procedures Created ---------------------------------------------------------------- Kimball Hill and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the Northern District of Illinois to establish claims notice and sell down procedures. The Debtors are currently incurring significant net operating losses and have substantial net unrealized built-in losses -- the Tax Attributes -- in their assets, Edward J. Madell, senior vice president, treasurer, chief financial officer of Kimball Hill, Inc., relates. The Debtors may lose the ability to use these Tax Attributes if they experience an "ownership change" for tax purposes, he says. Valuable Tax Attributes Pursuant to the Internal Revenue Code of 1986, as amended, the Debtors are able to carry back and then forward recognized Built- in Losses to offset future taxable income and tax liability, thereby resulting in a cash refund of recent taxes paid and improved liquidity in the future, Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, the Debtors' proposed counsel, relates. The Debtors may use the recognized Built-in Losses to offset any taxable income generated by transactions completed during their Chapter 11 cases and other taxable income. However, to the extent the trading or transfers of Kimball Hill's stock results in an "ownership change" within the meaning of Section 382 of the Internal Revenue Code, that trading or transfers could severely limit or even eliminate the Debtors' ability to use their Tax Attributes, Mr. Schrock notes. Generally, an "ownership change" occurs if the percentage, by value, of the stock of a corporation owned by one or more shareholders holding 5% of the stock increases by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any time during the three-year testing period ending on the date of the ownership change. Section 382(1)(5) Exception Section 382(1)(5) of the IRC provides that a debtor corporation is not subject to the general limitation imposed by Section 382 with respect to an ownership change if, as a result of the transactions contemplated by a bankruptcy plan, historic stockholders or the corporation's "qualified creditors" own at least 50% of the total value and voting power of the reorganized debtor's stock -- the Section 382(1)(5) Exception. Under the Section 382(l)(5) Exception, the Debtors need to ensure that "qualified creditors" hold at least 50% of their stock immediately after emergence to preserve the majority of their Built-in Losses. Accordingly, the Debtors ask the Court to establish an effective date -- Record Date -- for notice and sell-down procedures for trading in claims against their estates. The Record Date Order is designed to ensure that the Debtors' right is preserved if they determine at a later date that the Sell-Down Procedures are necessary to satisfy the "qualified creditor" rule to preserve their Tax Attributes. Given that the Tax Attributes are property of their estates, the Debtors have a duty to take steps to preserve them and the Court has the authority under Section 362 of the Bankruptcy Code to enforce the automatic stay by taking steps to restrict the transfer of claims that could jeopardize the existence of these valuable assets, Mr. Schrock says. Entry of the Record Date Order will not affect the rights of any party in interest, Mr. Schrock maintains. Instead, it will set and preserve the Record Date should Sell-Down Procedures eventually become necessary to avoid the imposition of an irrevocable limitation on, and the possible loss of the Debtors' Tax Attributes. The approval of the proposed Record Date Order does not constitute approval of any Sell-Down Procedures, or even endorse the notion of Sell-Down Procedures, Mr. Schrock clarifies. The Debtors anticipate once they formulate a detailed proposed plan of reorganization, they may need to seek entry of a Sell- Down Order that will enable them to: (a) determine whether they will qualify for the Section 382(l)(5) Exception; and (b) require certain Substantial Claimholders to "sell-down" unsecured claims to the extent necessary to allow them to qualify for the Section 382(l)(5) Exception. In the event that Sell-Down Procedures are proposed, they would provide that: * A person or entity holding an amount of claims entitling that holder to receive more than 4.75% of the equity of the reorganized Debtors should provide the Debtors with limited information including the size of those holdings and the date those holdings were acquired; * The amount of claims held by a claimholder as of the Record Date would constitute the "Protected Amount;" * Claimholders would never be required to sell down their claims below the Threshold Amount or the Protected Amount, whichever is greater; * The Debtors would seek to require claimholders with claims greater than the Threshold Amount to provide updated holdings information shortly after the date on which the Court approves a disclosure statement for a plan of reorganization that proposes to utilize the Section 382(l)(5) Exception. Based on the updated holdings information, the Debtors would then determine whether it would be necessary to require claimholders holding claims in excess of the Threshold Amount and Protected Amount to sell down a portion of their holdings to preserve the Tax Attributes. Any Sell-Down Procedures the Debtors would propose would provide an adequate opportunity and notice for claimholders to sell down their claims without triggering an unreasonable adverse impact on the value of those claims, Mr. Schrock maintains. About Kimball Hill Based in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Ft. Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007 reflected total assets of $795,473,000 and total debts $631,867,000. (Kimball Hill Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). LINENS N THINGS: Seeks Extension of Time to File Schedules ---------------------------------------------------------- Linen 'N Things, Inc., and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend the time within which they must file their schedules of assets and liabilities, and statements of financial affairs. The Debtors want their deadline extended to July 31, 2008. Given the size and complexity of the Debtors' business operations, the fact that certain prepetition invoices have not been received, and the extensive efforts in negotiating with key creditors prior to the Petition Date, the Debtors were unable to compile all of the information required to complete their Schedules and Statements. The Debtors also say that because of numerous critical operational matters that its employees and legal personnel must address, the Debtors will not be in a position to complete the Schedules and Statements within the time specified by the Bankruptcy Code. About Linens 'n Things Clifton, New Jersey-based Linens Holding Co., which does business through its operating subsidiary Linens 'N Things Inc. -- http://www.lnt.com/-- 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 well as private label home furnishings merchandise in the industry. Linens 'N Things and 11 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on May 2, 2008 (Lead Case No. 08-10832). The Canadian operations are not included in the filings. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC will serve as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Issue No. 3, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: To Pay $73,000,000 to Critical Vendors ------------------------------------------------------- Linen 'N Things, Inc., and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to grant administrative priority status for undisputed obligations to their vendors arising from postpetition delivery, or receipt of goods and services, which were ordered prepetition. The Debtors also seek authority to pay those obligations in the ordinary course of business. In connection with the normal operation of their businesses, the Debtors rely on their vendor community for the provision of goods to be sold in their retail store locations. As of the Petition Date, the Debtors have certain prepetition purchase orders outstanding with various Vendors estimated at $73,000,000. As a consequence of the commencement of the Chapter 11 cases, the Vendors may be concerned that the obligations arising from the Prepetition Orders, will be treated as general unsecured claims against the bankruptcy estates, relates proposed counsel for the Debtors, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware. Mr. Collins notes that Vendors may refuse to ship goods and perform services, or recall shipments, with respect to Prepetition Orders unless the Debtors issue substitute postpetition purchase orders, or obtain a Court order: (i) providing that all undisputed obligations arising from the Prepetition Orders, and goods that are en route to the Debtors on the Petition date are afforded administrative priority status under Section 503(b) of the Bankruptcy Code; and (ii) authorizing the Debtors to satisfy the obligations in the ordinary course of their businesses. Absent the relief sought, Mr. Collins contends that the Debtors may be required to expend substantial time and effort reissuing the Prepetition Orders to provide the Vendors with assurance of administrative priority. He points out that a disruption to the continuous flow of goods and supplies could result in a shortage of inventory at the Debtors' stores, which could lead to dissatisfied customers, potentially harming customer confidence in the Debtors' ability to conduct business at this critical juncture. Payments to vendors will not be deemed to constitute postpetition assumption or adoption of any related agreements pursuant to Section 365 of the Bankruptcy Code, Mr. Collins says. The Debtors further ask the Court to direct all applicable banks and other financial institutions to receive, process, honor and pay all checks drawn or electronic funds transferred to pay Vendors for Prepetition Orders, whether those checks were presented prior to or after the Petition Date. They also seek for authority to issue new postpetition checks, or effect new electronic fund transfers, on account of the Prepetition Orders. The Debtors assure the Court that they have sufficient cash reserves to pay the amounts as they become due in the ordinary course of business. Court Okays Payment The Court has granted the Debtors' request. The Court ruled that the Debtors are authorized, but not obligated, to pay in the ordinary course of their businesses all undisputed obligations arising from postpetition delivery, receipt or shipment by Vendors under the Prepetition Orders. Judge Christopher Sontchi maintained that nothing in the order will be construed as prejudicing any rights the Debtors may have to dispute the amount of or basis for any claims arising in connection with the Prepetition Orders. He also noted that nothing in the order will be deemed either a grant of administrative expense priority status to, or authority to pay, any amounts that are disputed. About Linens 'N Things Clifton, New Jersey-based Linens Holding Co., which does business through its operating subsidiary Linens 'N Things Inc. -- http://www.lnt.com/-- 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 well as private label home furnishings merchandise in the industry. Linens 'N Things and 11 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on May 2, 2008 (Lead Case No. 08-10832). The Canadian operations are not included in the filings. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC will serve as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Issue No. 3, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Wants Kurtzman Carson as Claims Agent ------------------------------------------------------ Pursuant to Section 156(c) of the U.S. Judiciary and Judicial Procedures Code, as supplemented by Rule 2002(f) of the Federal Rules of Bankruptcy Procedure and Local Rule 2002-1(f), the Debtors sought and obtained the Court's authority to employ Kurtzman Carson Consultants LCC as claims, noticing and balloting agent. The Debtors' proposed counsel, Mark Collins, Esq., at Richards, Layton and Finger in Wilmington, Delaware, said that the employment of Kurtzman Carson will promote the economical and efficient administration of the Debtors' estates. Utilizing Kurtzman Carson will allow the Debtors to avoid duplication in claims administration and in providing notices to their creditors. Additionally, the large number of creditors and other parties-in-interest involved in the Debtors' Chapter 11 cases would almost certainly impose heavy administrative and other burdens on the Court and the Office of the Clerk of the Court. The Debtors further believe that Kurtzman Carson is well qualified to provide such services, expertise, consultation and assistance. Kurtzman Carson Consultants has assisted and advised numerous Chapter 11 debtors in connection with noticing, claims administration and reconciliation and administration of plan votes. As claims agent, Kurtzman Carson will: (a) transmit certain designated notices to appropriate parties as required by the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules; (b) maintain copies of all proofs of claim and proofs of interest filed in these cases; (c) maintain the official claims registers; (d) assist the Debtors with the dissemination of solicitation materials relating to a plan of reorganization; and (e) assist the Debtors in the creation and maintenance of a Web site to provide information about the bankruptcy cases to creditors and other partied in interest with respect to the Debtors' bankruptcy case. Specifically, Kurtzman Carson will: (a) prepare and serve required notices in the Chapter 11 cases, including (i) notice of commencement of the Chapter 11 cases and the initial meeting of creditors under Section 341(a); (ii) notice of the claims bar date; (iii) notices of objections to claims; (iv) notices of any hearings on a disclosure statement and confirmation of a plan of reorganization; (v) other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; and assist in the publication of required notices, as necessary; (b) within five business days after the service of a notice, prepare for filing with the Clerk's Office an affidavit of service that includes a copy of the notice served, an alphabetical list of persons on whom the notice was served, along with their addresses, and the date and manner of service; (c) maintain copies of all proofs of claim and proofs of interest filed in the Chapter 11 cases; (d) maintain an official claims register by docketing all proofs of claim and proofs of interest in a claims database that includes (i) the name and address of the claimant or interest holder and any agent thereof if the proof of claim or proof of interest was filed by an agent; (ii) date the proof of claim or proof of interest was received by Kurtzman Carson Consultants and/or the Court; (iii) the asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims register; (f) transmit to the Clerk's Office a copy of the claims register on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; (g) maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest and make the list available to the Clerk's Office or any party-in interest upon request; (h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in this case without charge during regular business hours; (i) create and maintain a public access website setting forth pertinent case information and allowing access to electronic copies of proofs of claim or proofs of interest; (j) record all transfers of claims pursuant to Rule 3001(e) and give notice of those transfers; (k) assist the Debtors in the reconciliation and resolution of claims; (l) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; (m) assign temporary employees to process claims, as necessary; (n) promptly comply with such further conditions and requirements as the Clerk's Office of the Court may at any time prescribe; (o) provide balloting and solicitation services, including preparing ballots, producing personalized ballots and tabulating creditor ballots on a daily basis; and (p) provide other claims processing, noticing, balloting and related administrative services as may be requested from time to time by the Debtors. Kurtzman Carson will also assist the Debtors by acting as solicitation and disbursing agent in connection with the Chapter 11 plan process. The Debtors will pay Kurtzman Carson's fees and reimburse its expenses in accordance with an employment agreement, dated April 3, 2008. The employment agreement provides that Kurtzman Carson will receive a $100,000 retainer for its services. Kurtzman's fees and expenses will be treated as an administrative expense of the Debtors' Chapter 11 estates and be paid by the Debtors in the ordinary course of business. James Le, chief operating officer of Kurtzman Carson, assures the Court that his firm does not have any adverse connection with the Debtors, their creditors or any other party- in-interest. He adds that his firm does not hold or represent an interest adverse to the Debtors' estates and is a "disinterested person" as defined in Section 101(14), as modified by Section 1107(b). Mr. Le discloses that prior to the Petition Date, Kurtzman performed certain services for the Debtors. The Debtors do not owe Kurtzman Carson Consultants, any amount for services performed or expenses incurred prior to the Petition Date. About Linens N' Things Clifton, New Jersey-based Linens Holding Co., which does business through its operating subsidiary Linens 'N Things Inc. -- http://www.lnt.com/-- 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 well as private label home furnishings merchandise in the industry. Linens 'N Things and 11 affiliates filed separate voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware on May 2, 2008 (Lead Case No. 08-10832). The Canadian operations are not included in the filings. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC will serve as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News Issue No. 3, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) MAGNA ENTERTAINMENT: Posts $46.5 Million Net Loss in First Quarter ------------------------------------------------------------------ Magna Entertainment Corp. disclosed Tuesday its financial results for the first quarter ended March 31, 2008. Including discontinued operations, the company reported a net loss of $46.5 million for the quarter ended March 31, 2008, compared with net income of $2.5 million in the same period last year. Discontinued Operations Discontinued operations for the three months ended March 31, 2008, and 2007, include the operations of Remington Park in Oklahoma, Thistledown in Ohio, Portland Meadows in Oregon, Great Lakes Downs in Michigan and Magna Racino(TM) in Austria. The net loss from discontinued operations was $33.5 million for the three months ended March 31, 2008, compared to a net loss of $3.2 million in 2007. The net loss in 2008 includes write-downs of $29.2 million related to Magna Racino(TM) long-lived assets and $3.1 million related to Instant Racing terminals and the associated facility at Portland Meadows. Revenues Revenues from continuing operations were $231.0 million for the three months ended March 31, 2008, a decrease of $23.2 million or 9.1% compared to $254.2 million for the three months ended March 31, 2007. The decreased revenues from continuing operations were primarily due to a decline in California revenues of $17.2 million due to a net loss of eight live race days at Santa Anita Park as a result of excessive rain and track drainage issues affecting the new synthetic racing surface that was installed in the fall of 2007. In addition, Golden Gate Fields ran one less live race day in the three months ended March 31, 2008, compared to the prior year period. EBITDA from Continuing Operations EBITDA from continuing operations decreased to $15.9 million for the three months ended March 31, 2008, versus $24.6 million for the three months ended March 31, 2007. Management's Comments Frank Stronach, chairman and interim chief executive officer commented: "We are very disappointed with our first quarter operating results, some of which can be attributed to weather and track drainage issues at Santa Anita Park beyond our control, and some of which reflect short-term disruptions as we continue to build out our Gulfstream Park commercial joint venture with Forest City. I remain fully committed to implementing the company's previously announced debt elimination plan, and to seeing the operating results dramatically improved. I remain optimistic about MEC's medium term prospects". Blake Tohana, executive vice-president and chief financial officer, commented: "Although the weak U.S. real estate and credit markets have slowed our progress to date on asset sales, we remain firmly committed to our debt elimination plan. In April 2008, we completed the sale of 225 acres of excess real estate located in Ebreichsdorf, Austria to a subsidiary of Magna International Inc. for a purchase price of EUR20.0 million ($31.6 million). In January 2008, we sold our remaining two parcels of excess real estate located in Porter, New York for cash consideration of $1.5 million. The net proceeds received from these transactions were used entirely to repay debt." Cash Flows During the three months ended March 31, 2008, cash used in continuing operations was $3.6 million, which improved $12.4 million from cash used in continuing operations of $16.0 million in the three months ended March 31, 2007, primarily due to the increased loss from continuing operations being more than offset by increased depreciation, future tax expense and the write-down of long-lived assets and decreased balances relating to due from parent and other accrued liabilities relative to the prior year period. Cash provided from financing activities during the three months ended March 31, 2008, of $16.9 million includes net borrowings of $16.9 million from the company's controlling shareholder and $500,000 from bank indebtedness, partially offset by net repayments of $500,000 of long-term debt. The company said that although it continues to implement its debt elimination plan, the sale of assets under the debt elimination plan is taking longer than originally contemplated and, as a result, the company will likely need to seek extensions from existing lenders and additional funds in the short-term from one or more possible sources. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $1.2 billion in total assets, $914.9 million in total liabilities, and $318.2 million in total stockholders' equity. The company's consolidated financial statements at March 31, 2008, also showed strained liquidity with $286.9 million in total current assets available to pay $436.5 million in total current liabilities. Going Concern Disclaimer As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. At March 31, 2008, the company had $229.1 million of debt due to mature in the 12-month period ending March 31, 2009, including amounts owing under the company's $40.0 million senior secured revolving credit facility with a Canadian financial institution, which is scheduled to mature on May 23, 2008, amounts owing under its bridge loan facility of up to $80.0 million with a subsidiary of MI Developments Inc., the company's controlling shareholder, which is scheduled to mature on May 31, 2008, and the company's obligation to repay $100.0 million of indebtedness under the Gulfstream Park project financings with a subsidiary of MID by May 31, 2008. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MAR-ROX: Voluntary Chapter 11 Case Summary ------------------------------------------ Debtor: Mar-Rox, Inc. 1300 North 10th St., Ste. 400 McAllen, TX 78501 Bankruptcy Case No.: 08-70261 Type of Business: The Debtor owns and operates a motel. Chapter 11 Petition Date: May 6, 2008 Court: Southern District of Texas (McAllen) Judge: Richard S. Schmidt Debtor's Counsel: Oscar Luis Cantu, Jr., Esq. Email: r3oscar@aol.com 3740 Colony Dr., Ste. 208 San Antonio, TX 78230 Tel: (210) 507-3573 Fax: (210) 447-2545 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor does not have any creditors who are not insiders. MBIA INC: No Reason to Deploy $1.1BB Offering Proceeds, CEO Says ---------------------------------------------------------------- MBIA Inc. Chairman and Chief Executive Jay Brown informed shareholders in a letter that the company doesn't plan to deploy the $1.1 billion it raised in its last equity offering until the company determines the optimal path to its long-term legal and operating structure and until it has achieved a stable target capitalization level in the insurance company. Given the more than adequate liquidity in both its insurance and asset management businesses, the company determined that there is no compelling reason to move the cash at this point. As reported in the Troubled Company Reporter on Jan. 11, 2008, MBIA said in a press statement that as part of its plan to raise capital to meet or exceed the rating agencies' Triple-A requirements, its primary insurance operating subsidiary, MBIA Insurance Corporation, intends to issue $1 billion of surplus notes due 2033. Also, Mr. Brown explained that the decision to eliminate the MBIA Inc. dividend significantly reduced its cash needs at the holding company to around $115 million a year, an amount that the company expect can be addressed many years into the future from both cash on hand and dividends from its operating subsidiaries. As TCR reported on Feb. 26, 2008, MBIA's board of directors voted to eliminate the quarterly dividend. The elimination of the dividend will preserve approximately $174 million on an annualized basis, which is the amount that the company paid out in dividends in 2007. This action was taken at the recommendation of Mr. Brown to further strengthen the company's financial resources and to increase its operating flexibility. The dividend was most recently reduced on Jan. 9, 2008 to 13 cents, although no dividends were paid out at that rate. Additionally, the board voted to move to an annual dividend evaluation in the first quarter of each year. In his letter, Mr. Brown clarified that with more than $12 billion in invested investment grade assets in the insurance company, the company stated that it has ample liquidity to meet normal operating expenses, the interest payment on the new surplus notes and to pay out expected claims on mortgage-related transactions. The combination of installment premiums, investment income, a short duration and staggered maturity schedule will keep MBIA from being pressured to sell assets outside of the ordinary course of managing the portfolio. A copy of the letter to the owners by Jay Brown is available at: http://ResearchArchives.com/t/s?2b9f "I see no need to raise dilutive equity capital to support our existing business plans. While I believe the long-term opportunities for our business remain strong, in my view we have adequate equity capital to get through this crisis and it makes no economic sense to our current owners to raise equity capital at todays price levels." Headquartered in Armonk, New York, MBIA Inc. (NYSE:MBI) -- http://www.mbia.com-- provides financial guarantee insurance, investment management services, and municipal and other servicesto public finance and structured finance clients on a globalbasis. The company conducts its financial guarantee business through its wholly owned subsidiary, MBIA Insurance Corporation and provides investment management products and financial services through its wholly owned subsidiary MBIA Asset Management, LLC. MBIA manages its activities primarily through two principal business operations: insurance and investment management services. In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico, S.A. de C.V. During the year ended Dec. 31, 2006, MBIA discontinued its municipal services operations. These operations included MBIA MuniServices Company. On Dec. 5, 2006, the company completed the sale of MBIA MuniServices Company. * * * As reported in the Troubled Company Reporter on March 26, 2008, Fitch Ratings has decided to maintain its Insurer Financial Strength and debt ratings on MBIA Inc. and its subsidiaries for the foreseeable future. Fitch expects to maintain the MBIA ratings as long as Fitch believes that it can maintain a clear, well-supported credit view without access to certain non-public details concerning MBIA's insured portfolio, to which Fitch will no longer have access. As reported in the Troubled Company Reporter on Jan. 21, 2008, Moody's Investors Service placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In the same rating action, Moody's also placed the surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade. This rating action reflects Moody's growing concern about the potential volatility in ultimate performance of mortgage and mortgage-related CDO risks, and the corresponding implications for MBIA's risk-adjusted capital adequacy. Prior to this rating action, the rating outlook for MBIA was negative. MCJUNKIN RED: $475M Shareholder Payment Cues Moody's B1 CF Rating ----------------------------------------------------------------- Moody's Investors Service assigned a B1 corporate family rating to McJunkin Red Man Holding Corp., a B3 rating to its proposed $450 million term loan facility, and a stable outlook. At the same time, Moody's withdrew the corporate ratings and outlook at McJunkin Red Man Corp. as MRMH is now the highest legal entity with rated debt in the capital structure. In addition, Moody's upgraded MRM's senior secured term loan facility, to B1 from B2, and its upsized $700 million senior secured asset-based revolving credit facility to Baa3 from Ba3. The rating action was prompted by the recent announcement that MRM will be paying a $475 million shareholder distribution. The special distribution will be financed with $25 million of new borrowings from MRM's ABL facility and the new $450 million term loan issued at the Holdco level, which represents the return of the special equity consideration contributed by shareholders to complete the merger of McJunkin and Red Man in 2007. The three-notch upgrade to the ABL facility was prompted by 1) the introduction of loss absorbing subordinated debt at the Holdco level, which improves the estimated relative recovery of the ABL facility, and 2) the application of Moody's ABL rating methodology, which grants well-structured ABLs a one-notch upgrade above the ratings otherwise indicated by Moody's loss-given- default methodology. The introduction of the Holdco debt to MRMH's capital structure was also responsible for the one-notch upgrade to the MRM term loan, to B1. Ratings assigned: McJunkin Red Man Holding Corp. -- Corporate family rating at B1 -- Term loan facility (LGD6, 91%) at B3 Ratings Upgraded: McJunkin Red Man Corp. -- Senior secured term loan facility to B1 (LGD4, 56%) from B2 -- Senior secured asset-based revolving credit facility to Baa3 (LGD2, 18%) from Ba3 Moody's believes the B1 corporate family rating continues to reflect MRM's modest operating margins typical of distributors, an assumed moderate downturn in the inherently volatile energy sector, modest tangible asset coverage, and the potential for acquisitions. With the addition of the Holdco debt, MRMH's consolidated leverage will be relatively high for the energy sector, at approximately 3.4x pro forma EBITDA as of March 28, 2008. At the same time, the ratings recognize the company's improved operating performance in 2008 and solid credit metrics on an adjusted and pro forma basis primarily due to reduced leverage relative to 2007 levels. Moody's also favorably views MRM's stable operating margins and cash flows primarily due to margin based and cost-plus customer contracts, the countercyclical nature of working capital, and modest capital expenditures. Furthermore, the ratings reflect MRM's increased size, geographic coverage, and diversification across the upstream, midstream, and downstream energy sectors. The stable outlook reflects Moody's view that key rating factors are not likely to change over the near term. Factors that could negatively impact the ratings include softening of the energy sector, deterioration in liquidity, a weakening of working capital metrics, and additional debt-financed acquisitions. However, if the company sustains its volume levels and achieves expected cost savings, MRM could improve its credit metrics by reducing current debt levels. Specifically, if the company lowers its adjusted Debt/EBITDA ratio towards 3.0x on an actual basis, generates significant free cash flow, and maintains adequate liquidity, the ratings would likely improve. McJunkin Red Man Corporation, headquartered in both Charleston, West Virginia and Tulsa, Oklahoma, is a relatively large distributor of pipes, valves, and fittings, serving the major end markets in the process industry; downstream (petroleum refinery and chemical processing), midstream (gas distribution & transmission) and upstream (natural gas and oil exploration and production). MDI INC: Has Until November 3 to Comply w/ Nasdaq's Bid Price Rule ------------------------------------------------------------------ The Nasdaq Stock Market provided MDI Inc. with an additional 180-calendar-day extension period, or until Nov. 3, 2008, to regain compliance with the $1 minimum bid price rule as set forth in NASDAQ Marketplace Rule 4310(c)(4) (the Rule). The letter stated that although MDI has not yet regained compliance with the Rule, it has met all initial inclusion criteria for the NASDAQ Capital Market as set forth in Marketplace Rule 4310(c), except for the minimum bid price requirement. The company related that this letter has no effect on the company's NASDAQ listing and MDI shares will continue to be traded on NASDAQ during the 180-day extension period. MDI's management and board of directors are working to address compliance with the NASDAQ continued listing standards with the goal of regaining compliance within the 180-day extension period. To regain compliance, NASDAQ generally requires that the closing bid price of the company's common stock must meet or exceed $1 per share for a minimum of 10 consecutive business days. If MDI will not be able to demonstrate compliance with the minimum bid price rule by Nov. 3, 2008, the company would be notified that its common stock will be delisted. If that were to occur, MDI would have the opportunity to appeal the determination to delist its common stock. The company intends to pursue all available options to ensure its continued listing on the Nasdaq Stock Market. About MDI Inc. Headquartered in San Antonio, Texas, MDI Inc. (NASDAQ:MDII) -- http://www.mdisecure.com/-- is engaged in manufacturing and marketing enterprise-grade physical and electronic security technologies that include open architecture security command and control software, intelligent access control hardware and video surveillance management solutions. MERRILL LYNCH TRUST: Moody's Junks Ratings on Five Cert. Classes ---------------------------------------------------------------- Moody's Investors Service has downgraded ten certificates and placed on review for possible downgrade seven classes of certificates, from a transaction issued by Merrill Lynch First Franklin Mortgage Loan Trust. The transaction is backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-A -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Aa3 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Baa1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Ba3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-6, Downgraded to Ca from A3 -- Cl. B-1, Downgraded to C from Baa1 -- Cl. B-2, Downgraded to C from Baa2 -- Cl. B-3, Downgraded to C from Baa3 -- Cl. B-4, Downgraded to C from Ba1 MEZZ CAP: Fitch Puts 'CCC/DR5' Rating on $500,000 Class J Certs. ---------------------------------------------------------------- Fitch Ratings has downgraded and assigned distressed recovery ratings to Mezz Cap's commercial mortgage pass-through certificates, series 2004-C1, as: -- $4.4 million class H to 'B-/DR1' from 'B'; -- $0.5 million class J to 'CCC/DR5' from 'B-'. In addition, Fitch has affirmed these classes: -- $28.4 million class A at 'AAA'; -- $2.8 million class B at 'AA+'; -- $2.3 million class C at 'AA-'; -- $2.8 million class D at 'A-'; -- $1.5 million class E at 'BBB+'; -- $1.6 million class F at 'BBB+'; -- Interest-only class X at 'AAA'; -- $1.1 million class G at 'BB+'. Fitch does not rate the $2.8 million class K certificates. The downgrades and assignment of distressed recovery ratings are the result of Fitch's expected losses on specially serviced assets. As of the April 2008 remittance report, the pool's aggregate certificate balance has decreased 4.6% to $48.2 million from $50.5 million at issuance. Twenty-one loans (30.0%) have been defeased. The mortgage loans consist of two notes - the A note, or senior component, which is not included in this trust's mortgage assets, and the B note. The B notes in this pool consist of subordinate interests in the first mortgage loans. All loans are secured by traditional commercial real estate property types and are subject to standard intercreditor agreements that limit the rights and remedies of the B note holder in the event of default and upon refinancing. Due to their subordinate positions, B notes which default and incur a loss are typically 100% non-recoverable. Four assets (4.0%) are currently in special servicing with losses expected. The non-rated class K is sufficient to absorb Fitch's expected losses; however, if additional loans become specially serviced class J will likely be impacted. The largest (1.6%) and second largest (1.1%) specially serviced assets are multifamily properties owned by the same borrower in Indianapolis, Indiana, and are more than 90 days delinquent. No recovery is expected on the respective B-note portions included in the trust. The third specially serviced asset (0.7%) is a multifamily property in Arlington, Texas and is currently real estate owned. A recent appraisal value indicates a complete loss of the B-note portion included in the trust. The smallest specially serviced asset (0.6%) is a multifamily property located in Euless, Texas and is more than 90 days delinquent. The special servicer is currently marketing the property. A recent appraisal value indicates a complete loss of the B-note portion included in the trust. MEZZ CAP: Fitch Junks Ratings on Two Certificate Classes -------------------------------------------------------- Fitch Ratings has downgraded four classes and assigned a Distressed Recovery rating to two classes of Mezz Cap's commercial mortgage pass-through certificates, series 2005-C3, as: -- $1.6 million class F downgraded to 'BB+' from 'BBB-'; -- $1.7 million class G downgraded to 'B+' from 'BB'; -- $4.9 million class H downgraded to 'CCC/DR1' from 'B'; -- $0.6 million class J downgraded to 'CCC/DR5' from 'B-'. In addition, Fitch has affirmed these classes: -- $41 million class A affirmed at 'AAA'; -- Interest only class X affirmed at 'AAA'; -- $1.8 million class B affirmed at 'AA'; -- $1.9 million class C affirmed at 'A'; -- $3.2 million class D affirmed at 'BBB'; -- $1.8 million class E affirmed at 'BBB-'. Fitch does not rate the $3.9 million class K certificates. The downgrades and assignment of the DR ratings are the result of Fitch's expected losses on specially serviced assets. As of the April 2008 remittance report, the pool's aggregate certificate balance has decreased 1.5% to $62.5 million from $63.4 million at issuance. Two loans (2.5%) have been defeased. The mortgage loans consist of two notes -- the A note, or senior component, which is not included in this trust's mortgage assets, and the B note. The B notes in this pool consist of subordinate interests in the first mortgage loans. All loans are secured by traditional commercial real estate property types and are subject to standard intercreditor agreements that limit the rights and remedies of the B note holder in the event of default and upon refinancing. Due to their subordinate positions, B notes which default and incur a loss are typically 100% non-recoverable. Nine assets (1.6%) are currently in special servicing with losses expected. The non-rated class K is sufficient to absorb Fitch's expected losses; however, if additional loans become specially serviced class J will likely be impacted. The largest specially serviced asset (1.2%) is collateralized by an industrial warehouse in Bend, Oregon, and is 90 days delinquent. The property transferred to the special servicer in October 2007 due to imminent default. The special servicer is pursuing foreclosure. The second largest specially serviced asset (0.9%) is collateralized by a multifamily property in Tallahassee, Florida, and is real estate owned. The asset transferred to the special servicer in February 2007 due to imminent default. The special servicer is marketing the property. MORRIS PUBLISHING: Moody's Cut Ratings on Covenant Breach Risk -------------------------------------------------------------- Moody's Investors Service has downgraded Morris Publishing Group, LLC's Corporate Family rating to B3 from B1 and Probability of Default rating to Caa1 from B1 following the company's disclosure that it is at risk of failing to meet one or more of its financial covenants for the period ended Dec. 31, 2008, and hence may be required to prepay the entire principal due under the senior secured credit facility, absent an improvement in financial performance, a reduction of debt, completion of an amendment, and/or a refinancing or asset sales. Ratings downgraded: -- Probability of Default Rating -- to Caa1 from B1 -- Corporate Family Rating -- to B3 from B1 -- $300 million senior subordinated notes -- to Caa1, LGD4, 56% from B2, LGD5, 75% -- $175 million senior secured revolving credit facility -- to Ba3 LGD1, 8% from Ba1, LGD2, 17% -- $89 million senior secured term loan A -- to Ba3 LGD1, 8% from Ba1, LGD2, 17% The rating outlook is negative. The downgrade incorporates Moody's view that Morris may default under the financial maintenance covenants of its senior secured credit agreements at the end of December 2008, due largely to recessionary market conditions which continue to affect its largest newspaper publishing markets and which have exceeded former expectations in terms of their negative impact on the company's operations. The negative outlook reflects Moody's view that Morris Publishing will continue to experience very soft market conditions in most of its newspaper publishing markets, especially the hard-hit sub- prime Jacksonville, Florida market, where the company's largest property - The Florida Times -- Union (accounting for more than 32% of Morris Publishing's 2007 sales) reported more than a 20% decline in advertising sales for the year ended Dec. 31, 2007. Somewhat offsetting the risk of the potential technical default leading to an actual payment default is the perceived above- average recovery expectation for the company's creditors, a shift that Moody's has made in concert with the elevated default risk which has resulted in improved loss given default point estimates that are supported by the firm's high underlying asset value relative to its debt burden. As a private company, controlled and managed by the Morris family, Morris Publishing and its parent Morris Communications do not provide any measure of board independence or any meaningful corporate governance provisions to protect debt holders. Moody's remains concerned about the significant level of inter-company transactions between Morris Publishing, Morris Communications and other subsidiaries of the ultimate holding company, Shivers Trading and Operating Company. Headquartered in Augusta, Georgia, Morris Publishing Group reported revenues of $374 million for the fiscal year ended 12/31/2007. Morris Publishing Group is a wholly owned subsidiary of Morris Communications, which also owns and operates periodicals, outdoor advertising, book publishing, commercial printing and radio broadcast properties. NETBANK INC: Has Until May 12 to File Chapter 11 Plan ----------------------------------------------------- The U.S Bankruptcy Court in Dallas, Texas, approved NetBank Inc.'s request to extend the exclusive period within which it could file a Chapter 11 Plan until May 12, 2008, Bill Rochelle of Bloomberg News reports. As reported in the Troubled Company Reporter on April 24, 2008, the Debtor needed additional time to redraft a plan and disclosure statement. The Debtor said that a death in the family of its lead counsel has delayed the finalization of the documentation of the plan. The Debtor said it is presently liquidating its remaining assets to maximize recovery to creditors. About NetBank Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. Rogers Towers and Kilpatrick Stockton LLP represent the Committee in this case. As of Sept. 25, 2007, the Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NEWFIELD EXPLORATION: S&P Rates $600MM Subordinated Notes BB- ------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' rating to Newfield Exploration Co.'s (BB+/Stable/--) $600 million in 7.125% senior subordinated notes due 2018. At the same time, S&P assigned a recovery rating of '6' to the notes, indicating our expectation of negligible (0% to 10%) recovery in the event of a payment default. "Proceeds from the expected offering will be used to refinance existing debt on Newfield's credit facility and help fund remaining 2008 capital expenses of around $1.5 billion," said Standard & Poor's credit analyst Paul Harvey. Although pro forma debt leverage will increase to roughly $4.10 per barrel of oil equivalent as a result of the transaction, S&P expect improving production and reserve levels in the near term as Newfield aggressively develops its Woodford Shale (Oklahoma), Monument Butte (Utah), and Texas Gulf Coast plays, which will help buffer current debt. Newfield is a Houston-based independent oil and gas exploration and production company. OFFICE PORTFOLIO: Fitch Lifts Rating on $17.1MM Certs. to 'BB+' --------------------------------------------------------------- Fitch upgraded Office Portfolio Trust commercial mortgage pass- through certificates, series 2001 HRPT as: -- $17.1 million class H to 'BB+' from 'BB'. In addition, Fitch affirmed and removed these class from Rating Watch Negative: -- $10.8 million class G at 'BBB-'; Fitch affirmed these classes: -- $13.6 million class A-1 at 'AAA'; -- $28.0 million class A-2 at 'AAA'; -- $91.0 million class A-2FL at 'AAA'; -- $11.6 million class B-FL at 'AA+'; -- $15.6 million class C-FL at 'AA'; -- $11.0 million class D at 'A+'; -- $10.0 million class E at 'A'; -- interest only class IO at 'AAA'; -- $11.1 million class E-FL at 'A'; -- $17.7 million class F at 'BBB'. The upgrade and removal of Rating Watch is due to receiving restated year-end 2007 financials from the borrower. As a result of the restatement, YE 2007 NOI increased 6.1%. The transaction collateral consists of 2.2 million square feet of office properties located in four metropolitan markets. The loans amortize on a 30-year schedule with a maturity date of January 2011. As of the April 2008 distribution date, the unpaid principal balance has amortized 8.6%, with the current balance at $237.5 million compared to $259.8 million at issuance. As of Dec. 1, 2007 the six cross-collateralized and cross- defaulted loans has experienced stable occupancy. Bridgepoint (17.4%) and Lakewood (9.0%) both located in Austin are 88.2% and 98.4% occupied, respectively. Herald Square (12.3%) and Indiana Avenue (8.9%) in Washington D.C. are both 100% occupied. The Cedars Sinai Medical (28.0%) building in Los Angeles is 99.9% occupied. The PNC Tower (24.4%) in Philadelphia is 91.8% occupied. The Fitch stressed NCF for the transaction remains slightly below that of issuance, however, because market rents have declined in several markets since issuance. OTC INTERNATIONAL: Can Hire Garden City as Claims & Noticing Agent ------------------------------------------------------------------ OTC International, Ltd. obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ the Garden City Group Inc. as its claims, noticing, and balloting agent. Garden City is expected to notify all potential creditors of the filing of the bankruptcy petitions and of the setting of the first meeting of creditors, notify all potential creditors of the existence and amount of their respective claims as evidenced by the Debtor's books and records, and assist with the solicitation and calculation of votes and distribution as required in furtherance of confirmation of plan of reorganization. Documents submitted to the Court did not disclose the firm's professional hourly rates. Michael Sherin, Esq., the chairman of Garden City, assured the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About OTC International Long Island City, New York, OTC International, Ltd. -- http://www.otcinternational.com/-- manufactures jewelry and precious metal, specializing in diamonds, gold, silver, gemstones, cameos, and watches. The company filed for Chapter 11 protection on April 3, 2008 (Bankr. S.D.N.Y. Case No. 08-11181). Ian R. Winters, Esq., and Patrick J. Orr, Esq., at Klestadt & Winters LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million and $100 million. OTC INTERNATIONAL: Court OKs Klestadt & Winters as Bankr. Counsel ----------------------------------------------------------------- OTC International, Ltd. obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Klestadt & Winters LLC as its general bankruptcy counsel, nunc pro tunc to April 3, 2008. Klestadt & Winters is expected to perform all appropriate services as the Debtor's counsel, including advising, representing, and preparing all necessary documents on behalf of the Debtor, and take all necessary actions to protect and preserve the Debtor's estate during the Chapter 11 case. Ian R. Winters, Esq., a partner at Klestadt & Winters, told the Court that the firm's professionals bill these hourly rates: Ian R. Winters $440 Other Partners $375 - $550 Associates $195 - $335 Paralegals $125 Mr. Winters assured the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About OTC International Long Island City, New York, OTC International, Ltd. -- http://www.otcinternational.com/-- manufactures jewelry and precious metal, specializing in diamonds, gold, silver, gemstones, cameos, and watches. The company filed for Chapter 11 protection on April 3, 2008 (Bankr. S.D.N.Y. Case No. 08-11181). Ian R. Winters, Esq., and Patrick J. Orr, Esq., at Klestadt & Winters LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $1 million to $100 million. PACIFIC LUMBER: Asks Court to Approve Global Plan Settlement ------------------------------------------------------------ Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, The Pacific Lumber Company, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. -- the PALCO Debtors -- ask Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas to approve a global Plan settlement agreement they entered into on May 1, 2008, with MAXXAM Inc., MAXXAM Group Inc., MAXXAM Group Holdings Inc., Mendocino Redwood Company, LLC, and Marathon Structured Finance Fund L.P., the Debtors' DIP Lender and Agent under the DIP Credit Facility. The Official Committee of Unsecured Creditors supports the Settlement although it is not a signatory to the Settlement Agreement, Jack L. Kinzie, Esq., Baker Botts L.L.P., in Dallas, Texas, informs the Court. The PALCO Debtors ask the Court to approve the Settlement only as it relates to them and their bankruptcy estates, Mr. Kinzie clarifies. The PALCO Debtors are not asking the Court to approve all the terms of the Settlement Agreement, because portions of the Settlement Agreement apply only to non-debtors. The PALCO Debtors believe that the actions they have undertaken under the Settlement are mere exercises of their fiduciary duties; thus, not requiring Court approval. Nevertheless, the PALCO Debtors acknowledge that they need the Court's authority to grant the releases under the Settlement. The Settlement represents a comprehensive approach to the resolution of the issues that separated the major stakeholders in the Debtors' Chapter 11 cases, and helps pave the way for the confirmation of a Plan of Reorganization for the Debtors that preserves jobs, strengthens the reorganized companies, recognizes value in the timberlands, and eliminates years of potential litigation among the settling parties, Mr. Kinzie notes. As part of the Settlement Agreement, Marathon and Mendocino agreed to "greatly improve" their proposed Plan, as reflected in the Marathon/Mendocino Modified First Amended Joint Plan of Reorganization delivered to the Court on May 1, 2008, with Marathon, Mendocino, and the Creditors Committee as plan proponents. After engaging in extensive negotiations with Marathon and Mendocino, the PALCO Debtors now actively support and defend the Marathon/Mendocino Modified First Amended Joint Plan, Mr. Kinzie avers. The salient terms of the Global Plan Settlement are: PALCO Debtors' Concessions to: Benefits to PALCO Debtors -------------------------- ---------------------------------- A. Marathon and Mendocino Increase the likelihood of confirmation of the Marathon/ * Global mutual releases Mendocino Plan by: * Support of Marathon/ - eliminating the New Timber Mendocino Plan Notes and removing the tax claims portion of the price * Withdrawal of PALCO adjustment; Alternative Plan - the contribution of * Withdrawal of Support $580 million in cash by for Debtors' Joint Plan Marathon and Mendocino to and Scopac Alternative Newco, and Newco paying the Plan Indenture Trustee $530 million for pro rata distribution among the timber noteholders; - contributing at least $200 million in new equity capital; - preserving jobs and benefits for the Debtors' employees; and - reaffirming the assumption of the PALCO retirement Plan. -------------------------- ---------------------------------- B. MAXXAM Entities (1) Global mutual release including the release of * Global mutual releases claims that exceed $40 million * Support of Marathon/ Mendocino Plan (2) Induce MAXXAM Entities to provide tax indemnification to * Withdrawal of PALCO Marathon and Mendocino, which Alternative Plan was an important factor in Marathon's and Mendocino's * Withdrawal of support decision to make Plan for the Debtors' Joint modifications Plan and Scopac Alternative Plan. -------------------------- ---------------------------------- Marathon also agrees to pay MAXXAM $2.25 million in cash upon the Court's approval of the Settlement Agreement. A full-text copy of the Global Plan Settlement Agreement is available for free at: http://bankrupt.com/misc/PALCO_GlobalPlanSettlementAgrmt.pdf Mr. Kinzie relates that the MAXXAM Entities' agreement to indemnify Newco and others for certain tax liabilities is an important feature of the Settlement Agreement. The indemnity enabled Marathon and Mendocino to modify the Marathon/Mendocino Plan to increase the cash distribution to the timber noteholders to $530 million -- subject to adjustment as provided in the Plan -- and to change the form of distribution from cash and New Timber Notes to an "all cash" payment. In order for the MAXXAM Entities to agree to provide the indemnity, they sought certain releases from the PALCO Debtors, Mr. Kinzie relates. The PALCO Debtors believe that the MAXXAM Entities would not have agreed to provide the indemnity to Newco without the releases, in which case, the entire settlement may never have happened. The releases granted by the PALCO Debtors are a vital element of consideration in reaching a deal, Mr. Kinzie notes. If the Settlement Motion is approved and the Marathon/Mendocino Plan is confirmed and becomes effective resulting in the MAXXAM Entities receiving a release from the PALCO Debtors, the PALCO Debtors will in return receive a release from the MAXXAM Entities, which results in the elimination of more than $40 million in unsecured claims. "This result avoids significant litigation costs of its own and eliminates the possibility of a significant dilution to the recovery of unsecured creditors," Mr. Kinzie says. No causes of action that belong to Scotia Pacific Company LLC are released under the Settlement Agreement, because Scopac is not a party to the Settlement, according to Mr. Kinzie. The PALCO Debtors, however, reserve their right to amend the Settlement Motion if an agreement with Scopac can be reached prior to any hearing. Although confirmation of the Marathon/Mendocino Plan is not conditioned in any way on the approval of the Settlement Agreement, the Settlement Agreement and the changes resulting in the Marathon/Mendocino Plan were negotiated simultaneously and have greatly streamlined the remaining portion of the confirmation hearings, Mr. Kinzie 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. 58; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Plan Confirmation Trial Extended to May 15 ---------------------------------------------------------- Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, has again extended the Pacific Lumber Company confirmation trial to May 15, 2008. Judge Schmidt has ordered for closing arguments with respect to the PALCO rival Chapter 11 plans to be heard May 15 and 16. Briefing schedules are to be submitted to the Court May 13. Another four-day confirmation trial took place in Judge Schmidt's courtroom from April 29, 2008, through May 2, 2008, for the presentation of evidence with respect to PALCO's ongoing plan issues. One of the main issues tackled at those hearings is how much the Scotia Pacific Company LLC timberlands, totaling more than 200,000 acres, are really worth. Certain expert testimony were heard, and several witnesses were crossed examined during the hearings. On May 1, PALCO chief financial officer Gary Clark testified to the Court that PALCO's cash availability is rapidly dwindling, which could possibly hamper the company's operations by July 2008, The Eureka Reporter discloses. "Delays will only make that worse," John Fiero, Esq., of Pachulski Stang Ziehl & Jones LLP, in San Francisco, California, on behalf of the Official Committee of Unsecured Creditors, agreed with Mr. Clark, the newspaper adds. Mr. Clark also informed the Court May 1 that he has resigned from his position as PALCO's chief financial officer. Going forward, Judge Schmidt has reminded the parties to concentrate on the central issue of the timberland valuation, according to The Eureka Reporter. The Court has asked each plan proponent to prepare its comment on the expert testimony on timberland valuation presented in the latest confirmation hearings, which to its opinion are right and which are incorrect, and its reason for believing so, the newspaper relates. The current valuations for the Scopac timberlands range from $400 million to $900 million. MAXXAM Supports Marathon/MRC Plan Mendocino Redwood Co. LLC and Marathon Structured Finance Fund LP, PALCO's secured lender, delivered to the Court a modified plan on May 1. The modified Plan now offers $530 million in cash to noteholders. "We believe we have enhanced the valuation to the full extent we can," Mendocino attorney Allan Brilliant told The Times-Standard. As previously reported, PALCO attorneys have informed Judge Schmidt that the company engaged in negotiation talks with Marathon and Mendocino to come up with a consensual plan. Subsequently, MAXXAM Inc., the parent company of PALCO, expressed its entire support for the modified Marathon/MRC Plan. In exchange for its support, the parent company would get $2.25 million in exchange for tax protection measures under the Marathon/MRC Plan, The Times-Standard reports. Scopac has not expressed support for the Marathon/MRC Plan. BoNY Continues to Resist The Bank of New York Trust, the Indenture Trustee for timber notes issued by Scopac, is not a party to the Marathon/MRC/PALCO deal. BoNY is owed by Scopac about $800 million with respect to the Timber Notes. BoNY's rival plan for PALCO contemplates an auction of the Scopac timberlands. BoNY continues to insist that its plan is the best for Scopac creditors. BoNY has also argued extensively on the valuation of the Scopac timberlands. In other news, the Associated Press disclosed that Harvard University's endowment fund has expressed interest last May 1 in acquiring the Scopac timberlands. Harvard attorney Steven Hoort told the Court that the Fund is ready to bid for the timberlands at a much higher price than Marathon's, the AP said. BoNY urged Judge Schmidt to consider the Fund's offer, according to the Times-Standard. The Fund, however, reportedly backed out from its offer late May 1, Times-Standard added. The Eureka Reporter disclosed, in a separate report, that a "Neal Wolf" called the Court to inform that his client is contemplating on finalizing a written proposal for $565 million to $590 million for the Scopac timberlands and a 20-year log supply agreement for the Scotia mill. Mr. Wolf's client has been identified as TimberStar, an entity that owns timberlands in Maine, Texas, and Louisiana. To note, Beal Bank has previously expressed interest in acquiring the Scopac timberlands for $603 million. 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. 58; http://bankrupt.com/newsstand/or 215/945-7000). PEOPLE'S CHOICE: Panel Is Sole Plan Proponent; CEO Dispute Fixed ---------------------------------------------------------------- The United States Bankruptcy Court for the Central District of California designated the Official Committee of Unsecured Creditors in People's Choice Financial Corp.'s chapter 11 cases as the sole plan proponent under the Third Amended Joint Liquidating Plan of Reorganization dated April 11, 2008, and the associated Disclosure Statement the panel originally co-proposed with the Debtors. The Court, in its ruling, held that the objections raised by Neil Kornswiet, former CEO and present director of People's Choice Home Loan, Inc., People's Choice Funding, Inc., and People's Choice Financial Corporation, "is resolved on the terms set forth in the record of the Court." On behalf of Mr. Kornswiet, Nathan A. Schultz, Esq., at Stutman, Treister & Glatt Professional Corporation, in Los Angeles, California, argued that on its face, the Committee's request is a "non-starter" and that only a plan proponent can modify a plan. Mr. Schultz pointed out that the only plan and disclosure statement on file were never validly authorized by the Debtors in the first place, a fact that the Debtors' counsel has since acknowledged. In its request, Mr. Schultz said, the Creditors Committee also sought alternative remedies: i) Authority to amend a facially invalid plan in direct contravention of the requirements of Section 1127 of the Bankruptcy Code, or ii) Approval of a newly proposed disclosure statement before it or the plan has been filed in direct contravention of the Rules 3016, 3017 and 9006 of the Federal Rules of Bankruptcy Procedure. Even if the Creditors Committee were to file its plan and disclosure statement in advance of the scheduled hearing, the Motion fails to provide any evidence to support a finding by the Court that cause exists to approve a Committee-sponsored disclosure statement on the shortest of all possible notice, Mr. Schultz argued. But far more concerning is the Creditors Committee's attempt to "sweep under the rug" the Debtors' failure to implement essential corporate governance mechanics with respect to the plan process. Parties-in-interest were led to believe that the versions of the plan and disclosure statements filed over the last several weeks, which have been subject of lengthy hearings and extensive review and discussions among the parties, reflected the considered judgment of the Debtors and the support of the Creditors Committee, Mr. Schultz stated. Now, it has become apparent that the Creditors Committee will be the driving force behind a plan for which the Debtors have withdrawn their "sponsorship," Mr. Schultz avers. These recent developments are not "technical glitches that can be fine-tuned" on shortened notice; they reflect fundamental issues for the Debtors' estates that must be fully vetted, he asserted. About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Case No. 07-10772). J. Rudy Freeman, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represents the Debtors. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, People's Choice disclosed total assets of $806,776,901 and total liabilities of $105,772,386. (People's Choice Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). PEOPLE'S CHOICE: Panel Can Solicit Votes On Liquidation Plan ------------------------------------------------------------ The United States Bankruptcy Court for the Central District of California permitted the Official Committee of Unsecured Creditors in People's Choice Financial Corp.'s chapter 11 cases to commence soliciting votes on, and subsequently seek confirmation of, the Joint Liquidating Plan of Reorganization of People's Choice Home Loan, Inc., People's Choice Funding, Inc., and People's Choice Financial Corporation. The Creditors Committee has sought the Court's approval to be named as sole proponents of the Liquidating Plan after former CEO and current director defendant Neil B. Kornswiet claimed that the Debtors did not have the corporate authority to file the Plan. Judge Robert N. Kwan has approved the Committee's request, and ruled that the disclosure statement explaining the terms of the Plan contains adequate information that would permit creditors to reach an informed judgment on the Plan. Judge Kwan held hearings on April 7, April 14, April 16, and April 22, 2008 with respect to the adequacy of the information in the Disclosure Statement. All objections to the Disclosure Statement have been settled or are overruled. The hearing to consider confirmation of the Liquidating Plan, which is now sponsored solely by the Creditors Committee, will commence on July 23, 2008, at 9:00 a.m. Committee Asks Unsecured Creditors to Support Plan The Committee recommends to holders of general unsecured claims that they vote to accept the Liquidating Plan. The Committee says it has worked closely with management of the Debtors and the Debtors counsel in developing the Plan and submits that the Plan represents the best alternative for unsecured creditors. The Plan contains a global compromise among the estates. The global compromise, according to the Committee, will permit the estates to avoid potentially protracted and expensive litigation over claims between and among the estates, and over issues of substantive consolidation, that could delay and impair recoveries to general unsecured creditors. The global compromise is a cornerstone of the Plan. In the absence of confirmation of the Plan, it is far from certain that such a global compromise would be consummated. The Committee adds that the Plan also accomplishes a further critical result -- it permits the Debtors to preserve the status of PCFC as a real estate investment trust. If PCFC's REIT status is not preserved, this could result in significant consequences and claims that could ultimately impair recoveries to general unsecured creditors of the estates. If the Plan is not confirmed, and the cases are converted to Chapter 7 of the Bankruptcy Code, the Committee does not believe that the Debtors will be able to preserve their REIT status. "For these and the other reasons set forth in the Disclosure Statement, the Plan is reasonable, is calculated to minimize expensive estate litigation, and is superior to conversion to chapter 7." The Committee notes that the Plan provides that holders of general unsecured claims shall receive distributions after all senior claims have been satisfied in full. The Plan provides that holders of general unsecured claims against PCHLI and Funding will receive 10% to 14% recovery, while holders of unsecured claims against PCFC will receive 0% to 1% recovery. Solicitation Schedule Unsecured Creditors and other parties entitled to vote on the Plan are required to submit their ballots by July 2, 2008 at 5:00 p.m. Pacific Time to XRoads Case Management Services, the balloting agent. The Committee will send solicitation packages -- containing a notice of the confirmation hearing, and Plan-related deadlines -- to all creditors, all equity security holders, the Debtors, the United States Trustee, the U.S. Securities and Exchange Commission, the Internal Revenue Service and special notice parties. The solicitation packages sent to members entitled to vote under the Plan -- Classes 3A through 3C and Classes 4A through 4C -- will include ballots. The guidelines in tabulating the Ballots include: (a) Any creditor whose claim is the subject of a pending objection will not be entitled to vote on the Plan and the vote will not be counted in determining whether the requirements of Section 1126(e) of the Bankruptcy Code have been met unless the claim has been temporarily allowed for voting purposes by Court order. (b) If an entity submits a Ballot for a claim or interest (i) for which there is no timely proof of claim or interest filed asserting a claim amount and for which there is no corresponding Scheduled Amount, or (ii) which is the subject of an unresolved objection filed before the Confirmation Hearing, the Ballot will not be counted unless otherwise ordered by the Court. (c) If a creditor asserts duplicate claims in multiple classes, the Creditors Committee will select the proper class and that creditor will have only one vote for those claims. The Creditors Committee will count only one Ballot for purposes of those claims. (d) Creditors that have claims in more than one voting class under the Plan must submit a separate Ballot for voting their claims in each class. (e) If any entity casts more than one eligible Ballot with respect to the same claim or interest before the Balloting Deadline, the last Ballot received before the deadline will be deemed to supersede any prior Ballots by the entity with respect to that claim or interest. (f) Any incomplete or untimely Ballot will not be counted. Any Ballot that is signed but that does not indicate an acceptance or rejection of the Plan will be deemed to be a Ballot accepting the Plan. The Creditors Committee will file the Plan supplement containing forms of final documents at least 10 days before the Balloting Deadline. The Creditors Committee may extend the Balloting Deadline or modify or waive these procedures with respect to any Ballots. Any extension, waiver or modification will be indicated in connection with the submission of the report on balloting. Confirmation Objections Due July 3 The Court has set July 3 as the deadline to file and serve briefs in support of or against confirmation and submit supporting evidence, including final declarations. Parties, however, are asked to submit their preliminary objections by May 12. Hearings on the confirmation of the Plan will be begin July 23, but parties will hold depositions before that and pre-trial conferences before that date. The Confirmation Briefing Schedule provides for this timetable: Date Description ---- ----------- 05/05/08 Deadline for the plan proponent to file and serve: (a) a preliminary statement that identifies and generally describes the proponent's prima facie case in support of confirmation of the Plan and (b) a preliminary witness list that identifies the individuals that the proponent anticipates using in support of confirmation and a general description of the expected testimony of those individuals. 05/12/08 Deadline for any party objecting to confirmation to file and serve: (a) a preliminary statement that identifies and generally describes each of its objections to confirmation of the Plan and (b) a preliminary witness list that identifies the individuals who the objecting party anticipates using in support of the objections and a general description of the expected testimony of those individuals. 05/14/08 Deadline to serve requests for admission, document requests and interrogatories. 05/30/08 Completion of requests for admission, document production and responses to interrogatories 06/04/08 Deadline for the plan proponent and any objecting party to file and serve, to the extent any of the witnesses is an expert witness, a copy of the expert witness report as required under Rule 26(a) of the Federal Rules of Civil Procedure. Deadline for the plan proponent to file and serve a preliminary exhibit list detailing all documents on which the proposed witnesses will base their testimony or which will be admitted in support of confirmation. Deadline for any party objecting to confirmation to file and serve a preliminary exhibit list detailing all documents on which the proposed witnesses will base their testimony or which will be admitted in support of the objections to confirmation. 06/05/08 Commencement of depositions. 06/05/08 Deadline to serve Solicitation Package. 06/11/08 Deadline to file and serve motions to temporarily allow or disallow claims solely for purposes of determining who may vote on the Plan. Deadline to stipulate to temporary allowance or disallowance of a claim solely for purposes of determining who may vote on the Plan. 06/25/08 Deadline to object to motions to temporarily allow or disallow claims solely for voting purposes. 07/01/08 Completion of depositions. 07/02/08 Balloting Deadline. 07/03/08 Deadline to reply to motions to temporarily allow or disallow claims for voting purposes. Deadline to file and serve briefs in support of or against confirmation and submit supporting evidence, including final declarations. 07/09/08 Hearing on motion to temporarily allow or disallow claims for voting purposes. Deadline to file summary of Ballots. 07/17/08 Deadline to file and serve reply briefs in support of or against confirmation. Exchange of final exhibits and witness lists. 07/18/08 Deadline to file stipulation re admissibility of exhibits or written evidentiary objections. 07/18/08 Pre-trial conference. 07/23/08 to Plan Confirmation Hearings. 07/25/08 About People's Choice Headquartered in Irvine, California, People's Choice Financial Corp. -- http://www.pchl.com/-- is a residential mortgage banking company, through its subsidiaries, originates, sells, securitizes and services primarily single-family, non-prime, residential mortgage loans. The company and two of its affiliates, People's Choice Home Loan, Inc., and People's Choice Funding, Inc., filed for chapter 11 protection on March 20, 2007 (Bankr. C.D. Calif. Case No. 07-10772). J. Rudy Freeman, Esq., at Pachulski, Stang, Ziehl & Jones, L.L.P., represents the Debtors. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. In its schedules filed with the Court, People's Choice disclosed total assets of $806,776,901 and total liabilities of $105,772,386. (People's Choice Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). PNM RESOURCES: S&P Cuts Corporate Credit Rating to BB- from BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating to 'BB-' from 'BB+' on PNM Resources, Inc. and its electric utility subsidiaries Public Service Co. of New Mexico and Texas- New Mexico Power Co. In addition, Standard & Poor's affirmed its 'BB+' debt ratings on both PNM and TNMP; unsecured debt at both utility affiliates were assigned a '1' recovery rating, indicating a very high (90%-100%) recovery in the event of payment default. Finally, Standard & Poor's lowered its rating to 'BB-' from 'BB' on PNMR's senior unsecured debt. All entities were removed from CreditWatch, where they were placed April 18, 2008; the outlook is stable. "The rating action reflects the creditworthiness of the entity as it confronts several operational challenges coupled with a deterioration in its financial performance," said Standard & Poor's credit analyst Antonio Bettinelli. "The company's substantial speculative trading loss of $30.3 million post tax at its unregulated unit, First Choice Power highlights management's ineffectiveness and lack of attentiveness in regard to risk controls and tolerance levels at the higher-risk trading unit." This trading misstep, coupled with ongoing poor operational performance from its generating fleet, asset write-downs, liquidity pressure from refinancing risk and higher commodity prices, as well as protracted proceedings with regulators, contribute to a weaker credit profile for PNMR. It also places an unexpected strain on consolidated financial results for 2008, and further burdens the company's weak liquidity position. Given the operational challenges the firm faces, its strained financial condition, and the continued regulatory proceedings, positive credit momentum is beyond reach at the current time. Rating degradation could occur if the firm is unsuccessful in meeting its operational and financial challenges. POWERMATE HOLDINGS: Gets Court OK on $10.3 Mil. Asset Sale ---------------------------------------------------------- The Hon. Kevin Gross of the United States Bankruptcy Court for the District of Delaware authorized Powermate Holding Corp. and its debtor-affiliates to sell certain assets for $10,372,519 in the aggregate, free and clear of liens and interests. In April, the Debtors entered into an separate asset purchase agreement with a group of "stalking-horse" bidders -- Tap Enterprises, MAT Industries LLC and Homelite Technologies Ltd. -- wherein each of the bidders were required to pay a break-up fee of 2.5% of the purchase price, if outbid by another party. Stalking-Horse Acquired Purchase Bidder Asset Price -------------- -------- -------- Homelite Technologies machinery and $5,498,143 Ltd. equipment Tap Enterprises Inc. finished goods $2,525,385 and reconditioned inventory Tap Enterprises Inc. machinery and $2,049,000 equipment MAT Industries LLC trademarks $300,000 Judge Gross approved the Debtors' proposed bidding procedures for the sale of certain assets on April 24, 2008. A full-text copy of Asset Purchase Agreement dated April 18, 2008, with Homelite is available for free at http://ResearchArchives.com/t/s?2b9a A full-text copy of Asset Purchase Agreement dated May 2, 2008, with Tap Enterprises is available for free at http://ResearchArchives.com/t/s?2b9b A full-text copy of Asset Purchase Agreement dated April 16, 2008, with Tap Industries is available for free at http://ResearchArchives.com/t/s?2b9c A full-text copy of Asset Purchase Agreement dated April 16, 2008, with MAT Industries is available for free at http://ResearchArchives.com/t/s?2b9d About Powermate Holding Headquartered in Aurora, Illinois, Powermate Holding Corp. -- http://www.powermate.com/-- anufacturers of portable and home standby generators, air compressors, and pressure washers. The company and two of its affiliates filed for Chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP, represents the Committee in these cases. When the Debtors filed for protection from their creditors, they listed assets and debt between $50 million and $100 million. PRC LLC: ACE American et al. Oppose Disclosure Statement -------------------------------------------------------- The ACE American Insurance Company, ACE Property & Casualty Insurance Company, and Illinois Union Insurance Company complain that PRC LLC and its debtor-affiliates' Disclosure Statement does not contain adequate information concerning the treatment of the insurance policies between ACE and the Debtors. According to Karel S. Karpe, Esq., at White and Williams LLP, in New York, ACE has issued various insurance policies since 2003, providing for prepetition and postpetition coverages to the Debtors and possibly their non-debtor affiliates, in the form of workers compensation and employers liability, errors & omissions, property fire and other casualty insurance. At times, ACE's coverage obligation includes the duty to defend. The Policies require the Debtors to pay premiums, to provide notice of claims, and to participate in the investigation and defense of claims. The Policies also give ACE rights to participate in the defense and settlement of claims in instances where ACE does not have a duty to defend. The Policies include provisions that obligate the Debtors to preserve and transfer to ACE any rights they may have against others to recover all or any part of any payment that ACE makes under the insurance policies. All of these obligations are ongoing and continuing. Ms. Karpe argues that the Disclosure Statement does not contain adequate information concerning the Debtors' proposed Plan of Reorganization's treatment of the ACE Policies or the consequences of that treatment. Thus, ACE objects to the Disclosure Statement to the extent that: * it indicates that insurance policies will be treated as executory contracts, but does not indicate whether the Debtors will be assuming or rejecting any insurance policies or whether the Reorganized Debtors will be performing the Debtors' obligations under the ACE Policies; * it preserves Debtors' rights under insurance policies, but says nothing about ACE's rights; * it indicates that the Debtors will reject all executory contracts except for those included in a schedule of executory contracts that purportedly will be included in the Debtors' Plan Supplement, but the Plan Supplement will not be submitted until five business days before the deadline for approval or rejection of the Debtors' proposed Plan; * it does not contain any provisions indicating if and how the Debtors' obligations under the ACE Policies will be performed by the Reorganized Debtors; * it does not contain any provisions indicating if and how the premiums currently owed under the ACE Policies and to be owed under the ACE Policies will be paid; * it indicates that the Reorganized Debtors are provided the sole authority to object to, litigate, settle or adjust claims. These provisions appear to conflict with the Debtors' obligations under the ACE Policies and may also jeopardize coverage, Mr. Karpe says; * it indicates that the Plan will enjoin certain claims against the Debtors, certain other parties, and the Debtors' assets. These provisions may interfere with ACE's ability to investigate, defend, litigate and settle claims in the ordinary course of business and therefore possibly jeopardize coverage; and * it indicates that the proposed Plan will preserve the Debtors' rights of setoff, but expressly preclude the rights of setoff, recoupment or subrogation belonging to other parties. Accordingly, ACE asks the U.S. Bankruptcy Court for the Southern District of New York not to approve the Disclosure Statement unless the objections it raised are addressed. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Court Extends Action Removal Period to July 21 ------------------------------------------------------- The Honorable Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York extended the deadline by which PRC LLC and its debtor-affiliates must remove their prepetition actions until the earlier of the effective date of a confirmed Chapter 11 plan, or July 21, 2008. As of April 1, 2008, PRC LLC is a party to some non-bankruptcy causes of actions filed in various venues throughout the United States, each of which was filed before the date of bankruptcy. The Debtors told the Court that their objective is to exit bankruptcy expeditiously and, to that end, the Debtors' have focused their efforts on preparing their bankruptcy schedules, motions to assume or reject prepetition contracts or leases, a disclosure statement, and a plan of reorganization. The Debtors related that they are analyzing various aspects of each Action, but did not believe they are able to make informed decisions as to whether to file notices of removal in each case by April 22, 2008. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Court Extends Lease Decision Period to August 20 --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the time within which PRC LLC and its debtor-affiliates may assume or reject their unexpired leases and executory contracts pursuant to Section 365(d)(4) of the U.S. Bankruptcy Code to the earlier of the effective date of a confirmed Chapter 11 plan, or Aug. 20, 2008. As reported in the Troubled Company Reporter on April 10, 2008, the Debtors told the Court that they are party to numerous leases of non-residential real property which, in most instances, provide the premises used as contact centers in connection with the Debtors' core business operations. Since the filing of bankruptcy, the Debtors have diligently reviewed their business needs with respect to leased premises and have filed several motions to reject leases. Currently, the Debtors lease 19 premises for which no motion to assume or reject has been filed with the Court. A list of these leases is available for free at: http://researcharchives.com/t/s?2a5b The Debtors' objective is to exit bankruptcy expeditiously. To that end, the Debtors have focused significant attention on preparing and filing bankruptcy schedules, a disclosure statement, and a plan of reorganization. While the Debtors are working as expeditiously as possible to analyze all aspects of their businesses, they did not believe it will be possible to make an informed decision as to whether to assume or reject all of the Leases by May 22, 2008. The Debtors said they do not want to forfeit any of the Leases as a result of the "deemed rejection" provision of Section 365(d)(4). The Debtors assured the Court that their landlords will not be prejudiced by the requested extension. The Debtors noted that they are current, and intend to remain current, on their postpetition obligations under the Leases. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Debtors submitted to the Court a Chapter 11 Plan of Reorganization on Feb. 12, 2008. (PRC LLC Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRIMUS TELECOM: Posts $3MM Net Loss in 1st Quarter Ended March 31 ----------------------------------------------------------------- PRIMUS Telecommunications Group Incorporated disclosed on Monday results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $425.6 million in total assets and $877.1 million in total liabilities, resulting in a $451.5 million total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $191.8 million in total current assets available to pay $228.1 million in total current liabilities. The company reported a $3.0 million net loss for the quarter, compared to a net loss of $2.6 million in the first quarter of 2007. First quarter 2008 net revenue was $227 million, in line with net revenue of $227.0 million in the first quarter of 2007. The net loss in the first quarter of 2008 includes a $2.0 million gain from early extinguishment of debt and a $2.0 million gain on foreign currency transactions. The net loss in the first quarter of 2007 includes a $6.0 million loss on early extinguishment or restructuring of debt and a $3.0 million gain on foreign currency transactions. "We are encouraged by the results in the first quarter, particularly the sequential growth in both overall and retail revenue - a goal that we have been pursuing," said K. Paul Singh, chairman and chief executive officer of PRIMUS. "While we recognize that a single quarter is far from a trend, we hope the results are an early indication that our targeted investments in sales and marketing and infrastructure will lead to further progress in increasing retail revenues. "Despite the positive revenue performance in the first quarter, we believe it is premature to adjust our prior guidance of a 2% to 5% yea-over-year net revenue decline. Similarly, assuming currency exchange rates remain at current levels, we confirm our prior 2008 Adjusted EBITDA guidance to be in the range of $65.0 million to $80.0 million. That outcome will be influenced by the success we achieve in our expanded sales and marketing efforts. In addition, we now expect capital expenditures for the year to be in the $25.0 million to $30.0 million range, approximately $5.0 million lower than our prior guidance," Mr. Singh said. "During the first quarter, we accomplished the following: opened new, and expanded existing, data centers in Canada and Australia; expanded the global DSLAM footprint by 35 to a total of 288 to expand the availability of our broadband services; augmented network capacity to offer higher speed DSL services in Australia and Canada; and continued growth of the company's direct sales force and telemarketing capabilities across its major markets," Mr. Singh stated. "Also, during the quarter, we purchased and retired $15.0 million principal amount of the company's outstanding debt maturing in 2009. In addition, we completed the sales of a minority equity investment in a Japanese entity and surplus fiber assets for an aggregate $3.0 million in cash proceeds. We continue to pursue other potential sales of select assets to improve our liquidity and narrow our geographical focus to our major franchises in the United States, Canada, Australia and Europe. "However, the uncertainty in the capital markets combined with a weak overall economic outlook may extend our time horizon to meet our goal of generating $50.0 million in cash proceeds from assets sales, particularly if valuation parameters are not at acceptable levels," Mr. Singh concluded. First Quarter 2008 Financial Results "First quarter 2008 net revenue was $227.0 million, up 2% or $4.0 million from the prior quarter and in line with the first quarter 2007. The $4.0 million revenue increase as compared to the prior quarter was comprised of a $3.0 million increase in wholesale services revenue and a $1.0 million increase in retail services revenue," said Thomas R. Kloster, chief financial officer. "The growth in retail services revenue reflects continued increases from high-margin broadband, VOIP, local, wireless, data and hosting revenues, which, for the first time in over nine quarters, exceeded the decline in legacy voice and dial-up Internet services revenue. We believe attaining retail revenue growth lends validity to our strategy of making network investments and shifting resources to sales and marketing." Net revenue less cost of revenue was $84.0 million or 37.3% of net revenue in the first quarter as compared to $82.0 million and 36.3% in the year-ago quarter. Selling, general and administrative expense in the first quarter was $69.0 million, up $1.0 million from $68.0 million in the year- ago quarter. Income from operations was $10.0 million in the first quarter of 2008 (including a $3.0 million gain from sale of assets), an improvement of $2.0 million from the first quarter of 2007. First quarter 2008 Adjusted EBITDA was $15.0 million, an increase of $1.0 million from $14.0 million in the year-ago quarter. Interest expense for the first quarter 2008 was $15.0 million, up from $13.0 million in the first quarter 2007. The increase over the year-ago quarter is attributable to the interest related to the 14 1/4% Senior Secured Notes, issued in February and March 2007. Income tax expense for the first quarter was $2.0 million, which includes charges for determination of possible future tax obligations under Financial Accounting Standards Board Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," and withholding tax expense for intercompany interest and royalty fees owed by certain foreign subsidiaries. Liquidity and Capital Resources PRIMUS ended the first quarter 2008 with a cash balance of $67.0 million ($56.0 million unrestricted) as compared to $91.0 million ($81.0 million unrestricted) as of Dec. 31, 2007. The $25.0 million decrease in unrestricted cash balance is comprised of $7.0 million for capital expenditures primarily to fund the previously announced Australian DSLAM network expansion and the Canadian data center expansion, $16.0 million for interest payments, $11.0 million to purchase and retire $15.0 million principal amount of the company's outstanding debt maturing in 2009, $2.0 million for scheduled debt principal reductions, and $7.0 million for working capital movements. These declines are offset by $15.0 million of Adjusted EBITDA, and $3.0 million from the sale of assets. Free Cash Flow for the first quarter 2008 was negative $14.0 million (comprised of $7.0 million used in operating activities and $7.0 million utilized for capital expenditures) as compared to negative $13.0 million in the year-ago quarter. The principal amount of PRIMUS's long-term debt obligations as of March 31, 2008, was $649.0 million, as compared to $664.0 million at Dec. 31, 2007. About PRIMUS Telecom Headquartered in McLean, Virginia, Primus Telecommunications Group (OTC: PRTL) -- http://www.primustel.com/-- is an integrated communications services provider offering international and domestic voice, voice-over-Internet protocol (VOIP), Internet, wireless, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 500 points-of-presence (POPs) throughout the world, ownership interests in undersea fiber optic cable systems, 18 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service downgraded Primus Telecommunications Group Incorporated's corporate family rating to Ca from Caa3. PROPEX INC: Can Exercise Business Judgment for Idle Assets ---------------------------------------------------------- The Hon. John Cook of the U.S. Bankruptcy Court for the Eastern District of Tennessee authorized Propex Inc. and its debtor- affiliates to exercise their business judgment in determining whether to sell, dispose of, or transfer certain miscellaneous property, up to an aggregate of $500,000. Before disposition of any miscellaneous property, the Debtors will provide its Official Committee of Unsecured Creditors a notice of, and information about, the disposition, the Court held. The Creditors Committee then has seven business days to notify the Debtors, in writing, of any objection. The Debtors are authorized to complete the proposed transaction, if the Creditors Committee does not timely notify them of an objection, the Court stated. However, if the Creditors Committee timely objects, the Debtors will not close on the proposed transaction without receiving either the Creditor Committee's consent, or the Court's order. The Debtors will provide the Creditors Committee and the DIP Lenders with a report describing any sale, disposal or transfer of the Miscellaneous Property, on or before the 20th day of every month, beginning May 2008. The sale, disposal or transfer of the Miscellaneous Property will be deemed to have been made free and clear of any and all liens, claims and encumbrances. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It is produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. As of Sept. 30, 2007, the debtors' balance sheet showed total assets of $585,700,000 and total debts of $527,400,000. The Debtors' exclusive period to file a plan of reorganization expires on May 17, 2008. (Propex Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) PROPEX INC: Wants Court to Reject Two Chattanooga Office Leases --------------------------------------------------------------- Propex Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Tennessee to reject two office leases covering their location at 6025 Lee Highway, in Chattanooga that they no longer need. The Leases are: (a) a lease between the Debtors, as lessee, and The Raines Group, Inc., as managing agent for Chattanooga-Lee, LLC, dated February 14, 2006, as amended on October 5, and December 24, 2007; and (b) a lease between the Debtors and Raines Group, dated October 26, 2006, as amended on December 24, 2007. The Debtors vacated the leases on April 30, 2008, and will turn over full and complete access of the lease premises to the landlord on that date. According to Edward L. Ripley, Esq., at King & Spalding, LLP, in Houston, Texas, vacating and turning over the space provided under the Leases, along with the rejection of the leases, will save the Debtors approximately $5,230 each month. "Immediate rejection of these leases is in the best interest of the Debtors' estates," he says. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It is produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The debtors' has selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. As of Sept. 30, 2007, the debtors' balance sheet showed total assets of $585,700,000 and total debts of $527,400,000. The Debtors' exclusive period to file a plan of reorganization expires on May 17, 2008. (Propex Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) SACO I: Moody's Downgrades Ratings on 97 Certificate Classes ------------------------------------------------------------ Moody's Investors Service has downgraded 97 certificates and placed on review for possible downgrade 19 classes of certificates from 17 transactions issued by SACO I Trust. The transactions are backed by second lien loans. The certificates were downgraded because the bonds' credit enhancement levels, including excess spread and subordination were too low compared to the current projected loss numbers at the previous rating levels. The actions take into account the continued and worsening performance of transactions backed by closed-end-second collateral. Substantial pool losses of over the last few months have eroded credit enhancement available to the mezzanine and senior certificates. Despite the large amount of write-offs due to losses, delinquency pipelines have remained high as borrowers continue to default. Complete rating actions are: Issuer: SACO I Trust 2005-1 -- Cl. B-1, Placed on Review for Possible Downgrade, currently Baa2 -- Cl. B-2, Downgraded to B3 from Ba3 Issuer: SACO I Trust 2005-2 -- Cl. M-5, Downgraded to Baa1 from A3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to B1 from Baa1 -- Cl. B-2, Downgraded to Caa3 from B3 -- Cl. B-3, Downgraded to C from Ca Issuer: SACO I Trust 2005-3 -- Cl. B-2, Downgraded to B1 from Baa2 -- Cl. B-3, Downgraded to Caa2 from Ba3 -- Cl. B-4, Downgraded to C from Ca Issuer: SACO I Trust 2005-4 -- Cl. M-4, Downgraded to Baa1 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Ba3 from A3 -- Cl. B-1, Downgraded to B3 from Baa1 -- Cl. B-2, Downgraded to Ca from Ba3 -- Cl. B-3, Downgraded to Ca from Caa2 Issuer: SACO I Trust 2005-5 -- Cl. I-M-1, Downgraded to Aa2 from Aaa; Placed Under Review for further Possible Downgrade -- Cl. I-M-2, Downgraded to A2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. I-M-3, Downgraded to Baa3 from A1; Placed Under Review for further Possible Downgrade -- Cl. I-M-4, Downgraded to B1 from A2 -- Cl. I-M-5, Downgraded to B2 from A3 -- Cl. I-B-1, Downgraded to Caa1 from Baa1 -- Cl. I-B-2, Downgraded to Ca from Ba2 -- Cl. I-B-3, Downgraded to Ca from B2 -- Cl. I-B-4, Downgraded to C from Ca Issuer: SACO I Trust 2005-6 -- Cl. M-1, Downgraded to A1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to Baa1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Ba1 from Baa1 -- Cl. M-4, Downgraded to B2 from Ba1 -- Cl. M-5, Downgraded to Caa1 from Ba3 -- Cl. B-1, Downgraded to Caa3 from B3 -- Cl. B-2, Downgraded to C from Ca Issuer: SACO I Trust 2005-7 -- Cl. M-3, Downgraded to Baa3 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B1 from A2 -- Cl. M-5, Downgraded to B3 from Baa2 -- Cl. B-1, Downgraded to Caa2 from Ba3 -- Cl. B-2, Downgraded to Ca from B3 -- Cl. B-3, Downgraded to C from Caa3 Issuer: SACO I Trust 2005-8 -- Cl. M-2, Downgraded to A2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Baa2 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Ba3 from A2 -- Cl. M-5, Downgraded to B2 from Baa2 -- Cl. B-1, Downgraded to Caa1 from Ba3 -- Cl. B-2, Downgraded to Caa3 from B3 -- Cl. B-3, Downgraded to C from Caa3 Issuer: SACO I Trust 2005-9 -- Cl. M-2, Downgraded to A3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Baa2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Ba3 from Baa2 -- Cl. M-5, Downgraded to B2 from Ba1 -- Cl. M-6, Downgraded to Caa1 from Ba3 -- Cl. B-1, Downgraded to Caa3 from B3 -- Cl. B-2, Downgraded to Ca from Caa2 Issuer: SACO I Trust 2005-10 -- Cl. I-M, Downgraded to Caa1 from Ba2 -- Cl. I-B-1, Downgraded to Ca from B1 -- Cl. I-B-2, Downgraded to Ca from Caa1 -- Cl. I-B-3, Downgraded to C from Ca -- Cl. II-M-1, Downgraded to A1 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. II-M-2, Downgraded to Baa2 from A1; Placed Under Review for further Possible Downgrade -- Cl. II-M-3, Downgraded to Ba3 from A3 -- Cl. II-M-4, Downgraded to B2 from Baa1 -- Cl. II-M-5, Downgraded to Caa1 from Ba1 -- Cl. II-M-6, Downgraded to Ca from B1 -- Cl. II-B-1, Downgraded to C from Caa2 -- Cl. II-B-2, Downgraded to C from Ca Issuer: SACO I Trust 2005-GP1 -- Cl. M-2, Downgraded to C from B1 -- Cl. B-1, Downgraded to C from B3 Issuer: SACO I Trust 2005-WM1 -- Cl. B-1, Downgraded to Ba3 from Ba1 -- Cl. B-2, Downgraded to Caa3 from B3 -- Cl. B-3, Downgraded to C from Ca Issuer: SACO I Trust 2005-WM2 -- Cl. M-2, Placed on Review for Possible Downgrade, currently Aa3 -- Cl. M-3, Downgraded to Ba2 from A1 -- Cl. M-4, Downgraded to B3 from A2 -- Cl. M-5, Downgraded to Caa3 from A3 -- Cl. B-1, Downgraded to Ca from Ba2 -- Cl. B-2, Downgraded to C from B3 Issuer: SACO I Trust 2005-WM3 -- Cl. M-1, Downgraded to B1 from Aa2 -- Cl. M-2, Downgraded to B3 from A3 -- Cl. M-3, Downgraded to Caa2 from Baa3 -- Cl. M-4, Downgraded to Ca from Ba3 -- Cl. M-5, Downgraded to Ca from B2 -- Cl. B-1, Downgraded to C from Caa2 -- Cl. B-2, Downgraded to C from Ca Issuer: SACO I Trust 2006-1 -- Cl. A, Downgraded to A3 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-1, Downgraded to C from B1 -- Cl. M-2, Downgraded to C from Caa2 Issuer: Saco I Trust 2006-2 -- Cl. I-M, Downgraded to Caa3 from B1 -- Cl. I-B-1, Downgraded to C from Caa2 -- Cl. II-M, Downgraded to C from Ca Issuer: SACO I Trust 2006-5 -- Cl. I-A, Downgraded to A3 from A1; Placed Under Review for further Possible Downgrade -- Cl. I-M-1, Downgraded to Ba1 from A2 -- Cl. I-M-2, Downgraded to B2 from Baa3 -- Cl. I-M-3, Downgraded to B3 from Ba2 -- Cl. I-M-4, Downgraded to Caa2 from B2 -- Cl. I-M-5, Downgraded to Ca from Caa2 -- Cl. I-M-6, Downgraded to C from Ca -- Cl. II-A-1, Downgraded to A3 from A1; Placed Under Review for further Possible Downgrade -- Cl. II-A-3, Downgraded to A3 from A1; Placed Under Review for further Possible Downgrade -- Cl. II-M-1, Downgraded to B1 from A3 -- Cl. II-M-2, Downgraded to Caa1 from B1 -- Cl. II-M-3, Downgraded to C from Caa2 -- Cl. II-M-4, Downgraded to C from Ca SHARPER IMAGE: Asks Court to Approve Asset Sale Procedures ---------------------------------------------------------- Prior to the Petition Date, Sharper Image Corporation began an examination of the performance of its 184 stores to identify unprofitable stores. As a result, the Debtor determined that 96 of its stores and one of its distribution centers were unprofitable and required immediate liquidation to maximize the value of the merchandise. As a consequence of that analysis, the Debtor obtained approval from the Court to conduct store closing sales at the Liquidation Stores. Conducting the Store Closing Sales enabled the Debtor to focus further analysis on its on-going stores and other assets to determine how to maximize value to its estate, Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, relates. The Debtor has now determined that a sale is necessary to preserve the value of its remaining assets for the benefit of its stakeholders. Mr. Kortanek states that the combination of disappointing sales and limited availability under the DIP Facility has severely hindered the Debtor's ability to improve and continue its retail operations. "The lapse of time only exacerbates the effect of the current liquidity crisis, which now threatens to dissipate the value of Sharper Image's trade name and its other related intellectual property," Mr. Kortanek said. "Delay in realizing the value of the trade name and related intellectual property will result in erosion of that value," he adds. The Debtor believes that an orderly sale process should be established. Mr. Kortanek points out that the proposed process will ensure maximum value is obtained by selling in a competitive market environment (i) the Debtor's assets, including without limitation its trade name and other intellectual property, as soon as practicable, and (ii) as many of its unexpired leases of non-residential real property as may be practicable. The Debtor proposes to solicit offers for the purchase of all, or parts of, its assets, including (i) the purchase of all or substantially all of the Assets and Leases as an on-going operation, or parts thereof, and (ii) bids for the purchase of any of the Leases or owned real property not included in the Asset Purchase Offer. Any and all offers will be considered by the Debtor in consultation with the Statutory Creditors' Committee. Accordingly, the Debtor asks the U.S. Bankruptcy Court for the District of Delaware to approve: (a) proposed procedures in connection with the Sale; (b) the time, date, and place of (i) the auction, and (ii) the hearing to consider entry of the sale order; (c) the form of notice of the Auction and the Procedures Hearing; (d) the form of asset purchase agreement and lease purchase agreement to be used in connection with the solicitation of offers; and (e) the Debtor's entry into customary expense reimbursement arrangements with offerors that may be identified prior to or after the entry of an order authorizing and approving the Sale Procedures at a hearing, scheduled for May 14, 2008. Subsequent to the Auction, the Debtor asks the Court for the: (i) approval of the Sale, free and clear of all liens, claims, and encumbrances; (ii) approval of, if any, sales of Leases, free and clear of all liens, claims, and encumbrances to the party or parties submitting the highest or best Lease Purchase Offers; and (iii) if necessary, the assumption and assignment of executory contracts and Leases. Proposed Sale Procedures The Debtor proposes that on or prior to April 25, 2008, it will have served the Auction and Hearing Notice on (i) the Office of the United States Trustee for the District of Delaware, (ii) the attorneys for the Secured Lender, (iii) the attorneys for the Statutory Creditors' Committee, (iv) all known entities holding or asserting a lien in the Assets or Leases, (v) all parties to Contracts and Leases that the Debtor believes will or may be assumed and assigned, (vi) for each state in which its retail stores are located, (a) the Attorney General's Office, and (b) the applicable taxing authorities, and (vii) all entities entitled to notice in the Chapter 11 case. The Debtor relates that Offers and adequate assurance packages must be submitted so that they are actually received by no later than 12:00 noon, Eastern Time, on May 9, 2008, by (i) the Debtor, (ii) the attorneys for the Secured Lender, and (iii) the attorneys for the Statutory Creditors' Committee -- Offer Notice Parties. Any and all offers will be considered by the Debtor in consultation with the Statutory Creditors' Committee. If any Offer is conditioned upon the assumption and assignment of Contracts or Leases, then the offeror must identify the Contracts or Leases to be assumed and assigned, and provide evidence of its ability to provide adequate assurance of future performance of the Contracts or Leases along with the Offer. After the submission of Offers, the Debtor, in consultation with the Statutory Creditors' Committee, may enter into an agreement, subject to higher or better offers at the Auction, with one or more entities that submit Asset Purchase Offers for substantially all, or a part of, the Debtor's assets,. The Expense Reimbursement Agreement may include reimbursement for costs and expenses incurred by the offeror in connection with its Asset Purchase Offer. The Debtor will seek approval of the Expense Reimbursement at the Procedures Hearing. If an Expense Reimbursement Agreement is entered into after the Procedures Hearing, the Debtor will seek retroactive approval of the Expense Reimbursement at the Sale Hearing. Prior to the Auction, the Debtor will distribute the appropriate Expense Reimbursement Agreement, if any, to the parties submitting the other Qualified Offers. The Auction will be conducted at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, on May 28, 2008, at 10:00 a.m., Eastern Time. The Debtor proposes that objections to the Procedures Order must be served so as to be actually received by May 7, 2008, at 4:00 p.m., Eastern Time by (i) the Debtor, (ii) the Office of the United States Trustee for the District of Delaware, (iii) the attorneys for the Secured Lender, and (iv) the attorneys for the Statutory Creditors' Committee. The Sale Hearing will be held in the United States Bankruptcy Court for the District of Delaware, on May 29, 2008, at 2:00 p.m., Eastern Time, or another date and time that the Court may direct. The Sale Hearing may be adjourned without further notice other than by announcement at the Sale Hearing. Objections to the Sale are due May 21, 2008, at 4:00 p.m., Eastern Time. To facilitate the Auction process and assist Interested Parties in preparing Offers for the Assets and Leases, the Debtor will provide a proposed form of asset purchase agreement on which Offers may be predicated. Moreover, Lease Purchase Offers must be submitted pursuant to the terms of a lease purchase agreement. The Court will convene a hearing on May 14, 2008, to consider approval the Debtor's proposed Sale Procedures. EklecCo Objects EklecCo Newco, L.L.C. believes that the Debtor's proposed procedures for the sale of its assets may deny EklecCo any meaningful opportunity to appear and object since the Sale Hearing is only one day after the Auction. Kevin M. Newman, Esq., at Menter, Rudin & Trivelpiece, P.C., in Syracuse, New York, relates that although the Debtor will provide EklecCo with adequate assurance packages it receives regarding future performance by lease assignees, there is no indication as to when this information is to be provided. The Debtor proposes that EklecCo be required to object to a proposed assumption and assignment before it even knows who the proposed assignee is, Mr. Newman points out. EklecCo will not know what the Debtor will be asking the Court to approve at the Sale Hearing until possibly the Sale Hearing, but nevertheless is required to file objections on or before May 21, 2008, Mr. Newman notes. Mr. Newman points out that EklecCo is entitled to have (i) definitive notice of exactly who the Lease is to be assigned to, (ii) adequate assurance information regarding any assignee, (iii) time to determine whether to object to the proposed assignment, (iv) time to conduct expedited discovery regarding the proposed assignment, and (v) time to file an objection. Sharper's Largest Stakeholder Not Keen on Acquiring Company Kaja Whitehouse of the New York Post reports that Sharper Image's largest shareholder, Sun Capital Partners, is expected to be absent during the bidding process. Citing an unnamed source familiar with the situation, the New York Post says certain officials at Sun Capital think acquiring Sharper Image may not be a good move as researchers have calculated that it would cost around $50 million the first year -- including $30 million in operating costs and $20 million in losses -- to run the company. Sharper's Image's statement of financial affairs discloses that Sun Capital has a 19.5% stake in the company. According to the same report, an insider at Sharper Image said parties interested in acquiring the company were mostly strategic buyers, or companies, and not private-equity firms. About 20% of of the roughly 90 parties that have expressed interest are currently conducting due diligence, said the source. A Sun Capital spokesman declined to comment on the matter. Based in San Francisco, California, Sharper Image Corp. -- http://www.sharperimage.com/-- is a multi-channel specialty retailer. It operates in three principal selling channels: the Sharper Image specialty stores throughout the U.S., the Sharper Image catalog and the Internet. The company has operations in Australia, Brazil and Mexico. In addition, through its Brand Licensing Division, it is also licensing the Sharper Image brand to select third parties to allow them to sell Sharper Image branded products in other channels of distribution. The company filed for Chapter 11 protection on Feb. 19, 2008 (Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the Debtor in its restructuring efforts. An Official Committee of UnsecuredCreditors has been appointed in the case. When the Debtor filed for bankruptcy, it listed total assets of US$251,500,000 and total debts of US$199,000,000. (Sharper Image Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). SIRVA INC: First Amended Plan Gets 100% Vote from Class 1 --------------------------------------------------------- Alison M. Tearnen, senior consultant at Kurtzman Carson Consultants LLC, notifies the U.S. Bankruptcy Court for the Southern District of New York that all members of Class 1 - Prepetition Facility Claims has voted to accept SIRVA, Inc., and its debtor-affiliates' First Amended Plan Prepackaged Joint Plan of Reorganization. Number Amount Class Accepting Accepting Percentage ----- ---------- --------- --------- 1 45 Ballots $416,796,635.36 100% Number Amount Class Rejecting Rejecting Percentage ----- --------- --------- ---------- 1 0 Ballots $0.00 0% According to Ms. Tearnen, Highland Capital Management LP and Highland Credit Strategies Holding Corp.'s ballot accepting the First Amended Plan was not tabulated because Highland was not a Class 1 claimholder as of the Record Date. The Court, on May 2, 2008, approved the Debtors' solicitation package and continued solicitation of votes from the holders of Class 1 Prepetition Facility Claims, to ensure the acceptance of the First Amended Plan. The Debtors' continued solicitation of Class 1 did not require solicitation from holders of Class 5-A or Class 5-B Claims, as the Debtors deemed those classes to reject the Plan. The Court will convene a hearing today, May 7, 2008, at 10:00 a.m., to consider confirmation of the Plan. A full-text copy of the Debtors' First Amended Prepackaged Joint Plan of Reorganization is available at no charge at: http://bankrupt.com/misc/SIRVA1stAmendedPlan.pdf A blacklined copy of the Debtors' First Amended Prepackaged Joint Plan of Reorganization is available at no charge at: http://bankrupt.com/misc/SIRVA1stAmendedPlanBlacklined.pdf About Sirva Inc. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company has operations in Costa Rica. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. The Committee's counsel is Pachulski Stang Ziehl & Jones. When the Debtors filed for bankruptcy, it reported total assets of $924,457,299 and total debts of $1,232,566,813 for the quarter ended Sept. 30, 2007. (Sirva Inc. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIRVA INC: Court Approves Pre-Packaged Plan of Reorganization ------------------------------------------------------------- The Honorable James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York approved Sirva Inc. and its debtor- affiliates' pre-packaged Chapter 11 Plan of Reorganization, clearing the way for SIRVA and its subsidiaries to emerge from Chapter 11 in short order. "As a result of our financial restructuring, SIRVA and all of our subsidiaries, including Allied and northAmerican, now have a significantly stronger financial foundation," Robert W. Tieken, chief executive officer, said. "The balance sheet recapitalization we undertook has reduced the Company's debt and interest expense, enhancing our ability to compete in the moving and relocation markets and positioning SIRVA for long-term success." On Feb. 5, 2008, SIRVA and most of its domestic subsidiaries filed voluntary Chapter 11 petitions. The court's confirmation of the Plan, which had already received overwhelming support from the the Debtors' secured lenders, allows SIRVA to implement its restructuring and recapitalization. Specifically, the Plan reduces SIRVA's outstanding bank debt by roughly $200 million and annual cash interest expense by approximately $40 million. At the time of the Chapter 11 filing, SIRVA entered into a $150 million debtor-in-possession financing facility with members of its pre-petition lender group. Upon emergence, the DIP financing facility will convert into a $215 million senior secured credit facility to fund ongoing operations and borrowings. Once its Plan becomes effective, SIRVA will become a private company, and its stock will no longer be publicly traded. Headquartered in Westmont, Illinois, SIRVA Inc. (Pink Sheets : SIRV.PK) -- http://www.sirva.com/-- is a provider of relocation solutions to a well-established and diverse customer base. The company handles all aspects of relocation, including home purchase and home sale services, household goods moving, mortgage services and home closing and settlement services. SIRVA conducts more than 300,000 relocations per year, transferring corporate and government employees along with individual consumers. SIRVA's brands include Allied, Allied International, Allied Pickfords, Allied Special Products, DJK Residential, Global, northAmerican, northAmerican International, Pickfords, SIRVA Mortgage, SIRVA Relocation and SIRVA Settlement. The company has operations in Costa Rica. The company and 61 of its affiliates filed separate petitions for Chapter 11 protection on Feb. 5, 2008 (Bankr. S.D.N.Y. Case No. 08-10433). Marc Kieselstein, Esq. at Kirkland & Ellis, L.L.P. is representing the Debtor. An official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for bankruptcy, it reported total assets of US$924,457,299 and total debts of US$1,232,566,813 for the quarter ended Sept. 30, 2007. (Sirva Inc. Bankruptcy News; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). SIX FLAGS: Management Outlines Cost-Cutting Measures to Investors ----------------------------------------------------------------- Mark Shapiro, President and Chief Executive Officer of Six Flags, Inc., and Jeffrey R. Speed, the company's Chief Financial Officer, gave a presentation at Six Flags Investor Day at Six Flags Great Adventure in Jackson, New Jersey, on April 29, 2008. Mr. Shapiro disclosed that management's thrust for 2008 would be to improve core businesses, generate new revenue stream and control costs. Mr. Shapiro said 2008 expense reductions include reduction of cash operating expenses, excluding cost of sales, by $50,000,000. Moreover, roughly $25,000,000 of reductions are marketing-related, including moving from 3 to 2 advertising agencies; less radio, and more on-line spending; and concentrating spending into Spring and early Summer seasons. Management will also reduce operations-related expenses by as much as $25,000,000, including reducing full-time headcount primarily through an Early Retirement Program; labor savings through rollout of "real-time" Seasonal Labor Tracking System; and cost savings associated with the removal of inefficient rides and attractions. Mr. Speed disclosed that company experienced limited attendance growth from 2002 to 2005. Attendance, he said, has declined as the company has re-positioned the brand. Mr. Speed said Six Flags has $288,000,000 in Preferred Income Equity Redeemable Securities due August 2009 and $280,000,000 in 8.875% Notes due February 2010. He said the company has various potential alternatives to address the $288,000,000 PIERS and the $280,000,000 8.875% Notes, including: -- tapping a $300,000,000 uncommitted optional Term Loan; -- refinancing, or exchange or extension -- selling sales, like excess land or parks -- a certain New Orleans Insurance claim Mr. Shapiro disclosed that Six Flags has concluded its first international licensing agreement for a Six Flags theme park to be developed in Dubai, United Arab Emirates. The company also has entered into a 1-year exclusivity agreement with respect to a potential Six Flags theme park/resort development in China. It is also in discussions concerning several other international theme park development opportunities in the Middle East, India and East Asia. A full-text copy of Six Flag's presentation slides is available at no charge at http://ResearchArchives.com/t/s?2b98 About Six Flags Headquartered in New York City, Six Flags Inc. (NYSE: SIX) -- http://www.sixflags.com/-- is the world's largest regional theme park company with 21 parks across the United States, Mexico and Canada. Founded in 1961, Six Flags has provided world class entertainment for millions of families with cutting edge, record- shattering roller coasters and appointment programming with events like the popular Thursday and Sunday Night Concert Series. Now 47 years strong, Six Flags is recognized as the preeminent thrill innovator while reaching to all demographics -- families, teens, tweens and thrill seekers alike -- with themed attractions based on the Looney Tunes characters, the Justice League of America, skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank Engine. At Dec. 31, 2007, the company's consolidated balance sheet showed $2.945 billion in total assets, $2.497 billion in total liabilities, $415 million in redeemable minority interests, and $285 million in mandatorily redeemable preferred stock, resulting in a $252 million total stockholders' deficit. * * * As reported by the Troubled Company Reporter on April 25, 2008, Fitch Ratings kept a 'CCC' rating on Six Flags' Senior Unsecured Notes and Preferred Stock. Fitch noted that the company is below breakeven on an interest coverage basis, and leverage is around 13.8 times (x), both of which are very concerning. However, Fitch said, the company's liquidity has been sufficient to cover operating costs in the off-season, invest in its parks and continue to attempt its turnaround in 2008. Fitch also noted that the $300 million PIERs securities come due in April 2009 and represent material refinancing risk. Six Flags Inc. also continues to carry Moody's Investors Service's Caa1 corporate family rating assigned on Nov. 9, 2007. Outlook is Negative. SMART BALANCE: Moody's Lifts Ratings on Leverage Improvement ------------------------------------------------------------ Moody's Investors Service upgraded Smart Balance, Inc.'s long-term ratings, including its corporate family and probability of default ratings to B1 from B3. The company's speculative grade liquidity rating of SGL-2 was affirmed. The rating outlook is stable. This rating action concludes the review for possible upgrade began on Jan. 7, 2008. Ratings upgraded: -- Corporate family rating to B1 from B3 -- Probability of default rating to B1 from B3 GFA Brands, Inc.: -- $20 million 1st lien revolving credit agreement expiring in May 2013 to Ba3 (LGD3, 42%) from B2 (LGD3, 36%) -- $80 million (original $120 million) 1st lien Term Loan B maturing in May 2014 to Ba3 (LGD3, 42%) from B2 (LGD3, 36%) -- $10 million (original $40 million) 2nd lien Term Loan maturing in November 2014 at B3 (LGD5, 88%) from Caa2 (LGD5, 86%) Rating affirmed: -- Speculative grade rating at SGL-2 The upgrade reflects Smart Balance's significant improvement in leverage and financial flexibility following two recent capital transactions: (1) the repayment of approximately $70 million of debt in December 2007 and March 2008, funded by $76.5 million proceeds from the December 2007 redemption of warrants; and (2) the January 3, 2008 forced conversion of the company's $175.6 million Series A convertible preferred stock to common stock. Moody's standard analytical adjustments had previously included 75% of this preferred stock in debt. The company's B1 corporate family rating is supported by its significantly-improved credit metrics and robust organic revenue growth. However, these attributes are offset by the speculative grade elements in the company's profile, primarily its limited scale, narrow product focus, and niche market position within the highly-competitive packaged food industry. The speculative grade liquidity rating of SGL-2 (good liquidity) reflects the expectation that the company will generate relatively stable earnings and cash flow. Moody's anticipates that the company's free cash flow will fund its working capital, capital expenditure, dividends and scheduled debt payments over the next 12 months. The significant reduction in funded debt will also give the company more flexibility under its financial covenants. Headquartered in Paramus, New Jersey, Smart Balance, Inc. is a marketer of margarine spreads and several other packaged food products sold within the functional food category under the Smart Balance and Earth Balance brands. The company's products are designed to provide specific dietary characteristics and benefits to consumers. Revenues for the fiscal year ended December 31, 2007, proforma for the May 2007 GFA acquisition, were approximately $175 million. SPRINT NEXTEL: Hooks Up With Clearwire on $14BB Wireless Venture ---------------------------------------------------------------- Sprint Nextel Corporation and Clearwire Corporation, a start-up supported by cellphone pioneer Craig McCaw, disclosed a joint venture valued at $14.5 billion, The Wall Street Journal reports. According to WSJ, when the agreement is completed, Sprint will hold about 51% of the firm, existing Clearwire shareholders will own 27%, and new investors will hold 22%. The deal assumes a price of $20 per Clearwire share, WSJ says. The new company will take on Clearwire's name and be publicly traded, WSJ relates. As reported in the Troubled Company Reporter on May 7, 2008, cable providers will be able to offer wireless service under a re-sell agreement with the new Clearwire. The new company will give cable operators and Google prominent roles in shaping the future of mobile Internet access and a new platform for their content and services as growth begins to slow in their traditional businesses. Intel will gain new support for WiMax, a technology standard Intel has championed and that will be used in the venture's high-speed network. The venture still requires approval from regulators. WSJ, citing analysts, relates that the venture will have a two- year head-start on rivals Verizon Wireless and AT&T Inc., which are just starting to sketch out plans for their next-generation wireless networks. About Clearwire Corporation Headquartered in Kirkland, Washington, Clearwire Corporation (NASDAQ:CLWR) -- http://www.clearwire.com/-- builds and operates wireless broadband networks that enable Internet communications. Its wireless broadband networks cover entire communities and deliver a high-speed Internet connection that not only creates a new communications path into the home or office, but also provides a broadband connection anytime and anywhere within its coverage area. It offers services in both domestic and international markets. The company's services consist primarily of providing wireless broadband connectivity, but in some of its domestic markets, it also offers voice-over Internet protocol telephony services. About Sprint Nextel Headquartered in Reston, Virginia, Sprint Nextel Corporation (NYSE:S) -- http://www.sprint.com/-- offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving about 54 million customers at the end of the fourth quarter 2007; industry-leading mobile data services; instant national and international walkie- talkie capabilities; and a global Tier 1 Internet backbone. * * * As reported in the Troubled Company Reporter on May 2, 2008, Standard & Poor's Rating Services lowered its corporate credit and senior unsecured ratings on Sprint Nextel Corp. to 'BB' from 'BBB-' and removed the ratings from CreditWatch with negative implications. The outlook is stable. STRUCTURED ASSET: Fitch Lowers Ratings on $153.2MM Certificates --------------------------------------------------------------- Fitch Ratings has taken rating actions on Structured Asset Securitizations Corporation mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $631.7 million and downgrades total $153.2 million. Additionally, $90.1 million was placed on Rating Watch Negative. SASCO 2003-39EX -- $4.1 million class M3 affirmed at 'A-'; -- $1.2 million class B downgraded to 'BB-' from 'BBB-': SASCO 2004-GEL1 -- $13.6 million class A affirmed at 'AAA'; -- $7.6 million class M1 affirmed at 'AA'; -- $4.0 million class M2 affirmed at 'A'; -- $3.4 million class M3 downgraded to 'BB+' from 'BBB'; -- $1.5 million class M4 downgraded to 'BB-' from 'BBB-'; SASCO 2004-GEL2 -- $3.7 million class A1 affirmed at 'AAA'; -- $1.6 million class A2 affirmed at 'AAA'; -- $11.0 million class M1 affirmed at 'AA'; -- $8.9 million class M2 affirmed at 'A'; -- $3.8 million class M3 affirmed at 'BBB'; -- $1.7 million class M4 downgraded to 'BBB-' from 'BBB'; -- $4.1 million class B downgraded to 'C/DR4' from 'BB'; SASCO 2004-GEL3 -- $15.1 million class A affirmed at 'AAA'; -- $13.5 million class M1 affirmed at 'AA'; -- $3.8 million class M2 downgraded to 'BBB+' from 'A'; -- $4.7 million class B downgraded to 'CC/DR3' from 'BB'; SASCO 2005-GEL1 -- $9.6 million class A affirmed at 'AAA'; -- $13.0 million class M1 affirmed at 'AA'; -- $8.0 million class M2 affirmed at 'A'; -- $5.7 million class M3 affirmed at 'BBB'; -- $1.7 million class M4 downgraded to 'BB+' from 'BBB-'; -- $3.6 million class B downgraded to 'CC/DR4' from 'BB'; SASCO 2005-GEL2 -- $27.5 million class A affirmed at 'AAA'; -- $6.7 million class M1 affirmed at 'AA'; -- $5.7 million class M2 downgraded to 'BBB+' from 'A+'; -- $3.6 million class M3 downgraded to 'BB+' from 'A-'; -- $1.4 million class M4 downgraded to 'BB' from 'BBB+'; -- $1.7 million class B downgraded to 'BB' from 'BBB'; SASCO 2005-GEL3 -- $16.5 million class A affirmed at 'AAA'; -- $9.0 million class M1 affirmed at 'AA+'; -- $8.2 million class M2 affirmed at 'AA+'; -- $13.7 million class M3 affirmed at 'A+'; -- $7.2 million class M4 downgraded to 'BB+' from 'A-'; -- $5.7 million class M5 downgraded to 'BB ' from 'BBB+'; SASCO 2006-GEL1 -- $40.3 million class A1 affirmed at 'AAA'; -- $48.4 million class A2 affirmed at 'AAA'; -- $16.1 million class M1 affirmed at 'AA'; -- $13.0 million class M2 downgraded to 'A-' from 'A+'; -- $10.1 million class M3 downgraded to 'BB' from 'BBB+'; -- $7.4 million class M4 downgraded to 'BB-' from 'BBB-'; -- $6.0 million class B downgraded to 'C/DR6' from 'BB-'; SASCO 2006-GEL4 -- $80.9 million class A1 affirmed at 'AAA'; -- $50.7 million class A2 affirmed at 'AAA'; -- $22.1 million class A3 affirmed at 'AAA'; -- $22.6 million class M1 rated 'AA+', placed on Rating Watch Negative; -- $6.8 million class M2 rated 'AA+', placed on Rating Watch Negative; -- $5.8 million class M3 downgraded to 'A-' from 'AA'; -- $5.8 million class M4 downgraded to 'BBB' from 'AA-'; -- $5.2 million class M5 downgraded to 'BBB-' from 'A+'; -- $5.2 million class M6 downgraded to 'BBB-' from 'A'; -- $3.9 million class M7 downgraded to 'BB+' from 'A-'; -- $6.0 million class M8 downgraded to 'BB' from 'BBB'; -- $4.5 million class B1 downgraded to 'B' from 'BB+', placed on Rating Watch Negative; SASCO 2007-GEL1 -- $115.1 million class A1 affirmed at 'AAA'; -- $38.8 million class A2 affirmed at 'AAA'; -- $18.6 million class A3 affirmed at 'AAA'; -- $23.9 million class M1 rated 'AA+', placed on Rating Watch Negative; -- $6.9 million class M2 rated 'AA', placed on Rating Watch Negative; -- $6.3 million class M3 rated 'AA-', placed on Rating Watch Negative; -- $6.2 million class M4 downgraded to 'BBB' from 'A+'; -- $5.6 million class M5 downgraded to 'BBB-' from 'A'; -- $5.3 million class M6 downgraded to 'BB+' from 'A-', placed on Rating Watch Negative; -- $4.7 million class M7 downgraded to 'BB' from 'BBB+', placed on Rating Watch Negative; -- $4.1 million class M8 downgraded to 'BB' from 'BBB', placed on Rating Watch Negative; -- $5.0 million class B1 downgraded to 'B' from 'BB+', placed on Rating Watch Negative. THORNBURG MORTGAGE: Seeks Stockholders' Approval to Dilute Shares ----------------------------------------------------------------- The Board of Directors of Thornburg Mortgage Corp. unanimously approved and declared advisable amendments to the company's charter to: -- increase the number of authorized shares of Thornburg capital stock from 500 million to 4 billion shares, and -- modify the terms of each of the company's existing series of preferred stock. The Board will present the proposals to the company's shareholders at the annual stockholders' meeting on June 12, 2008. The Board recommends approval of the proposals by the shareholders. The election of three Class II nominees to the Board will also be tackled during the annual meeting. Class II nominees are current or newly appointed board members whose terms expire in 2008. Shareholders of record of Thornburg common stock and its 10% Series F Cumulative Convertible Redeemable Preferred Stock at the close of business on May 6, 2008, will be entitled to vote at the 2008 Annual Meeting. Moreover, any modification on the terms of the company's outstanding series of preferred stock requires affirmative votes of 66-2/3% of the votes entitled to be cast. As reported by the Troubled Company Reporter on April 1, Thornburg raised $1.35 billion through a private placement offering of senior subordinated secured notes, warrants for the purchase of common stock and participations in the principal of the company's mortgage-backed securities portfolio financed with reverse repurchase agreements. The offering was backstopped by entities affiliated with MatlinPatterson Global Advisers LLC. To successfully raise new capital, the new investors were granted the right to receive warrants to purchase, for $0.01 per share, up to 90% of the fully diluted common shares of the company, assuming certain conditions are fulfilled. The TCR reported April 23 that Thornburg issued 168,606,548 Warrants and escrowed another 29,322,878 Warrants. MatlinPatterson acquired 69,641,835 of the 168,606,548 Warrants; and exercised the Warrants on April 15, 2008, to acquire 69,641,835 shares of Thornburg common stock for an aggregate exercise price of $696,418.35. Excluding exercises of any other Warrants issued on March 31, 2008, MatlinPatterson beneficially owns 28.9% of the shares of Thornburg common stock then outstanding. Assuming that all of the other Warrants issued on March 31, 2008, were exercised, MatlinPatterson would beneficially own 20.5% of the Thornburg shares then outstanding. In a letter to shareholders, Larry A. Goldstone, Thornburg's president and chief executive officer, said the terms and conditions of the financing transaction are highly dilutive to the company's shareholders existing as of April 11, 2008. Notwithstanding the dilution, approval of the amendment to increase the number of authorized shares of capital stock of the company is necessary to meet the terms and conditions of the financing transaction and to put the company in a position to resume normalized business operations, he said. >From December 31, 2007, through March 6, 2008, Thornburg received $1.8 billion in margin calls, of which approximately $907 million occurred after February 14. The company met margin calls of $1.2 billion. At March 6, 2008, the company was unable to meet $610 million of the remaining margin calls. The company faced a possible liquidation of its mortgage securities portfolio at that time, were it not for the $1.35 billion financing transaction, Mr. Goldstone said. According to Mr. Goldstone, there are several conditions of the financing transaction that still need to be satisfied for the company to be in a position to normalize its business operations. Aside from getting shareholders to approve amendments to the company charter, Thornburg needs to successfully complete a tender offer for at least 90% of the total outstanding shares of preferred stock and at least 66-2/3% of the outstanding shares of each series of preferred stock. If the proposal to amend the charter to increase the number of authorized shares is not approved by June 15, 2008, or Thornburg does not complete the proposed tender offer or it does not issue additional warrants to certain investors, the senior subordinated secured notes will continue to earn interest at 18% per annum instead of a reduced rate of 12% per annum. In addition, the company will be subject to the terms of a Principal Participation Agreement, which means that during the period from March 19, 2009, through March 31, 2015, the investors in the Principal Participation Agreement will be entitled to receive all monthly principal payments on the companys mortgage- backed securities portfolio financed with reverse repurchase agreements. "We believe that the impact of this would be that the future appreciation in the fair market value of these securities would not be recovered by the Company for the benefit of the common or preferred shareholders. Rather, any recovered value would be paid to the investors in the Principal Participation Agreement. Shareholder approval of the amendment to increase the number of authorized shares and the amendment to our charter to modify the terms of our preferred stock, along with the successful completion of the preferred stock tender offer will improve the Company's ability to resume normalized business operations," Mr. Goldstone said. The Annual Meeting will be held at the Eldorado Hotel in Santa Fe, New Mexico, at 12:00 p.m., local time. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. At Dec. 31, 2007, the company's consolidated balance sheet showed $36.5 billion in total assets, $34.5 billion in total liabilities, and $2.00 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on March 10, 2008, Moody's Investors Service downgraded to Ca from Caa2 the senior unsecured debt, and to C from Ca the preferred stock ratings of Thornburg Mortgage, Inc. Thornburg's Ca unsecured debt rating remains under review for possible downgrade. The downgrades were in response to Thornburg's announcement that cross-defaults have been triggered under all of the REIT's repurchase agreements and secured loan agreements. Reverse repurchase agreements represent a key source of funding for the company. The TCR said on March 10 that Standard & Poor's Ratings Services lowered its issue ratings on Thornburg Mortgage Inc.'s senior unsecured debt to 'CC' from 'CCC+' and preferred stock to 'C' from 'CCC-'. Both issue ratings will remain on CreditWatch negative, where they were placed on March 3, 2008. The counterparty credit rating remains on selective default. Given Thornburg's limited financial resources, S&P believes the risk of default has increased further. The TCR also said on March 10 that, given Thornburg Mortgage, Inc.'s weakening credit profile stemming from defaults under the company's reverse repurchase agreements, Fitch has downgraded the Debtors' four ratings -- Issuer Default Rating to 'RD' from 'CCC'; -- Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'; -- Unsecured subordinate notes to 'C/RR6' from 'CC/RR6'; and -- Preferred stock to 'C/RR6' from 'CC/RR6'. TIMBERWOLF I: Expected Loss Prompts Moody's to Lower Ratings ------------------------------------------------------------ Moody's Investors Service has downgraded ratings of four classes of notes issued by Timberwolf I, Ltd. and left on review for possible further downgrade the rating of one of these classes. The notes affected by the rating action are: (1) Class Description: $100,000,000 Class A-1a Floating Rate Notes Due 2039 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade (2) Class Description: $200,000,000 Class A-1b Floating Rate Notes Due 2039 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: C (3) Class Description: $100,000,000 Class A-1c Floating Rate Notes Due 2044 -- Prior Rating: Caa1 on review for possible downgrade -- Current Rating: C (4) Class Description: $100,000,000 Class A-1d Floating Rate Notes Due 2044 -- Prior Rating: Caa3 on review for possible downgrade -- Current Rating: C The transaction experienced an Event of Default as reported by the Trustee on March 10, 2008, caused by a default in the payment, when due and payable, of interest on the Class S-2 Notes, Class A Notes and Class B Notes, which default has continued for a period of seven days, as described in Section 5.1(a) of the Indenture dated March 27, 2007. As provided in Article 5 of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral and the Notes. In this regard, Moody's has been notified by the Trustee that a majority of the Controlling Class and the Cashflow Swap Counterparty have directed the Trustee to sell and liquidate all of the Collateral pursuant to the applicable provisions of the Indenture. The rating actions taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and outcome of the sale and liquidation of the Collateral. Because of this uncertainty, the ratings assigned to the Class A- 1a Notes remain on review for possible further action. Timberwolf I, Ltd. is a collateralized debt obligation backed by a portfolio of ABS CDO securities. TOPANGA CDO: Moody's Chips Ratings on Six Note Classes ------------------------------------------------------ Moody's Investors Service has downgraded ratings of six classes of notes issued by Topanga CDO II, Ltd., and left on review for possible further downgrade the rating of one of these classes. The notes affected by the rating action are: Class Description: Up to $650,000,000 Class S Floating Rate Senior Secured Notes Due 2046 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $161,000,000 Class A-1 Floating Rate Senior Secured Notes Due 2046 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Ca Class Description: $60,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: C Class Description: $45,000,000 Class B Floating Rate Subordinate Secured Deferrable Notes Due 2046 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C Class Description: $42,000,000 Class C Floating Rate Junior Subordinate Secured Deferrable Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C Class Description: $20,000,000 Class D Floating Rate Junior Subordinate Secured Deferrable Notes Due 2046 -- Prior Rating: Ca -- Current Rating: C The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on April 15,2008, of an event of default caused when the Class A Principal Coverage Ratio is less than 100%, described in Section 5.1(h) of the Indenture dated Dec. 14, 2006. Topanga CDO II, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Assets and the Notes. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the rating assigned to the Class S Notes remains on review for possible further action. TROPICANA ENTERTAINMENT: Gets Court's Nod on First Day Motions -------------------------------------------------------------- Tropicana Entertainment LLC received approval from the U.S. Bankruptcy Court for the District of Delaware of its first day motions, which were submitted as part of its voluntary filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Included among the motions, the company received approval to: -- continue wage and salary payments and other benefits to employees; -- continue to honor customer programs well as certain other pre-petition customer obligations; and -- pay certain pre-petition trade claims held by critical vendors. The company will continue to pay all vendors and suppliers in the ordinary course for goods and services delivered post-petition. In addition, Tropicana Entertainment also received court approval to utilize, on an interim basis, up to $20 million of $67 million of its Debtor-in-Possession financing, which it negotiated with Silver Point Finance LLC, pending a final hearing on May 30. The company is cash flow positive on an operational basis and, along with its DIP financing, has more-than-adequate resources to meet its needs. "We are pleased the court has approved these critical first day motions, which will ensure that we continue normal operations during the restructuring," Scott Butera, president of Tropicana Entertainment, said. "This is an important first step in our plan to recapitalize the company." About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq. at Richards Layton & Finger represent the Debtors in their restructuring efforts. Its financial advisor is Lazard Ltd. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. TROPICANA ENT: S&P Puts Rating at Default After Bankruptcy Filing ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Tropicana Entertainment LLC and its unrestricted subsidiary, Tropicana Las Vegas Resort & Casino LLC, to 'D', including the 'CCC-' corporate credit rating on each entity. "The ratings downgrade follows the filing by both TELLC and TLV on May 5, 2008 for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Wilmington, Delaware," said Standard & Poor's credit analyst Ben Bubeck. In December 2007, it was announced that the New Jersey Casino Control Commission had denied the company's gaming license renewal application, citing, among other reasons, the commission's opinion that management failed to appreciate the workings of the Atlantic City marketplace. TELLC was operating under a one-year forbearance agreement with bank lenders under its credit facility, effective Dec. 12, 2007, and is in the process of selling its properties in Atlantic City, New Jersey, Evansville, Indaiana, and Vicksburg, Mississippi to generate proceeds to repay outstanding debt under the credit facility. TELLC also previously announced a one-month forbearance agreement with bondholders, effective April 15, 2008, to allow the company to continue to attempt to renegotiate or restructure the terms of the indenture with bondholders. This followed a ruling in late- February 2008 by the Delaware Chancery Court that the company was in default under section 4.06 of the notes indenture. Management has elected to include its wholly owned, unrestricted TLV subsidiary in the bankruptcy filing. S&P's ratings on TELLC and TLV have always incorporated a view of the consolidated enterprise, as S&P believed that the strategic relationship between the entities was an important factor, which, despite the distinct financing structures that were established, linked the credit quality of the two entities. The nine business entities included in the filing are casinos and affiliates that are directly owned by TELLC, including: Bayou Caddy's Jubilee Casino Casino Aztar Horizon Casino Hotel Horizon Casino Resort MontBleu Resort Casino & Spa River Palms Resort & Casino Tropicana Express Hotel & Casino Sheraton Hotel and Belle of Baton Rouge Casino Tropicana Casino & Resort -- Las Vegas, Nevada Tropicana Atlantic City Casino & Resort and the Lighthouse Point Casino were excluded from the filing. TROPICANA ENT: Bankruptcy Filing Cues Moody's Default Rating ------------------------------------------------------------ Moody's Investors Service lowered Tropicana Entertainment LLC's and Tropicana Las Vegas Resort and Casino LLC Probability of Default ratings to D from Ca. All other existing long term ratings are confirmed. The rating action follows the companies announcement on May 5, 2008 that Tropicana and Trop Las Vegas voluntarily filed for Chapter 11 bankruptcy. For Tropicana Entertainment LLC: This rating is downgraded: -- Probability of Default Rating to D from Ca. These ratings are confirmed: -- Corporate Family Rating at Caa3; -- First lien senior secured revolving credit facility at B3 (LGD2, 15%); -- First lien senior secured term loan at B3 (LGD2, 15%); -- Senior Subordinate notes at Ca (LGD4, 64%). For Tropicana Las Vegas Resort and Casino, LLC This rating is downgraded: -- Probability of Default rating to D from Ca. These ratings are confirmed: -- Corporate Family Rate at Caa2; -- First lien senior secured term loan at Caa2 (LGD2, 25%). Moody's plans to withdraw all the ratings of Tropicana and Trop Las Vegas in the near future. Tropicana Entertainment, headquartered in Kentucky, is a privately owned gaming company that owns and operates eleven casino properties, ten of which form the Restricted Group. The properties are located in Atlantic City, New Jersey, Baton Rouge, Louisiana, and Vicksburg and Greenville, Mississippi, Laughlin and Lake Tahoe, Nevada, Las Vegas, Nevada, and Evansville, Indiana. UBS AG: To Cut 5,500 Jobs and Sell $15BB of Mortgage Assets ----------------------------------------------------------- UBS AG plans to reduce 5,500 jobs throughout the bank as part of the company's restructuring, Elena Logutenkova of the Bloomberg News reports. The headcount slash which will affect about 7% of the workforce, will include 2,600 investment bankers, primarily in London and New York, various reports state. According to WSJ, the cuts will fall mainly on fixed-income business areas, which has cost UBS more than $37 billion in write- downs. The scaled-down operation will be less of a threat to the bank's private-banking business, which provides services to rich individuals, WSJ notes. Various reports relate that the determination came with the company's plans to exit the municipal bond business and sell $15 billion in distressed mortgage assets to a newly created fund managed by BlackRock Inc. In a press statement, UBS said it posted a first-quarter net loss of CHF11.54 billion or $10.95 billion, compared with net profit of CHF3.03 billion in the year-earlier period. UBS fell 4.5% in Swiss trading, the most in four weeks, after clients withdrew more assets than they added for the first time in almost eight years, reports add. Several reports cite chief executive Marcel Rohner as saying, UBS must adapt to slowing markets but that the bank is committed to remaining a player in traditional investment-banking areas such as helping companies raise money and advising on mergers and acquisitions. About UBS AG UBS AG -- http://www.ubs.com/-- together with its subsidiaries, provides a range of financial products and services worldwide. UBS' businesses are Global Wealth Management and Business Banking, Global Asset Management, and Investment Banking. The company was founded in 1862 and is based in Zurich, Switzerland. Its Wealth management services in the United States are provided by UBS Financial Services Inc. UBS' U.S. headquarters is at 1285 Avenue of the Americas, New York City. VALLAMBROSA HOLDINGS: Case Summary & Five Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Vallambrosa Holdings, LLC fka Vallambrosa Development Co., LLC 2245 Crawford-Smithonia Road Colbert, GA 30628 Bankruptcy Case No.: 08-40791 Chapter 11 Petition Date: May 6, 2008 Court: Southern District of Georgia (Savannah) Debtor's Counsel: James L. Drake, Jr. Email: jdrake7@bellsouth.net P.O. Box 9945 Savannah, GA 31412 Tel: (912) 790-1533 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lanyard Development, Inc. consulting fees $1,000,000 6029-C Ogeechee Road Savannah, GA 31419 Wilson & Sons trade debt & brush $100,0000 P.O. Box 147 and debris removal Arnoldsville, GA 30619 Larry Jones trade debt & brush $30,000 1273 Smithonia Road removal and mosquito Colbert, GA 30628 abatement C-Marc trade debt & $8,500 marketing video Gayle & Associates trade debt & $7,500 landscape for marketing VALLEJO CITY: City Officials Finally Opt for Bankruptcy Protection ------------------------------------------------------------------ Top officials in the city of Vallejo, California, unanimously voted for the city to file for Chapter 9 bankruptcy protection, Bloomberg News reports. As reported in the Troubled Company Reporter on May 7, 2008, City Manager Joseph Tanner recommended that the city file for bankruptcy. During the last couple of weeks, city officials have worked out a plan to stave bankruptcy off. Vallejo faces a $13.2 million 2007-2008 general fund operating deficit and a negative funding balance of $9 million on June 30. In March, the council approved a tentative agreement that temporarily kept it afloat. The council reached an interim pact with the Vallejo Police Officers Association and the International Federation of Firefighters in relation to a contract that expires June 30. Under the agreement, Vallejo police and firefighters will give up 6.5% of an 8.5% raise they received last year. However, the city still needed additional concessions. The city council approved resolutions to prevent the city from filing for bankruptcy by the end of March. Despite of this, officials weren't able to reach an agreement after they were set to present a long-term financial plan by April 22, 2008. "Nobody wants bankruptcy, but there doesn't appear to be a whole lot of options left. . . [W]e are going to be out of money by June 30. It's all a numbers game now," Bloomberg quotes Joanne Schivley, one of the council members, as saying. Bloomberg relates that failed labor concessions prompted the city council to finally vote for bankruptcy. For many months the city had been dealing with rising costs of police and firefighter services, as well as store closings and a decline in home values brought about by the nationwide mortgage crisis. These factors took a huge toll on the city's tax revenue flow, Bloomberg says. Bankruptcy was to be the city's "last, best option" after negotiations with unions proved unsuccessful. About the City of Vallejo Vallejo -- http://www.ci.vallejo.ca.us/GovSite/-- is a city in Solano County. As of the 2000 census, the city had a total population of 116,760. It is located in the San Francisco Bay Area on the northern shore of San Pablo Bay. According to Vallejo's comprehensive annual report for the year ended June 30, 2007, the city has $983 million in assets and $358 million in debts. VOUGHT AIRCRAFT: S&P Holds 'B-' Rating; Revises Outlook to Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on aerospace supplier Vought Aircraft Industries Inc. to stable from negative. At the same time, S&P affirmed the 'B-' corporate credit rating on the company. Vought has about $680 million of debt outstanding. S&P also assigned ratings to Vought's proposed $200 million incremental term loan facility. S&P assigned a 'B-' issue-level rating, the same as the corporate credit rating, and a '3' recovery rating, indicating an expectation of meaningful (50%-70%) recovery of principal and prepetition interest in the event of a payment default. At the same time, S&P lowered its issue-level ratings on the senior secured credit facilities, to 'B-', the same as the corporate credit rating, from 'B'. S&P revised the recovery rating to '3', indicating an expectation of meaningful (50%-70%) recovery in a payment default, from '2'. The downgrade on the existing secured debt reflects the potential impact on recovery of the additional $200 million of first-lien debt that ranks pari passu with the existing facilities. S&P affirmed the 'CCC' issue-level rating on the senior unsecured notes. The '6' recovery rating, reflecting an expectation of negligible (0%-10%) recovery in the event of a payment default, remains unchanged. "The outlook revision is based on improved liquidity, stemming primarily from a material increase in the term loan," said Standard & Poor's credit analyst Roman Szuper. Other developments enhancing liquidity are anticipated settlement of claims with Boeing Co. regarding costs incurred on the 787 jetliner program and improved payment terms; proceeds from the sale of the company's 50% joint-venture interest in Global Aeronautica; and better operating performance. Vought should have adequate liquidity in 2008 and 2009 to meet working capital and cash flow needs despite delays on the 787 and planned production ramp-up of this program, high capital spending, and sizable pension plan funding requirements. The ratings on Vought reflect a highly leveraged financial profile, stemming from a heavy debt burden and prior losses, and weak cash flow over the next one to two years because of large upfront costs for new programs, such as the 787. S&P's ratings also take into account limited program diversity, prolonged and uncertain payback for new business investment, and participation in the cyclical and competitive commercial aircraft industry. These factors are offset somewhat by the company's major market position, its strategic importance to Boeing, and currently strong conditions in the commercial aerospace market. Dallas-based Vought is one of the largest independent producers of aerostructures for commercial, military, and business aircraft. Structures manufactured include wings, fuselages, and tail sections. Improved liquidity and expected profitable operations should allow the company to maintain a financial profile appropriate for the ratings. Certification of the 787, a successful production ramp- up of this jetliner, and better efficiency, profitability, and liquidity could lead us to revise the outlook to positive over the next 12 to 18 months. S&P could revise the outlook to negative if delays or cost overruns on the 787 constrain liquidity, or if Vought fails to generate adequate profitability and cash flow on existing programs. VOUGHT AIRCRAFT: Moody's Holds Ratings; Revises Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service affirmed Vought Aircraft Industries, Inc.'s corporate family and probability of default ratings of B2 and revised the rating outlook to stable from negative. At the same time, the rating agency affirmed the Ba3 rating on the company's senior secured bank credit facilities, including a $200 million increase to the term loan. The larger amount of secured bank debt however caused recovery expectations on the company's unsecured notes to decline. As a result, the rating on the notes was lowered to Caa1 from B3. Vought has obtained underwritten commitments to exercise an "accordion" feature in its existing bank agreement. This will increase the term loan by $200 million, taking the pro forma total as of Dec. 31, 2007 to approximately $613 million. The company will retain proceeds from the offering for general corporate purposes. Combined with anticipated proceeds from the sale of its interest in Global Aeronautica and incremental accommodations with an OEM customer, Vought's cash balances are expected to cover substantial investment requirements over the next year. Those requirements include ongoing expenditures associated with the production ramp on Boeing's 787 program and contributions to its defined benefit pension plan and disbursements under its retiree medical plan. Although Boeing has reduced its near-term 787 shipset requirements from its major suppliers, the lower production schedule is still expected to be cash consumptive to Vought in calendar 2008. In aggregate, Vought's pro forma cash resources should be sufficient to cover negative free cash flow over the coming twelve months. Significantly, this should permit the company's $150 million revolving credit facility to go un-drawn until mid-2009; retaining a degree of financial flexibility which is beneficial to the company's liquidity profile. The B2 corporate family rating reflects Vought's material leverage, negative free cash flow, modest interest coverage metrics and adequate liquidity profile following receipt of proceeds of the new $200 million term loan. Qualitatively, the rating also considers Vought's relative scale and certain concentrations within its sizable revenue and backlog. Moody's positively views Vought's strong and sustainable position as a key supplier of important structural components to major commercial and military aircraft OEM's, Boeing and Airbus in particular, and the resultant revenue visibility this provides. This is evidenced in Vought's backlog of $3.4 billion at year-end 2007, which will have increased from recent awards on rotary aircraft from Sikorsky and Bell. Continuation of strong build- rates across all three of Vought's business segments and realization of restructuring savings are anticipated to produce increased volumes with relatively stable operating margins going forward (after adjusting for certain contract provisions). The stable outlook is based upon Vought's improved near-term liquidity profile and credit metrics which are expected to gradually strengthen over time. Moody's would anticipate that Vought should have sufficient resources to span the period until mid-to-late 2009 when the company should transition to break-even to slightly positive free cash flow. Boeing's revised 787 schedule and related adjustments are expected to ease stress on Vought's peak investment in this program and spread those requirements over a longer time frame. Ratings affirmed with revised term loan amount and up-dated loss given default assessments: -- Corporate Family Rating, B2 -- Probability of Default, B2 -- $150 million secured revolving credit facility, Ba3, LGD-2, 26% -- $613 million secured term loan, Ba3, LGD-2, 26% -- $75 million secured synthetic letter of credit facility, Ba3, LGD-2, 26% Rating lowered with updated loss given default assessment: -- $270 million unsecured notes to Caa1, LGD-5, 79% from B3, LGD-5, 76% The last rating action was on December 17, 2007 at which time the corporate family rating and unsecured note rating were affirmed but ratings on the secured bank credit facilities were lowered. At that date, the outlook was negative. The Caa1 rating on the unsecured notes flows from an increased amount of secured bank obligations above the notes in the waterfall of claims. This affects the expected loss on the more junior instrument as a result of lower recovery expectations. Vought Aircraft Industries, Inc., headquartered in Dallas, Texas, is one of the largest independent developers and producers of structural assemblies for commercial, military, and business aircraft. Vought had revenues of $1.6 billion in 2007. WASHINGTON MUTUAL: Moody's Cuts Ratings on 82 Tranches ------------------------------------------------------ Moody's Investors Service has downgraded the ratings of 82 tranches from 18 Alt-A transactions issued by Washington Mutual. Thirty nine tranches remain on review for possible further downgrade. Additionally, 150 tranches were placed on review for possible downgrade. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Alt-A mortgage loans. The ratings were downgraded, in general, based on higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to credit enhancement levels. The actions described below are a result of Moody's on-going review process. Complete rating actions are: Issuer: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2005-7 -- Cl. B-2, Downgraded to A3 from A2 -- Cl. B-3, Downgraded to Ba3 from Baa2 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2005-10 Trust -- Cl. B-1, Downgraded to A2 from Aa2 -- Cl. B-2, Downgraded to Ba1 from A2 -- Cl. B-3, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-1 Trust -- Cl. B-1, Downgraded to Aa3 from Aa2 -- Cl. B-2, Downgraded to Ba2 from A2 -- Cl. B-3, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-4 Trust -- Cl. 3-M-1, Downgraded to Baa1 from Aa2 -- Cl. 3-M-2, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. 3-M-3, Downgraded to Ca from Ba1 -- Cl. 3-M-4, Downgraded to Ca from Ba2 -- Cl. 3-B-1, Downgraded to Ca from B3 -- Cl. 3-B-2, Downgraded to Ca from Caa1 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-5 Trust -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-11, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-13, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-14, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-CB-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-8, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-CB-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-CB-P, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-1A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-1B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-4A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-4B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 4-A-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 3-M-1, Downgraded to Ba3 from Aa1 -- Cl. 3-M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. 3-M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. 3-M-4, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. 3-M-5, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. 3-M-6, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. 3-B-1, Downgraded to Caa1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. 3-B-2, Downgraded to Ca from Ba2 -- Cl. 3-B-3, Downgraded to Ca from B1 -- Cl. 3-B-4, Downgraded to Ca from B3 -- Cl. 3-B-5, Downgraded to Ca from Caa2 -- Cl. C-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. C-P, Placed on Review for Possible Downgrade, currently Aaa Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-6 Trust -- Cl. 1-CB-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-CB-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 3-CB-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-CB-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 4-A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. C-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. L-B-1, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. L-B-2, Downgraded to Ca from Ba1 -- Cl. L-B-3, Downgraded to Ca from B3 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-7 -- Cl. A-1A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-1B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2A, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2C, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B2 from Aa2 -- Cl. M-2, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from A3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Ca from Ba1 -- Cl. B-2, Downgraded to Ca from Ba3 -- Cl. B-3, Downgraded to Ca from B3 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-8 -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3C, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba3 from Aa2 -- Cl. M-2, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B3 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to Ca from Ba1 -- Cl. B-3, Downgraded to Ca from Ba3 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-9 Trust -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to Ba1 from Aa2 -- Cl. M-2, Downgraded to B1 from A1; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B2 from A2; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to Ca from Ba1 -- Cl. B-3, Downgraded to Ca from Ba3 -- Cl. B-4, Downgraded to Ca from B3 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2006-AR10 Trust -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B1 from Aa1 -- Cl. M-2, Downgraded to B2 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrad -- Cl. M-4, Downgraded to B3 from A2; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Caa1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to Ca from Ba2 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2007-1 Trust -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-9, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. C-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. C-P, Placed on Review for Possible Downgrade, currently Aaa Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2007-2 Trust -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-7, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-8, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-10, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-12, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 3-A-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. C-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. C-P, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-2, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to Ca from B1 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2007-3 Trust -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-10, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-11, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-12, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-13, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-14, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-15, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-16, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-17, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-18, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-19, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-20, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-21, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-22, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-23, Placed on Review for Possible Downgrade, currently Aaa -- Cl. P, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to B1 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. B-2, Downgraded to B1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to Ca from B2 Issuer: WaMu Mortgage Pass-Through Certificates, WMALT 2007-4 -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-13, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. C-X, Placed on Review for Possible Downgrade, currently Aaa Issuer: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-5 Trust -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-10, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-11, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-12, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-13, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-14, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-15, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-16, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-17, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-18, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-19, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-20, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-21, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-22, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-23, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-24, Placed on Review for Possible Downgrade, currently Aaa -- Cl. X, Placed on Review for Possible Downgrade, currently Aaa Issuer: WaMu Mortgage Pass-Through Certificates, WMALT Series 2007-HY1 Trust -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3B, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B2 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B-1, Downgraded to Ca from Ba2 -- Cl. B-2, Downgraded to Ca from B3 Issuer: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OC1 -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B3 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to Caa1 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Caa1 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. M-5, Downgraded to Ca from Ba1 -- Cl. M-6, Downgraded to Ca from Ba2 -- Cl. B-1, Downgraded to Ca from B1 -- Cl. B-2, Downgraded to Ca from Caa2 -- Cl. B-3, Downgraded to Ca from Caa3 Issuer: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2007-OC2 -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. M-1, Downgraded to B3 from Aa1; Placed Under Review for further Possible Downgrade -- Cl. M-2, Downgraded to B3 from Aa2; Placed Under Review for further Possible Downgrade -- Cl. M-3, Downgraded to B3 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. M-4, Downgraded to Ca from B3 -- Cl. B-1, Downgraded to Ca from Caa1 -- Cl. B-2, Downgraded to Ca from Caa2 WELLMAN INC: Court OKs FTI Consulting as Panel's Financial Advisor ------------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Wellman Inc. and its debtor-affiliates' bankruptcy cases obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to retain FTI Consulting, Inc., as its financial advisors nunc pro tunc to March 13, 2008. The Creditors Committee selected the firm because of its extensive experience in providing financial advisory services in large and complex Chapter 11 cases. As financial advisors, FTI is expected to: (1) assist the Creditors Committee in reviewing financial- related disclosures required by the Court; (2) help in analyzing the Debtors' postpetition financing, which include preparing for hearings to consider the use of cash collateral and DIP financing; (3) assist in reviewing the Debtors' short-term cash management procedures; (4) assist in reviewing the Debtors' proposed key employee retention and other critical employee benefit programs; (5) advice and assist the Creditors Committee in identifying the Debtors' core business assets, and the disposition of assets or liquidation of unprofitable operations; (6) assist in reviewing the Debtors' cost and benefit analysis with respect to the affirmation or rejection of various executory contracts and leases; (7) help in assessing operations and identifying potential areas of saving costs, including overhead and operating expense reduction and efficiency improvement; (8) assist in reviewing financial information distributed by the Debtors to creditors and other parties; (9) attend meetings and help in discussing with the Debtors, potential investors, and other parties-in-interest as requested; (10) help in reviewing or preparing information and analysis necessary for the confirmation of a Chapter 11 plan; (11) assist in evaluating and analyzing avoidance actions; (12) help in evaluating accounting and tax matters; (13) provide litigation advisory services, along with expert witness testimony on case related issues as required by the Creditors Committee; and (14) render other services that are consistent with the role of a financial advisor, and not duplicative of services provided by other professionals in the Debtors' cases. In exchange for its services, FTI will receive a monthly fee of $125,000 and will be reimbursed for any expenses it may incur in connection with its employment. To the extent FTI provides forensic and litigation consulting services, it will be paid on an hourly basis and reimbursed for its expenses. The firms' professionals bill: Professionals Hourly Rate ------------- ----------- Senior Managing Directors $540 - $720 Managing Directors $465 - $550 Directors $380 - $475 Senior Consultant $285 - $360 Consultant $220 - $270 Project Assistant $75 - $185 Samuel Star, senior managing director of FTI, assures the Court that the firm does not represent any other parties with interest adverse to the Debtors' cases, and is eligible to represent the Creditors Committee under Section 1103(b) of the Bankruptcy Code. Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WELLMAN INC: Court Approves Ropes & Gray as Committee Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized the Official Committee of Unsecured Creditors appointed in Wellman Inc. and its debtor-affiliates' bankruptcy cases to retain Ropes & Gray LLP, as its counsel nunc pro tunc to the Debtors' bankruptcy filing. The Creditors Committee selected the firm because of its extensive experience in representing unsecured creditors' committees in Chapter 11 cases and other debt restructuring. As counsel, Ropes & Gray is expected to: (a) advise the Creditors Committee with respect to its rights, duties and powers in the Debtors' bankruptcy cases; (b) assist and advise the Creditors Committee in its consultations with the Debtors; (c) assist in analyzing the claims of the Debtors' creditors and capital structure, and in negotiating with holders of claims and equity interests; (d) assist in investigating the conduct, financial condition and business operation of the Debtors; (e) assist in analyzing, and negotiating with the Debtors or any third parties on matters related to the assumption or rejection of lease and contracts, asset dispositions, financing, among other things; (f) assist and advise the Creditors Committee with its communications to the general creditor body; (g) represent the Creditors Committee at all hearings and other proceedings; (h) review and analyze applications, court orders, and other documents filed with the Court; (i) advise and assist with respect to any legislative, regulatory or governmental activities; (j) assist in reviewing and analyzing the Debtors' various commercial agreements; (k) prepare, on behalf of the Creditors Committee, any pleadings; (1) investigate and analyze any claims against the Debtors' non-debtor affiliates; (m) investigate and analyze any claims against the Debtors' lenders; (n) advise the Creditors Committee with respect to any sale of the Debtors' assets; and (o) perform other legal services if necessary. In exchange for the services, Ropes & Gray will be paid on an hourly basis and will be reimbursed for expenses it may incur for working with the Creditors Committee. The firm's attorneys and other professionals who are expected to provide services, bill: Professionals Hourly Rates ------------- ------------ Mark R. Bane $850 Mark R. Somerstein $720 James A. Wright, III $465 Charles P. Humphreville $330 Sarah B. Roberts $240 Mr. Somerstein, Esq., at Ropes & Gray, in New York, tells the Court that the firm does not have an interest materially adverse to the interests of the Debtors, their estates, or other parties- in-interest. He assures the Court that the firm is a "disinterested person" within the meaning of Sections 1103 and 101(14) of the Bankruptcy Code. Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WESTLAKE CHEMICAL: S&P Puts 'BB-' Prelim. Rating on Unsecured Debt ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary 'BB+' senior unsecured debt rating and preliminary 'BB-' subordinated debt rating to Westlake Chemical Corp.'s recently filed universal shelf registration. At the same time, S&P affirmed all of its existing ratings on Westlake, including the 'BB+' corporate credit rating. The outlook is negative. "The ratings on Westlake reflect the company's weak business position in its domestically focused commodity olefins and chlorovinyl businesses, cyclical end markets, uncertain prospects in the important housing market, and medium-term concerns related to global oversupply in the olefins/polyolefin market," said Standard & Poor's credit analyst Paul Kurias. "These risks are partially offset by credit measures that are strong for the rating and a prudent financial policy, which the company has demonstrated through its low debt usage through a cycle." Additional strengths include a fair degree of production integration and a favorable domestic market share in a key product, low-density polyethylene. Westlake, whose majority owner is the Chao family, is a midsize producer of commodity petrochemical products, with market positions in two broad categories and annual sales of more than $2.7 billion. The company's integrated olefin/polyolefin business consists mainly of ethylene (a basic petrochemical, most of which is consumed within the company), polyethylene, and styrene. The chlorovinyl category includes chlorine, caustic soda, vinyl chloride monomer, and polyvinyl chloride and PVC fabricated products. The negative outlook reflects our expectation for a weaker operating environment and somewhat elevated financial risk because of higher debt. Still, S&P expect credit ratios to be appropriate for the ratings, even as they weaken from their current levels. Westlake's exposure to adverse business cycles remains a constraint on ratings. S&P could lower the ratings modestly in the near term if earnings or cash flows weaken so that our key credit metric of funds from operations to total debt declines to below 25% and appears likely to continue its downward trajectory because of cyclical weakness. S&P could also downgrade Westlake if it unexpectedly departed from its stated financial policies or adopted business strategies to more aggressively pursue growth in a manner that increased leverage. WILSHIRE MORTGAGE: Fitch Affirms 'B+' Rating on $300,000 Certs. --------------------------------------------------------------- Fitch Ratings has taken rating actions on Wilshire mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are removed. Affirmations total $2.7 million and downgrades total $2.3 million. Wilshire 1997-WFC1 -- Notional Amount class IO affirmed at 'AAA'; -- $0.1 million class PO affirmed at 'AAA'; -- $1.3 million class M-1 affirmed at 'AAA'; -- $1.0 million class M-2 affirmed at 'AAA'; -- $0.8 million class M-3 downgraded to 'A+' from 'AA+'; -- $1.5 million class B-1 downgraded to 'B+' from 'BB+'; -- $0.3 million class B-2 affirmed at 'B+'. WORLD HEART: Gets NASDAQ Warning on Minimum Bid Price Compliance ---------------------------------------------------------------- World Heart Corporation said that on April 30, 2008, it received a notice from the Listing Qualifications Department of The NASDAQ Stock Market stating that for the last 30 consecutive business days, the bid price of the Company's common shares has closed below the minimum $1.00 per share requirement for continued inclusion under Marketplace Rule 4310(c)(4). The notice further states that pursuant to Marketplace Rule 4310(c)(8)(D), the Company will be provided 180 calendar days (or until October 27, 2008) to regain compliance. If, at anytime before October 27, 2008, the bid price of the Company's common shares closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Company may regain compliance with the Rule. The NASDAQ staff may, in its discretion, require the Company to maintain a bid price of at least $1.00 per share for a period in excess of ten consecutive business days (but generally no more than 20 consecutive business days) before determining that the Company has demonstrated the ability to maintain long-term compliance. The notice indicates that, if compliance with the Rule is not regained by October 27, 2008, the NASDAQ staff will determine whether the Company meets the NASDAQ Capital Market initial listing criteria as set forth in the Marketplace Rule 4310(c), except for the bid price requirement. If it meets the criteria, the NASDAQ staff will notify the Company that it has been granted an additional 180 calendar day compliance period. If the Company is not eligible for an additional compliance period, the NASDAQ staff will provide a written notification that the Company's common shares will be delisted and at that time, the Company may appeal the staff's determination to a Listing Qualifications Panel. About World Heart Corporation Headquartered in Oakland, California, WorldHeart -- http://www.worldheart.com/-- is a developer of mechanical circulatory support systems. The Company has additional facilities in Salt Lake City, Utah and Herkenbosch, Netherlands. WorldHeart's registered office is Ottawa, Ontario, Canada. Going Concern Doubt As reported in the Troubled Company Reporter on April 4, 2008, Burr, Pilger & Mayer LLP raised substantial doubt about the ability of World Heart Corporation to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed to the corporation's recurring losses. The company posted a net loss of $18,563,816 on total revenues of $2,575,577 for the year ended Dec. 31, 2007, as compared with a net loss of $20,085,049 on total revenues of $8,616,038 in the prior year. At Dec. 31, 2007, the company's balance sheet showed $3,247,595 in total assets, $3,338,240 in total liabilities and $1,000,000 in convertible debenture, resulting in $1,090,645 stockholders' deficit. ZIFF DAVIS: Further Amends Disclosure Statement and Plan -------------------------------------------------------- Ziff Davis Media, Inc., and its debtor-affiliates have revised the schedule for the solicitation of votes and confirmation of their reorganization plan: May 6, 2008 Voting Record Date June 9, 2008 Deadline to Submit Ballots June 9, 2008 Deadline to File Confirmation Objections June 17, 2008 Confirmation Hearing Aside from the scheduling changes and additional modifications, the Second Amended Joint Chapter 11 Plan of Reorganization and the Third Amended Disclosure Statement, filed May 6, 2008, also say that "certain of the Committee members" are supporting the Plan. The prior versions had provided that "Committee members" support the Plan. The Official Committee of Unsecured Creditors is comprised of Concordia Partners, L.P.; Deutsche Bank Trust Company Americas, as Subordinated Notes Indenture Trustee and Stub Subordinated Notes Indenture Trustee; Joshua Tree Capital Partners; MHR Fund Management LLC; River Run Fund, LTD.; RR Donnelly & Sons Company; and Sony Computer Entertainment. Deutsche Bank earlier opposed approval of the Second Amended Disclosure Statement, saying that the document fails to provide information regarding items which are necessary to address in light of their proposed treatment of the claims under the Stub Notes and Subordinated Notes. The Third Amended Disclosure Statement also provides that the Plan support agreement and the terms sheet that forms the basis of the Plan was negotiated among the Debtors, the Ad Hoc Senior Secured Note Holder Group, the Creditors Committee, the MHR Noteholders, and other parties. Class 5 Claims Among the provisions of the Plan Support Agreement and Term Sheet, embodied in the Second Amended Joint Plan, holders of Allowed Class 5 Claims will receive (a) 10% of the New Ziff Davis Holdings Common Stock and (b) the Warrants exercisable into shares of New Ziff Davis Holdings Common Stock to be issued on the Plan's effective date. This provision is subject to the rights of a Subordinated Note Indenture Trustee and the Stub Note Indenture Trustee to first satisfy unpaid fees and expenses pursuant to Sections 7.07 of the Subordinated Notes Indenture and Section 7.07 of the Stub Notes Indenture to the extent that the fees are not paid. Administrative Claims Under the Plan, administrative claims representing contractual liabilities like those arising under loans or advances to the Debtors including the Senior Secured Notes Indenture, the Note Purchase Agreement, the Subordinated Notes Indenture and the Stub Notes Indenture, whether or not incurred in the ordinary course of business of the Debtors after the Petition Date, will be paid by the Debtors in accordance with the terms of the particular transactions. Holders of Disputed Claims Now Allowed to Vote The prior versions of the Plan and Disclosure Statement provided that only holders of allowed claims in the voting classes are entitled to vote on the Plan. The Third Amended Plan provides holders of allowed claims in the voting classes are entitled to vote on the Plan and the amount of their claims. However, it also provides that a claim which is unliquidated, contingent or disputed is entitled to cast a ballot in the amount of $1.00, unless and until the claim amount is estimated or determined by the U.S. Bankruptcy Court for the Southern District of New York or another court of competent jurisdiction, or pursuant to an agreement with the Debtors. However, the Court may deem a contingent and unliquidated claim to be allowed on a provisional basis for voting purposes. Holders of claims in the voting classes may vote on the Plan only if they are holders as of May 6, 2008, the distribution record date. Making of Distributions The Reorganized Debtors will designate a person to serve as the disbursing agent under the Plan. Except for distribution to holders of Allowed Senior Secured Note Claims and MHR Note Claims, which will be made to the collateral trustee, distributions to holders of Allowed Claims will be made by the Disbursing Agent. At the close of business on the Distribution Record Date, the transfer ledgers for the Subordinated Notes and the Stub Notes will be closed, and there will be no further changes in the record holders of the notes. Except as provided in the Plan, the Debtors, the Reorganized Debtors, the Disbursing Agent, the Subordinated Notes Indenture Trustee, the Stub Notes Indenture Trustee, and each of their respective agents, successors, and assigns will have no obligation to recognize any transfer of the Subordinated Notes or the Stub Notes occurring after the Distribution Record Date and will be entitled instead to recognize and deal for all purposes under the Plan with only those record holders stated on the transfer ledgers as of the close of business on the Distribution Record Date irrespective of the number of distributions to be made under the Plan to the persons. Cancellation of Subordinated Notes and Stub Notes On the Effective Date, except as otherwise provided for in the Plan, (a) the Subordinated Notes and the Stub Notes will be deemed extinguished, canceled and of no further force or effect, and (b) the obligations of the Debtors and the Reorganized Debtors under any agreements or indentures governing the Subordinated Notes or the Stub Notes will be discharged without further action under any applicable agreement, law, regulation, order, or rule and without any action on the party of the Bankruptcy Court or any person; provided, however, that the Subordinated Notes, the Stub Notes, the Subordinated Notes Indenture and the Stub Notes Indenture will continue in effect solely for the purposes of: (a) allowing the holders of the Subordinated Notes and the Stub Notes to receive the distributions provided for in Section 3.09 of the Plan; (b) allowing the Disbursing Agent or the Subordinated Notes Indenture Trustee or the Stub Notes indenture Trustee, as the case may be, to make distributions on account of the Subordinated Note Claims and the Stub Note Claims; and (c) preserving the rights of the Subordinated Notes Indenture Trustee and the Stub Notes Indenture Trustee with respect to their respective fees and expenses,including legal fees, to the extent not paid pursuant to Section 13.11 of the Plan, and, without limitation, the liens identified in Section 13.12 of the Plan and any indemnification rights provided by the Subordinated Notes Indenture and/or the Stub Notes Indenture. Subsequent to the performance by the Subordinated Notes Indenture Trustee and the Stub Notes Indenture Trustee or its agents of any duties that are required under the Plan or the Confirmation Order or under the terms of the Subordinated Notes Indenture and the Stub Notes Indenture, the Subordinated Notes Indenture Trustee and the Stub Notes Indenture Trustee and its agents and their successors and assigns shall be relieved of, and released from, all obligations arising under the Subordinated Notes Indenture, the Stub Notes Indenture, or other applicable agreements or law and the Subordinated Notes Indenture and the Stub Notes Indenture shall be deemed to be discharged. A Holder of Senior Secured Note Claims or MHR Note Claims will realize gain or loss on the exchange of a Senior Secured Note or MHR Note pursuant to the Plan in an amount equal to the difference between (i) the amount realized and (ii) the Holder's adjusted tax basis in the Senior Secured Note or MHR Note. A Holder's amount realized should equal the sum of (a) issue price of the New Senior Secured Note received by the Holder, (b) issue price of the Indemnity Escrow Proceed Rights received by such Holder, (c) the fair market value of all the contingent payments due under the Indemnity Escrow Rights received by such Holder, (d) the fair market value of the New Ziff Davis Holdings Common Stock received by such Holder, and (e) the Cash received by such Holder. In the prior versions of the Plan and Disclosure Statement "fair market value", not "issue price" was used for items (a) and (b), and there were no provision for contingent payments under the Indemnity Escrow Rights. Potential Dilution Caused by Options or Warrants Subject to the terms of the Warrant Agreement, issuances of New Ziff Davis Common Stock after the Effective Date will not alter the number of shares of New Ziff Davis Common Stock into which the Warrants may be exercised. For example, if on the Effective Date in the aggregate 1000 shares of New Ziff Davis Common Stock are issued to Holders of Claims in Classes 4 and 5, then the Warrants will be for an aggregate of 50 shares of New Ziff Davis Common Stock. If an additional 40 shares of New Ziff Davis Common Stock are issued after the Effective Date under the New Management Incentive Plan, the Warrants will continue to be exercisable into 50 shares of New Ziff Davis Common Stock. * * * A full-text copy of the black-lined version of the Debtors' 3rd Amended Disclosure Statement is available for free at http://bankrupt.com/misc/Blackline_Ziff3rdAmendedDS.pdf A full-text copy of the Debtors' 2nd Amended Plan of Reorganization is available for free at http://bankrupt.com/misc/Blackline_Ziff3rdAmendedDS.pdf * Fitch Expects Store Sales Performance to Remain Weak in 2008 -------------------------------------------------------------- Fitch Ratings expects that comparable store sales performance in the U.S. retail industry will remain weak for the remainder of 2008, particularly in the discretionary apparel and home products segments. Retail operators continue to face a challenging consumer environment characterized by higher energy and commodity costs, increased unemployment rates, falling real estate and stock prices, and declines in credit availability. 'Economic pressures have not abated, forcing many retailers to be more cautious in their outlooks for 2008,' said Karen Ghaffari, Managing Director, Fitch Ratings U.S. Retail Team. 'Companies are taking more defensive actions to preserve market share and cash flow.' Many retailers in Fitch's U.S. retail coverage have curbed capital spending and share repurchases from highs seen in 2007 to preserve liquidity. Nonetheless, the combination of pressured revenue, intensified promotional activity and high costs related to energy and commodities is expected to further stress retail operating profit margins in 2008. >From a credit perspective, Fitch views the ratings across its U.S. retail coverage as generally stable in 2008 given issuer efforts to manage through the macroeconomic weakness to preserve revenues, profits, and cash flow. However, there is more downside rating risk than upside rating potential, particularly in the more discretionary department store and specialty retail sectors, and for high yield credits. Fitch also expects a rise in the number of retailer bankruptcies, as already evidenced by the recent filing of Chapter 11 by Linens 'n Things and among home furnishing retailers. * S&P Says US Banks May Have Made It Through Recent Market Turmoil ------------------------------------------------------------------ Although another phase of risk repricing that will keep investors on edge may be looming, U.S. banks and securities firms appear to have made it through the worst of the recent market turmoil, said a report released by Standard & Poor's Ratings Services titled, "Rated U.S. Banks Likely To Weather Market Difficulties." S&P believe the next phase of risk repricing for U.S. banks will be slower than the mark-to-market process and resemble the more familiar banking credit cycle for commercial banks and thrifts. Despite the potential negative impact on earnings, S&P believe U.S. banks' current capital levels are well positioned to address these potential challenges, particularly following the proactive capital-raising efforts of the past several months. "In our view, the speed at which the current cycle has turned can be best illustrated by the profitability financial institutions reported during 2007. In the first half of 2007, all FDIC-insured banks reported a pretax profit margin of 35%. For the full year, the banks reported only 28%," said Standard & Poor's credit analyst Tanya Azarchs. For full-year 2008, S&P could see pretax margins close to break-even for the system. Losses for residential mortgages, home equity lines of credit, and homebuilder loans are poised to create large losses for banks. This could produce credit losses of $94 billion annually for all FDIC-insured financial institutions during the next two years at least, and is likely to produce bottom-line losses for a large number of both banks and thrifts. * S&P Says Slowing of Bank Lending May Not Lead to Rating Actions ----------------------------------------------------------------- The slowing of commercial real estate lending among U.S. regional banks may be problematic for some financial institutions' performance, but it is unlikely to result in widespread rating actions on those with the highest exposures, according to a new report by Standard & Poor's Ratings Services titled, "Cracks Are Emerging In Commercial Real Estate For U.S. Banks." Standard & Poor's believes that certain issuers concentrated in builder- related segments with certain geographic and loan exposures could see negative ratings actions depending on credit quality losses and their profitability outlook. "We expect that credit quality within most CRE segments will remain sound, with the exception of construction, which has shown considerable credit deterioration in recent quarters," said Standard & Poor's credit analysts Robert Hansen and Catherine Mattson. "CRE lending standards are generally more conservative than those of the last downturn, and lower loan-to-value ratios will likely help mitigate potential losses for CRE lenders." Residential construction and development loans are currently experiencing a significant downturn, in particular in markets where home price appreciation outpaced the industry, such as Florida, Georgia, Arizona, Nevada, and California, according to the report. While nonperforming asset levels and net charge-offs have increased, they are off a low base. As banks increase their loan-loss provisions to build reserves for potential losses, however, earnings are diminishing for CRE lending. CRE segments, such as retail or hospitality, will likely weaken in the face of low consumer spending, but Standard & Poor's doesn't expect credit losses to outpace its expectations for a normal cyclical downturn. Overall, it expects CRE valuations to decline from elevated levels during the next two years because of a difficult financing landscape and economic weakness. * S&P Says Credit Card Charge-Offs Continue to Mount in March '08 ----------------------------------------------------------------- Charge-offs continued to mount in March 2008 among U.S. credit card trusts, as they have for the past year, according to Standard & Poor's Ratings Services' recent bankcard Credit Card Quality Index report. At the same time, robust excess spread, which provides the first level of protection against defaults, and a high payment rate both contributed to solid trust performance in March. The CCQI monitors the performance of more than $425 billion in receivables held in trusts of rated credit card- backed securities. The charge-off rate for the overall index increased 50 basis points to 5.7% from the previous month. "Despite the negative trend, the current charge-off rate still remains well below the average high of 7.1% reported between 2002 and 2003 and the five- year average of 6.6% between 2000 and 2004, before the implementation of the Bankruptcy Reform Act in October 2005," said Standard & Poor's credit analyst Kelly Luo. Meanwhile, delinquencies were relatively flat in March. Thirty- and 60-plus-day delinquencies were unchanged at 4.5% and 3.2%, respectively, while 90-plus-day delinquencies were up 10 bps. "While the total delinquency rates for most trusts are now close to their 2005 levels, they remain below the levels seen in 2002 and 2003," Ms. Luo said. The payment rate, which determines how quickly investors are paid out under adverse conditions, increased 50 bps to 19.1% in March, from 18.6% in February. "The increase in payment rates may reflect the additional collection days in March compared with February," Ms. Luo said. More than three-quarters of the trusts in the CCQI reported higher payment rates in March. Excess spread for the overall CCQI dropped 30 bps to 8.1% in March. Excess spread in many trusts had been trending lower in 2007 than in 2006 due to rising charge-offs; however, most of the trusts, aided by lower base rates resulting from the Federal Reserve interest rate cuts, still recorded healthy excess spread levels in the first quarter of 2008. During the recent quarter, Standard & Poor's lowered its ratings on eight confidentially rated transactions backed by credit card receivables. All of the downgrades resulted from rating actions on bond insurer Financial Guaranty Insurance Co. * Rebecca Winthrop Joins Ballard Spahr in Los Angeles ----------------------------------------------------- Rebecca J. Winthrop, Esq. joined the Los Angeles office of Ballard Spahr Andrews & Ingersoll, LLP as counsel in the Litigation Department and the Bankruptcy, Reorganization and Capital Recovery group, disclosed David C. Sampson, Esq., a managing partner of Ballard Spahr's Los Angeles office. "Rebecca is an excellent addition to our team," said Sampson. "Her extensive experience in bankruptcy and creditors' rights will be an asset to the firm and our clients." Ms. Winthrop concentrates her practice on representing financial institutions in commercial lending transactions, workouts and bankruptcies. She has also worked on documenting and closing complex loan transactions. Ms. Winthrop's experience includes representing indenture trustees and bondholders in workouts and bankruptcies involving high-yield securities. Additionally, she represents prospective estate assets purchasers in the negotiation and drafting of overbid and breakup arrangements, real estate developers and investment trusts in the protection of their development rights, and franchisors, telecommunications companies and other unsecured creditors in complex Chapter 11 and 13 cases. About Ballard Spahr Ballard Spahr Andrews & Ingersoll, LLP -- http://www.ballardspahr.com/-- is an Am Law 100 firm with more than 500 lawyers in 11 offices in the United States. The firm's core practice group for bankruptcy, reorganization and capital recovery comprises bankruptcy litigators and corporate attorneys who regularly represent creditor and debtor constituencies in bankruptcies, loan restructurings, bond workouts and creditors' rights actions. Ballard Spahr clients include Fortune 500 corporations, hospitals, universities, financial institutions, managed care organizations, defense contractors, utilities, public officials and private individuals. *Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------ Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Norway Adventure Sports, Ltd. Bankr. N.D. Ill. Case No. 08-10458 Chapter 11 Petition filed April 25, 2008 See http://bankrupt.com/misc/ilnb08-10458.pdf In Re Gazelle One, LLC Bankr. D. Md. Case No. 08-15899 Chapter 11 Petition filed April 29, 2008 Filed as Pro Se In Re Petawatt Solar, Inc. Bankr. C.D. Calif. Case No. 08-12264 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/cacb08-12264.pdf In Re Ft. Myers Mattress Co., Inc. Bankr. M.D. Fla. Case No. 08-06132 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/flmb08-06132.pdf In Re Frontier Holding and Development Corp. Bankr. S.D. Fla. Case No. 08-15517 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/flsb08-15517.pdf In Re Al-Maha Enterprises Co., Inc. Bankr. E.D. Mich. Case No. 08-50503 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/mieb08-50503.pdf In Re The Living Waters Trust Bankr. W.D. N.C. Case No. 08-10337 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/ncwb08-10337.pdf In Re Advent Molded Products, Inc. Bankr. D. Ariz. Case No. 08-04961 Chapter 11 Petition filed April 30, 2008 Filed as Pro Se In Re Fitness Express-Holmen, LLC Bankr. W.D. Wis. Case No. 08-12132 Chapter 11 Petition filed April 30, 2008 See http://bankrupt.com/misc/wiwb08-12132.pdf In Re Chamblee Mill & Fertilizer, LLC Bankr. N.D. Ala. Case No. 08-81326 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/alnb08-81326.pdf In Re Red Square Restaurant, Inc. Bankr. C.D. Calif. Case No. 08-12775 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/cacb08-12775.pdf In Re Medical Equipment Depot, LLC aka Medical Equipment Depot Bankr. E.D. Mich. Case No. 08-50763 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/mieb08-50763.pdf In Re ATWJ Group, LLC Bankr. S.D. Miss. Case No. 08-01384 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/mssb08-01384.pdf In Re Liberty Protection Services, Inc. Bankr. E.D. N.Y. Case No. 08-72216 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/nyeb08-72216.pdf In Re Blue Management Group, Inc. dba Crew Coffee Restaurant and Bar Bankr. S.D. N.Y. Case No. 08-35946 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/nysb08-35946.pdf In Re Wynnefield Education Services, Inc. Bankr. E.D. Pa. Case No. 08-12868 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/paeb08-12868.pdf In Re Spartan Machine Works, LLC Bankr. D. S.C. Case No. 08-02611 Chapter 11 Petition filed May 1, 2008 Filed as Pro Se In Re Richard Hugh Livingston Bankr. W.D. Mich. Case No. 08-03925 Chapter 11 Petition filed May 1, 2008 Filed as Pro Se In Re Charles Gibson Dyer Bankr. D. Mass. Case No. 08-13203 Chapter 11 Petition filed May 1, 2008 Filed as Pro Se In Re Francisco Saez Bankr. C.D. Calif. Case No. 08-15967 Chapter 11 Petition filed May 1, 2008 Filed as Pro Se In Re E.F. Group, Inc. Bankr. E.D. Tex. Case No. 08-41108 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/txeb08-41108.pdf In Re Sharp Ram Corp. Bankr. N.D. Tex. Case No. 08-41926 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/txnb08-41926.pdf In Re Nuts n Bolts, Inc. Bankr. W.D. Wash. Case No. 08-12663 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/wawb08-12663.pdf In Re Robert Alyn Rael Bankr. D. Wyo. Case No. 08-20251 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/wyb08-20251.pdf In Re Professional Contractors, Inc. Bankr. D. Wyo. Case No. 08-20252 Chapter 11 Petition filed May 1, 2008 See http://bankrupt.com/misc/wyb08-20252.pdf In Re Aqua Shi, L.P. Bankr. E.D. Calif. Case No. 08-90826 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/caeb08-90826.pdf In Re Kathleen Marie Vadasz Bankr. N.D. Calif. Case No. 08-52234 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/canb08-52234.pdf In Re Dovark Rental Properties, Inc. Bankr. M.D. Fla. Case No. 08-02529 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/flmb08-02529.pdf In Re MM Acquisition, LLC dba Masterpiece Millwork Bankr. N.D. Ga. Case No. 08-21204 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/ganb08-21204.pdf In Re Stephanies Fine Jewelers, LLC Bankr. E.D. La. Case No. 08-10974 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/laeb08-10974.pdf In Re Michael Antonio Rodriquez Bankr. D. Md. Case No. 08-16180 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/mdb08-16180.pdf In Re Vehicle Solutions, LLC Bankr. W.D. Mich. Case No. 08-03988 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/miwb08-03988.pdf In Re Church of God in Christ Jesus Bankr. E.D. N.C. Case No. 08-02983 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/nceb08-02983.pdf In Re Valentine Enterprises, LLC Bankr. D. Ariz. Case No. 08-05081 Chapter 11 Petition filed May 2, 2008 Filed as Pro Se In Re Stan Eugene Swienckowski aka Linden Swienckowski Bankr. C.D. Calif. Case No. 08-15962 Chapter 11 Petition filed May 2, 2008 Filed as Pro Se In Re Jabot, LLC Bankr. S.D. Tex. Case No. 08-32771 Chapter 11 Petition filed May 2, 2008 Filed as Pro Se In Re Marian Mitchell Oliver Corp. dba McMillan Dental Care Bankr. D. S.C. Case No. 08-02653 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/scb08-02653.pdf In Re Auburn Ace Holdings, LLC Bankr. W.D. Wash. Case No. 08-12687 Chapter 11 Petition filed May 2, 2008 See http://bankrupt.com/misc/wawb08-12687.pdf In Re Iron Dog Trucking, LLC Bankr. N.D. N.Y. Case No. 08-31128 Chapter 11 Petition filed May 3, 2008 See http://bankrupt.com/misc/nynb08-31128.pdf In Re Midtown Developers, LLC Bankr. N.D. Ga. Case No. 08-68533 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/ganb08-68533.pdf In Re Skill Construction & Development, Inc. Bankr. N.D. Ga. Case No. 08-68535 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/ganb08-68535.pdf In Re The Royal Group, Inc. Bankr. S.D. Ga. Case No. 08-20436 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/gasb08-20436.pdf In Re Koch Property Management, Inc. Bankr. W.D. N.Y. Case No. 08-21089 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/nywb08-21089.pdf In Re SPP Property & Business Management, Inc. Bankr. W.D. Pa. Case No. 08-22982 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/pawb08-22982-A.pdf See http://bankrupt.com/misc/pawb08-22982-B.pdf See http://bankrupt.com/misc/pawb08-22982-C.pdf In Re Dwight L.P. Bankr. W.D. Pa. Case No. 08-22985 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/pawb08-22985.pdf In Re BRTC Investments, LP Bankr. C.D. Calif. Case No. 08-16108 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re Great Faith Investments Bankr. S.D. Tex. Case No. 08-32858 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re Hauntz Development, LLC Bankr. S.D. Tex. Case No. 08-32919 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re BSC Bandit, Inc. Bankr. C.D. Calif. Case No. 08-12866 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re Markee William Brown, Jr. Bankr. N.D. Ga. Case No. 08-68330 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re Kevin Roy McLean Bankr. N.D. Calif. Case No. 08-30763 Chapter 11 Petition filed May 5, 2008 Filed as Pro Se In Re 8525 Mid-Cities Boulevard Bankr. N.D. Tex. Case No. 08-42049 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/txnb08-42049.pdf In Re Willrent, LLC Bankr. S.D. Tex. Case No. 08-10241 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/txsb08-10241.pdf In Re Chong's Associates, Inc. dba Market Square Food Mart #1 Bankr. S.D. Tex. Case No. 08-32933 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/txsb08-32933.pdf In Re BJR, Ltd. dba Comfort Rest Waterbeds, Inc. Bankr. W.D. Va. Case No. 08-70807 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/vawb08-70807.pdf In Re Andrew I. Torres Bankr. D. Ariz. Case No. 08-05220 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/azb08-05220.pdf In Re The Tan Factory, Inc. Bankr. S.D. Fla. Case No. 08-15795 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/flsb08-15795.pdf In Re Tashi III Homes, LLC Bankr. N.D. Ga. Case No. 08-11240 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/ganb08-11240.pdf In Re Herbert Whitney Frye, Jr. Bankr. N.D. Ind. Case No. 08-11402 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/innb08-11402.pdf In Re Gary Lee Dilley Bankr. N.D. Ind. Case No. 08-11404 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/innb08-11404.pdf In Re Radio City, LLC dba Trump's Bar & Grill Bankr. S.D. Ohio Case No. 08-54295 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/ohsb08-54295.pdf In Re Luxevan Corp. Bankr. D. P.R. Case No. 08-02887 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/prb08-02887.pdf In Re James Michael Jugon Bankr. S.D. Tex. Case No. 08-33003 Chapter 11 Petition filed May 6, 2008 Filed as Pro Se In Re Dare Investments, LLC Bankr. N.D. Ga. Case No. 08-41372 Chapter 11 Petition filed May 6, 2008 Filed as Pro Se In Re Rehoboth Ministries of Manvel, Inc. Bankr. S.D. Tex. Case No. 08-80214 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/txsb08-80214.pdf In Re Zaragoza-Betel Car Wash, L.P. aka Calif. Self Service Car Wash, Inc. Bankr. W.D. Tex. Case No. 08-30685 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/txwb08-30685.pdf ********* 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 ***