/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080516.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 16, 2008, Vol. 12, No. 116 Headlines ABOVE THE SMOKE: Voluntary Chapter 11 Case Summary ABS GLOBAL FINANCE: Fitch Affirms Class E-1 Notes' BB Rating ACXIOM CORP: Posts $58.2 Million Net Loss in First Quarter 2008 AES CORP: Fitch Rates Senior Unsecured Notes 'BB/RR1' AES CORP: Moody's Puts B1 Rating on $600MM Senior Unsecured Notes ALASKA AIR: Moody's Affirms All Ratings; Changes Outlook to Neg. AMERICAN AXLE: UAW Talks Stall Over Health & Unemployment Benefits AMERICAN HOME TRUST: S&P's Affirms 'B' Rating on Class M-5 Notes AMERICAN HOME TRUST: S&P Slashes Rating to 'D' on Cl. II-M-1 Trust AMP'D MOBILE: Files $90,982 Preference Suit Against LetsTalk.Com AMP'D MOBILE: Inks Stipulation Rejecting Westside Medical Lease AMPEX CORP: Judge Sees Appointment of Equity Holders Panel as Moot ASCALADE COMM: Hong Kong Court OKs ACL's Scheme of Arrangement ATHERTON & JENNINGS: Case Summary & Three Largest Unsec. Creditors BEAR STEARNS ABS: Fitch Rates 57 Classes Below Investment Grade BERRY PLASTICS: Posts $29.3MM Net Loss in Quarter Ended March 29 BLOCKBUSTER INC: Earns $45 Million in Quarter ended April 6 BLUE SKY 2: Case Summary & Two Largest Unsecured Creditors BLUE WATER: Files Liquidation Analysis Under Chapter 11 Plan BLUE WATER: Gets Permission to Pay Incentives to Employees BOISE INC: Moody's Lifts Loan Rtng. to B1; Revises Outlook to Pos. BUFFETS HOLDINGS: U.S. Trustee Balks at Employees Incentive Plan BUFFETS HOLDINGS: Court Sets July 21 as Claims Bar Date BUFFETS HOLDINGS: Wants to Limit Bank's Rights to Value Collateral BUFFETS HOLDINGS: Wants Court's Okay to Amend Asset Sale Contract CABLEVISION SYSTEMS: Moody's Rtngs. Unmoved by Pending Acquisition CAPITAL AUTO: S&P Puts 'BB' Rating on $7.915MM Subordinate Notes CDC COMMERCIAL: Moody's Holds B3 Rating on $3.187MM Class P Certs. CENTERSTAGING MUSICAL: Seeks to Hire Lewis Landau as Counsel CENTERSTAGING MUSICAL: Can Employ Biggs & Co. as Accountant CENTERSTAGING MUSICAL: U.S. Trustee Forms Three-Member Committee CHESAPEAKE CORP: Obtains $250MM Replacement Facility from GECC CHESAPEAKE CORP: In Talks to Amend U.K. Pension Recovery Plan CHRYSLER LLC: Reaches Tentative Settlements with CAW Officials CIMAREX ENERGY: S&P Lifts Credit Rating to BB with Stable Outlook CITIGROUP COMMERCIAL: Moody's Affirms Ba1 Rating on Class L Certs. CITIGROUP COMMERCIAL: Moody's Cuts Rating to Caa1 on Class O Cert. CLEAR CHANNEL: Inks Settlement Agreement with CC Media and Lenders CLFX CORP: Full Payment of Debt Cues Moody's to Withdraw Ratings COMM 2007-FL14: Stable Performance Cues Moody's to Hold Ratings CONTINENTAL AIR: Sets Alliance with UAL After Failed Merger COUNTRY-WIDE INSURANCE: A.M. Best Lifts IC Rating to bb- from b CSFB MORTGAGE: Moody's Holds Junked Ratings on Two Cert. Classes CRYOCATH TECHNOLOGIES: March 31 Balance Sheet Upside-Down by $6MM CSFB MANUFACTURED: S&P Cuts Rating on Class B-1 Certificates to B+ CSMC TRUST: S&P Junks Ratings on Seven Cert. Classes CY ORIENTAL: Gets Consent from Lender to File Records Until May 31 EINSTEIN NOAH: Inks Interest Rate Swap Deal with Wells Fargo ENCAP GOLF: Taps Cole Schotz as Bankruptcy Counsel ENERGY PARTNERS: Posts $2.3 Million Net Loss in 2008 First Quarter EPICEPT CORP: Faces Nasdaq Delisting on Depressed Securities Value EPICEPT CORP: Amends Loan & Warrant Pacts with Hercules Technology FLEETWOOD ENTERPRISES: Sells Property to Finance Bond Redemption FOOTSTAR INC: Board Intends to Liquidate Company by End of 2008 GENERAL MOTORS: Reaches Tentative Settlements with CAW Officials GENERAL MOTORS: CAW Balks at Announcement of Windsor Plant Closure GREAT LAKES: A.M. Best Puts bb- IC Rating Under Positive Review HAWAIIAN AIRLINES: Settles Litigation Involving Mesa Air Group HEXION SPECIALTY: March 31 Balance Sheet Upside Down by $1.3 Bil. IDLEAIRE TECH: Files for Chapter 11 Protection in Delaware IDLEAIRE TECHNOLOGIES: Wants to Use $8 Million DIP Facility IDLEAIRE TECHNOLOGIES: Depleting Cash Cues Sale to Investor Group IDLEAIRE TECHNOLOGIES: To Engage Kurtzman Carson as Claims Agent IDLEAIRE TECHNOLOGIES: Taps CRG's Stephen Gray as CRO INTERTAPE POLYMER: Posts $2MM Net Loss in Quarter ended March 31 IRVINE SENSORS: Sells More Than 1% of Shares in Unregistered Deals JABIL CIRCUIT: Moody's Rtng Unmoved by Planned $150MM Notes Add-On JETBLUE AIRWAYS: Fitch Cuts Sr. Unsec. Notes' Rating to CCC-/RR6 JOURNAL REGISTER: Posts $72MM Net Loss in Quarter Ended March 30 JOURNAL REGISTER: Moody's Junks Rating on Likely Covenant Breach JOHN HOWARD: Case Summary & Seven Known Creditors JOHN DALY: Case Summary & Eight Known Creditors KENTUCKY DATA: Moody's Holds B1 CF Rating; Changes Outlook to Pos. LANDING DEVELOPMENT: Section 341(a) Meeting Set for May 20 LEHMAN ABS: S&P Chips 'BB+' Rating on Class M-1 Certs. to 'B-' LEHMAN BROTHERS TRUST: Moody's Affirms Caa1 Rating on Certificates LEVITT AND SONS: Administrator Taps Whelchel & Dunlap as Counsel LEVITT AND SONS: Administrator Wants to Employ VHB as Consultant LINENS N THINGS: Reports 2008 First Quarter Sales Results LINENS N THINGS: Wants to Employ Richards Layton as Counsel LINEN N THINGS: Wants to Employ Gardere as Special Counsel MCKINNEY ZONE: Voluntary Chapter 11 Case Summary MERGE HEALTHCARE: Posts $7.8 Million Net Loss in 2008 1st Quarter MESA AIR: Settles Litigation Involving Hawaiian Airlines MESA AIR: Won't File March 2008 Quarterly Report on Time MESABA AVIATION: Andy Roberts Appointed to Lead Company MESABA AVIATION: Liquidating Trustee Appeals MAC Ruling MICROMET INC: Posts $5.9 Million Net Loss in 2008 First Quarter ML-CFC COMMERCIAL: Moody's Holds B3 Rating on $4.603MM Cl. P Trust MOORE CUSTOM: Case Summary & Four Largest Unsecured Creditors MORGAN STANLEY: Moody's Holds Low-B Ratings on Four Cert. Classes MOULDING FX: Voluntary Chapter 11 Case Summary MTI GLOBAL: Has Until May 31 to Amend Credit Facility with Lender NEW CENTURY: Claimants Buck Plan; Proponents Push for Confirmation NEWPAGE CORP: S&P Holds 'B' Rating and Revises Outlook to Positive NORD RESOURCES: March 31 Balance Sheet Upside-Down by $3 Million NORTH AMERICAN: S&P Rates $545MM First-Lien Facilities BB+ NORTHWEST AIRLNES: Appoints Andy Roberts to Lead Mesaba OMNI FINANCIAL: To Delay Filing Quarterly Report on Form 10-Q PACIFIC LUMBER: Scopac Objects to Marathon/Mendocino, BoNY Plans PACIFIC LUMBER: Lehman Offers $10-Mil. Loan for Scopac, BoNY Says PACIFIC LUMBER: Sierra Pacific Willing to Buy Mills, BoNY Says PARMALAT SPA: 1st Qtr Profit Down on Lesser Legal Settlements PARMALAT SPA: Provides Updates on Legal Actions Against Citigroup PENAMISADE LTD: Case Summary & Four Largest Unsecured Creditors PHLA INC: Case Summary & Five Largest Unsecured Creditors PILGRIM'S PRIDE: Equity Issuance Won't Affect Moody's Ratings PROTECTION ONE: POI Acquisition Declares 46.6% Equity Stake PROTECTION ONE: March 31 Balance Sheet Upside-Down by $45 Million QIS INC: Case Summary & 20 Largest Unsecured Creditors RAAC SERIES: S&P Lowers Ratings on Three Certificate Classes RCS-CHANDLER: Section 341(a) Meeting Slated for May 27 RECKSON OPERATING: Fitch Says Ties To SL Green Factor in Ratings RELIANT CHANNELVIEW: BoNY Balks at Further Use of Cash Collateral RESIDENTIAL FUNDING: Moody's Cuts Rating on Cl. M-5 Loan to Ba2 ROADHOUSE GRILL: To Liquidate, End Leases of Restaurants RUTLAND: Fitch Puts Class B3-LEK Notes' BB Rating on Neg. Watch SANDRIDGE ENERGY: Prices $750 Million Offering of 8% Senior Notes SANDRIDGE ENERGY: Moody's Rates Pending $750MM Note B3 SCRIPPS FRENCH: Case Summary & Seven Largest Unsecured Creditors SENTINEL MANAGEMENT: Files Disclosure Statement in Illinois SENTINEL MANAGEMENT: U.S. Trustee Amends Creditors' Panel Members SHARPER IMAGE: Hilco Joint Venture Named Stalking Horse Bidder SI INTERNATIONAL: S&P Withdraws Ratings at Company's Request SIX FLAGS: Exchange Notes Offer Cues Moody's to Hold Caa1 Rating SKYBUS AIRLINES: U.S. Trustee Appoints 5-Member Creditors Panel SKYBUS AIRLINES: Files Schedules of Assets and Liabilities SMI NEW HOME: Case Summary & 15 Largest Unsecured Creditors SUNCREST LLC: Section 341(a) Meeting Scheduled for May 19 SUPERVALU INC: S&P Puts 'BB+' Rating on Existing $4BB Facilities TRANSMERIDIAN EXPLO: March 31 Balance Sheet Upside-Down by $31MM TRIAD FINANCIAL: Moody's Junks Ratings on Citigroup Deal Amendment TROPICANA ENTERTAINMENT: Wants Lazard Freres as Financial Advisor TROPICANA ENT: Endorses AlixPartners LLP as Restructuring Advisors TROPICANA ENT: Wants to Hire Ernst & Young as Accounting Advisor TRUMP ENTERTAINMENT: Harry Hagerty Joins Board of Directors TW HOTEL: Improving Performance Cues Moody's to Lift Ratings UAL CORP: Sets Pricing Alliance with Continental Airlines UAL CORP: Name and Chicago HG Likely to Remain After USAir Merger US AIRWAYS: Merger Likely to Retain UAL Name and Chicago HG US SHIPPING: S&P Puts 'B-' Rating Under Neg. Watch on Poor Fin'l UTSTARCOM INC: Expects Up to $590MM Revenues in 2008 First Quarter VALERO ENERGY: El Paso Note Assumption Cues S&P to Cut Rating VICORP RESTAURANTS: Panel Taps FTI Consulting as Financial Advisor VICORP RESTAURANTS: Taps Morris Nichols as Conflicts Counsel VICORP RESTAURANTS: Taps Piper Jaffray as Financial Advisor VISTEON CORP: Appoints Donald Stebbins as Chief Executive Officer WARNEX INC: March 31 Balance Sheet Upside-Down by C$1.3 Million WELLMAN INC: Gets Extension on Deadline for Auction Protocol WELLMAN INC: Wants Court to Extend Deadline to Remove Actions * Fitch: Most Subprime-Related Bank Losses Are Already Disclosed * S&P Downgrades Ratings on 169 Classes from 38 RMBS Transactions * S&P Outlines Events that Could Affect Credit Card ABS Ratings * BOOK REVIEW: The First Junk Bond: A Story of Corporate Boom and Bust ********* ABOVE THE SMOKE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Above The Smoke P.O. Box 771 Gatlinburg, TN 37738 Bankruptcy Case No.: 08-31972 Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Tennessee (Knoxville) Debtor's Counsel: Edward J. Shultz, Esq. Email: eshultz@ayreslaw.com Ayres & Parkey P.O. Box 23380 Knoxville, TN 37933 Tel: (865) 637-1181 Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million The Debtor does not have any creditors who are not insiders. ABS GLOBAL FINANCE: Fitch Affirms Class E-1 Notes' BB Rating ------------------------------------------------------------ Fitch Ratings has affirmed and removed from Rating Watch Negative (RWN) the class E-1 notes issued by ABS Global Finance Plc (ABS Global), Series 2006-1: -- Class E-1 (USD2 million) notes affirmed at 'BB'; off RWN The notes were placed on RWN on November 15, 2007, due to the level of defaults experienced by the transaction. According to the April 2008 servicer report, the credit enhancement of the notes has been reduced to 0.66% from the original 1% at closing. The notes' credit enhancement comprises the class F-1 notes and the equity tranche, of which the equity tranche has been depleted by 0.34% due to defaults. The affirmation of the notes follows further analysis of the current portfolio, in particular the obligors with the weakest credit profile in the securitised asset pool. Fitch believes that the current levels of credit enhancement are sufficient to protect the class E-1 noteholders against losses that might arise from further defaults, based on the different stressed scenarios that defaults continue to occur until the expected maturity date. The transaction is currently within its revolving period, during which principal collections are used to purchase new eligible receivables. From June 2008, the transaction administrator will perform principal collection tests for each class of the notes, which will measure whether underlying assets can generate sufficient collections to redeem each class of notes at the expected maturity date in December 2008. The tests will be repeated every month from June to December 2008. If the principal collection tests are not met, the revolving period will end and the principal accumulation period will commence. ABS Global is a public limited liability company issuing USD floating-rate notes backed by trade finance loan receivables originated by branches of Citibank, N.A. (Citibank, rated 'AA-' (AA minus)/ 'F1+' with a Negative rating Outlook) in Hong Kong, Singapore and Taiwan. ACXIOM CORP: Posts $58.2 Million Net Loss in First Quarter 2008 --------------------------------------------------------------- Acxiom Corporation (Nasdaq: ACXM) reported its financial results for the fourth quarter and fiscal year end ended March 31, 2008. The company will host an investor day June 17 in New York. Details will be made available on the Acxiom Web site. Revenue for the fourth quarter was $349.8 million compared to $356.4 million in the fourth quarter of fiscal 2007. Operating loss for the quarter was $76.0 million and loss per diluted share was $0.76. The results for the quarter include the impact of $107.2 million of restructuring and other items (of which $104.5 million are included in the loss from operations, with the remainder included in other expense), which contributed to the loss by the equivalent of $0.91 per diluted share. For the 12-month period ended March 31, 2008, revenue totaled $1.384 billion compared to $1.391 billion in the prior year. Income from operations for the 12 month period was $40.2 million compared to $154.1 million a year ago. Loss per diluted share was $0.10 compared to earnings per diluted share of $0.80 in the prior year. The loss per diluted share includes the impact of $84.2 million, or the equivalent of $0.70 per diluted share, of expense from unusual items. For the first quarter of 2008, the company reported a net loss of $58.2 million, compared with net income of $5.7 million in the same period in 2007. As of March 31, 2008, the company's total stockholders' equity was $500.5 million. According to John Meyer, Acxiom Corp. CEO and President, "During my first 90 days I have focused on meeting our customers and our people, rationalizing costs and gaining a deeper understanding of our offerings and value propositions. I have also made a number of leadership and role changes. "We are working to develop strategic and operational plans to help overcome the current challenges we are facing in some industry sectors and to provide a springboard for growth in future years. The initial focus will be on our customers and potential customers, leveraging our capabilities and assets across all industries we serve, and creating a winning market-facing culture. We already have a very strong foundation to do that. I believe in this opportunity now even more than when I was evaluating coming on board." Restatement, Restructuring and Other Items The Company is restating its financial statements for 2007, 2006, and prior years to correct its accounting related to accrued service revenue. The impact of this restatement will be a reduction in net income of $2.4 million in 2006 and $2.9 million in 2007. Accrued revenue, which is reflected in accounts receivable, will be reduced by a total of $52.2 million. Fourth-quarter loss per diluted share of $.76 includes $107.2 million or the equivalent of $0.91 per share in unusual expenses. The major components of the restructuring and other items are: * Gains, losses and other - $74.5 million composed of: -- Restructuring charges - $42.9 million related to headcount reduction, real estate closure, contract termination; -- Closing operations - $13.5 million related to previously acquired operations and the flight department; -- Asset disposal/impairment - $15.0 million, primarily software; -- Other – $3.1 million related to legal, international and other; * IT contract restructuring - $34.0 million reflected as increase in cost of services; * Loss on investment - $2.7 million reflected in Other, net; * Accrued revenue restatement - $.4.0 million increase in revenue. Of the $107.2 million in restructuring and other items, approximately $59.2 million represents balance sheet assets written down that do not require cash outlays. Approximately $48.0 million represents estimated cash payments to be made on obligations primarily related to headcount reductions, real estate and facilities lease terminations and an aircraft lease termination. The $48 million includes obligations of approximately $34 million to be paid in fiscal 2009, with the remainder in future periods. Details of Acxiom’s fourth-quarter results include: * Revenue of $349.8 million compared to $356.4 million in the fourth quarter a year ago; * Loss from operations of $76.0 million compared to income from operations of $28.4 million in the fourth quarter last year; * Loss from operations this quarter included $107.2 million of restructuring and other items; * Loss per diluted share of $0.76 compared to earnings per share of $0.07 in the fourth quarter of fiscal 2008; included in the loss per share of $0.76 is the negative impact of restructuring and other items which was the equivalent of $.91 per diluted share; * Operating cash flow of $90.5 million compared to $76.5 million in the fourth quarter a year ago; * Free cash flow available to equity of $14.7 million compared to $15.4 million a year ago; free cash flow available to equity is a non-GAAP financial measure. Details of Acxiom’s fiscal year results include: * Revenue of $1.38 billion compared to $1.39 billion in the prior year; * Income from operations of $40.2 million in 2008 compared to $154.1 million in fiscal 2007; * Loss per diluted share of $0.10 compared to earnings per diluted share of $0.80 in fiscal 2007; net restructuring and other items for the year were $84.2 million, or the equivalent of $0.70 per diluted share; In addition to the restructuring and other items in the fourth quarter, the company had a benefit of a net gain of $22.9 million comprised of: -- Gains from a merger termination payment and sale of assets of $68.2 million; -- Restructuring costs, transaction costs, retirement and loss on sale of assets of $30.0 million; -- Additional contract impairment in cost of services of $10.0 million; -- Reduction in revenue related to accrued revenue restatement to previous quarters of $5.2 million; * Operating cash flow of $300.3 million compared to $260.0 million in the prior year; * Free cash flow available to equity of $77.5 million compared to $55.2 million a year ago; free cash flow available to equity is a non-GAAP financial measure. Segment information: * Information Services Division: The division develops, sells and delivers industry-tailored solutions globally through the integration of products, services and consulting. Revenue for the quarter was $189.7 million, up 0.8 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $741.3 million, up 1.8 percent from the previous year. Operating income for the quarter was $24.1 million, down 7.7 percent from the third quarter of the previous year. For the 12 months just ended, operating income was $97.2 million, down 22.0 percent from the previous 12-month period. * Information Products Division: The division develops and sells all global data products, including InfoBase-X and PersonicX, as well as fraud and risk mitigation products sold in the U.S., including InsightIdentify. It focuses on product development, product lifecycle management, data content management and innovation. Revenue for the quarter was $115.2 million, up 5.2 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $431.3 million, up 3.8 percent from the previous year. Operating income for the quarter was $13.1 million, up 45.9 percent from the fourth quarter of the previous year. For the 12 months just ended, operating income was $23.8 million, up 25.7 percent from the previous 12-month period. * Infrastructure Management Division: The division develops and delivers information technology products and services that improve a company’s ability to manage its information technology delivery platform with lower costs and higher efficiencies. Such offerings include traditional IT outsourcing and transformational solutions such as the Acxiom data factory. Revenue for the quarter was $108.2 million, down 8.8 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $447.5 million, down 6.1 percent from the previous year. Operating income for the quarter was $8.3 million, down 16.1 percent from the fourth quarter of the previous year. For the 12 months just ended, operating income was $44.3 million, down 10.3 percent from the previous 12-month period. Investor Day The company will be hosting an investor day on June 17 and providing a forecast for fiscal 2009 at that time. Company management will also discuss operations and prospects at the investor day. The event will be held at the NASDAQ facilities in New York and will be web cast. Further information will be made available at http://www.acxiom.com/ Web Link to Financials http://www.acxiom.com/FY08_Q4_Financialsis a link to the detailed financial information. About Acxiom Corporation Headquartered in Little Rock, Arkansas, Acxiom Corporation, (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States and Europe, and in Australia, China and Canada. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Moody's Investors Service confirmed Acxiom's Ba2 corporate family rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on May 17, 2007, following the company's announcement that it had entered into a definitive agreement to be acquired by Silver Lake and ValueAct Capital for $3 billion. AES CORP: Fitch Rates Senior Unsecured Notes 'BB/RR1' ----------------------------------------------------- Fitch Ratings has assigned a 'BB/RR1' rating to AES Corporation's (AES) $600 million issuance of senior unsecured notes maturing 2020. AES' long-term Issuer Default Rating (IDR) is rated 'B+'. Fitch's rating is based on its expectation that AES will use the proceeds to pay down higher-cost debt. The Rating Outlook is Stable. The ratings of AES reflect the large amount of parent-company recourse debt, the structural subordination of that debt to subsidiary debt, and the reliance on distributions from its subsidiaries for parent company debt service. Offsetting, in part, the company's financial risk is the solid base of cash flow from utility businesses and contracted generation as well as the diversity of cash flow sources. The current Stable Rating Outlook reflects Fitch's expectation that credit metrics will stay within parameters for the current rating. Headquartered in Arlington, Virginia, AES Corporation -- http://www.aes.com/-- a global power company, operates in South America, Europe, Africa, Asia and the Caribbean countries. Generating 44,000 megawatts of electricity through 124 power facilities, the company delivers electricity through 15 distribution companies. Its consolidated revenues totaled $13.6 billion during fiscal year 2007. AES has been in Eastern Europe for over ten years, since it acquired three power plants in Hungary in 1996. Currently, AES has two distribution companies in Ukraine, which serve 1.2 million customers and generation plants in the Czech Republic and Hungary. AES is also the leading company in biomass conversion in Hungary, generating 37% of the nation's total renewable generation in 2004. AES started developing projects in India and Pakistan in 1992 and entered China's market in 1994. In 1996, AES joined with Chinese partners to build Yangcheng, the country's first "coal by wire" power plant, to help fuel China's rapid economic expansion through affordable power. In India, AES successfully participated in the country's first and only generation privatization. AES CORP: Moody's Puts B1 Rating on $600MM Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to The AES Corporation's proposed issuance of $600 million senior unsecured notes due 2020. In addition, Moody's has affirmed the ratings of AES, including the company's Corporate Family Rating at B1, its Probability of Default Rating at B1, its senior secured credit facilities at Ba1, its second priority senior secured notes at Ba3, its senior unsecured notes at B1 and its trust preferred securities at B3. The rating outlook for AES is stable. The rating affirmation reflects an expectation that AES will use the proceeds from the proposed offering to refinance a similar amount of recourse debt. The rating affirmation also takes into account the company's concurrent effort to eliminate the financial covenants contained in its second priority senior secured notes. AES's ratings consider the company's high leverage and the structural subordination of its recourse debt to the significant level of non-recourse debt in its consolidated capital structure. Structural constraints are somewhat mitigated by the diversification provided by AES's large number of subsidiaries, their wide geographic distribution and balanced fuel mix, and the significant proportion of the company's cash flows that are subject to stable regulation or long-term contracts. Subsidiary distributions to AES are expected to be approximately $1.1 billion in 2008, similar to 2007 results. Recourse debt however increased approximately 16% or $760 million to $5.6 billion during 2007 as AES borrowed to finance growth. This increase in leverage constrains upward movement in AES's current rating levels over the near-term. The commercial operation of various generating stations currently under construction that are expected to achieve operation in the 2009/2010 timeframe is expected to improve the scale of subsidiary distributions and financial metrics and may be a trigger for upward ratings pressure. Ratings affirmed/LGD assessments revised: The AES Corporation -- Corporate Family Rating -- B1 -- Probability of Default Rating -- B1 -- Senior secured credit facilities -- Ba1 (LGD1, 5%) from (LGD1, 2%) -- Second priority senior secured note -- Ba3 (LGD3, 41%) from (LGD3, 38%) -- Senior unsecured notes -- B1 (LGD4, 56%) from (LGD4, 53%) AES Trust III -- Convertible trust preferred securities -- B3 (LGD6, 95%) from (LGD6, 94%) Rating assigned: The AES Corporation -- $600 million of new senior unsecured notes, B1 (LGD4, 56%) The AES Corporation is a global power company with generation and distribution assets in Europe, Asia, Latin America, Africa and the United States. Its consolidated revenues totaled $13.6 billion during fiscal year 2007. ALASKA AIR: Moody's Affirms All Ratings; Changes Outlook to Neg. ---------------------------------------------------------------- Moody's Investors Service affirmed all debt ratings of Alaska Air Group and its primary subsidiary Alaska Airlines, Inc. -- corporate family rating of B1. The outlook has been changed to negative from stable. The negative outlook reflects Moody's expectation that Alaska will record a net loss and negative cash flow from operations in 2008 due to the impact of materially higher fuel costs and weakening economic conditions which are likely to pressure yields. Although the company has fuel hedges that are meaningfully more beneficial than competitors, Alaska will be challenged to generate positive cash flow from operations if current fuel prices persist. Of greatest concern to Moody's is a deteriorating earnings environment for all airlines, including Alaska, primarily driven by persistently elevated fuel costs. Fuel now represents the largest component of airline's cost structures and expectations are that even if fuel costs moderate somewhat during the latter part of the year, the significant losses incurred in the early part of 2008 will not be offset. Under these conditions, Alaska's credit metrics are likely to worsen despite its actions to control costs which include fuel reduction initiatives such as a new flight planning system to effect more direct routings, single- engine taxi procedures, the use of more ground power at airports, and the installation of winglets which improve fuel efficiency. While likely to weaken by cash use, Alaska's liquidity profile remains adequate. Alaska has a less stressful capital spending plan this year because the majority of scheduled aircraft deliveries are financed and Alaska expects to receive financing on the remaining aircraft. As well, following the completion of fleet transition programs at Alaska Airlines and Horizon Air in 2008, capital spending is expected to decline materially in 2009. Alaska has modest near term debt maturities of approximately $100 million annually through 2012. Although Moody's expects Alaska to use cash in its operations in 2008, Moody's believe liquidity will be adequate due to the availability under an undrawn revolving line of credit. Moody's notes that Alaska remains well in compliance with the financial covenants associated with the revolver. If Alaska is unable to implement offsetting actions to improve its operating performance, such as further cost cutting initiatives, fuel surcharges or fare increases, the ratings could be pressured down. Of particular concern to the rating would be any evidence that sustained cash losses from operations were eroding the company's liquidity profile ore posing any risk to future covenant compliance under the bank facility. Alternatively, the outlook could be stabilized if fuel prices moderate and Alaska is able to resume profitable operations and improve its cash flow metrics. Outlook Actions: Issuer: Alaska Air Group, Inc. -- Outlook, Changed To Negative From Stable Issuer: Alaska Airlines Inc. -- Outlook, Changed To Negative From Stable Alaska Air Group, headquartered in Seattle, Washington, is a holding company for two U.S. passenger airlines, Alaska Airlines Inc. and Horizon Air Industries, Inc. AMERICAN AXLE: UAW Talks Stall Over Health & Unemployment Benefits ------------------------------------------------------------------ The strike called by the International United Auto Workers union at American Axle & Mnufacturing Holdings Inc.'s original U.S. locations continues into its 81th day. Approximately 3,650 associates are represented by the International UAW at these five facilities in Michigan and New York. AAM and the International UAW bargained over the past weekend and made progress on numerous issues. There are very few remaining issues separating the parties from reaching agreement. Negotiations have stalled since late Sunday over two issues: healthcare benefits for actively employed associates and Supplemental Unemployment Benefits. With respect to active healthcare benefits, the International UAW would like to continue a comprehensive plan design that would cost AAM approximately double the rate of its principal UAW-represented competitor suppliers in the U.S. SUB is a benefit not typically offered by automotive suppliers. SUB consists of both direct wage payments and benefit continuation for associates not working due to layoff. None of AAM's principal UAW-represented competitor suppliers have SUB in their labor agreements negotiated with the International UAW. SUB is a contract provision that is driving work out of AAM's original U.S. locations. Paying associates who are not working is an uncompetitive burden that AAM cannot bear if it is to compete successfully in the U.S. market and earn new or replacement business. Both of these benefit programs are major cost drivers that must be addressed in order for AAM to attain a U.S. market competitive labor agreement for the original U.S. locations. AAM is not -- and never has been -- an original equipment manufaturer, the company has indicated. AAM is a Tier 1, Tier 2 and Tier 3 supplier to the automotive industry. In addition to SUB, the International UAW is requesting many other OEM-style contract provisions for the original U.S. locations. These include a $5,000 signing bonus, buy-out incentives up to $140,000 per associate and buydowns that are comparable to agreements previously reached at Delphi and Magna New Process Gear. AAM desires to keep work in the original U.S. locations. AAM is prepared to invest up to $200 million in these facilities to support future product program sourcing if a U.S. market competitive labor agreement is attained with the International UAW. The recent and rapidly accelerating deterioration in the domestic light truck market is having a most severe negative impact on AAM's U.S. operations. While this is unfortunate, it is a market reality that AAM and the International UAW must jointly address. AAM stands ready to continue negotiating with the International UAW to reach an agreement that ends this terribly costly and disruptive strike so that the original U.S. locations can begin earning new and replacement business to sustain future operations. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on April 4, 2008, Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. AMERICAN HOME TRUST: S&P's Affirms 'B' Rating on Class M-5 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on six classes of mortgage-backed notes issued by American Home Mortgage Assets Trust 2007-SD2. As of the April 2008 remittance period, total delinquencies were 87.72% of the current pool balance, while severe delinquencies were 82.22%. These levels are down slightly from the March 2008 remittance period, when total delinquencies were 88.13% of the current pool balance and severe delinquencies were 83.41%. Through the April 2008 remittance period, cumulative realized losses totaled 6.49% of the original pool balance. Despite the level of the delinquency pipeline and the realized losses this transaction has experienced, which S&P believe are consistent with the characteristics of the collateral, S&P affirmed its ratings on the six outstanding classes because its analysis indicates that they have adequate credit support percentages for their current ratings. This deal has a current outstanding pool factor of 79.58% and is 11 months seasoned. Subordination provides credit support for this deal. The pool originally consisted of fixed- and adjustable-rate mortgage loans, a substantial portion of which are in bankruptcy, or foreclosure proceedings, or are otherwise nonperforming. The mortgage loans are secured by first or second liens on one- to four-family residential properties, planned unit developments, condominiums, and manufactured housing. Ratings Affirmed American Home Mortgage Assets Trust 2007-SD2 Mortgage-backed notes series 2007-SD2 Class Rating ----- ------ A AAA M-1 AA M-2 A M-3 BBB M-4 BB M-5 B AMERICAN HOME TRUST: S&P Slashes Rating to 'D' on Cl. II-M-1 Trust ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on classes II-A and II-M-1 from American Home Mortgage Investment Trust 2007-A. S&P downgraded class II-A to 'CCC' from 'AAA' and downgraded class II-M-1 to 'D' from 'AA'. The downgrades reflect the deteriorating performance of the collateral pool as monthly net losses continue to significantly outpace monthly excess interest cash flows, resulting in the complete write-down of the overcollateralization for loan group II. The other subordinate classes from this loan group (classes II-M-2, II-M-3, II-M-4, II-M-5, and II-M-6) have already experienced complete write-downs to their principal balances. During the March 2008 remittance period, the loan group experienced a $6,810,484 realized loss, which resulted in the complete write-down to the principal balances of classes II-M-2, II-M-3, II-M-4, II-M-5, and II-M-6. As a result, Standard & Poor's withdrew its ratings on these classes on May 13, 2008. In addition, class II-M-1 experienced a partial write-down to its principal balance, which caused the class to default. Consequently, S&P have lowered the rating on this class to 'D'. As of the April 2008 remittance period, cumulative losses for loan group II, as a percentage of the original pool balance, totaled 21.86%. Total delinquencies (30-plus days, foreclosures, and REOs) for the loan group II total 21.26%. Subordination and excess spread provide credit support for the affected loan group. The collateral for this loan group primarily consists of closed-end second-lien, adjustable- and fixed-rate mortgage loans secured by one- to four-family residential properties. Ratings Lowered American Home Mortgage Investment Trust 2007-A Rating ------ Class To From ----- -- ---- II-A CCC AAA II-M-1 D AA AMP'D MOBILE: Files $90,982 Preference Suit Against LetsTalk.Com ---------------------------------------------------------------- Amp'd Mobile, Inc., filed a complaint against LetsTalk.Com, Inc., before the United States Bankruptcy Court in the District of Delaware, seeking to recover money with respect to certain transfers. The Debtor also seeks to avoid those Transfers. The Debtor relates that it transacted business with LetsTalk.Com, Inc. prior to the Petition Date. It caused the transfer of certain amounts, totaling $90,982, from a bank account owned by the Debtor to LetsTalk.Com. Accordingly, the Transfer was a transfer of an interest of the Debtor in property, Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, in Wilmington Delaware, points out. He adds that the Transfer was made to or for the benefit of LetsTalk.com. Also, LetsTalk.com's claim against the Debtor for which the Transfer was made was an antecedent debt. Mr. Yoder also cites that the Transfer was made on or within 90 days before the Petition Date, of which during that time, the Debtor was insolvent, as that term is defined in Section 101(32) of the Bankruptcy Code. The Debtor's debts exceeded the value of all of its property, he avers. Mr. Yoder adds that the Transfer enabled LetsTalk.com to receive more than it would receive if: (a) the Debtor's case was a case under Chapter 7 of the Bankruptcy Code; (b) the transfer had not been made; and (c) the Transferee received payment of its debt to the extent provided by the Bankruptcy Court. Mr. Yoder informs the Court that on December 18, 2007, the Debtor, by their counsel, made written demand on LetsTalk.com for the return of the Transfer. LetsTalk.com, however, has failed or refused to return the Transfer. Mr. Yoder argues that the Transfers are avoidable under Section 547(b) of the Bankruptcy Code and that the property is recoverable from the Transferee pursuant to Section 550 of the Bankruptcy Code. Accordingly, the Debtor ask the Court to: (a) avoid, and allow it, to recover the Transfers; (b) to the extent LetsTalk.com holds a claim against the Debtor or its bankruptcy estate, disallow that claim pursuant to Section 502(d); (c) grant it an award of pre-judgment interest on the value of the Transfer from the date of its demand letter until the entry of judgment; (d) award to it costs and disbursement of expenses it incurred in relation to the Adversary Proceeding. About Amp'd Mobile Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm, represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. The Debtor is in the process of selling various assets. (Amp'd Mobile Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AMP'D MOBILE: Inks Stipulation Rejecting Westside Medical Lease --------------------------------------------------------------- Amp'd Mobile, Inc., and Westside Medical Park LLC, as landlord, were parties to a certain lease agreement dated March 5, 2007, wherein the Debtor leased office and warehouse space consisting of: -- approximately 70,000 rentable square feet of office space located at 1933 and 1925 S. Bundy Drive, in Los Angeles, California; and -- a portion of approximately 15,000 square feet of space at 1901 S. Bundy Drive, in Los Angeles, California. In a stipulation approved by the U.S. Bankruptcy Court for the District of Delaware, the parties agreed that: (1) The Lease is rejected effective September 30, 2007. (2) Any right to possession of the Premises by or through the Debtor, the estate, or anyone claiming any interest in the Premises, is terminated and forfeited under applicable non-bankruptcy law as of September 30, 2007. (3) The Debtor, the estate, and any person or entity claiming a right to possession under or through the Debtor or otherwise, will immediately quit and deliver possession of the Premises to the Landlord or its authorized agent. (4) The Premises will immediately be delivered to the Landlord and any personal property and furniture, fixtures, and equipment remaining in or on the Premises after September 30, 2007 is deemed abandoned to the Landlord pursuant to Section 554 of the Bankruptcy Code and the Landlord will have limited relief from the automatic stay imposed by Section 362 solely for the purpose of disposing any of the Debtor's personal property remaining in or on the Premises after September 30, 2007, as well as any interior or exterior signage without any liability to the Debtor for violation of the automatic stay. The stay relief will permit the Landlord to serve any notice on the Debtor as is required by the law of the State of California prior to disposing of any of the Debtor's personal property remaining in or on the Premises. (5) The Landlord will also have relief from the automatic stay to set off under Section 553, or otherwise recoup, and apply, the Security Deposit of $259,000 against the general unsecured portion of any claim that it files in the Debtor's bankruptcy case. Provided however, that before recouping or applying the Security Deposit, the Landlord will provide the Debtor, the Secured Lender and the Official Committee of Unsecured Creditors written notice of the intended application, and the Debtor, Secured Lender and Committee will have 10 days to object in writing to that application. If any objection is not resolved, the parties may seek a resolution of the objection from the Court. (6) Modification of the automatic stay permits the Landlord to issue, file, serve, or record any and all notices as may be desirable or necessary under applicable non-bankruptcy law in conjunction with the exercise of its rights and remedies to recover possession of the Premises, terminate the Lease, and to dispose of any personal property remaining on the Premises without any liability whatsoever to the Debtor or any third party. The Landlord does not have relief from the automatic stay to seek and recover any monetary amounts from the Debtor for any reason or to pursue any action against the Debtor based on mechanic's liens or other liens asserted on the Premises. (7) The Landlord will have an allowed $137,410 administrative claim under Section 365(d)(3) and Section 503(b)(1) for June 2007 rent and related charges, which will be paid pari passu with the payment of all other administrative claims in the Debtor's bankruptcy proceeding pursuant to a confirmed plan of liquidation without further need of the Landlord to file an additional administrative expense claim or demand for administrative expense payment. About Amp'd Mobile Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm, represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. The Debtor is in the process of selling various assets. (Amp'd Mobile Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AMPEX CORP: Judge Sees Appointment of Equity Holders Panel as Moot ------------------------------------------------------------------ The Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York denied a request to immediately appoint an Official Committee of Equity Holders filed by ValueVest High Concentration Master Fund Ltd., equity security holder and party-in-interest of Ampex Corporation and its debtor-affiliates, Tiffany Kary of Bloomberg News reports. Ms. Kary quotes Judge Gonzalez as saying that the company is insolvent and shareholders are not going to get any distribution in this bankruptcy case. Judge Gonzalez is convinced that the company can no longer pay equity holders, she notes. As reported in the Troubled Company Reporter on May 5, 2008, ValueVest said the Committee is expected to represent and prosecute the interest of shareholders and recover certain of their equity stake in the Debtors. ValueVest argued that the Debtors are not insolvent and there is a substantial likelihood of a meaningful distribution to equity. The Debtors have at least 393 shareholders with Class A common stock outstanding as of March 25, 2008, wherein ValueVest holds 13.4% shares of the Debtors' Class A common stock. About Ampex Corporation Headquartered in Redwood City, California, Ampex Corporation -- http://www.ampex.com-- designs and manufactures data storage products used in defense application to gather images and other date from aircrafts, satellites and submarines. The company and six of its affiliates filed for Chapter 11 protection on March 30, 2008 (Bankr. S.D.N.Y. Lead Case No.08- 11094). Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems Bankruptcy Solution as claims, noticing and balloting agent. The U.S. Trustee for Region 2 appointed five creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $26,467,000 and total debts of $133,602,000. As of Dec. 31, 2007, Ampex reported a balance sheet data with total assets of $26.46 million, total liabilities of $133.60 million resulting to a total stockholders' deficit of $107.13 million. ASCALADE COMM: Hong Kong Court OKs ACL's Scheme of Arrangement -------------------------------------------------------------- Ascalade Communications Inc. disclosed that the High Court of Hong Kong sanctioned the Scheme of Arrangement filed by Ascalade Communications Limited under Section 166 of the Companies Ordinance (Chapter 32) of Hong Kong, in connection with the on- going legal proceedings filed by Ascalade and Ascalade Technologies Inc. in Canada under the Companies' Creditors Arrangement Act. Ascalade Communications Limited is an indirect subsidiary of the company and is a major operating company in the Ascalade group of companies. The Scheme of Arrangement was approved at a meeting of the creditors of ACL held on May 2, 2008. As an outcome of the court sanctioning the Scheme, Deloitte & Touche Hong Kong have been appointed Scheme Administrators and will oversee management in the orderly wind-up of ACL and sale of the assets located in the Peoples Republic of China. In the Scheme, the Administrator has estimated that proven ACL creditors will potentially receive a dividend of $0.37 for each dollar filed in a claim, there are certain qualifications and warnings which are associated with this realization; as ACL has not yet realized upon its assets and all creditors' claims have not yet been adjudicated. It should be noted that the companies have filed claims against ACL in the Scheme. Subsequent to the sanctioning of the Scheme by the Hong Kong High Court, the company will commence formal marketing of the significant assets located in the PRC, namely the factory, machinery and equipment and raw material inventory. Progress in these marketing efforts will be the subject of future updates. Any recovery in the CCAA for creditors and other stakeholders of the companies, including shareholders, is uncertain and is highly dependent upon a number of factors, including the recovery from the sale of the factory, equipment and inventory in the PRC and the outcome of the Scheme in Hong Kong. In addition, Ascalade is providing this update in accordance with Ontario Securities Commission Policy 57-603 Defaults by Reporting Issuers in Complying with Financial Statement Filing Requirements. In accordance with the OSC Policy, the company confirms that, except as disclosed in press statements dated April 2, 2008, April 9, 2008, and April 29, 2008, issued by the company since its initial default statement dated March 31, 2008: (i) there is no material change to the information set out in its initial default statement filed pursuant to the OSC Policy; (ii) there has been no failure by the company to adhere to the Alternative Information Guidelines set out in the OSC Policy with respect to the financial statement filing default; and (iii) there is no other material information concerning the affairs of the company that has not been generally disclosed. About Ascalade Communications Inc. Based in Richmond, British Columbia, Ascalade Communications Inc. (TSE:ACG) -- http://www.ascalade.com/ -- is an innovative product company that designs, develops and manufactures digital wireless and communication products. The company deliver products by offering its partners and customers complete vertical integration, from product design and development to final production. The company's products include digital cordless phones, Voice over Internet Protocol phones, digital wireless baby monitors and digital wireless conference phones. Ascalade products have been distributed in more than 35 countries and under 80 regional brands. Ascalade also has facilities in Qingyuan, China, Hong Kong and a sales office in Hertfordshire, United Kingdom. On April 29, 2008, Jervis Rodrigues, senior vice-president of Deloitte & Touche Inc., filed separate petitions for protection under Chapter 15 of the U.S. Bankruptcy Code on behalf of Ascalade Communications Inc. and its debtor-affiliate (Bankr. N.D. Ill. Case Nos. 08-10612 and 08-10616). Jeffrey G. Close, Esq. at Chapman and Cutler LLP represents the Petitioner in the Chapter 15 case. Ascalade's financial condition as of September 2007 showed total assets of $99,630,000 and total debts of $40,410,000. ATHERTON & JENNINGS: Case Summary & Three Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Atherton & Jennings 120, LLC 129 West Third St. Tulsa, OK 74103 Bankruptcy Case No.: 08-11031 Chapter 11 Petition Date: May 5, 2008 Court: Northern District of Oklahoma (Tulsa) Judge: Terrence L. Michael Debtor's Counsel: Scott P. Kirtley, Esq. Email: skirtleyattorney@riggsabney.com Riggs, Abney, Neal, Turpen, Orbison 502 West 6th St. Tulsa, OK 74119-1016 Tel: (918) 587-3161 http://www.riggsabney.com/ Total Assets: $1,600,751 Total Debts: $1,545,077 Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service penalty for unfiled $2,089 Ogden, UT 84201-0038 return Downtown Tulsa Unlimited fees $1,132 321 S. Boston Tulsa, OK 74103 American Electric Power utilities $488 P.O. Box 24421 Canton, OH 44701-4421 BEAR STEARNS ABS: Fitch Rates 57 Classes Below Investment Grade --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Bear Stearns Asset Backed Securities mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $2.2 billion and downgrades total $691.9 million. Additionally, $179.5 million was placed on Rating Watch Negative. BSABS Trust 2002-2 -- $22.7 million class A-1 affirmed at 'AAA'; -- $3.0 million class A-2 affirmed at 'AAA'; -- $3.7 million class M-1 affirmed at 'AA+'; -- $3.3 million class M-2 affirmed at 'A+'; -- $3.9 million class B affirmed at 'BBB'; BSABS Trust 2003-1 -- $54.3 million class A-1 affirmed at 'AAA'; -- $7.1 million class A-2 affirmed at 'AAA'; -- $9.0 million class M-1 affirmed at 'AA'; -- $8.6 million class M-2 affirmed at 'A'; -- $6.6 million class B affirmed at 'BBB'; BSABS Trust 2003-2 TOTAL -- $24.7 million class A-1 affirmed at 'AAA'; -- $15.5 million class A-2 affirmed at 'AAA'; -- $28.6 million class A-3 affirmed at 'AAA'; -- $10.2 million class M-1 affirmed at 'AA'; -- $9.1 million class M-2 downgraded to 'BBB+' from 'A'; -- $8.2 million class B downgraded to 'BB' from 'BBB'; BSABS Trust 2003-3 -- $39.6 million class A-2 affirmed at 'AAA'; -- $7.8 million class M-1 affirmed at 'AA'; -- $7.1 million class M-2 affirmed at 'A'; -- $4.5 million class B affirmed at 'BBB'; BSABS Trust 2003-SD1 -- $45.1 million class A affirmed at 'AAA'; -- $4.7 million class M-1 affirmed at 'AA'; -- $4.2 million class M-2 affirmed at 'A'; -- $3.0 million class B affirmed at 'BBB'; BSABS Trust 2003-SD2 TOTAL -- $4.7 million class I-A affirmed at 'AAA'; -- $11.8 million class II-A affirmed at 'AAA'; -- $6.2 million class III-A affirmed at 'AAA'; -- $3.6 million class B-1 affirmed at 'AA'; -- $3.0 million class B-2 affirmed at 'A'; -- $2.4 million class B-3 affirmed at 'BBB'; BSABS Trust 2003-SD3 -- $44.0 million class A affirmed at 'AAA'; -- $5.3 million class M-1 affirmed at 'AA'; -- $4.5 million class M-2 affirmed at 'A'; -- $3.6 million class B affirmed at 'BBB'; BSABS Trust 2004-1 -- $22.9 million class A-2 affirmed at 'AAA'; -- $17.7 million class M-1 affirmed at 'AA'; -- $5.5 million class M-2 affirmed at 'AA'; -- $2.2 million class M-3 affirmed at 'A'; -- $0.1 million class B-1 affirmed at 'BBB+'; -- $2.3 million class B-2 rated 'BBB-', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2004-2 -- $10.4 million class A-1 affirmed at 'AAA'; -- $19.7 million class A-3 affirmed at 'AAA'; -- $11.5 million class A-5 affirmed at 'AAA'; -- $11.3 million class M-1 affirmed at 'AA+'; -- $13.7 million class M-2 affirmed at 'BBB+'; -- $4.6 million class M-3 downgraded to 'B' from 'BB'; -- $1.2 million class B downgraded to 'CCC/DR2' from 'B'; BSABS Trust 2004-SD2 -- $4.4 million class I-A affirmed at 'AAA'; -- $4.0 million class II-A affirmed at 'AAA'; -- $10.2 million class III-A affirmed at 'AAA'; -- $11.1 million class IV-A affirmed at 'AAA'; -- $4.7 million class B-1 affirmed at 'AA'; -- $3.9 million class B-2 affirmed at 'A'; -- $3.3 million class B-3 affirmed at 'BBB'; -- $2.6 million class B-4 affirmed at 'BB-'; -- $1.8 million class B-5 affirmed at 'B'; Bear Stearns Asset Backed Securities Trust 2005-1 -- $4.6 million class A affirmed at 'AAA'; -- $37.7 million class M1 affirmed at 'AA'; -- $18.5 million class M2 downgraded to 'BB-' from 'BBB-'; -- $4.3 million class M3 downgraded to 'B+' from 'BB'; -- $3.9 million class M4 downgraded to 'B+' from 'BB-'; -- $3.0 million class M5 affirmed at 'B'; -- $4.5 million class M6 downgraded to 'C/DR5' from 'CC'; -- $7.4 million class M7 downgraded to 'C/DR6' from 'CC'; Bear Stearns Asset Backed Securities Trust 2005-2 -- $7.2 million class A-2 affirmed at 'AAA'; -- $24.1 million class A-3 affirmed at 'AAA'; -- $34.0 million class M-1 affirmed at 'AA'; -- $17.7 million class M-2 affirmed at 'A'; -- $3.9 million class M-3 affirmed at 'BBB+'; -- $5.8 million class M-4 affirmed at 'BBB-'; -- $3.2 million class M-5 downgraded to 'BB' from 'BBB-'; -- $4.6 million class M-6 downgraded to 'B+' from 'BB'; -- $10.2 million class M-7 downgraded to 'C/DR5' from 'C'; Bear Stearns Asset Backed Securities Trust 2005-3 -- $40.5 million class A-1 affirmed at 'AAA'; -- $23.6 million class A-3 affirmed at 'AAA'; -- $26.1 million class M-1 affirmed at 'AA'; -- $14.8 million class M-2 downgraded to 'BBB' from 'A'; -- $3.4 million class M-3 downgraded to 'BBB-' from 'A-'; -- $3.0 million class M-4 downgraded to 'BB' from 'BBB+'; -- $3.4 million class M-5 downgraded to 'BB' from 'BBB'; -- $2.9 million class M-6 downgraded to 'BB-' from 'BBB-'; -- $5.3 million class M-7 downgraded to 'B+' from 'BB'; Bear Stearns Asset Backed Securities Trust 2005-SD1 Group 1 -- $0.0 million class I-A-1 affirmed at 'AAA'; -- $36.0 million class I-A-2 affirmed at 'AAA'; -- $53.7 million class I-A-3 rated 'AAA', placed on Rating Watch Negative; -- $7.6 million class I-M-1 affirmed at 'AA'; -- $3.8 million class I-M-2 affirmed at 'A'; -- $2.3 million class I-M-3 downgraded to 'BBB+' from 'A-'; -- $2.3 million class I-M-4 downgraded to 'BBB' from 'BBB+'; -- $2.3 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $2.3 million class I-M-6 downgraded to 'BB-' from 'BBB-'; -- $2.3 million class I-B downgraded to 'B' from 'BB'; Bear Stearns Asset Backed Securities Trust 2005-SD1 Group 2 -- $25.3 million class II-A affirmed at 'AAA'; -- $5.9 million class II-M-1 affirmed at 'AA'; -- $3.7 million class II-M-2 affirmed at 'A'; -- $2.5 million class II-M-3 affirmed at 'BBB'; -- $2.0 million class II-B affirmed at 'BBB-'; Bear Stearns Asset Backed Securities, Inc. 2005-SD2 ARM Loans -- $38.1 million class II-A-1 affirmed at 'AAA'; -- $4.3 million class II-A-2 affirmed at 'AAA'; -- $11.5 million class II-M-1 affirmed at 'AA'; -- $5.9 million class II-M-2 downgraded to 'BBB' from 'A'; -- $5.7 million class II-M-3 downgraded to 'BB' from 'BBB'; -- $1.1 million class II-B downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities, Inc. 2005-SD2 FRM Loans -- $3.7 million class I-A-1 affirmed at 'AAA'; -- $20.8 million class I-A-2 affirmed at 'AAA'; -- $61.1 million class I-A-3 affirmed at 'AAA'; -- $10.2 million class I-M-1 affirmed at 'AA'; -- $3.4 million class I-M-2 affirmed at 'A'; -- $2.0 million class I-M-3 affirmed at 'A-'; -- $2.0 million class I-M-4 downgraded to 'BBB' from 'BBB+'; -- $2.0 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $1.0 million class I-M-6 downgraded to 'BB-' from 'BBB-'; -- $2.9 million class I-B downgraded to 'B+' from 'BB'; Bear Stearns Asset Backed Securities 2005-SD3 I LLC Group 1 -- $120.4 million class I-A rated 'AAA', placed on Rating Watch Negative; -- $12.9 million class I-M-1 downgraded to 'A' from 'AA'; -- $6.6 million class I-M-2 downgraded to 'BBB' from 'A'; -- $1.8 million class I-M-3 downgraded to 'BBB-' from 'A-'; -- $1.4 million class I-M-4 downgraded to 'BB+' from 'BBB+'; -- $1.2 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $1.2 million class I-M-6 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities 2005-SD3 I LLC Group 2 -- $29.7 million class II-A-1 affirmed at 'AAA'; -- $3.3 million class II-A-2 affirmed at 'AAA'; -- $7.8 million class II-M-1 affirmed at 'AA'; -- $3.7 million class II-M-2 affirmed at 'A'; -- $2.5 million class II-M-3 affirmed at 'BBB'; -- $0.6 million class II-M-4 affirmed at 'BBB-'; -- $1.5 million class II-B affirmed at 'BB'; Bear Stearns Asset Backed Securities 2005-SD4 Group I - FRMs -- $87.4 million class I-A-1 downgraded to 'AA' from 'AAA'; -- $36.2 million class I-A-2 downgraded to 'AA' from 'AAA'; -- $7.6 million class I-PO downgraded to 'AA' from 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $9.0 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $3.5 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.0 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $1.9 million class I-B-4 downgraded to 'B' from 'BB'; -- $1.1 million class I-B-5 downgraded to 'C/DR6' from 'B'; Bear Stearns Asset Backed Securities 2005-SD4 Group II - ARMs -- $55.8 million class II-A-1 affirmed at 'AAA'; -- $6.2 million class II-A-2 affirmed at 'AAA'; -- $11.5 million class II-M-1 affirmed at 'AA'; -- $5.1 million class II-M-2 downgraded to 'BBB-' from 'A'; -- $2.5 million class II-M-3 downgraded to 'BB' from 'BBB'; -- $0.9 million class II-M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD1 -- $200.4 million class A affirmed at 'AAA'; -- $16.5 million class M-1 affirmed at 'AA'; -- $8.9 million class M-2 downgraded to 'BBB' from 'A'; -- $4.7 million class M-3 downgraded to 'BB' from 'BBB'; -- $1.8 million class M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD2 Aggregate -- $64.3 million class A-1 affirmed at 'AAA'; -- $70.6 million class A-2 affirmed at 'AAA'; -- $56.8 million class A-3 affirmed at 'AAA'; -- $16.4 million class M-1 affirmed at 'AA'; -- $8.3 million class M-2 affirmed at 'A'; -- $5.7 million class M-3 downgraded to 'BB' from 'BBB'; -- $1.1 million class M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD3 ARM -- $26.2 million class II-1A-1 downgraded to 'A' from 'AAA'; -- $6.2 million class II-1A-2 downgraded to 'A' from 'AAA'; -- $23.8 million class II-2A-1 downgraded to 'A' from 'AAA'; -- $5.6 million class II-2A-2 downgraded to 'A' from 'AAA'; -- $27.9 million class II-3A-1 downgraded to 'A' from 'AAA'; -- $7.0 million class II-3A-2 downgraded to 'A' from 'AAA'; -- $0.0 million class II-X-1 affirmed at 'AAA'; -- $0.0 million class II-X-2 affirmed at 'AAA'; -- $10.5 million class II-B-1 downgraded to 'BBB+' from 'AA'; -- $5.3 million class II-B-2 downgraded to 'BBB-' from 'A'; -- $2.9 million class II-B-3 downgraded to 'BB' from 'BBB'; -- $1.9 million class II-B-4 downgraded to 'B' from 'BB'; -- $1.5 million class II-B-5 downgraded to 'C/DR6' from 'B'; Bear Stearns Asset Backed Securities Trust 2006-SD3 FRM -- $39.1 million class I-A-1A downgraded to 'A-' from 'AAA'; -- $3.3 million class I-A-1B downgraded to 'A-' from 'AAA'; -- $4.6 million class I-A-1C downgraded to 'A-' from 'AAA'; -- $24.2 million class I-A-2A downgraded to 'A-' from 'AAA'; -- $8.0 million class I-A-2B downgraded to 'A-' from 'AAA'; -- $49.1 million class I-A-3 downgraded to 'A-' from 'AAA'; -- $1.9 million class I-PO downgraded to 'A-' from 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $8.9 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $4.3 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.8 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $2.7 million class I-B-4 downgraded to 'B' from 'BB'; -- $2.4 million class I-B-5 downgraded to 'DR' from 'B'; Bear Stearns Asset Backed Securities Trust 2006-SD4 -- $50.3 million class 1A-1 affirmed at 'AAA'; -- $18.0 million class 1A-2 affirmed at 'AAA'; -- $17.5 million class 1A-3 affirmed at 'AAA'; -- $45.0 million class 2A-1 affirmed at 'AAA'; -- $7.7 million class 2A-2 affirmed at 'AAA'; -- $34.4 million class 3A-1 affirmed at 'AAA'; -- $5.9 million class 3A-2 affirmed at 'AAA'; -- $14.4 million class B-1 downgraded to 'BBB+' from 'AA'; -- $6.7 million class B-2 downgraded to 'BBB-' from 'A'; -- $3.9 million class B-3 downgraded to 'BB' from 'BBB'; -- $1.8 million class B-4 downgraded to 'B+' from 'BB'; -- $2.7 million class B-5 downgraded to 'B' from 'B'; -- $0.0 million class X-2 affirmed at 'AAA'; Bear Stearns Asset Backed Securities Trust 2006-2 -- $33.9 million class A-1 affirmed at 'AAA'; -- $34.7 million class A-2 affirmed at 'AAA'; -- $9.7 million class A-3 affirmed at 'AAA'; -- $15.6 million class M-1 affirmed at 'AA'; -- $4.4 million class M-2 affirmed at 'AA-'; -- $7.8 million class M-3 affirmed at 'A'; -- $3.5 million class M-4 affirmed at 'A-'; -- $3.4 million class M-5 affirmed at 'BBB+'; -- $3.0 million class M-6 affirmed at 'BBB'; -- $3.0 million class M-7 affirmed at 'BBB-'; Bear Stearns Asset Backed Securities Trust 2007-SD1 ARMs -- $42.4 million class II-1A-1 affirmed at 'AAA'; -- $5.3 million class II-1A-2 affirmed at 'AAA'; -- $31.9 million class II-2A-1 affirmed at 'AAA'; -- $4.0 million class II-2A-2 affirmed at 'AAA'; -- $30.0 million class II-3A-1 affirmed at 'AAA'; -- $3.8 million class II-3A-2 affirmed at 'AAA'; -- $7.8 million class II-B-1 downgraded to 'BBB+' from 'AA'; -- $3.0 million class II-B-2 downgraded to 'BBB-' from 'A'; -- $2.1 million class II-B-3 downgraded to 'BB' from 'BBB'; -- $0.9 million class II-B-4 downgraded to 'B+' from 'BB'; -- $0.7 million class II-B-5 rated 'B', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2007-SD1 FRMs -- $35.7 million class I-A-1 affirmed at 'AAA'; -- $23.3 million class I-A-2A affirmed at 'AAA'; -- $2.5 million class I-A-2B affirmed at 'AAA'; -- $26.2 million class I-A-3A affirmed at 'AAA'; -- $2.8 million class I-A-3B affirmed at 'AAA'; -- $1.7 million class I-PO affirmed at 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $5.3 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $3.0 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $1.9 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $1.2 million class I-B-4 downgraded to 'B+' from 'BB'; -- $0.8 million class I-B-5 rated 'B', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2007-SD2 FRMS -- $30.1 million class I-A-1A affirmed at 'AAA'; -- $1.6 million class I-A-1B affirmed at 'AAA'; -- $22.6 million class I-A-2A affirmed at 'AAA'; -- $1.2 million class I-A-2B affirmed at 'AAA'; -- $45.1 million class I-A-3A affirmed at 'AAA'; -- $2.4 million class I-A-3B affirmed at 'AAA'; -- $1.7 million class I-PO affirmed at 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $8.1 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $4.9 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.8 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $2.4 million class I-B-4 downgraded to 'B+' from 'BB'; -- $1.5 million class I-B-5 rated 'B', placed on Rating Watch Negative. BERRY PLASTICS: Posts $29.3MM Net Loss in Quarter Ended March 29 ---------------------------------------------------------------- Berry Plastics Corp. reported a net loss of $29.3 million for the second quarter ended March 29, 2008, compared with a net loss of $13.6 million in the corresponding period ended March 31, 2007. Net sales increased 14.0% to $844.3 million for the quarter from $741.6 million for the prior quarter. This $102.7 million increase includes acquisition volume growth of 9.0%. Net sales in the rigid open top business increased from $219.5 million in the prior quarter to $247.9 million in the quarter. Base volume growth in the rigid open top business, excluding net selling price increases, was 5.0% driven primarily by growth in the company's various container product lines and thermoformed drink cups. Net sales in the rigid closed top business increased from $155.2 million in the prior quarter to $211.2 million in the quarter primarily as a result of acquisition volume growth attributed to Captive and MAC totaling $51.0 million for the quarter. The flexible film business net sales increased from $229.2 million in the prior quarter to $257.8 million in the quarter. Acquisition volume growth attributed to Rollpak was $14.3 million for the quarter. Base volume declined, excluding net selling price increases, by 11.0% for the quarter primarily due to softness in the housing market and the company's decision to discontinue historically lower margin business. Net sales in the tapes/coatings business decreased from $137.7 million in the prior quarter to $127.4 million in the quarter primarily driven by softness in the new home construction and automotive markets partially offset by strong volume growth in the corrosion protection business. Gross profit decreased by $9.3 million to $112.4 million for the quarter from $121.7 million for the prior quarter. This decrease is primarily attributed to the timing lag of passing through increased raw material costs to customers as well as $2.4 million of purchase accounting inventory adjustments related to the acquisitions of Captive and MAC partially offset by additional sales volume and productivity improvements in the flexible films and tapes/coatings segments as a result of realizing synergies from the Berry Covalence merger. Total operating expenses increased to $91.2 million, from $84.1 million in the prior quarter, primarily as a results of increases in selling, general and administrative expenses. Net interest expense increased $8.1 million to $67.2 million for the quarter from $59.1 million in the prior quarter primarily as a result of increased borrowings to finance the Captive acquisition. For the quarter, the company recorded an income tax benefit of $16.7 million or an effective tax rate of 36.3%, which is a change of $9.4 million from the income tax benefit of $7.3 million or an effective tax rate of 34.1% in the prior quarter. 26 Weeks Ended March 29, 2008 Net sales increased 11.0% to $1.6 billion billion for the 26 weeks ended March 29, 2008, from $1.4 billion for the same period ended March 31, 2007. This $161.8 million increase includes 6.0% acquisition related volume growth. Gross profit increased by $13.1 million to $221.2 million from $208.1 million for the 26 weeks ended March 31, 2007. This increase is primarily the result of the additional sales volume and productivity improvements in the flexible films and tapes/coatings segments as a result of realizing synergies from the Berry Covalence Merger. Selling, general and administrative expenses increased by $14.0 million to $165.4 million for the 26 weeks ended March 29, 2008, from $151.4 million during the same period of fiscal 2007. Restructuring and impairment charges were $5.2 million primarily as a result of costs incurred associated with the plant consolidations within the flexible films and tapes/coatings segments. Other expenses increased from $7.5 million during the 26 weeks ended March 31, 2007, to $18.9 million for the 26 weeks ended March 29, 2008, primarily as a result of expenses associated with the integration of Old Covalence and the corresponding achievement of synergies. Net interest expense increased $9.7 million to $128.7 million for from $119.0 million in the prior 26 week period primarily as a result of increased borrowings to finance the Captive acquisition. The company recorded an income tax benefit of $36.4 million or an effective tax rate of 37.5%, which is a change of $9.6 million from the income tax benefit of $26.8 million or an effective tax rate of 36.3% in the prior 26-week period. Net loss was $60.6 million for the 26 weeks ended March 29, 2008, compared to a net loss of $44.4 million for the 26 weeks ended March 31, 2007. Liquidity and Capital Resources The company's senior secured credit facilities consist of a $1.2 billion term loan and a $400.0 million asset based revolving line of credit. The term loan matures on April 3, 2015, and the revolving line of credit matures on April 3, 2013. At March 29, 2008, the company had unused borrowing capacity of $243.8 million under the revolving line of credit. The company was in compliance with all covenants at March 29, 2008. At March 29, 2008, the company had outstanding long-term debt of $3.3 billion, compared to $2.7 billion at Sept. 29, 2007. Balance Sheet At March 29, 2008, the company's consolidated balance sheet showed $4.5 billion in total assets, $4.1 billion in total liabilities, and $380.4 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the thirteen weeks ended March 29, 2008, are available for free at http://researcharchives.com/t/s?2c00 About Berry Plastics Headquartered in Evansville, Ind., Berry Plastics Corporation -- http://www.berryplastics.com/-- is a manufacturer and marketer of plastic packaging products. Berry Plastics products include open-top and closed top packaging, polyethylene-based plastic films, industrial tapes, medical specialties, packaging, heat- shrinkable coatings and specialty laminates. * * * As reported in the Troubled Company Reporter on April 16, 2008, Moody's Investors Service affirmed its Caa1 (LGD 4, 63%) rating on each of the company's $225.0 million senior secured second lien FRN due 2014 and $525.0 million senior secured lien notes due 2014, and its Caa2 (LGD 5, 85%) rating on the company's $265.0 million senior subordinated notes due 2016. BLOCKBUSTER INC: Earns $45 Million in Quarter ended April 6 ----------------------------------------------------------- Blockbuster Inc. reported net income of $45.4 million for the first quarter ended April 6, 2008, an improvement of $94.4 million as compared with a net loss of $49.0 million for the first quarter of 2007. Total revenues decreased 5.4% to $1.39 billion for the first quarter of 2008 from $1.47 billion for the first quarter of 2007, as a result of fewer company-operated stores. Domestic same-store revenues increased 2.9% as compared to the first quarter of 2007, reflecting a 920 basis point improvement over the first quarter of 2007. This increase was driven by a 0.4% growth in same-store rental revenues and a 19.7% increase in same-store merchandise sales. International same-store revenues decreased 1.5% from the same period last year, reflecting a 0.9% increase in same-store rental revenues and a 4.9% decline in same-store merchandise sales. Worldwide same-store revenues grew 1.4% from the same period last year. "The significant improvement in our first quarter results demonstrates the underlying strength of our core rental and emerging retail business," Jim Keyes, Blockbuster chairman and CEO, said. "BLOCKBUSTER Total Access(TM), our subscription rental offering, is now profitable and positioned for growth." "Additionally, our stores achieved positive growth in both sales and margin," Mr. Keyes added. "We are particularly pleased that domestic same-store revenues showed an improvement for the first time in five years primarily as a result of several initiatives we have put in place, including an increased availability of top new movies, improved store merchandising and more effective pricing." "Going forward, we are confident we can continue to grow our core business, which will enable us to focus on aggressive development of our digital offerings," Mr. Keyes continued. "Our ability to provide convenient access to both physical and electronic media entertainment will provide Blockbuster a meaningful competitive advantage and allow us to create enhanced shareholder value over the long-term." Liquidity and Capital Resources As of April 6, 2008, no balance was outstanding under the company's revolving credit facility and $406.5 million was outstanding under the term loan portions of its credit facilities. The available borrowing capacity under the revolving credit facility, excluding the $150.0 million reserved for issuance of letters of credit provided for Viacom Inc. at Viacom's expense, and $52.7 million reserved to support other letters of credit, totaled $222.3 million at April 6, 2008. Net cash flows from financing activities increased $56.9 million to $9.1 million of cash used for financing activities during the first quarter of 2008 from $66.0 million of cash used for financing activities during the first quarter of 2007. This change was due to a $56.3 million decrease in net debt repayments. At April 6, 2008, the company has cash and cash equivalents of $137.7 million. Working capital was $77.2 million as compared to $30.7 million at Jan. 6, 2008. At April 6, 2008, the company's balance sheet data showed total assets of $2.6 billion, total liabilities of $1.9 billion and total shareholders' equity of $706.5 million. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with over 7,800 stores throughout the Americas, Europe, Asia and Australia. The company maintains operations in Brazil, Mexico, Denmark, Italy, Taiwan, and Australia. At Jan. 6, 2008, the company's total debt, including capital lease obligations was US$757.8 million compared with US$984.2 million in Dec. 31, 2006. * * * In December 2007, Fitch Ratings affirmed Blockbuster Inc.'s long-term Issuer Default Rating at 'CCC' and the senior subordinated notes at 'CC/RR6'. The rating outlook is stable. BLUE SKY 2: Case Summary & Two Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Blue Sky 2, Inc. aka Old Barn Restaurant 8100 S. Parkside Burbank, IL 60459 Bankruptcy Case No.: 08-12097 Type of Business: The Debtor owns and operates a restaurant. Chapter 11 Petition Date: May 13, 2008 Court: Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Karl L. Halperin, Esq. Rosenfield, Kaplan & Halperin 6160 N. Cicero, Ste. 320 Chicago, IL 60646 Tel: (773) 481-2700 Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million Debtor's Two Largest Known Creditors: Entity Claim Amount ------ ------------ Becker Dairy unknown 4224 W. Chicago Chicago, IL 60651 Anmar Foods, Inc. unknown 2150 W. Carroll Ave. Chicago, IL 60638 BLUE WATER: Files Liquidation Analysis Under Chapter 11 Plan ------------------------------------------------------------ Blue Water Automotive Systems, Inc., and its debtor affiliates delivered to the U.S. Bankruptcy Court for the Eastern District of Michigan a liquidation analysis to assist holders of claims and interests in determining whether they will recover at least as much in the going concern Chapter 11 sale as they would recover in a forced liquidation sale by a Chapter 7 trustee, and subsequently assist them in determining whether to accept or reject their Joint Plan of Liquidation. As reported by the Troubled Company Reporter on May 15, the Debtors' Liquidation Plan provides for the sale of substantially all of their assets in a going concern sale pursuant to Chapter 11 rather than liquidating under Chapter 7 of the Bankruptcy Code. According to John A. Simon, Esq., at Foley & Lardner LLP, in Wilmington, Delaware, the Debtors' going concern sale under their Chapter 11 Plan will provide at least as much of a recovery to holders of Claims or Equity Interests as the holders would receive in a Chapter 7. The Chapter 11 sale will be of substantially all of the Debtors' assets. The Debtors have engaged an investment banker to conduct a sale process, in which the Debtors have invested a substantial amount of time, effort and resources in extensively marketing substantially all of the Debtors' assets for a sale. A sale is expected to close by June 30, 2008. The Sale will preserve the goodwill embedded in the Debtors as a going concern, he says. In contrast, Mr. Simon says a Chapter 7 liquidation would be a forced sale, after the Debtors' operations have ceased. Goodwill would not be preserved in a Chapter 7 liquidation. Moreover, it is unlikely that the assets being sold in the Debtors' current Chapter 11 sale process would be available to be liquidated by a Chapter 7 trustee. Because the Debtors have no equity in their assets in a forced liquidation, in a Chapter 7 liquidation, the Debtors' secured creditors would be entitled to lift the automatic stay to foreclose on their collateral. Therefore, in a Chapter 7, the only assets likely to be subject to administration by the Trustee for the benefit of holders of Claims and Equity Interests would be the Causes of Action, which will otherwise become Creditors Trust assets under the Plan. In addition, in a Chapter 7 proceeding, the trustee is entitled to a percentage of the distributions made by the trustee. The distribution is in addition to the costs and expenses associated with pursuing the Causes of Action. Furthermore, the Chapter 7 trustee's professionals are entitled to be paid ahead of the Allowed Claims and Equity Interests against the Debtors. Mr. Simon says that the analysis of the Best Interests Test under Section 1129(a)(7) is based on a number of assumptions, which are subject to significant business, economic, and competitive uncertainties and contingencies beyond the control of the Debtors and their management. For the purposes of the Liquidation Analysis, assumptions are based on the forced liquidation value of the fixed assets as determined by recent appraisals of the assets. As to current assets, the Liquidation Analysis assumes estimated and unaudited book values of the Debtors assets on April 30, 2008. The analysis is subject to any changes due to the Debtors' continued operation. The book values used were obtained from the Debtors' draft financial statements and accounting records. The values have not been subject to review or audit by an independent accounting firm, Mr. Simon says. Inventories consist primarily of raw materials, work-in-process, and finished goods of Blue Water's products. Inventories do not include tooling inventory. Current inventory is estimated to be approximately $6.5 million. Inventory aged greater than 90 days is estimated to be one-third of total inventory and is estimated to total approximately $2.9 million. Prepaid items, consisting of prepaid maintenance contracts and prepaid finance charges related to prior financings, are estimated to be approximately $1,800,000. Prepaid expenses are estimated to be approximately $3,900,000. The DIP Credit Facility, as of May 9, 2008, totaled $28,700,000. A full-text copy of the Liquidation Analysis is available for free at http://bankrupt.com/misc/bw_liquidationanalysis.pdf Blue Water Automotive Systems, Inc. Balance Sheet As of April 30, 2008 ASSETS: Working Capital and other assets Cash and cash equivalents $1,876,913 Accounts Receivable: Trade 22,715,018 Participating Customers 9,066,573 Non-participating Customers 13,648,445 Tooling 15,178,243 ----------- Net Accounts Receivable $37,893,261 Inventory 6,476,052 Inventory - Aged 2,911,202 Prepaid Items 1,801,760 Other Assets Other current and long term assets 3,919,743 Other Assets - ----------- Total Other Assets $3,919,743 ----------- Total Working Capital Assets $54,878,931 Equipment Surplus - Available to Satisfy the DIP Facility Balance - Less DIP Facility Balance - Working Capital Assets Available for Liquidation Equipment and Real Estate Assets Available for Liquidation by the Chapter 7 Trustee Other Items Chapter 5 Causes of Action 2,337,987 Claims Against Sarnautomotive 1,250,000 Owned Tooling - Estimated Proceeds Available for Liquidation by the Chapter 7 Trustee: Less costs associated with liquidation Chapter 7 Trustee fees - Administrative Expenses - ----------- Total costs associated with liquidation - Net Estimated Proceeds for Liquidation by the Chapter 7 Trustee - Liquidation Analysis Estimated Recovery Rate and Liquidation Value Recovery Value ----------- --------------------- Low High Low High --- ---- ---------- ---------- Working Capital and other assets Cash and cash equivalents 100% 100% $1,876,913 $1,876,913 Accounts Receivable Trade Participating Customers 0% 35% - 3,173,300 Non-participating Customers 10% 45% 1,346,845 6,141,800 Tooling 0% 15% - 2,276,736 --------- --------- Net Accounts Receivable 1,346,845 11,591,836 Inventory 62% 76% 4,036,199 4,907,228 Inventory Aged 5% 10% 145,560 291,120 Prepaid Items 0% 0% - - Other Assets Other current and long term 0% 17% - 665,050 Other Assets 0% 0% - - --------- ---------- Total Other Assets - 665,050 --------- ---------- Total Working Capital Assets 7,423,517 19,332,149 Equipment Surplus 5,876,787 5,876,787 --------- ---------- Available to Satisfy DIP Credit Facility Balance 13,300,304 25,208,935 Less, DIP Credit Facility Balance (28,690,568)(28,690,568) ---------- ---------- Working Capital Assets Available for Liquidation - - Equipment and Real Estate Assets Available for Liquidation by the Chapter 7 Trustee - - Other Items Chapter 5 Causes of Action 10% 50% 233,799 1,168,994 Claims Against Sarnautomotive 20% 100% 250,000 1,250,000 Owned Tooling 0% 0% - - --------- ---------- Estimated Proceeds Available 483,799 2,418,994 for Liquidation by the Chap. 7 Trustee Less costs associated with liquidation Chapter 7 Trustee fees (14,514) (72,570) Administrative Expenses (4,277,000)(3,207,750) --------- ---------- Total costs associated with liquidation ($4,291,514)($3,280,320) Net Estimated Proceeds for Liquidation by the Chapter 7 Trustee - - --------- ---------- 0% 0% Liquidation Analysis Estimated Midpoint Value Assets Working Capital and other assets Cash and cash equivalents $1,876,913 Accounts Receivable Trade Participating Customers 1,586,650 Non-participating Customers 3,753,322 Tooling 1,138,368 ---------- Net Accounts Receivable $6,478,340 Inventory 4,471,714 Inventory Aged 218,340 Prepaid Items - Other Assets Other current and long term assets 332,525 Other Assets - ----------- Total Other Assets $332,525 ----------- Total Working Capital Assets $13,377,833 Equipment Surplus 5,876,787 Available to Satisfy the DIP Facility Balance 19,254,620 Less, DIP Credit Facility Balance (28,690,568) Working Capital Assets Available for Liquidation - Equipment and Real Estate Assets Available for Liquidation by the Chapter 7 Trustee - Other Items Chapter 5 Causes of Action 701,396 Claims Against Sarnautomotive 750,000 Owned Tooling - Estimated Proceeds Available for Liquidation by the Chap. 7 Trustee 1,451,396 Less costs associated with liquidation Chapter 7 Trustee fees (43,542) Administrative Expenses (3,742,375) ----------- Total costs associated with liquidation - ----------- Net Estimated Proceeds for Liquidation by the Chapter 7 Trustee - 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 operations 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 Debtors filed their Liquidation Plan on May 9, 2008. The Court will convene a hearing May 23 to consider approval of the Disclosure Statement explaining the Plan, for voting purposes. The Court will hold a hearing June 18, 2008, to consider confirmation of the Plan. (Blue Water Automotive Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BLUE WATER: Gets Permission to Pay Incentives to Employees ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan authorizes Blue Water Automotive Systems, Inc., and its affiliated debtors to pay incentives to certain critical employees. The Incentive Payments will be made upon the closing of the sale of the Debtors' assets, the Critical Employees will be eligible for $323,577 in aggregate Incentive Payments if they: (i) perform their duties in a manner in the judgment of upper management of the Debtors; and (ii) are in the employ of the Debtors upon the closing of the sale. The balance of Incentive Payments, aggregating $174,234, will be paid to the Critical Employees upon the closing of the sale (a) if there are no defaults under the Accommodation Agreements with the Major Customers that are not waived; and (b) in proportion to the Debtors' collection, on a percentage basis, of prepetition, non-participating customer accounts receivable aged over 60 days. If the Non-Participating Customer AR is reduced by 50% upon closing of the sale of the Debtors' assets, 50% of the Reserve will be paid to the Employees. A schedule delineating the methodology is set out by the Court: Total NP Customers Receivables > 60 days at 5/5/08 $4,078,868 Less cushion/reserve (20%) (815,774) --------- Subtotal NP Customers Receivables $3,263,094 ========= Collection Percentage of NP Customer Receivables> 60 days: Percentage Amount Bonus ---------- ------ ----- 33% $1,076,821 $57,497 66% 2,153,642 114,994 100% 3,263,094 174,234 As previously reported by the Troubled Company Reporter in April, the Debtors proposed to make incentive payments totaling US$497,812 to a limited number of critical, non-insider employees. 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. According to the Troubled Company Reporter on May 15, 2008, the Debtors' counsel, Nicole Y. Lamb-Hale, Esq., at Foley & Lardner, LLP, in Detroit, Michigan, clarified that the Incentive Payments, if any, will be paid only upon consummation of a sale of the Debtors' assets. 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 operations 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 Debtors filed their Liquidation Plan on May 9, 2008. The Court will convene a hearing May 23 to consider approval of the Disclosure Statement explaining the Plan, for voting purposes. The Court will hold a hearing June 18, 2008, to consider confirmation of the Plan. (Blue Water Automotive Bankruptcy News, Issue No. 14, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BOISE INC: Moody's Lifts Loan Rtng. to B1; Revises Outlook to Pos. ------------------------------------------------------------------ Moody's Investors Service changed Boise Inc.'s outlook to stable from positive and upgraded its second lien term loan to B1 from B2 based on the company's revised capital structure after the completion of its acquisition of Boise Cascade's Paper and Packaging & Newsprint segments. The revision increased term loan borrowings and introduced a subordinated PIK note into the capital structure, which improves the relative rating of the second lien term loan, leading to a one-notch upgrade. The company's corporate family rating remains Ba3. All other ratings were affirmed. During the shareholder voting process to approve the acquisition, approximately 30% of the shareholders eligible to vote elected to convert their shares to cash. This required the raising of $120 million of debt. In the Dec. 26, 2007 rating action, Moody's stated that the positive outlook was based on the transaction being consummated without any stockholders exercising their conversion rights and that the company would have approximately $946 million of outstanding indebtedness. Moody's also stated that if a significant number of shareholders decided to exercise their conversion rights, the outlook might be changed to stable. The transaction closed on February 22, 2008 and as of March 31, 2008, the company had approximately $1.1 billion of outstanding indebtedness due to the lower than anticipated equity consideration. The equity shortfall of approximately $120 million was financed by Boise's issuance of a $59 million subordinated 15.75% related- party PIK note to Boise Cascade (matures in 2015) and an increase of $61 million to the second lien term loan. The introduction of the loss absorbing PIK note primarily drove the one-notch upgrade to the second lien term loan, to B1. Under Moody's loss-given- default methodology, the expected loss for the second lien term loan decreased based on the revised capital structure. Boise's ratings still reflect the reasonable amount of leverage at transaction close and Moody's expectation of strong and stable operating performance over the intermediate term. Moody's believes that the company's market position as the third largest producer of uncoated free sheet paper in North America, favorable industry supply trends from recent consolidation and rationalization actions, and pricing improvements will allow the company to generate margins and free cash flow appropriate for a Ba3 corporate family rating. The ratings also consider the challenges of shifting to higher margin specialty products, input cost pressures, and declining demand in certain of Boise's products. Ratings Upgraded: -- Second Lien Secured Term Loan, to B1 (LGD5 81%) from B2 Rating Affirmed: -- Corporate Family Rating, Ba3 First Lien Secured Revolver, Ba2 (LGD3, 36%) -- First Lien Secured Term Loan A, Ba2 (LGD3, 36%) First Lien Secured Term Loan B, Ba2 (LGD3, 36%) -- Speculative Grade Liquidity Rating, SGL-2 The outlook is stable. Boise Inc., headquartered in Boise, Idaho, is the third largest North American producer in uncoated free sheet paper and has a significant presence in the markets for linerboard, corrugated containers, and specialty and premium paper products. BUFFETS HOLDINGS: U.S. Trustee Balks at Employees Incentive Plan ---------------------------------------------------------------- Roberta A. DeAngelis, acting United States Trustee for Region 3, tells the United States Bankruptcy Court for the District of Delaware, that from the information contained in a motion to approve an annual incentive plan by Buffets Holdings Inc. and its debtor-affiliates, approximately 15 of the employees included in the plan appear to be officers, directors, or persons in control, and thus insiders within the meaning of Section 101 of the Bankruptcy Code. Ms. DeAngelis says she objects to the motion to the extent that the Debtors assert -- but do not demonstrate -- that the payments proposed to be made under the Debtors' AIP are ordinary course transactions not subject to review under Section (503)(c) of the Bankruptcy Code. Ms. DeAngelis also objects to the Debtors' assertion that Section 503(c)(3) simply subjects the AIPs to review under the business judgment rule. "[T]he Debtors have not demonstrated in the Motion that the modified 2008 AIP and the new 2009 AIP are ordinary course transactions," Ms. DeAngelis says. "[T]he Debtors' assertion that section 503(c)(3) of the Bankruptcy Code only subjects the proposed bonus payments to review under the business judgment rule fails to accord proper meaning to the new limitations imposed by section 503(c)(3) of the Bankruptcy Code." Section 503(c)(3) provides that "notwithstanding Section (b), there shall neither be allowed nor paid-other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case including transfers made to, or obligations incurred for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition." The Debtors must demonstrate that the AIPs are necessary to preserve the value of the Debtors' estates and are "justified by the facts and circumstances of the case," Ms. DeAngelis asserts. As reported in the Troubled Company Reporter on May 13, 2008, the Debtors asked the Court to approve their performance-based Annual Incentive Plans for fiscal years 2008 and 2009. To remain competitive, the Debtors, like many large companies, have traditionally incorporated into their management compensation system an annual performance-based incentive component. The historical targeted incentive programs provided for bonuses to be paid to the Employees if the Debtors attained 50% of the Debtors' targeted EBITDA levels, with the bonus amounts increasing if the Debtors attained 100% of the Debtors' targeted EBITDA. These targeted incentive programs were offered to Employees, in addition to other bonus packages, to provide bonus compensation. Prior to the Petition Date, the Board of Directors implemented precisely this sort of EBITDA-based incentive program for fiscal year 2008. Incentive Compensation for Fiscal Year 2008 In the discretion of the Board of Directors, management Employees participating in the 2008 AIP would be eligible for incentive compensation that is linked to the Debtors' aggregate EBITDA exceeding $80,035,512 for the 2008 fiscal year -- the EBITDA level for the fiscal year set forth in the Debtors' debtor-in- possession budget. This is consistent with the general structure of incentive bonus plans historically offered to Employees, which have been based on the Debtors' overall financial performance, which is primarily focused on EBITDA. The modified 2008 AIP proposed by the Debtors would provide Employees with a bonus payment only if the Debtors exceed the 2008 Performance Goal by a minimum of $250,000. If the EBITDA for fiscal year 2008 is between $80,285,512 and $81,995,512, a discretionary pool of bonus funds, up to the maximum amount of $1,710,000, will be created, plus 10% of any EBITDA growth above $81,995,512. The 2008 Pool would be used to fund incentive payments to the Employees: * 54% of the 2008 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2008 base salary; * 36% of the 2008 Pool to approximately 102 Employees who are corporate support employees, allocated among the Employees based on their 2008 base salary; * 10% of the 2008 Pool to be allocated to Employees in the two groups disclosed -- excluding the Debtors' chief executive officer and chief operating officer -- who have been determined by the Board of Directors to have demonstrated exceptional performance in the fiscal year and in assisting the Debtors in exceeding the 2008 Performance Goal; provided that no individual Employee will receive more than $10,000 in compensation on account of this portion of the 2008 Pool. If the EBITDA generated by the Debtors' business exceeds the 2008 Performance Goal plus $250,000, but is less than $81,995,512, the 2008 Pool will be reduced dollar for dollar by the amount by which EBITDA is less than $81,995,512. Incentive Compensation for Fiscal Year 2009 In the discretion of the Board of Directors, management Employees participating in the AIPs would be eligible for incentive compensation that is linked to EBITDA generated by the Debtors' business for fiscal year 2009 EBITDA of $90,288,146, the EBITDA level set forth in the Debtors' DIP budget for the 2009 fiscal year. The 2009 AIP proposed by the Debtors would provide Employees with a bonus payment upon the Debtors' exceeding the 2009 Performance Goal. If the EBITDA generated by the Debtors' business is between $90,288,146 and $91,963,146, a discretionary pool of bonus funds, up to the maximum amount of $1,675,000, will be created, plus 50% of any EBITDA growth from $91,963,146 to $92,463,146, plus 20% of any EBITDA growth from $92,463,146 to $102,900,000. The 2009 Pool will be used to fund incentive payments to the Employees: * 54% of the 2009 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2009 base salary; * 36% of the 2009 Pool to approximately 112 Employees who are corporate support employees, allocated among the Employees based on their 2009 base salary; * 10% of the 2009 Pool to be allocated to Employees in the two groups disclosed -- but excluding the Debtors' Chief Executive Officer and Chief Operating Officer -- who have been determined by the Board of Directors to have demonstrated exceptional performance in the fiscal year and in assisting the Debtors in exceeding the 2009 Performance Goal, provided that no individual Employee will receive more than $10,000 in compensation on account of this portion of the 2009 Pool. If the EBITDA generated by the Debtors' business exceeds the 2009 Performance Goal, but is less than $91,963,146, the 2009 Pool will be reduced dollar for dollar by the amount by which EBITDA is less than $91,963,146. Furthermore, the Debtors would create an additional pool, equal to 10% of any Fiscal Year 2009 EBITDA growth beyond $102,900,000, which would be used to fund incentive payments to certain Employees: * 75% of the Supplemental 2009 Pool to approximately 15 Employees with titles of Vice President and above, allocated among the Employees based on their 2009 base salary; * 25% of the 2009 Pool to approximately 112 Employees who are corporate support employees, allocated among the Employees based on their 2009 base salary. Incentive Compensation to COO The Debtors also seek the court's approval to pay an incentive- related bonus to Tahoe Joe's vice president and chief operating officer upon completion of his first year of employment provided that the COO satisfactorily completes the mutual goals and objectives established by the Debtors and the COO. The COO was hired on November 16, 2007. The Debtors and the COO agreed that the mutual objective to serve as a condition precedent to the COO receiving a Personal Performance Bonus would be a reduction in both the Debtors' food and labor costs by at least one percent each, which would correlate to an annual savings of approximately $30,000,000 in operating costs. The maximum Personal Performance Bonus is $120,000. The Debtors believe that any Personal Performance Bonus for which the COO would be eligible would be earned postpetition and could therefore be paid in the ordinary course. However, the Debtors request confirmation that they Debtors are authorized, in the sole discretion of the Board of Directors, to honor and pay the Personal Performance Bonus to the COO as part of the AIPs. Since the COO is one of the parties who will share in the 2008 Pool to be distributed if the Debtors exceed the 2008 Performance Goal, the total amount of bonus compensation to be paid to the COO on account of the Personal Performance Bonus plus his portion of the 2008 Pool will not exceed $120,000. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that performance-based compensation forms an integral part of the total cash compensation paid by the Debtors to their management team. Ms. Morgan explains that the annual incentive plans are a critical component of the Debtors' effort to reorganize their business. The annual incentive plan is necessary in order to appropriately compensate the Debtors' management employees and to ensure that the employees remain motivated to perform the important tasks necessary to effect a successful reorganization of the Debtors' businesses. About Buffets Holdings Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). BUFFETS HOLDINGS: Court Sets July 21 as Claims Bar Date ------------------------------------------------------- The United States Bankruptcy Court fort the District of Delaware established July 21, 2008, at 4:00 p.m., as the deadline by which all entities holding prepetition claims against Buffets Holdings Inc. and its debtor-affiliates, including governmental units, must file proofs of claim. As reported in the Troubled Company Reporter on May 13, 2008, in connection with the Debtors' rejection of executory contracts or unexpired leases pursuant to Section 365 of the Bankruptcy Code, the Debtors propose that any person or entity that asserts a Rejection Damages Claim must file a proof of claim on or before the later of: (a) the Claims Bar Date, or (b) 4:00 p.m., Prevailing Eastern Time, on the date that is 30 days after entry of an order approving the rejection of an executory contract or unexpired lease pursuant to which the entity asserting the Rejection Damages Claim is a party, or (c) another date as the Court may fix. The Debtors proposed that any entity holding an interest in the Debtors need not file a proof of interest on or before the Claims Bar Date. Interest Holders that wish to assert claims against the Debtors that arise out of or relate to the ownership or purchase of an Interest, including claims arising out of or relating to the sale, issuance or distribution of the Interest, must file proofs of claim on or before the Claims Bar Date. Any entity asserting Claims against more than one Debtor must file a separate proof of claim with respect to each Debtor. In addition, any entity filing a proof of claim must identify on its proof of claim form the particular Debtor against which its Claim is asserted. Any entity that is required to file a proof of claim in the Chapter 11 cases pursuant to the Bankruptcy Code, the Bankruptcy Rules or the Bar Date Order with respect to a particular claim against the Debtors, but fails to do so by the applicable Bar Date, should not be treated as a creditor with respect to the Claim for the purposes of voting on and distribution under any Chapter 11 plan proposed or confirmed in the Debtors' cases. The Debtors proposed to serve all known entities holding potential prepetition claims with: (a) a notice of the Bar Dates, and (b) a proof of claim form. The Bar Date Notice states, among other things, that proofs of claim must be filed with Epiq Bankruptcy Solutions LLC on or before the applicable Bar Date. The Debtors propose that claimants be permitted to submit proofs of claim in person or by courier service, hand delivery, or mail. Proofs of claim submitted by facsimile or e-mail will not be accepted. Proofs of claim will be deemed filed when actually received by Epiq. The Debtors also intended to publish a notice of the Bar Dates within l0 business days of the date of entry of the order approving the Claims Bar Date, in either the national edition of The Wall Street Journal or the national edition of The New York Times. Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, told the Court that the establishment of the Claims Bar Date is necessary for the Debtors to obtain complete and accurate information regarding the nature, validity and amount of all claims that will be asserted in their Chapter 11 cases. This will enable the Debtors to fully administer their estates and to make distributions under any confirmed Chapter 11 plan, she says. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). BUFFETS HOLDINGS: Wants to Limit Bank's Rights to Value Collateral ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Buffets Holdings, Inc. and its debtor-affiliates asks the United States Bankruptcy Court for the District of Delaware to issue an order limiting the methods that may ultimately be used to value assets of the Debtors' estates that are encumbered by the prepetition security interests and liens that secure all obligations that were owed by the Debtors to Credit Suisse, Cayman Islands Branch and the Debtors' other prepetition lenders for whom Credit Suisse acts as agent, as of the Debtors' bankruptcy filing. Credit Suisse, et al., assert that the liens that secure their prepetition claims encumber "substantially all" of the Debtors' prepetition assets and that, as such, the value of their collateral for purposes of Section 506(a) and (b) of the Bankruptcy Code should be determined based on the "going concern value" of the Debtors' entire "enterprise". The Committee, however, contends that while the value of those particular assets that are encumbered by Credit Suisse, et al.'s prepetition liens may indeed be valued individually on a "going concern" basis, the "going concern" value of any of the Debtors' assets that are not subject to Credit Suisse and the lenders' prepetition liens, and the value of any "good will" associated with the unencumbered assets, must be subtracted from any "going concern" valuation of the Debtors' entire "enterprise" to determine the extent to which Credit Suisse, et al.: * are "over secured" or "under secured" for purposes of Section 506(a), and * may recover their contract interest, costs and fees under Section 506(b), in addition to the principal amount of their prepetition claims. The unsecured creditors of the Debtors for whom the Committee acts as fiduciary stand to be directly impacted by the method ultimately employed to value Credit Suisse, et al.'s collateral for purposes of Section 506(b), Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, explains. If Credit Suisse, et al., are allowed to value their collateral based on a so-called "enterprise" valuation that is not adjusted for the value of those significant assets of the Debtors that are not subject to any perfected liens, Credit Suisse and the lenders may improperly be found to be fully secured under Section 506(b) and therefore permitted to recover contract interest, fees or costs in addition to the principal amount of the Debtors' prepetition indebtedness. "[T]his outcome could substantially deplete the pool of assets otherwise available for application to the claims of Debtors' other creditors," Ms. Jones says. According to Ms. Jones, the value of the Debtors' assets that are not encumbered by any of Credit Suisse, et al.'s prepetition liens comprise a substantial portion of the overall value of the Debtors' business enterprise that must be adjusted for in any determination of the aggregate value of Credit Suisse, et al.'s collateral. The Committee maintains that absent actual dispositions of Credit Suisse, et al.'s collateral from which the value of the assets disposed of can be conclusively established, the value of Credit Suisse, et al.'s prepetition collateral will be determined in the Debtors' Chapter 11 cases only by using one or the other of these two methods: (i) by valuing each of the specific assets that comprise Credit Suisse, et al.'s' collateral -- tangible and intangible -- and determining overall value based on the sum total of only those component parts; or (ii) by determining the overall "enterprise value" of the Debtors' businesses, first by using a recognized enterprise valuation method -- like the Discounted Cash Flow method, the Guideline Publicly Traded Company method, or the Guideline Merged and Acquired Company method -- and then by deducting from that computed amount: (a) the "going concern" value of those assets of the Debtors that are not encumbered by Credit Suisse, et al.'s perfected prepetition liens, and (b) a proportional amount of the overall "goodwill" value of the Debtors' enterprise, as determined by the ratio of the going concern value of Debtors' assets not encumbered by Credit Suisse, et al.'s prepetition liens to the "going concern" value of Debtors' assets that are encumbered by Credit Suisse, et al.'s' perfected prepetition liens times the value of all "goodwill" as determined at the time of valuation. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). BUFFETS HOLDINGS: Wants Court's Okay to Amend Asset Sale Contract ----------------------------------------------------------------- Buffets Holdings Inc. and its debtor-affiliates seek approval from the United States Bankruptcy Court for the District of Delaware to amend a contract for the sale and purchase of real estate located at 40 Cavalier Blvd., in Florence, Kentucky. The Debtors also seek the Court's permission to extend the sale closing date of the property from May 30, 2008, to July 14, 2008. According to Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, the Debtors seek to amend the contract because the purchaser -- Value Place Real Estate Services LLC -- has yet to obtain certain governmental approvals necessary to begin the construction of a value place hotel on the property. In exchange for the Debtors' agreement to the Purchaser's request to extend the closing date, the Purchaser has agreed to increase the amount of its earnest deposit under the sale contract by $5,000, Mr. Morgan says. The Debtors submit that an extension of the closing date is an ordinary course transaction for which it does not need court approval. However, out of an abundance of caution, the Debtors ask the Court to approve the extension. As reported in the Troubled Company Reporter on Feb. 20, 2008, the Court authorized the Debtors to sell certain properties, along with their rights, title and interest, free and clear of encumbrances, pursuant sale contracts with different purchasers Before the Debtors' bankruptcy filing, they determined that some of their restaurants were not performing adequately and should be closed and the underlying properties sold. Accordingly, the Debtors retained Huntley Mullaney Spargo & Sullivan LLC to develop a marketing plan for the Properties. After coordinating with local estate brokers, Huntley Mullaney's efforts resulted in the Debtors executing purchase agreements for each of the Properties before the Petition Date. The Properties and their purchasers are: Property Price Purchaser -------- ----- --------- 6633 West Kellogg Drive $990,000 Meridian Investments Wichita, Kansas LLC 1207 South Main Street 2,000,000 Andy Yang, Wan B. Sikeston, Missouri Liu, Yong Eric Wang 2623 Wards Road 1,000,000 Lucky Property LLC Lynchburg, Virginia 40 Cavalier Blvd. 995,000 Value Place Real Florence, Kentucky. Estate Services LLC The Debtors' proposed counsel, Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, explains that the Properties were marketed by skilled brokers; are not core components of the Debtors' long-range business strategy; and are an economic burden. "The elimination of liabilities associated with the Properties, in addition to the value to be realized by the estates through the sale of the Properties, is beneficial to the Debtors, estates, and creditors," Ms. Morgan said. Ms. Morgan also contended that an auction is not necessary because it would be costly and impractical given the value to be received. "The proposed sales involve Buyers that are ready, willing and able to close," Ms. Morgan argued. Ms. Morgan noted that the Properties are clear of all liens; satisfies Section 363(f) of the Bankruptcy Code; and are being sold in "good faith" under Section 363(m). Additionally, the Debtors sought authorization from the Court to pay the local brokers their commissions aggregating $209,500. Ms. Morgan maintains that the Local Brokers' fee commissions are well within the range customarily found in similar real estate transactions. Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. (Buffets Holdings Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CABLEVISION SYSTEMS: Moody's Rtngs. Unmoved by Pending Acquisition ------------------------------------------------------------------ Moody's Investors Service commented that the short-term liquidity profile for Cablevision Systems Corporation and its wholly-owned indirect subsidiary Rainbow National Services LLC could be weakened -- potentially materially -- if the company is unable to access the capital markets and pre-fund at least some of its near- term financing needs following a string of recent acquisition- related announcements and disclosures. However, because Moody's believes there is a reasonable chance that Cablevision will be successful in improving its liquidity, current ratings and outlooks are not affected by the pending acquisitions. Both Cablevision and Rainbow have Ba3 corporate family ratings with stable outlooks, and SGL-3 and SGL-1 liquidity ratings, respectively. On May 12, 2008, Cablevision announced plans to acquire an approximate 97% interest in Newsday Media Group, a publisher of the daily newspaper Newsday that serves Long Island and the broader New York metropolitan area, along with other local publications in a transaction valued at $650 million. This announcement followed the previous week's announcement by Rainbow Media Holdings LLC, a subsidiary of Cablevision and the parent of Rainbow, which agreed to acquire Sundance Channel for total consideration of approximately $500 million. Also recently disclosed were an incremental $830 million of planned capital expenditures (albeit likely to be incurred over a more extended period) to support the upgrade and refurbishment of Madison Square Garden and to build out a wireless broadband network. In consideration of the company's scheduled debt maturities and proforma for the reported $650 million bank financing commitment arranged to support the Newsday acquisition, current cash balances and projected free cash flow, along with availability under existing committed lines of credit will likely not be sufficient to satisfy these capital requirements. The companies have generally outperformed their peer groups and are broadly seen to be rounding out their media holdings as much (if not more) from a defensive perspective as an offensive one. As long as the balance sheets remain relatively healthy and financial flexibility remains intact, Moody's views the ongoing investment initiatives as credit-neutral (if not favorable). Indeed, Moody's expects the modest negative impact of the two acquisitions on the company's credit metrics will be offset by opportunities to generate incremental revenue and realize cost synergies, although these will arguably not likely inure to the benefit of creditors holding the company's rated debt instruments given the unrestricted nature of such investments and the tax- driven structure being effected. Moody's Senior Vice President Russell Solomon says, "notwithstanding the potential benefits of adding complementary media and publishing businesses to the existing asset base and their relatively modest impact on key credit metrics, the incremental capital spending requirements exacerbate the company's refinancing risk, particularly in the context of significantly large debt repayments already scheduled to occur over the next 12- to-18 months." Moody's notes that approximately $635 million and $25 million of requisite debt repayments are scheduled for the next twelve months ending 3/31/2009 for Cablevision's CSC Holdings restricted group and Rainbow, respectively. And another $1.4 billion comes due after that in 2009. At 1Q 2008, Cablevision had $399 million of unrestricted cash, and $1 billion and $300 million, respectively, of revolving lines of credit at the Cablevision restricted group and Rainbow, which were both largely unutilized. Absent a sufficiently large refinancing, the liquidity profile for both Cablevision and Rainbow is likely to become strained due to substantially large utilization of the two committed revolving lines of credit over the near-term. Alternatively, if the companies are able to cover their near-term funding needs by raising new money, as expected, and subsequently free-up availability under their respective revolvers and replenish current cash balances that will otherwise likely be needed to effect the pending acquisitions, then their respective liquidity positions will indeed remain intact and their SGL and corporate family ratings will subsequently also likely remain unchanged. Headquartered in Bethpage, New York, Cablevision Systems Corporation is predominantly a domestic cable multiple system operator serving more than 3 million subscribers in and around the metropolitan New York area. Rainbow National Services LLC, headquartered in Jericho, New York, supplies television programming to cable television and direct broadcast satellite providers throughout the United States. The company predominantly operates three entertainment programming networks, American Movie Classics, WE: Women's Entertainment, and The Independent Film Channel. CAPITAL AUTO: S&P Puts 'BB' Rating on $7.915MM Subordinate Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Capital Auto Receivables Asset Trust 2008-2's $1.575 billion asset-backed notes series 2008-2. The ratings reflect: -- The credit quality of the underlying pool, which has a weighted average FICO score of 717.17 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. Ratings Assigned Capital Auto Receivables Asset Trust 2008-2 Class Rating Type Interest rate Amount ----- ------ ---- ------------- ------ A-1* A-1+ Senior Fixed $285,000,000 A-2a AAA Senior Fixed $100,000,000 A-2b AAA Senior Floating $400,000,000 A-3a AAA Senior Fixed $320,000,000 A-3b AAA Senior Floating $200,000,000 A-4 AAA Senior Fixed $187,002,000 B** A Sub Fixed $51,448,000 C** BBB Sub Fixed $23,746,000 D** BB Sub Fixed $7,915,000 * The class A-1 notes were 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. Sub -- Subordinate. CDC COMMERCIAL: Moody's Holds B3 Rating on $3.187MM Class P Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of 13 classes of CDC Commercial Mortgage Trust 2002-FX1, Commercial Mortgage Pass-Through Certificates, Series 2002-FX1 as: -- Class A-1, $98,742,740, Fixed, affirmed at Aaa -- Class A-2, $304,897,000, Fixed, affirmed at Aaa -- Class X-CL, Notional, affirmed at Aaa -- Class X-CP, Notional, affirmed at Aaa -- Class B, $25,499,000, Fixed, affirmed at Aaa -- Class C, $9,562,000, Fixed, affirmed at Aaa -- Class D, $20,719,000, Fixed, affirmed at Aaa -- Class E, $7,968,000, Fixed, affirmed at Aaa -- Class F, $7,969,000, Fixed, upgraded to Aaa from Aa2 -- Class G, $12,750,000, WAC, upgraded to Aa2 from A1 -- Class H, $9,562,000, WAC, upgraded to A1 from A3 -- Class J, $14,344,000, Fixed, upgraded to Baa2 from Baa3 -- Class K, $12,749,000, Fixed, affirmed at Ba2 -- Class L, $6,375,000, Fixed, affirmed at Ba3 -- Class M, $4,781,000, Fixed, affirmed at B1 -- Class N, $3,985,000, Fixed, affirmed at B2 -- Class P, $3,187,000, Fixed, affirmed at B3 Moodys is upgrading classes F, G, H and J due to a significant increase in the percentage of defeased loans as well as increased credit support. As of the April 17, 2008 distribution date, the transaction's aggregate balance has decreased by approximately 12.6% to $557.4 million from $637.5 million at securitization. The Certificates are collateralized by 50 mortgage loans ranging in size from less than 1.0% to 14.8% of the pool, with the top ten loans representing 63.9% of the pool. Nineteen loans, representing 60.1% of the pool, have defeased and are collateralized by U.S. Government securities. Two loans have been liquidated from the pool resulting in a realized loss of approximately $838,000. There are no loans in special servicing and eleven loans, representing 10.1% of the pool, are on the master servicer's watchlist. Moody's was provided with full year 2006 operating results for 99.6% of the performing loans and full- or partial- year 2007 operating results for 99.6% of the performing loans. Moody's loan to value ratio is 84.7%, compared to 84.3% at last review and compared to 82.3% at securitization. The top three non-defeased loans represent 19.0% of the pool. The largest loan is the Seattle Supermall Loan ($58.3 million - 10.5%), which is secured by a 935,000 square foot retail center located in Auburn, Washington. The property is 95.5% occupied, compared to 89.0% at securitization. Major tenants include Sam's Club (16.5% GLA; lease expiration May 2019), Burlington Coat Factory (9.2% GLA; lease expiration January 2011) and Gart Sports (8.1% GLA; lease expiration January 2011). Moody's LTV is 75.7%, compared 76.2% at last review and 82.4% at securitization. The second largest loan is the Marriott Islandia Loan ($25.5 million - 4.6%), which is secured by a 278-room full service hotel located in Islandia (Suffolk County), New York. Performance has declined since securitization. Full-year 2007 financials indicate that RevPAR was $91.10, compared to $92.90 at last review and $107.00 at securitization. The loan has amortized by approximately 9.6% since securitization. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is 103.5%, compared to 89.3% at last review and 73.8% at securitization. The third largest loan is the Grand Avenue Loan ($22.0 million -- 4.0%) which is secured by a 100,240 square foot strip retail center located on Grand Avenue in a mixed-use neighborhood in Queens, NY. The center is anchored by a Stop and Shop (47.8% of the GLA; lease expiring 2022), and twelve in-line tenants. As of January 2008, the property was 89.7% occupied, compared to 95.7% at last review and compared to 100% at securitization. Moody's LTV is 86.5%, compared to 84.8% at last review and compared to 87.5% at securitization. The increase in LTV can be attributed to the recent jump in the vacancy rate and an increase in operating expenses. CENTERSTAGING MUSICAL: Seeks to Hire Lewis Landau as Counsel ------------------------------------------------------------ CenterStaging Musical Productions, Inc. asks the U.S. Bankruptcy Court for the Central District of California for authority to employ Lewis R. Landau as its general bankruptcy counsel. The Debtor says that the general bankruptcy counsel's services are required to represent the Debtor as a debtor-in-possession in fulfilling its duties under sections 1106 and 1107 of the U.S. Bankruptcy Code. The general bankruptcy counsel's services will include all legal services required to assist the Debtor in fulfilling its duties, including all contested matters but excluding corporate, tax and securities-related services. The Debtor states that, to the best of its knowledge, Mr. Landau is a disinterested person as that term is defined under Section 101(14) of the U.S. Bankruptcy Code, and has no interest adverse to the Debtor, its creditors or the estate. Mr. Landau's hourly rate is $400 per hour. His paralegal support Linda Landau bills at $140 per hour. Mr. Landau charges for third-party cost reimbursement and not for office expenses. The Debtor has paid Mr. Landau $5,000 on Feb. 5, 2008, to commence legal services. The source of this payment was the Debtor's operations. On March 5, 2008, the Debtor paid Mr. Landau an additional $25,000 for chapter 11 legal services plus an additional $10,000 that Mr. Landau immediately transferred to Biggs & Co. for accounting services. The direct source of the second payment was the Debtor, bu the liquidity for such payment was a concurrent $115,000 loan by Bridgepointe Master Fund, LLC to the Debtor. Mr. Landau fully earned $30,000 in fees and costs prior to the filing of the petition, which amount was applied from the retainer deposit. Mr. Landau has waived any excess amount due from the Debtor for pre-petition work and is not a creditor of the Debtor. Headquartered in Burbank, California, CenterStaging Musical Productions, Inc. -- http://www.centerstaging.com/-- is a rehearsal and production services company that provides production support for most of the live television award shows like the Academy Awards and the Grammy Awards. The company also is a production-support provider for TV shows such as "The Late Show With David Letterman," "The Tonight Show With Jay Leno" and "Late Night With Conan O'Brien." The company filed for Chapter 11 protection on March 10, 2008 (Bankr. C.D. Calif. Case No. 08- 13019). Lewis R. Landau, Esq., in Calabasas, California, represents the Debtor. CENTERSTAGING MUSICAL: Can Employ Biggs & Co. as Accountant ----------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California granted CenterStaging Musical Productions, Inc. permission to employ Biggs & Co. as accountant. The Debtor said it requires the services of certified public accountants experienced in bankruptcy to prepare and file federal and state tax returns, prepare bankruptcy estate accounting incident, among other functions. Biggs & Co. attests that it does not represent or hold any interest adverse to the Debtor or its estates, and that the firm is a "disinterested person" as such term is defined in Section 101(14) of the bankruptcy code. It is contemplated that Biggs will seek compensation based upon its normal usual hourly billing rates. Rate Schedule Samuel R. Biggs, Partner Regular Work $350.00 Depositions and Court Testimony $400 Charles E. Kunz, Partner Regular Work $275.00 Depositions and Court Testimony $400 John E. Sullivan, Partner Regular Work $275.00 Depositions and Court Testimony $365 Samuel Okstad, Partner $250 Erin Rose, Manager $175 Lisa Nuzzi, Manager $175 Manager/Supervisor Accountants $150.00-225.00 Senior and Junior Accountants $95-150.00 Paraprofessionals $50-100.00 There has been no written or oral agreement of employment and/or compensation between Biggs and Debtor. However, Biggs received a pre-petition retainer of $10,000 of which $1,295 was applied toward fees earned in assisting the Debtor with its bankruptcy filing. The $8,705 balance of unearned fess will be held in Biggs' client trust account as a security deposit toward fees approved and allowed to be paid subject to approval of the court. Headquartered in Burbank, California, CenterStaging Musical Productions, Inc. -- http://www.centerstaging.com/-- is a rehearsal and production services company that provides production support for most of the live television award shows like the Academy Awards and the Grammy Awards. The company also is a production-support provider for TV shows such as "The Late Show With David Letterman," "The Tonight Show With Jay Leno" and "Late Night With Conan O'Brien." The company filed for Chapter 11 protection on March 10, 2008 (Bankr. C.D. Calif. Case No. 08- 13019). Lewis R. Landau, Esq., in Calabasas, California, represents the Debtor. CENTERSTAGING MUSICAL: U.S. Trustee Forms Three-Member Committee ---------------------------------------------------------------- The United States Trustee for Region 16 named three creditors as members of the Official Committee of Unsecured Creditors in CenterStaging Musical Productions, Inc.'s chapter 11 case filed with the U.S. Bankruptcy Court for the Central District of California. The three committee members are: 1. Jeffrey Sumpter c/o Stonefield Josephson, Inc. 2049 Century Park East, #400 Los Angeles, CA 90067-9467 Phone: (3100 453 9400 Fax: (310) 453-1187 2. Stanley J. Andrade c/o Andrade Architects, Inc. 2880 S. Coast Highway Laguna Beach, CA 92651 Phone: (949) 715 7474 Fax: (949) 715-7475 3. Robert Philpot 16030 Ventura Blvd. #380 Encino, CA 91436 Phone: (818) 905-9500 Fax: (818) 905-6823 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About CenterStaging Musical Headquartered in Burbank, California, CenterStaging Musical Productions, Inc. -- http://www.centerstaging.com/-- is a rehearsal and production services company that provides production support for most of the live television award shows like the Academy Awards and the Grammy Awards. The company also is a production-support provider for TV shows such as "The Late Show With David Letterman," "The Tonight Show With Jay Leno" and "Late Night With Conan O'Brien." The company filed for Chapter 11 protection on March 10, 2008 (Bankr. C.D. Calif. Case No. 08- 13019). Lewis R. Landau, Esq., in Calabasas, California, represents the Debtor. CHESAPEAKE CORP: Obtains $250MM Replacement Facility from GECC -------------------------------------------------------------- Chesapeake Corp. disclosed in its financial report for the first quarter of 2008 that on May 2, 2008, the company entered into a commitment letter with GE Commercial Finance Limited and General Electric Capital Corporation to act as the lead arranger and underwriter to provide a $250 million senior secured credit facility to refinance outstanding borrowings under the company's 2004 senior revolving credit facility. The 2004 senior revolving credit facility, as amended, matures in February 2009. The company can borrow up to $250 million under the 2004 Credit Facility. Amounts available under the 2004 Credit Facility are limited by the amount currently borrowed and the amounts of outstanding letters of credit. The Credit Facility is collateralized by a pledge of the inventory, receivables, intangible assets and other assets of Chesapeake Corporation and certain U.S. subsidiaries, and is guaranteed by Chesapeake Corporation, each material U.S. subsidiary and each United Kingdom subsidiary borrower, although most U.K. subsidiary borrowers only guarantee borrowings made by U.K. subsidiaries. Obligations of our U.K. subsidiary borrowers under the Credit Facility are collateralized by a pledge of the stock of our material U.K. subsidiaries. On March 5, 2008, the company obtained agreement from a majority of the lenders under the 2004 senior revolving credit facility to amend the facility. The amendment affects financial maintenance covenants in all four quarters of fiscal 2008, providing an increase in the total leverage ratios and a decrease in the interest coverage ratios. In addition, interest rates were increased to 450 basis points over LIBOR and basket limitations were imposed for acquisitions, dispositions and other indebtedness, among other changes. The amendment also stipulated that in the event that the senior revolving credit facility was not fully refinanced prior to March 31, 2008, the company would provide a security interest in substantially all tangible assets of its European subsidiaries. Activities are currently underway by the lenders under the senior revolving credit facility to obtain security interests in certain of the company's assets, primarily in the U.K. and Ireland. The company was in compliance with all of its debt covenants as of the end of the first quarter of fiscal 2008. However, based on current projections the company may not be in compliance with the financial covenants under the senior revolving credit facility at the end of the second quarter of fiscal 2008. The company expects to avoid compliance issues with these financial covenants by improving cash flows, reducing outstanding indebtedness, replacing or amending the senior revolving credit facility or obtaining waivers from the lenders, but there can be no assurance that these alternatives will be successfully implemented. Failure to comply with the financial covenants would be an event of default under the senior revolving credit facility. If such an event of default were to occur, the lenders under the senior revolving credit facility could require immediate payment of all amounts outstanding under the facility and terminate their commitments to lend under the facility. Pursuant to cross-default provisions in many of the instruments that govern the company's other outstanding indebtedness, immediate payment of much of the other outstanding indebtedness could be required, all of which would have a material adverse effect on the business, results of operations and financial condition. Outstanding borrowings under the Credit Facility as of March 30, 2008 totaled $185.2 million. $250-Mil. GECC Replacement Loan The Company and its U.K. subsidiary, Chesapeake plc, entered into a commitment letter with the GE Entities on May 2, 2008. The Facility will consists of a U.K. credit facility in an aggregate amount up to $235 million and a U.S. credit facility in an aggregate amount up to $15 million. The GE Credit Facilities will refinance and replace the Company's Credit Facility which matures in February 2009. The GE Credit Facilities are expected to include revolving credit and term loans secured, in the case of the U.K. credit facility, by substantially all of the assets of Chesapeake plc and its material operating subsidiaries in the U.K. and the Republic of Ireland and in addition certain assets of its material operating subsidiaries in Europe and, in the case of the U.S. credit facility, certain assets of the Company and substantially all of the assets of certain of its material U.S. operating subsidiaries. The commitment letter is subject to a number of conditions that must be satisfied before the GE Credit Facilities documents are finalized and the lenders' commitment is funded. While the Company anticipates it will close on the refinancing before the end of June 2008, there can be no assurances that such closing will occur. The company believes that the current Credit Facility and the GE Credit Facilities will give it adequate financial resources to support the company's anticipated long-term and short-term capital needs and commitments. If the Company is unable to refinance the Credit Facility by February 2009, all amounts outstanding under the Credit Facility will become payable and, pursuant to cross-default provisions in many of the instruments that govern the company's other outstanding indebtedness, immediate payment of much of its other outstanding indebtedness could be required, all of which would have a material adverse effect on its business, results of operations and financial condition. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:CSK) -- http://www.cskcorp.com/-- is a supplier of specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. Chesapeake has 47 locations in France, Ireland, United Kingdom, North America, China, HongKong, among others and employs approximately 5,500 people. For the quarter ended March 30, 1008, the company reported $1,225,100,000 in total assets and $948,100,000 in total liabilities. CHESAPEAKE CORP: In Talks to Amend U.K. Pension Recovery Plan ------------------------------------------------------------- Chesapeake Corp. disclosed in its most recent quarterly report that one of the company's U.K. subsidiaries is party to a recovery plan for its U.K. pension plan. The subsidiary is required to make annual cash contributions to the U.K. Pension Plan in July of each year of at least GBP6 million above otherwise required levels to achieve a funding level of 100 percent by July 2014. The company has received the April 2008 valuation of the U.K. Pension Plan's assets and liabilities prepared by the actuarial advisors for the U.K. Pension Plan's Trustee, which included the actuary's calculation of the additional supplementary contribution due under the current Recovery Plan in July 2008 to achieve 90 percent funding. The actuary's report indicates a total plan funding shortfall (under the terms of the plan on an ongoing basis) of approximately GBP58.9 million as of April 5, 2008. A funding shortfall of that amount will result, under the terms of the current Recovery Plan, in a July 2008 supplementary contribution to the U.K. Pension Plan of GBP35.6 million (including the scheduled annual supplementary payment of GBP6 million). In the joint letter to the U.K. Pensions Regulator, management of the company's U.K. subsidiary stated its concern that the July 2008 additional supplementary contribution under the Recovery Plan could exceed its then-current estimate of GBP21 million (including the scheduled annual supplementary payment of GBP6 million), which it might be unable to pay without breaching certain financial covenants in the company's Credit Facility or likely to be included in any refinancing thereof, and that any such breach would trigger cross-defaults under substantially all of the company's other debt. The Trustee for the U.K. Pension Plan stated in the letter, among other things, that it was committed to working with the subsidiary to secure funding for the plan in accordance with the statutory funding objective, while recognizing that maintaining a financially healthy employer is in the best interests of the U.K. Pension Plan. The Trustee acknowledged to the U.K. Pensions Regulator that the subsidiary will find it difficult to make any significant cash payment under the Recovery Plan currently, or in the near future. Amendments to Recovery Plan Eyed The company negotiated with the Trustee regarding possible amendments to the Recovery Plan which will modify the obligations with respect to the requirement in the Recovery Plan for additional supplementary contributions to achieve 90 percent funding as at April 5, 2008, and still comply with statutory requirements. In the course of those negotiations, the company confirmed to the Trustee that its U.K. subsidiary will be unable to pay the now-determined July 2008 additional supplementary contribution of GBP29.6 million (the excess over the July 2008 annual payment of GBp6 million) under the current Recovery Plan without breaching certain financial covenants in our existing senior revolving credit facility or likely to be included in any refinancing thereof, and that any such breach would trigger cross- defaults under substantially all of the company's other debt. The company also noted that failure to pay amounts due under the current Recovery Plan could ultimately result in a winding-up of the U.K. Pension Plan, triggering a payment required by statute calculated on a "buy out" basis (estimated to be GBP159.3 million as of April 2008). All of the above would have a material adverse effect on the company's business, results of operations and financial condition. The company has reached preliminary agreement with the Trustee on the principles of amendments to the Recovery Plan which will reduce the supplemental payment due on or before July 15, 2008 to GBP6 million, and provide additional assurance of, and security for, our future funding of the plan. The company believes the amounts payable under the proposed amended recovery plan can be paid without the Company breaching relevant financial covenants. The company and the Trustee are in the process of finalizing the terms of the Amended Recovery Plan and will seek any appropriate approvals required for the Amended Recovery Plan. While there can be no assurance that the Recovery Plan will be amended and approved, the company expects to finalize the Amended Recovery Plan prior to the July 15, 2008 payment date. Credit Facility The company is a party to a $250 million credit facility, as amended, which matures in February 2009. Outstanding borrowings under the Credit Facility as of March 30, 2008, totaled $185.2 million. The company was in compliance with all of its debt covenants as of the end of the first quarter of fiscal 2008. However, based on current projections the company may not be in compliance with the financial covenants under the senior revolving credit facility at the end of the second quarter of fiscal 2008. On May 2, 2008, the company entered into a commitment letter with GE Commercial Finance Limited and General Electric Capital Corporation to act as the lead arranger and underwriter to provide a $250 million senior secured credit facility to refinance outstanding borrowings under the company's 2004 senior revolving credit facility that matures in February 2009. While the Company anticipates it will close on the refinancing before the end of June 2008, there can be no assurances that such closing will occur. About Chesapeake Corporation Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:CSK) -- http://www.cskcorp.com/-- is a supplier of specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. Chesapeake has 47 locations in France, Ireland, United Kingdom, North America, China, HongKong, among others and employs approximately 5,500 people. For the quarter ended March 30, 1008, the company reported $1,225,100,000 in total assets and $948,100,000 in total liabilities. CHRYSLER LLC: Reaches Tentative Settlements with CAW Officials -------------------------------------------------------------- The Canadian Auto Workers union reached tentative settlements with both General Motors Corp. and Chrysler LLC that meet the pattern established with Ford Motor Co. The CAW represents close to 13,000 GM workers and 8,000 Chrysler workers in Canada. As reported in the Troubled Company Reporter on May 7, 2008, for the first time in its history, Ford Motor Company of Canada, Limited reached a collective bargaining agreement with CAW more than four months before the current contract expires. Ford employees represented by the CAW ratified the new deal in a vote held May 4, 2008. The early settlement brings stability to Ford's operations as it prepares to launch the new Ford Flex crossover vehicle at the Oakville Assembly Complex, which also builds the Ford Edge and Lincoln MKX. Ford disclosed plans to add 500 positions to increase production at the Oakville plant due to high demand for the Ford Edge and Lincoln MKX, and to prepare for the start of production of the Ford Flex. According to a CAW press statement, both settlements were unanimously endorsed by the CAW/GM and CAW/Chrysler Master Bargaining committees, respectively and later overwhelmingly supported by local union leadership. The three-year agreements resist two-tier wages and provide productivity and quality bonuses, improved restructuring incentives, benefit improvements, COLA increases in both second and third years and improved language on health and safety issues among other gains. The union negotiated new product commitments for both Oshawa car and St. Catharines facilities as well as a strong close-out agreement for members at the GM Windsor Transmission plant. During bargaining the company announced that the Windsor plant will close in 2010. The union also extended the operating life of the Chrysler Casting plant in Etobicoke, Ontario, at least until 2011. The tentative settlements are subject to ratification by CAW members. Ratification meetings will be held at various GM and Chrysler locations on Friday, May 16 and Saturday, May 17, 2008. CAW media advisories will be issued after the ratification votes are counted at each company providing details of the results. Ratification meeting dates, times and locations are: * CAW General Motors units -- Friday, May 16 1) Local 1973 Ciociaro Club, Salons A,B,C 3745 N. Talbot Road Windsor, ON 9:00am 2) Local 199 Brock University Bob Davis Gym 500 Glenridge Ave St. Catharines, ON 12:00 noon 3) Local 222 General Motors Centre 99 Athol Street E., Oshawa, ON 3:00pm -- Saturday, May 17 1) Local 636 Local 636 Union Hall 126 Beale Street Woodstock, ON 9:30am * CAW Chrysler units -- Saturday, May 17 1) Local 195 CAW Local 195 Hall 3400 Somme Avenue Windsor, ON 7:00am, 1:00pm, 3:00pm 2) Local 1459 SCA Oplenac 895 Rangeview Road Mississauga, ON (S. of Lakeshore, between Cawthra & Dixie) 8:00am 3) Local 1498 CAW Local 444 union hall 1855 Turner Road Windsor, ON 10:00am 4) Local 1285 International Centre, Hall #1 6900 Airport Road (Airport & Derry Road) Mississauga, ON 10:30am 5) Local 444 University of Windsor 401 Sunset Avenue St. Denis Hall Windsor, ON 2:00pm About Ford Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. About Chrysler Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on May 9, 2008, Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has also downgraded the senior secured bank facilities, including senior secured first-lien bank loan to 'BB/RR1' from 'BB+/RR1'; and senior secured second-lien bank loan to 'CCC+/RR6' from 'BB+/RR1'. The recovery rating on the second lien was also downgraded from 'BB+/RR1' to 'CCC+/RR6' based on lower asset value assumptions and associated recoveries in the event of a stress scenario. CIMAREX ENERGY: S&P Lifts Credit Rating to BB with Stable Outlook ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior unsecured ratings on Cimarex Energy Co. to 'BB' from 'BB-'. S&P maintained the recovery rating on the senior unsecured notes of '3', indicating the likelihood of meaningful (50%-70%) recovery in the event of a payment default. The outlook is stable. Cimarex had $487 million debt outstanding as of March 31, 2008. "The upgrade reflects Cimarex's commitment to a fairly conservative financial policy and, in particular, very low debt leverage to offset its exposure to commodity price swings," said Standard & Poor's credit analyst Paul Harvey. "In addition, Cimarex has successfully integrated its 2005 acquisition of Magnum Hunter Resources, a concern that weighed on ratings. Given the very favorable outlook for hydrocarbon prices over the next 12 months, and increasing production, Cimarex should continue to generate above-average financial measures for its rating." Mr. Harvey also said, "We could raise the ratings if Cimarex can maintain its strong financial measures while improving its business profile. We could lower the ratings if Cimarex pursues a more aggressive financial policy and debt leverage exceeds 3.0x to 3.5x debt to EBITDA, considerately more than current levels." CITIGROUP COMMERCIAL: Moody's Affirms Ba1 Rating on Class L Certs. ------------------------------------------------------------------ Moody's Investors Service upgraded one class and affirmed three classes of Citigroup Commercial Mortgage Trust 2004-FL1, Commercial Mortgage Pass-Through Certificates, Series 2004-FL1 as: -- Class K, $5,380,894, Floating, upgraded to A1 from Baa1 -- Class L, $3,069,602, Floating, affirmed at Ba1 -- Class X-2GMAC, Notional, affirmed at Aaa -- Class X-3GMAC-MULTI, Notional, affirmed at Aaa Moody's is upgrading one class based on increased credit support due to loan payoffs. The Certificates are collateralized by two loans. As of the April 15, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 98.6% to $8.5 million from $613.8 million at securitization as a result of the payoff of 33 loans originally in the pool. Jamestown Mall ($5.3 million -- 62.9%) is secured by a regional mall containing 1.0 million square feet (308,000 square feet is collateral) located in Florissant, Missouri, approximately 15 miles north of St. Louis. The mall is anchored by Sears, Macy's, and a J.C. Penney Outlet. In-line occupancy is approximately 40% compared to total occupancy of 73.2% at securitization. The loan is currently in special servicing. The mall, which was managed by General Growth Properties at last review, is now managed by Jones Lang LaSalle. The borrower has exercised the second of its two one-year extension options and the loan matures June 1, 2008. Moody's current underlying rating is Ba1 compared to Baa1 at last review and securitization. Hensley Distribution Center ($3.1 million -- 37.1%) is secured by a 125,000 square foot warehouse property located in Tempe, Arizona. The property is currently 100% vacant. The tenant who occupied the entire property, Hensley & Co. was a wholesaler for Anheuser-Busch and vacated the property in March 2008 upon their lease expiration. The borrower has exercised the second of its two one-year extension options and the loan matures Jan. 1, 2009. The senior loan exposure is $25 per square foot. The property is currently being marketed for sale by CB Richard Ellis with three potential buyers. Moody's current underlying rating is Aa2 compared to Baa3 at last review and securitization. CITIGROUP COMMERCIAL: Moody's Cuts Rating to Caa1 on Class O Cert. ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of three classes and affirmed the ratings of 23 classes of Citigroup Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2006-C5 as: -- Class A-1, $49,981,330, affirmed at Aaa -- Class A-2, $236,789,000, affirmed at Aaa -- Class A-3, $93,821,000, affirmed at Aaa -- Class A-SB, $92,770,000, affirmed at Aaa -- Class A-4, $774,252,000, affirmed at Aaa -- Class A-1A, $227,907,476, affirmed at Aaa -- Class A-M, $212,378,000, affirmed at Aaa -- Class A-J, $172,556,000, affirmed at Aaa -- Class XC, Notional, affirmed at Aaa -- Class XP, Notional, affirmed at Aaa -- Class B, $42,476,000, affirmed at Aa2 -- Class C, $21,237,000, affirmed at Aa3 -- Class D, $26,548,000, affirmed at A2 -- Class E, $29,201,000, affirmed at A3 -- Class F, $26,548,000, affirmed at Baa1 -- Class G, $21,237,000, affirmed at Baa2 -- Class H, $21,238,000, affirmed at Baa3 -- Class J, $7,964,000, affirmed at Ba1 -- Class K, $7,964,000, affirmed at Ba2 -- Class L, $7,964,000, affirmed at Ba3 -- Class M, $2,655,000, downgraded to B2 from B1 -- Class N, $7,964,000, downgraded to B3 from B2 -- Class O, $2,655,000, downgraded to Caa1 from B3 -- Class AMP-1, $40,000,000, affirmed at Baa1 -- Class AMP-2, $48,000,000, affirmed at Baa2 -- Class AMP-3, $27,000,000, affirmed at Baa3 Moody's is downgrading Classes M, N and O due to an overall decline in pool performance, LTV dispersion and projected losses from specially serviced loans. As of the April 17, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 0.5% to $2.23 billion from $2.24 billion at securitization. The Certificates are collateralized by 208 loans ranging in size from less than 1.0% to 5.8% of the pool with the top 10 loans representing 35.1% of the pool. The pool includes two loans (9.3% of the pool) with underlying ratings. The trust has not realized any losses since securitization. Currently there are five loans, representing 1.7% of the pool, in special servicing. Moody's has estimated a total loss of $9.4 million among these five loans. Thirty-nine loans, representing 11.9% of the pool, are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Moody's was provided with year-end 2006 or year-end 2007, and partial year 2007 operating results for 76.8% and 16.2% of the pool, respectively. Moody's weighted average loan to value ratio for the conduit component is 107.0% compared to 104.4% at securitization. According to Moody's analysis, 17.8% of the conduit pool has a LTV in excess of 120.0% compared to 6.7% at securitization. The largest loan with an underlying rating is the Tower 67 Loan ($100.0 million -- 4.7%), which is secured by a 449-unit high-rise multifamily tower built in 1986, located in the Upper West Side neighborhood of New York, NY. The property was 95.0% occupied as of December 2007 compared to 97.1% as of July 2006. Both rents and expenses at the property have increased since securitization. Moody's current underlying rating is A3, the same as at securitization. The second largest loan with an underlying rating is the Ala Moana Portfolio Loan ($96.0 million -- 4.5%), which is secured by a 2.0 million square foot regional mall and office component. Located in Honolulu, HI, the mall is dominant within its trade area and is considered the world's largest open-air shopping center. The property recently underwent an expansion to include a 200,000 square foot Nordstrom department store as well as 100,000 square feet of additional retail space. The upside potential from the expansion space, which opened for operation during 1Q2008, was accounted for at securitization. Moody's current underlying rating is A3, the same as at securitization. The top three conduit loans represent 14.8% of the outstanding pool balance. The largest conduit loan is the IRET Portfolio Loan ($122.6 million -- 5.8%), which is secured by nine crossed- collateralized and cross-defaulted office properties located in Nebraska (4), Missouri (2), Minnesota (2), and Kansas (1). The properties were built between 1982 and 2001 and total 936,720 square feet. Major tenants at the properties include Applied Underwriters (Berkshire Hathaway), Unigraphics Solutions, Hewlett Packard, and Wachovia Insurance Services. The portfolio occupancy was 94.1% as of January 2008 compared to 95.7% at securitization. Moody's LTV is 110.2%, the same as at securitization. The second largest conduit loan is the 801 South Figueroa Street Loan ($120.0 million -- 5.7%), which is secured by a 443,271 square foot Class A office building located in the Los Angeles CBD. As of February 2008, the largest tenant (Federal Chubb Insurance, 25.5% NRA) has vacated their space and thus far, the borrower has released approximately 25% of that space. The property benefits from a strong location in a competitive market, and will likely not sustain below-market occupancy. Moody's LTV is 144.4%, compared to 131.6% at securitization. The third largest conduit loan is the NNN WellPoint Operations Center Loan ($70.0 million -- 3.3%), which is secured by a 562,000 square foot Class A office building built in 2000, located in downtown Indianapolis. The property is 100% leased to WellPoint, Inc. (senior unsecured Baa1) through July 2015 with one, five-year extension option. The loan matures July 2011. Moody's LTV is 98.5%, the same as at securitization. CLEAR CHANNEL: Inks Settlement Agreement with CC Media and Lenders ------------------------------------------------------------------ Clear Channel Communications, Inc., entities sponsored by Bain Capital Partners, LLC and Thomas H. Lee Partners, L.P., and a bank syndicate consisting of Citigroup Inc., Deutsche Bank AG, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland PLC and Wachovia Corp., have entered into a settlement agreement in connection with the lawsuits previously filed in the Supreme Court of the State of New York and the State Court in Bexar County, Texas. Pursuant to the terms of the settlement agreement, the parties have agreed to enter into a third amendment to the merger agreement. Under the terms of the amended merger agreement, as disclosed in the Troubled Company Reporter on May 14, 2008, Clear Channel shareholders will receive $36.00 in cash for each share they own. As an alternative to receiving the $36.00 per share cash consideration, Clear Channel's shareholders will again be offered the opportunity on a purely voluntary basis to exchange some or all of their shares of Clear Channel common stock on a one-for-one basis for shares of Class A common stock in CC Media Holdings, Inc., the new corporation sponsored by the private equity group to acquire Clear Channel. In limited circumstances, shareholders electing to receive some or all cash consideration, on a pro rata basis, will be issued shares of CC Media Holdings Class A common stock in exchange for some of their shares of Clear Channel stock, up to a cap of $1.00 per share. Shareholders who elected to receive the stock consideration prior to the special meeting of shareholders held Sept. 25, 2007, will have their shares of Clear Channel stock returned to them and will be required to make a new election prior to the new special shareholders' meeting. While the merger is expected to close by the end of the third quarter 2008 pending shareholder approval, the parties to the settlement agreement have agreed to extend the outside date for completion of the merger to Dec. 31, 2008. As part of the settlement agreement, the banks in the syndicate supporting the transaction have entered into fully-negotiated and documented definitive agreements to provide long-term financing to Clear Channel. The banks, the private equity investors, Clear Channel, certain shareholders, and Bank of New York (serving as escrow agent) have entered into an Escrow Agreement pursuant to which the private equity investors and the banks have agreed to fund into escrow the total amount of their respective equity and debt obligations, in a combination of cash and letters of credit, within ten and seven business days, respectively. Certain shareholders also have agreed to deposit into escrow securities of Clear Channel that these parties have agreed to exchange for Class A common stock of CC Media Holdings. Following deposit of funds and other property into escrow, each party to the merger related litigation pending in New York and Texas will file all papers necessary to terminate the litigation, with prejudice. The board of directors of Clear Channel has unanimously approved the amended merger agreement and recommends that the shareholders approve the amended merger agreement and the merger. The board of directors of Clear Channel makes no recommendation with respect to the voluntary stock election or the Class A common stock of the new corporation. The total number of Clear Channel shares that may elect to receive shares in the new corporation will make up 30% of the new corporation's equity and is expected to be roughly 30 million. These shares would have a total value of about $1.1 billion (at the $36.00 per share cash consideration) and represent approximately 30% of the outstanding capital stock of the new corporation immediately following the closing of the merger. The terms of the merger agreement, as amended, provide that no shareholder will be allocated more than 11,111,112 shares representing an estimated 11% of the outstanding capital stock of the new corporation immediately following the closing of the merger. If Clear Channel shareholders elect to receive more than the allocated number of shares of the Class A common stock of the new corporation, then the shares will be allocated to shareholders who elect to receive them on a pro-rata basis. Those Clear Channel shareholders electing to receive shares of the new corporation will receive $36.00 per share for any such Clear Channel shares that are not exchanged in this manner. The election process will occur in connection with the shareholder vote on the merger, and will be described fully in an updated proxy statement and prospectus that will be mailed to Clear Channel shareholders. The merger agreement, as amended, which will require shareholder approval, includes provisions limiting the fees payable to the private equity group in the transaction, and requiring that the board of directors of the new corporation at all times include at least two independent directors. The shares of CC Media Holdings to be issued to Clear Channel shareholders who elect to receive them in exchange for their existing shares will be registered with the Securities and Exchange Commission, but will not be listed on any national exchange. Goldman Sachs & Co. served as financial advisor to Clear Channel on the transaction, and Akin Gump Strauss Hauer & Feld LLP served as legal advisor to the company. "We are very pleased to have reached this accord with our sponsors and the banks funding the transaction," Mark P. Mays, the Chief Executive Officer of Clear Channel, said. "This revised agreement is a win for our shareholders because it provides them with substantial value and certainty while avoiding the delay and inherent risks associated with complex litigation. Our shareholders will receive a significant premium over recent stock price levels and can elect to continue to participate in our future upside. Importantly, this agreement greatly increases the certainty that the merger will close because all debt and equity funds will be deposited in escrow until the transaction closes. "Clear Channel's business prospects will be enhanced further through an improved capital structure that includes a lower debt load. We appreciate greatly the support of our shareholders as well as the loyalty and hard work of our dedicated employees over these many months. We are eager to begin working with THL and Bain Capital, the stellar team that will help us to fulfill our considerable promise." "We have been extremely pleased by our partnership with the Clear Channel management team. We believe this agreement, and the definitive long-term financing package the banks have agreed to provide, offers clarity and confidence to Clear Channel's customers, employees and partners," John P. Connaughton, a Managing Director at Bain Capital, stated. "We look forward to supporting the continued global market leadership, growth and success of the most innovative company in the radio broadcasting and out-of-home media space." "We are pleased to arrive at this resolution which enables us to complete the acquisition of Clear Channel," Scott M. Sperling, Co- President of THL Partners, said. "We appreciate that the banks have provided the company with the robust, long-term financing that will allow Clear Channel to achieve its outstanding operational and growth potential. We would like to thank all of the stakeholders who worked to achieve this positive outcome, and we are looking forward to working closely with our investment partners and with the entire Clear Channel leadership team to execute on our plans to grow the company to its full potential." A representative of the bank group, Chad Leat, Chairman of the Alternative Asset Group at Citi, said: "The Banks are very pleased to have reached a constructive resolution of the matter. We look forward to an expeditious closing of the revised transaction and want to express our appreciation to all those who contributed to the solution. We look forward to participating with our partners in Clear Channel's continued success." In connection with its support of a settlement, Highfields Capital Management LP, which manages funds that beneficially own 7.7% of Clear Channel's common stock, extended its Voting Agreement with entities sponsored by the private equity group. Under the Agreement, Highfields has agreed to vote in favor of the transaction and to retain up to $400 million in equity of CC Media Holdings. Additionally, the Agreement includes provisions assuring public shareholders who elect to receive stock in the surviving entity that they will receive equal treatment to the private equity investors in dividends and other distributions, representation on the Board of Directors of the surviving entity and have certain other rights following completion of the merger. "As the largest shareholder in Clear Channel, we saw an opportunity to bring all parties together to remove the risk and uncertainty of litigation and we are glad that a constructive and mutually beneficial business solution could be reached, Jonathon S. Jacobson, Senior Managing Director of Highfields, said. "We fully support this revised transaction." "Clear Channel can now accelerate the initiatives it has underway to capitalize on the strength of its assets and drive profitability," Richard L. Grubman, Senior Managing Director of Highfields, added. "We look forward to continuing to play a meaningful role in ensuring the company is positioned to create substantial long-term value." Clear Channel will set a record date, time and place for a new special meeting of shareholders after filing an updated joint proxy statement or prospectus with the Securities and Exchange Commission. Shareholders with questions about the merger or how to vote their shares should call Clear Channel's proxy solicitor, Innisfree M&A Incorporated, toll-free at (877) 456-3427. A full-text copy of the Amended Agreement and Plan of Merger is available for free at http://ResearchArchives.com/t/s?2c08 About Clear Channel Based in San Antonio, Texas, Clear Channel Communications Inc. (NYSE:CCU) -- http://www.clearchannel.com/-- is a media and entertainment company specializing in "gone from home" entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio, television and outdoor displays. Outside U.S., the company operates in 11 countries -- Norway, Denmark, the United Kingdom, Singapore, China, the Czech Republic, Switzerland, the Netherlands, Australia, Mexico and New Zealand. As of Dec. 31, 2007, it owned 717 core radio stations, 288 non-core radio stations which are being marketed for sale and a leading national radio network operating in the United States. * * * In March 2008, Standard & Poor's Ratings Services said its ratings on Clear Channel Communications Inc., including the 'B+' corporate credit rating, remain on CreditWatch with negative implications. Fitch Ratings stated that in line with previous guidance, Clear Channel Communications' 'BB-' Issuer Default Rating and Senior Unsecured Ratings would remain in place if the going-private transaction is not completed. Moody's stated that assuming the transaction is completed as currently contemplated, Clear Channel will likely be assigned a Corporate Family Rating of B2 and the rating on the existing senior notes is likely to be notched down to Caa1 based on their expected subordination to the new senior secured debt facilities and the new senior notes. CLFX CORP: Full Payment of Debt Cues Moody's to Withdraw Ratings ---------------------------------------------------------------- Moody's Investors Service has withdrawn all of its ratings on CLFX Corporation. The ratings withdrawal follows the payment in full of all outstanding senior secured bank debt under the credit agreement dated as of May 30, 2003, which was terminated. Ratings withdrawn: -- B1 corporate family rating -- B1 probability of default rating -- Ba3 senior secured term loans -- Ba3 senior secured revolver CLFX Corporation, based in Richmond, Virginia, is a global manufacturer of flow control products used in oil & gas, power generation, marine and a variety of other applications. COMM 2007-FL14: Stable Performance Cues Moody's to Hold Ratings --------------------------------------------------------------- Moody's Investors Service upgraded three classes, downgraded three classes and affirmed twenty-two classes of COMM 2007-FL14 as: -- Class A, $330,532,177, Floating, affirmed at Aaa -- Class A-J, $430,456,000, Floating, affirmed at Aaa -- Class B, $49,015,965, Floating, affirmed at Aa1 -- Class C, $40,366,403, Floating, affirmed at Aa2 -- Class D, $34,599,850, Floating, affirmed at Aa3 -- Class E, $34,599,850, Floating, affirmed at A1 -- Class F, $34,599,850, Floating, affirmed at A2 -- Class G, $11,533,105, Floating, affirmed at A3 -- Class H, $11,533,105, Floating, affirmed at Baa1 -- Class J, $7,208,324, Floating, affirmed at Baa2 -- Class K, $10,092,069, Floating, affirmed at Baa3 -- Class GBL1, $15,317,178, Floating, affirmed at Baa2 -- Class GBL2, $20,103,796, Floating, affirmed at Baa3 -- Class GBL4, $12,445,207, Floating, affirmed at Ba1 -- Class PG1, $4,000,000, Floating, affirmed at Baa1 -- Class PG2, $6,000,000, Floating, affirmed at Baa2 -- Class PG3, $6,000,000, Floating, affirmed at Baa3 -- Class PG4, $5,400,000, Floating, affirmed at Ba1 -- Class AOA1, $12,000,000, Floating, downgraded to Ba2 from Baa2 -- Class AOA2, $11,000,000, Floating, downgraded to Ba3 from Baa3 -- Class AOA4, $15,000,000, Floating, downgraded to B2 from Ba2 -- Class PH1, $4,444,000, Floating, affirmed at Baa1 -- Class PH2, $4,000,000, Floating, affirmed at Baa2 -- Class PH3, $5,000,000, Floating, affirmed at Baa3 -- Class CA1, $964,900, Floating, upgraded to A2 from Baa2 -- Class CA2, $578,940, Floating, upgraded to A3 from Baa3 -- Class CA3, $385,960, Floating, upgraded to Baa1 from Ba1 -- Class SA1, $7,906,125, Floating, affirmed at Baa3 Moody's is affirming the above pooled classes due to overall stable or improving property performances of the collateralized assets associated with the pooled certificates. Moody's is upgrading the rake classes backed by the CarrAmerica Portfolio due to improved property performances and the release of one asset. Moody's is downgrading the rake classes backed by 1330 Avenue of the Americas due to sponsorship concerns as well as a slowdown in market leasing. The pooled Certificates are collateralized by eleven senior mortgage loan participations. As of the April 15, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 53.6% to $1.2 billion from $2.5 billion at securitization. The significant reduction in the aggregate balance is primarily caused by the April 2008 repayment of the Macklowe EOP Manhattan Portfolio Loan (53.2% of the original pooled trust balance). The repayment was made on a modified pro rata basis. The largest remaining loan, MSREF/Glenborough Portfolio ($343.7 million -- 34.6% of the pooled trust balance) is secured by sixteen office or mixed use properties located in five states and totaling approximately 2.8 million square feet. Four properties that represented 3.7% of the allocated loan balance at securitization have been released at no premium. In aggregate, net cash flow for the remaining assets has increased 5.7% from 2006 to 2007. Moody's pooled loan to value ratio is 62.3%, up slightly from securitization. Moody's current underlying rating is A3, the same as securitization. Additionally, there are junior trust loans secured by the portfolio which are the rake classes GBL1, GBL2, GBL3 and GBL4. Moody's current rating for GBL1, GBL2 and GBL4 are Baa2, Baa3 and Ba1, the same as securitization. Moody's does not rate rake bond GBL3. The 1330 Avenue of the Americas Loan ($187.0 million -- 18.8% of the pooled trust balance) is secured by a 446,250 square foot, Class A office building located on Sixth Avenue within Midtown Manhattan. The sponsor of the loan is Macklowe Properties. Due to the anticipated departure of the largest tenant Covington & Burling (128,575 square feet or 28.8% of the net rentable area) combined with additional tenant departures, the property's vacancy rate has increased from 9.7% at securitization to 37.4%. Net cash flow has decreased 26.1% from 2006 to 2007. Due to the current business and legal issues facing the sponsor and a slowdown in market leasing, Moody's is lowering the underlying rating of the loan from A3 at securitization to Baa3. Moody's pooled LTV has increased from 61.3% at securitization to 67.1%. Additionally, there are junior trust loans secured by the property which are the rake classes AOA1, AOA2, AOA3 and AOA4. Moody's is downgrading the rating for AOA1, AOA2 and AOA4 from Baa2 to Ba2, Baa3 to Ba3 and Ba2 to B2, respectively. Moody's does not rate rake bond AOA3. The Poughkeepsie Galleria Loan ($121.1 million -- 12.2% of the pooled trust balance) is secured by a 1.2 million square foot regional mall located Poughkeepsie, New York. The mall is anchored by J.C. Penney, Macy's, Sears, and Target and includes a 16 screen stadium style movie cinema. The sponsor of the loan is the Pyramid Companies. Net cash flow has experienced a slight decrease of 1.7% 2006 to 2007. Moody's current underlying rating is A3, the same as securitization. Moody's pooled LTV is 60.6%. Additionally, there are junior trust loans secured by the property which are the rake classes PG1, PG2, PG3 and PG4. Moody's current rating for PG1, PG2, PG3 and PG4 are Baa1, Baa2, Baa3 and Ba1, the same as securitization. The Trizec Portfolio Mortgage Loan ($89.3 million -- 9.0% of the pooled trust balance) is a pari passu participation in a $600.0 million whole loan. The cross-collateralized and cross- defaulted mortgages consist of land and improvements on 22 separate office buildings totaling 7.9 million square feet. The properties are located in the following five metropolitan areas: Los Angeles, California (10 properties -- 3.2 million square feet); San Diego, California (3 properties -- 1.4 square feet); Jersey City, New Jersey (1 property -- 1.1 million square feet); Washington D.C. (6 properties -- 1.4 million square feet); and Houston, Texas (2 properties -- 0.8 million square feet). The loan sponsors are Brookfield Properties Corporation and Blackstone Real Estate Partners, L.L.P. Moody's pooled LTV is 39.8%, the same as securitization. Moody's current underlying rating is Aaa, the same as at securitization. The San Francisco Parc 55 loan ($67.6 million -- 6.8% of the pooled trust balance) is secured by a 1,009-key, full service hotel in San Francisco's theatre district near Union Square and the Moscone Convention Center. In 2007, a $20.4 million ($20,218 per key) room and meeting facility renovation occurred. Despite the renovation interruptions, RevPAR and net cash flow increased 7.3% and 4.6%, respectively from 2006 to 2007. Moody's current underlying rating is A3, the same as securitization. Moody's pooled LTV is 52.6%. Additionally, there are junior trust loans secured by the property which are the rake classes PH1, PH2, and PH3. Moody's current rating for PH1, PH2, and PH3 are Baa1, Baa2, Baa3, the same as securitization. The Sheraton Austin loan ($29.6 million -- 3.0% of the pooled trust balance) is secured by a 365-key, full service hotel in Downtown Austin, Texas. The hotel was re-flagged as a Sheraton in 2007, departing from the Marriott brand affiliation. In addition the property is in the processes of a $16.6 million ($45,517 per key renovation). Moody's current underlying rating is A2, the same as securitization. Moody's pooled LTV is 51.6%. Additionally, there is a junior trust loan secured by the asset which is the rake class SA1. Moody's current rating for SA1 is Baa3, the same as securitization. The CarrAmerica Portfolio Loan ($11.6 million -- 1.2% of the pooled trust balance) is secured by two office buildings known as the Fairchild Research Center with 131,561 square feet located in Mountain View, California, and an office/R&D complex known as Sunnyvale Tech Center with 166,250 square feet located in Sunnyvale, California. A third property, Highland Corporate Park, has been released from the security of the loan resulting in a 61.4% decrease in the outstanding loan balance. Fairchild Research Center is 100% leased to Nokia through June, 2009. Sunnyvale Tech Center was 87.4% leased, as of Dec., 2007, compared to 75.3% at securitization. Moody's underlying rating for the pooled balance is A1, compared to Baa1 at securitization. The LTV for the pooled balance is 56.4%, compared to 61.4% at securitization. The trust debt is a 50% pari passu interest. Additionally, there are junior trust loans secured by the portfolio which are the rake classes CA1, CA2, and CA3. Moody's is upgrading the rating for CA1, CA2 and CA3 from Baa2 to A2, Baa3 to A3 and Ba1 to Baa1, respectively. CONTINENTAL AIR: Sets Alliance with UAL After Failed Merger ----------------------------------------------------------- United Airlines and Continental Airlines Inc. are holding talks to form an alliance that would set pricing and schedules, Mary Schlangenstein and John Hughes of Bloomberg News says. The alliance discussions went underway shortly after the failed merger talks between the two airlines, Bloomberg said. An alliance with U.S. antitrust immunity to collaborate on fares would provide most of the benefits of a merger, at the same time avoiding regulatory challenges as well as the need to combine workforces, Bloomberg notes. "Antitrust immunity is a kind of quasi-merger," James M. Higgins, analyst at Soleil Securities Corp., told Bloomberg. "It doesn't put you through the actual integration, which is where the cost savings ultimately can come, but which is also risky, especially now." "As we've said over the last few weeks, we are examining our alliance relationships as we think it's important that we be a major player in one of the three major global airline alliances," Bloomberg quotes Mary Clark, a spokeswoman for Continental, as saying. The alliance talks are reportedly separate from United's merger talks with US Airways. Continental Says "No" to Merger As reported by the Troubled Company Reporter on April 28, 2008, Continental Airlines Inc.'s Chairman and CEO Larry Kellner and President Jeff Smisek disclosed to more than 45,000 employees that the company's Board of Directors unanimously supported the management's recommendation that, in the current industry environment, the best course for Continental is not to merge with another airline at this time. According to the two executives, the Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a standalone basis. The management will, however, continue to review potential alliances and its membership in SkyTeam. Continental is considering alternatives to SkyTeam as its carefully evaluates which major global alliance will be best for Continental over the long term. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 24, 2008, Standard & Poor's Ratings Services said that its ratings and outlook on UAL Corp., parent of United Air Lines Inc. (both rated B/Negative/--) are not affected by UAL's report of a heavy first-quarter loss. UAL reported a first-quarter $542 million pretax loss, as much higher fuel prices more than offset increased revenues. S&P had revised its rating outlook on both entities to negative from stable on April 16, 2008. In that outlook revision, S&P cited very high fuel prices and the expected effect on UAL revenues of a weak U.S. economy. About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * As reported in the Troubled Company Reporter on April 22, 2008, Standard & Poor's Ratings Services revised its rating outlook on Continental Airlines Inc. (B/Negative/B-3) to negative from stable. S&P also placed its ratings on selected enhanced equipment trust certificates that are secured by regional jets on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. COUNTRY-WIDE INSURANCE: A.M. Best Lifts IC Rating to bb- from b --------------------------------------------------------------- A.M. Best Co. has upgraded the financial strength rating to B- (Fair) from C++(Marginal) and issuer credit rating to "bb-" from "b" of Country-Wide Insurance Company. The outlook for both ratings is stable. The upgrades reflect Country-Wide's strengthened risk-adjusted capitalization, improved operating performance and extensive local market expertise in the downstate New York automobile marketplace. Recent operating profitability has been attributed to management's focus on core underwriting results and improved internal controls. Specific corrective actions included stringent underwriting, improved rate adequacy and enhanced claim controls. Underwriting performance further benefited from management's increased emphasis on reserve adequacy and technology advancements. Offsetting factors include Country-Wide's elevated gross underwriting leverage measures and dependence on reinsurance for surplus relief as measured by its reinsurance recoverable balance and high ceded reinsurance leverage ratio. Also, unfavorable loss reserve development trends in prior years dampened underwriting results and severely weakened risk-adjusted capitalization. Country-Wide's business concentration exposes earnings to changes in the regulatory and legislative environment as well as competitive market pressures. CSFB MORTGAGE: Moody's Holds Junked Ratings on Two Cert. Classes ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of five classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1997-C2 as: -- Class A-X, Notional, affirmed at Aaa -- Class D, $38,533,712, affirmed at Aaa -- Class E, $25,655,000, affirmed at Aaa -- Class H, $29,320,000, affirmed at Caa2 -- Class I, $14,660,000, affirmed at C Although the performance of the pool has declined, Moody's is affirming the investment grade ratings due to the build up in credit support from loan payoffs and amortization. Despite the increase in credit support, Moody's is affirming the below investment grade ratings due to concerns over potential future losses. As of the May 17, 2008 distribution date, the transaction's aggregate principal balance has decreased by approximately 86.5% to $197.6 million from $1.5 billion at securitization. The Certificates are collateralized by 49 mortgage loans ranging in size from less than 1.0% to 9.7% of the pool, with the top 10 non- defeased loans representing 52.4% of the pool. The pool includes a credit tenant lease component which represents 43.5% of the pool. Four loans, representing 14.1% of the pool, have defeased and are secured with U.S. Government securities. Twenty-one loans have been liquidated from the pool resulting in aggregate realized losses of approximately $39.4 million. Currently two loans, representing 8.2% of the pool, are in special servicing. Moody's has not projected any losses from the specially serviced loans. Nine loans, representing 20.0% of the pool, are on the master servicer's watchlist. Four of the watchlisted loans, representing 8.5% of the pool, are on the watchlist because the respective borrowers were not able to refinance their loans on their ARD date. The servicer has enforced cash management agreements for each of these loans pursuant to the loan documents and the loans are being monitored by the special servicer. Moody's was provided with full and partial year 2007 operating results for 89.0% and 100.0% of the pool's performing conduit loans, respectively. Moody's weighted average loan to value ratio is 86.2% compared to 75.1% at Moody's last full review in June 2006 and 84.6% at securitization. The top three non-defeased loans represent 22.6% of the outstanding pool balance. The largest loan is the 78 Corporate Center Loan ($19.1 million -- 9.7%), which is secured by a 176,700 square foot office building located in Bedminister Township, New Jersey. The property is 100.0% leased to Verizon Wireless (Moody's senior unsecured rating for parent, Verizon Communications, Inc., is A3; stable outlook) through November 2021. The loan benefits from a hyper-amortization schedule and has amortized 40.1% since securitization. The loan matures in May 2014. Moody's LTV is 64.5% compared to 73.5% at last review. The second largest loan is the Kendig Square Shopping Center Loan ($13.3 million -- 6.7%), which is secured by a 260,200 square foot retail center located in West Lampeter Township (Lancaster County), Pennsylvania. Major tenants include K-Mart, Eckerd and Dollar Tree. The loan matures in November 2011. Moody's LTV is 74.3% compared to 76.9% at last review. The third largest loan is the Bannockburn Executive Plaza Loan ($9.2 million -- 4.7%), which is secured by a 132,000 square foot office building located approximately 30 miles north of Chicago in Bannockburn, Illinois. The property was 92.0% leased as of December 2007. The loan is on the watchlist due to the upcoming lease expirations of four tenants which occupy approximately 38.0% of the premises. Although the property's performance has improved since last review, Moody's analysis incorporates a downward adjustment to reflect the expected decline in occupancy due to lease expirations. The loan matures in November 2012. Moody's LTV is 85.6% compared to 66.9% at last review. The CTL component is secured by 35 properties leased to 9 tenants under bondable triple net leases. The largest exposures include CVS Corporation (Moody's senior unsecured rating Baa2, stable outlook; 30.3% of the CTL component), Kmart Corporation (Moody's senior unsecured rating of parent, Sears Holdings Company, is Ba1; stable outlook; 25.4%) and Cobbs Theaters (11.0%). CRYOCATH TECHNOLOGIES: March 31 Balance Sheet Upside-Down by $6MM ----------------------------------------------------------------- CryoCath(R) Technologies Inc.'s balance sheet at March 31, 2008, showed total assets of $36.8 million and total liabilities of $43.2 million, resulting in a total shareholders' deficit of roughly $6.4 million. CryoCath's net loss for the second quarter ended March 31, 2008, is $6.1 million compared with a net loss of $6.0 million in the second quarter of fiscal 2007. Working Capital was $8.6 million at March 31, 2008, a decrease of $4 million from the working capital at Dec. 31, 2007 of $12.6 million, and a decrease of $9.4 million from the working capital of $18.0 million at Sept. 30, 2007. The company's cash, cash equivalents and short-term investments totaled $10.5 million a decrease of $3.1 million and $13.5 million over the $13.6 million at Dec. 31, 2007, and the $24.0 million at Sept. 30, 2007. The company, as of March 31, 2008, had access to approximately $15.9 million in cash and borrowing facilities as compared to $19.4 million at the end of December 2007. About CryoCath Technologies Inc. Headquartered in Quebec, Canada, CryoCath Technologies Inc. (TSE:CYT) -- http://www.cryocath.com/-- is a medical technology company engaged in creating minimally invasive, catheter cryotherapy products to treat cardiovascular diseases. The Company\u2019s range of catheter and probe designs for the treatment of achyarrhythmia includes focal catheters (Freezor, Freezor Xtra and Freezor MAX) and balloon catheter (Arctic Front) CryoAblation products. Freezor, Freezor Xtra and Freezor MAX catheters are deflectable and torquable, incorporating three electrocardiogram rings and a temperature sensor at the tip for temperature monitoring and control. Arctic Front is a balloon catheter that has been developed and designed to create lesions near or in the ostea (openings) of the pulmonary veins to treat AF. CSFB MANUFACTURED: S&P Cuts Rating on Class B-1 Certificates to B+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on four classes of certificates issued from CSFB Manufactured Housing Pass-Through Certificates series 2001-MH29 and 2002-MH3 and removed them from CreditWatch with negative implications. At the same time, S&P affirmed the ratings on the class A and M-1 certificates from the same transactions. The lowered ratings reflect higher-than-expected cumulative net losses and the deterioration of credit enhancement caused by the weak performance trends associated with the underlying pool of manufactured housing contracts originated by CIT Group/Sales Financing Inc. As of the April 2008 distribution date, CSFB 2001-MH29 had experienced current cumulative net losses of 10.41%, with 77 months of performance and a pool factor of 40.08%. CSFB 2002-MH3 had experienced current cumulative net losses of 8.22%, with 72 months of performance and a pool factor of 46.25%. As a result of the higher-than-expected losses, overcollateralization for CSFB 2001-MH29 has been reduced to 1.34% of the initial collateral balance, which is below the required level of 4%, and overcollateralization for CSFB 2002-MH3 has been reduced to 1.58% of the initial collateral balance, which is below the required level of 7%. S&P believe that because of the higher-than-expected cumulative net losses, the remaining credit support is no longer sufficient to maintain the previous ratings on the class M-2 and B-1 certificates. Standard & Poor's will continue to monitor these transactions to determine whether further rating actions are warranted. Ratings Lowered and Removed from Creditwatch Negative CSFB Manufactured Housing Pass-Through Certificates Rating ------ Series Class To From ------ ----- -- ---- 2001-MH29 M-2 A- A/Watch Neg 2001-MH29 B-1 B+ BBB/Watch Neg 2002-MH3 M-2 A- A/Watch Neg 2002-MH3 B-1 B+ BBB/Watch Neg Ratings Affirmed CSFB Manufactured Housing Pass-Through Certificates Series Class Rating ------ ----- ------ 2001-MH29 A AAA 2001-MH29 M-1 AA 2002-MH3 A AAA 2002-MH3 M-1 AA CSMC TRUST: S&P Junks Ratings on Seven Cert. Classes ---------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on all nine classes of mortgage-backed pass-through certificates issued by CSMC Mortgage-Backed Trust Series 2006-4. Concurrently, S&P placed its 'AAA' ratings on 23 classes on CreditWatch with negative implications. The lowered ratings reflect our opinion that, given S&P's lifetime projected losses, projected credit support for the affected classes is insufficient to support the ratings at their previous levels. Standard & Poor's notes that there are two structures in the transaction, but in this press release S&P address only the structure containing Alternative-A collateral. To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends for changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. As of the April 25, 2008, distribution date, severe delinquencies were approximately 13.9% of the current pool balance. Cumulative realized losses for this transaction are 0.40% of the original pool balance. Class D-B-9 took a $675,796 write-down in the last pay period, which prompted us to downgrade this class to 'D'. This delinquency and loss trend, together with loan-level risk characteristics and continuing deterioration in the macroeconomic outlook, has enabled us to arrive at S&P's lifetime projected losses. S&P believe its consideration of expected lifetime losses has become appropriate as the depth and duration of the housing downturn continues to increase. In reviewing this transaction, S&P employed the surveillance assumptions announced on Jan. 15, 2008, and described in "U.S. RMBS Surveillance, CDO Of ABS Assumptions Revised Amid Defaults, Negative Housing Outlook," published on RatingsDirect. Consequently, S&P have placed all its 'AAA' ratings on CreditWatch with negative implications and lowered our ratings on all other certificates from this transaction. Subordination is the primary source of credit support for this transaction. The underlying collateral for this series consists of fixed-rate U.S. Alt-A mortgage loans that are secured by first liens on one- to four-family residential properties. Ratings Lowered CSMC Mortgage-Backed Trust Series 2006-4 Mortgage-backed pass-through certificates Rating ------ Class To From ----- -- ---- D-B-1 B AA- D-B-2 CCC A D-B-3 CC A- D-B-4 CC BBB+ D-B-5 CC BBB D-B-6 CC BBB- D-B-7 CC BB+ D-B-8 CC BB- D-B-9 D B- Ratings Placed on Creditwatch Negative CSMC Mortgage-Backed Trust Series 2006-4 Mortgage-backed pass-through certificates Rating ------ Class To From ----- -- ---- 1-A-1 AAA/Watch Neg AAA 1-A-2 AAA/Watch Neg AAA 1-A-3 AAA/Watch Neg AAA 1-A-4 AAA/Watch Neg AAA 1-A-5 AAA/Watch Neg AAA 1-A-6 AAA/Watch Neg AAA 1-A-7 AAA/Watch Neg AAA 1-A-8 AAA/Watch Neg AAA 1-A-9 AAA/Watch Neg AAA 1-A-10 AAA/Watch Neg AAA 1-A-11 AAA/Watch Neg AAA 1-A-12 AAA/Watch Neg AAA 1-A-13 AAA/Watch Neg AAA 2-A-1 AAA/Watch Neg AAA 3-A-1 AAA/Watch Neg AAA 3-A-2 AAA/Watch Neg AAA 4-A-1 AAA/Watch Neg AAA 8-A-1 AAA/Watch Neg AAA 9-A-1 AAA/Watch Neg AAA 10-A-1 AAA/Watch Neg AAA 10-A-2 AAA/Watch Neg AAA D-X AAA/Watch Neg AAA D-P AAA/Watch Neg AAA CY ORIENTAL: Gets Consent from Lender to File Records Until May 31 ------------------------------------------------------------------ CY Oriental Holdings Ltd. obtained consents from Maple Trade Finance Inc., the company's trade finance lender, to extend filing of the company's audited financial statements until May 30, 2008. The company is also in the process of obtaining a similar consent from its bank lender, HSBC, pursuant to the terms of the company's lending facilities with these two lenders. The company disclosed that it is necessary delay the filing to provide additional time to gather and review documentation relating to the company's purchase and sales transactions. The company related that if necessary, it will request additional consents from these lenders to further extend the filing of the company's audited financial statements to June 2008. The company expects that the review will be completed in June 2008 and expects that the audited year end financial statements will be filed by June 30, 2008. If the company fail to file the audited year end financial statements by June 30, 2008, the Canadian Securities Regulators may impose a cease trade order on all trading of the company's shares until the financial statements are filed. Also, the company's interim financial statements for the first quarter period ended March 31, 2008, are expected to be filed after the audited year end financial statement are filed and therefore, such interim financial statements will not be filed by May 30, 2008. Additionally, the company disclosed that the company's insiders are barred from trading CY Oriental shares until the company's audited financial statements for the fiscal year ended Dec. 31, 2007, are filed, pursuant to the terms of the management cease trade order issued by the British Columbia Securities Commission. About CY Oriental Holdings Ltd. CY Oriental Holdings Ltd. -- http://www.cyoriental.com/-- (TSX-V: CYO) is a Canadian incorporated, China-based manufacturer and value-added supplier of apparel and fashion products to leading international brands and retailers, including department stores. CY Oriental owns and operates a manufacturing facility in Shanghai, China and in the city of Tengzhou, China. The company's ready-made products include quality garments, including woven casual wear, woven formal wear, casual jeanswear and sports outerwear. EINSTEIN NOAH: Inks Interest Rate Swap Deal with Wells Fargo ------------------------------------------------------------ Einstein Noah Restaurant Group, Inc., entered into an interest rate swap with Wells Fargo Foothills, pursuant to an International Swaps and Derivatives Association Master Agreement in customary form. The company entered into the interest rate swap transaction to mitigate the company's floating rate interest risk on $60 million of its total outstanding debt under our amended credit facility dated as of June 28, 2007. The interest rate swap has an effective date of Aug. 28, 2008, and a termination date of Aug. 28, 2010. The company is required to make certain fixed rate payments to the Bank calculated on an initial notional amount of $60 million, in exchange for receiving floating payments based on a LIBOR rate for the same initial $60 million notional amount. The interest rate swap transaction effectively fixes the annual interest rate payable on $60 million of the company's total outstanding debt at 3.52% plus an applicable margin. Notwithstanding the terms of the interest rate swap transaction, the company is ultimately obligated for all amounts due and payable under the credit facility. The company may enter into additional swap transactions in the future from time to time. Headquartered in Lakewood, Colo., Einstein Noah Restaurant Group Inc. (Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a a retail chain of quick casual restaurants in the United States, specializing in foods for breakfast and lunch. The company operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bage(R) brand. The company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. At April 1, 2008, the company's consolidated balance sheet showed $154.1 million in total assets and $183.2 million in total liabilities, resulting in a $29.1 million total stockholders' deficit. ENCAP GOLF: Taps Cole Schotz as Bankruptcy Counsel -------------------------------------------------- EnCap Golf Holdings LLC and NJM Capital LLC ask the Hon. Novalyn L. Winfield of the United States Bankruptcy Court for the District of New Jersey for authority to employ Cole, Schotz, Meisel, Forman & Leonard, P.A., as their bankruptcy counsel. Cole Schotz is expected to: a) advise the Debtors of their rights, powers, and duties as debtors-in-possession in continuing to operate and manage their assets; b) advise the Debtors concerning, and assisting in the negotiation of and documentation of, the use of cash collateral and post-petition financing, debt restructuring and related transactions; c) review the nature and validity of agreements relating to the Debtors' business and property and advise the Debtors in connection therewith; d) review the nature and validity of liens, if any, asserted against the Debtors and advise as to the enforceability of such liens; e) advise the Debtors concerning the actions the Debtors might take to collect and recover property for the benefit of their estates; f) prepare on the Debtors' behalf all necessary and appropriate applications, motions, pleadings, orders, notices, petitions, schedules, and other documents, and review all financial and other reports to be filed in the Debtors' Chapter 11 cases; g) advise the Debtors concerning, and preparing responses to, applications, motions, pleadings, notices, and other papers which may be filed in the Debtors' Chapter 11 cases; h) counsel the Debtors in connection with formulation, negotiation and promulgation of a plan of reorganization and related documents; and i) perform all other legal services for and on behalf of the Debtors which may be necessary or appropriate in the administration of their Chapter 11 cases. As of the Debtors' bankruptcy filing, the firm has a $500 retainer and will hold that cash for legal services to be performed during these Chapter 11 cases. The firm's professionals current rates are: Designations Hourly Rates ------------ ------------ Members $380-$625 Associates $240-$325 Paralegals $145-$215 Michael D. Sirota, Esq., shareholders of the firm, assures the Court that the firm does not hold any adverse interest in the Debtors' estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Mr. Sirota can be reached at: Michael D. Sirota, Esq. Shareholders Cole, Schotz, Meisel, Forman & Leonard, P.A. Court Plaza North, 22 Main Street P.O. Box 800 Hackensack, New Jersey 07602-0800 Tel: (201) 489-3000 Fax: (201) 489-1536 http://www.coleschotz.com/ Headquartered in East Rutherford, New Jersey, EnCap Golf Holdings, LLC, a subsidiary of Cherokee Investment Partners of North Carolina, develops closed landfills and other brownfield properties into golf courses. The company and its affiliate, NJM Capital LLC, filed for Chapter 11 protection on May 8, 2008 (Bankr. D. N.J. Lead Case No.08-18581). When the Debtors filed for protection against their creditors, they listed asset and debts between $100 million and $500 million. ENERGY PARTNERS: Posts $2.3 Million Net Loss in 2008 First Quarter ------------------------------------------------------------------ Energy Partners Ltd. reported last week financial and operational results for the first quarter ended March 31, 2008. For the first quarter of 2008, the company reported net income of $2.3 million, compared to net income for the first quarter of 2007 of $3.7 million. Revenue for the first quarter of 2008 was $97.5 million, compared with first quarter 2007 revenues of $108.5 million. Discretionary cash flow, which is cash flow from operating activities before changes in working capital and exploration expenses, was $55.4 million versus $71.2 million in the first quarter last year. Cash flow from operating activities in the first quarter of 2008 was $62.4 million compared with $113.8 million in the same quarter a year ago. The first quarter of 2007 benefited from higher production volumes, some from properties that have since been sold, and the settlement of insurance claims related to Hurricanes Katrina and Rita. The first quarter of 2008 benefited from strong commodity prices, including record oil prices, and a pre-tax gain on the sale of two non-operated Western area properties totaling $7.1 million. These benefits were reduced by the previously announced dryhole cost of $18.2 million for an exploratory well in South Timbalier 46 and a pre-tax loss on derivative instruments of $8.3 million, of which $3.1 million was a pre-tax non-cash unrealized loss. Lease operating expenses and depreciation, depletion, and amortization were lower than the same period a year ago due mainly to the sale of substantially all of the company's onshore south Louisiana assets in June 2007 and lower production volumes. Additionally, general and administrative expenses substantially decreased in the first quarter of 2008 due to lower personnel costs and the absence of financial and legal advisory costs related to the exploration of strategic alternatives and self tender offer fees present in the first quarter of 2007. Production for the first quarter of 2008 averaged 15,799 barrels of oil equivalent (Boe) per day, versus 25,982 Boe per day in the first quarter of 2007. First quarter 2008 production volumes were down compared to the first quarter of 2007 primarily due to natural field declines, the sale of substantially all of the company's onshore south Louisiana properties in June of 2007 and minimal contributions from new production within the quarter. Natural gas production in the first quarter of 2008 averaged 56.2 million cubic feet (Mmcf) per day and oil production averaged 6,432 barrels per day. Price realizations, all of which are stated before the impact of derivative instruments, averaged $93.24 per barrel for oil and $8.38 per thousand cubic feet (Mcf) of natural gas in the first quarter of 2008, compared to $53.31 per barrel and $7.09 per Mcf in the first quarter of 2007. During the quarter, capital expenditures for exploration and development activities totaled $65.0 million. As of March 31, 2008, the company had cash on hand of $13.8 million and total debt of $474.5 million. This compares to the Dec. 31, 2007 cash balance of $8.9 million and total debt of $484.5 million. The company has completed its semi annual borrowing base redetermination and, as anticipated, the borrowing base has been set at $150.0 million, of which $25.0 million is currently drawn. Richard A. Bachmann, the company's chairman and chief executive officer, commented, "We are pleased we have made progress towards meeting our outlined goals this year. We were able to meet our production goal in the first quarter despite not yet having contribution from our deepwater Raton well. Our exploration drillwell performance is back in line with our historical success rate in the mid-seventy percent range, and our development drillwell program is off to a good start in South Timbalier 26 and is yielding better than expected results in East Bay. "I am also pleased to see our overall expenses are trending down as forecasted, and we are continuing the process to reduce our cash costs to better match our narrowed focus within our core Eastern and Central offshore areas." Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $815.7 million in total assets, $709.5 million in total liabilities, and $106.2 million in total stockholders' equity. 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?2bea About Energy Partners Founded in 1998, Energy Partners Ltd. (NYSE: EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company based in New Orleans, Louisiana. The company's operations are focused along the U.S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services said that ratings on Energy Partners Ltd. (B/Negative/--) would not be immediately affected by several recent developments. The company announced $100.0 million in noncash, pretax impairment charges, largely related to mechanical failures, early depletion, and production difficulties in fields located in its Western offshore area. Its leverage metrics have weakened year-over-year, with debt per proved barrel currently above $11 on an adjusted basis. And it has seen feeble drilling and reserve replacement results in 2007. As reported in the Troubled Company Reporter on March 3, 2008, Moody's Investors Service downgraded Energy Partners Ltd.'s Corporate Family Rating to Caa1 from B3, its Probability of Default to Caa1 from B3, and the ratings on its $300.0 million senior unsecured fixed rate notes and $150.0 million senior unsecured floating rate notes to Caa2 (LGD 4, 67%) from Caa1 (LGD 4, 65%). The downgrade reflects EPL's continued weak capital productivity, especially as evidenced by its 2007 results, negative sequential quarterly production trends, and continued high financial leverage. The rating outlook remains negative. EPICEPT CORP: Faces Nasdaq Delisting on Depressed Securities Value ------------------------------------------------------------------ EpiCept Corp. was notified by the Nasdaq Listing Qualifications Department that the Company has not regained compliance with the continued listing requirements of The Nasdaq Capital Market because the market value of the company's listed securities fell below $35,000,000 for ten consecutive trading days (pursuant to Rule 4310(c)(3)(B) of the Nasdaq Marketplace Rules). As a result, its securities are subject to delisting from The Nasdaq Capital Market. As reported in the Troubled Company Reporter on April 22, 2008, the company disclosed that the Nasdaq Listing Qualifications Department notified EpiCept on April 4, 2008 that it was not in compliance with the market value requirement. Pursuant to Nasdaq Marketplace Rule 4310(c)(8)(C), the company was provided a period of 30 calendar days, or until May 5, 2008, to regain compliance. The company intends to request a hearing before a Nasdaq Listing Qualifications Panel to review this determination. The company's securities will remain listed on The Nasdaq Capital Market pending the Panel's decision. The company expects the hearing to be held in approximately 30 to 45 days and the Panel's decision to be announced within 30 to 45 days after the hearing. In the event the company's securities are delisted from The Nasdaq Capital Market, the company's securities may also be eligible to trade on the over-the-counter market. Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) -- http://www.epicept.com/-- is a specialty pharmaceutical company focused on the development of pharmaceutical products for the treatment of cancer and pain. The company has a portfolio of five product candidates in active stages of development. It includes an oncology product candidate submitted for European registration, two oncology compounds, a pain product candidate for the treatment of peripheral neuropathies and another pain product candidate for the treatment of acute back pain. The two wholly owned subsidiaries of the company are Maxim, based in San Diego, California, and EpiCept GmbH, based in Munich, Germany, which are engaged in research and development activities. EpiCept Corp.'s consolidated balance sheet at Dec. 31, 2007, showed stockholders' deficit of $14.1 million, compared with a deficit of $9.3 million at Dec. 31, 2006. EPICEPT CORP: Amends Loan & Warrant Pacts with Hercules Technology ------------------------------------------------------------------ EpiCept Corp. amended its loan, warrant, and deposit control agreements with Hercules Technology Growth Capital, Inc. The company agreed with Hercules to maintain, subject to certain exceptions, a minimum cash balance of $500,000 in the company's bank accounts that are subject to the security interest maintained by Hercules under the loan agreement. The company amended the Hercules loan agreement to state that by May 19, 2008, the company shall deliver to Hercules a term sheet or commitment letter from a third party for a transaction on terms reasonably acceptable to Hercules which provide gross proceeds to the company of at least $10,000,000. By June 15, 2008, the company is required to have received at least $5,000,000 in proceeds from such transaction. By July 31, 2008, the company is required to have received the remainder of the proceeds. Additionally, the company is required to pay Hercules an amendment fee of $50,000. The company also amended the Hercules warrant so that the number of shares of the company's common stock issuable upon exercise of the warrant, or the warrant shares, would be equal to the quotient derived by dividing (a) $665,999 by (b) the exercise price. The exercise price was amended to be the lesser of (1) $1.46 and (2) the volume weighted average price for the 10 trading days immediately prior to May 7, 2008, or the current price, provided that if a subsequent eligible financing does not occur by June 30, 2008, the exercise price from and after June 30, 2008 shall be the lesser of (1) the current price and (2) the volume weighted average price for the 10 trading days immediately prior to June 30, 2008. If the company participates in a subsequent eligible financing by issuing any equity securities after May 7, 2008 and before June 30, 2008 in a transaction or series of transactions in which the company receives proceeds of at least $5,000,000, then at the option of Hercules, the warrant shares shall be of the type and series issued in the subsequent eligible financing and shall include all rights of a holder of such securities, including any warrants or rights to acquire other securities, and the exercise price shall be the price per share paid by the purchasers of the equity securities in subsequent eligible financing. A full-text copy of the First Amendment to the Loan and Security Agreement is available for free at http://ResearchArchives.com/t/s?2c01 A full-text copy of the Second Amendment to the Warrant Agreement is available for free at http://ResearchArchives.com/t/s?2c02 A full-text copy of the First Amendment to the Deposit Account Control Agreement is available for free at http://ResearchArchives.com/t/s?2c03 About EpiCept Corporation Based in Tarrytown, New York, EpiCept Corporation (NASDAQ:EPCT) -- http://www.epicept.com/-- is a specialty pharmaceutical company focused on the development of pharmaceutical products for the treatment of cancer and pain. The company has a portfolio of five product candidates in active stages of development. It includes an oncology product candidate submitted for European registration, two oncology compounds, a pain product candidate for the treatment of peripheral neuropathies and another pain product candidate for the treatment of acute back pain. The two wholly owned subsidiaries of the company are Maxim, based in San Diego, California, and EpiCept GmbH, based in Munich, Germany, which are engaged in research and development activities. EpiCept Corp.'s consolidated balance sheet at Dec. 31, 2007, showed stockholders' deficit of $14.1 million, compared with a deficit of $9.3 million at Dec. 31, 2006. FLEETWOOD ENTERPRISES: Sells Property to Finance Bond Redemption ---------------------------------------------------------------- Fleetwood Enterprises Inc. sold its property assets in order to pay off an upcoming bond redemption, The Wall Street Journal reports. The company's bondholders will redeem around $100 million in bonds on Dec. 15, 2008. Fleetwood needs to finance the redemption and consequently has sold off its headquarters in Riverside, California for $23.5 million, relates WSJ. Additionally, the company is currently surveying its assets for possible sales, WSJ says. Aside from asset sales, the company is contemplating on issuing shares of stock to pay those bonds. "[W]e are sure we can meet this requirement, though it sure could have happened at a better time," WSJ quotes company treasurer Lyle Larkin as saying. In its financial statements for the fourth quarter and fiscal year ended April 27, 2008, the company posted $370 million in revenues for the three months ended April 27, 2008, compared to $488 million in revenues during the same quarter of last year. According to WSJ, demand for recreational vehicles has fallen as home values have decreased. One key factor for this has been the surging prices of gasoline and fuel, says WSJ, citing Al Koch of turnaround experts firm AlixPartners. Based in Riverside, California, Fleetwood Enterprises Inc. -- http://www.fleetwood.com/-- through its subsidiaries, is one of North America's largest producers of recreational vehicles and manufactured homes. Fleetwood has approximately 9,000 associates working in facilities strategically located throughout the nation. FOOTSTAR INC: Board Intends to Liquidate Company by End of 2008 --------------------------------------------------------------- The board of directors of Footstar Inc. and its debtor-affiliates has decided to liquidate the group of companies by the end of 2008, Footwear News reports. Pursuant to a liquidation plan, the company will give out cash distributions to its shareholders coming from current cash and other proceeds from asset sales, and will submit a dissolution plan to the shareholders in 2009. As a prelude to the liquidation, the company will issue a $1 share distribution to interest holders on June 3, relates Footwear News. Based in West Nyack, New York, Footstar Inc. -- http://www.footstar.com/-- retails family and athletic footwear. As of August 28, 2004, the company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal- Mart and Shoe Zone stores. The company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their successful restructuring. When the Debtor filed for Chapter 11 protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. The Court confirmed the Debtors' Amended Joint Plan on Jan. 25, 2006. The Plan became effective on Feb. 7, 2005. GENERAL MOTORS: Reaches Tentative Settlements with CAW Officials ---------------------------------------------------------------- The Canadian Auto Workers union reached tentative settlements with both General Motors Corp. and Chrysler LLC that meet the pattern established with Ford Motor Co. The CAW represents close to 13,000 GM workers and 8,000 Chrysler workers in Canada. As reported in the Troubled Company Reporter on May 7, 2008, for the first time in its history, Ford Motor Company of Canada, Limited reached a collective bargaining agreement with CAW more than four months before the current contract expires. Ford employees represented by the CAW ratified the new deal in a vote held May 4, 2008. The early settlement brings stability to Ford's operations as it prepares to launch the new Ford Flex crossover vehicle at the Oakville Assembly Complex, which also builds the Ford Edge and Lincoln MKX. Ford disclosed plans to add 500 positions to increase production at the Oakville plant due to high demand for the Ford Edge and Lincoln MKX, and to prepare for the start of production of the Ford Flex. According to a CAW press statement, both settlements were unanimously endorsed by the CAW/GM and CAW/Chrysler Master Bargaining committees, respectively and later overwhelmingly supported by local union leadership. The three-year agreements resist two-tier wages and provide productivity and quality bonuses, improved restructuring incentives, benefit improvements, COLA increases in both second and third years and improved language on health and safety issues among other gains. The union negotiated new product commitments for both Oshawa car and St. Catharines facilities as well as a strong close-out agreement for members at the GM Windsor Transmission plant. During bargaining the company announced that the Windsor plant will close in 2010. The union also extended the operating life of the Chrysler Casting plant in Etobicoke, Ontario, at least until 2011. The tentative settlements are subject to ratification by CAW members. Ratification meetings will be held at various GM and Chrysler locations on Friday, May 16 and Saturday, May 17, 2008. CAW media advisories will be issued after the ratification votes are counted at each company providing details of the results. Ratification meeting dates, times and locations are: * CAW General Motors units -- Friday, May 16 1) Local 1973 Ciociaro Club, Salons A,B,C 3745 N. Talbot Road Windsor, ON 9:00am 2) Local 199 Brock University Bob Davis Gym 500 Glenridge Ave St. Catharines, ON 12:00 noon 3) Local 222 General Motors Centre 99 Athol Street E., Oshawa, ON 3:00pm -- Saturday, May 17 1) Local 636 Local 636 Union Hall 126 Beale Street Woodstock, ON 9:30am * CAW Chrysler units -- Saturday, May 17 1) Local 195 CAW Local 195 Hall 3400 Somme Avenue Windsor, ON 7:00am, 1:00pm, 3:00pm 2) Local 1459 SCA Oplenac 895 Rangeview Road Mississauga, ON (S. of Lakeshore, between Cawthra & Dixie) 8:00am 3) Local 1498 CAW Local 444 union hall 1855 Turner Road Windsor, ON 10:00am 4) Local 1285 International Centre, Hall #1 6900 Airport Road (Airport & Derry Road) Mississauga, ON 10:30am 5) Local 444 University of Windsor 401 Sunset Avenue St. Denis Hall Windsor, ON 2:00pm About Ford Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin American regions, including Argentina and Brazil. About Chrysler Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on 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. GENERAL MOTORS: CAW Balks at Announcement of Windsor Plant Closure ------------------------------------------------------------------ After General Motors Corp. disclosed that it will close its Windsor Transmission plant in 2010, eliminating 1,400 jobs, Canadian Auto Workers President Buzz Hargrove said he is both frustrated and angered by the news. "This decision came as an incredible shock," Mr. Hargrove said. "It will be devastating to our members, their families and the community of Windsor." The Windsor Transmission plant, which manufactures front-wheel- drive, automatic transmissions and transmission components, is the last of General Motors' operations in Windsor. The closure will mark the first time in decades that the company has not had a presence in the community. Mr. Hargrove said provincial politicians have expressed their concern, but he also blasted the federal government for having written off the auto industry, particularly Prime Minister Stephen Harper, Industry Minister Jim Prentice and Finance Minister Jim Flaherty. "Until the federal Conservative government addresses the issues of unfair trade, the ongoing loss of Big Three market share, the high dollar and provides new investment supports, there will be more layoffs and more plant closures," Mr. Hargrove said. The CAW is currently in negotiations with General Motors, with a final settlement depending largely on the company's commitment to new products as well as improved pensions and severance packages for the Windsor workforce. "Our members have done everything they possibly can to ensure the survival of the facility," plant chairperson Ken Bruner said. "It's up to our federal government to step in and support this industry and stop unfair trade before it's too late." Mr. Hargrove says that GM has an obligation to its Windsor Transmission plant workers, citing consistently high levels of quality and productivity. "You simply can't negotiate your way out of scarcity," Mr. Hargrove added. This news comes just weeks after GM announced it will drop the second production shift from the truck plant in Oshawa, Ontario, eliminating close to 1,000 jobs, as reported in the Troubled Company Reporter on April 30, 2008. 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. GREAT LAKES: A.M. Best Puts bb- IC Rating Under Positive Review --------------------------------------------------------------- A.M. Best Co. has placed the financial strength ratings of B- (Fair) and issuer credit rating of "bb-" of Great Lakes Casualty Insurance Company under review with positive implications. The under review status with positive implications reflects the effects on GLC's ratings of Main Street America Group's announcement that a definitive agreement to purchase GLC from its parent, Newco Financial Holdings, Inc., has been reached. The ratings will remain under review pending further discussions with the managements of GLC and MSA on GLC's future role within MSA, as well as the conclusion of the agreement. Prior to the conclusion of the agreement, A.M. Best will continue to monitor the unfolding situation and react as necessary. MSA's FSR of A(Excellent) and ICR of "a" are unchanged. HAWAIIAN AIRLINES: Settles Litigation Involving Mesa Air Group -------------------------------------------------------------- Hawaiian Airlines reached late in April a settlement of its lawsuit with Mesa Air Group, Inc., regarding Mesa's misuse of confidential and proprietary information obtained during Hawaiian's Chapter 11 plan of reorganization in 2004. Mesa runs inter-island flight services operated under the go! brand name. Under the terms of the settlement and without admitting any wrongdoing, Mesa will receive $37.5 million from a bond the Company previously posted with the United States Bankruptcy Court for the District of Hawaii. Hawaiian Airlines will be entitled to the remaining collateral of the Bond totaling $52.5 million. Mesa will withdraw its appeal of the $80 million judgment -- plus interest, attorney's fees and costs -- awarded against Mesa by the Bankruptcy Court in October 2007. The cash payment is required to be made within two business days of approval of a stipulation by the bankruptcy court that will follow dismissal of the appeals. The settlement does not restrict in any way go!'s ability to continue to offer services in the Hawaiian interisland market. Mark Dunkerley, Hawaiian's President and CEO, said, "This settlement is the last chapter in the legal dispute over Mesa's misuse of Hawaiian's confidential information. We were delighted with the award of damages and this settlement." On October 30, 2007, the Bankruptcy Court ruled in favor of Hawaiian, awarding Hawaiian $80 million for damages incurred to date and ordering that Mesa pay Hawaiian post-judgment interest and its cost of litigation and reasonable attorneys fees. In November 2007, Mesa filed a notice of appeal to the ruling and was required to post a $90 million bond as security for the judgment, post judgment interest, and attorney's fees, pending the outcome of the appeal. As reported by the Troubled Company Reporter on Feb. 1, 2008, the Hon. Robert Faris directed Mesa to pay Hawaiian Airlines Inc. $3.9 million for costs of litigation and attorneys' fees the carrier incurred in their dispute over the misuse of confidential information to gain an unfair competitive advantage. The TCR said Nov. 2, 2007, that the $80 million in damages was awarded to compensate Hawaiian for damages it suffered through October 2007. The court did not award damages for any injury Hawaiian may sustain in the future as a result of Mesa's misconduct. About Mesa Air Mesa currently operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. About Hawaiian Airlines Hawaiian Airlines, Inc. -- http://www.hawaiianair.com/-- a subsidiary of Hawaiian Holdings Inc. (Amex: HA), provides passenger air service between the U.S. mainland and Hawaii. The company also offers nonstop service to Hawaii from more U.S. gateway cities than any other airline, as well as service to the Philippines, Australia, American Samoa, and Tahiti. Hawaiian also provides approximately 145 daily jet flights among the Hawaiian Islands. The company filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827) on March 21, 2003. Joshua Gotbaum served as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum was represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. The Bankruptcy Court confirmed the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005. The Plan took effect on June 2, 2005. HEXION SPECIALTY: March 31 Balance Sheet Upside Down by $1.3 Bil. ----------------------------------------------------------------- Hexion Specialty Chemicals, Inc. reported its results for the first quarter ended March 31, 2008. Highlights for the first quarter of 2008 include: * Revenues of $1.64 billion in 2008 compared to $1.44 billion during the prior year period, an increase of 14 percent. * Operating income of $82 million for the first quarter of 2008 versus $104 million for the comparable prior year period. First quarter 2008 operating income was negatively impacted by $17 million in increased raw materials costs and $6 million from a Versatic Acids force majeure. * Net loss of $6 million for the 2008 quarter versus net income of $4 million in the first quarter of 2007. * Segment EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $154 million in the first quarter of 2008 compared to $170 million during the prior year period, a 9 percent decrease. * Adjusted EBITDA was $678 million for the Last Twelve Month (LTM) period ended March 31, 2008. "Demand for many of our key specialty products increased compared to 2007 levels," said Craig O. Morrison, Chairman, President and CEO. "Our strong quarterly sales gains reflect an ongoing focus on pricing actions to offset rising raw material costs, continued growth from international markets and our broad product portfolio. In addition, the forest products business of Arkema GmbH, our most recent acquisition, also performed well in its first full quarter of operations within Hexion. "We are focused on driving year-over-year sales and EBITDA gains. Our first quarter 2008 Segment EBITDA, however, was negatively impacted by $17 million in increased raw materials and $6 million from a Versatic Acids force majeure. We are working diligently to recover these raw material cost increases. We will continue to address the challenging North American market conditions through cost controls, synergy achievement and productivity initiatives, as well as growing our international business, which represents approximately 60 percent of our overall sales." As of March 31, 2008, the company had total assets of $4.2 billion and total liabilities of $5.5 billion, resulting in a shareholders' deficit of $1.3 billion. Synergy Update As part of its synergy program from the Hexion formation, the Company achieved $6 million in synergies during the first quarter of 2008. As of March 31, 2008, Hexion has achieved $126 million in synergies from its synergy program targeting $175 million in savings. The Company continues to expect to take all actions for its synergy program by the end of 2008. Transaction Update Hexion previously announced in the first quarter of 2008 that both it and Huntsman Corporation agreed to allow additional time for the Federal Trade Commission to review the proposed merger of the two companies. On April 5, 2008, Hexion exercised its option to extend the Termination Date under the Merger Agreement until July 4, 2008. "We continue to fully cooperate with regulatory agencies and are working closely with Huntsman and the agencies in order to obtain the regulatory approvals required to complete the merger," Morrison said. On July 12, 2007, Hexion entered into a definitive agreement to acquire Huntsman Corporation in an all-cash transaction valued at approximately $10.6 billion, including the assumption of debt. Under the terms of the Merger Agreement, the cash price per share to be paid by Hexion increases each day from April 5, 2008 through consummation of the merger at the equivalent of approximately 8% per annum (less any dividends or distributions declared or made). The transaction was approved by Huntsman shareholders on October 16, 2007 and is subject to customary closing conditions, including regulatory approval in the U.S., European Union and several other countries. Segment Results Following are net sales and Segment EBITDA by reportable segment for the first quarter of 2008. Segment EBITDA is defined as EBITDA adjusted to exclude certain non-cash and non-recurring expenses. Segment EBITDA is the primary performance measure used by the Company to evaluate operating results and allocate resources among segments. Segment EBITDA is also the profitability measure used in management and executive incentive compensation programs. Corporate and Other primarily represents certain corporate, general and administrative expenses that are not allocated to the segments. (U.S. Dollars in Millions) (Unaudited) Three months ended March 31, 2008 2007 ---------------------------- Net Sales to Unaffiliated Customers Epoxy and Phenolic Resins $639 $567 Formaldehyde and Forest Product Resins 554 428 Coatings and Inks 332 343 Performance Products 111 100 ---------------------------- $1,636 $1,438 Segment EBITDA: Epoxy and Phenolic Resins $74 $95 Formaldehyde and Forest Product Resins 53 44 Coatings and Inks 19 25 Performance Products 21 18 Corporate and Other (13) (12) Earnings Call Hexion Specialty Chemicals, Inc. hosted a teleconference to discuss First Quarter 2008 results on May 14, 2008. A replay of the call will be available for three weeks beginning at 12 p.m. Eastern Time on May 14, 2008. The playback can be accessed by dialing 888-286-8010 (U.S.) and 617-801-6888 (International). The passcode is 67271444. A replay also will be available through the Investor Relations Section of the Company's Web site. About Hexion Specialty Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://www.hexionchem.com/-- is a producer of thermosetting resins, or thermosets. Thermosets are a critical ingredient in virtually all paints, coatings, glues and other adhesives produced for consumer or industrial uses. Hexion Specialty Chemicals is controlled by an affiliate of Apollo Management L.P. IDLEAIRE TECH: Files for Chapter 11 Protection in Delaware ---------------------------------------------------------- IdleAire Technologies Corp. filed for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware. The company expected a net loss of $93 million on $37 million of total revenues, WVLT-TV reports, citing one of the company's filings with the U.S. Securities and Exchange Commission. Knoxvillebiz.com also relates that the company was restricted in its borrowing opportunities, and subsequently blamed its bankruptcy filing on the credit crisis. "So everything came apart and I don't blame them, but my goodness it is a tough one," Knoxvillebiz.com quotes company investor David Coffey as saying. According to Knoxvillebiz.com, the company hunted for financing after "market uncertainties" made underwriters withdraw from a planned IPO. The company initially had 11 investors, but all of them declined to give financing. "Given its inability to raise operating capital, IdleAire's management has determined in its reasonable business judgment that it is in the best interests of all stakeholders to commence a Chapter 11 case," Knoxvillebiz.com says, citing the company's court filing. Based in Knoxville, Tennessee, IdleAire Technologies Corp. -- http://www.idleaire.com/-- manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company filed for Chapter 11 protection on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson LLC, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $210,879,000 and total debts of $303,616,000. IDLEAIRE TECHNOLOGIES: Wants to Use $8 Million DIP Facility ----------------------------------------------------------- IdleAire Technologies Corp. asked authority from the U.S. Bankruptcy Court for the District of Delaware to obtain $8 million in postpetition secured debt on an interim basis. On behalf of an investor group, Wells Fargo NA, administrative and collateral agent, agreed to provide the Debtor with up to $25 million cash advances and other extensions of credit on a priming senior secured revolving basis pursuant to the terms of a debtor-in-possession financing agreement. The DIP facility bears a 15% interest per annum, payable in kind until maturity, with a 2% upward adjustment in the event of a default. The DIP facility matures in the earlier of (i) July 18, 2008, unless extended, (ii) the consummation of an approved sale, (iii) the effective date of the plan of reorganization, (iv) the date the total commitment is terminated, (v) the acceptance by the borrower of offer or bid from a buyer that does not provide for the actual payment in full of the Debtor's obligations, or (vi) unless waived by the lenders in their sole discretion. The Debtor said that the DIP facility should allow the Debtor to continue its operations but only for the short-term. A projected period of continuing operating losses suggests that the only viable long-term solution -- to preserve the value of its assets, its 1,200 employees, and its business -- is through a sale pursuant to Section 363 of the U.S. Bankruptcy Code. A separate story on the Debtor's motion to sell its assets to an investor group is in today's copy of the Troubled Company Reporter. Investor Group is Proposed Purchaser and DIP Lender After unsuccessful efforts to sell assets prior to bankruptcy filing, the Debtor's board determined that it was best for creditors if IdleAire files for bankruptcy in order to sell substantially all of the Debtor's assets to a proposed purchaser. IdleAire Acquisition Company LLC, the proposed purchaser, is a Delaware limited liability corporation comprised by various investors, including Airlie Opportunity Master Fund Ltd., Kenmont Special Opportunities Master Fund LP, Miesque Fund Limited, SV Special Situations Master Fund Ltd., Pierce Diversified Trading Strategy Fund LLC, Whitebox Hedged High Yield Partners LP, Wilfrid Aubrey Growth Fund LP and Wilfrid Aubrey International Limited. The proposed purchaser agrees to acquire the Debtor's assets for $10 million, plus assumption of some liabilities. The investors agreed to (i) provide up to $25 million of postpetition financing, (ii) hold a prepetition claim secured by a lien on all of the Debtor's assets in the principal amount of $3.7 million, and (iii) assert a right to direct Wells Fargo, the indenture trustee of 13% secured discount notes to credit bid up to about $320 million of the notes. About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. The Debtor asked the Court to hire professionals at Holland & Knight LLP as its counsels. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. IDLEAIRE TECHNOLOGIES: Depleting Cash Cues Sale to Investor Group ----------------------------------------------------------------- IdleAire Technologies Corp. told the U.S. Bankruptcy Court for the District of Delaware that it is close to exhausting its cash resources, and needs to sell its assets. The Debtor added that it does not believe it will be able to continue its business unless it receives a cash infusion, which certain members of the majority secured noteholder group or debtor-in-possession lenders have agreed to provide pursuant to a postpetition credit agreement. A separate story on the Debtor's request to use its lenders' DIP facility is in today's copy of the Troubled Company Reporter. The Debtor said that the DIP facility should allow the Debtor to continue its operations but only for the short-term. A projected period of continuing operating losses suggests that the only viable long-term solution -- to preserve the value of its assets, its 1,200 employees, and its business -- is through a sale pursuant to Section 363 of the U.S. Bankruptcy Code. Marketing Efforts and Proposed Purchaser The Debtor informed the Court that prior to the bankruptcy filing, it engaged KPMG Corporate Finance to, among others, identify prospective funding sources for the Debtor's business. The Debtor, through KPMG's assistance, contacted 11 potential funding sources. A number of parties executed confidentiality agreements and were provided private placement memorandum and due diligence materials. In the course of discussions with the potential funding sources, some parties expressed interest in some of the Debtor's assets. However, no party offered definitive terms as to either funding or acquisition. The Debtor's board determined that it was best for creditors if IdleAire to file for bankruptcy in order to give effect to the transaction to sell substantially all of the Debtor's assets to a proposed purchaser. IdleAire Acquisition Company LLC, the proposed purchaser, made clear to the Debtor that it is unwilling to either (i) advance additional funding or (ii) consummate the transaction contemplated by the a sale term sheet outside a chapter 11 proceeding due to numerous uncertainties. However, the proposed purchaser said it is willing to act as stalking horse bidder. IdleAire Acquisition is a Delaware limited liability corporation comprised by various investors, including Airlie Opportunity Master Fund Ltd., Kenmont Special Opportunities Master Fund LP, Miesque Fund Limited, SV Special Situations Master Fund Ltd., Pierce Diversified Trading Strategy Fund LLC, Whitebox Hedged High Yield Partners LP, Wilfrid Aubrey Growth Fund LP and Wilfrid Aubrey International Limited. The proposed purchaser agrees to acquire the Debtor's assets for $10 million, plus assumption of some liabilities. The investors agreed to (i) provide up to $25 million of postpetition financing, (ii) hold a prepetition claim secured by a lien on all of the Debtor's assets in the principal amount of $3.7 million, and (iii) assert a right to direct Wells Fargo, the indenture trustee of 13% secured discount notes to credit bid up to about $320 million of the notes. Proposed Deadlines The Debtor proposed that these deadlines be set: a. entry of bid procedures order no later than three business days following the petition date, or May 15, 2008; b. prospective bidder execution of non-disclosure agreements within 30 days of the petition date, or June 11, 2008; c. submission of overbids within 50 days of the petition date, or July 1, 2008; d. auction within two days of bid deadline, or July 3, 2008; e. sale hearing within two business days of bid deadline, or July 8, 2008; f. closing of sale no later than July 18, 2008. About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. The Debtor asked the Court to hire professionals at Holland & Knight LLP as its counsels. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. IDLEAIRE TECHNOLOGIES: To Engage Kurtzman Carson as Claims Agent ---------------------------------------------------------------- IdleAire Technologies Corp. asked authority from the U.S. Bankruptcy Court for the District of Delaware to employ Kurtzman Carson Consultants LLC as its claims, noticing and balloting agent. KCC will, on behalf of the Debtor and the Office of the Clerk for the U.S. Bankruptcy Court, (i) transmit designated and required notices to appropriate parties, (ii) maintain copies of proofs of claim and proofs of interest, (iii) maintain the official claims register, (iv) assist the Debtor with the dissemination of solicitation materials relating to plan and ballot tabulation, (v) provide computerized claims, claims objection and balloting database services, and (vi) provide other relevant administrative services. The Debtor said that KCC has a wealth of experience in serving as claims and notice agent, and is providing and has provided similar services to chapter 11 debtors, including Charys Holding Company Inc., Pac-West Telecom Inc., and Matress Gallery. Basedon KKC Agreement for Services, the Debtor agrees to reimburse or pay for KKC's incurred costs related to third party items. Where the fee for these items is expected to exceed $10,000 in a single month, an advance payment may be required. The Debtor agrees to pay a $50,000 retainer to KKC. The agent's specific charges were not disclosed. The Debtor assured the Court that KCC is a disinterested person and does not represent any interest to the Debtor's estate. The firm can be reached at: Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 Attn: James M. Le Tel: (310) 823-9000 Fax: (310) 823-9133 About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. IDLEAIRE TECHNOLOGIES: Taps CRG's Stephen Gray as CRO ----------------------------------------------------- IdleAire Technologies Corp. asked authority from the U.S. Bankruptcy Court for the District of Delaware to employ CRG Partners Group LLC as crisis manager and Stephen S. Gray as its chief restructuring officer. CRG and Mr. Gray are expected to assist the Debtor in its restructuring efforts, effective as of the bankruptcy filing. As CRO, Mr. Gray will (i) be responsible for day-to-day management and operational issues of the Debtor, (ii) will assist in the evaluation of the Debtor's options for maximizing the value of its assets, (iii) assist with the formulation, negotiation and consummation of a possible sale of the Debtor or its assets, and (iv) assist the Debtor with the formulation, negotiation and promulgation of a plan of reorganization or liquidation. As crisis manager, CRG and its employees will provide, among others, financial and operational analysis of the Debtor's current and potential profitability, ongoing cash requirements, profit center distributions and break-even levels. CRG will also assist with lender negotiations, and enhancement of liquidity issues. According to the Debtor, CRG is a nationally recognized turn- around and crisis management firm with skilled managers and advisors that provide a comprehensive range of interim management, consulting and financial advisory services. The Debtor also said that Mr. Gray has substantial amount of experience in advising troubled companies regarding operational and financial issues. He was the founder of The Recovery Group, one of CRG's predecessor firms, and has over 30 years working as a turnaround consultant and crisis manager. Mr. Gray charges $580 per hour and CRG's other professionals charge $275 to $550 per hour depending on the level of experience. In addition, CRG will bill an administrative fee of 4.5% of its professional fees. The Debtor paid CRG $100,000 retainer. To the best of the Debtor's knowledge, CRG and Mr. Gray are disinterested persons as that term is defined in the Bankruptcy Code. The firm can be reached at: CRG Partners Group LLC 2 Atlantic Ave. Boston, MA 02110 Tel: (617) 482-4242 http://www.crgpartners.com/ About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. INTERTAPE POLYMER: Posts $2MM Net Loss in Quarter ended March 31 ---------------------------------------------------------------- Intertape Polymer Group Inc. reported net loss of $1.9 million for the first quarter compared to a net loss of $600,000 for the first quarter of 2007. Non-recurring items in the first quarter were related to the refinancing of the existing Senior Secured Credit Facility and included both the noncash write-off of debt issue expenses of $3.1 million and the settlement of the interest rate swap agreements at a cost of $2.9 million. Cash flow from operations before changes in non-cash working capital items provided liquidity of $9.5 million for the first quarter of 2008 compared to $7.8 million for the first quarter of 2007. The improvement essentially reflects profit improvement, despite a $2.9 million charge for the settlement of the interest rate swap agreements. Changes in non-cash working capital items used $12.3 million for the first quarter of 2008 compared to using $1.5 million during the same period in 2007. The greater cash use in the first quarter of 2008 results from increases in trade accounts receivable and inventories and a reduction in accounts payable and accrued liabilities from year-end levels. As a result, operating activities used cash of $2.8 million for the first quarter of 2008 compared to providing liquidity of $6.3 million for the first quarter of 2007. At March 31, 2008, the company's balance sheet showed total assets of $697.2 million, total liabilities of $342.7 million and total shareholders' equity of $354.5 million. About Intertape Polymer Group Based in Montreal, Quebec and Sarasota/Bradenton, Florida, Intertape Polymer Group Inc. (NYSE,ITP; TSX: ITP.TO) -- http://www.intertapepolymer.com/-- develops and manufactures specialized polyolefin plastic and paper-based packaging products and complementary packaging systems for industrial and retail use. The company employs approximately 2,100 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe. * * * As reported in the Troubled Company Reporter on Dec. 26, 2007, Standard & Poor's Ratings Services raised its rating on Intertape's senior subordinated notes to 'CCC+' from 'CCC'. IRVINE SENSORS: Sells More Than 1% of Shares in Unregistered Deals ------------------------------------------------------------------ Irvine Sensors Corporation has issued: (i) 100,000 shares of common stock to an accredited institutional investor upon such investor's conversion on April 30, 2008 of $30,000 of the stated value of the Series A-1 10% Cumulative Convertible Preferred Stock of the company and (ii) 333,333 shares of common stock to the same accredited institutional investor upon such investor's conversion on May 5, 2008 of $100,000 of the stated value of the Series A-1 Stock of the company. As a result of the conversion on May 5, 2008, the company has issued more than 1% of its outstanding shares of common stock in unregistered transactions in the aggregate, according to a Securities and Exhange Commission filing. The sales of shares of common stock have been determined to be exempt from registration under the Securities Act of 1933 in reliance on Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering. The investor has represented that it is an accredited investor, as that term is defined in Regulation D, and that it has acquired the securities for investment purposes only and not with a view to or for sale in connection with any distribution. Based in Costa Mesa, California, Irvine Sensors Corporation (Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies, the manufacture and sale of optical systems and equipment for military applications through its Optex subsidiary and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low- power analog and mixed-signal integrated circuits for diverse systems applications. * * * As reported in the Troubled Company Reporter on Jan. 24, 2008, Grant Thornton LLP expressed substantial doubt about Irvine Sensors Corp.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Sept. 30, 2007. The auditing firm reported that the company incurred net losses for the years ended Sept. 30, 2007, Oct. 1, 2006 and Oct. 2, 2005, respectively, and the company has working capital of only $1,799,100 at Sept. 30, 2007. JABIL CIRCUIT: Moody's Rtng Unmoved by Planned $150MM Notes Add-On ------------------------------------------------------------------ Moody's Investors Service commented that Jabil Circuit, Inc.'s Ba1 corporate family and senior unsecured debt ratings, SGL-1 speculative grade liquidity rating and negative outlook would not be affected by the company's recent announcement that it intends to offer up to $150 million of add-on 10-year senior notes. The terms of the proposed issue will be identical to the company's $250 million 8.25% senior unsecured notes due 2018 (rated Ba1). Jabil plans to issue up to $150 million senior unsecured notes as an add-on to its $250 million senior note issue that was placed in January 2008. Jabil expects to use the net add-on proceeds to replenish cash balances, which were used in conjunction with proceeds from the $250 million note issue to repay short-term debt incurred in connection with the purchase of Taiwan Green Point (Green Point). While the add-on note issue modestly increases the company's overall leverage profile, Moody's believes Jabil has capacity at the current rating level to incur the additional debt. On a pro forma basis, Moody's estimates Jabil's debt to EBITDA has increased to 3.2x from 2.8x as of the twelve months ended February 2008. The incremental debt combined with expectations of diminished free cash flow limits financial flexibility and weakly positions the company in the Ba1 rating category. Jabil's Ba1 corporate family rating reflects the highly competitive pricing pressures and inherent volatility that currently plague the EMS industry, as well as rising capex and working capital requirements associated with Jabil's transition to a more vertically integrated business model to compete more effectively against its competitors. The rating also reflects the company's mid-single digit gross margins, ongoing large-scale restructuring program, exposure to the currently weak consumer segment, unfavorable product mix and the winding down of legacy OEM programs, ahead of full ramp-up of higher margin vertical programs, which are expected to pressure revenue growth rates and margins. At the same time, Jabil's CFR is supported by its Tier 1 industry leadership status and solid market position, benefiting from the secular OEM outsourcing trend, its global manufacturing footprint with facilities located near OEM customer sites and its focus on end-to-end solutions, mechanical engineering, vertical component production and emerging EMS segments with higher margin/low volume characteristics. Consideration is also given to the company's manufacturing facilities in low labor cost regions as well as its strong liquidity profile. The negative outlook reflects Jabil's lower revenue and profitability outlook stemming from a weaker than expected demand environment, particularly in the company's consumer electronics (roughly one-third of revenues) and automotive segments, reduced cash flow generation prospects over the next several quarters, as well as continued challenges in the overall EMS space, which has been impacted by excess capacity, increasing competition, customer attrition and execution missteps. The negative outlook also considers a weaker margin profile in the near-to-intermediate term led by gross margin decline in the company's consumer division coupled with the possibility of further restructuring actions that will depress already thin operating margins; expectations of capex above historical levels; and integration risks associated with Green Point. Finally, the negative outlook considers the possibility of further debt-funded acquisitions as the company seeks to advance its market position against competitors in the EMS space. Moody's will monitor closely the company's market position, operating margin trends, working capital metrics and free cash flow generation and notes that ratings could be downgraded over the next 6 -- 9 months if the company experiences: (i) material customer/program losses without offsetting increases in new customer wins/program ramps; (ii) a continued decline in operating margins (excluding restructuring/impairment costs and amortization of intangibles) below 2% over the next 2 - 3 quarters; (iii) extended weakness in its consumer electronics business resulting in continued revenue contraction, operating losses or operating margins below 1% for this segment; (iv) a significant deterioration in the company's cash position from current levels; (v) higher than expected restructuring charges; (vi) an inability to internally fund capex and working capital, resulting in sustained negative free cash flow; or (vii) a notable increase in financial leverage, as measured by debt to EBITDA (Moody's adjusted) above 3.8x. Jabil's SGL-1 rating reflects its very good liquidity position. As of Feb. 29, 2008, Jabil maintained roughly $531 million of cash. Although free cash flow was negative $228 million for fiscal 2007, the company generated $328 million of positive free cash flow in the recent LTM. Jabil is expected to produce moderate levels free cash flow in the near term, albeit at lower than expected levels due to weaker revenue and profitability, and higher capex. The company currently has access to an undrawn $800 million revolver. Including the incremental debt associated with the add-on note issue, Moody's expects the company to remain in compliance with its financial covenants. Jabil Circuit, Inc., headquartered in St. Petersburg, Florida, is an electronic product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies. JETBLUE AIRWAYS: Fitch Cuts Sr. Unsec. Notes' Rating to CCC-/RR6 ---------------------------------------------------------------- Fitch Ratings has downgraded the debt ratings of JetBlue Airways Corp. (JBLU): -- Issuer Default Rating (IDR) to 'B-' from 'B'; -- Senior unsecured convertible notes to 'CCC-/RR6' from 'CCC/RR6'. This action affects approximately $425 million of outstanding debt. The Rating Outlook for JetBlue is Negative. Fitch's downgrade follows the dramatic run-up in jet fuel costs and growing evidence of a softening revenue outlook that will likely drive larger losses and weakened free cash flow during the remainder of 2008. Although the $300 million equity investment by Germany's Deutsche Lufthansa AG helped boost JBLU's liquidity position in the first quarter, Fitch expects cash balances to remain under pressure over the next several months as JBLU and the other U.S. airlines continue to trim unprofitable capacity in the face of unsustainably high jet fuel prices. While JBLU's fleet plan flexibility provides some opportunity to manage capacity growth lower in 2008 and 2009, additional cash-raising options are limited, and the carrier's liquidity cushion will likely be eroded somewhat as operating losses continue and debt maturities are met without the benefit of positive free cash flow. The 'B-' IDR reflects JBLU's highly leveraged capital structure, its diminished cash flow generation capacity and its vulnerability to ongoing fuel and revenue shocks in an industry that remains unable to recover surging and largely uncontrollable energy costs through higher fares. Importantly, the rating also captures the fact that JBLU's current liquidity position is adequate to meet 2008 fixed obligations, but intense fuel cost pressure and worsening unit revenue comparisons through the year will likely reduce cash balances by year-end. In addition to scheduled aircraft-backed debt principal payments this year, JBLU will fund $175 million in convertible notes that investors can put back to the company on July 15. Total scheduled debt maturities for the final three quarters of 2008 are $343 million. Besides the Lufthansa investment proceeds booked in January, liquidity will be supplemented by the sale of nine used Airbus A320 aircraft this year. These sales could generate as much as $100 million in cash after repayment of associated aircraft debt. All A320 and Embraer E190 aircraft deliveries for 2008 are financed, and JBLU may be able to defer some upcoming scheduled deliveries in order to reduce debt-financed aircraft capital spending while conserving cash tied to pre-delivery deposits. Including currently illiquid auction rate securities ($284 million on the March 31 balance sheet) which may be sold in coming months if auctions for these securities are successful, JBLU's total cash balance stood at $1.0 billion at the end of the first quarter. Supplemental sources of liquidity are constrained, however, and JBLU has no revolving credit facility in place. Looking ahead to 2009, JBLU faces a more manageable level of scheduled debt maturities ($159 million). However, adverse fuel and revenue developments could force JBLU to explore further capital-raising options-including the sale of its LiveTV in-flight entertainment subsidiary, monetization of equity in owned A320 aircraft or new equity capital beyond the $300 million already invested by Lufthansa. During first quarter (Q1), JBLU paid $118 million more for fuel than it did a year ago, and the outlook for Q2 and Q3 (based on the current forward curve) is discouraging. For each 10-cent move in the price of jet fuel, JBLU faces approximately $45 million of annual cost pressure. Using the company's latest guidance of $3.05 per gallon for the full year 2008, therefore, fuel costs alone would rise by approximately $500 million in 2008 vs. 2007. Through April 17, JBLU had hedged 46% of expected Q2 fuel consumption through a combination of heating oil collars (11% of total consumption with upside protection at $2.19 per gallon) and heating oil swaps (35% of expected consumption at an average price of $2.56 per gallon). Management has again signaled its willingness to slow growth and trim unprofitable flying in an effort to stem cash outflows. This follows two years in which capacity growth rates were pulled back through the sale of used A320s and the deferral of some new aircraft deliveries. The latest capacity guidance for 2008 calls for growth of 3% to 5%, down from 6% to 8% before the most recent spike in fuel costs. To meet this capacity target, JBLU plans to sell nine used A320 aircraft this year and another one in 2009. In light of good secondary market demand and positive net cash flow on each A320 sale, this remains a workable safety valve to manage available seat mile (ASM) capacity down in a worsening operating environment. These aircraft sales, together with announced domestic schedule cuts by other carriers, should support revenue per ASM performance somewhat later in the year. However, sluggish U.S. economic growth this year will likely erode air travel demand further-limiting opportunities to fully cover rising jet fuel costs through higher fares. Despite the fact that JBLU has an almost entirely domestic route network, unit revenue performance in Q1 topped that of the U.S. legacy carriers by a significant margin. This was due in part to very weak revenue per ASM performance in Q107 during the storm- related operational break-down last year. For the remainder of 2008, a continuation of solid unit revenue growth will be required to offset an expected unit cost increase of 20% to 22% for the full year (assuming 2008 jet fuel prices of $3.05 per gallon). Revenue per ASM growth will be supported by industry-wide fare moves that are boosting yields as load factors and traffic come under some pressure due to higher fares and slowing U.S. economic growth. In its April traffic release, JBLU reported a 5.2 point decline in its monthly load factor, while RASM increased by 3% as average fares increased on 7% growth in ASM capacity. While summer bookings appear strong, JBLU and the rest of the industry can expect to feel intense revenue pressure after August, as seasonal demand patterns shift. Importantly, this is the point at which announced domestic capacity reduction throughout the U.S. industry will begin to take full effect. A further downgrade into the 'CCC' category could follow if the sharp deterioration of operating trends seen since the start of the year continues over the next few months, and if an extension of tight credit market conditions limits JBLU's ability to raise capital as cash balances are reduced further in the face of extreme fuel cost pressure. JOURNAL REGISTER: Posts $72MM Net Loss in Quarter Ended March 30 ---------------------------------------------------------------- Journal Register Company reported a net loss of $72.2 million for the first quarter ended March 30, 2008, as compared to income from continuing operations of $1.5 million for the prior year quarter ended April 1, 2007. The net loss for the period includes a $95.4 million, $70.2 million net of tax, non-cash charge for the impairment of assets. This charge relates to a write-down of the carrying value of mastheads and goodwill for the Michigan and New York clusters. The first quarter of 2007 included a loss from discontinued operations and a gain on the sales of our New England cluster properties in February of 2007. Net income for the 2007 first quarter was $29.1 million. Excluding non-cash impairment charges and the other items, the 2008 first quarter loss would have been $2.0 million as compared to net income from continuing operations of $1.5 million for the prior year quarter ended April 1, 2007. Debt, Interest Expense and other Financial Information The company again amended its credit facility and covenants to increase liquidity during these difficult times for the newspaper industry. The company's next debt amortization payment is due in the second quarter of 2009. The company's effective interest rate was 7.3% for the first quarter 2008 compared to 7.0% for fourth quarter and 6.2% for the first quarter of 2007. The company's capital expenditures were $0.8 million for the first quarter of 2008. Those expenditures included production equipment and spending for technological and online improvements. Additionally, during the first quarter of 2008, the company sold its distribution center property in Milford, Connecticut for a gain of $0.4 million. Liquidity The company was in compliance with the total leverage financial covenant contained in the Amended Credit Agreement for the fiscal quarter ending March 30, 2008, under the terms of the Second Amendment. At March 30, 2008, the company had cash of approximately $15.9 million and approximately $12.5 million available under the Amended Credit Agreement. There can be no assurances that this will remain sufficient to meet the company's operating needs. At March 30, 2008, the company's balance sheet showed total assets of $841.5 million, total liabilities of $828.8 million and total stockholders" equity of $12.7 million About Journal Register company Headquartered in Yardley, Pennsylvania, Journal Register company (NYSE:JRC)-- http://www.journalregister.com-- owns and operates 27 daily newspapers and 368 non-daily publications as of Dec. 31, 2006. The company also operates 239 individual websites that are affiliated with the company's daily newspapers, non-daily publications and its network of employment websites. All of the company's operations are clustered in seven geographic areas: Greater Philadelphia, Michigan, Connecticut, Greater Cleveland, New England, and the Capital-Saratoga and Mid-Hudson regions of New York. The company owns JobsInTheUS, a network of 19 employment websites and three commercial printing operations. The company's total paid circulation is approximately 616,000 daily, 635,000 Sunday and its total non-daily distribution is approximately 6.4 million. In February 2007, the company sold two of its New England Cluster daily community newspapers to Gatehouse Media. * * * As reported in the Troubled Company Reporter on May 8, 2008, Standard & Poor's Ratings Services lowered its rating on 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. JOURNAL REGISTER: Moody's Junks Rating on Likely Covenant Breach ---------------------------------------------------------------- Moody's Investors Service has downgraded Journal Register Company's Corporate Family rating to Caa2 from B3, and its Probability of default rating to Caa3 from Caa1, following management's disclosure that it is probable that the company will be in violation of the total leverage financial covenant calculation under its senior secured credit agreement (as amended) as of July 23, 2008 unless there is significant improvement in operating results during the second fiscal quarter or the Company is successful in obtaining an additional amendment. Details of the rating actions are: Ratings downgraded: -- $150 million senior secured revolving credit facility due 2012 -- to Caa2, LGD3, 34% from B3, LGD3, 33% -- $543 million senior secured term loan A due 2012 -- to Caa2, LGD3, 34% from B3, LGD3, 33% -- Corporate Family rating -- to Caa2 from B3 -- Probability of Default rating -- to Caa3 from Caa1 The outlook remains negative. The downgrade of the CFR incorporates Moody's view that Journal Register faces a heightened probability of default following the release of 1Q08 financial results which reported further top line deterioration (down 10%), free cash flow losses and management's disclosure that the company will probably default under its recently amended (twice) financial covenants as of July 23, 2008. Because Journal Register now reports the entire $640 million balance of its senior secured debt as a current liability, the company's current liabilities substantially exceed its current assets, effectively representing an insolvent credit profile. The continuing negative outlook reflects Moody's concern that Journal Register will likely default under the terms of its senior secured loan covenants during 2008 (absent an amendment) and Moody's view that even if the company receives further covenant relief, it is not likely to generate sufficient free cash flow to cover its scheduled 2009 debt repayment obligations (absent a recapitalization). Ratings may need to be lowered further if the company's business operations and liquidity profile continue to deteriorate and/or an actual payment default and subsequent restructuring transpires. Moody's notes that debtholders are currently protected with only a deminimus equity cushion (based upon the company's current market value of around $10 million) and that a sale or liquidation of the company would likely result in less than full (albeit still above-average, per Moody's estimates) recovery for secured lenders. The Caa2 CFR reflects Journal Register's heavy debt burden, its high financial leverage, the cyclical pressure which continues to depress the company's advertising revenues (especially in Michigan) and the competition posed by print and electronic media in virtually all of Journal Register's markets. Ratings are supported by the company's positive LTM free cash flow generation, the efficiencies provided by its clustering strategy, and by its geographic diversification. Journal Register Company is a leading US newspaper publishing company. Based in Yardley Pennsylvania, the company recorded sales of $451 million for the LTM period ended March 31, 2008. JOHN HOWARD: Case Summary & Seven Known Creditors ------------------------------------------------- Debtor: John Howard Pontiac-Buick-GMC, Inc. 185 Wade Street Waynesburg, PA 15370 Bankruptcy Case No.: 08-22223 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- John W. Howard 08-22224 Type of Business: John Howard Pontiac-Buick-GMC, Inc., is a dealer of new and used cars. John W. Howard is the president of John Howard Pontiac-Buick-GMC, Inc. John Howard Chrysler Jeep Dodge, Inc., an affiliate of the debtors, filed for chapter 11 protection on Feb. 7, 2008 (Bankr. W.D. Pa. Case No. 08-20777). Chapter 11 Petition Date: April 4, 2008 Court: Western District of Pennsylvania (Pittsburgh) Judge: Jeffery A. Deller Debtors' Counsel: Robert O Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Tel: (412) 392-0330 Fax: (412) 392-0335 Estimated Assets Estimated Debts ---------------- --------------- John Howard $1 million to $1 million to Pontiac-Buick-GMC, Inc. $10 million $10 million John W. Howard $1 million to $1 million to $10 million $10 million A. John Howard Pontiac-Buick-GMC, Inc.'s Three Known Creditors: Entity Claim Amount ------ ------------ Community Bank Unknown P.O. Box 357 Carmichaels, PA 15320 John W. Howard Unknown 142 Stewart Street Waynesburg, PA 15370 United Bank Unknown P.O. Box 2373 Charleston, WV 25326 B. John W. Howard's Four Known Creditors: Entity Claim Amount ------ ------------ Community Bank Unknown P.O. Box 357 Carmichaels, PA 15320 Countrywide Financial Unknown P.O. Box 660625 Dallas, TX 75266 GMAC Unknown P.O. Box 9001719 Louisville, KY 40290 United Bank Unknown P.O. Box 2373 Charleston, WV 25326 JOHN DALY: Case Summary & Eight Known Creditors ----------------------------------------------- Debtors: John J. Daly and Carmencita Yanga Daly 1113 Morella Park Drive Martinez, CA 94553 Bankruptcy Case No.: 08-41639 Chapter 11 Petition Date: April 6, 2008 Court: Northern District of California (Oakland) Judge: Edward D. Jellen Debtors' Counsel: Duane L. Tucker, Esq. Law Offices of Duane L. Tucker 27793 Tampa Avenue Hayward, CA 94544 Tel: (510) 670-0668 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's Eight Known Creditors: Entity Claim Amount ------ ------------ California Employment Development Department Unknown Bankruptcy Group MIC 92E P.O. Box 826880 Sacramento, CA 94280-0001 California Franchise Tax Board Unknown Special Procedures Bankruptcy Unit P.O. Box 2952 Sacramento, CA 95812-2952 EMC Mortgage Corporation Unknown Attn: Bankruptcy Department P.O. Box 293150 Lewisville, TX 75029-3150 Labor Commissioner Unknown 1515 Clay St., Room 801 Oakland, CA 94612-1463 Mortgage Electronic Registration System Unknown Attn: Bankruptcy Department P.O. Box 293150 Lewisville, TX 75029-3150 State Board of Equalization Unknown Collection Department P.O. Box 942879 Sacramento, CA 94279-0001 Washington Mutual Bank Unknown Moss Codilis, LLP Mail Stop: JAXA2035 7255 Baymeadows Way Jacksonville, FL 32256-6851 Wells Fargo Bank Unknown P.O. Box 10438 Des Moines IA 50306-0438 KENTUCKY DATA: Moody's Holds B1 CF Rating; Changes Outlook to Pos. ------------------------------------------------------------------ Moody's Investors Service has affirmed the ratings on Kentucky Data Link, and changed the outlook to positive from stable, based on the Company's strong operating performance, coupled with expectations of de-leveraging and continued free cash flow growth over the forward rating horizon. Moody's has taken these ratings actions: Issuer: Kentucky Data Link, Inc. -- Outlook, Changed To Positive From Stable -- Corporate family rating -- Affirmed B1 -- Probability of default rating -- Affirmed B2 -- US$240M Senior Secured Bank Credit Facility Due 2014, Affirmed B1 LGD3 (34%) -- US$40M Senior Secured Bank Credit Facility Due 2012, Affirmed B1 LGD3 (34%) The company's credit facilities were put in place to fund the purchase of Norlight Telecommunications from Journal Communications and refinance KDL's existing debt in February 2007. The positive outlook reflects KDL's performance over the past year, as it has exceeded Moody's revenue and expense expectations and has been successful in achieving synergies from the Norlight acquisition. Although KDL spent more than Moody's expected on network expansion, including acquiring some of McLeod's fiber properties in the Midwest and building new fiber runs to support access points for a wireless operator in the Chicago area, Moody's believes that this forward capex spending will position the Company to generate healthy free cash flow and continue its deleveraging program. The B1 corporate family rating reflects KDL's small size, modest historical free cash flow, high pro forma leverage, greater likelihood of increased competition as the company grows, and the ongoing integration of Norlight within its operations. The ratings are supported by KDL's track record of profitability, which is largely attributed to the company's strong position as the only alternative to the incumbent ILEC in the 2nd and 3rd tier markets in the Midwest and the Southeast US. KDL is a wholesale transport service provider in the Midwest and the Southeast US. The company's headquarters are located in Evansville, Indiana. LANDING DEVELOPMENT: Section 341(a) Meeting Set for May 20 ---------------------------------------------------------- The U.S. Trustee for Region 18 will convene a meeting of creditors of Landing Development LLC at 1:30 p.m., on May 20, 2008, at UST1, U.S. Trustee's Office, Room 223 in Portland, Oregon. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Milwaukie, Oregon-based Landing Development LLC, aka Volare at Eagle Landings and aka Marnella Homes, -- http://www.marnellahomes.com/-- is a home builder. The company, together with Tony Marnella Inc. and Anthony Lawrence Marnella, filed chapter 11 petition on April 14, 2008 (Bankr. D. Ore. Case Nos. 08-31686, 08-31685 and 08-31688). Judge Elizabeth L. Perris presides the case. Susan S. Ford, Esq., at Sussman Shank LLP represents the Debtors in their restructuring efforts. They listed $10 to $50 million in assets and debts when they filed for bankruptcy. LEHMAN ABS: S&P Chips 'BB+' Rating on Class M-1 Certs. to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on eight classes of senior/subordinate asset-backed certificates from Lehman ABS Manufactured Housing Contract Trust 2001-B. The long- term rating on class A-7 from this transaction was not affected by these actions because it benefits from an insurance policy issued by Ambac Assurance Corp. The lowered ratings reflect the deterioration in credit enhancement resulting from the worse-than-expected performance trends displayed by the underlying pool of manufactured housing contracts, which were originated by CIT Group/Sales Financing Inc. Effective April 1, 2008, Green Tree Servicing LLC is the servicer on this transaction. As of the April 2008 payment date, this transaction had a pool factor of 40.33%, and the trust had experienced cumulative net losses of 14.5% after 78 months of performance. In addition, 8.4% of the current pool balance is more than 60 days past due, and more than 13% of the current pool balance is more than 30 days past due. Moreover, the high level of monthly losses and insufficient excess spread have caused complete principal write- downs on the class B-2 certificate, and the class B-1 certificate has been written down to almost half of its original outstanding principal balance. Standard & Poor's will continue to monitor this transaction to determine whether further rating actions are warranted. Ratings Lowered Lehman ABS Manufactured Housing Contract Trust 2001-B Rating ------ Class To From ----- -- ---- A-1 BBB+ A+ A-2 BBB+ A+ A-3 BBB+ A+ A-4 BBB+ A+ A-5 BBB+ A+ A-6 BBB+ A+ M-1 B- BB+ M-2 CCC- CCC+ LEHMAN BROTHERS TRUST: Moody's Affirms Caa1 Rating on Certificates ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of four classes and affirmed the ratings of four classes of Lehman Brothers Floating Rate Commercial Mortgage Trust 2006-CCL C2, Commercial Mortgage Pass-Through Certificates, Series 2006-CCL C2 as: -- Class X, Notional, affirmed at Aaa -- Class X-FLP, Notional, affirmed at Aaa -- Class J, $3,241,096, Floating, upgraded to Aaa from A1 -- Class K, $20,030,000, Floating, upgraded to A3 from Baa3 -- Class L, $18,920,000, Floating, affirmed at Ba3 -- Class M, $26,776,000, Floating, affirmed at Caa1 -- Class GRS $585,489, Floating, upgraded to A1 from Baa1 -- Class MTH, $25,925, Floating, upgraded to A1 from A3 Moody's is upgrading pooled classes J and K due to increased credit support from partial property releases. Moody's is upgrading non-pooled rake classes GRS and MTH due to decreased loan leverage from condominium unit releases from the 88 Greenwich Street and Mandalay on the Hudson Loans, respectively. The Certificates are collateralized by six senior participation interests in seven properties. The loans range in size from 1.0% to 24.0% of the pool based on current principal balances. As of the April 15, 2008 distribution date, the transaction's aggregate certificate balance had decreased by approximately 92.3% to $71.8 million from $932.9 million at securitization as the result of the payoff of ten loans initially in the pool and partial property releases associated with the remaining six loans. The trust contains transitional assets that are undergoing conversion for sale as residential condominiums. Classes J, K, L and M are pooled classes. Classes GRS and MTH are non-pooled classes that depend on the performance of the 88 Greenwich Street Loan and the Mandalay on the Hudson Loan, respectively. The 88 Greenwich Street Loan (18.1%) is secured by 457 residential units and 51,383 square feet of retail space. The building was originally constructed as an office building and was converted to a rental apartment building in 2002. It is located in New York City's Financial District. The conversion is proceeding in line with the initial business plan. Units began to close in July, 2007. To date, 250 units have closed (54.7%) and there are an additional 29 units (6.3%) under contract. The average sales price for these 279 units is $798,820 per unit (approximately $1,140 per square foot). LEVITT AND SONS: Administrator Taps Whelchel & Dunlap as Counsel ---------------------------------------------------------------- Soneet R. Kapila, as chief administrator for certain debtors- affiliates of Levitt and Sons LLC that are borrowers under a DIP Loan Agreement with Wachovia Bank N.A., seek authority from the U.S. Bankruptcy Court for the Southern District of Florida to retain the law firm Whelchel, Dunlap, Jarrard & Walker, LLP, as its special counsel, nunc pro tunc to April 19, 2008. Mr. Kapila wants to hire Whelchel & Dunlap to assist him in carrying out his duties, including representing him in connection with zoning and local government issues. Whelchel & Dunlap has agreed to be compensated from funds advanced under the DIP Loan Agreement upon filing fee applications in accordance with Section 330 of the Bankruptcy Code and the local rules of the Court. The firm's hourly rate is $240. Whelchel & Dunlap has requested that Mr. Kapila deposit a $3,000 retainer to apply against future statements, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, informs the Court. William A. Bagwell, a member of Whelchel & Dunlap, assures the Court that his firm and its individual members do not hold or represent any interest adverse to the Debtors, their creditors or estates. Mr. Bagwell discloses that the firm represents Bob Vass and Sally Porter in the Debtors' Chapter 11 cases. Mr. Vass and Ms. Porter entered into residential purchase agreements with the Wachovia Debtors prepetition. The agreements have been rejected by the Wachovia Debtors and Mr. Vass and Ms. Porter have filed proofs of claim in the Debtors' bankruptcy cases. Whelchel is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code, Mr. Bagwell asserts. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LEVITT AND SONS: Administrator Wants to Employ VHB as Consultant ---------------------------------------------------------------- Soneet R. Kapila, as chief administrator for certain debtors- affiliates of Levitt and Sons LLC that are borrowers under a DIP Loan Agreement with Wachovia Bank N.A., seek authority from the U.S. Bankruptcy Court for the Southern District of Florida to retain Vanasse Hangen Brustlin, Inc., as an engineering consultant in the Debtors' Chapter 11 cases, nunc pro tunc to April 8, 2008. Mr. Kapila seeks to hire VHB to assist him in carrying out his duties with respect to two of the Wachovia Debtors' residential communities, Cascades at Sarasota and Rio Mar Sarasota, both located in Manatee County, Florida. In connection with the development of Rio Mar Sarasota and Cascades at Sarasota, the Wachovia Debtors were required by local governmental authorities to post bonds to provide funding to the local government in the event they failed to complete or correct defects in sidewalk, roadway and other improvements, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, relates. Since the date of bankruptcy, the Wachovia Debtors have been informed by local government authorities that they were considering calling the bonds. VHB served as Project Engineer regarding the Project Bonds, Ms. Jackson informs the Court. VHB has been chosen as an engineering consultant because of the experience of the firm's personnel with the Projects, according to Ms. Jackson. VHB will be paid according to its hourly fees and expenses advanced from funds under the DIP Loan Agreement, in accordance with the Court's November 14, 2007 Interim Compensation and Reimbursement Order and local rules of the Court. The firm estimates that the total cost of its contemplated services as an engineering consultant will not exceed $20,500. Steve J. Shroyer, a Florida licensed professional engineer and senior project manager at VHB, assures the Court that neither he nor any other employee of his firm has any connection with any creditors or any other parties-in-interest or their attorneys or accountants in the Debtors' Chapter 11 cases. VHB and its individual employees do not hold or represent any interest adverse to the Debtors, their creditors or estates, Mr. Shroyer asserts. The firm and its employees are each a disinterested person, as the term is defined in Section 101(14) of the Bankruptcy Code, he attests. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Reports 2008 First Quarter Sales Results --------------------------------------------------------- Linens Holding Co., reported its sales results for the first quarter ended March 29, 2008. The Company reported total net sales of $566.9 million for the quarter, a 0.8% decrease over the same period in 2007. This decrease in net sales resulted from a comparable store sales decline of 5.7% for the quarter, partially offset by the opening of new stores. Due to its recent Chapter 11 bankruptcy filing, the Company requires additional time to complete the preparation of its consolidated financial statements for the first quarter of 2008. The delay is necessary in part because, in connection with the Company's bankruptcy filing, the Company is performing an impairment analysis related to certain of its tangible and intangible assets, which is not yet complete. As a result, the Company has not finalized its quarterly financial statements on its customary schedule and will not file its Form 10-Q with the Securities and Exchange Commission today. The Company intends to finalize the financial statements and file the report as soon as reasonably practicable. In addition, due to these factors, the Company will not hold a first quarter 2008 investor earnings conference call. The Company ended the quarter with an asset-based revolver balance of $349.1 million (excluding outstanding letters of credit totaling $61.8 million), cash on hand of $8.3 million and excess availability under its revolving credit facility of $116.1 million. The Company disclosed in its recent Chapter 11 bankruptcy filing that an aggregate amount of $369.3 million was outstanding under the revolver as of the date of the filing, May 2, 2008. This balance excludes outstanding letters of credit totaling $61.1 million. At the same time, the Company had total liquidity of $95.3 million, consisting of excess availability under its revolving credit facility of $77.9 million and available cash of $17.4 million. As of the close of business on May 11, 2008, the Company had total liquidity in excess of $100 million. During the first quarter of 2008, the Company opened seven stores and closed three stores as compared with opening two stores and closing zero stores during the first quarter of 2007. Store square footage increased 2.9% to 19.5 million at March 29, 2008 compared with 19.0 million at March 31, 2007. Linens 'n Things, with 2007 sales of approximately $2.8 billion, is one of the leading, national large format retailers of home textiles, housewares and home accessories. As of March 29, 2008, Linens 'n Things operated 593 stores in 47 states and seven provinces across the United States and Canada. More information about Linens 'n Things can be found online at http://www.lnt.com/ Linens 'N Things Delays Filing 1st Quarter Results with SEC Linens Holding Co., Linens 'n Things, Inc., and Linens 'n Things Center, Inc., informed the Securities and Exchange Commission they are "not in a position" where they will be able to file their Quarterly Report on Form 10-Q for the 13-week period ended March 29, 2008, in a timely manner. The Linens 'n Things Entities pointed to their Chapter 11 filing as the principal reason for the delay. The cited that, as a result of their bankruptcy filing, they are performing an impairment analysis related to certain of their tangible and intangible assets, which analysis is not yet complete. Francis M. Rowan, senior vice president and chief financial officer, said Linens 'n Things requires additional time to complete its consolidated financial statements and management's discussion and analysis of financial condition and results of operations. According to Mr. Rowan, the company intends to file the Report as soon as reasonably practicable. 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. 5, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)7 LINENS N THINGS: Wants to Employ Richards Layton as Counsel ----------------------------------------------------------- Linens 'n Things and its debtor-affiliates seek the authority of the United States Bankruptcy Court for the District of Delaware to employ Richards, Layton & Finger, P.A., as counsel, nunc pro tunc to their bankruptcy filing date. Francis M. Rowan, the Debtors' senior vice president and chief financial officer, says that Richards Layton has extensive experience and knowledge in business reorganizations and liquidations. The Debtors believe that Richards Layton is well qualified to represent them in a most efficient and timely manner. As counsel, Richards Layton will: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession; (b) protect and preserve the Debtors' bankruptcy estates, by prosecuting actions on their behalf, and negotiating disputes, in which the Debtors are involved; (c) prepare all necessary motions, applications, and reports in connection with the administration of the estates; and (d) perform all other necessary legal services in connection with the cankruptcy cases. Richards Layton will be paid in its standard hourly rates: Mark D. Collins $560 John H. Knight $490 Michael J. Merchant $420 Jason M. Madron $305 Christopher M. Sarnis $235 L. Katherine Good $235 Aja McDowell $175 The Debtors will also reimburse Richards Layton with its reasonable out-of-pocket expenses. Richards Layton has rendered legal services to the Debtors prior to the Petition Date in connection with the preparation of, and commencement of the Chapter 11 cases. The firm received a total retainer of $350,000 for prepetition services and related expenses. A portion of the payment has been applied to outstanding balances existing as of the Petition Date. The Debtors propose that the retainer paid to Richards Layton that was not expended for prepetition services and disbursements, be treated as an evergreen retainer paid in contemplation of services to be rendered pursuant to this application. The Debtors also propose that the amounts be held by the firm as security throughout the bankruptcy cases until its fees and expenses are awarded by final order, and are then payable. Mark D. Collins, Esq., a director at Richards Layton, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of 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. 4, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINEN N THINGS: Wants to Employ Gardere as Special Counsel ---------------------------------------------------------- Linens 'n Things and its debtor-affiliates seek the authority of the United States Bankruptcy Court for the District of Delaware to employ Gardere Wynne Sewell LLP as their special counsel in their Chapter 11 Cases, nunc pro tunc to their bankruptcy filing date. Gardere Wynne has represented the Debtors before the Petition Date in connection with numerous areas and legal issues, including the Debtors' prepetition efforts to avoid a Chapter 11 filing, preparation for the commencement of their Bankruptcy Cases. Gardere will work closely with the Debtors' proposed counsel, Richards, Layton & Finger, P.A., to ensure that the tasks discretely related to the bankruptcy process are appropriately handled by Richards Layton. Morgan, Lewis & Bockius LLP has also been engaged as special counsel in connection with financing matters, real estate matters and matters pertaining to the Debtors' Canadian subsidiaries. The Debtors say they require various counsel so that they will be able to effect their reorganization proceedings with optimal efficiency because their Bankruptcy Cases are complex and involves a multi-level debt structure and almost 600 retail stores throughout the United States of America and Canada. Gardere has represented the Debtors prepetition in connection with these areas and issues: (i) general corporate; (ii) securities matters, including SEC filings; (iii) real estate; (iv) tax; (v) intellectual property; (vi) labor, employment and employment benefits; (vii) general litigation; (viii) regulatory issues; (ix) licensing, insurance, transportation and vendor issues; (x) negotiation of credit agreements; (xi) statutory compliance counseling; (xii) resolution of issues related to the Debtors' lease portfolio and Canadian subsidiaries; and (xiii) various other matters applicable to the Canadian subsidiaries. Gardere will continue to provide legal advice to the Debtors during the course of their Chapter 11 cases. The Debtors will compensate Gardere in accordance with the firm's customary hourly rates: Professional Hourly Rate ------------ ----------- Partners $390 to $750 Associates $210 to $450 Paraprofessionals $90 to $210 The Debtors will also reimburse Gardere for all reasonable out- of-pocket expenses incurred relating directly to work performed for the Debtors. Francis M. Rowan, senior vice president and chief financial officer of the Debtors, discloses that the Debtors paid Gardere $625,000, as a retainer fee before the Petition Date. The Debtors paid Gardere $3,797,752 in the 12-month period ended April 30, 2008, for legal services rendered to the Debtors during the period. As of the Petition Date, the Debtors do not owe Gardere for legal services rendered or expenses provided before the Petition Date. Gardere Not Disinterested Ronald M. Gaswirth, a partner at Gardere, assures the Court that the firm does not represent any interest materially adverse to the Debtors, their creditors and the United States Trustee or any other party in interest. Section 327(a) of the Bankruptcy Code provides that the debtor may employ attorneys and other professionals, provided that they do not hold an interest adverse to the estate, and they are disinterested persons. According to Mr. Rowan, Gardere has served as the Debtors' outside general counsel for over two years. The Linens Companies do not have an integral legal department and, accordingly, Gardere lawyers have become intimately familiar with the operations of the Debtors and have been involved in the negotiation and implementation of a myriad of contracts and other business functions throughout the Debtors' organization. The Linens Companies have invested millions of dollars in the services Gardere has provided, and Gardere has established a significant knowledge base regarding the Linens Companies, which can neither practically no economically be transferred to alternative counsel at a time when the Linens Companies most require knowledgeable advice and counseling. The Debtors admit that Gardere, however, is precluded from applying for employment under Section 327(a) due to the sole fact that one of its partners, Ron Gaswirth, served in the very ministerial role of secretary to the Debtors prior to the bankruptcy filing. Mr. Gaswirth was at all times a full partner at Gardere during his tenure as Secretary, received no salary or other compensation as Secretary, yet took notes at quarterly meetings of the Debtors' Board of Directors in furtherance of Gardere's responsibilities as counsel to the Linens Companies. Unfortunately Mr. Gaswirth cannot technically qualify under the disinterestedness test. Despite the lack of statutory mandate, apparently Mr. Gaswirth's lack of disinterestedness is deemed impugned to the entire firm of Gardere, the Debtors relate. Accordingly, the Debtors say they are compelled to apply to the Court for the employment of Gardere under Section 327(e) of the Bankruptcy Code. Section 327(e) provides the debtor may employ for a specified special purpose, other than to represent it in conducting the case, an attorney that has represented the debtor, if in the best interest of the estate, and if the attorney does not represent or hold any interest adverse to the debtor or the estate with respect to the matter on which the attorney is to be employed. Mr. Rowan acknowledges that normally, general bankruptcy counsel employed under Section 327(a) would merely call upon special counsel with particular areas of expertise for assistance and information about these legal areas of the law when necessary. Due to the extensive knowledge of Gardere, the Debtors request that bankruptcy attorneys at Gardere continue to interact with attorneys in the appropriate specialty areas of practice at Gardere to assist Richards Layton in "obtaining" the appropriate legal information and thereby more efficiently handing a project and assisting Richards Layton as Section 327(a) bankruptcy counsel. 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. 5, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)7 MCKINNEY ZONE: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: McKinney Zone, LP 448 North Custer Rd. McKinney, TX 75071 Bankruptcy Case No.: 08-41186 Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Robert T. DeMarco, Esq. Email: bob@bankruptcytx.com Boyd Veigel, P.C. 218 E. Lousiana, P.O. Box 1179 McKinney, TX 75070 Tel: (972) 562-9700 Fax: (972) 208-4603 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. MERGE HEALTHCARE: Posts $7.8 Million Net Loss in 2008 1st Quarter ----------------------------------------------------------------- Merge Healthcare Incorporated reported on Monday financial results for the first quarter ended March 31, 2008. The net loss for the first quarter of 2008 totaled $7.8 million, compared to a net loss of $9.7 million in the first quarter of 2007 and a net loss of $9.6 million in the fourth quarter of 2007. The net loss in the fourth quarter of 2007 also includes a $1.2 million charge for the write-down to the estimated fair market value of an investment in the equity of a privately held customer of Cedara Software. For the first quarter ended March 31, 2008, revenue totaled $13.7 million, compared to $15.9 million in the first quarter ended March 31, 2007 and $15.6 million in the fourth quarter ended Dec. 31, 2007. Operating loss for the first quarter ended March 31, 2008, was $8.4 million, compared to an operating loss of $10.2 million in the first quarter ended March 31, 2007, and $8.5 million in the fourth quarter ended Dec. 31, 2007. Contributing to the operating loss for the first quarter of 2008 was a charge of $1.4 million for costs, primarily severance costs, incurred in connection with the reduction in force that was announced and implemented on Feb. 14, 2008, and $300,000 in additional severance costs for the former president of the company's EMEA business unit, partially offset by $1.1 million in reimbursement from the company's primary insurance carrier for legal fees incurred in connection with Merge's class action litigation. Contributing to the operating loss for the first quarter of 2007 was a restructuring charge of $800,000 in connection with the rightsizing initiative announced in November of 2006. The adjusted operating loss for the first quarter of 2008 was $4.0 million compared to adjusted operating losses of $4.2 million in the first quarter of 2007 and the fourth quarter of 2007. The non-GAAP adjusted operating income (loss) excludes the impact of stock option expense under SFAS 123(R), depreciation and amortization expense, non-recurring legal and accounting costs, various lawsuits and the pursuit of strategic options, reduction in force and duplication of effort costs. Going Concern Disclaimer As reported in the Troubled Company Reporter on April 29, 2008, KPMG LLP in Chicago expressed substantial doubt about Merge Healthcare Incorporated'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 and negative cash flows. The company says it has generated losses from operations over the past nine consecutive quarters and the company currently has no credit facility. As a result, the company is currently completely dependent on available cash and operating cash flow to meet its capital needs. Possible Bankruptcy If adequate funds are not available or are not available on acceptable terms, the company will likely not be able to fund its new teleradiology business, take advantage of unanticipated opportunities, develop or enhance services or products, respond to competitive pressures, or continue as a going concern beyond June 30, 2008, and may have to seek bankruptcy protection. About Merge Healthcare Merge Healthcare Inc. (Nasdaq: MRGE; TSX: MRG) -- http://www.merge.com/-- is a developer of medical imaging and clinical software applications and developmental tools. The company develops medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. MESA AIR: Settles Litigation Involving Hawaiian Airlines -------------------------------------------------------- Hawaiian Airlines reached late in April a settlement of its lawsuit with Mesa Air Group, Inc., regarding Mesa's misuse of confidential and proprietary information obtained during Hawaiian's Chapter 11 plan of reorganization in 2004. Mesa runs inter-island flight services operated under the go! brand name. Under the terms of the settlement and without admitting any wrongdoing, Mesa will receive $37.5 million from a bond the Company previously posted with the United States Bankruptcy Court for the District of Hawaii. Hawaiian Airlines will be entitled to the remaining collateral of the Bond totaling $52.5 million. Mesa will withdraw its appeal of the $80 million judgment -- plus interest, attorney's fees and costs -- awarded against Mesa by the Bankruptcy Court in October 2007. The cash payment is required to be made within two business days of approval of a stipulation by the bankruptcy court that will follow dismissal of the appeals. The settlement does not restrict in any way go!'s ability to continue to offer services in the Hawaiian interisland market. Mark Dunkerley, Hawaiian's President and CEO, said, "This settlement is the last chapter in the legal dispute over Mesa's misuse of Hawaiian's confidential information. We were delighted with the award of damages and this settlement." On October 30, 2007, the Bankruptcy Court ruled in favor of Hawaiian, awarding Hawaiian $80 million for damages incurred to date and ordering that Mesa pay Hawaiian post-judgment interest and its cost of litigation and reasonable attorneys fees. In November 2007, Mesa filed a notice of appeal to the ruling and was required to post a $90 million bond as security for the judgment, post judgment interest, and attorney's fees, pending the outcome of the appeal. As reported by the Troubled Company Reporter on Feb. 1, 2008, the Hon. Robert Faris directed Mesa to pay Hawaiian Airlines Inc. $3.9 million for costs of litigation and attorneys' fees the carrier incurred in their dispute over the misuse of confidential information to gain an unfair competitive advantage. The TCR said Nov. 2, 2007, that the $80 million in damages was awarded to compensate Hawaiian for damages it suffered through October 2007. The court did not award damages for any injury Hawaiian may sustain in the future as a result of Mesa's misconduct. About Hawaiian Airlines Hawaiian Airlines, Inc. -- http://www.hawaiianair.com/-- a subsidiary of Hawaiian Holdings Inc. (Amex: HA), provides passenger air service between the U.S. mainland and Hawaii. The company also offers nonstop service to Hawaii from more U.S. gateway cities than any other airline, as well as service to the Philippines, Australia, American Samoa, and Tahiti. Hawaiian also provides approximately 145 daily jet flights among the Hawaiian Islands. The company filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Hawaii (Case No. 03-00827) on March 21, 2003. Joshua Gotbaum served as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum was represented by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. The Bankruptcy Court confirmed the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005. The Plan took effect on June 2, 2005. About Mesa Air Mesa currently operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. MESA AIR: Won't File March 2008 Quarterly Report on Time -------------------------------------------------------- Mesa Air Group, Inc., won't be able to file its quarterly financial report for the period ended March 31, 2008, on time. In a filing with the Securities and Exchange Commission, Brian S. Gillman, Mesa Air's Executive Vice President, General Counsel and Secretary, explains that certain information required in Mesa Air's Quarterly Report on Form 10-Q for the quarter ended December 31, 2007, necessary for an accurate and full completion of the March 31 report could not be provided within the proscribed time period without unreasonable effort or expense. Mesa Air expects to report a profit in the current quarter versus the comparable quarter of prior fiscal year due to certain nonrecurring charges, according to Mr. Gillman. Mesa currently operates 182 aircraft with over 1,000 daily system departures to 157 cities, 42 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. On May 14, 2008, Air Midwest, Inc., a wholly owned subsidiary of Mesa Air, unveiled plans to discontinue all operations by June 30 including its current scheduled services, citing record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. MESABA AVIATION: Andy Roberts Appointed to Lead Company ------------------------------------------------------- Andy Roberts, executive vice president for operations of Northwest Airlines Corporation, will manage Mesaba Aviation, Inc. starting June 16, 2008, The Associated Press reports. News of Mr. Roberts' appointment came after Northwest issued a statement disclosing that Neal Cohen, executive vice president - strategy, international and CEO regional airlines, will leave the Company effective June 16, 2008. Mr. Cohen returned to Northwest in May 2005 as executive vice president and chief financial officer. He played a vital role in leading the Company's restructuring efforts and upon Northwests emergence from bankruptcy, in June 2007, Cohen was promoted to his current position. Northwest Airlines' President and Chief Executive Officer, Doug Steenland, said, "Neal made tremendous contributions during a critical time for Northwest Airlines. His leadership throughout the restructuring process positioned the Company well during an extremely tumultuous period in the industry. We're grateful that Neal returned to the airline to help guide Northwest through the restructuring process and we wish him the very best in his future endeavors." Discussing his departure, Mr. Cohen said, "Over the past three years, we have worked collaboratively to reposition Northwest and secure its future for the long-term. Having successfully completed the restructuring process, and with the impending merger with Delta, I'm excited about the opportunity to pursue business interests outside of the airline industry that I put on hold when I returned to Northwest. I'm confident that the airline will continue to be an industry leader and am proud to have been a part of its success." Neal Cohen, 48, was executive vice president of finance and chief financial officer for US Airways from April 2002 to April 2004. Prior to US Airways, Cohen served as chief financial officer for various service and financial organizations. He spent nine years with Northwest, from 1991 to 2000, where he held a number of senior positions including senior vice president and treasurer. Prior to joining Northwest, he spent seven years at General Motors' Treasurers office in New York. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service placed the debt ratings of Delta Air Lines, Inc. ("Delta", corporate family at B2) and Northwest Airlines Corporation ("Northwest", corporate family rating at B1) on review for possible downgrade. The review was prompted by the announcement that the two airlines have agreed to combine in an all-stock transaction with a combined enterprise value of approximately $18 billion. Fitch Ratings has affirmed the debt ratings of Delta Air Lines, Inc. following the announcement that Delta has agreed to merge with Northwest Airlines Corp., subject to approval by the two airlines' shareholders and the U.S. Department of Justice. Delta's ratings were affirmed as: Issuer Default Rating at 'B'; First-lien senior secured credit facilities at 'BB/RR1'; Second- lien secured credit facility (Term Loan B) at 'B/RR4'. The issue ratings apply to $2.5 billion of committed credit facilities. The Rating Outlook for Delta has been revised to Negative from Stable. Standard & Poor's Ratings Services placed its ratings, including the 'B+' long-term corporate credit rating, on Northwest Airlines Corp. on CreditWatch with negative implications, following announcement of a merger agreement with Delta Air Lines Inc. (B/Watch Pos/--). The CreditWatch listing affects enhanced equipment trust certificates with various ratings, excepting those that are insured by a bond insurer. S&P's listing of Northwest ratings on CreditWatch with negative implications and those of Delta on CreditWatch with positive implications implies that S&P foresee a corporate credit rating of either 'B' or 'B+' for the combined entity. About Mesaba Aviation Based in Eagan, Minnesota, Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines(OTC:NWACQ.PK). The company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represented the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represented the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. The U.S. Bankruptcy Court for the District of Minnesota confirmed Mesaba's Modified Plan of Reorganization on April 9, 2007. Mesaba exited bankruptcy on April 24, 2007, and was later acquired by Northwest Airlines from MAIR Holdings Inc. (Mesaba Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MESABA AVIATION: Liquidating Trustee Appeals MAC Ruling ------------------------------------------------------- Odyssey Capital Group, LLC, as the liquidating trustee for Mesaba Aviation, Inc.'s modified Plan of Reorganization, asks the United States District Court for the District of Minnesota to determine whether the U.S. Bankruptcy Court for the District of Minnesota erred in: (a) granting Metropolitan Airports Commission's motion for summary judgment; (b) denying the Trustee's cross-motion for summary judgment; (c) excluding from evidence the opinions of Trustee's expert witness, Jeffrey A. Johnson of Integra Realty Resources, regarding: * the fair market value of the Hangar and the MN Airlines Lease; and * the appropriate discount rate to be used in calculating present value pursuant to the Bankruptcy Court's order granting MAC's Motion in Limine on February 12, 2008. Bankruptcy Court Ruling Must be Reversed The Liquidating Trustee asks the District Court to (i) reverse the Bankruptcy Court's order; (ii) disallow Claim No. 958 in its entirety; and (iii) direct MAC to repay all amounts paid by the Trustee on account of Claim 958. Mark L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman & Tansey, in Minneapolis, Minnesota, contends that: -- MAC is not entitled to the presumption of validity under the Bankruptcy Code; -- MAC failed to properly calculate its damages; and -- MAC's asserted damages are speculative, remote and based on incomplete evidence. As previously reported, the Debtor rejected an airport hangar lease with MAC, as the lessor, with 20 years remaining on the term of the lease. The Debtor originally agreed to lease the hangar at $1,328,686 plus annual costs of approximately $240,000. MAC filed Claim No. 958 for $3,249,233, asserting damages resulting from the Debtor's rejection of the Lease. The Liquidating Trustee objected to the Claim because MAC has identified one or more tenants to whom it will re-let some or all of the property, and MAC has otherwise failed to mitigate its damages. MAC contended that it has already mitigated its damages by entering into a new lease with Sun Country Airlines and that it incurred damages amounting to $27,980,490 before entering into the New Lease. MAC secured the New Lease in less than one year after the Debtor rejected their Lease. The New Lease has a 10-year initial term from 2008 to 2017, and a 10-year tenant renewal option for years 2018-2027. Mr. Meyer relates that the dispute focuses primarily on whether, in applying Minnesota law's measure of the damages, the hangar subject to the Lease has any rental value during the Option Period. MAC argues that it deserves to collect all lease payments due under the Mesaba Lease during the Option Period. The Liquidating Trustee wanted Mr. Johnson to provide expert opinion on the fair market value of the hangar. However, MAC asked the Bankruptcy Court to exclude Mr. Johnson's opinion as support to the Liquidating Trustee's objection arguing that Mr. Johnson has not conducted any discovery before the deadline to do so. The Liquidating Trustee told the Bankruptcy Court that the deadline is impracticable in the matter under Federal Rules of Civil Procedure. The two parties made their requests "in limine" or immediately before the start of a hearing. Consequently, the Bankruptcy Court excluded Mr. Johnson from testifying as to the rental value of the hangar and the appropriate discount factor to be used in determining the present value of MAC's damages. In addition, each of MAC and the Liquidating Trustee asked the Bankruptcy Court to enter summary judgment against the other. The Bankruptcy Court granted MAC's request for summary judgment. Mr. Meyer contends that the Bankruptcy Court erroneously determined that the New Lease was not evidence of the Hangar's Rental Value and that the hypothetical risk that the property may not be leased in the Option Period rendered the Hangar valueless during the Option Period. He asserts that the only competent evidence of the Rental Value of the Hangar is the New Lease, which resulted from an arm's-length negotiation. MAC's Claim No. 958 is defective on its face because MAC failed to properly calculate damages according to Minnesota law, Mr. Meyer says. MAC must prove that it sustained recoverable damages. According to Mr. Meyer, while it is conceivable that the Hangar could sit empty for a decade, it is not a credible position in light of the undisputed facts in the record and is not the standard under Minnesota law. Minnesota law on lease damages requires deducting Rental Value of the Hanger, not merely the rent contracted to be paid. The Hangar itself has a clear Rental Value evidenced by the Sun Country Lease, Mr. Meyer relates. MAC will be better off with the Sun Country Lease than with the Mesaba Lease, Mr. Meyer says. If Sun Country will exercise its Option, MAC will receive not less than $2,000,000, in percentage rent, he says. According to Mr. Meyer, Mr. Johnson stated clearly in his deposition that the best evidence of Rental Value or future rental stream of the Hangar, as opposed to the present discounted value of that Rental Value, is the rent negotiated in the Sun Country Lease. The Bankruptcy Court erred in concluding that there was "no information disclosed" at the Johnson Deposition, Mr. Meyer maintains. Mr. Johnson's testimony regarding evidence of the Rental Value of the Hangar should be admitted as evidence, he adds. MAC Asserts Ruling Should be Upheld The Metropolitan Airports Commission asserts that the Bankruptcy Court's decision granting summary judgment against Odyssey Capital Group, LLC, the liquidating trustee for Mesaba Aviation, Inc.'s modified Plan of Reorganization, should be upheld. Connie A. Lahn, Esq., at Fafinski Mark & Johnson, P.A., in Eden Prairie, Minnesota, asserts that a decision by a lower court to exclude expert testimony due to a failure to comply with discovery deadlines is only reversed if there was a gross abuse of discretion resulting in fundamental unfairness. Ms. Lahn contends that MAC's claim is undisputed because: -- the Liquidating Trustee failed to produce evidence disputing it; -- MAC mitigated its damages; and -- MAC properly calculated its damages. Mesaba's rejection of the Lease constitutes a breach, Ms. Lahn asserts. The breach resulted in damages incurred by MAC for $27,980,490 in unpaid rent due under the remaining term. According to Ms. Lahn, MAC experienced many difficulties in finding a new tenant for the Hangar. The Hangar was custom- designed by Mesaba for its own needs, it is smaller than the average hangars at the Minneapolis-St. Paul International Airport, or MSP, and is not large enough to accommodate the commercial aircraft regularly flown at MSP. The only carriers that could use the Hangar were: Northwest Airlines, Sun Country Airlines, and Champion Air. However, the Hangar is too small for the large commercial aircraft used by these carriers, Ms. Lahn relates. MAC must limit the use of hangars at MSP for aviation-related activities, pursuant to a bond financing obtained by MAC to finance construction of the Hangar, Ms. Lahn says. There are also security concerns that limit the types of tenants that can operate at MSP. Ms. Lahn relates that MAC directly contacted every party that realistically could be a tenant for the Hangar. MN Airlines, doing business as Sun Country Airlines, is an affiliate of Petters Aviation, and was the only carrier who expressed any interest in the Hangar. Ms. Lahn asserts that neither MN Airlines nor MAC knows whether MN Airlines will exercise its option to renew the lease. The option has no value to MAC because MAC has no power to exercise the option. MAC is still liable to make the Bond payments if the option is not exercised. An unoccupied hangar has no value to MAC, she says. If MN Airlines does not exercise the option, it is uncertain whether MAC will be able to re-lease the Hangar to another tenant, or for what price, Ms. Lahn contends. "The airline industry is extremely volatile," Ms. Lahn reminds the Court. "MAC does not know what will happen in this industry in 10 years. In the last 10 years, virtually every major tenant at MSP has filed for bankruptcy. Fuel costs are at an all-time high, negatively impacting the industry, and most of MAC's hangar space is currently underutilized because of these changing conditions." Ms. Lahn further points out that the Liquidating Trustee did not describe the substance of Mr. Johnson's expert opinions, nor did it describe the basis for his opinions. As a result, MAC had no idea, at the close of discovery, what Mr. Johnson's expert opinion would be, she says. About Mesaba Aviation Based in Eagan, Minnesota, Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines(OTC:NWACQ.PK). The company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represented the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represented the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. The U.S. Bankruptcy Court for the District of Minnesota confirmed Mesaba's Modified Plan of Reorganization on April 9, 2007. Mesaba exited bankruptcy on April 24, 2007, and was later acquired by Northwest Airlines from MAIR Holdings Inc. (Mesaba Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) MICROMET INC: Posts $5.9 Million Net Loss in 2008 First Quarter --------------------------------------------------------------- Micromet Inc. reported a net loss of $5.9 million for the three months ended March 31, 2008, compared to a net loss of $7.6 million for the same period in 2007. For the three months ended March 31, 2008, Micromet recognized total revenues of $5.9 million, compared to $2.8 million for the same period in 2007. Total operating expenses were $13.3 million for the three months ended March 31, 2008, compared to $10.3 million for the same period in 2007. Micromet's cash and cash equivalents were $27.7 million as of March 31, 2008. Net cash provided by operating activities was $364,000 for the quarter ended March 31, 2008, compared to $7.9 million used in operating activities for the same period in 2007. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $53.2 million in total assets, $33.4 million in total liabilities, and $19.8 million in total stockholders' equity. 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?2bf0 Going Concern The company disclosed in its Form 10-Q for the first quarter of 2008, that as of March 31, 2008, the company had an accumulated deficit of $170.8 million, and its expects to continue to incur substantial, and possibly increasing, operating losses for the next several years. The company says that these conditions create substantial doubt about the company's ability to continue as a going concern. About Micromet Inc. Micromet Inc. (Nasdaq: MITI) -- http://www.micromet-inc.com/-- is a biopharmaceutical company developing novel, proprietary antibodies for the treatment of cancer, inflammation and autoimmune diseases. Four of its antibodies are currently in clinical trials, while the remainder of the product pipeline is in preclinical development. ML-CFC COMMERCIAL: Moody's Holds B3 Rating on $4.603MM Cl. P Trust ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of 22 classes of ML-CFC Commercial Mortgage Securities Trust, Series 2006-2 as: -- Class A-1, $39,050,605, affirmed at Aaa -- Class A-2, $88,159,000, affirmed at Aaa -- Class A-3, $54,481,000, affirmed at Aaa -- Class A-SB, $91,905,000, affirmed at Aaa -- Class A-4, $734,750,000, affirmed at Aaa -- Class A-1A, $263,114,771, affirmed at Aaa -- Class A-M, $184,145,000, affirmed at Aaa -- Class A-J, $130,108,000, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $36,829,000, affirmed at Aa2 -- Class C, $16,113,000, affirmed at Aa3 -- Class D, $32,225,000, affirmed at A2 -- Class E, $18,415,000, affirmed at A3 -- Class F, $29,923,000, affirmed at Baa1 -- Class G, $18,415,000, affirmed at Baa2 -- Class H, $20,716,000, affirmed at Baa3 -- Class J, $9,207,000, affirmed at Ba1 -- Class K, $4,604,000, affirmed at Ba2 -- Class L, $6,905,000, affirmed at Ba3 -- Class M, $2,302,000, affirmed at B1 -- Class N, $4,604,000, affirmed at B2 -- Class P, $4,603,000, affirmed at B3 Moody's is affirming the transaction due to overall stable pool performance. As of the April 14, 2008 distribution date, the transactions aggregate certificate balance has decreased by approximately 1.0% to $1.80 billion from $1.82 billion at securitization. The certificates are collateralized by 191 loans ranging in size from less than 1.0% to 9.9% of the pool with the top 10 loans representing 32.3% of the pool. The pool includes one loan (9.9% of the pool) with an underlying rating. Moody's was provided year-end 2006 and 2007 operating results for 86.5% and 59.3% of the pool, respectively. Moody's weighted average loan to vale ratio for the conduit component in 102.3% compared to 101.3% at securitization. The trust has not realized any losses since securitization. Currently there is one loan representing less than 1.0% of the pool in special servicing. Moody's is not currently estimating a loss at this time. Twenty-two loans, representing 5.8% of the pool, are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association monthly reporting package. As part of Moody's ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. The loan with an underlying rating is the 100 Summer Street Loan ($180.0 million -- 9.9%), which is secured by a 1.1 million square foot class A office building located in downtown Boston, Massachusetts. The property was approximately 100% occupied as of December 2007 compared with 97.4% at securitization. Major tenants include Fidelity Properties, Lexington Insurance Company, and Nixon Peabody, which together lease 53.6% of the property. Moody's current underlying rating is Baa2, compared to Baa3 at securitization. The top three conduit loans represent 12.6% of the outstanding pool balance. The largest conduit loan is the Penn Mutual Towers and Washington Square Garage Loan ($102.8 million -- 5.6%), which is secured by a 853,840 square foot Class A property located in downtown Philadelphia, Pennsylvania. The property was approximately 98% occupied as of January 2008 compared with 95.2% at securitization. The loan matures in April 2016. Moody's LTV is 108.2%, the same as at securitization. The second largest conduit loan is the 200 Paul Loan ($80.3 million -- 4.4%), which is secured by a 527,680 square foot telecommunications building located in close proximity to the main fiber optic line that serves San Francisco, California. The loan matures in October 2015. Moody's LTV is 93.5%, compared to 94.3% at securitization. The third largest conduit loan is the CNL-Cirrus MOB Portfolio III Loan ($47.2 million -- 2.6%), which is secured by five medical office properties located in two states and totaling 269,707 square feet. The properties were approximately 88.9% occupied as of December 2007 compared with 91.5% at securitization. The loan matures in April 2016. Moody's LTV is 99.7%, compared to 104.0% at securitization. MOORE CUSTOM: Case Summary & Four Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Moore Custom Homes, Ltd. 3301 Merrimack Flower Mound, TX 75022 Bankruptcy Case No.: 08-41170 Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Roy G. Morris, Esq. Email: rmorris@morris-law.com The Morris Legal Group 610 Parker Square Flower Mound, TX 75028 Tel: (972) 539-0090 Fax: (972) 539-1464 Total Assets: $3,350,000 Total Debts: $2,390,500 Debtor's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Chase Bank Line of Credit $75,000 P.O. Box 78039 Phoenix, AZ 85062 Denton County Tax Assessor Taxes $38,000 Attn: Steve Mossman P.O. Box 90223 Denton, TX 76202 Roy G. Morris Attorney Fees $14,000 610 Parker Square Flower Mound, TX 75028 Chase Bank Credit Card $10,500 MORGAN STANLEY: Moody's Holds Low-B Ratings on Four Cert. Classes ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of 11 classes of Morgan Stanley Dean Witter Capital I Trust 2002-HQ, Commercial Mortgage Pass-Through Certificates, Series 2002-HQ as: -- Class A-2, $9,848,806, affirmed at Aaa -- Class A-3, $363,674,000, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $32,781,000, affirmed at Aaa -- Class C, $29,608,000, affirmed at Aaa -- Class D, $7,402,000, affirmed at Aaa -- Class E, $10,574,000, upgraded to Aaa from Aa1 -- Class F, $8,460,000, upgraded to Aaa from Aa2 -- Class G, $8,459,000, upgraded to Aa2 from A1 -- Class H, $14,804,000, upgraded to Baa1 from Baa2 -- Class J, $6,345,000, upgraded to Baa3 from Ba1 -- Class K, $6,344,000, affirmed at Ba2 -- Class L, $8,460,000, affirmed at B1 -- Class M, $6,344,000, affirmed at B2 -- Class N, $2,115,000, affirmed at B3 Moody's is upgrading Classes E, F, G, H and J due to increases in credit support, defeasance and overall improved pool performance. As of the April 15th 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 37.8% to $525.8 million from $846.0 million at securitization. The Certificates are collateralized by 64 mortgage loans ranging in size from less than 1.0% to 23.1% of the pool, with the top 10 non-defeased loans representing 47.6% of the pool. The pool's largest loan has an underlying rating. Sixteen loans, representing 25.3% of the pool, have defeased and are secured by U.S. Government securities. The pool has not experienced any realized losses. Currently one loan, representing 1.7% of the pool, is in special servicing. Moody's is estimating a $1.0 million loss from this specially serviced loan. Ten loans, representing 12.8% of the pool, are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association monthly reporting package. As part of our ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Moody's was provided with full-year 2006 and partial-year 2007 operating results for 98.0% and 95.0% of the pool, respectively. Moody's loan to value ratio for the conduit component, excluding the defeased loans, is 82.8% compared to 85.9% at Moody's last full review in March 2007 and 85.8% at securitization. The loan with an underlying rating is the Woodfield Mall Loan ($121.5 million -- 23.1%), which represents a participation interest in a $242.9 million first mortgage loan. The loan is secured by the borrower's interest in a 2.2 million square foot super regional shopping center located 25 miles northwest of downtown Chicago in Schaumburg, Illinois. As of July 2007, in- line occupancy was 96.0% compared to 99.1% at last review. The borrower is a joint venture between the California Public Employees' Retirement System and General Motors Pension Trust. The property is also encumbered by a $40.2 million B Note, which is held outside the trust. Moody's current underlying rating is Aaa, the same as at last review. The top three conduit loans represent 14.5% of the outstanding pool balance. The largest conduit loan is the CBL Portfolio Loan ($36.4 million - 6.9%), which is secured by three shadow anchored retail properties totaling 617,000 square feet. The properties are Willowbrook Plaza (Houston, Texas); Massard Crossing (Fort Smith, Arkansas); and Pemberton Plaza (Vicksburg, Mississippi). As of December 2007, the portfolio was 91.0% occupied compared to 93.0% at last review. Performance has declined since last review based on decreased revenues and increased expenses. Moody's LTV is 88.2% compared to 86.1% at last review. The second largest conduit loan is the Denver West Village Loan ($22.4 million - 4.3%), which is secured by a 310,000 square foot power center located in Lakewood, Colorado. The center is anchored by United Artists Theaters, Ultimate Electronics and Bed Bath & Beyond. The center was 94.1% occupied as of June 2007, the same as at last review. The loan is on the master servicer's watchlist due to a debt service coverage ratio below 1.20. Moody's LTV is 98.6% compared to 98.2% at last review. The third largest conduit loan is the Enterprise Center Loan ($17.4 million - 3.3%), which is secured by an 189,000 square foot office building located in Chantilly, Virginia. The property was 78.3% occupied as of December 2007 compared to 80.0% at last review and 100.0% at securitization. The largest tenant is the International Bank for Reconstruction and Development, occupying 29.0% of the premises through January 2013. The loan is on the master servicer's watchlist due to a debt service coverage ratio below 1.20. Moody's LTV is 98.7%, essentially the same as at last review. MOULDING FX: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Moulding FX, LC P.O. Box 27834 Salt Lake City, UT 84127-0834 Bankruptcy Case No.: 08-22905 Type of Business: The Debtor provides moulding services. Chapter 11 Petition Date: May 5, 2008 Court: District of Utah (Salt Lake City) Debtor's Counsel: Andres' Diaz, Esq. Email: courtmail@adexpresslaw.com 1 On 1 Legal Services 307 West 200 S., Ste. 3004 Salt Lake City, UT 84101 Tel: (801) 596-1661 Fax: (801) 359-6803 Estimated Assets: $500,000 to $1 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. MTI GLOBAL: Has Until May 31 to Amend Credit Facility with Lender ----------------------------------------------------------------- MTI Global Inc. is subject to an amended forbearance agreement with its principal lender, a Canadian chartered bank dated Feb. 22, 2008, pursuant to which the company has until May 31, 2008, to amend its credit facilities with the Bank. The agreement also commits the company to raise sufficient capital to repay the term loan then outstanding and meet its other liquidity needs. Pursuant to the amended forbearance agreement, the company did not achieve its March 31, 2008, earnings before interest, taxes and depreciation covenant and a general covenant. The Bank has agreed to a continued forbearance of the defaults while the company proceeds to satisfy the terms of the amended forbearance agreement. The company is proceeding through a process to meet the requirements of the amended forbearance agreement. As part of this process the company has signed a non-binding agreement with a private capital source for $7.0 million of mezzanine financing subject to the completion of due diligence and documentation. These funds will be utilized to repay the term bank loan, for restructuring, and for other corporate initiatives. The company reported net loss of $914,000, a decline from a net income of $7,000 for the same period last year. Subsequent to quarter end these restructuring initiatives were disclosed: -- The Buchanan, Virginia plant will be closed and the operations will be moved to the two remaining U.S. silicone operations facilities in Milton, Florida and Richmond, Virginia during the second half of 2008. -- The Polyfab Aerospace plant in Mississauga, Ontario will be closed and the transfer of production to Mexico completed by the end of May 2008. At March 31, 2008, the company's balance sheet showed total assets of C$61.2 million, total liabilities of C$22.4 million and total shareholders' equity of C$38.8 million About MTI Global Headquartered in Mississauga, Ontario, MTI Global Inc. (TSX: MTI) -- http://www.mtiglobalinc.com/-- designs, develops and manufactures custom-engineered products using silicone and other cellular materials. The company serves a variety of specialty markets focused on three main product categories: Silicone, Aerospace and Fabricated Products. MTI's Canadian manufacturing operations are located in Mississauga, Ontario, with international manufacturing operations located in Richmond and Buchanan, Virginia; Pensacola, Florida; Bremen, Germany; and a contract manufacturer venture in Ensenada, Mexico. The company also has sales operations in England and Sweden, and an engineering support centre in Brazil. NEW CENTURY: Claimants Buck Plan; Proponents Push for Confirmation ------------------------------------------------------------------ The First Amended Joint Chapter 11 Plan of Liquidation prepared by New Century Financial Corp. and its debtor-affiliates, and the Official Committee of Unsecured Creditors cannot be confirmed under Section 1129(a) of the Bankruptcy Code, since it violates Section 1123(a)(4) by providing a greater distribution to the Master Repurchase Agreement Creditors, said Gregory J. Schroeder, Michelle Parker, Martin Warren, Steve Holland, Nabile Bawa and the Ad Hoc Committee of Beneficiaries of the New Century Financial Corporation Deferred Compensation Plan and Supplemental Executive Retirement/Savings Plan, in a post-hearing brief. Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware had allowed the parties to make post-hearing submissions supporting or objecting to the confirmation of the Plan. Under the Plan, the MRA Creditors are included in the Class of Other Unsecured Creditors of NCFC -- Class HC3b, while their claims are enhanced by factor of 30%. The Plan Proponents had explained that the disparate treatment for the class members was because the MRAs had multiple claims against multiple debtors, as did some other groups of creditors, and the discrimination was justified because it was necessary to offset other adjustments. On behalf of the Beneficiaries, Joseph H. Hurston, Esq., at Stevens & Lee PC, in Wilmington, Delaware, says that the Plan Proponents' justifications cannot support the intra-class discrimination since it clearly violates Section 1123(a)(4). The Beneficiaries add the Plan Proponents failed to satisfy Section 1129(a)(7) because they did not prove that each member of the dissenting class of New Century Financial Corp. unsecured creditors will receive as much under the Plan as they would in a Chapter 7 case. Mr. Hurston also notes that the Holdco/Opco Model as specified in the Plan involved substantive consolidation of all the holding companies, as well as all the operating companies, as separate groups. According to Mr. Hurston, the Debtors' cases could not support substantive consolidation under rigorous tests, citing in re Owens Corning, 419 F.3d 195, 211 (3rd Cir. 2005). The Plan embodies substantive consolidation when the cases could not be substantively consolidated. In addition, the Plan required adjusting compromises to mitigate the harm caused by substantive consolidation. Pursuant to Owens Corning's case and the Court's rulings therein, Mr. Hurston contends that substantive consolidation with compensating adjustments, as embodied in the Plan, is not permitted. Plan Proponents Say Plan Should Be Confirmed The Creditors Committee and the Debtors state the Amended Plan provides a more efficient vehicle to accomplish the goal of liquidating the Debtors' estates and distributing proceeds to creditors, than a conversion to Chapter 7, and recoveries to creditors will likely exceed than if the cases are converted. They note that no Plan Proponent will receive any special benefit under the Plan. The Debtors' counsel, Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts the Plan is feasible, and the Debtors will have sufficient liquidity to consummate the Plan. The Plan should be confirmed, he contends. The Plan Proponents note that they have dealt with the major issues raised by the Deferred Compensation Claimants in their prehearing brief and in closing argument made on April 25, 2008. Nonetheless, they reiterate that the Beneficiaries badly misstate the Plan in their argument that the Beneficiaries will receive inferior and different treatment compared to that of the MRA Claimants. The Plan Proponents maintain that the Plan provides the same treatment for each claim in Class HC3b, and assert that the Beneficiaries have misstated the Plan in their arguments. They state that every creditor in Class HC3b will receive equal treatment -- its pro rata share of the litigation proceeds and net distributable assets. They point out that no claim in that class is inflated. The Plan Proponents aver that the Plan is a full and fair resolution of the complex legal and factual issues in the Debtors' Chapter 11 cases. The Plan satisfies the standards of the Bankruptcy Code is is supported by the creditor body, and thus, should be confirmed, they assert. * * * In their summary of the evidentiary record supporting the Plan's confirmation, the Plan Proponents addressed the "few limited issues" they did not have an opportunity to address orally at the April 25 hearing. Among other things, the Plan Proponents presented facts concerning uncertainties as to which Debtor owns the interests in the Carrington Investments, totaling approximately $49,500,000, the Rabbi Trust, the tax refunds, and certain servicing rights that have been sold to Carrington Management LLC. The Debtors represent that the money held in the Rabbi Trust was funded by New Century Mortgage Corp. NCMC also funded the Carrington Investment. NCFC, once the parent corporation prior to October 2004, is now known as New Century TRS Holdings. In addition to the Carrington Interests and the Rabbi Trust, there are also certain intercompany claims including a $240,600,000 NCMC net receivable from TRS Holdings, as well as litigation proceeds. According to Mr. Samis, the controversy whether which Debtor owned the assets contributed to the decision to pool assets for the purposes of distributions under the Plan. Further, the Plan provides that the Litigation Proceeds will be shared among the Debtors so that all creditors will benefit to a varying degree. The Tax Refunds will be attributed to NCMC based on the Debtors' accounting, and which Debtor paid taxes and generated losses. The intercompany claims are dealt with through Determined Distribution Amounts, settling complex intercompany and intercreditor issues. The Plan Proponents also set evidence concerning the Multi-Debtor Claim Protocol and the EPD/Breach Claim Protocol, as well as the joint administrative expense share set forth in the Plan. A full-text copy of the Summary of the Evidentiary Record Supporting the Plan is available at no charge at: http://ResearchArchives.com/t/s?2c05 About New Century Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Debtors' exclusive period to file a plan expired on Jan. 28, 2008. (New Century Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEWPAGE CORP: S&P Holds 'B' Rating and Revises Outlook to Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on NewPage Corp. to positive from stable. S&P affirmed the 'B' corporate credit rating and all other ratings on the Miamisburg, Ohio-based coated-paper manufacturer. "The outlook revision reflects our assessment that NewPage's credit measures will strengthen over the next several quarters because of improving operating performance," said Standard & Poor's credit analyst Andy Sookram. "Substantially higher prices and benefits from cost-savings programs are helping to offset higher input costs. As a result, we expect the company to generate significant free cash flow, which will be used to reduce debt balances that were increased to fund the acquisition of Stora Enso Oyj's North American paper manufacturing operations in December 2007." NewPage recently announced plans for an IPO of its common stock during the second half of 2008. It expects to use the proceeds to reduce about $370 million in holding company debt. As a result, consolidated credit measures could improve further and be more consistent with a higher rating. "We expect the operating margin to increase to 15% and debt to EBITDA ratio to improve to around 5.5x over the next several quarters," Mr. Sookram said. "We would consider an upgrade if the company reduces debt and maintains the total debt to EBITDA ratio below 5x as a result of improved operating performance and debt reduction. Alternatively, if market conditions deteriorate because of a general economic slowdown, if cost savings and synergies are delayed because of integration issues, or if debt reduction takes longer than expected, we could revise the outlook to stable." NORD RESOURCES: March 31 Balance Sheet Upside-Down by $3 Million ---------------------------------------------------------------- Nord Resources Corporation's balance sheet at March 31, 2008, showed total assets of $ 29.2 million and total liabilities of $32.3 million, resulting in a total shareholders' deficit of roughly $3.1 million. The company incurred net loss of $675,000 for the first quarter ended March 31, 2008, was compared with a net loss of $55,000 in the comparable period in 2007. "This was a significant period for Nord Resources in that we achieved commercial copper production from residual leaching of the existing ore heaps at the Johnson Camp Mine on Feb. 1, 2008," John Perry, president and chief executive officer, said. "Our plan, as disclosed on Feb. 21, 2008, is to complete reactivation this year and to reach full copper production from new ore in early spring 2009." Liquidity and Financial Resources The company's cash flows from operating activities during the three months ended March 31, 2008, and 2007 were negative $532,132 and negative $114,079. As of March 31, 2008, Nord Resources had drawn down $12 million of the $25 million secured term-loan credit facility arranged in June 2007 with Nedbank Limited. The company believes that the remaining $13 million available under the credit facility, funds from the special warrant financing completed in June 2007, and funds generated from operations will be sufficient to meet the capital requirements to reactivate the Johnson Camp Mine. About Nord Resources Based in Tucson, Ariz., Nord Resources Corporation (Pink Sheets: NRDS) -- http://www.nordresources.com/ -- is an emerging copper producer, which controls a 100% interest in the Johnson Camp SX-EW copper project in Arizona. Nord's near term objective is to resume mining and leaching operations at the Johnson Camp mine, which has been on care and maintenance status since August 2003. Nord has decided to proceed with its mine plan bases on an updated feasibility study that was completed in October 2005, subject to raising sufficient financing. Going Concern Doubt On March 26, 2008, Mayer Hoffman McCann PC, in Denver, Colorado, expressed substantial doubt about Nord Resources Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements as of the years ended Dec. 31, 2007, and 2006. The auditing firm company reported that the company incurred a net loss of $2.5 million and $6.2 million during the years ended Dec. 31, 2007, and 2006. The company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet the company's obligations on a timely basis, to produce copper at a level where it can become profitable, to pay off existing debt and provide sufficient funds for general corporate purposes. NORTH AMERICAN: S&P Rates $545MM First-Lien Facilities BB+ ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its proposed 'BB+' rating and '1' recovery rating to North American Energy Alliance LLC's $545 million first-lien facilities, indicating the expectation for very high (90% to 100%) recovery in the event of a payment default. At the same time, Standard & Poor's assigned its 'BB-' rating and '4' recovery rating to NAEA's $325 million bridge loan, indicating the expectation of average (30%-50%) recovery in the event of a payment default. The outlook is stable. Proceeds from the issues will be combined with $815 million of equity and used to acquire Consolidated Edison Development's generation portfolio of six projects totaling 1,706 MW located in ISO-NE and PJM. The total cash consideration is $1.477 billion ($866/kw), translating to a debt-to-capital ratio of roughly 54% (all facilities fully drawn plus $64.1 million of acquired debt). The debt amount is $547/kW. NORTHWEST AIRLNES: Appoints Andy Roberts to Lead Mesaba ------------------------------------------------------- Andy Roberts, executive vice president for operations of Northwest Airlines Corporation, will manage Mesaba Aviation, Inc. starting June 16, 2008, The Associated Press reports. News of Mr. Roberts' appointment came after Northwest issued a statement disclosing that Neal Cohen, executive vice president - strategy, international and CEO regional airlines, will leave the Company effective June 16, 2008. Mr. Cohen returned to Northwest in May 2005 as executive vice president and chief financial officer. He played a vital role in leading the Company's restructuring efforts and upon Northwests emergence from bankruptcy, in June 2007, Cohen was promoted to his current position. Northwest Airlines' President and Chief Executive Officer, Doug Steenland, said, "Neal made tremendous contributions during a critical time for Northwest Airlines. His leadership throughout the restructuring process positioned the Company well during an extremely tumultuous period in the industry. We're grateful that Neal returned to the airline to help guide Northwest through the restructuring process and we wish him the very best in his future endeavors." Discussing his departure, Mr. Cohen said, "Over the past three years, we have worked collaboratively to reposition Northwest and secure its future for the long-term. Having successfully completed the restructuring process, and with the impending merger with Delta, I'm excited about the opportunity to pursue business interests outside of the airline industry that I put on hold when I returned to Northwest. I'm confident that the airline will continue to be an industry leader and am proud to have been a part of its success." Neal Cohen, 48, was executive vice president of finance and chief financial officer for US Airways from April 2002 to April 2004. Prior to US Airways, Cohen served as chief financial officer for various service and financial organizations. He spent nine years with Northwest, from 1991 to 2000, where he held a number of senior positions including senior vice president and treasurer. Prior to joining Northwest, he spent seven years at General Motors' Treasurers office in New York. About Mesaba Aviation Based in Eagan, Minnesota, Mesaba Aviation Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines(OTC:NWACQ.PK). The company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represented the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represented the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. The U.S. Bankruptcy Court for the District of Minnesota confirmed Mesaba's Modified Plan of Reorganization on April 9, 2007. Mesaba exited bankruptcy on April 24, 2007, and was later acquired by Northwest Airlines from MAIR Holdings Inc. (Mesaba Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/ or 215/945-7000) About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service placed the debt ratings of Delta Air Lines, Inc. ("Delta", corporate family at B2) and Northwest Airlines Corporation ("Northwest", corporate family rating at B1) on review for possible downgrade. The review was prompted by the announcement that the two airlines have agreed to combine in an all-stock transaction with a combined enterprise value of approximately $18 billion. Fitch Ratings has affirmed the debt ratings of Delta Air Lines, Inc. following the announcement that Delta has agreed to merge with Northwest Airlines Corp., subject to approval by the two airlines' shareholders and the U.S. Department of Justice. Delta's ratings were affirmed as: Issuer Default Rating at 'B'; First-lien senior secured credit facilities at 'BB/RR1'; Second- lien secured credit facility (Term Loan B) at 'B/RR4'. The issue ratings apply to $2.5 billion of committed credit facilities. The Rating Outlook for Delta has been revised to Negative from Stable. Standard & Poor's Ratings Services placed its ratings, including the 'B+' long-term corporate credit rating, on Northwest Airlines Corp. on CreditWatch with negative implications, following announcement of a merger agreement with Delta Air Lines Inc. (B/Watch Pos/--). The CreditWatch listing affects enhanced equipment trust certificates with various ratings, excepting those that are insured by a bond insurer. S&P's listing of Northwest ratings on CreditWatch with negative implications and those of Delta on CreditWatch with positive implications implies that S&P foresee a corporate credit rating of either 'B' or 'B+' for the combined entity. OMNI FINANCIAL: To Delay Filing Quarterly Report on Form 10-Q ------------------------------------------------------------- Omni Financial Services, Inc. (NASDAQ: OFSI), the bank holding company for Omni National Bank, said that it will delay filing its Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 because completion of the audit and financial statements for the year ended December 31, 2007 is subject to resolution of issues relating to certain valuation assertions in such financial statements. The ultimate resolution of these issues will also impact the financial results for the quarter ended March 31, 2008. The primary issue relates to documentation supporting valuation assertions of other real estate owned (OREO) held by the Company. The OREO was acquired through foreclosure of properties that collateralized loans in the Community Development Lending Division. The Company is working with its independent registered public accounting firm to resolve these issues but the timing of the resolution is currently unknown. These valuation assertions materially affect OREO and the provision for and the allowance for loan and lease losses, which in turn impacts both earnings and capital. Therefore, the Company cannot reliably quantify the results of operations for 2007. Although the Company cannot quantify the results of operations, it expects to report a substantial loss for the year ended December 31, 2007. The loss relates to a significant increase in the provision for loan and lease losses; a decrease in net interest income resulting from an increase in non-performing loans; expenses for adjustments to the carrying value of OREO in certain markets; a $4.7 million goodwill impairment charge resulting from the decline in the market value of the Company's stock as of December 31, 2007; recognition of a $550,000 "other than temporary" impairment of Federal Home Loan Mortgage preferred investment securities; and a charge of $450,000 related to a retirement agreement with a former executive officer. The Company expects to report a loss for the quarter ended March 31, 2008, as the number of non-performing loans and OREO foreclosures in the Company's portfolio has continued to increase due to the current liquidity crisis and tightening of the credit and lending markets that commenced during the latter stages of 2007 and has continued to date in 2008. The increase in non- performing assets has resulted in a reduction of interest income and reversal of accrued interest on loans now classified as non- performing loans. About Omni Omni Financial Services, Inc. -- http://www.onb.com/-- is a bank holding company headquartered in Atlanta, Georgia. Omni Financial Services, Inc. provides a full range of banking and related services through its wholly owned subsidiary, Omni National Bank, a national bank headquartered in Atlanta, Georgia. Omni has one full service banking location in Atlanta, one in Dalton, Georgia, four in North Carolina, one in Chicago, Illinois, one in Dallas, Texas, one in Houston, Texas and one in Tampa, Florida. In addition, Omni has loan production offices in Charlotte, North Carolina, Birmingham, Alabama, and Philadelphia, Pennsylvania. Omni provides traditional lending and deposit gathering capabilities, as well as a broad array of financial products and services, including specialized services such as community redevelopment lending, small business lending and equipment leasing, warehouse lending, and asset-based lending. Omni Financial Services, Inc.'s common stock is traded on the NASDAQ Global Market under the ticker symbol "OFSI." PACIFIC LUMBER: Scopac Objects to Marathon/Mendocino, BoNY Plans ---------------------------------------------------------------- "Scotia Pacific Company, LLC, as debtor-in-possession, is the only party bound by a fiduciary duty to obtain an objective assessment of its estate's value," Aaron G. York, Esq., at Gibson, Dunn & Crutcher LLP, in Dallas, Texas, told the Hon. Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas. Thus, under that mandate, Scopac obtained independent expertise and presented highly credible evidence that its assets are sufficiently valuable to pay all the Scopac creditors in full, and even make a return to equity, Mr. York related. In connection with this, Mr. York told the Court that evidence of value remains relevant to the analysis of how the Plans of Reorganization proposed by The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes on one side, and Marathon Structured Finance Fund L.P. and Mendocino Redwood Company, LLC on the other, treat Scopac's estate. The valuation evidence demonstrates that whereas Scopac based its full payment plan on its experts' value opinions, the proponents of the Marathon/Mendocino Plan and the BoNY Plan based their valuations on a desired outcome, Mr. York pointed out. He noted that the Marathon/Mendocino Plan proves the point most dramatically, because it bases its attempt to cash out the Noteholders for approximately 60 cents on the dollar on a carefully crafted valuation that is approximately half that of Scopac's independent experts. The Noteholders themselves have been inconsistent as to value, Mr. York contended. Eight months ago, before the proponents of the Marathon/Mendocino Plan threatened to cash out the Noteholders, the Noteholders' valuation was significantly lower. Now, the Noteholders have changed experts and have a new, much higher valuation, but not high enough to provide value to any constituency other than the Noteholders, but sufficiently in excess of the Marathon/Mendocino Plan proponents' valuation to argue against a judicially-determined cash out, Mr. York said. "The bottom line is that valuation is crucial to resolving the Scopac case, and that a mechanism must be found within the confines of the Bankruptcy Code to deal with this issue in the context of a confirmable plan," Mr. York told Judge Schmidt. Scopac's Objections to Marathon/Mendocino Plan Scopac argues that the Marathon/Mendocino Plan discriminates unfairly, is not fair and equitable to dissenting classes, and is unconfirmable as a matter of law. Among other things, Mr. York pointed out that the Marathon/Mendocino Plan: -- appears to wipe out Scopac's administrative priority claims against the estate of The Pacific Lumber Company. These claims must be paid in cash in full on the effective date of the Marathon/Mendocino Plan in order for the it to be confirmed; -- discriminates unfairly against Class 9 Scopac General Unsecured Claims and Class 11 Non-Debtor Affiliate Claims by paying a materially lower recovery to them than it pays to another class with the same priority, Class 8 Scopac Trade Claims; -- is not fair and equitable with respect to Class 6 Scopac Timber Note Secured Claims because, although it effectively contemplates a sale of Scopac's assets to Newco, it does not permit the Noteholders to credit bid any amount; -- is not fair and equitable to Class 6 because it strips the Noteholders' liens and cashes them out at what the Marathon/Mendocino Plan Proponents hope will be a judicially-determined depressed value, thereby depriving the Noteholders of the benefit of their bargain; and -- violates Sections 1129(a)(I), 1123(b), 363(b) and 1129(a)(3) of the Bankruptcy Code because it constitutes a forced sale of the Debtors' assets to Newco and Townco, which will be 100% owned by Mendocino or Marathon, without subjecting the assets to any market valuation process and for far less than fair and reasonable value. "The only way to resolve the valuation issue in the context of a confirmable plan is by a true market test, through an auction in which credit bidding is conditioned to avoid chilling the bidding process while still protecting the Noteholders' position," Mr. York explained. Court Should Limit BoNY's Credit Bid The BoNY Plan proposes to auction the Scopac timberlands. The essential problem, however, is that BoNY has retained the apparently unfettered right to credit bid under the BoNY Plan, Mr. York pointed out. "This will chill competitive bidding, as Mr. Cherner, the Vice President of Scotia Redwood Foundation, himself testified," he says. Although Mr. Cherner and BoNY tried to assure the Court that the Noteholders intend to have a competitive auction, the Court need not -- and should not -- take them at their word, Mr. York asserted. Instead, the Court should use its power under Section 363(k) of the Bankruptcy Code to cap BoNY's right to credit bid at $603 million, Scopac urges. Furthermore, Scopac adds, the Court should specify that BoNY's bid must include sufficient cash to pay Administrative Claims, Priority Claims and to fund a $1.45 million distribution to General Unsecured Creditors under the BoNY Plan, in the event that BoNY submits a credit bid. Failure to limit BoNY's credit bid will create a sale environment that will generate less than fair and reasonable value for Scopac's assets, Mr. York told Judge Schmidt. Against this backdrop, Scopac asks the Court to: (1) decline confirmation of the Marathon/Mendocino Plan; (2) cap BoNY's ability to credit bid at $603 million; and (3) specify that BoNY's bid, like all other bidders, must include sufficient cash to pay Administrative Claims, Priority Claims and to fund a $1.45 million distribution to General Unsecured Creditors. 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; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Lehman Offers $10-Mil. Loan for Scopac, BoNY Says ----------------------------------------------------------------- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, notified the Court on May 12, 2008, that Lehman Commercial Paper Inc. has made an offer to extend up to $10 million in financing to the Plan Agent to fund Scotia Pacific Company LLC's operations and administrative costs during the post-confirmation, pre-sale period as contemplated in BoNY's Modified First Amended Plan of Reorganization. BoNY has elected former California Governor Pete Wilson to serve as Plan Agent. Representing BoNY, Zack A. Clement, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, states that although the evidence adduced at the confirmation hearing on the Debtors' Chapter 11 cases demonstrated (i) that Scopac has sufficient cash to operate during the post-confirmation, pre-sale period, and (ii) that the Plan Agent has the power to borrow additional funds to the extent necessary, BoNY filed the Notice to add additional certainty to the Plan Agent's ability to obtain the "gap period" loan. The Lehman DIP Loan provides additional proof of the feasibility of the BoNY Plan, which will expose Scopac's assets to the market and will result in the highest and best return to the Scopac estate and its creditors, Mr. Clement states. A full-text copy of the Lehman Term Sheet is available for free at http://bankrupt.com/misc/PALCO_LehmanTermSheet.pdf 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; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Sierra Pacific Willing to Buy Mills, BoNY Says -------------------------------------------------------------- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, notified the Court on May 12, 2008, that Sierra Pacific Industries has made an offer to the Pacific Lumber Company as "Chapter 11 debtor-in-possession, or a trustee appointed under either Chapter 11 or Chapter 7" to buy the PALCO mill, the related cogeneration plant, and related working capital for roughly $45 million. Representing BoNY, Zack A. Clement, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, relates that in a term sheet outlining the purchase proposal, Sierra Pacific commits to make major capital expenditures to enhance the performance of the existing Scotia Mill and to construct and reconstruct the facility so that it will: (a) feature separate small log and large log mills designed to cut redwood, Douglas fir, and whitewoods; (b) be capable of handling larger logs; and (c) by drawing logs from the entire region in addition to logs from Scotia Pacific Company LLC, be capable of producing more output volume of lumber, thereby creating numerous additional jobs in the town of Scotia. Marathon Structured Finance Fund L.P's security interest in the town of Scotia, which was proposed to be abandoned to Marathon under the Marathon/Mendocino Plan, will be enhanced in value by the increased mill operations and employment in Scotia that will result from the consummation of the transactions contemplated by the Sierra Pacific Term Sheet, Mr. Clement avers. A full-text copy of the Sierra Pacific Term Sheet is available for free at: http://bankrupt.com/misc/PALCO_SierraPacificTermSheet.pdf 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; http://bankrupt.com/newsstand/or 215/945-7000). PARMALAT SPA: 1st Qtr Profit Down on Lesser Legal Settlements ------------------------------------------------------------- Parmalat S.p.A. said its net profit fell to EUR90,200,000, or $140,000,000, in the first quarter of 2008 from a restated EUR110,300,000, a year earlier. The figure missed the EUR103,900,000 median estimate of three analysts surveyed by Bloomberg News. Parmalat attributed its first quarter profit decline to lesser collections from legal settlements, as well as higher milk costs. The settlements with the banks and auditors, in connection with its bankruptcy, dropped by about a third from a year earlier, Sara Gay Forden of Bloomberg News notes. "The first quarter is typically weak, but the first few months of this year were particularly weak due to the increase in the cost of raw materials," Enrico Bondi, Parmalat's chief executive officer, said in a conference call, according to the report. Parmalat executives plan to spend more on marketing and product innovation, in order to reach the low end of the range forecast. Citing turbulent market conditions, they said they expect the company's EBITDA to increase 7 percent this year, to EUR390,000,000. Parmalat also cited "strong competitive pressure" from retailers who are pushing their house brands and currency fluctuations. Parmalat shares held a closing price of EUR1.9225 on May 14 at the Milan Online Stock Market. As of March 28, 2008, about 1,667,496,728 shares of Parmalat were issued and outstanding. Shareholders of Parmalat who hold more than 2% of ordinary capital as of February 29 are: No. of Shares Stake ------------- ----- JP Morgan Chase & Co. Corporation 49,997,275 3.010% Societe Generale Asset Mgt. UK Ltd 48,540,624 2.922% Capital Research and Management 46,641,900 2.808% Fir Tree, Inc. 43,753,261 2.634% Intesa San Paolo Group 40,274,358 2.424% Deutsche Bank AG 33,924,745 2.042% ----------- ------- Total 263,132,163 15.840% Parmalat's shares have slid 18 percent this year, cutting Parmalat's market value to EUR3,640,000,000, Bloomberg notes. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Three Cayman Islands-based special-purpose vehicles created by Parmalat were placed under separate winding up petitions before the Grand Court of the Cayman Islands in January 2004. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as liquidators in the cases of Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. On Jan. 20, 2004, the Liquidators filed Sec. 304 petitions, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York on behalf of Parmalat Finance, et al. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PARMALAT SPA: Provides Updates on Legal Actions Against Citigroup ----------------------------------------------------------------- Parmalat S.p.A. has said its actions against Citigroup Inc. are underway. In view of the ongoing proceedings, Parmalat believes any comment to be inappropriate. Parmalat SpA noted that Citigroup is currently involved in three proceedings: (1) a committal to trial in Parma, Italy, for its alleged co-liability in the fraudulent bankruptcy at Parmalat; (2) another criminal proceeding in Milan, Italy, for alleged market rigging; and (3) in a further trial for damages before the New Jersey Court. According to Nicola Palmieri, Esq., Parmalat legal counsel, the trial against Citigroup at the Bergen County Superior Court in New Jersey might last five or six weeks, Sara Gay Forden of Bloomberg News reported. The length of the trial will mean a significant increase in legal costs, Mr. Palmieri had said without elaborating. No settlement talks are under way with Citigroup, Mr. Palmieri told Bloomberg News, and lawsuits are progressing against Bank of America Corp., Grant Thornton LLP, and Italian banks who were Parmalat's former lenders. Sources close to Citigroup also told Thomson Financial News reports that the bank is not holding talks with Parmalat to settle its U.S. civil case or with Italian investigators for plea-bargain agreements. According to Thomson Financial News, analysts have speculated that Parmalat and Citigroup could reach a settlement during a civil trial in New Jersey. Citigroup is facing a US$2.2 billion in damages in New Jersey and has counter-sued Parmalat for US$699 million. Citigroup executives, meanwhile, are facing criminal charges in Milan and Parma, Italy. The bank has been denying the charges. Separately, Judge Eleonora Fiengo of a court in Parma, Italy, denied a request by Parmalat founder Calisto Tanzi's lawyers to unite all trials connected to the financial collapse of Parmalat S.p.A., Colleen Barry writes for The Associated Press. Giampiero Biancolella, counsel for Mr. Tanzi, argued that combining the Parma trials will allow an efficient defense of his client, noting that many strands in the cases overlap, AP reports. Judge Fiengo refused the request, ruling that keeping the trials separate would hasten smaller cases without hindering the defense, AP relates. The judge however combined two of the trials -- the main trial accusing Mr. Tanzi and 22 others of fraudulent bankruptcy will now include the founder's former lawyer Michele Ributti, who is charged of misappropriating Parmalat funds. Judge Fiengo kept these trials separate: * relating to the failure of the Parmatour travel firm; * relating to Parmalat's purchase of mineral water-firm Ciappazzi; and * relating funds availed from Emilia Romagna Factoring. The court will resume trials June 4, 2008, AP relates. The court will decide the same day whether to combine to the main proceedings the trial relating to Parmalat's acquisition of Eurolat. Paola Cagossi, a lawyer representing more than 1,000 Parmalat investors, told AP that maintain several trials would give small shareholders a better chance of winning damages. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has about 40 brand product lines, which include yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The company's U.S. operations filed for chapter 11 protection on Feb. 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Three Cayman Islands-based special-purpose vehicles created by Parmalat were placed under separate winding up petitions before the Grand Court of the Cayman Islands in January 2004. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Ltd. serve as liquidators in the cases of Dairy Holdings Ltd., Parmalat Capital Finance Ltd., and Food Holdings Ltd. On Jan. 20, 2004, the Liquidators filed Sec. 304 petitions, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York on behalf of Parmalat Finance, et al. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. On June 21, 2007, the U.S. Court granted Parmalat permanent injunction. PENAMISADE LTD: Case Summary & Four Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Penamisade, Ltd. dba North Star Crossing Shopping Center 6905 Echo Canyon Drive McKinney, TX 75070 Bankruptcy Case No.: 08-41176 Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Michelle E. Shriro, Esq. Email: mshriro@singerlevick.com Singer & Levick, P.C. 16200 Addison Rd., Ste. 140 Addison, TX 75001 Tel: (972) 380-5533 Fax: (972) 380-5748 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Action Services Unknown P.O. Box 850 Rockwall, TX 75087-0850 City of Garland Unknown P.O. Box 461508 Garland, TX 75046-1508 Garland Heating & Air Unknown Conditioning Co. 2113 South Garland Rd. Garland, TX 75040 TXU Energy Unknown PHLA INC: Case Summary & Five Largest Unsecured Creditors --------------------------------------------------------- Debtor: PHLA, Inc. dba Lakeway Quick Lube and Oil 1103 RR 620 S. Austin, TX 78734 Bankruptcy Case No.: 08-10841 Chapter 11 Petition Date: May 5, 2008 Court: Western District of Texas (Austin) Judge: Craig A. Gargotta Debtor's Counsel: Stephen W. Sather, Esq. Email: ssather@bnpclaw.com Barron & Newburger, P.C. 1212 Guadalupe, Ste. 104 Austin, TX 78701 Tel: (512) 476-9103, 220 (ext.) Fax: (512) 476-9253 http://www.bnpclaw.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $500,000 to $1 million Debtor's Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jolink, Gray Attorney Fees $11,158 4131 Spicewood Springs, #C-8 Austin, TX 78759 Ward, Donna Loan $10,000 9120 CR 1405 Athens, TX 75751 Citi Bank Credit Card $7,299 701 E. 60th St. N. Sioux Falls, SD 57117 Discover Credit Card $3,500 Byrd, Jim Judgment $985 PILGRIM'S PRIDE: Equity Issuance Won't Affect Moody's Ratings ------------------------------------------------------------- Moody's Investors Service stated that Pilgrim's Pride Corporation's recent common equity issuance, while positive for the company's liquidity, has not at this point had an impact on its ratings or on Moody's ongoing review of those ratings for possible downgrade that began on April 16, 2008. Pilgrim's Pride sold 7.5 million common shares for net proceeds of approximately $177 million. Net proceeds will be applied to debt reduction and for general corporate purposes. Should all net proceeds be allocated to debt reduction, outstanding reported debt, over $1.63 billion at March 29, 2008, would fall by less than 11%. However, a potential debt reduction of that magnitude would improve the company's financial flexibility, especially if applied to outstandings under Pilgrim's Pride's revolving credit facilities. At May 2, 2008, prior to the equity issuance, the company had unused availability of only $328.5 million under three revolving commitments aggregating $902.1 million. Ample committed availability is especially crucial when margins are under pressure, as they are now for Pilgrim's Pride. For the second fiscal quarter ended March 29, 2008, the company reported an operating loss of $143.6 million, after restructuring charges of approximately $5.7 million. Feed grain costs in fiscal 2008, now expected to be $800 million higher than in the prior year, are unlikely to be fully offset by price increases and/or cost cuts, in Moody's view. Moody's notes that Pilgrim's Pride recently obtained an amendment to its financial covenants through the end of fiscal 2009, another positive action in terms of financial flexibility. Headquartered in Pittsburg, Texas, Pilgrim's Pride Corporation is the world's largest chicken company. Sales for the twelve months ended March 29, 2008 were approximately $8.47 billion. The company's corporate family rating is Ba3, and its ratings are under review for possible downgrade. PROTECTION ONE: POI Acquisition Declares 46.6% Equity Stake ----------------------------------------------------------- POI Acquisition LLC discloses that it owns 11,803,887 shares in Protection One Inc. common stock, representing 46.6% interest of common stock outstanding. In addition, Monarch Alternative Capital LP beneficially owns 5,901,942 shares of Protection One common stock. The shares represent 23.3% of the 25,306,913 shares of common stock outstanding as of March 10, 2008. Monarch Master Funding Ltd. directly beneficially owns 5,333,333 shares of Protection One common stock, which represent 21.1% of the outstanding shares of common stock. Headquartered in Lawrence, Kansas, Protection One Inc. (NASDAQ:PONE) -- http://www.ProtectionOne.com/-- is a vertically integrated national providers of sales, installation, monitoring, and maintenance of electronic security systems to homes and businesses. Network Multifamily, Protection One's wholly owned subsidiary, is a security provider to the multifamily housing market. The company also owns the provider of wholesale monitoring services, the combined operations of CMS and Criticom International. PROTECTION ONE: March 31 Balance Sheet Upside-Down by $45 Million ----------------------------------------------------------------- Protection One Inc. reported on Monday its unaudited financial results for the first quarter ended March 31, 2008 on Monday. At March 31, 2008, the company's consolidated balance sheet showed $655.0 million in total assets and $700.2 million in total liabilities, resulting in a $45.2 million total stockholders' deficit. Total revenue in the first quarter of 2008 increased by 33.3% to $91.6 million, largely due to the company's merger with Integrated Alarm Services Group Inc. (IASG) on April 2, 2007. As a result of the increased debt assumed in connection with the merger and the fair valuation of customer and dealer accounts acquired in the merger, interest expense and non-cash amortization increased by 27.0% and 84.4%, respectively. The retirement of the company's Senior Subordinated Notes with the proceeds from the $110.3 million unsecured term Loan on March 14th resulted in a $12.8 million loss on retirement of debt. The impact of these items was largely responsible for the increase in the company's net loss to $23.1 million, from $5.3 million in 2007. The company's adjusted EBITDA in the first quarter of 2008 increased 32.4% to $26.8 million compared to $20.2 million in the same period of 2007. Total company recurring monthly revenue (RMR) as of March 31, 2008, was $26.6 million, up from $20.1 million as of March 31, 2007, due to contributions from the merger. Richard Ginsburg, Protection One's president and chief executive officer, commented, "Operationally, we accomplished a great deal in the first quarter. As a result of significant efforts, we have largely completed our program to address the cellular industry's movement to digital technology. In addition, our Retail segment delivered another quarter of exceptional growth in RMR additions, notwithstanding the generally uncertain economic conditions. "Retail additions increased 12.7% compared to additions in the first quarter of 2007 of which commercial additions, our principal area of focus, increased 26.0% with a slight benefit from the merger. Our Multifamily segment also contributed additions growth, and our Wholesale business' RMR at the end of the quarter was up 3.5% from year end." Ginsburg continued, "In the middle of the first quarter, we launched a new marketing program, from which we expect to see benefits in the current quarter and going forward. Of the national monitoring providers, we were first to market with an interactive service under the e-SecureSM product name, and we expect our enhanced targeting and service bundles based on e- Secure to deliver improved residential and commercial average revenue per unit. Finally, we continued our efforts to build our national accounts program, capitalizing on our national footprint and expertise in this area." Ginsburg closed, "With respect to cancels, we are seeing indications that attrition in the IASG portfolio has stabilized and expect a decrease in the second quarter. We will continue to focus on reducing attrition and operating costs in order to drive improvement in adjusted EBITDA. We were also very pleased to have been the only monitored security provider recently named by Forbes.com as one of "America's Most Trustworthy Companies," and we will strive to continually operate in a manner to be deserving of such recognition, demonstrating a strong commitment to integrity and service throughout our organization." Net Debt The company's cash and equivalents as of March 31, 2008, were $33.5 million compared to $41.0 million at Dec. 31, 2007, with the decrease primarily due to cash payments in connection with the redemption of the Senior Subordinated Notes. The company's total debt and capital leases, excluding debt discounts and premiums, as of March 31, 2008, was $525.1 million, compared to $526.0 million as of Dec. 31, 2007. The company borrowed approximately $110.3 million under the new Unsecured Term Loan facility to redeem all of the Senior Subordinated Notes. A loss of $12.8 million was recorded in connection with the retirement of the Senior Subordinated Notes, which consisted of the write-off of unamortized discount, a make-whole payment, and termination fees. The company recently entered into interest rate swaps on $150.0 million and $100.0 million tranches of its Senior Secured Term loan fixing LIBOR at 3.19% and 3.15%, respectively, for approximately 30 months. With the execution of these hedges, $365.3 million, or approximately 70%, of the company's debt carries a fixed interest rate. At current LIBOR, the company's annualized cash interest expense is approximately $48.0 million. Net debt as of March 31, 2008, was $491.6 million compared to $485.0 million at Dec. 31, 2007. While not included in net debt, the company also has notes receivable due from its Wholesale dealers of approximately $5.7 million as of March 31, 2008. 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?2bf8 About Protection One Headquartered in Lawrence, Kan., Protection One Inc. (Nasdaq: PONE) -- http://www.ProtectionOne.com/-- is a vertically integrated national provider of sales, installation, monitoring, and maintenance of electronic security systems to homes and businesses. Network Multifamily, Protection One's wholly owned subsidiary, is the largest security provider to the multifamily housing market. The company also owns the nation's largest provider of wholesale monitoring services, the combined operations of CMS and Criticom International. QIS INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Q.I.S., Inc. aka Quality Industrial Services, Inc. 27481 Beverly Rd. Romulus, MI 48174 Bankruptcy Case No.: 08-50993 Type of Business: The Debtor provides inspection, sorting, rework, warehousing, transportation, Level 1 & 2 containment assistance, kitting, packaging, sequencing and light assembly. See http://www.qis9002.com/ Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Michigan (Detroit) Judge: Walter Shapero Debtor's Counsel: Jayson Ruff, Esq. Email: jruff@mcdonaldhopkins.com Thomas K. Lindahl, Esq. Email: tlindahl@mcdonaldhopkins.com 39533 Woodward Ave., Ste. 318 Bloomfield Hills, MI 48304 Tel: (248) 646-5070 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kotz, Sangster, Wysocki & Berg professional services $232,179 400 Renaissance Ctr., Ste. 3400 Detroit, MI 48243-1602 Job 1 USA trade $200,667 A/R Dept. P.O. Box 635417 Cincinnati, OH 45263-5417 Ohio Commerce Center trade $126,769 SDS 12-2113 P.O. Box 86 Minneapolis, MN 55486-2113 Mancan, Inc. trade $87,775 Qualified Staffing trade $84,067 Ambassador Personnel trade $82,695 McNish Group professional services $55,643 Arcadia trade $48,000 Centerpoint Properties trade $44,903 Ben Muller Reality trade $38,458 Dominion East Ohio $36,724 Verizon trade $34,295 Qwest trade $33,573 Express Services, Inc. trade $32,873 (Verizon) Goodman Factors, trade $32,557 The Callos Cos. trade $32,210 Forge trade $29,561 Innovative Computer Systems trade $24,207 Global Office Solutions trade $24,122 StaffStore Enterprises, Inc. trade $22,019 RAAC SERIES: S&P Lowers Ratings on Three Certificate Classes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on three classes of mortgage asset-backed pass-through certificates from RAAC Series 2006-SP1 Trust. At the same time, S&P affirmed its ratings on the remaining five classes from this transaction. As of the April 2008 remittance period, total delinquencies were 40.98% of the current pool balance, up from 16.61% one year ago, while severe delinquencies were 33.78%, up from 11.32% a year ago. Cumulative realized losses to date are 2.82% of the original pool balance. As highlighted by the delinquency and loss trends, the downgrades reflect the adverse performance of the collateral pools. Monthly net losses continue to outpace monthly excess interest cash flows, thereby compromising overcollateralization and resulting in weakened credit support. Specifically, monthly net losses have exceeded excess interest in nine out of the 12 past months, or approximately 75% of the time. Moreover, as of the April 2008 remittance period, O/C was approximately $10,334,557, below its target of $12,699,584, resulting in a deficiency of approximately $2,365,026. Despite the performance of the aforementioned classes, S&P's analysis indicates that the remaining classes from this transaction have adequate credit support. As a result, the affirmations reflect loss coverage percentages that S&P believe are sufficient to maintain the current ratings. The deal's outstanding pool factor is currently 51.72%, and the deal is 25 months seasoned. Subordination, O/C, and excess interest cash flows provide credit support for this deal. The pool originally consisted of 30-year, fixed- and adjustable-rate mortgage loans secured by first or second liens on one- to four- family residential properties. Ratings Lowered RAAC Series 2006-SP1 Trust Mortgage asset-backed pass-through certificates Rating ------ Class To From ----- -- ---- M-3 BB A M-4 B A- M-5 B- BBB+ Ratings Affirmed RAAC Series 2006-SP1 Trust Mortgage asset-backed pass-through certificates Class Rating ----- ------ A-1 AAA A-2 AAA A-3 AAA M-1 AA+ M-2 AA- RCS-CHANDLER: Section 341(a) Meeting Slated for May 27 ------------------------------------------------------ The U.S. Trustee for Region 14 will convene a meeting of creditors of RCS-Chandler LLC at 4:30 p.m., on May 27, 2008, at the U.S. Trustee Meeting Room, 230 North First Avenue, Suite 102 in Phoenix, Arizona. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Phoenix, Arizona-based RCS-Chandler LLC sought protection under chapter 11 on April 11, 2008 (Bankr. D. Ariz. Case No. 08-04021). Sarah Sharer Curley presides the case. Michael R. Walker, Esq., at Schian Walker P.L.C. When the Debtor filed for bankruptcy, it listed assets and debts between $50 million and $100 million. RECKSON OPERATING: Fitch Says Ties To SL Green Factor in Ratings ---------------------------------------------------------------- Reckson Operating Partnership, L.P.'s (ROP) ratings are based on the consolidated profile of its parent, SL Green, according to the latest credit analysis update by Fitch Ratings. On a standalone basis, ROP has relatively low leverage and strong coverage metrics and a largely unencumbered stabilized portfolio. However, the absence of formal ring-fencing agreements between ROP and SL Green and Fitch's view of SL Green's credit characteristics are drivers behind Fitch's views of ROP. On April 14, 2008, Fitch Ratings affirmed and removed ROP from Rating Watch Negative. Fitch's latest credit analysis update on ROP, which provides more detail supporting Fitch's ratings, is available on the Fitch Ratings Web site at http://www.fitchratings.com/ Fitch's currently rates ROP: -- IDR 'BB+'; -- Senior unsecured notes 'BB+'; -- Senior unsecured convertible notes 'BB+'; -- Rating Outlook Stable. Primary credit strengths include : -- ROP's diversified tenant base with no tenant contributing more than 7.3% of base rent; -- ROP's strong unencumbered asset and debt-service coverage of 2.9x and 2.5x, respectively; -- Manageable debt maturity schedule. Primary credit concerns include the following: -- Reckson Operating Partnership is not a ring-fenced subsidiary; -- Considerable geographic concentration, with all of the assets located in the New York tri-state area, half of which are located within Manhattan. RELIANT CHANNELVIEW: BoNY Balks at Further Use of Cash Collateral ----------------------------------------------------------------- The Bank of New York told the The U.S. Bankruptcy Court for the District of Delaware that it objects to the motion filed by Reliant Energy Channelview L.P. and its debtor-affiliates seeking an extension of a cash collateral order unless a short extension is conditioned upon the lenders' receipt of appropriate adequate protection. BoNY is an administrative agent to the Debtors' lenders under a credit agreement dated Dec. 15, 1999. The Court entered on May 2, 2008, a second agreed order related to the Debtors' request to use lenders' cash collateral. The Court had allowed the Debtors to use cash collateral of not less than $4 million until yesterday, May 15, 2008. BoNY said that the lenders are, by significant margin, the largest creditors of the Debtors with an aggregate outstanding principal of about $342 million under the credit agreement. The debt under the credit agreement is secured by, among others, a lien on substantially all of the Debtors' assets. On Feb. 26, 2008, the Debtors filed a motion to approve the sale of assets to Kelson Energy IV LLC for an estimated price of $468 million. Following an auction on April 7, 2008, the Debtors determined to instead sell the assets to GIM Cogeneration Channelview LLC for $500 million, plus cash on hand at the time of closing. According to BoNY, both the sale transactions contemplated a sale absent assumption and assignment of a second amended and restated cash flow participation agreement for the Channelview Plant Project, dated Dec. 15, 1999 between Channelview and Equistar Chemicals LP. On April 9, 2008, the Court held that the project could not be excluded from the sale transaction. A dispute between the Debtors, its parent company Reliant Energy Inc. and Equistar was placed under mediation on May 12, 2008. On May 2, the existing cash collateral order expired. In order to permit the Court time to order mediation, the lenders agreed to a short extension so that the Debtors' cash collateral motion could be heard Wednesday, May 14, 2008. As of yesterday, the lenders' agreement to permit the Debtors to use cash collateral expired. In addition, the appointment of a chapter 11 trustee is an event of default under the existing cash collateral order and allows the lenders to terminate the Debtors' use of cash collateral. About Reliant Energy Channelview Based in Houston, Reliant Energy Channelview L.P. -- http://www.reliant.com/-- owns a power plant located near Houston, and is an indirect wholly owned subsidiary of Reliant Energy Inc. The company and its three affiliates, Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and Reliant Energy Services Channelview LLC filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No. 07-11160). Jason M. Madron, Esq., Lee E. Kaufman, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., Richards, Robert J. Stearn Jr., Esq., at Layton & Finger P.A., and Timothy P. Cairns, Pachulski Stang Ziehl & Jones represent the Debtors. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in the Debtors' cases. David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamiltion LLP, represent the Committee. When the Debtors filed for protection from their creditors, they listed total assets of $362,000,000 and total debts of $342,000,000. RESIDENTIAL FUNDING: Moody's Cuts Rating on Cl. M-5 Loan to Ba2 --------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of three tranches issued in two transactions securitized by RFC. The underlying collateral consists of fixed-rate mortgage and adjustable-rate mortgage loans acquired by Residential Funding Corporation under their Home Solution Program. The program was established for first-lien mortgage loans with high loan-to-value ratios of up to 107%. The deals being reviewed have experienced increased severities over time, which have increased losses through delinquent loan liquidations. Timing of losses coupled with the passing of stepdown triggers for RAMP 2004-RZ3 have caused the protection available to the subordinated bonds to be diminished. Complete rating actions are: Issuer: RAMP Series 2004-RZ1 Trust -- Cl. M-4, downgraded from Baa2 to Ba1 -- Cl. M-5, downgraded from Baa3 to Ba2 Issuer: RAMP Series 2004-RZ3 Trust -- Cl. M-I-4, downgraded from Baa2 to Ba1 ROADHOUSE GRILL: To Liquidate, End Leases of Restaurants -------------------------------------------------------- The Hon. Paul Hyman of the U.S. Bankruptcy Court in West Palm Beach, Florida, converted the Chapter 11 bankruptcy cases of Roadhouse Grill Inc. and R.H.G. Acquisition Corporation to Chapter 7 liquidation proceedings, Dawn McCarty of Bloomberg News reports. According to Bloomberg, the Court allows the Debtors to liquidate their assets because it could not sustain business operations when it failed to obtain at least $1.3 million in financing from MCF Development LLC to cure defaults on the remaining leased stores. The Debtors say in court filings they decided to end the leases of their 20 remaining restaurant locations, Mrs. McCarty relates. About Roadhouse Grill Headquartered in Palm Beach, Florida, Roadhouse Grill, Inc. -- http://www.roadhousegrill.com/-- owned 57 restaurants and franchised 12 branches to five other companies. The company and its affiliate, R.H.G. Acquisition Corp., filed for chapter 11 protection on Oct. 8, 2007 (Bankr. S.D. Fla. Case Nos. 07-18410 and 07-18414). Paul J. Battista, Esq., at Kelley & Fulton P.A., represents the Debtors. The U.S. Trustee for Region 21 appointed nine creditors to serve on an Official Committee of Unsecured Creditors. Paul J. Battista, Esq., at Genovese, Joblove and Battista, P.A., represents the Committee in these cases. According to the Debtors' schedules, it listed total assets of $5,209,124 and total liabilities of $21,671,484. RUTLAND: Fitch Puts Class B3-LEK Notes' BB Rating on Neg. Watch --------------------------------------------------------------- Fitch Ratings has placed these classes of Rutland Rated Investments Sedona 2005-1 (Sedona 2005-1) notes on Rating Watch Negative: -- USD20,000,000 class A-3F secured limited recourse fixed-rate credit linked notes due 2010, rated 'BBB', Rating Watch Negative. -- USD2,000,000 class A3-LK secured limited recourse floating-rate credit linked notes due 2010, rated 'BBB', Rating Watch Negative. -- USD60,000,000 class B3-LEK secured limited recourse floating-rate credit linked notes due 2010, rated 'BB', Rating Watch Negative. The Rating Watch Negative placements reflect Fitch's view on the credit risk of the rated notes following the release of its new Corporate CDO rating criteria. Key drivers of this transaction's credit risk include: -- Portfolio credit risk deteriorating to an average portfolio quality of 'BBB-' compared to 'BBB'/'BBB-' in June 2007, with 23.0% of the portfolio rated below investment grade. -- Portfolio migration risk with 14.0% of the portfolio on Rating Watch Negative and 18.0% of the portfolio with a Negative Outlook. -- Industry concentration of 42.0% in the three largest, made up of 25.0% in banking & finance, 9.0% in retail (general) and 8.0% in telecommunications. Given Fitch's view of concentration and the current credit quality of the portfolio, the credit enhancement levels of 3.1% for classes A-3F and A3-LK, and 2.4% for class B3-LEK are not sufficient to justify the current ratings of these notes. Resolution of the Negative Watch status will incorporate any changes made to the portfolio or the transaction along with additional portfolio migration. If there are no significant changes prior to the resolution of the Watch status, classes A3-F, A3-LK and B3-LEK will likely be downgraded to the 'B' category or lower. Sedona 2005-1 is a synthetic collateralized debt obligation (CDO) referencing a static portfolio of primarily investment grade corporate obligations. At close, proceeds from the issuance of the notes were used to collateralize credit default swaps (CDS) between the issuer and Bear Stearns Credit Products Inc., the CDS counterparty (guaranteed by Bear Stearns Companies, rated 'F2/A-', Rating Watch Positive) and further guaranteed by JPMorgan Chase & Co., rated 'F1+/AA-' by Fitch. SANDRIDGE ENERGY: Prices $750 Million Offering of 8% Senior Notes ----------------------------------------------------------------- SandRidge Energy Inc. priced its private placement offering of $750 million of 8% Senior Notes due June 1, 2018. Proceeds of the offering, which is expected to settle and close on May 20, 2008, subject to customary closing conditions, are will be used to repay the outstanding borrowings under its senior revolving credit facility and to fund its capital expenditure program focused on the West Texas Overthrust. The company 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. Oklahoma City-based SandRidge SandRidge Energy Inc. (NYSE: SD) -- http://www.sandridgeenergy.com/-- is an independent natural gas and oil company with its principal focus on exploration, development and production activities. The company also owns and operates drilling rigs and a related oil field services company operating under the name Lariat Services Inc.; gas gathering, marketing and processing facilities, and, through its wholly owned subsidiary PetroSource Energy Company, carbon dioxide treating and transportation facilities and tertiary oil recovery operations. The company is focused on exploration and exploitation of its significant holdings in West Texas that it refers to as the West Texas Overthrust, a natural gas prone geological region that includes the Pinon Field, and its South Sabino and Big Canyon. * * * As reported in the Troubled Company Reporter on May 14, 2008, Standard & Poor's Ratings Services assigned its 'B-' rating to SandRidge Energy Inc.'s (B/Positive/--) proposed $500 million in senior unsecured notes, with a recovery rating of '5', indicating S&P's expectation of modest (10%-30%) recovery in the event of a payment default. At the same time, S&P affirmed SandRidge's 'B' corporate credit rating and lowered the issue rating on the company's $1 billion in existing senior unsecured notes to 'B-' from 'B' and revised the recovery rating to '5' from '3'. SANDRIDGE ENERGY: Moody's Rates Pending $750MM Note B3 ------------------------------------------------------ Moody's assigned a B3 rating to SandRidge Energy, Inc.'s pending $750 million senior unsecured note offering. Moody's affirmed SD's B2 corporate family rating, B2 probability of default rating, and B3 senior unsecured rating but changed the point estimate from LGD4-63% to LGD5-70%. The rating outlook remains stable. The change in the LGD point estimate reflects both the growth in expected senior secured bank revolver debt in the capital structure and a larger borrowing base amount, expected to be $1.050 billion after the note offering. The prior $700 million borrowing base had been increased to $1.2 billion in April 2008 and will be reduced to $1.050 billion with the note offering. Note proceeds will be used to repay approximately $420 million currently outstanding borrowings under the secured revolver and pre-fund capital spending. After the offering, SD would have roughly $330 million of cash and $1.050 billion of available secured revolver borrowing capacity. SD's current ratings and outlook incorporate high leverage relative to SD's peers, its high outspending of cash flow, and a risk of substantial capital dissipation if its large exploration and development program disappoints. However, the ratings also consider strong front-end equity funding underpinning SD's aggressive exploration and development drilling program, strong drilling results in the established Pinon Field, accelerating production rates, promising results in SD's exploration acreage to the east along the West Texas Overthrust Trend, sufficient liquidity to fund the $1.5 billion 2008 capital program, substantial reduction in current and forecasted net debt per unit of production due to accelerating production, and roughly flat net debt leverage on proven developed reserves and fully loaded leverage on total proven reserves. Moody's will continue to monitor the success of the company's drilling program throughout 2008 to determine the extent to which quarterly production increases are commensurate with the level of offset additional debt as reflected by the debt/production metric. Production is accelerating and debt per unit of production ahs been declining. Production averaged 29,320 boe/day (176 mmcfe/day) in 2007, 36,990 boe/day (222 mmcfe/day) in fourth quarter 2007, 41,833 boe/day (251 mmcfe/day) in first quarter 2008 and, as estimated by Moody's, significantly higher in May 2008. The ratings are restrained by very high leverage, which leaves little room if the drilling program underperforms. SD's ratings are restrained by high leverage on proven developed reserves, production and cash flow, and on total proven reserves (debt plus FAS 69 capex divided by total proven reserves). Cash flow after capital spending will be negative well into 2009. The core credit issue remains the scale and productivity of drilling activity that SD can mount and sustain at its core remote Pinon Field in the West Texas Overthrust play. SD needs to continually boost production and reserves relative to debt to establish momentum for a higher rating. Pro-forma Gross Debt / PD reserves would be in the $17/PD boe range on March 31, 2008 PD reserves but Net Debt/ PD reserves of $13.08/PD boe is only slightly higher than year-end 2007's level of $12.80/PD boe. Leverage on PD reserves may rise during 2008 as SD mounts major front-end spending in advance of establishing commensurate reserve bookings by year-end 2008. Pro-forma net leverage per unit of current daily production would be $33,516/boe of daily production, down from $37,959 on fourth quarter 2007 production. With estimated 2008 cash flow of $600 million, over $100 million of expected asset sale proceeds, and budgeted capital spending of $600 million, SD will substantially outspend 2008 cash flow. The shortfall will be funded with over $300 million in net cash note proceeds remaining after repaying existing revolver debt and secured revolver borrowings. SandRidge Energy, Inc. is headquartered in Oklahoma City, Oklahoma. SCRIPPS FRENCH: Case Summary & Seven Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Scripps French Valley Commercial, LLC 484 Prospect St. La Jolla, CA 92037 Bankruptcy Case No.: 08-04070 Chapter 11 Petition Date: May 14, 2008 Court: Southern District of California (San Diego) Debtor's Counsel: Bruce A. Wilson, Esq. 2031 Fort Stockton Dr. San Diego, CA 92103 Tel: (619) 497-0627 Fax: (619) 497-0628 Email: Brucewils@aol.com Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million Debtor's Seven Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cox, Castle & Nicholson, LLP Legal services $109,409 Attn: Adam B. Weissburg 19800 MacArthur Blvd., Ste. 500 Irvine, CA 92612 Tel: (949) 476-2111 Developers Research Consulting services $90,144 Attn: Scot Oldham 2151 Michelson Dr., Ste. 190 Irvine, CA 92612 Tel: (949) 861-3300 Scripps Investments & Loans, Services $24,180 Inc. 484 Prospect St. La Jolla, CA 92037 Tel: (858) 866-6300 FCI Lender Services, Inc. Foreclosure services $20,016 Lavine, Lofgren, Morris & Legal Services $5,000 Solomon Ward Seidenwurm & Legal Services $698 Smith, LLP John Condas Services $154 SENTINEL MANAGEMENT: Files Disclosure Statement in Illinois ----------------------------------------------------------- Sentinel Management Group Inc. together with the Official Committee of Unsecured Creditors and the appointed Chapter 11 Trustee Frederick J. Grede, as co-proponents, delivered to the Hon. John H. Squires of the U.S. Bankruptcy Court for the Northern District of Illinois a Disclosure Statement dated May 13, 2008, explaining their Chapter 11 Plan of Liquidation. Overview of the Plan The Plan contemplates the liquidation of the Debtor's property and distribution of any recoveries to its creditors. The Plan provides for the transfer of all asset of the Debtor's into the liquidation trust. A liquidation trustee will be appointed to implement and administer the Plan. On the effective date, the liquidation trustee will maintain a reserve for the payment of Bank of New York's disputed secured claim. Money will be set aside from the cash on hand equal to the full amount stated on the proof of claim filed by BoNY on the Plan's effective date. Treatment of Claims and Interests Under the Plan, holders of these claims are expected to get 100% including: i) administrative claims, totaling $7,000,000; ii) secured claims of BoNY, totaling $312,247,000; iii) other priority claims; and iv) priority tax claims. In addition, holders of secured claims will either receive cash or collateral securing their allowed secured claim in an amount equal to that claim. Each holder of Customer Claim, totaling roughly $1,220,320,123 of which $427,678,307 is attributable to Citadel-Beneficiary customers, will receive a pro rata distribution of customer property. Holder are expected to recover between 35% to 71%. On the contrary, Citadel-Beneficiary will not get any distributions until all other customers receive the same percentage recovery distribution as the Citadel-Beneficiary Customers including interest pursuant to the Plan. Allowed General Unsecured creditors, totaling $10,000,000, will also receive a pro rata distribution of cash and cash proceeds of all property not allocated for payment of allowed claims in other classes. These creditors will not get any distribution on account of their claims including: i) subordinated claims, totaling $6,088,895 and ii) equity interest. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2bf2 A full-text copy of the Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?2bf3 About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- is a full service firm offering a variety of security solutions. The company filed a voluntary chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd. represent the Debtor. Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. DLA Piper US LLP represents as the Committee's co-counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Mr. Grede selected Catherine L. Steege, Esq., Christine L. Childers, Esq., and Vincent E. Lazar, Esq., at Jenner & Block LLP as his counsels. As reported in the Troubled Company Reporter on Dec. 19, 2007, the Court extended, until June 13, 2008, the Debtor's exclusive periods to file a Chapter 11 plan of reorganization and disclosure statement. SENTINEL MANAGEMENT: U.S. Trustee Amends Creditors' Panel Members ----------------------------------------------------------------- The U.S. Trustee for Region 11 amended the members of the Official Committee of Unsecured Creditors of Sentinel Management Group Inc. following the resignation of FC Stone LLC in the committee. The creditors committee's current members are: a) Discus Master Ltd. ATTN: Philippe Jordan CraigMuir Chambers P.O. Box 71 Road Town, Tortola British Virgin Islands b) Jump Trading ATTN: William DiSomma 600 W. Chicago Avenue #825 Chicago, Illinois 60610 c) Penson GHCO ATTN: Carl Gilmore 600 W. Chicago Avenue, Suite 775 Chicago, Illinois 60610 d) Rotchford Barker ATTN: Rotchford Barker 40 County Road 2AC P.O. Box 2080 Cody, Wyoming 82414 e) JEM Commodity Relative Value Fund LP ATTN: John Moody 28 S.W. 1ST Avenue, Suite 420 Portland, Oregon 97201 f) Vision Financial Markets LLC ATTN: Michael Doherty 4 High Ridge Park Suite 100 Stamford, Connecticut 06905 g) BC Capital Fund A, LLC ATTN: Timothy Currie 2813 Northwood Circle Corning, New York 14830 h) Kottke Associates LLC ATTN: Carmen Soldato 141 W. Jackson, Suite 1220 Chicago, Illinois 60604 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- is a full service firm offering a variety of security solutions. The company filed a voluntary chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd. represent the Debtor. Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. DLA Piper US LLP represents as the Committee's co-counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Mr. Grede selected Catherine L. Steege, Esq., Christine L. Childers, Esq., and Vincent E. Lazar, Esq., at Jenner & Block LLP as his counsels. As reported in the Troubled Company Reporter on Dec. 19, 2007, the Court extended, until June 13, 2008, the Debtor's exclusive periods to file a Chapter 11 plan of reorganization and disclosure statement. SHARPER IMAGE: Hilco Joint Venture Named Stalking Horse Bidder -------------------------------------------------------------- A joint venture led by Hilco Consumer Capital, L.P., and GB Brands, LLC, in partnership with Windsong Brands, LLC and Crystal Capital, was approved by the U.S. Bankruptcy Court for the District of Delaware as the stalking horse bidder for certain assets of The Sharper Image Corporation. HCC and GBB have developed a global licensing strategy for wholesale, retail, direct-to-retail, e-commerce and catalog businesses which will exploit The Sharper Image's heritage of quality, excitement, innovation and fun. During its 32-year history, The Sharper Image has developed one of America's most widely recognized and positively perceived consumer brands. HCC and GBB recognize The Sharper Image's blend of upscale specialty positioning, iconic stature, outstanding consumer recognition and appeal across a wide demographic. Jamie Salter, CEO of HCC, commented, "The Sharper Image's brand versatility encompasses a vast array of products which demonstrates the powerful and consistent brand attributes of quality, excitement, innovation and fun." He added, "Whether it is electronics, housewares, health and fitness or unique gifts in personal care or travel, The Sharper Image brand delivers on all of the brand's attributes." Stephen Miller of GBB continued, "GBB envisions this to be a terrific opportunity to transform a tier-one, iconic American brand into a global, multi-channel platform of diverse and unique consumer products using leading technologies and trend-setting innovations. This reflects the core transformational competencies of the joint venture partners and we look forward to working with new licensees to grow the brand worldwide and in multiple categories." The joint venture will partner with a number of global institutions in the ongoing development of The Sharper Image brand. About Hilco Consumer Capital Hilco Consumer Capital -- http://www.hilcocc.com/-- is a private equity firm that makes strategic investments in consumer lifestyle brands through acquisitions of North American manufacturers, wholesalers, intellectual property and retailers. HCC investments range from $25 million to $250 million. Current portfolio brands and companies include Caribbean Joe(R: 75.02, +0.71, +0.95%), Ellen Tracy, Halston(R: 75.02, +0.71, +0.95%), Tommy Armour Golf(R: 75.02, +0.71, +0.95%), RAM Golf(R: 75.02, +0.71, +0.95%), and Bombay Brands, LLC. HCC is a unit of The Hilco Organization, a Chicago-based, international provider of diversified financial and operational services, including business asset valuations, asset acquisition and disposition services, M&A services and retail consulting. About GB Brands, LLC GB Brands, LLC is a member of the Gordon Brothers Group family of companies. GB Brands LLC purchases, sells, and licenses brands and other intellectual property. Founded in 1903, Gordon Brothers Group -- http://www.GordonBrothers.com/-- is a global advisory, restructuring and investment firm specializing in retail and consumer products, industrial and real estate sectors. Gordon Brothers Group maximizes value for both healthy and distressed companies by purchasing or selling all categories of assets, appraising assets, providing debt financing, making private equity investments, and operating businesses for extended periods. Gordon Brothers Group conducts over $40 billion in annual transactions and appraisals. Its private equity fund, 1903 Equity Fund, holds majority or minority positions in a portfolio of companies including Como Fred David, Clair de Lune, Deb Shops, Dollarama, Grafton-Fraser, Laura Secord, Things Remembered and Toys R Us. About Windsong Brands LLC Windsong Brands, LLC -- http://www.windsongbrands.com/-- is a private equity firm that focuses on investments in leading middle market consumer companies that own strong recognizable brands. The team has a diverse background of consumer expertise that assists and guides company management to unlock the true potential of their brand. Windsong Brands makes majority and minority investments in both public and private companies. Investments and portfolio brand companies include Ellen Tracy, Caribbean Joe, Joe's Jeans, Field & Stream, Como Sport, and Alerion Aviation. About Crystal Capital Established by a team of experienced financial professionals, Crystal Capital is an investment firm that provides capital for middle market companies across all industries. The founding principals each have over 25 years of experience and have provided in excess of $15 billion in creative capital commitments for buyouts, recapitalizations, refinancings and growth opportunities. About Sharper Image 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; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SI INTERNATIONAL: S&P Withdraws Ratings at Company's Request ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings, including the 'B+' corporate credit rating, on Reston, Virginia-based SI International Inc. at the company's request. SIX FLAGS: Exchange Notes Offer Cues Moody's to Hold Caa1 Rating ---------------------------------------------------------------- Moody's Investors Service affirmed Six Flags, Inc.'s Caa1 Corporate Family rating, downgraded Six Flags' Probability of Default Rating to Ca from Caa1 and downgraded the ratings on Six Flags' 2013 and 2014 notes to Caa3 from Caa1. Moody's also assigned a Caa2 rating and LGD4-59% assessment to Six Flags Operations, Inc.'s proposed $400 million of senior unsecured exchange notes maturing in 2016. The rating actions follow Six Flags' announced offer to exchange its notes due in 2010 (at 90% of the original principal amount if tendered by the Early Tender Date) and in 2013 and 2014 (at 70% of the original principal amount if tendered by the Early Tender Date), in some combination although not fully, for the $400 million of proposed notes. The exchange involves no significant net cash proceeds to Six Flags or bondholders and is scheduled to expire on June 11, 2008. The rating actions are detailed as: Assignments: Issuer: Six Flags Operations, Inc. -- Senior Unsecured Regular Bond/Debenture (2016 Exchange Notes), Assigned Caa2, LGD4-59% Downgrades: Issuer: Six Flags Inc. -- Probability of Default Rating, Downgraded to Ca from Caa1 -- Senior Unsecured Notes due 2013 and 2014, Downgraded to Caa3, LGD3-30% from Caa2, LGD5-76% LGD Updates: Issuer: Six Flags Theme Parks Inc. -- Senior Secured Bank Credit Facility, Changed to B1, LGD2-20% from B1, LGD2-19% Issuer: Six Flags Inc. -- Senior Unsecured Notes due 2010, Changed to Caa2, LGD2-10% from Caa2, LGD5-76% On Review for Possible Downgrade: Issuer: Six Flags Inc. -- Senior Unsecured Notes due 2010, currently Caa2, LGD2-10% Outlook Actions: Issuer: Six Flags Inc. -- Outlook, Changed To Ratings Under Review (2010 Notes only) from Negative Issuer: Six Flags Operations, Inc. -- Outlook, Changed To Negative The proposed $400 million of exchange notes will be guaranteed by Six Flags, Inc. and will be structurally senior with respect to the wholly-owned parks to the existing $1.4 billion of senior unsecured notes and $288 million of mandatory redeemable preferred stock issued by Six Flags, Inc. The SFO exchange notes and Six Flags, Inc. notes have the same senior unsecured claim on the Texas and Georgia partnership park interests. The exchange notes are effectively and structurally subordinate to the $1.1 billion senior secured credit facility issued by Six Flags Theme Parks, Inc. with respect to the wholly-owned parks. SFO is a subsidiary of Six Flags, Inc. and an intermediate holding company of SFTP. Moody's estimates there is minimal room under the proposed 6.5x debt incurrence test (based on the Leverage Ratio, as defined, for SFO and its subsidiaries) in the exchange notes for incremental debt at SFO or SFTP absent an improvement in operating performance at the wholly-owned parks. In addition, the exchange notes have a change of control put right at 101% of par. Moody's believes the exchange offer reduces the near term potential for a payment default on the non-exchanged securities (however, Moody's will classify the exchange as a default due to the distressed nature of the same), but it does not materially alter the credit profile reflected in the Caa1 CFR. The exchange offer alleviates some of the refinancing risk associated with the looming $280 million February 2010 bond maturity, but will likely affect the company's cash interest requirements only moderately (could increase or decrease depending on the mix of bonds tendered) and does not improve the company's weak cash flow generation or materially reduce the very high leverage. The exchange offer also does not address the August 2009 PIERS redemption date, although the company's negative equity position may preclude a redemption of the PIERS under Delaware law. The current ratings on the 2010, 2013 and 2014 notes will remain in place until the exchange offer closes and are based on Moody's estimate of the expected near term loss on the original principal in the exchange offer given the likelihood of the transaction closing as outlined in the company's May 14, 2008 press release. As noted, Moody's expects to characterize the proposed transaction as a distressed exchange and will change the PDR to Caa1/LD if the exchange offer closes, and then back to Caa1 approximately three days thereafter. Moody's expects the ratings on any 2010, 2013 and 2014 notes that remain outstanding following the exchange offer to be Caa3 with a LGD5-85% assessment, although the LGD point estimates could change slightly depending on the mix of bonds exchanged. The current Caa2 rating on the 2010 notes remains on review for downgrade based on the expectation that the rating will be lowered to Caa3 upon closing of the exchange offer. The B1 rating and LGD2-20% assessment on SFTP's credit facility, the Caa2 rating and LGD4-59% assessment on the proposed $400 million exchange notes, and the Caa3 rating and LGD6-98% assessment on the PIERS reflect the probability of a subsequent default on the non-exchanged securities and the projected loss given default of these securities, the latter of which is governed by Moody's loss given default methodology and the anticipated debt mix upon completion of the proposed exchange offer. Accordingly, Moody's anticipates the ratings and LGD assessments for these specific instruments will not change if the exchange offer is closed. The LGD point estimates on the credit facility were updated to reflect the change in expected debt mix. Six Flags' Caa1 CFR continues to reflect uneven and weak operating performance resulting from shifts in strategy for the portfolio of regional theme parks, consistently negative free cash flow generation and very high leverage and financial risk. Debt-to- EBITDA (14.6x for FY 2007 incorporating Moody's standard adjustments) has increased in the last few years, notwithstanding significant asset sales, and is at a level Moody's views as unsustainable. Moody's expects the rating outlook will be negative upon completion of the exchange offer. Six Flags, headquartered in New York City, is a regional theme park company that operates 21 parks spread across North America. The park portfolio includes 19 wholly-owned facilities (including parks near New York City, Chicago and Los Angeles) as well as two parks - Six Flags over Texas and Six Flags over Georgia - in which Six Flags owns partial interests (currently less than 50%) but consolidates due to significant operational control and residual economic interest. Annual revenue approximates $970 million. SKYBUS AIRLINES: U.S. Trustee Appoints 5-Member Creditors Panel --------------------------------------------------------------- The United States Trustee for Region 3 appoined five members to the Official Committee of Unsecured Creditors in the chapter 11 case of Skybus Airlines, Inc.: 1. Sourcespeed LLC Attn: Geoffrey Alan Wolfe 420 Wolfe Street Alexandria, VA 22314 Tel: (703) 201-3593 Fax: (928) 447-0807 2. Port City Air, Inc. Attn: Michael A. Holmes 104 Grafton Drive Portsmouth, NH 03801 Tel: (430) 430-1111 Fax: (603) 430-1199 3. World Fuel Services Inc. Attn: Richard V. Mellone 9800 NW 41 st Street, Suite 400 Miami, FL 33178 Tel: (305) 428-8085 Fax: 305-392-5601 4. Wells Fargo Bank Northwest, N.A. Attn: Russell Hettinger, Vice President 100 NE 3rd Ave., Suite 800 Fort Lauderdale, FL 33301 Tel: (954) 760-7777 Fax: 954-760-7716 5. Airbus North America Customer Services, Inc. Attn: Boris Sakrauski 198 Van Buren Street, Suite 300 Herndon, VA 20170 Tel: (703) 834-3400 Fax: 703-834-3340 William K. Harrington, Esq., represents the U.S. Trustee in the Debtor's case. About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc., -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. When the Debtor filed for protection against its creditors, it listed assets between $100 million and $500 million and debts between $10 million and $100 million. SKYBUS AIRLINES: Files Schedules of Assets and Liabilities ---------------------------------------------------------- Skybus Airlines, Inc., delivered to the United States Bankruptcy Court for the District of Delaware its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $121,344,036 C. Property Claimed as Exempt D. Creditors Holding $52,380,791 Secured Claims E. Creditors Holding $32,031,996 Unsecured Priority Claims F. Creditors Holding $18,863,541 Unsecured Nonpriority Claims ------------ ------------- TOTAL $121,344,036 $103,276,329 About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc. -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. SMI NEW HOME: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: SMI New Home Solutions, LLC P.O. Box 139 Union, KY 41091 Bankruptcy Case No.: 08-20895 Type of Business: The Debtor builds homes. See http://www.sminewhomesolutions.com/ Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Kentucky (Covington) Debtor's Counsel: Stuart P. Brown, Esq. Email: sbrown@ortlaw.com O'Hara Ruberg Taylor Sloan & Sergen 25 Crestview Hills Mall Rd., Ste. 201 P.O. Box 17411 Crestview Hills, KY 41017 Tel: (859) 331-2000 Fax: (859) 578-3365 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Contract Lumber $102,045 3245 Hazelton-Etna Rd. Pataskala, OH 43062 Chase Cardmember Service Business credit card $77,539 P.O. Box 15292 Wilmington, DE 19886 NuWay Drywall Co. HT043 $4,920 150 Washington Ave. Bellevue, KY 41073 CC017 $4,899 BL013 $4,581 J-Mar Concrete (HT 32) Lot 32 HT $6,789 (Foundation poured); value of security: $86,462; value of senior lien: $95,417 J-Mar Concrete BL011 $6,139 Pacific Life IRA Match $12,562 McSwain Carpets, Inc. C017 $7,369 HT043 $4,760 Kentucky Farm Bureau Insurance $9,972 Co. Central Light SB 1, BL 11, BL 13, $8,423 BL 9, BL 47, CC 17, HT 43, HT 20, WW 36, WW 38, SC 303 84 Lumber Co. CC 017 $7,758 Carl Domaschko Excavation HT 032, BL 5, CC $7,319 17, SC 303, HT 32, SB 1, BL 5 Joe Lay & Sons Plumbing HT043 $6,066 Wood, Herron & Evans $5,710 Ikon Office Solutions $5,473 R.O. Why!Marketing $5,000 SUNCREST LLC: Section 341(a) Meeting Scheduled for May 19 --------------------------------------------------------- The U.S. Trustee for Region 18 will convene a meeting of creditors of SunCrest LLC, fka DAE/Westbrook LLC, at 9:30 a.m., on May 19, 2008, at The City Library, 210 East 400 South, Auditorium, in Salt Lake City, Utah. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Draper, Utah, SunCrest, L.L.C. fka DAE/Westbrook LLC -- http://www.suncrest.com-- develops master planned community located in the Traverse Ridge in Draper in both Salt Lake and Utah Counties. At present, approximately 2,452 homes sites remain available out of 3,903 sites. The company holds a majority of the representative positioms with the SunCrest Home Owners Association. The company has spent at least $102 million on land development in the aggregate, pursuant to court documents. The Debtor filed chapter 11 protection on April 11, 2008 (Bankr. D. Utah Case No. 08-22302) with Judge William T. Thurman presiding. John E. Mitchell, Esq., P. Beth Lloyd, Esq., and William L. Wallander, Esq., at Vinson & Elkins L.L.P., represent the Debtor. The Debtor listed total assets of $54,057,922 and total liabilities of $55,329,651. SUPERVALU INC: S&P Puts 'BB+' Rating on Existing $4BB Facilities ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level and recovery ratings on SUPERVALU INC.'s existing $4.0 billion senior secured credit facilities. The credit facilities are rated 'BB+', with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery in the event of a payment default. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on SUPERVALU. The outlook is positive. SUPERVALU's $4.0 billion credit facilities, which consist of a $2.0 billion revolving credit facility, a $750 million term loan A, and a $1.25 billion term loan B, were issued in June 2006. Proceeds from the term loans A and B were used to partially fund SUPERVALU's acquisition of Albertson's Inc. in mid-2006. "The rating on Minneapolis-based SUPERVALU reflects the company's participation in the highly competitive supermarket industry, its limited free operating cash flow given its sizable capital expenditure needs, its leveraged balance sheet, and its older acquired store base compared with large industry peers," said Standard & Poor's credit analyst Diane Shand. "The company's large scale, good market positions, broad geographic reach, and format diversity partially mitigate those weaknesses." SUPERVALU's $44 billion in annual revenues rank it in second place among traditional supermarkets, behind Kroger Co.'s roughly $70 billion in the fiscal year ended February 2008. The supermarket industry remains highly competitive, with many alternative food retailers such as supercenters, wholesale clubs, convenience stores, and drugstores expanding their grocery offerings over the years. TRANSMERIDIAN EXPLO: March 31 Balance Sheet Upside-Down by $31MM ---------------------------------------------------------------- Transmeridian Exploration Inc.'s consolidated balance sheet at March 31, 2008, showed $402.2 million in total assets, $341.2 million in total liabilities, and $92.5 million in redeemable convertible preferred stock, resulting in a $31.5 million total stockholders' deficit. At March 31, 2008, the company's consolidated balance sheet also showed strained liquidity with $6.0 million in total current assets available to pay $62.2 million in total current liabilities. The company reported a net loss of $10.9 million on oil sales of $15.3 million for the first quarter ended March 31, 2008, compared with a net loss of $15.5 million on oil sales of $7.1 million in the corresponding period a year ago. Net revenues for the three months ended March 31, 2008, increased approximately 113.0%, over the comparable period of 2007 although the total volumes sold decreased. This is due primarily to the higher average price per bbl and the mix of export and domestic sales. For the three months ended March 31, 2008, the company sold 221,355 bbls at an average price of $72.25 per bbl. In the first quarter of 2007, the company sold 130,180 bbls in the export market at an average price of $31.22 per bbl and 136,258 bbls in the domestic market at an average price of $25.30 per bbl. In April 2007, the company began export pipeline sales which have allowed the company to receive a higher price per bbl as compared to export sales via rail where the purchaser is responsible for transportation costs, thus resulting in a higher discount from quoted crude oil prices. Additionally, crude oil prices on the quoted global exchanges were significantly higher on average in the first quarter of 2008 as compared to the first quarter of 2007. The average number of producing wells increased from 10.4 wells in the first quarter of 2007 to 12.3 wells in the first quarter of 2008. Average daily production, however, decreased, due primarily to the lack of acid stimulation on newly completed wells, deferred workovers on existing wells and the delay of a pressure maintenance project because of a lack of sufficient operating funds, which has not allowed wells to flow at their optimal levels. The company recognizes revenue from the sale of oil when the purchaser takes physical delivery of the oil. As of March 31, 2008, the company had 18,817 bbls of oil in inventory that had not yet been sold, as compared to 59,373 bbls as of Dec. 31, 2007. Total operating costs and expenses increased to $15.5 million from $13.7 million during the three months ended March 31, 2007, primarily due to higher operating and admistrative expense in Kazakhstan, primarily as a result of a reduction of inventory between periods. In addition, for the three months ended March 31, 2008, transportation and storage costs were $1.5 million, or $6.72 per bbl, as compared to $1.1 million, or $3.58 per bbl, for the first quarter of 2007. The increase is due to the increase of export pipeline sales in the first quarter of 2008 for which the company incurs pipeline charges on the crude oil transported to the applicable ports of loading. Interest Expense Interest expense, net of capitalized interest of $181,000, was $10.6 million for the three month period ended March 31, 2008, as compared to interest expense of $9.0 million, net of $1.8 million of capitalized interest, for the three month period ended March 31, 2007. This increase is primarily due to the decrease in the amount of interest capitalized in the first quarter of 2008 as compared to the same quarter of 2007. Capitalized interest decreased in the first quarter of 2008 primarily due to decreased drilling activity and the commissioning of the company's central production facility and related equipment and the connection to the regional pipeline system in the second half of 2007. Liquidity and Capital Resources The company is currently carrying out a limited workover program in the South Alibek Field (the Field) to clean out paraffin deposits in wells and install continuous gas lift equipment in selected wells. At current production levels of approximately 2,100 bopd, and at the prices the company currently receives, management believes it will be able to generate sufficient cash flow to cover operating costs, overhead and scheduled interest payments on its debt. The company utilized much of its excess liquidity during the period in 2007 when the Field was shut-in to fund operating costs, overhead, scheduled interest payments and necessary capital expenditures. As a result, the company does not currently have the necessary resources to allow for continued drilling of exploration and development wells and to meet other working capital obligations. 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?2bf1 Going Concern Doubt UHY LLP in Houston raised substantial doubt on Transmeridian's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's negative working capital, stockholders' deficit, and operating losses since its inception. The company had a net working capital deficit of approximately $56.2 million and a stockholders' deficit of approximately $31.5 million at March 31, 2008. Approximately 89.0% of the company's accounts payable at March 31, 2008, have been outstanding more than 120 days. About Transmeridian Exploration Based in Houston, Transmeridian Exploration Inc. (AMEX: TMY) -- http://www.tmei.com/ -- is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. The company's primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan covered by License 1557 and the related exploration and production contracts with the government of Kazakhstan. TRIAD FINANCIAL: Moody's Junks Ratings on Citigroup Deal Amendment ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of Triad Financial Corp. and placed the ratings on review for possible further downgrade. The rating action is precipitated by Triad's 8-K filing that, pursuant to an amendment to the company's Warehouse Lending Agreement with Citigroup, this facility will cease to be available to the company to fund new originations as of June 30, 2008 (original maturity date of the facility was April 29, 2009). In the 8-K filing Triad also announced that three directors, each of whom had been appointed to the board by the Goldman Sachs investors, had resigned. The Citigroup facility is one of two warehouse facilities maintained by Triad, the other being a $500 million facility from Barclays Bank that matures in January 2009. However, in the same 8-K filing, Triad calls into question its ability to borrow under the Barclay's facility. In Moody's view, these developments represent a material impairment of the company's liquidity and financial flexibility. The inability to access funding for new originations would also severely damage Triad's franchise. During its review, Moody's will evaluate a variety of factors, including the prospects for arranging replacement financing on a timely basis, the terms and conditions of such financing, and the potential effects of these developments on the company's operations and franchise. These ratings were downgraded: -- Corporate Family Rating, to Caa1 from B2 -- Senior Unsecured Debt, to Caa2 from B3 Based in Huntington Beach, California, Triad is an auto finance company that operates primarily in the sub-prime segment of the market. The company had $3.9 billion in managed receivables as of Dec. 31, 2007. TROPICANA ENTERTAINMENT: Wants Lazard Freres as Financial Advisor ----------------------------------------------------------------- Tropicana Entertainment LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Lazard Freres & Co. LLC as their investment banker and financial advisors in connection with the prosecution of their Chapter 11 cases and all related matters. The Debtors tell the Court that they need Lazard to provide them advice on their restructuring activities. The Debtors selected Lazard because of the firm's extensive experience and excellent reputation in providing financial advisory and investment banking services in complex Chapter 11 cases. Before the bankruptcy filing, the Debtors engaged Lazard to provide general investment banking and financial advice in connection with their attempts to complete a strategic restructuring and to prepare for the commencement of their Chapter 11 Cases. Lazard will: a. review and analyze the Debtors' business, operations, and financial projections; b. evaluate the Debtors' potential debt capacity light of its projected cash flows; c. assist in determining a capital structure for the Debtors; d. assist in determining a range of estimated values for the Debtors on a going concern basis; e. advise the Debtors on tactics and strategies for negotiating with the stakeholders; f. render financial advice to the Debtors and participate in meetings or negotiations with the Stakeholders, rating agencies or other appropriate parties in connection with any Restructuring; g. advise the Debtors on the timing, nature, and terms of new securities, other consideration or other inducements to be offered pursuant to the Restructuring; h. advise and assist the Debtors in evaluating potential financing transactions by the Debtors, and, subject to Lazard's agreement so to act, and, if requested by Lazard, to execution of appropriate agreements, on behalf of the Debtors, contacting potential sources of capital as the Debtors may designate and assist the Debtors in implementing the Financing; i. assist the Debtors in preparing documentation within Lazard's area of expertise that is required in connection with the Restructuring; j. subject to the mutual agreement of the Debtors and Lazard, assist the Debtors in identifying and evaluating candidates for a potential sale transaction, advise the Debtors in connection with negotiations and aid in the consummation of a Sale Transaction; k. attend meetings of the Debtors' Board of Directors and its committees with respect to matters on which Lazard has been engaged to advise the Debtors; and l. provide testimony, as necessary, with respect to matters on which Lazard has been engaged to advise the Debtors in any proceeding before any bankruptcy court. In addition, Lazard will provide any additional investment banking and financial advisory services in connection with the engagement as the Debtors may reasonably request from time to time. Lazard's Fees In exchange for the contemplated services, Lazard will be entitled to monthly and transaction fees. A. Monthly Fee Lazard will receive a monthly fee of $75,000 payable on execution of its engagement letter with the Debtors and on the first day of each month thereafter until the earlier of the completion of the Restructuring or the termination of Lazard's engagement pursuant to the Engagement Letter; provided, that, if that the Debtors file for protection under bankruptcy law, each Monthly Fee payable after the date of the filing will be increased to $150,000. All Monthly Fees paid in respect of the first six months of the engagement will be credited, without duplication, against any Restructuring Fee, Sale Transaction Fee, Minority Sale Transaction Fee, or Financing Fee payable; provided, that, in the event of a Chapter 11 filing, the credit will only apply to the extent that the fees are approved in their entirety by the Bankruptcy Court, if applicable. B. Transaction Fees A fee equal to 0.75% of the aggregate face value of the Existing Obligations involved in a Restructuring will be payable to Lazard upon the consummation of a Restructuring involving the Debtors' bank debt, bond debt, and other on and off balance sheet indebtedness, ; provided, however, that if the Restructuring is to be completed through a "pre-packaged" or "pre-arranged" plan of reorganization, the Restructuring Fee will be earned and will be payable upon the earlier of (i) execution of definitive agreements with respect to the plan and (ii) delivery of binding consents to the plan by a sufficient number of creditors or bondholders, as the case may be, to bind the creditors or bondholders, as the case may be to the plan. In the event Lazard is paid a fee in connection with a "pre-packaged" or "pre-arranged" plan and the plan is not consummated, Lazard will return the fee to the Debtors. In the event that the Debtors and Lazard mutually agree that Lazard will provide advice and assistance in connection with a possible Sale Transaction, then: (i) if, whether in connection with the consummation of a Restructuring or otherwise, the Debtors consummate a Sale Transaction incorporating all or a majority of the assets or all or a majority or controlling interest in the equity securities of the Debtors, Lazard will be paid a fee equal to the greater of (A) the fee calculated based on the Aggregate Consideration as set forth in a schedule attached to the Engagement Letter or (B) the Restructuring Fee; (ii) if, whether in connection with the consummation of a Restructuring or otherwise, the Debtors consummate any Sale Transaction not covered by clause (i) above, the Debtors will pay Lazard a fee based on a calculated Aggregate Consideration; (iii) any Sale Transaction Fee or Minority Sale Transaction Fee will be payable upon consummation of the applicable Sale Transaction. A fee, payable upon consummation of a Financing, equal to the amount set forth in another schedule to the Engagement Letter, one-half of any Financing Fee paid in respect of a Financing consummated in connection with a Restructuring of the Existing Obligations will be credited against any Restructuring Fee subsequently payable in respect of the Restructuring. However, all Financing Fees paid in respect of a Financing solely involving Senior Secured Debt and consummated in connection with a Restructuring of the Existing Obligations will be credited against any Restructuring Fee subsequently payable in respect of the Restructuring. If Lazard provides services to the Debtors for which a fee is not provided, the services will, except insofar as they are the subject of a separate agreement, be treated as falling within the scope of the Engagement Letter, and the Debtors and Lazard will agree upon a fee for the services based on good faith negotiations. Lazard may be entitled to more than one of the fees. Lazard's actual and necessary expenses related to the contemplated services will also be reimbursed. The Debtors relate that before the bankruptcy filing, they paid $243,158 in full payment of monthly fees and expenses reimbursement to Lazard for invoices billed through April 2008. They also paid Lazard $838,716 for the Financing Fee associated with the pending DIP financing and for a retainer relating to the firm's monthly fees and expense reimbursement incurred since the last periodic invoice. Any portion of the payment not used to pay and reimburse Lazard for its fees and expenses will be detailed in Lazard's first interim fee application, and that portion will be credited towards Lazard's fees and expenses as allowed by the Court. The Debtors have also agreed to provide customary and reasonable indemnification protection to Lazard. Daniel M. Aronson, managing director of Lazard, assures the Court that his firm is a "disinterested person" as the phrase is defined in Section 101(14) of the Bankruptcy Code. 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. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. 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 Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Endorses AlixPartners LLP as Restructuring Advisors ------------------------------------------------------------------ Tropicana Entertainment LLC and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to employ AlixPartners LLP as their restructuring advisors. The Debtors inform the Court that they require AlixPartners' experience in providing excellent restructuring advisory services in large Chapter 11 cases. AlixPartners will: a. assist in developing and monitoring performance of the Debtors' business plan and related analyses and alternatives; b. assist the Debtors and their management in developing and monitoring a short-term cash flow which is l3-week cash receipts and disbursements forecasting tool and related methodologies, and to assist with planning for alternatives as requested by the Debtors; c. assist the Debtors' management in complying with certain bankruptcy administration requirements including, but not limited to, filing of schedules and statements; developing and producing monthly operating reports; developing a database of claims and liabilities as of the filing date; and other mutually agreed upon tasks; d. assist the Debtors and their management team in coordinating and managing the communications and due diligence requests with the various constituents during the pendency of the Debtors' Chapter II Cases; e. assist the Debtors in attempting to meet various current or potential compliance obligations, including requirements relating to financing agreements, bankruptcy court reporting requirements and gaming industry requirements; f. assist in obtaining and presenting information required by parties in interest in the Debtors' bankruptcy process, including official committees appointed by the Court and the Court itself; g. assist the Debtors with the appropriate entity segregation and of reporting for parent and subsidiary entities; h. assist, as requested, in tasks like reconciling, managing, and negotiating claims, determining preferences, and collection of same and similar administrative matters; and i. assist with other matters as may be requested that fall within AlixPartners' expertise and that are mutually agreeable. AlixPartners' services will be paid in accordance with its customary hourly rates: Professional Hourly Rate ------------ ----------- Managing Directors $650 to $850 Directors $485 to $650 Vice Presidents $335 to $480 Associates $250 to $340 Analysts $225 to $250 Paraprofessionals $170 to $200 AlixPartners will also be reimbursed for actual and reasonable out-of-pocket expenses incurred in connection with the Debtors' Chapter 11 Cases. The Debtors paid $303,909 to AlixPartners for services rendered in preparation of filing their Chapter 11 cases. The Debtors also advanced $200,000 to AlixPartners to be applied against fees and expenses. John Castellano, a managing partner of AlixPartners, assures the Court that his firm is a "disinterested person" as the phrase is defined in Section 10(14) of the Bankruptcy Code. 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. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. 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 Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Wants to Hire Ernst & Young as Accounting Advisor ---------------------------------------------------------------- Tropicana Entertainment LLC and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to employ Ernst & Young LLP as their independent auditor and accounting advisor in connection with their Chapter 11 cases. The Debtors relate that they selected Ernst & Young because it is familiar with their business and financial affairs and because the firm has extensive experience in and an excellent reputation for providing high quality auditing and accounting advisory services to large and complex companies, including debtors and creditors in bankruptcy reorganization. The Debtors previously employed Ernst & Young to provide audit and accounting services. Ernst & Young will: a. conduct annual audit of the consolidated financial statements of Tropicana Entertainment, LLC, Columbia Properties Vicksburg, LLC, JMBS Casino LLC, and CP Laughlin Realty, LLC, for the years ended December 31, 2007 and December 31, 2008; b. conduct SAS 100 review of Tropicana II Entertainment, LLC, Columbia Properties Vickburg, LLC, JMBS Casino LLC, and CP Laughlin Realty, LLC; c. conduct annual audit of the financial statements of Tropicana Las Vegas Resort and Casino, LLC, Aztar Indiana Gaming Company, LLC, Greenville Riverboat, LLC, and Greenville Riverboat, LLC, and Sargasso Corporation for the year ended December 31, 2007; d. conduct an annual audit of the financial statements of Tropicana Las Vegas Resort and Casino, LLC, Greenville Riverboat, LLC, and Sargasso Corporation for the year ended December 31, 2008; e. conduct audits of any entities as a result of sales agreements; f. conduct annual audit of the historical basis financial statements of Adamar of New Jersey, Inc., for the year ended December 31, 2007. g. conduct research and consult with management regarding financial accounting and reporting matters; h. prepare management letter; i. conduct audit of and report on the financial statements and supplemental schedule of the Aztar Corporation 401(k) Plan, for the year ended December 31, 2007, which is to be included in the Plan's Form 5500 filing with the Department of Labor's Employee Benefits Security Administration; and j. conduct various agreed upon procedures under Indiana, Nevada, New Jersey, Louisiana, and Mississippi gaming regulations, including internal control, audit, and testing procedures. Ernst & Young will be paid for the contemplated services in accordance with its customary hourly rates: Professional Hourly Rate ------------ ----------- National Partner $700 Partner $525 Executive Director $475 Senior Manager $455 Manager $335 Senior $210 Staff $160 Senior Client Serving Associate $140 The Debtors will reimburse Ernst & Young for actual expenses incurred in considering or responding to discovery requests or participating as a witness in any proceeding with regard to the audit and accounting advisory services; and reasonable and customary out-of-pocket expenses. Steven Beinlich, partner at Ernst & Young, assures the Court that his firm is a "disinterested person" as the phrase is defined under Section 10(14) of the Bankruptcy Code. 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. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. 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 Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRUMP ENTERTAINMENT: Harry Hagerty Joins Board of Directors ----------------------------------------------------------- Harry C. Hagerty has been appointed to Trump Entertainment Resorts, Inc.'s Board of Directors. Mr. Hagerty brings to the Board senior level financial and operational experience at significant corporations, including the financial and gaming industries. Most recently, Mr. Hagerty was Executive Vice President and Chief Financial Officer of Global Cash Access Holdings, Inc. Prior to that position, he served as Executive Vice President and Chief Financial Officer of Caesars Entertainment, Inc. Mr. Hagerty has also served as Managing Director of Investment Banking at both BancBoston Robertson Stephens, Inc. and Deutsche Morgan Grenfell, Inc. Mr. Hagerty, 47, will serve on the Audit Committee of the Board. His appointment will be effective upon receipt of required regulatory approval, and expires at the company's 2010 annual meeting of stockholders. Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ:TRMP) -- http://www.trump.com-- owns and operates three casino hotel properties: Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino. Trump Entertainment conducts gaming activities and provides customers with casino resort and entertainment experiences. The company is the successor to Trump Hotels & Casino Resorts Inc. and its subsidiaries. During the year ended Dec. 31, 2006 the company focused on property and operational changes. It commenced the first phase of its renovation capital program and began construction of a 786-room hotel tower at the Trump Taj Mahal. * * * As reported in the Troubled Company Reporter on April 16, 2008, Moody's Investors Service downgraded Trump Entertainment Resort Holdings, Inc.'s probability of default rating to Caa1 from B3. The company's B3 corporate family rating and Caa1 8.5% senior secured second lien notes, however, were confirmed. Concurrently, TER's speculative grade liquidity rating was raised to SGL-3 from SGL-4, and a negative ratings outlook was assigned. This rating action ends the review process which began on Dec. 17, 2007. TW HOTEL: Improving Performance Cues Moody's to Lift Ratings ------------------------------------------------------------ Moody's Investors Service upgraded twelve classes, and affirmed two classes of TW Hotel Funding 2005-LUX as: -- Class A1, $108,137,045, Floating, affirmed at Aaa -- Class A2, $36,045,682, Floating, affirmed at Aaa -- Class B, $18,002,568, Floating, upgraded to Aaa from Aa1 -- Class C, $21,002,996, Floating, upgraded to Aaa from Aa2 -- Class D, $10,298,766, Floating, upgraded to Aa1 from Aa3 -- Class E, $13,785,750, Floating, upgraded to Aa2 from A1 -- Class F, $14,029,028, Floating, upgraded to Aa3 from A2 -- Class G, $10,298,766, Floating, upgraded to A1 from A3 -- Class H, $20,273,162, Floating, upgraded to A2 from Baa1 -- Class J, $15,731,974, Floating, upgraded to A3 from Baa2 -- Class K, $21,895,015, Floating, upgraded to Baa1 from Baa3 -- Class L, $14,596,677, Floating, upgraded to Baa2 from Ba1 -- Class M, $24,165,609, Floating, upgraded to Baa3 from Ba2 -- Class N, $16,380,715, Floating, upgraded to Ba1 from Ba3 Moody's is affirming and upgrading the above pooled classes due to overall improving property performances, release of a property and value appreciation. The pooled Certificates are collateralized by a single loan secured by four properties. As of the April 15, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 19% to $345 million from $425 million at securitization. The significant reduction in the aggregate balance is primarily caused by the April 2007 release of the Kona Village Resort (13% of the original pooled trust balance) property. The repayment was made on a modified pro rata basis. Moody's current underlying rating is Ba1 versus Ba3 at securitization. Moody's pooled LTV is 66%. All of the assets in the pool were in various stages of renovation when they were securitized. The stabilization process post- securitization meets Moody's original expectations, and the release of Kona Village Resort, a highly transitional asset in nature, benefited the pool. Furthermore, all of the hotels in the pool have irreplaceable location, and locations with high barriers to entry. UAL CORP: Sets Pricing Alliance with Continental Airlines --------------------------------------------------------- United Airlines and Continental Airlines Inc. are holding talks to form an alliance that would set pricing and schedules, Mary Schlangenstein and John Hughes of Bloomberg News says. The alliance discussions went underway shortly after the failed merger talks between the two airlines, Bloomberg said. An alliance with U.S. antitrust immunity to collaborate on fares would provide most of the benefits of a merger, at the same time avoiding regulatory challenges as well as the need to combine workforces, Bloomberg notes. "Antitrust immunity is a kind of quasi-merger," James M. Higgins, analyst at Soleil Securities Corp., told Bloomberg. "It doesn't put you through the actual integration, which is where the cost savings ultimately can come, but which is also risky, especially now." "As we've said over the last few weeks, we are examining our alliance relationships as we think it's important that we be a major player in one of the three major global airline alliances," Bloomberg quotes Mary Clark, a spokeswoman for Continental, as saying. The alliance talks are reportedly separate from United's merger talks with US Airways. Continental Says "No" to Merger As reported by the Troubled Company Reporter on April 28, 2008, Continental Airlines Inc.'s Chairman and CEO Larry Kellner and President Jeff Smisek disclosed to more than 45,000 employees that the company's Board of Directors unanimously supported the management's recommendation that, in the current industry environment, the best course for Continental is not to merge with another airline at this time. According to the two executives, the Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental's prospects on a standalone basis. The management will, however, continue to review potential alliances and its membership in SkyTeam. Continental is considering alternatives to SkyTeam as its carefully evaluates which major global alliance will be best for Continental over the long term. About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * As reported in the Troubled Company Reporter on April 22, 2008, Standard & Poor's Ratings Services revised its rating outlook on Continental Airlines Inc. (B/Negative/B-3) to negative from stable. S&P also placed its ratings on selected enhanced equipment trust certificates that are secured by regional jets on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 24, 2008, Standard & Poor's Ratings Services said that its ratings and outlook on UAL Corp., parent of United Air Lines Inc. (both rated B/Negative/--) are not affected by UAL's report of a heavy first-quarter loss. UAL reported a first-quarter $542 million pretax loss, as much higher fuel prices more than offset increased revenues. S&P had revised its rating outlook on both entities to negative from stable on April 16, 2008. In that outlook revision, S&P cited very high fuel prices and the expected effect on UAL revenues of a weak U.S. economy. UAL CORP: Name and Chicago HG Likely to Remain After USAir Merger ----------------------------------------------------------------- United Airlines Inc., and US Airways Group, Inc. are about to consolidate, Julie Johnsson of the Chicago Tribune reports. The paper, citing a person familiar with the deal, discloses that the merged company will likely be headquartered in Chicago, United's base. However, United's executives are expected to step aside and let US Airways' CEO Doug Parker and president Scott Kirby lead the combined carrier, Ms. Johnsson says. If the merger goes through, public relations and branding experts believe that United's name would most likely be retained since it is more established and has a better reputation, Mike Sunnucks of the Phoenix Business Journal reports. "United Airlines is larger, and its brand is older and more established. It carries longevity and credibility that may resonate more broadly, particularly in hub markets like Washington, and Chicago," said Steve Carr, a principal of Phoenix-based public relations firm, Kur Carr Group Inc., reports Mr. Sunnucks. Several parties made statements regarding the merger talks, including Captain Steve Wallach, Chairman of the United Master Executive Council of the Air Line Pilots Association, and the Association of Flight Attendants-CWA Master Executive Council presidents at America West, US Airways and United. ALPA Says Merger Should be Last Resort "We are aware of continued speculation in the media of a possible merger between United Airlines and US Airways and have serious concerns that the highly-touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality," Mr. Wallach said. "We therefore believe that a merger with US Airways should be a last resort and not a first choice for United." "First, much of the financial benefit of a merger occurs because the merged carrier takes traffic away from other carriers. . . . Second, much of the anticipated costs savings from a merger are expected to come from an 'optimization of the fleet' and the integration of operations. . . . Third, the transaction is touted as providing significant cash to the merged carrier. However, we are concerned that continued high fuel costs and the significant integration costs incurred in a merger could deplete cash reserves before the benefits of the transaction are realized sometime in the future." "We continue to believe that the 'execution risks' are far greater than assumed. America West and US Airways have been unable to integrate after two and a half years, and there is no solution in sight. In fact, labor conditions at US Airways have worsened. If United and US Airways were to merge, there could not be any integration of operations until ALPA is recertified following a new election, and this could take at least a year. Once recertified, integration of the pilot seniority lists and negotiation of a new agreement will take at a minimum one and a half to two years and conceivably as long as four. Following integration, full fleet optimization likely will take an additional one to two years. In other words, the merger could take as long as six to seven years, and under the best of circumstances, at least four years to complete. During this interim period there would be minimal, if any, cost savings and financial benefits to the merged entity. "We also believe that it is unrealistic to assume that the merger will receive Department of Justice approval. . . . Moreover, we believe there [is] a number of operational issues at United that need to be addressed, and that it is a mistake to sit idly by waiting for a merger to bail us out. . . . We also find it difficult to understand why United is the only carrier in the industry with no aircraft on order or on option. All these issues require immediate attention. ". . . . We are proud to be United pilots and want to do all that we can to help our airline retain its stature and leadership position in the industry." AFA Says Flight Attendants Should be Supported Representing more than 21,000 flight attendants, the Association of Flight Attendants-CWA Master Executive Council presidents -- Greg Davidowitch at United, Mike Flores at US Airways, and Gary Richardson at America West -- had this to say regarding the "failed actions of the current management at each airline and the dangers of multiplying those failures by forcing them under one roof": "Labor relations at our carriers is at an all-time low. US Airways CEO Doug Parker has failed for almost three years to negotiate a combined contract with the flight attendants at America West and US Airways. While executives have repeatedly awarded themselves millions in salary and bonuses, America West and US Airways flight attendants have not received raises or improvements in working conditions for nearly five years." "The track record of United Airlines executives is no better. . . . These staffing cuts and scheduling practices provide no benefit and only wreak havoc on passengers' travel experience." "In order for such an inherently risky and complex business transaction to be successful, there must be an underlying rationale and an accord with flight attendants. To date there is no evidence of either. If current management at these companies expects cooperation in any consolidation scenario, they must address the needs of flight attendants. "The problems at our airlines can and should be fixed. Flight attendants continue to struggle under the draconian cuts of bankruptcy and deserve decent wages and work conditions. Only when the needs of the employees are met will US Airways and United Airlines have a chance at being airlines where people want to work and passengers want to fly. "In order for any merger to be successful, it will need to have the support of flight attendants. We encourage our respective management teams to first address the problems that have created this adversarial labor environment before contemplating any kind of consolidation scenario. Unless immediate focus is placed on the outstanding road blocks to success at each of our airlines, flight attendant issues will become real and significant obstacles in the path of any merger." About US Airways Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) - http://www.usairways.com/-- primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' Chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 26, 2008, Standard & Poor's Ratings Services revised its outlook on US Airways Group Inc. to stable from positive. S&P has affirmed all ratings, including the 'B-' long-term corporate credit rating. The TCR reported on April 17, 2008, that Fitch Ratings has affirmed the debt ratings of US Airways Group, Inc. as: Issuer Default Rating at 'B-'; Secured term loan rating at 'BB-/RR1'; and Senior unsecured rating at 'CCC/RR6'. Fitch's ratings apply to approximately $1.7 billion in outstanding debt. The Rating Outlook has been revised to Stable from Positive. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 24, 2008, Standard & Poor's Ratings Services said that its ratings and outlook on UAL Corp., parent of United Air Lines Inc. (both rated B/Negative/--) are not affected by UAL's report of a heavy first-quarter loss. UAL reported a first-quarter $542 million pretax loss, as much higher fuel prices more than offset increased revenues. S&P had revised its rating outlook on both entities to negative from stable on April 16, 2008. In that outlook revision, S&P cited very high fuel prices and the expected effect on UAL revenues of a weak U.S. economy. US AIRWAYS: Merger Likely to Retain UAL Name and Chicago HG ----------------------------------------------------------- United Airlines Inc., and US Airways Group, Inc. are about to consolidate, Julie Johnsson of the Chicago Tribune reports. The paper, citing a person familiar with the deal, discloses that the merged company will likely be headquartered in Chicago, United's base. However, United's executives are expected to step aside and let US Airways' CEO Doug Parker and president Scott Kirby lead the combined carrier, Ms. Johnsson says. If the merger goes through, public relations and branding experts believe that United's name would most likely be retained since it is more established and has a better reputation, Mike Sunnucks of the Phoenix Business Journal reports. "United Airlines is larger, and its brand is older and more established. It carries longevity and credibility that may resonate more broadly, particularly in hub markets like Washington, and Chicago," said Steve Carr, a principal of Phoenix-based public relations firm, Kur Carr Group Inc., reports Mr. Sunnucks. Several parties made statements regarding the merger talks, including Captain Steve Wallach, Chairman of the United Master Executive Council of the Air Line Pilots Association, and the Association of Flight Attendants-CWA Master Executive Council presidents at America West, US Airways and United. ALPA Says Merger Should be Last Resort "We are aware of continued speculation in the media of a possible merger between United Airlines and US Airways and have serious concerns that the highly-touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality," Mr. Wallach said. "We therefore believe that a merger with US Airways should be a last resort and not a first choice for United." "First, much of the financial benefit of a merger occurs because the merged carrier takes traffic away from other carriers. . . . Second, much of the anticipated costs savings from a merger are expected to come from an 'optimization of the fleet' and the integration of operations. . . . Third, the transaction is touted as providing significant cash to the merged carrier. However, we are concerned that continued high fuel costs and the significant integration costs incurred in a merger could deplete cash reserves before the benefits of the transaction are realized sometime in the future." "We continue to believe that the 'execution risks' are far greater than assumed. America West and US Airways have been unable to integrate after two and a half years, and there is no solution in sight. In fact, labor conditions at US Airways have worsened. If United and US Airways were to merge, there could not be any integration of operations until ALPA is recertified following a new election, and this could take at least a year. Once recertified, integration of the pilot seniority lists and negotiation of a new agreement will take at a minimum one and a half to two years and conceivably as long as four. Following integration, full fleet optimization likely will take an additional one to two years. In other words, the merger could take as long as six to seven years, and under the best of circumstances, at least four years to complete. During this interim period there would be minimal, if any, cost savings and financial benefits to the merged entity. "We also believe that it is unrealistic to assume that the merger will receive Department of Justice approval. . . . Moreover, we believe there [is] a number of operational issues at United that need to be addressed, and that it is a mistake to sit idly by waiting for a merger to bail us out. . . . We also find it difficult to understand why United is the only carrier in the industry with no aircraft on order or on option. All these issues require immediate attention. ". . . . We are proud to be United pilots and want to do all that we can to help our airline retain its stature and leadership position in the industry." AFA Says Flight Attendants Should be Supported Representing more than 21,000 flight attendants, the Association of Flight Attendants-CWA Master Executive Council presidents -- Greg Davidowitch at United, Mike Flores at US Airways, and Gary Richardson at America West -- had this to say regarding the "failed actions of the current management at each airline and the dangers of multiplying those failures by forcing them under one roof": "Labor relations at our carriers is at an all-time low. US Airways CEO Doug Parker has failed for almost three years to negotiate a combined contract with the flight attendants at America West and US Airways. While executives have repeatedly awarded themselves millions in salary and bonuses, America West and US Airways flight attendants have not received raises or improvements in working conditions for nearly five years." "The track record of United Airlines executives is no better. . . . These staffing cuts and scheduling practices provide no benefit and only wreak havoc on passengers' travel experience." "In order for such an inherently risky and complex business transaction to be successful, there must be an underlying rationale and an accord with flight attendants. To date there is no evidence of either. If current management at these companies expects cooperation in any consolidation scenario, they must address the needs of flight attendants. "The problems at our airlines can and should be fixed. Flight attendants continue to struggle under the draconian cuts of bankruptcy and deserve decent wages and work conditions. Only when the needs of the employees are met will US Airways and United Airlines have a chance at being airlines where people want to work and passengers want to fly. "In order for any merger to be successful, it will need to have the support of flight attendants. We encourage our respective management teams to first address the problems that have created this adversarial labor environment before contemplating any kind of consolidation scenario. Unless immediate focus is placed on the outstanding road blocks to success at each of our airlines, flight attendant issues will become real and significant obstacles in the path of any merger." About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 24, 2008, Standard & Poor's Ratings Services said that its ratings and outlook on UAL Corp., parent of United Air Lines Inc. (both rated B/Negative/--) are not affected by UAL's report of a heavy first-quarter loss. UAL reported a first-quarter $542 million pretax loss, as much higher fuel prices more than offset increased revenues. S&P had revised its rating outlook on both entities to negative from stable on April 16, 2008. In that outlook revision, S&P cited very high fuel prices and the expected effect on UAL revenues of a weak U.S. economy. About US Airways Based in Tempe, Arizona, US Airways Group Inc.'s (NYSE: LCC) - http://www.usairways.com/-- primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc., and Airways Assurance Limited, LLC. Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on Sept. 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. The Debtors' Chapter 11 plan for its second bankruptcy filing became effective on Sept. 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 26, 2008, Standard & Poor's Ratings Services revised its outlook on US Airways Group Inc. to stable from positive. S&P has affirmed all ratings, including the 'B-' long-term corporate credit rating. The TCR reported on April 17, 2008, that Fitch Ratings has affirmed the debt ratings of US Airways Group, Inc. as: Issuer Default Rating at 'B-'; Secured term loan rating at 'BB-/RR1'; and Senior unsecured rating at 'CCC/RR6'. Fitch's ratings apply to approximately $1.7 billion in outstanding debt. The Rating Outlook has been revised to Stable from Positive. US SHIPPING: S&P Puts 'B-' Rating Under Neg. Watch on Poor Fin'l ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B-' corporate credit rating, on U.S. Shipping Partners L.P. on CreditWatch with negative implications. "The CreditWatch placement reflects the company's worse-than- expected near-term operating outlook, a deteriorating financial profile, increasing liquidity constraints, and the possibility of a financial covenant breach over the next several months," said Standard & Poor's credit analyst Funmi Afonja. The CreditWatch also reflects S&P's expectations of continued earnings and cash flow pressures because of rising fuel prices and increased exposure to the volatile spot market due to the expiration of time-charter contracts in recent months. The Edison, New Jersey- based shipping company has about $463 million of lease-adjusted debt. U.S. Shipping's near-term operating outlook is worse-than- expected. The company has stated that it is possible that it could fall out of compliance with certain financial covenants relating to leverage, fixed-charge, and interest coverage at the end of the second quarter of 2008, and likely that it will fall out of compliance with these same covenants by the end of the third quarter of 2008. The company has retained financial advisers to assist in exploring strategic alternatives, including the possible sale of the business or the sale of new equity, and other ways to increase liquidity and strengthen the financial resources of the company. Current ratings on U.S. Shipping reflect the tanker company's limited free cash flow after partnership distributions; a very aggressive financial policy; participation in the competitive and capital-intensive shipping industry; and the modest size of its fleet of older vessels. These vessels, which face increasing competitive pressures from newer vessels, will be phased out over time because of a legislative mandate that all tankers that transport oil into U.S. ports be double-hulled by 2015. U.S. Shipping has placed an order for several new articulated tug barges, one of which has already been delivered, to replace existing capacity. In addition to the new ATB program, U.S. Shipping created a joint venture (USS Products Investor LLC) to finance the construction of nine double-hulled product tankers by NASSCO, a subsidiary of General Dynamics Corp. U.S. Shipping has the right to buy the new product tankers from the joint venture as they are built, with the first delivery expected in the second quarter of 2009. Until its fleet is replaced, U.S. Shipping is likely to face increased competitive pressures from newer vessels in the marketplace. Earnings pressures are further exacerbated by higher labor costs from recently renegotiated collective bargaining agreements with its unions. Standard & Poor's will assess the company's operating prospects, covenant compliance, liquidity, and the decision the company reaches in exploring its strategic alternatives in resolving the CreditWatch. S&P could lower ratings if the company breaches its financial covenants, if liquidity constraints increase, or if operating performance further deteriorates. UTSTARCOM INC: Expects Up to $590MM Revenues in 2008 First Quarter ------------------------------------------------------------------ UTStarcom Inc. disclosed Tuesday preliminary results for its fiscal first quarter ended March 31, 2008. The company said that its first quarter revenues are now expected to be in the range of $580 million to $590 million, compared with the initial guidance of $500 million to $520 million. This, the company says, is attributable to better than expected performance from the its Personal Communications Division as well as from the company's core business units. Revenue in the first quarter of 2007 was $475.9 million. Gross margins are now expected to be in the range of 15% to 16% compared to the initial guidance of approximately 13%. Gross margins in the first quarter of 2007 were 15.8%. The first quarter operating expenses are now expected to be in the range of $120 million to $125 million, compared to the initial guidance of $115 million to $120 million. The company says that the higher than expected operating expenses are in part due to unanticipated professional services expenses. Operating expenses were $127.5 million in the first quarter of 2007. As of March 31, 2008, the company had cash, cash equivalents and short-term investments of approximately $305.0 million, compared to $503.0 million as of Dec. 31, 2007. The debt balance as of March 31, 2008, was approximately $36.0 million, compared to $323.0 million as of Dec. 31, 2007. During the quarter, the company repaid $289.5 million of convertible notes, including accrued interest. The company also benefited from strong cash flow from operations generated primarily by management of working capital. Certain significant items in the first quarter include: -- $49.0 million in gains on sale of investments including the Gemdale Corporation investment -- A net $9.0 million tax benefit primarily due to a change in withholding tax laws in China "Since announcing our new corporate strategy in September 2007, we have made a good deal of progress," said Peter Blackmore, UTStarcom's president and chief operating officer. "These preliminary results reflect that progress, plus we benefited from some positive one time factors. There is still a lot of work to do in our turnaround, but we are on track with where we expected to be. The company did not disclose estimated net income or loss. About UTStarcom Inc. UTStarcom Inc. -- http://www.utstar.com/-- (Nasdaq: UTSI) provides IP-based, end-to-end networking solutions and international service and support. The company develops, manufactures and markets its broadband, wireless, and terminal solutions to network operators in both emerging and established telecommunications markets worldwide. UTStarcom was founded in 1991 and is headquartered in Alameda, California. The company has research and development centers in the USA, Canada, China, Korea and India. As of Dec. 31, 2007, the company's consolidated balance sheet showed $2.0 billion in total assets, $1.4 billion in total liabilities, $3.7 million in minority interest in consolidated subsidiaries, and $618.0 million in total stockholders' equity. * * * As reported in the Troubled Company Reporter on March 31, 2008, PricewaterhouseCoopers LLP, in San Jose, Calif., expressed substantial doubt about UTStarcom 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 net losses, negative cash flows from and significant debt obligations. VALERO ENERGY: El Paso Note Assumption Cues S&P to Cut Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the $15 million unsecured notes due 2012 of Valero Energy Corp. (BBB/Stable/--) to 'BB-' from 'BBB', reflecting the assumption of the notes by El Paso Corp. (BB/Positive/--). Ratings List Rating Lowered To From -- ---- Valero Energy Corp. Senior unsecured US$15 mil due 2012 BB- BBB VICORP RESTAURANTS: Panel Taps FTI Consulting as Financial Advisor ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in VICORP Restaurants Inc. and VI Acquisition Corp.'s Chapter 11 cases asks authority from the U.S. Bankruptcy Court for the District of Delaware to employ FTI Consulting Inc. as its financial advisor. FTI Consulting will, among others, render assistance to the Committee in the review of financial related disclosures required by the Court, information and analysis regarding the Debtors' financing, and financial data distributed by the Debtors to creditors and other parties-in-interest. Steven Simms, a senior managing director at FTI Consulting, tells the Court that FTI will seek compensation for $125,000 per month for the first six months, $100,000 per month for the following 3 months, and $75,000 for after each consecutive month. In addition, Mr. Simms tells the Court that the firm expects to receive a completion fee ranging from $350,000 to $500,000. Mr. Simms assures the Court that the firm does not represent any interest adverse to the Debtors' estates. About VICORP Restaurants Based in Denver, Colorado, VICORP Restaurants Inc. -- http://www.vicorpinc.com/-- operates two restaurant concepts under proven and well-recognized brands, Village Inn and Bakers Square. Founded in 1958, VICORP has 343 restaurants in 25 states, consisting of 250 company-operated restaurants and 93 franchised restaurants. Known for its strong breakfast heritage, Village Inn has been serving its signature breakfast items like one-of-a-kind skillet dishes and made-from-scratch pancakes for 50 years. In addition, Village Inn offers traditional American fare for lunch and dinner. The company and its affiliates filed for Chapter 11 protection on April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Kimberly Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A. Robinson, Esq., at Reed Smith LLP, represents the Debtors in their restructuring efforts. The Debtors chose Wells Fargo Trumbull as their claims, noticing, and balloting agent. The U.S. Trustee for Region 3, appointed seven members to the Official Committee of Unsecured Creditors in the Debtors' cases. When the Debtors filed for protection from their creditors they listed estimated assets and debts of $100 million to $500 million. VICORP RESTAURANTS: Taps Morris Nichols as Conflicts Counsel ------------------------------------------------------------ VICORP Restaurants Inc. and VI Acquisition Corp. ask authority from the U.S. Bankruptcy Court for the District of Delaware to employ Morris Nichols Arsht and Tunnell LLP as their conflicts counsel, nunc pro tunc to April 3, 2008. Morris Nichols will, among others, perform all necessary services as the conflicts counsel, including representing the Debtors and providing them with advice, and take all necessary actions to preserve the Debtors estates. Derek C. Abbott, Esq., a partner at Morris Nichols, tells the Court that the firm's professionals bill these hourly rates: Partners $425 - $675 Associates $220 - $400 Paraprofessionals $180 - $195 Case Clerks $120 Mr. Abbott assures the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About VICORP Restaurants Based in Denver, Colorado, VICORP Restaurants Inc. -- http://www.vicorpinc.com/-- operates two restaurant concepts under proven and well-recognized brands, Village Inn and Bakers Square. Founded in 1958, VICORP has 343 restaurants in 25 states, consisting of 250 company-operated restaurants and 93 franchised restaurants. Known for its strong breakfast heritage, Village Inn has been serving its signature breakfast items like one-of-a-kind skillet dishes and made-from-scratch pancakes for 50 years. In addition, Village Inn offers traditional American fare for lunch and dinner. The company and its affiliates filed for Chapter 11 protection on April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Kimberly Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A. Robinson, Esq., at Reed Smith LLP, represents the Debtors in their restructuring efforts. The Debtors chose Wells Fargo Trumbull as their claims, noticing, and balloting agent. The U.S. Trustee for Region 3, appointed seven members to the Official Committee of Unsecured Creditors in the Debtors' cases. When the Debtors filed for protection from their creditors they listed estimated assets and debts of $100 million to $500 million. VICORP RESTAURANTS: Taps Piper Jaffray as Financial Advisor ----------------------------------------------------------- VICORP Restaurants Inc. and VI Acquisition Corp. ask authority from the U.S. Bankruptcy Court for the District of Delaware to employ Piper Jaffray & Co. as their financial advisor, nunc pro tunc to April 3, 2008. Piper Jaffray will, among others, evaluate the Debtors potential debt capacity in light of existing and prospective cash flows, and provide assistance to the Debtors regarding marketing processes, lease sales, and negotiating transactions. The firm has agreed to receive from the Debtors: a) a monthly fee of $100,000; b) a cash fee of 1% of the aggregate principal amount of the Debtors' credit facilities, which includes their prepetition indebtedness; c) a financing fee equal to 1% of the aggregate amount of new monies provided to the Debtors which exceed $50 million; and d) an M&A transaction fee equal to 1% of the transaction value paid by a third party. The Debtors assure the Court that the firm is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. About VICORP Restaurants Based in Denver, Colorado, VICORP Restaurants Inc. -- http://www.vicorpinc.com/-- operates two restaurant concepts under proven and well-recognized brands, Village Inn and Bakers Square. Founded in 1958, VICORP has 343 restaurants in 25 states, consisting of 250 company-operated restaurants and 93 franchised restaurants. Known for its strong breakfast heritage, Village Inn has been serving its signature breakfast items like one-of-a-kind skillet dishes and made-from-scratch pancakes for 50 years. In addition, Village Inn offers traditional American fare for lunch and dinner. The company and its affiliates filed for Chapter 11 protection on April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Donna L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Kimberly Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A. Robinson, Esq., at Reed Smith LLP, represents the Debtors in their restructuring efforts. The Debtors chose Wells Fargo Trumbull as their claims, noticing, and balloting agent. The U.S. Trustee for Region 3, appointed seven members to the Official Committee of Unsecured Creditors in the Debtors' cases. When the Debtors filed for protection from their creditors they listed estimated assets and debts of $100 million to $500 million. VISTEON CORP: Appoints Donald Stebbins as Chief Executive Officer ----------------------------------------------------------------- The board of directors of Visteon Corporation elected Donald J. Stebbins as president and chief executive officer, effective June 1, 2008. Mr. Stebbins, who was president and chief operating officer, succeeds Michael F. Johnston in the CEO role. Mr. Johnston will continue as executive chairman of the global automotive supplier. Mr. Stebbins, 50, has been president and COO since joining Visteon in 2005, following 13 years in senior leadership positions with Lear Corp. Expanding Mr. Stebbins' leadership role is a timely and logical step in Visteon's long-term executive succession planning process, according to Mr. Johnston. "The three-year plan that we launched in 2006 is successfully positioning Visteon for sustainable success," Mr. Johnston said. "As we approach the conclusion of this phase of our transformation, it's a logical time for Don to assume a greater role in steering the organization into the future." As CEO, Mr. Stebbins will lead the development and execution of Visteon's long-term strategy while continuing to oversee the company's global operations, sales, manufacturing, product development, research and development, and customer relations. Mr. Stebbins has more than 20 years of leadership experience and a solid history of performance in managing a global manufacturing business. He has served on Visteon's board of directors since December 2006. Mr. Johnston, 60, has been chairman and CEO since June 1, 2005. He joined Visteon in September 2000 as chief operating officer and president, and has held the CEO post since June 2004. Mr. Johnston has guided Visteon from a North America-focused parts supplier that was heavily dependent on one automaker, to a global engineering and manufacturing company with a focused product portfolio and a diversified customer and geographic base. As executive chairman, Mr. Johnston will concentrate on ensuring company policies and investments align with corporate strategy, interfacing with the board of directors, and fostering relationships with key customers and financial stakeholders. In expanding Mr. Stebbins' responsibilities, Visteon's board cited his global and financial experience and his success restructuring, improving and growing Visteon's operations in a challenging market environment. "Don's appointment as CEO underscores his proven leadership and core strengths in global operations and finance, which have resulted in a more competitive cost structure and expanded capabilities in fast-growing markets such as the Asia Pacific region," Mr. Johnston said. Along with leading Visteon's long-term strategy, Stebbins said his immediate priorities include successfully completing the remaining restructuring actions identified in Visteon's three-year plan; continuing to improve quality, employee safety and efficiency; and generating profitable new business wins in Visteon's core product areas. "We have a tremendously talented and experienced leadership team," Mr. Stebbins said. "Their abilities and energy, coupled with the strong working relationship that Mike and I have developed, give me every confidence that Visteon will continue taking positive steps and delivering on our commitments." Reporting to Mr. Stebbins will be William G. Quigley III, executive vice president and chief financial officer; John Donofrio, senior vice president and general counsel; Robert Pallash, senior vice president and president, global customer group; Dorothy L. Stephenson, senior vice president, human resources; the vice presidents of the three major product groups: Joy Greenway – climate, Terry Gohl – interiors and lighting, and Steve Meszaros – electronics; Asaf Farashuddin, vice president, strategy; Jim Sistek, vice president, information technology; and Julie Fream, vice president, North American customer group and global communications. Mr. Stebbins joined Visteon from Lear Corp., where he was president and chief operating officer of Lear's operations in Europe, Asia and Africa. Previously, he was president and COO of Lear's operations in the Americas. Mr. Stebbins joined Lear in 1992 as vice president and treasurer. He held various financial positions of increasing responsibility with Lear, including a 1997 promotion to senior vice president and chief financial officer. Previously, he held positions at Bankers Trust Company and Citibank. Mr. Stebbins holds a bachelor's degree in finance from Miami University in Oxford, Ohio, where he is also a member of its Business Advisory Council. He holds a master's degree in business administration from the University of Michigan. He has served on Visteon's board of directors since December 2006. Additionally, he is a member of the board of directors of WABCO Holdings Inc. Based in Van Buren Township, Michigan, Visteon Corp. (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic, and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company's other corporate offices are in Shanghai, China; and Kerpen, Germany. The company has facilities in 26 countries and employs approximately 43,000 people. Visteon Corporation's balance sheet at March 31, 2008, showed total assets of $7.2 billion and total liabilities of $7.3 billion resulting in a total shareholders' deficit of about $136 million. * * * To date, Visteon Corp. holds Moody's Investors Service's Caa2 senior unsecured debt rating, and Fitch Ratings Services' CC senior unsecured debt rating and CCC long-term issuer default rating. WARNEX INC: March 31 Balance Sheet Upside-Down by C$1.3 Million --------------------------------------------------------------- Warnex Inc. announced on Tuesday its financial results for the first quarter ended March 31, 2008. At March 31, 2008, the company's interim consolidated balance sheet showed C$16.5 million in total assets and C$17.8 million in total liabilities, resulting in a C$1.3 million total shareholders' deficit. The company's interim consolidated balance sheet at March 31, 2008, also showed strained liquidity with C$7.7 million in total current assets available to pay C$17.7 million total current liabilities. The company reported a net loss of C$286,322 for the three months ended March 31, 2008, versus a net loss of C$920,907 in the comparable period a year ago. For the three-month period ended March 31, 2008, the net loss from continuing operations amounted to C$286,322, versus a net loss from continuing operations of C$383,115 in the comparable period in 2007. Revenue from continuing operations for the first quarter ended March 31, 2008, was C$6.1 million, similar to last year's revenue of C$6.2 million in the first quarter. "We are pleased to have delivered solid first quarter results following the completion of our transition to a company focused on laboratory services," said Mark Busgang, president and chief executive officer of Warnex. "With the announced agreements in principle for the restructuring of our debentures and our financing agreement with Desjardins, we are executing our strategy to reduce our debentures by C$5.0 million and improve our balance sheet in order to better position us for future growth opportunities. We have also concluded our corporate restructuring and implemented various cost cuts as we move towards becoming a profitable CRO." Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the quarter amounted to C$474,649 versus C$666,670 for the same quarter a year ago. Total EBITDA including discontinued operations was C$474,649 for the quarter compared with C$155,449 in the corresponding quarter in 2007. Financial expenses decreased by C$163,736, from C$527,761 in the first quarter of 2007 to C$364,025 in the first quarter of 2008, mainly due to less interest following repayments made on the long term debt and debentures. As of March 31, 2008, the company had C$1.8 million in cash and working capital deficiency of C$10.0 million since the long term debentures mature on June 25, 2008, and July 9, 2008. The debenture holders have agreed to restructure the debt as announced on March 19, 2008. About Warnex Inc. Warnex Inc. (TSX: WNX) -- http://www.warnex.ca/-- provides laboratory services to the pharmaceutical and healthcare sectors. Warnex's analytical services division provides pharmaceutical and biotechnology companies with a variety of quality control services, including traditional chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex's bioanalytical services division specializes in bioequivalence and bioavailability studies for clinical trials. Warnex's medical laboratories division focuses on genetic and biochemical testing for the healthcare industry and has extensive expertise in genetic testing for human identification, molecular diagnostics, and pharmacogenetics. WELLMAN INC: Gets Extension on Deadline for Auction Protocol ------------------------------------------------------------ Wellman, Inc., ands its debtor-affiliates said that their debtor- in-possession lenders have granted a one-week extension on its deadline to have a sale bidding procedures approved by the U.S. Bankruptcy Court for the Southern District of New York. As reported in the Troubled Company Reporter on April 11, 2008, the Court approved the $225,000,000 of DIP Financing from a group of lenders; Deutsche Bank Securities Inc., as lead arranger and bookrunner; Deutsche Bank Trust Company Americas, as administrative agent; JPMorgan Chase Bank, N.A., as syndication agent; and General Electric Capital Corp., LaSalle Business Credit, LLC, and Wachovia Finance Corp., as co-documentation agents. The Credit Agreement dated Feb. 26, 2008, required the Debtors to: (i) obtain within 90 days after the Petition Date an order from the Bankruptcy Court (a) approving bidding procedures, (b) scheduling bidding deadline, auction date and sale hearing date, and (c) establishing procedures under Sections 364 and 365 of the Bankruptcy Code for the Wellman Sale and the assignment and assumption of certain contracts related thereto; (ii) obtain an order approving the Wellman Sale by July 31, 2008; and (iii) close the sale within 15 days of the later of (i) the entry of the Sale Order, and, if a stay of the order is pending, the date the order becomes final and non-appealable, if during the time of the stay, a bond has been issued. Wellman says that, in consultation with its stakeholders, it is evaluating offers and restructuring alternatives, including a plan of reorganization, in an effort to maximize the value of Wellman's business on a going concern basis. "In order to allow us to maximize value for all of our stakeholders, the DIP lenders have agreed to provide us additional time to continue discussions with interested parties." With the extension, the deadline to obtain Court-approval of the bidding procedures is extended from May 22 to May 29. The letter agreement, which provides for the extension, does not not amend the other events of default under the Credit Agreement. Hence, the July 31 deadline to obtain Court approval of the Sale remains in place. 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. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WELLMAN INC: Wants Court to Extend Deadline to Remove Actions ------------------------------------------------------------- Wellman Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend the period within which they may remove actions, through and including the later of: (a) Aug. 25, 2008, (b) 30 days after an order terminating the automatic stay with respect to the particular action sought to be removed, or (c) with respect to Postpetition Actions, the time periods under Rule 9027(a)(3). The Debtors believe that the proposed extension of the removal period will provide them with additional time to allow them to consider, and make decisions concerning, the removal of the Actions. Unless the requested extension is granted, the Debtors contend that they will not have sufficient time to consider adequately if removal of any of Actions is necessary. Mr. Henes assures the Court that the rights of any party to the Actions will not be prejudiced by the requested extension because those Actions will not be proceeding in their respective courts even absent the requested extension. Moreover, if the Debtors seek to remove any Action pursuant to Bankruptcy Rule 9027, any party to the litigation can seek to have that Action remanded. The Court will convene a hearing on May 20, 2008, at 12:00 p.m., to consider the Debtors' request. Rule 9027(a)(2) of the Federal Rules of Bankruptcy Procedure provides that if a claim or cause of action in a civil action is pending when a case under the Bankruptcy Code is commenced, a notice of removal may be filed in the bankruptcy court only within: (a) 90 days after the order for relief in the case, (b) 30 days after entry of an order terminating a stay under Section 362 of the Bankruptcy Code, or (c) 30 days after a trustee qualifies in the Chapter 11 case, but not later than 180 days after the order for relief. Bankruptcy Rule 9006 permits the Court to extend the period provided by Rule 9027, provided that a request for extension is made before the applicable deadline. With respect to postpetition actions, Bankruptcy Rule 9027(a)(3) provides for removal only within the shorter of: (i) 30 days after receipt, through service or otherwise, of a copy of the initial pleading detailing the claim or cause of action sought to be removed, or (ii) 30 days after receipt of the summons if the initial pleading has been filed with the Court but not served with the summons. Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, tells the Court that the Debtors are a party to numerous lawsuits pending in various state and federal courts, and are represented by many different law firms in each of those lawsuits. Moreover, additional actions may be filed against the Debtors. Mr. Henes relates that since the Petition Date, the Debtors and their professionals have been focusing on: (a) preparing and filing their schedules of assets and liabilities and statements of financial affairs,which is a time-consuming undertaking given the Debtors' size, complexity, and limited personnel; (b) responding to the Official Committee of Unsecured Creditors' numerous due diligence requests from the Debtors' stakeholders; (c) obtaining final approval of the Debtors' postpetition financing arrangement and stabilizing their business operations; and (e) conducting a marketing process to test the viability of selling substantially all of the Debtors' assets. As a result, the Debtors have not been in a position to undertake a thorough analysis of the Actions and develop a strategy with respect to whether they should remove certain Actions, asserts Mr. Henes. 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. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * Fitch: Most Subprime-Related Bank Losses Are Already Disclosed ---------------------------------------------------------------- Fitch Ratings says global banks have already written down more than 80% of their losses from subprime mortgage assets. In a special report published today, the agency estimates total market losses from subprime mortgage assets at USD400 billion, though estimates may be as high as USD550 billion, depending on the method of calculation used. Approximately 50% of these losses, USD200 billion to USD275 billion, are held by banks, with the remainder held by financial guarantors, insurance companies, asset managers and hedge funds. As of May 2008, Fitch estimates disclosed losses by banks on subprime residential mortgage-backed securities (RMBS) or collateralised debt obligations referencing mortgage-backed securities (ABS-CDOs) to be USD165 billion, or 83% of the banks' portion of the losses. "Subprime mortgage-related losses for the total market vary considerably depending on the methodology used," says Krishnan Ramadurai, Managing Director in Fitch's Financial Institutions Group. "Given the problems associated with methods of calculation based on ABX and TABX indices, we believe that Fitch's internal loss estimate of USD400 billion is a more appropriate reflection of losses though they are also sensitive to assumptions made on underlying loss rates." "To the extent that institutions have effectively hedged their exposures with financially sound counterparties, these loss figures may be over-estimated," says Gerry Rawcliffe, Managing Director and Group Credit Officer for Fitch's Financial Institutions Group. "Nevertheless, for those institutions that did not hedge a sufficient portion of their super-senior exposures, mark-to-market losses on these residual exposures have been so large that their capital ratios have come under acute stress." The subprime market originated as much as USD1.4trn of loans in the last three years, Fitch estimates. The report "Subprime Mortgage-Related Losses - A Moving Target" is available on the agency's subscription at http://www.fitchresearch.com/ * S&P Downgrades Ratings on 169 Classes from 38 RMBS Transactions ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 169 classes from 38 residential mortgage-backed securities transactions backed by U.S. subprime mortgage loan collateral issued in 2007. At the same time, S&P removed 142 of the lowered ratings from CreditWatch with negative implications. In addition, S&P affirmed its ratings on 229 classes from 55 RMBS transactions backed by U.S. subprime loans and removed them from CreditWatch negative. The downgrades reflect our opinion that projected credit support for the affected classes is insufficient to maintain the previous ratings, given S&P's current projected losses. As announced in "Projected Losses For U.S. Subprime RMBS Issued In 2006 And First- Half 2007 As Of April 24, 2008," published April 24, 2008, on RatingsDirect, S&P calculated its projected deal-specific losses by reviewing the individual loan-level characteristics and most recent performance data, as described in "S&P Revises Projected Losses For U.S. Subprime RMBS Transactions Issued In First-Half 2007," which S&P published April 24, 2008, on RatingsDirect. Due to current market conditions, S&P are assuming that it will take approximately 15 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. In addition, S&P are assuming a loss severity of approximately 45% for U.S. subprime RMBS transactions issued in 2007. The lowered ratings reflect S&P's assessment of credit support under three constant prepayment rate scenarios. The first scenario utilizes the lower of the lifetime or 12-month CPR, while the second utilizes a 6% CPR, which is very slow by historical standards. The third scenario uses a prepayment rate that is equal to two times the lower of the lifetime or 12-month CPR. S&P incorporated a third CPR scenario into our cash flow analysis to account for potential increases in prepayments, which may occur from normal increases typically found in the seasoning of pools combined with a chance that governmental proposals, if adopted, may lead to increased CPRs. S&P assumed a constant default rate for each pool. Because the analysis focused on each individual class with varying maturities, prepayment scenarios may cause an individual class or the transaction itself to prepay in full before it incurs the entire loss projection. Slower prepayment assumptions lengthen the average life of the mortgage pool, which increases the likelihood that total projected losses will be realized. The longer a class remains outstanding, however, the more excess spread it generates. Standard & Poor's has updated its projected excess spread to account for the recent cuts in U.S. interest rates. Standard & Poor's recently announced that it will discount a portion of excess spread to account for potential interest rate modifications in an upwardly sloping mortgage rate environment. An interest rate modification may extend the initial fixed-rate period of a mortgage loan to five years from two and three years. The reduction in interest rates has effectively extended the initial interest rates beyond the interest rate reset period. As a result of the reduction in excess spread, many loan modifications may no longer be needed. Standard & Poor's has updated its assumptions on excess spread to reflect the current environment. To assess the creditworthiness of each class, S&P reviewed the individual delinquency and loss trends of each transaction for changes, if any, in risk characteristics, servicing, and the ability to withstand additional credit deterioration. For mortgage pools that are continuing to show increasing delinquencies, S&P increased its cash flow stresses to account for potential increases in monthly losses. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P assumed in its analysis. For example, a class may have to withstand 115% of its base case loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand 125% of its base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can withstand approximately 150% of our base case loss assumptions under our analysis, subject to individual caps assumed on specific transactions. S&P determined the caps by limiting the amount of remaining defaults to 90% of the current pool balances. A combination of subordination, excess spread, and overcollateralization provide credit support for the affected transactions. The underlying collateral for these deals consists of fixed- and adjustable-rate U.S. subprime mortgage loans that are secured by first and second liens on one- to four-family residential properties. To date, including the classes listed below and actions on both publicly and confidentially rated classes, S&P have resolved the CreditWatch placements of the ratings on 2,836 classes from 475 U.S. RMBS subprime transactions from the 2006 and 2007 vintages. Currently, S&P's ratings on 320 classes from 53 U.S. subprime RMBS transactions from the 2006 and 2007 vintages are on CreditWatch negative. Ratings Lowered Ace Securities Corp Home Equity Loan Trust Series 2007-HE4 Series 2007-HE4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-7 00442LAM1 CC CCC M-8 00442LAN9 CC CCC M-9 00442LAP4 CC CCC ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- M-8 000797AN0 CC CCC M-9 000797AP5 CC CCC Asset Backed Securities Corporation Home Equity Loan Trust Series AMQ 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- M9 04544TAP6 CC CCC BNC Mortgage Loan Trust 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- B2 05568QAT2 CC CCC GSAMP Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 3622MGAU2 CC CCC Home Equity Asset Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 43710LAP9 CC CCC B-2 43710LAQ7 CC CCC B-3 43710LAR5 CC CCC Lehman ABS Mortgage Loan Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M10 52521MAQ5 CC CCC M11 52521MAR3 CC CCC MASTR Asset Backed Securities Trust 2007-HE1 Series 2007-HE1 Rating ------ Class CUSIP To From ----- ----- --- ---- M-12 576457AR6 CC CCC Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- B3 59025CAS9 CC CCC Morgan Stanley ABS Capital I Inc. Trust 2007-NC2 Series 2007-NC2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-3 61753NAQ3 CC CCC Natixis Real Estate Capital Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 638728AM7 CC CCC B-3 638728AN5 CC CCC B-4 638728AP0 CC CCC Nomura Home Equity Loan, Inc. Home Equity Loan Trust Series 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-8 65537NAN4 CC CCC M-9 65537NAP9 CC CCC Option One Mortgage Loan Trust 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-9 68403FAP1 CC CCC Option One Mortgage Loan Trust 2007-CP1 Series 2007-CP1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-8 68402YAM8 CC CCC M-9 68402YAN6 CC CCC Securitized Asset Backed Receivables LLC Trust 2007-BR2 Series 2007-BR2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-3 81378PAL2 CC CCC Soundview Home Loan Trust 2007-OPT1 Series 2007-OPT1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-10 83612TAQ5 CC CCC Structured Asset Securities Corporation Mortgage Loan Trust 2007-BC3 Series 2007-BC3 Rating ------ Class CUSIP To From ----- ----- -- ---- B2 86363WAZ2 CC CCC Ratings Lowered and Removed from Creditwatch Negative Ace Securities Corp Home Equity Loan Trust Series 2007-HE4 Series 2007-HE4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 00442LAA7 BBB AAA/Watch Neg A-2C 00442LAD1 A AAA/Watch Neg A-2D 00442LAE9 BBB AAA/Watch Neg M-1 00442LAF6 BB AA+/Watch Neg M-2 00442LAG4 B+ AA+/Watch Neg M-3 00442LAH2 B AA+/Watch Neg M-4 00442LAJ8 B- AA/Watch Neg ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASAP2 Series 2007-ASAP2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 00442UAF6 BBB AA+/Watch Neg M-2 00442UAG4 BB AA+/Watch Neg M-3 00442UAH2 B+ AA/Watch Neg M-4 00442UAJ8 B AA/Watch Neg M-5 00442UAK5 B- AA-/Watch Neg ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 000797AA8 BB AAA/Watch Neg A-2C 000797AD2 A AAA/Watch Neg A-2D 000797AE0 BB AAA/Watch Neg M-1 000797AF7 B+ AA+/Watch Neg M-2 000797AG5 B AA/Watch Neg M-3 000797AH3 B- AA/Watch Neg Asset Backed Securities Corporation Home Equity Loan Trust, Series AMQ 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- A1 04544TAA9 BBB AAA/Watch Neg A4 04544TAD3 AA AAA/Watch Neg A5 04544TAE1 BBB AAA/Watch Neg M1 04544TAF8 B AA+/Watch Neg M2 04544TAG6 B- AA/Watch Neg BNC Mortgage Loan Trust 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- M2 05569QAG9 BBB AA/Watch Neg BNC Mortgage Loan Trust 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 05568QAF2 BBB AA+/Watch Neg M2 05568QAG0 B AA/Watch Neg M3 05568QAH8 B- B/Watch Neg C-Bass 2007-CB5 Trust Series 2007-CB5 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 12464YAE9 A AA/Watch Neg M-3 12464YAF6 BB AA-/Watch Neg Citigroup Mortgage Loan Trust 2007-AHL3 Series 2007-AHL3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 17312GAD3 AA AA+/Watch Neg M-2 17312GAE1 BBB AA/Watch Neg M-3 17312GAF8 BB AA-/Watch Neg Citigroup Mortgage Loan Trust 2007-AMC4 Series 2007-AMC4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 17313BAG6 BBB AA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 23245CAG5 A AA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-BC2 Series 2007-BC2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 12669QAG4 A AA/Watch Neg Equifirst Loan Securitization Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 29445UAE5 A AA/Watch Neg M-3 29445UAF2 BBB AA-/Watch Neg GSAMP Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 3622MGAF5 BBB A+/Watch Neg Home Equity Asset Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A-1 43710LAA2 A AAA/Watch Neg 2-A-3 43710LAD6 AA AAA/Watch Neg 2-A-4 43710LAE4 A AAA/Watch Neg M-1 43710LAF1 BB AA+/Watch Neg M-2 43710LAG9 B AA+/Watch Neg M-3 43710LAH7 B- AA-/Watch Neg Home Equity Asset Trust 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 43710TAG2 AA AA+/Watch Neg M-3 43710TAH0 A AA+/Watch Neg M-4 43710TAJ6 BBB AA/Watch Neg HSI Asset Securitization Corporation Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 40430RAF3 AA AA+/Watch Neg M-2 40430RAG1 BBB AA/Watch Neg M-4 40430RAJ5 B BB/Watch Neg M-5 40430RAK2 B- B/Watch Neg HSI Asset Securitization Corporation Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-3 40430TAC6 A AAA/Watch Neg A-4 40430TAD4 BBB AAA/Watch Neg M-1 40430TAE2 BB AA+/Watch Neg M-2 40430TAF9 B+ AA+/Watch Neg M-3 40430TAG7 B AA/Watch Neg M-4 40430TAH5 B- AA/Watch Neg JPMorgan Mortgage Acquisition Trust 2007-CH3 Series 2007-CH3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 46630XAH1 BBB AA/Watch Neg Lehman ABS Mortgage Loan Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A1 52521MAA0 BBB AAA/Watch Neg 2-A3 52521MAD4 AA AAA/Watch Neg 2-A4 52521MAE2 BBB AAA/Watch Neg M1 52521MAF9 B+ AA+/Watch Neg M2 52521MAG7 B AA/Watch Neg MASTR Asset Backed Securities Trust 2007-HE1 Series 2007-HE1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 576457AF2 BBB AA/Watch Neg Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-2 Series 2007-2 Rating Class CUSIP To From ----- ----- -- ---- A-1 59024QAA8 A AAA/Watch Neg A-2C 59024QAD2 A AAA/Watch Neg A-2D 59024QAE0 A AAA/Watch Neg M-1 59024QAF7 BB AA+/Watch Neg M-2 59024QAG5 B+ AA/Watch Neg Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A 59025CAA8 BBB AAA/Watch Neg 2-A3 59025CAD2 A+ AAA/Watch Neg 2-A4 59025CAE0 BBB AAA/Watch Neg 1-M1 59025CAF7 BB AA+/Watch Neg 2-M1 59025CAG5 BB AA+/Watch Neg 1-M2 59025CAH3 B+ AA/Watch Neg 2-M2 59025CAJ9 B+ AA/Watch Neg Merrill Lynch Mortgage Investors Trust, Series 2007-MLN1 Series 2007-MLN1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 59024UAG6 A AA/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61753KAA4 AA AAA/Watch Neg A-2d 61753KAE6 AA AAA/Watch Neg M-1 61753KAF3 A AA+/Watch Neg M-2 61753KAG1 BB AA/Watch Neg M-3 61753KAH9 B+ BB/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-NC2 Series 2007-NC2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2d 61753NAF7 AA AAA/Watch Neg M-1 61753NAG5 BB AA+/Watch Neg M-2 61753NAH3 B AA/Watch Neg Natixis Real Estate Capital Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 638728AB1 AA AAA/Watch Neg A-3 638728AC9 BBB AAA/Watch Neg A-4 638728AD7 BB AAA/Watch Neg M-1 638728AE5 B AA+/Watch Neg M-2 638728AF2 B- AA-/Watch Neg Nomura Home Equity Loan, Inc. Home Equity Loan Trust Series 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 65537NAA2 BBB AAA/Watch Neg II-A-3 65537NAD6 BBB AAA/Watch Neg II-A-4 65537NAE4 BBB AAA/Watch Neg M-1 65537NAF1 BB AA+/Watch Neg M-2 65537NAG9 B+ AA+/Watch Neg M-3 65537NAH7 B AA/Watch Neg M-4 65537NAJ3 B- AA-/Watch Neg Option One Mortgage Loan Trust 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 68403FAA4 A AAA/Watch Neg II-A-3 68403FAD8 AA AAA/Watch Neg II-A-4 68403FAE6 A AAA/Watch Neg M-1 68403FAF3 BB AA+/Watch Neg M-2 68403FAG1 B AA/Watch Neg Option One Mortgage Loan Trust 2007-CP1 Series 2007-CP1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 68402YAE6 BBB AA+/Watch Neg M-2 68402YAF3 BB AA-/Watch Neg RAMP Series 2007-RS2 Trust Series 2007-RS2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2 75157DAB0 AA AAA/Watch Neg A-3 75157DAC8 A AAA/Watch Neg M-1 75157DAD6 BB AA+/Watch Neg M-2 75157DAE4 B+ AA/Watch Neg M-3 75157DAF1 B AA-/Watch Neg RASC Series 2007-KS2 Trust Series 2007-KS2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 74924WAF4 A AA+/Watch Neg M-2 74924WAG2 B AA/Watch Neg Securitized Asset Backed Receivables LLC Trust 2007-BR2 Series 2007-BR2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 81378PAA6 BBB AAA/Watch Neg A-2 81378PAB4 BBB AAA/Watch Neg M-1 81378PAC2 B+ AA+/Watch Neg M-2 81378PAD0 B AA/Watch Neg M-3 81378PAE8 B- AA/Watch Neg SG Mortgage Securities Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 78420RAA6 AA AAA/Watch Neg A-2 78420RAB4 AA AAA/Watch Neg M-1 78420RAC2 BB AA+/Watch Neg M-2 78420RAD0 B+ AA/Watch Neg M-3 78420RAE8 B AA/Watch Neg M-4 78420RAF5 B- B/Watch Neg Soundview Home Loan Trust 2007-OPT1 Series 2007-OPT1 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 83612TAA0 AA AAA/Watch Neg II-A-4 83612TAE2 AA AAA/Watch Neg M-1 83612TAF9 BBB AA+/Watch Neg M-2 83612TAG7 B+ AA/Watch Neg M-3 83612TAH5 B AA-/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-BC3 Series 2007-BC3 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A4 86363WAD1 AA AAA/Watch Neg 2-A4 86363WAH2 AA AAA/Watch Neg 1-M1 86363WAJ8 BB AA+/Watch Neg 2-M1 86363WAK5 BB AA+/Watch Neg 1-M2 86363WAL3 B AA/Watch Neg 2-M2 86363WAM1 B AA/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-EQ1 Series 2007-EQ1 Rating ------ Class CUSIP To From ----- ----- -- ---- A1 86363HAA0 A AAA/Watch Neg A4 86363HAD4 AA AAA/Watch Neg A5 86363HAE2 A AAA/Watch Neg M1 86363HAF9 BB AA+/Watch Neg M2 86363HAG7 B+ AA/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-TC1 Series 2007-TC1 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 86364GAC7 A+ AA+/Watch Neg M2 86364GAD5 BBB AA-/Watch Neg WaMu Asset Backed Certificates Series 2007-HE3 Trust Series 2007-HE3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 93364EAG9 BBB AA+/Watch Neg M-2 93364EAH7 BB AA/Watch Neg Ratings Affirmed and Removed from Creditwatch Negative Ace Securities Corp Home Equity Loan Trust Series 2007-HE4 Series 2007-HE4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2A 00442LAB5 AAA AAA/Watch Neg A-2B 00442LAC3 AAA AAA/Watch Neg ACE Securities Corp. Home Equity Loan Trust, Series 2007-ASAP2 Series 2007-ASAP2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 00442UAA7 AAA AAA/Watch Neg A-2A 00442UAB5 AAA AAA/Watch Neg A-2B 00442UAC3 AAA AAA/Watch Neg A-2C 00442UAD1 AAA AAA/Watch Neg A-2D 00442UAE9 AAA AAA/Watch Neg ACE Securities Corp. Home Equity Loan Trust, Series 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2A 000797AB6 AAA AAA/Watch Neg A-2B 000797AC4 AAA AAA/Watch Neg Asset Backed Securities Corporation Home Equity Loan Trust, Series AMQ 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- A2 04544TAB7 AAA AAA/Watch Neg A3 04544TAC5 AAA AAA/Watch Neg Bear Stearns Asset Backed Securities I Trust 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 073859AG5 AA+ AA+/Watch Neg M-2 073859AH3 AA AA/Watch Neg BNC Mortgage Loan Trust 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- A1 05569QAA2 AAA AAA/Watch Neg A2 05569QAB0 AAA AAA/Watch Neg A3 05569QAC8 AAA AAA/Watch Neg A4 05569QAD6 AAA AAA/Watch Neg A5 05569QAE4 AAA AAA/Watch Neg M1 05569QAF1 AA+ AA+/Watch Neg M3 05569QAH7 B B/Watch Neg BNC Mortgage Loan Trust 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- A1 05568QAA3 AAA AAA/Watch Neg A2 05568QAB1 AAA AAA/Watch Neg A3 05568QAC9 AAA AAA/Watch Neg A4 05568QAD7 AAA AAA/Watch Neg A5 05568QAE5 AAA AAA/Watch Neg C-Bass 2007-CB5 Trust Series 2007-CB5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 12464YAA7 AAA AAA/Watch Neg A-2 12464YAB5 AAA AAA/Watch Neg A-3 12464YAC3 AAA AAA/Watch Neg M-1 12464YAD1 AA+ AA+/Watch Neg C-BASS Mortgage Loan Asset-Backed Certificates Series 2007-SP2 Series 2007-SP2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 1248MHAD4 AA+ AA+/Watch Neg M-2 1248MHAE2 AA+ AA+/Watch Neg M-3 1248MHAF9 AA+ AA+/Watch Neg M-4 1248MHAG7 AA AA/Watch Neg M-5 1248MHAH5 AA- AA-/Watch Neg Citigroup Mortgage Loan Trust 2007-AHL3 Series 2007-AHL3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 17312GAS0 AAA AAA/Watch Neg A-2 17312GAT8 AAA AAA/Watch Neg A-3A 17312GAA9 AAA AAA/Watch Neg A-3B 17312GAB7 AAA AAA/Watch Neg A-3C 17312GAC5 AAA AAA/Watch Neg M-4 17312GAG6 B B/Watch Neg Citigroup Mortgage Loan Trust 2007-AMC3 Series 2007-AMC3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 17312EAF3 AA+ AA+/Watch Neg M-2 17312EAG1 AA AA/Watch Neg Citigroup Mortgage Loan Trust 2007-AMC4 Series 2007-AMC4 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 17313BAA9 AAA AAA/Watch Neg A-2A 17313BAB7 AAA AAA/Watch Neg A-2B 17313BAC5 AAA AAA/Watch Neg A-2C 17313BAD3 AAA AAA/Watch Neg A-2D 17313BAE1 AAA AAA/Watch Neg M-1 17313BAF8 AA+ AA+/Watch Neg M-3 17313BAH4 B B/Watch Neg Citigroup Mortgage Loan Trust 2007-WFHE1 Series 2007-WFHE1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 17311CAD3 AA+ AA+/Watch Neg M-2 17311CAE1 AA AA/Watch Neg Citigroup Mortgage Loan Trust 2007-WFHE3 Series 2007-WFHE3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 17313CAD1 AA+ AA+/Watch Neg M-2 17313CAE9 AA AA/Watch Neg CWABS Asset Backed Certificates Trust 2007-10 Series 2007-10 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-M-1 23246BAL5 AA+ AA+/Watch Neg 2-M-1 23246BAM3 AA+ AA+/Watch Neg 1-M-2 23246BAN1 AA AA/Watch Neg 2-M-2 23246BAP6 AA AA/Watch Neg 1-M-3 23246BAQ4 B B/Watch Neg 2-M-3 23246BAR2 B B/Watch Neg CWABS Asset-Backed Certificates Series 2007-11 Series 2007-11 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-M-3 23247LAJ7 B B/Watch Neg 2-M-3 23247LAK4 B B/Watch Neg 1-M-2 23247LAG3 AA AA/Watch Neg 2-M-2 23247LAH1 AA AA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 23245CAF7 AA+ AA+/Watch Neg M-3 23245CAH3 B B/Watch Neg CWABS Asset-Backed Certificates Trust 2007-7 Series 2007-7 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 12669VAF5 AA+ AA+/Watch Neg M-2 12669VAG3 AA AA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-8 Series 2007-8 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 12669WAG1 AA+ AA+/Watch Neg M-2 12669WAH9 AA AA/Watch Neg CWABS Asset-Backed Certificates Trust 2007-BC2 Series 2007-BC2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 12669QAF6 AA+ AA+/Watch Neg M-3 12669QAH2 B B/Watch Neg CWABS Asset-Backed Certificates Trust 2007-BC3 Series 2007-BC3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 23246LAF6 AA+ AA+/Watch Neg M-2 23246LAG4 AA AA/Watch Neg Equifirst Loan Securitization Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2A 29445UAA3 AAA AAA/Watch Neg A-2B 29445UAB1 AAA AAA/Watch Neg A-2C 29445UAC9 AAA AAA/Watch Neg M-1 29445UAD7 AA+ AA+/Watch Neg Fieldstone Mortgage Investment Trust, Series 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 31659YAE4 AA+ AA+/Watch Neg M2 31659YAF1 AA AA/Watch Neg M3 31659YAG9 AA AA/Watch Neg First NLC Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 32115BAA8 AAA AAA/Watch Neg A-2 32115BAB6 AAA AAA/Watch Neg A-3 32115BAC4 AAA AAA/Watch Neg A-4 32115BAD2 AAA AAA/Watch Neg M-1 32115BAE0 AA+ AA+/Watch Neg M-2 32115BAF7 AA AA/Watch Neg M-3 32115BAG5 AA AA/Watch Neg GSAMP Trust 2007-FM2 Series 2007-FM2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 3622MHAF3 AA+ AA+/Watch Neg M-2 3622MHAG1 AA AA/Watch Neg GSAMP Trust 2007-HE1 Series 2007-HE1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 3622MDAF2 AA+ AA+/Watch Neg M-2 3622MDAG0 AA AA/Watch Neg M-3 3622MDAH8 BBB BBB/Watch Neg M-4 3622MDAJ4 B B/Watch Neg GSAMP Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- M-1 362440AF6 AA+ AA+/Watch Neg M-2 362440AG4 AA AA/Watch Neg M-3 362440AH2 AA- AA-/Watch Neg GSAMP Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 3622MGAA6 AAA AAA/Watch Neg A-2A 3622MGAB4 AAA AAA/Watch Neg A-2B 3622MGAC2 AAA AAA/Watch Neg A-2C 3622MGAD0 AA AA/Watch Neg A-2D 3622MGAE8 AA AA/Watch Neg R 3622MGAQ1 AAA AAA/Watch Neg RC 3622MGAR9 AAA AAA/Watch Neg RX 3622MGAS7 AAA AAA/Watch Neg M-2 3622MGAG3 B B/Watch Neg Home Equity Asset Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- 2-A-1 43710LAB0 AAA AAA/Watch Neg 2-A-2 43710LAC8 AAA AAA/Watch Neg R 43710LAS3 AAA AAA/Watch Neg P 43710LAT1 AAA AAA/Watch Neg Home Equity Asset Trust 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A-1 43710TAA5 AAA AAA/Watch Neg 2-A-1 43710TAB3 AAA AAA/Watch Neg 2-A-2 43710TAC1 AAA AAA/Watch Neg 2-A-3 43710TAD9 AAA AAA/Watch Neg R 43710TAR8 AAA AAA/Watch Neg P 43710TAS6 AAA AAA/Watch Neg M-1 43710TAF4 AA+ AA+/Watch Neg M-5 43710TAK3 BB BB/Watch Neg 2-A-4 43710TAE7 AAA AAA/Watch Neg HSI Asset Securitization Corporation Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 40430RAA4 AAA AAA/Watch Neg II-A-1 40430RAB2 AAA AAA/Watch Neg II-A-2 40430RAC0 AAA AAA/Watch Neg II-A-3 40430RAD8 AAA AAA/Watch Neg II-A-4 40430RAE6 AAA AAA/Watch Neg M-3 40430RAH9 BB BB/Watch Neg HSI Asset Securitization Corporation Trust 2007-NC1 Series 2007-NC1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 40430TAA0 AAA AAA/Watch Neg A-2 40430TAB8 AAA AAA/Watch Neg JPMorgan Mortgage Acquisition Trust 2007-CH3 Series 2007-CH3 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1A 46630XAA6 AAA AAA/Watch Neg A-1B 46630XAB4 AAA AAA/Watch Neg A-2 46630XAC2 AAA AAA/Watch Neg A-3 46630XAD0 AAA AAA/Watch Neg A-4 46630XAE8 AAA AAA/Watch Neg A-5 46630XAF5 AAA AAA/Watch Neg M-1 46630XAG3 AA+ AA+/Watch Neg M-3 46630XAJ7 B B/Watch Neg Lehman ABS Mortgage Loan Trust 2007-1 Series 2007-1 Rating ------ Class CUSIP To From ----- ----- -- ---- 2-A1 52521MAB8 AAA AAA/Watch Neg 2-A2 52521MAC6 AAA AAA/Watch Neg MASTR Asset Backed Securities Trust 2007-HE1 Series 2007-HE1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 576457AA3 AAA AAA/Watch Neg A-2 576457AB1 AAA AAA/Watch Neg A-3 576457AC9 AAA AAA/Watch Neg A-4 576457AD7 AAA AAA/Watch Neg M-1 576457AE5 AA+ AA+/Watch Neg M-3 576457AG0 BB BB/Watch Neg M-4 576457AH8 B B/Watch Neg Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2A 59024QAB6 AAA AAA/Watch Neg A-2B 59024QAC4 AAA AAA/Watch Neg R 59024QAS9 AAA AAA/Watch Neg M-3 59024QAH3 B B/Watch Neg Merrill Lynch First Franklin Mortgage Loan Trust, Series 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- 2-A1 59025CAB6 AAA AAA/Watch Neg 2-A2 59025CAC4 AAA AAA/Watch Neg R 59025CAV2 AAA AAA/Watch Neg 1-M3 59025CAK6 B B/Watch Neg 2-M3 59025CAL4 B B/Watch Neg Merrill Lynch Mortgage Investors Trust, Series 2007-MLN1 Series 2007-MLN1 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 59024UAA9 AAA AAA/Watch Neg A-2A 59024UAB7 AAA AAA/Watch Neg A-2B 59024UAC5 AAA AAA/Watch Neg A-2C 59024UAD3 AAA AAA/Watch Neg A-2D 59024UAE1 AAA AAA/Watch Neg M-1 59024UAF8 AA+ AA+/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-HE5 Series 2007-HE5 Rating ------ Class CUSIP To From ----- ----- -- ---- A-2a 61753KAB2 AAA AAA/Watch Neg A-2b 61753KAC0 AAA AAA/Watch Neg A-2c 61753KAD8 AAA AAA/Watch Neg M-4 61753KAJ5 B B/Watch Neg Morgan Stanley ABS Capital I Inc. Trust 2007-NC2 Series 2007-NC2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 61753NAA8 AAA AAA/Watch Neg A-2fpt 61753NAB6 AAA AAA/Watch Neg A-2a 61753NAC4 AAA AAA/Watch Neg A-2b 61753NAD2 AAA AAA/Watch Neg A-2c 61753NAE0 AAA AAA/Watch Neg Nationstar Home Equity Loan Trust 2007-B Series 2007-B Rating ------ Class CUSIP To From ----- ----- -- ---- 1-AV-1 63860LAA8 AAA AAA/Watch Neg 2-AV-1 63860LAB6 AAA AAA/Watch Neg 2-AV-2 63860LAC4 AAA AAA/Watch Neg 2-AV-3 63860LAD2 AAA AAA/Watch Neg 2-AV-4 63860LAE0 AAA AAA/Watch Neg M-1 63860LAF7 AA+ AA+/Watch Neg M-2 63860LAG5 AA AA/Watch Neg M-3 63860LAH3 AA- AA-/Watch Neg Natixis Real Estate Capital Trust 2007-HE2 Series 2007-HE2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 638728AA3 AAA AAA/Watch Neg Nomura Home Equity Loan, Inc. Home Equity Loan Trust Series 2007-3 Series 2007-3 Rating ------ Class CUSIP To From ----- ----- -- ---- II-A-1 65537NAB0 AAA AAA/Watch Neg II-A-2 65537NAC8 AAA AAA/Watch Neg Option One Mortgage Loan Trust 2007-4 Series 2007-4 Rating ------ Class CUSIP To From ----- ----- -- ---- II-A-1 68403FAB2 AAA AAA/Watch Neg II-A-2 68403FAC0 AAA AAA/Watch Neg Option One Mortgage Loan Trust 2007-CP1 Series 2007-CP1 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A-1 68402YAA4 AAA AAA/Watch Neg II-A-1 68402YAB2 AAA AAA/Watch Neg II-A-2 68402YAC0 AAA AAA/Watch Neg II-A-3 68402YAD8 AAA AAA/Watch Neg M-3 68402YAG1 B B/Watch Neg Popular ABS Mortgage Pass-Through Trust 2007-A Series 2007-A Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 73316NAA3 AAA AAA/Watch Neg A-2 73316NAB1 AAA AAA/Watch Neg A-3 73316NAC9 AAA AAA/Watch Neg M-1 73316NAD7 AA AA/Watch Neg M-2 73316NAE5 AA AA/Watch Neg RAMP Series 2007-RS2 Trust Series 2007-RS2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 75157DAA2 AAA AAA/Watch Neg RASC Series 2007-KS2 Trust Series 2007-KS2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-I-1 74924WAA5 AAA AAA/Watch Neg A-I-2 74924WAB3 AAA AAA/Watch Neg A-I-3 74924WAC1 AAA AAA/Watch Neg A-I-4 74924WAD9 AAA AAA/Watch Neg A-II-1 74924WAE7 AAA AAA/Watch Neg Saxon Asset Securities Trust 2007-2 Series 2007-2 Rating ------ Class CUSIP To From ----- ----- -- ---- A-1 80556YAA3 AAA AAA/Watch Neg A-2a 80556YAB1 AAA AAA/Watch Neg A-2b 80556YAC9 AAA AAA/Watch Neg A-2c 80556YAD7 AAA AAA/Watch Neg A-2d 80556YAE5 AAA AAA/Watch Neg M-1 80556YAF2 AA+ AA+/Watch Neg M-2 80556YAG0 AA AA/Watch Neg Soundview Home Loan Trust 2007-OPT1 Series 2007-OPT1 Rating ------ Class CUSIP To From ----- ----- -- ---- II-A-1 83612TAB8 AAA AAA/Watch Neg II-A-2 83612TAC6 AAA AAA/Watch Neg II-A-3 83612TAD4 AAA AAA/Watch Neg X 83612TAR3 AAA AAA/Watch Neg Specialty Underwriting and Residential Finance Trust, Series 2007-BC2 Series 2007-BC2 Rating ------ Class CUSIP To From ----- ----- -- ---- M1 84752EAF0 AA+ AA+/Watch Neg M2 84752EAG8 AA AA/Watch Neg M3 84752EAH6 A+ A+/Watch Neg M4 84752EAJ2 BB BB/Watch Neg M5 84752EAK9 B B/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-BC3 Series 2007-BC3 Rating ------ Class CUSIP To From ----- ----- -- ---- 1-A1 86363WAA7 AAA AAA/Watch Neg 1-A2 86363WAB5 AAA AAA/Watch Neg 1-A3 86363WAC3 AAA AAA/Watch Neg 2-A1 86363WAE9 AAA AAA/Watch Neg 2-A2 86363WAF6 AAA AAA/Watch Neg 2-A3 86363WAG4 AAA AAA/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-EQ1 Series 2007-EQ1 Rating ------ Class CUSIP To From ----- ----- -- ---- A2 86363HAB8 AAA AAA/Watch Neg A3 86363HAC6 AAA AAA/Watch Neg M3 86363HAH5 B B/Watch Neg Structured Asset Securities Corporation Mortgage Loan Trust 2007-TC1 Series 2007-TC1 Rating ------ Class CUSIP To From ----- ----- -- ---- A 86364GAA1 AAA AAA/Watch Neg A-IO 86364GAB9 AAA AAA/Watch Neg WaMu Asset Backed Certificates Series 2007-HE3 Trust Series 2007-HE3 Rating ------ Class CUSIP To From ----- ----- -- ---- I-A 93364EAA2 AAA AAA/Watch Neg II-A1 93364EAB0 AAA AAA/Watch Neg II-A-2 93364EAC8 AAA AAA/Watch Neg II-A3 93364EAD6 AAA AAA/Watch Neg II-A4 93364EAE4 AAA AAA/Watch Neg II-A5 93364EAF1 AAA AAA/Watch Neg * S&P Outlines Events that Could Affect Credit Card ABS Ratings --------------------------------------------------------------- Defaults are unlikely but ratings on U.S. credit card asset-backed securities could be adversely affected upon the occurrence of one or more events, according to a report by Standard & Poor's Ratings Services. The report identifies those events as a significant deterioration in a key performance variable, such as losses or payment rate; a simultaneous deterioration of more than one performance variable at the same time; or a material downgrade or insolvency of the originator. To test how sensitive credit card ABS ratings are to these events, the report simulates how these ratings could respond to varying levels of deterioration in key performance variables under a pessimistic economic stress. Credit card ABS have historically been one of the most stable sectors of the securitization market, but have been under pressure lately from a variety of factors that are combining to test the performance of credit card portfolios. Investors, therefore, have questions about how S&P's ratings on credit card ABS might hold up under current and future performance and macroeconomic conditions. "We examined what would cause the downgrade of both 'AAA' and 'BBB' tranches -- usually the senior and junior notes in a transaction -- and identified certain scenarios that could cause a review for possible rating action," said credit analyst Ildiko Szilank. "We may re-examine our base case assumptions should losses rise beyond historical experience for a prolonged period of time," she explained. "Similarly, we would examine our assumptions if an issuer's payment rate declines significantly from current levels and the trend continues, and we hadn't already factored this decline into our base case assumptions." She added: "Our base case assumptions are generally higher than current levels and incorporate prior recession experience." Ms. Szilank noted that 'AAA' rated classes are subject to the same performance-related risk factors as 'BBB' rated classes. "Nevertheless, senior notes are relatively well insulated in card transaction structures and benefit from the diversion of principal cash flows from subordinate classes, if necessary, should performance deteriorate," she said. It is important to understand that because we apply simultaneous stresses to base case assumptions for various variables that incorporate historical experience, the deterioration in any one variable may not necessarily result in a potential downgrade. Ms. Szilank elaborated: "Our 'BBB' break-even peak loss rate for the prime bankcard sector averages about 14.7%, which is approximately 82% more than the severe recession scenario peak loss projection, by our Chief Economist, of 8.1%." The report explains that a potential downgrade would depend on an issuer-specific analysis to evaluate the drivers behind the deterioration of each performance variable; the change in context of other key variables that influence our assessment of credit quality; and the likelihood that the negative trend would continue. "We would also consider qualitative factors, such as changes in portfolio composition and the underwriting, servicing, and collection strategies of the issuer," Ms. Szilank concluded. * BOOK REVIEW: The First Junk Bond: A Story of Corporate Boom and Bust -------------------------------------------------------- Author: Harlan D. Platt Publisher: Beard Books Paperback: 256 pages List Price: US$34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587981203/internetbankrupt This is a book that business people will find particularly enlightening. It details how Texas International, Inc.'s bankruptcy filing affected various stakeholders, the bankruptcy negotiation process, and the alternative post-bankruptcy structures that were considered. This engrossing book follows the extraordinary journey of the company through its corporate growth and decline, debt exchange offers, and corporate rebirth. It is a case study of a company that exemplified the 1980s, complete with fascinating people, financial innovations, and successive rounds of high stakes poker, as the misfortunes of the company unfold. Detailed is the involvement of Drexel Lambert banking house and its guiding spirit Michael Milken, who secured fresh capital for the company through the issuance of a high-yield bond with an above-market rate of interest to counterbalance its elevated credit risk. ********* 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 ***